Genesis Worldwide Inc. Announces First Quarter 2010 Financial Results
Continues Joint Venture and Divestiture Strategies
Shareholder Purchases Term Loan
VAUGHAN, ON, May 14 /CNW/ - Genesis Worldwide Inc. ("Genesis" or the "Company"), (TSX: GWI), today announces its financial results for the first quarter ended March 31, 2010. All dollar amounts are in Canadian dollars unless otherwise stated.
Business Update
---------------
The following is an update of the transactions discussed in the Company's press release dated April 28, 2010 -
- As part of the Company's new business strategy, the joint venture
negotiations with Alexandria Steel Forming Co. ("Alexandria") in
Egypt, and Manazil Steel Framing Co. ("Manazil") in Abu Dhabi, are
nearing completion. Both of these markets are showing buoyancy and
continued economic improvement. As part of the Manazil joint venture,
the Company recently transferred four employees to Abu Dhabi. This
included the transfer of Maged Mostafa; the former Chief Operating
Officer of the Company's licensing division.
- The special committees that were formed to negotiate a joint venture
with Codding Enterprises L.P., the Company's largest shareholder, as
well as the divestiture of KML Engineered Homes Ltd., a subsidiary of
the Company, are continuing their negotiations. These two initiatives
further demonstrate the Company's commitment to pursue its new
strategic direction. Although the Company believes it is likely that
it will consummate the contemplated joint venture and divestiture
transactions, there can be no assurance that any or all of the
transactions will ultimately be finalized, or that, if finalized,
they will be under the same terms and conditions as currently
contemplated.
- The Company recently received a demand letter from its lender
requesting payment of all amounts owing as of the date of the demand
letter. Subsequent to receiving the demand letter, and prior to the
expiration of the ten day cure period, Codding Enterprises L.P., a
current shareholder of the Company (the "Potential Buyer"), initiated
discussions with the lender to potentially purchase the term loan. As
a result, the Potential Buyer has agreed, subject to customary
closing conditions, to purchase the term loan. The parties are in the
process of completing final documentation. The Potential Buyer has
expressed its desire to modify the term loan in several ways,
including a reduction in the monthly loan payments, and removal of
certain restrictive covenants.
Financial Highlights
--------------------
- Total revenue for the first quarter ended March 31, 2010 decreased
80.2% to $965,085, compared to $4,878,637 for the same period in
2009. Revenue for the licensing division for the first quarter of
2010 decreased 91.4% to $191,097, compared to $2,225,533 for the
first quarter in 2009. Revenue for the structural products division
for the first quarter of 2010 decreased 70.8% to $773,988, compared
to $2,653,104 for the same quarter in 2009. Revenue for the first
quarter of 2010 was impacted by the Company's inability to maintain
consistent sustained production from manufacturing as it continued to
manage working capital.
- Operating expenses for the first quarter of 2010 decreased 4.6% to
$1,677,267, compared to $1,758,425 for the same period in 2009. On
November 16, 2009, each of the Company's operating divisions
implemented short-term layoffs of personnel in order to preserve
cash. A total of 47 personnel were laid-off (36 in the structural
products division, 9 in the licensing division and 2 in the
corporate head office). During the quarter ended March 31, 2010, the
Company recalled 2 employees (1 in the structural products division
and 1 in the licensing division), and the Company continued with
intermittent short-term layoffs of 17 employees (in the structural
products division). All remaining employees that were not recalled,
or not part of the current short-term layoffs, have either resigned
from the Company, or their employment with the Company was terminated
during the quarter ended March 31, 2010. The Company continues to
evaluate operating costs in an effort to reduce costs.
- Net loss for the first quarter of 2010 was $1,798,402, or ($0.03) per
common share, compared to a net loss of $944,925, or ($0.03) per
common share, for the first quarter of 2009.
Further information regarding the Company, and its business and operations, may be obtained from the Company's continuous disclosure documents filed from time-to-time with the Canadian securities regulatory authorities. These continuous disclosure documents are available through the Company's web site at www.genesisworldwide.com, or through the SEDAR website maintained by the Canadian securities regulatory authorities, which can be accessed at www.sedar.com.
About Genesis Worldwide Inc.
Genesis is a provider of green light steel building systems and solutions targeted at the global commercial, residential and institutional building sectors. Genesis delivers customized turnkey structural solutions including innovative light steel products, and provides software packages, industrial equipment, training programs, professional services and support ("Genesis Solution") to its customers and partners globally. Headquartered in the Greater Toronto Area in Ontario, Canada, Genesis has established a network of partners with engineering, manufacturing and distribution operations in Canada, the United States, the Middle East, Eastern Europe and Russia. For additional information about the Company, visit www.genesisworldwide.com.
Caution Regarding Forward-Looking Information
Certain statements in this press release which are not historical facts constitute forward-looking statements or forward-looking information within the meaning of applicable securities laws ("forward-looking statements") and are made pursuant to the "safe harbour" provisions of such laws. Statements related to the Company's projected revenues, earnings, growth rates, performance, business prospects and opportunities are forward-looking statements, as are any statements relating to future events, conditions or circumstances. The use of terms such as "may", "will", "should", "plan", "believes", "predict", "potential", "anticipate", "expect", "project", "target", "estimate", "continue", and similar terms are intended to assist in identification of these forward-looking statements. These statements are based on certain factors and assumptions including expected growth, results of operations, performance and business prospects, and opportunities. These assumptions, although considered reasonable by the Company at the time of preparation, may prove to be incorrect.
Readers are cautioned not to place undue reliance upon any such forward-looking statements. Such forward-looking statements are not promises or guarantees of future performance and involve both known and unknown risks and uncertainties that may cause the actual results, performance or achievements of the Company to differ materially from the results, performance, achievements or developments expressed or implied by such forward-looking statements.
