Dynetek reports 2006 fourth quarter and year end results



    CALGARY, March 22 /CNW/ - Dynetek Industries Ltd. (TSX:DNK), a leader in
the design, manufacturing and marketing of proprietary fuel storage cylinders
and systems for compressed natural gas (CNG) and hydrogen, today reported
results for the three months and the twelve months ended December 31, 2006.

    Financial Highlights
    
    -  Revenues from cylinder and systems sales for the twelve months ended
       December 31, 2006 of $35.9 million increased $12.4 million or 53%
       compared with the twelve months ended December 31, 2005.
    -  Revenues from cylinder and system sales for the three months ended
       December 31, 2006 of $11.3 million increased $5.4 million or 92%
       compared with the same period of 2005.
    -  Confirmed order book in excess of $29.0 million as at
       December 31, 2006 to be delivered in 2007.
    -  Twelfth consecutive quarter of positive EBITDA(1).
    -  Cash flow from operations for the year ended December 31, 2006 was
       $1.1 million.
    

    Christian Rasche, President and Chief Executive Officer, noted that the
increase in fourth quarter revenues reflects shipments which were deferred
from the second and third quarters due to delivery delays in raw materials. As
noted in Dynetek's second quarter 2006 report, heavy rains and flooding shut
down the manufacturing plant of a key raw material supplier and prevented it
from delivering for a period of time. Although Dynetek has worked closely with
the supplier to overcome past delivery issues, many shipments by Dynetek of
cylinders and systems were delayed from the second and third quarters into the
fourth quarter. Normally Dynetek ships its products by sea at low cost. In
order to maintain market leadership and customer needs, Dynetek incurred
unexpected airfreight costs of approximately $1.3 million and additional
labour and overtime costs of approximately $0.2 million in order to fill our
European orders by year end. Dynetek continued to airfreight its products
overseas until mid February 2007, at which time it resumed shipping by sea at
lower cost.
    "2006 was a tremendous year for cylinders and system sales for Dynetek,"
commented Mr. Rasche. "In Europe we experienced a 54% increase in our CNG
cylinder and system sales from one year ago. Our Canadian operation also saw a
53% increase in cylinder and system sales."
    "We were frustrated in 2006 with our raw material supply and the
difficulties it caused in our ability to deliver to our customers," said Mr.
Rasche. "Without the additional airfreight expense and labour costs, Dynetek
would have been profitable."

    
    (1)  Earnings before interest, taxes, non-cash foreign exchange,
         impairment of other assets, stock based compensation, depreciation
         and amortization (EBITDA) is a non-GAAP measure and may not be
         comparable to similar measures used by other companies. Management
         believes EBITDA is a useful measure to assist in the assessment of
         Dynetek's ability to generate cash flows from its operations.


    Year in Review

    -  Total revenue for the twelve months ended December 31, 2006 of
       $38.4 million compared to $26.7 million for the same period of 2005.

    -  Total revenues for the three months ended December 31, 2006 of
       $12.1 million, which is $5.3 million or 78% increase compared to the
       same period of 2005.

    -  Cylinder and system sales for the European operations for the
       twelve months ended December 31, 2006 were $22.8 million representing
       an increase of $8.0 million or 54% compared to 2005.

    -  Cylinder and system sales for the Canadian operations for the twelve
       months ended December 31, 2006 were $13.1 million representing an
       increase of $4.4 million or 51% compared to 2005.

    -  Contribution margins decreased from 23% in fourth quarter of 2005 to
       16% in the comparative fourth quarter for 2006, and from 25% for the
       year ended December 31, 2005 to 21% for the year ended December 31,
       2006, primarily due to abnormal airfreight costs as noted above.

    -  Cash flow from operations for the fourth quarter ended December 31,
       2006 was $1.8 million compared to $1.3 million for the same period of
       2005.

    -  Dynetek's Canadian operation delivered 27 bulk transportation modules,
       representing revenue of $4.6 million, to John Thompson Engineering
       PTY, a division of Burns and Roe Worley, located in Sydney, Australia.
       Dynetek's BT modules are being used to transport compressed
       natural gas (CNG) to a power plant located in Western Australia.

