CALGARY, March 29, 2012 /CNW/ - Dynetek Industries Ltd. ("Dynetek" or "Company") reported today its results for the three and twelve months ended December 31, 2011. The full audited consolidated financial statements and Management's Discussion and Analysis have been filed on SEDAR at www.sedar.com and on Dynetek's website at www.dynetek.com.
| (thousands of Canadian dollars, except share capital and per share data)
| Three months
ended December 31
|Cylinder and system sales||4,311||4,256||14,332||22,272|
|Research and development income||1,735||1,279||5,460||3,060|
|Net loss per common share (basic and fully diluted)||(0.41)||(0.04)||(0.46)||(0.14)|
|Cash and restricted cash||550||1,370||550||1,370|
|Non-cash working capital1||4,984||8,973||4,984||8,973|
|Long-term borrowings and finance leases||183||5,413||183||5,413|
|Intangible assets expenditures||(3)||76||69||201|
|Joint venture expenditures||87||(59)||413||56|
|Property, plant and equipment expenditures||135||52||254||449|
|Cash flow (deficiency) from operations||1,166||149||(2,116)||763|
|Weighted average common shares outstanding||20,964,250||20,959,500||20,961,621||20,958,686|
1 EBITDA, non-cash working capital and working capital are non-GAAP financial measures. Dynetek defines EBITDA as earnings before finance costs, taxes, share based compensation, gain or loss on non-current asset disposal, foreign exchange gain or loss, impairment and 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. Since non-GAAP financial measures do not have a standardized definition, they may differ from the non-GAAP financial measures used by other companies. Dynetek strongly encourages investors to review its financial statements and other publicly filed reports in their entirety and not rely on a single non-GAAP financial measure.
Cylinder and system sales for the year ended December 31, 2011 were $14.3 million, a decrease of 36% from $22.3 million for the year ended December 31, 2010. Cylinder and system sales for the three months ended December 31, 2011 were $4.3 million, no change from the fourth quarter of 2010. North American cylinder and system revenue for the year ended December 31, 2011 experienced a 20% decrease compared to the year ended December 31, 2010. European cylinder and system revenue experienced a 44% decrease during the same period. The overall decrease in cylinder and system revenue was due to difficult public sector economic conditions in our key markets. Those economic conditions resulted in reduced public funding to our clients, the majority whom rely on government funding for their operations.
| (thousands of Canadian dollars)
| Three months
ended December 31
|Cylinder and system sales||2011||2010||2011||2010|
|North American operations||1,450||2,360||6,473||8,122|
Research and development ("R&D") income for the three months ended December 31, 2011 was $1.7 million, an increase of 36% from the same period of 2010. R&D income for year ended December 31, 2011 was $5.5 million, an increase of 78% over the year ended December 31, 2010. The year-over-year increase is a result of significant contracts that began in the fourth quarter of 2010 with deliverables continuing through the first quarter of 2012.
EBITDA for the three and twelve months ended December 31, 2011 was ($1.3 million) and ($4.6 million) respectively, compared to EBITDA of $0.1 million and $0.5 million for the same respective periods of 2010. The decreases in EBITDA resulted from a combination of significantly reduced cylinder and system revenues and increased pricing for major raw materials that began in the fourth quarter of 2010.
Net loss for the three and twelve months ended December 31, 2011 was $8.6 million or $0.41 per common share and $9.6 million or $0.46 per common share respectively, compared to net loss of $0.8 million or $0.04 per common share and $3.0 million or $0.14 per common share for the same respective periods of 2010. Net loss in the fourth quarter was negatively impacted by a combination of a $5.8 million impairment of assets and a $0.6 million write down of inventory to its net realizable value. The impairment was required to adjust the carrying value of assets to the fair value implied by a combination of recent asset appraisals and the December 12, 2011 non-binding letter of intent (the "SV LOI") executed with SV Greentech Private Ltd. ("SV") pursuant to which SV proposed, on a non-binding basis, to acquire 100% of the outstanding shares of Dynetek for $0.36 per share.
At December 31, 2011, working capital was $5.5 million compared to $10.3 million at December 31, 2010 and the company was not in compliance with the working capital ratio and minimum tangible net worth covenants specified in the Company's credit agreement.
On March 23, 2012, Dynetek closed a transaction with Callidus Capital Corporation ("Callidus") to refinance its previous credit facility held by a Canadian chartered bank. The new Callidus facility includes a $7.0 million demand revolving loan ("Revolving Loan"), a $0.7 million demand non-revolving loan ("Non-revolving Loan") and a $1.3 million demand non-revolving bridge loan ("Bridge Loan"). The facility is secured by a general security agreement over the assets of Dynetek and Dynetek Europe GmbH including a mortgage over real estate assets. The Revolving Loan is due in full upon the earlier of demand and March 22, 2013 and is availed through a weekly borrowing base report. The Non-revolving Loan is due in full upon the earlier of demand and March 22, 2013. The Bridge Loan is due in full upon the earlier of demand and July 23, 2012.
Dynetek continues to focus on generating increased worldwide sales from its commercialized CNG products through geographic expansion. While Europe and North America continue to provide the majority of near term sales, Dynetek is seeking to expand its presence in the Asia-Pacific market through joint venture relationships in Korea, India and China.
The global economic slowdown in 2011 has had a negative impact on Dynetek's current markets. However, customer order activity has started to increase during the first quarter of 2012. Management continues to be in discussions with S.V. Greentech Private Limited and its strategic partners to explore potential strategic alternatives available to Dynetek, including a potential sale of the Company on a share exchange basis. However, there is no binding agreement in place. As a result, and as a result of the risk factors noted herein, there can be no assurance as to the terms on which a transaction may occur or that a transaction will occur at all.
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.
FORWARD LOOKING STATEMENTS
In addition to historical information, this news release contains forward-looking statements or information, collectively "forward-looking statements" as defined under applicable securities legislation, and should be read in conjunction with the financial statements and related notes for the year ended December 31, 2011 and 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.
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; expectations as to 2012 revenue and cylinder units sales compared to 2011; future activity levels of government funding; expected increases in demand for cylinders; continuation of R&D contracts; Dynetek's expansion into the Asia Pacific market; and Dynetek's negotiations with respect to strategic alternatives.
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, including, without limitation, Canada, the United States, India, Korea, China and Germany. 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 including, without limitation, Canada, the United States, India, Korea, China and Germany; (ii) volatility in commodity prices and exchange rates; (iii) access to capital; (iv) competition for, among other things, capital and skilled personnel; (v) actions by governmental or regulatory authorities including changes in environmental and tax legislation; (vi) changes in the level of government funding for clean technology initiatives; (vii) a failure to recognize the benefits of joint ventures; and, (viii) changes in the demand for fuel storage systems. 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.
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