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Measurement Specialties Announces Third Quarter Results
FAIRFIELD, N.J., Feb. 8 /PRNewswire-FirstCall/ -- Measurement Specialties,
Inc. (AMEX:MSS), a designer and manufacturer of sensors and sensor-based
consumer products, today reported financial results for the three and nine
months ended December 31, 2004.
The Company reported income from continuing operations for the three months
ended December 31, 2004 of $3.6 million, or $0.25 per diluted share, as
compared to $0.9 million, or $0.06 per diluted share for the same period last
year. Proforma Non-GAAP income from continuing operations for the three months
ended December 31, 2003 (which excludes a charge for non-cash equity based
compensation, litigation expense, restructuring costs and includes an
adjustment to the income tax provision to present the income on a fully taxed
basis) was $3.7 million, or $0.26 per diluted share. For the nine months
ended December 31, 2004, the Company reported income from continuing operations
of $11.0 million, or $0.78 per diluted share, as compared to $6.3 million, or
$0.45 per diluted share for the same period last year. Proforma Non-GAAP
income from continuing operations for the nine months period ended December 31,
2003 was $9.3 million, or $0.66 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, "We've made tremendous progress in
the sensor division this quarter, both in terms of integration of previous
acquisitions and new transactions. With the recent acquisitions of Humirel,
MWS Sensorik and the Polaron pressure business, we have expanded our footprint
in Europe and enhanced our technology portfolio. Equally important, we have
built our management bench strength by rounding out our leadership team with a
number of talented industry veterans. Looking forward, our attention has
turned from acquisition to integration of the new companies, specifically in
the areas of accounting/IT, operations and sales/marketing."
Mr. Guidone continued, "For the fiscal year, we anticipate sales of
approximately $140 million: $92 million in the Sensor Division and $48 million
from the Consumer Division. On a consolidated basis, we expect earnings to be
approximately $1.05 per diluted share for FY05. Strong growth in sensor sales,
given the full year effect of the acquisitions and synergies from integration,
should drive earnings growth of 35% in FY06."
Three months Ended December 31, 2004
For the three months ended December 31, 2004, net sales increased 13.0% to
$36.0 million, as compared to $31.9 million for the three months ended December
31, 2003. For the three months ended December 31, 2004, net sales in the Sensor
division increased 55.5% to $23.0 million, as compared to $14.8 million for the
three months ended December 31, 2003, while net sales in the Consumer Products
division decreased 23.7% to $13.1 million for the current fiscal quarter, as
compared to $17.1 million for the three months ended December 31, 2003.
Excluding sales from recent acquisitions, net sales increased $2.4 million or
16.3%.
For the three months ended December 31, 2004, gross profit increased $1.1
million to $15.1 million from $14.0 million for the three months ended December
31, 2003. For the three months ended December 31, 2004, the Company reported
consolidated gross margin of 42.0%, as compared to 44.1% for the same period
last year. The decrease in gross margin occurred as a result of an overall mix
shift to lower margin business, both in terms of the organic growth (automotive
and non-automotive business) as well as growth through acquisitions (some of
the acquired businesses operate at gross margins lower than the historical base
sensor business). For Consumer Products division, lower tire gauge sales,
which contribute a higher margin than the scale business, has also contributed
to the decrease in gross margin. Additionally, as a result of the Conair
transaction, the entire scale business is now realizing OEM margins, which are
historically lower than retail margins. Also contributing to the lower margins
was the effect of lower pricing and higher cost of sales in certain of our bath
scale lines.
Operating expenses were $9.9 million for the three months ended December 31,
2004, as compared to $12.9 million for the three months ended December 31,
2003. Operating expenses for the current period reflect additional expenses
associated with the recent acquisitions as well as additional costs associated
with the implementation of Sarbanes-Oxley, deferred financing costs and early
loan termination fees. Included in the operating expense for the three months
ended December 31, 2003 is a $3.0 million charge for non-cash equity
compensation, $0.4 million for litigation expense and $0.5 million for
restructuring costs. Please refer to the notes and reconciliation's relating
to non-GAAP financial measures contained in this press release for further
discussion of these items. The current quarter also includes a decrease in
accruals associated with the employee profit sharing plan.
