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Press release from CNW Group

Dynetek Industries Ltd. Reports 2012 First Quarter Results

Friday, May 11, 2012

Dynetek Industries Ltd. Reports 2012 First Quarter Results17:30 EDT Friday, May 11, 2012CALGARY, May 11, 2012 /CNW/ - Dynetek Industries Ltd. ("Dynetek" or "Company") reported today its results for the three months ended March 31, 2012. The unaudited condensed consolidated financial statements and Management's Discussion and Analysis have been filed on SEDAR at www.sedar.com and on Dynetek's website at www.dynetek.com.FINANCIAL      (thousands of Canadian dollars, except share capital and per share data)(unaudited)      Three months ended      March 31        20122011Cylinder and system sales4,3213,084Research and development income1,8481,251Total revenue6,1694,335   Other income1543   EBITDA1(603)(452)Net loss(873)(878)Net loss per common share (basic and fully diluted)(0.04)(0.04)Cash1,210451Non-cash working capital13,5968,455Working capital14,8069,314Total assets22,17232,713Long-term borrowing and finance leases334,463Non-current assets expenditure108213Cash flow deficiency from operations(1,990)(1,190)Weighted average common shares outstanding20,964,25020,959,500 OPERATIONAL Consolidated cylinder and system sales for the first quarter ended March 31, 2012 were $4.3million, an increase of 40%, from $3.1 million for the same period of 2011 as activity levels in Dynetek's major markets rebound from the historic lows of 2011. Current order activity levels in both Europe and North America indicate that cylinder and system sales for 2012 could exceed those of 2011.Research and development ("R&D") incomefor the first quarter of 2012 was $1.8 million, an increase of 48%, from $1.2 million for the same quarter of 2011. The 2012 first quarter increase in R&D income reflects the final milestone billing for two major research contracts that began during 2010.  In addition, Dynetek sold $0.6 million of hydrogen valve products in the first quarter of 2012, compared to sales of $0.5 million in the same quarter of 2011, an increase of 26%.Gross profit was $0.7 million for the first quarter 2012, which was $0.6 million higher than the first quarter of 2011.  Corresponding gross profit percentage for the first quarter ended March 31, 2012 was 11% of sales compared to 2% of sales for the same quarter of 2011. Gross profit as a percentage of sales increased quarter over quarter due to higher sales activities which allowed for greater recovery of fixed costs.    EBITDA for the quarter ended March 31, 2012 was a loss of ($0.6 million), compared to the 2011 first quarter EBITDA loss of ($0.5 million).  Despite the higher gross profit from operations in the first quarter of 2012, $0.5 million from the settlement of the last government contribution agreement boosted the first quarter EBITDA of 2011.  Net loss for the three months ended March 31, 2012 was ($0.9 million) or ($0.04) per common share, which was the same for the first quarter of 2011.The Company increased its line of credit from $3.5 million at December 31, 2011 to $9.0 million on March 23, 2012, with the replacement of its previous lender with a new asset based lender. The new credit facility is comprised of three demand facilities which will allow the Company access, subject to borrowing base calculations,  to a maximum of $9.0 million.  At March 31, 2012, working capital was $4.8 million compared to $5.5 million at December 31, 2011.OUTLOOK Geographic expansion will be the main driver of worldwide sales growth. While Europe and North America continue to provide the majority of near term sales, Dynetek is actively expanding its presence in the Asia-Pacific market through its expanding joint venture relationships.  Dynetek is focused on generating increased worldwide sales from its commercialized CNG products and continuing to develop opportunities in the long-term hydrogen market through research and development activities with the global OEMs. Dynetek also continues to develop applications for its cylinders in the bulk transportation and stationary storage segments.Customer order activity increased during the first quarter of 2012, reversing the impact of the global economic slowdown in 2011 which negatively impacted Dynetek's current markets.Management continues to be in discussions with certain parties with respect to the strategic alternatives available to Dynetek, including a potential sale of the Company on a share exchange basis. However, there is no binding agreement in place. As a result, and as a result of the risk factors noted herein, there can be no assurance as to the terms on which a transaction may occur or that a transaction will occur at all.ABOUT DYNETEKDynetek Industries Ltd. is a world-leading participant in the global clean technology space and a leader in the design and manufacture of proprietary fuel storage systems.  