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Press release from GlobeNewswire (a Nasdaq OMX company)

Measurement Specialties Announces Third Quarter Results

Wednesday, February 01, 2012

Measurement Specialties Announces Third Quarter Results13:00 EST Wednesday, February 01, 2012HAMPTON, Va., Feb. 1, 2012 (GLOBE NEWSWIRE) -- Measurement Specialties, Inc. (Nasdaq:MEAS) (the "Company"), a global designer and manufacturer of sensors and sensor-based systems, announces results for the three and nine months ended December 31, 2011. The Company reported an increase in consolidated net sales of $4.6 million, or approximately 6%, to $76.3 million for the three months ended December 31, 2011, as compared to the corresponding period of last year. Excluding sales attributed to the Eureka, Celesco and Gentech acquisitions of approximately $6.9 million for the three months ended December 31, 2011, organic sales decreased $2.3 million or 3%. For the three months ended December 31, 2011, the Company reported net income of $4.7 million, or $0.30 per diluted share, as compared to net income of $7.5 million, or $0.49 per diluted share, for the same period last year. The Company reported an increase in consolidated net sales of $28.8 million, or 15%, to $226.8 million for the nine months ended December 31, 2011, as compared to the corresponding period of last year. Excluding sales attributed to the Pressure Systems, Inc., Eureka, Celesco and Gentech acquisitions of approximately $19.5 million and $7.2 million for the nine months ended December 31, 2011 and 2010, respectively, organic sales increased $16.5 million or approximately 8.6%. For the nine months ended December 31, 2011, the Company reported net income of $19.4 million, or $1.22 per diluted share, as compared to net income of $19.8 million, or $1.30 per diluted share, for the same period last year. Frank Guidone, Company CEO, commented, "Our earnings performance in the third quarter was directly impacted by lower sales volume, lower gross margin resulting from poor overhead absorption and higher scrap, largely associated with new programs, and higher amortization expense associated with recent acquisitions. As we noted previously, we had strong bookings during the quarter which we believe will support a recovery in the forth quarter. We expect fiscal 2012 consolidated net sales to range from $308 million to $311 million. While R&D expense has always been considered an investment in future growth, we currently have an unusually high number of large development programs ongoing that negatively impact results in the near term, but will significantly contribute to organic growth over the next several years." On February 1, 2012, the Company filed its Form 10-Q for the three and nine months ended December 31, 2011. Please refer to the Management's Discussion and Analysis of Financial Condition and Results of Operations included in the Company's Form 10-Q filed for a more complete discussion of sales, margin and expenses. The Company will host an investor conference call on Thursday, February 2, 2012 at 11:00 AM Eastern to answer questions regarding the third quarter results reported in our Form 10-Q for quarter ended December 31, 2011.  US dialers: (877) 407-9210; International dialers (201) 689-8049.  Interested parties may also listen via the Internet at: www.investorcalendar.com. The call will be available for replay for 30 days by dialing (877) 660-6853 (US dialers); (201) 612-7415 (International dialers), and entering the replay pass code #286 and conference ID# 387500, and on Investorcalendar.com.About Measurement Specialties: Measurement Specialties, Inc. (MEAS) designs and manufactures sensors and sensor-based systems to measure precise ranges of physical characteristics such as pressure, temperature, position, force, vibration, humidity and photo optics. MEAS uses multiple advanced technologies – piezo-resistive silicon sensors, application-specific integrated circuits, micro-electromechanical systems ("MEMS"), piezoelectric polymers, foil strain gauges, force balance systems, fluid capacitive devices, linear and rotational variable differential transformers, electromagnetic displacement sensors, hygroscopic capacitive sensors, ultrasonic sensors, optical sensors, negative thermal coefficient ("NTC") ceramic sensors, mechanical resonators, reed switch and submersible hydrostatic level sensors – to engineer sensors that operate precisely and cost effectively.  This release includes forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended.  Forward looking statements may be identified by such words or phrases  as "should", "intends", " is subject to", "expects", "will", "continue", "anticipate", "estimated", "projected", "may", " believe", "future prospects", or similar expressions.  Factors that might cause actual results to differ materially from the expected results described in or underlying our forward-looking statements include: Conditions in the general economy, including risks associated with the current financial crisis and worldwide economic conditions and reduced demand for products that incorporate our products; Competitive factors, such as price pressures and the potential emergence of rival technologies; Compliance with export control laws and regulations; Fluctuations in foreign currency exchange and interest rates; Interruptions of suppliers' operations or the refusal of our suppliers to provide us with component materials, particularly in light of the current economic conditions and potential for suppliers to fail; Timely development, market acceptance and warranty performance of new products; Changes in product mix, costs and yields; Uncertainties related to doing business in Europe and China; Legislative initiatives, including tax legislation and other changes in the Company's tax position; Legal proceedings; Compliance with debt covenants, including events beyond our control; Conditions in the credit markets, including our ability to raise additional funds or refinance our existing credit facility; Adverse developments in the automotive industry and other markets served by us; and risk factors listed from time to time in the reports we file with the SEC.  