Canam Group Announces its 2016 Fourth Quarter Results

SAINT-GEORGES, QC, Feb. 16, 2017 /CNW Telbec/ - Canam Group Inc. (TSX: CAM) ("Canam Group" or the "Corporation") today published its financial results for the three-month period and fiscal year ended December 31, 2016.

Periods ended December 31
			Three months
(in millions of $, except per-share amounts)			2016			2015
Revenues		$	486.5		$	493.8
Selling and administrative expenses		$	30.0	6.2%	$	30.9	6.3%
Adjusted EBITDA^1		$	9.5	1.9%	$	34.0	6.9%
Net income (net loss)^2		$	(2.0)		$	17.8
Net earnings per share^2 (basic and diluted)		$	(0.04)		$	0.39
Fiscal years ended December 31			Fiscal years
(in millions of $, except per-share amounts)			2016			2015
Revenues		$	1,856.9		$	1,606.9
Selling and administrative expenses		$	122.8	6.6%	$	108.4	6.7%
Adjusted EBITDA^1		$	21.3	1.1%	$	112.0	7.0%
Net income (net loss)^2		$	(13.3)		$	46.8
Net earnings per share^2 (basic and diluted)
	Basic	$	(0.28)		$	1.09
	Diluted	$	(0.28)		$	1.08

¹ Refer to the section entitled Non-IFRS measures.

² Represents net income (net loss) attributable to shareholders.

Results for the fourth quarter of 2016

Consolidated revenues for the fourth quarter of 2016 totalled $486.5M, compared to $493.8M for the same quarter in 2015.

Selling and administrative expenses represented 6.2% of fourth-quarter revenues in 2016, or $30M, compared to 6.3% of revenues in 2015, or $30.9M. This variation is particularly attributable to the payroll decrease resulting from the refocusing of the heavy structural steel business approach begun in the third quarter of 2016.

The adjusted EBITDA in the fourth quarter of 2016 amounted to $9.5M or 1.9% of revenues, as compared with an adjusted EBITDA of $34M or 6.9% of revenues for the same quarter of 2015. The decrease is attributable to the compression of gross margins in certain Corporation's groups of products and services.

In the fourth quarter of 2016, the net loss attributable to shareholders totaled $2M, or $0.04 per share, compared to a net income of $17.8M, or $0.39 per share, in 2015.

Results for fiscal year 2016

In 2016, revenues totaled $1,856.9M, compared to $1,606.9M in 2015, representing an increase of $250M, or 15.6%. This increase is attributable to all of the Corporation's activities, but primarily to bridge products and services. Sales made in US dollars benefited from the devaluation of the Canadian dollar compared to the US dollar.

The net loss attributable to shareholders in the 2016 fiscal year represented $13.3M, or $0.28 per basic share, compared to a net income of $46.8M, or $1.09 per basic share, for the previous year. The loss is mainly attributable to the recording of an after-tax allowance of $32M in the second quarter of 2016 due to significant additional costs for a heavy structural steel project, and to the unfavorable impact of bridge projects in the United States.

Refocusing of the Corporation's activities

• Heavy structural steel
  Following the revision of its approach to the heavy structural steel market begun last July, the Corporation announced that it will no longer act as a structural steel contractor for complex, large‑scale projects. Accordingly, in the future, it will participate in structural steel projects that present a reasonable level of risk given the size of the Corporation and the nature of its primary activities. This will allow for a more predictable evolution of profits.
  
  After reducing its estimation and project management workforce last summer, the Corporation completed its reorganization over the last few weeks. The new team has a mandate to maximize the use of the structural steel manufacturing capacity at the St. Gédéon de Beauce plant.

• Bridge activities in the United States
  In light of the challenges encountered with bridge projects in the United States over the last year, the Corporation decided to thoroughly review all of its US activities in the bridge sector, taking into consideration all the options that would enable the Corporation to meet its profitability objectives.

Pressure on gross margins

"The 2016 results reflect a non-residential construction market that slowed down in Canada but was very active in the United States, without relieving the pressure on the margins," explained Marc Dutil, President and CEO. "But our results are affected by negative margins on bridge projects in the United States and in particular by the allowance taken in the second quarter for a heavy structural steel project. We are continuing discussions with the client to resolve the issue of additional costs, and we are confident that we will reach an agreement."