    -  Signed a letter of intent with Delphi Automotive Systems Do Brazil
       LTDA. ("Delphi SA"). Delphi SA is a wholly owned subsidiary of Delphi
       Corp., of Troy, Michigan. The letter of intent records the intention
       of Dynetek and Delphi SA to negotiate a commercial agreement to
       establish an exclusive distributorship arrangement and the prospect
       for a manufacturing plant in Brazil for the production of DyneCell
       cylinders for CNG in transit bus and automotive applications into the
       South American market.

    -  Signed a sub-project agreement with ATF Advanced Technologies & Fuels
       Canada Inc. (ATFCAN), to supply six CNG fuel storage systems,
       including related engineering and on the ground support, to Tata
       Motors Limited of India.

    -  Supplied the on-board hydrogen fuel storage systems to Ford Motor
       Company for the first three hydrogen powered vehicles delivered
       December 7th to Parliament Hill in a unique pilot project to test the
       vehicles in real-life conditions. Dynetek is providing its certified
       350bar (5000psi) storage solution for these hydrogen fueled internal
       combustion engines.

    -  Moved the Dynetek Europe operation to a larger facility and along with
       additional production equipment increased manufacturing capabilities.
    

    In early 2007 Dynetek announced that it had accepted a purchase order
representing approximately $7 million (CAD) in sales with Magna Steyr, an
operating unit of Magna International Inc. The purchase order involves the
development, certification and supply of 700bar compressed hydrogen fuel
storage systems, including related engineering, to Magna Steyr in connection
with DaimlerChrysler's fuel cell program. Dynetek will commence delivery of
storage systems for system and vehicle testing in the later part of 2007.

    Additional information relating to Dynetek

    Additional information concerning Dynetek is available on SEDAR at
www.sedar.com.
    Dynetek Industries Ltd. is a leading international company engaged in the
design, manufacturing and marketing of fueling systems and high-pressure
components including valves and regulators. The key component of the storage
system is the DyneCell (R) cylinder, capable of storing high pressure gases
including compressed natural gas (CNG), hydrogen, and various industrial
gases. Dynetek's cylinder and fuel storage systems applications include but
are not limited to: the transportation industry, including passenger
automobiles, light and heavy-duty trucks, transit and school buses; the bulk
hauling of compressed gases; and stationary storage or ground storage
refueling applications.

    Forward looking statements

    In addition to historical information, this news release contains
forward-looking statements and should be read in conjunction with the
financial statements and related notes for the year ended December 31, 2006.
Forward-looking statements are based upon current assumptions, expectations
and estimates that involve a number of risks and uncertainties and actual
results could differ materially from those discussed in the forward-looking
statements. Readers are encouraged to review the section in the Management's
Discussion and Analysis titled 'Principal Risks and Uncertainties' for a
discussion of factors that could affect Dynetek's future operations and
financial results. Forward-looking statements are based upon management's
assumptions, expectations and estimates at the time the statements are made.
Dynetek does not update forward-looking statements should circumstances or
management's assumptions, expectations or estimates change, except where
required by law.


    
    Dynetek Industries Ltd.

    Consolidated Balance Sheets
    (thousands of Canadian dollars)
    (unaudited)

                                                        December    December
                                                              31          31
                                                            2006        2005
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    ASSETS
    Current assets
      Cash and cash equivalents                            2,030       2,809
      Accounts receivable                                  8,246       6,516
      Inventory                                           11,859      10,392
      Prepaid expenses                                       696         719
    -------------------------------------------------------------------------
                                                          22,831      20,436

    Intangible assets and deferred costs                   5,917       5,054

    Capital assets                                        17,263      16,216

    Future income tax                                      2,355       2,505
    -------------------------------------------------------------------------

                                                          48,366      44,211
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES
    Current liabilities
      Accounts payable and accrued liabilities             7,891       5,145
      Operating bank line                                  2,650           -
      Current portion of long-term debt                      185         137
    -------------------------------------------------------------------------
                                                          10,726       5,282

