MKS Announces Second Quarter Fiscal 2009 Financial Results
Tue Nov 25, 4:00 PMWATERLOO, ONTARIO--(Marketwire - Nov. 25, 2008) - MKS Inc. (MKS) (TSX: MKX.TO), the global application lifecycle management (ALM) technology leader, today announced its financial results for the second quarter ended October 31, 2008. All amounts are reported in US dollars under United States Generally Accepted Accounting Principles.
Financial & Operational Highlights: Q2 2009 (compared with Q2 2008) - Total revenue increased 19% to $16.3 million from $13.6 million - Income from operations increased 302% to $2.0 million from $0.5 million - Net income increased to $1.4 million or $0.03 per share compared to net income of $0.2 million - ALM revenue increased 20% to $14.2 million from $11.9 million - ALM license revenue increased 22% to $5.1 million from $4.2 million - ALM services revenue increased 33% to $2.8 million from $2.1 million - ALM maintenance revenue increased 13% to $6.4 million from $5.6 million - Secured new contract wins at Caterpillar, Diehl, Japan Airlines, Knorr-Bremse, Magna, NCR, Northrop Grumman, TD and Xerox Closing cash balance at October 31, 2008 was $10.6 million, down from $12.9 million at April 30, 2008. During the quarter MKS repurchased 1,464,000 shares at a total cost of $2.5 million under the terms of its Normal Course Issuer Bid. "We believe that the continued strength of our business is based on our increasingly accepted position as the clear ALM technology choice for major enterprise customers. The technology leaders that have committed to MKS Integrity in recent years give us a solid base to continue to build our business," said Philip Deck, CEO of MKS Inc. "As well as demonstrating our ability to grow in this turbulent economic environment, this past quarter we started to enjoy the lower costs that the declining Canadian currency delivers." "This quarter, we were pleased to see broad based strength across our worldwide business with new contract wins, significant follow-on licensing, strong services growth and significantly higher profitability," said Michael Harris, president and COO, MKS Inc. "We enter the back half of our year with continued license pipeline expansion and growing services backlog. Our continued focus is on customers who are most motivated to reduce the complexity of managing the software embedded in their products and where lowering the cost of software delivery is a compelling reason to implement MKS Integrity even in difficult times." Financial Review Revenue for the second quarter of fiscal 2009 was $16.3 million, up 19 percent from $13.6 million from the second quarter of the prior fiscal year. Net income for the second quarter of fiscal 2009 was $1.4 million, or $0.03 per share, compared to $0.2 million, or $0.00 per share, reported in the second quarter of fiscal 2008. Six month revenues for fiscal 2009 increased 16 percent to $31.6 million compared with revenues of $27.2 million for the same period in fiscal 2008. Six month net income was $2.0 million, an increase from a net loss of ($0.1) million for the same period in fiscal 2008. Second quarter fiscal 2009 Application Lifecycle Management (ALM) revenue was $14.2 million, up 20 percent, compared to revenues of $11.9 million reported in the second quarter of fiscal 2008. Six month ALM revenues for fiscal 2009 increased 17 percent to $27.6 million from $23.6 million for the first six months of fiscal 2008. Outlook MKS is committed to profitable organic growth in its primary operating segment, ALM. The Company strives to maintain a balance between increasing current shareholder returns and funding investments for long term growth. The steady growth of maintenance revenue offers significant potential for operating margin improvement over the long term. Similarly, increases in the scope of the Company's field sales and services teams, and in the capacity of the Company's engineering organization represent the most significant enablers to the Company's long term growth, both requiring immediate commitments of cash and recognition of costs with the future returns extending over several years. The Company plans for slower growth in operating margins than it could otherwise achieve in order to fund investments in sales, marketing and engineering needed to achieve strong long term revenue growth. The largest uncertainty in maintaining the balance between profitability and long term revenue growth is the variability of license revenue on a quarterly basis. This variability is expected to continue as the average size of transactions may increase as quickly as license revenue. The Company also expects a continued decline in the Interoperability business of approximately 10 percent annually. Conference Call Details Interested parties may access the call by dialing 800-215-2393 or 1-416-620-9644. A digital recording of the call will be available for seven (7) days from November 25, 2008 to December 2, 2008 and may be accessed by dialing 800-558-5253 or 416-626-4100 and by entering reservation #21352432. About MKS MKS Inc., the global application lifecycle management (ALM) technology leader, enables software engineering and IT organizations to seamlessly manage their worldwide software development activities. With its flagship product, MKS Integrity, MKS offers support for all software development activities through a single enterprise application, resulting in better global collaboration and higher productivity. MKS supports customers worldwide with offices across North America, Europe and Asia. For more information about MKS, visit our Web site at http://www.mks.com. Copyright(C) 2008 MKS Inc. MKS and MKS Integrity are trademarks of MKS Inc. All other trademarks mentioned in this release are the property of their respective owners. This news release contains forward-looking statements that involve risks and uncertainties, which may cause actual results to differ materially from the statements made. When used in this document, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" and similar expressions are intended to identify forward-looking statements. Such statements reflect the Company's current views with respect to future events and are subject to such risks and uncertainties. Although the Company believes the expectations represented by such forward looking statements are reasonable, there can be no assurance that those expectations will prove to be correct. Many factors could cause our actual results to differ materially from the statements made including those factors detailed from time to time in filings made by the Company with Canadian securities regulatory authorities. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated or expected. The Company does not intend and does not assume any obligation to update these forward-looking statements.
