General Donlee Canada Inc. Reports Third Quarter Results and Declares Quarterly Dividend of $0.0825 per Share

TORONTO, Nov. 7, 2011 /CNW/ - General Donlee Canada Inc. (the "Corporation," the "Company" or "General Donlee") (TSX: GDI) today announced its results for the third quarter, ended September 30, 2011. The Board has declared a quarterly dividend of $0.0825 per common share payable on January 16, 2012 to holders of record at the close of business on December 30, 2011.

Financial highlights relating to General Donlee's third quarter 2011 include:

  • Sales of $12.5 million, up 25% compared to Q3 2010
  • $2.0 million in cash flow from operations before changes in working capital, an increase of 55% compared to Q3 2010
  • Net income of $0.5 million compared to net income of $1.4 million in Q3 2010
  • Sales order backlog of $53.6 million at September 30, 2011, up $8.8 million from year-end 2010
  • Quarterly dividend of $0.0825 per share announced on September 22, 2011 and paid to shareholders on October 14, 2011

Consistent growth in sales and positive cash flow from operations

"General Donlee's 25% increase in sales in the third quarter and 22% increase in sales year-to-date over the comparable periods last year continue to reflect improving fundamentals in the industries we serve and our ability to grow our business with current and new customers. As a result, in the third quarter we generated $2.0 million of positive cash flow from operations before changes in working capital, and paid out $0.88 million in quarterly dividends to shareholders," said Interim Chief Executive Officer and Chief Financial Officer, Garen Mikirditsian.

Strong production

"Our production order backlog which has grown by $8.8 million in the first nine months of 2011 remains strong at $53.6 million, up 20% relative to our backlog at the end of last year," said Mr. Mikirditsian. "The strong backlog builds confidence for the future and is evidence that our customer-focused business strategy is yielding positive, concrete results. Based on the increased rate of quoting activity we've seen in 2011, we expect demand to remain robust."

Impact of stronger USD at quarter-end

"Our net income for the quarter reflects a net foreign exchange loss of $0.5 million mainly resulting from a non-cash mark-to-market loss of $0.7 million on our long-term hedging program due to the USD gaining strength at the end of the month of September. Net income for the third quarter also reflects a $0.2 million provision for deferred taxes. Excluding the impact of foreign exchange gains or losses and deferred taxes, net income for the third quarter of 2011 was $1.2 million, a 60% increase compared to net income of $0.75 million in the similar period in 2010," said Mr. Mikirditsian.

To mitigate its exposure to currency fluctuations, General Donlee has a rolling hedging program with a chartered Canadian bank through which it reduces its U.S. dollar exposure by entering into foreign exchange forward contracts. As of September 30, 2011, the Company had foreign exchange forward contracts outstanding to sell $16.9 million U.S. dollars and to buy Canadian dollars at an average exchange rate of CAD $1.0242. In addition, the Company's significant U.S. dollar purchases of raw materials and outside services provide a partial offset in its U.S. dollar exposure.

Financial Highlights

The following summary of financial data presents General Donlee's consolidated results of operations for the three-and nine month periods ended September 30, 2011, including comparative results for the same periods in 2010.             

($ millions, except Share/Unit and
per Share/Unit amounts, unaudited)                
Three Months Ended Nine Months Ended
  Sept. 30/11 Sept. 30/10 Sept. 30/11 Sept. 30/10
Operations        
Sales 12.6 10.0 37.1 30.4
Gross profit 3.0 2.4 8.6 7.3
Net income 0.5 1.4 2.9 1.5
Basic income per share/Unit(a)                             $0.044 $0.132   $0.276   $0.145

(a)  Based on weighted average of 10,664,634 shares/Units outstanding.

General Donlee delivered sales of $37.1 million in the first nine months of 2011 - an increase of $6.7 million, or 22%, over its sales in the same period in 2010. Sales in the Company's aerospace and power generation products division during the first nine month period ended September 30, 2011 were $23.2 million - up by 27%, or $5.0 million, over the comparable period in 2010. General Donlee's industrial products division's sales during the same period were $13.9 million, an increase of $1.7 million or 14% over the same period last year.

The Company's net income during the nine months ended September 30, 2011 was $2.9 million, compared to net income of $1.5 million during the same period in the previous year. This increase in profitability reflected:

  • Stronger gross profit levels resulting from improved sales, net of the negative impact of a rising Canadian dollar
  • An accounting gain of $0.7 million on pension curtailment.

Outlook

The continuing growth in General Donlee's sales volumes during the first nine months of 2011 reflects increasing demand within the industries the Company serves, and General Donlee's ability to remain a supplier of choice for many customers thanks to the expertise of its employees, its continuous improvements in operational effectiveness, and a commitment to invest in production capacity. "We are seeing an overall increase in business activity. In addition to benefiting from robust fundamentals tied to growing global demand for aerospace products, we are noting strong traction with customers in the oil and gas and industrial products sectors," said Interim Chief Executive Officer and Chief Financial Officer, Garen Mikirditsian.

The Company's strong operating performance is also a result of its focus on continuously improving its operations, and an emphasis on achieving increasing integration between its two operating divisions. "Through further integration, we are able to optimize capacity utilization, share best practices and serve our customers better, " said Mr. Mikirditsian. "Furthermore, increased sharing of resources allows us to achieve cost synergies which result in improved profitability for our business," added Mr. Mikirditsian.

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 November 7, 2011 the Corporation will file its interim Consolidated Financial Statements (including the notes thereto) and Management's Discussion and Analysis for the third quarter ended September 30, 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.

 

SOURCE General Donlee Canada Inc.

For further information:

Garen Mikirditsian
Interim Chief Executive Officer
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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