MTS Systems Corporation (NASDAQ:MTSC) Q4 2017 Earnings Conference Call Transcript

Nov 28, 2017 • 10:00 am ET


MTS Systems Corporation (NASDAQ:MTSC) Q4 2017 Earnings Conference Call Transcript


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Good day, and welcome to the MTS Fourth Quarter 2017 Earnings Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Mr. Brian Ross, MTS SVP and CFO. Please go ahead sir.

Brian Ross

Thank you, Kathy. Good morning, and welcome to MTS Systems fiscal 2017 fourth quarter investor teleconference. Joining me on the call today is Jeff Graves, President and CEO.

(Forward-Looking Cautionary statements)

This presentation may also include reference to financial measures which are not calculated in accordance with generally accepted accounting principles or GAAP. These measures may be used by management to compare the operating performance of the company over time. They should not be considered in isolation or as a substitute for GAAP measures. A reconciliation of any non-GAAP measures to the nearest GAAP measure can be found in the Company's earnings release.

Jeff, will now begin his update with an overview of our industry and business performance for fiscal year 2017 and the expectation for fiscal year 2018.

Jeffrey Graves

Thank you, Brian, and good morning, everyone. Thank you for joining us for our investor call today. We appreciate having the opportunity to discuss our results for the fourth quarter of fiscal 2017, which ended on September 30, in addition to recapping the full year. We'll also provide you with the outlook for our fiscal 2018.

As a general summary, fiscal 2017 was a watershed year for MTS as we completed our evolution into a comprehensive test and measurement company, having the scale, technology, leadership and the operational footprint to support our customer base worldwide. With over 50 years of success behind us, we've never been better positioned in both our Sensors and Test businesses for sustained growth and profitability in the years ahead.

So let me begin with the key takeaways from the fourth quarter and full year. First, we were pleased to end the fiscal year on a high note, driven by both our Test and Sensor businesses. The fourth quarter, we delivered over $200 million of revenue and record new orders that reflect the strength of our product technologies and our intense focus on total customer satisfaction. Sensors continued their positive momentum from the third quarter as anticipated, while Test surpassed even our highest expectations, delivering 12% orders growth year-over-year and 28% growth sequentially from the third quarter. This strong sales performance drove our year-end backlog for the full company to well over $350 million, with our Test backlog alone rebounding to over $300 million for the first time in several quarters. I'll comment in more detail on specific market segments that drove this performance in a moment.

Second, we were very pleased to have met our goals for the integration of the PCB Group in 2017 as the PCB organization and our legacy Sensor business were successfully consolidated into one MTS Sensors business unit, operating under a unified high-performing leadership team. In addition to optimizing our operations footprints and organization structure during the year, a significant amount of