Winalta Inc. Reports Second Quarter Fiscal 2009 Results
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 division
- 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 quarter
- 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 results
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 (www.sedar.com).
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 "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
Ron Berg, 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
