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. |
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Three months ended June 30, |
Six months ended June 30, |
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2014 |
2013 |
2014 |
2013 |
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------------------------------------------------------------ |
----------- |
----------- |
----------- |
----------- |
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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 |
----------- |
----------- |
----------- |
----------- |
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taxes |
4,748 |
3,129 |
7,110 |
6,618 |
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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 |
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----------- |
----------- |
----------- |
----------- |
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Unrealized gain (loss) on translation of |
|||||||||
foreign operations (net of tax) |
21 |
(25) |
(35) |
(43) |
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----------- |
----------- |
----------- |
----------- |
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Other comprehensive income (loss) |
21 |
(25) |
(35) |
(43) |
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----------- |
----------- |
------------ |
----------- |
||||||
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 |
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WaterFurnace Renewable Energy, Inc. |
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June 30, |
December 31, |
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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 |
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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 |
||||
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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.
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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. WaterFurnace Renewable Energy, Inc.; 9000 Conservation Way, Fort Wayne, Indiana, 46809-9794, (260) 478-5667
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