Investor Pres Mar2011

8/2/2019 Investor Pres Mar2011

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Flow Confidential 1

Flow ConfidentialFlow International Corporation

Flow International Corporation

Compounding our Advantage

Investor PresentationMarch 2011


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This presentation contains forward-looking statements within the meaning of the safe-harbor

provisions of the Private Securities Litigation Reform Act of 1995. Such statements involveknown and unknown risks, uncertainties and other factors that could cause the actual resultsof the Company to differ materially from the results expressed or implied by such statements,including positioning for and delivery of growth, the outlook for revenue, income andoperating margins, the ability to adjust prices, expected investments in sales and personnelinitiatives, addressable markets, the Companys competitive advantages, the Companyscustomer access, growth of the indirect distribution channel, the position of manufacturing

resources, new information technology capabilities, and other factors. Accordingly, althoughthe Company believes that the expectations reflected in such forward-looking statements arereasonable, there can be no assurance that such expectations will prove to be correct. TheCompany has no obligation to update the forward-looking information contained in thispresentation.


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Flow InternationalCorporation is

a global technology-based companycommitted to providing a world-classcustomer experience

providing customer-driven waterjetcutting and cleaning solutions

capable of consistently deliveringprofitable, dynamic growth


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30+%* market share of the global waterjet shapecutting market

Twice the share of next largest competitor

Reported fiscal 2010 annual revenue of $173.7 million and YTD Q3fiscal 2011 revenue of $157.0 million

Four times* the next largest competitors waterjet related revenue

More than one-half from outside North AmericaSignificant portion of revenue is a recurring stream from existingcustomers

One-third of revenue is high margin spare parts business

Many customers return for additional waterjet machines

Over 10,000 installations have run more than 70 million hours inover 45 countries

* Based on internal estimate by Flow


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Flow Waterjets cancut virtually any

solid materialincluding: stone,tile, glass, metal,

foam, rubber,plastic, and food


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$37,752

$42,037

$45,356$48,604

$46,580

$52,935

$57,473

37.0% 39.6% 40.2% 39.0%

41.5%

37.5%40.2%

(7.3)%(0.6)% (0.6)% 1.1% 1.4% 1.6%

4.9%

Q1FY10 Q2FY10 Q3FY10 Q4FY10 Q1FY11 Q2FY11 Q3FY11

Dollars in thousandsSales Gross Margin % Pro Forma Operating Income Margin *

* Pro Forma Operating Income Margin for the fiscal quarters presented excludesRestructuring and Other Operating Charges of $4.8M, and a gain of $600k in Q1 FY10,

and Q2 FY10, respectively. There were no other adjustments for other periods presented.


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$37,752

$42,037

$45,356$48,604

$46,580

$52,935

$57,473

$(1,095)

$2,302 $1,773$2,895 $2,938 $3,114

$4,926

Q1FY10 Q2FY10 Q3FY10 Q4FY10 Q1FY11 Q2FY11 Q3FY11

Dollars in thousandsSales EBITDA


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Summary in Millions

3 months 3 months 3 monthsJan-31-2010 Oct-31-2010 Jan-31-2011

Revenue 45.4$ 52.9$ 57.5$

Cost of Goods Sold 27.1 33.1 34.4

Gross Margin 18.2 19.9 23.1

Gross Margin% 40.2% 37.5% 40.2%

Operating Expenses 18.5 19.0 20.3

Operating Income (0.3) 0.9 2.8

Other Expense (1.6) (0.3) (0.5)

Income Tax Benefit (Provision) 1.1 (0.8) (1.1)

Income (Loss) from Continuing Operations (0.8) (0.2) 1.3

Net Income (Loss) (0.7) (0.3) 1.2

Basic EPS

Net Income (Loss) (0.02) (0.01) 0.03

Weighted Avg. Basic Shares 46.9 47.2 47.3

For the Fiscal Period Ending


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Q3 FY11 Results: Revenue of $57.5 million, a 27% increase versus Q2 FY10, and 9% sequential

increase from Q2 FY11 revenue of $52.9 million

Operating profit of $2.8 million, fourth consecutive quarter of operating profit

Net Income of $1.2 million, or $0.03 per share

The first time in over two years that the Company has reported significant netincome from operations

Adjusted EBITDA of $4.9 million for the quarter

Established a new 3-year Credit Facility with significantly more favorableterms based on the strength of our current credit profile


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Going Forward Q4 FY11 Outlook:

Revenue range: $57 million to $59 million, stable to modest sequential growth

Operating income range: $1.5 million to $2.5 million

Net income range: $500k to $1 million

Margin Pressures The waterjet category has historically been able to raise prices to pass through

significant inflationary pressures

Incremental Investments in Business

Expect to make selected investments in sales and personnel initiatives in Q4 FY11 andQ1 FY12 to drive growth

