ADF Group announces its results of the second quarter ended July 31, 2009



    
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    Highlights of the Second Quarter:

    - Order backlog totalling $151 million as at July 31,2009, up 21% over
      the corresponding period in 2008.
    - New contract of $77 million in July 2009 and new investments of
      $6 million pursuant to this major contract.
    - Available liquidities of $21.5 million at July 31, 2009 (comprised of
      cash, cash equivalents and short-term investments), exceeding by
      $14.1 million its long-term debt including the current portion.
    - Revenues of $18.7 million compared with $24 million for the second
      quarter of the previous fiscal year.
    - Gross margin of 24% of revenues (compared with 29% last year),
      EBITDA(1) margin of 19.1% (compared with 25.3% last year) and net
      earnings of 10% of revenues (17% last year).
    - Net earnings of $1.8 million or $0.05 per share (basic and diluted),
      compared with $4.1 million or $0.11 per share (basic and diluted) for
      the same period last year.
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    TERREBONNE, QC, Sept. 9 /CNW Telbec/ - ADF GROUP INC. ("ADF" or the
"Corporation") (TSX: DRX) closed its second quarter with net earnings of $1.8
million or $0.05 per share (basic and diluted) on revenues of $18.7 million
compared with net earnings of $4.1 million or $0.11 per share (basic and
diluted) on revenues of $24.0 million for the same period in 2008. For the
first six months ended July 31, 2009, net earnings reached $4.1 million or
$0.11 per share (basic and diluted) on revenues of $ 35.5 million, compared
with net earnings of $7.3 million or $0.20 per share (basic and diluted) on
revenues of $49.2 million for the same period in 2008.
    "These results reflect declines from the corresponding periods of the
previous year. However, the decrease in revenues is in line with our forecasts
considering the different mix of the contracts from one period to another, and
the decrease in the margin is due to the time lag between the recognition of
costs and revenues with regard to a contract. We expect that this downward
trend will be reversed during the second half of the current fiscal year due
to the recent contract awards for which the Corporation supplies the raw
material (steel) as well as the connection design and engineering services, in
addition to the fabrication hours", indicated Mr. Jean Paschini, Chairman of
the Board and Chief Executive Officer.
    The second-quarter gross profit margin and EBITDA(1) margin were down
from the quarter ended July 31, 2008, standing at 24% and 19% respectively,
compared with 29% and 25%. For the first six months of the fiscal year, these
same margins were also down from the first half of the previous year,
declining to 28.1% and 22% respectively, compared with 28.6% and 24%.
    As at July 31, 2009, ADF Group continued to benefit from a healthy and
solid financial position, with liquidity (consisting of cash, cash equivalents
and short-term investments) of $21.5 million - exceeding by $14.1 million its
long-term debt including the current portion - and shareholders' equity of
$87.6 million.

    Major New Contract Award and Increase in Backlog

    On July 13, 2009, the Corporation announced the award of a major contract
of $77 million in North America's public infrastructure sector. Under the
terms of the contract, ADF Group will fabricate the oversized steel components
with complex geometry and which will weigh close to 100 tons each, as well as
highly complex architectural elements, and will also supply the design and
engineering of connections and the steel.
    As at July 31, 2009, ADF Group's order backlog reached $151 million, up
21% over the same date last year. These orders are scheduled to be executed
over a period of 24 months.

    Investment Program

    Further to $77 million contract award in July 2009, the Corporation
announced investments of $6 million to acquire additional fabrication
equipment and to retrofit one of the plant's fabrication bays, including,
among others, the addition of two (2) 50-ton overhead cranes. These
investments could be financed by the Corporation's working capital.

    Subordinate Voting Shares Redemption

    During the second quarter ended July 31, 2009, the Corporation redeemed
446,400 subordinate voting shares for a net consideration of $1.1 million,
representing an average price of $2.44 per share. As at July 31, 2009, since
the implementation of the normal course issuer bid program, the Corporation
has redeemed 618,300 subordinate voting shares for a net consideration of $1.4
million, representing an average price of $2.35 per share.

