DRX ADF Group Inc

TERREBONNE, QC, Dec. 9 /CNW/ -- Highlights: -- Revenues of $40.3 million for the nine months ended October 31, 2010. -- Gross margin of 29.6% of revenues for the nine-month period ended October 31, 2010 compared with 27.1% at the same date last year. -- Net earnings of $0.6 million for the quarter ended October 31, 2010 and $2.7 million for the nine-month period ended at the same date. -- Available liquidities (including cash, cash equivalents and short term investments) of $20.3 million as at October 31, 2010 exceeded the total debt by $11 million. TERREBONNE, QC, Dec. 9 /CNW Telbec/ - ADF GROUP INC. ("ADF" or the "Corporation") (ticker symbol: DRX/TSX) closed the third quarter ended October 31, 2010, with revenues of $13.7 million compared with $15.8 million for the same quarter of the previous fiscal year. This decrease is primarily attributable to the different revenue mix and the increase in the Canadian dollar in relation to the U.S. dollar. For the nine-month period ended October 31, 2010, revenues totalled $40.3 million compared with $51.3 million for the same period last year. Gross margin as a percentage of revenues rose from 24.9% in the third quarter of fiscal 2010 to 25.5% in the third quarter of fiscal 2011. For the nine-month period ended October 31, 2010, the gross margin represented 29.6% of revenues versus 27.1% last year. "This performance is attributable to the quality of the contracts awarded to ADF — the complexity of which notably carries strong added value — combined with the investments made over the past two years to optimize our facilities, and the know-how of our personnel" said Jean Paschini, Chairman of the Board and Chief Executive Officer. The third-quarter earnings before interest, taxes, depreciation and amortization ("EBITDA") amounted to $2.1 million, or 15% of revenues compared with $3.3 million or 21% of revenues in the third quarter of the previous fiscal year. For the first nine months of the current fiscal year, EBITDA totalled $7.7 million, or 19% of revenues versus $10.9 million or 21% of revenues last year. ADF Group closed the quarter with net earnings of $0.6 million or $0.02 per share (basic and diluted), compared with net earnings of $1.4 million or $0.04 per share (basic and diluted) in the same period of the previous year. For the first nine months ended October 31, 2010, net earnings amounted to $2.7 million or $0.08 per share (basic and diluted) compared with net earnings of $5.5 million or $0.15 per share (basic and diluted) in the same period a year earlier. Besides a lower business volume and unfavourable currency fluctuations, this decrease is explained by an increase in the effective tax rate. For information purposes, the higher effective tax rate had a negative impact of $0.01 on third-quarter earnings per share (basic and diluted), although it did not affect the Corporation's cash outflows. Operating activities generated cash flows of $6.5 million since the beginning of the current fiscal year, contributing to maintain ADF Group in an excellent financial position. As at October 31, 2010, ADF Group had a working capital of $39.2 million for a current ratio of 3.45:1 and total cash (including cash, cash equivalents and short-term investments) of $20.3 million. The Corporation's available short-term liquidities exceeded its total interest-bearing debt by $11 million. "ADF Group's business environment was practically the same in the third quarter than in the first half of fiscal 2011. We were faced with the slow economic recovery in the United States and the strength of the Canadian dollar against the U.S. dollar. Despite this challenging context, ADF Group remained profitable and financially solid" said Mr. Paschini. Outlook As at October 31, 2010, ADF's order backlog amounted to $83 million, compared with $137 million on the same date in 2009. It should be noted that ADF's order backlog as at October 31, 2010 does not entirely reflect the revenues likely to be recognized in upcoming quarters, as it includes a portion only of the contractual changes brought to existing orders at the request of customers during the previous months. Thus, based on ADF's order backlog as at October 31, 2010 and the contractual changes underway, the Corporation estimates that it will be busy with profitable work for the next 12 to 15 months at least. "Although we remain cautious in light of current market conditions, we are confident as to ADF Group's outlook for the short, medium and long term. We are witnessing increased activity in the non-residential construction sector in Western Canada where we have teamed up with a partner in order to set up an operational centre. In the United States, we believe it will take some time for the industry's activity to return to a more normal level. With this in mind, we will keep our focus on our vision of value creation and niche positioning by bidding exclusively on projects meeting our strict criteria in terms of differentiation, profit