EDEN PRAIRIE, Minn., May 6, 2019 /PRNewswire/ -- MTS Systems Corporation (Nasdaq: MTSC), a leading global supplier of high-performance test systems, motion simulators and sensors, today reported financial results for its fiscal year 2019 second quarter ended March 30, 2019.

MTS Systems Corporation. (PRNewsFoto/MTS Systems Corporation)

SECOND QUARTER FINANCIAL AND OPERATING HIGHLIGHTS

  • Revenue of $233.0 million, reflecting the highest revenue-producing quarter in the history of MTS, including record revenue in both Test & Simulation and Sensors
  • GAAP diluted earnings per share of $0.73, an increase of $0.29 or 66% year-over-year
  • Net income margins of 6.1% for the quarter, a year-over-year increase of 167 basis points
  • Adjusted EBITDA margins of 16.1% for the quarter, a year-over-year increase of 172 basis points
  • Backlog of $493.5 million, a year-over-year increase of 40%
  • Declared 149th consecutive quarterly dividend

FINANCIAL TABLE


Three Months Ended


Six Months Ended

(in thousands, except per share data - unaudited)

March 30,
 2019


March 31,
 2018


March 30,
 2019


March 31,
 2018

Revenue

$

233,046



$

191,323



$

436,227



$

385,485


Revenue % increase (decrease)1

21.8

%


(1.1)

%


13.2

%


(1.8)

%

Gross margin

37.5

%


39.1

%


38.0

%


39.6

%

Operating margin

10.4

%


8.7

%


9.7

%


8.6

%

Earnings before taxes

$

17,076



$

10,176



$

28,273



$

19,646


Net income

14,160



8,438



24,661



41,589


Diluted earnings per share

0.73



0.44



1.27



2.16


Adjusted diluted earnings per share2

0.76



0.45



1.36



2.18


Adjusted EBITDA2

37,554



27,526



67,656



54,404


Cash and cash equivalents, end of period

74,122



84,378






Backlog, end of period

493,468



352,172






Total debt, end of period

464,420



409,733








1  

Revenue growth rates in fiscal year 2019 reflect the acquisition of E2M Technologies B.V. that occurred on November 21, 2018.

2   

Refer to the "Non-GAAP Financial Measures" section below for discussion of the calculation of these non-GAAP financial measures.

EXECUTIVE COMMENTARY - DR. JEFF GRAVES, PRESIDENT AND CHIEF EXECUTIVE OFFICER

"Our second quarter performance was strong on virtually all key metrics, as we continue to successfully execute on our growth, diversification and operational efficiency strategies. From a top-line perspective, we delivered over 21% revenue growth, supported by record revenues in both our Test & Simulation and Sensors businesses.

From a profitability perspective, we continue to focus intensely on our cost structure and operational efficiency initiatives, which contributed to a 68% increase in net income, with margins rising to 6.1% for the quarter, and a 36% increase in Adjusted EBITDA, equating to a margin of 16.1% for the quarter. This strong performance supported our continuing investments in the business, further deleveraging of our balance sheet and a continued return of cash to our shareholders through our dividend.

Given the volume and quality of the orders we experienced in the first half of our fiscal year and our significant backlog position, we remain confident in our ability to deliver on our strategy of growth and expanded profitability in fiscal year 2019 and beyond."

HIGHLIGHTS FOR THE 2019 SECOND FISCAL QUARTER

Revenue

Revenue was $233.0 million, up 21.8% compared to the same prior year period, driven by record revenue in Test & Simulation, which included equipment volume growth in all sectors, a full quarter contribution from the acquisition of E2M, which closed in the first quarter of fiscal year 2019, and continued growth in our Test services activities. Sensors experienced broad demand across all market sectors, as well as the initial ramp-up in volume associated with the U.S. Department of Defense contract, which combined to deliver a record revenue quarter for this business as well.

Orders

Test & Simulation orders for the quarter were $132.1 million, up 25.6% compared to the same prior year period, driven primarily by a large order in the ground vehicles sector of our Test & Simulation business, increased demand across the structures and simulation sectors, and strong growth in the Americas region.

