HIGHLIGHTS Quarter ended September 30, 2010 -------------------------------- - Revenues of $168.7 million compared with $102.1 million for the corresponding quarter of fiscal 2010, an increase owing primarily to the inclusion of the results of Christ Water Technology AG (CWT). - Normalized EBITDA of $(4.0) million compared with $4.2 million year over year, a decrease stemming mainly from the decline in gross margin in the Water Treatment Group (Ovivo) owing in particular to the implementation of turnaround plans at two European divisions. - Net loss of $9.6 million ($0.22 per share, basic and diluted) compared with net earnings of $0.7 million ($0.02 per share, basic and diluted) for the second quarter of fiscal 2010, a decrease resulting largely from operating losses at two European divisions of the Water Treatment Group (Ovivo), higher amortization expense arising from the inclusion of CWT's results, interest on long-term debt and an unfavourable change in the net amount of foreign exchange losses and gains. - Used cash flow of $5.0 million compared with free cash flow of $0.6 million year over year. Six-month period ended September 30, 2010 ----------------------------------------- - Revenues of $321.3 million compared with $216.0 million for the corresponding period of fiscal 2010, an increase driven by the inclusion of CWT's results. - Normalized EBITDA of $(0.4) million compared with $8.1 million year over year, a decline resulting mainly from the decline in gross margin in the Water Treatment Group (Ovivo) due in particular to the implementation of turnaround plans at two European divisions. - Net loss of $13.8 million ($0.31 per share, basic and diluted) compared with net earnings of $1.6 million ($0.05 per share, basic and diluted) for the first six months of fiscal 2010, a decrease largely attributable to operating losses at two European divisions, higher amortization expense resulting from the inclusion of CWT's results, interest on long-term debt and a decline in fair value of financial instruments. - Used cash flow of $3.3 million compared with free cash flow of $2.1 million year over year. Data as at September 30, 2010 ----------------------------- - Total net debt to total capitalization ratio of 11.9% as at September 30, 2010 compared with 6.9% as at March 31, 2010, an increase resulting from investments in working capital. - Total net debt of $35.6 million, a marked improvement from $61.2 million as at June 30, 2010. - Backlog worth $428.2 million compared with $212.7 million as at September 30, 2009 (an increase driven by the inclusion of CWT's results and organic growth at constant exchange rates in the Pulp and Paper Group) and $452.1 million as at June 30, 2010 (a slight decline stemming primarily from the Water Treatment Group (Ovivo)). </pre> <p/> <p><span class="xn-location">MONTREAL</span>, <span class="xn-chron">Nov. 11</span> /CNW Telbec/ - (All amounts are in Canadian dollars)</p> <p/> <p>GLV Inc. (the "Corporation"; TSX: GLV.A, GLV.B) released its results today for the three- and six-month periods ended <span class="xn-chron">September 30, 2010</span>. The Corporation reported substantial increase in revenues, driven mainly by the inclusion of the results of Christ Water Technology AG (CWT). However, the combined adverse effect of a series of factors resulted in a net loss for the second quarter and first six months of the fiscal year.</p> <p>"As we announced on <span class="xn-chron">October 26, 2010</span>, the results of two European divisions of the Water Treatment Group (Ovivo) had significantly impacted our consolidated results for the quarter as a result of expenses caused by steps taken and additional costs to complete certain contracts," said President and Chief Executive Officer Richard Verreault. "Turnaround plans are underway at these two divisions to provide, in particular, for more stringent approval processes and contract management, especially with regard to cost assessments, drawing on best practices in place elsewhere in the organization," added <span class="xn-person">Mr. Verreault</span>.</p> <p/> <p>Summary analysis of financial results</p> <p/> <p>This press release provides a summary analysis of results for the three- and six-month periods ended <span class="xn-chron">September 30, 2010</span>. For more information, see the Corporation's interim Management's Discussion and Analysis (MD&A) and Consolidated Financial Statements, filed today on SEDAR (<a href="http://www.sedar.com">www.sedar.com</a>) and the Corporation's website (<a href="http://www.glv.com">www.glv.com</a>). Note that financial measures such as EBITDA and free cash flow, which are not measures determined under Canadian generally accepted accounting principles ("GAAP"), have also been used to analyze performance. See the interim MD&A for information on the non-GAAP measures used.