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.