Mr. Tom Huntington reports

WATERFURNACE RENEWABLE ENERGY INC. FISCAL YEAR AND 4TH QUARTER RESULTS

WaterFurnace Renewable Energy Inc. has released the company's fiscal year 2013 and fourth quarter results. In 2013, the company significantly increased gross margins by 2.2 percentage points, rising from 35.7 per cent in 2012 to 37.9 per cent in 2013. Sales of the company's new 7 Series variable capacity product, a stronger mix of residential sales and continued cost reduction efforts all contributed to margin growth in 2013. (Amounts are in U.S. dollars.)

Two thousand thirteen income before interest, joint venture operations and income taxes was up by 22.2 per cent over 2012. The increase was primarily attributable to reduced selling, general and administrative expenses, improved gross margins, and a stronger mix of residential sales.

Total comprehensive income for 2013 was up 35.5 per cent as compared with 2012. Earnings per share increased from 82 cents in 2012 to $1.12 in 2013. The company generated excess cash of $5.5-million after paying $12.6-million in dividends to shareholders in 2013.

Operating expenses were down $1.6-million from 2012, due largely to decreases in sales and marketing expenses, fourth quarter 2012 head count reductions, and fewer expenses related to business development efforts in 2013, namely the cost in 2012 to form and start up the joint venture operations in China.

The JV, WaterFurnace Shenglong HVACR Climate Solutions Ltd., outperformed company expectations by exceeding $9-million in revenue in its first full year of operations. In addition, the JV posted a profit that exceeded management's expectations. It is anticipated that new products, engineering synergies and expansion into new markets will continue to drive rapid revenue growth in the future.

Chairman of the board, Tim Shields, remarked, "The performance of our joint venture in China shows how planning, vision and sound strategy along with a tremendous effort on the part of management can really pay off."

International sales, which exclude Canada, were 3.7 per cent of total sales in 2013 compared with 2.9 per cent in 2012. Sales in Asian markets and new opportunities in Russia and Japan have opened up additional revenue sources. Synergies with the joint venture in China have helped drive the company's international sales over the past year.

Sales for Hyper Engineering, the company's subsidiary in Australia, rose by more than 16 per cent. Hyper Engineering manufactures electrical soft-start devices and recently introduced a new line of three-phase products to complement its existing single-phase products.

"While the economy continued to create challenges for the industry throughout most of 2013, we maintained our investments in employees, infrastructure and products," said WaterFurnace president and chief executive officer, Tom Huntington. "Additionally, in the fourth quarter, the nation witnessed an uptick in consumer confidence and a long-awaited rebound in construction of higher-end homes. These factors provided the company momentum to finish out the year and leaves us optimistic going into 2014."

The company's chairman of the board, Mr. Shields, stated: "The board of directors is pleased with the overall performance of the company in 2013. Management's steadfast focus on strategic improvements to the business allowed us not only to grow our cash reserves but also to increase dividends during a tough economic climate."

The annual report to shareholders is available at the company's website and filed on SEDAR. The chief executive officer and chief financial officer will conduct a webcast covering the results of the year and quarter on March 12, 2014, at 4 p.m. Eastern Standard Time. Those interested can listen live or to the recorded version at the company's website.

                                         
                                CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME      
                          PREPARED USING INTERNATIONAL FINANCIAL REPORTING STANDARDS 
                                      (thousands of U.S. $ except per-share data)         

                                           Three months ended Dec. 31,               Year ended Dec. 31,
                                                2013             2012             2013             2012

Sales                                $        33,770 $         34,375 $        118,776 $        119,697
Cost of sales                                 19,806           21,075           73,752           76,967
Gross profit                                  13,964           13,300           45,024           42,730
Operating expenses                             6,123            6,104           22,561           24,164
Research and development expenses                542              391            2,297            2,070
Income before interest and
income taxes                                   7,299            6,805           20,166           16,496
Share of income (loss) from                       89              (28)             106              (28)
joint venture
Finance income (expense)                         251             (223)             394             (893)
Income before income taxes                     7,639            6,554           20,666           15,575
Income tax expense                             2,709            2,435            6,884            5,515
Net income                                     4,930            4,119           13,782           10,060
Unrealized (loss) gain on
translation of foreign operations                (26)              11             (107)              31
(net of tax)
Other comprehensive (loss) income                (26)              11             (107)              31
Net income and total
comprehensive income                 $         4,904 $          4,130 $         13,675 $         10,091
Earnings per share                   $          0.40 $           0.33 $           1.12 $           0.82

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