Flanders Corporation Reports Second Quarter 2009 Financial Results

WASHINGTON, NC, Jul 30 (MARKET WIRE) --
Flanders Corporation (NASDAQ: FLDR)

-- Grew revenue 2.5% compared to second quarter 2008
-- Increased gross margins 600 basis points compared to second quarter
2008
-- Delivered $5.6 million in EBITDA, more than doubling second quarter
2008

Flanders Corporation (NASDAQ: FLDR) reported financial results for the
second quarter ended June 30, 2009.

Flanders Corporation's Chairman, president and CEO Harry Smith said: "Our
second quarter results build upon our achievements and prove the steps
taken to improve our business are paying off. As a result of better sales
and marketing efforts, we grew second quarter 2009 revenue 2.5%, compared
to the same period last year, even though a nationwide drop in June
temperatures caused orders to be softer than originally expected. Our
backlog for the third quarter is strong, and we are excited about the
second half of 2009. We also continue to make great strides in our
research and development efforts to improve our current products,
introduce new technology and expand our product line with existing
customers."

"In addition, we are excited to welcome Tom Justice as our new COO.
Bringing his 28 years of diverse experience in the air filtration industry
to the team, Tom will play an integral role to achieve operational
excellence and to develop innovative new products," added Smith.

Financial Summary - Second Quarter 2009

Revenue for the second quarter 2009 was $58.7 million, compared to $57.3
million in the second quarter 2008. Gross margin for the first quarter was
21%, compared to 15% in the second quarter 2008. The second quarter 2009
net income was $2.4 million, or $0.09 per diluted share. This compares to
the second quarter of 2008 net income of $6.9 million, which included a
$6.8 million gain for extraordinary items, or $0.26 per diluted share.
EBITDA for the second quarter 2009 was $5.6 million, compared to $2.1
million in the second quarter of 2008.

Management uses some measures not in accordance with generally accepted
accounting principles (GAAP) to evaluate the results of the company's
operations and believes earnings before interest, taxes, extraordinary
items, depreciation and amortization (EBITDA) provides a useful measure of
operations.

Flanders' Chief Financial Officer John Oakley said: "We delivered revenue
increases even during the recession, and we are poised to grow in the
second half. Equally important, our procurement and procedural measures
continue to post results. Second quarter gross margins increased 600 basis
points and EBITDA grew $3.4 million to $5.6 million, compared to second
quarter 2008. Looking ahead, we are adjusting our guidance to reflect
continuing economic conditions in commercial & industrial. Nonetheless, we
are still quite optimistic about growth and profitability in 2009."

Financial Summary - Six Months Ended June 30, 2009

Revenue for the six months ended June 30, 2009 was $106.7 million,
compared to $106.5 million for the same period a year ago. Gross margin
for the period was 21%, compared to 16% for the same period a year ago.
Year-to-date net income was $4.2 million, or $0.16 per diluted share,
compared to net income of $9.3 million, which included an $8.3 million
gain for extraordinary items, or $0.35 per diluted share for the same
period a year ago. EBITDA for the period was $10.0 million, compared to
$5.8 million for the same period a year ago.

Financial Outlook - Full Year 2009

Management continues to expect the company to be profitable and deliver
positive EBITDA for 2009. The company adjusted its 2009 revenue guidance
to be between $225 million and $240 million, from the previous
expectations provided on May 4th, 2009, of revenue between $235 million
and $246 million.

Recent Corporate Highlights

-- Appointed Tom Justice as Chief Operating Officer in July. A 28-year
veteran of the air filtration industry, with tremendous experience in
operations management and product development.
-- Acquired certain assets from Wildwood Industries, Inc. in May, for
$3.6 million in cash. Flanders retained the furnace filter equipment and
inventory and immediately sold the unrelated assets to R.P.S. Products,
Inc. for $2.2 million in cash.
-- Awarded its second purchase agreement from Shaw AREVA MOX Services,
LLC in June. Flanders will produce 24 glove box assemblies during 2010 and
2011 for approximately $3.5 million.

Conference Call

Chairman, president and CEO Harry Smith and CFO John Oakley are scheduled
to conduct a conference call and simultaneous webcast at 11:00 a.m. ET on
July 30, 2009 to review these results in more detail. To access the call
in the U.S., please dial (866) 425-6192, and for international callers
dial (973) 409-9253 approximately 10 minutes prior to the start of the
conference call. The conference ID will be 16845808. A telephone replay
will be available until midnight Eastern Time on August 3rd by dialing
(800) 642-1687 or (706) 645-9291 and entering pass code 16845808.

