Exhibit 99.1
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Contact: | | Steve Reichenbach |
| | | Chief Financial Officer |
| | | 253-850-3500 |
FLOW INTERNATIONAL ANNOUNCES FISCAL 2005
FOURTH QUARTER AND YEAR END RESULTS
Quarterly Waterjet Sales Up 40%, Annual Waterjet Sales up 30%, Equity Raise Allows for Elimination of Subordinated Debt
KENT, Wash., July 28, 2005– Flow International Corporation (Nasdaq: FLOW), the world’s leading supplier of ultrahigh-pressure waterjet products, today reported results for its fiscal 2005 fourth quarter and year ended April 30, 2005. On a consolidated basis, FLOW reported quarterly sales of $65.0 million, operating income of $6.3 million, or 9.7% of sales, and a net loss of $4.7 million or $0.20 basic and diluted loss per share, which includes in interest expense, the write off of $6.3 million in debt discount and related loan fees. For comparison purposes, in the fiscal 2004 fourth quarter, the Company reported consolidated sales of $54.4 million, operating income of $1.7 million and a net loss of $3.6 million or $0.23 basic and diluted loss per share. The fiscal 2004 loss included restructuring charges of $1.2 million and tax expense of $1.9 million for the future repatriation of foreign earnings. FLOW paid off all of its subordinated debt, as well as a significant portion of its senior debt, during the fourth fiscal quarter, as a result of strong cash flow from operations and the completion of a $59 million net Private Investment in Public Equity (‘PIPE’) transaction in March 2005.
“We continue to progress against all measures by growing our core waterjet business, and by continuing to increase operating profitability,” said Stephen R. Light, FLOW’s President and Chief Executive Officer. “I am very pleased to report 40% revenue growth in the quarter in our core waterjet business. In addition to many positive developments during the quarter, including our PIPE, we are particularly gratified to have recently received a number of awards in recognition of our achievements in providing industry leading “customer” value and restoring our Company to financial health. That others should choose to take a fresh interest in the positive events at our Company, serves as testament to the dedicated and ongoing efforts of everyone at FLOW.”
For the year ended April 30, 2005, FLOW reported record sales of $219.4 million, operating income of $11.5 million and a net loss of $10.8 million or $0.61 basic and diluted loss per share. These 2005 results include $862,000 in restructuring and financial consulting charges, as well as $6.3 million in additional interest expense resulting from the amortization of debt discount and related debt fees associated with the early pay-off of the Company’s subordinated debt. For
comparison, in the 12 months ended April 30, 2004 the Company reported consolidated revenues of $177.6 million, an operating loss of $1.9 million, and a net loss of $11.5 million or $0.75 basic and diluted loss per share. Results for fiscal 2004 include restructuring and financial consulting charges of $4.8 million and the tax expense of $1.9 million for the future repatriation of foreign earnings.
Operations Review
FLOW Waterjet: For the fiscal 2005 fourth quarter, the Waterjet operations reported sales of $48.8 million and operating income of $3.8 million, which compares to revenues of $35.0 million and an operating loss of $431,000 in the fiscal 2004 fourth quarter. Waterjet continued to perform well across all reporting geographies, with $5.7 million of the $13.8 million increase attributable to standard systems and spares in North America, where improved unit sales are a result of increased sales and marketing activity. Throughout fiscal 2005, FLOW enhanced the awareness of its waterjet technology through increased marketing and tradeshow efforts, most notably the bi-annual International Manufacturing Technology Show in September, 2004. The Company also increased sales and technical service personnel and added two machine tool distributors in North America during the past 12 months.
