MTS Reports Fiscal 2018 Fourth Quarter And Full Year Financial Results
FOURTH QUARTER FINANCIAL AND OPERATING HIGHLIGHTS
- Revenues of
$197.9 million , with gross margin rising 180 basis points to 38.7% - Second consecutive quarter of strong Test orders at
$140.7 million - Record Sensors orders of
$96.3 million , with a book-to-bill ratio of 1.24 - Awarded Sensors multi-year contract associated with the
U.S. Department of Defense valued at approximately$187 million inclusive of options, received initial purchase order funded up to$20 million in the quarter - Diluted earnings per share increased to
$0.56 - Declared 147th consecutive quarterly dividend
FULL YEAR FINANCIAL AND OPERATING HIGHLIGHTS
- Revenues of
$778.0 million , including Sensors revenue growth of 11% - Gross margin of 39.3%, an increase of 90 basis points
- Diluted earnings per share of
$3.18 , an increase of$1.87 or 143% - Record backlog of
$415.2 million , driven by record fourth quarter Sensors orders and Test momentum - Continued deleveraging of the balance sheet with
$73.7 million of debt payments
FINANCIAL TABLE
Three Months Ended |
Twelve Months Ended |
|||||||||||||||
(in thousands, except per share data - unaudited) |
September 29, 2018 |
September 30, 2017 |
September 29, 2018 |
September 30, 2017 |
||||||||||||
Revenue |
$ |
197,879 |
$ |
201,488 |
$ |
778,032 |
$ |
787,955 |
||||||||
Revenue % increase (decrease)1 |
(1.8) |
% |
(6.2) |
% |
(1.3) |
% |
21.2 |
% |
||||||||
Gross margin |
38.7 |
% |
36.9 |
% |
39.3 |
% |
38.4 |
% |
||||||||
Operating margin |
8.0 |
% |
6.2 |
% |
8.4 |
% |
7.0 |
% |
||||||||
Earnings before taxes |
$ |
14,532 |
$ |
4,187 |
$ |
44,223 |
$ |
23,011 |
||||||||
Net income |
10,760 |
5,570 |
61,328 |
25,084 |
||||||||||||
Diluted earnings per share |
0.56 |
0.29 |
3.18 |
1.31 |
||||||||||||
Adjusted diluted earnings per share2 |
0.61 |
0.44 |
3.28 |
2.22 |
||||||||||||
Adjusted EBITDA2 |
32,683 |
28,261 |
114,869 |
119,795 |
||||||||||||
Cash and cash equivalents, end of period |
71,804 |
108,733 |
||||||||||||||
Backlog, end of period |
415,155 |
360,016 |
||||||||||||||
Total debt, end of period |
388,378 |
457,639 |
1 |
Revenue growth rates in fiscal year 2017 reflect the first year of our PCB acquisition from July 5, 2016. |
2 |
Refer to the "Non-GAAP Financial Measures" section below for discussion of the calculation of these non-GAAP financial measures. |
EXECUTIVE COMMENTARY - DR.
"We are very pleased with how we ended the fiscal year, with increasing momentum across both of our business segments. While the Test ground vehicles sector remains sluggish by historical measure, all other Test equipment sectors, as well as our Test services, were robust, leading to a 50-year record order level for the second half of fiscal 2018 in our Test business. This performance puts us in a solid position for growth and margin improvement for Test in the year ahead."
"Our Sensors business had an outstanding year, with record revenues and strong operating performance, driven by broad strength across our Sensors industrial and test sectors. As good as we felt about our execution in 2018, our positive outlook for the future was further reinforced with the award, late in our fourth quarter, of a new Sensors multi-year contract associated with the
"In short, while the first half order challenges driven by the Test ground vehicles sector provided a headwind for full-year performance, the record order rates of the second half of the year, for both our Test and Sensors businesses, left us feeling very positive as we closed out our fiscal 2018. The resulting 50-year record backlog at year end, which topped
HIGHLIGHTS FOR THE 2018 FOURTH FISCAL QUARTER
Revenue
Revenue was
Orders
Test orders for the quarter were
Sensors orders for the quarter were a record
Earnings Before Taxes
Earnings before taxes totaled
Net Income and Diluted Earnings Per Share
Diluted earnings per share was
Adjusted EBITDA
Adjusted EBITDA grew to
Capital Structure
We continued to strengthen our balance sheet by reducing our debt outstanding for the eighth consecutive quarter. This included debt payments of
Dividend
The Board of Directors declared a quarterly dividend of $0.30 per share. The dividend was payable on October 1, 2018 to shareholders of record as of the close of business on September 17, 2018. This was our 147th consecutive quarterly dividend.
