Document


	Three Months Ended						Twelve Months Ended
(in thousands, except per share data - unaudited)	October 3, 2020			September 28, 2019			October 3, 2020			September 28, 2019
Revenue	$	215,055		$	224,082		$	828,586		$	892,518
Revenue % increase (decrease)	(4.0)		%	13.2		%	(7.2)		%	14.7		%
Gross margin	34.9		%	34.9		%	34.8		%	36.9		%
Operating margin1	(131.7)		%	6.5		%	(29.9)		%	8.9		%
Earnings (loss) before taxes1	$	(292,443)		$	4,150		$	(283,706)		$	48,613
Net income (loss)1	(280,675)			4,821			(272,051)			43,067
Diluted earnings (loss) per share1	(14.56)			0.25			(14.16)			2.21
Adjusted diluted earnings per share2	0.95			0.37			2.03			2.44
Adjusted EBITDA2	31,258			29,601			121,212			132,614
Cash and cash equivalents, end of period							88,913			57,937
Backlog, end of period							457,586			420,115
Total debt, end of period							584,573			512,617

Revenue was $215.1 million, down 4.0% compared to the same prior year period, due to volume declines in Test & Simulation and Sensors. Both businesses were negatively impacted by COVID-19 due to the closure of customer sites, travel restrictions and delayed customer spending. Test & Simulation revenue decreased primarily due to a decline in volume from softness in our ground vehicles, simulation and materials sectors, coupled with lower service volume. The decline was partially offset by top-line contributions from the acquisition of the R&D entities in Denmark (R&D) of $18.8 million, which was completed early in the second quarter of fiscal year 2020. Sensors revenue declined due to softness in all sectors except our test sector, which included continued U.S. Department of Defense volume growth and a full quarter of revenue from Endevco, which closed during the fourth quarter of fiscal year 2019. There were no material cancellations of orders or backlog in the fourth quarter.

Diluted earnings (loss) per share was $(14.56) compared to $0.25 during the prior year on net income (loss) of $(280.7) million and $4.8 million, respectively. The $14.81 per share decrease was primarily driven by a $15.13 per share decrease associated with a non-cash impairment of assets and a decline in gross profit as the result of lower revenue volume in both businesses reflecting the impact of COVID-19. Additionally, net income and diluted earnings per share were negatively impacted by the R&D contingent consideration fair value adjustment, Test & Simulation restructuring expense, higher interest expense from the accretion of contingent consideration and increased acquisition-related expenses due to the R&D acquisition. The decline was partially offset by lower compensation expense reflecting permanent and temporary cost savings from actions taken in fiscal year 2020 and further cost containment measures.

Fourth quarter of fiscal year 2020 and 2019 results include $15.52 and $0.12 per share, respectively, of non-recurring costs associated with an impairment of assets, Test & Simulation restructuring actions taken in fiscal year 2020, the R&D contingent consideration fair value adjustment, acquisition-related expenses, E2M and Endevco acquisition inventory fair value adjustments and the impact of the change in weighted average diluted common shares outstanding. R&D was acquired in the second quarter of fiscal year 2020, and E2M and Endevco were acquired in the first and fourth quarters of fiscal year 2019, respectively. Adjusting for these items, adjusted diluted earnings per share was $0.95 for the fourth quarter of fiscal year 2020 and $0.37 for the same period in the prior year. A reconciliation of adjusted diluted earnings per share, a non-GAAP financial measure, to diluted earnings per share, the most directly comparable GAAP financial measure, is provided in Exhibit B of this earnings release.

Adjusted EBITDA increased to $31.3 million, in the fourth quarter of fiscal year 2020, up 5.6% compared to the prior year. The increase was primarily driven by positive contributions from the acquisition of R&D, lower compensation expense reflecting permanent and temporary cost savings measures taken in fiscal year 2020, and further cost containment measures, partially offset by a decline in gross profit from lower revenue in both businesses reflecting the impact of COVID-19. A reconciliation of Adjusted EBITDA, a non-GAAP financial measure, to net income, the most directly comparable GAAP financial measure, is provided in Exhibit D of this earnings release.

