2013-02-14 14:34:02 -
Fourth Quarter Net Income Increased more than $500,000
7(th) Consecutive Year of Profitability
Chicago, Illinois, February 14, 2013---- Wells-Gardner Electronics Corporation
(NYSE MKT: WGA) announced net sales in the fourth quarter ending December
31, 2012 were $14.2 million, an increase of 55 percent over $9.2 million in the
fourth quarter 2011. The Company reported net earnings for the fourth quarter
2012 of $323,000 or $0.03 per share compared to a net loss of $(180,000) or
$(0.02) per share for the same period in 2011. The fourth quarter 2011 results
included non-recurring charges net of credits of $309,000, made up of $478,000
of litigation expenses and $125,000 of operating expenses related to the
Illinois Video Gaming Terminal (VGT) business for which there was no revenue,
offset by a tax benefit of $294,000.
For the twelve months ending December 31, 2012, net sales were $51.1 million, an
increase of 19 percent from $42.9 million in the same period in 2011. The
Company reported net earnings of $164,000 or $0.01 per share compared to net
earnings of $28,000 or $0.00 per share in the twelve months 2011. The twelve
months 2012 earnings included non-recurring charges of $758,000 made up of
$447,000 for upgrading the Company's Oracle ERP system as well as $311,000 of
operating expenses related to the Illinois Video Gaming business for the first
two quarters, for which there was no revenue. The twelve months 2011 earnings
included non-recurring charges net of credits of $1.0 million made up of
$784,000 of litigation expenses and $516,000 of operating expenses related to
the Illinois VGT business, offset by a tax benefit of $294,000.
"We are pleased that gaming sales increased in 2012 by $8.4 million or 22
percent due substantially to the sales of VGT units in Illinois," said Anthony
Spier, Wells-Gardner's Chairman and Chief Executive Officer. "In the fourth
quarter 2012 gaming sales increased by $5.4 million or 66 percent. Gross margins
for the quarter declined to 17.1 percent compared to 17.8 percent in the same
quarter in the prior year, primarily due to the product mix in the quarter.
Operating expenses in the quarter increased by only $12,000."
"The balance sheet continues to remain strong. Debt increased to $3.7 million
at December 31, 2012 compared to $1.1 million at December 31, 2011. This debt
level included more than $3 million of VGT inventory and receivables, net of
payables as well as an increase in cash of over $500,000. This means that we
have reduced inventory for the rest of the business by over $1 million. We are
continuing tight fiscal controls and the Company's debt equity ratio is 23
percent compared to 7 percent at the same date in 2011."
Outlook
We are projecting sales in 2013 of between $62 million and $67 million compared
to $51.1 million in 2012 with the increase in Illinois VGT sales partially
offset by lower base business sales as the North American replacement slot
market remains sluggish. The Company continues to develop proprietary product
for the gaming and amusement markets and for markets other than gaming,
including vending, signage and medical. The Company expects to be profitable in
the first quarter 2013 and for the full year 2013.
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 most of its LCDs 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 Nevada, New
Jersey, Florida and Illinois. AGE is also a distributor of video gaming
terminals in Illinois.
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 Twelve Months Ended December 31, 2012 and 2011
Three Months Ended Twelve Months Ended
December 31, December 31,
-----------------------------------------------------------
2012 2011 2012 2011
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Net sales $ 14,205,000 $ 9,178,000 $ 51,117,000 $ 42,894,000
Cost of sales 11,773,000 7,547,000 42,149,000 34,903,000
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Gross margin 2,432,000 1,631,000 8,968,000 7,991,000
Engineering,
selling &
administrative
expenses 2,088,000 2,076,000 8,677,000 8,137,000
-------------------------------------------------------------------------------
Operating Earnings
(Loss) 344,000 (445,000) 291,000 (146,000)
Interest expense 27,000 29,000 113,000 121,000
Other income, net - - (1,000) -
Income Tax expense (6,000) (294,000) 15,000 (294,000)
-------------------------------------------------------------------------------
Net Earnings (Loss) $ 323,000 $ (180,000) $ 164,000 $ 28,000
-------------------------------------------------------------------------------
Earnings per share:
Basic earnings per $ $
share 0.03 $ (0.02) $ 0.01 0.00
Diluted earnings $ $
per share 0.03 $ (0.02) $ 0.01 0.00
Basic average
common shares
outstanding 11,666,898 11,599,343 11,655,060 11,591,681
Diluted average
common shares
outstanding 11,669,006 11,606,446 11,658,246 11,598,536
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originality of the information contained therein.
Source: Wells-Gardner Electronics Corporation via Thomson Reuters ONE
[HUG#1678087]