Order backlog

The order backlog stood at $1,139M as at December 31, 2016, compared to $1,183M as at December 31, 2015.

Dividend

The Board of Directors approved the payment of a dividend of $0.04 per share payable on March 31, 2017, to shareholders of record on March 17, 2017.

About Canam Group Inc.

Canam Group specializes in designing integrated solutions and fabricating customized products for the North American construction industry. Each year, Canam Group takes part in an average of 10,000 building, structural steel and bridge projects, which can also include the supply of preconstruction and project management services. The Corporation operates 23 plants across North America and employs close to 4,650 people in Canada, the United States, Romania and India.

Conference call, webcast and presentation

Canam Group will hold a conference call with financial analysts and media representatives on Thursday, February 16, 2017, at 9:00 a.m. EST. The call can be accessed via webcast at canamgroupinc.com and newswire.ca.

Please note that the conference call will be accompanied by a complementary presentation in PDF format that can be downloaded from the Corporation's website at canamgroupinc.com. A replay of the conference call will be available until March 2, 2017, by dialing 1-800-408-3053 and entering access code 3495498, followed by the pound key (#).

Non-IFRS measures

Earnings before interest, tax, depreciation and amortization (adjusted EBITDA) and net debt are not defined by International Financial Reporting Standards (IFRS) and cannot be formally presented in the consolidated financial statements. Even though adjusted EBITDA and net debt are non-IFRS measures, they are used by managers, analysts, investors and other financial stakeholders to assess the Corporation's operating performance and management from a financial and operational standpoint. Refer to the section entitled "Non-IFRS measures" of the Corporation's 2015 Annual Report for the definition of this indicator.

Caution regarding forward-looking statements

This press release may contain forward-looking statements, which include, but are not limited to, statements with respect to the Corporation's growth strategy, costs, financial position and financial results, economic and business outlook, prospects and trends of the Corporation's industry segment, expected growth in demand for products and services, the dates of expected or scheduled deliveries, orders and project execution in general, objectives, projects, targets, priorities, business strategy, and the expected impact of legislative and regulatory environment and legal proceedings. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "anticipate", "plan", "foresee", "believe", "continue" or "maintain", the negative of these terms, variations of them or similar terminology. By their nature, forward-looking statements require the Corporation to make assumptions and are subject to important known and unknown risks and uncertainties, which may cause actual results in future periods to differ materially from forecasted results. While the Corporation considers its assumptions to be reasonable and appropriate based on information currently available, there is a risk that they may not be accurate. Readers should not place undue reliance on forward-looking statements. Factors that could cause actual results to differ materially from those anticipated in the forward-looking statements include in particular the risks and uncertainties described in the Corporation's 2015 Annual Report in the section entitled "Risks and Uncertainties". The forward-looking statements contained herein are made as of the date hereof and are subject to change thereafter, and the Corporation has no intention and undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities regulations.

CONSOLIDATED STATEMENTS OF INCOME (LOSS)
Periods and years ended December 31
			Three-month periods				Years
(in thousands of Canadian dollars, except per share amounts)			2016		2015		2016		2015
Revenues		$	486,542	$	493,797	$	1,856,858	$	1,606,855
Cost of sales, excluding depreciation and amortization^(1)			448,109		425,371		1,709,362		1,377,066
Selling and administrative expenses			29,990		30,867		122,774		108,358
Profit sharing program			756		4,308		5,557		11,287
Depreciation of property, plant and equipment			8,605		6,601		30,295		25,660
Amortization of intangible assets			895		866		3,674		2,943
Other net gains			(1,763)		(741)		(2,174)		(1,857)
Finance costs			2,772		2,599		11,150		14,433
Finance revenue			(151)		(148)		(701)		(667)
Share of loss of a joint venture and associates			114		447		1,219		1,536
Earnings (loss) before income tax			(2,785)		23,627		(24,298)		68,096
Tax expense (income)
	Current		8,369		6,351		19,871		13,554
	Deferred		(9,511)		(439)		(31,872)		7,787
			(1,142)		5,912		(12,001)		21,341
Net income (loss)		$	(1,643)	$	17,715	$	(12,297)	$	46,755
Net income (loss) attributable to:
	Shareholders	$	(2,014)	$	17,791	$	(13,290)	$	46,765
	Non-controlling interests		371		(76)		993		(10)
		$	(1,643)	$	17,715	$	(12,297)	$	46,755
Net earnings (loss) per share attributable to shareholders
	Basic	$	(0.04)	$	0.39	$	(0.28)	$	1.09
	Diluted	$	(0.04)	$	0.39	$	(0.28)	$	1.08
Weighted average number of common shares (in thousands of shares)
	Basic		45,726		46,075		46,673		43,074
	Diluted		45,726		46,106		46,673		43,106
Number of common shares outstanding (in thousands of shares)							45,362		47,551