During the quarter, our total debt decreased by $10.5 million to $584.6 million as we continue to pay-down our outstanding debt balance. We ended the quarter with $88.9 million of cash on the balance sheet, leading to a net debt balance of $495.7 million. The ratio of interest-bearing debt to Adjusted EBITDA and the ratio of net interest-bearing debt to Adjusted EBITDA remain in full compliance with the debt covenant levels specified in our debt agreements. We have no material debt maturities until July 2023. Subsequent to the end of our fiscal year, we paid an additional $7 million on our outstanding debt, further improving leverage and entered into an agreement to sell our Shanghai, China building with an anticipated gain on sale. We intend to use the proceeds from the sale of our Shanghai facility to further reduce debt and provide further cash flow for operational demands and general corporate purposes.

Revenue was $828.6 million, down 7.2% compared to the prior year, due to a decline in Test & Simulation, partially offset by growth in Sensors. Both businesses were negatively impacted by COVID-19 due to reduced access to our customers, reduced production capacity, temporary closures of customer facilities and delayed spending by our customers. Test & Simulation revenue decreased primarily due to a decline in volume from softness in our ground vehicles and materials sectors, coupled with lower service volume. The decline was partially offset by top-line contributions from the acquisition of R&D of $47.6 million. Sensors revenue increased due to continued U.S. Department of Defense volume growth and a full year of top-line contributions from the Endevco acquisition in our test sector. The increase was partially offset by weakness in the other three sectors. There were no material cancellations of orders or backlog in the fiscal year.

Test & Simulation orders for the fiscal year were $496.5 million, up 3.9% compared to the prior year, primarily driven by the award of the largest order in MTS history for an advanced seismic simulation system in China, valued at over $70 million, the addition of wind energy orders from the acquisition of R&D and two large orders totaling $17 million secured in the fourth quarter of fiscal year 2020. This increase was partly offset by lower orders in our ground vehicles and materials sector, along with lower services orders reflecting the global impact of COVID-19.

Diluted earnings (loss) per share was $(14.16) compared to $2.21 in the prior year on net income (loss) of $(272.1) million and $43.1 million, respectively. The $16.37 per share decrease was primarily driven by a $15.16 per share decrease associated with a non-cash impairment of assets and a gross profit decline in both businesses reflecting the impact of COVID-19. Additionally, net income and diluted earnings per share were negatively impacted by Test & Simulation restructuring expense for actions taken in fiscal year 2020 to reduce operating costs, higher interest expense on increased debt levels, the R&D contingent consideration fair value adjustment and higher acquisition-related expenses due to the R&D and Endevco acquisitions. The decline was partially offset by lower compensation expense reflecting permanent and temporary cost savings measures taken in fiscal year 2020, further cost containment measures and a reduction in the effective tax rate which includes $0.06 of discrete tax benefits in fiscal year 2020.

Fiscal year 2020 and 2019 results included $16.20 and $0.23 per share, respectively, of non-recurring costs associated with an impairment of assets, Test & Simulation restructuring actions taken in fiscal year 2020, the R&D contingent consideration fair value adjustment, acquisition-related expenses, E2M and Endevco acquisition inventory fair value adjustments and the impact of the change in weighted average diluted common shares outstanding. R&D was acquired in the second quarter of fiscal year 2020, and E2M and Endevco were acquired in the first and fourth quarters of fiscal year 2019, respectively. Adjusting for these items, adjusted diluted earnings per share was $2.03 for fiscal year 2020 and $2.44 for the prior year. A reconciliation of adjusted diluted earnings per share, a non-GAAP financial measure, to diluted earnings per share, the most directly comparable GAAP financial measure, is provided in Exhibit C of this earnings release.

Adjusted EBITDA declined to $121.2 million in fiscal year 2020, down 8.6% compared to the prior year. The decrease was primarily driven by a decline in gross profit from lower revenue in Test & Simulation reflecting the impact of COVID-19 and product mix in Sensors, partially offset by lower compensation expense reflecting permanent and temporary cost savings measures taken in fiscal year 2020, along with further cost containment measures. A reconciliation of Adjusted EBITDA, a non-GAAP financial measure, to net income, the most directly comparable GAAP financial measure, is provided in Exhibit D of this earnings release.

