Flow International Announces Fiscal 2006 Second Quarter Results
Company Delivers Increased Revenues and Improved Profitability
KENT, Wash., Dec. 20 -- Flow International Corporation , the world's leading supplier of ultrahigh-pressure waterjet products, today reported results for its fiscal 2006 second quarter ended October 31, 2005. FLOW reported consolidated quarterly sales from continuing operations of $50.7 million and operating income of $5.1 million, or 10.2% of sales. Net income for the quarter was $2.0 million or $0.06 basic earnings per share and $0.05 on a diluted basis, including a $237,000 net loss from discontinued operations and a $261,000 loss on sale related to the Company's Avure business, which the Company divested during the quarter and classified as a discontinued operation. Excluding the impact of the Avure business, income from continuing operations for the quarter was $2.5 million, or $0.07 basic and diluted earnings per share.
By comparison, in the fiscal 2005 second quarter, FLOW reported consolidated quarterly sales from continuing operations of $44.1 million and operating income of $2.2 million or 5.1% of sales. The Company reported a net loss of $275,000 or $0.02 basic and diluted loss per share, including a net loss of $1.2 million from discontinued operations related to the divested Avure business. The Company reported income from continuing operations of $955,000 or $0.06 per diluted share in the year-ago period.
"With each quarter of sustained growth, cash generation, and profitability, we further demonstrate our ability to move forward as a highly motivated and focused organization," said Stephen R. Light, FLOW's President and Chief Executive Officer. "As many of our markets have continued to strengthen, so has our ability to compete within those markets with superior technology and support."
For the six months ended October 31, 2006, FLOW reported consolidated sales from continuing operations of $92.7 million, compared to $82.4 million during the prior six-month period in fiscal 2005. Including the impact of the discontinued Avure business, net income for the six months ended October 31, 2005 was $2.0 million, or $0.06 per basic earnings per share and $0.05 on a diluted basis, compared to a net loss of $2.6 million, or $0.17 basic and diluted loss per share in the prior year.
Operations Review
For the fiscal 2006 second quarter, compared to the prior-year quarter:
-- Waterjet system sales accounted for 73% of revenues in the quarter and
increased 18% or $5.7 million from the prior-year quarter, primarily on
the continued strength of domestic shapecutting sales and increased
aerospace revenue. Consumables revenues increased 7% to $13.7 million,
accounting for 27% of total revenues. Consumables sales have increased
along with the growth in the installed base of waterjets in use, as
well with FLOW's increased success in supporting its installed base.
The Company believes that spare parts sales should continue to increase
as more systems are put into service.
-- North America Waterjet sales increased 39% to $28.6 million during the
quarter, fueled by a healthy aerospace market, where the Company
continued to recognize percentage-of-completion revenue on the backlog
for large composite machining centers from contracts awarded in fiscal
2005. Increasingly, the aerospace industry recognizes the accuracy,
speed, and versatility advantages of the waterjet over conventional
cutting technologies.
-- Sales in Asia Waterjet increased 16% to $7.5 million on a growth in
demand from the electronics industry in Taiwan.
-- Other International Waterjet sales increased 5% to $8.8 million during
the quarter on improved economic conditions and increased sales of
consumables, as more systems have been put into service in South
America.
-- The Other segment revenues declined 33% to $5.8 million from softness
in the domestic automotive industry, as well as from the closing and
relocation of the Company's Wixom, Michigan facility to its Burlington,
Ontario facility. The "Other" segment does not make primary use of the
Company's ultrahigh-pressure water pump technology, providing
automation and robotic system solutions to the automotive market.
Avure Divestiture
On October 31, 2005 FLOW completed the divestiture of its General Press operations, which consisted of the North America Press and the International Press segments, as well as the non-ultrahigh-pressure portion of its Food segment. The businesses were acquired by an affiliate of Gores Technology Group, LLC, a Los Angeles-based private equity firm for estimated net proceeds of $14.4 million, comprised of cash and notes. At closing, FLOW entered into a supply agreement with Gores to design and manufacture advanced high-pressure pumps for the food industry.
