Exhibit 99.1
News Release
| FOR IMMEDIATE RELEASE | For More Information Contact: |
| April 20, 2004 | Susan Knight, Chief Financial Officer
(952)937-4000
Paul Runice, Treasurer
(952) 937-4003 |
MTS Reports Strong Second Quarter Earnings and Confirms 2004 EPS Guidance
Eden Prairie, Minn., April 20, 2004 – MTS Systems Corporation (NASDAQ: MTSC) today reported net income of $6.5 million, or $0.30 per diluted share, for its second quarter ended March 27, 2004, a 63 percent increase compared to net income of $4.0 million, or $0.19 per diluted share, for the second quarter of fiscal 2003. Second quarter income before discontinued operations of $6.5 million, or $0.30 per diluted share, was essentially flat compared to prior year income before discontinued operations of $6.4 million, or $0.30 per diluted share.
Second quarter orders were $87.5 million, an increase of 11 percent compared to orders of $78.8 million for second quarter of fiscal 2003, driven by increased Test segment volume in Europe and Asia and the receipt of a $10 million order in the ground vehicles market. Backlog decreased approximately 3 percent in the quarter, from $222 million to $216 million, reflecting the second quarter cancellation of a $10 million order, partially offset by favorable currency translation.
“As projected, earnings delivered in the quarter were up strongly due to the previous divestiture of under-performing businesses and improved operational performance across both segments,” said Sidney W. Emery, Jr., Chairman and CEO. “While overall orders increased, the North American marketplace did not show signs of recovery. Based on the first half results, we are confirming our full year earnings per share guidance of $1.15-$1.20, which reflects anticipated second half investments in both business segments.”
Second quarter revenue was in line with the Company’s expectations at $88.2 million, a decrease of 5 percent compared to revenue of $93.2 million for the second quarter of fiscal 2003. This decrease was primarily due to prior year revenue associated with a large aerospace project that did not repeat in the current quarter. Additionally, $4.6 million of favorable currency translation offset lower volume compared to the prior year.
Second quarter income from operations was $9.2 million, an increase of 12 percent compared to income from operations of $8.2 million for the second quarter of fiscal 2003, primarily driven by higher margin product mix in both the Test and Industrial segments.
Cash flow provided by operations was approximately $19 million for the second quarter, driven by continued working capital improvement and strong earnings.
Segment Results
Test Segment:
Orders for the Test segment were $75.2 million for the second quarter, up 14 percent compared to orders of $65.7 million for second quarter of fiscal 2003, primarily due to improved volume in both Europe and Asia. Backlog decreased 2 percent, from $213 million to $208 million, reflecting a $10 million order
MTS News Release
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cancellation in second quarter, partially offset by favorable currency translation. Second quarter revenue was $74.1 million, a decrease of 8 percent compared to $80.8 million for second quarter of fiscal 2003, primarily due to project timing and significant prior year revenue associated with a large aerospace project which did not repeat in the current quarter. Gross profit as a percent of revenue was 36.6 percent, an increase of 2.2 percentage points compared to 34.4 percent for second quarter of fiscal 2003, due to higher-margin revenue mix. The segment reported $7.3 million in income from operations, unchanged compared to the second quarter of fiscal 2003.
Industrial Segment:
Orders for the Industrial segment were $12.3 million for the second quarter, a decrease of 6 percent compared to orders of $13.1 million for second quarter of fiscal 2003. This decrease reflects the prior year receipt of a $1.5 million contract by AeroMet, partially offset by increased orders in the Sensors business. Backlog decreased 11 percent, from $9 million to $8 million. Revenue was $14.1 million for the second quarter, an increase of 14 percent compared to revenue of $12.4 million for second quarter of fiscal 2003, driven by increased volume in the Sensors business. Gross profit as a percent of revenue was 49.9 percent, an increase of 5.6 percentage points compared to 44.3 percent for second quarter of fiscal 2003, reflecting favorable product mix and one-time costs in the prior year associated with a canceled contract. Income from operations was $1.9 million, an increase of 111 percent compared to income from operations of $0.9 million for second quarter of fiscal 2003, driven by improved revenue volume and higher margins.
Second Quarter Conference Call
A conference call will be held on Wednesday, April 21, at 9:00 a.m. CDT (10:00 a.m. EDT). Call +1-630-395-0025; state the Passcode “Second Quarter” and conference leader “Chip Emery”. Telephone re-play will be available through 6:00 p.m. CDT, May 21, 2004. Call +1-402-220-4107 and state the Passcode “4006.”
If you prefer to listen live over the Internet, please log on to the web at <http://www.mts.com/news/financial_news.htm> and click on the webcast image. The call will be archived through 6:00 p.m. CDT, July 21, 2004.
