ADF Group. Inc. - Results for the fiscal year ended January 31, 2017

HIGHLIGHTS

• Revenues, at $102.8 million, are 4.8% higher than last year
• Gross margin, as a percentage of revenues, stood at 16.7%, which is a 2.4% increase compared with a year ago
• New contract awards worth a total of $235 million during the 2017 fiscal year
• Order backlog standing at $194.5 million as at January 31, 2017

TERREBONNE, QC, April 13, 2017 /CNW Telbec/ - ADF GROUP INC. ("ADF" or the "Corporation") (TSX: DRX) recorded revenues of $102.8 million during the fiscal year ended January 31, 2017, up by $4.8 million compared with the previous fiscal year. The change in revenues results from the increase in the production level at all of the Corporation's facilities and by the year-to-year favourable variation in the average exchange rate.

The gross margin as a percentage of revenues went from 14.3% during the fiscal year ended January 31, 2016 to 16.7% during the fiscal year ended January 31, 2017. This increase, as a percentage of revenues, is mainly driven by the increase in the activity level, by a better absorption of fixed costs and the favourable impact of the foreign exchange.

ADF Group recorded a net income of $1.5 million ($0.05 basic and diluted per share) during the fiscal year ended January 31, 2017 compared with a net income of $1.7 million ($0.05 basic and diluted per share) a year ago.

On January 31, 2017, the Corporation had $24.8 million in working capital. On January 31, 2017, cash and cash equivalents totalled $334,000, down by $2.0 million compared with January 31, 2016. In addition, as at January 31, 2017, the Corporation used $13.3 million on its credit facilities, whereas they were unused as at January 31, 2016. The decrease in available cash is explained by the start of new major projects for which raw material purchases, including steel, require significant liquidities. In spite of this, the Corporation remains in a solid position to support its ongoing operations, pursue its development projects and remunerate its shareholders in accordance with the dividend payment policy.

As at January 31, 2017, the Corporation order backlog totalled $194.5 million, compared with $70.6 million as at January 31, 2016. These contracts will be progressively completed by the end of the second quarter of the fiscal year ending January 31, 2019.

Financial Highlights
Fiscal Years Ended January 31,	2017	2016
(In thousands of CA$, and dollars per share)	$	$
Revenues	102,846	98,089
EBITDA	8,462	7,244
Net income for the year	1,499	1,699
- Basic per share	0.05	0.05
- Diluted per share	0.05	0.05
Average number of outstanding shares (basic, in thousands)	32,624	32,597
Average number of outstanding shares (diluted, in thousands)	32,686	32,807

Outlook

"Our revenues have surpassed for the first time since the 2004 fiscal year the $100-million mark. We expect to maintain the growth of our revenues while improving at the same time our operational efficiency" indicated Mr. Jean Paschini, Co-Chairman of the Board of Directors and Chief Executive Officer.

"Managing our working capital requirements will remain a key element of fiscal 2018, especially during this period of growth of our order backlog. We have, however, set up credit facilities to manage this growth" concluded Mr. Paschini.

Dividend

ADF Group announces the payment of a semi-annual dividend of $0.01 per subordinate voting share and multiple voting share to be paid on May 16, 2017 to shareholders of record as at April 28, 2017.

Annual Meeting of Shareholders

ADF Group Inc. Annual Meeting of Shareholders will be held on:

Date:		Wednesday, June 14, 2017
Time:		11:00 a.m.
Place:		Hotel Sheraton Laval, 2440 des Laurentides, Laval, Quebec

Financial results for the first quarter ending April 30, 2017, will also be disclosed at the Corporation's shareholder meeting.

About ADF Group Inc.

ADF Group Inc. is a North American leader in the design and engineering of connections, fabrication, including the application of industrial coatings, and installation of complex steel structures, heavy steel built-ups, as well as in miscellaneous and architectural metals for the non-residential infrastructure sector. 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, and a Construction Division in the United States, which specializes in the installation of steel structures and other related products.

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

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.

All amounts are in Canadian dollars, unless otherwise indicated.

CONFERENCE CALL WITH INVESTOR, APRIL 13, 2017 AT 10:00 A.M. (Montreal time)

 

RESULTS FOR THE FISCAL YEAR ENDED JANUARY 31, 2017

TO PARTICIPATE, PLEASE DIAL 1-866-865-3087 A FEW MINUTES BEFORE THE START OF THE CALL.

