DRUMMONDVILLE, QC, Aug. 13, 2014 /CNW Telbec/ - CVTech Group Inc. ("CVTech" or "the Corporation") (TSX: CVT) today reported results for the second quarter ended June 30, 2014. All amounts are in Canadian dollars unless otherwise indicated.
"CVTech achieved another solid revenue growth in the second quarter of 2014, mainly as a result of strong increases in business activity in the U.S. and Ontario. However, the rapid business growth in Ontario required a greater recourse to subcontracting, which negatively affected operating profitability", said Pierre L. Gauthier, President and Chief Executive Officer of CVTech.
| Financial highlights | Three months ended June 30 | Six months ended June 30 | ||||
| (in thousands of dollars, except per-share data) | 2014 | 2013 | 2014 | 2013 | ||
| Revenues | 77,925 | 55,289 | 149,108 | 111,673 | ||
| EBITDA | 1,824 | (16) | 6,374 | 2,271 | ||
| Net earnings | (691) | (1,755) | 726 | (1,778) | ||
| Per share - basic and diluted ($) | (0.01) | (0.02) | 0.01 | (0.02) | ||
| Weighted average number of shares outstanding (basic, in thousands) | 71,533 | 72,008 | 71,533 | 72,119 | ||
SECOND-QUARTER RESULTS
Revenues were $77.9 million, up 40.9% from the second quarter of 2013. The increase was due mainly to growth in revenues from contracts for the construction, maintenance and repair of underground lines, from contracts related to mechanical work and from contracts associated with electrical energy projects for industrial, commercial and institutional customers. In addition, the conversion effect resulting from fluctuations in the value of the Canadian dollar increased the value of U.S.-dollar-denominated revenues for the quarter ended June 30, 2014 by $3.2 million compared to the same period in 2013. However, revenues from contracts for the construction, maintenance and repair of electricity distribution lines were lower.
Revenues from work carried out in the U.S. were up 32.0% to $51.0 million, while revenues from contracts performed in Canada were up 61.6% to $27.0 million. Reflecting increased market penetration, the Corporation's Ontario revenues grew strongly, to $16.2 million in the second quarter of 2014 compared to $2.6 million in the second quarter of 2013.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") were $1.8 million, or 2.3% of revenues, compared to negative EBITDA of $16,000, or 0.0% of revenues, in the second quarter of 2013. The improvement, both in dollars and as a percentage of revenues, reflects growth in sales volume, offset in part by greater recourse to subcontracting in Ontario. EBITDA in the second quarter of 2013 had been affected by an unprofitable contract in the U.S. and by the start-up of projects in new market segments.
For the second quarter of 2014, the Corporation recorded a net loss of $691,000, or $0.01 per basic and diluted share, compared to a net loss of $1.8 million, or $0.02 per basic and diluted share, in the second quarter of 2013.
At June 30, 2014, the value of the Corporation's order backlog was approximately $176.0 million, compared with $213.0 million at the end of the previous quarter.
SIX-MONTH RESULTS
Revenues for the six months ended June 30, 2014 were $149.1 million, up 33.5% from $111.7 million in the six months ended June 30, 2013. The conversion effect increased the value of U.S.-dollar-denominated revenues for the six months ended June 30, 2014 by approximately $7.0 million compared to the same period a year earlier. Revenues from work carried out in the U.S. were up 21.1% to $94.5 million, while revenues from contracts performed in Canada were up 62.4% to $54.6 million.
EBITDA for the first six months of 2014 was $6.4 million, or 4.3% of revenues, up from $2.3 million, or 2.0% of revenues, a year earlier. Net earnings were $726,000, or $0.01 per basic and diluted share, versus a net loss of $1.8 million, or $0.02 per basic and diluted share, in the same period a year earlier.
FINANCIAL POSITION
During the second quarter of 2014, CVTech entered into an agreement with a banking syndicate for a total of $65.0 million in bank financing. The financing obtained consists of a renewable credit facility of $40.0 million in Canadian dollars, on which funds may also be drawn in U.S. dollars, and a long-term loan of an authorized amount of $25.0 million. These financing sources, which have a three-year term, replaced the previous agreements and provide the Corporation with greater financial flexibility in the execution of its action plan.
The Corporation has used part of the long-term loan under this banking agreement to repay certain bank loans, thus providing a better balance between current and long-term financing. Consequently at June 30, 2014 the Corporation's long-term debt, including the current portion, was $27.4 million, compared to $17.0 million three months earlier. The ratio of long-term debt to equity was 0.33 at June 30, 2014, compared to 0.20 three months earlier. However, the balance of bank loans outstanding was reduced by $11.3 million during the quarter to $23.2 million at June 30, 2014. The Corporation held $1.6 million in cash at that date.
OUTLOOK
"Our priority is to pursue the deployment of our new organizational structure. It is now in place in the U.S., while in Canada our strategic review is continuing and we expect to implement the new structure in late 2014 or early 2015. This initiative will bring the Corporation increased flexibility to take advantage of new trends and new business opportunities. It will position CVTech advantageously with reference to the evolution of the industry, in particular regarding sources of electric power generation and the potential for related services, in order to offer its customers a complete range of high-value-added services", concluded Mr. Gauthier.
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 assumes no obligation beyond what is required under the law to update or revise forward-looking statements pursuant to new information or future events.
OVERVIEW OF THE CORPORATION
CVTech is a company operating in the energy sector. The Corporation is a leading provider of construction and maintenance services to the public utility and heavy industrial markets mainly in Quebec, Ontario and the eastern United States. Through its subsidiaries, the Corporation provides maintenance and construction services for electricity transmission and distribution networks, substations and electrical power houses, as well as the control of vegetation on rights-of-way for electrical lines.
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.
Pierre L. Gauthier
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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