Results for the Fiscal Year Ended January 31, 2012

TERREBONNE, QC, April 12, 2012 /CNW Telbec/ - ADF Group Inc. ("ADF" or the "Corporation") (TSX: DRX) recorded revenues of $48.4 million for the 2012 fiscal year compared with $55.3 million the previous fiscal year. This decrease reflects the economic conditions prevailing in the Corporation's markets. In addition, during the fourth quarter ended January 31, 2012, the Corporation recorded a backcharge from its client relating to a project at the World Trade Center in New York. U.S.A., which reduced the revenues previously recognized by about $3.5 million, thereby reducing the gross margin by the same amount.

The gross margin in dollar value declined during the 2012 fiscal year compared with the 2011 fiscal year, which is in line with the revenue decrease. As a percentage of revenues, the gross margin decreased from 25.6% during the fiscal year ended January 31, 2011 to 19.2% in fiscal 2012. This decrease is also explained by the new contracts awarded during the 2012 fiscal year, which generate lower profit margins than those posted by ADF in previous years.

Net income for the fiscal year ended January 31, 2012, amounted to $1.8 million or $0.06 basic per share ($0.05 diluted per share), compared with a net income of $5.4 million or $0.16 per share (basic and diluted) in 2011. In addition to the factors previously mentioned, this decline reflects the foreign exchange variations, which generated a lesser gain during the 2012 fiscal year than in 2011 year, whereas the profit mix generated mostly by the Corporation's U.S. subsidiaries, was subject to a higher tax rate than in recent years.

As at January 31, 2012, the Corporation had $24.5 million in liquidities (consisting of cash, cash equivalents and short-term investments), up by 14% from the previous year, exceeding ADF Group's total debt by $18.3 million.

Cash flows provided by operations allowed to further improve the financial position of the Corporation, which, as at January 31, 2012, had $42.6 million in working capital, up by 15.9% compared with 2011.

Outlook

During the 2012 fiscal year, ADF Group obtained various mandates in Canada. Although carrying lower profit margins than the major projects executed in previous years, these new contracts enabled the Corporation to increase its fabrication capacity utilization rate and make use of its qualified labour force. ADF Group's order backlog was valued at $48 million as at January 31, 2012.

"We will be active on the Canadian market where the short-term outlook is brighter than in the United States. We are primarily targeting industrial facilities in Western Canada, and public infrastructures in Ontario and Quebec. To this end, we have recently invested in the acquisition of specialized equipment to enhance our competitiveness in the construction and rehabilitation of bridges" said Mr. Jean Paschini, Chairman of the Board and Chief Executive Officer.

Management foresees that the launch of new major projects in the commercial and industrial sectors in the United States will continue to incur some delays in the short-term. Prospects for the U.S. public infrastructures market are more encouraging. In fact, the current state of public infrastructures will require important investments in the near future.

"In light of this opportunity, we are analyzing the possibilities to set up a fabrication plant in the United States, which would give us access to this market, and provide us with a greater market access south of the border. Over the medium and long term, the American market will remain ADF's target market" added Mr. Paschini.

"We are confident as we look to ADF Group's future, considering the Corporation's healthy financial position, its leading expertise and the quality of its assets" concluded Mr. Paschini.

Dividend

The Corporation's Board of Directors approved a semi-annual dividend payment. Consequently, ADF Group announces the payment of a semi-annual dividend of $0.01 per share, payable on May 17, 2012 to shareholders of record as at April 30, 2012.

Annual Meeting of Shareholders

ADF Group Inc. Annual Meeting of Shareholders will be held on:

Date:	Wednesday, June 13, 2012
Time:	11:00 a.m.
Place:	Hilton Montreal-Laval Hotel Laval, Quebec

Financial results for the first quarter ending April 30, 2012, will also be disclosed at the Corporation's shareholders' meeting.

ABOUT ADF GROUP INC. | ADF Group Inc. is a North American leader in the design and engineering of connections, fabrication and installation of complex steel structures, heavy steel built-ups, as well as miscellaneous and architectural metals for the nonresidential construction industry. 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.

NON-IFRS MEASURES | EBITDA is not a performance measure recognized by IFRS standards, and is not likely to be comparable to similar measures presented by other issuers. Management, as well as investors, consider this to be useful information to assist them in assessing the Corporation's profitability and ability to generate funds to finance its operations.

All amounts are in Canadian dollars, unless otherwise indicated.

CONFERENCE CALL WITH INVESTORS
to discuss ADF Group's results for the fiscal year ended January 31, 2012

Thursday April 12, 2012 at 10:00 a.m. (Montreal Time)

To participate in the conference call, please dial 1-888-231-8191 a few minutes before the start of the call.

