Winland Electronics, Inc. (NYSE Amex: WEX) today reported sales
of Proprietary Environmental Monitoring products of $769,000 for
the third quarter ended September 30, 2011, down $69,000, or 8.2
percent, from the $838,000 that the company reported in the same
period in 2010. Net loss from the quarter totaled $300,000, or
$0.08 per share versus a loss of $305,000, or $0.08 per share for
the same period in 2010.
The company reported an operating loss of $296,000 for the three
months ended September 30, 2011 compared to an operating loss of
$198,000 for the comparable period in 2010. Gross margins decreased
to 34.9 percent from 47.3 percent for the three months ended
September 30, 2011 compared to the same period in 2010. Declines in
gross margin for the three months ended September 30, 2011 were
expected based on changing from a direct internal manufacturing
operation to outsourcing the company’s manufacturing requirements
upon the sale of its EMS business segment.
“Sales in the third quarter were down as a result of a decline
in volume from our largest customer, a situation attributable to
the customer’s current inventory positions and the timing of
replacement orders,” said Brian Lawrence, Winland’s Chief Financial
Officer and Senior Vice President. “On the positive side, however,
the company realized increased sales to its other top ten
customers, with sales up 10 percent quarter-over-quarter and 16
percent year-over-year.”
The company’s lower cost structure from its restructuring in
late 2010 and early 2011 resulted in General and Administrative
expenses of $191,000 for the second quarter, down $177,000
year-over-year. G&A expenses were down as a result of
significant decreases in salaries of $78,000 and board of director
fees totaling $28,000, decreased information technology fees of
$24,000 and lower professional fees of $20,000.
Sales and marketing expenses were $270,000 for the three months
ended September 30, 2011, an increase of $44,000 over the third
quarter of 2010. The increase was due to increased advertising
expenses of $20,000 and increased marketing and trade show expenses
of $20,000 as the company incurred costs in advance of an expected
release of its new EA800-ip product.
Nine-Month Results
Net sales for the nine months ended September 30, 2011 were $2.7
million, up $223,000 from the comparable period in 2010. The
increase was related to increased sales of $123,000 to the
company’s largest distributor and a large project sale of $79,000
to a new customer.
The company reported a net loss of $646,000, or $0.17 per basic
and diluted share for the nine months ended September 30, 2011,
versus a net loss of $1.7 million, or $0.45 per share for the same
period in 2010.
For the nine months ended September 30, 2011, the company
reported an operating loss of $707,000 compared to an operating
loss of $1.0 million for the same period in 2010. Gross margins
decreased to 32.6 percent from 43.1 percent for the nine months
ended September 30, 2011 compared to the same period in 2010.
General and Administrative expenses were $693,000 in the first
nine months of 2011, down from $1.3 million in the same period in
2010. The decline in expense was primarily related to decreased
salaries expenses of $332,000, decreased professional fees of
$80,000, decreased information technology fees of $77,000,
decreased audit fees of $75,000 and decreased financial advisor
fees of $67,000, partially offset by $44,000 of increased bank fees
related to non-recurring financing fees.
For the nine months ended September 30, 2011, sales and
marketing expenses were $736,000, up $44,000 compared to the same
period in 2010. The increase was attributable to increased salary
expenses of $22,000 and increased marketing and trade show expenses
of $12,000, partially offset by decreased information technology
fees of $27,000.
“We are disappointed in the softening in total sales, but
recognize that this was primarily attributable to one customer,”
Mr. Lawrence said. “Our sales momentum within our broader customer
base continues to build, and we’re encouraged our new EnviroAlert
EA800-ip will provide increased sales which will positively affect
our results as we enter 2012.”
Going forward, press releases regarding the company’s financial
results will be posted on the Company’s website and will be
communicated when available.
About Winland
Electronics
Winland Electronics, Inc. (www.winland.com), is an industry
leader of critical condition monitoring devices. Products including
EnviroAlert, WaterBug, TempAlert, Vehicle Alert and more are
designed in-house to monitor critical conditions for industries
including health/medical, grocery/food service,
commercial/industrial, as well as agriculture and residential.
Proudly made in the USA, Winland products are compatible with any
hard wire or wireless alarm system and are available through
distribution worldwide. Headquartered in Mankato, MN, Winland
trades on the NYSE Amex Exchange under the symbol WEX.
Cautionary Statements
Certain statements contained in this press release and other
written and oral statements made from time to time by the company
do not relate strictly to historical or current facts. As such,
they are considered forward-looking statements, which provide
current expectations or forecasts of future events. The statements
included in this release with respect to the following matters are
forward looking statements; (i) that the company’s sales momentum
within its broader customer base continues to build; and (ii) that
the EnviroAlert EA800-ip will provide increased sales which will
positively affect the company’s results as it enters 2012. These
statements involves risks and uncertainties, known and unknown,
including among other risks that (i) the company’s sales momentum
within its broader customer base does continue to build; (ii) the
company will recognize increased sales due to the EA800-ip, and
(iii) the company’s results will be positively affected.
Consequently, no forward-looking statement can be guaranteed and
actual results may vary materially.
