ADF Group. Inc. – Results for the fiscal year ended January 31, 2017

HIGHLIGHTS

  • Revenues, at $102.8 million, are 4.8% higher than last year
  • Gross margin, as a percentage of revenues, stood at 16.7%, which is a 2.4% increase compared with a year ago
  • New contract awards worth a total of $235 million during the 2017 fiscal year
  • Order backlog standing at $194.5 million as at January 31, 2017

TERREBONNE, QC, April 13, 2017 /CNW Telbec/ – ADF GROUP INC. ("ADF" or the "Corporation") (TSX: DRX) recorded revenues of $102.8 million during the fiscal year ended January 31, 2017, up by $4.8 million compared with the previous fiscal year. The change in revenues results from the increase in the production level at all of the Corporation's facilities and by the year-to-year favourable variation in the average exchange rate.

The gross margin as a percentage of revenues went from 14.3% during the fiscal year ended January 31, 2016 to 16.7% during the fiscal year ended January 31, 2017. This increase, as a percentage of revenues, is mainly driven by the increase in the activity level, by a better absorption of fixed costs and the favourable impact of the foreign exchange.

ADF Group recorded a net income of $1.5 million ($0.05 basic and diluted per share) during the fiscal year ended January 31, 2017 compared with a net income of $1.7 million ($0.05 basic and diluted per share) a year ago.

On January 31, 2017, the Corporation had $24.8 million in working capital. On January 31, 2017, cash and cash equivalents totalled $334,000, down by $2.0 million compared with January 31, 2016. In addition, as at January 31, 2017, the Corporation used $13.3 million on its credit facilities, whereas they were unused as at January 31, 2016. The decrease in available cash is explained by the start of new major projects for which raw material purchases, including steel, require significant liquidities. In spite of this, the Corporation remains in a solid position to support its ongoing operations, pursue its development projects and remunerate its shareholders in accordance with the dividend payment policy.

As at January 31, 2017, the Corporation order backlog totalled $194.5 million, compared with $70.6 million as at January 31, 2016. These contracts will be progressively completed by the end of the second quarter of the fiscal year ending January 31, 2019.

 

 
 

Financial Highlights

   
     

Fiscal Years Ended January 31,

2017

2016

(In thousands of CA$, and dollars per share)

$

$

     

Revenues

102,846

98,089

EBITDA

8,462

7,244

Net income for the year

1,499

1,699

– Basic per share

0.05

0.05

– Diluted per share

0.05

0.05

Average number of outstanding shares (basic, in thousands)

32,624

32,597

Average number of outstanding shares (diluted, in thousands)

32,686

32,807

     

 

Outlook

"Our revenues have surpassed for the first time since the 2004 fiscal year the $100-million mark. We expect to maintain the growth of our revenues while improving at the same time our operational efficiency" indicated Mr. Jean Paschini, Co-Chairman of the Board of Directors and Chief Executive Officer.

"Managing our working capital requirements will remain a key element of fiscal 2018, especially during this period of growth of our order backlog. We have, however, set up credit facilities to manage this growth" concluded Mr. Paschini.

Dividend

ADF Group announces the payment of a semi-annual dividend of $0.01 per subordinate voting share and multiple voting share to be paid on May 16, 2017 to shareholders of record as at April 28, 2017.

Annual Meeting of Shareholders

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

 

Date:

 

Wednesday, June 14, 2017

Time:

 

11:00 a.m.

Place:

 

Hotel Sheraton Laval, 2440 des Laurentides, Laval, Quebec

 

Financial results for the first quarter ending April 30, 2017, 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 and engineering of connections, fabrication, including the application of industrial coatings, and installation of complex steel structures, heavy steel built-ups, as well as in miscellaneous and architectural metals for the non-residential infrastructure sector. ADF Group Inc. 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. The Corporation operates two fabrication plants and two paint shops, in Canada and in the United States, and a Construction Division in the United States, which specializes in the installation of steel structures and other related products.

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

Earnings before interest, taxes, depreciation and amortization ("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. Refer to the section "Non-GAAP Measures" of the Corporation's Management's Discussion and Analysis for the definition of this metric and reconciliation to the most comparable IRFS measures.

All amounts are in Canadian dollars, unless otherwise indicated.

