Results for the fiscal year ended January 31, 2016

HIGHLIGHTS

  • 29% increase in revenues compared with the previous fiscal year
  • Gross margin, as a percentage of revenues, stood at 14.3%, which is a 4.7% increase compared with a year ago
  • Return to profitability with the recording of a net income of $1.7 million
  • New contract awards worth a total of $100 million during the 2016 fiscal year
  • Construction of a new paint shop at ADF’s own Terrebonne facilities

TERREBONNE, QC, April 14, 2016 /CNW Telbec/ – ADF GROUP INC. ("ADF" or the "Corporation") (TSX: DRX) recorded revenues of $98.1 million during the fiscal year ended January 31, 2016, up by $22.0 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.

The gross margin as a percentage of revenues went from 9.6% during the fiscal year ended January 31, 2015 to 14.3% during the fiscal year ended January 31, 2016. This increase is mainly explained by a better product mix and a better absorption of the fabrication fixed costs, in line with the volume at both of our fabrication plants, as well as by the favorable foreign exchange rate impact.

ADF Group recorded a net income of $1.7 million ($0.05 basic and diluted per share) during the fiscal year ended January 31, 2016 compared with a negative net income of $1.6 million (-$0.05 basic and diluted per share) a year ago.

On January 31, 2016, the Corporation had $21.0 million in working capital including short-term available liquidities (comprised of cash, cash equivalents and short-term investments) of $2.4 million. On February 22, 2016, a few days after the close of its 2016 fiscal year, the Corporation drew the second tranche of $5.0 million from a bank loan contracted during the third quarter of the fiscal year ended January 31, 2016. 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, 2016, the Corporation order book totalled $70.6 million, compared with $48.0 million as at January 31, 2015. These contracts will be progressively completed by the end of the second quarter of fiscal 2018.

 

Financial Highlights

Fiscal Years Ended January 31,

2016

2015

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

$

$

Revenues

98,089

76,058

EBITDA

7,244

1,594

Net income for the year

1,699

(1,570)

Basic per share

0.05

(0.05)

Diluted per share

0.05

(0.05)

Average number of outstanding shares (basic, in thousands)

32,597

32,499

Average number of outstanding shares (diluted, in thousands)

32,807

32,499

 

New Orders

On March 30, 2016, the Corporation announced the award of new contracts worth over $43.0 million, in Quebec and in U.S. East Coast. In addition to fabricating various steel structures and unique heavy steel built-ups, and performing the installation work thereof, ADF’s contracts also include the supply of the shop drawings, the purchase of the steel required in the scope of these different projects, and in some cases, the application of special industrial coatings. These projects will be primarily carried out at ADF’s Terrebonne fabrication plant and they are scheduled to extend until July 2017.

Outlook

"Including our recently commissioned new paint shop in Terrebonne, we now have five centers of excellence in North America, which will enable us to efficiently reach clients across this market" indicated Mr. Jean Paschini, Co-Chairman of the Board of Directors and Chief Executive Officer.

"For fiscal 2017, our goal is to integrate all of our recent investments and making sure we maintain a solid backlog to support all of our activities, and continue improving our operational processes" 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, 2016 to shareholders of record as at April 29, 2016.

Annual Meeting of Shareholders

 

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

Date:

Wednesday, June 15, 2016

Time:

11:00 a.m.

Place:

Hotel Sheraton Laval, 2440 Des Laurentides, Laval, Quebec

 

Financial results for the first quarter ending April 30, 2016, 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 Section 10 "Non-GAAP Measures" of the Corporation’s Management’s Discussion and Analysis for Fiscal Year Ended January 31, 2016, 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 14, 2016 AT 10:00 A.M. (Montreal time)

RESULTS FOR THE FISCAL YEAR ENDED JANUARY 31, 2016

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 14, 2016

at 1:00 p.m. until midnight Thursday, April 21, 2016, by dialing 1-855-859-2056; access code 77353950.

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 OF FINANCIAL POSITION

As at January 31,

2016

2015

(In thousands of Canadian dollars)

$

$

ASSETS

Current assets

Cash and cash equivalents

2,377

7,946

Short-term investments

789

Accounts receivable

23,146

14,143

Holdbacks on contracts

1,693

4,309

Income tax assets

29

Work in progress

7,521

6,834

Inventories

6,180

5,769

Prepaid expenses and other current assets

1,889

1,679

Total current assets

42,806

41,498

Non-current assets

Property, plant and equipment

91,067

83,000

Intangible assets

2,871

2,781

Other non-current assets

3,337

3,969

Deferred income tax assets

6,390

6,567

Total assets

146,471

137,815

LIABILITIES

Current liabilities

Accounts payable and other current liabilities

17,772

15,971

Income tax liability

49

Deferred revenues

2,753

4,173

Derivative financial instruments

403

1,115

Current portion of long-term debt

868

763

Total current liabilities

21,845

22,022

Non-current liabilities

Long-term debt

14,351

9,374

Deferred income tax liabilities

2,742

2,461

Total liabilities

38,938

33,857

SHAREHOLDERS’ EQUITY

Capital stock

68,077

69,185

Contributed surplus

6,397

6,433

Accumulated other comprehensive income

9,507

5,835

Retained income

23,552

22,505

Total shareholders’ equity

107,533

103,958

Total liabilities and shareholders’ equity

146,471

137,815

 