WINLAND ELECTRONICS, INC. CONDENSED STATEMENTS OF
OPERATIONS (In Thousands, Except Share and Per Share Data)
(Unaudited)
For the Three Months
EndedSeptember 30,
For the Nine Months
EndedSeptember 30,
2011 2010
2011 2010 Net
sales
$ 769 $ 838
$ 2,673 $ 2,450 Cost
of sales
501 442
1,801 1,395
Gross profit
268 396
872
1,055 Operating expenses: General and administrative
191 368
693 1,339 Sales and marketing
270 226
736 736 Research and development
103
-
150 -
564 594
1,579
2,075
Operating loss (296
) (198 )
(707 ) (1,020 ) Other income
(expenses): Interest expense
(6 ) (19 )
(45
) (31 ) Other, net
2 (9 )
17 (10 )
(4 ) (38
)
(28 ) (78 )
Loss from
continuing operations before income taxes (300 )
(236 )
(735 ) (1,098 ) Income tax benefit
(expense)
- 89
(9
) 87 Loss from continuing operations
(300 ) (147 )
(744 ) (1,011 ) Gain
(loss) from discontinued operations, net of tax
-
(158 )
98 (656 )
Net loss $ (300 ) $ (305 )
$
(646 ) $ (1,667 ) Loss per common share data:
Basic and diluted
$ (0.08 ) $ (0.08 )
$
(0.17 ) $ (0.45 ) Loss from continuing operations per
common share data: Basic and diluted
$ (0.08 )
$ (0.04 )
$ (0.20 ) $ (0.27 ) Gain (loss) from
discontinued operations per common share data: Basic and diluted
$ - $ (0.04 )
$ 0.03 $ (0.18 )
Weighted-average number of common shares outstanding: Basic and
diluted
3,701,630 3,699,230
3,700,848 3,690,911
WINLAND ELECTRONICS, INC. CONDENSED
BALANCE SHEETS (In Thousands, Except Share Data)
ASSETS
September 30,2011
December 31,2010
(Unaudited) Current Assets Cash and cash equivalents
$ 1,598 $ 318
Accounts receivable, less allowance for
doubtful accounts of $7 as of September 30, 2011 and $10 as of
December 31, 2010
402 547 Receivable due from EMS asset sale
250 -
Refundable income taxes
- 277 Inventories
442 112
Prepaid expenses and other assets
71 87 Current assets of
discontinued operations
157
4,649 Total current assets
2,920 5,990
Property and Equipment, at cost
Property and equipment
313 3,750 Less accumulated
depreciation and amortization
235
1,447 Net property and equipment
78 2,303 Assets held for sale, net
2,135 - Property
and equipment of discontinued operations, net
- 1,151
Total assets $ 5,133
$ 9,444
LIABILITIES AND STOCKHOLDERS' EQUITY Current
Liabilities Revolving line-of-credit
$ - $ 1,249
Current maturities of long-term debt
365 448 Accounts
payable
473 381 Other short-term tax liabilities
- 68
Accrued liabilities: Compensation
135 410 Other
23 35
Current liabilities of discontinued operations
60 2,084
Total current liabilities 1,056
4,675 Long-Term
Liabilities Deferred revenue
108 114 Long-term
liabilities of discontinued operations
-
29 Total long-term
liabilities 108
143 Total liabilities
1,164 4,818
Stockholders’ Equity
Common stock, par value $0.01 per share;
authorized 20,000,000 shares; issued and outstanding 3,701,630 as
of September 30, 2011 and 3,699,230 shares as of December 31,
2010
37 37 Additional paid-in capital
5,014 5,025
Accumulated deficit earnings
(1,082
) (436 )
Total stockholders’ equity 3,969
4,626 Total liabilities and
stockholders’ equity $
5,133 $ 9,444
WINLAND ELECTRONICS, INC. CONDENSED
STATEMENTS OF CASH FLOWS (In Thousands) (Unaudited)
For the Nine Months EndedSeptember 30,
2011 2010
Cash Flows From Operating Activities
Net loss
$ (646 ) $ (1,667 )
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
100 589 Non-cash stock based
compensation
(13 ) 23 Decrease in allowance for
doubtful accounts
(3 ) (6 ) Decrease in allowance for
obsolete inventory
(20 ) - Loss on disposal of
equipment
- 56 Decrease in deferred tax valuation allowance
- (86 )
Decrease in allowance for obsolete
inventory held for discontinued operations
(112 ) - Loss on sale of EMS business unit
14
- Changes in assets and liabilities: Accounts receivables
8
297 Refundable income taxes
277 628 Inventories
(310
) (280 ) Prepaid expenses and other assets
16 6
Accounts payable
42 324
Accrued expenses, including deferred
revenue and other short and long term tax liabilities
(341 ) (39 )
Net cash used in
operating activities (988 ) (155 )
Cash Flows From Investing Activities Purchases of
property and equipment
(10 ) (31 ) Proceeds from sale
of property and equipment
- 7 Sale of inventory from
discontinued operations
2,795 - Cash from sale of EMS
business unit, net of transaction costs
813
-
Net cash provided by (used in) investing
activities 3,598 (24 )
Cash flows From
Financing Activities Net borrowings (payments) on revolving
credit agreement
(1,249 ) 581
Net principal payments on long-term
borrowings, including capital lease obligations
(83 ) (282 ) Cash received from exercise of stock
options
2 7
Net cash provided
by (used in) financing activities (1,330 )
306
Net increase in cash and cash
equivalents 1,280 127 Cash and cash equivalents
Beginning
318 55 Ending
$
1,598 $ 182 Supplemental Disclosures of
Cash Flow Information Cash payments for interest
$ 49
$ 81 Cash receipts for income taxes
$
209 $ 628 Non-cash reclassification of other
tax liability from long-term to short-term
$ -
$ 258 Non-cash investing activities
Receivable recorded for sale of EMS
Business unit
$ 250 $ - Accrued transaction costs for
sale of EMS business unit
$ 50 $ -