For those unable to participate, a taped rebroadcast will be available from
April 12, 2012 at 1:00 p.m. until midnight April 19, 2012,
by dialing 1-855-859-2056 ; access code 66290573

The conference call (audio) will also be available at www.adfgroup.com
Members of the media are invited to listen in.

CONSOLIDATED STATEMENTS OF INCOME

Fiscal Years Ended January 31,		2012	2011
(In thousands of Canadian dollars and in dollars per share)		$	$
Revenues		48,431	55,268
Cost of goods sold		39,128	41,132
Gross Margin		9,303	14,136
Selling and administrative expenses		6,690	6,598
Financial revenue		(345)	(293)
Financial expenses		233	392
Foreign exchange gain		(1,043)	(2,486)
		5,535	4,211
Income before income tax expense		3,768	9,925
Income tax expense		1,956	4,534
Net income for the year		1,812	5,391
Earnings per share
	Basic per share	0.06	0.16
	Diluted per share	0.05	0.16
Average number of outstanding shares (in thousands)		32,771	33,642
Average number of outstanding diluted shares (in thousands)		33,309	34,301

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Fiscal Years Ended January 31,		2012	2011
(In thousands of Canadian dollars)		$	$
Net income for the year		1,812	5,391
Other comprehensive income:
	Exchange differences on translation of foreign operations ^(a)	(53)	(1,621)
	Changes in value of available-for-sale financial assets ^(b)	(56)	—
		(109)	(1,621)
Comprehensive income for the year		1,703	3,770

(a)	Net of hedging activities and of $24,000 in related income taxes for the fiscal year ended January 31, 2012 (nil for the fiscal year ended January 31, 2011).
(b)	Net of $9,000 in related income taxes.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

		Capital Stock	Contributed Surplus	Accumulated Other Comprehensive Income	Retained Income	Total
(In thousands of Canadian dollars)		$	$	$	$	$
Balance, February 1, 2010		75,436	3,659	144	13,348	92,587
	Net income for the year	—	—	—	5,391	5,391
	Other comprehensive income	—	—	(1,621)	—	(1,621)
	Comprehensive income for the year	—	—	(1,621)	5,391	3,770
	Share-based compensation	—	237	—	—	237
	Options exercised	277	(101)	—	—	176
	Subordinate voting share redemption	(5,681)	1,945	—	—	(3,736)
Balance, January 31, 2011		70,032	5,740	(1,477)	18,739	93,034
		Capital Stock	Contributed Surplus	Accumulated Other Comprehensive Income	Retained Income	Total
(In thousands of Canadian dollars)		$	$	$	$	$
Balance, February 1, 2011		70,032	5,740	(1,477)	18,739	93,034
	Net income for the year	—	—	—	1,812	1,812
	Other comprehensive income	—	—	(109)	—	(109)
	Comprehensive income for the year	—	—	(109)	1,812	1,703
	Share-based compensation	—	107	—	—	107
	Options exercised	20	(7)	—	—	13
	Subordinate voting share redemption	(966)	528	—	—	(438)
	Dividends	—	—	—	(656)	(656)
Balance, January 31, 2012		69,086	6,368	(1,586)	19,895	93,763

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As at		January 31, 2012	January 31, 2011	February 1, 2010
(In thousands of Canadian dollars)		$	$	$
ASSETS
Current assets
	Cash and cash equivalents	18,976	18,677	5,770
	Short-term investments	5,562	2,787	11,652
	Accounts receivable	14,189	22,215	13,421
	Holdbacks on contracts	5,082	167	2,692
	Work in progress	5,263	403	1,574
	Inventories	3,613	3,865	3,093
	Income tax assets	—	—	442
	Prepaid expenses and other current assets	782	985	2,299
	Derivative financial instruments	—	741	832
	Total current assets	53,467	49,840	41,775
Non-current assets
	Holdbacks on contracts	—	3,562	1,297
	Property, plant and equipment	45,089	46,871	47,438
	Intangible assets	2,618	2,601	2,590
	Other non-current assets	2,796	2,852	2,312
	Deferred income tax assets	4,549	6,960	11,569
Total assets		108,519	112,686	106,981
LIABILITIES
Current liabilities
	Accounts payable and other current liabilities	5,551	5,365	5,649
	Income tax liabilities	77	159	—
	Deferred revenues	2,618	4,994	1,274
	Derivative financial instruments	75	45	—
	Current portion of long-term debt	2,526	2,513	2,422
	Total current liabilities	10,847	13,076	9,345
Non-current liabilities
	Long-term debt	3,676	6,151	4,645
	Deferred income tax liabilities	233	425	404
Total liabilities		14,756	19,652	14,394
SHAREHOLDERS' EQUITY
	Retained income	19,895	18,739	13,348
	Accumulated other comprehensive income	(1,586)	(1,477)	144
		18,309	17,262	13,492
	Capital stock	69,086	70,032	75,436
	Contributed surplus	6,368	5,740	3,659
Total shareholders' equity		93,763	93,034	92,587
Total liabilities and shareholders' equity		108,519	112,686	106,981

