WaterFurnace Renewable Energy, Inc. 3rd Quarter Results: Announces Quarterly Dividend


FORT WAYNE, IN, Nov. 9, 2012 /CNW/ - WaterFurnace Renewable Energy, Inc. [WFI:TSX], the leading manufacturer of energy efficient heating and cooling solutions, today reported third quarter financial results. The Company announced lower-than-projected sales and profits due to sustained pressures from a struggling economy, weak consumer confidence among affluent homeowners, and low natural gas and propane prices. The industry segments of residential and commercial geothermal heat pumps along with boiler/tower products witnessed contraction. The Company, however, increased its market share in both residential and commercial sectors while in a very competitive environment.

Gross profit as a percentage of sales increased from 37.9% in Q3 2011 to 38.0% in Q3 2012. Continued releases of new products along with effective supply chain initiatives provided this enhancement in margins despite lower manufacturing absorption.

On July 27, 2012, the Company signed a joint venture agreement with Chinese company Ningbo Shenglong Group Co., Ltd. (Shenglong) to form WaterFurnace Shenglong HVACR Climate Solutions, Ltd. (WFSL), also a Chinese company. Management believes that the increased global footprint and ability to bring focus to the Chinese market bodes well for the Company. Not only does this venture provide new sourcing and distribution opportunities, it also brings the enormous growth potential of the Chinese market to the Company and its shareholders. Operations of the joint venture began on November 5, 2012.

Cash and cash equivalents increased for the first nine months of 2012 by $175 thousand after paying $9.4 million in dividends versus an increase of $3.0 million for the first nine months of 2011 after paying $8.5 million in dividends. Cash disbursements for the first nine months of 2012 included $397 thousand paid in startup costs for the Company's new joint venture in China.

"While the industry continued to weather short-term challenges, WaterFurnace maintained its focus on business investments, market share and product innovation," said Tom Huntington, President and CEO of WaterFurnace. "The successful launch of the 7 Series—the first variable capacity geothermal heat pump available to homeowners—marked a milestone for the entire industry and will have an increasingly positive impact on our sales and brand image as the market recovers."

The Board of Directors approved a quarterly dividend of $0.24 U.S. per share for shareholders of record on November 21, 2012, with payment on December 3, 2012. Chairman of the Board Tim Shields added, "WaterFurnace is committed to a long-term strategy and the Board of Directors remains optimistic about the Company's ability to weather challenging business conditions thanks to the steps management has taken to strengthen and diversify the overall business."

The third quarter report to shareholders is available at www.waterfurnace.com and filed on SEDAR at www.sedar.com. The CEO and CFO will conduct a webcast covering the results of the quarter at 11:00 AM Eastern Daylight Time on Monday, November 12, 2012. Those interested can listen live or to the recorded version at http://www.newswire.ca/en/webcast/detail/1053867/1145469 or at the Company's website: www.waterfurnace.com.

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.

 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,
        2012   2011   2012   2011
Sales       $ 29,483   $ 35,957   $ 85,322   $ 98,449
  Cost of sales         18,284     22,333     55,892     65,838
Gross profit         11,199     13,624     29,430     32,611
  Operating expenses         5,970     5,789     18,060     17,537
  Research and development expenses         622     514     1,679     1,499
Income before interest & income taxes         4,607     7,321     9,691     13,575
  Finance income         24     50     111     109
  Finance expense         (224)     (76)     (781)     (155)
Income before income taxes         4,407     7,295     9,021     13,529
  Income tax expense         1,529     2,665     3,080     5,021
Net income         2,878     4,630     5,941     8,508
  Unrealized loss on translation of foreign
   operations (net of tax)
        23     (9)     20     (9)
Other comprehensive income         23     (9)     20     (9)
Total comprehensive income         $ 2,901   $ 4,621   $ 5,961   $ 8,499
Earnings per share (U.S.$) on net income         $ 0.24   $ 0.38   $ 0.49   $ 0.70


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

 September 30,

 December 31,
  Current Assets              
    Cash and cash equivalents     $ 11,821   $ 11,646
    Short-term investments       10,226     10,181
    Receivables       15,058     20,126
    Income taxes receivable       768     -
    Inventory       11,395     9,188
    Prepaids and deposits       559     1,264
  Total current assets       49,827     52,405
  Property, plant and equipment       6,758     6,762
  Deferred tax assets       9,404     7,686
  Intangible assets       1,568     1,713
  Long-term investments       285     -
Total Assets     $ 67,842   $ 68,566
  Current Liabilities              
    Payables and accruals     $ 5,775   $ 7,041
    Income taxes payable       -     652
    Provision for warranty claims - current portion        3,754     3,274
  Total current liabilities       9,529     10,967
  Finance leases       47     76
  Deferred compensation       866     749
  Provision for warranty claims       18,395     15,104
Total Liabilities       28,837     26,896
Shareholders' Equity              
  Share capital       18,236     17,505
  Foreign exchange translation adjustment       26     6
  Retained earnings       20,743     24,159
Total Shareholders' Equity       39,005     41,670
Total Liabilities & Shareholders' Equity     $ 67,842   $ 68,566


SOURCE: WaterFurnace Renewable Energy, Inc.

For further information:

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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