MTS Reports Fiscal 2019 Second Quarter Financial Results
EDEN PRAIRIE, Minn., May 6, 2019 /PRNewswire/ -- MTS Systems Corporation (Nasdaq: MTSC), a leading global supplier of high-performance test systems, motion simulators and sensors, today reported financial results for its fiscal year 2019 second quarter ended March 30, 2019.
SECOND QUARTER FINANCIAL AND OPERATING HIGHLIGHTS
-- Revenue of $233.0 million, reflecting the highest revenue-producing
quarter in the history of MTS, including record revenue in both Test &
Simulation and Sensors
-- GAAP diluted earnings per share of $0.73, an increase of $0.29 or 66%
year-over-year
-- Net income margins of 6.1% for the quarter, a year-over-year increase of
167 basis points
-- Adjusted EBITDA margins of 16.1% for the quarter, a year-over-year
increase of 172 basis points
-- Backlog of $493.5 million, a year-over-year increase of 40%
-- Declared 149(th) consecutive quarterly dividend
FINANCIAL TABLE
Three Months Ended
Six Months Ended
(in thousands,
except per
share data -
unaudited)
March 30,
March 31,
March 30,
March 31,
2019 2018 2019 2018
---
Revenue $
233,046 $
191,323 $
436,227 $
385,485
Revenue %
increase
(decrease)(1) 21.8
% (1.1)
% 13.2
% (1.8)
%
Gross margin 37.5
% 39.1
% 38.0
% 39.6
%
Operating margin 10.4
% 8.7
% 9.7
% 8.6
%
Earnings before
taxes $
17,076 $
10,176 $
28,273 $
19,646
Net income 14,160 8,438 24,661 41,589
Diluted earnings
per share 0.73 0.44 1.27 2.16
Adjusted diluted
earnings per
share(2) 0.76 0.45 1.36 2.18
Adjusted
EBITDA(2) 37,554 27,526 67,656 54,404
Cash and cash
equivalents,
end of period 74,122 84,378
Backlog, end of
period 493,468 352,172
Total debt, end
of period 464,420 409,733
1 Revenue growth rates in fiscal
year 2019 reflect the acquisition
of E2M Technologies B.V. that
occurred on November 21, 2018.
2 Refer to the "Non-GAAP Financial
Measures" section below for
discussion of the calculation of
these non-GAAP financial
measures.
EXECUTIVE COMMENTARY - DR. JEFF GRAVES, PRESIDENT AND CHIEF EXECUTIVE OFFICER
"Our second quarter performance was strong on virtually all key metrics, as we continue to successfully execute on our growth, diversification and operational efficiency strategies. From a top-line perspective, we delivered over 21% revenue growth, supported by record revenues in both our Test & Simulation and Sensors businesses.
From a profitability perspective, we continue to focus intensely on our cost structure and operational efficiency initiatives, which contributed to a 68% increase in net income, with margins rising to 6.1% for the quarter, and a 36% increase in Adjusted EBITDA, equating to a margin of 16.1% for the quarter. This strong performance supported our continuing investments in the business, further deleveraging of our balance sheet and a continued return of cash to our shareholders through our dividend.
Given the volume and quality of the orders we experienced in the first half of our fiscal year and our significant backlog position, we remain confident in our ability to deliver on our strategy of growth and expanded profitability in fiscal year 2019 and beyond."
HIGHLIGHTS FOR THE 2019 SECOND FISCAL QUARTER
Revenue
Revenue was $233.0 million, up 21.8% compared to the same prior year period, driven by record revenue in Test & Simulation, which included equipment volume growth in all sectors, a full quarter contribution from the acquisition of E2M, which closed in the first quarter of fiscal year 2019, and continued growth in our Test services activities. Sensors experienced broad demand across all market sectors, as well as the initial ramp-up in volume associated with the U.S. Department of Defense contract, which combined to deliver a record revenue quarter for this business as well.