Safe Harbor Statement

The statements made in this press release regarding Flanders (1) results
building upon its achievements and proving steps taken to improve our
business are paying off; (2) having better sales and marketing; (3) being
excited about the second half of 2009, (4) making great strides in
research and development efforts, introducing new technology and expanding
its product line with existing customers, (5) Tom Justice playing an
integral role to achieve operational excellence and to develop innovative
new products, (6) procurement and procedural measures continuing to post
results, and (7) being optimistic about growth and profitability in 2009
are based on the current expectations and beliefs of the management of
Flanders and are subject to a number of risks and uncertainties that could
cause actual results to differ materially from those described in the
forward-looking statements. For a more detailed discussion of risk factors
that may affect Flanders' operations, please refer to the Company's Form
10-K for the year ended December 31, 2008, and Form 10-Q for the period
ended March 30, 2009. These forward-looking statements speak only as of
the date on which such statements are made, and the Company undertakes no
obligation to update such forward-looking statements, except as required
by law.

About Flanders

Flanders is a leading air filtration products manufacturer. Flanders'
products are utilized by many industries, including those associated with
commercial and residential heating, ventilation and air conditioning
systems, semiconductor manufacturing, ultra-pure materials, biotechnology,
pharmaceuticals, synthetics, nuclear power and nuclear materials
processing.

For further information on Flanders and its products, visit its web site
at http://www.flanderscorp.com/ or contact Kirsten Chapman or Tim Dien at
(415) 433-3777.

FLANDERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)

June 30, December 31,
------------ ------------
2009 2008
------------ ------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 690 $ 404
Receivables:
Trade, less allowance: $3,297 and $3,683
at June 30, 2009 and December 31, 2008,
respectively 45,642 37,682
Other 897 280
Inventories 35,615 31,549
Deferred taxes 3,716 4,285
Income taxes 7,447 10,048
Other current assets 4,150 4,714
------------ ------------
Total current assets 98,157 88,962
Property and equipment, less accumulated
depreciation: $56,345 and $55,520
at June 30, 2009 and December 31, 2008,
respectively 65,052 57,156
Intangible assets, less accumulated
amortization: $1,479 and $1,449
at June 30, 2009 and December 31, 2008,
respectively 304 295
Notes receivable and other assets 14,730 14,604
------------ ------------
Total assets $ 178,243 $ 161,017
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt and
capital lease obligations $ 1,098 $ 1,307
Accounts payable 24,659 22,795
Accrued expenses 17,063 13,517
Other current liabilities 6,179 6,179
------------ ------------
Total current liabilities 48,999 43,798
Long-term capital lease obligations, less
current maturities 190 554
Long-term debt, less current maturities 37,918 29,611
Long-term liabilities, other 3,821 4,286
Deferred taxes - -
Commitments and contingencies
------------ ------------
Total liabilities 90,928 78,249
Stockholders' equity:
Preferred stock, $.001 par value, 10,000
shares authorized; none issued - -
Common stock, $.001 par value; 50,000 shares
authorized; issued and outstanding: 25,524
and 25,524 shares at June 30, 2009 and
December 31, 2008, respectively 26 26
Additional paid-in capital 87,298 87,253
Accumulated other comprehensive loss (966) (1,231)
Retained earnings (deficit) 957 (3,280)
------------ ------------
Total stockholders' equity 87,315 82,768
------------ ------------
Total liabilities and stockholders'
equity $ 178,243 $ 161,017
============ ============

FLANDERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Net sales $ 58,727 $ 57,269 $ 106,747 $ 106,463
Cost of goods sold 46,129 48,773 84,244 89,243
--------- --------- --------- ---------
Gross profit 12,598 8,496 22,503 17,220

Operating expenses 8,559 9,313 16,094 18,589
--------- --------- --------- ---------
Operating income (loss) 4,039 (817) 6,409 (1,369)

Nonoperating income (expense):
Other income, net 148 1,442 902 4,045
Interest expense (318) (492) (585) (1,125)
--------- --------- --------- ---------
Total nonoperating income
(expense) (170) 950 317 2,920
--------- --------- --------- ---------

