ST. JOHN'S, Jan. 12 /CNW/ - Today, Rutter Inc. (TSX: RUT) released its
audited consolidated financial statements for the year ended August 31, 2008
and disclosed it is currently engaged in exclusive negotiations with an
external party for the sale of certain assets in its Controls and Automation
segment.
Summary financial information is provided in this press release which
should be read in conjunction with the full financial statements and MD&A
available on the Company's web site at www.rutter.ca or on SEDAR at
www.sedar.com.
SUMMARY OF RESULTS
The Company's quarterly and year end results are summarized in the tables
below:
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(in thousands except per share amounts)
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Three Three Change Twelve Twelve Change
Months Months Months Months
2008 2007 2008 2007
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Revenue $ 22,436 $ 23,341 $ (905) $ 86,651 $ 61,735 $ 24,916
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EBITDA (1) (938) 825 (1,763) 769 591 178
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Other (costs)
income (2) (19,422) 233 (19,655) (31,362) (3,125) (28,237)
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Net loss -
Discontinued
Operations 1,959 (1,948) 3,907 352 (2,126) 2,478
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Net loss (18,401) (890) (17,511) (30,241) (4,660) (25,581)
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Loss Per
Share $ (0.24) $ - $ (0.24) $ (0.39) $ (0.09) $ (0.30)
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(1) EBITDA is identified in the Company's financial statements as
"Earnings before undernoted items" and is more fully defined in the
Company's financial statements and MD&A.
(2) Other (costs) income include: Depreciation and amortization; Interest
on long-term debt; Interest and bank charges; (Gain) on sale of
investments; Other items; Equity income; Write down of intangible
assets and product development costs; Goodwill impairment and Income
taxes (recovery); all of which are separately disclosed in the
Company's financial statements.
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(in thousands)
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Three Three Change Twelve Twelve Change
Months Months Months Months
2008 2007 2008 2007
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Technologies
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Revenue:
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Third
party
manufact-
uring $ 6,815 $ 7,461 $ (646) $ 24,386 $ 21,391 $ 2,995
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Company
owned
products 4,426 5,921 (1,495) 19,221 20,971 (1,750)
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Total
revenue 11,241 13,382 (2,141) 43,607 42,362 1,245
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EBITDA (1,208) 1,290 (2,498) 218 4,378 (4,160)
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Controls and
Automation
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Revenue 11,195 9,959 1,236 43,044 19,373 23,671
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EBITDA 891 188 703 2,720 (1,136) 3,856
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Corporate Costs (621) (653) 32 (2,169) (2,651) 482
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RESULTS
The improvement in revenues and EBITDA performance for the year compared
to last year are driven by the acquisition of Hinz Automation (Hinz) in the
fourth quarter of fiscal 2007. Overall EBITDA performance, while improved over
the previous year, has been significantly impacted by an additional warranty
expense of $2,600,000 which was required in the Technologies segment.
Technologies - The increase in revenue for the year is attributable to
third party manufacturing, primarily with the Company's military and
telecommunications customers. EBITDA performance for the segment has been
impacted by an additional warranty expense of $2,600,000 during the year for
the Company's VDR product. Increased selling, general and administrative
expenses include costs relating to a productivity improvement initiative
involving external consultants. This exercise has resulted in significant
change within the operation and has played an important role in the most
recent contract awards from the Company's major military customer. Demand for
the Company's VDR products weakened during the quarter, however the
significant growth continues to occur with the Company's military customers
which, combined with the efficiencies which has been achieved in operations,
will continue to generate stable performance for the segment in the future.
Controls and Automation - The continuing increases in revenues and EBITDA
in this segment are a result of the Hinz acquisition. Project workload in
Western Canada and the US has continued to show a steady, albeit moderate
growth rate and to date, has not been impacted by the economic downturn which
has occurred since the end of the fiscal year. Performance in Atlantic Canada
continues to face some challenges; however the outlook remains positive for
continued improvement.
Other Items and Net Loss - For the quarter the net loss increased by
$17,511,000 from the same quarter last year and for the year the loss
increased by $25,581,000 over the previous year. Included in the current year
are significant non-cash items such as the $9,525,000 goodwill impairment
charge and the $7,459,000 write down of intangible assets and product
development costs. In both cases, the charges relate primarily to assets
acquired as part of the acquisition of Hinz in the prior year. Depreciation
and amortization, also a non-cash item, represents $5,799,000 of the current
year loss. Interest on long term debt of $7,739,000 and severance and contract
termination costs of $1,032,000 also impacted the results.
CONCLUSION
As the year progressed, operational results in the Controls and
Automation segment demonstrated continuous improvement. The Technologies
segment successfully implemented productivity improvements designed to improve
the ongoing operation and its profitability; further expanded its relationship
with its major military customer; and addressed product quality issues with
the second generation of its VDR product. "These achievements are all very
encouraging and the Board remains confident in the underlying viability and
opportunity in both segments of the business," said David Beutel, Chairman of
the Company. "However, in light of the current global financial climate, the
Company needed to take proactive steps to improve its performance and balance
sheet. After exploring all options, the Board has determined the best course
of action is to divest of the assets of the Controls and Automation segment
except the Newfoundland based consulting group, allowing the Company to reduce
and restructure its remaining debt load. The Company is currently engaged in
exclusive negotiations with a potential buyer and anticipates announcing
specific details of these negotiations in the near future."
"The planned divestiture will generate the cash necessary to reduce the
debt significantly, and the Company's lender has agreed in principle
(contingent on the sale of the business unit) to a restructuring of the
remaining debt that will result in lower interest costs," said Ryan Hinz,
President, and CEO. "This restructuring will address the Company's current
debt compliance issues and will allow the Company to move forward, focusing on
core competencies in the Technologies segment and in the portion of the
engineering business to be retained," he concluded.
About Rutter - Rutter Inc. has two business segments, Controls and
Automation and Technologies. Rutter Hinz Inc. is a vendor independent
automation and controls systems engineering enterprise with offices in Canada
and the United States. Rutter Technologies Inc. is a global enterprise
providing voyage data recorders, enhanced radar solutions, marine certified
interfaces, safety lights and other custom integrated electronics systems.
Rutter Technologies is also an ISO 9001: 2000 manufacturer of electronics and
electronic subassemblies for clients in the marine, defense and
telecommunications sectors. For more information see www.rutter.ca.
Forward-Looking Statements
This press release may contain forward-looking statements that involve
risks and uncertainties. These statements reflect current expectations and are
subject to a number of risks and uncertainties including but not limited to,
change in technology and general market conditions. Due to the many risks and
uncertainties, Rutter Inc. cannot assure that forward-looking statements that
may be contained in this press release will be realized.
The TSX has not reviewed and does not accept responsibility for the
adequacy or accuracy of this release.
%SEDAR: 00022015E
