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

(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 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,
			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		$    0.32

WaterFurnace Renewable Energy, Inc.
Consolidated Statements of Financial Position
Prepared using International Financial Reporting Standards
(Unaudited—Thousands of U.S.$)
			June 30,		December 31,
			2012		2011
Assets
Current 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		1,264
Total current assets			49,478		52,405
Property, plant and equipment			6,858		6,762
Deferred tax assets			9,091		7,686
Intangible assets			1,616		1,713
Long-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		3,274
Total current liabilities			9,682		10,967
Finance leases			57		76
Deferred compensation			424		749
Provision 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		$ 68,566

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 [phone] and ask for investor relations. 

SOURCE: WaterFurnace Renewable Energy, Inc.

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