Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - FLOW INTERNATIONAL CORP | q2fy14pressrelease.htm |
Exhibit 99.1
Contact:
Flow Investor Relations
Geoffrey Buscher
253-813-3286
investors@flowcorp.com
FLOW INTERNATIONAL ANNOUNCES FISCAL 2014 SECOND QUARTER RESULTS
Kent, WA - December 4, 2013 - 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 2014 second quarter ended October 31, 2013.
Flow reported revenues of $66.3 million for the quarter, compared to year-ago second quarter revenues of $67.0 million. The Company reported net income for the quarter of $2.1 million or $0.04 per share, compared to net income of $2.1 million or $0.04 per share in the year-ago quarter.
Adjusted EBITDA for the quarter was $6.1 million or 9.2% of sales, compared to $6.0 million or 8.9% of sales for the year-ago quarter. A reconciliation of Adjusted EBITDA to Net Income is provided in the accompanying financial tables.
“We are pleased to report results that are consistent with the year ago quarter in total revenue and profits,” said Charley Brown, President and CEO. “We continue to expect closing the sale of Flow to American Industrial Partners in early 2014.”
In light of the pending transaction with American Industrial Partners (“AIP”), the Company will not be holding a conference call to discuss these results.
In addition, the Company is in continued discussions with the U.S. Federal Trade Commission (“FTC”) in connection with its proposed transaction with AIP, pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Act”). To facilitate those discussions, AIP withdrew its initial notification filing and subsequently refiled with the FTC on November 27, 2013, which started a new 30-day waiting period, and provides the FTC additional time to complete its investigation. The Company and AIP will continue to work cooperatively with the FTC in connection with its review. Completion of the transaction remains subject to the approval of Flow’s shareholders, regulatory approvals, and other customary closing conditions.
Operations Review for the Fiscal 2014 Second 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 $57.8 million for the quarter, down $5.4 million from $63.2 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 $8.5 million for the quarter, compared to $3.8 million in the year-ago quarter. Backlog for the Advanced segment was $14.8 million as of October 31, 2013 and will be realized over the next two to four quarters. |
• | Aggregate gross profit margins were 38.8% of sales for the quarter, compared to 37.9% in the year-ago quarter. |
• | Total operating expenses for the quarter were $21.7 million, compared to $21.5 million in the prior year period. |
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 the expectation of closing the sale transaction of Flow to American Industrial Partners in early 2014 and Flow and AIP working cooperatively with the FTC. 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 October 31, | Six Months Ended October 31, | ||||||||||||||||||||
2013 | 2012 | % Change | 2013 | 2012 | % Change | ||||||||||||||||
Sales | $ | 66,313 | $ | 67,038 | (1 | )% | $ | 125,317 | $ | 133,273 | (6 | )% | |||||||||
Cost of Sales | 40,570 | 41,618 | (3 | )% | 77,965 | 83,060 | (6 | )% | |||||||||||||
Gross Margin | 25,743 | 25,420 | 1 | % | 47,352 | 50,213 | (6 | )% | |||||||||||||
Operating Expenses: | |||||||||||||||||||||
Sales and Marketing | 11,505 | 12,719 | (10 | )% | 22,299 | 25,198 | (12 | )% | |||||||||||||
Research and Engineering | 2,864 | 3,007 | (5 | )% | 5,810 | 5,218 | 11 | % | |||||||||||||
General and Administrative | 5,930 | 5,730 | 3 | % | 11,261 | 11,599 | (3 | )% | |||||||||||||
Other Operating Charges | 1,392 | — | NM | 2,995 | — | NM | |||||||||||||||
Operating Expenses | 21,691 | 21,456 | 1 | % | 42,365 | 42,015 | 1 | % | |||||||||||||
Operating Income | 4,052 | 3,964 | 2 | % | 4,987 | 8,198 | (39 | )% | |||||||||||||
