Results for the fiscal year ended January 31, 2014

TERREBONNE, QC, April 10, 2014 /CNW Telbec/ - ADF Group Inc. ("ADF" or the "Corporation") (TSX: DRX) recorded revenues of $93.0 million for the 2014 fiscal year compared with $41.4 million the previous fiscal year, and recorded a net income of $7.7 million compared with a negative net income of $1.6 million a year earlier. The contracts signed in Western Canada as well as in Quebec, have contributed to the Corporation's revenue growth and consequently the increase in net income.

The gross margin as a percentage of revenues increased from 11.4% during the fiscal year ended January 31, 2013 to 21.7% during the fiscal year ended January 31, 2014. This increase is mainly explained by productivity improvements attributable to the additional volume of work brought by new contracts and the acceleration of the project in Alberta, as well as by the completion of certain smaller-scale projects with less favorable gross margins which have negatively impacted last fiscal year's margin. It should be noted that the fabrication hours in the Terrebonne plant have increased by more than 20% during the 2014 fiscal year compared with the previous year.

During the 2014 fiscal year, the Corporation generated operating cash flows of over $13.7 million. Despite investing more than $20 million for the construction of its new plant in Montana, U.S.A., ADF's short-term available liquidities (including cash, cash equivalents and short-term investments) exceeded its total debt by over $13 million as at January 31, 2014.

Financial Highlights

Fiscal Years Ended January 31,	2014		2013
(In thousands of dollars, and dollars per share)	$		$
Revenues	92,997		41,412
EBITDA	14,234		1,221
Net income for the year	7,682		(1,554)
- Basic per share	0.24		(0.05)
- Diluted per share	0.23		(0.05)
Average number of outstanding shares (basic, in thousands)	32,463		32,458
Average number of outstanding shares (diluted, in thousands)	33,060		32,458

In March 2013, ADF Group announced that it obtained from the Autorité des marchés financiers ("AMF") the authorization required under the new Bill no 1 on the integrity in public contracts, which is mandatory for all corporations wishing to work on any public construction or services contract in Quebec of $10 million or greater.

In February 2014, the Corporation announced a US$6.0 million investment to build a new 3,900-square-meter (42,000-square-foot) paint shop at its new fabrication plant site in Great Falls, Montana. The construction thereof started in March 2014 and commissioning is scheduled for September 2014.

In 2013, ADF Group was a job creator. In addition to increasing the workforce at its Terrebonne plant, since its implementation in Great Falls, the Corporation created to date 70 new local jobs. The Corporation expects this number to continue to increase during the year as the plant ramps up its production.

Outlook

The Corporation's order backlog stood at $36 million as of January 31, 2014 and should be progressively executed between now and the end of the third quarter of the 2015 fiscal year.

Over recent months Management has started to see encouraging signs of improvement in the conditions prevailing in ADF's markets. This positive trend, as evidenced by the increased number and size of tenders, allows the Corporation to foresee the coming months with certain optimism, although because prices remain weak, it remains cautious as to the short-term outlook.

"The 2014 fiscal year led the Corporation to record its best financial results in the last five years, and also allowed ADF to significantly expand its geographic reach with the implementation of a new plant in Montana. As planned, our new fabrication plant is operational since the beginning of 2014. One of our main challenges and objectives for the current year will be to develop ADF's presence in promising and emerging markets targeted by this plant, in the Midwestern U.S.A. and Western Canada" said Mr. Jean Paschini, Co-Chairman of the Board of Directors and Chief Executive Officer.

Dividend

The Corporation announces today a semi-annual dividend of $0.01 per subordinate and multiple voting share payable on May 16, 2014 to shareholders of record as at April 30, 2014.

Annual Meeting of Shareholders

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

Date: Wednesday, June 11, 2014
Time: 11:00 a.m.
Place: Hilton Montreal/Laval Hotel, Laval, Quebec

Financial results for the first quarter ending April 30, 2014, will also be disclosed at the Corporation's shareholder meeting.

About ADF Group Inc.

