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MTS Systems Corporation (NASDAQ:MTSC)

F3Q10 (Qtr End 10/03/09) Earnings Call

August 06, 2010 10:00 a.m. ET

Executives

Sue Knight - VP & CFO

Laura Hamilton - CEO

Analysts

John Franzreb - Sidoti & Company

Liam Burke - Janney Montgomery Scott

Mike Hamilton - RBC

Operator

Good day ladies and gentlemen. Welcome to the MTS Third Quarter 2010 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Sue knight. Please go ahead.

Sue Knight

Thank you, Kathryn. Good morning and welcome to MTS systems fiscal 2010 third quarter investor teleconference. Joining me on the call today is Laura Hamilton, Chairman and Chief Executive Officer.

I want to begin by reminding you that statements made today which are not a historical facts could be considered forward looking statements as defined by the Private Securities Litigation Reform Act of 1995.

Future results may defer materially from these statement depending upon risks, some of which are beyond management's control. A list of such risks can be found in the company's latest SEC Form 10-Q and 10-K. The company disclaims any obligation to revise forward statements made today based on future events.

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 operating performance of the company over time they should not be considered in isolation or substitute for GAAP measures.

Laura will now begin her update in our third quarter results.

Laura Hamilton

Thanks Sue, okay let's start our call here and we have got four topics for today. I am going to start with key messages, where I will also take you through Q3 order summary. We are going to turn it back over to Sue who will do the financial details and then I am going to talk about market trends and the market and financial outlook. We have four key messages for Q3.

Our first message is that we are reached that orders held steady for the quarter at $94 million because this is right in the middle of our 80-110 range that we said is our quarterly order range.

Our second key message is Q3 revenue and profits before the legal settlement charge were low. Centers performance was outstanding but this was clearly overshadowed by our inability to turn the Test backlog were significantly impacted Q3 revenue.

Although it was consistent with our Q2 outlook we are disappointed in the performance but June results are inline with our Q4 expectations. Our third key message is that we did sell the pattern litigation loss through this quarter which resulted in a $6.3 million tax.

As we said this is related to the nanoindentation product line which we de divested in 2006.

It's really important that you know we do not knowingly or intentionally in fringe pattern and we are pleased to be moving forward on this manner. Our last headline is around affirming our previously provided outlook excluding the Q3 charge and we are going to talk more about this at the end of the call.

So, let me go in by orders, remember we do a sequential quarter comparison. Total company orders for Q3 came in at $94 million which as I said is the middle of our expected range and was flat with the second quarter.

This quarter we had one $6 million order in Test and that put based orders at about $88 million which is down to 7%.

We had said that we expected the Q1 and Q2 growth rates to slow but we're pleased that the base orders remain stable around $85 million plus or minus.

We do continue to see larger order opportunity and it will be lumpy. Back to us for the company is about 4% on flat orders which is really due to the slower turning backlog. Let's shift to sensors Q3 orders. At $21.7 million, sensors orders was up 3% from Q2 and 7% excluding currency. Q3 is the highest quarter since Q4 of fiscal year '08. If you step back a minute, our sequential growth in sensors this year was 6% in Q1, 19% in Q2 and 3% in Q3. So it's been very healthy.

Let's look at the industrial market within sensors. In the industrial market Q3 orders were flat and essentially flat in the U.S. and Europe and Asia because the small number does not move the total. But Asia was up for a sixth consecutive quarter. So that's good news.

The mobile hydraulics market, Q3 orders were up 16% and mobile hydraulics just exceeded 15% of the sensors order mix. This quarter the U.S. looked flat, although the U.S. was up significantly from Q1. But we were up nicely in Europe, especially in local currency.

Sensors backlog at $14 million is up 7%. This is a 2X increase over orders growth, which is due primarily to supply challenges. So while we face supply challenges everyday and it makes our daily life more difficult, its still within an acceptable business range.

So the summary for sensors orders, current quarter moderation in industrial feels appropriate considering the pace of the global economy and we're pleased with the mobile hydraulics growth, which is an example of new market and applications, enhancing our growth.

I'm going to shift over to test Q3 orders. At $72 million, test orders were down 1%, which was due to currency. Test orders include the $6.5 million order and there was no large order in Q2. So base orders again were within what we call the normal range or normal variability.

We did see a slight delay in Europe and we're keeping our eye on it and China continues to be very important in the overall test picture. The $6.5 million orders that we did book this quarter is from China and is related to rail. So that's good news.

