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MKS Announces Third Quarter Fiscal 2009

Waterloo, ON - February 24, 2009:MKS Inc. (MKS) (TSX: MKX), the global application lifecycle management (ALM) technology leader, today announced its financial results for the third quarter ended January 31, 2009. All amounts are reported in US dollars under United States Generally Accepted Accounting Principles.

Waterloo, ON - February 24, 2009:MKS Inc. (MKS) (TSX: MKX), the global application lifecycle management (ALM) technology leader, today announced its financial results for the third quarter ended January 31, 2009. All amounts are reported in US dollars under United States Generally Accepted Accounting Principles.

Financial & Operational Highlights

Q3 2009 (compared with Q3 2008)

  • Year to date revenue increased 12% to $44.8 million from $40.0 million
  • Revenue for the quarter increased 3% to $13.2 million from $12.8 million
  • Income from operations for the quarter increased $1.2 million to $0.4 million from a loss of $0.8 million
  • Net income for the quarter increased to $0.3 million or $0.01 per share compared to a net loss of $0.8 million
  • Quarterly ALM revenue increased 5% to $11.6 million from $11.0 million
  • Quarterly ALM license revenue decreased 12% to $2.8 million from $3.1 million
  • Quarterly ALM services revenue increased 21% to $2.5 million from $2.1 million
  • Quarterly ALM maintenance revenue increased 8% to $6.3 million from $5.8 million
  • Secured new contract wins at Abbott Laboratories, Magna Electronics, Northrop Grumman, Royal Bank of Canada, TomoTherapy Incorporated, Verizon Wireless, Vertex Pharmaceuticals, and Wincor Nixdorf

Closing cash balance at January 31, 2009 was $16.3 million, up from $12.9 million at April 30, 2008 and up from $10.6 million at October 31, 2008. During the quarter, MKS did not repurchase any shares under the terms of its Normal Course Issuer Bid.

"We were pleased to report continued growth in revenue and profitability for the current quarter and the first nine months of this fiscal year," said Philip Deck, CEO of MKS Inc. "We also enjoyed strong cash generation as we completed our largest seasonal quarter for maintenance renewals and collections."

"While our license result was below our general quarter to quarter trend, we continue to enjoy a solid pipeline of follow-on and new license opportunities" said Michael Harris, president and COO, MKS Inc. "The current economic climate has made some of our traditionally strong markets more challenging, but we continue to find demand from organizations where the benefits of better management of software development can drive faster release cycles and higher productivity."

Financial Review

Revenue for the third quarter of fiscal 2009 was $13.2 million, up 3 percent from $12.8 million from the third quarter of the prior fiscal year. Net income for the third quarter of fiscal 2009 was $0.3 million, or $0.01 per share, compared to a loss of $0.8 million, or $0.01 per share, reported in the third quarter of fiscal 2008.

Nine month revenues for fiscal 2009 increased 12 percent to $44.8 million compared with revenues of $40.0 million for the same period in fiscal 2008. Nine month net income was $2.3 million, an increase from a net loss of $0.9 million for the same period in fiscal 2008.

Third quarter fiscal 2009 Application Lifecycle Management (ALM) revenue was $11.6 million, up 5 percent, compared to revenues of $11.0 million reported in the third quarter of fiscal 2008.

Nine month ALM revenues for fiscal 2009 increased 13 percent to $39.2 million from $34.6 million for the first nine months of fiscal 2008.

Outlook

The Company is performing well under the current economic climate.

MKS has grown its revenue and profit to date in fiscal 2009 driven by the positive performance of the Company's primary operating segment, ALM. During the quarter, the Company did not see any deterioration in its historical maintenance renewal rate, which remains at over 90%. Service revenue continues to grow and backlog remains stable.

While MKS' license pipeline growth has slowed due to the economic uncertainties faced by its customers, the Company believes that the level of licensing in the third quarter of fiscal 2009 was primarily attributable to normal quarter to quarter variability in major transactions, as it was in third quarter of fiscal 2008, rather than to the deterioration of ongoing license opportunities.

MKS expects that license revenue, total revenue, and income from operations will be higher in the fourth quarter of fiscal 2009 compared with the third quarter of fiscal 2009.

MKS recorded growing operating profits and cash flow through the first nine months of this fiscal year. The Company maintains a policy to pay quarterly dividends to limit the accumulation of cash excess to the needs of its business.

The Company expects a continued decline in the Interoperability business of approximately ten percent annually.

Conference Call Details

Interested parties may access the call by dialing 800-734-1246 or 1-416-620-2013. A digital recording of the call will be available for seven (7) days following the call and may be accessed by dialing 800-558-5253 or 416-626-4100 and by entering reservation #21398702.

For summarized financial information, please click here

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 © 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.

For further information contact:
Douglas Sawatzky, Chief Financial Officer
MKS Inc.
519-883-3252
dsawatzky@mks.com

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