Nine months Ended December 31, 2004
For the nine months ended December 31, 2004, net sales increased 15.9% to
$100.2 million, as compared to $86.5 million for the nine months ended December
31, 2003. For the nine months ended December 31, 2004, net sales in the Sensor
division increased 45.4% to $63.6 million, as compared to $43.8 million for the
nine months ended December 31, 2003, while net sales in the Consumer Products
division decreased 14.3% to $36.6 million, as compared to $42.7 million for the
nine months ended December 31, 2003. Excluding sales from recent acquisitions,
net sales increased $9.4 million or 21.5% for the period.
For the nine months ended December 31, 2004, gross profit increased $3.9
million to $42.8 million from $38.9 million for the nine months ended December
31, 2003. For the nine months ended December 31, 2004, the Company reported
consolidated gross margin of 42.7%, as compared to 45.0% for the same period
last year. The decrease in current year-to-date gross margin compared to the
same period last year is largely due to the same reasons noted in the three
months discussion above.
After considering the Proforma Non-GAAP adjustments to the prior year detailed
below, income from continued operations increased $1.7 million to $11.0
million. Operating expenses were $27.1 million for the nine months ended
December 31, 2004, as compared to $31.5 million for the nine months ended
December 31, 2003. Included in the operating expense for the nine months ended
December 31, 2003 is a $5.0 million charge for non-cash equity compensation,
$0.4 million for litigation expense and $0.5 million for restructuring costs.
The Company will host an investor conference call on Wednesday, February 9,
2005 beginning at 11:00 AM EST to answer questions regarding the quarterly
results reported in our Form 10Q for the three and nine months ended December
31, 2004. To participate, please dial 800-762-4758 prior to the start time.
International callers should dial (480) 629-9035. A recording of the call will
be available for 90 days by dialing (800) 475-6701 and entering access code
769837. The call will be simultaneously broadcast over the Internet and
available for 90 days thereafter at http://www.vcall.com/ and on the Company's
website at http://www.msiusa.com/.
COMPANY CONTACT: FRANK GUIDONE, CEO - 757-766-4400
INVESTOR/MEDIA CONTACT: AIMEE BOUTCHER - 973 239-2878
About MSI
Measurement Specialties, Inc. designs and manufactures sensors and sensor-
based consumer products. The Sensor division, also known as MSI Sensors,
produces a wide variety of sensors and transducers to measure precise ranges of
physical characteristics such as pressure, force, vibration, position, tilt,
flow and humidity. MSI Sensors uses multiple advanced technologies - including
piezoresistive, electro-optic, electro-magnetic, capacitive, application
specific integrated circuits (ASICs), micro-electromechanical systems (MEMS),
piezoelectric polymers and strain gauges -- to engineer sensors that operate
precisely and cost effectively. The Consumer division produces OEM bathroom
scales, Accutire(R) brand tire pressure gauges and other products.
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.
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 SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
For The Three Months For The Nine Months
Ended December 31, Ended December 31,
2004 2003 2004 2003
Net sales $36,016 $31,869 $100,247 $86,469
Cost of goods sold 20,898 17,823 57,424 47,527
Gross profit 15,118 14,046 42,823 38,942
Operating expenses
(income):
Selling, general and
administrative 9,037 8,018 24,785 23,019
Litigation expense -- 400 -- 400
Non-cash equity based
compensation -- 3,046 -- 4,954
Research and
development 919 850 2,576 2,610
Customer funded
development (80) -- (218) --
Restructuring costs
and other costs -- 545 -- 545
Total operating
expenses 9,876 12,859 27,143 31,528
Operating income 5,242 1,187 15,680 7,414
Interest expense, net 148 22 245 322
Other expense (income) 78 51 144 46
Income from continuing
operations before
income tax 5,016 1,114 15,291 7,046
Income tax 1,429 226 4,358 772
Income from continuing
operations 3,587 888 10,933 6,274
