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Press release from CNW Group

WaterFurnace Renewable Energy, Inc. 2nd Quarter Results:

Tuesday, August 06, 2013

WaterFurnace Renewable Energy, Inc. 2nd Quarter Results:

18:38 EDT Tuesday, August 06, 2013

(U.S.$)

FORT WAYNE, IN, Aug. 6, 2013 /CNW/ - WaterFurnace Renewable Energy, Inc. [WFI:TSX], the leading manufacturer of energy efficient heating and cooling solutions, today reported second quarter financial results. The Company posted quarterly sales revenue of $25.5 million, as compared to $28.2 for the second quarter of 2012. For the six months ended June 30, 2013 sales were $54.7 million, down 2.1% from sales of $55.8 a year ago. Net income and earnings per share remained consistent with 2012 levels at $2.2 million and $0.18 respectively. For the six months, net income was up $1.4 million and earnings per share increased $0.12 year over year.

The Company refined its warranty provision methodology in the first quarter of 2013 to more accurately charge warranty costs to each quarter which better represents the underlying transactions.  This resulted in decreases in cost of sales and the provision for warranty claims of $1.2 million in the first quarter versus the old methodology.  The change also has a corresponding impact on the other three quarters.  The impact on the quarter ended June 30, 2013 was an increase of $380 thousand in cost of sales and the provision for warranty claims.  Ignoring this refinement, the Company increased gross profit percentages 0.6% and increased earnings per share by $0.02 as compared to the second quarter of 2012.

Operating expenses in Q2 2013 were down 11.3% versus the same period in 2012 as the Company continues cost reduction efforts and sees the benefits of expense reductions enacted in late 2012. Selling and marketing expenses were also down for the quarter primarily due to timing of advertising programs. Research and development expenses are up 7.7% versus prior year as the Company continues to strategically invest in new product development. Finance expenses were lower due to interest rate decreases associated with the present value calculation of the warranty provision.

"WaterFurnace continues to remain focused on operational priorities that are within our control: cost-cutting initiatives, investments in growth and product development, expansion of margins and maintaining a strong cash position," said Tom Huntington, WaterFurnace President and CEO. "A cool, wet spring temporarily affected our replacement sales while the potentially fertile high-end homes segment hasn't yet enjoyed the rebound seen in multifamily and median homes. These trends, however, along with new energy legislation, new utility partnerships and a recovering economy are evolving to provide a tailwind for geothermal."

The Company's Joint Venture in China, WaterFurnace Shenglong HVACR Climate Solutions, continued to outperform the Company's expectations in both the revenue and profit during the second quarter.  The Company is pleased with the progress the team in China has achieved.

The Board of Directors approved a quarterly dividend of $0.25 U.S. per share for shareholders of record date at the close of market on August 22, 2013, with payment on September 3, 2013.

"We're confident about WaterFurnace's position and the overall management of the business," said Tim Shields, Chairman of the Board. "Additionally, the China JV continues to perform well and is providing insights that we can apply to our other business units."

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 August 7, 2013. Those interested can listen live or to the recorded version at http://www.newswire.ca/en/webcast/detail/1190635/1305279 .


WaterFurnace Renewable Energy, Inc.
Consolidated Statements of Comprehensive Income
Prepared using International Financial Reporting Standards
(Unaudited—Thousands of U.S.$ except per share data)
    Three months ended June 30,   Six months ended June 30,
      2013     2012     2013     2012
                         
Sales      $ 25,532   $ 28,198   $ 54,684   $ 55,839
  Cost of sales      16,307     17,752     35,928     37,608
Gross profit      9,225     10,446     18,756     18,231
  Operating expenses      5,507     6,212     10,991     12,090
  Research and development expenses      589     547     1,147     1,057
Income before interest and income
taxes 
    3,129     3,687     6,618     5,084
  Share of income (loss) from joint venture     57     --     (19)     --
  Finance income      18     44     39     87
  Finance expense      (65)     (232)     (159)     (557)
Income before income taxes      3,139     3,499     6,479     4,614
  Income tax expense      961     1,293     1,968     1,551
Net income      2,178     2,206     4,511     3,063
  Unrealized loss on translation of
foreign operations (net of tax) 
    (25)     (49)     (43)     (3)
Other comprehensive loss      (25)     (49)     (43)     (3)
Total comprehensive income    $    2,153   $    2,157   $    4,468   $    3,060
Earnings per share U.S.$
on net income 
    $     0.18   $     0.18   $     0.37   $     0.25



WaterFurnace Renewable Energy, Inc.
Consolidated Statements of Financial Position
Prepared using International Financial Reporting Standards
(Unaudited—Thousands of U.S.$)
      June 30,   December 31,
      2013     2012
Assets            
Current assets            
  Cash and cash equivalents     $    11,764   $ 11,928
  Short-term investments      10,246     10,232
  Receivables      14,489     16,045
  Income taxes receivable      709     --
  Inventory      11,177     10,539
  Prepaids and deposits      696     513
Total current assets      49,081     49,257
             
Property, plant and equipment      6,079     6,536
Intangible assets      1,423     1,519
Long-term investment      285     285
Investment in joint venture      2,911     2,923
Deferred tax assets      11,564     9,845
Total Assets      $ 71,343   $ 70,365
             
Liabilities            
Current liabilities                
  Payables and accruals      $    6,392   $    6,053
  Income taxes payable      --     377
  Provision for warranty claims - current portion      4,150     3,884
Total current liabilities      10,542     10,314
             
Finance leases      18     38
Deferred compensation      175     280
Provision for warranty claims     20,851     18,938
Total Liabilities      31,586     29,570
Shareholders' Equity            
  Share capital      19,763     18,999
  Foreign exchange translation adjustment      (6)     37
  Retained earnings      20,000     21,759
Total Shareholders' Equity      39,757     40,795
Total Liabilities and Shareholders' Equity    $ 71,343   $ 70,365



Forward-Looking Information Cautionary Notice

Certain 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 Information

WaterFurnace 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

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