WSI Industries Reports 40% Sales Increase Over Prior Year

MINNEAPOLIS--March 22, 2005--WSI Industries, Inc. today reported net sales of $3,654,000 for the second quarter of fiscal 2005 ended February 27, 2005, an increase of 40% from the year-earlier quarter of $2,615,000. The Company posted net income of $28,000 or $.01 per share, compared to $54,000 or $.02 per share in the second quarter of fiscal 2004. Included in results for the second quarter of fiscal 2005 was $160,000 of costs associated with the relocation of the Company's operations to its Monticello, Minnesota facility as well as the continued cost of operating the Company's Osseo, Minnesota facility.

Michael J. Pudil, president and chief executive officer, commented: "During the first six months of fiscal 2005, we have experienced a substantial increase in sales while concurrently relocating our entire manufacturing operation. We are pleased to have come through the period profitably while still meeting all of our customer requirements." Pudil went on to say: "With the relocation project behind us, we expect to show improved results during the balance of the fiscal year."

The Company also announced today that its Board of Directors has declared a dividend of $.0375 per share. The dividend will be payable April 20, 2005 to holders of record on April 6, 2005.

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 and aerospace, recreational vehicles, computers, small engines and the defense market.

                         WSI INDUSTRIES, INC.
                         --------------------

CONSOLIDATED STATEMENT OF OPERATIONS  (Unaudited)
In thousands, except per share amounts

                     Second quarter ended     First six months ended
                   ------------------------- -------------------------
                   February 27, February 29, February 27, February 29,
                       2005         2004         2005         2004
                   ------------ ------------ ------------ ------------
Net Sales               $3,654       $2,616       $7,529       $5,422
Cost of products
 sold                    3,036        2,198        6,338        4,582
                   ------------ ------------ ------------ ------------
Gross margin               618          418        1,191          840

Selling and
 administrative
 expense                   537          324        1,031          642
Interest and other
 income                     (5)          (4)          (6)          (8)
Interest and other
 expense                    42           15           82           31
                   ------------ ------------ ------------ ------------
Profit from
 operations before
 income taxes               44           83           84          175
Income taxes                16           27           30           63
                   ------------ ------------ ------------ ------------

Net earnings               $28          $56          $54         $112
                   ============ ============ ============ ============


Basic earnings per
 share                   $0.01        $0.02        $0.02        $0.04
                   ============ ============ ============ ============

Diluted earnings
 per share               $0.01        $0.02        $0.02        $0.04
                   ============ ============ ============ ============

Weighted average
 number of common
 shares                  2,558        2,552        2,558        2,552

Weighted average
 number of
 dilutive common
 shares
 outstanding             2,630        2,626        2,624        2,628




CONDENSED BALANCE SHEETS  (Unaudited)
In thousands

                                             February 27, February 29,
                                                 2005         2004
                                             ------------ ------------
Assets:
Total Current Assets                              $3,359       $3,363
Property, Plant, and Equipment, net                3,907        1,464
Intangible Assets                                  4,054        4,118
                                             ------------ ------------
  Total Assets                                   $11,320       $8,945
                                             ============ ============

Liabilities and Shareholders' Equity:
Total current liabilities                         $1,613       $1,086
Long-term debt                                     2,776          544
Shareholders' equity                               6,931        7,315
                                             ------------ ------------
  Total Liabilities and Shareholders' Equity     $11,320       $8,945
                                             ============ ============