Measurement Specialties Announces First Quarter Results; Posts Net
Income of $3.3 Million FAIRFIELD, N.J., Aug. 4
/PRNewswire-FirstCall/ -- Measurement Specialties, Inc. (AMEX:MSS),
a designer and manufacturer of sensors and sensor-based consumer
products, today reported financial results for its first fiscal
quarter ended June 30, 2004. The Company reported income from
continuing operations for the three months ended June 30, 2004 of
$3.3 million, or $0.23 per diluted share, as compared to $3.7
million, or $0.29 per diluted share for the same period last year.
Proforma Non-GAAP income from continuing operations for the three
months ended June 30, 2003 (which excludes a charge for non-cash
equity based compensation and includes an adjustment to the income
tax provision to present the income on fully taxed basis) was $2.9
million, or $0.23 per diluted share. Please refer to the notes and
reconciliation regarding Non-GAAP financial measures contained in
this release. Mr. Frank Guidone, Company CEO commented, "Our
consolidated results were generally in line with our expectations,
and ahead of analyst estimates, with the Sensor division performing
slightly ahead of plan, and the Consumer division below. At $17.1
million, Sensor division posted record net sales for the quarter,
and exceeded our 15% growth expectations. We are comfortable with
our earlier guidance on net sales for the core business of
approximately $120 million for FY05 (approximately $70 million in
the Sensor division and $50 million in the Consumer division), and
expect the recent acquisitions of Elekon, Entran and Encoder
Devices -- completed in late June and July -- to boost Sensor
revenue by an additional $15 to $17 million in fiscal 2005. This
should yield over 43% growth in the Sensor division for FY05 as
compared to FY04. We had guided toward $19 to $20 million in
pre-tax earnings prior to closing these transactions. With the
additional earnings provided by these acquisitions, we are
increasing our estimate of pre-tax earnings for fiscal 2005 to $21
to $22 million -- prior to realizing potential cost synergies (the
bulk of which will impact FY06). Integration efforts are under way,
and will continue for the next several quarters. We believe the
results this quarter, in terms of organic growth and successful
acquisitions, are consistent with the outlined strategy to
aggressively grow the Sensor division from $60 million in FY04 to
$150 million by FY07. We remain confident in achieving this goal."
For the three months ended June 30, 2004, net sales increased 7.6%
to $28.0 million, as compared to $26.0 million for the three months
ended June 30, 2003. For the three months ended June 30, 2004, net
sales in the Sensor division increased 15.9% to $17.1 million, as
compared to $14.8 million for the three months ended June 30, 2003,
while net sales in the Consumer Products division decreased 3.3% to
$10.9 million for the current fiscal quarter, as compared to $11.2
million for the three months ended June 30, 2003. In the fourth
quarter of fiscal FY04, the Company sold its branded consumer
products business to Conair Corporation. For the three months ended
June 30, 2004, gross profit remained flat at $12.6 million from the
same period last year. For the three months ended June 30, 2004,
the Company reported consolidated gross margin of 44.9%, as
compared to 48.3% for the same period last year. The decrease in
gross margin came largely from the Consumer Products division and
was primarily the result of Conair transaction, which results in
the entire scale business operating at OEM margins (which are
historically lower than retail margins), as well as lower tire
gauge sales. Operating expenses were $8.0 million for the three
months ended June 30, 2004, as compared to $8.5 million for the
three months ended June 30, 2003. Included in the operating expense
for the three months ended June 30, 2003 is a $0.1 million charge
for non-cash equity compensation. For the three months ended June
30, 2003, the Company incurred approximately $0.2 million in
professional fees over those incurred during the same period in the
current year. Continued Guidone "operating expenses were within the
guidance of $7.5 to $8 million per quarter, but slightly higher
than management expectations due to higher than anticipated legal
and accounting fees incurred in the quarter. With the ongoing
Sarbanes-Oxley activities, we expect additional professional fees
through fiscal 2005. Additionally, due to the increased overhead
associated with the acquired companies, we anticipate quarterly
operating expense to increase to approximately $9.5 to $10 million
per quarter. As cost synergies are realized, we would expect
quarterly operating expense to run $9 to $9.5 million per quarter."