HIGHLIGHTS FOR THE 2018 FULL FISCAL YEAR
Revenue
Revenue was
Orders
Test orders for the fiscal year were
Sensors orders for the fiscal year were a record
Earnings Before Taxes
Earnings before taxes totaled
Net Income and Diluted Earnings Per Share
Diluted earnings per share was
Adjusted EBITDA
Adjusted EBITDA of
OUTLOOK
Test Business
Overall, the outlook in Test remains positive as composite technologies, additive manufacturing, services, emerging markets, material light-weighting and ground transportation create new demand for the unique and sophisticated testing solutions that we have to offer. We believe this demand will be driven heavily by the increased use of additive manufacturing and the proliferation of carbon-fiber composites in the materials sector, the requirement for durability testing in the automotive industry as new car types continue to be developed with the rapidly changing landscape in autonomy and electrification of vehicles, and by continued strong growth in our Test services activities. However, we believe volatility in the Test ground vehicles sector will continue to present risk to our near-term results for the foreseeable future. In addition, we continue to invest specifically in operational efficiency initiatives to improve profitability and in new products and technologies to generate the highest demand for Test products and services in the coming years.
Sensors Business
Strong demand in the Sensors business is anticipated to continue during fiscal year 2019 across all sectors, driven by new products across all major markets and geographies and expanded opportunities associated with the
Consolidated
Based on these factors, we introduce our expected outlook for fiscal year 2019 including:
Metric |
Current Outlook |
|
Revenue |
$830 million to $870 million |
|
Adjusted EBITDA |
$122 million to $142 million |
|
Diluted earnings per share |
$2.30 to $2.60 |
The above outlook includes:
$8.5 million to $11.0 million for stock-based compensation, acquisition-related and restructuring expenses;- Our most recent acquisition of
E2M Technologies B.V. , in addition to the slightly positive effects of the implementation of the new revenue recognition standard; and - An anticipated effective tax rate, excluding discrete tax items, of 15-19% for fiscal year 2019.
A reconciliation of Adjusted EBITDA, a non-GAAP financial measure, to net income, the most directly comparable GAAP financial measure, for the above outlook is included in Exhibit F of this earnings release.
FOURTH QUARTER CONFERENCE CALL
As announced on
Call toll free +1-855-719-5012 (international toll +1-334-323-0522) and reference the conference pass code 1982047. Telephone replay will be available at
A transcript of the call can also be accessed from the MTS website at http://investor.mts.com beginning on
ABOUT
NON-GAAP FINANCIAL MEASURES
We believe that disclosing adjusted diluted earnings per share, which is diluted earnings per share excluding the impact from restructuring expenses, acquisition integration expenses, acquisition inventory fair value adjustment, China investigation expenses and acquisition-related expenses is useful to investors as a measure of operating performance. We use this as one measure to monitor and evaluate operating performance. Adjusted diluted earnings per share is a financial measure that does not reflect United States Generally Accepted Accounting Principles (GAAP). We calculate this measure by adding back the after-tax effect of the restructuring expenses, acquisition integration expenses, acquisition inventory fair value adjustment, China investigation expenses and acquisition-related expenses to net income and dividing the result by the diluted weighted average shares outstanding.
We believe that disclosing earnings before interest, taxes, depreciation and amortization (EBITDA) and EBITDA excluding the impact from stock-based compensation, restructuring expenses, acquisition integration expenses, acquisition inventory fair value adjustment and China investigation expenses (Adjusted EBITDA) is useful to investors as a measure of leverage and operating performance. We use these measures to monitor and evaluate leverage and operating performance. EBITDA and Adjusted EBITDA are financial measures that do not reflect GAAP. We calculate EBITDA by adding back interest, taxes, depreciation and amortization expense to net income. Adjusted EBITDA is calculated by adding back stock-based compensation, restructuring expenses, acquisition integration expenses, acquisition inventory fair value adjustment and China investigation expenses to EBITDA.
We believe that disclosing free cash flow is useful to investors as a measure of operating performance. We use this measure as an indicator of the Company's strength and ability to generate cash. Free cash flow is a financial measure that does not reflect GAAP. We calculate free cash flow as net cash provided by (used in) operating activities less purchases of property and equipment plus cash proceeds from sale of property and equipment.
