ADF Group Inc. – Results for the first quarter ended April 30, 2012

TERREBONNE, QC, June 13, 2012 /CNW Telbec/ – For the three-month period ended April 30, 2012, ADF GROUP INC. (“ADF” or the “Corporation”) (TSX: DRX) recorded revenues of $12.5 million compared with $13.2 million for the same period last year.

The gross margin as a percentage of revenues stood at 14.7% compared with 23.5% in the first quarter of the previous year. This decrease, which started in the third quarter of the 2012 fiscal year, is explained by the different mix of the projects currently underway.

Income before interest, income taxes, depreciation and amortization (EBITDA) amounted to $0.9 million, compared with $2.1 million the previous year.

The Corporation recorded a slight profit of $0.1 million (0.00$ per share) during the first quarter ended April 30, 2012, compared with a net income of $1.1 million ($0.03 per share) in the same period the previous year.

ADF closed the first quarter of the 2013 fiscal year with working capital of $42.3 million, of which $23.6 million in short-term available liquidities (cash, cash equivalents and short-term investments), As at April 30, 2012, ADF Group’s short-term available liquidities exceeded its total debt by $18.1 million, whereas the current ratio stood at 4.44:1.

ADF Group’s order backlog stood at $43 million on April 30, 2012, compared with $48 million on January 31, 2012. This decrease is mostly attributable to the gradual execution of contracts, net of contract changes and new contracts.

Mr. Jean Paschini, Chairman of the Board and Chief Executive Officer indicated that “the results for the first quarter followed a similar trend as observed in the past quarters, reflecting a still difficult economic environment in our markets. Although ADF Group has maintained a sound performance overall, we are not satisfied with these results. We are very keen on pursuing our goals to provide the Corporation with all the necessary tools to seize the opportunities that arise in this challenging context and to position ADF Group advantageously for the next economic upturn, while seeking to limit exposure to risks associated with our market segments.”

Mr. Paschini added that the Corporation is currently analyzing the possibility of setting up a fabrication plant in the United States, which would provide ADF access to the US public infrastructure market for which growth is expected in the coming years.

On April 11, 2012, the Corporation’s Board of Directors approved the payment of a semi-annual dividend. Consequently, on May 17, 2012, ADF Group paid a semi-annual dividend of $0.01 per share to shareholders of record as at April 30, 2012.

Annual Meeting of Shareholders

ADF Group’s Annual Meeting of Shareholders will take place this morning, June 13, 2012 at 11:00 am at the Hilton Montreal/Laval Hotel in Laval.

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 in miscellaneous and architectural metals for the non residential construction industry. 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.

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 first quarter ended April 30, 2012,

June 13, 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 Wednesday, June 13, 2012 at 1:00 p.m.
until midnight June 20, 2012, by dialing 1-855-859-2056; access code 83424725.

The conference call (audio) will also be available at www.adfgroup.com

Members of the media are invited to listen in.

 
CONSOLIDATED STATEMENT OF INCOME (unaudited)
Three-Month Periods Ended April 30, 2012   2011
(In thousands of Canadian dollars and in dollars per share) $   $
       
Revenues 12,464   13,229
Cost of goods sold 10,634   10,123
Gross Margin 1,830   3,106
Selling and administrative expenses 1,729   1,892
Financial revenues (45)   (95)
Financial expenses 44   60
Foreign exchange gain (76)   (755)
  1,652   1,102
Income before income tax expense 178   2,004
Income tax expense 87   923
Net income for the period 91   1,081
Earnings per share      
Basic per share 0.00   0,03
Diluted per share 0.00   0,03
Average number of outstanding shares (in thousands) 32,464   32,775
Average number of outstanding diluted shares (in thousands) 32,928   33,390
       
       
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
Three-Month Periods Ended April 30, 2012   2011
(In thousands of Canadian dollars) $   $
       
Net income for the period 91   1,081
Other comprehensive income:      
  Exchange differences on translation of foreign operations (a) (366)   (1,495)
Comprehensive income for the period (275)   (414)
(a)   Net of hedging activities and $12,000 in related income tax for the three-month period ended April 30, 2012 (nil for the three-month period ended April 30, 2011).

