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Press release from CNW Group

WaterFurnace Renewable Energy, Inc. 2nd Quarter Results: Announces Quarterly Dividend

Friday, August 10, 2012

WaterFurnace Renewable Energy, Inc. 2nd Quarter Results: Announces Quarterly Dividend19:55 EDT Friday, August 10, 2012(U.S.$)FORT WAYNE, IN, Aug. 10, 2012 /CNW/ - WaterFurnace Renewable Energy, Inc. [TSX: WFI], the leading manufacturer of energy efficient heating and cooling solutions, today reported second quarter financial results. The Company announced lower-than-projected sales due to sustained pressures from a struggling economy, weak consumer confidence, a slow new-home construction market and low natural gas and propane prices. Despite this, WaterFurnace was able to continue its overall market share growth during the second quarter of 2012, suggesting that it outperformed the industry.In the second quarter 2012, sales for the quarter were down 16.5% year-over-year, with residential sales channels down 15.7% and commercial sales channels down 18.6%. For the second quarter, net income was down $1.2 million compared to Q2 2011. For Q2 2012, sales to Canada were down 7.6% year over year as the region continued to struggle after termination of the ecoENERGY federal rebate program for geothermal installations. International equipment sales, excluding Canada, were down 37.1% for Q2, year over year. For the six months, however, these sales were up 8.4%.Operating expenses in Q2 2012 were up 5.1% versus the same period in 2011 as the Company continued to invest in business development activities. Expenses incurred for the quarter included approximately $309 thousand in respect of the joint venture agreement, finalized in July 2012, with Chinese company Ningbo Shenglong Group Co., Ltd. (Shenglong). Under the joint venture terms a newly formed company, WaterFurnace Shenglong HVACR Climate Solutions Co., Ltd. (WFSL), will provide heating, ventilation, air conditioning and refrigeration (HVACR) products to the Chinese domestic market under the "WFI" brand name. Shenglong's expertise in manufacturing and distribution for the Asian market combined with WaterFurnace's expertise in energy-efficient technologies and engineering will position WFSL to take advantage of the rapidly increasing HVAC opportunities in China.Gross profit percent to sales increased from 34.0% in Q2 2011 to 37.0% in Q2 2012, due primarily to successful cost targeting on recently introduced products such as the 5 Series. The 7 Series was also launched at the beginning of July and signifies groundbreaking innovations on multiple fronts - most notably as the first variable capacity geothermal system launched to the residential market. It's vastly more efficient than ordinary heating and cooling systems and 33% more efficient than any two-stage geothermal heat pump. IntelliZone2 was introduced at the same time to provide precise temperature control for up to six zones. It was designed to work with WaterFurnace's new Aurora communicating controls and which is unique for the geothermal heat pump industry."Our non-financial accomplishments were significant and will generate increased sales and profits going forward. In fact, we believe the initiatives we are driving now will define WaterFurnace's success for the next decade." said Tom Huntington, President and CEO.The Board of Directors approved a quarterly dividend of $0.24 U.S. per share for shareholders of record on August 22, 2012, with payment on September 4, 2012. Chairman of the Board Tim Shields added, "WaterFurnace is committed to a long-term strategy and the Board of Directors remains optimistic about the Company's ability to weather challenging business conditions thanks to the steps management has taken to strengthen the overall business."The second quarter report to shareholders is available at www.waterfurnace.com and filed on SEDAR at www.sedar.com. The CEO and CFO will conduct a webcast covering the results of the quarter at 11:00 AM Eastern Daylight Time on Monday, August 13, 2012. Those interested can listen live or to the recorded version at http://www.newswire.ca/en/webcast/detail/1010291/1091633 or at the Company's website: www.waterfurnace.com.WaterFurnace Renewable Energy, Inc.Consolidated Statements of Comprehensive IncomePrepared using International Financial Reporting Standards(Unaudited-Thousands of U.S.$ except per share data)    Three months ended June 30,  Six months ended June 30,  2012  2011  2012  2011         Sales  $ 28,198 $ 33,755 $ 55,839 $ 62,492 Cost of sales  17,752  22,293  37,608  43,505         Gross profit  10,446  11,462  18,231  18,987 Operating expenses  6,212  5,909  12,090  11,748 Research and development expenses  547  468  1,057  985         Income before interest and income taxes  3,687  5,085  5,084  6,254 Finance income  44  40  87  59 Finance expense  (232)  (42)  (557)  (79)         Income before income taxes  3,499  5,083  4,614  6,234 Income tax expense  1,293  1,692  1,551  2,356         Net income  2,206  3,391  3,063  3,878          Unrealized loss on translation of foreign operations (net of tax)  (49)  --  (3)  --         Other comprehensive loss  (49)  --  (3)  --         Total comprehensive income  $   2,157  $   3,391  $   3,060  $   3,878         Earnings per share U.S.$ on net income  $    0.18  $    0.28  $    0.25  $    0.32WaterFurnace Renewable Energy, Inc.Consolidated Statements of Financial PositionPrepared using International Financial Reporting Standards(Unaudited—Thousands of U.S.$)  June 30,  December 31,  2012  2011 AssetsCurrent assets         Cash and cash equivalents  $ 11,323  $ 11,646 Short-term investments  10,218  10,181 Receivables  14,872  20,126 Income taxes receivable  785  -- Inventory  11,585  9,188 Prepaids and deposits  695  1,264Total current assets  49,478  52,405      Property, plant and equipment  6,858  6,762Deferred tax assets  9,091  7,686Intangible assets  1,616  1,713Long-term investment  285  --       Total Assets  $ 67,328  $ 68,566     Liabilities    Current liabilities         Payables and accruals  $   6,042  $   7,041 Income taxes payable  --  652 Provision for warranty claims - current portion  3,640  3,274Total current liabilities  9,682  10,967      Finance leases  57  76Deferred compensation  424  749Provision for warranty claims  17,803  15,104      Total Liabilities  27,966  26,896     Shareholders' Equity     Share capital  18,236  17,505 Foreign exchange translation adjustment  3  6 Retained earnings  21,123  24,159     Total Shareholders' Equity  39,362  41,670     Total Liabilities and Shareholders' Equity  $ 67,328  $ 68,566Forward-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 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.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. SOURCE: WaterFurnace Renewable Energy, Inc.For further information: WaterFurnace Renewable Energy, Inc. 9000 Conservation Way Fort Wayne, Indiana  46809-9794 (260) 478-5667