SOURCE: Wells-Gardner Electronics Corp.

Wells-Gardner Electronics Corp.

August 04, 2009 16:30 ET

Wells-Gardner Reports Second Quarter Earnings Increased by 185 Per Cent to $484,000 or $0.05 Per Share

Best Earnings Quarter This Decade

CHICAGO, IL--(Marketwire - August 4, 2009) - Wells-Gardner Electronics Corporation (NYSE Amex: WGA) announced net earnings for the second quarter ending June 30, 2009 were $484,000 or $0.05 per share, an increase of 185 per cent compared to net earnings of $170,000 or $0.02 per share in the same period in the prior year. Second quarter sales were $14.4 million, which was basically flat with $14.5 million in the same quarter 2008.

For the six months ending June 30, 2009, net earnings were $587,000 or $0.06 per share compared to $369,000 or $0.04 per share in the first six months 2008. The six month 2009 earnings include non-recurring tax charges of $168,000. Sales were $26.0 million, a decline of 12% from $29.4 million in the same period in 2008.

"We are extremely pleased with this earnings performance in this difficult gaming market environment," said Anthony Spier, Wells-Gardner's Chairman and Chief Executive Officer. "Our increase in earnings was driven by an increase in margins as well as continued strong expense and inventory control. Margins increased in the quarter to 18.1 per cent compared to 16.1 per cent in the same quarter in the prior year due to moving more production to China, favorable product mix and improved design and purchasing cost control. Expenses were reduced by almost $90,000 and inventory reductions caused a reduction in interest expense of around $30,000."

"The balance sheet continues to strengthen with debt being reduced to $3.2 million as of June 30, 2009 compared with $5.2 million at June 30, 2008. As a result the debt has been reduced by $6.7 million the past three years. The Company's debt equity ratio is now 22 per cent compared to 37 per cent at year end 2008. The Company has generated over $2.0 million of operating cash flow in the first six months of 2009. This is the main reason interest expenses has been reduced by almost $85,000 in the first half 2009."

Outlook

"Considering we earned more in the first six months 2009 than we did in twelve months 2008, we expect the net earnings for the full year 2009 to be better than that of last year despite reduced sales. We currently expect that sales for the full year 2009 will be around $50 million dollars, slightly less than last year, as the worldwide gaming slot machine market remains sluggish for a longer period of time than many had anticipated. We will continue to aggressively control costs, interest expense and inventory levels ahead of the expected rebound in the slot machine replacement market."

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 (unaudited)
Three Months and Six Months Ended June 30, 2009 and 2008

                        Three Months Ended            Six Months Ended
                             June 30,                    June 30,
                        2009          2008          2009          2008
                    ------------- ------------- ------------- -------------
Net sales           $  14,376,000 $  14,525,000 $  25,980,000 $  29,441,000
Cost of sales          11,775,000    12,193,000    21,296,000    24,668,000
                    ------------- ------------- ------------- -------------
Gross margin            2,601,000     2,332,000     4,684,000     4,773,000
Engineering,
 selling &
 administrative
 expenses               1,978,000     2,064,000     3,797,000     4,179,000
                    ------------- ------------- ------------- -------------
Operating Earnings        623,000       268,000       887,000       594,000
Interest expense           58,000        87,000       116,000       200,000
Other expense, net         73,000             -       166,000             -
Income Tax expense          8,000        11,000        18,000        25,000
                    ------------- ------------- ------------- -------------
Net Earnings        $     484,000 $     170,000 $     587,000 $     369,000
                    ============= ============= ============= =============

Earnings per share:
Basic earnings per
 share              $        0.05 $        0.02 $        0.06 $        0.04
Diluted earnings
 per share          $        0.05 $        0.02 $        0.06 $        0.04

Basic average
 common shares
 outstanding           10,420,965    10,355,655    10,413,053    10,350,595
Diluted average
 common shares
 outstanding           10,420,965    10,357,717    10,413,053    10,352,400

Contact Information

  • Contact:
    Jim Brace
    Wells-Gardner
    (708) 290-2120
    or
    Alan Woinski
    Gaming USA Corporation
    (201) 599-8484