ADF Group Inc. is a North American leader in the design, engineering, fabrication and 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 key 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, 2014

Thursday April 10, 2014 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
April 10, 2014 at 1:00 p.m. until midnight April 17, 2014,
by dialing 1-855-859-2056; access code 15436849.

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,		2014		2013
(In thousands of Canadian dollars and in dollars per share)		$		$
Revenues		92,997		41,412
Cost of goods sold		72,778		36,706
Gross Margin		20,219		4,706
Selling and administrative expenses		9,431		6,910
Financial revenues		(155)		(186)
Financial expenses		189		168
Foreign exchange loss (gain)		144		(407)
		9,609		6,485
Income before income tax expense (recovery)		10,610		(1,779)
Income tax expense (recovery)		2,928		(225)
Net income for the year		7,682		(1,554)
Earnings per share
	Basic per share	0.24		(0.05)
	Diluted per share	0.23		(0.05)
Average number of outstanding shares (in thousands)		32,463		32,458
Average number of outstanding diluted shares (in thousands)		33,060		32,458

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Fiscal Years Ended January 31,		2014		2013
(In thousands of Canadian dollars)		$		$
Net income for the year		7,682		(1,554)
Other comprehensive income ^(a):
	Exchange differences on translation of foreign operations ^(b)	3,244		(147)
	Change in value of available-for-sale financial assets ^(c)	51		―
		3,295		(147)
Comprehensive income for the year		10,977		(1,701)

(a)	Will subsequently be reclassified to net income.
(b)	Net of hedging activities and $30,000 in related income tax recovery for the fiscal year ended January 31, 2014 (net of $4,000 in related income tax expense for the fiscal year ended January 31, 2013)
(c)	Net of $8,000 related income tax expense for the fiscal year ended January 31, 2014

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, 2012		69,086	6,368	(1,586)	19,895	93,763
	Net income for the year	―	―	―	(1,554)	(1,554)
	Other comprehensive income	―	―	(147)	―	(147)
	Comprehensive income for the year	―	―	(147)	(1,554)	(1,701)
	Share-based compensation	―	34	―	―	34
	Options exercised	3	(1)	―	―	2
	Redemption of subordinate voting shares	(54)	31	―	―	(23)
	Dividends	―	―	―	(649)	(649)
Balance, January 31, 2013		69,035	6,432	(1,733)	17,692	91,426
		Capital Stock	Contributed Surplus	Accumulated Other Comprehensive Income	Retained Income	Total
(In thousands of Canadian dollars)		$	$	$	$	$
Balance, February 1, 2013		69,035	6,432	(1,733)	17,692	91,426
	Net income for the year	―	―	―	7,682	7,682
	Other comprehensive income	―	―	3,295	―	3,295
	Comprehensive income for the year	―	―	3,295	7,682	10,977
	Share-based compensation	―	23	―	―	23
	Options exercised	104	(48)	―	―	56
	Dividends	―	―	―	(649)	(649)
Balance, January 31, 2014		69,139	6,407	1,562	24,725	101,833

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As at January 31,		2014		2013
(In thousands of Canadian dollars)		$		$
ASSETS
Current assets
	Cash and cash equivalents	18,675		23,914
	Short-term investments	798		3,228
	Accounts receivable	12,935		15,469
	Holdbacks on contracts	3,572		708
	Income tax assets	32		―
	Work in progress	6,139		272
	Inventories	5,609		4,771
	Prepaid expenses and other current assets	1,195		623
	Total current assets	48,955		48,985
Non-current assets
	Holdbacks on contracts	―		333
	Property, plant and equipment	68,476		47,067
	Intangible assets	2,713		2,586
	Other non-current assets	3,255		2,992
	Deferred income tax assets	4,585		4,567
Total assets		127,984		106,530
LIABILITIES
Current liabilities
	Accounts payable and other current liabilities	13,510		5,310
	Income tax liabilities	―		12
	Deferred revenues	4,121		6,105
	Derivative financial instruments	3		15
	Current portion of long-term debt	1,706		2,505
	Total current liabilities	19,340		13,947
Non-current liabilities
	Long-term debt	4,315		1,157
	Deferred income tax liabilities	2,496		―
Total liabilities		26,151		15,104
SHAREHOLDERS' EQUITY
	Capital stock	69,139		69,035
	Contributed surplus	6,407		6,432
	Accumulated other comprehensive income	1,562		(1,733)
	Retained income	24,725		17,692
Total shareholders' equity		101,833		91,426
Total liabilities and shareholders' equity		127,984		106,530

