FLOW INTERNATIONAL CORP - FORM 8-K - EX-99.1 - PRESS RELEASE - June 27, 2012

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Exhibit 99.1
Contact:
Flow Investor Relations
Geoffrey Buscher
253-813-3286
investors@flowcorp.com

FLOW INTERNATIONAL ANNOUNCES FOURTH QUARTER AND YEAR END RESULTS
Annual EPS Increases Ten-Fold to $0.20 on All-Time Record Revenues of $253.8 Million

Kent, WA - June 27, 2012 - 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 2012 fourth quarter and year ended April 30, 2012.

For the fiscal year ended April 30, 2012, Flow reported consolidated revenue growth of 17%, reaching a new record level of $253.8 million, compared to $216.5 million in the prior fiscal year. Sales from the Standard segment reached an all-time high of $230.3 million for the fiscal year 2012, a 23% improvement from the prior fiscal year, as consumable spare parts sales grew 14% to $80.0 million, also a new record. Net income for fiscal year 2012 was $9.4 million or $0.20 per share, compared to a net income of $0.8 million or $0.02 per share in the prior fiscal year.

For the fourth quarter of fiscal year 2012, Flow reported consolidated revenues of $63.4 million, a 6% increase from $59.5 million in the prior fiscal year. Net income in the fourth quarter was $2.6 million or $0.06 per share. In comparison, the Company reported net income in the prior-year period of $0.4 million or $0.01 per share.

Adjusted EBITDA for fiscal year 2012 was $24.4 million or 10% of sales, compared to $13.7 million or 6% of sales for the prior fiscal year. For the quarter, Adjusted EBITDA was $5.5 million or 9% of sales, compared to $2.8 million or 5% of sales in the year-ago quarter. A reconciliation of Adjusted EBITDA to Net Income is provided in the accompanying financial tables.

“Our fourth quarter results mark a solid conclusion to a fiscal year in which we broke a number of important records and reached significant profitability milestones,” said Charley Brown, President and CEO of Flow. “We also moved forward on our new Mach 2 and Mach 4 products, which have now made the very important transition into full global launch mode. These products will set new performance standards across a full continuum of waterjet machine tools, positioning us very well for continued profitable growth.”

Operations Review for the 2012 Fiscal Fourth Quarter and Year

•
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 $59.0 million for the quarter, an increase of $6.7 million or 13% from the year-ago quarter. For the year, Standard segment sales increased 23% to $230.3 million from $187.9 million in the prior year.

•
Advanced segment sales, which include sales of complex aerospace and application systems requiring specific custom configuration and advanced features, were $4.4 million for the quarter, a decline of $2.9 million or 40% from the year-ago quarter. For the year, Advanced segment sales declined 18% to $23.5 million from $28.6 million in the prior year. Advanced segment sales are recorded using the percentage of completion method, with lead times generally ranging from 12 to 24 months.

•
Aggregate gross margins were 39% for the quarter, compared to 37% in the prior-year quarter. Standard segment gross margins were 40% for the quarter, in line with the year-ago quarter. Advanced segment gross margins were 23% in the current quarter, an improvement compared to 13% in the year-ago quarter. For the year, aggregate gross margins were in line with year-ago gross margins at 39%. Standard and Advanced gross margins for the year were 41% and 24%, respectively, compared to 42% and 21% in the




prior year.

•
Total operating expenses for the quarter were $22.5 million, compared to $21.6 million in the prior-year quarter. Total operating expenses in the fourth quarter of fiscal 2012 included a $1.1 million non-cash, non-recurring incremental stock compensation charge related to adjusting employee attrition rates. Excluding this item, operating expenses were in-line with the year-ago quarter. For the year, total operating expenses were $84.7 million, compared to $79.6 million a year ago.

•
The Company recorded a tax benefit of $1.7 million during the quarter, primarily related to the favorable settlement of a tax audit. The impact on fourth quarter 2012 results was a net tax benefit of $1.0 million. This favorable settlement also impacted the full year 2012, lowering the Company's overall effective tax rate to 26%.

Conference Call
Flow plans to hold a conference call to discuss these results today: Wednesday, June 27, 2012 at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). The conference call may be heard by dialing 877-941-1427 or 480-629-9664. A 7-day replay will be available following the call by dialing 800-406-7325 or 303-590-3030. The conference call passcode is 4544811. 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 the world's leading developer and manufacturer of industrial waterjet machines for cutting and cleaning applications used in multiple industries including automotive, aerospace, job shop, surface preparation, and more. 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 performance standards for the Company's new products and expectations for continued profitability. 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 Income Statements
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Dollars in thousands, except per share data
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended April 30,
 
Twelve months ended April 30,
 
2012
 
2011
 
% Change
 
2012
 
2011
 
% Change
 
 
 
 
 
 
 
 
 
 
 
 
Sales
$
63,397

 
$
59,536

 
6
 %
 
$
253,768

 
$
216,524

 
17
 %
 
 
 
 
 
 
 
 
 
 
 
 
Cost of Sales
38,536

 
37,353

 
3
 %
 
154,400

 
132,063

 
17
 %
 
 
 