Orders
Test & Simulation orders for the quarter were $132.1 million, up 25.6% compared to the same prior year period, driven primarily by a large order in the ground vehicles sector of our Test & Simulation business, increased demand across the structures and simulation sectors, and strong growth in the Americas region.
Sensors orders for the quarter were $79.4 million, a 5.7% decrease over the same prior year period. This decline was primarily driven by weakness in the European and Asian regions specific to our Sensors position and systems sectors, partially offset by solid demand in the Americas region of our Sensors position sector and orders growth in our Sensors industrial sector from a slight rebound in the energy market.
Backlog
Backlog remained very strong at $493.5 million, up 40.1% from the same prior year period. Sequentially from the first quarter of fiscal year 2019, backlog was down 4.1% from our all-time high of $514.7 million as we saw a high-level of conversion to revenue on outstanding projects within the quarter.
Earnings Before Taxes
Earnings before taxes of $17.1 million was up $6.9 million compared to the same prior year period. This earnings increase was driven by growth in Test & Simulation gross profit, partially offset by higher operating expenses in both businesses and $0.5 million acquisition inventory fair value adjustment related to the acquisition of E2M.
Net Income and Diluted Earnings Per Share
Diluted earnings per share was $0.73 compared to $0.44 in the same prior year period on net income of $14.2 million and $8.4 million, respectively. The $0.29 increase was primarily driven by growth in Test & Simulation gross profit. Second quarter of fiscal year 2019 results were impacted by $0.03 of non-recurring costs associated with the acquisition inventory fair value adjustment and acquisition-related expenses. Similarly, results for the second quarter of fiscal year 2018 include a $0.01 impact for non-recurring restructuring expense. Adjusting for these items, adjusted diluted earnings per share was $0.76 for the second quarter of fiscal 2019, and $0.45 for the same period in the prior year.
Adjusted EBITDA
Adjusted EBITDA grew to $37.6 million in the second quarter of fiscal year 2019, up 36.4% compared to the same prior year period and 24.8% sequentially from the first quarter of fiscal year 2019. This growth was primarily due to significantly higher Test & Simulation gross profit and a full quarter contribution from the acquisition of E2M, partially offset by higher operating expenses in both Test & Simulation and Sensors. 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.
Capital Structure
During the quarter, our total debt balance decreased by $2.6 million. With a strong backlog and positive cash flow forecast, we expect to continue to pay down our debt, thus continuing to reduce our leverage ratio, between now and the end of fiscal year 2019.
Dividend
The Board of Directors declared a quarterly dividend of $0.30 per share. The dividend was payable on April 1, 2019 to shareholders of record as of the close of business on March 18, 2019. This was our 149(th) consecutive quarterly dividend.
OUTLOOK
Test & Simulation Business
Looking forward, our strong performance during the first half of fiscal year 2019 supports our positive outlook for our Test & Simulation business. From a revenue perspective, our near-record backlog at mid-year reflects strong sales momentum driven by the rapidly expanding use of advanced materials, such as carbon-fiber composites, the adoption of additive manufacturing methods for net-shape component fabrications, and the rapidly increasing complexity of ground and air vehicles which requires new simulation methods for determining product performance and life. Our energy and infrastructure markets remain robust, driven by continued growth in wind power and advanced building designs which are more resistant to damage from earthquakes, sea and storm events. In addition, the acquisition of E2M diversifies us further into flight simulation, entertainment and other advanced simulation markets that further expand our growth opportunities.
In addition to our exciting growth opportunities, we continue to invest in operational efficiency initiatives to improve profitability, and in new products and technologies to drive margin expansion and to generate continued strong demand for Test & Simulation products and services.
Sensors Business
Strong demand in our Sensors business is anticipated to continue during fiscal year 2019 across all sectors, driven by accelerating new product introductions across all major markets and geographies, and expanded opportunities associated with the U.S. Department of Defense. This combination of positive factors, including full production ramp-up of sensors for the U.S. military, is expected to provide double digit top-line growth for the second half of the fiscal year, along with Adjusted EBITDA margin expansion for the Sensors business for the remainder of fiscal year 2019.