Interest Expense, net | (127 | ) | (313 | ) | (59 | )% | (495 | ) | (598 | ) | (17 | )% | |||||||||
Other Income (Expense), net | 338 | (124 | ) | NM | (1,185 | ) | (389 | ) | NM | ||||||||||||
Income Before Income Taxes | 4,263 | 3,527 | 21 | % | 3,307 | 7,211 | (54 | )% | |||||||||||||
Provision for Income Taxes | (1,956 | ) | (1,352 | ) | 45 | % | (1,835 | ) | (2,829 | ) | (35 | )% | |||||||||
Income from Continuing Operations | 2,307 | 2,175 | 6 | % | 1,472 | 4,382 | (66 | )% | |||||||||||||
Loss from Discontinued Operations, net of Income Tax | (217 | ) | (65 | ) | NM | (227 | ) | (51 | ) | NM | |||||||||||
Net Income | $ | 2,090 | $ | 2,110 | (1 | )% | $ | 1,245 | $ | 4,331 | (71 | )% | |||||||||
Basic Earnings (Loss) Per Share: | |||||||||||||||||||||
Income from Continuing Operations | $ | 0.05 | $ | 0.04 | $ | 0.03 | $ | 0.09 | |||||||||||||
Discontinued Operations | (0.01 | ) | — | — | — | ||||||||||||||||
Net Income | $ | 0.04 | $ | 0.04 | $ | 0.03 | $ | 0.09 | |||||||||||||
Diluted Earnings (Loss) Per Share: | |||||||||||||||||||||
Income from Continuing Operations | $ | 0.05 | $ | 0.04 | $ | 0.03 | $ | 0.09 | |||||||||||||
Discontinued Operations | (0.01 | ) | — | — | — | ||||||||||||||||
Net Income | $ | 0.04 | $ | 0.04 | $ | 0.03 | $ | 0.09 | |||||||||||||
Weighted Average Shares Outstanding Used in Computing Basic and Diluted Income (Loss) Per Share (000): | |||||||||||||||||||||
Basic | 48,981 | 48,368 | 48,755 | 48,203 | |||||||||||||||||
Diluted | 49,307 | 48,904 | 49,118 | 48,941 | |||||||||||||||||
NM = not meaningful | |||||||||||||||||||||
Flow International Corporation | ||||||||||
Condensed Consolidated Balance Sheets | ||||||||||
(Unaudited) | ||||||||||
U.S. Dollars in thousands | ||||||||||
October 31, | April 30, | |||||||||
2013 | 2013 | % Change | ||||||||
ASSETS | ||||||||||
Current Assets: | ||||||||||
Cash and Cash Equivalents | $ | 14,317 | $ | 15,465 | (7 | )% | ||||
Receivables, net | 49,770 | 42,741 | 16 | % | ||||||
Inventories | 42,568 | 41,059 | 4 | % | ||||||
Other Current Assets | 12,659 | 17,194 | (26 | )% | ||||||
Total Current Assets | 119,314 | 116,459 | ||||||||
Property and Equipment, net | 16,840 | 17,894 | (6 | )% | ||||||
Other Long-Term Assets | 29,686 | 27,740 | 7 | % | ||||||
Total Assets | $ | 165,840 | $ | 162,093 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
Current Liabilities: | ||||||||||
Note Payable | $ | 2,550 | $ | — | NM | |||||
Subordinated Notes | — | 10,559 | NM | |||||||
Accounts Payable and Other Accrued Liabilities | 35,242 | 28,379 | 24 | % | ||||||
Other Current Liabilities | 19,690 | 18,326 | 7 | % | ||||||
Total Current Liabilities | 57,482 | 57,264 | ||||||||
Other Long-Term Liabilities | 9,046 | 8,095 | 12 | % | ||||||
Total Liabilities | 66,528 | 65,359 | ||||||||
Shareholders’ Equity | 99,312 | 96,734 | 3 | % | ||||||
Total Liabilities and Shareholders' Equity | $ | 165,840 | $ | 162,093 | ||||||
NM = not meaningful | ||||||||||
Flow International Corporation | ||||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||||
(Unaudited) | ||||||||||
U.S. Dollars in thousands | ||||||||||
Six Months Ended October 31, | ||||||||||
2013 | 2012 | % Change | ||||||||
Cash Flows from Operating Activities: | ||||||||||
Net Income | $ | 1,245 | $ | 4,331 | (71 | )% | ||||
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | ||||||||||
Depreciation and amortization | 3,227 | 2,839 | 14 | % | ||||||
Deferred Income Taxes | 1,393 | 2,667 | (48 | )% | ||||||
Provision for Slow Moving and Obsolete Inventory | 204 | 128 | 59 | % | ||||||
Bad Debt Expense | 164 | 220 | (25 | )% | ||||||
Incentive Compensation Expense | 1,116 | 1,299 | (14 | )% | ||||||
Warranty Expense | 3,147 | 3,034 | 4 | % | ||||||
Other | 1,476 | 581 | NM | |||||||
Changes in Operating Assets and Liabilities: | ||||||||||
Receivables | (7,686 | ) | (1,693 | ) | NM | |||||
