MTS Reports Fiscal 2013 First Quarter Financial Results

           MTS Reports Fiscal 2013 First Quarter Financial Results

- Record high revenue of $143 million supports continued long-term strategic
growth investments

- Test productivity gains drove higher revenue and EPS of $0.87, higher than
the previously communicated outlook for the quarter

- MTS reaffirms previous fiscal 2013 outlook for revenue and EPS growth rates
in the 5 to 10 percent range

PR Newswire

EDEN PRAIRIE, Minn., Jan. 31, 2013

EDEN PRAIRIE, Minn., Jan. 31, 2013 /PRNewswire/ -- MTS Systems Corporation
(NASDAQ: MTSC) today reported fiscal 2013 first quarter financial results.

(Logo: http://photos.prnewswire.com/prnh/20121115/AQ14468LOGO)

"We are pleased that MTS again delivered a solid quarter with record revenue
and healthy order and backlog levels," said Jeffrey Graves, president and
chief executive officer of MTS. "Our productivity and infrastructure
investments to bolster our backlog conversion are paying off, and this was
evident in our Test segment; this improved execution helped us exceed both our
revenue and EPS outlook for the quarter. While the results in our Sensors
segment continued to reflect a sluggish global economy and manufacturing
environment, we continue to invest in both segments to enhance our ability to
scale up the business to meet the significant global opportunities we see
before us."

First Quarter Results

Orders were $139.2 million, a 3 percent increase, compared to the fiscal 2012
first quarter, net of 1 percent negative currency translation. The increase
was driven by two large Test orders (>$5 million) in the quarter totaling $21
million compared to no large orders in the same period last year. Test orders
were up 5 percent while Sensors orders declined 7 percent. Backlog of $291
million was relatively flat compared to the prior year.

Revenue was $142.7 million, up 7 percent compared to the prior year, including
11 percent growth in Test, partially offset by a 14 percent decrease in
Sensors. The gross margin rate was 39.7 percent, down 4.2 percentage points,
reflecting planned productivity and infrastructure investments in both
businesses and Test service capacity. Additionally, an unfavorable mix of
lower-margin products negatively impacted margin by 2 percentage points. These
items were partially offset by volume leverage.

Income from operations totaled $20.1 million, down 15 percent compared to the
previous year. The decrease resulted from a lower gross margin rate and higher
sales expenses from planned investments. These expenses were partially offset
by lower administrative costs including legal expenses. Earnings per share
were $0.87, compared to $0.98 per share in the prior year.

Uses of Cash Include Accelerated Dividend Payment

Cash and cash equivalents at the end of the first quarter totaled $47.9
million, compared to $79.9 million at the end of fiscal 2012. During the first
quarter, $14.5 million of cash was used for additional working capital to
support revenue growth. Additionally, $9.6 million in dividends were paid to
shareholders which included an accelerated payment originally planned for
payment in January. Capital expenditures were $8.0 million.

Segment Results

Test Segment:

Dr. Graves said, "The results in our Test segment for the quarter reflect a
combination of strength in the ground vehicles and materials testing markets,
and emerging economies. These factors, along with improved efficiency and
execution in backlog conversion, contributed to the strong quarter in Test,
which accounts for approximately 80 percent of our business."

Total orders for the Test segment were $116.7 million, up 5 percent compared
to the prior year. As noted above, current year orders included a $12 million
European ground vehicle order for a rolling road wind tunnel measurement
system and a $9 million Americas' structures order for a vehicle motion
simulator. Geographically, Europe increased 48 percent and the Americas grew 7
percent. Asia declined 19 percent primarily due to the receipt of several
China seismic structures orders last year. Backlog of $276 million was flat
compared to the fiscal 2012 first quarter.

Revenue grew 11 percent to $121.1 million, primarily resulting from strong
execution on backlog and higher short-cycle product volume in Asia.

Gross profit was $44.6 million, relatively flat compared to the fiscal 2012
first quarter, and the gross margin rate was 36.9 percent, a decrease of 4.3
percentage points. The primary factors contributing to the decrease in gross
margin were the previously mentioned investments and the negative impact of
increased mix of lower-margin custom project revenue. These decreases were
partially offset by a 1 point benefit from volume leverage. The gross margin
rate is expected to be 1 – 3 percentage points higher for the remaining
quarters of the fiscal year, primarily depending on mix and volume.

