Mechanical Technology Incorporated Announces 2016 Year End Results
New U.S. Air Force contract and investment from Brookstone Partners strengthen MTI
ALBANY, NY -- (Marketwired) -- 03/02/17 -- 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 analysis with 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 2016 full year results and business update.
- Product revenue increased by $726 thousand in 2016 compared to 2015. This increase was a direct result of activity under the new U.S. Air Force contract, which offset declines in commercial engine vibration analysis system sales.
- Gross profit rose to 61.4% in 2016 from 60.9% in 2015. Lower material costs due to the change in product mix, combined with lower overhead costs from reduced staffing, contributed to the overall improvement in 2016. This marginal improvement was diminished by a $350 thousand charge to inventory for excessive amounts built in advance of an order that did not materialize in 2016.
- Operating loss improved by $1.1 million during 2016 compared to 2015 primarily from the increased sales and improvement in the gross profit, combined with decreased research and development and selling, general and administrative expenses. Included in these expenses were one-time costs of approximately $90 thousand associated with the adoption of a shareholder rights plan in October 2016 and $271 thousand in non-cash expense for stock-based compensation related to the immediate vesting of stock options stemming from the $2.7 million investment by Brookstone Partners Acquisition XXIV, LLC ("Brookstone"), a private equity firm headquartered in New York City, in October 2016. Without these non-recurring expenses and the aforementioned charge to inventory, the Company would have generated operating income for the year.
- Cash was $3.4 million at the end of 2016 compared to $462 thousand at year end 2015, reflecting the impact of the Brookstone investment and positive cash flow from operations.
Rick Jones, Chief Executive Officer of MTI, commented, "2016 was a successful year at MTI, one filled with long-awaited realization, short-term disappointment and considerable promise. In July 2016, the U.S. Air Force finally awarded the Company a follow-on, multi-year contract for the purchase of new PBS4100+ and PBS4100R+ vibration measurement and balancing systems and corresponding maintenance of previously deployed systems and accessories. This was a key factor in the revenue growth that MTI experienced during 2016. On the other hand, a large anticipated order for our precision sensors failed to materialize during the year that, regrettably, resulted in a one-time charge for excess inventory. Brookstone's sizeable investment, mentioned above, for the purchase of 3.75 million shares of MTI common stock, however, immediately strengthened our balance sheet and currently provides MTI with the resources to execute strategic growth initiatives, including organic endeavors and potential acquisitions."
"As experienced in previous years, we expect the first quarter of 2017 to be a challenge with regard to new customer business. However, with effective control of operating expenses and sufficient working capital, MTI is poised to build upon last year's accomplishments as we proceed into the new year."
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 "we expect the first quarter of 2017 to be a challenge with regard to new customer business" is not historical fact and constitutes a forward-looking statement within the meaning of federal securities laws. Such forward-looking statement is made as of today, and MTI disclaims any duty to update such statement. 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 changes in national and global economic conditions that impact demand for our products and/or accelerated purchases of our products by our customers due to changes in their business needs.
Source: Mechanical Technology, Incorporated
Released March 2, 2017