HIGHLIGHTS
- Revenues and net income down compared with the same period a year ago.
- $95 million worth of new contracts signed in the first quarter.
- Order backlog reached $158.7 million as at April 30, 2018, which is $73 million more than as at January 31, 2018.
TERREBONNE, QC, June 13, 2018 /CNW Telbec/ - ADF GROUP INC. ("ADF" or the "Corporation") (Ticker symbol:TSX: DRX), recorded revenues of $28.5 million during the first quarter ended April 30, 2018, compared with $48.6 million for the same quarter a year ago.
The gross margin, as a percentage of revenues, went from 10.7% during the quarter ended April 30, 2017, to 2.8% during the three-month period ended April 30, 2018. This decrease, as a percentage of revenues, is attributable to the drop in business volume. While fabrication on certain projects is almost completed, work on the newly signed contracts has not yet started. Because of the low level of costs incurred, paired with an ineffective absorption of fixed costs, the margins, as a percentage of revenues, were penalized twice over. In addition, the temporary layoffs announced at the end of March 2018 had little impact on the results of the first quarter ended April 30, 2018.
For the first quarter ended April 30, 2018, ADF recorded a negative net income of $910,000 (($0.03) basic and diluted per share) compared with a net income of $354,000 ($0.01 basic and diluted per share) a year ago.
The order backlog of the Corporation stood at $158.7 million as at April 30, 2018, compared with $85.5 million as at January 31, 2018. The current order backlog will extend until the third quarter of the fiscal year ending January 31, 2020. On April 30, 2018, working capital stood at $32.7 million. The Corporation takes appropriate measures in order to support the growth of its order backlog. To that effect, the Corporation has reached agreements with its financial institutions, and has implemented other measures to proactively managing its liquidity.
Financial Highlights
| Three-Month Periods Ended April 30, |
2018 |
2017 |
| (In thousands of dollars, and dollars per share) |
$ |
$ |
| Revenues |
28,477 |
48,638 |
| Earnings before interest, tax, depreciation and amortization (EBITDA) |
(1,186) |
3,081 |
| Net income for the period |
(910) |
354 |
| — Per share (basic and diluted) |
(0.03) |
0.01 |
| Average number of outstanding shares (basic, in thousands) |
32,635 |
32,627 |
| Average number of outstanding shares (diluted, in thousands) |
32,635 |
32,660 |
New Orders
On April 23, 2018, the Corporation announced the award of major contracts in the United States worth a total of $95 million. These new orders are part of new construction projects of commercial and industrial buildings, and call for the fabrication, encompassing shop drawings, the supply of raw material (steel) and industrial coating, and the installation of complex steel structures and heavy steel components. These new orders will be carried out at both of ADF's fabrication plants.
Outlook
"We are not satisfied with the results achieved during the first quarter ended April 30, 2018, even though that period was impacted by a series of factors, among which, the talks regarding the new tariffs on steel imports. Although this situation is constantly evolving, we are closely monitoring it, and we will analyze the potential impacts thereof on our operations" indicated Mr. Jean Paschini, Co-Chairman of the Board of Directors and Chief Executive Officer. "Despite this, and although selling prices in the markets served by ADF stay low, the number of potential projects remains interesting, and encourages us to pursue our efforts. It is with this in mind that we continue our efforts to renew our order backlog all the while maintaining our operational excellence" concluded Mr. Paschini.
Work-Sharing Program
Given the projects currently included the order book and the fabrication schedules thereof, the Corporation applied and received the approval from Service Canada to implement a Work-Sharing program for a certain number of its Terrebonne plant employees. The program, which came into effect on June 11, 2018, will allow certain employees to receive Employment Insurance benefits to make up for the reduced work hours. The Corporation and its union employees reached an agreement to put this program in place. This program will enable ADF to closely manage its costs until the fabrication work on the recently awarded projects begins. Thus, approximately 120 employees will have their working hours reduced from 40% to 60%, and these hours will be compensated by the Government program.
Conference Call with Investors
A conference call with investors is scheduled for today, June 13, 2018 at 10 a.m. (Eastern time) to discuss the results of Corporation first quarter results ended April 30, 2018.
To take part in the conference call, dial 1-888-390-0549, a few minutes prior to the conference call scheduled start time. A replay of this conference call will be available from June 13, 2018 at 1:00 p.m. until 11:59 p.m., June 20, 2018, by dialing 1-888-259-6562, followed by the access code 620166#.
The conference call (audio) will also be available at www.adfgroup.com. Members of the media are invited to listen in.
Annual Meeting of Shareholders
ADF Group Inc. Annual Meeting of Shareholders will be held on today, June 13, 2018, at 11:00 a.m., at the Imperia Hotel & Suites, located at 2935 de la Pinière Boulevard, Terrebonne, Quebec.
About ADF Group Inc.
ADF Group Inc. is a North American leader in the design and engineering of connections, fabrication, including industrial coatings, and installation of complex steel structures, heavy steel built-ups, as well as in miscellaneous and architectural metals for the non-residential construction industry. ADF Group Inc. is one of the few players in the industry capable of handling highly technically complex mega projects on fast-track schedules in the commercial, institutional, industrial and public sectors. The Corporation operates two fabrication plants and two paint shops, in Canada and in the United States.
Non-IFRS Measures
Earnings before interest, taxes, depreciation and amortization ("EBITDA") is not a performance measure recognized by IFRS standards, and is not likely to be comparable to similar measures presented by other issuers. Management, as well as investors, consider this to be useful information to assist them in assessing the Corporation's profitability and ability to generate funds to finance its operations. Refer to the section "Non-GAAP Measures" of the Corporation's Management's Discussion and Analysis for the definition of this metric and reconciliation to the most comparable IRFS measures.
Forward-Looking Information
This press release contains forward-looking statements reflecting ADF objectives and expectations. These statements are identified by the use of verbs such as "expect" as well as by the use of future or conditional tenses. By their very nature these types of statements involve risks and uncertainty. Consequently, reality may differ from ADF's expectations.
All amounts are in Canadian dollars, unless otherwise indicated.
Website : www.adfgroup.com
SOURCE ADF Group Inc.
ADF GROUP INC., Mr. Jean Paschini, Co-Chair of the Board of Directors and Chief Executive Officer; Mr. Jean-François Boursier, CPA, CA, Chief Financial Officer, Telephone : (450) 965-1911
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