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