Globalworth Regulatory News (GWI)

2 Aug 2007 07:00

Genesis Worldwide Inc. announces second quarter fiscal 2007 results

47% Growth in Revenue Over Second Quarter 2006 and 26% Growth in Revenue

Over First Quarter 2007

MISSISSAUGA, ON, Aug. 1 /CNW/ - Genesis Worldwide Inc. ("Genesis" or the "Company"), TSX/AIM: GWI, a leading provider of green structural building technology using light steel, announces its financial results for the quarter ended June 30, 2007. The Company reports its financial statements in accordance with Canadian generally accepted accounting principles ("GAAP") and reports in Canadian dollars.

Total revenue for the second quarter ended June 30, 2007 increased 47% to $5,018,264, compared to $3,412,006 for the same period a year ago, and a sequential growth of 26% from the first quarter of 2007.

Revenue from the licensing division for the second quarter of 2007 was $2,677,846, reflecting an increase of 13,065%, compared to the same quarter a year ago, and a sequential growth of 279% from the first quarter of 2007. Revenue for the licensing division recorded for the second quarter of 2007 was the highest revenue recorded in the Company's history.

Revenue from the structural products division for the second quarter of 2007 was $2,340,418, compared to $3,391,666 for the second quarter of 2006. This decrease of 31% was due mainly to the stoppage in manufacturing activity for a six-week period while the Company relocated its manufacturing operations to its new facility in Vaughan, Ontario. Compared to the first quarter of 2007, revenue from this division decreased by 23%.

Overall contribution margins for the second quarter of 2007 improved to $1,498,333, compared to $122,000 for the same quarter in 2006. This improvement of 1,128% is a direct result of increased licensing activities and an improvement in the contribution margins for structural products. Contribution margin for structural products for the second quarter of 2007 was 16.1%, compared to 3.3% for the same period last year. This improvement is a direct result of improvements made in the operations of the structural products division.

For the second quarter ended June 30, 2007, loss before other expenses was $952,529, compared to a loss of $2,203,762 for the second quarter a year ago, and a loss of $1,174,732 for the first quarter of 2007. Net loss for the second quarter ended June 30, 2007 was $1,727,168, or $0.08 per common share, compared to a loss of $0.12 per common share for the second quarter of 2006, and a loss of $0.10 per common share for the first quarter of 2007.

Financial Highlights (in thousands of dollars, except per share data and where otherwise indicated) Q2:Q1-07 Q2 2007 Q2 2006 Change Q1 2007 Change ------- ------- ------ ------- ------ Revenue 5,018 3,412 47% 3,989 26% Contribution Margin 1,498 122 1,128% 1,374 9% Expenses 3,225 2,602 24% 3,473 (7%) Net Loss 1,727 2,480 30% 2,099 18% Loss Per Share - basic and diluted (0.08) (0.12) 33% (0.10) 20%

From the net proceeds of the initial public offering, the Company repaid the Debentures in full on July 6, 2007, and currently does not have any interest bearing debt. On August 1, 2007, the Company has $10,893,455 in cash on hand.

Strategic Highlights (i) Focus on licensing activities - Completed shipment of C4 industrial equipment to Spain licensee. The Spain licensee has been awarded their first contract using light structural steel - Completed shipment of C4 industrial equipment to California licensee. This licensee will be commissioning their plant in Q3 2007 - Executed a license agreement for the United Arab Emirates (UAE) to focus on the UAE and Dubai markets (ii) Commercializing structural products division - Completed move into the new facilities in Vaughan, Ontario - Signed three contracts with first-time customers in Q2 2007 (iii) Ongoing research and development - Released version 4.0 of FrameBuilder(TM) with complete OEM agreement and integration of AutoCAD

"Genesis Worldwide made significant progress during the second quarter of 2007. We are executing on our strategic vision of growing our licensing technologies worldwide and commercializing our structural products division. Both of these activities are expected to increase the Company's revenue, improve contribution margins and lead us towards profitability. We believe that we continue to be well-positioned as a leader in providing green light steel structural solutions. All of these improvements took place during a very busy quarter where we successfully relocated our structural products division from Cambridge, Ontario to Vaughan, Ontario, and also completed the work on our initial public offering on both AIM and the TSX," said Vince Mifsud, Genesis Worldwide's President and Chief Executive Officer.

Conference Call

The Genesis management team will discuss its Q2 2007 results on a conference call to be held on Thursday, August 2, 2007 at 8:30 a.m. Eastern time (1:30 p.m. BST). A webcast link (audio only) will be made available from the Investor Relations portal of Genesis' web site at http://www.genesisworldwide.com/financial-reports.aspx. There will be a short presentation followed by a question and answer period (Q & A for conference call participants only) lasting for approximately one (1) hour.

