Flow International Announces Second Quarter Results

Sales of Consumable Parts Set All-Time Record

Dec 02, 2010, 16:05 ET from Flow International Corporation

KENT, Wash., Dec. 2, 2010 /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 2011 second quarter ended October 31, 2010.

For the second quarter of fiscal 2011, Flow reported consolidated revenues of $52.9 million, a 26% increase from $42.0 million in the prior-year period.  Net loss in the current quarter was $0.3 million or $0.01 per share.  In comparison, the Company reported net income of $0.7 million or $0.02 per share in the prior-year period, which included a non-recurring $0.6 million gain on the sale of a facility.

Consolidated Adjusted EBITDA was $3.1 million in the second quarter of fiscal 2011 compared to $2.3 million in the year-ago quarter.  The Company’s definition of Adjusted EBITDA is included in the attached tables and also in its filings with the U.S. Securities and Exchange Commission.

“We are now seeing consistent orders for our standard systems in all regions of the world for the first time since the recession hit, and quarterly sales of our consumables have eclipsed our pre-recession highs,” said Charley Brown, President and CEO of Flow.  “We believe that our strategic growth initiatives, including our new indirect channel of distribution, have helped us turn this corner sooner than positive macroeconomic trends alone would have allowed.”

Operations Review for the Second Quarter of Fiscal 2011

  • 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, were $44.9 million, an increase of $13.4 million or 43% from the prior-year quarter.
  • Advanced segment sales, which include sales of complex aerospace and application systems requiring specific custom configuration and advanced features, as well as parts and services for those installed systems, were $8.1 million for the quarter, reflecting an anticipated $2.5 million decline from the prior-year quarter.  Advanced segment sales are recorded using the percentage of completion method, with lead times ranging as long as 18 to 24 months.
  • Aggregate gross margins were 38% for the quarter, compared to aggregate gross margins of 40% in the prior-year quarter.  Standard segment gross margins were consistent quarter over quarter at 42%. Advanced segment gross margins were 15% in the current quarter compared to 31% in the prior-year quarter.  The decline in Advanced segment gross margin was attributable to unanticipated costs for certain contracts, primarily related to the installation phase of the projects. The Company expects gross margins in the Advanced segment to return to normalized levels in subsequent periods.
  • Total operating expenses for the quarter were $19.0 million, compared to $16.9 million in the prior-year quarter, excluding the $0.6 million gain recognized on the sale of a facility.  The $2.1 million increase is primarily the result of the reinstatement of wages and benefits, commissions related to increased sales and depreciation related to our ERP system.

Conference Call

Flow plans to hold a conference call to discuss these results today:  Thursday, December 2nd at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time).  The conference call may be heard by dialing 877-941-1427 or 480-629-9664.  A 7-day replay will be available following the call by dialing 800-406-7325 or 303-590-3030.  The conference call passcode is 4387631.  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 cutting technology to industries including automotive, aerospace, job shop, surface preparation, and 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 Company’s filings with the U.S. Securities and Exchange Commission. Forward- looking statements in this press release include, without limitation, statements regarding  improving revenue, optimism for the indirect channel of distribution and the expectation that margins will return to normalized levels.  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 Operations

(Unaudited)











US Dollars in thousands, except per share data











Three months ended October 31,


Six months ended October 31,


2010


2009

% Change


2010


2009

% Change











Sales

$      52,935


$   42,037

26%


$ 99,515


$ 79,789

25%











Cost of Sales

33,082


25,405

30%


60,329


49,181

23%











Gross Margin

19,853


16,632

19%


39,186


30,608

28%











Operating Expenses:










Sales and Marketing

10,885


8,975

21%


21,481


16,891

27%

Research and Engineering

2,436


1,850

32%


4,582


3,547

29%

General and Administrative

5,659


6,071

-7%


11,617


13,193

-12%

Restructuring and Other Operating Charges

-


(601)

NM


-


4,222

NM

Operating Expenses

18,980


16,295

16%


37,680


37,853

0%











Operating Income (Loss)

873


337

NM


1,506


(7,245)

NM











Interest Expense, net

(393)


(421)

-7%


(785)


(1,345)

-42%

Other Income (Loss), net

104


(150)

NM


396


352

13%











Income (Loss) Before (Provision) Benefit for Income Taxes

584


(234)

NM


1,117


(8,238)

NM

(Provision) Benefit for Income Taxes

(804)


923

NM


(1,868)


1,529

NM











Gain (Loss) from Continuing Operations

(220)


689

NM


(751)


(6,709)

89%











Gain (Loss) from Discontinued Operations, net of tax

(103)


8

NM


(112)


(1,140)

90%











Net Income (Loss)

$         (323)


$        697

NM


$    (863)


$ (7,849)

89%





















Basic and Diluted Income (Loss) Per Share:










Income (Loss) from Continuing Operations

$        (0.01)


$       0.02

NM


$   (0.02)


$   (0.17)

89%

Net Income (Loss)

$        (0.01)


$       0.02

NM


$   (0.02)


$   (0.19)

89%











Weighted Average Shares Outstanding Used in Computing










  Basic and Diluted Income (Loss) Per Share (000):  










