MKS Says Business Is Booming Enough to Give Dividends

Published: June 12, 2006

by Timothy Prickett Morgan

Canadian software change management vendor MKS reported its financial results for its fourth quarter and year end for fiscal 2006 last week, and business is so good that the company has instituted the practice of giving investors dividends.

MKS had sales of $12.6 million (U.S. dollars, not Canadian) in its fourth fiscal quarter ended April 30, which was up only a smidgen from the same quarter last year, and its application lifecycle management (ALM) software sales declined by 2 percent to $10 million. The company brought a mind-bogglingly large $6 million to the bottom line, an increase of over 256 percent compared to the $1.5 million profit it booked in the year ago quarter, but that income included a $5.2 million gain from an income tax recovery relating to the re-evaluation of assets at the company. Still, for the full fiscal 2006 year, MKS booked sales of $48.3 million, up 17 percent, while net income rose to $9.1 million, more than triple the $2.7 million in profit MKS had in fiscal 2005.

Because the company increased its cash reserves to $15.7 million, it has decided to give out a dividend of 2 cents a share, payable on July 17. "Our long term strategy and commitment to profitable organic growth, has resulted in steady growth in cash," explained Philip Deck, chief executive officer at MKS in a statement accompanying the financial results. "Our dividend is intended to act as a long term mechanism to reduce the accumulation of excess cash by returning it to its owners."

Looking ahead, MKS says that the revenue growth trend that it has been riding for the past three years will continue in fiscal 2007. The company expects sales in the range of $57 million to $60 million for the current fiscal year, with $4 million to $6 million in pre-tax profits. That puts net income in the range of $2.6 million to $3.9 million with a tax rate of 35 percent.