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| 8-K - FORM 8-K DATED DECEMBER 30, 2009 - MTS SYSTEMS CORP | mts095898_8k.htm |
positioned
for opportunity
M T S S Y S T E M S C O R P O R A T I O N
ORDERS
BACKLOG
$500M
400
300
200
100
0
$250M
200
150
100
0
REVENUE
NET INCOME
$500M
400
300
200
100
0
$50M
40
30
20
10
0
DILUTED EPS
RETURN ON INVESTED
CAPITAL
$3.00
2.25
1.50
.75
0
25%
20
15
10
5
0
DEBT
CASH(1)
$40M
30
20
10
0
$200M
150
100
50
0
(1)Cash, cash equivalents and short-term investments.
financial highlights
2008
2009
(Expressed in thousands, except per share and percent data)
Revenue
$ 460,515
$ 408,881
Net income
$ 49,191
$ 17,394(2)
Earnings per share, diluted
$ 2.80
$ 1.03(2)
Cash provided by operating activities
$ 30,174
$ 43,838
Return on sales
10.7%
4.3%
Return on invested capital
22.3%
7.9%
Dividends per share
$ 0.60
$ 0.60
Weighted average shares outstanding, diluted
17,544
16,831
Orders
$ 485,274
$ 340,839
Backlog of orders at year-end
$ 234,710
$ 167,726
(2)Includes severance impact of $8.0M in net income & $0.48 earnings per share.
geographic revenue
2008
2009
SENSORS
Americas
27%
29%
Europe
50%
49%
Asia
23%
22%
TEST
Americas
39%
36%
Europe
29%
28%
Asia
32%
36%
positioned
MTS: 43 years strong. Where we’ve been and where we are
makes us feel more confident about where we’re going.
Our expertise, commitment to customers, and favorable
geographic and market presence position us well to
capture the opportunities ahead.
for opportunity
MTS technology and services help researchers, engineers and manufacturers design and develop higher-quality products faster and at a lower cost.
Our solutions are integral to industries ranging from aerospace engineering and clean energy to industrial manufacturing, mobile hydraulics, biomedical device development, and civil engineering.
3
A global focus on energy-efficiency and the
environment has created
new opportunity in
rail, wind and geothermal technology.
to our shareholders
Before we
gladly bid farewell to 2009, I want to write a brief chapter on this period of
MTS’ history because its
importance will be felt for years to come.
It was a difficult year, one of our most challenging.
Our purpose, People Committed to Building Confidence in Product Performance, has not changed. Our intent, to secure the next 40 years, has not changed. Our pursuit to be a great company has not changed.
As we move forward, our goal is not to return to the past. Rather, we must chart the next 10 years, delivering exceptional performance in the eyes of our customers, employees and shareholders. Strong strategy execution got us here and is the key to our future success.
We start this next era in a better position for having experienced and successfully managed through the worst economic decline in decades. Our stated goal was to exit the year stronger than we went in. We feel this is exactly what we did by aggressively realigning our business, appropriately resizing our company, and quickly making difficult choices, all while keeping a strong focus on our customers.
In Sensors, we continued our work to improve product performance, maintain competitive pricing and, working with our customers, develop new applications that improve the performance of their products. In Test, we quickly responded to the drop in the automotive industry, established flexible market development teams and reduced our cost base while making MTS easier to work with in the future. Across MTS, we are leveraging our expertise in legacy markets to drive growth in emerging areas such as renewable energy and China, where we see the greatest near-term growth potential.
Visit www.MTS.com/AR09/CEO.HTML
to watch brief videos of CEO
Laura B. Hamilton discussing MTS.
We experienced a 29.8% drop in orders, but with our strong backlog entering the year, our revenue decline was limited to 11.2%. Together with tough decisions to reduce our workforce, dramatically curtail spending, and more tightly manage our assets, we remained profitable with positive cash flow while confidently maintaining our dividend. We worked to make good choices that appropriately balanced short-term and long-term needs.
Despite the difficulties we faced, our customers, shareholders and employees stuck with us throughout 2009, which we take as a very positive sign. This was especially true for our people. The uncertainty, change and layoffs were stressful. MTS employees pulled together and focused on what could be done at a time when it would have been easy to do otherwise. They deserve the credit for our accomplishments in 2009.
5
China continues to be a bright
spot in the
world economy, and we have made the
necessary investments in both
Sensors and
Test to participate in their rapid expansion.
a new reality for our customers
It is a new day. Our customers are adjusting to the new economic reality while also addressing the macro-trends of energy, the environment and globalization. They are under extreme pressure to perform, which creates both new challenges and opportunities for us all.
Our markets have reset well below historical levels. Our customers are making less money, and in response they are driving cost reduction, eliminating non-value-added work and being more selective in their investments. They are also experiencing increased competition. Everyone is going after a bigger piece of a smaller pie.