 
 
 
 
 
 
 
 
 
Gross Margin
24,861

 
22,183

 
12
 %
 
99,368

 
84,461

 
18
 %
 
 
 
 
 
 
 
 
 
 
 
 
Operating Expenses:
 
 
 
 
 
 
 
 
 
 
 
Sales and Marketing
12,648

 
12,310

 
3
 %
 
49,454

 
45,359

 
9
 %
Research and Engineering
2,784

 
2,979

 
(7
)%
 
10,863

 
10,074

 
8
 %
General and Administrative
7,070

 
6,330

 
12
 %
 
24,382

 
24,141

 
1
 %
Operating Expenses
22,502

 
21,619

 
4
 %
 
84,699

 
79,574

 
6
 %
 
 
 
 
 
 
 
 
 
 
 
 
Operating Income
2,359

 
564

 
NM

 
14,669

 
4,887

 
NM

 
 
 
 
 
 
 
 
 
 
 
 
Interest Expense, net
(174
)
 
(488
)
 
(64
)%
 
(1,050
)
 
(1,670
)
 
(37
)%
Other Income (Expense), net
(443
)
 
371

 
NM

 
(954
)
 
686

 
NM

 
 
 
 
 
 
 
 
 
 
 
 
Income Before Taxes
1,742

 
447

 
NM

 
12,665

 
3,903

 
NM

(Provision) Benefit for Income Taxes
1,003

 
31

 
NM

 
(3,276
)
 
(2,895
)
 
13
 %
 
 
 
 
 
 
 
 
 
 
 
 
Income from Continuing Operations
2,745

 
478

 
NM

 
9,389

 
1,008

 
NM

 
 
 
 
 
 
 
 
 
 
 
 
Income (Loss) from Discontinued Operations, net of Income Tax
(102
)
 
(90
)
 
13
 %
 
60

 
(242
)
 
NM

 
 
 
 
 
 
 
 
 
 
 
 
Net Income
$
2,643

 
$
388

 
NM

 
$
9,449

 
$
766

 
NM

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic and Diluted Income Per Share:
 
 
 
 
 
 
 
 
Income from Continuing Operations
$
0.06

 
$
0.01

 
NM

 
$
0.20

 
$
0.02

 
NM

Net Income
$
0.06

 
$
0.01

 
NM

 
$
0.20

 
$
0.02

 
NM

 
 
 
 
 
 
 
 
 
 
 
 
Weighted Average Shares Outstanding Used in Computing Basic and Diluted Income Per Share (000):
Basic
47,879

 
47,364

 
 
 
47,766

 
47,216

 
 
Diluted
47,944

 
47,543

 
 
 
47,766

 
47,228

 
 
 
 
 
 
 
 
 
 
 
 
 
 
NM = not meaningful
 
 
 
 
 
 
 
 
 
 
 




Flow International Corporation
Condensed Consolidated Balance Sheets
(Unaudited)
 
 
 
 
 
 
U.S. Dollars in thousands
 
 
 
 
 

April 30,
 
 

2012
 
2011
 
% Change
ASSETS

 

 

Current Assets:

 

 

Cash and Cash Equivalents
$
12,942

 
$
9,096

 
42
 %
Receivables, net
46,830

 
47,082

 
(1
)%
Inventories, net
40,069

 
28,609

 
40
 %
Other Current Assets
15,704

 
13,305

 
18
 %
Total Current Assets
115,545

 
98,092

 


Property and Equipment, net
17,488

 
19,104

 
(8
)%
Other Long-Term Assets
34,033

 
35,867

 
(5
)%
Total Assets
$
167,066

 
$
153,063

 


 
 
 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 


Current Liabilities:

 

 


Notes Payable
$
—

 
$
5,500

 
(100
)%
Current Portion of Long-Term Obligations
21

 
25

 
(16
)%
Accounts Payable and Other Accrued Liabilities
33,660

 
28,661

 
17
 %
Other Current Liabilities
25,419

 
22,775

 
12
 %
Total Current Liabilities
59,100

 
56,961

 


Other Long-Term Liabilities
7,331

 
7,925

 
(7
)%
Subordinated Notes
9,587

 
8,723

 
10
 %
Total Liabilities
76,018

 
73,609

 


 

 

 


Shareholders’ Equity
91,048

 
79,454

 
15
 %
Total Liabilities and Shareholders' Equity
$
167,066

 
$
153,063

 

 
 
 
 
 
 
 
 
 
 
 
 




Flow International Corporation
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
 
 
 
 
 
U.S. Dollars in thousands
 
 
 
 
 
 
Twelve Months Ended April 30,
 
2012
 
2011
 
% Change
Cash Flows from Operating Activities:
 
 
 
 
 
Net Income
$
9,449

 
$
766

 
NM

Adjustments to Reconcile Net Income to Cash Provided by Operating Activities:
Depreciation and Amortization
6,208

