- Consolidated revenues from continuing operations up 8.9% to $55.7 million
- EBITDA from continuing operations of $4.9 million, or 8.8% of revenues, versus $3.4 million or 6.7% of revenues in same quarter last year
- Net earnings from continuing operations of $2.0 million, or $0.03 per share, compared to $0.9 million or $0.01 per share a year earlier
- Dissolution of the independent committee
- New contracts valued at up to US$16.0 million
DRUMMONDVILLE, QC, Aug. 9, 2012 /CNW Telbec/ - CVTech Group Inc. ("CVTech" or "the Corporation") (TSX: CVT) today reported results for its second quarter ended June 30, 2012. Further to the acceptance of a letter of intent regarding the sale of operations in the CVT systems and related products segment, results from this segment are presented as discontinued operations and data for the corresponding period of the previous fiscal year have been restated. All amounts are in Canadian dollars unless otherwise indicated.
| Financial highlights | Three months ended June 30 | Six months ended June 30 | ||||
| (in thousands of dollars, except per-share data) | 2012 | 2011 | 2012 | 2011 | ||
| Revenues from continuing operations | 55,725 | 51,164 | 107,279 | 107,831 | ||
| EBITDA from continuing operations | 4,893 | 3,423 | 10,618 | 8,817 | ||
| Net earnings from continuing operations | 1,999 | 862 | 5,192 | 3,016 | ||
| Per share - basic and diluted ($) | 0.03 | 0.01 | 0.07 | 0.04 | ||
| Net earnings (loss) from discontinued operations | (156) | (83) | (1,410) | 406 | ||
| Net earnings | 1,843 | 779 | 3,782 | 3,422 | ||
| Per share - basic and diluted ($) | 0.03 | 0.01 | 0.05 | 0.05 | ||
| Weighted average number of shares outstanding (basic, in thousands) | 72,420 | 72,568 | 72,417 | 72,625 | ||
SECOND-QUARTER RESULTS
Revenues from continuing operations were $55.7 million, up 8.9% from $51.2 million in the second quarter of 2011. The rise was due mainly to higher revenues from construction, maintenance and repair of electricity distribution lines.
Earnings from continuing operations before interest, taxes, depreciation and amortization ("EBITDA") were $4.9 million, or 8.8% of revenues, in the second quarter of 2012, compared to $3.4 million, or 6.7% of revenues, in the second quarter of 2011. The increase in EBITDA, both in dollars and as a percentage of revenues, is attributable to higher revenues and a more favourable product mix in the second quarter of 2012. EBITDA for the second quarter of 2012 is net of non-recurring charges of $669,000 related to a proxy fight with regards to the acceptance of a circular from a dissenting shareholder and to the strategic alternatives review process.
Net earnings from continuing operations for the second quarter of 2012 were $2.0 million, or $0.03 per diluted share, compared to $862,000, or $0.01 per diluted share, in the second quarter of 2011. The net loss from discontinued operations was $156,000, versus $83,000 in 2011. As a result, net earnings stood at $1.8 million, or $0.03 per diluted share, compared to $779,000, or $0.01 per diluted share, in the year-earlier period.
"CVTech's revenues were up in most of its business sectors in the second quarter of 2012. Business related to electricity distribution networks was particularly strong, with numerous contracts in progress, some of them spreading over several years. This higher activity led to improved operating profitability. Even more important, our solid business relationships with the main actors of our industry have brought us new contracts in sectors with high growth potential, such as renewable energy," said André Laramée, President and Chief Executive Officer of CVTech.
SOLID CASH FLOW AND STRONG FINANCIAL POSITION
Reflecting the rise in net earnings, cash flow from operations before changes in working capital items was $5.0 million for the quarter ended June 30, 2012, compared to $4.3 million for the corresponding period in 2011.
As at June 30, 2012, CVTech's financial position was strong, with cash of $10.3 million and long-term debt, including the current portion, of $26.7 million. These amounts exclude cash and long-term debt related to assets held for sale. The ratio of long-term debt, including current portion, to equity was 0.35 as at June 30, 2012, versus 0.48 as at December 31, 2011.
SIX-MONTH RESULTS
Revenues from continuing operations for the six months ended June 30, 2012 were $107.3 million, stable from $107.8 million a year earlier. EBITDA from continuing operations was $10.6 million, or 9.9% of revenues, versus $8.8 million, or 8.2% of revenues, in the same period of 2011. EBITDA for the current year is net of a non-recurring charge of $784,000 related to the items noted above and an amount of $2.2 million related to the settlement of a life insurance claim recorded in the first quarter. Net earnings from continuing operations in the first six months of 2012 were $5.2 million, or $0.07 per diluted share, versus $3.0 million, or $0.04 per diluted share, in the first six months of 2011. Net earnings for the 2012 period were $3.8 million, or $0.05 per diluted share, versus $3.4 million, or $0.05 per diluted share, in the 2011 period.