The Company from time-to-time considers acquiring or disposing of business or product lines. Forward-looking statements do not include the impact of acquisitions or dispositions of assets, which could affect results in the near term.  Actual results may differ materially.  The Company assumes no obligation to update the information in this release.MEASUREMENT SPECIALTIES, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED)   Three Months EndedNine Months Ended  December 31,December 31,   (Amounts in thousands, except per share amounts)2011201020112010Net sales  $ 76,341  $ 71,687  $ 226,768  $ 198,022 Cost of goods sold  47,470  42,030  135,449  114,424  Gross profit  28,871  29,657  91,319  83,598 Selling, general, and administrative expenses  22,406  20,752  66,282  58,065  Operating income  6,465  8,905  25,037  25,533 Interest expense, net  806  753  1,932  2,395 Foreign currency exchange loss (gain)  27  (63)  47  134 Equity income in unconsolidated joint venture  (240)  (153)  (612)  (402) Other expense (income)  (10)  (24)  41  110 Income before income taxes  5,882  8,392  23,629  23,296  Income tax expense  1,187  893  4,269  3,453Net income $ 4,695  $ 7,499  $ 19,360  $ 19,843                Earnings per common share - Basic:        Net income - Basic  $ 0.31  $ 0.51  $ 1.29  $ 1.36  Net income - Diluted  $ 0.30  $ 0.49  $ 1.22  $ 1.30           Weighted average shares outstanding - Basic  15,040  14,684  15,059  14,609 Weighted average shares outstanding - Diluted  15,818  15,447  15,918  15,222      MEASUREMENT SPECIALTIES, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(UNAUDITED)     December 31,March 31,(Amounts in thousands)20112011   ASSETS        Current assets:     Cash and cash equivalents  $ 24,552  $ 20,860  Accounts receivable trade, net of allowance for       doubtful accounts of $678 and $714, respectively  45,027  43,624  Inventories, net  56,920  52,212  Deferred income taxes, net  2,652  3,212  Prepaid expenses and other current assets  5,215  5,514  Other receivables  1,583  1,222  Assets held for sale  1,829  --   Total current assets  137,778  126,644        Property, plant and equipment, net  54,004  50,303  Goodwill  145,617  115,864  Acquired intangible assets, net  50,792  28,656  Deferred income taxes, net  2,283  2,883  Investment in unconsolidated joint venture  3,019  2,578  Other assets  4,732  2,838 Total assets $ 398,225  $ 329,766      MEASUREMENT SPECIALTIES, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(UNAUDITED)          December 31,March 31,(Amounts in thousands, except share amounts)20112011   LIABILITIES AND SHAREHOLDERS' EQUITY      Current liabilities:     Current portion of long-term debt  $ 133  $ 171  Current portion of capital lease obligations  35  39  Promissory notes payable  2,660  2,713  Accounts payable  26,520  21,815  Accrued expenses  7,532  5,441  Accrued compensation  8,716  12,646  Income taxes payable  1,157  2,491  Deferred income taxes, net  430  444  Other current liabilities  2,899  2,752  Total current liabilities  50,082  48,512        Revolver  80,327  46,000  Long-term debt, net of current portion  20,722  20,901  Capital lease obligations, net of current portion  35  17  Acquisition earn-out contingencies  3,948  --   Deferred income taxes, net  12,025  3,532  Other liabilities  2,441  1,735  Total liabilities  169,580  120,697      Equity:      Serial preferred stock; 221,756 shares authorized; none outstanding  --   --   Common stock, no par; 25,000,000 shares authorized; 15,087,099 shares      and 14,989,675 shares issued and outstanding  --   --   Additional paid-in capital  96,707  93,608  Retained earnings  120,669  101,309  Accumulated other comprehensive income  11,269  14,152  Total equity  228,645  209,069 Total liabilities and shareholders' equity $ 398,225  $ 329,766      MEASUREMENT SPECIALTIES, INC AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)    Nine months ended December 31,(Amounts in thousands)20112010 Cash flows from operating activities:  Net income $ 19,360  $ 19,843     Adjustments to reconcile net income to net cash      provided by operating activities:   Depreciation and amortization  11,948  11,226 Gain on sale of assets  --   (3) Non-cash equity based compensation  3,662  2,231 Deferred income taxes  (479)  360 Equity income in unconsolidated joint venture  (612)  (402) Unconsolidated joint venture distributions  582  114 Net change in operating assets and liabilities:     Accounts receivable, trade  2,142  (5,264) Inventories  (2,932)  (10,316) Prepaid expenses, other current assets and other receivables  596  (864) Other assets  (1,910)  62 Accounts payable  1,622  451 Accrued expenses, accrued compensation, other current and other liabilities  (3,576)  3,365 Income taxes payable  (3,209)  1,784Net cash provided by operating activities 27,194  22,587 Cash flows from investing activities:     Purchases of property and equipment  (9,759)  (6,676) Proceeds from sale of assets  --   33 Acquisition of business, net of cash acquired, and acquired intangible