Income from operations totaled $16.4 million, down $1.4 million compared to
the prior year, due to higher operating expenses on relatively flat gross
profit. Operating expenses rose by $1.3 million, chiefly due to continued
investment in sales support growth initiatives to capitalize on global
marketplace opportunities.

Sensors Segment:

According to Dr. Graves, "Performance in Sensors largely reflects the tepid
global economy and manufacturing sector. We are closely monitoring market
conditions so we may respond quickly to changing customer needs. At the same
time, we are continuing our investment strategy to expand our global sales
coverage and increase productivity so we are well-positioned for growth as the
global economy improves."

Orders were $22.5 million, down 7 percent compared to the prior year.
Approximately half of the decline was due to currency. Growth in the Americas
and China were offset by currency impacts and soft market conditions in Europe
and Japan. The mobile hydraulic market was down 18 percent driven by customer
inventory adjustments and holiday plant shutdowns. The industrial market was
down modestly at 4 percent. Backlog of $15 million was down $1 million
compared to the fiscal 2012 first quarter.

Revenue declined 14 percent to $21.6 million, stemming from a lower beginning
backlog and reduced order volume. Gross profit was $12.0 million, down $2.0
million or 15 percent, and the gross margin rate was relatively flat at 55.5
percent. Income from operations was $3.7 million, down 37 percent, resulting
from lower gross profit.

Outlook

Dr. Graves concluded, "We remain focused on our three priorities: accelerating
innovation, capturing opportunities in emerging markets and realizing the
potential in our Test service business. We expect to see the gradual impact of
our investments as we move into the second half of fiscal 2013. We are
reaffirming our outlook for fiscal 2013 revenue and EPS growth in the 5 to 10
percent range, and still expect our performance to be more back-half loaded
due to order timing and the nature of Test backlog."

First Quarter Conference Call

A conference call will be held on February 1, 2013, at 10 a.m. EST (9 a.m.
CST). Call +1-719-325-2402 (Toll Free: +1-888-389-5988); and reference the
conference pass code "9434319." Telephone replay will be available until 12
p.m. CST, February 8, 2013. Call +1-719-457-0820 (Toll Free: +1-888-203-1112);
and reference the conference pass code "9434319."

A transcript of the call can also be accessed from the MTS website at
http://www.mts.com/en/Investor/index.htm. It will be available on February 6,
2013.

About MTS Systems Corporation

MTS Systems Corporation is a leading global supplier of high-performance test
systems and position sensors. The Company's testing hardware and software
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 position sensors
provide controls for a variety of industrial and vehicular applications. MTS
had 2,147 employees and revenue of $542 million for the fiscal year ended
September 29, 2012. Additional information on MTS can be found on the
worldwide web at http://www.mts.com.

This release contains "forward-looking statements" regarding financial
projections 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 are used to identify these forward-looking statements.

Forward-looking statements are based on our current expectations and
assumptions, which may not prove to be accurate. Many factors could cause
actual results to differ materially and adversely from these forward-looking
statements. Among these factors are risks related to: government contracting;
the Company's significant international business including but not limited to
currency value fluctuations, difficulty enforcing agreements and collecting
receivables, import and exporting matters, higher danger of terrorist
activity, difficulty in staffing and compliance with laws; volatility in the
global economy; competition; failure to achieve the Company's growth plans for
the expansion of its business because the Company's long-term success depends
on its ability to expand its business through new product development, mergers
and acquisitions, geographic expansion and service offerings, all of which are
subject to inherent risks including but not limited to market demand, market
acceptance of products and our ability to advance our technology; difficulties
obtaining the services of skilled employees; failure to protect its
intellectual property effectively or infringement upon the intellectual
property of others; product liability and commercial litigation; difficulty
obtaining materials or components for its products; government regulation; the
irregularity and development of sales, delivery and acceptance cycle for the
Company's products; the Company's customers are in cyclical industries;
interest rate fluctuations; the Company may be required to recognize
impairment charges for long-lived assets ;and cost, reputational and other
risks associated with disclosing use of conflict minerals. For a more thorough
discussion of the risks associated with our business, see the "Risk Factors"
section in the Company's most recent SEC Form 10-K, 10-Q and 8-K filings.
Except as required by law, the Company does not undertake any obligation to
publicly update or revise any forward-looking statement, whether as a result
of new information, future events or otherwise.