For those unable to participate, a taped rebroadcast will be available from Thursday, April 13, 2017

at 1:00 p.m. until midnight Thursday, April 20, 2017, by dialing 1-855-859-2056; access code 82085707.

 

The conference call (audio) will also be available on ADF's Website at www.adfgroup.com.

 

 

Members of the media are invited to listen in.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at January 31,		2017	2016
(In thousands of Canadian dollars)		$	$
ASSETS
Current assets
	Cash and cash equivalents	334	2,377
	Accounts receivable	22,326	23,146
	Holdbacks on contracts	3,613	1,693
	Income tax assets	842	―
	Work in progress	21,077	7,521
	Inventories	6,957	6,180
	Derivative financial instruments	696	―
	Prepaid expenses and other current assets	1,137	1,889
	Total current assets	56,982	42,806
Non-current assets
	Property, plant and equipment	90,060	91,067
	Intangible assets	2,920	2,871
	Other non-current assets	3,406	3,337
	Deferred income tax assets	5,316	6,390
Total assets		158,684	146,471
LIABILITIES
Current liabilities
	Credit facilities	13,336	―
	Accounts payable and other current liabilities	16,585	17,772
	Income tax liability	184	49
	Deferred revenues	1,264	2,753
	Derivative financial instruments	―	403
	Current portion of long-term debt	844	868
	Total current liabilities	32,213	21,845
Non-current liabilities
	Long-term debt	17,870	14,351
	Deferred income tax liabilities	2,951	2,742
Total liabilities		53,034	38,938
SHAREHOLDERS' EQUITY
	Capital stock	68,088	68,077
	Contributed surplus	6,422	6,397
	Accumulated other comprehensive income (loss)	6,741	9,507
	Retained income	24,399	23,552
Total shareholders' equity		105,650	107,533
Total liabilities and shareholders' equity		158,684	146,471

CONSOLIDATED STATEMENTS OF INCOME
Fiscal Years Ended January 31,		2017	2016
(In thousands of Canadian dollars and in dollars per share)		$	$
Revenues		102,846	98,089
Cost of goods sold		85,635	84,069
Gross Margin		17,211	14,020
Selling and administrative expenses		13,436	11,391
Financial revenues		(49)	(79)
Financial expenses		1,057	574
Other losses (gains)		254	(653)
		14,698	11,233
Income before income tax expense		2,513	2,787
Income tax expense		1,014	1,088
Net income for the year		1,499	1,699
Earnings per share
	Basic and diluted per share	0.05	0.05
Average number of outstanding shares (in thousands)		32,624	32,597
Average number of outstanding diluted shares (in thousands)		32,686	32,807

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Fiscal Years Ended January 31,		2017	2016
(In thousands of Canadian dollars)		$	$
Net income for the year		1,499	1,699
Other comprehensive income (loss) ^(a):
	Exchange differences on translation of foreign operations	(2,816)	3,672
	Change in value of available-for-sale financial assets ^(b)	50	―
		(2,766)	3,672
Comprehensive income (loss) for the year		(1,267)	5,371

a)	Will subsequently be reclassified to net income.
b)	Net of an immaterial amount related income tax expense for the fiscal year ended January 31, 2017.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
	Capital Stock	Contributed Surplus	Accumulated Other Comprehensive Income (Loss)	Retained Income	Total
(In thousands of Canadian dollars)	$	$	$	$	$
Balance, February 1, 2015	69,185	6,433	5,835	22,505	103,958
Net income for the year	―	―	―	1,699	1,699
Other comprehensive income (loss)	―	―	3,672	―	3,672
Comprehensive income (loss) for the year	―	―	3,672	1,699	5,371
Share-based compensation	―	44	―	―	44
Redemption of subordinate voting shares	(2,282)	364	―	―	(1,918)
Options exercised	1,174	(444)	―	―	730
Dividends	―	―	―	(652)	(652)
Balance, January 31, 2016	68,077	6,397	9,507	23,552	107,533

	Capital Stock	Contributed Surplus	Accumulated Other Comprehensive Income (Loss)	Retained Income	Total
(In thousands of Canadian dollars)	$	$	$	$	$
Balance, February 1, 2016	68,077	6,397	9,507	23,552	107,533
Net income for the year	―	―	―	1,499	1,499
Other comprehensive income (loss)	―	―	(2,766)	―	(2,766)
Comprehensive income (loss) for the year	―	―	(2,766)	1,499	(1,267)
Share-based compensation	―	30	―	―	30
Options exercised	11	(5)	―	―	6
Dividends	―	―	―	(652)	(652)
Balance, January 31, 2017	68,088	6,422	6,741	24,399	105,650

