Results for the fiscal year ended January 31, 2014

TERREBONNE, QC, April 10, 2014 /CNW Telbec/ - ADF Group Inc. ("ADF" or the "Corporation") (TSX: DRX) recorded revenues of $93.0 million for the 2014 fiscal year compared with $41.4 million the previous fiscal year, and recorded a net income of $7.7 million compared with a negative net income of $1.6 million a year earlier. The contracts signed in Western Canada as well as in Quebec, have contributed to the Corporation's revenue growth and consequently the increase in net income.

The gross margin as a percentage of revenues increased from 11.4% during the fiscal year ended January 31, 2013 to 21.7% during the fiscal year ended January 31, 2014. This increase is mainly explained by productivity improvements attributable to the additional volume of work brought by new contracts and the acceleration of the project in Alberta, as well as by the completion of certain smaller-scale projects with less favorable gross margins which have negatively impacted last fiscal year's margin. It should be noted that the fabrication hours in the Terrebonne plant have increased by more than 20% during the 2014 fiscal year compared with the previous year.

During the 2014 fiscal year, the Corporation generated operating cash flows of over $13.7 million. Despite investing more than $20 million for the construction of its new plant in Montana, U.S.A., ADF's short-term available liquidities (including cash, cash equivalents and short-term investments) exceeded its total debt by over $13 million as at January 31, 2014.

Financial Highlights

       
Fiscal Years Ended January 31, 2014   2013
(In thousands of dollars, and dollars per share) $   $
Revenues 92,997   41,412
EBITDA 14,234   1,221
Net income for the year 7,682   (1,554)
- Basic per share 0.24   (0.05)
- Diluted per share 0.23   (0.05)
Average number of outstanding shares (basic, in thousands) 32,463   32,458
Average number of outstanding shares (diluted, in thousands) 33,060   32,458


In March 2013, ADF Group announced that it obtained from the Autorité des marchés financiers ("AMF") the authorization required under the new Bill no 1 on the integrity in public contracts, which is mandatory for all corporations wishing to work on any public construction or services contract in Quebec of $10 million or greater.

In February 2014, the Corporation announced a US$6.0 million investment to build a new 3,900-square-meter (42,000-square-foot) paint shop at its new fabrication plant site in Great Falls, Montana. The construction thereof started in March 2014 and commissioning is scheduled for September 2014.

In 2013, ADF Group was a job creator. In addition to increasing the workforce at its Terrebonne plant, since its implementation in Great Falls, the Corporation created to date 70 new local jobs. The Corporation expects this number to continue to increase during the year as the plant ramps up its production.

Outlook

The Corporation's order backlog stood at $36 million as of January 31, 2014 and should be progressively executed between now and the end of the third quarter of the 2015 fiscal year.

Over recent months Management has started to see encouraging signs of improvement in the conditions prevailing in ADF's markets. This positive trend, as evidenced by the increased number and size of tenders, allows the Corporation to foresee the coming months with certain optimism, although because prices remain weak, it remains cautious as to the short-term outlook.

"The 2014 fiscal year led the Corporation to record its best financial results in the last five years, and also allowed ADF to significantly expand its geographic reach with the implementation of a new plant in Montana. As planned, our new fabrication plant is operational since the beginning of 2014. One of our main challenges and objectives for the current year will be to develop ADF's presence in promising and emerging markets targeted by this plant, in the Midwestern U.S.A. and Western Canada" said Mr. Jean Paschini, Co-Chairman of the Board of Directors and Chief Executive Officer.

Dividend

The Corporation announces today a semi-annual dividend of $0.01 per subordinate and multiple voting share payable on May 16, 2014 to shareholders of record as at April 30, 2014.

Annual Meeting of Shareholders

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

Date: Wednesday, June 11, 2014
Time: 11:00 a.m.
Place: Hilton Montreal/Laval Hotel, Laval, Quebec

Financial results for the first quarter ending April 30, 2014, 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, 2014

Thursday April 10, 2014 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
April 10, 2014 at 1:00 p.m. until midnight April 17, 2014,
by dialing 1-855-859-2056; access code 15436849.

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, 2014   2013
(In thousands of Canadian dollars and in dollars per share) $   $
Revenues 92,997   41,412
Cost of goods sold 72,778   36,706
Gross Margin 20,219   4,706
Selling and administrative expenses 9,431   6,910
Financial revenues (155)   (186)
Financial expenses 189   168
Foreign exchange loss (gain) 144   (407)
  9,609   6,485
Income before income tax expense (recovery) 10,610   (1,779)
Income tax expense (recovery) 2,928   (225)
Net income for the year 7,682   (1,554)
Earnings per share      
  Basic per share 0.24   (0.05)
  Diluted per share 0.23   (0.05)
Average number of outstanding shares (in thousands) 32,463   32,458
Average number of outstanding diluted shares (in thousands) 33,060   32,458


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

       
Fiscal Years Ended January 31, 2014   2013
(In thousands of Canadian dollars) $   $
Net income for the year 7,682   (1,554)
Other comprehensive income (a):      
  Exchange differences on translation of foreign operations (b) 3,244   (147)
  Change in value of available-for-sale financial assets (c) 51  
  3,295   (147)
Comprehensive income for the year 10,977   (1,701)
(a) Will subsequently be reclassified to net income.
(b) Net of hedging activities and $30,000 in related income tax recovery for the fiscal year ended January 31, 2014 (net of $4,000 in related income tax expense for the fiscal year ended January 31, 2013)
(c) Net of $8,000 related income tax expense for the fiscal year ended January 31, 2014

