Results for the First Quarter Ended April 30, 2010 - ADF Group maintains its
focus
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Highlights of the Quarter Ended April 30, 2010:
- Revenues totalled $13.6 million compared with $16.8 million during the
same quarter in 2009.
- The Corporation maintained high profit margins, of which a gross margin
of 34%, an EBITDA margin of 23% and a net profit margin of 9%.
- ADF closed the first quarter of the 2011 fiscal year with net earnings
of $1.2 million or $0.03 per share (basic and diluted), compared with
$2.2 million or $0.06 per share (basic and diluted) in the first
quarter of 2009.
- As at April 30, 2010, ADF had a current ratio of 5.15:1 and a
$9 million liquidities surplus over its long-term debt (including the
current portion).
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TERREBONNE, QC, June 9 /CNW Telbec/ - For the three-month period ended April 30, 2010, ADF Group ("ADF" or the "Corporation") (ticker symbol: DRX/TSX) recorded revenues of $13.6 million, compared with $16.8 million for the same quarter of the previous year. The first-quarter gross margin stood at $4.6 million, representing 34% of revenues, compared with $5.4 million or 32% of revenues for the same period the previous year.
The relative strong operational performance was in part impacted by the delays attributable to clients on certain projects and the sharp increase in the Canadian dollar in relation to the U.S. dollar between the two comparable periods ended April 30, 2010 and 2009.
EBITDA (earnings before interest, taxes, depreciation and amortization) margin also remained high, standing at 23.1%, compared with 24.4% in the same quarter of the previous year.
ADF closed the quarter with net earnings of $1.2 million or $0.03 per share (basic and diluted), compared with $2.2 million or $0.06 per share (basic and diluted) in the first quarter of the previous year. Besides the unfavourable impact of the appreciation in the Canadian dollar and the decrease in revenues due to delays caused by clients on certain projects, this variation reflects an increase in certain costs, including amortization and interest expenses resulting from the investments programs carried out over the past two fiscal years in order to expand, diversify and optimize ADF's production infrastructure.
Finally, as at April 30, 2010, the Corporation remains in an excellent financial position, as attested to by its 5.15:1 current ratio, its $9 million liquidities surplus comprised of cash (including cash, cash equivalents and short term investments) over its long-term debt (including the current portion), and a long-term debt to equity ratio of just 0.12:1.
"During the first quarter of fiscal 2011, ADF Group continued to address the challenges of a difficult business environment with efficiency and discipline. By keeping our focus on ADF's quality and profitability objectives, we were able to maintain and even increase our profit margins, regardless of the delays in connection with certain projects, and despite an unfavourable exchange rate" said Jean Paschini, Chairman of the Board and Chief Executive Officer.
Order Backlog
ADF Group's order backlog stood at approximately $100 million as at April 30, 2010, up 8% over $90 million at the same date a year earlier. Taking into account the various contractual additions brought to its existing contracts over the past months, the execution period of orders in hand will extend over a period of 15 to 18 months.
Redemption of Subordinate Voting Shares in the Normal Course of Business
As at April 30, 2010, the Corporation redeemed 62,100 subordinate voting shares under the NCIB program announced on April 15, 2010, for a net consideration of $0.15 million, representing an average price of $2.41 per share.
Outlook
Until such time as the economic recovery starts to have a tangible positive impact on our industry, ADF Group will strive to further enhance its competitive and technological edge in its current market segments, while seeking new growth avenues compatible with its targeted development, niche positioning and value-added objectives. "We will continue to make the Corporation's financial health our number one priority through structured and prudent management of its profit margins, liquidity, capital structure and business risks" said Mr. Jean Paschini.
Annual Shareholders' Meeting
ADF Group Inc.'s Annual General and Special Meeting of Shareholders will be held on June 9, 2010 at 11:00 a.m. at the Omni Mont-Royal Hotel in Montreal.
About ADF Group Inc.
