Gross Profit Improves 27% on 14% Revenue Growth Versus Prior Year
KENT, Wash., March 15 /PRNewswire-FirstCall/ -- Flow International
Corporation (Nasdaq: FLOW), the world's leading supplier of ultrahigh-pressure
waterjet products, today reported preliminary results for its fiscal 2006
third quarter ended January 31, 2006. Flow reported on a GAAP basis
consolidated quarterly sales of $47.5 million and operating income of
$1.4 million, or 3% of sales. Net loss for the quarter on a GAAP basis was
$2.3 million or ($0.07) basic and diluted loss per share. The increase in
Flow's stock price had a significant impact on the Company's reported results
for the three and nine months ended January 31, 2006. Excluding the effect of
the stock price appreciation during the quarter on the Key Executive Retention
Program (KERP) of $427,000 and the fair value adjustment of the warrants
issued in the Private Investment in Public Equity transaction completed on
March 21, 2005 ("PIPE Transaction") of $2.1 million, pro forma net income
would have been $230,000 or $ 0.01 per diluted share.
For the nine months ended January 31, 2006, Flow reported on a GAAP basis
consolidated sales of $140.2 million, compared to $124.1 million during the
prior nine-month period in fiscal 2005. Including the impact of the
discontinued Avure business, GAAP net loss for the nine months ended January
31, 2006 was $1.3 million, or ($0.04) basic and diluted loss per share.
Excluding the effect of the stock price appreciation during the nine months
ended January 31, 2006 on the KERP of $1.4 million and the fair value
adjustment of the PIPE warrants of $7 million, pro forma net income would have
been $7.1 million or $ 0.20 per diluted share.
"The basic business is doing well, however, we continued to incur
significant professional fees to support public filings, Sarbanes-Oxley
compliance, and ongoing litigation," said Stephen R. Light, FLOW's President
and Chief Executive Officer. "We had a strong revenue and gross profit margin
quarter, with growth in many areas of our waterjet business. With the
exception of a few isolated industries such as automotive, our markets are
continuing to show strength. We are working hard to continue increasing our
penetration in each of those areas. The marketplace is recognizing that
waterjets represent a superior cutting technology for everything from a
composite jumbo jet wing to kitchen counter tops."
As previously reported, given the expense impact of recent increases in
the stock price and possible further expenses if such increases in the stock
price were to continue, FLOW terminated its KERP in February 2006 by
accelerating the payout of the retention awards. This program had been
established in July 2003, at the beginning of Flow's turnaround in order to
retain key executives. Total cost of this program during the quarter which
included the impact of the stock price appreciation was $1.5 million.
Remaining costs associated with the KERP of $284,000 will be expensed during
the fourth quarter of fiscal 2006, after which there will be no further costs
associated with the program.
By comparison, in the fiscal 2005 third quarter, FLOW reported on a GAAP
basis consolidated quarterly sales from continuing operations of $41.8 million
and operating income of $1.7 million or 4% of sales. The Company reported a
GAAP loss from continuing operations of $2.2 million or ($0.14) per basic and
diluted share in the year-ago period. The Company reported a GAAP net loss of
$3.5 million or ($0.14) basic and ($0.22) diluted loss per share, including a
$1.3 million net loss from discontinued operations related to the Company's
Avure business, which was divested during the fiscal 2006 second quarter and
was classified as a discontinued operation.
For the nine months ended January 31, 2005, Flow reported a GAAP net loss
of $6.2 million, or ($0.39) basic and diluted loss per share, including a
$2 million net loss from discontinued operations related to the Company's
Avure business.
Operations Review
For the fiscal 2006 third quarter, compared to the prior-year quarter:
-- Waterjet system sales accounted for 73% of revenues in the quarter and
increased 19% or $5.5 million from the prior-year quarter, primarily
from strong domestic shapecutting sales, as well as from increased
aerospace revenue. Revenues from aftermarket sales, increased $300,000
or 2% to $12.7 million, accounting for 27% of total revenues. The
Company believes that its spare parts sales will increase as more
systems are put into service.