Conference Call Details ----------------------- Date: Thursday, August 2, 2007 Time: 8:30 a.m. Eastern time (1:30 p.m. BST) Local dial-in number: 416-340-8010 North America toll-free: 866-540-8136 Global toll-free: 800-8989-6323 (dial the international access code of the country you are calling from, i.e. a call from the United Kingdom would be dialed 00-800-8989-6323)

A replay of the call will be made available through the Genesis' Investor Relations web site portal at http://www.genesisworldwide.com/financial-reports.aspx, or by dialing 416-695-5800 (local callers only), or toll-free at 1-800-408-3053 (passcode 3230962 followed by the number sign), from approximately 12:00 p.m. Eastern time on the date of the call through to August 9, 2007.

About Genesis Worldwide Inc.

Genesis is headquartered in Mississauga, Ontario, Canada and has licensees worldwide. Genesis develops and licenses structural building technology aimed at the residential, commercial and institutional building markets. Genesis offers licensees a turn-key solution enabling them to custom design, manufacture and install complete light steel building structures. The Genesis Solution encompasses engineered processes and materials that are environmentally sustainable or "green". For additional information about the Company, visit www.genesisworldwide.com.

Forward-Looking Information

Certain statements contained in this press release constitute forward-looking information within the meaning of securities laws. Forward-looking information may relate to the Company's future outlook and anticipated events or results and, in some cases, can be identified by terminology such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or other similar expressions concerning matters that are not historical facts. These statements are based on certain factors and assumptions including expected growth, results of operations, performance and business prospects and opportunities. While the Company considers these assumptions to be reasonable based on information currently available to us, they may prove to be incorrect. Forward-looking information is also subject to certain factors, including risks and uncertainties that could cause actual results to differ materially from what we currently expect. These factors include changes in market and competition, governmental or regulatory developments and general economic conditions. Additional information identifying risks and uncertainties relating to the Company, its business and prospects are contained in Genesis' prospectus filed with the Canadian securities regulatory authorities, available at www.sedar.com.

