Press release from CNW Group
WaterFurnace Renewable Energy, Inc. 1st Quarter Results: 1st Quarter Sales Up 11.4% on Record Sales
Thursday, June 09, 2011
WaterFurnace Renewable Energy, Inc. 1st Quarter Results: 1st Quarter Sales Up 11.4% on Record Sales19:11 EDT Thursday, June 09, 2011(U.S.$)FORT WAYNE, IN, June 9, 2011 /CNW/ - WaterFurnace Renewable Energy, Inc. [WFI:TSX] today released the Company's first quarter 2011 results. In the first quarter of 2011, sales revenue increased by 11.4% over the first quarter of 2010 and profit before income taxes was up 52.3% or $365 thousand versus the first quarter of 2010. A higher mix of commercial sales, which have lower margins, along with slightly higher warranty cost and increased component costs resulted in reduced margin percent.Commercial sales rose 56.4% in the first quarter of 2011 over the first quarter of 2010. Federal tax credits of 30% of the installed cost of a residential Energy Star rated geothermal system along with state incentives and utility rebates continued to help drive sales. However, the slow economic recovery, tight credit markets and historically low housing starts have tended to offset sales gains associated with the tax credit.To maintain gross margins in the Company's sales channels during these periods of rapidly rising commodity costs, the Company followed a 3% price increase last December with a 4% price increase in April. Additional internal cost reduction efforts have been put in place to help offset future commodity increases.As the Company continued development of its sales channels and new markets, operating expenses rose 4.3% in the first quarter of 2011 over the first quarter of 2010. Operating expense as a percent to sales dropped from 22.0% in 2010 to 20.6% in 2011. Warranty costs also increased during the quarter primarily due to an increase in the number of units sold with longer warranties and higher claim costs. The Company had an adjustment to its income tax expense resulting in $449 thousand more in tax expense in the first quarter which related to prior periods. In the first quarter of 2010 the Company had an adjustment of $82 thousand that reduced income tax expense for the quarter which related to prior periods. These contributed to total comprehensive income for the quarter being down 10.8% from 2010.Tom Huntington, President and CEO, said, "While the national and global economic conditions continue to hamper growth, the Company has continued to expand its sales channels, markets and product offerings. As we saw with record first quarter sales, these efforts continue to offset the sluggish economic conditions. Companywide cost reduction efforts have also played a major role in our success. Continued diversification of our product lines and sales channels are expected to propel sales this year despite the lack of any discernable recovery in the economy."Tim Shields, Chairman of the Board, added, "Given the adverse first quarter weather for installing loops, the slow economic recovery and stagnate new home construction, the Company is doing well as it works hard to position itself for future demand. The Board is encouraged with the sales momentum and looks forward to the second, third & fourth quarters where historically the Company generates most of its profit."The first quarter report to shareholders is available at www.waterfurnace.com and filed on SEDAR at www.sedar.com. Management will conduct a webcast covering the results of the quarter at 11:00 AM Eastern Standard Time on Tuesday, June 14, 2011. Interested parties can listen live or to the recorded version at http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3528800 or at the Company's website: www.waterfurnace.com.WaterFurnace Renewable Energy, Inc.Consolidated Statements of Comprehensive IncomePrepared using International Financial Reporting Standards(Unaudited-Thousands of U.S.$ except per share data) Three months ended March 31, 2011 2010Sales$28,737 $25,794 Cost of sales 21,247 18,806Gross profit 7,490 6,988 Operating expenses 5,926 5,682 Research and development expenses 517 600Income before interest and income taxes 1,047 706 Finance income 19 - Finance expense (3) (8)Income before income taxes 1,063 698 Income tax expense 576 152Net income and total comprehensive income$487 $546 Basic and diluted earnings per share U.S.$$0.04 $0.05WaterFurnace Renewable Energy, Inc.Consolidated Statements of Financial PositionPrepared using International Financial Reporting Standards(Unaudited-Thousands of U.S.$) March 31, December 31, January 1, 2011 2010 2010Assets Current assets Cash and cash equivalents$5,626 $7,222 $4,785 Short-term investments 10,093 10,078 13,368 Receivables 17,480 21,255 16,794 Inventory 11,586 8,570 5,653 Prepaids and deposits 681 492 369Total current assets 45,466 47,617 40,969 Property, plant and equipment 7,329 7,309 6,962Deferred tax assets 6,994 6,212 4,852Intangible assets 1,791 - -Total Assets$61,580 $61,138 $52,783Liabilities Current liabilities Payables and accruals $7,325 $8,061 $7,398 Income taxes payable 514 1,124 880 Provision for warranty claims - current portion 2,960 2,724 2,215Total current liabilities 10,799 11,909 10,493 Finance leases 102 111 146Deferred compensation 215 540 264Provision for warranty claims 13,619 11,760 8,280Total Liabilities 24,735 24,320 19,183Shareholders' Equity Share capital 17,312 14,948 14,865 Retained earnings 19,533 21,870 18,735Total Shareholders' Equity 36,845 36,818 33,600Total Liabilities and Shareholders' Equity $61,580 $61,138 $52,783Forward-Looking Information Cautionary NoticeCertain statements in this release constitute forward-looking statements within the meaning of applicable Canadian securities laws. Readers are cautioned not to place undue reliance on such statements. Investors should not rely solely on this information to make investment decisions. These statements are subject to certain assumptions, risks and uncertainties. In addition, WaterFurnace's sales are related to the cost and stability of electricity, fuel oil, propane and natural gas. Federal, state and provincial building codes and energy incentives can also impact sales. WaterFurnace is subject to standard risks associated with most companies, such as normal competitive pressures. These and other risks could cause WaterFurnace's actual results, performance, achievements and developments to differ materially from the results, performance, achievements or developments expressed or implied by such forward-looking statements. Other risk factors can be found in WaterFurnace's Annual Information Form dated March 11, 2010 and other public documents filed by WaterFurnace with Canadian securities regulatory authorities. WaterFurnace assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by law.More InformationWaterFurnace Renewable Energy, Inc. is traded in both Canadian dollars and U.S. dollars on the Toronto Stock Exchange under the symbol WFI for Canadian dollars and WFI.U for U.S. dollars.WaterFurnace designs, manufactures and distributes geothermal heat pumps. The geothermal units use the renewable solar energy stored just below the surface of the earth to dramatically reduce the energy consumed by buildings for heating, cooling and hot water.For further information: Additional information about the Company and its products is available on the Company's website: www.waterfurnace.com. Or call (260) 478-5667 and ask for investor relations.