The environment continues to be highly competitive, especially in automotive and China. The test opportunity pipeline, the build opportunities that we're working on and converting to orders was down 4% this quarter, half of which is attributable to currency. So we would consider that essentially flat.

We continue to see more large sized custom opportunities than during the recession or prerecession but at lower probabilities and slower conversion rates. So nothing has changed significantly in this area and this then of course contributes to this broader range of potential outcome. Backlog in test is up 4%, again due to the lack of turning the custom backlog.

So in summary for test, Q3 orders are within the expected range and stable. Wins in wind and rail demonstrates that our market development efforts are paying off.

Now Sue will take you through more of the financial details.

Sue Knight

Thank you Laura. My remarks today will focus on the second and third sequential comparison. Beginning with revenue sequential revenue declined 10% from 94 million to 85 million. Currency translation accounted for two points of the Test point decline.

The revenue decline was partially attributable to a $4 million lower beginning of quarter backlog but the majority was associated with the higher mix of slow returning custom projects and backlog and year-to-date custom orders are up 41% over last year.

As we commented in the second quarter we have experienced some specific engineering resource constraint and at a higher number of customers site redness delays than delays than normal.

We have been working through these issues for the last two months such as the project milestones and engineering are now been completed on schedule and moving into manufacturing in the fourth quarter.

On the segment level test revenue was down 40% to 65 million due to the reasons previously mentioned. Sensor revenue was up 7% to 20 million about two times the order rate on 14% higher beginning at quarter backlog.

We continue to experience some supply constraints as Laura mentioned that have resulted in slightly longer cycle times in the Sensor business. In the third quarter May was the weakest from the three months in terms of revenue volume and profitability as we were working to complete the large amount on engineering work in the custom backlog as well as observing the cost of manufacturing in efficiencies.

In June, the profitability and the custom project schedules were back in track which positions us to achieve our outlook for the fourth quarter.

Moving on to gross profit, it was down 14% or 5.3 million on 10% lower revenue. The decline was driven by Test which was down 24% on 14% lower volume. The 65 million of revenue Test is significantly lower than we have for many years and resulted in a high level of operations inefficiencies or unabsorbed cost in the quarter.

In addition, the comparable period in the second quarter includes a non-recurring warranty claim settlement of 800,000.

Sensors gross profit was up 16% or1.6 million, the benefit of a 7% increase in volume. The growth margin rate was 39.1% a decline of 1.8 points. The Test growth margin rate declined 4.5 point to 33% not surprising given the low revenue but it's still disappointing.

On the other hand Sensors increased 4.5 points to 58% delivering growth margin rate performance that was better than their previous prerecessionary performance on 15% less revenue.

Sensor has had an excellent quarter; this rate however will continue to have some variability due to mix and will likely be in depressor in the future from rising supplier cost.

Operating expenses for the 35 million an increase of 6 million from the second quarter due to the 6 million legal settlement cost which were non-recurring.

Excluding these costs operating expenses were flat compared to Q2 and within our planned quarterly operating expense range of 28 to 30 million. Operating expenses vary depending on the timing inside of the order related selling cost and the timing of investment expenditures. We also continue to prudently manage all costs as the economic picture remains uncertain.

Next topic is EBIT rate. The EBIT rate was negative 2% in the quarter. Excluding the nonrecurring legal cost, the EBIT rate in the quarter was 7%, compared to 11% in the second quarter. The test segment volume decline resulted in an impact of 5 points of decline, which was partially offset by one point of favorable contributions from higher sensors volume.

Next topic is tax. We had a $1.6 million tax credit in the quarter which occurred for three reasons. First, 700,000 was associated with the EBIT loss in the quarter. Second, we completed the analysis of our historical earnings in Germany and repatriated $45 million of cash.

As a result of the cumulative earnings and currency valuation, the repatriation resulted in a tax credit of $400,000. We are very pleased that we were able to cost effectively bring back a significant amount of cash from Germany.

Third reason, the lax of the statute of limitations on tax contingencies resulted in a tax benefit of approximately 0.5 million. This quarter's tax rate credit compares favorably to a more normalized tax rate in the second quarter of 36%.

While our quarterly rate in each of the first three quarters have been quite variable, due to geographic profitability mix and the impact of our reserves and cash repatriation, the full year tax rate estimate is expected to be in the range of 32 to 34%.