CONSOLIDATED STATEMENTS OF CASH FLOWS
Fiscal Years Ended January 31,			2017	2016
(In thousands of Canadian dollars)			$	$
OPERATING ACTIVITIES
	Net income for the year		1,499	1,699
	Non-cash items:
		Amortization of property, plant and equipment	4,326	4,294
		Amortization of intangible assets	361	321
		Gain on disposal of property, plant and equipment	―	(618)
		Unrealized gain on derivative financial instruments	(1,099)	(712)
		Non-cash exchange loss (gain)	683	(709)
		Share-based compensation	951	44
		Income tax expense	1,014	1,088
		Inventories depreciation allowance	209	―
		Financial revenues	(49)	(79)
		Financial expenses	1,057	574
	Net income adjusted for non-cash items		8,952	5,902
	Changes in non-cash working capital items ^(1)		(18,686)	(7,059)
	Income tax paid		(901)	―
Cash flows from (used in) operating activities			(10,635)	(1,157)
INVESTING ACTIVITIES
	Disposal of short-term investments		―	778
	Net acquisition of property, plant and equipment		(6,809)	(8,591)
	Revenues from disposals of property, plant and equipment		―	1,457
	Acquisition of intangible assets		(410)	(411)
	(Increase) decrease in other non-current assets		(12)	641
	Interest received		49	96
Cash flows from (used in) investing activities			(7,182)	(6,030)
FINANCING ACTIVITIES
	Variation in credit facilities		13,329	―
	Issuance of long-term debt		5,000	5,000
	Financing costs relating to the debt		―	(107)
	Repayment of long-term debt		(816)	(772)
	Redemption of subordinate voting shares		―	(1,918)
	Issuance of subordinate voting shares		6	730
	Dividends paid		(652)	(652)
	Interest paid		(1,040)	(552)
Cash flows from (used in) financing activities			15,827	1,729
Impact of fluctuations in foreign exchange rate on cash flow			(53)	(111)
Net change in cash and cash equivalents during the fiscal year			(2,043)	(5,569)
Cash and cash equivalents, beginning of year			2,377	7,946
Cash and cash equivalents, end of year			334	2,377

(1)	The following table sets out in detail the components of the "Changes in non-cash working capital items":

Fiscal Years Ended January 31,		2017	2016
(In thousands of CA$)		$	$
	Accounts receivable	13	(8,008)
	Holdbacks on contracts	(1,895)	2,636
	Work in progress	(13,688)	(399)
	Inventories	(1,057)	(309)
	Prepaid expenses and other current assets	688	(139)
	Accounts payable and other current liabilities	(1,310)	651
	Deferred revenues	(1,437)	(1,491)
Changes in non-cash working capital items		(18,686)	(7,059)

SEGMENTED INFORMATION

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

Fiscal Years Ended January 31,		2017	2016
(In thousands of CA$)		$	$
Revenues
	Canada	17,957	22,368
	United States	84,889	75,721
		102,846	98,089

As at January 31,		2017	2016
(In thousands of CA$)		$	$
Non-current assets ^(1)
	Canada	50,110	47,480
	United States	46,276	49,795
		96,386	97,275

(1)	The non-current assets mainly include property, plant and equipment, intangible assets, investment tax credits and others non-current assets.

Revenues from external clients were allocated to each country on the basis of the project's location.

During the fiscal year ended January 31, 2017, 60% of the Corporation's revenues were realized with two (2) clients, for respective amounts of $36.8 million from the United States and $24.3 million from the United States and Canada, one (1) of whom was part of the Corporation's revenues concentration during the fiscal year ended January 31, 2016.

During the fiscal year ended January 31, 2016, 70% of the Corporation's revenues were realized with three (3) clients, for respective amounts of $30.5 million from the United States, $24.5 million from the United States and Canada, and $13.3 million from Canada, one (1) of whom was part of the Corporation's revenues concentration during the fiscal year ended January 31, 2015.

SOURCE ADF Group Inc.

Jean Paschini, Co-Chairman of the Board of Directors and Chief Executive Officer; Jean-François Boursier, CPA, CA, Chief Financial Officer; Telephone: [phone]

Related Links

http://www.adfgroup.com