WaterFurnace Renewable Energy, Inc. 1st Quarter Results: Deep snows and subzero temperature affect residential loop installations; Commercial shipments dramatically increase

(U.S. $)

FORT WAYNE, IN, May 7, 2014 /CNW/ - Water Furnace Renewable Energy, Inc. [WFI:TSX) the leading manufacturer of energy efficient heating and cooling solutions, today reported first quarter financial results. In the first quarter of 2014, sales revenue declined 8.3% over the record-setting first quarter of 2013 from $29.2 million to $26.7 million.

Deep snows and subzero temperatures halted residential loop installations as well as muted the completion of new homes in the first quarter, with recovery expected throughout the remainder of 2014. Commercial geothermal heat pump industry shipments fared much better during these harsh weather conditions due to industrial sized equipment capable of drilling through frozen ground conditions.  This resulted in a Q1 improvement of 8%, with WaterFurnace unit shipments increasing 40%. The water source industry (boiler/tower) systems, which do not require a ground loop, enjoyed a shipment increase of 7% with WaterFurnace unit shipments in this product category increasing 59% on a year over year basis.

Gross profit as a percent of sales increased from 32.7% in Q1 2013 to 33.9% in Q1 2014 primarily due to the productivity improvements completed in 2013.

Propane prices spiked dramatically, providing an opportunity for the Company to launch the most aggressive advertising campaign in Company history. This campaign quadrupled lead generation and doubled website traffic. Additionally, the campaign created a spike in online searches for WaterFurnace and even the term "geothermal heat pump", which bodes well for the remainder of the year. Operating expenses in Q1 2014 were up 12.8% versus the same period in 2013 which was mostly attributed to a $600 thousand national advertising campaign launched during the quarter.

"With the unusual cold and persistent snow of the first quarter behind us, we can now look forward to the rest of the year. We're extremely optimistic," said Tom Huntington, WaterFurnace President and CEO. "New housing starts are occurring, and residential loops are now being installed at a typical pace. Our dealers are very upbeat about this selling season, and we're all looking forward to a more traditional progression for the year."

The Company's Chairman of the Board, Tim Shields, stated, "The first quarter saw a pause in residential installations until the return of good weather. We're looking forward to the rest of 2014 and are confident we'll see significant growth."

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 quarter at 4:00 PM Eastern Standard Time on Thursday, May 8, 2014. Those interested can listen live or to the recorded version at http://www.newswire.ca/en/webcast/detail/1335797/1476491 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)
		Three months ended March 31,
		2014	2013
----------------------------------------------------------------------------------------------		--------------	--------------
Sales		$26,719	$29,152
	Cost of sales	17,660	19,621
		--------------	--------------
Gross profit		9,059	9,531
	Operating expenses	6,188	5,484
	Research and development expenses	509	558
		--------------	--------------
Income before interest and income taxes		2,362	3,489
	Share of loss from joint venture	(147)	(76)
	Finance income (expense)	230	(73)
		--------------	--------------
Income before income taxes		2,445	3,340
	Income tax expense	920	1,007
		--------------	--------------
Net income		1,525	2,333
		--------------	--------------
	Unrealized loss on translation of foreign operations (net of tax)	(56)	(18)
		--------------	--------------
Other comprehensive loss		(56)	(18)
		--------------	--------------
Total comprehensive income		$1,469	$2,315
		========	========
Earnings per share U.S.$ on net income		$0.12	$0.19
		--------------	--------------

 

WaterFurnace Renewable Energy, Inc. Consolidated Statements of Financial Position Prepared using International Financial Reporting Standards (Audited—Thousands of U.S. $)
			March 31,	December 31,
			2014	2013
----------------------------------------------------------------			--------------	--------------
Assets
Current assets
	Cash and cash equivalents		$15,484	$17,451
	Short-term investments		10,255	10,250
	Receivables		16,284	17,112
	Inventory		10,852	9,541
	Prepaids and deposits		778	575
			--------------	--------------
Total current assets			53,653	54,929
Property, plant and equipment			6,209	6,317
Intangible assets			1,278	1,325
Long-term investments			433	433
Investment in joint venture			2,902	3,049
Deferred tax assets			11,978	11,890
			--------------	--------------
Total Assets			$76,453	$77,943
			========	========
Liabilities
Current liabilities
	Payables and accruals		$7,431	$8,266
	Income taxes payable		620	671
	Provision for warranty claims - current portion		4,627	4,534
			--------------	--------------
Total current liabilities			12,678	13,471
Deferred compensation			216	472
Provision for warranty claims			22,209	21,456
			--------------	--------------
Total Liabilities			35,103	35,399
			--------------	--------------
Shareholders' Equity
	Share capital		20,235	19,763
	Foreign exchange translation adjustment		(126)	(70)
	Retained earnings		21,241	22,851
			--------------	--------------
Total Shareholders' Equity			41,350	42,544
			--------------	--------------
Total Liabilities and
	Shareholders' Equity		$76,453	$77,943
			========	========

 

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.

 

 

SOURCE: WaterFurnace Renewable Energy, Inc.

Additional information about the Company and its products is available on the Company's website: www.waterfurnace.com. Or call [phone] and ask for investor relations.

WaterFurnace Renewable Energy, Inc.
9000 Conservation Way
Fort Wayne, Indiana  46809-9794
[phone]