DRUMMONDVILLE, QC, Nov. 13, 2013 /CNW Telbec/ - CVTech Group Inc. ("CVTech" or "the Corporation") (TSX: CVT) today reported results for its third quarter ended September 30, 2013. All amounts are in Canadian dollars unless otherwise indicated.
| Financial highlights | Three months ended Sept. 30 | Nine months ended Sept. 30 | ||||
| (in thousands of dollars, except per-share data) | 2013 | 2012 | 2013 | 2012 | ||
| Revenues from continuing operations | 57,324 | 59,350 | 168,997 | 166,629 | ||
| EBITDA from continuing operations | 1,475 | 6,510 | 3,746 | 17,128 | ||
| Net earnings from continuing operations | (504) | 3,040 | (2,282) | 8,232 | ||
| Per share - basic and diluted ($) | (0.01) | 0.04 | (0.03) | 0.11 | ||
| Net earnings from discontinued operations | 0 | (461) | 0 | (1,871) | ||
| Net earnings | (504) | 2,579 | (2,282) | 6,361 | ||
| Per share - basic and diluted ($) | (0.01) | 0.04 | (0.03) | 0.09 | ||
| Weighted average number of shares outstanding (basic, in thousands) | 71,789 | 72,420 | 72,009 | 72,418 | ||
THIRD-QUARTER RESULTS
Revenues from continuing operations were $57.3 million, down 3.4% from $59.4 million in the third quarter a year earlier. The difference was due mainly to lower revenues from contracts for the construction, maintenance and repair of electricity distribution lines. In addition, revenues arising from natural disasters were lower in the third quarter of 2013 than in the year-earlier period. These factors were partially offset by an increase in revenues in Ontario and an increase in revenues from mechanical activities as well as from industrial, commercial and institutional projects in the United States.
In the third quarter, the Corporation recorded certain revenue adjustments under a U.S. contract for which some revenues could not be fully recognized in the second quarter of 2013, but whose costs were recorded. Negotiations with the customer continued during the third quarter and the Corporation believes it will be able to resolve this situation during the next few quarters.
Revenues from work performed in the U.S. were down 1.8% to $37.2 million, while revenues from contracts performed in Canada were down 6.3% to $20.1 million. The Ontario subsidiary continued to expand, generating revenues of approximately $3.0 million during the quarter ended September 30, 2013.
Earnings from continuing operations before interest, taxes, depreciation and amortization ("EBITDA") were $1.5 million in the third quarter of 2013, compared to $6.5 million in the third quarter of 2012. The decrease in EBITDA reflects the factors noted above, project start-ups in new market segments, a less favourable product mix and an increase in selling, general and administrative expenses. This last category included non-recurring professional fees of $506,000, related mainly to acquisition projects.
For the third quarter of 2013 the Corporation recorded a net loss of $504,000, or $0.01 per diluted share, compared to net earnings of $3.0 million, or $0.04 per diluted share, in the third quarter of 2012.
"The operating results of the third quarter, though below our expectations, show sequential improvement from the second quarter. CVTech continues to grow significantly in Ontario, while our mechanical activities, as well as our operations related to industrial, commercial and institutional electricity, have performed well on in the United States," said André Laramée, President and Chief Executive Officer of CVTech.
As at September 30, 2013, the value of the Corporation's order backlog was approximately $162.0 million. This amount does not include contracts valued at $45.8 million announced in the Corporation's press release of October 22, 2013.
NINE-MONTH RESULTS
Revenues from continuing operations in the nine-month period ended September 30, 2013 were $169.0 million, up 1.4% from $166.6 million in the same period a year earlier. EBITDA from continuing operations was $3.7 million versus $17.1 million a year earlier. Note that EBITDA for the first nine months of 2012 included a gain of $2.2 million on settlement of a life insurance claim. Excluding this item, EBITDA for the period was $14.9 million. In the first nine months of 2013, the Corporation recorded a net loss of $2.3 million, or $0.03 per diluted share, versus net earnings of $8.2 million, or $0.11 per diluted share, in the first nine months of 2012. Excluding the gain noted above, net earnings in the first nine months of 2012 were $6.0 million, or $0.08 per diluted share.
FINANCIAL POSITION
In the third quarter of 2013 the Corporation continued to reduce its long-term debt which, including the current portion, stood at $20.2 million as at September 30, 2013, compared to $21.6 million three months earlier. The resulting ratio of long-term debt to equity was 0.25 as at September 30, 2013, down from 0.26 three months earlier. Also as at September 30, 2013, CVTech held $2.1 million in cash, while its bank loans amounted to $26.4 million.
STRATEGIC REVIEW
In October 2013, the Corporation carried out a strategic review. The main objectives were to establish the principal strategic orientations for 2014-2015 and to define an action plan to put the proposed initiatives in place.
Following this strategic review, it was agreed that the Corporation should adopt a new business model to accelerate its growth and consolidate its position in the North American market over the coming years. Reorganization of the U.S. and Canadian subsidiaries, creation of shared administrative services, introduction of new lines of business and access to leading-edge expertise will enable CVTech to increase its competitiveness, raise its profile, attract new talent and optimize its business processes. The planning and coordination of the work is now under way and the new initiatives will be brought on stream over the coming year.
OUTLOOK
"In the short-term, since the results of the fourth quarter of 2012 included revenues of $34.7 million related to natural disasters and this year has been less active in that regard, sales volume in the fourth quarter of 2013 will be lower than a year earlier. In the longer term, we believe that the strategic review we have undertaken will make CVTech an even stronger and more diversified North American enterprise. Our new business model will be a major turning point for the Corporation and will enable CVTech to take advantage of a greater number of business opportunities across its markets and to improve its profitability," concluded Mr. Laramée.
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.
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.
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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