WINNIPEG, August 30, 2010 – Empire Industries Ltd. (TSX-V: EIL) today reported its financial results for the second quarter ended June 30, 2010. The consolidated financial statements and MD&A for the second quarter of 2010 have been filed on SEDAR and can be viewed at www.sedar.com or at www.empind.com.
Quarterly Highlights
- Gross profit of $4.5 million in the second quarter of 2010 (20% of revenue) increased from $1.6 million (5% of revenue)in the second quarter of 2009;
- Quarterly revenue decreased by $6.4 million over the prior year to $22.1 million;
- OG&A expenses of $3.3 million in the second quarter decreased by $1.2 million or 26% over the same quarter last year;
- EBITDA of $1.1 million improved by $4 million over the EBITDA loss in the same quarter last year;
- Cash provided by operations of $0.8 million in the second quarter of 2010 improved by $4.3 million over the quarter ended June 30, 2009;
- The pre-tax loss of $2.5 million includes a non-cash foreign exchange hedge loss of $2.3 million (representing a reversal of an unrealized gain recorded in the prior year) compared to a $2.9 million pre-tax loss in the same quarter last year (which included a non-cash hedge gain of $1.4 million). Excluding these unrealized hedge gains and losses, the pre-tax loss for the current quarter would have improved to $0.2 million compared to a pre-tax loss for June 30, 2009 of $4.3 million;
- Net loss of $2.5 million, or $0.03 loss per share, increased from a net loss of $2.2 million or $0.02 loss per share for the quarter ended June 30, 2009. Excluding a change in the valuation allowance of $0.6 million in the current quarter regarding the value of future tax assets, the loss would have been $1.9 million, and the loss per share would have been $0.02;
- Funded debt declined to $15.6 million from $42.9 million (decrease of 64%) at June 30, 2009. Net funded debt to tangible net worth improved to 47% at June 30, 2010 from 69% at the same date last year;
- The current ratio improved to 1.23 times at June 30, 2010 compared to 0.98 times at June 30, 2009.
On July 20, 2010, following quarter-end, the Company’s wholly-owned subsidiary Petrofield disposed of its patents related to hydrovac truck components for $1.2 million cash proceeds. The gain on disposition of about $1.2 million will be reflected in the Company’s third quarter results and the proceeds would have improved the Company’s current ratio to 1.29 times at June 30, 2010 on a pro forma basis.
“Our second quarter financial results have demonstrated progress in improved profitability, expense reduction and cash management resulting in positive cash flow,” said Guy Nelson, Chief Executive Officer. “However, we remain focussed on our continuing restructuring program geared to return the Company to sustained profitability and to align our overhead structure to the realities of a near term, weaker capital expenditure climate in Western Canada and a highly competitive landscape.”
Appointment of Ian Macdonald as Independent Board Chair
In addition, the Board of Directors has appointed Ian Macdonald as Independent Board Chair. Mr. Macdonald was elected a director of the Company at the June 16, 2010 annual shareholders’ meeting, and was appointed by the Board as Chair of the Audit Committee at that time. He is Managing Director of Tricapital Management Limited, a merchant bank that raises capital for mid-sized private and public companies, and has been advising companies on financial restructuring for over 22 years. Mr. Macdonald will retain his responsibilities as Chair of the Audit Committee.