Dynetek Reports Fourth Consecutive Quarter of Positive EBITDA



    CALGARY, Aug. 13 /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 and hydrogen, today reported results
for the three and six months ended June 30, 2009. The full unaudited
consolidated financial statements and MD&A have been filed on SEDAR at
www.sedar.com and on Dynetek's website at www.dynetek.com.

    
    Financial Highlights
    (tabular amounts in thousands of Canadian dollars,
    except share capital and per share data)
    (unaudited)

                                        Three months              Six months
                                               ended                   ended
                                             June 30                 June 30
                                    2009        2008        2009        2008
                             ------------------------------------------------
    Total revenue                  9,183       5,015      16,039       9,464
    Net loss                        (214)     (1,480)     (1,123)     (2,540)
    Net loss per common share
     (basic and fully diluted)     (0.01)      (0.07)      (0.05)      (0.12)
    EBITDA(1)                        407        (795)        408      (1,494)
    Cash                             745       3,746         745       3,746
    Non-cash working capital(1)   14,199      11,146      14,199      11,146
    Working capital(1)            15,352      15,300      15,352      15,300
    Total assets                  41,656      41,417      41,656      41,417
    Long-term debt and capital
     lease                         6,812       7,259       6,812       7,259
    Capital expenditures             (25)         70          31         148
    Cash flow deficiency from
     operations                     (626)     (1,713)     (3,447)     (2,365)
    Weighted average common
     shares outstanding       20,936,500  20,936,500  20,936,500  20,936,500
    -------------------------------------------------------------------------
    (1) EBITDA, non-cash working capital and working capital are non-GAAP
        financial measures. Dynetek defines EBITDA as earnings before
        interest, taxes, stock based compensation, foreign exchange gain or
        loss, depreciation and amortization. Dynetek defines non-cash working
        capital as current assets less cash restricted cash and current
        liabilities and working capital as current assets less current
        liabilities. Dynetek believes these non-GAAP financial measures
        provide investors and analysts with useful information so that they
        can better understand the financial results and perform a better
        analysis of Dynetek's growth and profitability potential.
    

    OPERATIONAL HIGHLIGHTS

    Dynetek reports positive EBITDA for the fourth consecutive quarter and
working capital in excess of $15.0 million for the sixth consecutive quarter.
Since the third quarter of 2008, Dynetek has generated EBITDA of $1.3 million
over the last four quarters. The Company's EBITDA for the six months ended
June 30, 2009, was $0.4 million compared to negative EBITDA of ($1.5) million
for the first six months of 2008. For the three months ended June 30 2009,
Dynetek generated EBITDA of $0.4 million that was $1.2 million higher than the
same three months of 2008. The increases in 2009 EBITDA were primarily
achieved from Dynetek's European operations, improvements in production which
resulted in increased productivity and continuation of cost saving strategies
implemented during the second quarter of 2008.
    In the first six months of 2009, cylinder and system revenue from the
European operations increased 174% compared to the same period of 2008. The
period over period increase, from $4.4 million in the first half of 2008 to
$12.2 million in 2009, was attributed to stronger sales activities with
European bus manufacturers. The increase in sales occurred despite
recessionary factors present during the period. During the second quarter of
2009, the European operations produced cylinder and system revenue of $7.3
million compared to $2.1 million for the same quarter of 2008 and North
American cylinder and system revenue was $1.0 million compared to $1.5 million
for the same quarter of 2008. Cylinder and system revenue from North American
operations decreased from $2.3 million for the first six months of 2008 to
$1.9 million for the same period of 2009. North American sales in 2009 have
been impacted by additional customer requests to defer sales orders to the
third quarter of 2009 and increased price competition. Dynetek's consolidated
cylinder and system revenue was $14.1 million for the first six months of 2009
compared to $6.8 million for the same six months of 2008, an increase of 108%.
    For the six months ended June 30, 2009, the Company recognized research
and development revenue of $1.9 million, compared to $2.6 million for the same
period of 2008. The decrease reflects that Dynetek will complete the final
milestone of its major hydrogen fuel storage system contract by September 30,
2009. Dynetek continues to source new research and development projects with
various Original Equipment Manufacturers but such projects have been smaller
scale compared to its current major hydrogen system contract.
    The increases in revenue and EBITDA for the first six months of 2009,
resulted in Dynetek recording a smaller year-to-date loss in 2009, (net loss
of $1.1 million or net loss of $0.05 per common share), compared to the same
period of 2008 (net loss of $2.5 million or net loss of $0.12 per common
share). During the second quarter of 2009, Dynetek recorded a net loss of
($0.2) million (net loss of $0.01 per common share) compared to a net loss of
($1.5) million (net loss of $0.07 per common share) for the second quarter of
2008.
    The Company continues to maintain consistent levels of liquidity. At June
30, 2009 working capital was $15.3 million, compared to $15.8 million at
December 31, 2008. The Company's quarterly working capital has been in excess
of $15.0 million since the start of 2008. Maintaining consistent levels of
working capital will allow Dynetek to maintain production levels and increase
its ability to fund projects related to sales and research and development.

