Flow International Corporation's
) financial results for the fiscal fourth quarter 2013 (ended Apr
30, 2013), which were brought forth recently in a preliminary
data released on June 7, were quite a disappointment.
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The company seems to be a victim of uneven customer demand as a
few markets were strong while others maintained a cautious
approach, primarily because of the prevailing global
uncertainties. Worries emanating from market conditions have
impacted Flow International's fourth quarter results and are
likely to have a spill over on the fiscal first quarter 2014 as
well. Preliminary outcome of the fourth quarter and initiatives
undertaken by the company are briefed below:
Management of Flow International estimates revenue in the fiscal
fourth quarter to be roughly $58 million, representing an 8.5%
year over year decline and operating profit to be roughly at a
breakeven level versus a $2.4 million profit in the year-ago
quarter. Revenue results in the first quarter 2014 are likely to
be somewhat similar to the sequential quarter while operating
income may reach $2.0 million.
Flow International has also undertaken a few initiatives to
reduce its operating costs and save $9 million annually. Also, an
additional $4 million savings are expected from a new product
line launched recently. All these savings are expected to be
realized by the end of fiscal year 2014. Restructuring charges
and other non-recurring costs of $1.0 million related to the cost
saving initiatives will be recorded in the fiscal first quarter
Along with the results and outlook, Flow International also
announced amendments in its 3-yr $25.0 million Senior Credit
Facility Agreement. The new agreement is a $40.0 million 4-year
Credit Facility, due to mature on May 31, 2017. Another important
announcement was the commencement of a review process-options
include sale of the company as well- to enhance shareholders
value. UBS Investment Bank will act as the financial advisor in
the evaluation procedure.
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 #3 (Hold).
Other stocks to watch out for are
Lincoln Electric Holdings Inc.
) with a Zacks Rank #2 (Buy),
Stanley Black & Decker, Inc.