Genesis Worldwide Inc. announces second quarter 2010 financial results
VAUGHAN, ON, Aug. 13 /CNW/ - Genesis Worldwide Inc. ("Genesis" or the "Company"), (TSX: GWI), today announces its financial results for the second quarter ended June 30, 2010. All dollar amounts are in Canadian dollars unless otherwise stated.
Business Update
---------------
The following are the Company's key business highlights -
- In pursuit of its newly adopted strategic plan, the Company completed
a joint venture transaction with Codding Steel Frame Technologies
("CSFT"), an affiliate of Codding Enterprises L.P. ("Codding"). The
new entity, Genesis Steel Frame Solutions L.P. ("GSFS LP"), will seek
to grow its U.S. market share through maximizing the output of its
Northern California operation, as well as through satellite
operations in strategic locations. In addition, GSFS LP will work to
establish other joint ventures throughout its new territory,
including South and Central America.
- Codding Enterprises L.P. ("Codding"), a current shareholder of the
Company, completed the purchase of the term loan from the Company's
lender. In addition to a number of other favorable modifications to
the terms of the loan, Codding will release part, or all of,
Genesis' $500,000 in restricted cash.
- As part of the Company's new business strategy, the joint venture
negotiations are continuing with Alexandria Steel Forming Co.
("Alexandria") in Egypt, and Manazil Steel Framing Co. ("Manazil") in
Abu Dhabi. Middle East and Northern African markets are showing
buoyancy and continued economic improvement. In addition, Genesis has
signed a Memorandum of Understanding with Megastar, a substantial
Vietnamese construction equipment company and a current licensee of
the Company, to enter into a joint venture agreement to manufacture
and erect the Genesis system in South East Asia.
- The special committee that was formed to negotiate the divestiture of
KML Engineered Homes Ltd., a subsidiary of the Company, is continuing
negotiations and the Company expects to finalize this transaction on
or before August 31, 2010. This initiative further demonstrates the
Company's commitment to pursue its new strategic direction.
Although the Company believes it is likely that it will consummate
these contemplated joint venture and divestiture transactions, there
can be no assurance that these transactions will ultimately be
finalized, or that, if finalized, they will be under the same terms
and conditions as currently contemplated.
Now that Genesis has its new Board and management structure in place, and has reduced its operating expenses, management believes that the Company now possesses the relevant experience, expertise and cost structure to create long-term shareholder value.
Financial Highlights
--------------------
- Due to the restructuring activities, total revenue for the second
quarter ended June 30, 2010 decreased 32.4% to $2,067,815, compared
to $3,058,604 for the same period in 2009. Revenue for the licensing
division for the second quarter of 2010 decreased 102.1% to negative
$17,028, compared to $805,636 for the second quarter in 2009. This
negative amount was attributed to a reversal of royalty revenue from
a licensee of the Company, Codding, due to the termination of its
license agreement as a result of the joint venture transaction.
Licensing revenue for the six months ended June 30, 2010 decreased
94.3% to $174,069, compared to $3,031,169 for the same period in
2009. Revenue for the structural products division for the second
quarter of 2010 decreased 7.5% to $2,084,843, compared to $2,252,968
for the same quarter in 2009. Structural products revenue for the six
months ended June 30, 2010 decreased 41.7% to $2,858,831, compared to
$4,906,072 for the same period in 2009. The decrease in structural
products revenue was a result of the Company's temporary inability to
maintain consistent sustained production from manufacturing as it
continued to manage working capital.
- Operating expenses for the second quarter ended June 30, 2010
decreased 22.4% to $1,705,661, compared to $2,196,927 for the same
period in 2009. Operating expenses for the six months ended June 30,
2010 decreased 14.5% to $3,382,928, compared to $3,955,352. This
reduction in operating expenses is a result of cost savings
initiatives. The Company continues to evaluate operating costs in an
effort to reduce costs. The operating expenses for the six months
ended June 30, 2010 include costs for termination obligations.
- Net loss for the second quarter ended June 30, 2010 was $1,914,665,
or ($0.03) per common share, compared to a net loss of $1,619,264, or
($0.05) per common share, for the second quarter of 2009. Net loss
for the six months ended June 30, 2010 was $3,713,067, or ($0.07) per
common share, compared to a net loss of $2,564,189, or ($0.08) per
common share for the same period in 2009.
Further information regarding the Company, and its business and operations, may be obtained from the Company's continuous disclosure documents filed from time-to-time with the Canadian securities regulatory authorities. These continuous disclosure documents are available through the Company's web site at www.genesisworldwide.com, or through the SEDAR website maintained by the Canadian securities regulatory authorities, which can be accessed at www.sedar.com.
About Genesis Worldwide Inc.