Moving on to earnings per share, earnings in the quarter was zero, compared to $0.37 in the second quarter. Excluding the legal settlement charges, earnings per share this quarter of $0.24 on 85 million of revenue compares favorably to Q1 when we had $0.23 of earnings on 89 million of revenue.

My last topic is cash and cash utilization. We ended the quarter with a strong $105 million cash balance. In the third quarter, cash from operations was 5 million, capital expenditures were 3.4 million, consistent with previous quarters and we paid 6.3 million of delayed payment for the fund acquisitions based on the original deal terms.

Dividends paid were 2.4 million, and 4.7 million was spent on share purchases, similar to the second quarter. The 7.5 million legal settlement payment will occur in the fourth quarter, not the third quarter results.

Our cash deployment priorities remain unchanged. The first priority is investment in the business. The second priority is to maintain a level of cushion in light of the continuing economic uncertainty and the third priority is to return excess cash to shareholders. We periodically evaluate ways to return cash to shareholders, including dividends and share purchases.

In summary, our financial results this quarter were mixed. The test revenue, volume and profitability were disappointing giving our opening backlog position. Sensors volume increased in the associated cost leverage again this quarter are great news. The German cash repatriation and health cash position are also noteworthy and we're glad to have the legal settlement behind us. We are very confident we'll have much better results in the fourth quarter.

Now I'd like to turn the call back to Laura.

Laura Hamilton

Okay, so let's just view market trends and market outlook and I am going to start by taking a look at year-to-date orders and trends. From a total company perspective we are up 20% year-to-date over fiscal year '09 and we would like to end the year at about 15 to 20% over last year. Both businesses are up 20% or better and clearly business conditions have improved over this period of time. We are winning in our core markets, although Test is facing strong competition.

The two interesting things I want to share with you the first is on a company basis year-to-date China is at $60 million in orders which is up 25% over last year. The other area company wide wind and rail year-to-date is at $20 million and is up 300% over last year though some great results in the year-to-date results.

So, how are we feeling about the market opportunity going forward? In general the biggest factor is the world wide economy and we still remain concerned about the fundamental and we believe there will be ups and downs. So, let's take a look now at our five key markets.

The first is Sensors industrial market, looking back over the last six quarters the first two quarters were clearly in decline and we hit a low below $15 million and we saw two quarters stabilize around $16 million and the last two quarters have been pretty steady at 18.

We would like to see this whole study in the near term given concerns about sustainability of the current market drivers. Clearly new applications allow us to outperform the market in this segment.

Moving to Sensors mobile hydraulic over the last six quarters, the first two quarters were at or less than a $1 million. This was an area that really stopped and then over the previous four quarters we have seen quick decline to about 3.5 million.

The outlook is dependent on the economic future for world wide construction and agriculture. But in addition this is new technology adoption and it's driving growth beyond economic conditions.

Let's shift to Test ground vehicles, over the last six quarters this has been essentially flat, albeit at a new lower level excluding this quarter's $6.5 million rate of order.

Investment funding is happening but clearly much more cautiously and competition continues. We see opportunity in test ground vehicles in China in both passenger car and rail as well as entire aerodynamics and after market.

Moving to the materials market, over the last six quarter this market has really held better through the recession than any other and we have been pretty steady for the last four quarters. Fiscal year '10 stimulus spending may not repeat. So, we are going to need to offset that by capturing opportunities in the base business and in China growth and finally the structures market.

It's the nature of this segment is much more episodic so it's much more difficult to drop conclusion based off for the trends. But our focus on wind is starting to pay off and we see opportunity going forward. In summary we have captured much of the opportunity that exists from the economic improvement this year and we see opportunity for fiscal year '11.

It maybe tampered by more slowing in the economy but we are responding to increased competition by strengthening our cost position and we're continuing to monitor the external environment and well respond to changes as required.

So let's finish with the fiscal year '10 financial outlook. In the last call we communicated a second half outlook. While the Q3 results excluding the settlement were weaker than expected due to test's drop in revenue, we are maintaining our full year outlook.

This means that for Q4 we expect sensors revenue and EBIT to hold versus Q3 and we say that with a high level of confidents. Test needs to deliver about 15 million more in revenue versus the third quarter and why are we confident we can do this?