(1)	As at December 31, 2016 and 2015, the cost of sales, including depreciation and amortization, was $456,180 and $431,096 respectively, for the three-month periods and $1,735,735 and $1,399,158 respectively, for the years.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Periods and years ended December 31
			Three-month periods				Years
(in thousands of Canadian dollars)			2016		2015		2016		2015
Net income (loss)		$	(1,643)	$	17,715	$	(12,297)	$	46,755
Other comprehensive income (loss):
Items that will be reclassified subsequently to profit or loss:
	Change in unrealized gains (losses) on translating foreign operations		7,452		14,731		(13,116)		62,653
	Change in unrealized gain (loss) on translating debt designated as hedging item of the net investment in foreign operations		(294)		(689)		633		(3,473)
			7,158		14,042		(12,483)		59,180
Available-for-sale asset:
	Unrealized gains (losses) on available-for-sale financial assets arising during the period		37		172		(189)		199
	Reclassified to statements of income		- -		- -		- -		(2)
			37		172		(189)		197
			7,195		14,214		(12,672)		59,377
Items that will not be reclassified subsequently to profit or loss:
Defined benefit plans:
	Actuarial gains (losses) of the defined benefit plans		(1,943)		2,948		(1,943)		2,948
	Tax income (expense)		530		(780)		530		(780)
			(1,413)		2,168		(1,413)		2,168
Other comprehensive income (loss)			5,782		16,382		(14,085)		61,545
Comprehensive income (loss)		$	4,139	$	34,097	$	(26,382)	$	108,300
Comprehensive income (loss) attributable to:
	Shareholders	$	3,679	$	34,173	$	(27,469)	$	108,294
	Non-controlling interests		460		(76)		1,087		6
		$	4,139	$	34,097	$	(26,382)	$	108,300

CONSOLIDATED BALANCE SHEETS
(in thousands of Canadian dollars)		As at December 31, 2016		As at December 31, 2015
Assets
Current assets
Cash and cash equivalents	$	13,567	$	7,050
Accounts receivable		318,149		320,517
Costs and estimated profits in excess of billings		259,363		194,298
Inventories		144,601		166,833
Recoverable tax assets		212		1,573
Prepaid expenses and other assets		5,038		3,230
		740,930		693,501
Non-current assets
Investments		9,936		6,173
Interests in a joint venture and associates		37,823		39,370
Property, plant and equipment		374,849		348,391
Intangible assets		16,300		11,500
Goodwill		56,285		56,023
Deferred tax assets		33,410		4,007
Long-term receivables and other assets		3,782		5,564
Total assets	$	1,273,315	$	1,164,529
Liabilities
Current liabilities
Accounts payable and accrued liabilities	$	272,339	$	223,580
Billings in excess of costs and estimated profits		87,066		73,465
Current tax liabilities		6,476		4,156
Current portion of balance of purchase price of businesses		646		1,282
Provision		8,137		- -
Current portion of debt		25,204		43,083
		399,868		345,566
Non-current liabilities
Debt		284,446		164,356
Balance of purchase price of businesses		1,442		650
Provisions		11,131		19,485
Deferred tax liabilities		6,148		8,897
Other liabilities		2,560		1,208
Total liabilities		705,595		540,162
Equity
Share capital		229,035		239,777
Retained earnings		256,277		294,458
Other equity items		77,033		90,090
Total equity attributable to shareholders		562,345		624,325
Non-controlling interests		5,375		42
Total equity		567,720		624,367
Total equity and liabilities	$	1,273,315	$	1,164,529

