WSI Industries Reports Third Quarter Financial Results

MINNEAPOLIS, MN--(Marketwired - Jun 21, 2016) - WSI Industries, Inc. (NASDAQ: WSCI) today reported sales for its fiscal 2016 third quarter ending May 29, 2016 of $8,886,000 versus the prior year amount of $12,368,000. Year-to-date sales for the period ended May 29, 2016 totaled $27,106,000 versus $34,204,000 in the prior year.

The Company also reported net income of $78,000 or $.03 per diluted share for the fiscal 2016 third quarter compared to $409,000 or $.14 per diluted share in the prior year third quarter. Year-to-date income was $216,000 or $.07 per diluted share versus $1,031,000 or $.35 per diluted share in the prior year.

Benjamin Rashleger, president and chief executive officer, commented: "We continue to feel downward pressure from our customers due to an uncertain economic environment. For a second consecutive quarter we experienced a year-over-year decline in sales from our major customer. With this decrease, and with the elimination of our energy related work which made up a large percentage of our portfolio, our overall sales decreased from the prior year. However, even with these decreases in sales, we were able to remain profitable in the third quarter." Rashleger continued: "As previously communicated, we are fully committed to our business development strategy, and are making the investments in staffing and infrastructure to generate the necessary results. We are seeing success in securing new customers and programs in aerospace, defense and automotive markets, and we are continuing to build our pipeline of new opportunities. We have confidence in our strategy and team, and believe we will begin to further realize the results of these efforts." Rashleger concluded: "WSI Industries remains financially strong. We have over $6.0 million in cash on hand and a high working capital balance. We are well positioned with capital to support both organic growth and external acquisition strategies for the Company."

WSI Industries, Inc. is a leading contract manufacturer that specializes in the machining of complex, high-precision parts for a wide range of industries, including automotive, avionics and aerospace, energy, recreational vehicles, small engines, bioscience and the defense markets.

The statements included herein which are not historical or current facts are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Reform Act of 1995. There are certain important factors which could cause actual results to differ materially from those anticipated by some of the statements made herein, including the Company's ability to retain current programs and obtain additional manufacturing programs, and other factors detailed in the Company's filings with the Securities and Exchange Commission.

WSI INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
In thousands, except per share amounts
			Third quarter ended								Three quarters ended
			May 29,				May 31,				May 29,				May 31,
			2016				2015				2016				2015
Net Sales			$	8,886			$	12,368			$	27,106			$	34,204
Cost of products sold				7,934				11,105				24,620				30,218
	Gross margin			952				1,263				2,486				3,986
Selling and administrative expense				788				727				2,209				2,340
Interest and other income				(16	)			(2	)			(20	)			(4	)
Interest and other expense				76				89				236				259
Income from operations before income taxes				104				449				61				1,391
Income taxes				26				40				(155	)			360
Net income			$	78			$	409			$	216			$	1,031
Basic income per share			$	0.03			$	0.14			$	0.07			$	0.35
Diluted income per share			$	0.03			$	0.14			$	0.07			$	0.35
Weighted average number of common shares				2,920				2,912				2,909				2,909
Weighted average number of diluted shares				2,925				2,964				2,961				2,961

CONDENSED BALANCE SHEETS (Unaudited)
In thousands
				May 29,			May 31,
				2016			2015
Assets:
Total Current Assets				$	12,746		$	13,696
Property, Plant, and Equipment, net					11,811			13,342
Intangible Assets					2,376			2,380
		Total Assets		$	26,933		$	29,418
Liabilities and Shareholders' Equity:
Total current liabilities				$	3,811		$	4,750
Long-term debt					7,180			8,723
Deferred tax liabilities					1,951			1,960
Shareholders' equity					13,991			13,985
		Total Liabilities and Shareholders' Equity		$	26,933		$	29,418

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
In thousands
	Three quarters ended
	May 29,				May 31,
	2016				2015
Cash flows from operating activities (1)	$	3,886			$	1,882
Cash used in investing activities		(276	)			(127	)
Cash used in financing activities		(1,381	)			(1,626	)
Net increase in cash and cash equivalents		2,229				129
Cash and cash equivalents at beginning of period		4,150				3,233
Cash and cash equivalents at end of period	$	6,379			$	3,362

(1)

Cash flows from operating activities includes non-cash adjustments for depreciation, deferred taxes and stock option compensation expense of $1,540 and $1,642 at May 29, 2016 and May 31, 2015, respectively.