 

 

CONFERENCE CALL WITH INVESTOR, APRIL 13, 2017 AT 10:00 A.M. (Montreal time)

 

RESULTS FOR THE FISCAL YEAR ENDED JANUARY 31, 2017

 

 

TO PARTICIPATE, 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 Thursday, April 13, 2017

 

at 1:00 p.m. until midnight Thursday, April 20, 2017, by dialing 1-855-859-2056; access code 82085707.

 

The conference call (audio) will also be available on ADF's Website at www.adfgroup.com.

 

 

Members of the media are invited to listen in.

 

 

 

 

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

     
     

As at January 31,

2017

2016

(In thousands of Canadian dollars)

$

$

     

ASSETS

   

Current assets

   
 

Cash and cash equivalents

334

2,377

 

Accounts receivable

22,326

23,146

 

Holdbacks on contracts

3,613

1,693

 

Income tax assets

842

 

Work in progress

21,077

7,521

 

Inventories

6,957

6,180

 

Derivative financial instruments

696

 

Prepaid expenses and other current assets

1,137

1,889

 

Total current assets

56,982

42,806

       

Non-current assets

   
 

Property, plant and equipment

90,060

91,067

 

Intangible assets

2,920

2,871

 

Other non-current assets

3,406

3,337

 

Deferred income tax assets

5,316

6,390

Total assets

158,684

146,471

LIABILITIES

   

Current liabilities

   
 

Credit facilities

13,336

 

Accounts payable and other current liabilities

16,585

17,772

 

Income tax liability

184

49

 

Deferred revenues

1,264

2,753

 

Derivative financial instruments

403

 

Current portion of long-term debt

844

868

 

Total current liabilities

32,213

21,845

       

Non-current liabilities

   
 

Long-term debt

17,870

14,351

 

Deferred income tax liabilities

2,951

2,742

Total liabilities

53,034

38,938

SHAREHOLDERS' EQUITY

   
 

Capital stock

68,088

68,077

 

Contributed surplus

6,422

6,397

 

Accumulated other comprehensive income (loss)

6,741

9,507

 

Retained income

24,399

23,552

Total shareholders' equity

105,650

107,533

Total liabilities and shareholders' equity

158,684

146,471

     

 

CONSOLIDATED STATEMENTS OF INCOME

     
     

Fiscal Years Ended January 31,

2017

2016

(In thousands of Canadian dollars and in dollars per share)

$

$

     

Revenues

102,846

98,089

Cost of goods sold

85,635

84,069

Gross Margin

17,211

14,020

Selling and administrative expenses

13,436

11,391

Financial revenues

(49)

(79)

Financial expenses

1,057

574

Other losses (gains)

254

(653)

 

14,698

11,233

Income before income tax expense

2,513

2,787

Income tax expense

1,014

1,088

Net income for the year

1,499

1,699

Earnings per share

   
 

Basic and diluted per share

0.05

0.05

Average number of outstanding shares (in thousands)

32,624

32,597

Average number of outstanding diluted shares (in thousands)

32,686

32,807

     

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

     
     

Fiscal Years Ended January 31,

2017

2016

(In thousands of Canadian dollars)

$

$

     

Net income for the year

1,499

1,699

Other comprehensive income (loss) (a) :

   
 

Exchange differences on translation of foreign operations

(2,816)

3,672

 

Change in value of available-for-sale financial assets (b)

50

 

(2,766)

3,672

Comprehensive income (loss) for the year

(1,267)

5,371

     

a)

Will subsequently be reclassified to net income.

b)

Net of an immaterial amount related income tax expense for the fiscal year ended January 31, 2017.

 

 

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

           
 

Capital Stock

Contributed
Surplus

Accumulated Other
Comprehensive
Income (Loss)

Retained
Income

Total

(In thousands of Canadian dollars)

$

$

$

$

$

           

Balance, February 1, 2015

69,185

6,433

5,835

22,505

103,958

Net income for the year

1,699

1,699

Other comprehensive income (loss)

3,672

3,672

Comprehensive income (loss) for the year

3,672

1,699

5,371

Share-based compensation

44

44

Redemption of subordinate voting shares

(2,282)

364

(1,918)

Options exercised

1,174

(444)

730

Dividends

(652)

(652)

Balance, January 31, 2016

68,077

6,397

9,507

23,552

107,533

           
 

Capital Stock

Contributed

Surplus

Accumulated Other

Comprehensive

Income (Loss)

Retained

Income

Total

(In thousands of Canadian dollars)

$

$

$

$

$

           