    Outlook

    "With an increased order backlog and additional contracts for which we
supply the raw material and connection engineering services, along with
fabrication hours, we are confident we will achieve a satisfactory performance
in the second half of the fiscal year. We also remain focused on our long-term
value creation strategy, based on our positioning in market niches that are
highly specialized and less subject to cyclical fluctuations - our focus on
value-added fabrication activities - our targeted and sustained investments in
the upgrading and capacity of our infrastructures and the quality of our
personnel - our disciplined management of our activities, resources and
capital structure", added Mr. Jean Paschini.

    About ADF

    ADF Group Inc. is a North American leader in the design, engineering,
fabrication and selective 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 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.

    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.

    All amounts are in Canadian dollars.

    
    (1) Earnings before interest, taxes, depreciation and amortization


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                       CONFERENCE CALL WITH INVESTORS:

                       TO DISCUSS ADF GROUP'S RESULTS
       FOR THE SECOND QUARTER AND FIRST SIX MONTHS ENDED JULY 31, 2009

           Wednesday, September 9, 2009 at 10:00 am (Montreal time)

      To participate in the conference call, please dial 1-888-231-8191
       To ensure you can participate, please dial a few minutes before the
                               start of call.
        For those unable to participate, a taped rebroadcast will be
     available from Wednesday, September 9, 2009 at noon until 11:59 p.m.
               September 16, 2009, by dialing 1-800-365-8354;
                          access code 28579182#.

            The conference call will be simultaneously webcast at
                 www.adfgroup.com and archived for 90 days.
               Members of the media are invited to listen in.
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    CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME

    -------------------------------------------------------------------------
                                       Three (3) Months     Six (6) Months
                                     ---------          ----------
                                     ----------------------------------------
    Periods ended July 31,                2009      2008      2009      2008
                                     ----------------------------------------
    (In thousands of $, except
     per-share amounts)                      $         $         $         $

    Revenues                            18,748    23,994    35,500    49,153
    Cost of goods sold                  14,162    17,051    25,530    35,095
    -------------------------------------------------------------------------
    Gross margin                         4,586     6,943     9,970    14,058
    Selling and administrative
     expenses                            1,005       862     2,309     2,077
    -------------------------------------------------------------------------
    Earnings before undernoted items:    3,581     6,081     7,661    11,981
    Amortization
      Property, plant and equipment        667       600     1,331     1,183
      Intangible assets                     81        13       154        26
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                                           748       613     1,485     1,209
    (Gain) loss on foreign exchange       (765)     (701)   (1,326)     (641)
    -------------------------------------------------------------------------
                                           (17)      (88)      159       568
    -------------------------------------------------------------------------
    Earnings before financial charges
     and income taxes                    3,598     6,169     7,502    11,413
    -------------------------------------------------------------------------
    Financial charges
      Interest on long-term debt            50       113       110       239
      Interest income                     (166)      (46)     (325)     (132)
      Other interest                       (18)       17         -        72
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                                          (134)       84      (215)      179
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    Earnings before income taxes         3,732     6,085     7,717    11,234
    -------------------------------------------------------------------------
    Income taxes
      Current                                7         3       175       171
      Future                             1,880     2,032     3,457     3,779
    -------------------------------------------------------------------------
                                         1,887     2,035     3,632     3,950
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    Net earnings and comprehensive
     income                              1,845     4,050     4,085     7,284
    -------------------------------------------------------------------------
    Basic earnings per share              0.05      0.11      0.11      0.20
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    Diluted earnings per share            0.05      0.11      0.11      0.20
    -------------------------------------------------------------------------
    Average number of outstanding
     shares (in thousands)              36,013    36,145    36,002    36,126
    -------------------------------------------------------------------------
    Average number of outstanding
     diluted shares (in thousands)      36,868    37,258    36,801    37,290
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                                     ---------          ----------


    CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (DEFICIT)

    -------------------------------------------------------------------------
                                       Three (3) Months     Six (6) Months
                                     ---------          ----------
                                     ----------------------------------------
    Periods ended July 31,                2009      2008      2009      2008
                                     ----------------------------------------
    (In thousands of $)                      $         $         $         $

    Retained earnings (deficit),
     beginning of the period             4 012   (72 304)    1 772   (75 538)
    Net earnings                         1 845     4 050     4 085     7 284
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    Retained earnings (deficit),
     end of the period                   5 857   (68 254)    5 857   (68 254)
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                                     ---------          ----------


