China Joint Venture Exceeds Expectations
Increased margins, strong cash generation and renewed optimism for
residential new construction.
(U.S. $)
FORT WAYNE, IN, March 11, 2014 /CNW/ - WaterFurnace Renewable Energy, Inc. [WFI:TSX] today 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% in 2012 to 37.9% 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.
2013 income before interest, joint venture operations and income taxes
was up by 22.2% 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% as compared to 2012.
Earnings per share increased from $0.82 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, Q4 2012 headcount
reductions, and fewer expenses related to business development efforts
in 2013, namely the cost in 2012 to form and start up the joint venture
(JV) 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% of total sales in
2013 compared with 2.9% 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%. 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 & CEO, 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, Tim 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 www.waterfurnace.com and filed on SEDAR at www.sedar.com. The CEO and CFO will conduct a webcast covering the results of the
year and quarter at 4:00 PM Eastern Standard Time on Wednesday, March
12, 2014. Those interested can listen live or to the recorded version
at http://www.newswire.ca/en/webcast/detail/1288441/1421449 or at the Company's website: www.waterfurnace.com.
WaterFurnace Renewable Energy, Inc. |
Consolidated Statements of Comprehensive Income |
Prepared using International Financial Reporting Standards
|
(Thousands of U.S. $ except per share data)
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Unaudited
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Audited
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| Three months ended December 31,
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| Year ended December 31, |
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2013
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2012
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2013
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2012
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-----------------------------------------------------
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--------------
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--------------
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--------------
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--------------
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Sales
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$
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33,770
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$
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34,375
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$
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118,776
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$
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119,697
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|
Cost of sales
|
|
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19,806
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|
|
21,075
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73,752
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76,967
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--------------
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--------------
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--------------
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Gross profit
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|
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13,964
|
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|
13,300
|
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|
45,024
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|
42,730
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Operating expenses
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|
|
6,123
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|
|
6,104
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|
22,561
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|
|
24,164
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Research and development
expenses
|
|
|
542
|
|
|
391
|
|
|
2,297
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|
|
2,070
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--------------
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--------------
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--------------
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--------------
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Income before interest and
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income taxes
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7,299
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|
6,805
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|
|
20,166
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|
|
16,496
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Share of income (loss) from
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89
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|
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(28)
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|
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106
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|
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(28)
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joint venture
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Finance income (expense)
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|
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251
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|
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(223)
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|
|
394
|
|
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(893)
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--------------
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--------------
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--------------
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--------------
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Income before income taxes
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|
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7,639
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|
6,554
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|
20,666
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|
15,575
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Income tax expense
|
|
|
2,709
|
|
|
2,435
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|
|
6,884
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|
|
5,515
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--------------
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--------------
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--------------
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--------------
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Net income
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4,930
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|
4,119
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13,782
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|
10,060
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Unrealized (loss) gain on
translation of foreign operations
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(26)
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11
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(107)
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31
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(net of tax)
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--------------
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--------------
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--------------
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--------------
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Other comprehensive (loss) income
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(26)
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11
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(107)
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|
31
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Net income and total
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comprehensive income
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|
$
|
4,904
|
|
$
|
4,130
|
|
$
|
13,675
|
|
$
|
10,091
|
|
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========
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========
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========
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========
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Earnings per share U.S.
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|
$
|
0.40
|
|
$
|
0.33
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$
|
1.12
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$
|
0.82
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--------------
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--------------
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WaterFurnace Renewable Energy, Inc. |
Consolidated Statements of Financial Position |
Prepared using International Financial Reporting Standards
|
(Audited—Thousands of U.S. $)
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December 31,
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December 31,
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2013
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2012
|
----------------------------------------------------------------
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Assets |
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Current assets
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Cash and cash equivalents
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$
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17,451
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$
|
11,928
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Short-term investments
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10,250
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10,232
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Receivables
|
|
|
17,112
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|
|
16,045
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Inventory
|
|
|
9,541
|
|
|
10,539
|
|
Prepaids and deposits
|
|
|
575
|
|
|
513
|
|
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--------------
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--------------
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Total current assets
|
|
|
54,929
|
|
|
49,257
|
Property, plant and equipment
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|
|
6,317
|
|
|
6,536
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Intangible assets
|
|
|
1,325
|
|
|
1,519
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Long-term investments
|
|
|
433
|
|
|
285
|
Investment in joint venture
|
|
|
3,049
|
|
|
2,923
|
Deferred tax assets
|
|
|
11,890
|
|
|
9,845
|
|
|
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--------------
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--------------
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Total Assets
|
|
$
|
77,943
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|
$
|
70,365
|
|
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========
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========
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Liabilities |
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Current liabilities
|
|
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Payables and accruals
|
|
$
|
8,266
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|
$
|
6,053
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|
Income taxes payable
|
|
|
671
|
|
|
377
|
|
Provision for warranty claims - current portion
|
|
|
4,534
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|
|
3,884
|
|
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|
--------------
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--------------
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Total current liabilities
|
|
|
13,471
|
|
|
10,314
|
Finance leases
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|
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--
|
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|
38
|
Deferred compensation
|
|
|
472
|
|
|
280
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Provision for warranty claims
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|
|
21,456
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18,938
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|
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--------------
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--------------
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Total Liabilities
|
|
|
35,399
|
|
|
29,570
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--------------
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--------------
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Shareholders' Equity |
|
|
|
|
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Share capital
|
|
|
19,763
|
|
|
18,999
|
|
Foreign exchange translation adjustment
|
|
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(70)
|
|
|
37
|
|
Retained earnings
|
|
|
22,851
|
|
|
21,759
|
|
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--------------
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--------------
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Total Shareholders' Equity
|
|
|
42,544
|
|
|
40,795
|
|
|
|
--------------
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--------------
|
Total Liabilities and |
|
|
|
|
|
|
| Shareholders' Equity
|
|
$
|
77,943
|
|
$
|
70,365
|
|
|
|
========
|
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|
========
|
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.
Additional information about the Company and its products is available
on the Company's website: www.waterfurnace.com. Or call (260) 478-5667 and ask for investor relations.
SOURCE WaterFurnace Renewable Energy, Inc.
<p> WaterFurnace Renewable Energy, Inc.<br/> 9000 Conservation Way<br/> Fort Wayne, Indiana 46809-9794<br/> (260) 478-5667 </p>