Form 8-K |
MINNESOTA | 0-02382 | 41-0908057 |
(STATE OR OTHER JURISDICTION OF INCORPORATION) | (COMMISSION FILE NUMBER) | (I.R.S. EMPLOYER IDENTIFICATION NO.) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Emerging growth company ☐ |
Item 2.02 | Results of Operations and Financial Condition |
Item 9.01 | Financial Statements and Exhibits |
(d) | Exhibits |
99.1 | Press Release dated May 8, 2017 announcing the results of operations and financial condition for the fiscal quarter ended April 1, 2017. |
MTS SYSTEMS CORPORATION | |||
(Registrant) | |||
Date: | May 8, 2017 | By: | /s/ Jeffrey P. Oldenkamp |
Jeffrey P. Oldenkamp | |||
Senior Vice President and Chief Financial Officer |
Number | Title | Method of filing | |
99.1 | Press Release dated May 8, 2017 announcing the results of operations and financial condition for the fiscal quarter ended April 1, 2017. | Furnished electronically |
FOR IMMEDIATE RELEASE May 8, 2017 |
Ø | GAAP EPS increased 90% from the prior year period to $0.38, including a $0.29 negative impact from costs associated with the China investigation and acquisition integration and restructuring expenses |
Ø | Strong year-to-date operating cash flow of $41 million primarily due to continued focus on working capital improvements |
MTS SYSTEMS CORPORATION | |||||||||||||||
Condensed Consolidated Statements of Income | |||||||||||||||
(unaudited - in thousands, except per share data) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
April 1, 2017 | April 2, 2016 | April 1, 2017 | April 2, 2016 | ||||||||||||
Revenue | $ | 193,424 | $ | 137,098 | $ | 392,703 | $ | 277,599 | |||||||
Cost of sales | 114,568 | 91,954 | 240,383 | 179,944 | |||||||||||
Gross profit | 78,856 | 45,144 | 152,320 | 97,655 | |||||||||||
Gross margin | 40.8 | % | 32.9 | % | 38.8 | % | 35.2 | % | |||||||
Operating expenses | |||||||||||||||
Selling, general and administrative | 54,183 | 35,021 | 108,676 | 68,637 | |||||||||||
Research and development | 9,261 | 5,752 | 17,942 | 11,046 | |||||||||||
Total operating expenses | 63,444 | 40,773 | 126,618 | 79,683 | |||||||||||
Income from operations | 15,412 | 4,371 | 25,702 | 17,972 | |||||||||||
Operating margin | 8.0 | % | 3.2 | % | 6.5 | % | 6.5 | % | |||||||
Interest income (expense), net | (7,418 | ) | (257 | ) | (14,698 | ) | (458 | ) | |||||||
Other income (expense), net | 666 | 107 | (163 | ) | (203 | ) | |||||||||
Income before income taxes | 8,660 | 4,221 | 10,841 | 17,311 | |||||||||||
Provision for income taxes | 1,461 | 1,223 | 1,937 | 2,539 | |||||||||||
Net income | $ | 7,199 | $ | 2,998 | $ | 8,904 | $ | 14,772 | |||||||
Earnings per share | |||||||||||||||
Basic | |||||||||||||||
Earnings per share | $ | 0.38 | $ | 0.20 | $ | 0.47 | $ | 1.00 | |||||||
Weighted average common shares outstanding | 19,016 | 14,756 | 18,992 | 14,808 | |||||||||||
Diluted | |||||||||||||||
Earnings per share | $ | 0.38 | $ | 0.20 | $ | 0.47 | $ | 0.99 | |||||||
Weighted average common shares outstanding | 19,109 | 14,851 | 19,095 | 14,925 |
MTS SYSTEMS CORPORATION | |||||||
Condensed Consolidated Balance Sheets | |||||||
(unaudited - in thousands, except per share data) | |||||||
April 1, 2017 | October 1, 2016 | ||||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 97,433 | $ | 84,780 | |||
Accounts receivable, net | 115,830 | 133,500 | |||||
Unbilled accounts receivable | 73,951 | 76,626 | |||||
Inventories, net | 125,146 | 132,566 | |||||
Other current assets | 21,378 | 12,793 | |||||
Total current assets | 433,738 | 440,265 | |||||
Property and equipment, net | 99,131 | 100,789 | |||||
Goodwill | 369,224 | 369,700 | |||||
