General Donlee Canada Inc. Reports Strong First Quarter Results and Increased Backlog

TORONTO, May 13 /CNW/ - General Donlee Canada Inc. (the "Corporation", the "Company" or "General Donlee") (TSX: GDI) (formerly "General Donlee Income Fund") today announced its results for the first quarter, ended March 31, 2011. General Donlee was converted from an Income Fund to a Corporation effective January 1, 2011.

General Donlee's first quarter 2011 results included:

  • Sales of $12.6 million, up 21% compared to Q1 2010
  • Gross profit of $2.9 million compared to $2.5 million in Q1 2010
  • Net income of $1.3 million, a significant increase compared to net income of $0.2 million in Q1 2010, with basic income per share of $0.24 compared to $0.03 per unit in the same period in 2010
  • Sales order backlog of $49.4 million at March 31, 2011, up $4.6 million from year-end 2010
  • Declaration of $0.165 per share in dividends payable to shareholders of record on March 31, 2011

"General Donlee's strong results in the first quarter of 2011, with a 21% increase over the comparable period in 2010, are evidence that the Company's effective execution of its business strategy are yielding results and that Management's anticipation of continued growth is well-grounded," said Michael Snow, Chief Executive Officer of General Donlee Canada Inc. "The significant $4.6 million growth in the Company's production order backlog relative to 2010 year-end further confirms the growth trends experienced by the industries General Donlee serves and the success of the Company's business strategy."

Positive cash flow from operations in the first quarter

General Donlee's operating activities during the first quarter generated positive cash flow of $1.6 million, consisting of cash from operating activities of $1.7 million while non-cash working capital items required $0.1 million.

Production backlog continues to build

The Company's continued efforts to augment relationships with existing customers and to create opportunities with new ones have had the two-fold effect of delivering consecutive quarters of significant sales increases, and building on its already-strong production backlog.

"Leveraging our excellent track record and recognizing opportunities in the marketplace, we were able to build our production backlog by a further $4.6 million in the first quarter, bringing it to $49.4 million by March 31, 2011," said Mr. Snow. "This is solid evidence of ongoing demand for our products, and is a testament to continued customer confidence in General Donlee. Looking to the second quarter and beyond, we see significant opportunities to quote on new business in industries served by both of our divisions, an excellent sign for the future."

Financial Highlights

The following summary of financial data presents General Donlee's consolidated results of operations for the three-month period ended March 31, 2011, including comparative results for the same period in 2010.

             

($ millions, except Share/Unit and
per Share/Unit amounts, unaudited)                 
Three Months Ended
  Mar. 31/11 Mar. 31/10
Operations    
Sales 12.6 10.4
Gross profit 2.9 2.5
Net income 1.3 0.2
Basic income per share/unit                             $0.243(a) $0.034(a)

(a)     Based on weighted average of 5,332,317 shares/units outstanding.

In the quarter ended March 31, 2011 the Company delivered sales of $12.6 million - an increase of $2.2 million, or 21%, over its sales in the same period in 2010. Sales in the Company's aerospace and power generation products division were $7.6 million - growth of $1.4 million, or 22%, over 2010, largely reflecting higher demand in commercial aerospace components for wide body aircraft engines, net of the negative impact of the rising Canadian dollar. General Donlee's industrial products division's sales in the first quarter of 2011 were $5.0 million, an increase of $0.8 million or 20% over the same period last year, due to the Company's ongoing efforts to engage new customers and to grow its business with existing ones.

The net income General Donlee achieved for the three months ended March 31, 2011 was $1.3 million, an increase over the same period in the previous year; this result incorporated the stronger gross profit resulting from improved sales, net of the negative impact of the rising Canadian dollar and as a result of the IFRS transition, the retroactive inclusion in 2010 of a negative change of $0.45 million (net of a deferred tax recovery of $0.39 million) in the fair value of the debenture conversion option.

General Donlee has sufficient working capital to support its current operations, as well as additional credit facilities to support future growth. At March 31, 2011, General Donlee had working capital of $15.6 million, compared to $15.9 million at December 31, 2010.

Conversion to IFRS

As of January 1, 2011, IFRS became effective for the Corporation replacing GAAP standards and as of that date the Corporation has adopted IFRS in reporting its interim and annual financial statements. Accordingly, the Corporation's inaugural IFRS results, and all future results, will be reported under IFRS and 2010 historical results have been restated to IFRS for comparison purposes. A reconciliation of the results as reported under prior Canadian GAAP and under IFRS will be included in the notes to the Corporation's interim Consolidated Financial Statements.

Completion of Conversion to a Corporation

On January 1, 2011, General Donlee Canada Inc. completed its previously-announced plan of arrangement to convert the Fund from an income trust to a public corporation. The common shares and debentures of the Corporation started trading on the Toronto Stock Exchange under the symbols "GDI" and "GDI.DB," respectively, at the opening of trading on January 4, 2011.

Outlook

"The results we have delivered in the first quarter of 2011 build on the momentum we began gaining in 2010, as our industry worked to climb its way out of the economic challenges that had characterized the latter part of the last decade," said Mr. Snow. "The strategies which we employed enabled General Donlee to weather that economic storm, and now we are well positioned to deliver significant sales growth as the industry turns the corner. Thanks to our focus on customer relationships - both with long-time customers and with new ones - as well as our strategic efforts to improve our operational effectiveness and profitability, we are a step ahead of the trend, and able to leverage that position to our Shareholders' benefit."

"In the quarters ahead, we will continue to leverage our strengths to take advantage of the positive trends seen in the military, industrial, power generation and certain segments of the commercial aerospace sectors." said Mr. Snow. "Already recognizing and acting on an increase in opportunities to quote for new business, we are working to further build on our strong production order backlog and make best use of our first-rate facilities, state-of-the-art equipment, and expert staff."

Company Profile

General Donlee Canada Inc. is a leading diversified manufacturer of precision-machined products for the military, commercial and general aerospace industries, and a specialist in the manufacture of precision-machined products for the industrial products and power generation industries.  General Donlee's operating strategy focuses on targeting niche markets for products that are aligned with its sophisticated manufacturing capabilities and skilled workforce.

SEDAR Filings

On May 16, 2011 the Corporation will file its interim Consolidated Financial Statements (including the notes thereto) and Management's Discussion and Analysis for the quarter ended March 31, 2011 with SEDAR at www.sedar.com.  These documents will also be available on the company's website at www.generaldonlee.com on the Financial Reports page.

Forward-Looking Information

As with all forward-looking statements, caution must be exercised to ensure that appropriate interpretation is made. Certain forward-looking statements are based on information currently available to Management, but are subject to a number of uncertainties and risks that could cause actual results to differ materially from the results discussed in the forward-looking statements. These uncertainties and risks include, but are not limited to those listed under the "Risk Factors" section of the Corporation's 2010 Annual Information Form, dated March 25, 2011 (which can be found at www.sedar.com).

Further information can be found in the disclosure documents filed by General Donlee Canada Inc. with the securities regulatory authorities, available at www.sedar.com or through the Corporation's website at www.generaldonlee.com.

% SEDAR 00017571E

 

 

SOURCE General Donlee Canada Inc.

For further information:

Garen Mikirditsian,
Chief Financial Officer
Telephone: (416) 743-4417
E-mail:  info@generaldonlee.com
Web site: www.generaldonlee.com

Profil de l'entreprise

General Donlee Canada Inc.

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