EDMONTON, Nov. 10 /CNW/ - Resin Systems Inc. (RS - TSX / RSSYF - OTCBB),
a composite products development company ("RS"), announces its financial and
operational results for the quarter ended September 30, 2006. RS has filed its
unaudited consolidated financial statements for the quarter and related
management's discussion and analysis with Canadian securities regulatory
authorities. The financial statements and management's discussion and analysis
have also been filed with the United States Securities and Exchange
Commission. Copies of the respective documents are available at www.sedar.com,
www.sec.gov and RS's website at www.grouprsi.com. RS reports in Canadian
dollars and all financial references in this news release are in Canadian
dollars unless otherwise noted.
Overview
Since starting its first product development in 2004, RS has successfully
created the RStandard(TM) product line of leading-edge utility poles. RS
continues to build the RStandard business globally and is receiving increasing
orders from its expanding customer base.
As a composite product innovator, RS has numerous products in various
stages of development including multiple advanced opportunities. In general,
these products present significant market opportunities while having
manageable barriers of entry. In most cases, RS will commercialize these new
products through licensed manufacturing arrangements.
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Financial Results
- RS achieved revenues of over $2 million;
- Net loss for the quarter ended September 30, 2006 was $12.8 million;
- RS consolidated its operations in Calgary, AB resulting in mostly
non-cash charges of $1.8 million. This consolidation allows RS to
eliminate $750,000 to $900,000 per quarter from its operating costs,
starting in the fourth quarter; and
- Cash burn was reduced by more than 20% compared to the second
quarter, with $7.7 million used in operations compared to
$9.9 million during the second quarter.
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RStandard Production
RS has developed a plan to address its production challenges and is
successfully executing it. The third quarter results have begun to show
initial results of RS's plan with significant progress made in the area of
RStandard production.
The most significant impact has been a substantial increase in production
with third quarter finished production 3.7 times second quarter production
levels.
In addition, RS successfully reduced unit costs 58 percent by reducing
the amount of material usage not resulting in finished product. Material
wastage, scrapped modules, and modules used for product testing all contribute
to costs in this area.
The amount of production approved for sale increased substantially, with
pass rates (the percentage of production approved for sale to customers)
climbing from an average of 22 percent in the second quarter to 66 percent by
the end of the third quarter and surpassing 75 percent by the end of October.
RStandard Market Penetration
RS continues to gain traction in the North American utility pole market
and increased the number of total customers 25 percent over the second
quarter.
RS continues to respond to global expressions of interest in RStandard
technology. In addition to the regions of Australia and China which have a
been a focus for some time, RS is in discussions with various interested
parties in South Korea, Philippines, India, The Middle East, the Mediterranean
region, Brazil and Mexico.
Product Development
RS has continued to execute its plan to complete product development of
its second product, VRoll, a composite tube to be used in bulk handling
conveyor systems. RS successfully completed internal and external testing of
VRoll during the third quarter and remains focused on finalizing the
commercialization model for VRoll. RS anticipates taking the product to market
in 2007.
Conference Call
RS will host a conference call on Friday, November 10, 2006 starting at
9:00 a.m., Mountain Time (11:00 a.m. Eastern Time) to discuss RS's third
quarter 2006 financial and operating results.
To participate in the conference call, please dial 1-866-585-6398
(toll-free in North America) or (416) 849-9626 approximately 10 minutes prior
to the call. A live audio webcast of the conference call will also be
available via RS's website, www.grouprsi.com, on the home page. The webcast
will be archived for approximately 90 days.
Reader Advisory
Certain information set forth in this news release, including
management's assessment of RS's future plans, operations, financial guidance
and long-term growth prospects, contains forward-looking statements which are
based on RS's current internal expectations, estimates, projections,
assumptions and beliefs, which may prove to be incorrect. Some of the
forward-looking statements may be identified by words such as "expects",
"anticipates", "believes", "projects", "plans" and similar expressions. These
statements are not guarantees of future performance and undue reliance should
not be placed on them. Such forward-looking statements necessarily involve
known and unknown risks and uncertainties, which may cause RS's actual
performance and financial results in future periods to differ materially from
any projections of future performance or results expressed or implied by such
forward-looking statements. These risks and uncertainties include, among other
things, RS's lack of revenues and unpredictability of future revenues; the
uncertainty of the profitability of existing and contemplated products of RS;
RS's ability to raise capital on acceptable terms when needed; RS's ability to
attract and retain key employees; competition from established competitors
with greater resources; the uncertainty of the developing markets in which RS
operates; the risks associated with rapidly changing technology; RS's reliance
on third parties to supply raw materials and the cost of such raw materials;
RS's reliance on third party licensees in international markets; intellectual
property risks, risks associated with international operations, foreign
exchange rate fluctuations and changes in general economic, market and
business conditions. Many of these risks and uncertainties are described in
RS's 2005 Annual Information Form and other documents RS files with the
Canadian securities authorities and the United States Securities and Exchange
Commission. The forward-looking statements are made as of the date hereof and
RS assumes no obligation to update or revise such statements to reflect new
events or circumstances unless otherwise required to by applicable securities
laws.
About RS
RS is a composite product innovator. RS develops advanced composite
products for large-scale industrial markets. These products replace products
which traditionally have been made using conventional building blocks of wood,
concrete and steel. The foundation of RS is continuous innovation and product
development utilizing its proprietary Version(TM) polyurethane resin system.
RS's business strategy is to continually seek out future business
opportunities in its realm of expertise while applying a focused, disciplined
approach to commercializing those opportunities that pass its business tests.
To date, RS has successfully developed and is bringing to market the award
winning RStandard(TM) modular composite transmission and distribution
structure and is in various stages of development of additional new composite
products. For the latest on RS's developments, click on "Latest News" on
www.grouprsi.com.
"Version", "RStandard" and "VRoll" are trademarks of Resin Systems Inc.