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in thousands of Canadian dollars)		Employee benefits paid in equity instruments		Exchange differences resulting from the translation of foreign operations		Exchange difference resulting from the translation of the debt designated as hedging item		Available-for- sale financial assets		Debenture conversion options		Total other equity items		Share capital		Retained earnings		Total share capital attributable to shareholders		Non- controlling interests		Total equity
Balance as at January 1, 2015	$	2,235	$	29,451	$	(806)	$	2	$	5,758	$	36,640	$	168,162	$	252,386	$	457,188	$	36	$	457,224
Net income for the year		- -		- -		- -		- -		- -		- -		- -		46,765		46,765		(10)		46,755
Comprehensive income		- -		62,637		(3,473)		197		- -		59,361		- -		2,168		61,529		16		61,545
Dividends		- -		- -		- -		- -		- -		- -		- -		(6,894)		(6,894)		- -		(6,894)
Repurchase of shares		- -		- -		- -		- -		- -		- -		(105)		- -		(105)		- -		(105)
Excess of acquisition cost over carrying amount of acquired common shares		- -		- -		- -		- -		- -		- -		- -		(214)		(214)		- -		(214)
Shares acquired by employees		(238)		- -		- -		- -		- -		(238)		238		- -		- -		- -		- -
Issuance of shares upon the conversion of debentures		- -		- -		- -		- -		- -		- -		65,971		- -		65,971		- -		65,971
Exercise of options upon the conversion of debentures		- -		- -		- -		- -		(5,511)		(5,511)		5,511		- -		- -		- -		- -
Unexercised debenture conversion options		- -		- -		- -		- -		(247)		(247)		- -		247		- -		- -		- -
Amortization of compensation costs related to the profit sharing program - stock ownership component		85		- -		- -		- -		- -		85		- -		- -		85		- -		85
Balance as at December 31, 2015	$	2,082	$	92,088	$	(4,279)	$	199	$	- -	$	90,090	$	239,777	$	294,458	$	624,325	$	42	$	624,367
Balance as at January 1, 2016	$	2,082	$	92,088	$	(4,279)	$	199	$	- -	$	90,090	$	239,777	$	294,458	$	624,325	$	42	$	624,367
Investment in subsidiaries by non-controlling interests		- -		- -		- -		- -		- -		- -		- -		- -		- -		4,246		4,246
Purchase obligation		- -		- -		- -		- -		- -		- -		- -		(4,507)		(4,507)		- -		(4,507)
Net loss for the year		- -		- -		- -		- -		- -		- -		- -		(13,290)		(13,290)		993		(12,297)
Comprehensive loss		- -		(13,210)		633		(189)		- -		(12,766)		- -		(1,413)		(14,179)		94		(14,085)
Dividends		- -		- -		- -		- -		- -		- -		- -		(7,415)		(7,415)		- -		(7,415)
Repurchase of shares		- -		- -		- -		- -		- -		- -		(11,118)		- -		(11,118)		- -		(11,118)
Excess of acquisition cost over carrying amount of acquired common shares		- -		- -		- -		- -		- -		- -		- -		(11,556)		(11,556)		- -		(11,556)
Shares acquired by employees		(376)		- -		- -		- -		- -		(376)		376		- -		- -		- -		- -
Amortization of compensation costs related to the profit sharing program - stock ownership component		85		- -		- -		- -		- -		85		- -		- -		85		- -		85
Balance as at December 31, 2016	$	1,791	$	78,878	$	(3,646)	$	10	$	- -	$	77,033	$	229,035	$	256,277	$	562,345	$	5,375	$	567,720

