Revenues Up 10% as Compared to Fiscal 2007 First Quarter
KENT, Wash., Sept. 11 /PRNewswire-FirstCall/ -- Flow International
Corporation (Nasdaq: FLOW), the world's leading developer and manufacturer
of industrial waterjet machines used for cutting and cleaning applications
around the world, today reported results for its fiscal 2008 first quarter
ended July 31, 2007. For the quarter, Flow reported that consolidated sales
grew 10% to $58.7 million over the prior year quarter.
Charley Brown, Flow's President and Chief Executive Officer, stated, "I
am pleased with the Company's strong performance in the first fiscal
quarter of 2008. Importantly, Flow's results this past quarter would have
been even more impressive were it not for the impact of order delays
affecting our aerospace business. We continue to see increasing global
demand for our waterjets and we are taking the steps necessary to
reposition the company for enhanced growth and shareholder value creation.
I look forward to building on these solid results and taking Flow to the
next level."
Flow reported net income of $377,000 or $0.01 per basic and diluted
share. Reported Net Income would have been $1.9 million or $0.05 per basic
and diluted share, if the non-recurring items related to the $2.9 million
expense of the retired CEO's contract amendment and a $1.3 million tax
benefit from the reversal of a valuation allowance at Company's German
subsidiary, were excluded. By comparison, for the fiscal first quarter
ended July 31, 2006, Flow reported net income of $3.0 million or $0.08 per
basic and diluted share. The year-ago first quarter included a loss of
$726,000 related to the sale of certain discontinued operations.
"While we have made progress in some areas we continue to focus on
improving Flow's gross profit margins and operating leverage," Brown added.
"I have been with Flow for two months, and my in-depth review of processes
and strategy throughout the organization is well underway. As a result of
this review, we have already identified numerous opportunities to maintain
our strong growth trajectory while implementing global processes and best
practices across the organization. We are confident that these efforts will
allow us to reduce costs, improve execution, and enhance customer service."
Operations Review
For the fiscal 2008 first quarter, compared to the prior-year quarter:
-- Standard systems sales grew 27% to $35.7 million globally and total
systems sales including aerospace and applications systems increased
9% to $42.7 million.
-- Revenues from consumables increased 14% to $16 million globally, as
the Company continues to increase its installed base of machines and
its share of ongoing spare parts and maintenance work for those
systems.
-- North America Waterjet sales, excluding sales to the aerospace
industry, were up a strong 21% to $28.3 million on increased market
penetration and the impact of the Company's new Hyperpressure 87K
product line.
-- Aerospace industry revenues were down 66% to $2.8 million. Notably,
the prior year period was a quarter that included revenue from the
first round of Boeing 787 orders and Airbus contracts that were
formally terminated during Q2 of fiscal 2007. Flow expects that a
shift in the timing of large follow-on orders for aerospace systems
will lead to an improvement over the coming quarters. In July, the
Company announced it has been awarded its second multi-million dollar
contract to manufacture and install a multi-axis Composite Machining
Center (CMC), abrasive waterjet and routing machine tool system for
use on the Airbus A320 program.
-- Europe and South America sales, which make up the Other International
Waterjet segment, increased 44% to $15.3 million, due to continued
strong demand in those geographies for shapecutting systems and spare
parts. Comparison to the prior year also benefited from the weaker US
Dollar to the Euro. Flow expects to continue to benefit from the
formal introduction of the 87,000 psi Hyperpressure pump at the
upcoming EMO Exposition in Hanover, Germany.
-- Sales in Asia were down 4% due to the slowdown in the flash memory
semiconductor industry and the impact of last year's investigations.
The new management team in Asia is focused on rebuilding revenue
momentum and has made progress in developing other market
opportunities in the region.
-- Applications segment sales were up 35%. The Applications segment
includes systems for robotic articulation applications and automation
systems which may or may not use waterjets. While some progress has
been made to reposition this business to waterjet only applications,
the segment continues to generate unacceptable bottom line results.
Flow has decided to exit the non-waterjet systems business and will
only complete work on open contracts for non-waterjet systems. As a
result, the Company has reduced the work force at its Burlington,
Canada facility by 20%.
Conference Call
Flow plans to hold a conference call to discuss these results on
Tuesday, September 11 at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time).
The conference call may be heard by dialing 1-303-262-2130. A 48-hour
replay will be available following the call by dialing 1-303-590-3000; the
replay passcode is 11096956. 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.