The Company will host an investor conference call on Friday, August
6th at 11:00 AM EST to answer questions regarding the quarterly
results reported in our Form 10Q for the three months ended June
30, 2004. To participate, please dial 888 273-9885 prior to the
start time. International callers should dial 612 332-0637. A
recording of the call will be available for 90 days by dialing 800
475-6701 and entering access code 740779. The call will be
simultaneously broadcast over the Internet and available for 90
days thereafter at http://www.vcall.comand/ on the Company's
website at http://www.msiusa.com/. COMPANY CONTACT: FRANK GUIDONE,
CEO - 973 808-3020 INVESTOR/MEDIA CONTACT: AIMEE BOUTCHER - 973
239-2878 Regulation G, "Conditions for Use of Non-GAAP Financial
Measures," promulgated under the Securities and Exchange Act of
1934, as amended, define and prescribe the conditions for use of
certain non-GAAP financial information. We believe that certain of
our financial measures which meet the definition of a non-GAAP
financial measure are important supplemental information to
investors. The Company uses pro forma measures of operating income,
net income, and basic and diluted earnings per share. Typically,
these pro forma measures exclude non-cash equity based compensation
from the Company's statement of operations, as well as non-ordinary
items relating to litigation matters and restructuring charges, and
an adjustment to tax each period on a fully taxed basis. The
non-cash equity based compensation results from warrants issued to
Four Corners Capital Partners LP, a limited partnership of which
Mr. Guidone, our Chief Executive Officer, is a principal. Excluding
these items is useful for illustrating and explaining operating
results and comparisons to prior periods. These items are excluded
from our internal operating plans and measurement of financial
performance, and we believe this is an important measure for
investors to consider in order to better understand the trends in
our operating results. The warrants that comprise the non-cash
compensation have the same basic attributes of an incentive stock
option, for which the Company uses the intrinsic value method
allowed for under Financial Accounting Standards Board Statement
No. 148. Under the intrinsic value method, there is no charge to
the statement of operations for incentive stock options. Because of
the structure of the arrangement with Mr. Guidone, the Company was
not able to issue incentive stock options and, therefore, issued
warrants to Four Corners Capital Partners LP. Although the basic
attributes of the warrants issued are similar to those of incentive
stock options, the intrinsic value method is not acceptable under
generally accepted accounting principles for valuing warrants,
therefore resulting in the non-cash equity based compensation
charge. These non-GAAP financial measures are used 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. These non-GAAP
financial measures provide an additional way of viewing aspects of
our operation that, when viewed with our GAAP results and the
accompanying reconciliation's 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.
Measurement Specialties is a designer and manufacturer of sensors,
and sensor-based consumer products. Measurement Specialties
produces a wide variety of sensors that use advanced technologies
to measure precise ranges of physical characteristics, including
pressure, motion, force, displacement, angle, flow, and distance.
Measurement Specialties uses multiple advanced technologies,
including piezoresistive, application specific integrated circuits
(ASICs), micro-electromechanical systems (MEMS), piezopolymers, and
strain gages to allow their sensors to 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, including but not limited to, statements
regarding non-recurring expenses, and resolution of pending
litigation. Forward looking statements may be identified by such
words or phases "should," "intends," "expects," "will," "continue,"
"anticipate," "estimated," "projected," "may," "we believe," "we
remain confident," "future prospects," or similar expressions. The
forward-looking statements above involve a number of risks and
uncertainties. Factors that might cause actual results to differ
include, but are not limited to, success of any reorganization;
ability to raise additional funds; conditions in the general
economy and in the markets served by the Company; competitive
factors, such as price pressures and the potential emergence of
rival technologies; interruptions of suppliers' operations
affecting availability of component materials at reasonable prices;
timely development and market acceptance, and warranty performance
of new products; success in integrating prior acquisitions; changes
in product mix, costs and yields, fluctuations in foreign currency
exchange rates; uncertainties related to doing business in Hong
Kong and China; and the risk factors listed from time to time in
the Company's SEC reports. 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 issue.
