Quarterly Waterjet Sales Up 40%, Annual Waterjet Sales Up 30%, Equity Raise
Allows for Elimination of Subordinated Debt
KENT, Wash., July 28 /PRNewswire-FirstCall/ -- Flow International
Corporation (Nasdaq: FLOW), the world's leading supplier of ultrahigh-pressure
waterjet products, today reported results for its fiscal 2005 fourth quarter
and year ended April 30, 2005. On a consolidated basis, FLOW reported
quarterly sales of $65.0 million, operating income of $6.3 million, or 9.7% of
sales, and a net loss of $4.7 million or $0.20 basic and diluted loss per
share, which includes in interest expense, the write off of $6.3 million in
debt discount and related loan fees. For comparison purposes, in the fiscal
2004 fourth quarter, the Company reported consolidated sales of $54.4 million,
operating income of $1.7 million and a net loss of $3.6 million or $0.23 basic
and diluted loss per share. The fiscal 2004 loss included restructuring
charges of $1.2 million and tax expense of $1.9 million for the future
repatriation of foreign earnings. FLOW paid off all of its subordinated debt,
as well as a significant portion of its senior debt, during the fourth fiscal
quarter, as a result of strong cash flow from operations and the completion of
a $59 million net Private Investment in Public Equity ('PIPE') transaction in
March 2005.
"We continue to progress against all measures by growing our core waterjet
business, and by continuing to increase operating profitability," said Stephen
R. Light, FLOW's President and Chief Executive Officer. "I am very pleased to
report 40% revenue growth in the quarter in our core waterjet business. In
addition to many positive developments during the quarter, including our PIPE,
we are particularly gratified to have recently received a number of awards in
recognition of our achievements in providing industry leading "customer" value
and restoring our Company to financial health. That others should choose to
take a fresh interest in the positive events at our Company, serves as
testament to the dedicated and ongoing efforts of everyone at FLOW."
For the year ended April 30, 2005, FLOW reported record sales of
$219.4 million, operating income of $11.5 million and a net loss of
$10.8 million or $0.61 basic and diluted loss per share. These 2005 results
include $862,000 in restructuring and financial consulting charges, as well as
$6.3 million in additional interest expense resulting from the amortization of
debt discount and related debt fees associated with the early pay-off of the
Company's subordinated debt. For comparison, in the 12 months ended April 30,
2004 the Company reported consolidated revenues of $177.6 million, an
operating loss of $1.9 million, and a net loss of $11.5 million or $0.75 basic
and diluted loss per share. Results for fiscal 2004 include restructuring and
financial consulting charges of $4.8 million and the tax expense of $1.9
million for the future repatriation f foreign earnings.
Operations Review
FLOW Waterjet: For the fiscal 2005 fourth quarter, the Waterjet
operations reported sales of $48.8 million and operating income of
$3.8 million, which compares to revenues of $35.0 million and an operating
loss of $431,000 in the fiscal 2004 fourth quarter. Waterjet continued to
perform well across all reporting geographies, with $5.7 million of the
$13.8 million increase attributable to standard systems and spares in North
America, where improved unit sales are a result of increased sales and
marketing activity. Throughout fiscal 2005, FLOW enhanced the awareness of
its waterjet technology through increased marketing and tradeshow efforts,
most notably the bi-annual International Manufacturing Technology Show in
September, 2004. The Company also increased sales and technical service
personnel and added two machine tool distributors in North America during the
past 12 months.
Within Waterjet during the fiscal 2005 fourth quarter and the 12 months
ended April 30, 2005:
-- For the quarter, total systems sales increased 55% to $35.6 million,
with $7 million of the $12.7 million increase from domestic system
sales. For the 12-month period, system sales increased 44% or $37.1
million to $122.1 million, on strong domestic and global demand
resulting from our increased marketing and sales investments. The
Company generated the bulk of the increase, or $25.1 million, through
an increase in domestic systems sales. The marketplace continues to
increase its recognition of the accuracy, speed, and versatility
advantages of the waterjet over conventional cutting technologies.
-- Waterjet sales in Asia and Europe were $16.1 million and $56.2 million
for the quarter and 12 months ended April 30, 2005, respectively. That
compares to $10.9 million and $45.1 million in the comparable quarter
and 12-month period in fiscal 2004, respectively. In particular, Asia
Waterjet sales increased $5.0 million or 24% for the year, driven
largely by sales in China, where the Company experienced strong demand
for shapecutting and cutting cell systems from a strengthening
automotive industry. In addition, FLOW continues to grow sales in
Europe as it benefits from more aggressive pricing, improvements in
standardized systems, and short lead-time delivery.
-- Consumables parts and service revenues increased 10% during the quarter
and 6% during the 12 months, to $13.2 million and $50.8 million,
respectively, with most of the increase from domestic sales a result of
the increasing number of operating systems, increasing sales of
proprietary productivity enhancing kits, as well as increased usage of
Flowparts.com for spare parts ordering.