MKS Inc.
Consolidated Balance Sheets
(U.S. dollars, thousands, unaudited)
October 31 April 30
2008 2008
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Assets:
Current assets:
Cash and cash equivalents $ 10,615 $ 12,933
Accounts receivable, net of allowances for
doubtful accounts of $169 (April 30, 2008 - $217) 11,621 16,054
Deferred income taxes 1,384 1,384
Other 1,281 1,539
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Total current assets 24,901 31,910
Fixed assets 4,431 4,530
Intangible assets 112 155
Goodwill 2,424 2,424
Deferred income taxes 1,983 3,245
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Total assets $ 33,851 $ 42,264
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Liabilities and shareholders' equity:
Current liabilities:
Accounts payable $ 3,459 $ 2,430
Accrued liabilities 3,096 5,149
Income taxes payable 498 656
Deferred revenue 12,739 15,460
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Total current liabilities 19,792 23,695
Shareholders' equity:
Share capital 55,129 56,408
Accumulated other comprehensive loss (3,824) (1,894)
Accumulated deficit (37,246) (35,945)
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Total shareholders' equity 14,059 18,569
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Total liabilities and shareholders' equity $ 33,851 $ 42,264
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MKS Inc.
Consolidated Statements of Operations
(U.S. dollars, thousands, except per share data, unaudited)
Three Months Ended Six Months Ended
October 31 October 31
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2008 2007 2008 2007
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Revenue:
License $ 6,425 $ 5,128 $ 12,581 $ 10,930
Maintenance 7,051 6,402 14,086 12,607
Service 2,792 2,098 4,966 3,698
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16,268 13,628 31,633 27,235
Operating expenses:
Cost of product and support 1,197 983 2,437 1,986
Cost of service 1,955 1,435 3,743 2,754
Sales and marketing 5,394 5,471 11,256 11,411
Research and development 2,970 3,305 6,128 6,966
General and administrative 1,867 2,070 3,830 3,957
Foreign exchange loss (gain) 519 (310) 622 (303)
Stock based compensation 408 187 579 303
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14,310 13,141 28,595 27,074
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Income from operations 1,958 487 3,038 161
Interest income, net 29 92 61 211
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Income before income taxes 1,987 579 3,099 372
Income tax provision (recovery):
Current (203) (147) 34 (196)
Deferred 837 529 1,162 691
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Income tax provision (recovery) 634 382 1,196 495
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Net income (loss) $ 1,353 $ 197 $ 1,903 $ (123)
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Earnings (loss) per share:
Basic and diluted $ 0.03 $ 0.00 $ 0.04 $ (0.00)
Basic weighted average number of
shares outstanding 50,730 50,624 50,955 50,602
Diluted weighted average number of
shares outstanding 51,272 51,030 51,517 50,602
MKS Inc.
Consolidated Statements of Cash Flows
(U.S. dollars, thousands, unaudited)
Three Months Ended Six Months Ended
October 31 October 31
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2008 2007 2008 2007
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Cash flows from operating
activities:
Net income (loss) $ 1,353 $ 197 $ 1,972 $ (123)
Adjustments to reconcile net income
(loss) to net cash provided by
(used for) operating activities:
Depreciation of fixed assets 345 333 661 626
Amortization of intangible assets 21 21 43 42
Stock based compensation 408 187 579 303
Deferred income taxes 837 530 1,162 691
Loss on disposal of fixed assets 16 43 41 43
Change in operating assets and
liabilities:
Accounts receivable 603 (1,638) 4,433 (3,463)
Other 572 407 258 (17)
Accounts payable 1,860 68 1,029 237
Accrued liabilities (461) (78) (2,053) 712
Income taxes payable (406) (146) (158) (197)
Deferred revenue (604) (685) (2,721) (1,520)
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Net cash provided by (used for)
operating activities 4,544 (761) 5,246 (2,666)
Cash flows used for investing
activities:
Purchase of fixed assets (497) (157) (700) (602)
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Net cash used for investing
activities (497) (157) (700) (602)
Cash flows used for financing
activities:
Proceeds on issuance of common
shares 160 87 443 125
Cash paid for shares repurchased
for cancellation (2,478) - (3,534) -
Dividends paid (1,007) (1,014) (2,040) (2,025)
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Net cash used for financing
activities (3,325) (927) (5,131) (1,900)
Effect of exchange rate changes on
cash and cash equivalents (1,616) (184) (1,733) (212)
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Change in cash and cash equivalents
balances (894) (2,029) (2,318) (5,380)
Cash and cash equivalents, beginning
of period 11,509 11,907 12,933 15,258
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Cash and cash equivalents, end of
period $ 10,615 $ 9,878 $ 10,615 $ 9,878
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ContactsDouglas Sawatzky MKS Inc.
Chief Financial Officer
(519) 883-3252
Email: dsawatzky@mks.com
Website: www.mks.com
101.79 (1.10%)
