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MTS Systems Corp. Reports Operating Results (10-Q)

February 04, 2010 | About:
10qk

10qk

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MTS Systems Corp. (MTSC) filed Quarterly Report for the period ended 2010-01-02.

Mts Systems Corp. has a market cap of $438.9 million; its shares were traded at around $26.45 with a P/E ratio of 17.4 and P/S ratio of 1.1. The dividend yield of Mts Systems Corp. stocks is 2.3%. Mts Systems Corp. had an annual average earning growth of 8.5% over the past 10 years.MTSC is in the portfolios of Bill Frels of MAIRS & POWER INC, Chuck Royce of ROYCE & ASSOCIATES, Richard Pzena of Pzena Investment Management LLC.

Highlight of Business Operations:

Orders increased 12.7% compared to $95.5 million for the Fourth Quarter of Fiscal 2009, primarily driven by increased volume in both segments. This increase includes the previously mentioned large custom orders, compared to one large custom order of approximately $7.0 million in the Fourth Quarter of Fiscal 2009. Backlog of undelivered orders was $184.3 million, an increase of 9.9% from backlog of $167.7 million at October 3, 2009. Revenue decreased 5.1% to $89.0 million, compared to $93.8 million for the Fourth Quarter of Fiscal 2009, primarily due to the impact of an extra week in the Fourth Quarter of Fiscal 2009. This decrease was comprised of an 8.3% decline in the Test segment, partially offset by a 7.6% increase in the Sensors segment. Income from operations was $6.4 million. This compares to a loss from operations of $3.9 million for the Fourth Quarter of Fiscal 2009, which included severance charges of $8.1 million. Excluding severance charges, operating expenses declined $3.3 million in the First Quarter of Fiscal 2010, primarily due to prior year workforce reduction actions and reduced discretionary spending, net of $1.4 million increased variable compensation. Earnings per diluted share increased $0.41 to $0.23, compared to a net loss of $0.18 for the Fourth Quarter of Fiscal 2009. Severance charges in the Fourth Quarter of Fiscal 2009 approximated $0.33 per share.

Orders increased 13.0% to $107.7 million, compared to $95.3 million for the First Quarter of Fiscal 2009, driven by two large custom orders in the Test segment totaling approximately $20 million, partially offset by $0.7 million lower volume in the Sensors segment across all geographies. Backlog of undelivered orders was $184.3 million, compared to $218.4 million at the end of the First Quarter of Fiscal 2009. Revenue decreased 23.7% to $89.0 million, compared to $116.6 million for the First Quarter of Fiscal 2009, primarily due to a 28.5% decline in opening backlog, partially offset by a 3.2% favorable impact of currency translation. Income from operations decreased 46.2% to $6.4 million, compared to $11.9 million for the First Quarter of Fiscal 2009, as the unfavorable impact of the volume decline in both segments was partially offset by reduced operating expenses. Earnings per diluted share decreased $0.34, or 59.6%, to $0.23, compared to $0.57 for the First Quarter of Fiscal 2009, primarily due to lower income from operations which negatively impacted earnings per diluted share by $0.22. Cash and cash equivalents at the end of the quarter totaled $113.7 million, compared to $118.9 million at the end of Fiscal 2009. Cash flows from operations generated $1.7 million, primarily driven by earnings, partially offset by higher working capital utilization. During the quarter, the Company invested $1.8 million in capital expenditures, paid $2.5 million in dividends, and purchased approximately 52,700 shares of its common stock for $1.4 million.

On a sequential basis, backlog of undelivered orders at January 2, 2010 was $184.3 million, an increase of 9.9% from backlog of $167.7 million at October 3, 2009. On a year-over-year basis, backlog decreased 15.6% from backlog of $218.4 million at the end of the First Quarter of Fiscal 2009. The Company seldom experiences order cancellations larger than $1.0 million; however, current economic conditions could have an adverse impact on order cancellations in the future.

Net income was $3.8 million, a decrease of $6.0 million, or 61.2%, compared to $9.8 million for the First Quarter of Fiscal 2009. Earnings per diluted share decreased $0.34, or 59.6%, to $0.23, compared to $0.57 for the First Quarter of Fiscal 2009. The decrease was primarily driven by lower income from operations.

Orders totaled $90.1 million, an increase of $13.1 million, or 17.0%, compared to orders of $77.0 million for the First Quarter of Fiscal 2009, primarily due to higher volume in the Americas and Europe, including the previously mentioned two large custom orders totaling approximately $20 million, as well as an estimated $2.4 million favorable impact of currency translation. There were no large orders in the First Quarter of Fiscal 2009. The Test segment accounted for 83.7% of total Company orders, compared to 80.8% for the First Quarter of Fiscal 2009.

Gross profit was $25.8 million, a decrease of $7.5 million, or 22.5%, compared to gross profit of $33.3 million for the First Quarter of Fiscal 2009. Gross profit as a percentage of revenue was 35.9%, an increase of 1.7 percentage points from 34.2% for the First Quarter of Fiscal 2009. This increase was primarily due to favorable product mix, partially offset by lower volume. Gross profit for the First Quarter of Fiscal 2009 included $0.8 million of costs associated with the sale of inventory that was written up to fair value as part of the SANS acquisition.

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