KENT, Wash., Dec. 5 /PRNewswire-FirstCall/ -- Flow International
Corporation (Nasdaq: FLOW), the world's leading developer and manufacturer of
industrial waterjet machines for cutting and cleaning applications, today
reported results for its fiscal 2009 second quarter ended October 31, 2008.
For the quarter, Flow reported that consolidated revenues increased 5% to
$60.6 million, which compares to $57.8 million in the year-ago quarter. Net
income for the quarter was $0.4 million or $0.01 per basic and diluted share,
compared to $2.3 million or $0.06 per basic and diluted share a year ago.
Net income for the quarter just ended includes charges of $585,000 in
closure costs related to the Company's decisions to close its Burlington,
Ontario facility and to shift from direct sales to a distributor relationship
in Korea and to close its operation there. Excluding those items, net income
on a pro forma basis for the fiscal 2009 second quarter would have been $0.03
per basic and diluted share. Net income was also reduced by an unusually high
effective tax rate resulting primarily from the closure of the Burlington
facility.
Flow also announced that it has retained Allen Hsieh as its interim Chief
Financial Officer, replacing Doug Fletcher, and has appointed Dohn Johnson,
the Company's Corporate Controller since 2007, Principal Accounting Officer.
Mr. Hsieh has served as Chief Financial Officer at InfoSpace, Inc., a
publicly-traded company, and was a partner at PricewaterhouseCoopers.
"These are solid operating results in challenging times, with growth in
standard systems and parts sales globally and a 58% increase in our advanced
systems backlog," said Charley Brown, President and CEO of Flow. "We continue
to position the Company for the current global economic slowdown and for
growth when markets rebound."
Operations Review
For the fiscal 2009 second quarter, compared to the prior-year quarter:
-- Standard segment sales, which include sales of systems that do not
require significant custom configuration, as well as parts and services for
those installed systems, increased 11% from $50.5 million to $56.1 million.
Within the segment, standard shapecutting system sales increased 13% on strong
worldwide demand. Consumable parts sales increased 6% on a larger installed
base of standard systems.
-- Advanced segment sales, which include sales of complex aerospace and
automation systems requiring specific custom configuration and advanced
features, as well as parts and services for those installed systems, declined
as anticipated to $4.5 million from $7.3 million. The decline is partially
attributable to the inclusion of revenue in the prior year quarter from the
Company's now-closed unprofitable non-waterjet automation systems business.
In the current quarter the advanced segment backlog increased $11.3 million to
$30.7 million. This backlog will create strong segment growth beginning in
the fourth quarter.
-- Consolidated gross margins improved from 41% to 42%. Gross margins
were 130 basis points lower in the standard segment on a higher mix of system
sales versus consumables, and 560 basis points higher in the advanced segment
due in part to reduced fixed overhead from the Burlington closure.
-- Total operating expenses increased 9%. The increase is primarily due
to closure costs for Burlington and Korea and the bi-annual International
Manufacturing Technology Show (IMTS) in September.
-- Operating profit was $3.4 million, compared to $3.6 million a year
ago. Excluding the $585,000 in closure costs, operating profit improved 11%
and represented 7% of sales, in line with the year-ago quarter.
-- Other Expense was higher by $456,000 primarily as a result of
volatility in foreign exchange markets.
-- The effective tax rate during the quarter was 85%, compared to 37% a
year ago. The higher effective tax rate is attributable to current-year
losses in certain foreign jurisdictions for which the Company does not
anticipate a tax benefit. Of the $2.2 million in tax expense, approximately
$1.3 million represents a non-cash deferred tax benefit.
Conference Call
Flow plans to hold a conference call to discuss these results today:
Friday, December 5th at 1:00 p.m. Eastern Time (10:00 a.m. Pacific Time). The
conference call may be heard by dialing 1-303-242-0001. A 48-hour replay will
be available following the call by dialing 1-303-590-3000; the replay passcode
is 11123128. A live audio Webcast of the conference call may be found in the
investor section at 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 and
cleaning. Flow provides state-of-the-art ultrahigh-pressure (UHP) technology
to numerous industries including automotive, aerospace, job shop, surface
preparation, food and dozens more. For more information, visit
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 April 30, 2008 Flow International Corporation
Form 10-K Report, filed with the Securities and Exchange Commission. Forward-
looking statements in this press release include, without limitation,
statements regarding strength in advanced system and spare parts sales and
increased backlog. Readers are cautioned not to place undue reliance on these
forward-looking statements that speak only as of the date of this
announcement.