    OUTLOOK

    The Company remains committed to growing its compressed natural gas
("CNG") and hydrogen revenue streams through targeted marketing initiatives.
The Company will have a stronger short-term focus on its CNG activities due to
a slowdown in hydrogen market activities. However, Dynetek believes that the
market for compressed hydrogen enabling technologies will continue to develop
over the next few years in conjunction with nearer term hydrogen industry
energy applications. Dynetek's non-permeable cylinders makes it a leading
storage solution for hydrogen vehicles and Dynetek believes it will be able to
enhance its market leader position in hydrogen storage systems when
opportunities arise.
    Major economic and environmental factors worldwide are contributing to
high-growth demand for natural gas vehicles ("NGVs") as follows:

    
    -   There is belief that natural gas is the only fuel that can
        significantly displace the reliance on foreign oil in the United
        States.
    -   Worldwide adoption of NGVs continues to be strong.
    -   Currently, compressed natural gas is up to 60% cheaper than diesel.
    -   A growing natural gas infrastructure. Continuing investment in
        infrastructure is adding to the number of compressed natural gas
        refueling centers.
    

    In 2009, the Company expects to increase its focus on revenue growth
opportunities in the CNG market for bus and heavy-duty truck applications and
for bulk hauling of larger quantities of compressed gas. The Company will
continue to market and deliver its Mobile Gas Distribution System, a
lightweight tube trailer designed for the gas utility industry. Currently, the
Company continues to develop and test new products for the CNG market
including its own 20 foot container for gas transportation purposes and a CNG
Type II cylinder.
    Dynetek is exploring new opportunities in Asia and Europe and recently
received approvals from several Asian countries to supply cylinders and
cylinder systems. In addition, Dynetek's European operations continue to see a
recovery within the European market, particularly the European bus market.
Dynetek will narrow its focus of its marketing activities to geographical
areas that currently generate revenues for the Company or has potential to
contribute significant revenue through CNG growth.
    The above trends and related market opportunities are expected to create
a positive intermediate and longer-term outlook for Dynetek. The Company does
anticipate new legislation to improve and maintain the North American
environment, which could lead to increased sales of its CNG systems.
    Dynetek expects to record positive EBITDA in the third quarter of 2009
due to increases in demand for its products and deferral of North American
orders into this quarter. The Company has forecasted operating results for the
third quarter of 2009 to be similar to those of the second quarter. With the
re-structuring of the North American sales management, Dynetek has implemented
a new strategy for North America, allowing the Company to be more competitive.
These changes were required as Dynetek believes there will be continued growth
in the NGV segment and the Company will pursue such markets.
    In response to the recessionary conditions experienced in North American
and Europe, the Company continues to manage its costs responsibly and improve
production efficiencies where possible. During the second quarter of 2009, the
Company reduced production and administrative staff to core levels and
continues to review supplier alternatives.

    ABOUT DYNETEK

    Dynetek Industries Ltd. designs, produces and markets one of the lightest
and most advanced fuel storage and refueling systems for compressed natural
gas, low emission vehicles and compressed hydrogen, zero-emission fuel cell
vehicles. Dynetek is recognized around the world for its solutions-of-choice
to the alternate fuel vehicle sector, evidenced by strategic relationships
with major manufacturers around the globe. Dynetek is listed on the Toronto
Stock Exchange, symbol: DNK

    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, 2008
and quarterly interim financial statements for 2009. 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
securities laws.





For further information:

For further information: Christian Rasche, President and CEO, Dynetek
Industries Ltd., 4410 46th Avenue SE, Calgary, Alberta, T2B 3N7, Tel Calgary:
(403) 720-0262, Tel Germany: + 49 2102 30963-20, Toll free: 1-888-396-3835,
Fax Calgary: (403) 720-0263, Fax Germany: +49 2102 30963-10, Web:
www.dynetek.com

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Dynetek Industries Ltd.

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