Canam Group Announces Its Third Quarter Results

SAINT-GEORGES, QC, Oct 27, 2016 /CNW Telbec/ - Canam Group Inc. (TSX: CAM) ("Canam Group" or the "Corporation") today published its financial results for the three-month and nine-month periods ended October 1, 2016.

Periods ended October 1, 2016 and September 26, 2015		Three months
(in millions of $, except per share amounts)		2016				2015
Revenues	$	485.3			$	432.1
Selling and administrative expenses	$	31.2	6.4	%	$	27.3	6.3	%
Adjusted EBITDA^1	$	23.8	4.9	%	$	33.6	7.8	%
Net income^2	$	8.8	1.8	%	$	14.5	3.4	%
Net earnings per share^2 (basic and diluted)	$	0.19			$	0.35
		Nine months
(in millions of $, except per share amounts)		2016				2015
Revenues	$	1,370.3			$	1,113.1
Selling and administrative expenses	$	92.8	6.8	%	$	77.5	7.0	%
Adjusted EBITDA^1	$	10.4	0.8	%	$	78.2	7.0	%
Net income (net loss)^2	$	(11.3)	(0.8)	%	$	29.0	2.6	%
Net earnings (net loss) per share^2 (basic and diluted)	$	(0.24)			$	0.69

¹ Refer to the section entitled "Non-IFRS measures."
² Represents net income (net loss) attributable to shareholders.

Results for the third quarter and the first nine months of 2016

Consolidated revenues for the third quarter of 2016 totalled $485.3M, which represents a $53.2M increase compared to revenues of $432.1M for the same quarter in 2015. Consolidated revenues for the first nine months of 2016 reached $1,370.3M, a $257.2M increase compared to revenues of $1,113.1M for the same period in 2015. The increase in the third quarter is mainly attributable to bridge operations, as well as the contribution of new companies acquired since the second quarter of 2016. The increase in revenues over the first nine months is attributable to all of the Corporation's groups of products and services.

Selling and administrative expenses totalled $31.2M for the third quarter of 2016, compared to $27.3M in 2015. In the first nine months of 2016, selling and administrative expenses represented $92.8M, compared to $77.5M for the same period in 2015. These increases are attributable to the increase in payroll expenses associated with the growth in revenues.

In the third quarter of 2016, the adjusted EBITDA was $23.8M, compared to $33.6M for the same quarter in 2015. The decrease is attributable to the compression of gross margins in the structural steel and building activities, the increase in the relative weight of sectors where gross margins are normally lower and the increase in selling and administrative expenses. After the first nine months of 2016, the adjusted EBITDA was $10.4M, compared to $78.2M for the same period in 2015. This decrease is attributable to the special provision recorded in the second quarter of 2016, as well as to the compression of gross margins, and the increase in selling and administrative expenses.

The net income attributable to shareholders in the third quarter of 2016 totaled $8.8M, or $0.19 per share, compared to a net income of $14.5M, or $0.35 per share, for the third quarter of 2015. After the first nine months of 2016, the net loss attributable to shareholders represented $11.3M, or $0.24 per share, compared to a net income of $29M, or $0.69 per share, for the corresponding period in 2015.

Order backlog

The order backlog stood at $1,095M as at October 1, 2016, compared to $1,234M as at September 26, 2015.

Dividend

The Board of Directors approved a dividend of $0.04 per share payable on January 5, 2017, to shareholders of record on December 16, 2016.

Pressure on the gross margins

"Pressure on the gross margins remains high in all of our markets," explained Marc Dutil, President and CEO. "Despite this pressure, our bridge division improved its performance in Canada, and the restructuring of heavy structural steel activities is on course."

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, October 27, 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 October 1, 2016 and September 26, 2015
(in thousands of Canadian dollars, except per share amounts)			Three months				Nine months
(unaudited)			2016		2015		2016		2015
Revenues		$	485,321	$	432,141	$	1,370,316	$	1,113,058
Cost of sales, excluding depreciation and amortization^(1)			427,200		368,770		1,261,253		951,695
Selling and administrative expenses			31,155		27,304		92,784		77,491
Profit sharing program			2,372		3,895		4,801		6,979
Depreciation of property, plant and equipment			7,571		6,605		21,690		19,059
Amortization of intangible assets			934		712		2,779		2,077
Other net gains			(790)		(1,448)		(411)		(1,116)
Finance costs			3,176		4,048		8,378		11,834
Finance revenue			(143)		(164)		(550)		(519)
Share of loss of a joint venture and associates			85		347		1,105		1,089
Earnings (loss) before income tax			13,761		22,072		(21,513)		44,469
Tax expense (income)
	Current		4,655		2,950		11,502		7,203
	Deferred		(429)		4,499		(22,361)		8,226
			4,226		7,449		(10,859)		15,429
Net income (loss)		$	9,535	$	14,623	$	(10,654)	$	29,040
Net income (loss) attributable to:
	Shareholders	$	8,778	$	14,541	$	(11,276)	$	28,974
	Non-controlling interests		757		82		622		66
		$	9,535	$	14,623	$	(10,654)	$	29,040
Net earnings (loss) per share attributable to shareholders
	Basic	$	0.19	$	0.35	$	(0.24)	$	0.69
	Diluted	$	0.19	$	0.35	$	(0.24)	$	0.69
Weighted average number of common shares (in thousands of shares)
	Basic		46,631		42,023		46,975		42,002
	Diluted		46,707		42,059		46,975		42,038
Number of common shares outstanding (in thousands of shares)							46,707		42,069

