Genesis Worldwide Inc.
TSX : GWI

Genesis Worldwide Inc.

May 05, 2009 18:21 ET

Genesis Worldwide Inc. Signs First Solution Provider and Improves Operating Results

MISSISSAUGA, ONTARIO--(Marketwire - May 5, 2009) - Genesis Worldwide Inc. ("Genesis" or the "Company"), (TSX:GWI), a leading provider of 'green' structural building products and technology in the light steel structural products industry, announces its financial results for the first quarter ended March 31, 2009. All dollar amounts are in Canadian dollars unless otherwise stated.

Overall Performance

The following are the Company's key business highlights during the quarter -

- Shipped its fourth Material Optimization Technology ("MOT") line to its Russian licensee, Metallist Ltd. In addition, the Company completed the installation of its first building project in Krasnodar, Russia.

- Signed a Strategic Alliance with China Perfect, endorsing the Genesis light steel structural system as the product of choice for their own six storeys and under building projects in China and North Africa.

- The Company signed its first Solution Provider arrangement with Thuli Inc. ("Thuli"). Thuli is located in South Africa and will be focused on providing the Genesis Solution to their local market.

- On February 23, 2009, completed a financing initiative with proceeds of $1,534,742 from a secured convertible debenture.

- Implemented numerous research and development initiatives to drive further cost reductions, including its GEM 4.0 hosted application, and MOT 1.1, which includes a new bent tab SMART component and control system upgrade enabling more efficient truss manufacturing.

- Signed a new green structural products project in the mid-rise residential market with a repeat customer consisting of four buildings.

- Increased backlog by 11% to $42.0 million as at March 31, 2009, compared to $38.0 million as at March 31, 2008.

- Reduced operating costs by approximately 30%, compared to the fourth quarter of 2008, and 45% from the first three quarters of 2008.

- Improved contribution margin percentage for its green structural products division to 21% in the first quarter of 2009, up from 16% over the previous quarter.

- Improved operating results in the first quarter of 2009 by reducing loss before other items to $453,747, compared to $903,863 for the first quarter of 2008.

- Achieved fourth consecutive quarter of improved results of operations as indicated in the chart below:



Operating Results Before Other Items
(unaudited, in thousands of dollars)


----------------------------------------------------------------------------
Structural
Period Licensing Products Corporate Total
----------------------------------------------------------------------------
Q1 2009 $ 68 $ (72) $ (450) $ (454)
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Q4 2008 (63) (680) (587) (1,330)
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Q3 2008 304 (695) (1,086) (1,477)
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Q2 2008 (250) (1,183) (613) (2,046)
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Financial Highlights

Three Months Ended March 31, 2009

- Total revenue for the first quarter ended March 31, 2009 decreased 37% to $4,878,637, compared to $7,682,126 for the same period in 2008.

- Revenue for the licensing division for the first quarter ended March 31, 2009 decreased 31% to $2,225,533, compared to $3,217,484 for the same period in 2008. Comparative quarterly results will vary depending on timing of shipment of industrial products.

- Revenue for the structural products division for the first quarter ended March 31, 2009 decreased 40% to $2,653,104, compared to $4,464,642 for the same period in 2008, reflecting a slowdown in the Ontario construction market.

- Improved contribution margin percentage for the structural products division to 20.9% for the first quarter ended March 31, 2009, compared to each of the previous four quarters.

- Operating expenses for the first quarter ended March 31, 2009 decreased 45% to $1,758,425, compared to $3,186,143 for the same period in 2008.

- Improved loss before other expenses for the first quarter ended March 31, 2009 to $453,747, compared to a loss of $903,863 for the same quarter of 2008.

- Improved net loss for the first quarter ended March 31, 2009 to $944,925, or ($0.03) per common share, compared to a net loss of $1,240,559, or ($0.04) per common share, for the same period in 2008.

Backlog

Backlog for the licensing division is defined as undelivered contractual commitments, other than minimum royalty obligations, and assumes that in cases of multi-year/multi-facility commitments by licensees, subsequent facilities match the industrial technology configured for the first facility. Backlog for the structural products division is defined as the undelivered portion of signed construction contracts. The timing of these contractual commitments into revenue is uncertain and the possibility exists that contractual commitments can be de-booked.

A breakdown of the Company's backlog is as follows:

- Total backlog as at March 31, 2009 was approximately $42.0 million, representing an 11% increase over backlog of approximately $38.0 million as at March 31, 2008.

- Backlog for the licensing division as at March 31, 2009 was approximately $16.0 million. This excludes minimum royalty obligations.

- Backlog for the structural products division as at March 31, 2009 was approximately $26.0 million.