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (unaudited)
  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       1,081   1,081
  Other comprehensive income     (1,495)     (1,495)
  Comprehensive income for the period     (1,495)   1,081   (414)
  Share-based compensation   59       59
  Dividends       (328)   (328)
Balance, April 30, 2011 70,032   5,799   (2,972)   19,492   92,351
                   
                   
  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 period       91   91
  Other comprehensive income     (366)     (366)
  Comprehensive income for the period     (366)   91   (275)
  Share-based compensation   11       11
  Options exercised 1         1
  Dividends       (325)   (325)
Balance, April 30, 2012 69,087   6,379   (1,952)   19,661   93,175

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at April 30, 2012 January 31, 2012
  (unaudited) (audited)
(In thousands of Canadian dollars) $ $
 
ASSETS    
Current assets    
  Cash and cash equivalents 18,209 18,976
  Short-term investments 5,440 5,562
  Accounts receivable 14,171 14,189
  Holdbacks on contracts 4,231 5,082
  Work in progress 7,858 5,263
  Inventories 3,985 3,613
  Prepaid expenses and other current assets 676 782
  Derivative financial instruments 66
  Total current assets 54,636 53,467
Non-current assets    
  Property, plant and equipment 44,396 45,089
  Intangible assets 2,630 2,618
  Other non-current assets 2,801 2,796
  Deferred income tax assets 4,178 4,549
Total assets 108,641 108,519
     
LIABILITIES    
Current liabilities    
  Accounts payable and other current liabilities 6,399 5,551
  Income tax liabilities 21 77
  Deferred revenues 3,360 2,618
  Derivative financial instruments 29 75
  Current portion of long-term debt 2,492 2,526
  Total current liabilities 12,301 10,847
Non-current liabilities    
  Long-term debt 3,015 3,676
  Deferred income tax liabilities 150 233
Total liabilities 15,466 14,756
     
SHAREHOLDERS’ EQUITY    
  Retained income 19,661 19,895
  Accumulated other comprehensive income (1,952) (1,586)
  17,709 18,309
  Capital stock 69,087 69,086
  Contributed surplus 6,379 6,368
Total shareholders’ equity 93,175 93,763
Total liabilities and shareholders’ equity 108,641 108,519
 
     
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Three-Month Periods Ended April 30, 2012 2011
(In thousands of Canadian dollars) $ $
 
OPERATING ACTIVITIES    
  Net income for the period 91 1,081
  Non-cash items:    
    Amortization of property, plant and equipment 747 792
    Amortization of intangible assets 89 89
    Unrealized gain on derivative financial instruments (112) (226)
    Non-cash exchange loss (gain) 161 (244)
    Share-based compensation 11 59
    Income tax expense 87 923
    Financial revenues (45) (95)
    Financial expenses 44 60
  Net income adjusted for non-cash items 1,073 2,439
  Changes in non-cash working capital items (1) (790) 2,961
  Income tax expense paid (152) (368)
Cash flows from (used in) operating activities 131 5,032
     
INVESTING ACTIVITIES    
  Disposal (acquisition) of short-term investments 62 (2,905)
  Net acquisition of property, plant and equipment (64) (29)
  Acquisition of intangible assets (101) (88)
  Reduction in other non-current assets (5) 1
  Interest received 59 77
Cash flows from (used in) investing activities (49) (2,944)
     
FINANCING ACTIVITIES    
  Repayment of long-term debt (613) (600)
  Issuance of subordinate voting shares 1
  Interest paid on the interest rate swap (6) (9)
  Interest paid (44) (53)
Cash flows from (used in) financing activities (662) (662)
Impact of fluctuations in foreign exchange rate on cash (187) (709)
Net (decrease) increase in cash and cash equivalents (767) 717
Cash and cash equivalents, beginning of period 18,976 18,677
Cash and cash equivalents, end of period 18,209 19,394
(1) Detail the components of the “Changes in non-cash working capital items”:
         
  Periods Ended April 30, 2012   2011
  (In thousands of Canadian dollars) $   $
           
    Accounts receivable (116)   (749)
    Holdbacks on contracts 785   5
    Income tax 77   (12)
    Work in progress (2,693)   (166)
    Inventories (372)   (58)
    Prepaid expenses and other current assets 106   273
    Accounts payable and other current liabilities 645   233
    Deferred revenues 778   3,435
  Changes in non-cash working capital items (790)   2,961

   
For the purpose of the consolidated statements of cash flows, cash and cash equivalents in the amount of $18,209,000 as at April 30, 2012 and $19,394,000 as at April 30, 2011 were only composed of cash.

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.

     
Periods Ended April 30, 2012 2011
(In thousands of Canadian dollars) $ $
     
Revenues    
  Canada 2,521 225
  United States 9,943 13,004
  12,464 13,229
     
     
As at April 30, 2012 January 31, 2012
(In thousands of Canadian dollars) $ $
     
Property, Plant and Equipment    
  Canada 43,737 44,410
  United States 659 679
  44,396 45,089

All intangible assets and investment tax credits included under “Other non-current assets” at April 30, 2012 and January 31, 2012 originated from Canada.

During the three-month period ended April 30, 2012, two clients accounted for 84% of the Corporation’s revenues (one client accounted for 94% of the revenues during the three-month period ended April 30, 2011), and therefore were the only ones 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