SOURCE: Wells-Gardner Electronics Corp.

Wells-Gardner Electronics Corp.

February 12, 2010 08:30 ET

Wells-Gardner Reports Fiscal 2009 Earnings of $1.1 Million Compared to $204,000 in 2008

Best Fiscal Earnings in This Decade

CHICAGO, IL--(Marketwire - February 12, 2010) - Wells-Gardner Electronics Corporation (NYSE Amex: WGA) announced net earnings for the fourth quarter ending December 31, 2009 were $244,000 or $0.02 per share compared to net earnings of $19,000 or $0.00 per share in the same period in the prior year. Fourth quarter sales were $13.1 million, which was flat with sales of the fourth quarter 2008.

For the fiscal year ending December 31, 2009, net earnings were $1.1 million or $0.11 per share compared to $204,000 or $0.02 per share in the fiscal year 2008. The 2009 earnings include non-recurring tax charges of $168,000. Sales were $52.5 million, a decline of 2 percent from $53.8 million in the same period in 2008.

"We are pleased with our 2009 earnings performance in what was arguably one of the most difficult years for the gaming industry," said Anthony Spier, Wells-Gardner's Chairman and Chief Executive Officer. "Our increase in earnings in the fourth quarter was driven by an increase in margins as well as continued strong inventory control. Margins increased in the quarter to 15.8 percent compared to 14.5 percent in the same quarter in the prior year due to moving more production to China and improved design and purchasing cost control. Lower inventory resulted in a reduction in interest expense of $26,000."

"Our increase in earnings for the fiscal year ended December 31, 2009 was driven by the increase in margins to 17.4 percent from 15.5 percent in the prior year period, as well as a reduction in interest expenses of $143,000 due to reducing the Company's working capital requirements."

"The balance sheet continues to strengthen with debt being reduced by $3 million to end the year at $2.2 million. The Company's debt to equity ratio is now 14 percent compared to 37 percent at year end 2008. The Company has generated over $3.0 million of operating cash flow in the last 12 months. This is the main reason interest expenses have been reduced in fiscal 2009."

Outlook

Management expects sales for the full year 2010 to be approximately $60 to $62 million, an increase of over 15% due almost entirely to the anticipated revenue from the new Illinois Video Lottery market. However, we expect 2010 to be a challenging year for two reasons. First, the Company expects revenue from the Video Lottery market to begin in the fourth quarter of 2010, while the Company will have expenses throughout the year in preparation of our entry into this new market. Second, management expects the LCD display business to remain very competitive.

The combination of a full year of the Illinois VLT market, a strong pick up in the slot replacement cycle, and the opening of new casinos both domestically and internationally are expected to make 2011 a strong year.

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 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, Hammonton, New Jersey, Miami, Florida and McCook, Illinois. AGE is planning to enter in 2010 the Illinois Video Lottery market as a distributor. AGE also sells refurbished gaming machines on a global basis.

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, 2009 and 2008


                        Three Months Ended          Twelve Months Ended
                           December 31,                December 31,
                    --------------------------  --------------------------
                        2009          2008          2009          2008
                    ------------  ------------- ------------  ------------
Net sales           $ 13,100,000  $  13,115,000 $ 52,526,000  $ 53,839,000
Cost of sales         11,028,000     11,219,000   43,378,000    45,483,000
                    ------------  ------------- ------------  ------------
Gross margin           2,072,000      1,896,000    9,148,000     8,356,000
Engineering,
 selling &
 administrative
 expenses              1,902,000      1,809,000    7,771,000     7,774,000
                    ------------  ------------- ------------  ------------
Operating Earnings       170,000         87,000    1,377,000       582,000
Interest expense          42,000         68,000      213,000       356,000
Investment in Joint
 Venture                  (1,000)             -       (1,000)       (3,000)
Other expense, net         4,000              -      170,000             -
Income Tax expense      (119,000)             -     (102,000)       25,000
                    ------------  ------------- ------------  ------------
Net Earnings        $    244,000  $      19,000 $  1,097,000  $    204,000
                    ============  ============= ============  ============

Earnings per share:
Basic earnings per
 share              $       0.02  $        0.00 $       0.11  $       0.02
Diluted earnings
 per share          $       0.02  $        0.00 $       0.11  $       0.02

Basic average
 common shares
 outstanding          10,420,965     10,348,965   10,417,031    10,349,778
Diluted average
 common shares
 outstanding          10,427,494     10,348,965   10,417,031    10,349,778

Contact Information

  • Jim Brace
    Wells-Gardner
    (708) 290-2120

    Alan Woinski
    Gaming USA Corporation
    (201) 599-8484