margins and cash flow generation, and that fully leverage our expertise. It is by pursuing this strategy that we managed to maintain a good profitability and preserve an excellent financial position during the worst economic crisis of the past 80 years. Likewise, our strategy will best serve the interests of our shareholders when our markets recover, especially since the investments we have made in recent years — in the midst of the economic turmoil — have enhanced our lead over the competition and our ability not only to meet the highest criteria in our industry, but to set new standards" concluded Mr. Jean Paschini. About ADF Group Inc. ADF Group Inc. is a North American leader in the connections design and engineering, fabrication and installation of complex steel structures, heavy built-ups, as well as 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, as well as projects subject to fast-track schedules, in the commercial, institutional, industrial and public sectors. Forward-Looking Information This press release contains forward-looking statements reflecting ADF Group's 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 a financial measure not prescribed by Canadian generally accepted accounting principles ("GAAP") 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. ____________________________________________________________________ | CONFERENCE CALL WITH INVESTORS | | | | To discuss ADF Group's results | | for the third quarter and first nine months ended October 31, 2010 | | | | Thursday, December 9, 2010 at 10:00 a.m. (Montreal time) | | | | To participate in the conference call, 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, December 9, 2010 at 1:00 p.m. until midnight Wednesday, | | December 15, 2010, by dialing | | 1-800-642-1687; access code 27883045. | | | | The conference call (audio) will also be available at | | www.cnw.ca, | | and archived for a 90-day period. | | | | | | Members of the media are invited to listen in. | |____________________________________________________________________| CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME Three Months Nine Months Periods Ended October 31, 2010 2009 2010 2009 (In thousands of $ except $ per-share amounts) $ $ $ Revenues 13,687 15,769 40,295 51,269 Cost of goods sold 10,192 11,837 28,369 37,367 Gross margin before foreign 3,495 exchange variation 3,932 11,926 13,902 Gain on foreign exchange (517) (120) (842) (1,446) Gross margin 4,012 4,052 12,768 15,348 Selling and administrative 1,426 expenses 656 4,177 2,965 Earnings before undernoted 2,586 items: 3,396 8,591 12,383 Amortization Amortization of property, 758 plant and equipment 686 2,265 2,017 Amortization of intangible 86 assets 84 251 238 844 770 2,516 2,255 Earnings before financial charges (interest income) and income taxes 1,742 2,626 6,075 10,128 Financial charges (interest 24 income) (48) 38 (263) Earnings before income taxes 1,718 2,674 6,037 10,391 Income taxes Current 171 108 352 283 Future 917 1,186 2,979 4,643 1,088 1,294 3,331 4,926 Net earnings and 630 comprehensive income 1,380 2,706 5,465 Basic earnings per share 0.02 0.04 0.08 0.15 Diluted earnings per share 0.02 0.04 0.08 0.15 Average number of outstanding 32,997 shares (in thousands) 35,322 33,936 35,498 Average number of outstanding 33,595 diluted shares (in thousands) 36,187 34,624 36,323 CONSOLIDATED STATEMENTS OF RETAINED EARNINGS Three Months Nine Months Periods Ended October 31, 2010 2009 2010 2009 (In thousands of $) $ $ $ $ Retained earnings, beginning of 11,875 5,857 9,799 1,772 period Net earnings 630 1,380 2,706 5,465 Retained earnings, end of period 12,505 7,237 12,505 7,237 CONSOLIDATED STATEMENTS OF CONTRIBUTED SURPLUS Three Months Nine Months Periods Ended October 31, 2010 2009 2010 2009 (In thousands of $) $ $ $ $ Contributed surplus, beginning of period 4,903 2,653 3,371 2,175 Stock-based compensation 31 89 219 216 Exercise of options - (5) (94) (29) Excess of the book value over the acquisition cost of redeemed subordinate voting shares 507 415 1,945 790 Contributed surplus, end of period 5,441 3,152 5,441 3,152 CONSOLIDATED BALANCE SHEETS At October 31, 2010 At January 31, 2010 (Audited) (In thousands of $) $ $ ASSETS Current Cash and cash equivalents 12,712 5,770 Short-term investments 7,596 11,652 Accounts receivable 24,744 14,850 Income taxes 66 442 Holdbacks on contracts 667 2,692 Investment tax credits 536 536 Work in progress 428 1,574 Inventories 3,574 3,093 Prepaid expenses 615 334 Derivative financial 703 832 instruments Future income tax assets 3,488 3,182 55,129 44,957 Holdbacks on long-term 2,876 1,297 contracts Investment tax credits 2,065 2,065 Property, plant and 42,811 42,760 equipment Intangible assets 2,599 2,590 Other assets 253 247 Future income tax assets 5,622 9,452 111,355 103,368 LIABILITIES Current Accounts payable 3,118 1,955 Accrued charges 1,146 994 Salaries and fringe 896 1,732 benefits payable Deferred revenues 8,219 2,242 Derivative financial 66 - instruments