FLOW INTERNATIONAL CORPORATION | ||||
(Exact Name of Registrant as Specified in Its Charter) | ||||
Washington | 001-34443 | 91-1104842 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
23500 64th Avenue South, Kent, Washington 98032 | ||||
(Address of principal executive offices) | ||||
(zip code) | ||||
(253) 850-3500 | ||||
(Registrant’s Telephone Number, Including Area Code) | ||||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below): | ||||
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||||
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||||
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||||
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | ||||
FLOW INTERNATIONAL CORPORATION (Registrant) | ||||||
Date: March 11, 2013 | By: | /s/ John S. Leness | ||||
John S. Leness | ||||||
General Counsel and Secretary |
• | 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 $62.6 million for the quarter, an increase of $3.5 million or 6% 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 $5.1 million for the quarter, and as anticipated, a decline of $1.7 million or 25% 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 profits were $26.7 million or 39% of sales for the quarter, compared to $26.1 million or 40% of sales in the prior-year quarter. |
• | Standard Segment gross profits were $25.1 million or 40% of sales for the quarter, compared to the year-ago quarter gross profit of $24.2 million or 41% of sales. The gross profit variation is driven by product and geographic mix. |
• | Advanced Segment gross profits were $1.6 million or 31% of sales in the current quarter, compared to $1.8 million or 27% of sales in the year-ago quarter. |
• | Total operating expenses for the quarter were $21.9 million, compared to $20.1 million in the prior-year quarter. The year over year increase reflects timing of initiatives undertaken by the Company, higher |
Flow International Corporation | |||||||||||||||||||||
Condensed Consolidated Statements of Operations | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
U.S. Dollars in thousands, except per share data | |||||||||||||||||||||
Three Months Ended January 31, | Nine Months Ended January 31, | ||||||||||||||||||||
2013 | 2012 | % Change | 2013 | 2012 | % Change | ||||||||||||||||
Sales | $ | 67,658 | $ | 65,808 | 3 | % | $ | 200,931 | $ | 190,371 | 6 | % | |||||||||
Cost of Sales | 41,005 | 39,737 | 3 | % | 124,065 | 115,864 | 7 | % | |||||||||||||
Gross Margin | 26,653 | 26,071 | 2 | % | 76,866 | 74,507 | 3 | % | |||||||||||||
Operating Expenses: | |||||||||||||||||||||
Sales and Marketing | 12,837 | 12,028 | 7 | % | 38,035 | 36,806 | 3 | % | |||||||||||||
Research and Engineering | 3,213 | 2,712 | 18 | % | 8,431 | 8,079 | 4 | % | |||||||||||||
General and Administrative | 5,818 | 5,342 | 9 | % | 17,417 | 17,312 | 1 | % | |||||||||||||
Operating Expenses | 21,868 | 20,082 | 9 | % | 63,883 | 62,197 | 3 | % | |||||||||||||
Operating Income | 4,785 | 5,989 | (20 | )% | 12,983 | 12,310 | 5 | % | |||||||||||||
Interest Expense, net | (287 | ) | (305 | ) | (6 | )% | (885 | ) | (876 | ) | 1 | % | |||||||||
Other Expense, net | (252 | ) | (384 | ) | (34 | )% | (641 | ) | (511 | ) | 25 | % | |||||||||
Income Before Income Taxes | 4,246 | 5,300 | (20 | )% | 11,457 | 10,923 | 5 | % | |||||||||||||
Provision for Income Taxes | (1,551 | ) | (2,041 | ) | (24 | )% | (4,380 | ) | (4,279 | ) | 2 | % | |||||||||
