Mechanical Technology Announces Second Quarter 2016 Earnings

Sales, earnings and cash rebound compared to the first quarter of
2016, followed by the award of the $9.35 million U.S. Air Force contract
immediately after quarter end

ALBANY, N.Y.–(BUSINESS WIRE)–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
second quarter 2016 results and business update.

  • Revenue decreased by $143 thousand for the second quarter of 2016 as
    compared to the same period in 2015. The decrease in product revenue
    is attributable to reduced instrumentation product shipments to Asia,
    combined with a minor decline in turbo-machinery sales.
  • Gross profit, as a percentage of product revenue, rose from 62.4%
    during the second quarter last year to 66.4% for the second quarter of
    2016. This upturn was attributable to lower overhead costs and
    improved inventory management reducing charges to reserves during the
    2016 quarter for potentially obsolete stock.
  • Net income was $108 thousand for the three months ended June 30, 2016
    compared to a net loss of $218 thousand for the three months ended
    June 30, 2015. The increase in net income is primarily a result of the
    improvement in gross margins and the decreased spending in the sales
    department, overhead and administration.
  • Cash was $529 thousand at the end of the second quarter, an increase
    of $67 thousand from December 31, 2015, a result of consistent
    controls in spending, receivables and payables.

While revenue decreased compared to the second quarter of 2015, revenue
during the second quarter of 2016 increased by $583 thousand as compared
to the first quarter of 2016 as a result of increases in instrumentation
product shipments to the Americas and Asia, combined with an increase in
commercial turbo-machinery, while gross margins returned to levels
consistent with those regularly experienced prior to the first quarter
of 2016, and net income rose $694 thousand when compared to the first
quarter 2016 net loss of $586 thousand.

In addition, on July 1, 2016, the Company entered into a contract with
the U.S. Air Force to supply the Company’s PBS 4100+ and 4100R+
vibration measurement and balancing systems, along with associated
accessories and maintenance. The total contract, if fully executed, has
a value of $9.35 million, with the initial basic one-year term of the
contract having an estimated value of approximately $1.8 million.

“We are pleased with the efforts put forth by our entire organization
that achieved the positive results we have reported for this quarter”
commented Kevin Lynch, Chairman and Chief Executive Officer of MTI. “The
increase in sales compared to the first quarter of this year combined
with diligent cost control demonstrated our ability to achieve positive
earnings while continuing to develop both our products and markets.”

“With the long awaited award of the U.S. Air Force follow-on contract,
having a total value of $9.35 million, we can now move forward in
support the women and men of the U.S. Air Force in their
responsibilities to provide the maintenance for engine performance and
safety, which the PBS systems offer. We will be initiating deliveries
under this contract starting in the third quarter of 2016.”

“We are continuing to pursue additional sales opportunities in Asia with
our new products in laser, capacitance and the tensile tester product
portfolios. Despite the Asian market continuing its lackluster
performance, we do see a higher level of interest and activity emerging
from this region.”

“Overall, we anticipate an improved remainder of the year as we enter
the third quarter of 2016 with a stronger backlog and lower operating
costs, thus supporting our consistent strategy in precision test and
measurement sensors, instruments and systems.”

About MTI

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 is not historical fact, in
particular, “We will be initiating deliveries under this contract
starting in the third quarter of 2016” and “we anticipate an improved
remainder of the 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
failure of the U.S. Air Force to exercise its option to purchase
products under the new contract; that the uncertainty of the global
economy may affect demand for our products; variability of customer
requirements resulting in cancellations, reductions, or delays; 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.

Contacts

MTI
Lisa Brennan, 518-218-2500
lbrennan@mtiinstruments.com