ADF Group Inc. - Results for the first quarter ended April 30, 2012

TERREBONNE, QC, June 13, 2012 /CNW Telbec/ - For the three-month period ended April 30, 2012, ADF GROUP INC. ("ADF" or the "Corporation") (TSX: DRX) recorded revenues of $12.5 million compared with $13.2 million for the same period last year.

The gross margin as a percentage of revenues stood at 14.7% compared with 23.5% in the first quarter of the previous year. This decrease, which started in the third quarter of the 2012 fiscal year, is explained by the different mix of the projects currently underway.

Income before interest, income taxes, depreciation and amortization (EBITDA) amounted to $0.9 million, compared with $2.1 million the previous year.

The Corporation recorded a slight profit of $0.1 million (0.00$ per share) during the first quarter ended April 30, 2012, compared with a net income of $1.1 million ($0.03 per share) in the same period the previous year.

ADF closed the first quarter of the 2013 fiscal year with working capital of $42.3 million, of which $23.6 million in short-term available liquidities (cash, cash equivalents and short-term investments), As at April 30, 2012, ADF Group's short-term available liquidities exceeded its total debt by $18.1 million, whereas the current ratio stood at 4.44:1.

ADF Group's order backlog stood at $43 million on April 30, 2012, compared with $48 million on January 31, 2012. This decrease is mostly attributable to the gradual execution of contracts, net of contract changes and new contracts.

Mr. Jean Paschini, Chairman of the Board and Chief Executive Officer indicated that "the results for the first quarter followed a similar trend as observed in the past quarters, reflecting a still difficult economic environment in our markets. Although ADF Group has maintained a sound performance overall, we are not satisfied with these results. We are very keen on pursuing our goals to provide the Corporation with all the necessary tools to seize the opportunities that arise in this challenging context and to position ADF Group advantageously for the next economic upturn, while seeking to limit exposure to risks associated with our market segments."

Mr. Paschini added that the Corporation is currently analyzing the possibility of setting up a fabrication plant in the United States, which would provide ADF access to the US public infrastructure market for which growth is expected in the coming years.

On April 11, 2012, the Corporation's Board of Directors approved the payment of a semi-annual dividend. Consequently, on May 17, 2012, ADF Group paid a semi-annual dividend of $0.01 per share to shareholders of record as at April 30, 2012.

Annual Meeting of Shareholders

ADF Group's Annual Meeting of Shareholders will take place this morning, June 13, 2012 at 11:00 am at the Hilton Montreal/Laval Hotel in Laval.

About ADF Group Inc.

ADF Group Inc. is a North American leader in the design and engineering of connections, fabrication 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.

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.

Non-IFRS Measures

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.

All amounts are in Canadian dollars, unless otherwise indicated.

CONFERENCE CALL WITH INVESTORS

To discuss ADF Group's results for the first quarter ended April 30, 2012,

June 13, 2012 at 10:00 a.m. (Montreal time)

To participate in the conference call, please dial 1-888-231-8191 a few minutes before the start of the call.

For those unable to participate, a taped rebroadcast will be available from Wednesday, June 13, 2012 at 1:00 p.m.
until midnight June 20, 2012, by dialing 1-855-859-2056; access code 83424725.

The conference call (audio) will also be available at www.adfgroup.com

Members of the media are invited to listen in.

CONSOLIDATED STATEMENT OF INCOME (unaudited)
Three-Month Periods Ended April 30,		2012		2011
(In thousands of Canadian dollars and in dollars per share)		$		$
Revenues		12,464		13,229
Cost of goods sold		10,634		10,123
Gross Margin		1,830		3,106
Selling and administrative expenses		1,729		1,892
Financial revenues		(45)		(95)
Financial expenses		44		60
Foreign exchange gain		(76)		(755)
		1,652		1,102
Income before income tax expense		178		2,004
Income tax expense		87		923
Net income for the period		91		1,081
Earnings per share
Basic per share		0.00		0,03
Diluted per share		0.00		0,03
Average number of outstanding shares (in thousands)		32,464		32,775
Average number of outstanding diluted shares (in thousands)		32,928		33,390
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
Three-Month Periods Ended April 30,		2012		2011
(In thousands of Canadian dollars)		$		$
Net income for the period		91		1,081
Other comprehensive income:
	Exchange differences on translation of foreign operations ^(a)	(366)		(1,495)
Comprehensive income for the period		(275)		(414)

(a)	Net of hedging activities and $12,000 in related income tax for the three-month period ended April 30, 2012 (nil for the three-month period ended April 30, 2011).

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited)
		Capital Stock		Contributed Surplus		Accumulated Other Comprehensive  Income		Retained Income		Total
(In thousands of Canadian dollars)		$		$		$		$		$
Balance, February 1, 2011		70,032		5,740		(1,477)		18,739		93,034
	Net income for the year	-		-		-		1,081		1,081
	Other comprehensive income	-		-		(1,495)		-		(1,495)
	Comprehensive income for the period	-		-		(1,495)		1,081		(414)
	Share-based compensation	-		59		-		-		59
	Dividends	-		-		-		(328)		(328)
Balance, April 30, 2011		70,032		5,799		(2,972)		19,492		92,351
		Capital Stock		Contributed Surplus		Accumulated Other Comprehensive Income		Retained Income		Total
(In thousands of Canadian dollars)		$		$		$		$		$
Balance, February 1, 2012		69,086		6,368		(1,586)		19,895		93,763
	Net income for the period	-		-		-		91		91
	Other comprehensive income	-		-		(366)		-		(366)
	Comprehensive income for the period	-		-		(366)		91		(275)
	Share-based compensation	-		11		-		-		11
	Options exercised	1		-		-		-		1
	Dividends	-		-		-		(325)		(325)
Balance, April 30, 2012		69,087		6,379		(1,952)		19,661		93,175

