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

Canada Newswire

(U.S.$)

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 Seriesthe first variable capacity geothermal heat pump available to homeownersmarked 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 IncomePrepared using International Financial Reporting Standards(Unaudited-Thousands of U.S.$ except per share data)Three months endedSeptember 30,Nine months endedSeptember 30,2012201120122011 Sales$29,483$35,957$85,322$98,449Cost of sales18,28422,33355,89265,838Gross profit11,19913,62429,43032,611Operating expenses5,9705,78918,06017,537Research and development expenses6225141,6791,499Income before interest & income taxes4,6077,3219,69113,575Finance income2450111109Finance expense(224)(76)(781)(155)Income before income taxes4,4077,2959,02113,529Income tax expense1,5292,6653,0805,021Net income2,8784,6305,9418,508Unrealized loss on translation of foreignoperations (net of tax)23(9)20(9)Other comprehensive income23(9)20(9)Total comprehensive income$ 2,901$4,621$5,961$8,499Earnings per share (U.S.$) on net income$ 0.24$0.38$0.49$0.70

WaterFurnace Renewable Energy, Inc.Consolidated Statements of Financial PositionPrepared using International Financial Reporting Standards(Unaudited-Thousands of U.S.$)September 30,2012December 31,2011AssetsCurrent AssetsCash and cash equivalents$11,821$11,646Short-term investments10,22610,181Receivables15,05820,126Income taxes receivable768-Inventory11,3959,188Prepaids and deposits5591,264Total current assets49,82752,405Property, plant and equipment6,7586,762Deferred tax assets9,4047,686Intangible assets1,5681,713Long-term investments285-Total Assets$67,842$68,566LiabilitiesCurrent LiabilitiesPayables and accruals$5,775$7,041Income taxes payable-652Provision for warranty claims - current portion3,7543,274Total current liabilities9,52910,967Finance leases4776Deferred compensation866749Provision for warranty claims18,39515,104Total Liabilities28,83726,896Shareholders' EquityShare capital18,23617,505Foreign exchange translation adjustment266Retained earnings20,74324,159Total Shareholders' Equity39,00541,670Total Liabilities & Shareholders' Equity$67,842$68,566