Chicago, Illinois - August 6, 2014 --- Wells-Gardner Electronics Corporation (NYSE MKT: WGA) announced financial results today for the second quarter ended June 30, 2014.
Highlights for the second quarter of 2014 included:
- Net income for the quarter totaled $226,000 or $0.02 per fully diluted share, compared to $31,000 or $0.00 per fully diluted share in the second quarter of 2013 driven by aggressive expense control.
- Revenue for the quarter totaled $12.4 million compared to revenue of $14.1 million in the second quarter of 2013. This is a reduction of $1.7 million sales, which led to a gross margin decline of $244,000.
- Engineering, Sales and Administrative expenses decreased 20% or $436,000.
- This resulted in an increase in second quarter net income of $195,000.
- Parts sales increased by 20 per cent and parts margin also improved compared to the prior year quarter.
- Video Lottery Terminal (VLT) sales in the second quarter were $4.5 million compared to $5.6 million in the second quarter of 2013.
- Cash flow from operations for the quarter was positive; long-term debt totaled $230,000; with cash on hand of $560,000, essentially making the Company net debt-free at June 30, 2014.
Anthony Spier, chairman and chief executive officer of Wells-Gardner, said, "General market conditions during the second quarter of 2014 remained challenging. VLT sales for the quarter decreased 20% compared to the second quarter of 2014, as the business begins to enter a mature stage. Parts sales for the quarter increased approximately 20 percent versus the comparable quarter last year and increased approximately 28 percent versus the first quarter of 2014. During the quarter we were able to recapture some OEM parts and service business and generated increased FutureLogic sales.
"LCD revenue for the second quarter of 2014 decreased 14 per cent from a relatively strong prior year quarter. However, LCD revenue increased approximately five per cent from the first quarter of 2014. Although the gaming industry continues to be soft the Company continues to make progress on increasing LCD unit sales. The second quarter of 2014 was the second consecutive quarter of increased monitor unit sales."
Mr. Spier continued, "By and large, financial results for the quarter came in as expected. We continue to generate positive cash flow, we are essentially debt free as our cash position exceeds our debt balance and we continue to run the Company conservatively with a focus on managing expenses.
On December 4, 2013 the Board of Directors of Wells-Gardner Electronics Corporation authorized management to explore strategic alternatives. The Company has retained El Segundo, California-based Innovation Capital as its financial advisor to conduct a thorough review of the Company`s business and assets and to provide recommendations for consideration by the Wells-Gardner Board of Directors. Management is reviewing the options suggested by Innovation Capital. There can be no assurance that this evaluation process will result in any transaction. Management will report the results of the strategic review at the conclusion of the process.
Based on its best estimates and information available at this time, management believes full year 2014 net sales will be in a range between $46 million and $49 million, compared to $57.9 million in full year 2013. Management believes that the first quarter of the year will turn out to be the most challenging of the year, as evidenced by the improved sequential results generated in the just completed second quarter. The sales guidance for the year is based on the assumption that the City of Chicago does not opt in to the VLT program in 2014.
The Company will host a conference call and webcast at 11:00 AM Eastern Time on Wednesday, August 6, 2014. 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 37818554. 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 Wednesday, August 6, 2014. The replay call in number is 888-843-7419 and the pass code is 37818554#.
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.
Financial Table to Follow
|WELLS-GARDNER ELECTRONICS CORPORATION|
|Condensed Consolidated Statements of Earnings (unaudited)|
|Three Months and Six Months Ended June 30, 2014 and 2013|
|Three Months Ended June 30,||Six Months Ended June 30,|
|Cost of sales||10,363,000||11,819,000||20,757,000||26,891,000|
|Engineering, selling & administrative expenses||1,778,000||2,214,000||3,725,000||4,587,000|
|Other expense, net||(7,000||)||0||(13,000||)||1,000|
|Income Tax expense||0||2,000||38,000||2,000|
|Earnings per share:|
|Basic earnings per share||$||0.02||$||0.00||$||0.03||$||0.05|
|Diluted earnings per share||$||0.02||$||0.00||$||0.03||$||0.05|
|Basic average common shares outstanding||11,771,286||11,725,944||11,751,673||11,709,446|
|Diluted average common shares outstanding||11,771,286||11,728,018||11,751,673||11,711,689|
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Source: Wells-Gardner Electronics Corporation via GlobeNewswire