So Q4 revenue will be significantly higher than Q3. It's not that far off from Q2 and we have the backlog. Engineering is meeting their project milestones and work is moving into manufacturing as expected and if we hit the revenue, June's results have demonstrated that we can deliver the earnings.

So excluding the one time settlement, fiscal year '10 full year outlook for the year for revenue is 365 to 375 million and for earnings per share to be between $1.20 and $1.30. Earnings per share including the settlement charge will be between $0.96 and $1.06.

So in closing the overall outlook for MTS is positive and while some aspects of our business did not meet our performance expectations this quarter, it was an interesting quarter as we were named Ferrari innovative supplier of the year. Ferrari recognized MTS for our uniqueness of attitude to innovation and our competence. Our uniqueness of attitude and our competent position us well for the opportunity ahead.

And we'll now turn the meeting over to Kathryn to open it up for questions.

Question-and-Answer Session

Operator

(Operator Instructions). And we'll hear first from John Franzreb with Sidoti & Company.

John Franzreb - Sidoti & Company

Good morning Laura and Sue.

Laura Hamilton

Good morning John.

John Franzreb - Sidoti & Company

First question is regarding the engineering resource issue that you pointed out. Did that mean that you didn't have enough personnel or the right mix of personnel to execute on the job? Could you just give us clarity into that?

Laura Hamilton

Okay, the comment is really about mix and so it's the same comment from last quarter. So as custom orders started coming in again, the mix of orders, so we had done a workforce reduction which we knew we were carrying excess capacity. So its not that we're saying we cut far below the volumes. It was the mix within engineering and it was specific small pockets and we didn't address it quickly enough with alternative resources.

John Franzreb - Sidoti & Company

So did you have to rehire?

Laura Hamilton

No. We really needed to, so one of the things we talk about is that we need increased flexibility. A great thing about MTS is the breadth. It's the breadth of our markets. It's the breadth of our applications; it's the breadth of our geographies. On the flip side it's challenging to have the right expertise on the right day and when you get multiple orders in one niche it means that we have to use more ways than just Bob the expert to work on this and we have been working on cost training maybe not exactly the right word but we have been working on ways of having more flexibility and I think just with the upturn coming up on such a low on custom we didn't were scientifically to these specific pockets.

John Franzreb - Sidoti & Company

Okay, change gears here. If I heard you correctly, I think you said in the sensor business that rise in supplier costs we are going to have an impact on margins, if I heard that correctly why can't you pass through those rising cost to your customers.

Laura Hamilton

I think what we are seeing is it's possible that rising supplier cost I think we are all in the midst of it right now between steel and electronics. So, I think what we are saying is we have done a good job so far and obviously pricing is one option but we need to be working, I mean we need to look at the whole picture. So, I think it was a more a caution than an absolute statement.

John Franzreb - Sidoti & Company

Okay fair enough and one last question then I am going to go back in the queue, Laura several times you mentioned or something you referenced to strong competition. Where is the competition coming from and what is doing, are you expecting orders at lower margins, what is your reaction to it?

Laura Hamilton

Okay, so I am trying to reiterate the same statement post recession so where is this coming from, the pie is smaller and nobody went away so it's that basic. It's everybody is trying to get a bigger piece of a smaller pie and we highlight things like ground vehicles in China because the ground vehicles market is the one that drops the most dramatically at the low 50% and everybody knows that you have to grow in China to outperform the world wide GDP.

So, no change in statement, very much trying to reiterate the same statement. So, that's where it is coming from, are we dropping our margins? No, we actually this year, year-to-date has maintained and we can see this vest on our standard, I mean our custom side of the business. We tracked sold margin and we have not seen degradation in our sold margin rates.

We do see price pressure and our response is cost program, so we are putting some pretty big stakes in the ground internally in terms of fundamentally changing cost position in order to stay competitive in this more competitive environment.

We still see that we are able to get price premium and what we are saying is I mean most people would die for a premium and we got to make the same amount of money if we are getting premiums even if the price is lower.

So, that's what we are working on.

John Franzreb - Sidoti & Company

Okay great, thanks. I will get back into queue.

Laura Hamilton

Great. Thank you.

Operator

Thank you. And we'll continue on with Liam Burke from Janney Montgomery Scott.

Liam Burke - Janney Montgomery Scott

Thank you. Good morning Laura. Good morning Sue.