Consolidated
Based on these factors, we are confident in our outlook for fiscal year 2019 and are maintaining our full year guidance as:
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
Adjusted diluted earnings
per share
$2.42 to $2.72
The above outlook includes:
-- $8.5 million to $11.0 million for stock-based compensation,
restructuring expenses, acquisition-related expenses and acquisition
fair value inventory adjustment;
-- Our acquisition of E2M, in addition to the slightly positive effects of
the implementation of the new revenue recognition standard as compared
to the previous standard; and
-- An anticipated effective tax rate, excluding discrete tax items, of
15-18% for fiscal year 2019.
A reconciliation of Adjusted EBITDA and Adjusted diluted earnings per share, non-GAAP financial measures, to net income and diluted earnings per share, the most directly comparable GAAP financial measures, respectively, for the above outlook is included in Exhibits E and F of this earnings release, respectively.
SECOND QUARTER CONFERENCE CALL
As announced on April 22, 2019, a conference call will be held on May 7, 2019 (tomorrow), at 10:00 a.m. ET (9:00 a.m. CT). Dr. Jeffrey A. Graves, President and Chief Executive Officer, and Brian T. Ross, Senior Vice President and Chief Financial Officer, will host the call, which will include a question and answer session after prepared remarks.
Call toll free +1-800-667-5617 (international toll +1-334-323-0509) and reference the conference pass code 1389363. Telephone replay will be available at 1:00 p.m. ET following the call until 1:00 p.m. ET, May 14, 2019. Call toll free +1-888-203-1112 and reference the conference pass code 1389363.
A transcript of the call can also be accessed from the MTS website at http://investor.mts.com beginning on May 8, 2019.
ABOUT MTS SYSTEMS CORPORATION
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 3,400 employees as of September 29, 2018 and revenue of $778 million for the fiscal year ended September 29, 2018. Additional information on MTS can be found at www.mts.com.
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-related expenses and the acquisition inventory fair value adjustment 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-related expenses and the acquisition inventory fair value adjustment 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), EBITDA excluding the impact from stock-based compensation, restructuring expenses, acquisition-related expenses and the acquisition inventory 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, restructuring expenses, acquisition-related expenses and the acquisition inventory fair value adjustment to EBITDA. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by revenue.
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 our 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 and businesses, net of cash acquired, plus cash proceeds from sales 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, F and G of this earnings release.
FORWARD-LOOKING STATEMENTS
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. 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 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 Sensors and Test & Simulation 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 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.
MTS SYSTEMS CORPORATION
Consolidated Statements of Income
(unaudited - in thousands, except per share data)
Three Months Ended
Six Months Ended
March 30, March 31, March 30, March 31,
2019 2018 2019 2018
---
Revenue
Product $
206,690 $
165,453 $
381,769 $
334,694
Service 26,356 25,870 54,458 50,791
Total revenue 233,046 191,323 436,227 385,485
Cost of sales
Product 129,579 101,133 237,746 201,627
Service 16,117 15,365 32,826 31,105
Total cost of sales 145,696 116,498 270,572 232,732
Gross profit 87,350 74,825 165,655 152,753