Inventories | (2,286 | ) | (2,607 | ) | (12 | )% | ||||
Other Operating Assets | 1,411 | (340 | ) | NM | ||||||
Accounts Payable | 4,125 | 553 | NM | |||||||
Other Operating Liabilities | 1,344 | (5,626 | ) | NM | ||||||
Net Cash Provided by Operations | 8,880 | 5,386 | 65 | % | ||||||
Cash Flows from Investing Activities: | ||||||||||
Expenditures for Property, Equipment and Intangible Assets | (2,343 | ) | (3,776 | ) | (38 | )% | ||||
Other Investing Activities | — | 532 | NM | |||||||
Net Cash Used in Investing Activities | (2,343 | ) | (3,244 | ) | (28 | )% | ||||
Cash Flows from Financing Activities: | ||||||||||
Borrowings Under Credit Facility | 29,000 | 31,140 | (7 | )% | ||||||
Repayments Under Credit Facility | (26,450 | ) | (31,140 | ) | (15 | )% | ||||
Repayments of Subordinated Notes | (10,824 | ) | — | NM | ||||||
Repayments Under Other Financing Arrangements | (3 | ) | (2 | ) | 50 | % | ||||
Net Cash Used in Financing Activities | (8,277 | ) | (2 | ) | NM | |||||
Effect of Changes in Exchange Rates | 592 | 191 | NM | |||||||
Net Change in Cash and Cash Equivalents | (1,148 | ) | 2,331 | |||||||
Cash and Cash Equivalents, Beginning of the Period | 15,465 | 12,942 | 19 | % | ||||||
Cash and Cash Equivalents, End of the Period | $ | 14,317 | $ | 15,273 | (6 | )% | ||||
Supplemental Disclosures of Cash Flow Information | ||||||||||
Cash Paid during the Period for: | ||||||||||
Interest | $ | 183 | $ | 130 | 41 | % | ||||
Taxes | $ | 718 | $ | 1,581 | (55 | )% | ||||
NM = not meaningful | ||||||||||
Flow International Corporation | |||||||||||||||||||||
Supplemental Data | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
U.S. Dollars in thousands | |||||||||||||||||||||
Three Months Ended October 31, | Six Months Ended October 31, | ||||||||||||||||||||
2013 | 2012 | % Change | 2013 | 2012 | % Change | ||||||||||||||||
Consolidated Sales by Category: | |||||||||||||||||||||
Standard System Sales | $ | 34,599 | $ | 40,330 | (14 | )% | $ | 63,971 | $ | 80,292 | (20 | )% | |||||||||
Advanced System Sales | 8,514 | 3,751 | 127 | % | 16,814 | 7,905 | 113 | % | |||||||||||||
Consumable Parts Sales | 23,200 | 22,957 | 1 | % | 44,532 | 45,076 | (1 | )% | |||||||||||||
Total | $ | 66,313 | $ | 67,038 | (1 | )% | $ | 125,317 | $ | 133,273 | (6 | )% | |||||||||
Segment Revenue: | |||||||||||||||||||||
Standard | $ | 57,799 | $ | 63,202 | (9 | )% | $ | 108,503 | $ | 125,219 | (13 | )% | |||||||||
Advanced | 8,514 | 3,836 | 122 | % | 16,814 | 8,054 | 109 | % | |||||||||||||
$ | 66,313 | $ | 67,038 | (1 | )% | $ | 125,317 | $ | 133,273 | (6 | )% | ||||||||||
Depreciation and Amortization Expense | $ | 1,635 | $ | 1,413 | 16 | % | $ | 3,227 | $ | 2,839 | 14 | % | |||||||||
Capital Spending | $ | 817 | $ | 2,326 | (65 | )% | $ | 2,343 | $ | 3,776 | (38 | )% | |||||||||
NM = not meaningful | |||||||||||||||||||||
Flow International Corporation | |||||||||||||||||||||
Reconciliation of Adjusted EBITDA to Net Income | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
U.S. Dollars in thousands | |||||||||||||||||||||
Three Months Ended October 31, | Six Months Ended October 31, | ||||||||||||||||||||
2013 | 2012 | % Change | 2013 | 2012 | % Change | ||||||||||||||||
Net Income | $ | 2,090 | $ | 2,110 | (1 | )% | $ | 1,245 | $ | 4,331 | (71 | )% | |||||||||
Add Back: | |||||||||||||||||||||
Depreciation and Amortization | 1,635 | 1,413 | 16 | % | 3,227 | 2,839 | 14 | % | |||||||||||||
Income Tax Provision | 1,956 | 1,352 | 45 | % | 1,835 | 2,829 | (35 | )% | |||||||||||||
Interest Charges | 138 | 325 | (58 | )% | 522 | 665 | (22 | )% | |||||||||||||
Non-Cash Charges (i) | 277 | 768 | (64 | )% | 2,313 | 1,695 | 36 | % | |||||||||||||
Adjusted EBITDA | $ | 6,096 | $ | 5,968 | 2 | % | $ | 9,142 | $ | 12,359 | (26 | )% | |||||||||
(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. | |||||||||||||||||||||