Mankato, Minn. / November 14, 2011 - Winland Electronics, Inc. (NYSE Amex: WEX) today reported sales of Proprietary Environmental Monitoring products of $769,000 for the third quarter ended September 30, 2011, down $69,000, or 8.2 percent, from the $838,000 that the company reported in the same period in 2010. Net loss from the quarter totaled $300,000, or $0.08 per share versus a loss of $305,000, or $0.08 per share for the same period in 2010.
The company reported an operating loss of $296,000 for the three months ended September 30, 2011 compared to an operating loss of $198,000 for the comparable period in 2010. Gross margins decreased to 34.9 percent from 47.3 percent for the three months ended September 30, 2011 compared to the same period in 2010. Declines in gross margin for the three months ended September 30, 2011 were expected based on changing from a direct internal manufacturing operation to outsourcing the company’s manufacturing requirements upon the sale of its EMS business segment.
“Sales in the third quarter were down as a result of a decline in volume from our largest customer, a situation attributable to the customer’s current inventory positions and the timing of replacement orders,” said Brian Lawrence, Winland’s Chief Financial Officer and Senior Vice President. “On the positive side, however, the company realized increased sales to its other top ten customers, with sales up 10 percent quarter-over-quarter and 16 percent year-over-year.”
The company’s lower cost structure from its restructuring in late 2010 and early 2011 resulted in General and Administrative expenses of $191,000 for the second quarter, down $177,000 year-over-year. G&A expenses were down as a result of significant decreases in salaries of $78,000 and board of director fees totaling $28,000, decreased information technology fees of $24,000 and lower professional fees of $20,000.
Sales and marketing expenses were $270,000 for the three months ended September 30, 2011, an increase of $44,000 over the third quarter of 2010. The increase was due to increased advertising expenses of $20,000 and increased marketing and trade show expenses of $20,000 as the company incurred costs in advance of an expected release of its new EA800-ip product.
Nine-Month Results
Net sales for the nine months ended September 30, 2011 were $2.7 million, up $223,000 from the comparable period in 2010. The increase was related to increased sales of $123,000 to the company’s largest distributor and a large project sale of $79,000 to a new customer.
The company reported a net loss of $646,000, or $0.17 per basic and diluted share for the nine months ended September 30, 2011, versus a net loss of $1.7 million, or $0.45 per share for the same period in 2010.
For the nine months ended September 30, 2011, the company reported an operating loss of $707,000 compared to an operating loss of $1.0 million for the same period in 2010. Gross margins decreased to 32.6 percent from 43.1 percent for the nine months ended September 30, 2011 compared to the same period in 2010.
General and Administrative expenses were $693,000 in the first nine months of 2011, down from $1.3 million in the same period in 2010. The decline in expense was primarily related to decreased salaries expenses of $332,000, decreased professional fees of $80,000, decreased information technology fees of $77,000, decreased audit fees of $75,000 and decreased financial advisor fees of $67,000, partially offset by $44,000 of increased bank fees related to non-recurring financing fees.
For the nine months ended September 30, 2011, sales and marketing expenses were $736,000, up $44,000 compared to the same period in 2010. The increase was attributable to increased salary expenses of $22,000 and increased marketing and trade show expenses of $12,000, partially offset by decreased information technology fees of $27,000.
“We are disappointed in the softening in total sales, but recognize that this was primarily attributable to one customer,” Mr. Lawrence said. “Our sales momentum within our broader customer base continues to build, and we’re encouraged our new EnviroAlert EA800-ip will provide increased sales which will positively affect our results as we enter 2012.”
Going forward, press releases regarding the company’s financial results will be posted on the Company’s website and will be communicated when available.