Intangible assets, net | 260,513 | 266,789 | |||||
Other long-term assets | 9,291 | 10,477 | |||||
Total assets | $ | 1,171,897 | $ | 1,188,020 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current liabilities | |||||||
Current maturities of long-term debt, net | $ | 10,218 | $ | 9,850 | |||
Accounts payable | 41,480 | 46,383 | |||||
Advance payments from customers | 86,766 | 72,728 | |||||
Other accrued liabilities | 73,019 | 87,160 | |||||
Total current liabilities | 211,483 | 216,121 | |||||
Long-term debt, less current maturities | 449,798 | 455,001 | |||||
Other long-term liabilities | 106,572 | 111,638 | |||||
Total liabilities | 767,853 | 782,760 | |||||
Shareholders' equity | |||||||
Common stock, $0.25 par; 64,000 shares authorized: | |||||||
16,724 and 16,660 shares issued and outstanding as | |||||||
of April 1, 2017 and October 1, 2016, respectively | 4,181 | 4,165 | |||||
Additional paid-in capital | 157,277 | 154,879 | |||||
Retained earnings | 255,459 | 256,589 | |||||
Accumulated other comprehensive income (loss) | (12,873 | ) | (10,373 | ) | |||
Total shareholders' equity | 404,044 | 405,260 | |||||
Total liabilities and shareholders' equity | $ | 1,171,897 | $ | 1,188,020 |
Exhibit A | ||||||||||
MTS SYSTEMS CORPORATION | ||||||||||
Segment Financial Information | ||||||||||
(unaudited - in thousands) | ||||||||||
Three Months Ended | ||||||||||
Test Segment | April 1, 2017 | April 2, 2016 | % Variance | |||||||
Revenue | $ | 123,840 | $ | 113,797 | 9 | % | ||||
Cost of sales | 79,106 | 80,628 | (2 | )% | ||||||
Gross profit | 44,734 | 33,169 | 35 | % | ||||||
Gross margin | 36.1 | % | 29.1 | % | ||||||
Operating expenses | 38,367 | 31,454 | 22 | % | ||||||
Income from operations | $ | 6,367 | $ | 1,715 | 271 | % | ||||
Sensors Segment | ||||||||||
Revenue | $ | 69,584 | $ | 23,301 | 199 | % | ||||
Cost of sales | 35,462 | 11,326 | 213 | % | ||||||
Gross profit | 34,122 | 11,975 | 185 | % | ||||||
Gross margin | 49.0 | % | 51.4 | % | ||||||
Operating expenses | 25,077 | 9,319 | 169 | % | ||||||
Income from operations | $ | 9,045 | $ | 2,656 | 241 | % | ||||
Total Company | ||||||||||
Revenue | $ | 193,424 | $ | 137,098 | 41 | % | ||||
Cost of sales | 114,568 | 91,954 | 25 | % | ||||||
Gross profit | 78,856 | 45,144 | 75 | % | ||||||
Gross margin | 40.8 | % | 32.9 | % | ||||||
Operating expenses | 63,444 | 40,773 | 56 | % | ||||||
Income from operations | $ | 15,412 | $ | 4,371 | 253 | % |
Exhibit B | |||||||||
MTS SYSTEMS CORPORATION | |||||||||
Reconciliation of Earnings Per Share Excluding Acquisition Integration, | |||||||||
China Investigation and Restructuring Expenses | |||||||||
(unaudited - in thousands, except per share data) | |||||||||
Three Months Ended | |||||||||
April 1, 2017 | |||||||||
Pre-Tax | Tax | Net | |||||||
Net income | $ | 8,660 | $ | 1,461 | $ | 7,199 | |||
Acquisition integration expenses1 | 690 | 188 | 502 | ||||||
China investigation expenses1 | 6,759 | 1,827 | 4,932 | ||||||
Restructuring expenses2 | 381 | 134 | 247 | ||||||
Adjusted net income3 | $ | 16,490 | $ | 3,610 | $ | 12,880 | |||
Weighted average diluted common shares outstanding | 19,109 | ||||||||
Diluted earnings per share | $ | 0.45 | $ | 0.07 | $ | 0.38 | |||
Diluted earnings per share - Impact of acquisition integration expenses | 0.04 | 0.01 | 0.03 | ||||||
Diluted earnings per share - Impact of China investigation expenses | 0.35 | 0.10 | 0.25 | ||||||
Diluted earnings per share - Impact of restructuring expenses | 0.02 | 0.01 | 0.01 | ||||||
Adjusted diluted earnings per share3 | $ | 0.86 | $ | 0.19 | $ | 0.67 | |||
