MTS Reports Continued Operating Improvements
EDEN PRAIRIE, Minn., April 25 MTS Systems Corporation today reported net income of
$3.5 million, or $0.17 per share, for the second quarter ended March 31, 2001,
compared to $1.4 million, or $0.07 per share, in the prior year. Second
quarter 2001 revenue was $97.9 million, compared to $95.3 million in the prior
year. Revenue and net income for the second quarter exceeded consensus
estimates. Orders for the second quarter were $88 million, compared to
$101 million in the second quarter of fiscal 2000.
For the first six months of fiscal 2001, net income was $3.8 million, or
$0.18 per share, compared to a loss of $4.7 million, or ($0.22) per share for
the first six months of fiscal 2000. Revenue for the first six months of
fiscal 2001 was $182.9 million, essentially flat with the revenue for the
first six months of fiscal 2000. With orders of $191 million for the first
six months of fiscal 2001, revenue backlog totaled $178 million at March 31,
2001.
"Solid operating performance highlighted our second quarter," said Sidney
W. Emery, Jr., chairman and CEO. "These improvements were in line with our
internal plans and reflect progress in the mechanical testing and simulation
sector. New business included an increased demand for our rolling track
systems for the tire, passenger car and specialty vehicle markets, as well as
strength across the globe in aircraft structural testing. Especially well
received were our new software simulation products announced in March at the
Society of Automotive Engineers' exposition in Detroit. Integrated with MTS
hardware and our alliance partners' software solvers, these new products will
enhance our customers' time to market.
"We did, however, experience a slow down in North American business
levels. Overall, we were $10 million off our plan for new orders -- the
result of aggressive cut backs in capital spending in the North American
automotive market and a precipitous drop in North American demand for our
factory automation components in the semiconductor, electronics assembly and
industrial markets. These were offset somewhat by robust orders in Europe and
Asia in both sectors.
"Looking ahead, our outlook for fiscal year 2001 remains cautious as the
North American economy has slowed considerably over the past four months and
we expect this situation to continue in the near-term. So far this has not
significantly impacted our European or Asian business, but will likely have a
negative affect on new order levels in the second half. However, the
combination of our backlog position and continued emphasis on operating
improvement supports our outlook of significant operating earnings growth this
year. For the third quarter we are projecting revenue to be flat with the
second quarter in the middle $90 million range with earnings per share in the
mid to high teens. While much depends upon the market, we remain comfortable
with the consensus estimate of MTS' full-year earnings per share being in the
low to mid sixties."
Sector Results
Mechanical Testing and Simulation Sector:
Revenue for this sector was $76.2 million for the second quarter ended
March 31, 2001, up 6.9% compared to revenue of $71.3 million for second
quarter 2000. With orders of $68 million, backlog declined approximately
$8 million in the quarter. Sector gross margin, as a percentage of revenue,
was 34.2% in the quarter, up from 33.8% in the second quarter last year.
Operating earnings of $5.9 million were better than planned and improved
substantially from $0.8 million last year.
For the first six months of fiscal 2001, revenue for the sector increased
to $140.5 million, essentially unchanged from the prior year. Sector gross
margin for the first six months of fiscal 2001 was 33.8%, compared to 27.8%
for the first six months of fiscal 2000. Operating earnings of $5.8 million
were much improved over the $6.7 million loss reported in the previous year.
Factory Automation Sector:
Revenue for this sector was $21.7 million for the second quarter ended
March 31, 2001, down 9.5% compared to revenue of $24.0 million for second
quarter 2000. This reflects a substantial slowdown in the motion control
business in North America, as we experienced aggressive cutbacks in both order
quantities and previously planned shipments across the board. Orders of
$20 million resulted in a $2 million decrease in backlog for the sector.
Gross margin dipped from 43.1% in the second quarter last year to 41.3% this
year. At $0.9 million, operating earnings were substantially below plan and
the $3.2 million reported for second quarter last year.
For the first six months of fiscal 2001, revenue for the sector increased
slightly to $42.4 million, compared to $42.1 million in the second quarter
2000. Gross margins were down at 40.5% versus 43.2% in the previous year.
Sector earnings for the first six months of fiscal 2001 were $3.0 million,
down approximately $1.7 million from the prior year first half.
MTS SYSTEMS CORPORATION
Consolidated Statements of Income
(unaudited - in thousands of dollars,
except earnings per share data)
Three Months Ended Six Months Ended
March 31 March 31
2001 2000 2001 2000
Net revenue $97,935 $95,291 $182,924 $182,505
Cost of revenue 62,876 60,821 118,246 125,249
Gross profit 35,059 34,470 64,678 57,256
Operating expenses:
Selling 14,223 14,611 28,228 29,004
General & administrative 8,255 9,145 16,766 16,818
Research & development 5,776 6,684 10,864 13,363
Total operating
expenses 28,254 30,440 55,858 59,185
Income (loss) from
operations 6,805 4,030 8,820 (1,929)
Interest expense 1,544 1,648 3,033 3,004
Interest income (145) (161) (251) (279)
Other expense (income), net (461) 331 (268) 2,354
Income (loss) before
income taxes 5,867 2,212 6,306 (7,008)
Income tax provision
(benefit) 2,347 841 2,522 (2,340)
Net income (loss) $3,520 $1,371 $3,784 ($4,668)
Basic earnings (loss)
per share $0.17 $0.07 $0.18 ($0.22)
Weighted average number
of common shares
outstanding -- basic 20,661 20,836 20,691 20,858
Diluted earnings (loss)
per share $0.17 $0.07 $0.18 ($0.22)
Weighted average number
of common shares
outstanding -- diluted 20,866 20,928 20,817 20,858
MTS SYSTEMS CORPORATION
Condensed Consolidated Balance Sheets
(unaudited - in thousands of dollars)
March 31, Sept. 30,
2001 2000
Cash and cash equivalents $8,852 $8,211
Accounts receivable 90,030 117,866
Unbilled contracts receivable 36,016 26,765
Inventories 75,157 62,520
Prepaid expenses 11,912 9,911
Total current assets 221,967 225,273
Property and equipment, net 69,580 72,081
Other assets 33,291 32,880
Total assets $324,838 $330,234
Notes payable to banks $2,113 $11,945
Current maturities of long-term debt 5,597 5,663
Accounts payable 17,942 22,755
Accrued liabilities 43,739 49,612
Advanced billings to customers 33,236 18,673
Total current liabilities 102,627 108,648
Deferred income taxes 5,728 5,628
Long term debt 58,195 58,104
Total shareholders' investment 158,288 157,854
Total liabilities and shareholders' investment $324,838 $330,234