Sensors orders for the quarter were $79.4 million, a 5.7% decrease over the same prior year period. This decline was primarily driven by weakness in the European and Asian regions specific to our Sensors position and systems sectors, partially offset by solid demand in the Americas region of our Sensors position sector and orders growth in our Sensors industrial sector from a slight rebound in the energy market.

Backlog

Backlog remained very strong at $493.5 million, up 40.1% from the same prior year period. Sequentially from the first quarter of fiscal year 2019, backlog was down 4.1% from our all-time high of $514.7 million as we saw a high-level of conversion to revenue on outstanding projects within the quarter.

Earnings Before Taxes

Earnings before taxes of $17.1 million was up $6.9 million compared to the same prior year period. This earnings increase was driven by growth in Test & Simulation gross profit, partially offset by higher operating expenses in both businesses and $0.5 million acquisition inventory fair value adjustment related to the acquisition of E2M.

Net Income and Diluted Earnings Per Share

Diluted earnings per share was $0.73 compared to $0.44 in the same prior year period on net income of $14.2 million and $8.4 million, respectively. The $0.29 increase was primarily driven by growth in Test & Simulation gross profit. Second quarter of fiscal year 2019 results were impacted by $0.03 of non-recurring costs associated with the acquisition inventory fair value adjustment and acquisition-related expenses. Similarly, results for the second quarter of fiscal year 2018 include a $0.01 impact for non-recurring restructuring expense. Adjusting for these items, adjusted diluted earnings per share was $0.76 for the second quarter of fiscal 2019, and $0.45 for the same period in the prior year.

Adjusted EBITDA

Adjusted EBITDA grew to $37.6 million in the second quarter of fiscal year 2019, up 36.4% compared to the same prior year period and 24.8% sequentially from the first quarter of fiscal year 2019. This growth was primarily due to significantly higher Test & Simulation gross profit and a full quarter contribution from the acquisition of E2M, partially offset by higher operating expenses in both Test & Simulation and Sensors. A reconciliation of Adjusted EBITDA, a non-GAAP financial measure, to net income, the most directly comparable GAAP financial measure, is provided in Exhibit D of this earnings release.

Capital Structure

During the quarter, our total debt balance decreased by $2.6 million. With a strong backlog and positive cash flow forecast, we expect to continue to pay down our debt, thus continuing to reduce our leverage ratio, between now and the end of fiscal year 2019.

Dividend

The Board of Directors declared a quarterly dividend of $0.30 per share. The dividend was payable on April 1, 2019 to shareholders of record as of the close of business on March 18, 2019. This was our 149th consecutive quarterly dividend.

OUTLOOK

Test & Simulation Business

Looking forward, our strong performance during the first half of fiscal year 2019 supports our positive outlook for our Test & Simulation business. From a revenue perspective, our near-record backlog at mid-year reflects strong sales momentum driven by the rapidly expanding use of advanced materials, such as carbon-fiber composites, the adoption of additive manufacturing methods for net-shape component fabrications, and the rapidly increasing complexity of ground and air vehicles which requires new simulation methods for determining product performance and life. Our energy and infrastructure markets remain robust, driven by continued growth in wind power and advanced building designs which are more resistant to damage from earthquakes, sea and storm events. In addition, the acquisition of E2M diversifies us further into flight simulation, entertainment and other advanced simulation markets that further expand our growth opportunities.

In addition to our exciting growth opportunities, we continue to invest in operational efficiency initiatives to improve profitability, and in new products and technologies to drive margin expansion and to generate continued strong demand for Test & Simulation products and services.

Sensors Business

Strong demand in our Sensors business is anticipated to continue during fiscal year 2019 across all sectors, driven by accelerating new product introductions across all major markets and geographies, and expanded opportunities associated with the U.S. Department of Defense. This combination of positive factors, including full production ramp-up of sensors for the U.S. military, is expected to provide double digit top-line growth for the second half of the fiscal year, along with Adjusted EBITDA margin expansion for the Sensors business for the remainder of fiscal year 2019.