1 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. | |||||||||
2 In determining the tax impact of restructuring expenses, we applied the statutory rate in effect for each jurisdiction where restructuring expenses were incurred. | |||||||||
3 Denotes non-GAAP financial measure. |
Exhibit C | |||||||||
MTS SYSTEMS CORPORATION | |||||||||
Reconciliation of Earnings Per Share Excluding Acquisition Integration | |||||||||
Acquisition Inventory Fair Value Adjustment, China Investigation and Restructuring Expenses | |||||||||
(unaudited - in thousands, except per share data) | |||||||||
Six Months Ended | |||||||||
April 1, 2017 | |||||||||
Pre-Tax | Tax | Net | |||||||
Net income | $ | 10,841 | $ | 1,937 | $ | 8,904 | |||
Acquisition integration expenses1 | 2,378 | 624 | 1,754 | ||||||
Acquisition inventory fair value adjustment1 | 7,724 | 1,993 | 5,731 | ||||||
China investigation expenses1 | 8,735 | 2,337 | 6,398 | ||||||
Restructuring expenses2 | 944 | 330 | 614 | ||||||
Adjusted net income3 | $ | 30,622 | $ | 7,221 | $ | 23,401 | |||
Weighted average diluted common shares outstanding | 19,095 | ||||||||
Diluted earnings per share | $ | 0.57 | $ | 0.10 | $ | 0.47 | |||
Diluted earnings per share - Impact of acquisition integration expenses | 0.12 | 0.03 | 0.09 | ||||||
Diluted earnings per share - Impact of acquisition inventory fair value adjustment | 0.40 | 0.10 | 0.30 | ||||||
Diluted earnings per share - Impact of China investigation expenses | 0.46 | 0.12 | 0.34 | ||||||
Diluted earnings per share - Impact of restructuring expenses | 0.05 | 0.02 | 0.03 | ||||||
Adjusted diluted earnings per share3 | $ | 1.60 | $ | 0.37 | $ | 1.23 | |||
1 In determining the tax impact of acquisition integration, acquisition inventory fair value adjustment and China investigation expenses, we applied a U.S. effective income tax rate before discrete items to these expenses. | |||||||||
2 In determining the tax impact of restructuring expenses, we applied the statutory rate in effect for each jurisdiction where restructuring expenses were incurred. | |||||||||
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 | Six Months Ended | |||||
April 1, 2017 | April 1, 2017 | |||||
Net income | $ | 7,199 | $ | 8,904 | ||
Provision for income taxes | 1,461 | 1,937 | ||||
Interest (income) expense, net | 7,418 | 14,698 | ||||
Depreciation and amortization | 8,440 | 16,832 | ||||
EBITDA1 | $ | 24,518 | $ | 42,371 | ||
Stock-based compensation | 916 | 2,637 | ||||
Acquisition integration expenses | 690 | 2,378 | ||||
Acquisition inventory fair value adjustment | — | 7,724 | ||||
China investigation expenses | 6,759 | 8,735 | ||||
Restructuring expenses | 381 | 944 | ||||
Adjusted EBITDA1 | $ | 33,264 | $ | 64,789 | ||
1 Denotes non-GAAP financial measure. | ||||||
Exhibit E | ||||||
MTS SYSTEMS CORPORATION | ||||||
Reconciliation of EBITDA and Adjusted EBITDA to Net Income - Outlook | ||||||
(unaudited - in thousands) | ||||||
Twelve Months Ended | ||||||
September 30, 2017 | ||||||
Low | High | |||||
Net income | $ | 15,400 | $ | 23,000 | ||
Provision for income taxes | 3,900 | 6,500 | ||||
Interest (income) expense, net | 30,000 | 31,000 | ||||
Depreciation and amortization | 34,000 | 35,000 | ||||
EBITDA1 | $ | 83,300 | $ | 95,500 | ||
Stock-based compensation and non-recurring expenses2 | 31,700 | 34,500 | ||||
Adjusted EBITDA1 | $ | 115,000 | $ | 130,000 | ||
1 Denotes non-GAAP financial measure. | ||||||
2 Includes pre-tax forecast expenses for stock-based compensation, acquisition integration, acquisition inventory fair value adjustment, restructuring and China investigation. |