Canam Group Announces Its Second Quarter Results

SAINT-GEORGES, QC, Aug. 4, 2016 /CNW Telbec/ - Canam Group Inc. (TSX: CAM) ("Canam Group" or the "Corporation") today published its financial results for the three-month and six-month periods ended July 2, 2016.

Periods ended July 2, 2016 and June 27, 2015	Three months
(in millions of $, except per share amounts)		2016					2015
Revenues	$	434.3				$	371.8
Selling and administrative expenses	$	30.7	7.1	%		$	26.0	7.0	%
Adjusted EBITDA^1	$	(35.3)	(8.1)	%		$	26.8	7.2	%
Net income (net loss)^2	$	(28.4)	(6.5)	%		$	10.0	2.7	%
Net earnings (net loss) per share^2 (basic and diluted)	$	(0.61)				$	0.24
	Six months
(in millions of $, except per share amounts)		2016					2015
Revenues	$	885.0				$	680.9
Selling and administrative expenses	$	61.6	7.0	%		$	50.2	7.4	%
Adjusted EBITDA^1	$	(13.5)	(1.5)	%		$	44.5	6.5	%
Net income (net loss)^2	$	(20.1)	(2.3)	%		$	14.4	2.1	%
Net earnings (net loss) per share^2 (basic and diluted)	$	(0.43)				$	0.34

¹ Refer to the section entitled "Non-IFRS measures."

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

Results for the second quarter and the first six months of 2016

Consolidated revenues for the second quarter of 2016 totaled $434.3M, which represents a $62.5M increase compared to revenues of $371.8M for the same quarter in 2015. Consolidated revenues in the first six months of 2016 reached $885M, a $204.1M increase compared to revenues of $680.9M for the same period in 2015. These increases are attributable to structural steel and bridge operations, as well as the appreciation of the US dollar compared to the Canadian dollar.

Selling and administrative expenses totaled $30.7M for the second quarter of 2016 compared to $26M in 2015. In the first six months of 2016, selling and administrative expenses represented $61.6M compared to $50.2M for the same period in 2015. These increases are attributable in large part to the payroll increase associated with the growth in revenues, and the US dollar's rise against the Canadian dollar.

In the second quarter of 2016, the Adjusted EBITDA was a negative $35.3M compared to $26.8M for the same quarter in 2015. After the first six months of 2016, the Adjusted EBITDA was negative $13.5M compared to $44.5M for the same period in 2015. This decrease in the Adjusted EBITDA in 2016 is mainly attributable to the recording of an after-tax allowance of $32M for a project, as announced on July 14, 2016.

In the second quarter of 2016, the net loss attributable to shareholders totaled $28.4M, or $0.61 per share, compared to a net income of $10M, or $0.24 per share, for the second quarter of 2015. After the first six months of 2016, the net loss attributable to shareholders stood at $20.1M, or $0.43 per share, compared to a net income of $14.4M, or $0.34 per share, for the corresponding period in 2015.

Order backlog

The order backlog stood at $1,248M as at July 2, 2016, compared to $1,058M as at June 27, 2015.

Dividend

The Board of Directors approved a dividend of $0.04 per share payable on September 30, 2016, to shareholders of record on September 16, 2016.

Realignment of operations

"While the performance of the building, FabSouth and the bridge operations gives us confidence for the future, the disappointing performance of the heavy structural division is forcing us to reconsider our strategy for that market," explained Marc Dutil, Canam Group's President and CEO. "While we are very proud of having the manufacturing and technical expertise for complex projects, our financial results should inevitably justify the substantial human, physical and financial resources that the Corporation invests in it." Noting that, at the end of the second quarter of 2016, the order backlog in the heavy structural division represented only 12.4% of the total backlog, Mr. Dutil said that "an action plan is in place, first to restructure these operations and, second, in looking to the future, to ascertain the continued participation of the Corporation in this type of large complex projects."

