Financial Highlights for the 2011 Fiscal Year
  • Revenues amounted to $55.3 million compared with $65.7 million in 2010.
  • Gross profit margin reached 31% of revenues, which is higher than in the two previous years.
  • EBITDA stood at 19.7% of revenues, which compares favourably with the industry average.
  • ADF closed fiscal 2011 with net earnings of $3.7 million or $0.11 per share (basic and diluted), compared with net earnings of $7.0 million or $0.20 basic per share ($0.19 diluted per share) in 2010.
  • As at January 31, 2011, ADF had a cash surplus of close to $13 million over its total debt, showing an increase of nearly 24% over 2010.
  • Operating cash flow posted a significant improvement over the 2010 fiscal year, totalling $8.4 million as at January 31, 2011.

TERREBONNE, QC, April 14 /CNW Telbec/ – ADF GROUP INC. (“ADF” or the “Corporation”) (TSX: DRX) recorded revenues of $55.3 million for the fiscal year ended January 31, 2011, compared with $65.7 million the previous year. This decrease reflects the economic conditions prevailing in the Corporation’s market segments, as well as a shift in the schedules attributable to the clients.

It should be noted that despite lower revenues, the gross profit margin as a percentage of revenues was higher than in the previous two years. It reached 31% in fiscal 2011, compared with 28.4% and 29.8 % in the 2010 and 2009 fiscal years respectively, reflecting the significant value-added content of ADF’s current projects, coupled with the investments made over the past three years to increase the efficiency and flexibility of its production facilities.

Earnings before interest, income taxes, depreciation and amortization (or EBITDA), excluding gains or losses on foreign exchange, remained high as a percentage of revenues, standing at 19.7% in 2011 versus 21.5% in 2010.

Net earnings amounted to $3.7 million or $0.11 per share (basic and diluted), compared with net earnings of $7.0 million or $0.20 basic per share ($0.19 diluted per share) in 2010. In addition to the decrease in business volume due mostly to the difficult economic climate, the decline in net earnings is attributable, notably, to a less favourable exchange rate, the increase in certain expenses following the significant investments in the facilities over the past few years and a higher tax rate than in 2010.

ADF closed the 2011 fiscal year with working capital of $41.7 million, of which $21.5 million in the form of short-term available liquidities (consisting of cash, cash equivalents and short-term investments), notably as a result of the $8.4 million cash flows provided by operating activities. Consequently, as at January 31, 2011, ADF Group’s short-term available liquidities exceeded its total interest-bearing debt by $12.8 million.

Mr. Jean Paschini, Chairman of the Board of Directors and Chief Executive Officer indicated that “these results reflect the Corporation’s strategy aimed at fostering sustainable growth, but not at the expense of targeted profitability. During fiscal 2011, we pursued our selective and disciplined approach with respect to our business development, strengthened our positioning in highly specialized and strong value-added market niches, and maintained a rigorous and prudent management of our liquidities, capital structure and business risks.”

Implementation of a Dividend Policy

In recognition of the steadfast confidence of ADF Group’s shareholders over the years, and considering the liquidities generated by the Corporation, the Board of Directors has approved the implementation of a semi-annual dividend payment policy. Consequently, ADF Group declares today a first semi-annual dividend of $0.01 per share, which will be paid on May 16, 2011 to shareholders of record as at April 29, 2011.

Order Backlog

In March 2011, ADF announced new orders worth US$23 million at the World Trade Center (WTC) in New York, U.S.A. These new mandates include the design and engineering of connections, fabrication and delivery to site of additional heavy steel built-up components, for the different projects ADF is currently carrying out at the WTC.

As of January 31, 2011, ADF’s order backlog stood at $67 million, with contracts in hand extending over an execution period of 12 to 15 months. It should be noted that the backlog as of January 31, 2011, does not include the aforementioned additional contracts at the WTC, the execution of which will equally extend over a period of 12 to 15 months, nor does it totally reflect the revenues likely to be recognized in upcoming quarters, as it only includes the contractual changes requested by clients at that date. Accordingly, based on current data, the Corporation expects its revenues for the next few quarters to be comparable or slightly superior to those of recent quarters.


In regard to business development, ADF has taken steps with a local partner over the past year to set up a plant in Western Canada. Through this strategic move, not only will the Corporation benefit from its partner’s expertise and market knowledge, but it will also be in a stronger position to take advantage of the high-potential industrial, commercial and institutional construction market in this region, driven by the dynamic energy industry.

