Winland Electronics, Inc., a leading designer and manufacturer of customer electronic control products and systems, today announced net sales of $4.5 million for the fourth quarter ended December 31, 2009, down $3.2 million, or 41.5% compared with the corresponding period in 2008. Net income was break-even for the quarter, unchanged from the comparable quarter in 2008.

EMS sales for the quarter totaled $3.7 million versus $7.1 million in the fourth quarter of 2008, a decline of 47.6%. Net sales for Winland's proprietary products segment for the quarter totaled $819,000, an increase of $158,000, or 23.9% from the comparable period in 2008.

"The fourth quarter was a difficult period from a revenue standpoint, with the sales slowdown that began in the second quarter persisting," said Thomas de Petra, President and Chief Executive Officer of Winland Electronics. "However, we are beginning to see production forecasts that suggest a stronger business climate. During the fourth quarter we experienced a nearly five-fold increase in our quotation activity over previous quarters."

Winland's customer base includes companies in transportation logistics and fleet management, industrial, instrumentation, medical and telecommunication.

The company recorded an operating loss for the quarter of $606,000 versus operating income of $62,000 in the comparable quarter in 2008, and gross margin totaled 8.8% versus 13.9% in the comparable period in 2008. The company's operating loss was offset by a $631,000 income tax benefit.

The company's EMS segment reported an operating loss of $330,000 in the fourth quarter of 2009 versus an operating profit of $476,000 in the comparable period of 2008. Winland's proprietary products segment operating income totaled $151,000, up 152% over the $60,000 in operating income in the fourth quarter of 2008. Fourth quarter gross margin for the company's proprietary products segment was 37.2% versus 41.5% in the comparable period in 2008.

"We believe that the process and efficiency improvements we have put in place are paying off," de Petra said. "During the second, third and fourth quarters of 2009, our quality and on-time delivery performance for the first time each exceeded 99%, and this continues to earn Winland new opportunities to quote additional programs from existing customers not previously open to us."

Twelve-Month Results

Net sales for the 12 months ended December 31, 2009 totaled $22.5 million, down $6.1 million, or 21%, versus the comparable period in 2008. EMS net sales declined 24%, or $5.9 million, to $19.4 million during 2009 compared to a year ago. One customer accounted for $3.1 million of the decline and the company's top two customers accounted for another $1.4 million. Three other customers whose orders totaled $1.8 million in 2008 did not place orders in 2009.

These declines were partially offset by Winland's third largest customer whose orders increased approximately $1.5 million. Sales from engineering services increased $160,000, to $1.2 million, a sum also reflected in the company's EMS segment sales. Proprietary Products net sales declined 5% to $3.2 million, down $182,000 from a year ago. Sales to Winland's largest proprietary products distributor were down $164,000 versus 2008.