Profitablity for Continuing Operations and Sale of Two European Subsidiaries
Waterlink, Inc. announced results for its third fiscal quarter. Net sales from continuing operations were $21.9 million for the current quarter as compared to $21.4 million in the prior year quarter, an increase of 2.5%. Sales increases were realized in the current year quarter at both the Specialty Products and Pure Water Divisions, with increases of 3.1% and 0.5%, respectively. The increase at the Specialty Products Division was primarily related to revenue on system orders that were delayed from the first half of fiscal 2001. Bookings from continuing operations for the quarter ended June 30, 2001 were $21.7 million, resulting in backlog from continuing operations at June 30, 2001 of $24.0 million, which is slightly below the March 31, 2001 backlog of $24.2 million. The current backlog represents a 35.3% increase from the backlog for continuing operations at June 30, 2000 due primarily to strong systems orders within the Pure Water Division at the end of the current quarter and a carryover of a large systems backlog for the Specialty Products Division from earlier in the fiscal year.
As announced at the end of the prior quarter, Waterlink's continuing operations are now comprised of its Specialty Products and Pure Water Divisions, as the Company's Board of Directors has approved a plan to sell the European Water and Wastewater Division. During July 2001 the Company completed the sale of two subsidiaries within the European Water and Wastewater Division; Waterlink UK Limited located in England and Waterlink OY located in Finland. With regard to the sale of these two businesses, Scott King, Waterlink's President and Chief Executive Officer, commented, "Although the proceeds from these two sales were not significant, the sale of the operations in both the UK and in Finland should enhance our ability to sell the remaining businesses within the European Water and Wastewater Division located in Sweden and in Germany."
For the quarter ended June 30, 2001 the Company recorded income from continuing operations of $80,000, or $0.00 per share, as compared to a loss from continuing operations of $196,000, or ($0.01) per share in the prior year quarter. The improvement in income from continuing operations was primarily the result of the increase in sales and cost reductions within the corporate office, partially offset by a $124,000 increase in the amortization of deferred financing costs due to an acceleration of the maturity date of the Company's Senior Credit Facility which occurred earlier in the fiscal year. The current quarter net loss of $348,000, or ($0.02) per share, includes the current quarter loss from discontinued operations of $428,000, or ($0.02) per share. Nearly all of the loss from discontinued operations was attributable to the two European subsidiaries mentioned previouslythat were sold in July 2001. The Company reported a net loss of $340,000, or ($0.02) per share, during the same period last year, which included a loss from discontinued operations of $144,000, or($0.01) per share.
Scott King, commenting on the company's recent results, "We are pleased with the performance of our Specialty Products and Pure Water Divisions. On a combined basis our continuing operations experienced their second consecutive quarter of growth in both sales and profitability, and of significant note, we were able to report income from continuing operations during the third quarter." Mr. King concluded, "We continue to explore various alternatives in which to maximize shareholder value under our strategic alternative process that was announced last year, although we have no developments to report at this time."
For the nine-month period ended June 30, 2001, the Company reported net sales of $59.4 million as compared to $62.1 million for the same period last year, a decrease of 4.4%. With regard to the comparable nine-month periods, the Pure Water Division realized an increase in sales of 5.3% due to higher bookings in the current fiscal year; and net sales at the Specialty Products Division decreased by 7.4%, primarily due to a combination of lower carbon sales and certain systems orders previously received being delayed until the latter part of fiscal 2001.
For the nine-month period ended June 30, 2001 the Company recorded a loss from continuing operations of $2,146,000, or ($0.11) per share, as compared to a loss from continuing operations of $37,000, or ($0.00) per share, in the prior year. The current year includes an increase in the amortization of deferred financing costs of $896,000, which was discussed previously in the current quarter's results. The net loss of $20,832,000 for the nine-month period ended June 30, 2001, or ($1.06) per share, includes the estimated loss on the disposal of the European Water and Wastewater Division and the loss on the disposal of the Separations Division, both recorded in previous quarters, which together totaled $17,475,000. In addition, the company recorded a loss from discontinued operations of $1,211,000 during the current nine-month period. When combined with the estimated loss of disposal of discontinued operations recorded this fiscal year, the total loss related to discontinued operations for the nine-months ended June 30, 2001 totaled $18,686,000, or ($0.95) per share. The company reported a net loss of $216,000, or ($0.01) per share, during the same period last year, which included a loss from discontinued operations of $179,000, or ($0.01) per share.