Many factors could cause the actual results of the Company to differ materially from the results, performance, achievements or developments expressed or implied by such forward-looking statements, including, without limitation, those factors discussed under the heading "Risk Factors" in the Company's most recent Annual Information Form ("AIF"), a copy of each of which is available on SEDAR at www.sedar.com. Forward-looking statements are based on management's current plans, estimates, projections, beliefs and opinions, and, except required by law, the Company does not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change.
Genesis Worldwide Inc.
CONSOLIDATED BALANCE SHEET
(unaudited)
As at As at
March 31 December 31
2010 2009
$ $
----------------------------
ASSETS
Current
Cash 24,126 72,247
Cash held in trust - 100,000
Restricted cash 500,000 500,000
Accounts receivable 1,734,761 2,818,204
Inventory 277,834 346,219
Prepaid expenses 206,080 255,719
----------------------------
Total current assets 2,742,801 4,092,389
Mortgage receivable 432,908 432,908
Property, plant and equipment 2,060,936 2,232,604
Intangible assets 19,133 1,015,101
----------------------------
5,255,778 7,773,002
----------------------------
----------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities 6,338,109 6,505,840
Term loan - current portion 894,177 991,587
Deferred revenue 840,594 847,964
Minimum royalty payment obligations 266,190 682,548
----------------------------
Total current liabilities 8,339,070 9,027,939
----------------------------
Long-term
Minimum royalty payment obligations - 578,058
----------------------------
Total long-term liabilities - 578,058
----------------------------
Shareholders' equity
Capital stock 61,690,108 61,114,911
Contributed surplus 1,815,400 1,842,492
Deficit (66,588,800) (64,790,398)
----------------------------
Total shareholders' equity (3,083,292) (1,832,995)
----------------------------
5,255,778 7,773,002
----------------------------
----------------------------
Genesis Worldwide Inc.
CONSOLIDATED STATEMENTS OF LOSS,
COMPREHENSIVE LOSS AND DEFICIT
(unaudited)
Three months ended
----------------------------
March 31 March 31
2010 2009
$ $
----------------------------
Revenues
Licensing 191,097 2,225,533
Structural products 773,988 2,653,104
----------------------------
Total revenues 965,085 4,878,637
----------------------------
Direct cost of revenues
Licensing 14,418 1,475,668
Structural products 872,066 2,098,291
----------------------------
Total direct cost of revenues 886,484 3,573,959
----------------------------
78,601 1,304,678
----------------------------
Expenses (other income)
Research and development 62,718 199,544
SR&ED tax credit - (50,000)
Selling and marketing 291,548 301,554
Engineering and project management 220,060 263,427
General and administrative 782,169 693,206
Occupancy 320,772 350,694
----------------------------
1,677,267 1,758,425
----------------------------
Loss before other expenses (1,598,666) (453,747)
----------------------------
Amortization of property, plant and equipment 171,668 233,106
Amortization of intangible assets 1,551 69,956
Foreign exchange gain (26,738) 27,591
Loss on disposal of property,
plant and equipment - 4,543
Bank interest expense and penalty charges 37,845 32,731
Minimum royalty accretion - 66,141
Term loan and debenture interest expense 15,410 57,110
----------------------------
199,736 491,178
----------------------------
Net loss and comprehensive loss for the period (1,798,402) (944,925)
Deficit, beginning of period (64,790,398) (53,271,129)
----------------------------
Deficit, end of period (66,588,800) (54,216,054)
----------------------------
----------------------------
Loss per share
Basic and diluted $ (0.03) $ (0.03)
----------------------------
----------------------------
Weighted average number of shares
outstanding 51,575,009 30,982,858
----------------------------
----------------------------
Genesis Worldwide Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Three months ended
----------------------------
March 31 March 31
2010 2009
$ $
----------------------------
OPERATING ACTIVITIES
Net loss for the year (1,798,402) (944,925)
Adjustments for non-cash items
Amortization of property,
plant and equipment and intangible
assets 173,219 303,062
Loss on disposal of property,
plant and equipment - 4,543
Stock-based compensation expense (recovery) (27,092) 36,423
Unrealized foreign exchange loss - 742
Minimum royalty accretion - 66,141
----------------------------
(1,652,275) (534,014)
Changes in non-cash working capital
balances related to operations
Accounts receivable 1,083,443 502,579
Inventory 68,385 649,975
Prepaid expenses 49,639 15,455
Accounts payable and accrued liabilities (167,730) 31,970
Deferred revenue (7,370) (1,676,770)
Cash held in trust 100,000 -
----------------------------
Cash used in operating activities (525,908) (1,010,805)
----------------------------
FINANCING ACTIVITIES
Debenture proceeds - 1,497,165
Repayment on term loan (97,410) (136,726)
Changes in long-term liability - 76,937
Common stock issued 575,197 -
----------------------------
Cash provided by financing activities 477,787 1,437,376
----------------------------
INVESTING ACTIVITIES
Additions to property, plant and equipment - (34,491)
Disposals of property, plant and equipment - 33,515
Additions to intangible assets - (19,866)
Minimum royalties paid - (150,000)
----------------------------
Cash used in investing activities - (170,842)
----------------------------
Net increase (decrease) in cash
during the period (48,121) 255,729
Cash, beginning of period 72,247 167,064
----------------------------
Cash, end of period 24,126 422,793
----------------------------
----------------------------
Supplemental cash flow information
Interest paid 15,410 28,853
----------------------------
----------------------------
For further information: Genesis Worldwide Inc., Catherine Smyth, Manager, Investor Relations, Tel: (905) 832-9286
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