Basic and Diluted

47,160


42,841



47,102


40,295


Diluted  

47,160


43,158



47,102


40,295












NM = not meaningful



Flow International Corporation

Consolidated Balance Sheets

(Unaudited)


US Dollars in thousands


October 31,


April 30,

%


2010


2010

Change

ASSETS:





Current Assets:





Cash

$        6,892


$     6,367

8%

Receivables, net

40,437


35,749

13%

Inventories

27,213


22,503

21%

Other Current Assets

9,136


9,476

-4%

Total Current Assets

83,678


74,095


Property and Equipment, net

19,862


21,769

-9%

Other Long-Term Assets

34,724


35,345

-2%


$    138,264


$ 131,209


LIABILITIES AND SHAREHOLDERS’ EQUITY:





Current Liabilities:





Notes Payable

$        2,050


$        350

NM

Current Portion of Long-Term Obligations

28


61

-54%

Accounts Payable and Other Accrued Liabilities

23,381


23,272

0%

Other Current Liabilities

22,421


18,499

21%

Total Current Liabilities

47,880


42,182


Other Long-Term Liabilities

5,778


5,449

6%

Subordinated Notes

8,327


7,954

5%

Total Other Long-Term Liabilities

61,985


55,585







Shareholders’ Equity

76,279


75,624

1%


$    138,264


$ 131,209







NM = not meaningful



Flow International Corporation

Supplemental Data

(Unaudited)








US Dollars in thousands











Three months ended October 31,


Six months ended October 31,


2010


2009

%
Change


2010


2009

%
Change











Sales Breakdown:










       Systems

$      34,907


27,365

28%


$ 65,442


$ 51,769

26%

       Consumable Parts

18,028


14,672

23%


34,073


28,020

22%

  Total

$      52,935


$   42,037

26%


$ 99,515


$ 79,789

25%











Segment Revenue Breakdown:










     Standard

$      44,860


$   31,413

43%


$ 85,703


$ 59,780

43%

     Advanced

8,075


10,624

-24%


13,812


20,009

-31%


$      52,935


$   42,037

26%


$ 99,515


$ 79,789

25%































Depreciation and Amortization Expense

$        1,562


$     1,361

15%


$   3,184


$   2,593

23%











Capital Spending

$           452


$     3,485

-87%


$   1,149


$   7,957

-86%



Flow International Corporation

Reconciliation of Adjusted EBITDA to Net Income (Loss)

(Unaudited)


US Dollars in thousands











Three months ended October 31,


Six months ended October 31,


2010


2009

%
Change


2010


2009

%
Change





















Net Income (Loss)

$         (323)


$        697

NM


$    (863)


$ (7,849)

89%

Add Back:










Depreciation and Amortization

1,562


1,361

15%


3,184


2,593

23%

Income Tax Provision (Benefit)

804


(923)

NM


1,868


(1,529)

NM

Interest Charges

437


474

-8%


850


1,438

-41%

Non-Cash Charges

531


622

-15%


901


785

15%

Other (i)

103


71

45%


112


5,769

-98%











Consolidated Adjusted EBITDA

$        3,114


$     2,302

35%


$   6,052


$   1,207

NM











(i) Allowable Add Backs Pursuant to Senior Credit Facility Agreement


NM = not meaningful



Flow International Corporation

Reconciliation of GAAP to Pro forma

(Unaudited)















US Dollars in thousands, except per share data









Three months ended October 31,


Six months ended October 31,


2010


2009


2010


2009

GAAP Income (Loss) from Continuing Operations

$         (220)


$        689


$    (751)


$ (6,709)









Adjustments:








OMAX Termination Charge

-


-


-


3,219

Restructuring and Other Operating Charges

-


(601)


-


1,003

Write-off of Deferred Debt Issuance Costs

-


-


-


253

Tax Effect of Adjustments

-


138


-


(1,692)

Tax Impact from Cash Repatriation & Discrete Foreign Tax Matters

303


-


990


-









Pro forma Income (Loss) from Continuing Operations

$             83


$        226


$      239


$ (3,926)

















GAAP Net Income (Loss)

$         (323)


$        697


$    (863)


$ (7,849)









Adjustments:








OMAX Termination Charge

-


-


-


3,219

Restructuring and Other Operating Charges

-


(601)


-


1,003

Write-off of Deferred Debt Issuance Costs

-


-


-


253

Discontinued Operations

103


(8)


112


1,140

Tax Effect of Adjustments

-


138


-


(1,692)

Tax Impact from Cash Repatriation & Discrete Foreign Tax Matters

303


-


990


-









Pro forma Net Income (Loss)

$             83


$        226


$      239


$ (3,926)

















Per Share Amounts
















GAAP Basic and Diluted Income (Loss) Per Share








Income (Loss) from Continuing Operations

$        (0.01)


$       0.02


$   (0.02)


$   (0.17)

Net Income (Loss)

$        (0.01)


$       0.02


$   (0.02)


$   (0.19)









Pro forma Basic and Diluted Income (Loss) per Share








Income (Loss) from Continuing Operations

$        (0.00)


$       0.01


$     0.01


$   (0.10)

Net Income (Loss)

$        (0.00)


$       0.01


$     0.01


$   (0.10)



SOURCE Flow International Corporation



RELATED LINKS

http://www.flowcorp.com