Consolidated

Based on these factors, we are confident in our outlook for fiscal year 2019 and are maintaining our full year guidance as:

Metric


Current Outlook

Revenue


$830 million to $870 million

Adjusted EBITDA


$122 million to $142 million

Diluted earnings per share


$2.30 to $2.60

Adjusted diluted earnings per share


$2.42 to $2.72

The above outlook includes:

  • $8.5 million to $11.0 million for stock-based compensation, restructuring expenses, acquisition-related expenses and acquisition fair value inventory adjustment;
  • Our acquisition of E2M, in addition to the slightly positive effects of the implementation of the new revenue recognition standard as compared to the previous standard; and
  • An anticipated effective tax rate, excluding discrete tax items, of 15-18% for fiscal year 2019.

A reconciliation of Adjusted EBITDA and Adjusted diluted earnings per share, non-GAAP financial measures, to net income and diluted earnings per share, the most directly comparable GAAP financial measures, respectively, for the above outlook is included in Exhibits E and F of this earnings release, respectively.

SECOND QUARTER CONFERENCE CALL

As announced on April 22, 2019, a conference call will be held on May 7, 2019 (tomorrow), at 10:00 a.m. ET (9:00 a.m. CT). Dr. Jeffrey A. Graves, President and Chief Executive Officer, and Brian T. Ross, Senior Vice President and Chief Financial Officer, will host the call, which will include a question and answer session after prepared remarks.

Call toll free +1-800-667-5617 (international toll +1-334-323-0509) and reference the conference pass code 1389363. Telephone replay will be available at 1:00 p.m. ET following the call until 1:00 p.m. ET, May 14, 2019. Call toll free +1-888-203-1112 and reference the conference pass code 1389363.

A transcript of the call can also be accessed from the MTS website at http://investor.mts.com beginning on May 8, 2019.

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 3,400 employees as of September 29, 2018 and revenue of $778 million for the fiscal year ended September 29, 2018. Additional information on MTS can be found at www.mts.com.

NON-GAAP FINANCIAL MEASURES

We believe that disclosing adjusted diluted earnings per share, which is diluted earnings per share excluding the impact from restructuring expenses, acquisition-related expenses and the acquisition inventory fair value adjustment 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 restructuring expenses, acquisition-related expenses and the acquisition inventory fair value adjustment to net income 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, restructuring expenses, acquisition-related expenses and the acquisition inventory 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, restructuring expenses, acquisition-related expenses and the acquisition inventory 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, E, F and G 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. Statements made under the heading "Outlook" are forward-looking statements, and words such as "may," "will," "should," "expects," "intends," "projects," "plans," "believes," "estimates," "targets," "anticipates," and similar expressions identify forward-looking statements in other parts of 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 Sensors and Test & Simulation sectors 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, those 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.


 MTS SYSTEMS CORPORATION

 Consolidated Statements of Income

 (unaudited - in thousands, except per share data)










Three Months Ended


Six Months Ended


March 30,
 2019


March 31,
 2018


March 30,
 2019


March 31,
 2018









Revenue








Product

$

206,690



$

165,453



$

381,769



$

334,694


Service

26,356



25,870



54,458



50,791


Total revenue

233,046



191,323



436,227



385,485


Cost of sales








Product

129,579



101,133



237,746



201,627


Service

16,117



15,365



32,826



31,105


Total cost of sales

145,696



116,498



270,572



232,732


Gross profit

87,350



74,825



165,655



152,753


 Gross margin

37.5

%


39.1

%


38.0

%


39.6

%









Operating expenses








Selling and marketing

33,395



30,597



65,484



62,625


General and administrative

22,105



18,992



43,183



39,554


 Research and development

7,676



8,626



14,848



17,467


 Total operating expenses

63,176



58,215



123,515



119,646










Income from operations

24,174



16,610



42,140



33,107


 Operating margin

10.4

%


8.7

%


9.7

%


8.6

%









Interest expense, net

(7,368)



(6,708)



(14,186)



(13,512)


Other income (expense), net

270



274



319



51










Income before income taxes

17,076



10,176



28,273



19,646


Income tax provision (benefit)

2,916



1,738



3,612



(21,943)


Net income

$

14,160



$

8,438



$

24,661



$

41,589










Earnings per share








 Basic








 Earnings per share

$

0.74



$

0.44



$

1.28



$

2.17


 Weighted average common shares outstanding

19,251



19,150



19,234



19,137










 Diluted








 Earnings per share

$

0.73



$

0.44



$

1.27



$

2.16


 Weighted average common shares outstanding

19,441



19,273



19,393



19,258










Dividends declared per share

$

0.30



$

0.30



$

0.60



$

0.60


 