ADF Group Inc. is a North American leader in the design, engineering, fabrication and selective installation in the non-residential construction industry of complex steel structures, heavy built-ups, as well as in miscellaneous and architectural metals. ADF is one of the few players in the industry capable of handling highly technically complex mega projects on fast-track schedules in the commercial, institutional, industrial and public sectors.
Forward-Looking Information
This press release contains forward-looking statements reflecting ADF objectives and expectations. These statements are identified by the use of verbs such as "expect" as well as by the use of future or conditional tenses. By their very nature these types of statements involve risks and uncertainty. Consequently, reality may differ from ADF's expectations.
All amounts are in Canadian dollars.
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CONFERENCE CALL WITH INVESTORS
TO DISCUSS ADF GROUP'S RESULTS
FOR THE FIRST QUARTER ENDED APRIL 30, 2010
June 9, 2010 at 10:00 a.m. (Montreal time)
To participate in the conference call, please dial 1-866-865-3087
a few minutes before the start of the call.
For those unable to participate, a taped rebroadcast will be available
from Wednesday, June 9, 2010 at 1:00 p.m. until midnight Tuesday,
June 15, 2010, by dialing 1-800-642-1687; access code 78897320
The conference call (audio) will also be available at www.cnw.ca.
Members of the media are invited to listen in.
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Consolidated Statements of Earnings and Comprehensive Income
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3-Month Periods Ended April 30, 2010 2009
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(In thousands of $ except per-share amounts) $ $
Revenues 13,641 16,752
Cost of goods sold 9,060 11,368
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Gross margin before foreign exchange variation 4,581 5,384
Gain on foreign exchange (424) (561)
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Gross margin 5,005 5,945
Selling and administrative expenses 1,426 1,304
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Earnings before undernoted items: 3,579 4,641
Amortization
Amortization of property, plant and equipment 686 664
Amortization of intangible assets 84 73
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770 737
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Earnings before financial charges (interest
income) and income taxes 2,809 3,904
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Financial charges (interest income)
Interest on long-term debt 61 60
Interest income (22) (159)
Other interest 11 18
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50 (81)
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Earnings before income taxes 2,759 3,985
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Income taxes
Current 121 168
Future 1,440 1,577
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1,561 1,745
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Net earnings and comprehensive income 1,198 2,240
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Basic earnings per share 0.03 0.06
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Diluted earnings per share 0.03 0.06
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Average number of outstanding shares
(in thousands) 34,494 36,196
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Average number of outstanding diluted shares
(in thousands) 35,311 36,890
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Consolidated Statements of Retained Earnings
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3-Month Periods Ended April 30, 2010 2009
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(In thousands of $) $ $
Retained earnings, beginning of period 9,799 2,807
Net earnings 1,198 2,240
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Retained earnings, end of period 10,997 5,047
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Consolidated Statements of Contributed Surplus
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3-Month Periods Ended April 30, 2010 2009
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(In thousands of $) $ $
Contributed surplus, beginning of period 3,371 2,175
Stock-based compensation 100 61
Exercise of options (94) (7)
Excess of the book value over the acquisition
cost of redeemed subordinate voting shares 32 144
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Contributed surplus, end of period 3,409 2,373
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Consolidated Balance Sheets
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At At
April 30, January 31,
2010 2010
(Audited)
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(In thousands of $) $ $
ASSETS
Current
Cash and cash equivalents 7,902 5,770
Short-term investments 11,562 11,652
Accounts receivable 19,552 14,850
Income taxes 103 442
Holdbacks on contracts 1,698 2,692
Investment tax credits 536 536
Work in progress 1,706 1,574
Inventories 3,488 3,093
Prepaid expenses 523 334
Derivative financial instruments 1,211 832
Future income tax assets 3,211 3,182
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51,492 44,957
Holdbacks on long-term contracts 664 1,297
Investment tax credits 2,065 2,065
Property, plant and equipment 43,775 42,760
Intangible assets 2,625 2,590