Investors should consider these non-GAAP financial measures in addition to, not as a substitute for or better than, financial measures prepared in accordance with GAAP. Reconciliations of the components of these measures to the most directly comparable GAAP financial measures are included in Exhibits B, C, D, E and F of this earnings release.
FORWARD-LOOKING STATEMENTS
This release contains "forward-looking statements" made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995 that are subject to certain risks and uncertainties, as well as assumptions, that could cause actual results to differ materially from historical results and those presently anticipated or projected. Statements made under the heading "Outlook" are forward-looking statements, and words such as "may," "will," "should," "expects," "intends," "projects," "plans," "believes," "estimates," "targets," "anticipates," and similar expressions identify forward-looking statements in other parts of the release. Such statements include, but are not limited to, statements about future financial and operating results, plans, objectives, expectations and intentions, statements about the opportunities and outlook for our Sensors and Test sectors and other statements that are not historical facts. These statements are based on our current expectations and beliefs and are subject to a number of risks, uncertainties and assumptions that could cause actual results to differ materially from those described in the forward-looking statements. Risks, uncertainties and assumptions that could cause our actual results to differ materially from those discussed in the forward-looking statements include, but are not limited to, those described in the "Risk Factors" section of our most recent Annual Report on Form 10-K filed with the
MTS SYSTEMS CORPORATION |
||||||||||||||||
Consolidated Statements of Income |
||||||||||||||||
(unaudited - in thousands, except per share data) |
||||||||||||||||
Three Months Ended |
Twelve Months Ended |
|||||||||||||||
September 29, 2018 |
September 30, 2017 |
September 29, 2018 |
September 30, 2017 |
|||||||||||||
Revenue |
||||||||||||||||
Product |
$ |
171,046 |
$ |
176,484 |
$ |
674,391 |
$ |
691,471 |
||||||||
Service |
26,833 |
25,004 |
103,641 |
96,484 |
||||||||||||
Total revenue |
197,879 |
201,488 |
778,032 |
787,955 |
||||||||||||
Cost of sales |
||||||||||||||||
Product |
104,716 |
111,393 |
409,525 |
427,405 |
||||||||||||
Service |
16,671 |
15,693 |
62,978 |
58,272 |
||||||||||||
Total cost of sales |
121,387 |
127,086 |
472,503 |
485,677 |
||||||||||||
Gross profit |
76,492 |
74,402 |
305,529 |
302,278 |
||||||||||||
Gross margin |
38.7 |
% |
36.9 |
% |
39.3 |
% |
38.4 |
% |
||||||||
Operating expenses |
||||||||||||||||
Selling and marketing |
31,537 |
31,958 |
126,333 |
124,912 |
||||||||||||
General and administrative |
20,605 |
21,234 |
79,240 |
87,539 |
||||||||||||
Research and development |
8,549 |
8,701 |
34,784 |
34,999 |
||||||||||||
Total operating expenses |
60,691 |
61,893 |
240,357 |
247,450 |
||||||||||||
Income from operations |
15,801 |
12,509 |
65,172 |
54,828 |
||||||||||||
Operating margin |
8.0 |
% |
6.2 |
% |
8.4 |
% |
7.0 |
% |
||||||||
Interest expense, net |
(6,121) |
(8,412) |
(25,882) |
(30,821) |
||||||||||||
Other income (expense), net |
4,852 |
90 |
4,933 |
(996) |
||||||||||||
Income before income taxes |
14,532 |
4,187 |
44,223 |
23,011 |
||||||||||||
Income tax provision (benefit) |