Genesis Worldwide Inc. INTERIM CONSOLIDATED BALANCE SHEETS (unaudited) As at As at June 30, December 31, 2007 2006 $ $ ------------------------------------------------------------------------- ASSETS Current Cash and cash equivalents 16,161 1,011,386 Accounts receivable, net 5,297,844 5,626,735 Inventories 858,300 769,441 Prepaid expenses and deposits 900,928 470,352 ------------------------------------------------------------------------- Total current assets 7,073,233 7,877,914 ------------------------------------------------------------------------- Long-term accounts receivable 431,250 - Property, plant and equipment 3,042,975 2,870,557 Deferred share issue costs 3,193,337 - Intangible assets 2,253,979 2,320,199 ------------------------------------------------------------------------- 15,994,774 13,068,670 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY) Current Accounts payable and accrued liabilities 4,544,528 4,744,193 Accrued share issue costs 3,140,066 - Warrants liability 600,000 600,000 Deferred revenue - current portion 2,777,595 2,141,733 Minimum royalty payment obligations 25,300 23,140 ------------------------------------------------------------------------- Total current liabilities 11,087,489 7,509,066 ------------------------------------------------------------------------- Long-term Deferred revenue 431,250 - Debentures due to related parties 6,000,000 3,190,585 Minimum royalty payment obligations 1,535,512 1,549,162 ------------------------------------------------------------------------- Total long-term liabilities 7,966,762 4,739,747 ------------------------------------------------------------------------- Shareholders' equity (deficiency) Capital stock 42,174,920 42,174,920 Contributed surplus 125,356 65,293 Deficit (45,359,753) (41,420,356) ------------------------------------------------------------------------- Total shareholders' equity (deficiency) (3,059,477) 819,857 ------------------------------------------------------------------------- 15,994,774 13,068,670 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Genesis Worldwide Inc. INTERIM CONSOLIDATED STATEMENTS OF LOSS, COMPREHENSIVE LOSS AND DEFICIT (unaudited) Three months ended June 30 Six months ended June 30 -------------------------- ------------------------ 2007 2006 2007 2006 $ $ $ $ ------------------------------------------------------------------------- Revenues Licensing 2,677,846 20,340 3,636,624 182,642 Structural products 2,340,418 3,391,666 5,370,938 7,916,498 ------------------------------------------------------------------------- Total revenues 5,018,264 3,412,006 9,007,562 8,099,140 ------------------------------------------------------------------------- Direct cost of revenues Licensing 1,555,272 10,412 2,079,943 73,841 Structural products 1,964,659 3,279,594 4,055,476 7,655,106 ------------------------------------------------------------------------- Total direct cost of revenues 3,519,931 3,290,006 6,135,419 7,728,947 ------------------------------------------------------------------------- 1,498,333 122,000 2,872,143 370,193 ------------------------------------------------------------------------- Expenses Research and development (recovery) (120,023) 269,141 111,128 506,867 Selling and marketing 439,953 289,495 825,924 534,645 Engineering and project management 471,619 444,249 857,798 719,343 General and administrative 808,650 1,042,347 1,827,717 1,636,441 Occupancy 323,957 280,530 627,540 604,440 Plant commissioning and restructuring costs 526,706 - 749,297 - ------------------------------------------------------------------------- 2,450,862 2,325,762 4,999,404 4,001,736 ------------------------------------------------------------------------- Loss before other expenses (952,529) (2,203,762) (2,127,261) (3,631,543) ------------------------------------------------------------------------- Amortization of property, plant and equipment 198,881 157,694 376,061 278,544 Amortization of intangible assets 67,412 67,413 134,825 134,826 Foreign exchange gain (36,413) (44,310) (49,620) (17,510) Bank interest expense - net - 22,163 - 17,287 Minimum royalty accretion 74,145 73,236 148,472 146,472 Debenture and loan interest expense 470,614 - 1,088,948 - ------------------------------------------------------------------------- 774,639 276,196 1,698,686 559,619 ------------------------------------------------------------------------- Net loss and comprehensive loss for the period (1,727,168) (2,479,958) (3,825,947) (4,191,162) Deficit, beginning of period (43,632,585) (35,671,948) (41,533,806) (33,960,744) ------------------------------------------------------------------------- Deficit, end of period (45,359,753) (38,151,906) (45,359,753) (38,151,906) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net loss per share Basic and diluted (0.08) (0.12) (0.18) (0.20) Weighted average number of common shares outstanding - basic and diluted 20,982,858 20,982,858 20,982,858 20,982,858 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Genesis Worldwide Inc. INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW (unaudited) Three months ended June 30 Six months ended June 30 -------------------------- ------------------------ 2007 2006 2007 2006 $ $ $ $ ------------------------------------------------------------------------- OPERATING ACTIVITIES Net loss for the period (1,727,168) (2,479,958) (3,825,947) (4,191,162) Adjustments for non-cash items Amortization of property, plant and equipment 198,881 157,694 376,061 278,544 Amortization of intangible assets 67,412 67,413 134,825 134,826 Stock compensation expense 51,501 8,562 60,063 17,124 Debenture interest expense accretion 342,215 - 809,453 - Minimum royalty accretion 74,145 73,236 148,472 146,472 ------------------------------------------------------------------------- (993,014) (2,173,053) (2,297,073) (3,614,196) Changes in non-cash working capital balances related to operations Accounts receivable (380,269) (477,888) (102,359) (878,481) Inventories 1,476,668 (489,669) (88,859) (540,134) Prepaid expenses and deposits (619,127) (66,238) (430,576) (76,014) Accounts payable and accrued liabilities (626,933) 175,999 (381,720) (653,212) Deferred revenue 791,801 397,640 1,067,112 1,358,768 ------------------------------------------------------------------------- Cash used in operating activities (350,874) (2,633,209) (2,233,475) (4,403,269) ------------------------------------------------------------------------- FINANCING ACTIVITIES Decrease in bank indebtedness - (2,952,492) - (1,526,682) Debenture proceeds - - 2,000,000 - ------------------------------------------------------------------------- Cash provided by (used in) financing activities - (2,952,492) 2,000,000 (1,526,682) ------------------------------------------------------------------------- INVESTING ACTIVITIES Additions to property, plant and equipment (349,171) (30,099) (548,479) (195,321) Additions to deferred IPO costs (53,271) - (53,271) - Minimum royalties paid (80,000) (40,000) (160,000) (80,000) ------------------------------------------------------------------------- Cash used in investing activities (482,442) (70,099) (761,750) (275,321) ------------------------------------------------------------------------- Net decrease in cash and cash equivalents during the period (833,316) (5,655,800) (995,225) (6,205,272) Cash and cash equivalents, beginning of period 849,477 7,285,415 1,011,386 7,834,887 ------------------------------------------------------------------------- Cash and cash equivalents, end of period 16,161 1,629,615 16,161 1,629,615 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Supplemental cash flow information Interest paid 171,018 22,163 312,842 17,287 Income taxes paid - - - - ------------------------------------------------------------------------- ------------------------------------------------------------------------- 2007 Non-cash investing activities The Company recorded a long-term receivable in the amount of $575,000 for a contract with a customer with an offsetting increase in deferred revenue. The Company recorded costs of $3,193,337 relating to its initial public offering, of which $3,140,066 are in accrued share issue costs. The Company recorded additions of $68,605 to intangible assets with an offsetting increase in accounts payable and accrued liabilities. ------------------------------------------------------------------------- -------------------------------------------------------------------------

For further information: Genesis Worldwide Inc., Catherine Smyth, Manager, Investor Relations, Tel: (905) 285-9909, ext. 302 or Canaccord Adams, Robert Finlay, Erin Needra, Tel: +44 020 7050 6500 (GWI)