WaterFurnace Renewable Energy, Inc. 2nd Quarter Results: Spring's Arrival Propels record Q2 Net Income and Gross Margin

(U.S. $)

FORT WAYNE, IN, Aug. 11, 2014   /CNW/ - WaterFurnace Renewable Energy, Inc. [WFI:TSX) the leading manufacturer of energy efficient heating and cooling solutions, today reported second quarter financial results. In the second quarter of 2014, sales revenue rose 29.7% over the second quarter of 2013 from $25.5 million to $33.1 million. Pent up demand from the severe winter, higher propane prices, new construction and benefits from national advertising helped fuel the sales increase in the second quarter.

As the severe winter of 2013 – 2014 finally subsided, the Company saw improved second quarter sales. Gross sales from the Direct to Dealer channel, the Company's most profitable area, rose 38.3% year over year and sharply contrasted a first quarter decline of 20.0% year over year.  Year to date Direct to Dealer gross sales increased 5.5% over prior year.  The Company's North American commercial gross sales increased 32.0% in the second quarter versus the same period last year.  Year to date, North American commercial gross sales have increased 23.9 % over the same period last year.  Overall, year to date total gross sales have increased 9.4% over last year.  It is believed the national advertising campaign that took place in the first quarter had a significant contribution to the sales increases achieved in Q2.

Gross profit as a percent of sales increased from 36.1% in Q2 2013 to 39.9% in Q2 2014 due to increased series 7 sales growth, a more favorable sales mix between Direct to Dealer and Commercial sales and continued cost containment.  A price increase implemented late in Q1 of 2014 also had a positive impact on gross profit.

Operating expenses in Q2 2014 were up 44.5% versus the same period in 2013 which included $1.5million in transaction expenses associated with the sale of the Company to NIBE Industrier AB. Without the added transaction expenses, operating expenses were in line with historical expense levels and expectations.

The Company achieved record net income, adjusted for transaction costs, and record gross margin dollars and percent to sales for the quarter.

"After the first quarter of this year I stated the Company was 'extremely optimistic.' I'm pleased that the second quarter results indicate our optimism was justified." said Tom Huntington, WaterFurnace President and CEO. "The entire organization did a superior job during a very busy quarter where non-operational activities could have led us to take our eye off the ball.  We remained focused and I'm very proud of the efforts of all our employees."

The Company's Chairman of the Board, Tim Shields, stated, "The efforts of the management team to focus on a number of diverse and important strategic tasks; while simultaneously delivering solid performance results in the second quarter was exceptional."

The Company has suspended future dividends pending the completion of the proposed transaction pursuant to the arrangement agreement (the "Arrangement Agreement") entered into with NIBE Industrier AB (publ) ("NIBE") which was announced on June 23, 2014.

The second quarter report to shareholders is available at www.waterfurnace.com and filed on SEDAR at www.sedar.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,
				2014	2013	2014	2013
------------------------------------------------------------				-----------	-----------	-----------	-----------
Sales				$ 33,122	$ 25,532	$ 59,841	$ 54,684
		Cost of sales		19,899	16,307	37,559	35,928
				-----------	-----------	-----------	-----------
Gross profit				13,223	9,225	22,282	18,756
		Operating expenses		7,956	5,507	14,144	10,991
		Research and development expenses		519	589	1,028	1,147
Income before interest and income				-----------	-----------	-----------	-----------
		taxes		4,748	3,129	7,110	6,618
		Share of (loss) income from
			Joint venture	(94)	57	(241)	(19)
		Finance income (expense)		75	(47)	305	(120)
				-----------	-----------	-----------	-----------
Income before income taxes				4,729	3,139	7,174	6,479
		Income tax expense		1,721	961	2,641	1,968
				-----------	-----------	-----------	-----------
Net income				3,008	2,178	4,533	4,511
				-----------	-----------	-----------	-----------
		Unrealized gain (loss) on translation of
			foreign operations (net of tax)	21	(25)	(35)	(43)
				-----------	-----------	-----------	-----------
Other comprehensive income (loss)				21	(25)	(35)	(43)
				-----------	-----------	------------	-----------
Total comprehensive income				$   3,029	$   2,153	$   4,498	$   4,468
Earnings per share U.S.$
		on net income		$     0.24	$     0.18	$     0.36	$     0.37
				========	========	========	========

 

WaterFurnace Renewable Energy, Inc. Consolidated Statements of Financial Position Prepared using International Financial Reporting Standards (Audited—Thousands of U.S. $)
			June 30,	December 31,
-------------------------------------------------------------------------------------			2014	2013
Assets
Current assets
	Cash and cash equivalents		$ 11,975	$   17,451
	Short-term investments		10,260	10,250
	Receivables		18,126	17,112
	Inventory		10,778	9,541
	Prepaids and deposits		693	575
Total current assets			51,832	54,929
Property, plant and equipment			6,248	6,317
Intangible assets			4,382	1,325
Goodwill			244	--
Long-term investments			433	433
Investment in joint venture			2,803	3,049
Deferred compensation			1,511	--
Deferred tax assets			13,681	11,890
			--------------	--------------
Total Assets			$ 81,134	$ 77,943
			========	========
Liabilities
Current liabilities
	Payables and accruals		$   9,012	$   8,266
	Income taxes payable		1,406	671
	Provision for warranty claims – current portion		4,827	4,534
			--------------	--------------
Total current liabilities			15,245	13,471
Deferred compensation			--	472
Contingent liability			1,910	--
Provision for warranty claims			22,854	21,456
			--------------	--------------
Total Liabilities			40,009	35,399
			--------------	--------------
Shareholders' Equity
	Share capital		20,235	19,763
	Foreign exchange translation		(105)	(70)
	Retained earnings		20,995	22,851
			--------------	--------------
Total Shareholders' Equity			41,125	42,544
			--------------	--------------
Total Liabilities and
	Shareholders' Equity		$ 81,134	$ 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]