MEASUREMENT SPECIALTIES, INC CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED) For The Three Months Ended June 30, 2004 2003 Net sales
$28,020 $26,041 Cost of goods sold 15,443 13,452 Gross profit
12,577 12,589 Operating expenses (income): Selling, general and
administrative 7,274 7,493 Non-cash equity based compensation -- 73
Research and development 809 906 Customer funded development (95) 0
Restructuring costs -- 0 Total operating expenses 7,988 8,472
Operating income 4,589 4,117 Interest expense, net (11) 165 Other
(income) (9) (7) Income from continuing operations before income
tax 4,609 3,959 Income tax 1,314 288 Income from continuing
operations 3,295 3,671 Discontinued operations: Income from
discontinued units -- 112 Net income $3,295 $3,783 Income per
common share - Basic Income from continuing operations $0.25 $0.31
Income from discontinued units -- 0.01 Net income $0.25 $0.32
Income per common share - Diluted Income from continuing operations
$0.23 $0.29 Income from discontinued units -- 0.01 Net income $0.23
$0.30 Weighted average shares outstanding - Basic 13,267,552
11,952,555 Weighted average shares outstanding - Diluted 14,195,676
12,487,894 MEASUREMENT SPECIALTIES, INC. CONDENSED CONSOLIDATED
BALANCE SHEETS (DOLLARS IN THOUSANDS) (UNAUDITED) June 30, March
31, 2004 2004 ASSETS Current assets: Cash and cash equivalents
$16,092 $19,274 Accounts receivable, trade, net of allowance for
doubtful accounts of $424, and $413 respectively 13,988 14,010
Inventories 13,700 10,170 Deferred income taxes - current 11,627
12,589 Prepaid expenses and other current assets 2,291 3,267 Total
current assets 57,698 59,310 Property and equipment, net 10,641
10,628 Other assets: Goodwill 11,113 4,191 Deferred income taxes
2,214 2,214 Other assets 728 657 14,055 7,062 Total assets $82,394
$77,000 MEASUREMENT SPECIALTIES, INC. CONDENSED CONSOLIDATED
BALANCE SHEETS (DOLLARS IN THOUSANDS) (UNAUDITED) June 30, March
31, 2004 2004 LIABILITIES AND SHAREHOLDERS' EQUITY Current
liabilities: Accounts payable $9,943 $7,919 Accrued compensation
1,842 3,224 Accrued expenses and other current liabilities 6,609
4,686 Accrued litigation expenses -- 2,100 Total current
liabilities 18,394 17,929 Other liabilities: Deferred Gain on sale
of assets 6,194 6,744 Notes from Elekon acquisition 2,250 -- Other
liabilities 1,302 1,487 Total liabilities 28,140 26,160
Shareholders' equity Serial preferred stock; 221,756 shares
authorized; none outstanding Common stock, no par; 20,000,000
shares authorized; 13,257,084 and 13,282,874 shares issued and
outstanding, respectively 5,502 5,502 Additional paid-in capital
53,627 53,509 Accumulated deficit (4,802) (8,097) Accumulated other
comprehensive loss (73) (74) Total shareholders' equity 54,254
50,840 $82,394 $77,000 The following table shows the Company's
non-GAAP results reconciled to the Generally Accepted Accounting
Principles ("GAAP") Consolidated Statements of Operations. The
Company's non-GAAP results do not include non-cash compensation
(please refer to the note titled "Non-Cash Compensation" under the
Critical Accounting Policies Section of the Management Discussion
and Analysis in the Company's Quarterly Report on Form 10Q for the
fiscal quarter ended June 30, 2004). For The Three Months Ended
June 30, 2004 2003 Non-GAAP Income: Income from continuing
operations: $3,295 $3,671 Non-GAAP Adjustments: Non-cash
compensation -- 73 Tax provision adjustment (1) -- (861) Non-GAAP
income from continuing operations 3,295 2,883 Income from
discontinued units -- 112 Non-GAAP net income $3,295 $2,995
Non-GAAP Income per common share - Basic Non-GAAP income from
continuing operations $0.25 $0.24 Income from discontinued units --
0.01 Non-GAAP net income $0.25 $0.25 Non-GAAP Income per common
share - Diluted Non-GAAP income from continuing operations $0.23
$0.23 Income from discontinued units -- 0.01 Non-GAAP net income
$0.23 $0.24 Weighted average shares outstanding - Basic 13,267,552
11,952,555 Weighted average shares outstanding - Diluted 14,195,676
12,487,894 (1) This non-GAAP measure adjusts the Company's as
reported tax provisions for three months ended June 30, 2003 to
provide for taxes at the expected effective tax rate of 28.5%.
Contact: Frank Guidone, CEO (973) 808-3020 Boutcher & Boutcher
Investor Relations Aimee Boutcher (973) 239-2878 DATASOURCE:
Measurement Specialties, Inc. CONTACT: Frank Guidone, CEO,
Measurement Specialties, Inc., +1-973-808-3020; or Investor
Relations - Aimee Boutcher, Boutcher & Boutcher,
+1-973-239-2878, for Measurement Specialties, Inc. Web site:
http://www.msiusa.com/ http://www.vcall.comand/
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