Winalta Inc. Reports First Quarter 2009 Results
Winalta Inc. (Winalta) today announced financial results for its fiscal 2009 first quarter ended January 31, 2009. The Company reports a net loss of $2.6 million on revenues of $10.9 million ($0.07 loss per share fully diluted) compared to net earnings of $0.8 million on revenue of $20.2 million ($0.02 per share fully diluted) in 2008. EBITDA for the three months ended January 31, 2009 was negative $0.5 million relative to $3.8 million in 2008.
Winalta's loss is reflective of a sharp drop in Homes revenue, a manufacturing switch from the production of homes to production of wellsite and camp units for Winalta's own fleet and an increase in consolidated general and administrative expenses. Despite the decreased activity in the oil and gas industry, Winalta's Industrial division showed both increases in revenue and profitability.
| Three Months Ended January 31, 2009 | ||
| 2009 | 2008 | |
| Revenue | $10,945 | $20,238 |
| Gross profit | $3,365 | $6,898 |
| Gross profit % | 31% | 34% |
| Net earnings (loss) | $(2,571) | $769 |
| Earnings (loss) per share | $(0.07) | $0.02 |
| EBITDA | $(479) | $3,843 |
| EBITDA per share | $(0.01) | $0.11 |
| Three Months Ended January 31, 2009 | ||||||
| Homes | Industrial | Manufacturing | ||||
| 2009 | 2008 | 2009(1) | 2008(2) | 2009(1) | 2008(2) | |
| Revenue | $2,606 | $11,297 | $8,379 | $5,744 | $3,276 | $5,431 |
| Gross profit | $399 | $3,311 | $3,474 | $2,311 | $(368) | $1,639 |
| Gross profit % | 15% | 29% | 42% | 40% | -11% | 30% |
(1) 2009 intersegment elimination is $3,316 ($3,222 Manufacturing, $94 Industrial) (2) 2008 intersegment elimination is $2,234 ($2,054 Manufacturing, $180 Industrial) |
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Industrial Division revenue increased by 46% for the three months ended January 31, 2009 over the same period of 2008, with the majority of the increase related to an increased fleet of wellsites, camp units and excavating equipment. The Industrial Division's gross profit margin of 42% on $8.4 million of revenue for the three months ended January 31, 2009 was an improvement over the 40% gross profit margin on $5.8 million for the same period of 2008. Overall margins increased as Winalta was able to maintain high utilization in the oilfield rentals division during the winter season and consistent profitability in the construction operations.
Homes Division revenue decreases are the result of the completed Pine Place subdivision in Fort McMurray, which contributed $6.6 million in revenue in 2008, together with seasonal decreases and a slow start to the selling of homes in some of the Company's newly opened communities.
Together with a reduction of lot inventory due to delivery of homes in subdivisions, home and lot inventory levels have been reduced by a combined $1.0 million for the three months ended January 31, 2009. No additional home inventory is being produced unless it is pre-sold under sales contracts to new customers. As the Company has approximately $5.0 million of homes sold waiting on spring and summer deliveries, there will be further decreases in inventory. In spite of the current economic conditions the number of deals written and deposits taken during the first quarter of 2009 has surpassed those written in the first quarter of 2008 and will result in revenue upon delivery in the second and third quarters of 2009.
The Manufacturing Division revenue decreased by $3.3 million as efforts at the Acheson manufacturing facility are focused on internal production of wellsites and camp units during the first two quarters of 2009. The negative gross margin is the result of one time production changeover, workflow transition, and staff training costs. The Manufacturing Division has returned to profitable production during the second quarter of 2009. The Manufacturing Division is currently producing industrial units at a slower pace of production with a significantly reduced workforce.
The consolidated general and administrative expenses for the first quarter of 2009 increased by approximately $0.8 million as compared to the same three month period in 2008, reflecting increased advertising and promotion expenditures, consulting and professional fees, together with management severances as overheads are being reduced. Management is focused on significant reductions in consolidated general and administrative expenses, these reductions will be reflected in future quarterly results.
We recognize these are difficult economic times. Winalta is focused on reducing homes inventory and is actively marketing its non-core assets. The performance of the Industrial Division is reflective of our oil and gas relationship and the quality of our products and service. Going forward, Winalta will continue to sell assets, reduce general and administrative expenses and focus on internal efficiencies in both the homes and industrial operations.
Additional information and Management's Discussion and Analysis are available on SEDAR (www.sedar.com).
Winalta Inc. (the "Company") operates with three distinct divisions. The Homes division sells CSA approved manufactured and modular homes and custom site-built homes and develops land and builds communities. The Industrial division operates a portable accommodation rental business and a construction services operation which provides earth moving and excavation related services, gravel and crushed aggregate sales and delivery, asphalt paving and concrete finishing. The Manufacturing division produces manufactured and modular homes and mobile industrial accommodations from facilities in Acheson, Alberta.
Winalta Inc. shares trade on the TSX Venture Exchange under the symbol "WTA.A".
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.
For further information
Business Contact
Artie T. Kos, President & CEO, Winalta Inc.,
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Tel: (780) 960-6900 Fax: (780) 962-9523
www.winaltainc.com
Austin Fraser, VP Corporate Development and Investor Relations
Tel: (403) 475-4698