CONSOLIDATED STATEMENTS OF INCOME

Fiscal Years Ended January 31,

2016

2015

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

$

$

Revenues

98,089

76,058

Cost of goods sold

84,069

68,791

Gross Margin

14,020

7,267

Selling and administrative expenses

11,391

9,854

Financial revenues

(79)

(151)

Financial expenses

574

399

Other gains

(653)

(58)

11,233

10,044

Income before income tax expense (recovery)

2,787

(2,777)

Income tax expense (recovery)

1,088

(1,207)

Net income for the year

1,699

(1,570)

Earnings per share

Basic per share

0,05

(0,05)

Diluted per share

0,05

(0,05)

Average number of outstanding shares (in thousands)

32,597

32,499

Average number of outstanding diluted shares (in thousands)

32,807

32,499

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Fiscal Years Ended January 31,

2016

2015

(In thousands of Canadian dollars)

$

$

Net income for the year

1,699

(1,570)

Other comprehensive income (a) :

Exchange differences on translation of foreign operations

3,672

4,273

Comprehensive income for the year

5,371

2,703

(a) Will subsequently be reclassified to net income.

 

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, 2014

69,139

6,407

1,562

24,725

101,833

Net income for the year

(1,570)

(1,570)

Other comprehensive income

4,273

4,273

Comprehensive income for the year

4,273

(1,570)

2,703

Share-based compensation

41

41

Options exercised

46

(15)

31

Dividends

(650)

(650)

Balance, January 31, 2015

69,185

6,433

5,835

22,505

103,958

Capital Stock

Contributed
Surplus

Accumulated Other
Comprehensive
Income

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

3,672

3,672

Comprehensive income 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

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

Fiscal Years Ended January 31,

2016

2015

(In thousands of Canadian dollars)

$

$

OPERATING ACTIVITIES

Net income for the year

1,699

(1,570)

Non-cash items:

Amortization of property, plant and equipment

4,294

3,874

Amortization of intangible assets

321

307

Gain on disposal of property, plant and equipment

(618)

Unrealized loss (gain) on derivative financial instruments

(712)

1,115

Non-cash exchange gain

(709)

(119)

Share-based compensation

44

41

Income tax expense (recovery)

1,088

(1,207)

Financial revenues

(79)

(151)

Financial expenses

574

399

Net income adjusted for non-cash items

5,902

2,689

Changes in non-cash working capital items (1)

(7,059)

(1,273)

Income tax expense recovery

4

Cash flows from (used in) operating activities

(1,157)

1,420

INVESTING ACTIVITIES

Disposal of short-term investments

778

Net acquisition of property, plant and equipment

(8,591)

(13,860)

Revenues from disposals of property, plant and equipment

1,457

Acquisition of intangible assets

(411)

(373)

Decrease (increase) in other non-current assets

641

(608)

Interest received

96

160

Cash flows from (used in) investing activities

(6,030)

(14,681)

FINANCING ACTIVITIES

Issuance of long-term debt

5,000

5,516

Financing costs relating to the debt

(107)

Repayment of long-term debt

(772)

(1,857)

Redemption of subordinate voting shares

(1,918)

Issuance of subordinate voting shares

730

31

Dividends paid

(652)

(650)

Interest paid on the interest rate swap

(2)

Interest paid

(552)

(371)

Cash flows from (used in) financing activities

1,729

2,667

Impact of fluctuations in foreign exchange rate on cash flow

(111)

(135)

Net change in cash and cash equivalents during the fiscal year

(5,569)

(10,729)

Cash and cash equivalents, beginning of year

7,946

18,675

Cash and cash equivalents, end of year

2,377

7,946

 

(1)

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

Fiscal Years Ended January 31,

2016

2015

(In thousands of Canadian dollars)

$

$

Accounts receivable

(8,008)

(881)

Holdbacks on contracts

2,636

(682)

Work in progress

(399)

(683)

Inventories

(309)

(44)

Prepaid expenses and other current assets

(139)

(475)

Accounts payable and other current liabilities

651

1,508

Deferred revenues

(1,491)

(16)

Changes in non-cash working capital items

(7,059)

(1,273)

 

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,

2016

2015

(In thousands of Canadian dollars)

$

$

Revenues

Canada

22,368

59,879

United States

75,721

16,179

98,089

76,058

As at January 31,

2016

2015

(In thousands of Canadian dollars)

$

$

Non-current assets (1)

Canada

47,480

45,218

United States

49,795

44,532

97,275

89,750

(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, 2016, 70% of the Corporation’s revenues were realized with three (3) clients, for respective amounts of $30,489,000 from the United States, $24,480,000 from the United States and Canada, and $13,269,000 from Canada, one (1) of whom was part of the Corporation’s revenues concentration during the fiscal year ended January 31, 2015.

During the fiscal year ended January 31, 2015, 47% of the revenues were realized with two (2) clients for amounts of $27,526,000 and $8,313,000 respectively, all generated in Canada, and therefore each client accounted for more than 10% of the Corporation’s revenues, one (1) of whom was part of the Corporation’s revenues concentration during the fiscal year ended January 31, 2014.

 

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