Flow International Announces Fiscal 2014 First Quarter Results

Flow International Corporation Logo

KENT, Wash., Sept. 9, 2013 (GLOBE NEWSWIRE) -- Flow International Corporation (Nasdaq:FLOW), the world's leading developer and manufacturer of industrial waterjet machines for cutting and cleaning applications, today reported results for its fiscal 2014 first quarter ended July 31, 2013.

Flow reported revenues of $59.0 million for the quarter, compared to year-ago first quarter revenues of $66.2 million. The Company reported a net loss for the quarter of $0.8 million or $0.02 per share, compared to net income of $2.2 million or $0.05 per share in the year-ago quarter. The Company's first quarter net loss includes non-recurring charges of $1.6 million consisting of expenses related to cost saving initiatives, primarily severance, the evaluation of strategic alternatives and the finalization of the investigations within our Brazilian operations. Additionally, an unrealized foreign currency exchange loss of $1.3 million was recorded in the first quarter, negatively impacting overall results as compared to an unrealized gain of $0.1 million in the year-ago quarter.

Adjusted EBITDA for the quarter was $3.0 million or 5.2% of sales, compared to $6.4 million or 9.6% of sales for the year-ago quarter. A reconciliation of Adjusted EBITDA to Net Income is provided in the accompanying financial tables.

"We saw our order patterns and revenue stabilize in Q1, following the macro-economic driven pull back in Q4," said Charley Brown, President and CEO. "We are also encouraged by early evidence of growth beyond those stable levels. The $13 million of cost reductions we announced in June are ahead of schedule, giving us confidence in our ability to achieve all of these savings, which represent more than 100% of last year's Operating Income."

Operations Review for the Fiscal 2014 First Quarter

  • Standard segment sales, which include sales of systems that do not require significant custom configuration as well as parts and services for those installed systems, were $50.7 million for the quarter, down $11.3 million from $62.0 million in the year-ago quarter.
  • Advanced segment sales, which include sales of complex aerospace and application systems requiring specific custom configuration and advanced features, were $8.3 million for the quarter, compared to $4.2 million in the year-ago quarter. Backlog for the Advanced segment was $22.7 million as of July 31, 2013 and will be realized over the next four to six quarters.
  • Aggregate gross profits at $21.6 million remain relatively stable on a percentage basis at 36.6% of sales for the quarter, compared to $24.8 million or 37.4% of sales in the year-ago quarter, variation based on product mix.
  • Total operating expenses for the quarter were $20.7 million, compared to $20.6 million a year ago. Operating expenses in the quarter included $1.6 million in non-recurring charges compared to none in the year-ago quarter.

Conference Call

Flow plans to hold a conference call to discuss these results: Monday, September 9, 2013 at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). The conference call may be heard by dialing 1-877-941-1427 or 1-480-629-9664. A 7-day replay will be available following the call by dialing 1-800-406-7325 or 1-303-590-3030. The conference call passcode is 4637943. A live audio Webcast of the conference call may be found in the investor section at www.flowwaterjet.com. A Webcast replay of the call will also be available for 90 days.

About Flow International

Flow International Corporation is a global technology-based manufacturing company committed to providing a world class customer experience. The Company offers technological leadership and exceptional waterjet performance to a wide-ranging customer base, benefiting many cutting and surface preparation applications, delivering profitable waterjet solutions and dynamic business growth opportunities to our customers. For more information, visit www.flowwaterjet.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 Company's filings with the U.S. Securities and Exchange Commission. Forward-looking statements in this press release include, without limitation, statements regarding early evidence of growth, and our expected achievement of cost reduction targets. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date of this announcement.