In November 2020, we were the victim of a ransomware incident that temporarily impacted our operations. As a result of the incident, certain of our data was encrypted, some of our data was exfiltrated from our systems, and business activities at several of our facilities were temporarily disrupted. As of the date hereof, our investigation indicates that the incident has been contained. We recovered the impacted data from the unauthorized actor, and we are not currently aware of any evidence of the impacted data being publicly released. We continue to investigate what information the unauthorized actor may have accessed or exfiltrated and resolve open items related to the incident. We expect expenses, net of insurance, to be approximately $2.0 to $3.0 million, with the majority incurred in the first quarter of fiscal 2021. We do not expect the temporary operational disruption that occurred to have a material impact on our financial results. Any failure or perceived failure by us to comply with applicable privacy or security laws, regulations, policies or obligations in connection with this incident, could result in government enforcement actions, regulatory investigations, litigation, fines and penalties and/or adverse publicity, which could impact expenses associated with the incident.

MTS Systems Corporation’s testing and simulation hardware, software and service solutions help customers accelerate and improve their design, development and manufacturing processes and are used for determining the mechanical behavior of materials, products and structures. MTS’ high-performance sensors provide measurements of vibration, pressure, position, force and sound in a variety of applications. MTS had 3,600 employees as of October 3, 2020 and revenue of $829 million for the fiscal year ended October 3, 2020. Additional information on MTS can be found at www.mts.com.

We believe that disclosing adjusted diluted earnings per share, which is diluted earnings per share excluding the impact from impairment of assets, restructuring / other expenses, acquisition-related expenses, the acquisition inventory fair value adjustments, contingent consideration fair value adjustment and the impact of the change in weighted average diluted common shares outstanding 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 impairment of assets, restructuring / other expenses, acquisition-related expenses, the acquisition inventory fair value adjustments, the contingent consideration fair value adjustment to net income and the impact of the change in weighted average diluted common shares outstanding and dividing the result by the diluted weighted average shares outstanding.

We believe that disclosing earnings before interest, taxes, depreciation and amortization (EBITDA), EBITDA excluding the impact from stock-based compensation, impairment of assets, restructuring / other expenses, acquisition-related expenses, the acquisition inventory fair value adjustments and the contingent consideration fair value adjustment (Adjusted EBITDA) and Adjusted EBITDA divided by revenue (Adjusted EBITDA margin) are useful to investors as a measure of leverage and operating performance. We use these measures to monitor and evaluate leverage and operating performance. EBITDA, Adjusted EBITDA and Adjusted EBITDA margin 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, impairment of assets, restructuring / other expenses, acquisition-related expenses, the acquisition inventory fair value adjustments and the contingent consideration fair value adjustment to EBITDA. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by revenue.

This earnings 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. Words such as "may," "will," "should," "expects," "intends," "projects," "plans," "believes," "estimates," "targets," "anticipates," and similar expressions identify forward-looking statements in this earnings 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 Test & Simulation and Sensors sectors, statements about the impact of COVID-19 and related economic uncertainty, statements about the proposed merger, including the expected timeline to closing and the receipt of certain approvals, 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, the currently-unknown impact of COVID-19 and related economic uncertainty, the risk that the proposed merger may not be completed in a timely manner or at all, the failure to satisfy the conditions to the consummation of the proposed merger, the impact of the proposed merger on our operations, and those risks described in the "Risk Factors" section of our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") and updated in any subsequent Quarterly Reports on Form 10-Q and other filings with the SEC. The reports referenced above are available on our website at www.mts.com or on the SEC’s website at www.sec.gov. Forward-looking statements speak only as of the date on which such statements are made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made to reflect the occurrence of unanticipated events or circumstances.

This communication does not constitute an offer to sell or the solicitation of an offer to buy the securities of MTS Systems Corporation (the “Company”) or the solicitation of any vote or approval. This communication relates to the proposed merger involving the Company, Amphenol Corporation (“Parent”) and Moon Merger Sub Corporation (“Sub”), whereby the Company will become a wholly owned subsidiary of Parent (the “proposed merger”). The proposed merger will be submitted to the shareholders of the Company for their consideration at a special meeting of the shareholders. In connection therewith, the Company intends to file relevant materials with the U.S. Securities and Exchange Commission (the “SEC”), including a definitive proxy statement on Schedule 14A (the “definitive proxy statement”) which will be mailed or otherwise disseminated to the Company’s shareholders when it becomes available. The Company may also file other relevant documents with the SEC regarding the proposed merger. SHAREHOLDERS ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. Shareholders may obtain free copies of the definitive proxy statement, any amendments or supplements thereto and other documents containing important information about the Company, once such documents are filed with the SEC, through the website maintained by the SEC at www.sec.gov. Free copies of the definitive proxy statement and any other documents filed with the SEC can also be obtained on the Company’s website at https://www.mts.com/ or by contacting the Company’s Investor Relations Department at IRRequest@mts.com.

