After a strong second-quarter performance, WSI Industries Inc. stock rose nearly 6 percent Tuesday, capping a 64 percent climb from its 52-week low last April.
The Monticello, Minn., precision machining firm’s stock closed at $7.95 per share Tuesday, up 45 cents, after it earned $258,000, or 9 cents a share, in the second quarter on revenue of $10.5 million.
Because of a lack of analyst coverage, there are no Wall Street estimates to measure the quarter against, but earnings more than tripled from a year ago, while sales rose 46 percent.
The company said results were driven by its powersports business, which provides parts for recreational vehicles such as motorcycles and all-terrain vehicles, and its energy business, which makes parts for the oil industry. In addition, sales are growing in the firm’s aerospace, avionics and defense businesses.
Powersports revenue rose 81 percent from a year ago, the company said. The energy business was said to be “strengthening” with the addition of three new customers.
“We experienced our second consecutive quarter with sales in excess of $10 million,” said CEO Benjamin Rashleger. “We expect to see continued improvement in sales and earnings in the last half of fiscal 2014, considering our optimism in many segments of our business.”
The company doubled its manufacturing space last year in anticipation of the increased demand for powersports products, and recently hired Dennis Middleton as its new director of operations, Rashleger said.
WSI Industries didn’t identify its powersports customers. But demand for precision parts for powersports is on the upswing due to the growth of recreational vehicle makers such Medina-based Polaris Industries Inc., Plymouth-based Arctic Cat Inc. and Harley-Davidson of Milwaukee, said Fred Zimmerman, emeritus professor of manufacturing at the University of St. Thomas.
“These companies are very demanding on their manufacturing tolerances, and would need precision machining plants to make those parts,” Zimmerman said. Motorcycles and all-terrain vehicles require precision parts “not just in their engines, but in their axles and drivetrains. It’s harder to make transmissions than engines, because if the machining isn’t right the transmission makes noise.
“Polaris, in particular, is providing a lot of work for precision machining shops because they bought Indian Motorcycles and they’re building all-terrain vehicles,” he added.