Genesis is a provider of green light steel building systems and solutions targeted at the global commercial, residential and institutional building sectors. Genesis delivers customized turnkey structural solutions including innovative light steel products, and provides software packages, industrial equipment, training programs, professional services and support ("Genesis Solution") to its customers and partners globally. Headquartered in the Greater Toronto Area in Ontario, Canada, Genesis has established a network of partners with engineering, manufacturing and distribution operations in Canada, the United States, the Middle East, Eastern Europe and Russia. For additional information about the Company, visit www.genesisworldwide.com.
Caution Regarding Forward-Looking Information
Certain statements in this press release which are not historical facts constitute forward-looking statements or forward-looking information within the meaning of applicable securities laws ("forward-looking statements") and are made pursuant to the "safe harbour" provisions of such laws. Statements related to the Company's projected revenues, earnings, growth rates, performance, business prospects and opportunities are forward-looking statements, as are any statements relating to future events, conditions or circumstances. The use of terms such as "may", "will", "should", "plan", "believes", "predict", "potential", "anticipate", "expect", "project", "target", "estimate", "continue", and similar terms are intended to assist in identification of these forward-looking statements. These statements are based on certain factors and assumptions including expected growth, results of operations, performance and business prospects, and opportunities. These assumptions, although considered reasonable by the Company at the time of preparation, may prove to be incorrect.
Readers are cautioned not to place undue reliance upon any such forward-looking statements. Such forward-looking statements are not promises or guarantees of future performance and involve both known and unknown risks and uncertainties that may cause the actual results, performance or achievements of the Company to differ materially from the results, performance, achievements or developments expressed or implied by such forward-looking statements.
Many factors could cause the actual results of the Company to differ materially from the results, performance, achievements or developments expressed or implied by such forward-looking statements, including, without limitation, those factors discussed under the heading "Risk Factors" in the Company's most recent Annual Information Form ("AIF"), a copy of each of which is available on SEDAR at www.sedar.com. Forward-looking statements are based on management's current plans, estimates, projections, beliefs and opinions, and, except required by law, the Company does not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change.
Genesis Worldwide Inc.
CONSOLIDATED BALANCE SHEET
(unaudited)
As at As at
June 30 December 31
2010 2009
$ $
-----------------------------
ASSETS
Current
Cash 7,542 72,247
Cash held in trust - 100,000
Restricted cash 500,000 500,000
Accounts receivable 1,479,836 2,818,204
Inventory 242,499 346,219
Prepaid expenses 203,981 255,719
-----------------------------
Total current assets 2,433,858 4,092,389
Mortgage receivable 432,908 432,908
Property, plant and equipment 1,899,351 2,232,604
Investment - -
Intangible assets 17,582 1,015,101
-----------------------------
4,783,699 7,773,002
-----------------------------
-----------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities 7,903,334 6,505,840
Term loan - current portion 1,018,560 991,587
Deferred revenue 587,333 847,964
Minimum royalty payment obligations 266,190 682,548
-----------------------------
Total current liabilities 9,775,417 9,027,939
-----------------------------
Long-term
Minimum royalty payment obligations - 578,058
-----------------------------
Total long-term liabilities - 578,058
-----------------------------
Commitments and contingencies
Shareholders' equity
Capital stock 61,690,108 61,114,911
Contributed surplus 1,821,639 1,842,492
Deficit (68,503,465) (64,790,398)
-----------------------------
Total shareholders' equity (4,991,718) (1,832,995)
-----------------------------
4,783,699 7,773,002
-----------------------------
-----------------------------
Genesis Worldwide Inc.
