FLOW INTERNATIONAL CORP - FORM 8-K - EX-99.1 - PRESS RELEASE - August 29, 2012

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8-K - 8-K - FLOW INTERNATIONAL CORPq1fy13pressrelease.htm


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

FLOW INTERNATIONAL ANNOUNCES FIRST QUARTER RESULTS
10% Growth Delivers Record Quarterly Revenues of $66 Million and EPS of $0.05

Kent, WA - August 29, 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 year 2013 first quarter ended July 31, 2012.

For the quarter, Flow reported revenues of $66.2 million, which represents a new all-time quarterly high and a 10% increase from $60.0 million in the year-ago quarter. Standard segment revenues of $62.0 million represent a 17% improvement versus the year-ago quarter, as consumable spare parts sales grew 10% to $22.1 million, also a new record. Net income in the first quarter was $2.2 million or $0.05 per share, compared to net income of $0.7 million or $0.01 per share in the prior-year period.

Adjusted EBITDA for the quarter was $6.4 million or 10% of sales, compared to $3.4 million or 6% of sales for the year-ago quarter. A reconciliation of Adjusted EBITDA to Net Income is provided in the accompanying financial tables.

“Continuing the trend from a strong fiscal 2012, sales in our Standard business continued at a record breaking pace, growing at a 17% clip,” said Charley Brown, President and CEO of Flow. “Despite widely publicized global macro-economic concerns, we are benefiting from the strategic expansion of our direct and indirect distribution channels combined with our broad product range. The global roll out of our new products is well under way and we expect them to continue gaining traction worldwide, particularly in the second half of our fiscal year.”

Operations Review for the 2013 Fiscal 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 $62.0 million for the quarter, an increase of $9.0 million or 17% from the year-ago quarter.

•
Advanced segment sales, which include sales of complex aerospace and application systems requiring specific custom configuration and advanced features, were $4.2 million for the quarter, a decline of $2.8 million or 40% from the year-ago quarter. 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 37% for the quarter, compared to 39% in the prior-year quarter. Standard segment gross margins were 39% for the quarter, down from the year-ago quarter gross margin of 41%, driven by product and geographic mix. Advanced segment gross margins were 13% in the current quarter, a decrease from 21% in the year-ago quarter largely driven by project and production mix.

•
Total operating expenses for the quarter were $20.6 million, compared to $22.0 million in the prior-year quarter.

Conference Call
Flow plans to hold a conference call to discuss these results today: Wednesday, August 29, 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 4559555. 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 aerospace, defense, automotive, disposable products, surface preparation, job shop, 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 the roll out of new products and expectations for increased sales of such products. 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
(Unaudited)
 
 
 
 
 
 
U.S. Dollars in thousands, except per share data
 
 
 
 
 
 
Three Months Ended July 31,
 
2012
 
2011
 
% Change
 
 
 
 
 
 
Sales
$
66,235

 
$
60,030

 
10
 %
Cost of Sales
41,442

 
36,910

 
12
 %
 
 
 
 
 
 
Gross Margin
24,793

 
23,120

 
7
 %
 
 
 
 
 
 
Operating Expenses:
 
 
 
 
 
Sales and Marketing
12,479

 
12,696

 
(2
)%
Research and Engineering
2,211

 
2,656

 
(17
)%
General and Administrative
5,869

 
6,609

 
(11
)%
Operating Expenses
20,559

 
21,961

 
(6
)%
 
 
 
 
 
 
Operating Income
4,234

 
1,159

 
NM

 
 
 
 
 
 
Interest Expense, net
(285
)
 
(271
)
 
5
 %
Other Expense, net
(265
)
 
(134
)
 
98
 %
 
 
 
 
 
 
Income Before Income Taxes
3,684

 
754

 
NM

Provision for Income Taxes
(1,477
)
 
(100
)
 
NM

 
 
 
 
 
 
Income from Continuing Operations
2,207

 
654

 
NM

 
 
 
 
 
 
Income from Discontinued Operations, net of Income Tax
14

 
57

 
(75
)%
 
 
 
 
 
 
Net Income
$
2,221

 
$
711

 
NM

 
 
 
 
 
 
Basic and Diluted Income Per Share:
 
 
 
 
 
Income from Continuing Operations
$
0.05

 
$
0.01

 
NM

Net Income
$
0.05

 
$
0.01

 
NM

 
 
 
 
 
 
Weighted Average Shares Outstanding Used in Computing Basic and Diluted Income Per Share (000):
Basic
48,039

 
47,532

 
 
Diluted
48,039

 
47,541

 
 
 
 
 
 
 
 
NM = not meaningful
 
 
 
 
 




Flow International Corporation
Condensed Consolidated Balance Sheets
(Unaudited)
 
 
 
 
 
 
U.S. Dollars in thousands
 
 
 
 
 
 
July 31,
 
April 30,
 
 
 
2012
 
2012
 
% Change
ASSETS
 
 
 
 
 
Current Assets:
 
 
 
 
 
Cash and Cash Equivalents
$
10,599

 
$
12,942

 
(18
)%
Receivables, net
47,444

 
46,830

 
1
 %
Inventories
40,219

 
40,069

 
—
 %
Other Current Assets
14,533

 
15,704

 
(7
)%
Total Current Assets
112,795

 
115,545

 
 
Property and Equipment, net
17,831

 
17,488

 
2
 %
Other Long-Term Assets
33,680

 
34,033

 
(1
)%
Total Assets
$
164,306

 
$
167,066

 
 
