Published:
Wells-Gardner Reports First Quarter Results
Wells-Gardner Reports First Quarter Results
First Quarter Growth of 6.8% in Core Gaming Sales
Wells-Gardner Electronics Corporation (AMEX: WGA) announced sales for the first quarter ending March 31, 2008 were $14.9
million, a decline of 6.7% from $16.0 million in the same quarter 2007.
First quarter net earnings were $199,000 or $0.02 per share compared to net
earnings of $321,000 or $0.03 per share in the same period in the prior
year.
"As I stated in our recent press release, we are pleased with the net
profit in the first quarter 2008 which is a significant improvement from
our original expectation of a range between a small loss and break-even,"
said Anthony Spier, Wells-Gardner's Chairman and Chief Executive Officer.
"The sales decline was caused by a decline of $1.5 million or 39 percent in
non-core amusement sales and a decline of $400,000 in used game device
sales offset by growth of 6.8% in our core gaming sales. Margins decreased
from a historical high of 18.7% in the 2007 first quarter to 16.4 % in the
2008 first quarter. These were offset by a reduction in operating expenses
of $350,000 and a reduction in interest expense of $60,000 resulting in the
better than expected earnings."
"We believe it is much more relevant to compare the first quarter 2008
results to that of the fourth quarter 2007 due to the current situation in
the slot machine cycle. The first quarter 2008 sales increased 8.8% from
the fourth quarter 2007 sales of $13.7 million due to an increase in core
gaming sales of $1.4 million offset by a reduction in used game device
sales. The net earnings of $199,000 for the first quarter 2008 compared to
a fourth quarter 2007 loss of ($321,000) or ($0.03) per share. This
improvement was due to a combination of higher sales and higher gross
margins. The higher gross margin of 16.4% compared to fourth quarter 2007
margin of 13.6% was primarily due to continuing to move more production to
Mainland China, which accounted for 70 percent of first quarter 2008 sales
compared to 53 percent for fiscal 2007's sales."
Outlook
"Considering we earned as much in the first quarter 2008 as we did in
Fiscal 2007, we expect the net earnings of 2008 to be better than that of
2007. Due to the unpredictability of the non-core amusement business, we
are taking a more conservative approach to that line of business in our
outlook. We expect to have total revenue of between $60 and $65 million in
2008. We expect gaming market growth in Pennsylvania, Florida racinos and
tribal casinos, California, Indiana, Maine, Macau and maybe Kansas. We
continue to be enthusiastic about our new management team operating our
Used Game Device business and expect significant contributions from that
business for the rest of 2008. The decline in the used game device
business in the first quarter 2008 was temporary as we have already
recognized more UGD revenue in the second quarter to date than we did for
the entire first quarter."
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, Egg Harbor
Township, 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 (Loss) (unaudited)
Three Months Ended March 31, 2008 and 2007
Three Months Ended March 31,
----------------------------------------------
2008 2007
----------------------- ----------------------
Net sales $ 14,916,000 15,980,000
Cost of sales 12,475,000 13,012,000
----------------------- ----------------------
Gross margin 2,441,000 2,968,000
Engineering, selling &
administrative expenses 2,114,000 2,463,000
----------------------- ----------------------
Operating earnings 327,000 505,000
Interest expense 114,000 174,000
Investment in Joint Venture - 136,000
Other expense (income), net 1,000 (112,000)
Income Tax 13,000 (14,000)
----------------------- ----------------------
Net earnings $ 199,000 $ 321,000
======================= ======================
Earnings per share:
Basic earnings (loss) per
share $ 0.02 $ 0.03
Diluted earnings (loss) per
share $ 0.02 $ 0.03
Basic average common shares
outstanding 9,852,407 9,784,046
Diluted average common
shares outstanding 9,852,983 9,841,752
Copyright © 2008, MarketWire
Copyright © 2008, NewsBlaze,
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