3,772 |
(1,383) |
(17,105) |
(2,073) |
||||||||||||
Net income |
$ |
10,760 |
$ |
5,570 |
$ |
61,328 |
$ |
25,084 |
||||||||
Earnings per share |
||||||||||||||||
Basic |
||||||||||||||||
Earnings per share |
$ |
0.56 |
$ |
0.29 |
$ |
3.20 |
$ |
1.32 |
||||||||
Weighted average common shares outstanding |
19,206 |
19,122 |
19,163 |
19,040 |
||||||||||||
Diluted |
||||||||||||||||
Earnings per share |
$ |
0.56 |
$ |
0.29 |
$ |
3.18 |
$ |
1.31 |
||||||||
Weighted average common shares outstanding |
19,363 |
19,222 |
19,293 |
19,137 |
||||||||||||
Dividends declared per share |
$ |
0.30 |
$ |
0.30 |
$ |
1.20 |
$ |
1.20 |
MTS SYSTEMS CORPORATION |
||||||||
Condensed Consolidated Balance Sheets |
||||||||
(unaudited - in thousands) |
||||||||
September 29, 2018 |
September 30, 2017 |
|||||||
ASSETS |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ |
71,804 |
$ |
108,733 |
||||
Accounts receivable, net |
122,243 |
123,994 |
||||||
Unbilled accounts receivable, net |
70,474 |
76,914 |
||||||
Inventories, net |
139,109 |
127,728 |
||||||
Other current assets |
24,572 |
19,880 |
||||||
Total current assets |
428,202 |
457,249 |
||||||
Property and equipment, net |
90,269 |
99,930 |
||||||
Goodwill |
369,275 |
369,762 |
||||||
Intangible assets, net |
246,138 |
255,079 |
||||||
Other long-term assets |
5,512 |
7,672 |
||||||
Total assets |
$ |
1,139,396 |
$ |
1,189,692 |
||||
LIABILITIES AND SHAREHOLDERS' EQUITY |
||||||||
Current liabilities |
||||||||
Current maturities of long-term debt, net |
$ |
32,738 |
$ |
39,095 |
||||
Accounts payable |
47,886 |
47,515 |
||||||
Advance payments from customers |
80,131 |
76,712 |
||||||
Other accrued liabilities |
78,358 |
84,067 |
||||||
Total current liabilities |
239,113 |
247,389 |
||||||
Long-term debt, less current maturities |
355,640 |
418,544 |
||||||
Other long-term liabilities |
66,711 |
94,982 |
||||||
Total liabilities |
661,464 |
760,915 |
||||||
Shareholders' equity |
||||||||
Common stock, $0.25 par; 64,000 shares authorized: |
||||||||
17,856 and 17,760 shares issued and outstanding as |
||||||||
of September 29, 2018 and September 30, 2017, respectively |
4,464 |
4,440 |
||||||
Additional paid-in capital |
171,407 |
163,632 |
||||||
Retained earnings |
300,585 |
261,258 |
||||||
Accumulated other comprehensive income (loss) |
1,476 |
(553) |
||||||
Total shareholders' equity |
477,932 |
428,777 |
||||||
Total liabilities and shareholders' equity |
$ |
1,139,396 |
$ |
1,189,692 |
MTS SYSTEMS CORPORATION |
||||||||||||||||
Condensed Consolidated Statements of Cash Flows |
||||||||||||||||
(unaudited - in thousands) |
||||||||||||||||
Three Months Ended |
Twelve Months Ended |
|||||||||||||||
September 29, 2018 |
September 30, 2017 |
September 29, 2018 |
September 30, 2017 |
|||||||||||||
Cash Flows from Operating Activities |
||||||||||||||||
Net income |
$ |
10,760 |
$ |
5,570 |
$ |
61,328 |
$ |
25,084 |
||||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities |
||||||||||||||||
Stock-based compensation |
1,905 |
1,675 |
7,283 |
5,600 |
||||||||||||
Fair value adjustment to acquired inventory |
— |
— |
— |
7,975 |
||||||||||||
Depreciation and amortization |
8,634 |
10,093 |
34,492 |
35,523 |
||||||||||||
(Gain) loss on sale or disposal of property and equipment |
(4,333) |
458 |
(4,162) |
733 |
||||||||||||
Amortization of financing fees |
820 |
1,668 |
4,644 |
4,366 |
||||||||||||
Deferred income taxes |
1,937 |
(4,728) |
