Science & Technology
Science and Technology
Science and Technology
Tue, November 10, 2009 Wells-Gardner Reports Third Quarter Earnings Increased by $450,000
CHICAGO, IL--(Marketwire - November 10, 2009) - Wells-Gardner Electronics Corporation (
For the nine months ending September 30, 2009, net earnings were $853,000 or $0.08 per share compared to $185,000 or $0.02 per share in the first nine months 2008, which is an increase of 460 percent. The nine month 2009 earnings include non-recurring tax charges of $168,000. Sales were $39.4 million, a decline of 3 percent from $40.7 million in the same period in 2008.
"We continue to be pleased with our earnings performance in this difficult gaming market environment," said Anthony Spier, Wells-Gardner's Chairman and Chief Executive Officer. "Our increase in earnings in the third quarter was driven by an increase in both revenue and margins as well as continued strong inventory control. Revenue increased by 19 percent due to strong LCD sales to our slot manufacturer customers. Margins increased in the quarter to 17.8 percent compared to 14.9 percent in the same quarter in the prior year due to moving more production to China and improved design and purchasing cost control. Operating expense was slightly higher than the third quarter last year due to accruals for compensation and legal matters. Inventory reductions caused a reduction in interest expense of over $30,000."
"Our increase in earnings for the nine months ended September 30, 2009 was driven by the increase in margins to 17.9 percent from 15.9 percent in the prior year period, as well as a reduction in interest expenses of $117,000 due to strong inventory control."
"The balance sheet continues to strengthen with debt being reduced to $1.5 million as of September 30, 2009 compared with $6.9 million at September 30, 2008. The Company's debt equity ratio is now 10 percent compared to 37 percent at year end 2008. The Company has generated over $5.4 million of operating cash flow in the last 12 months. This is the main reason interest expenses have been reduced by $117,000 in the first nine months 2009."
Outlook
Considering the Company earned more in the first nine months 2009 than we did in twelve months 2008, we expect the net earnings for the full year 2009 to be substantially better on an operational basis than that of last year despite reduced sales. We currently expect that sales for the full year 2009 will be approximately $51 to $53 million dollars, slightly less than last year, as the worldwide gaming slot machine market remains sluggish for a longer period of time than many had anticipated. We will continue to aggressively control costs, interest expense and inventory levels ahead of the expected rebound in the slot machine replacement market and start up of new jurisdictions.
Founded in 1925, Wells-Gardner Electronics Corporation is a distributor and manufacturer of color video monitors and other related distribution products for a variety of markets including, but not limited to, gaming machine manufacturers, casinos, coin-operated video game manufacturers and other display integrators. The Company has the majority of its LCDs and CRT monitors manufactured in Mainland China. In addition, the Company's American Gaming & Electronics, Inc. subsidiary ("AGE"), a leading parts distributor to the gaming markets, sells parts and services to over 700 casinos in North America with offices in Las Vegas, Nevada, Hammonton, New Jersey, Miami, Florida and McCook, Illinois. AGE also sells refurbished gaming machines on a global basis as well as installs and services some brands of gaming machines in casinos in North America.
This press release contains forward-looking statements within the meaning of the federal securities laws. Those statements include statements regarding the intent, belief or expectations of the Company and its management. Readers are cautioned that the forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties, and that actual results could differ materially from those expressed in any forward-looking statement. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include, but are not limited to, development of competing technologies, availability of adequate credit, interruption or loss of supply from key suppliers, increased competition, the regulatory process and regulatory and legislative changes affecting the gaming industry. Wells-Gardner assumes no obligation to update the information contained in this release to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events. For additional investor information, please contact Jim Brace -- Wells-Gardner at (708) 290-2120 or Alan Woinski -- Gaming USA Corporation at (201) 599-8484.
WELLS-GARDNER ELECTRONICS CORPORATION Condensed Consolidated Statements of Earnings (unaudited) Three Months and Nine Months Ended September 30, 2009 and 2008 Three Months Ended Nine Months Ended September 30, September 30, -------------------------- -------------------------- 2009 2008 2009 2008 ------------ ------------ ------------ ------------ Net sales $ 13,446,000 $ 11,283,000 $ 39,426,000 $ 40,724,000 Cost of sales 11,055,000 9,597,000 32,350,000 34,265,000 ------------ ------------ ------------ ------------ Gross margin 2,391,000 1,686,000 7,076,000 6,459,000 Engineering, selling & administrative expenses 2,072,000 1,785,000 5,869,000 5,964,000 ------------ ------------ ------------ ------------ Operating Earnings 319,000 (99,000) 1,207,000 495,000 Interest expense 55,000 88,000 171,000 288,000 Investment in Joint Venture - (2,000) - (3,000) Other expense, net - (1,000) 166,000 - Income Tax expense (2,000) - 17,000 25,000 ------------ ------------ ------------ ------------ Net Earnings $ 266,000 $ (184,000) $ 853,000 $ 185,000 ============ ============ ============= ============ Earnings per share: Basic earnings per share $ 0.03 $ (0.02) $ 0.08 $ 0.02 Diluted earnings per share $ 0.03 $ (0.02) $ 0.08 $ 0.02 Basic average common shares outstanding 10,420,965 10,348,965 10,415,710 10,350,595 Diluted average common shares outstanding 10,420,965 10,348,965 10,415,710 10,351,044 ** See acccompanying notes to the unaudited condensed consolidated financial statements.