assets  (46,317)  (27,037)Net cash used in investing activities (56,076) (33,680) Cash flows from financing activities:     Borrowings from revolver  48,900  62,746 Borrowings from long-term debt  --   20,000 Repayments of revolver and capital leases  (14,559)  (59,700) Repayments of long-term debt  (141)  (8,145) Payment of deferred financing costs  (353)  (1,568) Purchase of treasury stock  (6,500)  --  Proceeds from exercise of options and employee stock purchase plan  5,123  4,818 Excess tax benefit from exercise of stock options  819  122Net cash provided by (used in) financing activities 33,289  18,273       Net change in cash and cash equivalents  4,407  7,180 Effect of exchange rate changes on cash  (715)  371 Cash, beginning of year  20,860  23,165Cash, end of period $ 24,552  $ 30,716 Reconciliation of Non-GAAP Financial Measures (Unaudited):            Three Months EndedNine Months Ended  December 31,December 31,  2011201020112010      (In thousands, except percentages)                   Income from continuing operations, net of income taxes  $ 4,695  $ 7,499  $ 19,360  $ 19,843           Add Back:          Interest  806  753  1,932  2,395  Provision for income taxes  1,187  893  4,269  3,453  Depreciation and amortization  4,847  4,106  11,948  11,226  Foreign currency exchange loss (gain)  27  (63)  47  134  Non-cash equity based compensation  1,162  974  3,662  2,231  ITAR legal fees and acquisition related professional fees  333  14  800  32Adjusted EBITDA $ 13,057  $ 14,176  $ 42,018  $ 39,314  As % of Net Sales 17.1% 19.8% 18.5% 19.9%                    Free Cash Flow         Net cash provided by operating           activities from continuing operations  $ 8,061  $ 9,834  $ 27,194  $ 22,587 Purchases of property and equipment  (5,148)  (1,932)  (9,759)  (6,676)Free Cash Flow $ 2,913  $ 7,902  $ 17,435  $ 15,911 Regulation G, "Conditions for Use of Non-GAAP Financial Measures," promulgated under the Securities and Exchange Act of 1934, as amended, defines and prescribes the conditions for use of certain non-GAAP financial information. We believe that certain of our financial measures which meet the definition of non-GAAP financial measures provide important supplemental information to investors. The financial information accompanying this press release includes the Company's earnings before interest, income taxes, depreciation, amortization, foreign currency transaction gains/losses, non-cash equity based compensation and certain legal expenses, or "Adjusted EBITDA" and "Free Cash Flow." Adjusted EBITDA and Free Cash Flow are non-GAAP measures that are not in accordance with, or an alternative to, measures prepared in accordance with GAAP and may be different from Adjusted EBITDA and Free Cash Flow measures used by other companies. Adjusted EBITDA is derived by adding interest, taxes, depreciation, amortization, foreign currency transaction gains/losses, non-cash equity based compensation and certain legal expenses related to International Traffic in Arms Regulation (ITAR) matters to the Company's net income from continuing operations and professional fees related to acquisitions. Free Cash Flow is derived by taking net cash provided by operating activities from continuing operations and subtracting capital expenditures (purchases of property and equipment). The Company believes that Adjusted EBITDA is important to investors because it provides a financial measure that is more representative of the Company's cash flow (prior to taking into account the effects of changes in working capital and purchases of property and equipment), excluding non-cash expenses and items such as foreign currency transaction gains/losses, income taxes, interest and certain legal expenses, which vary greatly period to period. Legal expenses relate to the Company's previously announced investigation into certain export compliance issues. The Company believes that this measure is important to investors because it more accurately represents the leverage effect of fixed expenses. The Company believes Free Cash Flow is also important to investors as it provides useful information about the amount of cash generated by the business after the purchase of property, buildings and equipment, which can then be used to, among other things, invest in the Company's business, make strategic acquisitions and strengthen the balance sheet, and because it is a significant measure used in determining the enterprise value of the Company. A limitation on the use of Free Cash Flow as a measure of financial performance is that it does not represent the total increase or decrease in the Company's cash balance for the period or the residual cash flows available for discretionary expenditures due to the fact that the measure does not deduct the payments required for debt service and other obligations or payments made for business acquisitions. These non-GAAP financial measures are used by management in addition to and in conjunction with the results presented in accordance with GAAP.   These non-GAAP financial measures should not be relied upon to the exclusion of GAAP financial measures. Non-GAAP financial measures provide an additional way of viewing aspects of our operation that, when viewed with our GAAP results and the accompanying reconciliations to the corresponding GAAP financial measures, provide an understanding of certain factors and trends relating to our business.   The Company strongly encourages investors to review our financial statements and publicly filed reports in their entirety and to not rely on any single financial measure.CONTACT: Mark Thomson, CFO, (757) 766-4224