Within Waterjet during the fiscal 2005 fourth quarter and the 12 months ended April 30, 2005:
| | • | | For the quarter, total systems sales increased 55% to $35.6 million, with $7 million of the $12.7 million increase from domestic system sales. For the 12-month period, system sales increased 44% or $37.1 million to $122.1 million, on strong domestic and global demand resulting from our increased marketing and sales investments. The Company generated the bulk of the increase, or $25.1 million, through an increase in domestic systems sales. The marketplace continues to increase its recognition of the accuracy, speed, and versatility advantages of the waterjet over conventional cutting technologies. |
| | • | | Waterjet sales in Asia and Europe were $16.1 million and $56.2 million for the quarter and 12 months ended April 30, 2005, respectively. That compares to $10.9 million and $45.1 million in the comparable quarter and 12-month period in fiscal 2004, respectively. In particular, Asia Waterjet sales increased $5.0 million or 24% for the year, driven largely by sales in China, where the Company experienced strong demand for shapecutting and cutting cell systems from a strengthening automotive industry. In addition, FLOW continues to grow sales in Europe as it benefits from more aggressive pricing, improvements in standardized systems, and short lead-time delivery. |
| | • | | Consumables parts and service revenues increased 10% during the quarter and 6% during the 12 months, to $13.2 million and $50.8 million, respectively, with most of the increase from domestic sales a result of the increasing number of operating systems, increasing sales of proprietary productivity enhancing kits, as well as increased usage of Flowparts.com for spare parts ordering. |
Avure Technologies: For the fiscal 2005 fourth quarter, Avure recorded sales of $16.2 million and operating income of $2.5 million or 15.4% of sales, compared to sales of $19.4 million and
operating income of $2.1 million in the year-ago quarter. For the year, Avure sales were $46.4 million with operating income of $2.6 million, compared to sales of $44.7 million with an operating loss of $206,000 over the prior 12 months.
Within Avure during the fiscal 2005 fourth quarter and 12 months ended April 30, 2005:
| | • | | General Press revenue during the fiscal 2005 fourth quarter was $10.0 million, compared to $13.2 million in the prior-year quarter. For the year, General Press revenue increased to $31.3 million from $29.5 million in the prior 12 months. All of this growth was experienced in North America as the result of revenue recognized under two large contracts obtained in fiscal 2004 and manufactured in fiscal 2005. International Press sales for the year ended April 30, 2005 decreased $7.3 million as compared to the prior year. The International Press sales are almost exclusively large contract sales in excess of $2 million per contract and accordingly revenue will vary depending on the number and stage of manufacture of these contracts. The Company continues to benefit from an overall increase in production, even as sales fluctuate due to the 1-4 year sales and production cycle. |
| | • | | Avure’s Fresher Under Pressure® food technology revenue increased slightly during the quarter to $6.2 million from $6.1 million in the prior-year quarter. Fresher Under Pressure sales during the year decreased slightly to $15.1 million, compared to $15.3 million over the 12 months in fiscal 2004. The decrease is attributable to the timing of food systems production and the corresponding revenue recognition. |
General Press Divestiture
The General Press operations, which consist of the North America Press and International Press segments, while profitable, are not considered core to Flow’s business. In January 2005, the Company, with the assistance of Danske Markets Inc., began to market the General Press operations, with a confidential information memorandum. The Company is continuing to explore the possibility of selling these segments. However, there can be no assurance that the Company will find a suitable buyer at an acceptable price.
Debt Reduction
As a result of continued strong cash flow from operations and the $59 million net proceeds from the PIPE, FLOW paid off its total $49 million in subordinated debt and interest and paid down its senior debt by $13 million. The Company recorded an associated $6.3 million charge to amortize debt discount and expense related loan fees. FLOW recently announced that it has entered into a new three-year $30 million credit agreement with Bank of America N.A. and U.S. Bank N.A. The new agreement replaced the Company’s short-term facility, which was due to expire on August 1, 2005, with the new facility expiring July 08, 2008.
Conference Call
Flow International will host a conference call today at 1:00 p.m. EDT (10:00 a.m. PDT) to discuss the results. A live Webcast of the call may be found in the investor section at 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 technology for cutting, cleaning, and food safety applications, providing state-of-the-art ultrahigh-pressure (UHP) technology to industries including automotive, aerospace, job shop, surface preparation, food and more. For more information, visit 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 December 20, 2004 Flow International Corporation Form 10-K/A Report filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date of this announcement.
The Company is under no obligation, and does not intend, to update any of the forward looking statements in this press release.