</p> <p/> <pre> Selected Information ------------------------------------------------------------------------- Quarters Six-month periods ended September 30 ended September 30 --------------------- --------------------- 2010 2009 2010 2009 --------------------------------------------------- --------------------- (in thousands of $, except per share data and percentages) (restated) (restated) Revenues 168,713 102,134 321,295 215,973 Water Treatment (Ovivo) 113,427 58,175 210,003 123,794 Pulp & Paper 47,423 41,900 91,536 87,474 Other 7,863 2,059 19,756 4,705 --------------------------------------------------- --------------------- EBITDA (4,014) 3,268 (441) 6,715 Water Treatment (Ovivo) (1,762) 3,000 236 8,146 Pulp & Paper 3,578 2,566 7,331 4,009 Other (5,830) (2,298) (8,008) (5,440) --------------------------------------------------- --------------------- Normalized EBITDA(1) (4,014) 4,228 (441) 8,083 Water Treatment (Ovivo)(1) (1,762) 3,595 236 8,757 Pulp & Paper(1) 3,578 2,805 7,331 4,640 Other(1) (5,830) (2,172) (8,008) (5,314) --------------------------------------------------- --------------------- Normalized EBITDA margin(1) (% of revenues) -2.4% 4.1% -0.1% 3.7% Water Treatment (Ovivo)(1) -1.6% 6.2% 0.1% 7.1% Pulp & Paper(1) 7.5% 6.7% 8.0% 5.3% Other(1) n/a n/a n/a n/a --------------------------------------------------- --------------------- Net earnings (loss) (9,634) 719 (13,791) 1,590 --------------------------------------------------- --------------------- Free (used) cash flow (5,037) 617 (3,270) 2,074 --------------------------------------------------- --------------------- PER SHARE (basic and fully diluted) --------------------------------------------------- --------------------- Net earnings (loss) (0.22) 0.02 (0.31) 0.05 Free (used) cash flow (0.11) 0.02 (0.07) 0.07 --------------------------------------------------- --------------------- September March September March 30 31 30 31 Capitalization ratio 2010 2010 2010 2010 --------------------------------------------------- --------------------- Net debt to total capitalization ratio 11.9% 6.9% 11.9% 6.9% ------------------------------------------------------------------------- (1) Excluding restructuring costs </pre> <p/> <p>Second quarter of fiscal 2011</p> <p/> <p>For the three-month period ended <span class="xn-chron">September 30, 2010</span>, the Corporation reported revenues totalling <span class="xn-money">$168.7 million</span> compared with <span class="xn-money">$102.1 million</span> for the corresponding quarter of fiscal 2010. Most of this revenue growth stemmed from the Water Treatment Group (Ovivo), due in particular to the inclusion of CWT's results. Excluding CWT, the Water Treatment Group (Ovivo) recorded organic revenue growth driven by increased business in key markets, such as the U.S. The Pulp and Paper Group reported organic revenue growth, at constant exchange rates, sparked by higher demand for both new equipment and aftermarket services.</p> <p>In the second quarter of fiscal 2011, the Corporation reported consolidated normalized earnings before interest, income taxes and amortization (EBITDA) of $(4.0) million, down sharply from positive year-over-year EBITDA of <span class="xn-money">$4.2 million</span>. This negative difference resulted, in large, from operating losses at two European divisions of the Water Treatment Group (Ovivo) currently implementing turnaround plans. The overall impact was partially offset, however, by improved profitability in the Pulp and Paper Group</p> <p>Accordingly, the Corporation reported a net loss of <span class="xn-money">$9.6 million</span> (<span class="xn-money">$0.22</span> per share, basic and diluted) for the second quarter of fiscal 2011 compared with net earnings of <span class="xn-money">$0.7 million</span> (<span class="xn-money">$0.02</span> per share, basic and diluted) year over year. This significant negative difference resulted primarily from operating losses at two European Divisions of the Water Treatment Group (Ovivo), an increase in amortization of intangible assets resulting from the inclusion of CWT's results, interest on long-term debt and an unfavourable change in the net amount of foreign exchange losses and gains.</p> <p/> <p>Six-month period ended <span class="xn-chron">September 30, 2010</span></p> <p/> <p>For the first six months of fiscal 2011, the Corporation reported revenues totalling <span class="xn-money">$321.3 million</span> compared with <span class="xn-money">$216.0 million</span> for the same period of the previous fiscal year. Once again, revenue growth resulted, in large, from the inclusion of CWT's results, but also from organic revenue growth at constant exchange rates in the Pulp and Paper Group.