WSI Industries Reports Significantly Reduced Third Quarter Loss
MINNEAPOLIS--June 26, 2002--WSI Industries, Inc. today reported net sales of $2,145,000 for the third quarter of fiscal 2002 ended May 26, down from $5,141,000 in the year-earlier period. The Company's net loss came to $135,000 or $0.05 per diluted share, compared to the net loss of $315,000 or $0.13 per diluted share in the third quarter of fiscal 2001.The absence of sales from the former Bowman Tool and Machining, Inc. subsidiary, which was sold at the close of this year's second quarter, was a significant contributing factor to the lower sales in the current quarter. Strong manufacturing volumes for a recreational vehicle OEM partly offset the sharper than anticipated decline in WSI's avionics/aerospace business, reflecting weak conditions in the commercial aviation industry.
For the first nine months of fiscal 2002, net sales totaled $10,609,000, compared to $17,086,000 a year ago. The year-to-date net loss came to $3,130,000 or $1.27 per diluted share, compared to the net loss of $524,000 or $0.21 per diluted share in the first nine months of fiscal 2001. In this year's second quarter, the Company incurred significant corporate consolidation expenses, in addition to the write-off of the Bowman goodwill in connection with the unit's sale.
Michael J. Pudil, president and chief executive officer, commented: "As anticipated, WSI's third quarter loss improved materially in comparison to that of the second quarter, reflecting the positive impact of the Bowman divestiture on our operating expenses and debt structure. However, this sequential quarterly improvement was less than initially expected due to below-plan manufacturing volumes in several market segments. Due to our streamlined cost structure and reduced debt burden, we believe WSI is well-positioned for renewed profitability once our markets strengthen and sales volumes start building."
Selling and administrative expense declined by $746,000 to $366,000 in the third quarter from $1,112,000 in the year-earlier period. Due to the use of the Bowman divestiture proceeds to pay down bank debt, long-term debt declined to $1,444,000 from $7,555,000 a year earlier. Reflecting this improvement, the Company's debt/equity ratio strengthened to 0.31 from 0.90 a year ago. Interest expense dropped to $46,000 in the current quarter from $204,000 in last year's third quarter.
The Company expects to be at or near breakeven for the fourth quarter of fiscal 2002 ending August 25, despite continued weakness in most of its markets. WSI reported a net loss of $669,000 or $0.27 per diluted share in the fourth quarter of fiscal 2001.
WSI Industries, Inc. is a leading contract manufacturer that specializes in the machining of complex, high-precision parts for a wide range of industries, including avionics/aerospace, recreational vehicle, computer, engine and defense markets.
The statements included herein which are not historical or current facts are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Reform Act of 1995. There are certain important factors which could cause actual results to differ materially from those anticipated by some of the statements made herein, including the Company's ability to obtain additional manufacturing programs and retain current programs, the impact on revenues of reduced material content, and other factors detailed in the Company's filings with the Securities and Exchange Commission.
WSI INDUSTRIES, INC. CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) In thousands, except per share amounts Third quarter ended Three quarters ended ------------------- -------------------- May 26, May 27, May 26, May 27, 2002 2001 2002 2001 ---------- -------- ---------- --------- Net Sales $2,145 $5,141 $10,609 $17,086 Cost of products sold 1,873 4,140 9,363 13,540 ---------- -------- ---------- --------- Gross margin 272 1,001 1,246 3,546 Selling and administrative expense 366 1,112 1,563 3,419 Loss on sale of subsidiary - - 2,506 - Interest and other income (5) - (14) (17) Interest and other expense 46 204 321 665 ---------- -------- ---------- --------- Profit from operations before income taxes (135) (315) (3,130) (521) Income taxes - - 3 ---------- -------- ---------- --------- Net earnings ($135) ($315) ($3,130) ($524) ========== ======== ========== ========= Basic & diluted loss per share ($0.05) ($0.13) ($1.27) ($0.21) ========== ======== ========== ========= Weighted average number of common shares 2,465 2,465 2,465 2,465 CONDENSED BALANCE SHEETS (Unaudited) In thousands May 26, May 27, 2002 2001 ------- ------- Assets: Total current assets $3,017 $4,014 Property, plant, and equipment, net 2,344 9,574 Intangible assets 2,369 6,193 ------- ------- Total assets $7,730 $19,781 ======= ======= Liabilities and Shareholders' Equity: Total current liabilities $1,653 $3,805 Long-term debt 1,444 7,555 Shareholders' equity 4,633 8,421 ------- ------- Total Liabilities and Shareholders' Equity $7,730 $19,781 ======= =======