Laura Hamilton

Good morning

Liam Burke - Janney Montgomery Scott

Laura, you spoke in the last several quarters about sensor demand being a function of inventory restocking and you had a wait and see added to in about where the sell through was on the end user side. Do you have any more visibility into that right now?

Laura Hamilton

This is the part Liam that's hard because sometimes we're selling to the OEM but then often we're selling to the cylinder maker. So our visibility is really watching our industrial business growth rate and that's where we were saying it should probably moderate and it did and we can see that new applications still help but we're pleased to be holding steady at this rate because it's a much better rate. But I think we're all still waiting to see how some of the stuff plays out at more a macro level

Liam Burke - Janney Montgomery Scott

Okay, and you mentioned two markets or applications, both China and then wind and rail contributing measurable order growth. Generally is it weighted more heavily towards test or sensor or how do you balance, what's the balance between those two?

Laura Hamilton

Well if you think about the company 80-20, then the numbers are more tests because test orders are larger. So what we're saying -- yes, so the numbers are more test than they are sensors and tests has been focused on China in particular for several more years. So a lot of the China growth has been more test focused although we see opportunity in both China and in winds for sensors as well.

Liam Burke - Janney Montgomery Scott

As you doing any terms of business in China?

Laura Hamilton

Yes we are.

Liam Burke - Janney Montgomery Scott

Okay, thank you.

Laura Hamilton

And the one comment I did make was that in industrial, that it was relatively flat. I think we're up $200,000 quarter-over-quarter and U.S. and Europe was flat but Asia was up for the sixth consecutive quarter. Our Asia business is either China or Japan. So that would be other insights.

Operator

Thank you Mr. Burke. And we'll continue on. And we'll hear from Mike Hamilton with RBC.

Mike Hamilton - RBC

Good morning.

Laura Hamilton

Good morning.

Mike Hamilton - RBC

First Laura, you had made a comment on seeing, as I interpreted it, seeing better activity in the pipeline with custom and test but seeing a lower probability on conversion. How do you assess that?

Laura Hamilton

So just to make sure that I've been clear, this is not Q2, like a change in Q3 versus Q2. This is this year.

Mike Hamilton - RBC

Yup.

Laura Hamilton

Okay. So we assess it in multiple ways. It drops so dramatically during the recession that much of this is companies starting to reinvest. I said we see opportunity in tire, in rail and aerodynamics. So one bucket is companies that had plans to do things, stop them and have started again but as they start back up the companies are slower and more cautious in their large investments s and so one of the things I think we all read daily is companies are more likely right now to invest in capital than people but even when there is investing in capital there more scrutiny on return on investment, there is more authorization levels and there is more goal stop behavior.

Mike Hamilton - RBC

My take away on that would be that your conversion experience isn't you don't anticipate it necessarily to be lower; it's that the timing following this through is going to be longer.

Laura Hamilton

Yes and so because we measure conversion on a 90 day, if you look at the conversion in the next 90 days, conversion rate is down because this is where I said it takes three opportunities for every, before we thought this set will disclose and the we said but we should have one in backup and today we have two in backup.

So, when we say conversion rate we don't mean win rate.

Mike Hamilton - RBC

Thank you. Don't want to put words in your mouth so I will put in Sue's for a minute here. As we look to fourth quarter implication here is your tax rate going back up into the 36% rate or better? And

Sue Knight

It's back in the 30s.

Mike Hamilton - RBC

I guess just thoughts on the go forward, I am a little surprised only because there has certainly been some credits thrown into the domestic mix that won't around. I am just asking from stand point of your sense of what's going on?

Sue Knight

Well the one item that would have the biggest positive impact for us would be the restatement of the R&D tax credit but based on the legislative activity it looks like that it won't happen during our fiscal year. So, our current rate excludes the benefit of that which typically is more than a point and if they approve it in their what has been their historical pattern it would happen in our Q1 but then that's our fiscal 2011.

So, we are certainly on top of the things that drive our tax rate down that are legislatively driven, there have been a couple of small things that have happened this year but they were shadowed some thing as large as the R&D tax credit that has not been reinstated.

Mike Hamilton - RBC

Thanks. Operating margin in sensor was obviously pretty spectacular, is that heavily mix I mean I realize there is a little bit of volume but what's your thought on that your takeaways, your look forward into the coming year?