(28,252) |
(9,127) |
||||||||||||
Other |
1,215 |
1,055 |
3,338 |
3,698 |
||||||||||||
Changes in operating assets and liabilities |
(9,802) |
3,458 |
(15,424) |
(1,992) |
||||||||||||
Net Cash Provided by (Used in) Operating Activities |
11,136 |
19,249 |
63,247 |
71,860 |
||||||||||||
Cash Flows from Investing Activities |
||||||||||||||||
Purchases of property and equipment |
(2,544) |
(4,559) |
(12,321) |
(17,798) |
||||||||||||
Proceeds from sale of property and equipment |
6,724 |
— |
6,793 |
45 |
||||||||||||
Other |
— |
147 |
823 |
(853) |
||||||||||||
Net Cash Provided by (Used in) Investing Activities |
4,180 |
(4,412) |
(4,705) |
(18,606) |
||||||||||||
Cash Flows from Financing Activities |
||||||||||||||||
Payments on financing arrangements, net |
(3,757) |
(4,307) |
(73,795) |
(14,404) |
||||||||||||
Cash dividends |
(5,402) |
(5,103) |
(21,360) |
(20,079) |
||||||||||||
Proceeds from exercise of stock options and employee stock purchase plan |
291 |
(1) |
1,992 |
5,579 |
||||||||||||
Payments to purchase and retire common stock |
(97) |
(133) |
(1,403) |
(1,785) |
||||||||||||
Net Cash Provided by (Used in) Financing Activities |
(8,965) |
(9,544) |
(94,566) |
(30,689) |
||||||||||||
Effect of Exchange Rate Changes on Cash and Cash Equivalents |
(950) |
1,820 |
(905) |
1,388 |
||||||||||||
Cash and Cash Equivalents |
||||||||||||||||
Increase (decrease) during the period |
5,401 |
7,113 |
(36,929) |
23,953 |
||||||||||||
Balance, beginning of period |
66,403 |
101,620 |
108,733 |
84,780 |
||||||||||||
Balance, End of Period |
$ |
71,804 |
$ |
108,733 |
$ |
71,804 |
$ |
108,733 |
Exhibit A |
||||||||||
MTS SYSTEMS CORPORATION |
||||||||||
Segment Financial Information |
||||||||||
(unaudited - in thousands) |
||||||||||
Three Months Ended |
||||||||||
September 29, 2018 |
September 30, 2017 |
% Variance |
||||||||
Test Segment |
||||||||||
Revenue |
$ |
120,428 |
$ |
124,762 |
(3)% |
|||||
Cost of sales |
80,185 |
88,217 |
(9)% |
|||||||
Gross profit |
40,243 |
36,545 |
10% |
|||||||
Gross margin |
33.4% |
29.3% |
||||||||
Operating expenses |
33,795 |
34,715 |
(3)% |
|||||||
Income from operations |
$ |
6,448 |
$ |
1,830 |
252% |
|||||
Sensors Segment |
||||||||||
Revenue |
$ |
77,768 |
$ |
76,726 |
1% |
|||||
Cost of sales |
41,515 |
38,869 |
7% |
|||||||
Gross profit |
36,253 |
37,857 |
(4)% |
|||||||
Gross margin |
46.6% |
49.3% |
||||||||
Operating expenses |
26,896 |
27,178 |
(1)% |
|||||||
Income from operations |
$ |
9,357 |
$ |
10,679 |
12% |
|||||
Intersegment Eliminations |
||||||||||
Revenue |
$ |
(317) |
$ |
— |
||||||
Cost of sales |
(313) |
— |
||||||||
Gross profit |
(4) |
— |
||||||||
Income (loss) from operations |
$ |
(4) |
$ |
— |
||||||
Total Company |
||||||||||
Revenue |
$ |
197,879 |
$ |
201,488 |
(2)% |
|||||
Cost of sales |
121,387 |
127,086 |
(4)% |
|||||||
Gross profit |
76,492 |
74,402 |
3% |
|||||||
Gross margin |
38.7% |
36.9% |
||||||||
Operating expenses |
60,691 |
61,893 |
(2)% |
|||||||
Income from operations |
$ |
15,801 |
$ |
12,509 |
26% |
Exhibit B |
|||||||||||||||||||
MTS SYSTEMS CORPORATION |
|||||||||||||||||||
Reconciliation of Earnings Per Share Excluding |
|||||||||||||||||||
Restructuring, Acquisition Integration and China Investigation Expenses |
|||||||||||||||||||
(unaudited - in thousands, except per share data) |
|||||||||||||||||||
Three Months Ended |
|||||||||||||||||||
September 29, 2018 |
September 30, 2017 |
||||||||||||||||||