The Company and certain of its directors, executive officers and employees may, under the rules of the SEC, be deemed to be participants in the solicitation of proxies in connection with the proposed merger. Information regarding the Company’s directors and executive officers is contained in the Company’s Annual Report on Form 10-K for the fiscal year ended October 3, 2020, filed with the SEC on December 15, 2020, its definitive proxy statement on Schedule 14A for the 2020 annual meeting of shareholders, filed with the SEC on December 30, 2019, as modified or supplemented by any Form 3 or Form 4 filed with the SEC since the date of such definitive proxy statement, and in subsequent documents filed with the SEC. Additional information regarding the participants in the proxy solicitation and a description of their direct or indirect interests, by security holdings or otherwise, will be included in the definitive proxy statement and other relevant documents filed with the SEC regarding the proposed merger, if and when they become available. Free copies of these materials may be obtained as described in the preceding paragraph.


MTS SYSTEMS CORPORATION
Consolidated Statements of Income
(unaudited - in thousands, except per share data)

	Three Months Ended						Twelve Months Ended
	October 3, 2020			September 28, 2019			October 3, 2020			September 28, 2019

Revenue
Product	$	188,724		$	194,716		$	726,028		$	782,012
Service	26,331			29,366			102,558			110,506
Total revenue	215,055			224,082			828,586			892,518
Cost of sales
Product	128,380			126,464			477,716			494,725
Service	11,632			19,446			62,482			68,863
Total cost of sales	140,012			145,910			540,198			563,588
Gross profit	75,043			78,172			288,388			328,930
Gross margin	34.9		%	34.9		%	34.8		%	36.9		%

Operating expenses
Selling and marketing	30,581			32,834			120,288			131,639
General and administrative	28,707			22,854			96,089			86,658
Research and development	7,624			7,920			28,109			30,928
Impairment of assets	291,389			—			291,389			—
Total operating expenses	358,301			63,608			535,875			249,225

Income (loss) from operations	(283,258)			14,564			(247,487)			79,705
Operating margin	(131.7)		%	6.5		%	(29.9)		%	8.9		%

Interest expense, net	(7,995)			(10,685)			(33,970)			(31,558)
Other income (expense), net	(1,190)			271			(2,249)			466

Income (loss) before income taxes	(292,443)			4,150			(283,706)			48,613
Income tax provision (benefit)	(11,768)			(671)			(11,655)			5,546
Net income (loss)	$	(280,675)		$	4,821		$	(272,051)		$	43,067

Earnings (loss) per share
Basic
Earnings (loss) per share	$	(14.56)		$	0.25		$	(14.16)		$	2.24
Weighted average common shares outstanding	19,275			19,268			19,212			19,258

Diluted
Earnings (loss) per share	$	(14.56)		$	0.25		$	(14.16)		$	2.21
Weighted average common shares outstanding	19,275			19,519			19,212			19,447

Dividends declared per share	$	—		$	0.30		$	0.60		$	1.20


MTS SYSTEMS CORPORATION
Condensed Consolidated Balance Sheets
(unaudited - in thousands)

	October 3, 2020		September 28, 2019

ASSETS

Current assets
Cash and cash equivalents	$	88,913	$	57,937
Accounts receivable, net	128,733		121,260
Unbilled accounts receivable, net	84,685		80,331
Inventories, net	174,241		167,199
Other current assets	24,429		23,761
Total current assets	501,001		450,488

Property and equipment, net	95,110		101,083

Goodwill	228,640		429,039
Intangible assets, net	295,095		306,585
Other long-term assets	30,385		10,782
Total assets	$	1,150,231	$	1,297,977

