Empire Industries Ltd.

Empire Industries Ltd.

August 30, 2010 18:58 ET

Empire Industries Reports 2010 Second Quarter Results, Appointment of Independent Board Chair

WINNIPEG, MANITOBA--(Marketwire - Aug. 30, 2010) - Empire Industries Ltd. (TSX VENTURE: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.

About Empire Industries Ltd.

Empire Industries Ltd. is based primarily in western Canada, and operates in two market segments: Specialized Engineered Product Manufacturing and Steel Fabrication. It also participates in a strategic partnership in the industrial maintenance services sector through its equity stake in ACE Industrial Services, based in Fort McMurray. The Company's business operations are focused on the infrastructure, commercial and industrial construction marketplace of western Canada and select niche markets internationally. Empire's common shares are listed on the TSX Venture Exchange under the symbol EIL.

Caution Concerning Forward-Looking Statements

This news release contains forward-looking statements, within the meaning of applicable securities legislation, concerning Empire's business and affairs. In certain cases, forward-looking statements can be identified by the use of words such as ''plans'', ''expects'' or ''does not expect'', ''budget'', ''scheduled'', ''estimates'', "forecasts'', ''intends'', ''anticipates'' or variations of such words and phrases or state that certain actions, events or results ''may'', ''could'', ''would'', ''might'' or ''will be taken'', ''occur'' or ''be achieved''. These forward looking statements are based on current expectations, and are naturally subject to uncertainty and changes in circumstances that may cause actual results to differ materially. Readers are cautioned not to place undue reliance on such forward-looking statements. Forward-looking information is provided as of the date of this press release, and Empire assumes no obligation to update or revise them to reflect new events or circumstances, except as may be required under applicable securities laws.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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