Flow International Corporation (FLOW) reported its fiscal first quarter of 2014 (ended Jul 31, 2013) financial results on Sep 9, 2013. The company reported loss per share of 2 cents as compared to earnings per share of 5 cents recorded in the year-ago quarter. Results also lagged the Zacks Consensus Estimate of 1 cent earnings per share.
The above quarterly results include $1.6 million of non-recurring expenses and $1.3 million of unrealized foreign currency exchange loss.
Revenues
Flow International reported 10.9% year-over-year decline in sales to $59.0 million.
Standard segment revenues declined 18% year over year to $50.7 million, while Advanced segment reported sales of $8.3 million, up 97% year over year.
In the sales category, Flow International’s Standard System sales in the first quarter declined 27% to $29.4 million; Advanced System sales were $8.3 million, up 100%; and Consumable Parts sales were down 4% year over year at $21.3 million.
Margins
Cost of sales in the first quarter went down 9.8% year over year and represented 63.4% of total revenue, up from 62.6% in the year-ago quarter. Gross margin in the quarter came in at 36.6%. Sales and marketing, research and engineering, and general and administrative expenses, as a percentage of total revenue, stood at 32.3%.
Flow International reported 78% fall in its operating income that came in at $0.9 million versus $4.2 million in the year-ago quarter.
Balance Sheet/Cash Flow
Exiting the fiscal first quarter 2014, Flow International’s cash and cash equivalents stood at $13.4 million, a decrease of 13% sequentially.
The company used roughly $0.5 million of cash for operating activities as compared with $2.1 million used in the year-ago quarter. Capital spending increased 5.2% to $1.5 million.
Outlook
For the fiscal second quarter 2014, management of Flow International anticipates roughly 5% sequential increase in revenues to a range of $60-$62 million. Gross margin is expected to be toward the lower end of 38%-42% range. Operating income is expected to be roughly within $3.15-$3.85 million range. Tax rate is expected to be roughly 40%.
Also, as announced previously, Flow International’s initiatives to reduce its operating costs will save $9 million annually. An additional $4 million saving is expected from a new product line launched recently. All these savings are expected to be realized by the end of fiscal year 2014.
Flow International is one of the leading manufacturers of industrial waterjet machines and currently has a $178 million market capitalization. The stock carries a Zacks Rank #4 (Sell). Other stocks to watch out for are Lennox International, Inc. (LII), with a Zacks Rank #1 (Strong Buy) while Sandvik AB (SDVKY) and Adept Technology Inc. (ADEP) each carry a Zacks Rank #2 (Buy).
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