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
Short-term borrowings	$	17,000	$	—
Current maturities of long-term debt, net	25,843		27,969
Accounts payable	51,562		46,849
Advance payments from customers	78,774		70,520
Other accrued liabilities	123,672		106,238
Total current liabilities	296,851		251,576

Long-term debt, less current maturities	541,730		484,648
Other long-term liabilities	90,467		77,694
Total liabilities	929,048		813,918

Shareholders' equity
Common stock, $0.25 par; 64,000 shares authorized:
19,264 and 19,124 shares issued and outstanding as of
October 3, 2020 and September 28, 2019, respectively	4,816		4,781
Additional paid-in capital	189,580		182,422
Retained earnings	31,768		315,329
Accumulated other comprehensive income (loss)	(4,981)		(18,473)
Total shareholders' equity	221,183		484,059
Total liabilities and shareholders' equity	$	1,150,231	$	1,297,977


MTS SYSTEMS CORPORATION
Condensed Consolidated Statements of Cash Flows
(unaudited - in thousands)

	Three Months Ended				Twelve Months Ended
	October 3, 2020		September 28, 2019		October 3, 2020		September 28, 2019

Cash Flows from Operating Activities
Net income (loss)	$	(280,675)	$	4,821	$	(272,051)	$	43,067
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Stock-based compensation	1,936		2,099		7,150		9,397
Fair value adjustment to acquired inventory	—		460		1,140		1,601
Impairment of assets	291,389		—		291,389		—
Depreciation	6,556		5,129		23,843		20,614
Amortization	5,501		4,693		22,844		17,361
Accretion of contingent consideration	(396)		—		499		—
Contingent consideration fair value adjustment	6,791		—		8,092		—
(Gain) loss on sale or disposal of property and equipment	1,984		890		4,311		1,442
Amortization of debt issuance costs	977		3,958		3,197		6,765
Deferred income taxes	(18,893)		(9,630)		(17,175)		(11,060)
Other	564		770		692		2,227
Changes in operating assets and liabilities	18,695		10,303		(26,082)		(17,951)
Net Cash Provided by (Used in) Operating Activities	34,429		23,493		47,849		73,463

Cash Flows from Investing Activities
Purchases of property and equipment	(2,749)		(13,148)		(23,893)		(30,525)
Proceeds from sale of property and equipment	948		—		948		10
Purchases of businesses, net of acquired cash	(93)		(68,430)		(49,361)		(151,956)
Other	—		—		87		(285)
Net Cash Provided by (Used in) Investing Activities	(1,894)		(81,578)		(72,219)		(182,756)

Cash Flows from Financing Activities
Proceeds from issuance of long-term debt	—		350,000		58,576		430,391
(Payments on) proceeds from financing arrangements, net	(12,105)		(303,956)		10,063		(313,177)
Cash dividends	—		(5,614)		(17,205)		(21,713)
Proceeds from exercise of stock options and employee stock purchase plan	557		1,738		1,187		3,435
Payments to purchase and retire common stock	(32)		(149)		(1,208)		(1,533)
Net Cash Provided by (Used in) Financing Activities	(11,580)		42,019		51,413		97,403

Effect of Exchange Rate Changes on Cash and Cash Equivalents	2,885		(1,732)		3,933		(1,977)
Cash and Cash Equivalents
Increase (decrease) during the period	23,840		(17,798)		30,976		(13,867)
Balance, beginning of period	65,073		75,735		57,937		71,804
Balance, End of Period	$	88,913	$	57,937	$	88,913	$	57,937


Exhibit A
MTS SYSTEMS CORPORATION
Segment Financial Information
(unaudited - in thousands)


	Three Months Ended						Twelve Months Ended
	October 3, 2020			September 28, 2019			October 3, 2020			September 28, 2019
Test & Simulation Segment
Revenue	$	128,003		$	133,988		$	490,634		$	558,908
Cost of sales	93,519			97,683			357,296			391,493
Gross profit	34,484			36,305			133,338			167,415
Gross margin	26.9		%	27.1		%	27.2		%	30.0		%

