ALBANY, N.Y. -- (BUSINESS WIRE) -- Mechanical Technology, Incorporated (MTI or the Company), (Trading Symbol:MKTY), a company engaged, through its subsidiary MTI Instruments, Inc. (MTI Instruments), primarily in the design, manufacture and sale of test and measurement instruments and systems that provide solutions for precision linear displacement, vibration measurement and balancing developed for markets that require the exacting measurement and control of products and processes in the development and implementation of automated manufacturing, assembly, and consistent operation of complex machinery, announces its 2014 first quarter results and business update.
Product revenue in MTI Instruments for the three months ended March 31, 2014 decreased by $819 thousand to $1.4 million from $2.2 million during the three months ended March 31, 2013. This decrease in product revenue was attributable to the lack of sales of accessory kits sales to the U.S. Air Force under an existing contract, no semi-automated wafer metrology tool sales and a decline in commercial aviation balancing system activity.
Gross profit, as a percentage of product revenue, increased to 58.1%, compared to 55.7% for the same period in 2013 due to lower product material costs and the composition of the product sales mix.
Net loss for the three months ended March 31, 2014 was $432 thousand ($0.08 per share on a fully diluted basis) compared to net income of $86 thousand ($0.02 per share on a fully diluted basis) during the comparable 2013 period. This decrease in net income was primarily attributable to the decrease in product revenue.
“As anticipated from our experience in the fourth quarter of 2013, overall military spending, specifically new orders from the U.S. Air Force under existing contracts, and the projects incorporating our precision instruments in Asia continued to be delayed,” commented Kevin Lynch, our Chairman and Chief Executive Officer. “This directly impacted our earnings for the first quarter of 2014.
“Despite this shortfall, gross margins, as a percentage of revenue, remained strong at 58%. However, margin percentages are expected to decline as our market penetration strategy with major automated manufacturing and assembly companies in China gains strength and our sales volumes improve.
“At the same time, we continue to support our customer requirements through the successful achievement of ISO 9001:2008 certification, while also focusing on cost improvements through the ongoing implementation of lean manufacturing initiatives. Future fixed costs have also been lowered through the recent extension of our building lease.
“Inventories remain low and cash is being managed judiciously. We are also pleased to report that we recently entered into a new banking relationship with Bank of America, N.A. that improves our line of credit to $1.0 million.
“We are committed to our defined market strategy to grow in the markets of precision automated manufacturing, complex machinery measurement and analysis, and the developments to support these markets with our core instruments business. As a result, we are now beginning to realize this anticipated improvement with increased project and order activity. Additionally, the initial customer response to our newest product launch, the Accumeasure D, which targets precision measurement in industrial and electronics development and manufacturing, has been very favorable.
“Despite the slow start to 2014, we look for tangible improvements during the next quarter and throughout the year, in order to realize our goal of ongoing growth in sales and earnings.”
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 which are not historical fact, including “Margin percentages are expected to decline,” “Despite the slow start to 2014, we look for tangible improvements during the next quarter and throughout the year, in order to realize our goal of ongoing growth in sales and earnings,” and statements regarding our market penetration in China gaining strength, anticipated improvement in sales volume, our strategy and the significance of any new product development 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: revenue growth of our test and measurement instrumentation business may not be achieved; a reduction in defense department spending; our market penetration in China may not gain strength and thus our sales volumes will not improve; our inability to build and maintain relationships with our customers; significant periodic and seasonal quarterly fluctuations in our results of operations and the other risk factors listed from time to time in the Company’s SEC reports, including, but not limited to, our annual report on Form 10-K for the year ended December 31, 2013, and our quarterly reports on Form 10-Q.