-- North America Waterjet sales increased 17% to $25.3 million during the
quarter, on the strength of aerospace system deliveries. The aerospace
industry increasingly recognizes the accuracy, speed, and versatility
advantages of the waterjet over conventional cutting technologies.
-- Sales in Asia Waterjet increased 22% to $7.2 million on continued
growth in demand from the electronics industry in Taiwan.
-- Other International Waterjet sales, which consist primarily of sales
to Europe and South America, increased 20% to $9.8 million, on improved
system deliveries. In addition, sales to South America increased 29%
or $249,000 during the quarter as the Company increased its efforts to
boost shapecutting system sales to that region.
-- The "Other" segment revenues declined 17% to $5.3 million from
continued softness in the domestic automotive industry, as well as from
the closing and relocation of the Company's Wixom, Michigan facility to
its Burlington, Ontario facility.
Conference Call
Flow International will host a conference call today: Wednesday, March 15
at 1:00 p.m. Eastern Time (10:00 a.m. Pacific Time) to discuss these results.
The conference call may be heard by dialing 1-303-262-2137. A 48-hour replay
will be available following the call by dialing 1-303-590-3000; the replay
passcode is 11056150. In addition, a live audio Webcast of the conference
call may be found in the investor section at http://www.flowcorp.com. A Webcast
replay of the call will also be available for two weeks.
About Flow International
Flow International Corporation is the world's leading developer and
manufacturer of ultrahigh-pressure waterjet cutting technology to industries
including automotive, aerospace, job shop, surface preparation, and more. For
more information, visit http://www.flowcorp.com.
This press release contains forward-looking statements relating to
increasing spare parts sales, and increasing recognition of waterjet's
advantages for the aerospace and other industries. This statement is only a
prediction and actual results could differ materially based on a number of
risk factors, including those set forth in the April 30, 2005 Flow
International Corporation Form 10-K/A Report filed with the Securities and
Exchange Commission. Readers are cautioned not to place undue reliance on
these forward-looking statements that speak only as of the date of this
announcement.
The Company is under no obligation, and does not intend, to update any of
the forward-looking statements in this press release.
Contact: John Leness
General Counsel
253-850-3500
Flow International Corporation
Consolidated Statement of Operations
(Unaudited)
in thousands, except per share data
Three months ended Nine months ended
January 31, January 31,
% %
2006 2005 Change 2006 2005 Change
(restated)
Sales $47,530 $41,750 14% $140,201 $124,136 13%
Cost of sales 27,344 25,874 6% 79,748 78,697 1%
Gross margin 20,186 15,876 27% 60,453 45,439 33%
Operating expenses:
Sales and marketing 8,359 7,372 13% 23,808 20,664 15%
Research
and engineering 2,070 1,396 48% 5,640 4,273 32%
General and
administrative 8,306 5,377 54% 21,656 14,873 46%
Financial consulting -- -- NM -- 623 -100%
Restructuring 76 -- NM 661 -- NM
Operating expenses 18,811 14,145 33% 51,765 40,433 28%
Operating income 1,375 1,731 -21% 8,688 5,006 74%
Interest income
(expense), net 22 (3,664) -101% (1,341) (10,376) -87%
Other (expense)
income, net (2,906) 129 NM (5,820) 2,690 NM
(Loss) income
before provision
for income taxes (1,509) (1,804) -16% 1,527 (2,680) NM
Provision for
income taxes (398) (404) -1% (2,213) (1,533) 44%
Loss from
continuing operations (1,907) (2,208) -14% (686) (4,213) -84%
(Loss) income
from discontinued
operations, net of tax -- (1,293) -100% 966 (1,966) NM