</p> <p>The Corporation recognized consolidated normalized EBITDA of $(0.4) million for the first half of fiscal 2011, a sharply unfavourable contrast to the positive <span class="xn-money">$8.1 million</span> reading for the year-over-year period. As for the quarterly results, operating losses at two European divisions of the Water Treatment Group (Ovivo) were largely to blame.</p> <p>The Corporation recorded a year-to-date net loss of <span class="xn-money">$13.8 million</span> (<span class="xn-money">$0.31</span> per share, basic and diluted) compared with net earnings of <span class="xn-money">$1.6 million</span> (<span class="xn-money">$0.05</span> per share, basic and diluted) for the first half of fiscal 2010. In addition to the factors that contributed to the second quarter loss, the significant unfavourable effect of the mark-to-market remeasurement of financial instruments in the first quarter of fiscal 2011 also weighed on results.</p> <p/> <p>Financial position</p> <p/> <p>For the second quarter of fiscal 2011, the Corporation recorded cash outflows of <span class="xn-money">$5.0 million</span> (<span class="xn-money">$0.11</span> per share, basic and diluted) compared with cash inflows of <span class="xn-money">$0.6 million</span> (<span class="xn-money">$0.02</span> per share, basic and diluted) for the same quarter of fiscal 2010. For the first six months of fiscal 2011, the Corporation recorded cash outflows of <span class="xn-money">$3.3 million</span> (<span class="xn-money">$0.07</span> per share, basic and diluted) compared with cash inflows of <span class="xn-money">$2.1 million</span> (<span class="xn-money">$0.07</span> per share, basic and diluted) for the same period of the previous fiscal year.</p> <p>As at <span class="xn-chron">September 30, 2010</span>, after subtracting cash and cash equivalents, total net debt stood at <span class="xn-money">$35.6 million</span> for a total net debt to total capitalization ratio of 11.9% compared with <span class="xn-money">$20.3 million</span> and a 6.9% ratio as at <span class="xn-chron">March 31, 2010</span>. This is a marked improvement relative to <span class="xn-chron">June 30, 2010</span>, when total net debt stood at <span class="xn-money">$61.2 million</span> with a ratio of 19.0%.</p> <p/> <p>Backlog</p> <p/> <p>As at <span class="xn-chron">September 30, 2010</span>, the Corporation's backlog was worth <span class="xn-money">$428.2 million</span> compared with <span class="xn-money">$212.7 million</span> as at <span class="xn-chron">September 30, 2009</span>. This significant growth resulted largely from the inclusion of CWT's results, but also from organic growth in the value of the Pulp and Paper Group's backlog.</p> <p>Compared with the backlog as at <span class="xn-chron">June 30, 2010</span>, then valued at <span class="xn-money">$452.1 million</span>, the negative difference resulted from slower business in the seawater desalination segment and the implementation of turnaround plans underway at two European divisions. This was partially offset by business growth in other Water Treatment Group (Ovivo) segments, including semiconductor and the U.S. municipal market.</p> <p/> <p>Outlook</p> <p/> <p>The Corporation's short-term priorities continue to focus on increasing profitability for both operational groups and strengthening their respective positions to maximize market share. However, management will remain cautious over the next few quarters, in light of uncertain economic conditions in the U.S. and <span class="xn-location">Europe</span>.</p> <p>"We remain confident that situation will improve over the next few quarters," stated <span class="xn-person">Mr. Verreault</span>. "For instance, for the Water Treatment Group (Ovivo), the semiconductor, food and beverage processing and seawater desalination segments are expected to enjoy good business in the next few quarters. Recent contract tenders point to rebounding business, particularly in semiconductors, hard hit by the 2008-2009 recession. In light of its expertise and technological portfolio, the Water Treatment Group (Ovivo) is well positioned to capitalize on this recovery," said <span class="xn-person">Mr. Verreault</span>.</p> <p>Other industries are also seeing increased demand for water treatment systems, such as for use in metal refineries and pulp and paper plants, already served by Ovivo. In the municipal market, even though the pace of growth still lags historical averages, business has picked up somewhat with the attribution of major new contracts. The <span class="xn-chron">October 4, 2010</span> release of the Clean Water and Drinking Water Infrastructure Sustainability Policy by the U.S. Environmental Protection Agency (EPA) is expected to have a positive impact, since it encourages municipalities to invest in modernizing their water treatment infrastructure.