Flow International Announces Third Quarter Results

Flow International Corporation

Condensed Consolidated Income Statements

(Unaudited)

U.S. Dollars in thousands, except per share data

Three Months Ended January 31,

Nine Months Ended January 31,

2012

2011

% Change

2012

2011

% Change

Sales

$      65,808

$      57,473

15%

$ 190,371

$ 156,988

21%

Cost of Sales

39,737

34,381

16%

115,864

94,710

22%

Gross Margin

26,071

23,092

13%

74,507

62,278

20%

Operating Expenses:

Sales and Marketing

12,028

11,568

4%

36,806

33,049

11%

Research and Engineering

2,712

2,513

8%

8,079

7,095

14%

General and Administrative

5,342

6,194

(14%)

17,312

17,811

(3%)

Operating Expenses

20,082

20,275

(1%)

62,197

57,955

7%

Operating Income

5,989

2,817

NM

12,310

4,323

NM

Interest Expense, net

(305)

(397)

(23%)

(876)

(1,182)

(26%)

Other Income (Expense), net

(384)

(81)

NM

(511)

315

NM

Income Before Taxes

5,300

2,339

NM

10,923

3,456

NM

Provision for Income Taxes

(2,041)

(1,058)

93%

(4,279)

(2,926)

46%

Income from Continuing Operations

3,259

1,281

NM

6,644

530

NM

Income (Loss) from Discontinued Operations, net of Income Tax

57

(40)

NM

162

(152)

NM

Net Income

$        3,316

$        1,241

NM

$     6,806

$        378

NM

Basic and Diluted Income Per Share:

Income from Continuing Operations

$          0.07

$          0.03

NM

$       0.14

$       0.01

NM

Net Income

$          0.07

$          0.03

NM

$       0.14

$       0.01

NM

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

   Basic

47,857

47,301

47,730

47,168

   Diluted  

47,857

47,312

47,730

47,174

NM = not meaningful

Flow International Corporation

Condensed Consolidated Balance Sheets

(Unaudited)

U.S. Dollars in thousands

January 31,

April 30,

2012

2011

% Change

ASSETS

Current Assets:

Cash

$      10,185

$        9,096

12%

Receivables, net

47,247

47,082

—%

Inventories, net

34,280

28,609

20%

Other Current Assets

12,471

13,305

(6%)

Total Current Assets

104,183

98,092

Property and Equipment, net

17,380

19,104

(9%)

Other Long-Term Assets

34,218

35,867

(5%)

Total Assets

$    155,781

$    153,063

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current Liabilities:

Notes Payable

$             -

$        5,500

(100%)

Current Portion of Long-Term Obligations

26

25

4%

Accounts Payable and Other Accrued Liabilities

26,885

28,661

(6%)

Other Current Liabilities

24,782

22,775

9%

Total Current Liabilities

51,693

56,961

Other Long-Term Liabilities

8,132

7,925

3%

Subordinated Notes

9,362

8,723

7%

Total Liabilities

69,187

73,609

Shareholders’ Equity

86,594

79,454

9%

Total Liabilities and Shareholders' Equity

$    155,781

$    153,063

Flow International Corporation

Condensed Consolidated Statements of Cash Flows

(Unaudited)

U.S. Dollars in thousands

January 31,

January 31,

2012

2011

% Change

Cash Flows from Operating Activities:

Net Income

$        6,806

$           378

NM

Adjustments to Reconcile Net Income to Cash Provided by Operating Activities:                 

Depreciation and amortization

4,723

4,706

—%

Deferred Income Taxes

2,437

1,585

54%

Provision for Slow Moving and Obsolete Inventory

391

649

(40%)

Bad Debt Expense

389

346

12%

Incentive Compensation Expense

1,783

1,855

(4%)

Warranty Expense

3,043

1,304

NM

Other

881

787

12%

Changes in Operating Assets and Liabilities:

Receivables

(1,883)

(3,902)

(52%)

Inventories

(7,129)

(5,990)

19%

Other Operating Assets

(944)

(402)

NM

Accounts Payable

(738)

348

NM

Other Operating Liabilities

(467)

2,522

NM

Net Cash Provided by Operations

9,292

4,186

NM

Cash Flows from Investing Activities:

Expenditures for Property, Equipment and Intangible Assets

(3,346)

(2,700)

24%

Other Investing Activities

538

(1,632)

NM

Net Cash Used in Investing Activities

(2,808)

(4,332)

(35%)

Cash Flows from Financing Activities:

Borrowings Under Credit Facility

45,750

35,100

30%

Repayments Under Credit Facility

(51,250)

(33,550)

53%

Other Net Borrowings (Repayments)

27

(8)

NM

Net Cash (Used in) Provided by Financing Activities

(5,473)

1,542

NM

Effect of Changes in Exchange Rates

78

238

(67%)

Net Change in Cash and Cash Equivalents

1,089

1,634

Cash and Cash Equivalents, Beginning of the Period

9,096

6,367

43%

Cash and Cash Equivalents, End of the Period

$      10,185

$        8,001

27%

Supplemental Disclosures of Cash Flow Information

Cash Paid during the Period for:

Interest

261

288

(9)%

Taxes

588

476

24%

NM = not meaningful

Flow International Corporation

Supplemental Data

(Unaudited)

U.S. Dollars in thousands

Three Months Ended January 31,

Nine Months Ended January 31,

2012

2011

% Change

2012

2011

% Change

Sales Breakdown:

Systems

$      46,780

39,987

17%

$ 130,913

$ 105,429

24%

Consumable Parts

19,028

17,486

9%

59,458

51,559

15%

Total

$      65,808

$      57,473

15%

$ 190,371

$ 156,988

21%

Segment Revenue Breakdown:

Standard

$      59,076

$      49,916

18%

$ 171,267

$ 135,619

26%

Advanced

6,732

7,557

(11%)

19,104

21,369

(11%)

$      65,808

$      57,473

15%

$ 190,371

$ 156,988

21%

Depreciation and Amortization Expense

$        1,572

$        1,522

3%

$     4,723

$     4,706

—%

Capital Spending

$           995

$        1,551

(36%)

$     3,346

$     2,700

24%

NM = not meaningful

Flow International Corporation

Reconciliation of Adjusted EBITDA to Net Income

(Unaudited)

U.S. Dollars in thousands

Three Months Ended January 31,

Nine Months Ended January 31,

2012

2011

% Change

2012

2011

% Change

Net Income

$        3,316

$        1,241

NM

$     6,806

$        378

NM

Add Back:

Depreciation and Amortization

1,572

1,522

3%

4,723

4,706

—%

Income Tax Provision

2,041

1,058

93%

4,279

2,926

46%

Interest Charges

317

418

(24%)

937

1,268

(26%)

Non-Cash Charges (i)

868

687

26%

2,092

1,700

23%

Adjusted EBITDA

$        8,114

$        4,926

65%

$   18,837

$   10,978

72%

(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.