Except for historical information contained herein, statements in the
release are forward-looking statements that are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve known and unknown risks and
uncertainties, which may cause the Company's actual results in future
periods to differ materially from forecasted results. Those risks include,
but are not limited to, risks associated with maintaining strong growth,
implementing global processes and best practices, reducing costs, improving
execution, and enhancing customer service, large follow-on orders in the
aerospace business that will lead to improvement in coming quarters,
continued benefit from the formal introduction of the 87,000 psi
Hyperpressure pump, and increasing spare parts sales. Other risks are
described in the Company's filings with the Securities and Exchange
Commission (the "SEC") over the last 12 months, copies of which are
available from the SEC or may be obtained from the Company.
Flow International Corporation
Consolidated Statement of Income
(Unaudited)
Dollars in thousands,
except per share data
Three months ended July 31,
2007 2006 % Change
Sales $58,666 $53,410 10%
Cost of sales 35,066 30,378 15%
Gross margin 23,600 23,032 2%
Operating expenses:
Sales and marketing 10,457 9,597 9%
Research and
engineering 2,280 2,294 -1%
General and
administrative 12,416 7,020 77%
Operating expenses 25,153 18,911 33%
Operating income (loss) (1,553) 4,121 NM
Interest income, net 108 94 15%
Other income, net 312 625 -50%
Income (loss) before
taxes (1,133) 4,840 NM
Income tax (provision)
benefit 1,510 (1,072) NM
Income from continuing
operations 377 3,768 -90%
Discontinued operations,
net of tax - (726) -100%
Net income $377 $3,042 -88%
Per share amounts:
Basic from continuing
operations $0.01 $0.10 NM
Diluted from continuing
operations $0.01 $0.10 NM
Basic $0.01 $0.08 NM
Diluted $0.01 $0.08 NM
Weighted average shares
outstanding (000):
Basic 37,303 37,075
Diluted 37,906 37,877
NM = not meaningful
Flow International Corporation
Supplemental Data
(Unaudited)
Dollars in thousands
Three months ended July 31,
2007 2006 % Change
Divisional revenue
breakdown:
Systems $42,693 $39,346 9%
Consumable parts 15,973 14,064 14%
Total $58,666 $53,410 10%
Segment revenue
breakdown:
North America
Waterjet $31,058 $31,509 -1%
Asia Waterjet 7,027 7,356 -4%
Other International
Waterjet 15,310 10,641 44%
Applications 5,271 3,904 35%
$58,666 $53,410 10%
Depreciation and
amortization expense $733 $706 4%
Capital spending $1,425 $945 51%
Flow International Corporation
Selected Balance Sheet Data
Dollars in thousands
July 31, April 30,
2007 2007 % Change
Cash $33,369 $38,146 -13%
Receivables, net 26,090 26,618 -2%
Inventories 28,624 26,635 7%
Total debt 4,278 9,967 -57%
Flow International Corporation
Reconciliation of GAAP to Proforma
(Unaudited)
Dollars in thousands,
except per share data
Three months
ended July 31, 2007
GAAP Operating Loss (1,553)
Adjustment for non-recurring events:
Amendment of Former CEO Contract 2,891
Proforma Operating Income 1,339
GAAP Income from Continuing Operations 377
Adjustments for non-recurring events:
Amendment of Former CEO Contract 2,891
Reversal of German Valuation Allowance (1,330)
Proforma income from continuing operations 1,939
GAAP Net Income 377
Adjustments for non-recurring events:
Amendment of Former CEO Contract 2,891
Reversal of German Valuation Allowance (1,330)
Proforma income from continuing operations 1,939
Per Share Amounts
Basic Diluted
GAAP Income from Continuing Operations 0.01 0.01
Adjustments for non-recurring events:
Amendment of Former CEO Contract 0.08 0.08
Reversal of German Valuation Allowance (0.04) (0.04)
Proforma income from continuing operations 0.05 0.05
GAAP Net Income 0.01 0.01
Adjustments for non-recurring events:
Amendment of Former CEO Contract 0.08 0.08
Reversal of German Valuation Allowance (0.04) (0.04)
Proforma income from continuing operations 0.05 0.05
Basic Diluted
Weighted average shares outstanding (000): 37,303 37,906
SOURCE Flow International
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Related links:
http://www.flowcorp.com
CONTACT:
Flow Investor Relations, +1-253-813-3286
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