WaterFurnace Renewable Energy, Inc. 3rd Quarter Results: Raises Dividends on Increased Profits

(U.S.$)

FORT WAYNE, IN, Nov. 8, 2011 /CNW/ - WaterFurnace Renewable Energy, Inc. [WFI:TSX] today released the Company's third quarter 2011 results. In the third quarter of 2011, total comprehensive income increased by 6.0% over the third quarter of 2010. This follows a 6.1% year over year increase in comprehensive income for the second quarter of 2011. Sales for the quarter were down 4.3% from the same period in 2010. Direct to dealer residential sales were up slightly for the quarter versus last year. While Canadian sales remain below last year, the Company saw its Canadian sales improve in the third quarter versus the first six months of 2011. The Company's year to date sales revenue is 0.7% above last year's nine months ended September 30, 2010.

Today the Board of Directors approved a quarterly dividend of $0.24 U.S. per share for shareholders of record on November 22, 2011, with payment on December 1, 2011, a 9% increase in the current dividend.

Commercial sales growth remained strong for the quarter while international sales, other than Canadian, almost tripled albeit on a small but increasing base of business. The Company expects Commercial sales to continue to help drive market share growth as it enters 2012.

The Company continued development of its sales channels and new markets. Operating expenses rose 10.6% in the third quarter of 2011 over the third quarter of 2010. Continued investment in sales channel development, new product development and marketing programs drove the increase in year over year expense. The Company continues to expand both its geographic footprint and its market share.

Federal tax credits of 30% of the installed cost of a residential Energy Star rated geothermal system along with state incentives and utility rebates continued to help support residential sales. The broader HVAC market is constrained by the slow economic recovery, unemployment and tight credit markets. The current historically low housing starts have tended to offset sales gains associated with the tax credits.

The Company met its expectations for inventory turns, accounts receivable collections, day's sales outstanding and accounts payable for the period.

Tom Huntington, President and CEO, said, "Channel expansion and new marketing programs played a critical role in our performance. We do, however, remain concerned about the elusive U.S. residential new construction market recovery. We are excited about better than forecasted Canadian sales and the growth in our international commercial channel."

Tim Shields, Chairman of the Board, added, "We believe that management has a firm grasp on the general economic climate and its effects on our industry. As such, the Company's third quarter results show the Company's ability to outperform the industry in poor economic times. The Board recently reviewed the Company's five year strategic plan and while we face significant uncertainty, we are seeing the fruits of our strategic efforts paying off in the short-term."

The third quarter report to shareholders is available at www.waterfurnace.com and filed on SEDAR at www.sedar.com. Management will conduct a webcast covering the results of the quarter at 11:00 AM Eastern Standard Time on Thursday, November 10, 2011. Interested parties can listen live or to the recorded version at http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3713380 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 September 30,    Nine months ended September 30,
  2011   2010   2011    2010
               
Sales $ 35,957   $ 37,581   $ 98,449    $ 97,759
  Cost of sales 22,406   24,671   65,980   66,565
               
Gross profit 13,551   12,910   32,469    31,194
  Operating expenses 5,789   5,236   17,537    16,440
  Research and development expenses 514   789   1,499   1,979
               
Income before interest and income taxes 7,248   6,885   13,433    12,775
  Finance income 50   33   109    54
  Finance expense (3)   (19)   (13)   (47)
               
Income before income taxes 7,295   6,899   13,529    12,782
  Income tax expense 2,665   2,530   5,021    4,672
               
Net income and total comprehensive income $ 4,630   $   4,369   $   8,508    $  8,110
               
Earnings per share U.S.$ $   0.38   $    0.36    $    0.70    $    0.67

WaterFurnace Renewable Energy, Inc.
Consolidated Statements of Financial Position
Prepared using International Financial Reporting Standards
(Unaudited—Thousands of U.S.$)

  September 30,    December 31,    January 1,
  2011    2010    2010
           
Assets          
Current assets          
  Cash and cash equivalents  $ 10,264   $   7,222   $   4,785
  Short-term investments  10,156   10,078   13,368
  Receivables  18,815   21,255   16,794
  Inventory  10,036   8,570   5,653
  Prepaids and deposits  462   492   369
Total current assets  49,733   47,617   40,969
           
Property, plant and equipment  7,061   7,309    6,962
Deferred tax assets  7,290   6,212    4,852
Intangible assets  1,739   --   --
Total Assets  $ 65,823   $ 61,138   $ 52,783
           
Liabilities          
Current liabilities              
  Payables and accruals $   7,606    $   8,061   $   7,398
  Income taxes payable  435   1,124   880
  Provision for warranty claims - current portion  3,173   2,724   2,215
Total current liabilities  11,214   11,909   10,493
           
Finance leases  84   111   146
Deferred compensation  493   540   264
Provision for warranty claims  14,631   11,760   8,280
Total Liabilities  26,422   24,320   19,183
           
Shareholders' Equity          
  Share capital  17,505   14,948   14,865
  Foreign exchange translation adjustment  (9)   --    --
  Retained earnings  21,905   21,870   18,735
           
Total Shareholders' Equity  39,401   36,818   33,600
           
Total Liabilities and Shareholders' Equity  $65,823   $ 61,138    $ 52,783

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 (260) 478-5667 and ask for investor relations.

 

SOURCE WaterFurnace Renewable Energy, Inc.

For further information:

WaterFurnace Renewable Energy, Inc.
9000 Conservation Way
Fort Wayne, Indiana  46809-9794
(260) 478-5667

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WaterFurnace Renewable Energy, Inc.

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