HAMPTON, Va., Aug. 6, 2014 (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, 2014.
The Company reported an increase in consolidated net sales of $13.6 million, or 13.5%, to $114.1 million for the three months ended June 30, 2014, as compared to the same period last year. Excluding sales attributed to the Sensotherm and Wema acquisitions of approximately $11.5 million for the three months ended June 30, 2014, organic sales increased $2.1 million or approximately 2.1%, as compared to the same period last year.
During the last week of June and the first two weeks of July 2014, the Company experienced work stoppages and work slow-downs at its Shenzhen, China facility (the "work stoppages"). The work stoppages caused a delay in customer shipments and a disruption in operations resulting in labor and overhead variances at the end of the quarter. In addition, due to transaction-related expenses and unrealized foreign exchange losses associated with the Wema acquisition, transaction-related expenses associated with the proposed merger with TE Connectivity Ltd ("TE") announced on June 18, 2014, and restructuring charges associated with acquisitions and facility consolidation expenses, the Company's first quarter financial results were negatively impacted by several charges. The Company reported net income of $1.0 million, or $0.06 per diluted share, for the three months ended June 30, 2014, as compared to net income of $9.2 million, or $0.56 per diluted share, for the same period last year. The Company reported Adjusted Net Income of $9.3 million, or $0.55 per diluted share, for the three months ended June 30, 2014, as compared to Adjusted Net Income of $11.5 million, or $0.70 per diluted share, for the same period last year. A detailed list of adjustments is set forth in the Reconciliation of Non-GAAP Financial Measures table in this release and in our Quarterly Report on Form 10-Q for the three months ended June 30, 2014.
Frank Guidone, Company CEO commented, "There were a number of unusual events in the first quarter that significantly skewed our financial results. Accordingly, we believe our Adjusted EBITDA more accurately reflects the Company's performance. As a percent of sales, Adjusted EBITDA was below our target performance due to the China work stoppage, the impact of Wema (which operates at a lower Adjusted EBITDA margin than our core business) and unfavorable sales mix. However, we expect Adjusted EBITDA margin to improve throughout the fiscal year as we realize savings from previously announced restructuring efforts, integration benefits from Wema and improved overhead absorption from higher sales."
Guidone continued, "Bookings for the quarter were in line with sales, with three- and six-month book-to-bill ratios of 1.00 and 1.04, respectively. The Company recorded record high bookings of $57.5 million in July, which increased the three- and six-month book-to-bill ratios to 1.13 and 1.10, respectively."
Adjusted EBITDA and Adjusted Net Income are non-GAAP financial measures. Please refer to the notes and Reconciliation of Non-GAAP Financial Measures table in this release.
Bookings are orders the Company has accepted from customers and are supported by purchase orders.
On August 6, 2014, the Company filed its Quarterly Report on Form 10-Q for the three months ended June 30, 2014. Please refer to 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.
In light of the pending transaction with TE, the Company will not host an earnings conference call in conjunction with its first quarter results or provide financial guidance.
About Measurement Specialties: Measurement Specialties, Inc. (MEAS) designs and manufactures sensors and sensor-based systems to measure precise ranges of physical characteristics such as measuring pressure, linear/rotary position, force, torque, piezoelectric polymer film sensors, custom microstructures, load cells, vibrations and acceleration, optical absorption, humidity, gas concentration, gas flow rate, temperature, fluid properties and fluid level. MEAS uses multiple advanced technologies - piezoresistive silicon, polymer and ceramic piezoelectric materials, application specific integrated circuits, micro-electromechanical systems ("MEMS"), foil strain gauges, electromagnetic force balance systems, fluid capacitive devices, linear and rotational variable differential transformers, anisotropic magneto-resistive devices, electromagnetic displacement sensors, hygroscopic capacitive structures, ultrasonic measurement systems, optical measurement systems, negative thermal coefficient ("NTC") ceramic sensors, 3-6 DOF (degree of freedom) force/torque structures, complex mechanical resonators, magnetic reed switches, high frequency multipoint scanning algorithms, and high precision submersible hydrostatic level detection – 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: Uncertainties as to the timing of the proposed transaction with TE; The possibility that various closing conditions for the proposed transaction with TE may not be satisfied or waived, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the proposed transaction; The effects of disruption from the proposed transaction with TE making it more difficult to maintain relationships with employees, customers, business partners or governmental entities; Conditions in the general economy, including risks associated with 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 SUBSIDIARIES | ||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||