Laura Hamilton

I think it's a great question and I think the uncertainty is, so there is the mix element and mix always matter in one to two points. So, that's important. The cost picture is important. I think we're all -- everybody -- it is our expectation that we keep up with inflation but at the same time some of these larger supply issues in electronics and steel can be a factor. We've also been very slow to invest and so that's a cautious, conservative approach. If we feel confident we're going to be a this level or better, we'll take some temporary things that we've done and we will make more permanent investments and then that would moderate slightly.

Mike Hamilton - RBC

Thanks. Then I guess finally, looking at your near term guidance and kind of taking a ballpark middle of the road, I would assess that you're incremental revenue going forward here is carrying an operating margin in the 41 - 42% range. Is that a realistic way of thinking and other particular impacts of custom test that we should be thinking about as we build the picture going out into '11?

Laura Hamilton

I think it's accurate. You were talking about incremental margins? I think that's reasonable. And so what should we be thinking about, lets walk through the sensors picture, what we need to think about and in sensors, the profitability is great and what we really want to do is make sure that we're maximsing growth, profitable growth and when sensors growth is quite profitable. So we don't really want to squeeze the sensor business if it means limiting the growth potential.

In the test business, I think the things we're looking at again, we need to watch what's going to happen with inflation but we need to keep the programs in place to offset it with cost improvement and I think pressure in the market, we really need to keep up with in terms of cost programs. So I think we want to see this test business level out at this better level of performance.

Mike Hamilton - RBC

But nothing particularly quirky in fourth quarter custom mix that either provides a caution or an opportunity?

Laura Hamilton

No.

Mike Hamilton - RBC

Okay, thanks. Just one side note, again very impressive on the tax management and being able to repatriate. Congratulations on all the hard work there.

Laura Hamilton

Thank you. We have a great tax department.

Sue Knight

Thank you.

Mike Hamilton - RBC

Thank you. That's it from me.

Operator

(Operator Instructions). We'll take a follow-up from John Franzreb.

John Franzreb - Sidoti & Company

I guess I would like to kind of address what you're thinking about Laura as far as, how to accelerate the growth profile of the company? You've talked about a lot of lumpiness, a lot of cyclicality in some of the businesses. Are you thinking maybe you could be more aggressive in the M&A market, internal development of new products, how to move the needle more aggressively than sitting back and taking what is the markets giving you?

Laura Hamilton

Okay I guess I don't start with the promise that we are sitting back and taking whatever the market gives us and so it's hard to answer the question. Are we going to be more aggressive on M&A? No. We don't believe that M&A is a growth strategy; we are going to execute our growth strategy. The five growth areas sensor, industrial is driven by our ability to start performance up and cost down. It is very organic it's about new applications and really I think what we are looking at there is, is there a way to drive the application engine faster and more effectively.

So, that's what we are working. Mobile hydraulic is a growth engine, it's small but it has very large long-term potential. We continue, we are in the midst of putting our next five year plan together for mobile hydraulic, again it's quite organic. There aren't really opportunities to accelerate our progress by buying things.

So, again it will be internal investment in mobile hydraulics. On the Test side geographic is number one and China is number one within that. We did the acquisition and now it's time to continue to drive our step turns that we have for the SANS acquisition as well as our China plan.

Again we are at the end of our five year growth plan for our organic growth plan, so we are re-upping that plan that's number one, the second area is lifecycle, lifecycle is longer term and we are really right now building the basic capabilities to deliver services and consulting in a different way kind of wrapped around pieces of equipment and then the last is our product leadership, our market development and our two focused areas up and beyond our wind and rail and we continue to work those, I think we have shown some great results as we are up and so I think we are sticking to the plan.

John Franzreb - Sidoti & Company

Okay just wanted to know what you are at.

Laura Hamilton

Good.

John Franzreb - Sidoti & Company

Thanks a lot.

Operator

Thank you and we have no additional questions at this time. I will turn things over to our speakers for any additional or closing remarks.

Laura Hamilton

So, thank you participating, thank you for your questions, I think it always helped us to understand what's on your mind. We have got the rest of this year to deliver which are on track to do and I guess in closing from John's question we do have these five areas. Our five growth areas, we are committed to them and we are very actively driving progress in each of them to secure the long-term future for MTS. Thank you.

Operator

Thank you, once again ladies and gentlemen that does conclude today's presentation. Thank you for your participation and have a great weekend.

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Source: MTS Systems Corporation F3Q10 (Qtr End 10/03/09) Earnings Call Transcript

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