Measurement Specialties, Inc. (MEAS)

F1Q10 (Qtr End 06/30/10) Earnings Call

August 05, 2010 11:00 a.m. ET

Executives

Frank Guidone - President & CEO

Mark Thomson - CFO

Analysts

John Franzreb - Sidoti & Co

Larry Solow - CJS Securities

Presentation

Operator

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Previous Statements by MEAS
» Measurement Specialties, Inc F3Q09 Earnings Call Transcript
» Measurement Specialties, Inc. F1Q09 (Qtr End 06/30/08) Earnings Call Transcript
» Measurement Specialties, Inc. F4Q08 (Qtr End 03/31/08) Earnings Call Transcript

Greetings and welcome to the Measurement Specialties announces First Quarter Fiscal Year 2011 Conference Call. (Operator Instructions). It is now my pleasure to introduce your host Mr. Frank Guidone, CEO for Measurement Specialties. Thank you, Mr. Guidone you may now begin.

Frank Guidone

Thank you, Chris. Welcome everyone, I am going to start by reading our Safe Harbor provision, make a few opening remarks and then turn the call over to Mark. Management wishes to caution investors that certain statements made on today's call are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 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 believe, expect, intend, estimate, anticipate, project, will, may and similar expressions. All statements that address operating performance, events, or developments that we expect or anticipate will occur in the future or forward-looking statements. The forward-looking statements used herein are not guarantees of future performance and involve a number of risks and uncertainties. Please refer to risk factors outlined in the company's SEC reports for more detail.

The company from time to time considers acquiring or disposing businesses or product lines forward-looking statements do not include 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 provided in today's call.

During the call we may use non-GAAP financial measures including EBITDA and free cash flow, additional information containing this non-GAAP financial measures can be found in the earnings press release posted on our website.

Well as we mentioned in our press release we believe this quarter represented an important milestone for the company marking the first host recession quarter to break through the pre-recession earnings high watermark both in terms of EPS at $0.37 and EBITDA at 12.1 million.

More importantly our margins statistics in terms of gross margin SG&A as a percent of sales and EBITDA margin were all in line with the target earnings model we have consistently outlined.

At 19.8% our EBITDA percent was just shy of the 20% model we have defined for our fiscal ‘13 of 60 million EBITDA on 300 million sales. Our strong bookings over the past three quarters drove higher sales both in terms of year-over-year and quarter-over-quarter growth while book to bill declined slightly in Q1 to 1.06 from the prior two quarter average at around 1.1.

We were still solidly positive suggesting a strong Q2. Past two visibility is still limited although we're forecasting some modest contraction in Q3. For this to happen we would expect our book to bill to drop a low one for Q2.

I want to emphasize that while our sales force is forecasting a slightly lower Q3 based on customer feedback we have been getting conservative outlooks from our customers for several quarters yet our book to bill has remained positive.

July bookings are at respectable 20.5 million and we are off to a good start in August. So, we will have much better clarity on the half two outlook on our next call. We continue to make good progress on new programs, consisting with prior quarters approximately 20% of the increase in our first fiscal quarter over the last 12 month quarterly average as a result of new business introduced in the last 12 months.

We're quite busy qualifying new programs including our high viscosity fluid property sensor targeting a new automotive engine with start up production at the end of this calendar year, several new platforms for our windshield fogging module, several new OEM's for our engine air intake module or otherwise called TRICAN.

We continue to progress with two innovative new ultrasonic imaging programs within the medical ultrasound and biometric security markets and several GPS and location based monitoring systems for our low power, high resolution altimeter module. We expect these and other programs to help drive continued growth in future quarters.

With that I will turn the call over to Mark.

Mark Thomson

Thank you Frank. I'll now cover the financial results for the three months ended June 30th 2010 in more detail. To start I want to point out that we had an accounting change that took affect in our first quarter that impacted the presentation of our Japanese joint venture with Nikkiso. Historically we've included 100% of sales and costs of the joint venture and our results backed up the joint venture partner's interest from other non controlling interest expense.

Beginning this quarter, we did not include any of the sales or costs from the joint venture in our consolidated statement of operations and we added back the joint venture interest as equity income in unconsolidated joint venture.

The result to net income is the same. However sales are lowered by roughly 1 million this quarter. In order to compare prior periods on an apples to apples basis, we adjusted prior period financial information to conform to the current year presentation.

We are pleased with our performance during the first quarter and believe the first quarter financial results demonstrated the strength of our business model. Net sales for the first quarter increased 17.4 million to 61.2 million, a 40% increase over the same period last year.

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