Dynetek designs, produces and markets one of the lightest and most advanced fuel storage and refueling systems for compressed natural gas, low emission vehicles and compressed hydrogen, zero-emission fuel cell vehicles. Dynetek is recognized around the world for its solutions-of-choice to the alternate fuel vehicle sector, evidenced by strategic relationships with major manufacturers around the globe. Dynetek is listed on the Toronto Stock Exchange, symbol: DNK.FORWARD LOOKING STATEMENTSIn addition to historical information, this news release contains forward-looking statements or information, collectively "forward-looking statements" as defined under applicable securities legislation, and should be read in conjunction with the condensed consolidated financial statements as at March 31, 2012 and 2011 and year-end audited financial statements and related notes for the years ended December 31, 2011 and 2010.Readers are encouraged to review the section in the annual Management's Discussion and Analysis titled "Principal Risks and Uncertainties" for a discussion of factors that could affect Dynetek's future operations and financial results. Forward-looking statements are not based on historical facts, but rather reflect management's expectations regarding future plans and intentions, growth, results of operations, performance and business prospects and opportunities. The use of any of the words "plan", "expect", "project", "intend", "believe", "should", "anticipate", "estimate" or other similar words, or statements that certain events or conditions "may" or "will" occur are typically intended to identify forward-looking statements. Forward- looking statements contained in this document include, without limitation, statements regarding: Dynetek's negotiations with respect to strategic alternatives; management's growth and development strategies; the number of CNG buses operated in foreign markets; future sales for cylinders and systems in 2012; the number of CNG buses manufactured; incentives relating to CNG applications implemented by foreign governments; foreign market trends; and demand for CNG and hydrogen cylinders.Forward-looking statements are based on a number of factors and assumptions which have been used to develop such statements but which may prove to be incorrect. Although Dynetek believes that the expectations and assumptions reflected in such forward-looking statements are reasonable, undue reliance should not be placed on forward-looking statements because Dynetek can give no assurance that such expectations and assumptions will prove to be correct. With respect to the forward-looking statements contained in this document, assumptions have been made regarding, among other things: (i) industry demand; (ii) expectations regarding technology adoption rates for certain countries; (iii) the impact of governmental regulatory regimes and tax, environmental and other laws; (iv) prices of commodities; and the economic condition in certain countries, including, without limitation, Canada, the United States, India, Korea, China and Germany. Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated and described in the forward looking statements. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements including, without limitation: (i) changes in general economic, market and business conditions of certain countries, including, without limitation, Canada, the United States, India, Korea, China and Germany; (ii) volatility in commodity prices and exchange rates; (iii) access to capital; (iv) competition for, among other things, capital and skilled personnel; (v) actions by governmental or regulatory authorities including changes in environmental and tax legislation; (vi) changes in the level of government funding for clean technology initiatives; (vii) a failure to recognize the benefits of joint ventures; (viii) changes in the demand for fuel storage systems; and, (ix) customer cancelation of existing orders. The Company cautions that the foregoing list of assumptions, risks and uncertainties is not exhaustive. Additional information on these and other factors that could affect operations or financial results can be found in the Company's Annual Information Form available on SEDAR at www.sedar.com. The Company does not undertake any obligation to publicly update or revise any forward-looking statements except as expressly required by applicable securities law. 1 EBITDA, non-cash working capital and working capital are non-GAAP financial measures. Dynetek defines EBITDA as earnings before finance costs, taxes, share based compensation, foreign exchange gain or loss, depreciation and amortization. Non-cash working capital is defined as current assets less cash, restricted cash and current liabilities and working capital is defined as current assets less current liabilities. Since non-GAAP financial measures do not have a standardized definition, they may differ from the non-GAAP financial measures used by other companies. Dynetek strongly encourages investors to review its financial statements and other publicly filed reports in their entirety and not rely on a single non-GAAP financial measure. For further information: Douglas Pigot, Executive Chairman Dynetek Industries Ltd. 4410 - 46th Avenue SE Calgary, Alberta T2B 3N7 Tel Calgary: 403-720-0262 Toll free: 1-888-396-3835 Web: www.dynetek.com