New term loan

On July 28, 2016, the Corporation has set up a twenty-year term loan with Business Development Bank of Canada (BDC) for an amount of $50M. The Corporation's buildings located in Quebec have been pledged as collateral. The loan should be disbursed in September.

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 over 4,300 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, August 4, at 9 a.m. EDT. 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

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.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF INCOME (LOSS)
Periods ended July 2, 2016 and June 27, 2015
(in thousands of Canadian dollars, except per share amounts)			Three months				Six months
(unaudited)			2016		2015		2016		2015
Revenues		$	434,259	$	371,815	$	884,995	$	680,917
Cost of sales, excluding depreciation and amortization^(1)			437,741		315,835		834,053		582,925
Selling and administrative expenses			30,685		26,004		61,629		50,187
Profit sharing program			1,195		2,595		2,429		3,084
Depreciation of property, plant and equipment			7,144		6,236		14,119		12,454
Amortization of intangible assets			918		675		1,845		1,365
Other net losses			172		596		379		332
Finance costs			2,705		3,865		5,202		7,786
Finance revenue			(256)		(169)		(407)		(355)
Share of loss of a joint venture and associates			709		601		1,020		742
Earnings (loss) before income tax			(46,754)		15,577		(35,274)		22,397
Tax expense (income)
	Current		1,846		2,465		6,847		4,253
	Deferred		(20,035)		3,133		(21,932)		3,727
			(18,189)		5,598		(15,085)		7,980
Net income (loss)		$	(28,565)	$	9,979	$	(20,189)	$	14,417
Net income (loss) attributable to:
	Shareholders	$	(28,382)	$	10,036	$	(20,054)	$	14,433
	Non-controlling interests		(183)		(57)		(135)		(16)
		$	(28,565)	$	9,979	$	(20,189)	$	14,417
Net earnings (loss) per share attributable to shareholders
	Basic	$	(0.61)	$	0.24	$	(0.43)	$	0.34
	Diluted	$	(0.61)	$	0.24	$	(0.43)	$	0.34
Weighted average number of common shares (in thousands of shares)
	Basic		46,826		42,013		47,134		41,998
	Diluted		46,826		42,055		47,134		42,040
Number of common shares outstanding (in thousands of shares)							46,707		42,055

^(1)									As at July 2, 2016 and June 27, 2015, the cost of sales, including depreciation and amortization, was $443,773 and $321,172 respectively, for the three-month period and $846,075 and $593,613 respectively, for the six-month period.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Periods ended July 2, 2016 and June 27, 2015
(in thousands of Canadian dollars)			Three months				Six months
(unaudited)			2016		2015		2016		2015
Net income (loss)		$	(28,565)	$	9,979	$	(20,189)	$	14,417
Other comprehensive income (loss):
Items that will be reclassified subsequently to profit or loss:
	Change in unrealized gains (losses) on translating foreign operations		(3,009)		(7,803)		(26,238)		19,302
	Change in unrealized gain (loss) on translating debt designated as hedging item of the net investment in foreign operations		120		472		1,138		(1,265)
			(2,889)		(7,331)		(25,100)		18,037
Available-for-sale asset:
	Unrealized losses on available-for-sale financial assets arising during the period		(330)		- -		(135)		- -
	Reclassified to statements of income		- -		(2)		- -		(2)
Other comprehensive income (loss)			(3,219)		(7,333)		(25,235)		18,035
Comprehensive income (loss)		$	(31,784)	$	2,646	$	(45,424)	$	32,452
Comprehensive income (loss) attributable to:
	Shareholders	$	(31,487)	$	2,658	$	(45,175)	$	32,452
	Non-controlling interests		(297)		(12)		(249)		- -
		$	(31,784)	$	2,646	$	(45,424)	$	32,452

CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
(in thousands of Canadian dollars) (unaudited as at July 2, 2016)		As at July 2, 2016		As at December 31, 2015
Assets
Current assets
Cash and cash equivalents	$	10,513	$	7,050
Accounts receivable		325,657		320,517
Costs and estimated profits in excess of billings		246,235		194,298
Inventories		135,003		166,833
Recoverable tax assets		683		1,573
Prepaid expenses and other assets		9,294		3,230
		727,385		693,501
Non-current assets
Investments		9,732		6,173
Interests in a joint venture and associates		38,355		39,370
Property, plant and equipment		364,502		348,391
Intangible assets		9,850		11,500
Goodwill		56,918		56,023
Deferred tax assets		20,137		4,007
Long-term receivables and other assets		5,458		5,564
Total assets	$	1,232,337	$	1,164,529
Liabilities
Current liabilities
Accounts payable and accrued liabilities	$	282,300	$	223,580
Billings in excess of costs and estimated profits		81,106		73,465
Current tax liabilities		2,003		4,156
Current portion of balance of purchase price of businesses and redemption liability		5,085		1,282
Current portion of debt		40,869		43,083
		411,363		345,566
Non-current liabilities
Debt		222,899		164,356
Balance of purchase price of businesses and redemption liability		8,362		650
Provisions		18,485		19,485
Deferred tax liabilities		8,747		8,897
Other liabilities		1,017		1,208
Total liabilities		670,873		540,162
Equity
Share capital		235,866		239,777
Retained earnings		253,011		294,458
Other equity items		64,635		90,090
Total equity attributable to shareholders		553,512		624,325
Non-controlling interests		7,952		42
Total equity		561,464		624,367
Total equity and liabilities	$	1,232,337	$	1,164,529

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in thousands of Canadian dollars) (unaudited)		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 period		- -		- -		- -		- -		- -		- -		- -		14,433		14,433		(16)		14,417
Comprehensive income		- -		19,286		(1,265)		(2)		- -		18,019		- -		- -		18,019		16		18,035
Dividends		- -		- -		- -		- -		- -		- -		- -		(3,332)		(3,332)		- -		(3,332)
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		- -		- -		- -		- -		- -		- -		18		- -		18		- -		18
Exercise of options upon the conversion of debentures		- -		- -		- -		- -		(1)		(1)		1		- -		- -		- -		- -
Amortization of compensation costs related to the profit sharing program - stock ownership component		43		- -		- -		- -		- -		43		- -		- -		43		- -		43
Balance as at June 27, 2015	$	2,040	$	48,737	$	(2,071)	$	- -	$	5,757	$	54,463	$	168,314	$	263,273	$	486,050	$	36	$	486,086
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		- -		- -		- -		- -		- -		- -		- -		- -		- -		8,159		8,159
Purchase obligation		- -		- -		- -		- -		- -		- -		- -		(11,080)		(11,080)		- -		(11,080)
Net loss for the period		- -		- -		- -		- -		- -		- -		- -		(20,054)		(20,054)		(135)		(20,189)
Comprehensive loss		- -		(26,124)		1,138		(135)		- -		(25,121)		- -		- -		(25,121)		(114)		(25,235)
Dividends		- -		- -		- -		- -		- -		- -		- -		(3,760)		(3,760)		- -		(3,760)
Repurchase of shares		- -		- -		- -		- -		- -		- -		(4,287)		- -		(4,287)		- -		(4,287)
Excess of acquisition cost over carrying amount of acquired common shares		- -		- -		- -		- -		- -		- -		- -		(6,553)		(6,553)		- -		(6,553)
Shares acquired by employees		(376)		- -		- -		- -		- -		(376)		376		- -		- -		- -		- -
Amortization of compensation costs related to the profit sharing program - stock ownership component		42		- -		- -		- -		- -		42		- -		- -		42		- -		42
Balance as at July 2, 2016	$	1,748	$	65,964	$	(3,141)	$	64	$	- -	$	64,635	$	235,866	$	253,011	$	553,512	$	7,952	$	561,464