CONSOLIDATED STATEMENTS OF CASH FLOWS
Periods and years ended December 31
				Three-month periods								Years
(in thousands of Canadian dollars)				2016				2015				2016				2015
Cash flows from the following activities:
Operating activities
Net income (loss)			$	(1,643)		$		17,715		$		(12,297)		$		46,755
Adjustments:
		Amortization of compensation costs related to the profit sharing program – stock ownership component		21				21				85				85
		Gain on disposal of an investment		- -				- -				- -				(5)
		Loss (gain) on disposal of property, plant and equipment and intangible assets		123				(163)				(134)				(190)
		Depreciation of property, plant and equipment		8,605				6,601				30,295				25,660
		Amortization of intangible assets		895				866				3,674				2,943
		Amortization of deferred financing expenses		101				338				401				699
		Provisions		67				10,834				517				10,834
		Interest rate swaps		(216)				(139)				(428)				(297)
		Imputed interest		(195)				390				340				2,365
		Pension plans		391				(683)				(1,370)				(2,982)
		Deferred tax expense (income)		(9,511)				(439)				(31,872)				7,787
		Share of loss of a joint venture and associates		114				447				1,219				1,536
				(1,248)				35,788				(9,570)				95,190
Net change in non-cash operating working capital balances
Decrease (increase) in accounts receivable				3,147				3,321				18,303				(9,679)
Decrease (increase) in costs and estimated profits in excess of billings				9,615				1,497				68,365				(50,768)
Decrease in inventories				3,744				13,740				20,466				8,269
Decrease (increase) in current tax assets				2,370				(58)				2,713				33
Decrease (increase) in prepaid expenses and other assets				(261)				1,276				(1,828)				3,472
Increase (decrease) in accounts payable and accrued liabilities				(11,371)				(177)				33,300				17,665
Increase (decrease) in billings in excess of costs and estimated profits				(15,209)				(20,292)				9,756				(11,926)
Increase (decrease) in interest payable				659				(2,598)				632				(680)
Increase (decrease) in current tax liabilities				3,582				3,004				2,350				(924)
				(3,724)				(287)				17,327				(44,538)
Cash flows from (used in) operating activities				(4,972)				35,501				7,757				50,652
Financing activities
Repurchase of shares				(11,834)				- -				(22,674)				(319)
Dividends				- -				(1,671)				(7,500)				(6,681)
Increase in debt and bank loans				64,596				14,068				223,241				75,704
Repayment of debt and bank loans				(32,722)				(35,838)				(134,908)				(81,658)
Repayment of debentures				- -				(2,956)				- -				(2,956)
Repayment of balances of purchase price of businesses				- -				(959)				(1,207)				(959)
Issue expenses related to debt				(277)				(71)				(729)				(212)
Increase in other liabilities				113				117				96				148
Cash flows from (used in) financing activities				19,876				(27,310)				56,319				(16,933)
Investing activities
Proceeds from sale of property, plant and equipment and intangible assets				245				1,534				1,094				2,005
Additions to property, plant and equipment				(9,553)				(11,695)				(43,060)				(30,368)
Additions to intangible assets				(576)				(732)				(1,679)				(1,695)
Acquisition of an investment				(117)				(830)				(4,217)				(1,429)
Proceeds from disposal of an investment in an associate				99				- -				330				- -
Proceeds from disposal of an investment				- -				- -				- -				48
Distributions received				- -				- -				264				- -
Decrease (increase) in receivables and other assets				15				61				212				212
Increase in long-term receivables				(54)				(14)				(176)				(258)
Acquisition of business assets, net of cash and cash equivalents				1,363				(5)				(8,533)				(6,196)
Cash flows used in investing activities				(8,578)				(11,681)				(55,765)				(37,681)
Effects of changes in foreign exchange rate on cash and cash equivalents				(1,788)				982				(1,794)				2,751
Net change in cash and cash equivalents				4,538				(2,508)				6,517				(1,211)
Cash and cash equivalents – Beginning of period				9,029				9,558				7,050				8,261
Cash and cash equivalents – End of period			$	13,567		$		7,050		$		13,567		$		7,050
Supplementary information
		Interest paid	$	1,523		$		1,260		$		7,272		$		7,241
		Income taxes paid, net	$	3,573		$		3,405		$		14,909		$		14,261

SOURCE Canam Group Inc.

Media: François Bégin, Vice President, Communications, Canam Group Inc., 418-228-8031 / 418-225-1355 (mobile phone), [email protected]; Investors: René Guizzetti, Vice President and Chief Financial Officer, Canam Group Inc., 450-641-4000, [email protected]