Conference Call/Webcast

The Genesis management team will discuss its first quarter 2009 financial results on a conference call to be held on Wednesday, May 6, 2009 at 8:30 a.m. Eastern time (1:30 p.m. BST). As well, a webcast link (audio only) will be made available from the Investor Relations portal of Genesis' website at http://www.genesisworldwide.com/investor_relations.php?id=3. There will be a short presentation followed by a question and answer period lasting for approximately one (1) hour.



Conference Call Details
-----------------------

Date: Wednesday, May 6, 2009
Time: 8:30 a.m. Eastern time (1:30 p.m. BST)
Local dial-in: 416-695-7806
North America toll-free: 888-789-9572
Global toll-free: 800-6578-9818 (dial the international access
code of the country you are calling from,
i.e. a call from the United Kingdom would
be dialed 00-800-6578-9898)
Participant Passcode: 2374744


A replay of the call will be made available through the Genesis' Investor Relations website portal at http://www.genesisworldwide.com/investor_relations.php?id=3, or by dialing 416-695-5800 (local callers only), or toll-free at 1-800-408-3053 (passcode 5484255#), from approximately 12:00 p.m. Eastern time on the date of the call through to Wednesday, May 13, 2009.

Further information regarding the Company, and its business and operations, may be obtained from the Company's continuous disclosure documents filed from time-to-time with the Canadian securities regulatory authorities. These continuous disclosure documents are available through the Company's web site at www.genesisworldwide.com, or through the SEDAR website maintained by the Canadian securities regulatory authorities, which can be accessed at www.sedar.com.

About Genesis Worldwide Inc.

Genesis is a leading provider of green light steel structural building products, systems and technology targeted at the global commercial, residential and institutional building sectors. Genesis delivers customized turnkey structural solutions including innovative light steel products, software packages, industrial equipment, training programs, professional services and support. Headquartered in the Greater Toronto Area in Ontario, Canada, Genesis has established a network of partners with engineering, manufacturing and distribution operations in Canada, the United States, the Middle East, Eastern Europe and Russia. For additional information about the Company, visit www.genesisworldwide.com.

Caution Regarding Forward-Looking Information

Certain statements in this press release which are not historical facts constitute forward-looking statements or forward-looking information within the meaning of applicable securities laws ("forward-looking statements") and are made pursuant to the "safe harbour" provisions of such laws. Statements related to the Company's projected revenues, earnings, growth rates, performance, business prospects and opportunities are forward-looking statements, as are any statements relating to future events, conditions or circumstances. The use of terms such as "may", "will", "should", "plan", "believes", "predict", "potential", "anticipate", "expect", "project", "target", "estimate", "continue", and similar terms are intended to assist in identification of these forward-looking statements. These statements are based on certain factors and assumptions including expected growth, results of operations, performance and business prospects, and opportunities. These assumptions, although considered reasonable by the Company at the time of preparation, may prove to be incorrect.

Readers are cautioned not to place undue reliance upon any such forward-looking statements. Such forward-looking statements are not promises or guarantees of future performance and involve both known and unknown risks and uncertainties that may cause the actual results, performance or achievements of the Company to differ materially from the results, performance, achievements or developments expressed or implied by such forward-looking statements.

Many factors could cause the actual results of the Company to differ materially from the results, performance, achievements or developments expressed or implied by such forward-looking statements, including, without limitation, those factors discussed under the heading "Risk Factors" in the Company's most recent Annual Information Form ("AIF"), a copy of which is available on SEDAR at www.sedar.com. Forward-looking statements are based on management's current plans, estimates, projections, beliefs and opinions, and the Company does not undertake any obligation to update forward-looking statements, except required by law, should assumptions related to these plans, estimates, projections, beliefs and opinions change.



Genesis Worldwide Inc.

INTERIM CONSOLIDATED BALANCE SHEETS

(unaudited)

As at As at
March 31 December 31
2009 2008
$ $
--------------------------
ASSETS
Current
Cash and cash equivalents 422,793 167,064
Accounts receivable 7,278,192 7,780,771
Inventories and deposits on equipment 976,212 1,626,187
Prepaid expenses 295,510 310,964
--------------------------
Total current assets 8,972,707 9,884,986
Restricted cash 500,000 500,000
Property, plant and equipment 4,607,604 4,848,059
Intangible assets 2,058,315 2,105,862
--------------------------
16,138,626 17,338,907
--------------------------
--------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities 6,948,900 6,916,928
Term loan - current portion 582,500 570,943
Deferred revenue - current portion 1,102,496 2,779,266
Minimum royalty payment obligations 382,126 376,792
--------------------------
Total current liabilities 9,016,022 10,643,929
--------------------------
--------------------------