Conference Call
Flow International will host a conference call Tuesday, December 20 at 1:00 p.m. Eastern Time (10:00 a.m. Pacific Time) to discuss the results. The conference call may be heard by dialing 303-262-2138. A 48-hour replay will be available following the call by dialing 303-590-3000; the replay passcode is 11047847. In addition, a live 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 a forward-looking statement relating to spare parts sales. This statement is only a prediction and actual results could differ materially based on a number of risk factors, including those set forth in the April 30, 2005 Flow International Corporation Form 10-K/A Report filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date of this announcement.
The Company is under no obligation, and does not intend, to update any of the forward-looking statements in this press release.
Flow International Corporation
Consolidated Statement of Operations
(Unaudited)
Dollars in thousands, except per share data
Three months ended Six months ended
October 31, October 31,
2005 2004 % Change 2005 2004 % Change
Sales $50,685 $44,087 15% $92,671 $82,386 12%
Cost of sales 28,552 28,897 -1% 52,804 53,223 -1%
Gross margin 22,133 15,190 46% 39,867 29,163 37%
Operating expenses:
Marketing 7,860 7,043 12% 15,424 13,267 16%
Research and engineering 1,586 1,149 38% 3,359 2,666 26%
General and
administrative 7,053 4,756 48% 13,186 9,332 41%
Financial consulting -- -- NM -- 623 -100%
Restructuring 487 -- NM 585 -- NM
Operating expenses 16,986 12,948 31% 32,554 25,888 26%
Operating income 5,147 2,242 130% 7,313 3,275 123%
Interest expense, net (437) (3,700) -88% (1,363) (6,712) -80%
Other (expense)
income, net (1,129) 2,655 NM (2,914) 2,561 NM
Income (loss) before
provision for
income taxes 3,581 1,197 NM 3,036 (876) NM
Provision for
income taxes (1,126) (242) NM (1,698) (948) 79%
Income (loss) from
continuing operations 2,455 955 157% 1,338 (1,824) NM
(Loss) income from
discontinued operations,
net of tax (237) (1,230) -81% 902 (791) NM
Loss on sale of
discontinued operations,
net of tax (261) -- NM (261) -- NM
Net income (loss) $1,957 $(275) NM $1,979 $(2,615) NM
Income (loss) per share:
Basic and diluted
income (loss) from
continuing operations $0.07 $0.06 17% $0.04 $ (0.12) NM
Basic net income (loss) $0.06 $(0.02) NM $0.06 $(0.17) NM
Diluted net
income (loss) $0.05 $(0.02) NM $0.05 $(0.17) NM
Weighted average shares
outstanding (000):
Basic 34,597 15,905 34,448 15,796
Diluted 36,137 17,073 36,065 15,796
NM = not meaningful
Flow International Corporation
Supplemental Data
(Unaudited)
Dollars in thousands
Three months ended Six months ended
October 31, October 31,
2005 2004 % Change 2005 2004 % Change
Divisional revenue breakdown:
Flow Waterjet Systems:
Systems $36,950 $31,274 18% $65,671 $57,174 15%
Consumable parts
and services 13,735 12,813 7% 27,000 25,212 7%
Total $50,685 $44,087 15% $92,671 $82,386 12%
Segment revenue breakdown:
North America Waterjet $28,644 $20,663 39% $51,571 $36,563 41%
Asia Waterjet 7,468 6,453 16% 13,236 12,804 3%
Other International
Waterjet 8,789 8,396 5% 17,242 15,532 11%
Other 5,784 8,575 -33% 10,622 17,487 -39%
$50,685 $44,087 15% $92,671 $82,386 12%
Depreciation and
amortization expense $1,165 $ 1,224 -5% $2,337 $ 2,546 -8%
Capital spending $380 $117 NM $880 $446 97%
Flow International Corporation
Condensed Balance Sheet Data
Dollars in thousands
October 31, April 30,
2005 2005 % Change
(unaudited)(restated)
Cash, including short-term
restricted cash $25,357 $13,445 89%
Receivables, net 28,150 38,325 -27%
Inventories 19,402 24,218 -20%
Total current assets 90,847 84,666 7%
Total assets 108,862 118,467 -8%
Total debt $24,975 $19,147 30%
Total liabilities 80,178 87,356 -8%
Total shareholders'
equity 28,684 28,710 0%