CONSOLIDATED STATEMENTS OF CASH FLOWS

Fiscal Years Ended January 31,			2014		2013
(In thousands of Canadian dollars)			$		$
OPERATING ACTIVITIES
	Net income for the year		7,682		(1,554)
	Non-cash items:
		Amortization of property, plant and equipment	3,084		3,034
		Amortization of intangible assets	362		391
		Gain on disposal of property, plant and equipment	(2)		―
		Unrealized gain on derivative financial instruments	(12)		(60)
		Non-cash exchange loss (gain)	707		(149)
		Share-based compensation	23		34
		Income tax expense (recovery)	2,928		(225)
		Financial revenues	(155)		(186)
		Financial expenses	189		168
	Net income adjusted for non-cash items		14,806		1,453
	Changes in non-cash working capital items		(1,032)		10,076
	Income tax expense paid		(30)		(152)
	Cash flows from (used in) operating activities		13,744		11,377
INVESTING ACTIVITIES
	Disposal of short-term investments		2,482		2,305
	Net acquisition of property, plant and equipment		(22,683)		(5,004)
	Acquisition of intangible assets		(488)		(359)
	Increase in other non-current assets		(204)		(196)
	Interest received		156		229
	Cash flows from (used in) investing activities		(20,737)		(3,025)
FINANCING ACTIVITIES
	Issuance of long-term debt		4,819		―
	Repayment of long-term debt		(2,619)		(2,513)
	Issuance of subordinate voting shares		56		2
	Redemption of subordinate voting shares		―		(23)
	Dividends paid		(649)		(649)
	Interest paid on the interest rate swap		(13)		(23)
	Interest paid		(174)		(139)
Cash flows from (used in) financing activities			1,420		(3,345)
Impact of fluctuations in foreign exchange rate on cash flow			334		(69)
Net change in cash and cash equivalents			(5,239)		4,938
Cash and cash equivalents, beginning of year			23,914		18,976
Cash and cash equivalents, end of year			18,675		23,914

The following table sets out in detail the components of the "Changes in non-cash working capital items":

Fiscal Years Ended January 31,		2014		2013
(In thousands of Canadian dollars)		$		$
	Accounts receivable	2,842		(1,283)
	Holdbacks on contracts	(2,523)		4,079
	Income tax	―		35
	Work in progress	(5,863)		5,032
	Inventories	(825)		(1,158)
	Prepaid expenses and other current assets	(567)		159
	Accounts payable and other current liabilities	7,983		(278)
	Deferred revenues	(2,079)		3,490
Changes in non-cash working capital items		(1,032)		10,076

SEGMENTED INFORMATION

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

Fiscal Years Ended January 31,		2014		2013
(In thousands of Canadian dollars)		$		$
Revenues
	Canada	91,532		19,056
	United States	1,465		22,356
		92,997		41,412
As at January 31,		2014		2013
(In thousands of Canadian dollars)		$		$
Property. plant and equipment
	Canada	39,287		42,622
	United States	29,189		4,445
		68,476		47,067

All intangible assets and investment tax credits included in "Other non-current assets" at January 31, 2014 and January 31, 2013, originated from Canada.

During the fiscal year ended January 31, 2014, two (2) clients accounted for 86% of the Corporation's revenues (three (3) clients accounted for 70% of the revenues during the fiscal year ended January 31, 2013), and therefore each client accounted for more than 10% of revenues.

 

SOURCE: ADF Group Inc.

Contact:

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

Telephone:
[phone] / 1 [phone]

Web Site:
www.adfgroup.com