Successful Microtrak 4 introduction not significant enough to offset revenue shortfalls
ALBANY, N.Y.– Mechanical Technology, Incorporated (MTI or the Company), (OTCQB:MKTY), a company engaged, through its subsidiary MTI Instruments, Inc. (MTI Instruments), in the design, manufacture and sale of precision test and measurement sensors, instruments and systems that provide solutions for linear displacement, vibration measurement and system balancing and tensile measurements in markets that require the exacting measurement and control of products and processes for automated manufacturing, assembly, and consistent operation of complex machinery, announces its third quarter 2015 results and business update.
- Revenue decreased by $644 thousand in the third quarter of 2015 as compared to the corresponding prior year period. Significant shortfalls were realized in the general instrumentation market as purchase activity declined, while business with the U.S. Air Force did not appreciably rebound during the quarter.
- We had an operating loss of $596 thousand in the third quarter of 2015, with a $0.12 loss per share, as a result of the impact of third quarter revenue reductions.
- Gross profit was negatively impacted in the third quarter of 2015 as a result of reserves established for slow moving inventory. Acceptable gross margins of 55.9% were still achieved during the quarter, while margins for the nine months ended September 30, 2015 remained above 60%.
- Cash was $899 thousand at the end of the third quarter and remained at the same level as the end of the prior year third quarter.
Kevin Lynch, Chairman and Chief Executive Officer of MTI commented that “the Microtrak 4 laser has been approved at a key client in Asia where we received initial orders with additional commitments for future purchases.”
As mentioned in previous releases, the Microtrak 4 is specifically designed to target larger volume automated assembly operations where higher data speeds, digital output and ease of integration is required.
“Despite this, the anticipated revenues from general instrumentation product sales during the third quarter were not realized and resulted in losses for the quarter. The economic slowdown across Asia has impacted capital spending on new equipment and automation, where we focus most of our resources. This clearly delayed our order realization.”
“Since the end of the quarter, we have seen the order frequency improve, but not to the levels we would normally expect to attain profitability. With the demand in Asia now uncertain, we have delayed purchases under our stock repurchase program in order to retain cash and avoid taking on debt that could add additional expenses. We expect to initiate purchases as cash generation improves.”
“Every effort to increase revenue is underway, as new contracts are being negotiated that will impact revenues in the coming quarters. These actions, which are in progress across all regions, are anticipated to improve overall revenues. To support our endeavors to increase both sales and earnings, we continue to drive new product development and our lean manufacturing initiatives.”
MTI is engaged in the design, manufacture, and sale of test and measurement instruments and systems through its subsidiary MTI Instruments, Inc. MTI Instrument’s products use a comprehensive array of technologies to solve complex, real world applications in numerous industries including manufacturing, electronics, semiconductor, solar, commercial and military aviation, automotive and data storage. For more information about the Company, please visit www.mechtech.com.
The statement in this press release that “new contracts are being negotiated that will impact revenues in the coming quarters” constitutes a forward-looking statement within the meaning of federal securities laws. All forward-looking statements are made as of today, and MTI disclaims any duty to update such statements. It is important to note that the Company’s actual results could differ materially from those projected in forward-looking statements. Factors that could cause the anticipated results not to occur include: the failure to enter into the anticipated new contracts due to the counterparties deciding to purchase from other providers, our inability to come to agreement with the counterparties; variability of customer requirements resulting in cancellations, reductions, or delays; our inability to build and maintain relationships with our customers; and the other risk factors listed from time to time in the Company’s reports filed with the Securities and Exchange Commission, including, but not limited to, our annual report on Form 10-K for the year ended December 31, 2014, and our quarterly reports on Form 10-Q.
Mechanical Technology, Incorporated
Lisa Brennan, 518-218-2500
Source: Mechanical Technology, Incorporated
Released November 5, 2015