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Press release from GlobeNewswire (a Nasdaq OMX company)

Measurement Specialties Announces Record Results for the First Quarter Ended June 30, 2012

Wednesday, August 01, 2012

Measurement Specialties Announces Record Results for the First Quarter Ended June 30, 201213:00 EDT Wednesday, August 01, 2012HAMPTON, Va., Aug. 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 months ended June 30, 2012. The Company reported an increase in consolidated net sales of $11.4 million, or 14.8%, to $88.6 million for the three months ended June 30, 2012, as compared to the corresponding period of last year. Excluding sales attributed to the Eureka, Celesco, Gentech and Cosense acquisitions of approximately $10.3 million for the three months ended June 30, 2012, organic sales increased $1.1 million or approximately 1.5%. If the average U.S. dollar / Euro exchange rate had not changed during the three months ended June 30, 2012 as compared to the three months ended June 30, 2011, the Company's organic sales would have been higher by approximately $2.3 million. For the three months ended June 30, 2012, the Company reported net income of $8.6 million, or $0.53 per diluted share, as compared to net income of $8.0 million, or $0.50 per diluted share, for the same period last year. Frank Guidone, Company CEO commented, "We are pleased with our first quarter financial results. Consolidated net sales were slightly ahead of our guidance at $88.6 million, and we delivered a record high adjusted EBITDA at $17.2 million (or 19.4%). Given the sluggish macro-environment, we were happy with our three and six month book to bill ratio of 1.01. We are projecting second quarter sales of approximately $89 million, basically flat to Q1, which reflects modest improvement over Q1 offset by a weaker Euro. Higher expenses driven by increased wage (merit increases took effect in July) and higher stock compensation expense will negatively impact second quarter EPS; however, we expect EBITDA to improve slightly. The Purchasing Managers' Index now shows a decline in all geographic regions which suggests continued headwind with respect to organic sales; accordingly, we are carefully managing expenses. Nevertheless – based on our visibility at this time – we remain confident that new business will drive modest growth in our second half, supporting our full year sales guidance of $360 million."    Adjusted EBITDA is a non-GAAP financial measure.  Please refer to the notes and reconciliation regarding Non-GAAP financial measures contained in this release. On August 1, 2012, the Company filed its Form 10-Q for the three months ended June 30, 2012.  Please refer to the Management's Discussion and Analysis of Financial Condition and Results of Operations included in the Company's Form 10-Q for a more complete discussion of sales, margin and expenses. The Company will host an investor conference call on Thursday, August 2, 2012 at 11:00 AM Eastern to answer questions regarding the first quarter results reported in our Form 10-Q for the quarter ended June 30, 2012.  U.S. dialers: (877) 407-9210; International dialers (201) 689-8049.  Interested parties may also listen via the Internet at:  The call will be available for replay for 30 days by dialing (877) 660-6853 (U.S. dialers); (201) 612-7415 (International dialers), and entering the replay pass code #286 and conference ID# 398069, and on 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 SUBSIDIARIESCONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS(UNAUDITED)      Three Months Ended June 30,(Amounts in thousands, except share and per share amounts)20122011Net sales  $ 88,613  $ 77,184 Cost of goods sold  51,819  44,776 Gross profit  36,794  32,408 Selling, general, and administrative expenses  25,073  22,059 Operating income  11,721  10,349 Interest expense, net  722  579 Foreign currency exchange loss   39  399 Equity income in unconsolidated joint venture  (229)  (137) Other expense  34  47 Income before income taxes  11,155  9,461 Income tax expense  2,566  1,453Net income $ 8,589  $ 8,008             Earnings per common share - Basic:     Net income - Basic  $ 0.56  $ 0.53 Net income - Diluted  $ 0.53  $ 0.50       Weighted average shares outstanding - Basic  15,318  15,043 Weighted average shares outstanding - Diluted  16,155  16,028    MEASUREMENT SPECIALTIES, INC. AND SUBSIDIARIESCONSOLIDATED CONDENSED BALANCE SHEETS(UNAUDITED)      (Amounts in thousands)June 30, 2012March 31, 2012      ASSETS          Current assets:     Cash and cash equivalents  $ 28,604  $ 32,725 Accounts receivable trade, net of allowance for doubtful accounts