Loss on sale of
discontinued operations,
net of tax (407) -- NM (1,554) -- NM
Net loss $(2,314) $(3,501) -34% $(1,274) $(6,179) -79%
Loss per share:
Basic and
diluted loss
from continuing
operations $(0.06) $(0.14) -60% $(0.02) $(0.27) -93%
Basic and
diluted
net loss $(0.07) $(0.22) -70% $(0.04) $(0.39) -91%
Weighted average shares outstanding (000):
Basic and diluted 34,653 15,950 34,516 15,847
Diluted 34,653 15,950 35,972 15,847
NM = not meaningful
Flow International Corporation
Supplemental Data
(Unaudited)
Dollars in thousands
Three months ended Nine months ended
January 31, January 31,
% %
2006 2005 Change 2006 2005 Change
Divisional revenue breakdown:
Flow Waterjet Systems:
Systems $ 34,847 $29,367 19% $100,518 $86,541 16%
Consumable parts
and services 12,683 12,383 2% 39,683 37,595 6%
Total $ 47,530 $41,750 14% $140,201 $124,136 13%
Segment revenue breakdown:
North America
Waterjet $ 25,330 $21,404 18% $76,901 $57,967 33%
Asia Waterjet 7,168 5,877 22% 20,404 18,681 9%
Other International
Waterjet 9,771 8,154 20% 27,013 23,686 14%
Other 5,261 6,315 -17% 15,883 23,802 -33%
$ 47,530 $41,750 14% $140,201 $124,136 13%
Depreciation
and amortization
expense $645 $ 1,408 -54% $2,982 $ 3,954 -25%
Capital spending $487 $315 55% $1,367 $761 80%
Flow International Corporation
Condensed Balance Sheet Data
in thousands
January 31, April 30,
2006 2005 % Change
(restated)
Cash, including
short-term restricted cash $ 27,261 $13,445 103%
Receivables, net 25,343 38,325 -34%
Inventories 20,173 24,218 -17%
Total current assets 85,789 84,666 1%
Total assets 104,110 118,467 -12%
Total debt $ 16,315 $19,147 -15%
Total liabilities 75,297 87,435 -14%
Total shareholders' equity 28,813 29,464 -2%
Flow International Corporation
Reconciliation of GAAP to Proforma
(Unaudited)
in thousands, except per share data
Three months Nine months
ended ended
Jan. 31, 2006 Jan. 31, 2006
GAAP Operating Income $1,375 $8,688
Impact of stock price appreciation on
Key Executive Retention Program Costs $427 $1,436
Proforma Operating Income $1,802 $10,124
GAAP Loss from continuing operations ($1,907) ($686)
Impact of stock price appreciation
on Key Executive Retention Program Costs $427 $1,436
Impact of stock price appreciation on fair value
adjustment recorded in other income and expense $2,117 $6,952
Proforma income from continuing operations $637 $7,702
GAAP net loss ($2,314) ($1,274)
Impact of stock price appreciation on
Key Executive Retention Program Costs $427 $1,436
Impact of stock price appreciation on fair value
adjustment recorded in other income and expense $2,117 $6,952
Proforma net income $230 $7,114
GAAP loss per share:
Basic and diluted loss from
continuing operations ($0.06) ($0.02)
Impact of stock price appreciation on
Key Executive Retention Program Costs $0.01 $0.04
Impact of stock price appreciation on fair value
adjustment recorded in other income and expense $0.07 $0.20
Proforma income per share:
Basic income from continuing operations $0.02 $0.22
Diluted income from continuing operations $0.02 $0.21
GAAP net loss per share:
Basic and diluted ($0.07) ($0.04)
Impact of stock price appreciation on
Key Executive Retention Program Costs $0.01 $0.04
Impact of stock price appreciation on fair value
adjustment recorded in other income and expense $0.07 $0.21
Proforma net income per share:
Basic $0.01 $0.21
Diluted $0.01 $0.20
Weighted average shares outstanding (000):
Basic 34,653 34,516
Diluted (pro forma) 36,029 35,972
SOURCE Flow International Corporation
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Related links:
http://www.flowcorp.com
CONTACT:
John Leness, General Counsel of Flow
International Corporation, +1-253-850-3500
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