SOURCE: Wells-Gardner Electronics Corp.

Wells-Gardner Electronics Corp.

May 04, 2011 08:30 ET

Wells-Gardner Reports First Quarter Earnings

CHICAGO, IL--(Marketwire - May 4, 2011) - Wells-Gardner Electronics Corporation (NYSE Amex: WGA) announced net sales for the first quarter ending March 31, 2011 were $10.8 million, a decline of 6.6 percent from $11.6 million for the first quarter 2010. The Company reported a net loss for the first quarter 2011 of $(240,000) or $(0.02) per share compared to net earnings of $105,000 or $0.01 per share for the same period in 2010. The first quarter 2011 results included non-recurring charges of $342,000 made up of $200,000 for two litigation cases and $142,000 of operating expenses related to the Illinois Video Lottery business, which is not expected to generate revenue before the first quarter 2012. The first quarter 2010 included non-recurring charges of $24,000 for one of the same litigation cases and $101,000 for Video Lottery business expenses.

"Revenue rebounded from the difficult fourth quarter 2010 increasing by over 40 percent from $7.7 million. On a comparative basis revenue in the first quarter 2011 declined by less than 4.5 percent as we have exited the used game business which had generated $254,000 of revenue in the prior year first quarter. The new game sales declined by 7 percent, which is consistent with the latest revenue reports of the major manufacturers," said Anthony Spier, Wells-Gardner's Chairman and Chief Executive Officer. "Earnings were negatively affected by a combination of reduced revenue and a decline in margin to 17.7 percent from 18.5 percent in the same period in 2010. Without the non-recurring charges, the Company would have had net earnings of approximately $100,000 in the first quarter 2011."

"The balance sheet continues to be a strategic strength with a decline of $2.2 million in debt to $1.4 million at March 31, 2011 compared to $3.6 million at March 31, 2010. We are continuing tight fiscal controls and the Company's debt equity ratio is now 9 percent."

Outlook
We are projecting sales in 2011 of between $45 million and $48 million based on our prediction that the Illinois Video Lottery business will not begin until the first quarter 2012. The Illinois Supreme Court will be ruling on the legality of the Capital Bill, of which the Video Lottery Bill is part, after oral arguments due to begin on May 17, 2011. This will determine the start date of the Video Lottery business. The Company has picked up a large gaming customer in early 2011. Also management is optimistic about acquiring an additional new major gaming customer in 2011. Neither of these customers' sales were in our 2011 sales plan and would represent a significant increase in Wells-Gardner's global market share. We will continue to aggressively control costs, interest expense and inventory levels ahead of the expected rebound in the slot machine replacement market and start up of new jurisdictions, and in particular the start up of the Video Lottery business in Illinois.

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 Las Vegas, Nevada, Hammonton, New Jersey, Miami, Florida and McCook, 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.

WELLS-GARDNER ELECTRONICS CORPORATION
Condensed Consolidated Statements of Earnings (unaudited)
Three Months Ended March 31, 2011 and 2010
Three Months Ended March 31,
20112010
Net sales$10,807,00011,576,000
Cost of sales8,890,0009,434,000
Gross margin1,917,0002,142,000
Engineering, selling & administrative expenses2,129,0001,992,000
Operating Earnings(212,000)150,000
Interest expense29,00042,000
Other expense, net--
Income Tax expense(1,000)3,000
Net Earnings$(240,000)$105,000
Earnings per share:
Basic earnings per share$(0.02)$0.01
Diluted earnings per share$(0.02)$0.01
Basic average common shares outstanding11,562,71511,512,927
Diluted average common shares outstanding11,571,43411,523,457

Contact Information

  • For additional investor information, please contact
    Jim Brace
    Wells-Gardner
    (708) 290-2120

    Alan Woinski
    Gaming USA Corporation
    (201) 599-8484