^(1)	As at October 1, 2016 and September 26, 2015, the cost of sales, including depreciation and amortization, was $433,480 and $374,449 respectively, for the three-month period and $1,279,555 and $968,062 respectively, for the nine-month period.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Periods ended October 1, 2016 and September 26, 2015
(in thousands of Canadian dollars)			Three months				Nine months
(unaudited)			2016		2015		2016		2015
Net income (loss)		$	9,535	$	14,623	$	(10,654)	$	29,040
Other comprehensive income (loss):
Items that will be reclassified subsequently to profit or loss:
	Change in unrealized gains (losses) on translating foreign operations		5,670		28,620		(20,568)		47,922
	Change in unrealized gain (loss) on translating debt designated as hedging item of the net investment in foreign operations		(211)		(1,519)		927		(2,784)
			5,459		27,101		(19,641)		45,138
Available-for-sale asset:
	Unrealized gains (losses) on available-for-sale financial assets arising during the period		(91)		27		(226)		27
	Reclassified to statements of income		- -		- -		- -		(2)
			(91)		27		(226)		25
Other comprehensive income (loss)			5,368		27,128		(19,867)		45,163
Comprehensive income (loss)		$	14,903	$	41,751	$	(30,521)	$	74,203
Comprehensive income (loss) attributable to:
	Shareholders	$	14,027	$	41,669	$	(31,148)	$	74,121
	Non-controlling interests		876		82		627		82
		$	14,903	$	41,751	$	(30 521)	$	74,203

CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
(in thousands of Canadian dollars) (unaudited as at October 1, 2016)		As at October 1, 2016			As at December 31, 2015
Assets
Current assets
Cash and cash equivalents	$	9,029			$	7,050
Accounts receivable		316,383				320,517
Costs and estimated profits in excess of billings		274,407				194,298
Inventories		145,961				166,833
Recoverable tax assets		1,347				1,573
Prepaid expenses and other assets		4,850				3,230
		751,977				693,501
Non-current assets
Investments		9,783				6,173
Interests in a joint venture and associates		38,039				39,370
Property, plant and equipment		370,059				348,391
Intangible assets		9,438				11,500
Goodwill		57,958				56,023
Deferred tax assets		21,004				4,007
Long-term receivables and other assets		6,156				5,564
Total assets	$	1,264,414			$	1,164,529
Liabilities
Current liabilities
Accounts payable and accrued liabilities	$	274,936			$	223,580
Billings in excess of costs and estimated profits		95,445				73,465
Current tax liabilities		2,874				4,156
Current portion of balance of purchase price of businesses and purchase obligation		4,345				1,282
Current portion of debt		20,603				43,083
		398,203				345,566
Non-current liabilities
Debt		255,211				164,356
Balance of purchase price of businesses and purchase obligation		8,132				650
Provisions		18,835				19,485
Deferred tax liabilities		8,789				8,897
Other liabilities		943				1,208
Total liabilities		690,113				540,162
Equity
Share capital		235,866				239,777
Retained earnings		259,767				294,458
Other equity items		69,906				90,090
Total equity attributable to shareholders		565,539				624,325
Non-controlling interests		8,762				42
Total equity		574,301				624,367
Total equity and liabilities	$	1,264,414			$	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		- -		- -		- -		- -		- -		- -		- -		28,974		28,974		66		29,040
Comprehensive income		- -		47,906		(2,784)		25		- -		45,147		- -		- -		45,147		16		45,163
Dividends		- -		- -		- -		- -		- -		- -		- -		(5,003)		(5,003)		- -		(5,003)
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		- -		- -		- -		- -		- -		- -		192		- -		192		- -		192
Exercise of options upon the conversion of debentures		- -		- -		- -		- -		(16)		(16)		16		- -		- -		- -		- -
Amortization of compensation costs related to the profit sharing program - stock ownership component		64		- -		- -		- -		- -		64		- -		- -		64		- -		64
Balance as at September 26, 2015	$	2,061	$	77,357	$	(3,590)	$	27	$	5,742	$	81,597	$	168,503	$	276,143	$	526,243	$	118	$	526,361
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 (Note 3)		- -		- -		- -		- -		- -		- -		- -		- -		- -		8,093		8,093
Purchase obligation (Note 3)		- -		- -		- -		- -		- -		- -		- -		(11,252)		(11,252)		- -		(11,252)
Net income (loss) for the period		- -		- -		- -		- -		- -		- -		- -		(11,276)		(11,276)		622		(10,654)
Comprehensive income (loss)		- -		(20,573)		927		(226)		- -		(19,872)		- -		- -		(19,872)		5		(19,867)
Dividends		- -		- -		- -		- -		- -		- -		- -		(5,610)		(5,610)		- -		(5,610)
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		64		- -		- -		- -		- -		64		- -		- -		64		- -		64
Balance as at October 1, 2016	$	1,770	$	71,515	$	(3,352)	$	(27)	$	- -	$	69,906	$	235,866	$	259,767	$	565,539	$	8,762	$	574,301