Operating expenses	130,838			33,664			223,793			133,335

Income (loss) from operations	$	(96,354)		$	2,641		$	(90,455)		$	34,080

Sensors Segment
Revenue	$	87,268		$	90,420		$	339,223		$	334,976
Cost of sales	46,708			48,550			184,171			173,466
Gross profit	40,560			41,870			155,052			161,510
Gross margin	46.5		%	46.3		%	45.7		%	48.2		%

Operating expenses	227,463			29,944			312,082			115,890

Income (loss) from operations	$	(186,903)		$	11,926		$	(157,030)		$	45,620

Intersegment Eliminations
Revenue	$	(216)		$	(326)		$	(1,271)		$	(1,366)
Cost of sales	(215)			(323)			(1,269)			(1,371)
Gross profit	(1)			(3)			(2)			5

Income (loss) from operations	$	(1)		$	(3)		$	(2)		$	5

Total Company
Revenue	$	215,055		$	224,082		$	828,586		$	892,518
Cost of sales	140,012			145,910			540,198			563,588
Gross profit	75,043			78,172			288,388			328,930
Gross margin	34.9		%	34.9		%	34.8		%	36.9		%

Operating expenses	358,301			63,608			535,875			249,225

Income (loss) from operations	$	(283,258)		$	14,564		$	(247,487)		$	79,705


Exhibit B
MTS SYSTEMS CORPORATION
Reconciliation of Adjusted Diluted Earnings Per Share
(unaudited - in thousands, except per share data)


	Three Months Ended
	October 3, 2020						September 28, 2019
	Pre-tax		Tax		Net		Pre-tax		Tax		Net
Net income (loss)	$	(292,443)	$	(11,768)	$	(280,675)	$	4,150	$	(671)	$	4,821
Impairment of assets 1	291,389		—		291,389		—		—		—
Restructuring / other expenses 2	2,965		577		2,388		700		162		538
Acquisition-related expenses 2	32		5		27		1,805		379		1,426
Acquisition inventory fair value adjustment 2	—		—		—		460		97		363
Contingent consideration fair value adjustment 2	6,791		1,494		5,297		—		—		—
Adjusted net income 3	$	8,734	$	(9,692)	$	18,426	$	7,115	$	(33)	$	7,148

Weighted average diluted common shares outstanding					19,275						19,519
Adjusted weighted average diluted common shares outstanding 3,4					19,368						19,519

Diluted earnings (loss) per share	$	(15.17)	$	(0.61)	$	(14.56)	$	0.21	$	(0.04)	$	0.25
Impact of impairment of assets	15.13		—		15.13		—		—		—
Impact of restructuring / other expenses	0.15		0.03		0.12		0.04		0.01		0.03
Impact of acquisition-related expenses	—		—		—		0.09		0.02		0.07
Impact of acquisition inventory fair value adjustment	—		—		—		0.02		—		0.02
Impact of contingent consideration fair value adjustment	0.34		0.07		0.27		—		—		—
Impact of change in weighted average diluted common shares outstanding	(0.01)		—		(0.01)		—		—		—
Adjusted diluted earnings per share 3	$	0.44	$	(0.51)	$	0.95	$	0.36	$	(0.01)	$	0.37

1 Impairment of assets is non-deductible for tax purposes; therefore, there is no tax impact associated with the adjustment.

2 In determining the tax impact of restructuring / other expenses, acquisition-related expenses, the acquisition inventory fair value adjustment and the contingent consideration fair value adjustment, we applied the statutory rate in effect for each jurisdiction where the expenses were incurred.



3 Denotes non-GAAP financial measure.

4 Adjusted weighted average diluted common shares outstanding reflects the weighted average diluted common shares associated with adjusted net income, which may include the dilutive effect of common stock equivalents.


Exhibit C
MTS SYSTEMS CORPORATION
Reconciliation of Adjusted Diluted Earnings Per Share
(unaudited - in thousands, except per share data)


	Twelve Months Ended
	October 3, 2020						September 28, 2019
	Pre-tax		Tax		Net		Pre-tax		Tax		Net
Net income (loss)	$	(283,706)	$	(11,655)	$	(272,051)	$	48,613	$	5,546	$	43,067
Impairment of assets 1	291,389		—		291,389		—		—		—
Restructuring / other expenses 2	11,848		2,980		8,868		830		195		635
Acquisition-related expenses 2	4,899		1,048		3,851		2,938		617		2,321
Acquisition inventory fair value adjustment 2	1,140		239		901		1,601		269		1,332
Contingent consideration fair value adjustment 2	8,092		1,780		6,312		—		—		—
Adjusted net income 3	$	33,662	$	(5,608)	$	39,270	$	53,982	$	6,627	$	47,355