Pre-tax |
Tax |
Net |
Pre-tax |
Tax |
Net |
||||||||||||||
Net income |
$ |
14,532 |
$ |
3,772 |
$ |
10,760 |
$ |
4,187 |
$ |
(1,383) |
$ |
5,570 |
|||||||
Restructuring expenses 1 |
1,387 |
357 |
1,030 |
3,043 |
737 |
2,306 |
|||||||||||||
Acquisition integration expenses2 |
— |
— |
— |
622 |
127 |
495 |
|||||||||||||
China investigation expenses2 |
— |
— |
— |
229 |
57 |
172 |
|||||||||||||
Adjusted net income3 |
$ |
15,919 |
$ |
4,129 |
$ |
11,790 |
$ |
8,081 |
$ |
(462) |
$ |
8,543 |
|||||||
Weighted average diluted common shares outstanding |
19,363 |
19,222 |
|||||||||||||||||
Diluted earnings per share |
$ |
0.75 |
$ |
0.19 |
$ |
0.56 |
$ |
0.22 |
$ |
(0.07) |
$ |
0.29 |
|||||||
Impact of restructuring expenses |
0.07 |
0.02 |
0.05 |
0.16 |
0.04 |
0.12 |
|||||||||||||
Impact of acquisition integration expenses |
— |
— |
— |
0.03 |
0.01 |
0.02 |
|||||||||||||
Impact of China investigation expenses |
— |
— |
— |
0.01 |
— |
0.01 |
|||||||||||||
Adjusted diluted earnings per share3 |
$ |
0.82 |
$ |
0.21 |
$ |
0.61 |
$ |
0.42 |
$ |
(0.02) |
$ |
0.44 |
|||||||
1 |
In determining the tax impact of restructuring expenses, we applied the statutory rate in effect for each jurisdiction where restructuring expenses were incurred. |
2 |
In determining the tax impact of acquisition integration and China investigation expenses, we applied a U.S. effective income tax rate before discrete items to these expenses. |
3 |
Denotes non-GAAP financial measure. |
Exhibit C |
|||||||||||||||||||
MTS SYSTEMS CORPORATION |
|||||||||||||||||||
Reconciliation of Earnings Per Share Excluding Restructuring, Acquisition Integration, |
|||||||||||||||||||
Acquisition Inventory Fair Value Adjustment, China Investigation and Acquisition-Related Expenses |
|||||||||||||||||||
(unaudited - in thousands, except per share data) |
|||||||||||||||||||
Twelve Months Ended |
|||||||||||||||||||
September 29, 2018 |
September 30, 2017 |
||||||||||||||||||
Pre-tax |
Tax |
Net |
Pre-tax |
Tax |
Net |
||||||||||||||
Net income |
$ |
44,223 |
$ |
(17,105) |
$ |
61,328 |
$ |
23,011 |
$ |
(2,073) |
$ |
25,084 |
|||||||
Restructuring expenses1 |
2,730 |
697 |
2,033 |
4,079 |
1,099 |
2,980 |
|||||||||||||
Acquisition integration expenses2 |
— |
— |
— |
3,577 |
918 |
2,659 |
|||||||||||||
Acquisition inventory fair value adjustment2 |
— |
— |
— |
7,975 |
2,066 |
5,909 |
|||||||||||||
China investigation expenses2 |
— |
— |
— |
9,209 |
2,460 |
6,749 |
|||||||||||||
Acquisition-related expenses2 |
— |
— |
— |
— |
814 |
(814) |
|||||||||||||
Adjusted net income3 |
$ |
46,953 |
$ |
(16,408) |
$ |
63,361 |
$ |
47,851 |
$ |
5,284 |
$ |
42,567 |
|||||||
Weighted average diluted common shares outstanding |
19,293 |
19,137 |
|||||||||||||||||
Diluted earnings per share |
$ |
2.29 |
$ |
(0.89) |
$ |
3.18 |
$ |
1.20 |
$ |
(0.11) |
$ |
1.31 |
|||||||
Impact of restructuring expenses |
0.14 |
0.04 |
0.10 |
0.21 |
0.06 |
0.15 |
|||||||||||||
Impact of acquisition integration expenses |
— |
— |
— |
0.19 |
0.05 |
0.14 |
|||||||||||||
Impact of acquisition inventory fair value adjustment |
— |
— |
— |
0.42 |
0.11 |
0.31 |
|||||||||||||
Impact of China investigation expenses |
— |
— |
— |
0.48 |
0.13 |
0.35 |
|||||||||||||
Impact of acquisition-related expenses |
— |
— |
— |
— |
0.04 |
(0.04) |
|||||||||||||
Adjusted diluted earnings per share3 |
$ |
2.43 |
$ |
(0.85) |
$ |
3.28 |
$ |
2.50 |
$ |
0.28 |
$ |
2.22 |
|||||||
1 |
