WSI INDUSTRIES REPORTS FISCAL 2016 SECOND QUARTER RESULTS

March 28, 2016—Minneapolis, MN – WSI Industries, Inc. (NASDAQ: WSCI) today reported sales for its fiscal 2016 second quarter ending February 28, 2016 of $8,488,000 versus the prior year amount of $11,738,000. Year-to-date sales for the twenty-six weeks ended February 28, 2016 totaled $18,220,000 versus $21,836,000 in the prior year. The Company reported net income of $6,000 for the fiscal 2016 second quarter as compared to the prior year amount of $456,000. The fiscal 2016 second quarter net income was positively influenced by the recognition of a full-year U.S. research and development (R&D) tax credit resulting from the enactment of tax legislation in the calendar fourth quarter of 2015, which increased net earnings $101,000. Year-to-date income for the first two quarters was $138,000 or $.05 per diluted share versus $622,000 or $.21 per diluted share in the prior year.

Benjamin Rashleger, president and chief executive officer, commented: “Our fiscal 2016 second quarter results were influenced by a challenging economic climate. In addition to an expected drop in our energy business due to continuing low oil prices, sales from our largest customer unexpectedly also decreased in the second quarter due to decreases in their end customer demand. WSI remains heavily underutilized from a building and equipment perspective. We purchased and dedicated numerous pieces of equipment to the energy business, and with that overhead now underutilized, this has created a drag on our earnings.”

Rashleger continued: “We are aggressively seeking new opportunities. We have previously communicated that we are increasing our efforts, staffing, and investment in the business development side of our business. This process takes time, and it is important that we commit resources to building a strong pipeline of opportunities to not only fill our underutilized capacity, but to also drive the growth goals of our organization. Over the past year, we have further increased our efforts with the addition of a new Business Development Director, and we are further expanding the department with additions in both staff and capital that are entirely focused on identifying, developing and launching new business. While we understand that the ultimate measurement of success in being awarded with new programs, our level of quoting and business opportunities have never been higher, and we will work to grow it further. During the past quarter we successfully won programs from three new customers, and while the initial orders are small, we are excited about the growth potential of these customers.”

Rashleger concluded: “We believe that at this time, given our current results and our existing and planned initiatives to further our growth strategies, the most appropriate use for our cash would be to support these initiatives. Accordingly, our Board of Directors has determined to suspend our dividend.”

WSI Industries, Inc. is a leading contract manufacturer that specializes in the machining of complex, high-precision parts for a wide range of industries, including automotive, avionics and aerospace, energy, recreational powersports vehicles, small engines, marine, bioscience and the defense markets.

The statements included herein which are not historical or current facts are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Reform Act of 1995. Without limiting the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” or “estimate” or comparable terminology are intended to identify forward-looking statements. Such forward-looking statements include, for example, statements about: the Company’s use of cash or future financial performance, the Company’s growth strategy or business development initiatives, acquisition strategy or activity, the ability to retain current programs and obtain additional manufacturing programs. The statements made by the Company are based upon management’s current expectations and are subject to certain risks and uncertainties that could cause the actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include the risk factors described in the Company’s Annual Report on Form 10-K for the year ended August 30, 2015 and other factors set forth in the Company’s filings with the Securities and Exchange Commission.