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: (450) 965-1911 / 1 (800) 263-7560
Web Site: www.adfgroup.com