| UNAUDITED | ||
| Three Months Ended | ||
| June 30, | ||
| (Amounts in thousands, except per share amounts ) | 2014 | 2013 |
| Net sales | $ 114,129 | $ 100,512 |
| Cost of goods sold | 68,401 | 58,618 |
| Gross profit | 45,728 | 41,894 |
| Selling, general, and administrative expenses | 40,945 | 29,282 |
| Operating income | 4,783 | 12,612 |
| Interest expense, net | 1,095 | 914 |
| Foreign currency exchange loss | 2,619 | 154 |
| Equity income in unconsolidated joint venture | (223) | (121) |
| Other income | 74 | (2) |
| Income before income taxes | 1,218 | 11,667 |
| Income tax expense | 250 | 2,506 |
| Net income | $ 968 | $ 9,161 |
| Earnings per common share - Basic: | ||
| Net income - Basic | $ 0.06 | $ 0.59 |
| Net income - Diluted | $ 0.06 | $ 0.56 |
| Weighted average shares outstanding - Basic | 15,956 | 15,632 |
| Weighted average shares outstanding - Diluted | 16,837 | 16,481 |
| MEASUREMENT SPECIALTIES, INC. AND SUBSIDIARIES | ||
| CONSOLIDATED BALANCE SHEETS | ||
| UNAUDITED | ||
| June 30, | March 31, | |
| (Amounts in thousands) | 2014 | 2014 |
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $ 43,996 | $ 49,964 |
| Accounts receivable trade, net of allowance for doubtful accounts of $997 and $827, respectively | 88,757 | 65,451 |
| Inventories, net | 95,942 | 68,280 |
| Deferred income taxes, net | 6,407 | 1,719 |
| Prepaid expenses and other current assets | 8,685 | 6,097 |
| Other receivables | 2,723 | 1,407 |
| Promissory note receivable | 33 | 33 |
| Income taxes receivable | 1,727 | -- |
| Total current assets | 248,270 | 192,951 |
| Property, plant and equipment, net | 82,788 | 77,253 |
| Goodwill | 218,220 | 179,816 |
| Acquired intangible assets, net | 119,179 | 74,900 |
| Deferred income taxes, net | 3,601 | 3,940 |
| Investment in unconsolidated joint venture | 2,109 | 2,520 |
| Promissory note receivable | 705 | 712 |
| Other assets | 10,005 | 9,568 |
| Total assets | $ 684,877 | $ 541,660 |
| MEASUREMENT SPECIALTIES, INC. | ||
| CONSOLIDATED BALANCE SHEETS | ||
| UNAUDITED | ||
| June 30, | March 31, | |
| (Amounts in thousands, except share amounts) | 2014 | 2014 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Current portion of long-term debt | $ 10,000 | $ 138 |
| Current portion of capital lease obligations | 297 | 239 |
| Accounts payable | 49,315 | 32,967 |
| Accrued expenses | 14,524 | 6,337 |
| Accrued compensation | 17,597 | 17,251 |
| Income taxes payable | -- | 703 |
| Deferred income taxes, net | 150 | 152 |
| Restructuring liabilities | 1,140 | 84 |
| Other current liabilities | 3,810 | 3,481 |
| Total current liabilities | 96,833 | 61,352 |
| Revolver | 204,000 | 105,000 |
| Long-term debt, net of current portion | 10,000 | 20,000 |
| Capital lease obligations, net of current portion | 243 | 275 |
| Deferred income taxes, net | 25,603 | 13,025 |
| Other liabilities | 6,357 | 5,462 |
| Total liabilities | 343,036 | 205,114 |
| Equity: | ||
| Serial preferred stock; 221,756 shares authorized; none outstanding | -- | -- |
| Common stock, no par; 25,000,000 shares authorized; 16,031,521 shares and 15,934,051 shares issued and outstanding | -- | -- |
| Additional paid-in capital | 124,300 | 118,960 |
| Retained earnings | 201,929 | 200,961 |
| Accumulated other comprehensive income | 15,612 | 16,625 |
| Total equity | 341,841 | 336,546 |
| Total liabilities and shareholders' equity | $ 684,877 | $ 541,660 |
| MEASUREMENT SPECIALTIES, INC AND SUBSIDIARIES | ||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| UNAUDITED | ||
| Three months ended June 30, | ||
| (Amounts in thousands) | 2014 | 2013 |
| Cash flows from operating activities: | ||
| Net income | $ 968 | $ 9,161 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Depreciation and amortization | 5,965 | 4,832 |
| Gain on sale of assets | (264) | -- |
| Non-cash equity based compensation | 2,683 | 1,093 |
| Acquisition earn-out adjustment | -- | 39 |
| Deferred income taxes | 907 | 156 |
| Equity income in unconsolidated joint venture | (223) | (121) |
| Unconsolidated joint venture distributions | 677 | 615 |
| Net change in operating assets and liabilities, excluding the effects of acquisitions: | ||
| Accounts receivable, trade | 2,651 | (4,324) |
| Inventories | (1,874) | (501) |
| Prepaid expenses, other current assets and other receivables | 1,520 | 224 |
| Other assets | (363) | (480) |
| Accounts payable | (3,336) | 2,382 |
| Accrued expenses, accrued compensation, restructuring, other current and other liabilities | 42 | 486 |
| Income taxes receivable and payable | (2,605) | (52) |
| Net cash provided by operating activities | 6,748 | 13,510 |
| Cash flows from investing activities: | ||