Weighted average diluted common shares outstanding					19,212						19,447
Adjusted weighted average diluted common shares outstanding 3,4					19,332						19,447

Diluted earnings (loss) per share	$	(14.77)	$	(0.61)	$	(14.16)	$	2.50	$	0.29	$	2.21
Impact of impairment of assets	15.16		—		15.16		—		—		—
Impact of restructuring / other expenses	0.62		0.16		0.46		0.04		0.01		0.03
Impact of acquisition-related expenses	0.25		0.05		0.20		0.15		0.02		0.13
Impact of acquisition inventory fair value adjustment	0.06		0.01		0.05		0.08		0.01		0.07
Impact of contingent consideration fair value adjustment	0.43		0.10		0.33		—		—		—
Impact of change in weighted average diluted common shares outstanding	(0.01)		—		(0.01)		—		—		—
Adjusted diluted earnings per share 3	$	1.74	$	(0.29)	$	2.03	$	2.77	$	0.33	$	2.44

1 Impairment of assets is non-deductible for tax purposes; therefore, there is no tax impact associated with the adjustment.

2 In determining the tax impact of restructuring / other expenses, acquisition-related expenses, the acquisition inventory fair value adjustment and the contingent consideration fair value adjustment, we applied the statutory rate in effect for each jurisdiction where the expenses were incurred.

3 Denotes non-GAAP financial measure.

4 Adjusted weighted average diluted common shares outstanding reflects the weighted average diluted common shares associated with adjusted net income, which may include the dilutive effect of common stock equivalents.


Exhibit D
MTS SYSTEMS CORPORATION
Reconciliation of EBITDA and Adjusted EBITDA to Net Income
(unaudited - in thousands)


	Three Months Ended						Twelve Months Ended
	October 3, 2020			September 28, 2019			October 3, 2020			September 28, 2019
Net income (loss)	$	(280,675)		$	4,821		$	(272,051)		$	43,067
Net income (loss) margin	(130.5)		%	2.2		%	(32.8)		%	4.8		%

Income tax provision (benefit)	(11,768)			(671)			(11,655)			5,546
Interest expense, net	7,995			10,685			33,970			31,558
Depreciation	6,556			5,129			23,843			20,614
Amortization	5,501			4,693			22,844			17,361
EBITDA 1	(272,391)			24,657			(203,049)			118,146

Stock-based compensation	1,936			2,099			7,150			9,397
Impairment of assets 2	291,389			—			291,389			—
Restructuring / other expenses 2	3,168			700			12,238			830
Acquisition-related expenses 2	365			1,685			4,252			2,640
Acquisition inventory fair value adjustments	—			460			1,140			1,601
Contingent consideration fair value adjustment	6,791			—			8,092			—
Adjusted EBITDA 1	$	31,258		$	29,601		$	121,212		$	132,614
Adjusted EBITDA margin 1,3	14.5		%	13.2		%	14.6		%	14.9		%

1 Denotes non-GAAP financial measures.

2 Restructuring / other and acquisition-related expenses were adjusted to exclude stock-based compensation that is otherwise included in the stock-based compensation line and interest expense that is otherwise included in the interest expense, net line.

3 Adjusted EBITDA was divided by revenue when calculating Adjusted EBITDA margin.


Exhibit E
MTS SYSTEMS CORPORATION
Free Cash Flow
(unaudited - in thousands)


	Three Months Ended				Twelve Months Ended
	October 3, 2020		September 28, 2019		October 3, 2020		September 28, 2019
Net Cash Provided by (Used in) Operating Activities	$	34,429	$	23,493	$	47,849	$	73,463
Purchases of property and equipment	(2,749)		(13,148)		(23,893)		(30,525)
Proceeds from sale of property and equipment	948		—		948		10
Free cash flow 1	$	32,628	$	10,345	$	24,904	$	42,948


1 Denotes non-GAAP financial measures.


FOR IMMEDIATE RELEASE December 15, 2020