of $786 and $766, respectively  52,478  49,315 Inventories, net  57,952  57,704 Deferred income taxes, net  1,621  1,626 Prepaid expenses and other current assets  5,084  5,229 Other receivables  1,082  2,967 Asset held for sale  1,429  1,429 Total current assets  148,250  150,995       Property, plant and equipment, net  61,409  60,484 Goodwill  149,348  144,455 Acquired intangible assets, net  52,609  49,378 Deferred income taxes, net  3,516  3,613 Investment in unconsolidated joint venture  2,570  3,038 Other assets  6,734  6,244Total assets $ 424,436  $ 418,207    MEASUREMENT SPECIALTIES, INC.CONSOLIDATED BALANCE SHEETS(UNAUDITED)      (Amounts in thousands, except share amounts)June 30, 2012March 31, 2012      LIABILITIES AND SHAREHOLDERS' EQUITY          Current liabilities:     Short-term debt  $ --   $ 1,867 Current portion of long-term debt  126  123 Current portion of capital lease obligations  27  30 Promissory notes payable  1,480  --  Accounts payable  28,904  31,879 Accrued expenses  4,510  5,116 Accrued compensation  9,104  8,755 Income taxes payable  2,358  3,124 Deferred income taxes, net  354  375 Other current liabilities  2,749  3,201 Total current liabilities  49,612  54,470       Revolver  83,713  80,251 Long-term debt, net of current portion  20,639  20,711 Capital lease obligations, net of current portion  23  30 Acquisition earn-out contingencies  4,355  4,317 Deferred income taxes, net  10,264  10,184 Other liabilities  5,081  5,227 Total liabilities  173,687  175,190      Equity:     Serial preferred stock; 221,756 shares authorized; none outstanding  --   --  Common stock, no par; 25,000,000 shares authorized; 15,381,904 shares and 15,297,151 shares issued and outstanding  --   --  Additional paid-in capital  104,107  101,435 Retained earnings  137,602  129,013 Accumulated other comprehensive income  9,040  12,569 Total equity  250,749  243,017 Total liabilities and shareholders' equity $ 424,436  $ 418,207      MEASUREMENT SPECIALTIES, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)        Three months ended June 30,(Amounts in thousands)20122011 Cash flows from operating activities:     Net income $ 8,589  $ 8,008 Adjustments to reconcile net income to net cash provided by operating activities:   Depreciation and amortization  4,372  3,520 Non-cash equity based compensation  856  1,245 Acquistion earn-out fair value adjustment   90  --  Deferred income taxes  105  (612) Equity income in unconsolidated joint venture  (229)  (137) Unconsolidated joint venture distributions  825  --  Net change in operating assets and liabilities:     Accounts receivable, trade  (4,420)  59 Inventories  (1,180)  (1,560) Prepaid expenses, other current assets and other receivables  1,444  1,897 Other assets  (513)  (493) Accounts payable  (2,415)  411 Accrued expenses, accrued compensation, other current and other liabilities  (378)  (2,663) Income taxes payable  (738)  (733)Net cash provided by operating activities 6,408  8,942 Cash flows from investing activities:     Purchases of property and equipment  (3,900)  (2,576) Acquisition of business, net of cash acquired, and acquired intangible assets  (10,013)  -- Net cash used in investing activities (13,913) (2,576) Cash flows from financing activities:     Borrowings from revolver and short-term debt  7,797  --  Repayments of revolver and capital leases  (5,806)  (2,027) Repayments of long-term debt  (24)  (42) Proceeds from exercise of options and employee stock purchase plan  1,228  2,571 Excess tax benefit from exercise of stock options  588  306Net cash provided by (used in) financing activities 3,783  808             Net change in cash and cash equivalents  (3,722)  7,174 Effect of exchange rate changes on cash  (399)  345 Cash, beginning of year  32,725  20,860Cash, end of period $ 28,604  $ 28,379 Reconciliation of Non-GAAP Financial Measures (Unaudited):    Three Months Ended June 30,    20122011      (In thousands, except percentages)               Income from continuing operations, net of income taxes    $ 8,589  $ 8,008         Add Back:       Interest    722  579 Provision for income taxes    2,566  1,453 Depreciation and amortization    4,372  3,520 Foreign currency exchange loss    39  399 Non-cash equity based compensation    856  1,245 ITAR legal fees and acquisition related professional fees    11  73Adjusted EBITDA   $ 17,155  $ 15,277 As % of Net Sales   19.4% 19.8%        Free Cash Flow       Net cash provided by operating activities from continuing operations    $ 6,408  $ 8,942 Purchases of property and equipment    (3,900)  (2,576)Free Cash Flow   $ 2,508  $ 6,366 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