MTS Systems (MTSC) Tops Q1 EPS by 4c, Revenues Miss; Offers FY19 EPS/Revenue Guidance

MTS Systems (NASDAQ: MTSC) reported Q1 EPS of $0.59, $0.04 better than the analyst estimate of $0.55. Revenue for the quarter came in at $203.18 million versus the consensus estimate of $206.73 million.

• Revenues of $203.2 million, including year-over-year growth in both Test & Simulation and Sensors
• GAAP diluted earnings per share of $0.54, a decline of $1.18 year-over-year due to the prior year impact of the Tax Act
• Backlog of $514.7 million, a year-over-year increase of 45%, driven by strong orders growth across both business units
• Closed $80 million acquisition of E2M Technologies B.V. (E2M), a leading simulation company based in Amsterdam, Netherlands
• Declared 148th consecutive quarterly dividend

"We continue to execute on our growth and diversification strategy, as we capitalize on our expanding opportunities in Sensors, Test Services and Test equipment targeted toward the materials and structures sectors, as well as new market opportunities from our acquisition of E2M late in our first quarter. The success of these efforts is reflected in our strong year-over-year orders performance and an outstanding backlog position of $515 million, which far exceeded not only our prior year position, but also our fiscal year 2018 year-end backlog of $415 million.

Our Sensors business achieved another record orders level of $98 million in the quarter, representing a book-to-bill of 1.26, in part driven by the second purchase order associated with our U.S. Department of Defense contract.

Our Test & Simulation business delivered nearly 15% orders growth year-over-year, driven by our strong technology position associated with advanced materials test systems, as well as structural test systems which simulate seismic events and other unique operating environments for civil infrastructure and wind energy systems. In addition, E2M, with their excellent technology position and approvals, brings us continued opportunity for exciting growth in the flight simulation and entertainment markets.

Given the volume and quality of the orders we experienced in our first quarter of the fiscal year and our record backlog position, we are confident in our ability to deliver on our commitments to growth and expanded profitability in fiscal year 2019 and beyond."

GUIDANCE:

MTS Systems sees FY2019 EPS of $2.42-$2.72, versus the consensus of $2.56. MTS Systems sees FY2019 revenue of $830-870 million, versus the consensus of $855.49 million.

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 15-19% for fiscal year 2019.

For earnings history and earnings-related data on MTS Systems (MTSC) click here.

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