While this creates challenges for MTS, it also creates opportunity. In response to increased competition, our customers are pushing their organizations to develop fresher products, faster. They are increasingly turning to technology to differentiate — creating higher-performing, more energy-efficient, and “greener” offerings.
positioned for opportunity
So what does the future look like for MTS? The economic picture is mixed and has yet to fully play out. It will take time for the U.S., Europe, Japan, Korea and other regions to work through the many structural issues that still exist. At the same time, successful companies are moving forward to address the challenges and capture the opportunities. While the timing for meaningful economic growth remains unclear, we are confident that MTS is positioned to capitalize on the opportunities ahead.
In Sensors, we will not let up on our pursuit for increased performance while reducing cost. Together with our applications support, we have enabled machine builders around the world in steel, plastics, and
energy production to improve the efficiency of their machines and reduce the total cost of ownership for their customers. In Test, our applications expertise and real-life simulation capabilities are helping build confidence for our customers as they change materials to make greener engines that burn at higher temperatures, and as they change designs to make safer structures while removing weight.
We are excited about the opportunities to work with our customers on new applications in Sensors’ industrial and mobile hydraulics markets, and to address challenges like cost, energy and the environment. In Test, we continue to see opportunity to partner with our customers in product leadership and lifecycle management, where we can build confidence in product performance faster and more effectively. And, in both businesses, we see broad opportunity in China – whether in infrastructure investment like steel and rail, or in capability-building like automotive and plastic machine manufacturing. Across MTS, we are well positioned to help our customers successfully move forward.
We are
proud of what we accomplished in 2009.
We are pleased with our strong position
today.
We are
prepared to make the most of 2010 and beyond.
Chair and Chief Executive Officer
7
MTS solutions enable more
precise and repeatable
testing in extreme operating
environments, equipping our
customers to meet the demand
for energy-efficient products.
INDUSTRIES
» Aerospace
» Biomedical
» Clean energy
» Ground vehicles
» Geomechanical, civil and seismic engineering
» Rail
MTS ADVANTAGES
» Application knowledge
» Technology leadership
» Comprehensive offerings
» Worldwide service and consultation
» Standard and custom solutions
test
Test professionals rely on MTS expertise and technology to optimize their designs, improve productivity and enhance time-to-market performance. Our integrated solutions are globally recognized for enabling the efficient characterization of materials, components, subsystems and full-scale prototypes.
The comprehensive MTS offering of testing hardware, software and global support includes both standard tools and custom solutions, which are used worldwide by customers ranging from suppliers and researchers to large manufacturers.
$400M
$400M
300
300
200
200
100
100
0
0
ORDERS
REVENUE
$ millions
$ millions
$40M
30
20
10
0
12%
9
6
3
0
INCOME FROM
INCOME FROM
OPERATIONS
OPERATIONS
$ millions
$ millions
what our customers are saying
“We are now able to evaluate prototypes much earlier and launch better products sooner. Our partnership with MTS was instrumental in making this possible.”
Eric Rubie
President
Stealth Companies
“MTS technology allows us to uncover and resolve unknown items of quality function development (QFD) during the preparation stage, reducing our vehicle testing time by at least one month.”
Yoichi Sakai
Head Representative for
System
Experimental Development
Nissan Motor Co., Ltd.
“MTS has been a dependable partner from the very beginning, always going the extra mile to ensure we receive the equipment and support required.”
Lamia Salah (pictured on
left)
Manager
Wichita State University
National Institute
for Aviation Research
(NIAR)
9
New MTS triple-redundant
sensor technology simplifies
programming and virtually
eliminates recalibration for our
customers in applications such
as hydroturbine manufacturing,
automated welding and more.
INDUSTRIES
» Fluid power
» Fuel storage
» Medical products
» Metals
» Mobile equipment
» Plastics
» Wind and clean energy
» Wood processing
MTS ADVANTAGES
» Exclusive technologies in magnetostriction sensing
» Unrivaled application expertise
» Worldwide service and consultation
sensors
Highly precise and durable MTS position
and velocity sensors help fixed and mobile
equipment manufacturers automate their
machine functions. Leveraging exclusive
magnetostrictive technology, our sensors
allow customers to achieve high levels of
manufacturing speed, safety and efficiency.
$100M
75
50
25
0
ORDERS
$ millions
$100M
75
50
25
0
REVENUE
$ millions
$20M
15
10
5
0
INCOME FROM
OPERATIONS
$ millions
20%
15
10
5
0
INCOME FROM
OPERATIONS
as percent of revenue
what our customers are saying
“After having integrated sensors from
MTS, the profitability of our machines
has grown by 30 percent on average.
The sensor is actually the most
economic component of the machine.”
Oliver Hoffman
Managing Director
Hoffmann Sondermaschinenbau
“Our customers are demanding
machines with repeatability,
accuracy and
minimum downtime.
Since we switched to MTS EtherCAT
transducers, our FMI
machines have
improved in each of these three
areas. FMI has full confidence in
the
MTS product and will continue to
use it on future machines.”
Ken Carson
Franklin Manufacturing
11
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