MTS SYSTEMS CORPORATION
Consolidated Statements of Income
(unaudited - in thousands, except per share data)
                                         Three Fiscal Months Ended
                                         December 29,         December 31,
                                         2012                 2011
Revenue                                $     142,668    $    133,697
Cost of sales                          86,066               74,984
Gross profit                           56,602               58,713
Gross margin                           39.7%                43.9%
Operating expenses:
Selling, general and administrative    31,493               30,205
Research and development               5,052                4,959
Total operating expenses               36,545               35,164
Income from operations                 20,057               23,549
Operating margin                       14.1%                17.6%
Interest income (expense), net         6                    (206)
Other income (expense), net            452                  (23)
Income before income taxes             20,515               23,320
Provision for income taxes             6,732                7,781
Net income                            $      13,783  $     15,539
Earnings per share:
Basic-
Earnings per share                     $             $      
                                         0.88                0.99
Weighted average number of common       15,669               15,681
shares outstanding - basic
Diluted-
Earnings per share                     $             $      
                                         0.87                0.98
Weighted average number of common       15,845               15,832
shares outstanding - diluted







MTS SYSTEMS CORPORATION
Consolidated Balance Sheets
(unaudited - in thousands, except per share data)
                                         December 29,        September 29,
                                         2012                2012
ASSETS
Current Assets:
Cash and cash equivalents              $     47,923    $    79,852
Accounts receivable, net               94,788              84,119
Unbilled accounts receivable           56,855              51,306
Inventories                            72,746              67,979
Other current assets                   18,989              17,647
Total current assets                   291,301             300,903
Property and equipment, net            66,157              61,653
Goodwill                               16,385              16,239
Intangibles, net                       22,260              23,077
Other assets                           7,178               7,566
Total Assets                           $    403,281     $    409,438
LIABILITIES AND SHAREHOLDERS'
INVESTMENT
Current Liabilities:
Short-term borrowings                  $        71  $       230
Accounts payable                       32,039              33,744
Advance payments from customers        57,550              65,833
Other accrued liabilities              52,440              60,425
Total current liabilities              142,100             160,232
Other long-term liabilities            22,418              22,487
Total Liabilities                      164,518             182,719
Shareholders' Investment:
Common stock, $0.25 par; 64,000 shares
authorized:
 15,664 and 15,640 shares issued
and outstanding as
 of December 29, 2012 and September 3,916               3,910
29, 2012, respectively
Additional paid-in capital             2,403               652
Retained earnings                      220,329             211,256
Accumulated other comprehensive income 12,115              10,901
Total shareholders' investment         238,763             226,719
Total Liabilities and Shareholders'     $    403,281     $    409,438
Investment







Exhibit A
MTS SYSTEMS CORPORATION
Segment Financial Information
(unaudited - in thousands)
                         Three Fiscal Months Ended
                         December 29,         December 31,
Test Segment           2012                 2011                % Variance
Orders                 $    116,734     $    110,727     5%
Revenue                $    121,103     $    108,628     11%
Cost of Sales          76,459               63,917              20%
Gross profit           44,644               44,711              0%
Gross margin           36.9%                41.2%
Operating expenses     28,253               26,938              5%
Income from operations $     16,391    $     17,773    -8%
Sensors Segment
Orders                 $     22,479    $     24,103    -7%
Revenue                $     21,565    $     25,069    -14%
Cost of Sales          9,607                11,067              -13%
Gross profit           11,958               14,002              -15%
Gross margin           55.5%                55.9%
Operating expenses     8,292                8,226               1%
Income from operations $       3,666  $      5,776  -37%
Total Company
Orders                 $    139,213     $    134,830     3%
Revenue                $    142,668     $    133,697     7%
Cost of Sales          86,066               74,984              15%
Gross profit           56,602               58,713              -4%
Gross margin           39.7%                43.9%
Operating expenses     36,545               35,164              4%
Income from operations   $     20,057    $     23,549    -15%



SOURCE MTS Systems Corporation

Website: http://www.mts.com
Contact: Susan Knight, Chief Financial Officer, +1-952-937-4000
 
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