Income from Continuing Operations | 2,695 | 3,259 | (17 | )% | 7,077 | 6,644 | 7 | % | |||||||||||||
Income (Loss) from Discontinued Operations, net of Income Tax | (84 | ) | 57 | NM | (135 | ) | 162 | NM | |||||||||||||
Net Income | $ | 2,611 | $ | 3,316 | (21 | )% | $ | 6,942 | $ | 6,806 | 2 | % | |||||||||
Basic Earnings Per Share: | |||||||||||||||||||||
Income from Continuing Operations | $ | 0.06 | $ | 0.07 | $ | 0.15 | $ | 0.14 | |||||||||||||
Discontinued Operations | (0.01 | ) | — | (0.01 | ) | — | |||||||||||||||
Net Income | $ | 0.05 | $ | 0.07 | $ | 0.14 | $ | 0.14 | |||||||||||||
Diluted Earnings Per Share: | |||||||||||||||||||||
Income from Continuing Operations | $ | 0.05 | $ | 0.07 | $ | 0.14 | $ | 0.14 | |||||||||||||
Discontinued Operations | — | — | — | — | |||||||||||||||||
Net Income | $ | 0.05 | $ | 0.07 | $ | 0.14 | $ | 0.14 | |||||||||||||
Weighted Average Shares Outstanding Used in Computing Basic and Diluted Income Per Share (000): | |||||||||||||||||||||
Basic | 48,413 | 47,857 | 48,273 | 47,730 | |||||||||||||||||
Diluted | 49,141 | 47,857 | 49,053 | 47,730 | |||||||||||||||||
NM = not meaningful |
Flow International Corporation | ||||||||||
Condensed Consolidated Balance Sheets | ||||||||||
(Unaudited) | ||||||||||
U.S. Dollars in thousands | ||||||||||
January 31, | April 30, | |||||||||
2013 | 2012 | % Change | ||||||||
ASSETS | ||||||||||
Current Assets: | ||||||||||
Cash and Cash Equivalents | $ | 12,539 | $ | 12,942 | (3 | )% | ||||
Receivables, net | 52,935 | 46,830 | 13 | % | ||||||
Inventories | 40,138 | 40,069 | — | % | ||||||
Other Current Assets | 18,101 | 15,704 | 15 | % | ||||||
Total Current Assets | 123,713 | 115,545 | ||||||||
Property and Equipment, net | 17,949 | 17,488 | 3 | % | ||||||
Other Long-Term Assets | 28,393 | 34,033 | (17 | )% | ||||||
Total Assets | $ | 170,055 | $ | 167,066 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
Current Liabilities: | ||||||||||
Subordinated Notes | 10,305 | — | NM | |||||||
Accounts Payable and Other Accrued Liabilities | 33,382 | 33,681 | (1 | )% | ||||||
Other Current Liabilities | 19,820 | 25,419 | (22 | )% | ||||||
Total Current Liabilities | 63,507 | 59,100 | ||||||||
Other Long-Term Liabilities | 7,614 | 7,331 | 4 | % | ||||||
Subordinated Notes | — | 9,587 | NM | |||||||
Total Liabilities | 71,121 | 76,018 | ||||||||
Shareholders’ Equity | 98,934 | 91,048 | 9 | % | ||||||
Total Liabilities and Shareholders' Equity | $ | 170,055 | $ | 167,066 | ||||||
NM = not meaningful |
Flow International Corporation | ||||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||||
(Unaudited) | ||||||||||
U.S. Dollars in thousands | ||||||||||
Nine Months Ended January 31, | ||||||||||
2013 | 2012 | % Change | ||||||||
Cash Flows from Operating Activities: | ||||||||||
Net Income | $ | 6,942 | $ | 6,806 | 2 | % | ||||
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | ||||||||||
Depreciation and amortization | 4,385 | 4,723 | (7 | )% | ||||||
Deferred Income Taxes | 3,981 | 2,437 | 63 | % | ||||||
Provision for Slow Moving and Obsolete Inventory | 184 | 391 | (53 | )% | ||||||
Bad Debt Expense | 253 | 389 | (35 | )% | ||||||
Incentive Compensation Expense | 1,976 | 1,783 | 11 | % | ||||||
Warranty Expense | 4,389 | 3,043 | 44 | % | ||||||
Other | 1,211 | 881 | 37 | % | ||||||
Changes in Operating Assets and Liabilities: | ||||||||||
Receivables | (7,067 | ) | (1,883 | ) | NM | |||||
Inventories | (1,500 | ) | (7,129 | ) | (79 | )% | ||||
