MTS Reports Fiscal Year 2020 Fourth Quarter And Full Year Financial Results
EDEN PRAIRIE, Minn., Dec. 15, 2020 /PRNewswire/ -- MTS Systems Corporation (Nasdaq: MTSC), a leading global supplier of advanced test systems, motion simulators and precision sensors, today reported financial results for its fiscal year 2020 fourth quarter and full year ended October 3, 2020.
FULL YEAR FINANCIAL AND OPERATING HIGHLIGHTS
- Generated operating cash flow of
$47.8 million - Grew backlog to
$457.6 million , an increase of8.9% over prior year - Reported revenue of
$828.6 million , a decline of7.2% over prior year - Reported GAAP diluted loss per share of
$14.16 , including$15.16 of non-cash impairment of assets - Delivered adjusted diluted earnings per share of
$2.03 , including$0.93 of amortization expense
MERGER AGREEMENT
On December 8, 2020, we entered into a definitive agreement under which Amphenol Corporation (NYSE: APH) will acquire MTS for
FINANCIAL TABLE
Three Months Ended | Twelve Months Ended | ||||||||||||||
(in thousands, except per share data - unaudited) | October 3, | September 28, | October 3, | September 28, | |||||||||||
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 |
1 | Includes |
2 | Refer to the "Non-GAAP Financial Measures" section below for discussion of the calculation of these non-GAAP financial measures. |
HIGHLIGHTS FOR THE FISCAL YEAR 2020 FOURTH QUARTER
Revenue
Revenue was
Orders
Test & Simulation orders during the quarter were
Sensors orders during the quarter were
Backlog
Backlog remained strong at
Impairment of Assets
Non-cash impairment charges of
Net Income (Loss) and Diluted Earnings (Loss) Per Share
Diluted earnings (loss) per share was
Fourth quarter of fiscal year 2020 and 2019 results include
Adjusted EBITDA
Adjusted EBITDA increased to
Balance Sheet and Liquidity
During the quarter, our total debt decreased by
HIGHLIGHTS FOR THE FISCAL YEAR 2020 FULL YEAR
Revenue
Revenue was
Orders
Test & Simulation orders for the fiscal year were
Sensors orders for the fiscal year were
Net Income (Loss) and Diluted Earnings (Loss) Per Share
Diluted earnings (loss) per share was
Fiscal year 2020 and 2019 results included
Adjusted EBITDA
Adjusted EBITDA declined to
RANSOMWARE INCIDENT
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
FOURTH QUARTER CONFERENCE CALL
Due to the pending merger with Amphenol Corporation, we will not host a conference call to review our fiscal year fourth quarter 2020 financial results.
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 3,600 employees as of October 3, 2020 and revenue of
NON-GAAP FINANCIAL MEASURES
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.
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 and E 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. 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.
ADDITIONAL INFORMATION REGARDING THE MERGER AND WHERE TO FIND IT
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.
CERTAIN INFORMATION REGARDING PARTICIPANTS IN THE SOLICITATION
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, | September 28, | October 3, | September 28, | ||||||||||||
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 | 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 | 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, | September 28, | ||||||
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, | |||||||
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, | September 28, | October 3, | September 28, | ||||||||||||
Cash Flows from Operating Activities | |||||||||||||||
Net income (loss) | $ | (280,675) | $ | 4,821 | $ | (272,051) | $ | 43,067 | |||||||
Adjustments to reconcile net income (loss) to net | |||||||||||||||
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 | 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 | 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 | (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 | (12,105) | (303,956) | 10,063 | (313,177) | |||||||||||
Cash dividends | — | (5,614) | (17,205) | (21,713) | |||||||||||
Proceeds from exercise of stock options and | 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 | (11,580) | 42,019 | 51,413 | 97,403 | |||||||||||
Effect of Exchange Rate Changes on Cash and | 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, | September 28, | October 3, 2020 | September 28, | ||||||||||||
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 | 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 | 19,275 | 19,519 | |||||||||||||||||
Adjusted weighted average diluted common | 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 | — | — | — | 0.02 | — | 0.02 | |||||||||||||
Impact of contingent consideration fair | 0.34 | 0.07 | 0.27 | — | — | — | |||||||||||||
Impact of change in weighted average | (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 | 19,212 | 19,447 | |||||||||||||||||
Adjusted weighted average diluted common | 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 | 0.06 | 0.01 | 0.05 | 0.08 | 0.01 | 0.07 | |||||||||||||
Impact of contingent consideration fair value | 0.43 | 0.10 | 0.33 | — | — | — | |||||||||||||
Impact of change in weighted average | (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, | September 28, | October 3, | September 28, | ||||||||||||
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, | September 28, | October 3, | September 28, | ||||||||||||
Net Cash Provided by (Used in) Operating | $ | 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. |
View original content to download multimedia:http://www.prnewswire.com/news-releases/mts-reports-fiscal-year-2020-fourth-quarter-and-full-year-financial-results-301192436.html
SOURCE MTS Systems Corporation