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Wells-Gardner Reports 2013 Year-End Financial Results

Full year 2013 Revenue UP 13.3%;

Full-Year 2013 EPS: $0.06 vs. $0.01

Chicago, Illinois - February 13, 2014 --- Wells-Gardner Electronics Corporation (NYSE MKT: WGA) announced financial results today for the fourth quarter and the year ended December 31, 2013.

Highlights for full year 2013 and the fourth quarter included:

  • Net sales for full year 2013 increased 13.3 percent to $57.9 million compared to $51.1 million in 2012.
  • Video Lottery Terminal (VLT) sales in the fourth quarter were $6.4 million and $21.6 million for the full year compared to $4.4 million and $6.6 million respectively for the fourth quarter and full year 2012.
  • Net income for full year 2013 was $651,000, or $0.06 per diluted share, compared to net income of $164,000, or $0.01 per diluted share, in 2012; an increase of 397 percent.
  • Long-term debt totaled $1.6 million compared to $3.7 million at December 31, 2012.
  • Free cash flow generated by the Company was approximately $1.8 million for full year 2013.

Anthony Spier, chairman and chief executive officer of Wells-Gardner, said, "Revenue for the year of $57.9 million was in line with our prior guidance. We posted record VLT sales in the fourth quarter of $6.4 million compared to $4.4 million in the fourth quarter of 2012. VLT sales for the quarter were positively impacted by delivering orders that were delayed in the previous quarter. Demand for VLT units continued to be strong throughout the entire year despite the delay of orders in the third quarter. We also experienced growth of three percent in our parts business to the gaming industry in 2013. The increase in revenue drove a significantly improved bottom-line result, with net income for the full year increasing 297 percent to $651,000, or $0.06 per diluted share, versus net income of $164,000, or $0.01 per diluted share, in 2012. We are very pleased with the financial results of 2013."

"Overall, our base business continued to be challenging throughout 2013," continued Mr. Spier. "Our expectation going forward is that the marketplace will continue to remain highly competitive in 2014 and beyond. Although we did experience increased parts sales, we believe that is an indicator that a full scale replacement cycle has not yet commenced at existing casinos and gaming establishments throughout the U.S. The need to refresh the gaming experience throughout the industry is important to keep its customers coming back. When the replacement cycle does pick up, Wells-Gardner is well positioned to benefit.

"We continue to run the company conservatively with a focus on managing expenses, prudently managing bank debt, and operating our business from internally generated cash flow. Engineering, sales and administrative expenses for full year 2013 of $8.6 million were equivalent to $8.7 million in 2012. For the year we generated positive cash flow of approximately $1.8 million. Bank debt now stands at $1.6 million down from $3.7 million at the end of 2012."

During the fourth quarter the Company announced that its wholly-owned subsidiary, American Gaming & Electronics (AG&E) and FutureLogic, Inc. entered into a Sales Representative and Distribution Agreement through December 31 2015.

On December 4, 2013 the Board of Directors of Wells-Gardner Electronics Corporation authorized management to explore strategic alternatives. The Company has retained El Segundo, California-based Innovation Capital as its financial advisor to conduct a thorough review of the Company's business and assets and to provide recommendations for consideration by the Wells-Gardner Board of Directors. There can be no assurance that this evaluation process will result in any transaction. Management will report the results of the strategic review at the conclusion of the process.

Based on its best estimates and information available at this time, management believes full year 2014 net sales will be in a range between $53 million and $57 million, compared to $57.9 million in full year 2013, with the first quarter of 2014 expected to be the most challenging quarter of the year. We expect that demand for VLT units in 2014 will be comparable to that of full year 2013.

Conference Call
The Company will host a conference call and webcast at 11:00 AM Eastern Time on Thursday, February 13, 2014.  Both the call and webcast are open to the general public.

The conference call domestic dial-in number is 877-261-8990 and the pass code is 36644384. Questions will be taken only from participants on the conference call. The teleconference will be webcast by Thomson/CCBN on the Company's website at under the investor relations section. The conference call will be available via replay for 30 days beginning late February 13, 2014.  The replay call in number is 888-843-7419 and the pass code is 36644384#.

About Wells-Gardner Electronics Corporation
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's American Gaming & Electronics, Inc. subsidiary ("AGE"), a leading parts distributor to the gaming markets, sells parts and services to more than 700 casinos in North America with offices in Nevada, New Jersey, Florida and Illinois. AGE is also a licensed distributor of video gaming terminals in Illinois. For additional investor information, please contact Jim Brace - Wells-Gardner at (708) 290-2120 or Joseph Diaz, Managing Partner, Lytham Partners, LLC, (602) 889-9660.

Private Securities Litigation Reform Act of 1995
This press release contains forward-looking statements within the meaning of the federal securities laws.  The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for such forward-looking statements. The words, "believe," "project," "expect," "anticipate," "estimate," "will" and other similar statements of expectation identify forward-looking statements. 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.

Condensed Consolidated Statements of Earnings (unaudited)
Three Months and Twelve Months Ended December 31, 2013 and 2012
Three Months Ended Dec 31, Twelve Months Ended Dec 31,
2013 2012 2013 2012
Net sales $       13,563,000 14,205,000 57,916,000 51,117,000
Cost of sales       11,381,000 11,773,000 48,582,000 42,149,000
Gross margin         2,182,000 2,432,000 9,334,000 8,968,000
Engineering, selling & administrative expenses         2,069,000 2,088,000 8,624,000 8,677,000
Operating Earnings           113,000 344,000 710,000 291,000
Interest expense             16,000 27,000 77,000 113,000
Other Income, net              (5,000) - (10,000) (1,000)
Income Tax (benefit) expense              (9,000) (6,000) (8,000) 15,000
Net Earnings $           111,000 $ 323,000 $ 651,000 $ 164,000
Earnings per share:
Basic earnings per share $                 0.01 $ 0.03 $ 0.06 $ 0.01
Diluted earnings per share $                 0.01 $ 0.03 $ 0.06 $ 0.01
Basic average common shares outstanding       11,706,221 11,666,898 11,707,043 11,655,060
Diluted average common shares outstanding       11,706,221 11,669,006 11,707,887 11,658,246



AG&E Holdings Inc.

223 Pratt Street, Hammonton, NJ 08037 609-704-3000 FAX: 609-704-9685

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