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, 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
  Redemption of subordinate voting shares (54) 31 (23)
  Dividends (649) (649)
Balance, January 31, 2013 69,035 6,432 (1,733) 17,692 91,426
           
  Capital Stock Contributed
Surplus
Accumulated Other
Comprehensive
Income
Retained
Income
Total
(In thousands of Canadian dollars) $ $ $ $ $
Balance, February 1, 2013 69,035 6,432 (1,733) 17,692 91,426
  Net income for the year 7,682 7,682
  Other comprehensive income 3,295 3,295
  Comprehensive income for the year 3,295 7,682 10,977
  Share-based compensation 23 23
  Options exercised 104 (48) 56
  Dividends (649) (649)
Balance, January 31, 2014 69,139 6,407 1,562 24,725 101,833

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

       
As at January 31, 2014   2013
(In thousands of Canadian dollars) $   $
ASSETS      
Current assets      
  Cash and cash equivalents 18,675   23,914
  Short-term investments 798   3,228
  Accounts receivable 12,935   15,469
  Holdbacks on contracts 3,572   708
  Income tax assets 32  
  Work in progress 6,139   272
  Inventories 5,609   4,771
  Prepaid expenses and other current assets 1,195   623
  Total current assets 48,955   48,985
Non-current assets      
  Holdbacks on contracts   333
  Property, plant and equipment 68,476   47,067
  Intangible assets 2,713   2,586
  Other non-current assets 3,255   2,992
  Deferred income tax assets 4,585   4,567
Total assets 127,984   106,530
LIABILITIES      
Current liabilities      
  Accounts payable and other current liabilities 13,510   5,310
  Income tax liabilities   12
  Deferred revenues 4,121   6,105
  Derivative financial instruments 3   15
  Current portion of long-term debt 1,706   2,505
  Total current liabilities 19,340   13,947
Non-current liabilities      
  Long-term debt 4,315   1,157
  Deferred income tax liabilities 2,496  
Total liabilities 26,151   15,104
SHAREHOLDERS' EQUITY      
  Capital stock 69,139   69,035
  Contributed surplus 6,407   6,432
  Accumulated other comprehensive income 1,562   (1,733)
  Retained income 24,725   17,692
Total shareholders' equity 101,833   91,426
Total liabilities and shareholders' equity 127,984   106,530

CONSOLIDATED STATEMENTS OF CASH FLOWS

       
Fiscal Years Ended January 31, 2014   2013
(In thousands of Canadian dollars) $   $
OPERATING ACTIVITIES      
  Net income for the year 7,682   (1,554)
  Non-cash items:      
    Amortization of property, plant and equipment 3,084   3,034
    Amortization of intangible assets 362   391
    Gain on disposal of property, plant and equipment (2)  
    Unrealized gain on derivative financial instruments (12)   (60)
    Non-cash exchange loss (gain) 707   (149)
    Share-based compensation 23   34
    Income tax expense (recovery) 2,928   (225)
    Financial revenues (155)   (186)
    Financial expenses 189   168
  Net income adjusted for non-cash items 14,806   1,453
  Changes in non-cash working capital items (1,032)   10,076
  Income tax expense paid (30)   (152)
  Cash flows from (used in) operating activities 13,744   11,377
INVESTING ACTIVITIES      
  Disposal of short-term investments 2,482   2,305
  Net acquisition of property, plant and equipment (22,683)   (5,004)
  Acquisition of intangible assets (488)   (359)
  Increase in other non-current assets (204)   (196)
  Interest received 156   229
  Cash flows from (used in) investing activities (20,737)   (3,025)
FINANCING ACTIVITIES      
  Issuance of long-term debt 4,819  
  Repayment of long-term debt (2,619)   (2,513)
  Issuance of subordinate voting shares 56   2
  Redemption of subordinate voting shares   (23)
  Dividends paid (649)   (649)
  Interest paid on the interest rate swap (13)   (23)
  Interest paid (174)   (139)
Cash flows from (used in) financing activities 1,420   (3,345)
Impact of fluctuations in foreign exchange rate on cash flow 334   (69)
Net change in cash and cash equivalents (5,239)   4,938
Cash and cash equivalents, beginning of year 23,914   18,976
Cash and cash equivalents, end of year 18,675   23,914


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

       
Fiscal Years Ended January 31, 2014   2013
(In thousands of Canadian dollars) $   $
  Accounts receivable 2,842   (1,283)
  Holdbacks on contracts (2,523)   4,079
  Income tax   35
  Work in progress (5,863)   5,032
  Inventories (825)   (1,158)
  Prepaid expenses and other current assets (567)   159
  Accounts payable and other current liabilities 7,983   (278)
  Deferred revenues (2,079)   3,490
Changes in non-cash working capital items (1,032)   10,076


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, 2014   2013
(In thousands of Canadian dollars) $   $
Revenues      
  Canada 91,532   19,056
  United States 1,465   22,356
  92,997   41,412
       
As at January 31, 2014   2013
(In thousands of Canadian dollars) $   $
Property. plant and equipment      
  Canada 39,287   42,622
  United States 29,189   4,445
  68,476   47,067


All intangible assets and investment tax credits included in "Other non-current assets" at January 31, 2014 and January 31, 2013, originated from Canada.

During the fiscal year ended January 31, 2014, two (2) clients accounted for 86% of the Corporation's revenues (three (3) clients accounted for 70% of the revenues during the fiscal year ended January 31, 2013), and therefore each client accounted for more than 10% of revenues.

 

SOURCE ADF Group Inc.

For further information:

Contact:

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 / 1 (800) 263-7560

Web Site:
www.adfgroup.com