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MKS Announces Record Second Quarter Results

Waterloo, ON – November 30, 2005: MKS Inc. (MKS) (TSX: MKX) today announced its financial results for the second quarter of fiscal 2006 which ended on October 31, 2005. All amounts are reported in US dollars under United States Generally Accepted Accounting Principles.

Waterloo, ON – November 30, 2005: MKS Inc. (MKS) (TSX: MKX) today announced its financial results for the second quarter of fiscal 2006 which ended on October 31, 2005. All amounts are reported in US dollars under United States Generally Accepted Accounting Principles.

Highlights for the quarter included:

  • Comparing Q2 fiscal 2006 to Q2 fiscal 2005:
    • 23 percent increase in total revenue, from $9.4 million to $11.5 million
    • Increased net income from $0.2 million or $0.00 per share to $0.9 million or $0.02 per share
    • 31 percent growth in application lifecycle management (ALM) revenues from $7.3 million to $9.6 million
    • $0.6 million improvement in ALM profit from a loss of ($0.2) million to $0.4 million.

“We were pleased to deliver a quarter that was right on track with continued license growth, outstanding services performance and steady maintenance revenue gains,” said Philip C. Deck, CEO of MKS. “We were particularly gratified by the substantial increase in profitability and cash flow this quarter, delivered without the reliance on any large license transactions and given the Company’s continued significant investments in growth.”

  • Significant customer wins at Automatic Data Processing (ADP) Inc.; Axalto N.V.; BearingPoint Inc.; Continental Automotive Systems; The Centers for Medicare & Medicaid; Deutsche Lufthansa AG; Federal Aviation Administration; NCR Corporation; The Neiman Marcus Group Inc.; Royal Bank Financial Group; Tele Atlas N.V.; Volkswagen AG; and Wincor Nixdorf International GmbH.
  • 19 contracts worth greater than $100,000 vs. 17 in the same period last year
  • 94 percent growth in ALM service revenue over the second quarter of fiscal 2005.
  • MKS Integrity Suite® acclaimed by UK analyst firm Butler Group as “powerful and enterprise strength.”
  • Partnership with RCM Technologies providing access to deep consulting, implementation and process expertise across the United States, along with new partnerships with Anexinet Corporation, ARTiSAN Software, DCDP Ltd., Highbury Solutions, iTKO Inc., Objects Logic, Parasoft Corporation, Phoenix Business and Systems Process Inc., ProxyCo, and Utopia Solutions.

“Our attention continues to be focused at building on our outstanding win rate and record of successful deployments through aggressive field force expansion” said Michael Harris, MKS President and COO, “We are also making significant investments in marketing, PR and partnering to raise our profile across our target markets.”

Management Changes
Today MKS announced changes to its management organization. Michael W. Harris has been promoted to President, in addition to his longstanding role as Chief Operating Officer. All employees of MKS will now report through Mr. Harris in this expanded capacity. Mr. Harris will continue to report to Philip C. Deck, Chairman and CEO, whose role and title remains unchanged. Douglas Sawatzky, Vice President Finance has been promoted to Chief Financial Officer. Robert Dietrich, formerly CFO, is leaving the company.

“Today’s management changes reflect the entire board’s continued appreciation and confidence in Michael’s role in the success of MKS. With our continued profitable growth, we continue to evolve the structure of our organization towards better execution, organizational scalability and governance,” said Philip C. Deck. “I would like to congratulate Michael and Doug on their expanded responsibilities and to thank Rob for his tireless efforts and significant role in the rebuilding of MKS over the past 4 years.”

Financial Review
Total revenue for the second quarter of fiscal 2006 was $11.5 million, a 23 percent or $2.1 million increase from $9.4 million in the second quarter of fiscal 2005. Net income for the second quarter of fiscal 2006 was $0.9 million, or $0.02 per share, an improvement of 356 per cent or $0.7 million compared to net income of $0.2 million or $0.00 per share in the second quarter of fiscal 2005.

Six month revenue for fiscal 2006 was $22.3 million, a 22 percent or $4.1 million increase from $18.2 million for the same period in fiscal 2006. Six month net income was $1.5 million, up $1.1 million, or $0.03 per share, from the net income of $0.4 million, or $0.01 per share, reported in the same period of fiscal 2005.

Second quarter fiscal 2006 ALM revenues were $9.6 million, representing 31 percent growth over ALM revenues of $7.3 million in the second quarter of fiscal 2005. The Company’s cash position increased to $10.5 million from $8.9 million during the quarter.

MKS expects that the trend of revenue growth will continue throughout fiscal 2006 by developing ALM licensing opportunities through expansion of existing customer relationships and through targeting of Global 1000 companies in its primary markets worldwide. MKS believes that the positive results in Q2 06 and the anticipated growth in ALM revenue in the balance of fiscal 2006 will lead to annual fiscal 2006 revenue in the range of $47 to $51 million, (increased from our expectation of a range of $46 to $51 million announced last quarter), and income from operations before tax in the range of $3 to $4 million (unchanged from our expectation last quarter). Factors to be considered in arriving at these ranges, identified in the April 30, 2005 MD&A, yet still relevant as of October 31, 2005, include: the intention of MKS to expand its sales and services staff, increased marketing expenditures and increased ALM research and development expenditures to ensure MKS maintains its technical leadership in the ALM market and the expectation that MKS's Interoperability business will decline 5 to 10 percent over the course of the year.

Conference Call Details
The Company will hold a conference call on November 30 at 5:00 p.m. EST to discuss its second quarter performance. Interested parties may access the call by dialing 877-871-9526 or 416-620-2400. A digital recording of the call will be available for one (1) week, from November 30, 2005 to December 07, 2005, and may be accessed by dialing 800-558-5253 or 416-626-4100 and by entering reservation #21268923.

For summarized financial information, please click here.

About MKS
MKS is the premier provider of application lifecycle management solutions for the global 1000. MKS’s solution spans from requirements management to deployment providing customers with enhanced development productivity, visibility over processes, and improved IT controls for regulatory compliance. MKS’s software is distinguished by its single architecture and deep integration of features delivering collaboration throughout the development lifecycle, rapid implementation and low total cost of ownership. Founded in 1984, MKS serves more than 10,000 customers in countries across the world. Whether through deployment of MKS’s solution strategically on an enterprise scale, or by leveraging individual components to solve project-level challenges, our customers can use MKS’s software to enable higher levels of process maturity, better manage global development activity and safeguard their most critical business applications and software assets. Under its widely known MKS Toolkit brand, MKS also provides UNIX-Windows co-existence and system administration that significantly cut development and administrative costs and reduce time to market, while enabling enhanced performance. More information about MKS can be found at http://www.mks.com, or by calling 1-800-265-2797 (US & Canada), +49-711-351775-0 (Germany), +44-1483-733900 (United Kingdom) and 1-519-884-2251 (Rest of World).

Copyright © 2005 MKS Inc. MKS, MKS Integrity Suite, and MKS Toolkit are trademarks or registered 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.

US and Canada Media Contact:
Email: pr@mks.com


Investor Contact:
David Mason
Equicom Group Inc.
Phone 416.815.0700 x237 E-mail dmason@equicomgroup.com

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