This excerpt taken from the MTSC 8-K filed Jul 25, 2007.
MTS Reports Third Quarter EPS of $0.55, up 22% on 13% Revenue Growth
Eden Prairie, Minn., July 25, 2007 MTS Systems Corporation (NASDAQ: MTSC) today reported third quarter earnings of $0.55 per diluted share on net income of $10.0 million, an increase of 22 percent compared to earnings of $0.45 per diluted share on net income of $8.5 million for third quarter fiscal 2006.
Both orders and revenue were up significantly in the quarter with double digit growth in both the Test and Sensors segments, said Sidney W. Emery, Jr., Chairman and CEO. While unplanned custom project costs depressed Test segment margins, excellent Sensors segment performance along with tax benefits contributed to strong earnings in the quarter. Based on third quarter results and our outlook for the fourth quarter, we expect our full year EPS to be in the top half of the previously issued $2.15-$2.25 guidance range and revenue to be at the upper end of the $405-$415 range.
Third quarter orders totaled $111.9 million, an increase of 15 percent compared to orders of $97.7 million for third quarter fiscal 2006, primarily driven by two large Test segment orders in North America and Europe, and Sensors growth across all geographies, as well as an estimated $0.7 million favorable impact of currency translation. Backlog increased 1 percent sequentially in the quarter, from $204 million to $206 million. This compares to backlog of $198 million at the end of third quarter fiscal 2006.
Revenue for the third quarter totaled $108.6 million, a 13 percent increase compared to revenue of $95.9 million for third quarter fiscal 2006. This increase was driven by a higher proportion of standard product and service business in Test, continued growth in Sensors, and an estimated $1.4 million favorable impact of currency translation.
Gross profit for third quarter was $42.8 million, an increase of 4 percent compared to gross profit of $41.0 million for third quarter fiscal 2006, primarily due to increased volume, partially offset by unplanned custom project costs and increased warranty expense in the Test segment. Gross margin rate for the third quarter was 39.4 percent, a decrease of 3.4 percentage points compared to 42.8 percent for third quarter fiscal 2006. The decrease in margin rate was primarily due to higher project and warranty expenses in the Test segment. Third quarter income from operations totaled $11.7 million, flat compared to income from operations of $11.8 million for third quarter fiscal 2006, as planned increases in sales, marketing, and R&D spending to support strategic initiatives equaled the increase in gross profit.
Third quarter net income was $10.0 million, up 18 percent compared to net income of $8.5 million for third quarter fiscal 2006. This increase primarily resulted from decreased income tax expense of $1.6 million, primarily due to increased tax benefits resulting from research and development tax credits and export transactions. Reduced shares outstanding positively impacted earnings per diluted share by $0.02 for the quarter.
MTS News Release
Cash, cash equivalents and short-term investments at the end of the third quarter totaled $104 million, compared to $117 million at the end of second quarter of fiscal year 2007. The Company used $10.0 million of cash in the quarter, primarily due to increased short term working capital requirements. Approximately 108,000 shares were purchased in the quarter.