Flow International Corporation
Condensed Consolidated Statements of Operations
U.S. Dollars in thousands, except per share data
Three Months Ended July 31,
2013 2012 % Change
Sales $59,004 $66,235 (10.9)%
Cost of Sales 37,395 41,442 (9.8)%
Gross Margin 21,609 24,793 (12.8)%
Operating Expenses:
Sales and Marketing 10,794 12,479 (14)%
Research and Engineering 2,946 2,211 33%
General and Administrative 5,331 5,869 (9)%
Other Operating Charges 1,603
Operating Expenses 20,674 20,559 1%
Operating Income (Loss) 935 4,234 (78)%
Interest Expense, net (368) (285) 29%
Other Expense, net (1,523) (265) NM
Income (Loss) Before Taxes (956) 3,684 NM
(Provision) Benefit for Income Taxes 121 (1,477) NM
Income (Loss) from Continuing Operations (835) 2,207 NM
Income (Loss) from Discontinued Operations, net of Income Tax (10) 14 NM
Net Income (Loss) $(845) $2,221 NM
Basic and Diluted Income (Loss) Per Share:
Income (Loss) from Continuing Operations $ (0.02) $0.05
Discontinued Operations
Net Income (Loss) $ (0.02) $0.05
Weighted Average Shares Outstanding Used in Computing Basic and Diluted Income (Loss) Per Share (000):
Basic 48,528 48,039
Diluted 48,528 48,039
NM = not meaningful
Flow International Corporation
Condensed Consolidated Balance Sheets
U.S. Dollars in thousands
July 31, April 30,
2013 2013 % Change
Current Assets:
Cash and Cash Equivalents $13,440 $15,465 (13)%
Receivables, net 46,542 42,741 9%
Inventories, net 41,795 41,059 2%
Other Current Assets 16,459 17,194 (4)%
Total Current Assets 118,236 116,459
Property and Equipment, net 17,373 17,894 (3)%
Other Long-Term Assets 27,723 27,740 —%
Total Assets $163,332 $162,093
Current Liabilities:
Subordinated Notes $10,820 $10,559 2%
Accounts Payable and Other Accrued Liabilities 30,718 28,379 8%
Other Current Liabilities 18,179 18,326 (1)%
Total Current Liabilities 59,717 57,264
Other Long-Term Liabilities 8,133 8,095 —%
Total Liabilities 67,850 65,359
Shareholders' Equity 95,482 96,734 (1)%
Total Liabilities and Shareholders' Equity $163,332 $162,093
NM = not meaningful
Flow International Corporation
Condensed Consolidated Statements of Cash Flows
U.S. Dollars in thousands
Three Months Ended July 31,
2013 2012 % Change
Cash Flows from Operating Activities:
Net Income $ (845) $2,221 NM
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation and Amortization 1,592 1,426 12%
Deferred Income Taxes (48) 1,454 NM
Provision for Slow Moving and Obsolete Inventory 160 35 NM
Bad Debt Expense 53 113 (53)%
Incentive Compensation Expense 550 672 (18)%
Warranty Expense 1,462 1,711 (15)%
Other 1,612 157 NM
Changes in Operating Assets and Liabilities:
Receivables (4,790) (1,699) NM
Inventories (1,863) (1,283) 45%
Other Operating Assets 622 (1,138) NM
Accounts Payable 22 29 (24)%
Other Operating Liabilities 940 (5,775) NM
Net Cash Provided by Operations (533) (2,077) (74)%
Cash Flows from Investing Activities:
Expenditures for Property, Equipment and Intangible Assets (1,526) (1,450) 5%
Other Investing Activities 970 NM
Net Cash Used in Investing Activities (1,526) (480) NM
Cash Flows from Financing Activities:
Borrowings Under Credit Facility 7,400 14,940 (50)%
Repayments Under Credit Facility (7,400) (14,940) (50)%
Other Net Borrowings (7) NM
Net Cash Provided by (Used in) Financing Activities (7) NM
Effect of Changes in Exchange Rates 41 214 NM
Net Change in Cash and Cash Equivalents (2,025) (2,343)
Cash and Cash Equivalents, Beginning of the Year 15,465 12,942 19%
Cash and Cash Equivalents, End of the Year $13,440 $10,599 27%
Supplemental Disclosures of Cash Flow Information
Cash Paid during the year for:
Interest $57 $80 (29)%
Taxes $564 $1,408 (60)%
NM = not meaningful
Flow International Corporation
Supplemental Data
U.S. Dollars in thousands
Three Months Ended July 31,
2013 2012 % Change
Consolidated Sales by Category:
Standard System Sales $29,372 $39,962 (27)%
Advanced System Sales 8,299 4,154 100%
Consumable Parts Sales 21,333 22,119 (4)%
Total $59,004 $66,235 (11)%
Segment Revenue:
Standard $50,705 $62,017 (18)%
Advanced 8,299 4,218 97%
$59,004 $66,235 (11)%
Depreciation and Amortization Expense $1,592 $1,426 12%
Capital Spending $1,526 $1,450 5%
Flow International Corporation
Reconciliation of Adjusted EBITDA to Net Income
U.S. Dollars in thousands
Three Months Ended July 31,
2013 2012 % Change
Net Income (Loss) $ (845) $2,221 NM
Add Back:
Depreciation and Amortization 1,592 1,426 12%
Income Tax Provision (Benefit) (121) 1,477 NM
Interest Charges 384 340 13%
Non-Cash Charges (i) 2,036 927 NM
Adjusted EBITDA $3,046 $6,391 (52)%
(i) Allowable Add Backs Pursuant to Credit Facility Agreement
The Company defines Adjusted EBITDA as net income, determined in accordance with accounting principles generally accepted in the United States of America ("GAAP"), excluding the effects of income taxes, depreciation, amortization of intangible assets, interest expense, and other non-cash charges, which includes such items as stock-based compensation expense, foreign currency gains or losses, and other non-cash allowable add backs pursuant to the Company's Facility Agreement.
Adjusted EBITDA is a non-GAAP financial measure and the presentation of this non-GAAP financial measure is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. The items excluded from this non-GAAP financial measure are significant components of the Company's financial statements and must be considered in performing a comprehensive analysis of the overall financial results. The Company uses this measure, together with GAAP financial metrics, to assess its financial performance, allocate resources, evaluate the overall progress towards meeting its long-term financial objectives, and assess compliance with its debt covenants. The Company believes that this non-GAAP financial measure is useful to investors and analysts in allowing for greater transparency with respect to the supplemental information used in the Company's financial and operational decision making. The Company's calculation of Adjusted EBITDA may not be consistent with calculations of similar measures used by other companies.

CONTACT: Flow Investor Relations Geoffrey Buscher 253-813-3286 investors@flowcorp.com

Source:Flow International Corporation