Gross margin 37.5
% 39.1
% 38.0
% 39.6
%
Operating expenses
Selling and marketing 33,395 30,597 65,484 62,625
General and
administrative 22,105 18,992 43,183 39,554
Research and
development 7,676 8,626 14,848 17,467
Total operating
expenses 63,176 58,215 123,515 119,646
Income from
operations 24,174 16,610 42,140 33,107
Operating margin 10.4
% 8.7
% 9.7
% 8.6
%
Interest expense, net (7,368) (6,708) (14,186) (13,512)
Other income
(expense), net 270 274 319 51
Income before income
taxes 17,076 10,176 28,273 19,646
Income tax provision
(benefit) 2,916 1,738 3,612 (21,943)
Net income $
14,160 $
8,438 $
24,661 $
41,589
Earnings per share
Basic
Earnings per share $
0.74 $
0.44 $
1.28 $
2.17
Weighted average
common shares
outstanding 19,251 19,150 19,234 19,137
Diluted
Earnings per share $
0.73 $
0.44 $
1.27 $
2.16
Weighted average
common shares
outstanding 19,441 19,273 19,393 19,258
Dividends declared
per share $
0.30 $
0.30 $
0.60 $
0.60
MTS SYSTEMS CORPORATION
Condensed Consolidated Balance Sheets
(unaudited - in thousands)
March 30, September 29,
2019 2018
---
ASSETS
Current assets
Cash and cash equivalents $
74,122 $
71,804
Accounts receivable, net 117,349 122,243
Unbilled accounts receivable,
net 71,175 70,474
Inventories, net 179,071 139,109
Other current assets 32,307 24,572
Total current assets 474,024 428,202
Property and equipment, net 88,126 90,269
Goodwill 403,425 369,275
Intangible assets, net 287,101 246,138
Other long-term assets 7,958 5,512
Total assets $
1,260,634 $
1,139,396
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current maturities of long-
term debt, net $
28,076 $
32,738
Accounts payable 39,941 47,886
Advance payments from
customers 102,033 80,131
Other accrued liabilities 89,453 78,358
Total current liabilities 259,503 239,113
Long-term debt, less current
maturities, net 436,344 355,640
Other long-term liabilities 79,733 66,711
Total liabilities 775,580 661,464
Shareholders' equity
Common stock, $0.25 par; 64,000 shares
authorized:
17,900 and 17,856 shares issued and outstanding
as
of March 30, 2019 and
September 29, 2018,
respectively 4,475 4,464
Additional paid-in capital 176,918 171,407
Retained earnings 308,279 300,585
Accumulated other
comprehensive income (loss) (4,618) 1,476
Total shareholders' equity 485,054 477,932
Total liabilities and
shareholders' equity $
1,260,634 $
1,139,396
MTS SYSTEMS CORPORATION
Condensed Consolidated Statements of Cash Flows
(unaudited - in thousands)
Three Months Ended
Six Months Ended
March 30, March 31, March 30, March 31,
2019 2018 2019 2018
---
Cash Flows from Operating Activities
Net income $
14,160 $
8,438 $
24,661 $
41,589
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities
Stock-based compensation 2,895 1,668 4,689 3,290
Fair value adjustment to
acquired inventory 539 984
Depreciation and
amortization 9,508 8,612 18,468 17,348
(Gain) loss on sale or
disposal of property and
equipment 349 92 510 159
Amortization of financing
fees 1,039 1,316 2,099 2,626
Deferred income taxes 15 (302) (1,243) (30,654)
Other 659 963 1,087 1,687
Changes in operating
assets and liabilities (9,126) 7,248 (20,586) 1,213
Net Cash Provided by (Used
in) Operating Activities 20,038 28,035 30,669 37,258
Cash Flows from Investing Activities
Purchases of property and
equipment (5,576) (2,567) (9,349) (5,368)
Proceeds from sale of
property and equipment - 10 69
Purchases of business, net
of cash acquired (3,794) (81,826)
Other - 823 (285) 823
Net Cash Provided by (Used
in) Investing Activities (9,370) (1,744) (91,450) (4,476)
Cash Flows from Financing Activities
Proceeds from issuance of
long-term debt - 80,391
Payments on financing
arrangements, net (2,664) (33,550) (6,783) (50,447)
Cash dividends (5,365) (5,337) (10,724) (10,667)
Proceeds from exercise of
stock options and
employee stock purchase
plan 663 533 701 745
Payments to purchase and
retire common stock (42) (13) (398) (757)