</p> <p>In the pulp and paper industry, low inventories continue to bolster pulp prices, which prompts paper companies to invest in facility maintenance and, more recently, in new equipment purchases. For the Pulp and Paper Group, this situation has sparked a sharp upturn in business.</p> <p>For fiscal 2011 as a whole, assuming exchange rates remain stable at current levels and owing primarily to downwardly revised revenue forecasts for the Water Treatment Group (Ovivo) in the municipal segment and for the U.K. division responsible for energy contract management, the Corporation anticipates consolidated revenues ranging from <span class="xn-money">$675 million to $700 million</span>.</p> <p/> <p>About GLV Inc.</p> <p/> <p>GLV is a leading provider of technological solutions used in water treatment as well as in pulp and paper production. It operates in some 30 countries with approximately 2,300 employees. GLV is a public company whose shares trade on the <span class="xn-location">Toronto</span> Stock Exchange (TSX) under the ticker symbols GLV.A and GLV.B; it is a constituent of the S&P/TSX Clean Technology Index.</p> <p/> <p>Notice regarding forward-looking statements</p> <p/> <p>Certain information and statements in this press release and other public communications regarding management's objectives, projections, estimates, expectations or forecasts may constitute forward-looking statements within the meaning of applicable securities legislation. Forward-looking statements concern analyses and other information based on forecasted future results and the estimate of amounts that cannot yet be determined. These may be observations concerning, in particular, strategies, expectations, planned activities or future actions. Forward-looking statements are recognized by the use of terms such as "forecast," "project," "could," "plan," "aim," "estimate" and other similar terms, possibly used in the future or conditional, particularly with regard to certain assumptions.</p> <p>The management of GLV would like to point out that forward-looking statements involve a number of uncertainties and known and unknown risks such that GLV's actual and future results could differ considerably from those stated. Factors of uncertainty and risk that might result in such differences include the risks related to acquisitions and contracts with clients, dependence on key personnel, exchange rate fluctuations, credit, market and liquidity risks, competition, supplier-related risks, availability of the financing required to carry on the business and strategic plan, concentration risk, availability of raw materials, fluctuations in interest rates, potential lawsuits regarding intellectual property rights, asset impairment risk and risks associated with GLV's holding company structure. There can be no assurance as to the materialization of the results, performance or achievements as expressed in or underlying the forward-looking statements. In addition, unless otherwise indicated, the forward-looking statements included in this press release were set forth at the date hereof, and unless required to do so pursuant to applicable securities legislation, GLV's management assumes no obligation as to the updating or revision of the forward-looking statements as a result of new information, future events or other changes. Forward-looking statements are designed to provide the reader with a description of management's expectations regarding the Corporation's financial performance during fiscal 2011 and may not be appropriate for other purposes.</p> <p>Additional information about the risk factors to which GLV is exposed is provided under "Risk management and risk factors" in the MD&A for the fiscal year ended <span class="xn-chron">March 31, 2010</span> available on SEDAR (<a href="http://www.sedar.com">www.sedar.com</a>) and the Corporation's website (<a href="http://www.glv.com">www.glv.com</a>). The significant factors and assumptions used to draw conclusions or prepare forecasts or projections are also discussed in the MD&A for the fiscal year ended <span class="xn-chron">March 31, 2010</span>.</p> <p/> <pre> ------------------------------------------------------------------------- REMINDER CONFERENCE CALL --------------- Thursday, November 11, 2010 at 2 p.m. (EST) Dial-in number: 1-866-865-3087 An audio webcast of the conference call will be streamed live on www.glv.com. An audio recording will be accessible on demand from 5 p.m. (EST) November 11, 2010 until midnight November 18, 2010 at 1-800-642-1687 (access code: 21269073). -------------------------------------------------------------------------
For further information: Investors: Louis Guindon, Vice-President, Treasury, Tel.: +1 514-284-2224, [email protected]; Media: Yves Doucet, Director, Communications, Tel.: +1 514-284-7202, [email protected]
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