 MTS SYSTEMS CORPORATION

 Condensed Consolidated Balance Sheets

 (unaudited - in thousands)






March 30,
 2019


September 29,
 2018

 ASSETS








 Current assets




 Cash and cash equivalents

$

74,122



$

71,804


 Accounts receivable, net

117,349



122,243


 Unbilled accounts receivable, net

71,175



70,474


 Inventories, net

179,071



139,109


 Other current assets

32,307



24,572


 Total current assets

474,024



428,202






 Property and equipment, net

88,126



90,269






 Goodwill

403,425



369,275


 Intangible assets, net

287,101



246,138


 Other long-term assets

7,958



5,512


 Total assets

$

1,260,634



$

1,139,396






 LIABILITIES AND SHAREHOLDERS' EQUITY








 Current liabilities




 Current maturities of long-term debt, net

$

28,076



$

32,738


 Accounts payable

39,941



47,886


 Advance payments from customers

102,033



80,131


 Other accrued liabilities

89,453



78,358


 Total current liabilities

259,503



239,113






 Long-term debt, less current maturities, net

436,344



355,640


 Other long-term liabilities

79,733



66,711


 Total liabilities

775,580



661,464






 Shareholders' equity




 Common stock, $0.25 par; 64,000 shares authorized:




17,900 and 17,856 shares issued and outstanding as




of March 30, 2019 and September 29, 2018, respectively

4,475



4,464


 Additional paid-in capital

176,918



171,407


 Retained earnings

308,279



300,585


 Accumulated other comprehensive income (loss)

(4,618)



1,476


 Total shareholders' equity

485,054



477,932


 Total liabilities and shareholders' equity

$

1,260,634



$

1,139,396


 


 MTS SYSTEMS CORPORATION

Condensed Consolidated Statements of Cash Flows

 (unaudited - in thousands)










Three Months Ended


Six Months Ended


March 30,
 2019


March 31,
 2018


March 30,
 2019


March 31,
 2018









Cash Flows from Operating Activities








Net income

$

14,160



$

8,438



$

24,661



$

41,589


Adjustments to reconcile net income to net cash provided by (used in) operating activities








Stock-based compensation

2,895



1,668



4,689



3,290


Fair value adjustment to acquired inventory

539





984




Depreciation and amortization

9,508



8,612



18,468



17,348


(Gain) loss on sale or disposal of property and equipment

349



92



510



159


Amortization of financing fees

1,039



1,316



2,099



2,626


Deferred income taxes

15



(302)



(1,243)



(30,654)


Other

659



963



1,087



1,687


Changes in operating assets and liabilities

(9,126)



7,248



(20,586)



1,213


Net Cash Provided by (Used in) Operating Activities

20,038



28,035



30,669



37,258










Cash Flows from Investing Activities








Purchases of property and equipment

(5,576)



(2,567)



(9,349)



(5,368)


Proceeds from sale of property and equipment





10



69


Purchases of business, net of cash acquired

(3,794)





(81,826)




Other



823



(285)



823


Net Cash Provided by (Used in) Investing Activities

(9,370)



(1,744)



(91,450)



(4,476)










Cash Flows from Financing Activities








Proceeds from issuance of long-term debt





80,391




Payments on financing arrangements, net

(2,664)



(33,550)



(6,783)



(50,447)


Cash dividends

(5,365)



(5,337)



(10,724)



(10,667)


Proceeds from exercise of stock options and employee stock purchase plan

663



533



701



745


Payments to purchase and retire common stock

(42)



(13)



(398)



(757)


Net Cash Provided by (Used in) Financing Activities

(7,408)



(38,367)



63,187



(61,126)










Effect of Exchange Rate Changes on Cash and Cash Equivalents

424



2,383



(88)



3,989


Cash and Cash Equivalents








Increase (decrease) during the period

3,684



(9,693)



2,318



(24,355)


Balance, beginning of period

70,438



94,071



71,804



108,733


Balance, End of Period

$

74,122



$

84,378



$

74,122



$

84,378


 