Other Operating Assets | (1,400 | ) | (944 | ) | 48 | % | ||||
Accounts Payable | (2,835 | ) | (738 | ) | NM | |||||
Other Operating Liabilities | (7,438 | ) | (467 | ) | NM | |||||
Net Cash Provided by Operations | 3,081 | 9,292 | (67 | )% | ||||||
Cash Flows from Investing Activities: | ||||||||||
Expenditures for Property, Equipment and Intangible Assets | (4,936 | ) | (3,346 | ) | 48 | % | ||||
Other Investing Activities | 1,540 | 538 | NM | |||||||
Net Cash Used in Investing Activities | (3,396 | ) | (2,808 | ) | 21 | % | ||||
Cash Flows from Financing Activities: | ||||||||||
Borrowings Under Credit Facility | 37,990 | 45,750 | (17 | )% | ||||||
Repayments Under Credit Facility | (37,990 | ) | (51,250 | ) | (26 | )% | ||||
Borrowings (Repayments) Under Other Financing Arrangements | (2 | ) | 27 | NM | ||||||
Net Cash Used in Financing Activities | (2 | ) | (5,473 | ) | NM | |||||
Effect of Changes in Exchange Rates | (86 | ) | 78 | NM | ||||||
Net Change in Cash and Cash Equivalents | (403 | ) | 1,089 | |||||||
Cash and Cash Equivalents, Beginning of the Period | 12,942 | 9,096 | 42 | % | ||||||
Cash and Cash Equivalents, End of the Period | $ | 12,539 | $ | 10,185 | 23 | % | ||||
Supplemental Disclosures of Cash Flow Information | ||||||||||
Cash Paid during the Period for: | ||||||||||
Interest | $ | 159 | $ | 261 | (39 | )% | ||||
Taxes | $ | 2,055 | $ | 588 | NM | |||||
NM = not meaningful |
Flow International Corporation | |||||||||||||||||||||
Supplemental Data | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
U.S. Dollars in thousands | |||||||||||||||||||||
Three Months Ended January 31, | Nine Months Ended January 31, | ||||||||||||||||||||
2013 | 2012 | % Change | 2013 | 2012 | % Change | ||||||||||||||||
Consolidated Sales by Category: | |||||||||||||||||||||
Standard System Sales | $ | 41,859 | $ | 40,071 | 4 | % | $ | 122,151 | $ | 111,942 | 9 | % | |||||||||
Advanced System Sales | 5,065 | 6,709 | (25 | )% | 12,970 | 18,971 | (32 | )% | |||||||||||||
Consumable Parts Sales | 20,734 | 19,028 | 9 | % | 65,810 | 59,458 | 11 | % | |||||||||||||
Total | $ | 67,658 | $ | 65,808 | 3 | % | $ | 200,931 | $ | 190,371 | 6 | % | |||||||||
Segment Revenue: | |||||||||||||||||||||
Standard | $ | 62,579 | $ | 59,076 | 6 | % | $ | 187,798 | $ | 171,267 | 10 | % | |||||||||
Advanced | 5,079 | 6,732 | (25 | )% | 13,133 | 19,104 | (31 | )% | |||||||||||||
$ | 67,658 | $ | 65,808 | 3 | % | $ | 200,931 | $ | 190,371 | 6 | % | ||||||||||
Depreciation and Amortization Expense | $ | 1,546 | $ | 1,572 | (2 | )% | $ | 4,385 | $ | 4,723 | (7 | )% | |||||||||
Capital Spending | $ | 1,160 | $ | 995 | 17 | % | $ | 4,936 | $ | 3,346 | 48 | % | |||||||||
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, | ||||||||||||||||||||
2013 | 2012 | % Change | 2013 | 2012 | % Change | ||||||||||||||||
Net Income | $ | 2,611 | $ | 3,316 | (21 | )% | $ | 6,942 | $ | 6,806 | 2 | % | |||||||||
Add Back: | |||||||||||||||||||||
Depreciation and Amortization | 1,546 | 1,572 | (2 | )% | 4,385 | 4,723 | (7 | )% | |||||||||||||
Income Tax Provision | 1,551 | 2,041 | (24 | )% | 4,380 | 4,279 | 2 | % | |||||||||||||
Interest Charges | 297 | 317 | (6 | )% | 962 | 937 | 3 | % | |||||||||||||
Non-Cash Charges (i) | 942 | 868 | 9 | % | 2,637 | 2,092 | 26 | % | |||||||||||||
Adjusted EBITDA | $ | 6,947 | $ | 8,114 | (14 | )% | $ | 19,306 | $ | 18,837 | 2 | % | |||||||||
(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. | |||||||||||||||||||||