WSI Industries Reports Second Quarter Operating Results; Reaffirms Guidance for Expectation of Improving Second Half Results
MINNEAPOLIS--April 10, 2002--WSI Industries, Inc. today reported net sales of $4,653,000 for the second quarter of fiscal 2002 ended February 24, down from $5,371,000 in the year-earlier period. Sales for the current period included a full quarter's contribution from the Bowman Tool and Machining, Inc. subsidiary that was sold at the close of this year's second quarter. The Company reported a net loss of $2,748,000 or $1.11 per diluted share, compared to the net loss of $276,000 or $0.11 per diluted share in the second quarter of fiscal 2001.For the first six months of fiscal 2002, net sales totaled $8,464,000, compared to $11,946,000 a year ago. The first half net loss came to $2,995,000 or $1.22 per diluted share, compared to the net loss of $209,000 or $0.08 per diluted share in the first half of fiscal 2001.
Michael J. Pudil, president and chief executive officer, commented: "WSI's second quarter operations were at breakeven, excluding corporate consolidation expenses and the goodwill write-off of the Bowman business in connection with the sale of the Bowman facility, as well as an increase in the inventory reserve due to weakness in the Company's aerospace business following the events of September 11, 2001. The Bowman-related expenses and write-off totaled $2,506,000, while the inventory reserve was increased by $255,000."
Pudil added: "Consistent with our previously issued financial guidance, we continue to expect steadily improving results during this year's second half and a return to profitability in the fourth quarter. This outlook reflects the anticipated positive impact of the Bowman divestiture, including improved gross margins and reduced operating expenses. WSI will also benefit from significantly lower interest expense, reflecting our use of a portion of the Bowman sale proceeds to eliminate WSI's outstanding bank debt. As a result of this transaction, total debt declined to $2,767,000 at the end of the second quarter, from $9,801,000 a year ago. All of these positive factors are expected to more than offset the impact of reduced sales over the balance of fiscal 2002, reflecting the absence of Bowman's business."
As a result of the Bowman sale, WSI is now positioned to focus all of its resources on its Taurus operation, which involves machining processes with a higher value-added technology content. The Company also believes that business with several of Taurus' existing customers has considerable growth potential going forward.
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
Second quarter First six months
ended ended
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Feb. 24, Feb. 25, Feb. 24, Feb. 25,
2002 2001 2002 2001
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Net Sales $4,653 $5,371 $8,464 $11,946
Cost of products sold 4,119 4,267 7,490 9,400
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Gross margin 534 1,104 974 2,546
Selling and administrative expense 649 1,169 1,197 2,309
Loss on sale of subsidiary 2,506 - 2,506 -
Interest and other income (5) (5) (9) (18)
Interest and other expense 132 216 275 461
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Profit (loss) from operations
before income taxes (2,748) (276) (2,995) (206)
Income taxes - - 3
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Net earnings (loss) ($2,748) ($276) $2,995) ($209)
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Basic and diluted earnings (loss)
per share ($1.11) ($0.11) ($1.22) ($0.08)
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Weighted average number of common
shares 2,465 2,465 2,465 2,465
CONDENSED BALANCE SHEETS (Unaudited)
In thousands
Feb. 24, Feb. 25,
2002 2001
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Assets:
Total current assets $4,324 $4,088
Property, plant, and equipment, net 2,504 10,061
Intangible assets 2,368 6,288
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Total assets $9,196 $20,437
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Liabilities and Shareholders' Equity:
Total current liabilities $2,955 $3,800
Long-term debt 1,484 7,901
Shareholders' equity 4,757 8,736
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Total liabilities and shareholders' equity $9,196 $20,437
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