Sep 7 2006
Resin Systems Inc. through its operating division, RS Technologies (collectively "RS"), has achieved consistent improvements in the production of its RStandard 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.
http://www.grouprsi.com/