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at			April 30, 2012	January 31, 2012
			(unaudited)	(audited)
(In thousands of Canadian dollars)			$	$
ASSETS
Current assets
	Cash and cash equivalents		18,209	18,976
	Short-term investments		5,440	5,562
	Accounts receivable		14,171	14,189
	Holdbacks on contracts		4,231	5,082
	Work in progress		7,858	5,263
	Inventories		3,985	3,613
	Prepaid expenses and other current assets		676	782
	Derivative financial instruments		66	-
	Total current assets		54,636	53,467
Non-current assets
	Property, plant and equipment		44,396	45,089
	Intangible assets		2,630	2,618
	Other non-current assets		2,801	2,796
	Deferred income tax assets		4,178	4,549
Total assets			108,641	108,519
LIABILITIES
Current liabilities
	Accounts payable and other current liabilities		6,399	5,551
	Income tax liabilities		21	77
	Deferred revenues		3,360	2,618
	Derivative financial instruments		29	75
	Current portion of long-term debt		2,492	2,526
	Total current liabilities		12,301	10,847
Non-current liabilities
	Long-term debt		3,015	3,676
	Deferred income tax liabilities		150	233
Total liabilities			15,466	14,756
SHAREHOLDERS' EQUITY
	Retained income		19,661	19,895
	Accumulated other comprehensive income		(1,952)	(1,586)
			17,709	18,309
	Capital stock		69,087	69,086
	Contributed surplus		6,379	6,368
Total shareholders' equity			93,175	93,763
Total liabilities and shareholders' equity			108,641	108,519
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Three-Month Periods Ended April 30,			2012	2011
(In thousands of Canadian dollars)			$	$
OPERATING ACTIVITIES
	Net income for the period		91	1,081
	Non-cash items:
		Amortization of property, plant and equipment	747	792
		Amortization of intangible assets	89	89
		Unrealized gain on derivative financial instruments	(112)	(226)
		Non-cash exchange loss (gain)	161	(244)
		Share-based compensation	11	59
		Income tax expense	87	923
		Financial revenues	(45)	(95)
		Financial expenses	44	60
	Net income adjusted for non-cash items		1,073	2,439
	Changes in non-cash working capital items ^(1)		(790)	2,961
	Income tax expense paid		(152)	(368)
Cash flows from (used in) operating activities			131	5,032
INVESTING ACTIVITIES
	Disposal (acquisition) of short-term investments		62	(2,905)
	Net acquisition of property, plant and equipment		(64)	(29)
	Acquisition of intangible assets		(101)	(88)
	Reduction in other non-current assets		(5)	1
	Interest received		59	77
Cash flows from (used in) investing activities			(49)	(2,944)
FINANCING ACTIVITIES
	Repayment of long-term debt		(613)	(600)
	Issuance of subordinate voting shares		1	-
	Interest paid on the interest rate swap		(6)	(9)
	Interest paid		(44)	(53)
Cash flows from (used in) financing activities			(662)	(662)
Impact of fluctuations in foreign exchange rate on cash			(187)	(709)
Net (decrease) increase in cash and cash equivalents			(767)	717
Cash and cash equivalents, beginning of period			18,976	18,677
Cash and cash equivalents, end of period			18,209	19,394

(1)	Detail the components of the "Changes in non-cash working capital items":
	Periods Ended April 30,		2012		2011
	(In thousands of Canadian dollars)		$		$
		Accounts receivable	(116)		(749)
		Holdbacks on contracts	785		5
		Income tax	77		(12)
		Work in progress	(2,693)		(166)
		Inventories	(372)		(58)
		Prepaid expenses and other current assets	106		273
		Accounts payable and other current liabilities	645		233
		Deferred revenues	778		3,435
	Changes in non-cash working capital items		(790)		2,961

   
For the purpose of the consolidated statements of cash flows, cash and cash equivalents in the amount of $18,209,000 as at April 30, 2012 and $19,394,000 as at April 30, 2011 were only composed of cash.

SEGMENTED INFORMATION

The Corporation operates in the non-residential construction sector, primarily in the United States and Canada. Its operations include the connections design and engineering, fabrication and installation of complex steel structures, heavy steel built-ups, as well as miscellaneous and architectural metalwork.

Periods Ended April 30,		2012	2011
(In thousands of Canadian dollars)		$	$
Revenues
	Canada	2,521	225
	United States	9,943	13,004
		12,464	13,229
As at		April 30, 2012	January 31, 2012
(In thousands of Canadian dollars)		$	$
Property, Plant and Equipment
	Canada	43,737	44,410
	United States	659	679
		44,396	45,089

All intangible assets and investment tax credits included under "Other non-current assets" at April 30, 2012 and January 31, 2012 originated from Canada.

During the three-month period ended April 30, 2012, two clients accounted for 84% of the Corporation's revenues (one client accounted for 94% of the revenues during the three-month period ended April 30, 2011), and therefore were the only ones that accounted for more than 10% of revenues.

 

Source:  ADF Group Inc.

Contact:  
Jean Paschini, Chairman of the Board of Directors and Chief Executive Officer
Jean-François Boursier, CA, Chief Financial Officer

Telephone:  [phone]
Web Site:  www.adfgroup.com