Exhibit A

MTS SYSTEMS CORPORATION

Segment Financial Information

(unaudited - in thousands)














Three Months Ended




March 30,
 2019


March 31,
 2018


% Variance

Test & Simulation Segment






Revenue

$

151,032



$

110,238



37

%

Cost of sales

103,742



76,011



36

%

Gross profit

47,290



34,227



38

%

Gross margin

31.3

%


31.0

%









Operating expenses

34,606



30,932



12

%







Income from operations

$

12,684



$

3,295



285

%







Sensors Segment






Revenue

$

82,375



$

81,542



1

%

Cost of sales

42,301



40,922



3

%

Gross profit

40,074



40,620



(1)

%

Gross margin

48.6

%


49.8

%









Operating expenses

28,570



27,283



5

%







Income from operations

$

11,504



$

13,337



(14)

%







Intersegment Eliminations






Revenue

$

(361)



$

(457)




Cost of sales

(347)



(435)




Gross profit

(14)



(22)










Income (loss) from operations

$

(14)



$

(22)










Total Company






Revenue

$

233,046



$

191,323



22

%

Cost of sales

145,696



116,498



25

%

Gross profit

87,350



74,825



17

%

Gross margin

37.5

%


39.1

%









Operating expenses

63,176



58,215



9

%







Income from operations

$

24,174



$

16,610



46

%

 


Exhibit B

MTS SYSTEMS CORPORATION

Reconciliation of Earnings Per Share Excluding Restructuring, Acquisition-Related

and Acquisition Inventory Fair Value Adjustment Expenses

(unaudited - in thousands, except per share data)


















Three Months Ended


March 30, 2019


March 31, 2018


Pre-Tax

Tax

Net


Pre-Tax

Tax

Net

Net income

$

17,076


$

2,916


$

14,160



$

10,176


$

1,738


$

8,438


Restructuring expenses 1





362


92


270


Acquisition-related expenses 2

262


55


207






Acquisition inventory fair value adjustment 1

539


81


458






Adjusted net income 3

$

17,877


$

3,052


$

14,825



$

10,538


$

1,830


$

8,708










Weighted average diluted common shares outstanding



19,441





19,273










Diluted earnings per share

$

0.88


$

0.15


$

0.73



$

0.53


$

0.09


$

0.44


Impact of restructuring expenses





0.02


0.01


0.01


Impact of acquisition-related expenses

0.01



0.01






Impact of acquisition inventory fair value adjustment

0.03


0.01


0.02






Adjusted diluted earnings per share3

$

0.92


$

0.16


$

0.76



$

0.55


$

0.10


$

0.45


















In determining the tax impact of restructuring expenses and acquisition inventory fair value adjustment, we applied the statutory rate in effect for each jurisdiction where the expenses were incurred.









2   In determining the tax impact of acquisition-related expenses, we applied a U.S. effective income tax rate before discrete items to these expenses.









3  Denotes non-GAAP financial measure.

 


Exhibit C

MTS SYSTEMS CORPORATION

Reconciliation of Earnings Per Share Excluding Restructuring, Acquisition-Related

and Acquisition Inventory Fair Value Adjustment Expenses

(unaudited - in thousands, except per share data)


















Six Months Ended


March 30, 2019


March 31, 2018


Pre-Tax

Tax

Net


Pre-Tax

Tax

Net

Net income

$

28,273


$

3,612


$

24,661



$

19,646


$

(21,943)


$

41,589


Restructuring expenses 1

130


33


97



608


154


454


Acquisition-related expenses 2

1,035


217


818






Acquisition inventory fair value adjustment 1

984


148


836






Adjusted net income 3

$

30,422


$

4,010


$

26,412



$

20,254


$

(21,789)


$

42,043










Weighted average diluted common shares outstanding



19,393





19,258










Diluted earnings per share

$

1.46


$

0.19


$

1.27



$

1.02


$

(1.14)


$

2.16


Impact of restructuring expenses

0.01



0.01



0.03


0.01


0.02


Impact of acquisition-related expenses

0.05


0.01


0.04






Impact of acquisition inventory fair value adjustment

0.05


0.01


0.04






Adjusted diluted earnings per share3

$

1.57


$

0.21


$

1.36



$

1.05


$

(1.13)


$

2.18


















In determining the tax impact of restructuring expenses and acquisition inventory fair value adjustment, we applied the statutory rate in effect for each jurisdiction where the expenses were incurred.









