WINNIPEG, May 29 /CNW/ - Empire Industries Ltd. (TSX-V: EIL) ("Empire" or
the "Company"), today announced its unaudited consolidated financial results
for its first quarter ended March 31, 2009. The unaudited consolidated
financial statements and Management's Discussion and Analysis for the first
quarter are available on Empire's website at www.empind.com and have been
filed on SEDAR.
First Quarter Highlights:
- Revenue increased 8.4% to $42.0 million;
- Engineered products group revenue increased 19.3% to $21.0 million;
- Steel fabrication group revenue decreased slightly to $20.9 million.
- Gross margin was 9.2% of revenue compared to 17.4% of revenue for the
first quarter of last year;
- Net Loss was $1.6 million, or $0.02 per share, compared to net
earnings of $16 thousand, or $0.00 per share, for the first quarter
- Free cash flow increased $7.3 million which was all used to reduce
bank indebtedness leaving the Company with $4.6 million available on
its revolving facilities at March 31, 2009.
"Stronger revenues from our engineered products group, contributions from
our expansion into the maintenance services market through our Aboriginal
partnership and a significant improvement in our free cash flow were the
bright spots in an otherwise challenging quarter," said Guy Nelson, Chairman
and CEO of Empire Industries Ltd. "Our steel fabrication group was negatively
impacted by the contraction and deferral of large construction projects and
number of jobs generating lower margins compared to the prior year. The
profits from our engineered products group were not large enough to offset the
losses in the steel fabrication group and we had a net loss for the quarter of
$1.6 million, or $0.02 per share. On the positive side, all our business units
were focused on maximizing free cash flow to ensure that we weathered the
economic storm and our free cash flow increased to $7.3 million in the first
For the quarter ending March 31, 2009, revenue increased 8.4% to $42.0
million due to a 19.3% increase in engineered products revenue compared to the
first quarter of last year. Gross profit was reduced by 42.7% to $2.9 million,
primarily the result of a 71.1% reduction in contribution from the steel
fabrication group. Gross margin was 9.2% compared to 17.4% for the first
quarter a year ago.
EBITDA(1) loss was $1.1 million compared to EBITDA of $2.1 million for
the same quarter last year. In addition to the lower gross profit achieved,
profitability was impacted by a $0.4 million increase in operating, general
and administrative expenses resulting from: higher costs associated with the
establishment of a central office for the Company's B.C.-based steel
fabrication businesses and a $0.2 million increase in selling expenses
associated with higher underlying sales activity in wholly-owned subsidiary,
Tornado Technologies Inc. The Company had a net loss for the quarter amounting
to $1.6 million or $0.02 per share, compared to net earnings of $16 thousand,
or $0.00 per share, for the first quarter of 2008.
(1) Earnings before interest, taxes, depreciation and amortization.
"We expect negative economic conditions to continue to impact the
performance of our steel fabrication group throughout 2009," said Mr. Nelson.
"However, we are cautiously optimistic that lower steel prices and
strengthening oil prices will lead to the restoration of business capital
investment which should stimulate demand for non-residential construction.
This in turn will provide more bidding opportunities for fabrication and
installation work. Federal and various provincial government announcements in
recent months indicating a willingness to invest up to $21 billion in
infrastructure spending over the next two years, provide for a potentially
much brighter outlook for our steel fabrication group for 2010."
The Company's outlook for its engineered products group and its
aboriginal partnership both remain relatively positive for 2009. Empire's
engineered products group expects to benefit from a general improvement in
capital spending by the customers in the markets it serves with its
proprietary products. The Company's unique aboriginal partnership is also
well-positioned to capitalize on the high demand for maintenance services in
the Alberta oil sands region."
As stated in the Company's news release dated April 30, 2009, the Company
and its board of directors are evaluating specific alternatives to continue to
improve free cash flow and liquidity in order to rectify its covenant breaches
concurrent with maximizing shareholder value. Options being considered by the
Company are the sale of non-core assets, strategic equity partnerships, equity
raises, rigorous working capital management, continued cost containment and
reduction, and refinancing.
About Empire Industries Ltd.
Empire Industries Ltd. adds value to steel through its leading, Western
Canadian engineered products manufacturing and steel fabrication groups and
its Fort McMurray-based strategic partnership in the maintenance services
sector. The Company's business operations are focused on the infrastructure,
commercial and industrial construction marketplace of Western Canada and
select niche markets internationally. Empire's common shares are listed on the
TSX Venture Exchange under the symbol EIL.
This press release contains forward-looking statements, within the
meaning of applicable securities legislation, concerning Empire's business and
affairs. In certain cases, forward-looking statements can be identified by the
use of words such as "plans", "expects" or "does not expect", "budget",
"scheduled", "estimates", "forecasts", "intends", "anticipates" or variations
of such words and phrases or state that certain actions, events or results
"may", "could", "would", "might" or "will be taken", "occur" or "be achieved".
These forward looking statements are based on current expectations, and are
naturally subject to uncertainty and changes in circumstances that may cause
actual results to differ materially. Readers are cautioned not to place undue
reliance on such forward-looking statements. Forward-looking information is
provided as of the date of this press release, and Empire assumes no
obligation to update or revise them to reflect new events or circumstances,
except as may be required under applicable securities laws.
Neither TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release.
For further information:
For further information: please visit our web-site at: www.empind.com or
contact: Guy Nelson, Chairman & CEO, Empire Industries Ltd., Tel: (416)
366-7977, Email: firstname.lastname@example.org; David Carefoot, Chief Financial Officer,
Empire Industries Ltd., Tel: (204) 589-9305, Email: email@example.com;
Trevor Heisler, Investor Relations, The Equicom Group Inc., Tel: (416)
815-0700 x 270, Email: firstname.lastname@example.org