The solid financial performance and achievements over the past years are a direct result of ADF Group’s niche positioning strategy, its operational excellence and its selective approach to projects, which are targeted according to their potential for differentiation and the generation of good profit margins and strong cash flows. This value creation strategy will continue to guide ADF Group’s development over the long term. For the 2012 fiscal year, however, the Corporation will adapt its action plan to the current business environment, which will likely remain affected by the slow economic recovery and the scarcity of new projects in its niches, especially in the United States. In this context, one of the Corporation’s primary objectives for fiscal 2012 will be to grow its order backlog in order to sustain its future business volume. Hence, while concentrating on the optimal execution of its ongoing contracts and pursuing its development efforts in Western Canada, the Corporation will seek to increase its production capacity utilization rate by targeting high-volume projects. This approach could temporarily lower the average gross profit margin of the Corporation’s contract portfolio (expressed as a percentage of revenues), which would be offset by the revenue growth and a better fixed cost absorption rate.

“Although the current conditions in our markets prompt us to remain cautious, we are more confident than ever as to ADF’s future. We will enter the next upward economic cycle with strong fundamentals, including a highly productive and efficient fabrication plant, an extremely competent and motivated workforce, and a worldwide reputation enhanced by our performance in connection with New York’s WTC projects. In fact, along with ADF’s financial health, our confidence in the Corporation’s future is one of the key reasons behind our decision to implement the practice of paying dividends and our determination to establish a presence in Western Canada” concluded Mr. Jean Paschini.

Annual Meeting of Shareholders

ADF Group Inc. Annual Meeting of Shareholders will be held on June 15, 2011 at 11:00 a.m. at the Omni Mont-Royal Hotel in Montreal. Financial results for the first quarter ending April 30, 2011 will also be disclosed at the Corporation’s Annual 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 in miscellaneous and architectural metals for the non-residential 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-GAAP Measures

EBITDA is not a performance measure recognized by Canadian Generally Accepted Accounting Principles (GAAP) and consequently, it may not 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.


To discuss ADF Group’s results for the fiscal year ended January 31, 2011

Thursday, April 14, 2011 at 10:00 a.m. (Montreal time)

To participate in the conference call, please dial 1-800-732-1073 a few minutes before the start of the call.

For those unable to participate, a taped rebroadcast will be available
from April 14, 2011 at 1:00 p.m. until midnight April 20, 2011,
by dialing 1-877-289-8525; access code 4427247#.

The conference call (audio) will also be available at

Members of the media are invited to listen in.


Fiscal years ended January 31, 2011 2010
(In thousands of $) $ $
Revenues 55,268   65,740
Cost of goods sold 38,196 47,087
Gross margin before foreign exchange variation 17,072 18,653
(Gain) loss on foreign exchange (875) (1,680)
Gross margin 17,947 20,333
Selling and administrative expenses 6,201 4,493
Earnings before undernoted items: 11,746 15,840
  Amortization of property, plant and equipment 3,021 2,657
  Amortization of intangible assets 339 400
  3,360 3,057
Earnings before finance charges (interest income) and income taxes 8,386 12,783
Finance charges (interest income) 99 (489)
Earnings before income taxes 8,287 13,272
Income taxes 4,544 6,280
Net earnings and comprehensive income 3,743 6,992
Basic earnings per share 0.11 0.20
Diluted earnings per share 0.11 0.19
Average number of outstanding shares (in thousands) 33,642 35,480
Average number of outstanding diluted shares (in thousands) 34,296 36,334
(In thousands of $) $ $ $ $ $
Balance on February 1, 2009 80,685 2,175 144 2,807 85,811
  Net earnings and comprehensive income for the year 6,992 6,992
  Stock-based compensation 308 308
  Options exercised 131 (44) 87
  Share redemption (5,465) 932 (4,533)
Balance on January 31, 2010 75,351 3,371 144 9,799 88,665
  Net earnings and comprehensive income for the year 3,743 3,743
  Stock-based compensation 288 288
  Options exercised 280 (104) 176
  Share redemption (5,681) 1,945 (3,736)
Balance on January 31, 2011 69,950 5,500 144 13,542 89,136
As at January 31, 2011 2010
(In thousands of $) $ $