Funded through operations so operating leverage opportunity not compromised


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Waterjets

5%*

Laser65%

Plasma9%

EDM13%

Other8%

$6 to $8 Billion*Global Machine

Tool Shape Cutting

Market

* Based on internal estimate by Flow


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Awareness &Acceptance

Opportunity:Broader

Product Line

&Easy Access

to itAdoption

19901980 2000 2010

AbrasiveWaterjet

83

55,000PSI

84

Integrated

Product 96

60,000PSI

98

DynamicWaterjet

01

87,000PSI

06

Dynamic XD

&Mach Series

09

^^ ^


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FLOWS

ADVANTAGES

THE OPPORTUNITY

WATERJETS

High Awareness

Low Adoption

High RecurringRevenue

Disruptive

Technology

Best &Broadest Product Line

Unmatched CustomerAccess

Break-Through ProductDevelopment

Low Cost Manufacturing& Supply Chain

Op Ex LeverageOpportunity


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Custom engineered solutions

POC accounting with long lead times (as much as 18 to 24 months)

Price Points from $400,000 to multi-millions

Gross Margins in the 30% range plus or minus 5 points


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Virtually no customizationIncludes three market segments: Economy, Standard,and Production to denote good, better, and best

Price points: From less than $100k to over $400k

Standard system Gross Margins in the 40% range

Includes spare parts business with Gross Margins in themid to upper 40% range


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Standard

Systems47%

Advanced

Systems

20%

Spares

33%

Fiscal 2010 Total Revenue

($174MM)

Standard

Systems

53%Advanced

Systems

14%

Spares

33%

YTD Q3 Fiscal 2011 Total Revenue

($157MM)


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Advanced

Production

Standard

Economy

Early Adopters:Historical source ofcustomers;Flows global

leadership providesscale and low cost

Later Adopters:New source of customers ascategory awareness grows

Source of leadingtechnology T

echnology

Growt

h


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Economy Standard Production


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Revolutionary Mach 4 Production Segment Product:

Dynamic XD New 3D cutting capability cuts angles up to 60 degreesApplies Flows Dynamic cutting software to 3D Faster and more versatile Opens up new cutting applications


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Plasma Cutter: Very rough cutwith heat affected zonerequiring secondary grinding

Dynamic XD provides cleancut on sharp angle with nosecondary grinding


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Production

Standard

Best and largest Direct Sales Channeltook 25 years to build worldwide

Historically augmented by approximately30 third party sales agents anddistributors globally

Emphasis on higher priced products

Full second channel of distribution builtrecently: distributors and sales agents towork with dedicated sales team

Now more than 70 partners worldwide

Emphasis on mid to lower pricedproductsEconomy

Standard

Advanced


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Standard Systems

(Direct Sales)

31%

Advanced Systems

20%

Spares

33%

Fiscal 2010 Revenue

($174MM)

16% Standard Systems

(Indirect Sales)


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Direct Sales Channel

Over 70 Flow

Employees

Indirect Sales Channel

Over 70 Distributors &

Agents

Support of Both Channels From

More Than 200 Flow Employees Providing

Field Technical Service and Local Customer Service

Channel Cooperation


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Lean Enterprise Value Streaminitiatives to increase efficiency

Ability to scale in a low costfashion without adding

significant fixed costs


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Roll out global launch

Sell product in more than 25 countries

Identified Economy Segment Opportunity

Established relationship with Economy world leader: Dardi in China

Purchased minority ownership position in Dardi by year end 2008

Design product line combining Dardi tables with Flow

pumps and controls

Launch to first markets in August

Current sales rate establishes Flow as

the world leader in this segment

2008

200

9

20

10

TODAY


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Anticipate making selected investments in sales and personnel initiatives to be funded

through operations so operating leverage opportunity not compromisedOperating Margins expected in the 5% to 12% range at these levelsEBITDA potential of $20 to $40 million plus range in the various scenarios

Profitability scenarios at three revenue levels: $210, $250 and $300 million

$210,000

$250,000

$300,000

5%

8%

12%

$210 Million Sales $250 Million Sales $300 Million Sales

Dollars in ThousandsPotential Sales Operating Income


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Continue to Build Momentum Quarter over quarter sequential growth in revenue and income on a modest, consistent

upward trajectory Further investments in sales and personnel initiatives to be funded through operations so

operating leverage opportunity not compromised

Strong execution of strategic projects Broadest product line in the industry has been established

Technology leadership and superior performance at every price point

Break-through new products are selling well

Global indirect distribution channel initiative is working

Low cost manufacturing is in place

Supplier relationships are enhancing market position

Totally new information infrastructure and ERP system is rolling out

Attractive long term situation and position

Category ripe for growth Significant leadership position for Flow

Meaningful recurring revenue stream and EBITDA

Operating leverage opportunity

Manufacturing capacity and resources in place to support significant growth

Long-term credit facility in place to augment working capital needs


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Fl C fid ti l 29Fl C fid i lFlow International Corporation

Flow International Corporation

Compounding our Advantage

Investor PresentationMarch 2011

Investor Pres Mar2011

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