    Long-term debt                                         1,293       1,341

    SHAREHOLDERS' EQUITY
      Share capital                                       52,433      52,432
      Contributed surplus                                  2,391       2,182
      Deficit                                            (18,477)    (17,026)
    -------------------------------------------------------------------------
                                                         (36,437)     37,588

                                                          48,366      44,211
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
    (thousands of Canadian dollars except share capital and per share
     amounts)
    (unaudited)

                                  Three months ended              Year ended
                                         December 31             December 31
                                    2006        2005        2006        2005
    -------------------------------------------------------------------------

    REVENUE
      Sales                       11,334       5,858      35,932      23,521
      Research and
       development                   771         603       2,409       2,841
      Investment and other
       income                         14         317          84         397
    -------------------------------------------------------------------------
                                  12,119       6,778      38,425      26,759
    EXPENSES
      Cost of goods sold           9,513       4,538      28,454      17,648
      General and
       administrative              1,293       1,002       4,045       3,464
      Research and product
       development                   650         461       2,210       2,773
      Marketing                      509         546       1,859       1,703
      Interest                        62           -          84           -
      Depreciation                   698         328       1,757       1,223
      Amortization of
       intangible assets and
       deferred costs                320         139         811         476
      Foreign exchange loss           75         258         297         983
      Stock based compensation        56         105         209         399
      Impairment of other
       assets                          -           -           -         535
    -------------------------------------------------------------------------
                                  13,176       7,377      39,726      29,204
    -------------------------------------------------------------------------
    Loss before income taxes      (1,057)       (599)     (1,301)     (2,445)
    -------------------------------------------------------------------------

    PROVISION FOR TAXES
      Future income taxes            150           -         150           -
    -------------------------------------------------------------------------
                                     150           -         150           -
    -------------------------------------------------------------------------

    NET LOSS                      (1,207)       (599)     (1,451)     (2,445)
    -------------------------------------------------------------------------

    Deficit, beginning of
     period                      (17,270)    (16,427)    (17,026)    (14,581)
    -------------------------------------------------------------------------
    DEFICIT, END OF PERIOD       (18,477)    (17,026)    (18,477)    (17,026)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Per Share Information
    Net loss per share (basic
     and diluted)                  (0.06)      (0.03)      (0.07)      (0.12)
    Weighted average number
     of common shares
     outstanding              20,940,295  20,793,601  20,940,295  20,793,601
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENT OF CASH FLOWS
    (thousands of Canadian dollars)
    (unaudited)

                                  Three months ended              Year ended
                                         December 31             December 31
                                    2006        2005        2006        2005
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Cash flows provided by
     (used for) operating
     activities
    NET LOSS                      (1,207)       (599)     (1,451)     (2,445)
    Items not involving cash
      Depreciation                   698         328       1,757       1,223
      Amortization of
       intangible assets and
       deferred costs                320         139         811         476
      Stock based compensation        56         105         209         399
      Impairment of other
       assets                          -           -           -         535
      Future income tax              150           -         150           -
      Unrealized foreign
       exchange loss                (282)         43        (280)        597
    -------------------------------------------------------------------------
                                    (265)         17       1,196         785
    Changes in non-cash
     working capital
      Accounts receivable           (876)        644      (1,730)      1,894
      Inventory                    1,150        (209)     (1,467)       (901)
      Prepaid and other             (362)       (382)         23        (104)
      Accounts payable and
       accrued liabilities         1,934       1,307       2,746         758
      Unrealized foreign
       exchange (loss) in
       non-cash working
       capital                       173         (36)        200        (392)
    -------------------------------------------------------------------------
    Cash flow from operations
     (deficiency)                  1,754       1,340         968       2,040
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
      Additions to intangible
       assets and deferred
       costs                        (649)       (426)     (1,674)     (1,328)
      Additions to capital
       assets                       (861)       (355)     (2,804)     (1,588)
      Unrealized foreign
       exchange gain (loss) in
       investing activities            -           -           -          19
    -------------------------------------------------------------------------
                                  (1,510)       (781)     (4,478)     (2,897)
    -------------------------------------------------------------------------
    FINANCING ACTIVITIES
      Exercise of options              -           -           1          30
      Settlement of long-term
       debt                            -        (298)          -        (298)
      Operating bank line            475           -       2,650           -
    -------------------------------------------------------------------------
                                     475        (298)      2,651        (268)
    -------------------------------------------------------------------------