2   In determining the tax impact of acquisition-related expenses, we applied a U.S. effective income tax rate before discrete items to these expenses.









3  Denotes non-GAAP financial measure.

 


Exhibit D

MTS SYSTEMS CORPORATION

Reconciliation of EBITDA and Adjusted EBITDA to Net Income

(unaudited - in thousands)


















Three Months Ended


Six Months Ended


March 30, 2019


March 31, 2018


March 30, 2019


March 31, 2018

Net income

$

14,160



$

8,438



$

24,661



$

41,589


Net income margin

6.1

%


4.4

%


5.7

%


10.8

%









Income tax provision (benefit)

2,916



1,738



3,612



(21,943)


Interest expense, net

7,368



6,708



14,186



13,512


Depreciation and amortization

9,508



8,612



18,468



17,348


EBITDA 1

33,952



25,496



60,927



50,506










Stock-based compensation

2,895



1,668



4,689



3,290


Restructuring expenses



362



130



608


Acquisition-related expenses 2

168





926




Acquisition inventory fair value adjustment

539





984




Adjusted EBITDA 1

$

37,554



$

27,526



$

67,656



$

54,404


Adjusted EBITDA margin 1,3

16.1

%


14.4

%


15.5

%


14.1

%









1  Denotes non-GAAP financial measure.
















2  Acquisition-related expenses were adjusted to exclude stock-based compensation that is otherwise included in the stock-based compensation line.









3  Adjusted EBITDA was divided by revenue when calculating the Adjusted EBITDA margin.

 


Exhibit E

MTS SYSTEMS CORPORATION

Free Cash Flow

(unaudited - in thousands)


















Three Months Ended


Six Months Ended


March 30, 2019


March 31, 2018


March 30, 2019


March 31, 2018

Net Cash Provided by (Used in) Operating Activities

$

20,038



$

28,035



$

30,669



$

37,258


Purchases of property and equipment

(5,576)



(2,567)



(9,349)



(5,368)


Proceeds from sale of property and equipment





10



69


Free cash flow1

$

14,462



$

25,468



$

21,330



$

31,959


















1  Denotes non-GAAP financial measure.







 


Exhibit F

MTS SYSTEMS CORPORATION

Reconciliation of EBITDA and Adjusted EBITDA to Net Income - Outlook

(unaudited - in thousands)








Twelve Months Ending



September 28, 2019


Low

High

Net income

$

44,500


$

50,000


Income tax provision (benefit)

7,000


11,000


Interest expense, net

26,000


28,000


Depreciation and amortization

36,000


42,000


EBITDA1

113,500


131,000





Stock-based compensation and non-recurring expenses2

8,500


11,000


Adjusted EBITDA1

$

122,000


$

142,000








1  Denotes non-GAAP financial measure.




2  Includes pre-tax forecast expenses for stock-based compensation, restructuring expenses, acquisition-related expenses and acquisition inventory fair value adjustment.

 


Exhibit G

MTS SYSTEMS CORPORATION

Reconciliation of Diluted Earnings per Share and Adjusted Diluted Earnings per Share - Outlook

(unaudited - in thousands)










Twelve Months Ending


September 28, 2019


Low


High

Net income1

$

44,500



$

50,000


Non-recurring expenses 2

2,250



2,300


Adjusted net income 3

$

46,750



$

52,300






Weighted average diluted common shares outstanding

19,350



19,250






Diluted earnings per share

$

2.30



$

2.60


Impact of non-recurring expenses2

0.12



0.12


Adjusted diluted earnings per share

$

2.42



$

2.72










Refer to Exhibit F for tax impact on net income guidance.





2  Includes forecast expenses for restructuring expenses, acquisition-related expenses and acquisition inventory fair value adjustment.





3  Applied anticipated tax rate, excluding discrete tax items, of approximately 15-18%.

 

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SOURCE MTS Systems Corporation

Copyright 2019 PR Newswire

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