Measurement Specialties' Gross Margin and Net Income Improved in Third Quarter

2/14/2003 - Measurement Specialties, Inc. (AMEX: MSS), a designer and manufacturer of sensors and sensor-based consumer products, reported financial results for its third fiscal quarter and nine month period ended December 31, 2002. Net sales for the three months ended December 31, 2002 increased 7.0% to $28.4 million, as compared to $26.6 million for the same period last year. For the three months ended December 31, 2002, the Company reported net income from continuing operations of $1.0 million, or $0.08 per share (diluted), compared to a net loss from continuing operations of $1.3 million, or $(0.11) per share (diluted) for the three months ended December 31, 2001. Including the gain on the disposition of discontinued assets of $0.6 million, consolidated net income for the three months ended December 31, 2002 was $1.6 million, or $0.13 per share (diluted).

For the three months ended December 31, 2002, gross profit increased $2.8 million to $10.8 million from $8.0 million for the three months ended December 31, 2001. For the three months ended December 31, 2002, gross margin improved to 38.1% from 30.1% for the same period last year. Favorable inventory adjustments improved gross margin approximately 2 percentage points for the three month period ended December 31, 2002.

Net sales for the nine months ended December 31, 2002 increased 11.1% to $84.5 million, as compared to $76.1 million for the nine months ended December 31, 2001. For the nine months ended December 31, 2002, net sales were $44.5 million for the Consumer Products division and $40.0 million for the Sensor division, a 16.0% and 6.0% increase, respectively, over the same period last year. For the nine months ended December 31, 2002, gross margin improved to 34.3%, from 27.3% for the same period last year.

Frank Guidone, CEO stated “While several non-operating adjustments improved net income, the results from operations were solid, particularly at the gross margin level. The results of the restructuring and cost reduction efforts are clearly bearing fruit, especially in the Sensor division where facility consolidation and increased utilization of the China operation and the associated cost advantages have bolstered productivity and gross margin.” Mr. Guidone continued, “Securing the revolving facility from Fleet Capital will provide the liquidity to manage our seasonal working capital needs and, we believe, signals independent validation from the financial community that we have righted the ship. We continue to have challenges ahead, including resolving the class action litigation. We are disappointed with our insurance carrier’s denial of coverage in that case, and strongly disagree with their position. Regardless, management believes that resolving our pending litigation is the most significant step that remains in our otherwise successful turnaround.”

Operating expense was $9.3 million for the three months ended December 31, 2002, as compared to $9.4 million for the three months ended December 31, 2001. Included in operating expense for the three month period ended December 31, 2002 is $0.1 million associated with restructuring expense. Included in operating expense for the three month period ended December 31, 2001 is $0.8 million associated with goodwill impairment. For the three month period ended December 31, 2002, the Company estimates $2.3 million of the $2.8 million incurred for professional fees (included in operating expense) was non-recurring. Additionally, the Company incurred approximately $0.3 million in severance expense during this quarter. Several credits associated primarily with the reduction in bonus accrual and property tax refund, totaling approximately $0.7 million, offset operating expenses during the three month period ended December 31, 2002.

Measurement Specialties is a designer and manufacturer of sensors, and sensor-based consumer products. Measurement Specialties produces a wide variety of sensors that use advanced technologies to measure precise ranges of physical characteristics, including pressure, motion, force, displacement, angle, flow, and distance. Measurement Specialties uses multiple advanced technologies, including piezoresistive, application specific integrated circuits (ASICs), micro-electromechanical systems (MEMS), piezopolymers, and strain gages to allow their sensors to operate precisely and cost effectively.

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