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of Canadian dollars)			Three months					Nine months
(unaudited)			2016		2015			2016		2015
Cash flows from the following activities:
Operating activities
Net income (loss)		$	9,535	$	14,623	$		(10,654)	$	29,040
Adjustments:
	Amortization of compensation costs related to the profit sharing program – stock ownership component		22		21			64		64
	Gain on disposal of an investment		- -		- -			- -		(5)
	Gain on disposal of property, plant and equipment		(85)		(25)			(257)		(27)
	Depreciation of property, plant and equipment		7,571		6,605			21,690		19,059
	Amortization of intangible assets		934		712			2,779		2,077
	Amortization of deferred financing expenses		100		108			300		361
	Provisions		115		- -			450		- -
	Interest rate swaps		(82)		(29)			(212)		(158)
	Imputed interest		166		664			535		1,975
	Pension expense		(509)		(717)			(1,761)		(2,299)
	Deferred tax expense (income)		(429)		4,499			(22,361)		8,226
	Share of loss of a joint venture and associates		85		347			1,105		1,089
			17,423		26,808			(8,322)		59,402
Net change in non-cash operating working capital balances
Decrease (increase) in accounts receivable			13,289		(33,070)			15,156		(13,000)
Increase in costs and estimated profits in excess of billings			(26,013)		(18,080)			(77,980)		(52,265)
Decrease (increase) in inventories			(9,459)		1,434			16,722		(5,471)
Decrease (increase) in current tax assets			(641)		(67)			343		91
Decrease (increase) in prepaid expenses and other assets			4,486		2,657			(1,567)		2,196
Increase (decrease) in accounts payable and accrued liabilities			(8,747)		9,703			44,671		17,842
Increase in billings in excess of costs and estimated profits			12,822		6,105			24,965		8,366
Increase (decrease) in interest payable			(483)		1,922			(27)		1,918
Increase (decrease) in current tax liabilities			854		(824)			(1,232)		(3,928)
			(13,892)		(30,220)			21,051		(44,251)
Cash flows from (used in) operating activities			3,531		(3,412)			12,729		15,151
Financing activities
Repurchase of shares			- -		- -			(10,840)		(319)
Dividends			(1,849)		(1,671)			(7,500)		(5,010)
Increase in debt and bank loans			54,373		32,587			158,645		61,636
Repayment of debt and bank loans			(44,169)		(10,431)			(102,186)		(45,820)
Repayment of balances of purchase price of businesses			(1,207)		- -			(1,207)		- -
Issue expenses related to debt			(74)		(37)			(452)		(141)
Increase (decrease) in other liabilities			- -		11			(17)		31
Cash flows from (used in) financing activities			7,074		20,459			36,443		10,377
Investing activities
Proceeds from sale of property, plant and equipment			479		54			849		471
Additions to property, plant and equipment			(11,423)		(6,927)			(33,507)		(18,673)
Additions to intangible assets			(430)		(320)			(1,103)		(963)
Acquisition of investments			(142)		(449)			(4,100)		(599)
Proceeds from disposal of interests in an associate			231		- -			231		- -
Proceeds from disposal of an investment			- -		47			- -		48
Distribution received			- -		- -			264		- -
Decrease in receivables and other assets			164		32			197		151
Increase in long-term receivables			(122)		(244)			(122)		(244)
Acquisition of business assets, net of cash and cash equivalents			- -		(6,191)			(9,896)		(6,191)
Cash flows used in investing activities			(11,243)		(13,998)			(47,187)		(26,000)
Effects of changes in foreign exchange rate on cash and cash equivalents			(846)		1,239			(6)		1,769
Net change in cash and cash equivalents			(1,484)		4,288			1,979		1,297
Cash and cash equivalents – Beginning of period			10,513		5,270			7,050		8,261
Cash and cash equivalents – End of period		$	9,029	$	9,558	$		9,029	$	9,558
Supplementary information
	Interest paid	$	2,669	$	1,339	$		5,749	$	5,981
	Income taxes paid, net	$	2,215	$	3,762	$		11,336	$	10,856

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]