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
Periods ended July 2, 2016 and June 27, 2015
(in thousands of Canadian dollars)				Three months							Six months
(unaudited)				2016			2015				2016				2015
Cash flows from the following activities:
Operating activities
Net income (loss)		$	(28,565)		$		9,979		$		(20,189)		$		14,417
Adjustments:
	Amortization of compensation costs related to the profit sharing program – stock ownership component		21				22				42				43
	Gain on disposal of an investment		- -				(5)				- -				(5)
	Gain on disposal of property, plant and equipment		(178)				(25)				(172)				(2)
	Depreciation of property, plant and equipment		7,144				6,236				14,119				12,454
	Amortization of intangible assets		918				675				1,845				1,365
	Amortization of deferred financing expenses		97				127				200				253
	Provisions		335				- -				335				- -
	Interest rate swaps		(65)				(103)				(130)				(129)
	Imputed interest		181				657				369				1,311
	Pension expense		(585)				(734)				(1,252)				(1,582)
	Deferred tax expense (income)		(20,035)				3,133				(21,932)				3,727
	Share of loss of a joint venture and associates		709				601				1,020				742
			(40,023)				20,563				(25,745)				32,594
Net change in non-cash operating working capital balances
Decrease (increase) in accounts receivable			(17,816)				(39,546)				1,867				20,070
Increase in costs and estimated profits in excess of billings			(21,212)				(12,520)				(51,967)				(34,185)
Decrease (increase) in inventories			12,501				(3,620)				26,181				(6,905)
Decrease (increase) in current tax assets			(18)				(17)				984				158
Decrease (increase) in prepaid expenses and other assets			(5,722)				884				(6,053)				(461)
Increase in accounts payable and accrued liabilities			48,839				20,697				53,418				8,139
Increase (decrease) in billings in excess of costs and estimated profits			14,685				(10)				12,143				2,261
Increase (decrease) in interest payable			750				(5)				456				(4)
Decrease in current tax liabilities			(2,623)				(414)				(2,086)				(3,104)
			29,384				(34,551)				34,943				(14,031)
Cash flows from operating activities			(10,639)				(13,988)				9,198				18,563
Financing activities
Repurchase of shares			(6,526)				- -				(10,840)				(319)
Dividends			(1,869)				(1,670)				(5,651)				(3,339)
Increase in debt and bank loans			54,272				29,049				104,272				29,049
Repayment of debt and bank loans			(13,957)				(6,506)				(58,017)				(35,389)
Issue expenses related to debt			- -				(7)				(378)				(104)
Increase in other liabilities			- -				10				(17)				20
Cash flows from financing activities			31,920				20,876				29,369				(10,082)
Investing activities
Proceeds from sale of property, plant and equipment			280				31				370				417
Additions to property, plant and equipment			(10,964)				(6,862)				(22,084)				(11,746)
Additions to intangible assets			(294)				(401)				(673)				(643)
Proceeds from disposal of an investment			- -				1				- -				1
Acquisition of an investment			(1,650)				- -				(3,958)				(150)
Distribution received			264				- -				264				- -
Decrease in receivables and other assets			33				87				33				119
Acquisition of business assets, net of cash and cash equivalents			(9,896)				- -				(9,896)				- -
Cash flows from investing activities			(22,227)				(7,144)				(35,944)				(12,002)
Effects of changes in foreign exchange rate on cash and cash equivalents			373				389				840				530
Net change in cash and cash equivalents			(573)				133				3,463				(2,991)
Cash and cash equivalents – Beginning of period			11,086				5,137				7,050				8,261
Cash and cash equivalents – End of period		$	10,513		$		5,270		$		10,513		$		5,270
Supplementary information
	Interest paid	$	1,165		$		3,441		$		3,080		$		4,642
	Income taxes paid, net	$	4,680		$		2,797		$		9,121		$		7,094

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]