Dynetek Industries Ltd. Posts Second Quarter Profit

CALGARY, Aug. 11 /CNW/ - Dynetek Industries Ltd. ("Dynetek") reported today its results for the three and six months ended June 30, 2010. 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)
                                        Three months              Six months
                                       ended June 30           ended June 30
                                    2010        2009       2010         2009
    Cylinder and system sales      9,242       8,258     13,191       14,054
    Research and development
     income                          696         922      1,076        1,979
    Investment and other income        -           3          1            6
    Total revenue                  9,938       9,183     14,268       16,039

    EBITDA(1)                        891         407        449          408
    Net Income (loss)                117        (214)    (1,302)      (1,123)
    Net Income (loss) per common
     share (basic and fully
     diluted)                       0.01       (0.01)     (0.06)       (0.05)
    Cash                             290          99        290           99
    Non-cash working capital(1)   12,119      14,845     12,119       14,845
    Working capital(1)            12,817      15,352     12,817       15,352
    Total assets                  37,372      41,010     37,372       41,010
    Long-term debt and capital
     lease                         6,206       6,812      6,206        6,812
    Capital and intangible
     expenditures                    250          15        504          233
    Cash flow (deficiency)
     from operations                 359        (626)      (329)      (3,447)
    Weighted average common
     shares outstanding       20,959,203  20,936,500  20,959,203  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.


Cylinder and system sales for the six months ended June 30, 2010 were $13.2 million, a decrease of 6% from $14.1 million for the same period of 2009. Cylinder and system sales for the three months ended June 30, 2010 were $9.2 million, an increase of $1.0 million or 12% from $8.2 million in 2009. The increase in cylinder and system sales in the second quarter of 2010, compared to the same quarter of 2009, was the result of stronger sales activities from its European bus manufacturer customers and major North American customers. In addition, the deferral of sales from the first quarter of 2010 into the second quarter and specific European sales which were forecasted to be realized in the third quarter of 2010, being realized in the second quarter, also contributed to the increase. The year-to-date decrease in 2010 cylinder sales, compared to 2009, reflects the appreciation of the Canadian dollar against the US dollar and Euro.

    (thousands of Canadian              Three months              Six months
     dollars)                          ended June 30           ended June 30
    (unaudited)                     2010        2009       2010         2009
    Cylinder and system sales
    European operations            7,090       7,268     10,352       12,145
    North American operations      2,152         990      2,839        1,909
                                   9,242       8,258     13,191       14,054

Dynetek's revised North American sales focus has resulted in increased cylinder unit sales in the first six months of 2010. Dynetek expects 2010 unit sales in North America to exceed 2009 unit sales.

The unit sales from the European operations have increased in the first six months of 2010 compared to the same period of 2009. However, European revenue continues to be negatively impacted by the exchange rate. Dynetek expects 2010 unit sales from its European operations to exceed 2009 European unit sales.

Research and development income for the six months ended June 30, 2010 was $1.1 million, down 46% or $0.9 million from the same period in 2009. Research and development income for the three months ended June 30, 2010 was $0.7 million, down 25% or $0.2 million from the same period in 2009. During the six months and three months ended June 30, 2010, research and development revenue was lower than the same period in 2009 due to completion of the Magna Steyr contract by December 31, 2009.

Dynetek has secured new hydrogen projects for 2010 with major deliverables to occur in the third and fourth quarter of 2010. The new projects are currently anticipated to generate a higher level of research and development income for fiscal 2010 compared to the twelve months of 2009.

Dynetek continues to maintain significant levels of working capital. At June 30, 2010 working capital was $12.8 million compared to $13.7 million at December 31, 2009. Maintaining significant levels of working capital will continue to allow Dynetek to fund hydrogen research and development and develop new regions that demonstrate CNG growth.


Dynetek is focused on generating sales from its commercialized CNG products and continuing to develop opportunities in the long-term hydrogen market through research and development activities with the global OEMs. Dynetek also continues to develop applications for its cylinders in the bulk transportation and stationary storage segments.

