WaterFurnace Renewable Energy, Inc. Fiscal Year & 4th Quarter Results

T.WFI, ENVI

China Joint Venture Exceeds Expectations

Increased margins, strong cash generation and renewed optimism for residential new construction.

(U.S. $)

FORT WAYNE, IN, March 11, 2014 /CNW/ - WaterFurnace Renewable Energy, Inc. [WFI:TSX] today released the Company's fiscal year 2013 and fourth quarter results. In 2013 the Company significantly increased gross margins by 2.2 percentage points, rising from 35.7% in 2012 to 37.9% in 2013.  Sales of the Company's new 7 Series variable capacity product, a stronger mix of residential sales, and continued cost reduction efforts all contributed to margin growth in 2013.

2013 income before interest, joint venture operations and income taxes was up by 22.2% over 2012. The increase was primarily attributable to reduced Selling, General and Administrative expenses, improved gross margins and a stronger mix of residential sales.

Total comprehensive income for 2013 was up 35.5% as compared to 2012. Earnings per share increased from $0.82 in 2012 to $1.12 in 2013. The Company generated excess cash of $5.5 million after paying $12.6 million in dividends to shareholders in 2013.

Operating expenses were down $1.6 million from 2012, due largely to decreases in sales and marketing expenses, Q4 2012 headcount reductions, and fewer expenses related to business development efforts in 2013, namely the cost in 2012 to form and start up the joint venture (JV) operations in China.

The JV, WaterFurnace Shenglong HVACR Climate Solutions, Ltd. outperformed Company expectations by exceeding $9 million in revenue in its first full year of operations.  In addition, the JV posted a profit that exceeded management's expectations.  It is anticipated that new products, engineering synergies and expansion into new markets will continue to drive rapid revenue growth in the future.  Chairman of the Board Tim Shields remarked, "The performance of our joint venture in China shows how planning, vision and sound strategy along with a tremendous effort on the part of management can really pay off."

International sales, which exclude Canada, were 3.7% of total sales in 2013 compared with 2.9% in 2012.  Sales in Asian markets and new opportunities in Russia and Japan have opened up additional revenue sources.  Synergies with the joint venture in China have helped drive the Company's international sales over the past year.

Sales for Hyper Engineering, the Company's subsidiary in Australia, rose by more than 16%.  Hyper Engineering manufactures electrical soft-start devices and recently introduced a new line of three phase products to complement its existing single phase products.

"While the economy continued to create challenges for the industry throughout most of 2013, we maintained our investments in employees, infrastructure and products" said WaterFurnace President & CEO, Tom Huntington. "Additionally, in the fourth quarter the nation witnessed an uptick in consumer confidence and a long awaited rebound in construction of higher end homes. These factors provided the Company momentum to finish out the year and leaves us optimistic going into 2014."

The Company's Chairman of the Board, Tim Shields stated, "The Board of Directors is pleased with the overall performance of the Company in 2013. Management's steadfast focus on strategic improvements to the business allowed us not only to grow our cash reserves but also to increase dividends during a tough economic climate."

The annual 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 year and quarter at 4:00 PM Eastern Standard Time on Wednesday, March 12, 2014. Those interested can listen live or to the recorded version at http://www.newswire.ca/en/webcast/detail/1288441/1421449 or at the Company's website: www.waterfurnace.com.

WaterFurnace Renewable Energy, Inc.
Consolidated Statements of Comprehensive Income
Prepared using International Financial Reporting Standards
(Thousands of U.S. $ except per share data)
                         
    Unaudited    Audited
    Three months ended December 31,    Year ended December 31,
      2013     2012     2013     2012
-----------------------------------------------------     --------------     --------------     --------------      --------------
Sales    $ 33,770   $ 34,375   $ 118,776   $ 119,697
  Cost of sales      19,806     21,075     73,752     76,967
      --------------      --------------     --------------      --------------
Gross profit      13,964     13,300     45,024     42,730
  Operating expenses      6,123     6,104     22,561     24,164
  Research and development
    expenses
    542     391     2,297     2,070
      --------------     --------------      --------------      --------------
Income before interest and                        
  income taxes      7,299     6,805     20,166     16,496
  Share of income (loss) from      89     (28)     106     (28)
      joint venture                        
  Finance income (expense)      251     (223)     394     (893)
      --------------     --------------     --------------      --------------
Income before income taxes      7,639     6,554     20,666     15,575
  Income tax expense      2,709     2,435     6,884     5,515
      --------------     --------------      --------------     --------------
Net income       4,930     4,119     13,782     10,060
  Unrealized (loss) gain on
translation of foreign operations 
    (26)     11     (107)     31
  (net of tax)                        
      --------------     --------------      --------------     --------------
Other comprehensive (loss) income      (26)      11     (107)     31
Net income and total                        
  comprehensive income    $   4,904   $   4,130   $    13,675   $   10,091
      ========      ========     ========     ========
Earnings per share U.S.    $      0.40   $      0.33   $        1.12   $        0.82
      --------------     --------------     --------------     --------------




WaterFurnace Renewable Energy, Inc.
Consolidated Statements of Financial Position
Prepared using International Financial Reporting Standards
(Audited—Thousands of U.S. $)
             
      December 31,     December 31,
      2013     2012
----------------------------------------------------------------      --------------     --------------
Assets            
Current assets                
  Cash and cash equivalents     $ 17,451   $    11,928
  Short-term investments       10,250     10,232
  Receivables       17,112     16,045
  Inventory       9,541     10,539
  Prepaids and deposits       575     513
      --------------     --------------
Total current assets       54,929     49,257
Property, plant and equipment       6,317     6,536
Intangible assets       1,325     1,519
Long-term investments       433     285
Investment in joint venture       3,049     2,923
Deferred tax assets       11,890     9,845 
      --------------     --------------
Total Assets     $ 77,943   $ 70,365
      ========     ========
Liabilities            
Current liabilities                
  Payables and accruals     $    8,266   $    6,053
  Income taxes payable       671     377
  Provision for warranty claims - current portion       4,534     3,884
      --------------      --------------
Total current liabilities       13,471     10,314
Finance leases       --     38
Deferred compensation       472     280
Provision for warranty claims       21,456     18,938
      --------------     --------------
Total Liabilities       35,399     29,570
      --------------     --------------
Shareholders' Equity            
  Share capital       19,763     18,999
  Foreign exchange translation adjustment       (70)     37
  Retained earnings       22,851     21,759
      --------------     --------------
Total Shareholders' Equity       42,544     40,795
      --------------     --------------
Total Liabilities and                
  Shareholders' Equity     $ 77,943   $ 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.

WaterFurnace Renewable Energy, Inc.
9000 Conservation Way
Fort Wayne, Indiana  46809-9794
(260) 478-5667

Copyright CNW Group 2014

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