Current portion of 2,516 2,422 long-term debt 15,961 9,345 Long-term debt 6,818 4,645 Future income tax 554 713 liabilities 23,333 14,703 Shareholders' equity Retained earnings 12,505 9,799 Accumulated other comprehensive income 144 144 12,649 9,943 Capital stock 69,931 75,351 Contributed surplus 5,442 3,371 88,022 88,665 111,355 103,368 CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Nine Months Periods Ended October 31, 2010 2009 2010 2009 (In thousands of $) $ $ $ $ OPERATING ACTIVITIES Net earnings 630 1,380 2,706 5,465 Adjustments for: Amortization of property, plant and equipment 758 686 2,265 2,017 Amortization of intangible assets 86 84 251 238 Gain on disposal of property, plant and equipment - - (52) - Change in the fair value of derivative financial instruments (127) 689 195 (2,839) Non-cash exchange loss 166 2 128 1,178 Interest capitalized on long-term debt 3 5 11 15 Stock-based compensation 31 89 219 216 Future income taxes 917 1,186 2,979 4,643 Net earnings adjusted for non-monetary items 2,464 4,121 8,702 10,933 Changes in non-cash operating items Accounts receivable 543 (2,499) (9,894) (7,524) Short-term and long-term holdbacks on contracts (853) 135 446 949 Income taxes 57 109 376 (137) Work in progress 419 127 1,146 (654) Inventories 105 335 (481) 381 Prepaid expenses 270 311 (281) 38 Accounts payable, accrued charges, salaries and fringe benefits payable (991) (2,331) 479 (7,249) Deferred revenues 4,518 (1,321) 5,977 (441) 4,068 (5,134) (2,232) (14,637) 6,532 (1,013) 6,470 (3,704) INVESTING ACTIVITIES Disposal (acquisition) of short-term investments 14 - 4,056 (6,400) Acquisition of property, plant and equipment (111) (1,060) (2,264) (1,782) Acquisition of intangible assets (60) (98) (260) (563) Decrease in other assets (10) (60) (6) (56) (167) (1,218) 1,526 (8,801) FINANCING ACTIVITIES Issuances of subordinate voting shares 4 10 168 57 Issuance of long-term debt - - 4,370 - Repayment of long-term debt (625) (217) (1,692) (1,684) Redemption of subordinate voting shares (950) (2,234) (3,736) (3,687) (1,571) (2,441) (890) (5,314) Impact of fluctuations in foreign exchange rate on cash (42) 7 (164) (233) Net cash inflows (outflows) 4,752 (4,665) 6,942 (18,052) Cash and cash equivalents, beginning of period 7,960 9,103 5,770 22,490 Cash and cash equivalents, end of period (1) 12,712 4,438 12,712 4,438 Supplemental cash flow information Income taxes paid 102 2 393 206 Interest (paid) received (32) (6) 5 107 Non-cash financing and investing activities: Property, plant and equipment given in exchange for new equipment - - 139 - 1. At October 31, 2010, cash and cash equivalents were composed of $12,712,000 in cash ($4,416,000 in cash and $22,000 in cash equivalents as at October 31, 2009.) SEGMENTED INFORMATION The Corporation operates in the non-residential construction sector, primarily in North America. Its operations include the connections design and engineering, fabrication and installation of complex steel structures, heavy built-ups, as well as miscellaneous and architectural metals. Three Months Nine Months Periods ended October 31, 2010 2009 2010 2009 (In thousands of $) $ $ $ $ Revenues — Canada 4 1,413 567 9,106 — United States 13,683 14,356 39,728 42,163 13,687 15,769 40,295 51,269 At October 31, 2010 At January 31,2010 (Audited) (In thousands of $) $ $ Property, plant and equipment — Canada 42,705 42,620 — United States 106 140 42,811 42,760 During the nine-month period ended October 31, 2010, 89% of the Corporation's revenues were recorded with one client (72% with four clients during the same period in 2009, each of which accounted for more than 10% of revenues.). However, revenues were recorded on five distinct contracts with one client during fiscal year 2011. To view this news release in HTML formatting, please use the following URL: http://www.cnw.ca/en/releases/archive/December2010/09/c3673.html table border="0" valign="top"trtd valign="top" align="left"Source: /td td valign="top" align="left"bADF Group Inc./b/td/tr trtd valign="top" align="left" /td td valign="top" align="left"br//td/tr trtd valign="top" align="left"Contact: /td td valign="top" align="left"bJean Paschini/b, Chairman of the Board and Chief Executive Officerbr/ bJean-François Boursier,/bCA, Chief Financial Officerbr//td/tr trtd valign="top" align="left" /td td valign="top" align="left"br//td/tr trtd valign="top" align="left"Telephone:   /td td valign="top" align="left"(450) 965-1911 / 1 (800) 263-7560br//td/tr trtd valign="top" align="left"Web Site:  /td td valign="top" align="left"a cr="true" href="http://www.adfgroup.com"www.adfgroup.com/abr//td/tr trtd valign="top" align="left" /td td valign="top" align="left"br//td/tr trtd valign="top" align="left"bMedia:/b /td td valign="top" align="left"Mathieu Beaudoin, Morin Relations Publiquesbr/ Tel. 514-289-8688, ext. 225br/ Cell. : 514-473-4649br/ br/ orbr/ br/ Charles Durivage, Morin Relations Publiquesbr/ Tel. 514-289-8688, ext. 223br/ Cell. : 514-894-4186/td/tr/table

Copyright