| Purchases of property and equipment | (4,685) | (4,058) |
| Acquisition of business, net of cash acquired, and acquired intangible assets | (110,208) | (51,374) |
| Proceeds from sale of assets, net | 1,063 | -- |
| Net cash used in investing activities | (113,830) | (55,432) |
| Cash flows from financing activities: | ||
| Borrowings from revolver and short-term debt | 99,000 | 50,000 |
| Repayments of revolver and capital leases | (53) | (7,010) |
| Repayments of long-term debt | (138) | (34) |
| Payment of deferred acquisition payment | -- | (1,500) |
| Payment of deferred financing costs | (204) | -- |
| Proceeds from exercise of options and employee stock purchase plan | 2,201 | 3,000 |
| Excess tax benefit from exercise of stock options | 456 | 462 |
| Net cash provided by financing activities | 101,262 | 44,918 |
| Net change in cash and cash equivalents | (5,820) | 2,996 |
| Effect of exchange rate changes on cash | (148) | 286 |
| Cash, beginning of year | 49,964 | 36,028 |
| Cash, end of period | $ 43,996 | $ 39,310 |
| Reconciliation of Non-GAAP Financial Measures (Unaudited): | ||
| Three Months Ended | ||
| June 30, | ||
| 2014 | 2013 | |
| (In thousands, except percentages) | ||
| Net income | $ 968 | $ 9,161 |
| Add Back: | ||
| Interest | 1,095 | 914 |
| Provision for income taxes | 250 | 2,506 |
| Depreciation and amortization | 5,965 | 4,832 |
| Foreign currency exchange loss | 2,619 | 154 |
| Non-cash equity based compensation | 2,683 | 1,093 |
| Restructuring costs | 1,097 | 210 |
| China work stoppage | 195 | -- |
| China share-based compensation plan | 31 | -- |
| Transaction-related costs and other | 3,946 | 235 |
| Adjusted EBITDA | $ 18,849 | $ 19,105 |
| As % of Net Sales | 16.5% | 19.0% |
| Free Cash Flow | ||
| Capital expenditures for new Chinese and U.S. facilities | (1,347) | (732) |
| Purchases of property and equipment, excluding new facilities | (3,338) | (3,326) |
| Purchases of property and equipment | (4,685) | (4,058) |
| Net cash provided by operating activities | $ 6,748 | $ 13,510 |
| Free Cash Flow | $ 2,063 | $ 9,452 |
| Three Months Ended | Three Months Ended | ||
| (Amount in thousands, except per share amounts) | June 30, 2014 | June 30, 2013 | |
| Net income | $ 968 | $ 9,161 | |
| Adjustments: | |||
| Restructuring, after income taxes | 840 | 161 | |
| China work stoppage, after income taxes | 166 | -- | |
| Transaction-related costs, after income taxes | 3,023 | 180 | |
| Amortization expense, after income taxes | 2,244 | 1,860 | |
| China share-based compensation plan, after income taxes | 26 | -- | |
| Foreign currency exchange loss, after income taxes | 2,006 | 118 | |
| Total adjustments | 8,305 | 2,319 | |
| Adjusted Net Income | $ 9,273 | $ 11,480 | |
| Net income per diluted share | $ 0.06 | $ 0.56 | |
| Adjusted Net Income per diluted share | $ 0.55 | $ 0.70 | |
| Weighted average shares outstanding - Diluted | 16,837 | 16,481 | |
| Total income tax expense on tax effected adjustments | 2,512 | 709 | |
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 adjustments for certain items to the Company's net income ("Adjusted Net Income") and earnings before interest, income taxes, depreciation, amortization, foreign currency transaction gains/losses, non-cash equity based compensation ("Adjusted EBITDA"), and "Free Cash Flow." Adjusted EBITDA, Adjusted Net Income 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 Net Income, Adjusted EBITDA and Free Cash Flow measures used by other companies. Adjusted Net Income is derived by adjusting net income for the after income tax impact of restructurings costs, professional fees related to acquisitions, amortization, impact of the China work stoppages, China share-based compensation and foreign currency exchange losses. The after income tax amounts are calculated utilizing the applicable effective tax rates. Adjusted EBITDA is derived by adding interest, taxes, depreciation, amortization, foreign currency transaction losses, non-cash equity based compensation, professional fees related to acquisitions, certain restructuring costs, impact of the China work stoppages, China share-based compensation, and foreign currency gains to the Company's Net Income. 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 Net Income and Adjusted EBITDA are important to investors because it provides financial measures that are more representative of the quality of the Company's earnings, excluding non-cash expenses, fair value of earn-out gains and items such as foreign currency transaction gains/losses, income taxes, interest and certain legal expenses, which vary greatly period to period. The Company believes that Adjusted EBITDA is important to investors because it more accurately represents the leverage effect of fixed expenses. With regard to forward looking measures of Adjusted EBITDA and Adjusted EBITDA Margin, a reconciliation to the applicable GAAP financial measures is not provided because it is not available without unreasonable efforts. 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 liquidity 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.