In determining the tax impact of restructuring expenses, we applied the statutory rate in effect for each jurisdiction where restructuring expenses were incurred. |
2 |
In determining the tax impact of acquisition integration expenses, acquisition inventory fair value adjustment, China investigation expenses and acquisition-related expenses, we applied a U.S. effective income tax rate before discrete items to these expenses. |
3 |
Denotes non-GAAP financial measure. |
Exhibit D |
|||||||||||||||
MTS SYSTEMS CORPORATION |
|||||||||||||||
Reconciliation of EBITDA and Adjusted EBITDA to Net Income |
|||||||||||||||
(unaudited - in thousands) |
|||||||||||||||
Three Months Ended |
Twelve Months Ended |
||||||||||||||
September 29, |
September 30, |
September 29, |
September 30, |
||||||||||||
Net income |
$ |
10,760 |
$ |
5,570 |
$ |
61,328 |
$ |
25,084 |
|||||||
Income tax provision (benefit) |
3,772 |
(1,383) |
(17,105) |
(2,073) |
|||||||||||
Interest expense, net |
6,121 |
8,412 |
25,882 |
30,821 |
|||||||||||
Depreciation and amortization |
8,634 |
10,093 |
34,492 |
35,523 |
|||||||||||
EBITDA1 |
29,287 |
22,692 |
104,597 |
89,355 |
|||||||||||
Stock-based compensation |
1,905 |
1,675 |
7,283 |
5,600 |
|||||||||||
Restructuring expenses2 |
1,491 |
3,043 |
2,989 |
4,079 |
|||||||||||
Acquisition integration expenses |
— |
622 |
— |
3,577 |
|||||||||||
Acquisition inventory fair value adjustment |
— |
— |
— |
7,975 |
|||||||||||
China investigation expenses |
— |
229 |
— |
9,209 |
|||||||||||
Adjusted EBITDA1 |
$ |
32,683 |
$ |
28,261 |
$ |
114,869 |
$ |
119,795 |
|||||||
1 |
Denotes non-GAAP financial measures. |
2 |
Restructuring expenses were adjusted to exclude stock-based compensation forfeitures and depreciation expense that are otherwise included in the stock-based compensation line and depreciation and amortization line. |
Exhibit E |
|||||||||||||||
MTS SYSTEMS CORPORATION |
|||||||||||||||
Free Cash Flow |
|||||||||||||||
(unaudited - in thousands) |
|||||||||||||||
Three Months Ended |
Twelve Months Ended |
||||||||||||||
September 29, |
September 30, |
September 29, |
September 30, |
||||||||||||
Net Cash Provided by (Used in) Operating Activities |
$ |
11,136 |
$ |
19,249 |
$ |
63,247 |
$ |
71,860 |
|||||||
Purchases of property and equipment |
(2,544) |
(4,559) |
(12,321) |
(17,798) |
|||||||||||
Proceeds from sale of property and equipment |
6,724 |
— |
6,793 |
45 |
|||||||||||
Free cash flow1 |
$ |
15,316 |
$ |
14,690 |
$ |
57,719 |
$ |
54,107 |
|||||||
1 |
Denotes non-GAAP financial measures. |
Exhibit F |
||||||
MTS SYSTEMS CORPORATION |
||||||
Reconciliation of EBITDA and Adjusted EBITDA to Net Income - Outlook |
||||||
(unaudited - in thousands) |
||||||
Twelve Months Ending |
||||||
September 28, 2019 |
||||||
Low |
High |
|||||
Net income |
$ |
44,500 |
$ |
50,000 |
||
Income tax provision (benefit) |
7,000 |
11,000 |
||||
Interest expense, net |
26,000 |
28,000 |
||||
Depreciation and amortization |
36,000 |
42,000 |
||||
EBITDA1 |
113,500 |
131,000 |
||||
Stock-based compensation and non-recurring expenses2 |
8,500 |
11,000 |
||||
Adjusted EBITDA1 |
$ |
122,000 |
$ |
142,000 |
||
1 |
Denotes non-GAAP financial measures. |
2 |
Includes pre-tax forecast expenses for stock-based compensation, acquisition-related and restructuring expenses. |
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SOURCE
Brian Ross, Senior Vice President and Chief Financial Officer, brian.ross@mts.com, (952) 937-4000