About MTS Systems Corporation
MTS Systems Corporation is a global supplier of testing products that help customers accelerate and improve their design, development, and manufacturing processes. MTS products are used for determining the mechanical behavior of materials, products, and structures and include computer-based testing and simulation systems, modeling and testing software, and consulting services. The Company is also a leading manufacturer of industrial position sensors. MTS had 1,630 employees and revenue of $340 million for the fiscal year ended September 27, 2003. Additional information on MTS can be found on the worldwide web at http://www.mts.com.
This release contains “forward-looking statements” made pursuant to the safe harbor provision of the PrivateSecurities Litigation Reform Act of 1995 that are subject to certain risks and uncertainties, as well asassumptions, that could cause actual results to differ materially from historical results and those presentlyanticipated or projected. In addition to the factors discussed above, other important risk factors are delineatedin the Company’s SEC reports, including Form 10-K for the year ended September 27, 2003.
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MTS SYSTEMS CORPORATION
Consolidated Statements of Income
(unaudited - in thousands, except per share data)
| Three Months Ended | | Six Months Ended |
|---|
|
| |
| |
| March 27,
2004 | | March 29,
2003 | | March 27,
2004 | | March 29,
2003 |
|
| |
| |
| |
| |
| Revenue | | | $ | 88,239 | | $ | 93,236 | | $ | 172,870 | | $ | 177,675 | |
| Cost of sales | | | | 54,037 | | | 59,916 | | | 103,979 | | | 113,049 | |
|
| |
| |
| |
| |
| Gross profit | | | | 34,202 | | | 33,320 | | | 68,891 | | | 64,626 | |
|
| |
| |
| |
| |
| Operating expenses: | | |
| Selling | | | | 14,888 | | | 13,490 | | | 28,438 | | | 26,352 | |
| General and administrative | | | | 6,658 | | | 7,618 | | | 13,032 | | | 13,441 | |
| Research and development | | | | 3,458 | | | 4,043 | | | 7,060 | | | 7,623 | |
|
| |
| |
| |
| |
| Total operating expenses | | | | 25,004 | | | 25,151 | | | 48,530 | | | 47,416 | |
|
| |
| |
| |
| |
| | | | |
| Income from operations | | | | 9,198 | | | 8,169 | | | 20,361 | | | 17,210 | |
|
| |
| |
| |
| |
| Interest expense | | | | (679 | ) | | (949 | ) | | (1,382 | ) | | (1,993 | ) |
| Interest income | | | | 447 | | | 617 | | | 865 | | | 1,104 | |
| Other income, net | | | | 668 | | | 1,729 | | | 1,322 | | | 1,712 | |
|
| |
| |
| |
| |
| Income before income taxes and discontinued operations | | | | 9,634 | | | 9,566 | | | 21,166 | | | 18,033 | |
| Provision for income taxes | | | | 3,093 | | | 3,184 | | | 7,048 | | | 5,951 | |
|
| |
| |
| |
| |
| Income before discontinued operations | | | | 6,541 | | | 6,382 | | | 14,118 | | | 12,082 | |
|
| |
| |
| |
| |
| Discontinued operations: | | |
| Loss from discontinued operations, net of tax | | | | — | | | (17 | ) | | — | | | (220 | ) |
| Loss on sale of discontinued businesses, net of tax | | | | — | | | (2,402 | ) | | — | | | (2,402 | ) |
|
| |
| |
| |
| |
| Loss from discontinued operations, net of tax | | | | — | | | (2,419 | ) | | — | | | (2,622 | ) |
|
| |
| |
| |
| |
| Net income | | | $ | 6,541 | | $ | 3,963 | | $ | 14,118 | | $ | 9,460 | |
|
| |
| |
| |
| |
| Earnings per share: | | |
| Basic- | | |
| Income before discontinued operations | | | $ | 0.31 | | $ | 0.30 | | $ | 0.67 | | $ | 0.57 | |
| Discontinued operations: | | |
| Loss from discontinued operations, net of tax | | | | — | | | — | | | — | | | (0.01 | ) |
| Loss on sale of discontinued businesses, net of tax | | | | — | | | (0.11 | ) | | — | | | (0.11 | ) |
|
| |
| |
| |
| |
| Loss from discontinued operations, net of tax | | | | — | | | (0.11 | ) | | — | | | (0.12 | ) |
|
| |
| |
| |
| |
| Earnings per share | | | $ | 0.31 | | $ | 0.19 | | $ | 0.67 | | $ | 0.45 | |