Net Cash Provided by (Used
in) Financing Activities (7,408) (38,367) 63,187 (61,126)
Effect of Exchange Rate
Changes on Cash and Cash
Equivalents 424 2,383 (88) 3,989
Cash and Cash Equivalents
Increase (decrease) during
the period 3,684 (9,693) 2,318 (24,355)
Balance, beginning of
period 70,438 94,071 71,804 108,733
Balance, End of Period $
74,122 $
84,378 $
74,122 $
84,378
Exhibit A
MTS SYSTEMS CORPORATION
Segment Financial Information
(unaudited - in thousands)
Three Months Ended
March 30, March 31, % Variance
2019 2018
---
Test & Simulation Segment
---
Revenue $
151,032 $
110,238 37
%
Cost of sales 103,742 76,011 36
%
Gross profit 47,290 34,227 38
%
---
Gross margin 31.3
% 31.0
%
Operating expenses 34,606 30,932 12
%
---
Income from operations $
12,684 $
3,295 285
%
---
Sensors Segment
---
Revenue $
82,375 $
81,542 1
%
Cost of sales 42,301 40,922 3
%
Gross profit 40,074 40,620 (1)
%
---
Gross margin 48.6
% 49.8
%
Operating expenses 28,570 27,283 5
%
---
Income from operations $
11,504 $
13,337 (14)
%
---
Intersegment Eliminations
---
Revenue $
(361) $
(457)
Cost of sales (347) (435)
Gross profit (14) (22)
Income (loss) from
operations $
(14) $
(22)
Total Company
---
Revenue $
233,046 $
191,323 22
%
Cost of sales 145,696 116,498 25
%
Gross profit 87,350 74,825 17
%
---
Gross margin 37.5
% 39.1
%
Operating expenses 63,176 58,215 9
%
---
Income from operations $
24,174 $
16,610 46
%
---
Exhibit B
MTS SYSTEMS CORPORATION
Reconciliation of Earnings Per Share Excluding Restructuring, Acquisition-Related
and Acquisition Inventory Fair Value Adjustment Expenses
(unaudited - in thousands, except per share data)
Three Months Ended
March 30, 2019
March 31, 2018
Pre-Tax
Tax
Net Pre-Tax
Tax
Net
---
Net income $
17,076 $
2,916 $
14,160 $
10,176 $
1,738 $
8,438
Restructuring expenses
1 - 362 92 270
Acquisition-related
expenses (2) 262 55 207
Acquisition inventory
fair value adjustment
(1) 539 81 458
Adjusted net income 3 $
17,877 $
3,052 $
14,825 $
10,538 $
1,830 $
8,708
Weighted average diluted common
shares outstanding 19,441 19,273
Diluted earnings per
share $
0.88 $
0.15 $
0.73 $
0.53 $
0.09 $
0.44
Impact of
restructuring
expenses - 0.02 0.01 0.01
Impact of acquisition-
related expenses 0.01 0.01
Impact of acquisition
inventory fair value
adjustment 0.03 0.01 0.02
Adjusted diluted
earnings per share(3) $
0.92 $
0.16 $
0.76 $
0.55 $
0.10 $
0.45
1
In determining the tax impact of restructuring expenses and acquisition inventory fair value adjustment, we applied the statutory rate in effect for each jurisdiction where the expenses were incurred.
2
In determining the tax impact of 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 C
MTS SYSTEMS CORPORATION
Reconciliation of Earnings Per Share Excluding Restructuring, Acquisition-Related
and Acquisition Inventory Fair Value Adjustment Expenses
(unaudited - in thousands, except per share data)
Six Months Ended
March 30, 2019
March 31, 2018
Pre-Tax
Tax
Net Pre-Tax
Tax
Net
---
Net income $
28,273 $
3,612 $
24,661 $
19,646 $
(21,943) $
41,589
Restructuring expenses
1 130 33 97 608 154 454
Acquisition-related
expenses (2) 1,035 217 818
Acquisition inventory
fair value adjustment
(1) 984 148 836
Adjusted net income 3 $
30,422 $
4,010 $
26,412 $
20,254 $
(21,789) $
42,043
Weighted average diluted common shares
outstanding 19,393 19,258
Diluted earnings per
share $
1.46 $
0.19 $
1.27 $
1.02 $
(1.14) $
2.16
Impact of
restructuring
expenses 0.01 0.01 0.03 0.01 0.02
Impact of acquisition-
related expenses 0.05 0.01 0.04
Impact of acquisition
inventory fair value
adjustment 0.05 0.01 0.04
Adjusted diluted
earnings per share(3) $
1.57 $
0.21 $
1.36 $
1.05 $
(1.13) $
2.18
1
In determining the tax impact of restructuring expenses and acquisition inventory fair value adjustment, we applied the statutory rate in effect for each jurisdiction where the expenses were incurred.