Current projects underway within the research and development group are expected to result in 2010 research and development revenue exceeding 2009 research and development revenue and are evidence of the commitment on behalf of the OEMs to continue to pursue hydrogen strategies and to continue to see Dynetek as the supplier of choice.

Dynetek will continue to grow its worldwide CNG product sales. European markets will continue to provide the majority of near-term sales however the Company is working to expand sales in the North American and Asia Pacific markets.

Dynetek has refocused its North American sales strategy. The Company continues to market to its base of OEM clients and has expanded its marketing efforts to include companies operating in the dealer and after-market integrator segments. These additional segments represent a material expansion of future demand for Dynetek's products.

The Asia-Pacific market represents significant opportunity for revenue growth. Demand for CNG cylinders in Asia-Pacific markets is expected to increase materially over the next 5 years. The International Gas Union issued its report, "Report on Study Group 5.3 - Natural Gas Vehicles" at the IGU World Gas Conference in October 2009, which estimated that by 2015, there will be an additional 7.9 million natural gas vehicle equivalents in Asia-Pacific compared to only 0.8 million additional in Europe and 0.2 million additional in North America. Our recently announced Korean joint venture with Sejung Co. Ltd. represents significant progress in accessing this important market. In addition to Korea, our cylinders are now fully certified in India. We continue to evaluate joint venture partners in India with the intent of establishing a joint venture by the end of 2010.

With the expected increase in demand for cylinders over the mid term from North American and Asia Pacific markets, Dynetek has committed additional production resources and will be making near term capital investments in its Calgary production facility to ensure production capacity and reliability are sufficient to meet market demand.


Dynetek Industries Ltd. is a world-leading participant in the global clean technology space and a leader in the design and manufacture of proprietary fuel storage systems. Dynetek 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


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, 2009 and quarterly interim financial statements for 2010. Readers are encouraged to review the section in the annual 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.

Certain information set forth in this document contains forward-looking statements or information ("forward-looking statements"). Forward-looking statements are not based on historical facts, but rather reflect management's expectations regarding future plans and intentions, growth, results of operations, performance and business prospects and opportunities. The use of any of the words "plan", "expect", "project", "intend", "believe", "should", "anticipate", "estimate" or other similar words, or statements that certain events or conditions "may" or "will" occur are typically intended to identify forward-looking statements. Forward-looking statements contained in this document include, without limitation, statements regarding: management's growth and development strategies; the number of CNG buses operated in foreign markets; the number of compressed natural gas ("CNG") buses manufactured; incentives relating to CNG applications implemented by foreign governments; foreign market trends; and demand for CNG and hydrogen cylinders.

Forward-looking statements are based on a number of factors and assumptions which have been used to develop such statements but which may prove to be incorrect. Although Dynetek believes that the expectations and assumptions reflected in such forward-looking statements are reasonable, undue reliance should not be placed on forward-looking statements because Dynetek can give no assurance that such expectations and assumptions will prove to be correct. With respect to the forward-looking statements contained in this document assumptions have been made regarding, among other things: (i) industry demand; (ii) expectations regarding technology adoption rates for certain countries; (iii) the impact of governmental regulatory regimes and tax, environmental and other laws; (iv) prices of commodities; and the economic condition in certain countries. Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated and described in the forward looking statements. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements including, without limitation: (i) changes in general economic, market and business conditions of certain countries; (ii) volatility in commodity prices and exchange rates; (iii) access to capital; (iv) competition for, among other things, capital and skilled personnel; and, (v) actions by governmental or regulatory authorities including changes in environmental legislation. The Company cautions that the foregoing list of assumptions, risks and uncertainties is not exhaustive. Additional information on these and other factors that could affect operations or financial results can be found in the Company's Annual Information Form available on SEDAR at www.sedar.com. The Company does not undertake any obligation to publicly update or revise any forward-looking statements except as expressly required by applicable securities law.

SOURCE Dynetek Industries Ltd.

For further information: For further information: Douglas Pigot, Executive Chairman, Dynetek Industries Ltd., 4410 - 46th Avenue SE, Calgary, Alberta, T2B 3N7, Tel Calgary: 403-720-0262, Toll free: 1-888-396-3835, Web: www.dynetek.com

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