Long-term
Long-term payables 76,937 -
Convertible debenture 1,367,245 -
Term loan 834,971 983,253
Minimum royalty payment obligations 913,730 1,002,923
--------------------------
Total long-term liabilities 3,192,883 1,986,176
--------------------------


Shareholders' equity
Capital stock 56,733,075 56,733,075
Convertible debenture 129,919 -
Contributed surplus 1,282,781 1,246,358
Deficit (54,216,054) (53,270,631)
--------------------------
Total shareholders' equity 3,929,721 4,708,802
--------------------------
16,138,626 17,338,907
--------------------------
--------------------------



Genesis Worldwide Inc.

INTERIM CONSOLIDATED STATEMENT OF LOSS, COMPREHENSIVE LOSS AND DEFICIT

(unaudited)


Three months ended
-----------------------------
March 31 March 31
2009 2008
$ $
-----------------------------

Revenues
Licensing 2,225,533 3,217,484
Structural products 2,653,104 4,464,642
-----------------------------
Total revenues 4,878,637 7,682,126
-----------------------------

Direct cost of revenues
Licensing 1,475,668 1,772,402
Structural products 2,098,291 3,627,444
-----------------------------
Total direct cost of revenues 3,573,959 5,399,846
-----------------------------
1,304,678 2,282,280
-----------------------------

Expenses
Research and development 199,544 433,221
SR&ED tax credit (50,000) (57,217)
Selling and marketing 301,554 590,736
Engineering and project management 263,427 464,737
General and administrative 693,206 1,374,723
Occupancy 350,694 379,943
-----------------------------
1,758,425 3,186,143
-----------------------------
Loss before other expenses (453,747) (903,863)
-----------------------------
Amortization of property, plant and equipment 235,649 200,890
Amortization of intangible asset 67,413 67,656
Foreign exchange loss 27,591 45,135
Loss on fixed asset disposal 4,543 -
Interest expense (income), net 32,731 (50,434)
Minimum royalty accretion 66,141 73,449
Term loan and debenture interest expense 57,110 -
-----------------------------
491,178 336,696
-----------------------------
Net loss and comprehensive loss for the period (944,925) (1,240,559)
-----------------------------

Deficit, beginning of period (53,271,129) (46,041,668)

Deficit, end of period (54,216,054) (47,282,227)
-----------------------------
-----------------------------

Loss per share
Basic and diluted $ (0.03) $ (0.04)
-----------------------------
-----------------------------
Weighted average number of
shares outstanding 30,982,858 30,982,858
-----------------------------
-----------------------------


Genesis Worldwide Inc.

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

Three months ended
-------------------------
March 31 March 31
2009 2008
-------------------------
$ $

OPERATING ACTIVITIES
Net loss for the year (944,925) (1,240,559)
Adjustments for non-cash items
Amortization of property, plant and equipment
and intangible asset 303,062 268,546
Loss on asset disposal 4,543 -
Stock-based compensation expense 36,423 45,000
Unrealized foreign exchange loss 742 -
Minimum royalty accretion 66,141 73,449
-------------------------
(534,014) (853,564)
Changes in non-cash working capital balances
related to operations
Accounts receivable, net 502,579 943,211
Inventories and deposits on equipment 649,975 (149,345)
Prepaid expenses 15,455 107,730
Accounts payable and accrued liabilities 31,970 (1,144,550)
Deferred revenue (1,676,770) (2,397,263)
-------------------------
Cash used in operating activities (1,010,805) (3,493,781)
-------------------------

FINANCING ACTIVITIES
Repayment on term loan (136,726) -
Changes in long-term liability 76,937 -
Convertible debenture issued, net of issue
costs paid 1,497,165 -
-------------------------
Cash provided by financing activities 1,437,376 -
-------------------------

INVESTING ACTIVITIES
Additions to property, plant and equipment (34,491) (485,279)
Disposals to property, plant and equipment 33,515 -
Deferred patent costs (19,866) -
Minimum royalties paid (150,000) (80,000)
-------------------------
Cash used in investing activities (170,842) (565,279)
-------------------------

Net increase (decrease) in cash and
cash equivalents during the year 255,729 (4,059,060)
Cash and cash equivalents, beginning of period 167,064 5,987,862
-------------------------
Cash and cash equivalents, end of period 422,793 1,928,802
-------------------------
-------------------------

Supplemental cash flow information
Interest paid 28,853 -
-------------------------
-------------------------

Contact Information

  • Genesis Worldwide Inc.
    Catherine Smyth
    Manager, Investor Relations
    (905) 285-9909, ext. 302