ALBANY, N.Y.--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 measurement and 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 2015 full year results and business update.
- Product revenue decreased by $2.5 million in 2015 compared to 2014. Reduced instrument shipments to Asia resulting from the weakness in the Asian economies combined with the delays associated with the issuance of a new U.S. Air Force contract was not offset by sales of new product during 2015.
- Operating loss of $1.5 million in 2015, or a $0.28 operating loss per share, was primarily a result of the reduction in revenue.
- Gross profit, albeit strong at 60.9% but down compared to the 62.6% gross profit in 2014, was negatively impacted during 2015 due to the composition of the customer and product mix. The gross margin remains acceptable for the business as the mix continues to change.
- Cash was $462 thousand at the end of 2015 compared to $1.9 million at December 31, 2014, reflecting the impact of the operating losses for the year.
Kevin Lynch, Chairman and Chief Executive Officer of MTI commented that, “this was a very difficult yet productive year for MTI. With the economic conditions in Asia and the contract delays at the U.S. Air Force, we did not achieve our targets for growth in revenue and earnings. At the same time, we did make significant advances in business development with the qualification of digital Accumeasure and Microtrak 4 in original equipment manufacturers (OEM) equipment and process control applications at large global companies, as well as increased sales in the commercial aerospace segment of our business. We expect to see the positive impact of these efforts as we progress through the coming year.
We recently received the request for proposal by the U.S. Air Force for a five year supply of the PBS 4100+ systems, accessories and repairs. They informed us that they anticipate awarding us this contract by the end of April 2016. As no contract has yet been awarded, we cannot estimate what its structure or amount may be, but historically these contracts have resulted in close to $2.0 million in revenue per year.”
“At the end of 2015, the Company decided to increase the valuation allowance against the $1.3 million deferred tax asset that was originally established on our balance sheet at the end of 2011. This one-time, non-cash expense will provide a more understandable balance sheet for the Company and our investors, while still retaining significant net operating losses to offset future taxable earnings. This, along with our 2015 operating loss, resulted in the total reported loss of $2.8 million or $0.54 per share for the fiscal year.”
“During the first quarter of 2016, we began to initiate purchases under our stock repurchase program as our stock price has remained at low levels. Due to the limited volume traded on a daily basis, only a small number of shares have been accumulated to date. We will continue to evaluate our purchasing position on a periodic basis.”
“Entering 2016, the economic uncertainties continue to remain within Asia. The impact of the OEM qualifications are yet to be fully ascertained as we continue to work closely with the end user in developing the use of our products in their applications, drive new product development and execute our lean manufacturing initiatives. The first quarter is off to a slow start as we continue to see an overall weakness in revenues, but we are gradually building momentum in the Americas and Europe. We continue to implement every effort in order to increase revenue in both the near and longer term.”
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.
Statements in this press release that are not historical fact, including: our expectations regarding the award of a new U.S. Air Force contract and the timing thereof and “we expect to see the positive impact of these efforts as we progress through the coming year” constitute forward-looking statements within the meaning of federal securities laws. All forward-looking statements are made as of today, and MTI disclaims any duty to update such statements. 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: the U.S. Air Force does not award the contract due to procurement determinations within the federal government; the uncertainty of the global economy may affect demand for our products; our inability to build and maintain relationships with our customers; and the other risk factors listed from time to time in the Company’s reports filed with the Securities and Exchange Commission, including, but not limited to, our annual report on Form 10-K for the year ended December 31, 2015, and our quarterly reports on Form 10-Q.