Flow International Announces Fiscal 2008 Fourth Quarter Results

Revenues increase 21% in the Fourth Quarter

KENT, Wash., July 9 -- Flow International Corporation , the world's leading developer and manufacturer of industrial waterjet machines for cutting and cleaning applications, today reported results for its fiscal 2008 fourth quarter and year ended April 30, 2008.

For the quarter, Flow reported that consolidated sales grew 21% to $63.3 million, which compares to $52.3 million in the year-ago quarter. Net income for the quarter was $13.3 million or $0.35 per basic and diluted share, which compares to a net loss of $3.2 million or $0.09 basic and diluted loss per share. Net income for the most recent quarter includes an income tax benefit, which reflects the reversal of a valuation allowance on U.S. net operating loss (NOL) carryforwards, and other net deferred tax assets. Operating income for the fourth quarter was $6.2 million versus a $3.5 million operating loss in the prior year quarter.

"We had an excellent quarter and year both in revenue growth and improved profitability by capitalizing on the growing global demand for innovative waterjet solutions," said Charley Brown, Flow's President and Chief Executive Officer. "These results reflect the balanced nature of our business where growing portions of our portfolio compensate for downturns in other end markets or countries to deliver consistent double digit growth."

  Operations Review
  For the fiscal 2008 fourth quarter, compared to the prior-year quarter:

-- System sales grew 20% to $45.6 million globally, on increased marketplace awareness of the advantages of waterjets in general, as well as from recent product development and technology enhancements by Flow. Revenues from consumables increased 22% to $17.2 million globally, as the Company continues to increase its installed base of machines.

-- In North America Waterjet, the standard systems and spare parts business increased 17% to $33.9 million, from ongoing market penetration and further adoption of the Hyperpressure 87,000 psi product line. Aerospace industry revenues, which can fluctuate considerably depending on the timing of individual project's manufacturing schedules and shipments, increased 8% to $3.8 million. Last month Flow announced it had been awarded Airbus' entire multi-million dollar contract to manufacture and install multiple abrasive waterjet and routing machine tool systems, to be built and installed over the next 18-24 months for use in manufacturing the new Airbus A350 XWB (Xtra Wide-Body) aircraft.

-- Sales in Europe and South America, which comprise the Other International Waterjet segment, increased 35% to $18.8 million on continued strong demand for standard shapecutting systems and spare parts, as well as a weak U.S. dollar relative to the Euro.

-- Sales in Asia increased 46% to $8.2 million, further indicating that the business has rebuilt its revenue momentum.

-- As anticipated, the Canada-based Applications segment continued to decline, from $3.6 million to $2.4 million. The decline is primarily the result of the weak domestic auto industry and Flow's decision to cease the money-losing sales of non-waterjet automation systems to focus solely on sales of systems that integrate waterjet cutting technology. Flow announced last month that it would be closing its Burlington, Canada facility, the home of the Application segment, and moving the manufacturing and engineering functions to its expanded Advanced Systems Center in Jeffersonville, Indiana. Flow expects the cost of the closure and the move of production to cost approximately $2.7 million in fiscal 2009.

-- Gross margins were 42%, which is an improvement from 41% in the year- ago period. Operating expenses declined 18% as a result of additional expense control, with the largest decrease in general and administrative expenses based on a significant decrease in professional fees.

-- The $9.7 million improvement in operating profit was driven by higher sales volumes, improved operating leverage and expense control and elimination of one-time charges.

Conference Call

Flow plans to hold a conference call to discuss these results today: Wednesday, July 9 at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time). The conference call may be heard by dialing 1-303-205-0066. A 48-hour replay will be available following the call by dialing 1-303-590-3000; the replay passcode is 11116682. A live audio Webcast of the conference call may be found in the investor section at http://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 http://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 April 30, 2007 Flow International Corporation Form 10-K Report filed with the Securities and Exchange Commission. Forward-looking statements in this press release include, without limitation, statements regarding the growth of portions of the Company's portfolio of business, increases in the installed base of machines, revenue momentum in Asia, and the costs of the Burlington closure. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date of this announcement.