Balance, February 1, 2016

68,077

6,397

9,507

23,552

107,533

Net income for the year

1,499

1,499

Other comprehensive income (loss)

(2,766)

(2,766)

Comprehensive income (loss) for the year

(2,766)

1,499

(1,267)

Share-based compensation

30

30

Options exercised

11

(5)

6

Dividends

(652)

(652)

Balance, January 31, 2017

68,088

6,422

6,741

24,399

105,650

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

     
     

Fiscal Years Ended January 31,

2017

2016

(In thousands of Canadian dollars)

$

$

     

OPERATING ACTIVITIES

   
 

Net income for the year

1,499

1,699

 

Non-cash items:

   
   

Amortization of property, plant and equipment

4,326

4,294

   

Amortization of intangible assets

361

321

   

Gain on disposal of property, plant and equipment

(618)

   

Unrealized gain on derivative financial instruments

(1,099)

(712)

   

Non-cash exchange loss (gain)

683

(709)

   

Share-based compensation

951

44

   

Income tax expense

1,014

1,088

   

Inventories depreciation allowance

209

   

Financial revenues

(49)

(79)

   

Financial expenses

1,057

574

 

Net income adjusted for non-cash items

8,952

5,902

 

Changes in non-cash working capital items (1)

(18,686)

(7,059)

 

Income tax paid

(901)

Cash flows from (used in) operating activities

(10,635)

(1,157)

INVESTING ACTIVITIES

   
 

Disposal of short-term investments

778

 

Net acquisition of property, plant and equipment

(6,809)

(8,591)

 

Revenues from disposals of property, plant and equipment

1,457

 

Acquisition of intangible assets

(410)

(411)

 

(Increase) decrease in other non-current assets

(12)

641

 

Interest received

49

96

Cash flows from (used in) investing activities

(7,182)

(6,030)

FINANCING ACTIVITIES

   
 

Variation in credit facilities

13,329

 

Issuance of long-term debt

5,000

5,000

 

Financing costs relating to the debt

(107)

 

Repayment of long-term debt

(816)

(772)

 

Redemption of subordinate voting shares

(1,918)

 

Issuance of subordinate voting shares

6

730

 

Dividends paid

(652)

(652)

 

Interest paid

(1,040)

(552)

Cash flows from (used in) financing activities

15,827

1,729

Impact of fluctuations in foreign exchange rate on cash flow

(53)

(111)

Net change in cash and cash equivalents during the fiscal year

(2,043)

(5,569)

Cash and cash equivalents, beginning of year

2,377

7,946

Cash and cash equivalents, end of year

334

2,377

     

(1)

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

     
     

Fiscal Years Ended January 31,

2017

2016

(In thousands of CA$)

$

$

     
 

Accounts receivable

13

(8,008)

 

Holdbacks on contracts

(1,895)

2,636

 

Work in progress

(13,688)

(399)

 

Inventories

(1,057)

(309)

 

Prepaid expenses and other current assets

688

(139)

 

Accounts payable and other current liabilities

(1,310)

651

 

Deferred revenues

(1,437)

(1,491)

Changes in non-cash working capital items

(18,686)

(7,059)

     

 

SEGMENTED INFORMATION

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

 

     
     

Fiscal Years Ended January 31,

2017

2016

(In thousands of CA$)

$

$

     

Revenues

   
 

Canada

17,957

22,368

 

United States

84,889

75,721

 

102,846

98,089

     
     
     

As at January 31,

2017

2016

(In thousands of CA$)

$

$

     

Non-current assets (1)

   
 

Canada

50,110

47,480

 

United States

46,276

49,795

 

96,386

97,275

     

(1)

The non-current assets mainly include property, plant and equipment, intangible assets, investment tax credits and others non-current assets.

 

Revenues from external clients were allocated to each country on the basis of the project's location.

During the fiscal year ended January 31, 2017, 60% of the Corporation's revenues were realized with two (2) clients, for respective amounts of $36.8 million from the United States and $24.3 million from the United States and Canada, one (1) of whom was part of the Corporation's revenues concentration during the fiscal year ended January 31, 2016.

During the fiscal year ended January 31, 2016, 70% of the Corporation's revenues were realized with three (3) clients, for respective amounts of $30.5 million from the United States, $24.5 million from the United States and Canada, and $13.3 million from Canada, one (1) of whom was part of the Corporation's revenues concentration during the fiscal year ended January 31, 2015.

 

SOURCE ADF Group Inc.

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