  Cash and cash equivalents 18,677 5,770
  Short-term investments 2,787 11,652
  Accounts receivable 22,802 14,850
  Income taxes 442
  Holdbacks on contracts 167 2,692
  Investment tax credits 536
  Work in progress 403 1,574
  Inventories 3,865 3,093
  Prepaid expenses 398 334
  Derivative financial instruments 741 832
  Future income tax assets 4,952 3,182
  54,792 44,957
Holdbacks on long-term contracts 3,562 1,297
Investment tax credits 2,601 2,065
Property, plant and equipment 42,227 42,760
Intangible assets 2,601 2,590
Other assets 251 247
Future income tax assets 2,424 9,452
  108,458 103,368


  Accounts payable and accrued charges 5,365 4,681
  Income taxes 159
  Deferred revenues 4,994 2,242
  Derivative financial instruments 45
  Future income tax liabilities 62
  Current portion of long-term debt 2,513 2,422
  13,138 9,345
Long-term debt 6,151 4,645
Future income tax liabilities 33 713
  19,322 14,703
Commitments and contingencies    
  Retained earnings 13,542 9,799
  Accumulated other comprehensive income 144 144
  13,686 9,943
  Capital stock 69,950 75,351
  Contributed surplus 5,500 3,371
  89,136 88,665
  108,458   103,368
Fiscal years ended January 31, 2011 2010
(In thousands of $) $ $
  Net earnings 3,743 6,992
  Adjustments for:    
    Amortization of property, plant and equipment 3,021 2,657
    Amortization of intangible assets 339 400
    Gain on disposal of property, plant and equipment (52) (9)
    Unrealized loss (gain) on derivative financial instruments 136 (1,890)
    Non-cash exchange loss 266 1,541
    Interest capitalized on long-term debt 15 20
    Stock-based compensation 288 308
    Future income taxes 4,011 6,045
  Net earnings adjusted for non-monetary items 11,767 16,064
  Changes in non-cash operating working capital items 1 (3,320)   (15,781)
  8,447 283
  Disposal (acquisition) of short-term investments 8,865 (5,652)
  Net acquisition of property, plant and equipment (2,302) (4,046)
  Net acquisition of intangible assets (350) (588)
  Proceeds from disposal of property, plant and equipment 33
  Increase in other assets (4) (62)
  6,209 (10,315)
  Issuance of long-term debt 4,370
  Repayment of long-term debt (2,333) (1,718)
  Issuance of subordinate voting shares 176 87
  Redemption of subordinate voting shares (3,736) (4,533)
  (1,523) (6,164)
Impact of fluctuations in foreign exchange rate on cash (226) (524)
Cash inflows (outflows) 12,907 (16,720)
Cash and cash equivalents, beginning of year 5,770 22,490
Cash and cash equivalents, end of year 2 18,677 5,770
1. Details of the components of the “Changes in non-cash operating
working capital items”:
  Fiscal years ended January 31, 2011 2010
  (In thousands of $) $ $
    Accounts receivable (7,952) (3,685)
    Holdbacks on short- and long-term contracts 260 602
    Income taxes 601 (668)
    Investment tax credits (96)
    Work in progress 1,171 (946)
    Inventories (772) 178
    Prepaid expenses (64) 326
    Accounts payable and accrued charges 684 (8,967)
    Deferred revenues 2,752 (2,525)
  Changes in non-cash operating working capital items (3,320) (15,781)
2. As at January 31, 2011, cash and cash equivalents were composed of
$15,918,000 in cash, as well as $2,759,000 in cash equivalents
($5,770,000 in cash as at January 31, 2010.)


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 metal work.

Fiscal years ended January 31, 2011 2010
(In thousands of $) $ $
  Canada 698 10,312
  United States 54,570 55,428
  55,268  65,740
As at January 31, 2011 2010
(In thousands of $) $ $
Property, Plant and Equipment
  Canada 42,130 42,620
  United States 97 140
  42,227 42,760

During the fiscal year ended January 31, 2011, one client accounted for 90% of the Corporation’s revenues (70% of revenues were realized with two clients, each of which accounted for more than 10% of revenues, during the fiscal year ended January 31, 2010). However, revenues were recorded on five distinct contracts with one client during fiscal year ended January 31, 2011.


Source:  ADF Group Inc.
Contact:  Jean Paschini, Chairman of the Board of Directors and Chief Executive Officer
Jean-François Boursier, CA, Chief Financial Officer
Web Site:
(450) 965-1911 / 1 (800) 263-7560
Media:  Caroline Couillard
Morin Public Relations
Tel.:  514 289-8688, ext. 233
Cell.: 514 755-5729