Discontinued operations:
Income from
discontinued units -- -- -- 112
Net income $ 3,587 $888 $10,933 $6,386
Income per common
share - Basic
Income from continuing
operations $0.27 $0.07 $0.82 $0.51
Income from
discontinued units -- -- -- 0.01
Net income $0.27 $0.07 $0.82 $0.52
Income per common
share - Diluted
Income from continuing
operations $0.25 $0.06 $0.78 $0.45
Income from
discontinued units -- -- -- 0.01
Net income $0.25 $0.06 $0.78 $0.46
Weighted average
shares outstanding
- Basic 13,439,320 12,402,445 13,344,886 12,234,849
Weighted average
shares outstanding
- Diluted 14,204,853 14,004,490 14,089,032 13,905,942
MEASUREMENT SPECIALTIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
December 31, March 31,
2004 2004
ASSETS
Current assets:
Cash and cash equivalents $7,480 $19,274
Accounts receivable, trade,
net of allowance for doubtful
accounts of $1,104 and $327,
respectively 19,671 14,010
Inventories, net 21,296 10,170
Deferred income taxes - current 6,728 6,317
Prepaid expenses and other current assets 2,267 3,267
Total current assets 57,442 53,038
Property and equipment, net 14,254 10,628
Other assets:
Goodwill 40,998 4,191
Intangibles 5,082 --
Deferred income taxes - long term 5,195 8,486
Other assets 1,846 657
53,121 13,334
Total assets $124,817 $77,000
MEASUREMENT SPECIALTIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
December 31, March 31,
2004 2004
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of promissory
notes payable $1,000 $--
Current portion of deferred
acquisition payments 1,400 --
Short-term debt 649 --
Current portion of long-term debt 2,000 --
Accounts payable 15,985 7,919
Accrued compensation 2,751 3,224
Accrued expenses and
other current liabilities 4,340 1,886
Accrued litigation expense
-Shareholders' Class Action -- 2,800
Accrued litigation expenses-SEC -- 2,100
Deferred gain on sale of assets, current 2,925 2,830
Income taxes payable 787 --
Total current liabilities 31,837 20,759
Other liabilities:
Deferred gain on sale of assets,
net of current portion 1,722 3,914
Promissory notes payable 1,750 --
Long-term debt, net of current portion 19,914 --
Deferred acquisition payments 4,264 --
Other liabilities 1,210 1,487
Total liabilities 60,697 26,160
Shareholders' equity
Serial preferred stock; 221,756 shares
authorized; none outstanding
Common stock, no par; 20,000,000 shares
authorized; 13,533,044 and 12,466,950
shares issued and outstanding,
respectively 5,502 5,502
Additional paid-in capital 55,106 53,509
Retained earnings (Accumulated deficit) 2,836 (8,097)
Accumulated other comprehensive
income (loss) 676 (74)
Total shareholders' equity 64,120 50,840
Total Liabilities and
Shareholders' Equity $124,817 $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 Sections of the Management Discussion and Analysis).
For The Three Months For The Nine Months
Ended December 31, Ended December 31,
Non-GAAP Income: 2004 2003 2004 2003
Reported Income (loss)
from continuing
operations $3,587 $888 $10,933 $6,274
Non-GAAP Adjustments:
Non-cash equity-based
compensation 3,046 4,954
Litigation expense 400 400
Restructuring costs 545 545
Tax provision
adjustment (1) (1,229) (2,917)
Non-GAAP Income from
continuing operations 3,587 3,650 10,933 9,256
Income from
discontinued units
112
Non-GAAP net income $3,587 $3,650 $ 10,933 $9,368
Non-GAAP Income(loss)
per common share-Basic:
Non-GAAP Income (loss)
from continuing
operations $0.27 $0.29 $0.82 $0.76
Income from
discontinued units
0.01
Non-GAAP net
income (loss) $0.27 $0.29 $0.82 $0.77
Non-GAAP Income (loss)
per common share-Diluted:
Non-GAAP Income (loss)
from continuing
operations $0.25 $0.26 $0.78 $0.66
Income (loss) from
discontinued units 0.01
Non-GAAP net
income (loss) $0.25 $0.26 $0.78 $0.67
Weighted average
shares outstanding
- Basic 13,439,320 12,402,445 13,344,886 12,234,849
Weighted average
shares outstanding
- Diluted 14,204,853 14,004,490 14,089,032 13,905,942
DATASOURCE: Measurement Specialties, Inc.
CONTACT: Frank Guidone, CEO of Measurement Specialties, Inc.,
+1-757-766-4400, or Aimee Boutcher of Boutcher & Boutcher Investor Relations,
+1-973-239-2878, for Measurement Specialties, Inc.
Web site: http://www.msiusa.com/
http://www.vcall.com/