Results for the Fiscal Year Ended January 31, 2013

TERREBONNE, QC, April 11, 2013 /CNW Telbec/ – ADF Group Inc. (“ADF” or the “Corporation”) (TSX: DRX) recorded revenues of $41.4 million for the 2013 fiscal year compared with $48.4 million the previous fiscal year, and recorded a negative net income of $1.6 million compared with a net income of $1.8 million a year earlier.

Despite this loss, the Corporation generated operating cash flows of over $11 million. Consequently, ADF’s short-term available liquidities (including cash, cash equivalents and short-term investments) exceeded its total debt by $23.5 million as at January 31, 2013, increasing it net position by $5.1 million over January 31, 2012.

Financial Highlights

         
Fiscal Years Ended January 31,   2013   2012
(In thousands of dollars, and dollars per share)   $   $
         
Revenues   41,412   48,431
EBITDA   1,221   6,032
Net income   (1,554)   1,812
— Basic per share   (0.05)   0.06
— Diluted per share   (0.05)   0.05
Average number of outstanding shares (basic, in thousands)   32,458   32,771
Average number of outstanding shares (diluted, in thousands)   32,458   33,309

Authorization From the Autorité des Marchés Financiers (AMF)

On March 13, 2013, ADF announced that it was one of the first Quebec companies to obtain from the AMF the authorization required under the new Bill on the integrity in public contracts. It should be noted that this new authorization is mandatory for all corporations that wish to work on any public construction or services contract of $40 million or greater.

New Order

On March 20, 2013, ADF announced the award of the prestigious contract, worth $46.6 million, for the fabrication and installation of the steel structure of Quebec City’s future multi-purpose amphitheater.

Outlook

The Corporation’s order backlog stood at $34 million as of January 31, 2013 (excluding the recently awarded contract previously mentioned), and should be progressively executed between now and the third quarter of the 2014 fiscal year.

During the last fiscal year, ADF was awarded contracts totalling almost $28 million in the public infrastructures, industrial and recreational market segments in Canada.

“In early 2014, we will inaugurate our new a 9,290-square-metre (100,000-square-foot) fabrication plant that will be build on a 100-acre lot in the State of Montana, U.S.A. This new site will also be fitted out with a large structural steel fabrication and pre-assembly yard adjacent to the new plant. This strategic investment will allow ADF to expand its North American geographic footprint from coast to coast and will provide the Corporation with the ability to service new Canadian and American markets, efficiently and profitably” said Mr. Jean Paschini, Chairman of the Board of Directors and Chief Executive Officer. Mr. Paschini added that the site layout work is currently underway.

Since the beginning of the 2014 fiscal year, ADF reinforced its sales team to increase its Terrebonne plant’s order backlog, while developing the markets and customer base targeted by its new plant in Great Falls, Montana.

The Corporation is encouraged by current trends and considers that other developments will materialize in the months to come that will provide it with new momentum. While carrying out its important investment project, ADF Group will remain focused on its primary objective which is to promote sustainable and profitable growth of its operations, backed by prudent and rigorous management.

Dividend

The Corporation announces today a semi-annual dividend of $0.01 per subordinate and multiple voting share payable on May 17, 2013 to shareholders of record as at April 30, 2013.

Annual Meeting of Shareholders

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

Date:    Wednesday, June 12, 2013
Time:    11:00 a.m.
Place:    Sheraton Hotel, Laval, Quebec

Financial results for the first quarter ending April 30, 2013, 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, 2013

Thursday April 11, 2013 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 11, 2013 at 1:00 p.m. until midnight April 18, 2013,
by dialing 1-855-859-2056; access code 28147072.

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,   2013   2012
(In thousands of Canadian dollars and in dollars per share)   $   $
         
Revenues   41,412   48,431
Cost of goods sold   36,706   39,128
Gross Margin   4,706   9,303
Selling and administrative expenses   6,910   6,690
Financial revenues   (186)   (345)
Financial expenses   168   233
Foreign exchange gain   (407)   (1,043)
    6,485   5,535
Income before income tax expense (recovery)   (1,779)   3,768
Income tax expense (recovery)   (225)   1,956
Net income for the year   (1,554)   1,812
Earnings per share        
Basic per share   (0.05)   0.06
Diluted per share   (0.05)   0.05
Average number of outstanding shares (in thousands)   32,458   32,771
Average number of outstanding diluted shares (in thousands)   32,458   33,309

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

         
Fiscal Years Ended January 31,   2013   2012
(In thousands of Canadian dollars)   $   $
         
Net income for the year   (1,554)   1,812
Other comprehensive income:        
  Exchange differences on translation of foreign operations (a)   (147)   (53)
  Change in value of available-for-sale financial assets (b)     (56)
    (147)   (109)
Comprehensive income for the year   (1,701)   1,703
(a)   Net of hedging activities and $4,000 in related income tax expense for the fiscal year ended January 31, 2013 (income tax recovery of $24,000 for the fiscal year ended January 31, 2012).
(b)   Net of $ 9,000 related income tax recovery for the fiscal year ended January 31, 2012.

