Winalta Inc. Reports Second Quarter Fiscal 2009 Results

    CALGARY, June 30 /CNW/ - Winalta Inc. (Winalta) today announced financial
results for its fiscal 2009 second quarter ended April 30, 2009. The Company
reports a net loss of $5.2 million on revenues of $6.9 million ($0.15 loss per
share fully diluted) for the three months ended April 2009 compared to net
earnings of $2.3 million on revenues of $23.2 million ($0.07 per share fully
diluted) in 2008. EBITDA for the three months ended April 30, 2009 was
negative $1.5 million relative to $5.7 million in 2008.
    Winalta's decreased revenue and net loss for the second quarter 2009 are
reflective of the following:

    -  Net losses associated with the divestiture of partially built homes
       and lots associated with the closure of Winalta's site built home
    -  Manufacturing switch from the production of homes for external sale to
       production of wellsite and camp units for Winalta's industrial fleet
    -  Fewer home deliveries in the second quarter of 2009 but more sales
       written than in the same period of 2008. Sales written in the second
       quarter are delivered with revenue recognized in the third and fourth
    -  Completion of Winalta's Pine Place Fort McMurray development in the
       first quarter of 2009
    -  General and Administrative cost reduction achieved in the second
       quarter of 2009 will be reflected in Winalta third and fourth quarter

    Ron Berg, who assumed the role of President and CEO of Winalta Inc. on
April 30, 2009, immediately focused on reducing general and administrative
expenses, though the full affect of these changes will not be reflected until
Winalta's fiscal fourth quarter results. Mr. Berg commented that, "Winalta is
actively divesting of its non-core assets and is well positioned with salable,
profit generating assets. Proceeds from the sale of non-core assets and homes
sales are being used to pay down debt with a focus on strengthening our
balance sheet. We are continuing to explore acquisition targets in the energy
service sector and believe that in nine to twelve months there will be better
value in this sector. At this time Winalta will be in a position to fully
capitalize on these opportunities."

    Three Months Ended April 30, 2009

                                                          2009       2008(1)

    Revenue                                               $6,896     $23,198

    Gross profit                                          $2,233     $9,420

    Gross profit %                                        32%        41%

    Net earnings (loss)                                   $(5,181)   $2,339

    Earnings (loss) per share                             $(0.15)    $0.07

    EBITDA                                                $(1,450)   $5,662

    EBITDA per share                                      $(0.04)    $0.16

    Three Months Ended April 30, 2009

                       Homes                  Industrial

                       2009       2008(1)     2009       2008(1)

    Revenue            $1,686     $16,550     $5,190     $6,027

    Gross profit       $397       $6,888      $2,340     $2,779

    Gross profit %     24%        42%         44%        46%

    (1) Comparative results for 2008 have been adjusted from previous
    reported results to be consistent with the current period for certain
    reclassification of management overhead costs and earnings from
    discontinued operations

    The Homes Division experienced a very busy second quarter for home
orders. Fewer deliveries and the associated revenue from the retail sale of
homes as well as the sale of manufactured homes in subdivisions resulted in a
decrease in Homes Division revenue by 90% for the second quarter of 2009 as
compared to the same period in 2008. 75% of this decrease was a result of
Communities revenue for the three month period ending April 30, 2009 being
$12.4 million lower than the second quarter of 2008 due to the completed Pine
Place subdivision in Fort McMurray. The number of retail home deals written
and deposits taken during the second quarter of 2009 has surpassed those
written in the second quarter of 2008, revenue from sales closed in Q2 will be
realized in fiscal Q3 and Q4. The Company has approximately $6.5 million of
homes sold and waiting on delivery; $3.0 million of those homes have
conditions removed and waiting delivery, the other $3.5 million of those homes
have conditions pending and deposits taken. The majority of these sales will
further reduce inventory. No additional home inventory is being produced
unless it is pre-sold under sales contracts to new customers. The
Manufacturing Division is currently producing industrial units at a slower
pace of production due to a significantly reduced workforce.
    Industrial Division revenue increased by 21% for the six months ended
April 30, 2009 over the same period of 2008, with a 39% increase attributable
to oilfield rental revenue related to the increased number of well-sites units
and camps being rented. Industrial Division revenue of $5.2 million for the
three months ended April 30, 2009 was comparable to the same quarter in 2008.
Due to high demand for the Company's enlarged fleet of new portable
accommodations, oilfield rental revenue for the three months ended April 30,
2009 is 20% higher than the same second quarter period in 2008. Construction
services revenue has decreased by 25% for the second quarter as compared to
the same quarter of last year due to the slower economy and reduced level of
industrial activity in the region. The paving group has started up again in
the third quarter with $8.0 million in contracted services secured. The
oilfield rentals operation is looking forward to consistent profitability and
has secured the rental of the majority of its industrial accommodations into
the summer seasons.
    The net loss for the second quarter of $5.2 million relative to net
earnings of $2.3 million in 2008 is the result of reduced overall revenue
combined with the losses incurred on discontinued operations and production
inefficiencies related to the reduced level of industrial production at the
Acheson manufacturing facility. The Company has incurred losses of $0.7
million on the disposal of homes and serviced lots in Bruderheim, Alberta,
together with $0.3 million on maintaining the North Battleford facility.
    As the current backlog of pre-sold homes in inventory is delivered
through the third and fourth quarters and the revenue is realized, the Company
will be reducing its operating lines and term debt. Winalta's primary lenders
are supportive of the Company's plans and continue to understand the capacity
of the Company to convert inventory into cash during the remainder of the
fiscal year.
    The Winalta team is focused on divesting of non-core assets, converting
existing inventories into cash, paying down current debt and strengthening the
balance sheet in order to prepare for growth as an energy service company. The
Company continues to explore opportunities created during these turbulent
economic times.

    Additional information and Management's Discussion and Analysis are
available on SEDAR (

    Winalta Inc. is an integrated company with three main operating
divisions, Homes, Industrial, and Manufacturing. The Homes Division sells CSA
approved homes via retail centers, communities and supply arrangements. The
Industrial Division leases portable industrial accommodations and provides
construction services that include excavating, aggregate trucking and paving.
The Manufacturing Division builds CSA approved homes and portable industrial
accommodations from facilities near Spruce Grove, Alberta.
    Winalta Inc. shares trade on the TSX Venture Exchange under the symbol

    The TSX Venture Exchange has neither approved nor disapproved the
    contents of this news release. The TSX Venture Exchange does not accept
    responsibility for the adequacy or accuracy of this release.

    The words "believe", "expect", "intend", "anticipate", or any variation
of such words and similar expressions identify forward-looking statements, but
their absence does not mean that the statement is not forward-looking. These
statements are not guarantees of future performance and are subject to certain
risks, uncertainties and assumptions that are difficult to predict. Readers
are cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date of this news release. Winalta undertakes no
obligation to publicly update or revise any forward-looking statements or
information, whether as a result of new information, future events or
otherwise, except as required by securities laws.

    %SEDAR: 00005154E

For further information:

For further information: Business Contact, Ron Berg, President & CEO,
Winalta Inc.,, Tel: (780) 960-6900, Fax: (780)
962-9523,; Austin Fraser, VP Corporate Development and
Investor Relations, Tel: (403) 475-4698

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