Flow International Corporation
Consolidated Statement of Operations
(Unaudited)
Dollars in thousands except per share data
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| | | Three months ended April 30,
| | | Year ended April 30,
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| | | 2005
| | | 2004
| | | % Change
| | | 2005
| | | 2004
| | | % Change
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Sales | | $ | 65,044 | | | $ | 54,356 | | | 20 | % | | $ | 219,365 | | | $ | 177,609 | | | 24 | % |
Cost of sales | | | 38,979 | | | | 34,463 | | | 13 | % | | | 138,536 | | | | 112,382 | | | 23 | % |
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Gross margin | | | 26,065 | | | | 19,893 | | | 31 | % | | | 80,829 | | | | 65,227 | | | 24 | % |
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Operating expenses | | | | | | | | | | | | | | | | | | | | | | |
Marketing | | | 8,116 | | | | 8,656 | | | -6 | % | | | 32,032 | | | | 28,422 | | | 13 | % |
Research and engineering | | | 3,015 | | | | 1,788 | | | 69 | % | | | 9,692 | | | | 10,651 | | | -9 | % |
General and administrative | | | 8,634 | | | | 6,611 | | | 31 | % | | | 26,783 | | | | 23,261 | | | 15 | % |
Financial consulting | | | — | | | | — | | | NM | | | | 623 | | | | 1,520 | | | -59 | % |
Restructuring | | | — | | | | 1,162 | | | NM | | | | 239 | | | | 3,256 | | | -93 | % |
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Operating expenses | | | 19,765 | | | | 18,217 | | | 8 | % | | | 69,369 | | | | 67,110 | | | 3 | % |
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Operating income (loss) | | | 6,300 | | | | 1,676 | | | 276 | % | | | 11,460 | | | | (1,883 | ) | | NM | |
Interest expense, net | | | (9,206 | )(1) | | | (3,160 | ) | | -191 | % | | | (19,838 | )(1) | | | (12,785 | ) | | -55 | % |
Other income, net | | | (1,144 | ) | | | 1,001 | | | -214 | % | | | (81 | ) | | | 7,817 | | | -101 | % |
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Loss before taxes | | | (4,050 | ) | | | (483 | ) | | NM | | | | (8,459 | ) | | | (6,851 | ) | | -23 | % |
Income tax provision | | | (631 | ) | | | (3,122 | ) | | -80 | % | | | (2,338 | ) | | | (5,197 | ) | | -55 | % |
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Loss before discontinued operations | | | (4,681 | ) | | | (3,605 | ) | | 30 | % | | | (10,797 | ) | | | (12,048 | ) | | 10 | % |
Discontinued operations, net of tax | | | — | | | | — | | | NM | | | | — | | | | 526 | | | NM | |
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Net loss | | $ | (4,681 | ) | | $ | (3,605 | ) | | 30 | % | | $ | (10,797 | ) | | $ | (11,522 | ) | | 6 | % |
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Loss per share | | | | | | | | | | | | | | | | | | | | | | |
Basic and diluted before discontinued operations | | $ | (0.20 | ) | | $ | (0.23 | ) | | -13 | % | | $ | (0.61 | ) | | $ | (0.78 | ) | | 22 | % |
Basic and diluted | | $ | (0.20 | ) | | $ | (0.23 | ) | | -13 | % | | $ | (0.61 | ) | | $ | (0.75 | ) | | 19 | % |
Weighted average shares outstanding (000): | | | | | | | | | | | | | | | | | | | | | | |
Basic | | | 23,644 | | | | 15,586 | | | | | | | 17,748 | | | | 15,415 | | | | |
Diluted | | | 23,644 | | | | 15,586 | | | | | | | 17,748 | | | | 15,415 | | | | |
NM = not meaningful
| (1) | Includes $6.3 million of debt discount and other fees written off in conjunction with the pay-off of the Company’s subordinated debt. |
Flow International Corporation
Statement of Operations
Operations Breakdown
(Unaudited)
Dollars in thousands except per share data
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| | | Three Months ended April 30, 2005
| | Three Months ended April 30, 2004
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| | | Flow Waterjet
Systems
| | Avure
Technologies
| | Consolidated
| | Flow Waterjet
Systems
| | | Avure
Technologies
| | | Consolidated
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Sales | | $ | 48,830 | | $ | 16,214 | | $ | 65,044 | | $ | 35,002 | | | $ | 19,354 | | | $ | 54,356 | |
Cost of sales | | | 28,028 | | | 10,951 | | | 38,979 | | | 21,570 | | | | 12,893 | | | | 34,463 | |
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Gross margin | | | 20,802 | | | 5,263 | | | 26,065 | | | 13,432 | | | | 6,461 | | | | 19,893 | |