 
6,302

 
(1
)%
Deferred Income Taxes
720

 
2,368

 
(70
)%
Provision for Slow Moving and Obsolete Inventory
477

 
884

 
(46
)%
Bad Debt Expense
531

 
434

 
22
 %
Incentive Compensation Expense
3,546

 
2,347

 
51
 %
Warranty Expense
4,235

 
2,695

 
57
 %
Other
1,548

 
1,262

 
23
 %
Changes in Operating Assets and Liabilities:
 
 
 
 
 
Receivables
(2,071
)
 
(10,051
)
 
(79
)%
Inventories
(13,368
)
 
(6,392
)
 
NM

Other Operating Assets
(1,246
)
 
(2,485
)
 
(50
)%
Accounts Payable
4,672

 
2,088

 
NM

Other Operating Liabilities
(1,990
)
 
2,707

 
NM

Net Cash Provided by Operations
12,711

 
2,925

 
NM

Cash Flows from Investing Activities:
 
 
 
 
 
Expenditures for Property, Equipment and Intangible Assets
(4,601
)
 
(3,530
)
 
30
 %
Other Investing Activities
283

 
(929
)
 
NM

Net Cash Used in Investing Activities
(4,318
)
 
(4,459
)
 
(3
)%
Cash Flows from Financing Activities:
 
 
 
 
 
Borrowings Under Credit Facility
63,450

 
51,050

 
24
 %
Repayments Under Credit Facility
(68,950
)
 
(45,900
)
 
50
 %
Other Net Borrowings (Repayments)
5

 
(36
)
 
NM

Net Cash (Used in) Provided by Financing Activities
(5,495
)
 
5,114

 
NM

Effect of Changes in Exchange Rates
948

 
(851
)
 
NM

Net Change in Cash and Cash Equivalents
3,846

 
2,729

 
 
Cash and Cash Equivalents, Beginning of the Period
9,096

 
6,367

 
43
 %
Cash and Cash Equivalents, End of the Period
$
12,942

 
$
9,096

 
42
 %
 
 
 
 
 
 
Supplemental Disclosures of Cash Flow Information
 
 
 
 
 
Cash Paid during the year for:
 
 
 
 
 
Interest
300

 
403

 
(26
)%
Taxes
1,252

 
950

 
32
 %
 
 
 
 
 
 
NM = not meaningful
 
 
 
 
 







Flow International Corporation
Supplemental Data
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Dollars in thousands
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended April 30,
 
Twelve months ended April 30,
 
2012
 
2011
 
% Change
 
2012
 
2011
 
% Change
 
 
 
 
 
 
 
 
 
 
 
 
Sales Breakdown:
 
 
 
 
 
 
 
 
 
 
 
Standard System Sales
$
38,513

 
$
33,527

 
15
 %
 
$
150,456

 
$
117,721

 
28
 %
Advanced System Sales
4,387

 
7,196

 
(39
)%
 
23,358

 
28,431

 
(18
)%
Consumable Parts Sales
20,497

 
18,813

 
9
 %
 
79,954

 
70,372

 
14
 %
Total
$
63,397

 
$
59,536

 
6
 %
 
$
253,768

 
$
216,524

 
17
 %
 
 
 
 
 
 
 
 
 
 
 
 
Segment Revenue Breakdown:
 
 
 
 
 
 
 
 
 
 
 
Standard
$
59,005

 
$
52,268

 
13
 %
 
$
230,272

 
$
187,887

 
23
 %
Advanced
4,392

 
7,268

 
(40
)%
 
23,496

 
28,637

 
(18
)%
 
$
63,397

 
$
59,536

 
6
 %
 
$
253,768

 
$
216,524

 
17
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation and Amortization Expense
$
1,485

 
$
1,596

 
(7
)%
 
$
6,208

 
$
6,302

 
(1
)%
Capital Spending
$
1,255

 
$
830

 
51
 %
 
$
4,601

 
$
3,530

 
30
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




Flow International Corporation
Reconciliation of Adjusted EBITDA to Net Income
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Dollars in thousands
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended April 30,
 
Twelve months ended April 30,
 
2012
 
2011
 
% Change
 
2012
 
2011
 
% Change
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income
$
2,643

 
$
388

 
NM

 
$
9,449

 
$
766

 
NM

Add Back:
 
 
 
 
 
 
 
 
 
 
 
     Depreciation and Amortization
1,485

 
1,596

 
(7
)%
 
6,208

 
6,302

 
(1
)%
     Income Tax Provision
(1,003
)
 
(31
)
 
NM

 
3,276

 
2,895

 
13
 %
     Interest Charges
175

 
508

 
(66
)%
 
1,112

 
1,776

 
(37
)%
     Non-Cash Charges (i)
2,225

 
300

 
NM

 
4,317

 
2,000

 
NM

Adjusted EBITDA
$
5,525

 
$
2,761

 
NM

 
$
24,362

 
$
13,739

 
77
 %
 
 
 
 
 
 
 
 
 
 
 
 
(i) Allowable Add Backs Pursuant to Credit Facility Agreement
 
 
 
 
 
 
 
 
 
 
 
 
NM = not meaningful
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     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 Credit 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.
 
 
 
 
 
 
 
 
 
 
 
 






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