CONSOLIDATED STATEMENTS OF LOSS,
COMPREHENSIVE LOSS AND DEFICIT
(unaudited)
Three months ended Six months ended
----------------------------------------------------
June 30 June 30 June 30 June 30
2010 2009 2010 2009
----------------------------------------------------
$ $ $ $
----------------------------------------------------
Revenues
Licensing (17,028) 805,636 174,069 3,031,169
Structural products 2,084,843 2,252,968 2,858,831 4,906,072
----------------------------------------------------
Total revenues 2,067,815 3,058,604 3,032,900 7,937,241
----------------------------------------------------
Direct cost of
revenues
Licensing 13,841 70,107 28,259 1,545,775
Structural products 1,774,680 1,867,935 2,646,746 3,966,226
----------------------------------------------------
Total direct cost of
revenues 1,788,521 1,938,042 2,675,005 5,512,001
----------------------------------------------------
279,294 1,120,562 357,895 2,425,240
----------------------------------------------------
Expenses (other income)
Research and
development 31,989 125,678 94,707 325,222
SR&ED tax credit - (45,000) - (95,000)
Selling and marketing 133,012 402,780 424,560 704,334
Engineering and
project management 240,746 443,604 460,806 707,031
General and
administrative 1,002,361 920,780 1,784,530 1,613,985
Occupancy 297,553 349,085 618,325 699,780
----------------------------------------------------
1,705,661 2,196,927 3,382,928 3,955,352
----------------------------------------------------
Loss before other
expenses (1,426,367) (1,076,365) (3,025,033) (1,530,112)
----------------------------------------------------
Amortization of
property, plant
and equipment 161,585 232,546 333,253 466,204
Amortization of
intangible asset 1,552 71,383 3,103 140,787
Foreign exchange gain 25,832 350 (906) 27,941
(Income) loss from
investments - - - -
Loss on disposal of
property, plant and
equipment - 26,974 - 31,517
Bank interest expense
and penalty charges 43,845 (395) 81,690 32,336
Minimum royalty
accretion - 62,049 - 128,190
Debenture accretion - 60,804 - 60,804
Term loan and
debenture interest
expense 255,484 89,188 270,894 146,298
----------------------------------------------------
488,298 542,899 688,034 1,034,077
----------------------------------------------------
Net loss and
comprehensive loss
for the period (1,914,665) (1,619,264) (3,713,067) (2,564,189)
Deficit, beginning
of period (66,588,800) (54,216,054) (64,790,398) (53,271,129)
----------------------------------------------------
Deficit, end of
period (68,503,465) (55,835,318) (68,503,465) (55,835,318)
----------------------------------------------------
----------------------------------------------------
Loss per share
Basic and diluted $ (0.03) $ (0.05) $ (0.07) $ (0.08)
----------------------------------------------------
----------------------------------------------------
Weighted average
number of shares
outstanding 56,462,351 30,982,858 54,063,337 30,982,858
----------------------------------------------------
----------------------------------------------------
Genesis Worldwide Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Three months ended Six months ended
----------------------------------------------------
June 30 June 30 June 30 June 30
2010 2009 2010 2009
$ $ $ $
----------------------------------------------------
OPERATING ACTIVITIES
Net loss for the year (1,914,665) (1,619,264) (3,713,067) (2,564,189)
Adjustments for
non-cash items
Amortization of
property, plant
and equipment and
intangible assets 163,137 303,929 336,356 606,991
Loss on disposal of
property, plant
and equipment - 26,974 - 31,517
Stock-based
compensation
expense (recovery) 6,239 25,374 (20,853) 61,797
Unrealized foreign
exchange loss - (15,653) - (14,911)
Debenture accretion - 60,804 - 60,804
Minimum royalty
accretion - 62,049 - 128,190
(Income) loss from
investment - - - -
----------------------------------------------------
(1,745,289) (1,155,787) (3,397,564) (1,689,801)
Changes in non-cash
working capital
balances related
to operations
Accounts receivable 254,926 (3,753) 1,338,369 498,826
Inventories and
deposits on
equipment 35,335 53,210 103,720 703,185
Prepaid expenses 2,099 73,369 51,738 88,824
Accounts payable
and accrued
liabilities 1,689,606 (568,331) 1,521,876 (536,361)
Deferred revenue (253,261) 265,533 (260,631) (1,411,237)
Cash held in trust - - 100,000 -
----------------------------------------------------
Cash used in
operating activities (16,584) (1,335,759) (542,492) (2,346,564)
----------------------------------------------------
FINANCING ACTIVITIES
Debenture proceeds - 1,455,752 - 2,952,917
Repayment on term loan - (138,928) (97,410) (275,654)
Changes in long-term
liability - 42,574 - 119,511
Common stock issued - - 575,197 -
----------------------------------------------------
Cash provided by
financing activities - 1,359,398 477,787 2,796,774
----------------------------------------------------
INVESTING ACTIVITIES
Additions to property,
plant and equipment - (483) - (34,974)
Disposals of property,
plant and equipment - (12,988) - 20,527
Additions to
intangible assets - (13,856) - (33,722)
Minimum royalties paid - (150,000) - (300,000)
----------------------------------------------------
Cash used in
investing activities - (177,327) - (348,169)
----------------------------------------------------
Net increase
(decrease) in cash
during the year (16,584) (153,688) (64,705) 102,041
Cash, beginning of
period 24,126 422,793 72,247 167,064
----------------------------------------------------
Cash, end of period 7,542 269,105 7,542 269,105
----------------------------------------------------
----------------------------------------------------
Supplemental cash
flow information
Interest paid 20,260 56,263 35,670 85,116
----------------------------------------------------
----------------------------------------------------
For further information: Genesis Worldwide Inc., Catherine Smyth, Manager, Investor Relations, Tel: (905) 832-9286
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