|
| |
| |
| |
| |
| Weighted average number of common shares outstanding - basic | | | | 21,113 | | | 21,112 | | | 20,936 | | | 21,122 | |
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| |
| |
| |
| |
| Diluted- | | |
| Income before discontinued operations | | | $ | 0.30 | | $ | 0.30 | | $ | 0.65 | | $ | 0.56 | |
| Discontinued operations: | | |
| Loss from discontinued operations, net of tax | | | | — | | | — | | | — | | | (0.01 | ) |
| Loss on sale of discontinued businesses, net of tax | | | | — | | | (0.11 | ) | | — | | | (0.11 | ) |
|
| |
| |
| |
| |
| Loss from discontinued operations, net of tax | | | | — | | | (0.11 | ) | | — | | | (0.12 | ) |
|
| |
| |
| |
| |
| Earnings per share | | | $ | 0.30 | | $ | 0.19 | | $ | 0.65 | | $ | 0.44 | |
|
| |
| |
| |
| |
| Weighted average number of common shares outstanding - diluted | | | | 22,021 | | | 21,404 | | | 21,752 | | | 21,379 | |
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MTS News Release
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MTS SYSTEMS CORPORATION
Consolidated Balance Sheets
(unaudited — in thousands, except per share data)
| March 27,
2004 | | September 27,
2003 |
|---|
|
| |
| |
| ASSETS | | | | | | | | |
| Current Assets: | | |
| Cash and cash equivalents | | | $ | 161,034 | | $ | 74,183 | |
| Short-term investments | | | | -- | | | 58,560 | |
| Accounts receivable, net of allowances for doubtful accounts | | | | 65,040 | | | 59,637 | |
| Unbilled contracts and retainage receivable | | | | 22,397 | | | 21,939 | |
| Inventories | | | | 34,119 | | | 34,709 | |
| Prepaid expense | | | | 5,369 | | | 3,928 | |
| Current deferred tax asset | | | | 9,692 | | | 9,682 | |
| Other current assets | | | | 550 | | | 2,075 | |
| Assets held for sale | | | | 1,589 | | | — | |
|
| |
| |
| Total current assets | | | | 299,790 | | | 264,713 | |
|
| |
| |
| Property and Equipment: | | |
| Land | | | | 2,478 | | | 3,247 | |
| Buildings and improvements | | | | 46,601 | | | 47,031 | |
| Machinery and equipment | | | | 87,095 | | | 84,834 | |
| Accumulated depreciation | | | | (82,582 | ) | | (78,908 | ) |
|
| |
| |
| Total property and equipment, net | | | | 53,592 | | | 56,204 | |
|
| |
| |
| Goodwill | | | | 4,425 | | | 4,383 | |
| Other assets | | | | 2,295 | | | 2,562 | |
| Non-current deferred tax asset | | | | 2,529 | | | 2,516 | |
|
| |
| |
| Total Assets | | | $ | 362,631 | | $ | 330,378 | |
|
| |
| |
| LIABILITIES AND SHAREHOLDERS' INVESTMENT | | |
| Current Liabilities: | | |
| Notes payable | | | $ | 4,770 | | $ | 383 | |
| Current maturities of long-term debt | | | | 6,848 | | | 6,839 | |
| Accounts payable | | | | 14,852 | | | 10,483 | |
| Accrued payroll-related costs | | | | 20,656 | | | 24,742 | |
| Advance payments from customers | | | | 48,485 | | | 40,456 | |
| Accrued warranty costs | | | | 5,271 | | | 4,862 | |
| Accrued income taxes | | | | 7,666 | | | 5,571 | |
| Other accrued liabilities | | | | 15,580 | | | 15,838 | |
|
| |
| |
| Total current liabilities | | | | 124,128 | | | 109,174 | |
|
| |
| |
| Deferred income taxes | | | | 6,502 | | | 6,265 | |
| Long-term debt, less current maturities | | | | 29,238 | | | 30,487 | |
| Other long-term liabilities | | | | 9,133 | | | 8,346 | |
|
| |
| |
| Total Liabilities | | | | 169,001 | | | 154,272 | |
|
| |
| |
| Shareholders' Investment: | | |
| Common stock, $.25 par; 64,000 shares authorized: | | | | | | | | |
| 21,124 and 20,720 shares issued and outstanding | | | | 5,281 | | | 5,180 | |
| Additional paid-in capital | | | | 4,259 | | | 1,534 | |
| Retained earnings | | | | 173,682 | | | 162,076 | |
| Accumulated other comprehensive income | | | | 10,408 | | | 7,316 | |
|
| |
| |
| Total shareholders' investment | | | | 193,630 | | | 176,106 | |
|
| |
| |
| Total Liabilities and Shareholders' Investment | | | $ | 362,631 | | $ | 330,378 | |
|
| |
| |