CONSOLIDATED STATEMENTS OF CASH FLOWS

Fiscal Years Ended January 31,			2012	2011
(In thousands of Canadian dollars)			$	$
OPERATING ACTIVITIES
	Net income for the year		1,812	5,391
	Non-cash items:
		Amortization of property, plant and equipment	3,063	3,045
		Amortization of intangible assets	356	339
		Loss (gain) on disposal of property, plant and equipment	8	(52)
		Unrealized loss on derivative financial instruments	771	136
		Non-cash exchange gain	(63)	(600)
		Share-based compensation	107	237
		Income tax expense	1,956	4,534
		Financial revenue	(345)	(293)
		Financial expenses	233	392
	Net income adjusted for non-cash items		7,898	13,129
	Changes in non-cash working capital items ^(1)		243	(4,324)
	Income tax expense paid		(15)	(393)
Cash flows from (used in) operating activities			8,126	8,412
INVESTING ACTIVITIES
	(Acquisition) disposal of short-term investments		(2,807)	8,596
	Net acquisition of property, plant and equipment		(1,230)	(2,302)
	Acquisition of intangible assets		(373)	(350)
	Reduction in other non-current assets		(9)	(4)
	Interest received		380	629
Cash flows from (used in) investing activities			(4,039)	6,569
FINANCING ACTIVITIES
	Issuance of long-term debt		—	4,370
	Repayment of long-term debt		(2,491)	(2,333)
	Issuance of subordinate voting shares		13	176
	Redemption of subordinate voting shares		(438)	(3,736)
	Dividends paid		(656)	—
	Interest paid on the interest rate swap		(33)	(35)
	Interest paid		(199)	(290)
Cash flows from (used in) financing activities			(3,804)	(1,848)
Impact of fluctuations in foreign exchange rate on cash			16	(226)
Net increase in cash and cash equivalents			299	12,907
Cash and cash equivalents, beginning of year			18,677	5,770
Cash and cash equivalents, end of year ^(2)			18,976	18,677
Non-cash financing and investing activities were as follows:
	Obligation under a capital lease		37	134
	Property, plant and equipment given in exchange for new property, plant and equipment		56	139

(1) Details on the components of the "Changes in non-cash working capital items":

Fiscal Years Ended January 31,		2012	2011
(In thousands of Canadian dollars)		$	$
	Accounts receivable	7,825	(10,236)
	Holdbacks on contracts	(1,324)	23
	Income tax	144	476
	Work in progress	(4,764)	1,114
	Inventories	252	(772)
	Prepaid expenses and other current assets	203	774
	Accounts payable and other current liabilities	240	1,295
	Deferred revenues	(2,333)	3,002
Changes in non-cash working capital items		243	(4,324)

(2) For the purpose of the consolidated statements of cash flows, cash and cash equivalents are disclosed as follows:

As at	January 31, 2012	January 31, 2011	February 1, 2010
(In thousands of Canadian dollars)	$	$	$
Cash	18,976	15,918	5,770
Cash equivalents - term deposits	—	2,759	—
	18,976	18,677	5,770

SEGMENTED INFORMATION

The Corporation operates in the non-residential construction sector, primarily in the United States and Canada. Its operations include the connections design and engineering, fabrication and installation of complex steel structures, heavy steel built-ups, as well as miscellaneous and architectural metalwork.

Fiscal years ended January 31,		2012	2011
(In thousands of Canadian dollars)		$	$
Revenues
	Canada	6,371	698
	United States	42,060	54,570
		48,431	55,268

As at		January 31, 2012	January 31, 2011	February 1, 2010
(In thousands of Canadian dollars)		$	$	$
Property, Plant and Equipment
	Canada	44,410	46,767	47,293
	United States	679	104	145
		45,089	46,871	47,438

All intangible assets and investment tax credits included in "Other non-current assets" at February 1, 2010, January 31, 2011 and January 31, 2012, originated from Canada.

During the fiscal year ended January 31, 2012, one client accounted for 83% of the Corporation's revenues (one client accounted for 90% of the revenues during the fiscal year ended January 31, 2011), and was therefore the only one that accounted for more than 10% of revenues. 

 

Source:
ADF Group Inc.

Contact:
Jean Paschini, Chairman of the Board of Directors and Chief Executive Officer
Jean-François Boursier, CA, Chief Financial Officer

Telephone: [phone]
Web Site:  www.adfgroup.com