Earnings before income
taxes and extraordinary
items 3,869 133 6,726 1,551

Provision for income taxes 1,432 53 2,489 620
--------- --------- --------- ---------
Income before extraordinary
item 2,437 80 4,237 931

Extraordinary gain on Fire
(net of taxes) - 6,802 - 8,335
--------- --------- --------- ---------
Net earnings $ 2,437 $ 6,882 $ 4,237 $ 9,266
========= ========= ========= =========

Basic earnings per share:
Income before extraordinary
item $ 0.10 $ 0.00 $ 0.17 $ 0.04
Extraordinary item - 0.27 - 0.32
--------- --------- --------- ---------
Net earnings per share $ 0.10 $ 0.27 $ 0.17 $ 0.36
========= ========= ========= =========

Diluted earnings per share:
Income before extraordinary
item $ 0.09 $ 0.00 $ 0.16 $ 0.03
Extraordinary item - 0.26 - 0.32
--------- --------- --------- ---------
Net earnings per share $ 0.09 $ 0.26 $ 0.16 $ 0.35
========= ========= ========= =========

Weighted average common shares
outstanding:
Basic 25,524 25,725 25,524 25,724
========= ========= ========= =========
Diluted 25,887 26,203 25,845 26,185
========= ========= ========= =========

FLANDERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net cash provided by
operating activities $ 860 $ 1,818 $ 2,665 $ 5,468
-------- -------- -------- --------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Disposal, net of cash acquired - - - (11)
Purchase of property and
equipment (6,060) (3,192) (9,910) (5,237)
Proceeds from sale of property
and equipment 205 7 254 10
Proceeds from insurance claim on
building and equipment 466 - 466 -
Decrease in other assets 478 479 647 678
-------- -------- -------- --------
Net cash used in investing
activities (4,911) (2,706) (8,543) (4,560)
-------- -------- -------- --------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Principal payments on long-term
borrowings (943) (228) (1,133) (373)
Net proceeds from (payments on)
revolving credit agreement 5,233 596 7,387 (406)
Payment of debt issuance costs - - (90) -
Purchase and retirement of common
stock - (53) - (334)
Proceeds from sales of common
stock - - - 56
-------- -------- -------- --------
Net cash provided by (used in)
financing activities 4,290 315 6,164 (1,057)
-------- -------- -------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 239 (573) 286 (149)
CASH AND CASH EQUIVALENTS BEGINNING
OF PERIOD 451 922 404 498
-------- -------- -------- --------
CASH AND CASH EQUIVALENTS END OF
PERIOD $ 690 $ 349 $ 690 $ 349
======== ======== ======== ========

SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION
Cash paid during the period for:
Income taxes $ 179 $ 743 $ 241 $ 793
Interest 411 558 612 1,122

SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES
Sale of equipment for note
receivable $ 249 $ 332 $ 415 $ 415
Purchase of building with debt 1,480 - 1,480 -
Sale of building for note
receivable 200 - 200 -
Cashless exercise of common
stock (net) - (100) - (370)
Offset of accrued expenses
against trade accounts
receivable 2,412 1,614 5,839 8,825
Note receivable in lieu of
account receivable trade - 677 - 677
Offset of accrued expenses
against other receivables - 900 - 900

DISPOSAL OF COMPANIES
Working capital surplus disposed,
net of cash and cash equivalents
disposed $ - $ 959 $ - $ 1,425
Fair value of other assets
disposed, principally property
and equipment - 8,518 - 8,637
Goodwill disposed - - - 589
Minority interest - - - 141
-------- -------- -------- --------
$ - $ 9,477 $ - $ 10,792
======== ======== ======== ========

FLANDERS CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET EARNINGS TO EBITDA
(in thousands)
(unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2009 2008 2009 2008
--------- -------- --------- --------
Net Earnings $ 2,437 $ 6,882 $ 4,237 $ 9,266
Extraordinary items - (6,802) - (8,335)
Interest 318 492 585 1,125
Taxes 1,432 53 2,489 620
Depreciation and amortization 1,364 1,516 2,731 3,125
--------- -------- --------- --------
EBITDA $ 5,551 $ 2,141 $ 10,042 $ 5,801
========= ======== ========= ========

Company Contact:
John Oakley, CFO
Flanders Corporation
(252) 946-8081

Investor Relations Contacts:
Kirsten Chapman/ Tim Dien
Lippert / Heilshorn & Associates
(415) 433-3777 or Email Contact

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