2
In determining the tax impact of 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
Six Months Ended
March 30, 2019 March 31, 2018 March 30, 2019 March 31, 2018
---
Net income $
14,160 $
8,438 $
24,661 $
41,589
Net income margin 6.1 4.4 5.7 10.8
%
%
%
%
Income tax provision
(benefit) 2,916 1,738 3,612 (21,943)
Interest expense,
net 7,368 6,708 14,186 13,512
Depreciation and
amortization 9,508 8,612 18,468 17,348
EBITDA (1) 33,952 25,496 60,927 50,506
Stock-based
compensation 2,895 1,668 4,689 3,290
Restructuring
expenses - 362 130 608
Acquisition-related
expenses (2) 168 926
Acquisition
inventory fair
value adjustment 539 984
Adjusted EBITDA (1) $
37,554 $
27,526 $
67,656 $
54,404
Adjusted EBITDA 16.1 14.4
margin 1,3
%
%
% % 15.5 14.1
1
Denotes non-GAAP
financial measure.
2
Acquisition-related expenses were adjusted to exclude stock-based compensation that is otherwise included in the stock-based compensation line.
3
Adjusted EBITDA was divided by revenue when calculating the Adjusted EBITDA margin.
Exhibit E
MTS SYSTEMS CORPORATION
Free Cash Flow
(unaudited - in thousands)
Three Months Ended
Six Months Ended
March 30, 2019 March 31, 2018 March 30, 2019 March 31, 2018
---
Net Cash
Provided by
(Used in)
Operating
Activities $
20,038 $
28,035 $
30,669 $
37,258
Purchases of
property and
equipment (5,576) (2,567) (9,349) (5,368)
Proceeds from
sale of
property and
equipment - 10 69
Free cash
flow(1) $
14,462 $
25,468 $
21,330 $
31,959
1
Denotes non-GAAP financial measure.
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
EBITDA(1) 113,500 131,000
Stock-based
compensation and
non-recurring
expenses(2) 8,500 11,000
Adjusted EBITDA(1) $
122,000 $
142,000
1
Denotes non-GAAP financial measure.
2
Includes pre-tax forecast expenses for stock-based compensation, restructuring
expenses, acquisition-related expenses and acquisition inventory fair value adjustment.
Exhibit G
MTS SYSTEMS CORPORATION
Reconciliation of Diluted Earnings per Share and Adjusted Diluted Earnings per Share -Outlook
(unaudited - in thousands)
Twelve Months Ending
September 28, 2019
Low
High
---
Net income(1) $
44,500 $
50,000
Non-recurring
expenses 2 2,250 2,300
Adjusted net
income 3 $
46,750 $
52,300
Weighted
average
diluted common
shares
outstanding 19,350 19,250
Diluted
earnings per
share $
2.30 $
2.60
Impact of non-
recurring
expenses(2) 0.12 0.12
Adjusted
diluted
earnings per
share $
2.42 $
2.72
1
Refer to Exhibit F for tax impact on net income guidance.
2
Includes forecast expenses for restructuring expenses, acquisition-related
expenses and acquisition inventory fair value adjustment.
3
Applied anticipated tax rate, excluding discrete tax items, of approximately
15-18%.
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SOURCE MTS Systems Corporation