DISSOLUTION OF THE INDEPENDENT COMMITTEE
The Corporation's Board of Directors has dissolved the independent committee appointed to review strategic and financial alternatives. The independent committee's report concluded that CVTech's current business plan constitutes the best means to enhance shareholder value. The Board of Directors will remain on the lookout for any strategic opportunity to maximize shareholder value.
NEW CONTRACTS VALUED AT UP TO US$16.0 MILLION
The Corporation also announces that its subsidiary Riggs Distler & Company, Inc. has been awarded four contracts with a total value of up to US$16.0 million.
| 1) | Firm two-year contract, accompanied by a one-year option, awarded by a major utility service provider in Pennsylvania for blanket directional drilling on its underground electricity distribution network. This new contract represents annual revenues of US$2.5 million. Work should begin in October 2012 and approximately 20 employees will be assigned to this contract. | |
| 2) | Contract valued at US$4.0 million from a New Jersey utility company for the installation of a seven megawatt ground-mounted solar energy system in Medford, New Jersey. Work is expected to begin in August 2012 and extend over a four-month period. Approximately 80 employees will be assigned to this project. | |
| 3) | US$2.0 million contract awarded by National Grid USA to proceed with manhole cable installation on National Grid's underground electricity distribution network in Massachusetts. Execution of the contract is scheduled to begin in August 2012 and extend over a six-month period. Approximately 15 workers will be assigned to this project. | |
| 4) | US$2.5 million contract awarded by a major utility company in New Jersey for the rebuild of a 230 kilovolt transmission line in central New Jersey. Work is expected to begin in October 2012 and extend over a four-month period. Approximately 17 employees will be assigned to the project. |
The Corporation's order backlog at June 30, 2012 amounted to $237 million.
OUTLOOK
"In the short term, we are confident that the sale of our CVT systems and related products segment will close on, or about August 31, 2012. This transaction will enable CVTech to focus exclusively on its Energy segment in order to quickly capture many business opportunities arising in high-growth market niches. The sale will also strengthen CVTech's financial position, allowing us to consider new strategic acquisitions to broaden our product and service offering, our expertise and our geographical reach," concluded Mr. Laramée.
OVERVIEW OF THE CORPORATION
CVTech is a management company operating in two sectors. Through Thirau ltée and its subsidiaries Riggs Distler Inc. and Thirau LLC, the Corporation provides services to the electric power industry for the maintenance of transmission and distribution lines, primarily in Quebec, Ontario and the eastern United States. Another Thirau ltée subsidiary, J.J.L Déboisement inc., specializes in control of vegetation surrounding power lines and in clearing rights of way. Thirau LLC's wholly owned subsidiary Riggs Distler & Company, Inc. is a leading provider of maintenance and construction services to the utility and heavy industrial markets. In the CVT Systems and Related Products Segment, the Corporation, through CVTech-IBC Inc., designs, manufactures and sells continuously variable power transmission systems, or CVT systems. CVTech-AAB Inc. specializes in rebuilding crankshafts and cylinders and in distributing engine parts.
NON-IFRS MEASURE
EBITDA is a measure that has no standardized meaning prescribed by IFRS and is thus considered to be a non-IFRS measure. Therefore, this measure may not be comparable to similar measures presented by other issuers. This measure is presented and described in this release in order to provide additional information regarding the Corporation's liquidity and its ability to generate funds to finance its operations.
FORWARD-LOOKING STATEMENTS
This document may contain forward-looking statements that reflect management's current expectations regarding future events. Forward-looking statements are based on a number of factors and include risks and uncertainties. Actual results may differ from forecast results. Management has no obligation beyond what is required under the law to update or revise forward-looking statements pursuant to new information or future events.
Further information regarding CVTech is available in the SEDAR database (www.sedar.com) and on the Corporation's website at www.cvtech.ca.
SOURCE: CVTECH GROUP INC.
Source: CVTech Group Inc.
Contacts:
André Laramée, MBA
President and Chief Executive Officer
819-479-7771
[email protected]
Mario Trahan, CPA, CMA
Chief Financial Officer
819-479-7771
[email protected]
MaisonBrison Communications
Martin Goulet, CFA
514-731-0000
[email protected]
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