Avure Technologies: For the fiscal 2005 fourth quarter, Avure recorded
sales of $16.2 million and operating income of $2.5 million or 15.4% of sales,
compared to sales of $19.4 million and operating income of $2.1 million in the
year-ago quarter. For the year, Avure sales were $46.4 million with operating
income of $2.6 million, compared to sales of $44.7 million with an operating
loss of $206,000 over the prior 12 months.
Within Avure during the fiscal 2005 fourth quarter and 12 months ended
April 30, 2005:
-- General Press revenue during the fiscal 2005 fourth quarter was $10.0
million, compared to $13.2 million in the prior-year quarter. For the
year, General Press revenue increased to $31.3 million from $29.5
million in the prior 12 months. All of this growth was experienced in
North America as the result of revenue recognized under two large
contracts obtained in fiscal 2004 and manufactured in fiscal 2005.
International Press sales for the year ended April 30, 2005 decreased
$7.3 million as compared to the prior year. The International Press
sales are almost exclusively large contract sales in excess of $2
million per contract and accordingly revenue will vary depending on the
number and stage of manufacture of these contracts. The Company
continues to benefit from an overall increase in production, even as
sales fluctuate due to the 1-4 year sales and production cycle.
-- Avure's Fresher Under Pressure(R) food technology revenue increased
slightly during the quarter to $6.2 million from $6.1 million in the
prior-year quarter. Fresher Under Pressure sales during the year
decreased slightly to $15.1 million, compared to $15.3 million over the
12 months in fiscal 2004. The decrease is attributable to the timing
of food systems production and the corresponding revenue recognition.
General Press Divestiture
The General Press operations, which consist of the North America Press and
International Press segments, while profitable, are not considered core to
Flow's business. In January 2005, the Company, with the assistance of Danske
Markets Inc., began to market the General Press operations, with a
confidential information memorandum. The Company is continuing to explore the
possibility of selling these segments. However, there can be no assurance
that the Company will find a suitable buyer at an acceptable price.
Debt Reduction
As a result of continued strong cash flow from operations and the $59
million net proceeds from the PIPE, FLOW paid off its total $49 million in
subordinated debt and interest and paid down its senior debt by $13 million.
The Company recorded an associated $6.3 million charge to amortize debt
discount and expense related loan fees. FLOW recently announced that it has
entered into a new three-year $30 million credit agreement with Bank of
America N.A. and U.S. Bank N.A. The new agreement replaced the Company's
short-term facility, which was due to expire on August 1, 2005, with the new
facility expiring July 08, 2008.
Conference Call
Flow International will host a conference call today at 1:00 p.m. EDT
(10:00 a.m. PDT) to discuss the results. A live Webcast of the 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 technology for cutting, cleaning,
and food safety applications, providing state-of-the-art ultrahigh-pressure
(UHP) technology to industries including automotive, aerospace, job shop,
surface preparation, food and more. For more information, visit
http://www.flowcorp.com.
This press release contains forward-looking statements relating to future
events or future financial performance that involve risks and uncertainties.
The words "believe," "expect," "intend," "anticipate," variations of such
words and similar expressions identify forward-looking statements but their
absence does not mean that the statement is not forward-looking. These
statements are only predictions and actual results could differ materially
from those anticipated in these statements based on a number of risk factors,
including those set forth in the December 20, 2004 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: Steve Reichenbach
Chief Financial Officer
253-850-3500
Flow International Corporation
Consolidated Statement of Operations
(Unaudited)
Dollars in thousands, except per share data
Three months ended April 30,
2005 2004 % Change
Sales $65,044 $54,356 20%
Cost of sales 38,979 34,463 13%
Gross margin 26,065 19,893 31%
Operating expenses:
Marketing 8,116 8,656 -6%
Research and engineering 3,015 1,788 69%
General and administrative 8,634 6,611 31%
Financial consulting -- -- NM
Restructuring -- 1,162 NM
Operating expenses 19,765 18,217 8%