Contact:
Flow Investor Relations
Geoffrey Buscher
253-813-3286
investors@flowcorp.com
Flow International Corporation
Consolidated Statements of Income
(Unaudited)
US Dollars in thousands,
except per share data
Three months ended Six months ended
October 31, October 31,
2008 2007 %Change 2008 2007 %Change
Sales $60,578 $57,757 5% $117,643 $115,616 2%
Cost of sales 34,939 33,795 3% 65,873 68,351 -4%
Gross margin 25,639 23,962 7% 51,770 47,265 10%
Operating expenses:
Sales and
marketing 11,902 10,905 9% 21,999 21,303 3%
Research and
engineering 2,278 2,145 6% 4,528 4,425 2%
General and
administrative 7,578 7,300 4% 16,169 19,562 -17%
Restructuring
charges 444 - NM 1,880 - NM
Operating expenses 22,202 20,350 9% 44,576 45,290 -2%
Operating income 3,437 3,612 -5% 7,194 1,975 264%
Interest income, net (37) 156 -124% 12 265 -95%
Other expense, net (842) (579) 45% (449) (334) 34%
Income before taxes 2,558 3,189 -20% 6,757 1,906 255%
Income tax
(provision) benefit (2,162) (1,170) 85% (4,831) 460 NM
Income from
continuing operations 396 2,019 -80% 1,926 2,366 -19%
Discontinued operations,
net of tax 16 276 -94% 89 363 -75%
Net income $412 $2,295 -82% $2,015 $2,729 -26%
Per share amounts:
Basic income from
continuing
operations $0.01 $0.05 NM $0.05 $0.06 NM
Diluted income
from continuing
operations $0.01 $0.05 NM $0.05 $0.06 NM
Basic net income $0.01 $0.06 NM $0.05 $0.07 NM
Diluted net income $0.01 $0.06 NM $0.05 $0.07 NM
Weighted average shares
outstanding (000):
Basic 37,595 37,326 37,593 37,314
Diluted 37,595 37,511 37,596 37,540
NM = not meaningful
Flow International Corporation
Supplemental Data
(Unaudited)
US Dollars in thousands
Three months ended Six months ended
October 31, October 31,
2008 2007 %Change 2008 2007 %Change
Divisional revenue
breakdown:
Systems $43,172 $40,968 5% $82,258 $82,432 -0.2%
Consumable
parts 17,406 16,789 4% 35,385 33,184 7%
Total $60,578 $57,757 5% $117,643 $115,616 2%
Segment revenue
breakdown:
Standard $56,069 $50,469 11% $108,821 $101,231 7%
Advanced 4,509 7,288 -38% 8,822 14,385 -39%
$60,578 $57,757 5% $117,643 $115,616 2%
Depreciation and
amortization expense $1,047 $1,047 0% $2,097 $1,780 18%
Capital spending $3,642 $1,116 226% $4,942 $2,511 97%
Flow International Corporation
Selected Balance Sheet Data
US Dollars in thousands
October April
31, 30,
2008 2008 %Change
Cash $23,147 $29,099 -20%
Receivables, net 37,622 33,632 12%
Inventories 26,699 29,339 -9%
Total debt 4,440 4,428 0.3%
Flow International
Corporation
Reconciliation of GAAP to
Proforma
(Unaudited)
US Dollars in thousands,
except per share data
Three months Six months
ended October 31, ended October 31,
2008 2007 2008 2007
GAAP Income from
Continuing Operations $396 $2,019 $1,926 $2,366
Adjustments:
Restructuring Charges
Severance and Termination
Benefits 585 - 1,880 -
Inventory Write-Off - - 108 -
Premium from Warrant
Repurchase - 629 - 629
Change in German Tax Law - 389 - 389
Amendment of Former CEO
Contract - - - 2,891
Reversal of German
Valuation Allowance - - - (1,160)
Proforma Income from
Continuing Operations $981 $3,037 $3,914 $5,115
GAAP Net Income $412 $2,295 $2,015 $2,729
Adjustments:
Restructuring Charges
Severance and Termination
Benefits 585 - 1,880 -
Inventory Write-Off - - 108 -
Premium from Warrant
Repurchase - 629 - 629
Change in German Tax Law - 389 - 389
Amendment of Former CEO
Contract - - - 2,891
Reversal of German
Valuation Allowance - - - (1,160)
Proforma Net Income $997 $3,313 $4,003 $5,478
Per Share Amounts
GAAP Basic and Diluted
Income Per Share
Income from Continuing
Operations $0.01 $0.05 $0.05 $0.06
Net Income $0.01 $0.06 $0.05 $0.07
Proforma Basic and
Diluted Income per Share
Income from Continuing
Operations $0.03 $0.08 $0.10 $0.14
Net Income $0.03 $0.09 $0.11 $0.15
