Flow International Corp. Reports Operating Results (10-Q)
Flow International Corp. has a market cap of $193.4 million; its shares were traded at around $4.1 with and P/S ratio of 1.2. Hedge Fund Gurus that owns FLOW: Steven Cohen of SAC Capital Advisors. Mutual Fund and Other Gurus that owns FLOW: Arnold Schneider of Schneider Capital Management, Chuck Royce of Royce& Associates, Mario Gabelli of GAMCO Investors.
Highlight of Business Operations:During the current period, business activity in all of our geographic regions continued to exhibit signs of economic growth. Our standard system sales increased by 35% to $32.4 million for the three months ended January 31, 2011 compared to the year-ago quarter with double digit growth rates in all geographies. Advanced system sales were relatively consistent with the year-ago quarter. Consumable parts sales increased by 30% to $17.5 million during the same period with stronger demand across most of our end-use markets.
Our net income in the current period was $1.2 million or earnings per share of $0.03 which compares to a net loss of $0.7 million or $0.02 per share in the comparative prior period.
Consolidated Adjusted EBITDA (“Adjusted EBITDA”) for the three months ended January 31, 2011 increased from $1.8 million in the year-ago quarter to $4.9 million. The increase in Adjusted EBITDA was as a direct result of the significant improvement in sales, partially offset by an increase in our operating expenses. A reconciliation of Adjusted EBITDA to net income, which is the GAAP financial measure that is most directly comparable to our non-GAAP financial measure, is provided below.
In fiscal year 2010, we terminated our option to acquire OMAX following a thorough investigation of financing alternatives to complete the merger and unsuccessful attempts to negotiate a lower purchase price with OMAX. Pursuant to the terms of the amended Merger Agreement and the Settlement and Cross Licensing Agreement, the $15 million held in escrow was released to OMAX. We recorded a $6 million charge pursuant to the provisions of the amended Merger Agreement in the first quarter of fiscal year 2010, net of a $2.8 million discount as the two subordinated notes issued to OMAX were at a stated interest rate of 2%, which is below our incremental borrowing rate. This discount is being amortized as interest expense
Sales in our standard segment increased $12.9 million or 35%, and $38.8 million or 40% over the prior year comparative periods. Excluding the impact of foreign currency changes, sales in the Standard segment increased $13.1 million or 36% and $40.3 million or 42% for the respective three and nine months ended January 31, 2011 when compared to the prior year comparative periods. The quarter-to-date and year-to-date increases were primarily due to the following:
/td>Gross margin for the three and nine months ended January 31, 2011 amounted to $21.0 million or 42%, and $57.1 million or 42% of sales compared to $15.3 million or 41%, and $39.2 million or 41% of sales in the prior year comparative periods. The improvement in our margins for the respective three and nine months ended January 31, 2011 over the prior year comparative periods was primarily attributable to product mix. Generally, comparison of gross margin rates will vary period over period based on changes in our product sales mix and prices, and levels of production volume.
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