Operating income (loss) 6,300 1,676 276%
Interest expense, net (9,206) (1) (3,160) -191%
Other income, net (1,144) 1,001 -214%
Loss before taxes (4,050) (483) NM
Income tax provision (631) (3,122) -80%
Loss before discontinued operations (4,681) (3,605) 30%
Discontinued operations, net of tax -- -- NM
Net loss $(4,681) $(3,605) 30%
Loss per share:
Basic and diluted
before discontinued
operations $(0.20) $(0.23) -13%
Basic and diluted $(0.20) $(0.23) -13%
Weighted average shares
outstanding (000):
Basic 23,644 15,586
Diluted 23,644 15,586
Year ended April 30,
2005 2004 % Change
Sales $219,365 $177,609 24%
Cost of sales 138,536 112,382 23%
Gross margin 80,829 65,227 24%
Operating expenses:
Marketing 32,032 28,422 13%
Research and engineering 9,692 10,651 -9%
General and administrative 26,783 23,261 15%
Financial consulting 623 1,520 -59%
Restructuring 239 3,256 -93%
Operating expenses 69,369 67,110 3%
Operating income (loss) 11,460 (1,883) NM
Interest expense, net (19,838) (1) (12,785) -55%
Other income, net (81) 7,817 -101%
Loss before taxes (8,459) (6,851) -23%
Income tax provision (2,338) (5,197) -55%
Loss before discontinued operations (10,797) (12,048) 10%
Discontinued operations, net of tax -- 526 NM
Net loss $(10,797) $(11,522) 6%
Loss per share:
Basic and diluted before
discontinued operations $(0.61) $(0.78) 22%
Basic and diluted $(0.61) $(0.75) 19%
Weighted average shares
outstanding (000):
Basic 17,748 15,415
Diluted 17,748 15,415
NM = not meaningful
(1) includes $6.3 million of debt discount and other fees written off
in conjunction with the pay-off of the Company's subordinated debt
Flow International Corporation
Statement of Operations
Operations Breakdown
(Unaudited)
Dollars in thousands, except per share data
Three Months ended April 30, 2005
Flow
Waterjet Avure
Systems Technologies Consolidated
Sales $48,830 $16,214 $65,044
Cost of sales 28,028 10,951 38,979
Gross margin 20,802 5,263 26,065
Operating expenses 16,952 2,813 19,765
Operating income (loss) 3,850 2,450 6,300
Three Months ended April 30, 2004
Flow
Waterjet Avure
Systems Technologies Consolidated
Sales $35,002 $19,354 $54,356
Cost of sales 21,570 12,893 34,463
Gross margin 13,432 6,461 19,893
Operating expenses 13,863 4,354 18,217
Operating income (loss) (431) 2,107 1,676
Year ended April 30, 2005
Flow
Waterjet Avure
Systems Technologies Consolidated
Sales $172,966 $46,399 $219,365
Cost of sales 107,324 31,212 138,536
Gross margin 65,642 15,187 80,829
Operating expenses 56,726 12,643 69,369
Operating income (loss) 8,916 2,544 11,460
Year ended April 30, 2004
Flow
Waterjet Avure
Systems Technologies Consolidated
Sales $132,861 $44,748 $177,609
Cost of sales 83,604 28,778 112,382
Gross margin 49,257 15,970 65,227
Operating expenses 50,934 16,176 67,110
Operating income (loss) (1,677) (206) (1,883)
Flow International Corporation
Supplemental Data
(Unaudited)
Dollars in thousands
Three months ended April 30, Year ended April 30,
2005 2004 % Change 2005 2004 % Change
Divisional revenue
breakdown:
Flow Waterjet
Systems:
Systems $35,588 $22,923 55% $122,129 $85,015 44%
Consumable
parts
and
services 13,242 12,079 10% 50,837 47,846 6%
Total 48,830 35,002 40% 172,966 132,861 30%
Avure
Technologies
Fresher
Under
Pressure 6,191 6,137 1% 15,072 15,297 -1%
General
Press 10,023 13,217 -24% 31,327 29,451 6%
Total 16,214 19,354 -16% 46,399 44,748 4%
------- ------- -------- --------
$65,044 $54,356 20% $219,365 $177,609 24%
Geographic
revenue
breakdown:
United States $38,745 $28,336 37% $128,975 $92,799 39%
Rest of
Americas 5,568 4,585 21% 19,468 17,751 10%
Europe 13,907 16,143 -14% 45,417 46,557 -2%
Asia 6,824 5,292 29% 25,505 20,502 24%
------- ------- -------- --------
$65,044 $54,356 20% $219,365 $177,609 24%
Depreciation
and
amortization
expense $1,155 $1,350 -14% $5,109 $6,167 -17%
Capital
spending $1,001 $854 17% $1,762 $5,863 -70%
Flow International Corporation
Condensed Balance Sheet Data
Dollars in thousands
April 30, April 30,
2005 2004 % Change
Cash, including short-term restricted
cash $13,445 $12,835 5%
Receivables, net 42,781 44,860 -5%
Inventories 24,218 26,384 -8%
Total current assets 90,001 90,611 -1%
Total assets 131,334 135,071 -3%
Total debt $19,147 $86,808 -78%
Total liabilities 90,818 142,263 -36%
Total shareholders' equity (deficit) 37,732 (9,552) NM
NM = not meaningful
SOURCE Flow International Corporation
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Related links:
http://www.flowcorp.com
CONTACT:
Steve Reichenbach, Chief Financial Officer of
Flow International Corporation, +1-253-850-3500
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