Operating expenses | | | 16,952 | | | 2,813 | | | 19,765 | | | 13,863 | | | | 4,354 | | | | 18,217 | |
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Operating income (loss) | | | 3,850 | | | 2,450 | | | 6,300 | | | (431 | ) | | | 2,107 | | | | 1,676 | |
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| | | Year ended April 30, 2005
| | Year ended April 30, 2004
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| | | Flow Waterjet
Systems
| | Avure
Technologies
| | Consolidated
| | Flow Waterjet
Systems
| | | Avure
Technologies
| | | Consolidated
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Sales | | $ | 172,966 | | $ | 46,399 | | $ | 219,365 | | $ | 132,861 | | | $ | 44,748 | | | $ | 177,609 | |
Cost of Sales | | | 107,324 | | | 31,212 | | | 138,536 | | | 83,604 | | | | 28,778 | | | | 112,382 | |
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Gross margin | | | 65,642 | | | 15,187 | | | 80,829 | | | 49,257 | | | | 15,970 | | | | 65,227 | |
Operating expenses | | | 56,726 | | | 12,643 | | | 69,369 | | | 50,934 | | | | 16,176 | | | | 67,110 | |
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Operating income (loss) | | | 8,916 | | | 2,544 | | | 11,460 | | | (1,677 | ) | | | (206 | ) | | | (1,883 | ) |
Flow International Corporation
Supplemental Data
(Unaudited)
Dollars in thousands
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| | | Three months ended April 30,
| | | Year ended April 30,
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| | | 2005
| | 2004
| | % Change
| | | 2005
| | 2004
| | % Change
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Divisional revenue breakdown: | | | | | | | | | | | | | | | | | | |
Flow Waterjet Systems | | | | | | | | | | | | | | | | | | |
Systems | | $ | 35,588 | | $ | 22,923 | | 55 | % | | $ | 122,129 | | $ | 85,015 | | 44 | % |
Consumable parts and services | | | 13,242 | | | 12,079 | | 10 | % | | | 50,837 | | | 47,846 | | 6 | % |
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Total | | | 48,830 | | | 35,002 | | 40 | % | | | 172,966 | | | 132,861 | | 30 | % |
Avure Technologies | | | | | | | | | | | | | | | | | | |
Fresher Under Pressure | | | 6,191 | | | 6,137 | | 1 | % | | | 15,072 | | | 15,297 | | -1 | % |
General Press | | | 10,023 | | | 13,217 | | -24 | % | | | 31,327 | | | 29,451 | | 6 | % |
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Total | | | 16,214 | | | 19,354 | | -16 | % | | | 46,399 | | | 44,748 | | 4 | % |
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| | | $ | 65,044 | | $ | 54,356 | | 20 | % | | $ | 219,365 | | $ | 177,609 | | 24 | % |
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Geographical revenue breakdown: | | | | | | | | | | | | | | | | | | |
United States | | $ | 38,745 | | $ | 28,336 | | 37 | % | | $ | 128,975 | | $ | 92,799 | | 39 | % |
Rest of Americas | | | 5,568 | | | 4,585 | | 21 | % | | | 19,468 | | | 17,751 | | 10 | % |
Europe | | | 13,907 | | | 16,143 | | -14 | % | | | 45,417 | | | 46,557 | | -2 | % |
Asia | | | 6,824 | | | 5,292 | | 29 | % | | | 25,505 | | | 20,502 | | 24 | % |
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| | | $ | 65,044 | | $ | 54,356 | | 20 | % | | $ | 219,365 | | $ | 177,609 | | 24 | % |
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Depreciation and amortization expense | | $ | 1,155 | | $ | 1,350 | | -14 | % | | $ | 5,109 | | $ | 6,167 | | -17 | % |
Capital spending | | $ | 1,001 | | $ | 854 | | 17 | % | | $ | 1,762 | | $ | 5,863 | | 70 | % |
Flow International Corporation
Condensed Balance Sheet Data
Dollars in thousands
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| | | April 30,
2005
| | April 30,
2004
| | | % Change
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Cash, including short-term restricted cash | | $ | 13,445 | | $ | 12,835 | | | 5 | % |
Receivables net | | | 42,781 | | | 44,860 | | | -5 | % |
Inventories | | | 24,218 | | | 26,384 | | | -8 | % |
Total current assets | | | 90,001 | | | 90,611 | | | -1 | % |
Total assets | | | 131,334 | | | 135,071 | | | -3 | % |
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Total debt | | $ | 19,147 | | $ | 86,808 | | | -78 | % |
Total liabilities | | | 90,818 | | | 142,263 | | | -36 | % |
Total shareholders equity (deficit) | | | 37,732 | | | (9,552 | ) | | NM | |
NM = not meaningful