Other assets 244 247
Future income tax assets 7,742 9,452
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108,607 103,368
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LIABILITIES
Current
Accounts payable 2,978 1,955
Accrued charges 876 994
Salaries and fringe benefits payable 1,963 1,732
Deferred revenues 1,682 2,242
Current portion of long-term debt 2,508 2,422
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10,007 9,345
Long-term debt 8,034 4,645
Future income tax liabilities 591 713
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18,632 14,703
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Shareholders' equity
Retained earnings 10,997 9,799
Accumulated other comprehensive income 144 144
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11,141 9,943
Capital stock 75,425 75,351
Contributed surplus 3,409 3,371
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89,975 88,665
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108,607 103,368
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Consolidated Statements of Cash Flows
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3-Month Periods Ended April 30, 2010 2009
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(In thousands of $) $ $
OPERATING ACTIVITIES
Net earnings 1,198 2,240
Adjustments for:
Amortization of property, plant and equipment 686 664
Amortization of intangible assets 84 73
Gain on disposal of property, plant and
equipment (52) -
Unrealized gain on derivative financial
instruments (379) (1,183)
Non-cash exchange (gain) loss (191) 292
Interest capitalized on long-term debt 4 5
Stock-based compensation 100 61
Future income taxes 1,440 1,577
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Net earnings adjusted for non-monetary items 2,890 3,729
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Changes in non-cash operating items
Accounts receivable (4,702) (5,324)
Short-term and long-term holdbacks on
contracts 1,627 633
Income taxes 339 (33)
Work in progress (132) (942)
Inventories (395) 23
Prepaid expenses (189) 340
Accounts payable, accrued charges, salaries
and fringe benefits payable 1,136 (3,410)
Deferred revenues (560) 1,161
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(2,876) (7,552)
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Cash flows from operating activities 14 (3,823)
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INVESTING ACTIVITIES
Disposal of short-term investments 90 600
Acquisition of property, plant and equipment (1,649) (390)
Acquisition of intangible assets (119) (338)
Decrease in other assets 3 -
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Cash flows applied to investing activities (1,675) (128)
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FINANCING ACTIVITIES
Issuances of subordinate voting shares 162 17
Issuance of long-term debt 4,370 -
Repayment of long-term debt (411) (764)
Redemption of subordinate voting shares (150) (366)
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Cash flows from financing activities 3,971 (1,113)
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Impact of fluctuations in foreign exchange
rate on cash (178) (74)
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Net cash inflows (outflows) 2,132 (5,138)
Cash and cash equivalents, beginning of period 5,770 22,490
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Cash and cash equivalents, end of period(1) 7,902 17,352
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Supplemental cash flow information
Income taxes paid (191) (204)
Interest received 33 18
Non-cash financing and investing activities:
Property, plant and equipment given in
exchange for new equipment 139 -
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1. At April 30, 2010, cash and cash equivalents were composed of
$7,902,000 in cash ($4,016,000 in cash and $13,336,000 in cash
equivalents as at April 30, 2009.)
SEGMENTED INFORMATION
The Corporation operates in the non-residential construction sector, primarily in North America. Its operations include the connections design and engineering, fabrication and selective installation of complex steel structures, heavy built-ups as well as miscellaneous and architectural metal work.
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3-Month Periods Ended April 30, 2010 2009
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(In thousands of $) $ $
Revenues
- Canada 440 3,941
- United States 13,201 12,811
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13,641 16,752
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As at As at
April 30, January 31,
2010 2010
(Audited)
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(In thousands of $) $ $
Property, plant and equipment
- Canada 43,649 42,620
- United States 126 140
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43,775 42,760
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During the three-month ended April 30, 2010, 90% of the Corporation's revenues were recorded with one client (93% with five clients during the same period in 2009, each of which accounted for more than 10% of revenues).
For further information: Jean Paschini, Chairman of the Board and Chief Executive Officer, (450) 965-1911, 1-800-263-7560 , www.adfgroup.com; Media: Amély Tremblay, Morin Relations Publiques, (514) 289-8688, ext. 226; Source: ADF Group Inc.
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