EDMONTON, Sept. 6 /CNW/ - Resin Systems Inc. (RS - TSX / RSSYF - OTCBB),
a composite products innovator, through its operating division, RS
Technologies (collectively "RS"), has achieved consistent improvements in the
production of its RStandard(TM) composite utility poles since the second
quarter. These improvements are of significance to warrant their timely
release.
As part of its second quarter update in mid-August, RS outlined the
following production issues that negatively impacted its results during that
quarter:
<<
- Materials: RS encountered inconsistent performance issues and higher
than planned material waste in its production process;
- Equipment: RS encountered significant delays resulting from
incomplete performance and insufficiently robust equipment design by
its equipment supplier; and
- Labour: RS encountered staffing challenges due to the constrained
local labour market.
RS has solved the materials difficulties resulting in consistent product
quality, marked decrease in production costs and marked increase in production
output. RS has:
- reduced unit production costs in August approximately 75 percent
lower than those experienced during the second quarter and RS targets
achieving positive gross margins in the fourth quarter;
- achieved consistent product pass rates in August of over 85% and
continued progress to its targeted pass rate of 95%; and
- attained consistent saleable production during August of
approximately four times the weekly averages achieved during the
second quarter and production growth continues.
>>
RS's stabilized and consistent manufacturing process now allows it to
proceed with doubling its production crews to achieve 24 hour, seven day a
week operations of all cells in the fourth quarter. This demonstrated progress
has also enabled RS to consolidate all of its production operations in
Calgary, with the goal of further increasing overall efficiency and reducing
operating overhead.
RS continues to focus on implementing its plan to solve remaining
equipment completion delays and manage the ongoing labour issues while
increasing production levels and efficiencies.
"The advances achieved in production are resulting in marked improvement
in our operating results and will allow us to move forward with our business
plan," said Greg Pendura, Chief Executive Officer and President. "With the
Calgary operations showing steady progress, we are several weeks closer to
proceeding with our planned production capacity growth plans."
With the production progress shown through August, RS expects revenues of
approximately $3 million in the third quarter, $5 million in the fourth
quarter and continued revenue growth from those levels in 2007. In conjunction
with these significant improvements, RS continues to evaluate its optimal
go-forward financing strategy, which it will communicate separately at the
appropriate time.
Finally, RS is completing equipment design for its next production cells
and continued progress at RS's production facility will allow RS to execute
its plan for domestic and global growth in the RStandard business.
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;
intellectual property risks, 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 material product innovator. RS develops advanced
composite products for large-scale global markets. These products replace
those which historically have been made using the conventional building blocks
of wood, concrete and steel. The foundation of RS's product development is
continuous innovation built with its proprietary Version(TM) polyurethane
resin system.
Since 2004, RS has successfully developed and brought to market the award
winning RStandard(TM) modular composite transmission and distribution
structure and is currently in various stages of product development with
further innovative products. For the latest on RS's developments, click on
"Latest News" on www.grouprsi.com.
"Version" and "RStandard" are trademarks of Resin Systems Inc.