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, 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 shares redemption   (966)   528       (438)
  Dividends         (656)   (656)
Balance, January 31, 2012   69,086   6,368   (1,586)   19,895   93,763
                     
                     
    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
  Subordinate voting shares redemption   (54)   31       (23)
  Dividends         (649)   (649)
Balance, January 31, 2013   69,035   6,432   (1,733)   17,692   91,426

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

         
As at January 31,   2013   2012
(In thousands of Canadian dollars)   $   $
         
ASSETS        
Current assets        
  Cash and cash equivalents   23,914   18,976
  Short-term investments   3,228   5,562
  Accounts receivable   15,469   14,189
  Holdbacks on contracts   708   5,082
  Work in progress   272   5,263
  Inventories   4,771   3,613
  Prepaid expenses and other current assets   623   782
  Total current assets   48,985   53,467
         
Non-current assets        
  Holdbacks on contracts   333  
  Property, plant and equipment   47,067   45,089
  Intangible assets   2,586   2,618
  Other non-current assets   2,992   2,796
  Deferred income tax assets   4,567   4,549
Total assets   106,530   108,519
         
LIABILITIES        
Current liabilities        
  Accounts payable and other current liabilities   5,310   5,551
  Income tax liabilities   12   77
  Deferred revenues   6,105   2,618
  Derivative financial instruments   15   75
  Current portion of long-term debt   2,505   2,526
  Total current liabilities   13,947   10,847
         
Non-current liabilities        
  Long-term debt   1,157   3,676
  Deferred income tax liabilities     233
Total liabilities   15,104   14,756
         
SHAREHOLDERS’ EQUITY        
  Capital stock   69,035   69,086
  Contributed surplus   6,432   6,368
  Accumulated other comprehensive income   (1,733)   (1,586)
  Retained income   17,692   19,895
Total shareholders’ equity   91,426   93,763
Total liabilities and shareholders’ equity   106,530   108,519

CONSOLIDATED STATEMENTS OF CASH FLOWS

         
Fiscal Years Ended January 31,   2013   2012
(In thousands of Canadian dollars)   $   $
         
OPERATING ACTIVITIES        
  Net income for the year   (1,554)   1,812
  Non-cash items:        
    Amortization of property, plant and equipment    3,034   3,063
    Amortization of intangible assets    391   356
    Loss (gain) on disposal of property, plant and equipment       8
    Unrealized (gain) loss on derivative financial instruments   (60)   771
    Non-cash exchange gain   (149)   (63)
    Share-based compensation     34   107
    Income tax expense (recovery)   (225)   1,956
    Financial revenues   (186)   (345)
    Financial expenses   168   233
  Net income adjusted for non-cash items   1,453   7,898
  Changes in non-cash working capital items    10,076   243
  Income tax paid   (152)   (15)
Cash flows from (used in) operating activities   11,377   8,126
         
INVESTING ACTIVITIES        
  Net disposal (acquisition) of short-term investments   2,305   (2,807)
  Net acquisition of property, plant and equipment    (5,004)   (1,230)
  Acquisition of intangible assets    (359)   (373)
  Reduction in other non-current assets   (196)   (9)
  Interest received   229   380
Cash flows from (used in) investing activities   (3,025)   (4,039)
         
FINANCING ACTIVITIES        
  Repayment of long-term debt   (2,513)   (2,491)
  Issuance of subordinate voting shares   2   13
  Redemption of subordinate voting shares   (23)   (438)
  Dividends paid    (649)   (656)
  Interest paid on the interest rate swap   (23)   (33)
  Interest paid   (139)   (199)
Cash flows from (used in) financing activities   (3,345)   (3,804)
Impact of fluctuations in foreign exchange rate on cash flow   (69)   16
Net increase in cash and cash equivalents   4,938   299
Cash and cash equivalents, beginning of year    18,976   18,677
Cash and cash equivalents, end of year   23,914   18,976

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

         
Fiscal Years Ended January 31,   2013   2012
(In thousands of CA$)   $   $
         
  Accounts receivable   (1,283)   7,825
  Holdbacks on contracts   4,079   (1,324)
  Income tax   35   144
  Work in progress   5,032   (4,764)
  Inventories   (1,158)   252
  Prepaid expenses and other current assets   159   203
  Accounts payable and other current liabilities   (278)   240
  Deferred revenues   3,490   (2,333)
Changes in non-cash working capital items   10,076   243

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,   2013   2012
(In thousands of CA$)   $   $
         
Revenues        
  Canada   19,056   6,371
  United States   22,356   42,060
    41,412   48,431
         
         
As at January 31,   2013   2012
(In thousands of CA$)   $   $
         
Property, Plant and Equipment        
  Canada   42,622   44,410
  United States   4,445   679
    47,067   45,089

All intangible assets and investment tax credits included in “Other non-current assets” at January 31, 2013 and January 31, 2012, originated from Canada.

During the fiscal year ended January 31, 2013, three clients accounted for 70% of the Corporation’s revenues (one client accounted for 83% of the revenues during the fiscal year ended January 31, 2012), and therefore each client accounted for more than 10% of revenues.

 

SOURCE: ADF Group Inc.

Jean Paschini, 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