Wells-Gardner Reports Financial Results for Third Quarter of 2013
Q3 Revenue UP 4%; YTD Revenue UP 20%
2013 YTD Net Earnings: $541,000 vs. 2012 YTD Net Loss: ($159,000)
Chicago, Illinois - November 7, 2013 --- Wells-Gardner Electronics Corporation (NYSE MKT: WGA) announced financial results today for the third quarter of 2013, ended September 30, 2013.
Highlights for the third quarter and the first nine months of 2013 included:
Net sales increased 4 percent to $12.2 million compared to $11.7 million in the third quarter of 2012; for the nine months net sales increased 20 percent to $44.4 million versus $36.9 million in the prior year period.
Sales to the gaming industry increased 6 percent and 27 percent respectively for the third quarter of 2013 and the first nine months of 2012, primarily driven by the sale of VLT units in the state of Illinois.
Net loss for the third quarter was ($40,000), or $(0.00) per diluted share, significantly improved from a net loss of ($235,000), or $(0.02) per diluted share, in the third quarter of 2012. For the nine months net income was $541,000, or $0.05 per diluted share, versus a net loss of ($159,000), or $(0.01) per diluted share in the nine months 2012.
VLT backlog at September 30, 2013 was $18.25 million.
Long-term debt totaled $72,000 compared to $3.7 million at December 31, 2012.
Free cash flow generated by the Company was approximately $1.1 for the third quarter and $3.1 million for the first nine months of 2013.
Anthony Spier, chairman and chief executive officer of Wells-Gardner, said, "While VLT revenue for the third quarter of 2013 increased 69 percent versus the third quarter of 2012, consolidated revenue for the quarter came in below our expectations. A VLT product update was introduced by our strategic partner in September and consequently impacted sales during the quarter as customers delayed purchases until the introduction of the updated product. We expect that fourth quarter revenue will benefit as a number of sales that were expected in the third quarter shift into the fourth quarter. In light of the circumstances we are pleased with a breakeven quarter and expect a better result in the fourth quarter."
Mr. Spier continued, "During the quarter, we participated in the Global Gaming Expo (G2E) and this resulted in a great deal of interest in our new button-deck technology. Also, several customers have expressed an interest to determine whether our button-deck product is a good fit for their hardware. We are also working in conjunction with a current client to jointly develop a custom button-deck solution to improve the functionality of their products. We are very early in the development process, but are encouraged with the progress to this point."
"As has been the case throughout 2013, our base business continued to be challenged during the third quarter," continued Mr. Spier. "It remains a very competitive market place. We have yet to see a strong indication that the replacement cycle at existing casinos and gaming establishments throughout the U.S. is set to commence. As I have indicated in previous quarters, we know that the need to refresh the gaming experience is vitally important to keep consumers coming back to their favorite gaming venues. What we don`t yet know is when this long delayed replacement cycle will commence. However, when it does, we are well positioned to benefit."
"We continue to run the company conservatively with a unceasing focus on managing expenses, paying down debt, and operating our business from internally generated cash flow. For the quarter we generated positive cash flow of approximately $1.1 million and $3.1 million for the nine months. Bank debt now stands at $72,000 down from $2.2 million in the comparable quarter last year. Engineering, sales and administrative expenses for the quarter decreased 13 percent as cost control initiatives begin to gain traction," Mr. Spier concluded.
Outlook
Based on its best estimates and information available at this time, management believes full year 2013 net sales will increase in a range of 12 percent to 14 percent, or between $57 million and $58 million, compared to $51.1 million in full year 2012, with an increase in net earnings versus 2012.
Conference Call
The Company will host a conference call and webcast at 11:00 AM Eastern Time on Thursday, November 7, 2013. Both the call and webcast are open to the general public.
The conference call domestic dial-in number is 877-261-8990 and the pass code is 36034173. Questions will be taken only from participants on the conference call. The teleconference will be webcast by Thomson/CCBN on the Company`s website at www.wellsgardner.com under the investor relations section. The conference call will be available via replay for 30 days beginning late Thursday, November 7, 2013. The replay call in number is 888-843-7419 and the pass code is 36034173.
About Wells-Gardner Electronics Corporation
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`s American Gaming & Electronics, Inc. subsidiary ("AGE"), a leading parts distributor to the gaming markets, sells parts and services to more than 700 casinos in North America with offices in Nevada, New Jersey, Florida and Illinois. AGE is also a licensed distributor of video gaming terminals in Illinois. For additional investor information, please contact Jim Brace - Wells-Gardner at (708) 290-2120 or Joseph Diaz, Managing Partner, Lytham Partners, LLC, (602) 889-9660.
Private Securities Litigation Reform Act of 1995
This press release contains forward-looking statements within the meaning of the federal securities laws. The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for such forward-looking statements. The words, "believe," "project," "expect," "anticipate," "estimate," "will" and other similar statements of expectation identify forward-looking statements. 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.
WELLS-GARDNER ELECTRONICS CORPORATION | ||||||||
Condensed Consolidated Statements of Earnings (unaudited) | ||||||||
Three Months and Nine Months Ended September 30, 2013 and 2012 | ||||||||
Three Months Ended Sept 30, | Nine Months Ended Sept 30, | |||||||
2013 | 2012 | 2013 | 2012 | |||||
Net sales | $ | 12,246,000 | $ | 11,727,000 | $ | 44,353,000 | $ | 36,913,000 |
Cost of sales | 10,310,000 | 9,678,000 | 37,201,000 | 30,377,000 | ||||
Gross margin | 1,936,000 | 2,049,000 | 7,152,000 | 6,536,000 | ||||
Engineering, selling & administrative expenses | 1,967,000 | 2,258,000 | 6,555,000 | 6,589,000 | ||||
Operating (Loss) Earnings | (31,000) | (209,000) | 597,000 | (53,000) | ||||
Interest expense | 15,000 | 26,000 | 60,000 | 86,000 | ||||
Other expense, net | (6,000) | - | (6,000) | (1,000) | ||||
Income Tax expense | - | - | 2,000 | 21,000 | ||||
Net (Loss) Earnings | $ | (40,000) | $ | (235,000) | $ | 541,000 | $ | (159,000) |
Earnings per share: | ||||||||
Basic earnings per share | $ | (0.00) | $ | (0.02) | $ | 0.05 | $ | (0.01) |
Diluted earnings per share | $ | (0.00) | $ | (0.02) | $ | 0.05 | $ | (0.01) |
Basic average common shares outstanding | 11,703,139 | 11,664,224 | 11,707,321 | 11,651,099 | ||||
Diluted average common shares outstanding | 11,703,229 | 11,667,535 | 11,708,663 | 11,654,647 | ||||
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Source: Wells-Gardner Electronics Corporation via Thomson Reuters ONE
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