 
 
 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
Current Liabilities:
 
 
 
 
 
Notes Payable
$
—

 
$
—

 
—
 %
Current Portion of Long-Term Obligations
20

 
21

 
(5
)%
Accounts Payable and Other Accrued Liabilities
35,177

 
33,660

 
5
 %
Other Current Liabilities
19,729

 
25,419

 
(22
)%
Total Current Liabilities
54,926

 
59,100

 
 
Other Long-Term Liabilities
7,330

 
7,331

 
—
 %
Subordinated Notes
9,820

 
9,587

 
2
 %
Total Liabilities
72,076

 
76,018

 
 
 
 
 
 
 
 
Shareholders’ Equity
92,230

 
91,048

 
1
 %
Total Liabilities and Shareholders' Equity
$
164,306

 
$
167,066

 
 
 
 
 
 
 
 
 
 
 
 
 
 




Flow International Corporation
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
 
 
 
 
 
U.S. Dollars in thousands
 
 
 
 
 
 
Three Months Ended July 31,
 
2012
 
2011
 
% Change
Cash Flows from Operating Activities:
 
 
 
 
 
Net Income
$
2,221

 
$
711

 
NM

Adjustments to Reconcile Net Income to Net Cash (Used in) Provided by Operating Activities:
Depreciation and amortization
1,426

 
1,572

 
(9
)%
Deferred Income Taxes
1,454

 
(57
)
 
NM

Provision for Slow Moving and Obsolete Inventory
35

 
145

 
(76
)%
Bad Debt Expense
113

 
178

 
(37
)%
Incentive Compensation Expense
672

 
577

 
16
 %
Warranty Expense
1,711

 
1,035

 
65
 %
Other
157

 
574

 
(73
)%
Changes in Operating Assets and Liabilities:
 
 
 
 
 
Receivables
(1,699
)
 
3,919

 
NM

Inventories
(1,283
)
 
(3,367
)
 
(62
)%
Other Operating Assets
(1,138
)
 
277

 
NM

Accounts Payable
29

 
(136
)
 
NM

Other Operating Liabilities
(5,775
)
 
(3,558
)
 
62
 %
Net Cash (Used in) Provided by Operations
(2,077
)
 
1,870

 
NM

Cash Flows from Investing Activities:
 
 
 
 
 
Expenditures for Property, Equipment and Intangible Assets
(1,450
)
 
(631
)
 
NM

Other Investing Activities
970

 
347

 
NM

Net Cash Used in Investing Activities
(480
)
 
(284
)
 
69
 %
Cash Flows from Financing Activities:
 
 
 
 
 
Borrowings Under Credit Facility
14,940

 
14,900

 
—
 %
Repayments Under Credit Facility
(14,940
)
 
(17,300
)
 
(14
)%
Other Net Repayments
—

 
(41
)
 
(100
)%
Net Cash Used in Financing Activities
—

 
(2,441
)
 
(100
)%
Effect of Changes in Exchange Rates
214

 
(300
)
 
NM

Net Change in Cash and Cash Equivalents
(2,343
)
 
(1,155
)
 
 
Cash and Cash Equivalents, Beginning of the Period
12,942

 
9,096

 
42
 %
Cash and Cash Equivalents, End of the Period
$
10,599

 
$
7,941

 
33
 %
 
 
 
 
 
 
Supplemental Disclosures of Cash Flow Information
 
 
 
 
 
Cash Paid during the Period for:
 
 
 
 
 
Interest
$
80

 
$
132

 
(39
)%
Taxes
$
1,408

 
$
378

 
NM

 
 
 
 
 
 
NM = not meaningful
 
 
 
 
 






Flow International Corporation
Supplemental Data
(Unaudited)
 
 
 
 
 
 
U.S. Dollars in thousands
 
 
 
 
 
 
Three Months Ended July 31,
 
2012
 
2011
 
% Change
 
 
 
 
 
 
Consolidated Sales by Category:
 
 
 
 
 
Standard System Sales
$
39,962

 
$
32,978

 
21
 %
Advanced System Sales
4,154

 
6,986

 
(41
)%
Consumable Parts Sales
22,119

 
20,066

 
10
 %
 
$
66,235

 
$
60,030

 
10
 %
 
 
 
 
 
 
Segment Revenue:
 
 
 
 
 
Standard
$
62,017

 
$
53,004

 
17
 %
Advanced
4,218

 
7,026

 
(40
)%
 
$
66,235

 
$
60,030

 
10
 %
 
 
 
 
 
 
Depreciation and Amortization Expense
$
1,426

 
$
1,572

 
(9
)%
Capital Spending
$
1,450

 
$
631

 
NM

 
 
 
 
 
 
NM = not meaningful
 
 
 
 
 




Flow International Corporation
Reconciliation of Adjusted EBITDA to Net Income
(Unaudited)
 
 
 
 
 
 
U.S. Dollars in thousands
 
 
 
 
 
 
Three Months Ended July 31,
 
2012
 
2011
 
% Change
 
 
 
 
 
 
Net Income
$
2,221

 
$
711

 
NM

Add Back:
 
 
 
 
 
Depreciation and Amortization
1,426

 
1,572

 
(9
)%
Income Tax Provision
1,477

 
100

 
NM

Interest Charges
340

 
311

 
9
 %
Non-Cash Charges (i)
927

 
666

 
39
 %
Adjusted EBITDA
$
6,391

 
$
3,360

 
90
 %
 
 
 
 
 
 
(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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