    Foreign exchange gain
     (loss) on cash held in a
     foreign currency                109          (7)         80        (205)
    -------------------------------------------------------------------------
    Increase (decrease) in
     cash and cash
     equivalents                     828         254        (779)     (1,330)

    Cash and cash equivalents,
     beginning of period           1,202       2,555       2,809       4,139
    -------------------------------------------------------------------------

    Cash and cash equivalents,
     end of period                 2,030       2,809       2,030       2,809
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Corporate Information

    Board of Directors       Officers and Management  Bankers

                                                      Bank of Nova Scotia
    Heinz O. Portmann        Heinz O. Portmann        Calgary, Alberta
    Chairman of the Board    Chairman of the Board
    Dynetek Industries Ltd.                           Auditors
    Calgary, Alberta         Dr. Christian Rasche     Deloitte & Touche LLP
                             President and Chief      Calgary, Canada
                             Executive Officer

    Andrew T.B. Stuart (i)   Michael D. Portmann
    President and Chief      Vice President and
    Executive Officer        General Manager          Legal Counsel
    Sustainability Shift                              Gowling Lafleur
    Inc                      Ulrich Imhof             Henderson LLP
    Toronto, Ontario         Vice President,          Calgary, Alberta
                             Engineering
    Peter A. Leus(i)(v)                               Transfer Agent and
    Director                 Karen Y. Minton          Registrar
    Starlaw Holdings Ltd.    Vice President,          CIBC Mellon Trust
    Montreal, Quebec         Finance and CFO          Company
                                                      with offices in
    Michael J. Lang(*)(i)    Norman E. Hall           Toronto, Montreal and
    Chairman                 Corporate Secretary      Calgary
    Stonebridge Merchant
    Capital Corp.                                     Stock Listing
    Calgary, Alberta                                  Toronto Stock Exchange
                                                      Trading Symbol: DNK
    Larry A. Wright(*)(v)
    Executive Vice                                    Investor Relations
    President                                         To obtain additional
    Multimatic Inc                                    information about
    Markham, Ontario                                  Dynetek or to be placed
                                                      on our mailing list
    William K. Kovalchuk(*)  Corporate Head Office    for quarterly reports
    President                4410 - 46th Avenue SE    please contact:
    Claret Asset             Calgary, Alberta,        Christian Rasche
    Management Corp.         Canada                   Dynetek Industries Ltd.
    Montreal, Quebec         T2B 3N7                  Investor Relations
                             Tel (403) 720 0262       4410 - 46th Avenue SE
    Robb D. Thompson         Fax (403) 720 0263       Calgary, Alberta,
    Vice President           Web site:                Canada
    Finance and CFO          http://www.dynetek.com   T2B 3N7
    Berkana Energy Corp.                              Tel (403) 720 0262
    Calgary, Alberta         Subsidiary               Fax (403) 720 0263
                             Dynetek Europe GmbH      Email:
    Dr. Christian Rasche     Breitscheider Weg 117a   invest@dynetek.com
    President and Chief      D-40885 Ratingen
    Executive Officer        Germany
    Dynetek Industries Ltd.
    Witten, Germany


    (*)  Audit Committee member
    (i)  Compensation Committee member
    (v)  Corporate Governance Committee member
    
    %SEDAR: 00014127E




For further information:

For further information: Christian Rasche, President and Chief Executive
Officer, Dynetek Industries Ltd., 4410-46 Avenue S.E., Calgary, Alberta, T2B
3N7, Tel: (403) 720-0262, Toll-free: 1-888-396-3835, Fax: (403) 720-0263, Web:
www.dynetek.com

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Dynetek Industries Ltd.

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