    CONSOLIDATED STATEMENTS OF CONTRIBUTED SURPLUS

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                                       Three (3) Months     Six (6) Months
                                     ---------          ----------
                                     ----------------------------------------
    Periods ended July 31,                2009      2008      2009      2008
                                     ----------------------------------------
    (In thousands of $)                      $         $         $         $

    Contributed surplus, beginning of
     the period                          2,373     2,014     2,175     1,965
    Stock-based compensation                66        62       127       111
    Exercise of options and warrants       (17)      (17)      (24)      (17)
    Excess of the book value over the
     acquisition cost of redeemed
     subordinate voting shares             231         -       375         -
    -------------------------------------------------------------------------
    Contributed surplus, end of the
     period                              2,653     2,059     2,653     2,059
    -------------------------------------------------------------------------
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                                     ---------          ----------


    CONSOLIDATED BALANCE SHEETS

                                                         ---------
    -------------------------------------------------------------------------
                                                                At        At
                                                           July 31,  January
                                                              2009  31, 2009
                                                                    (Audited)
                                                         --------------------
    (In thousands of $)                                          $         $

    ASSETS
    Current
      Cash and cash equivalents                              9,103    22,490
      Short-term Investments                                12,400     6,000
      Accounts receivable                                   16,190    11,165
      Holdbacks on contracts                                 3,128     3,462
      Work in progress                                       1,409       628
      Inventories                                            3,225     3,271
      Prepaid expenses                                         933       660
      Derivative financial instruments                       2,470         -
      Income tax receivables                                    20         -
      Future income tax assets                               6,667     6,666
    -------------------------------------------------------------------------
                                                            55,545    54,342
      Holdbacks on long-term contracts                         649     1,129
      Property, plant and equipment                         39,751    40,360
      Intangible assets                                      2,713     2,402
      Other assets                                             181       185
      Future income tax assets                               8,504    13,444
      Investment tax credits                                 2,505     2,505
    -------------------------------------------------------------------------
                                                           109,848   114,367
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES
    Current
      Accounts payable                                       3,785     5,170
      Accrued charges                                        3,039     4,716
      Salaries and fringe benefits payable                   1,906     3,762
      Deferred revenues                                      5,647     4,767
      Income taxes                                               -       226
      Derivative financial instruments                           -     1,058
      Current portion of long-term debt                      2,729     3,018
    -------------------------------------------------------------------------
                                                            17,106    22,717
      Long-term debt                                         4,632     6,827
      Future income tax liabilities                            528        47
    -------------------------------------------------------------------------
                                                            22,266    29,591
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    Shareholders' equity
      Retained earnings                                      5,857     1,772
      Accumulated other comprehensive income                   144       144
    -------------------------------------------------------------------------
                                                             6,001     1,916
      Capital stock                                         78,928    80,685
      Contributed surplus                                    2,653     2,175
    -------------------------------------------------------------------------
                                                            87,582    84,776
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                                                           109,848   114,367
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                                                         ---------


    CONSOLIDATED STATEMENTS OF CASH FLOWS

    -------------------------------------------------------------------------
                                       Three (3) Months     Six (6) Months
                                     ---------          ----------
                                     ----------------------------------------
    Periods ended July 31,                2009      2008      2009      2008
                                     ----------------------------------------
    (In thousands of $)                      $         $         $         $

    OPERATING ACTIVITIES
      Net earnings                       1,845     4,050     4,085     7,284
      Adjustments for:
        Amortization of property,
         plant and equipment               667       600     1,331     1,183
        Amortization of intangible
         assets                             81        13       154        26
        Gain on disposal of property,
         plant and equipment                 -      (764)        -      (975)
        Unrealized gain on derivative
         financial instruments          (2,345)        -    (3,528)        -
        Non-cash exchange loss (gain)      973      (198)    1,911      (178)
        Future income taxes              1,880     2,032     3,457     3,779
        Interest capitalized on
         interest-free long-term debt        5         4        10         9
        Stock-based compensation            66        62       127       111
    -------------------------------------------------------------------------
    Net earnings adjusted                3,172     5,799     7,547    11,239
    -------------------------------------------------------------------------
      Changes in non-cash operating
       working capital items
        Accounts receivable                299       256    (5,025)   (4,968)
        Short-term and long-term
         holdbacks on contracts            181      (647)      814    (1,093)
        Work in progress                   161      (292)     (781)      502
        Inventories                         23      (229)       46      (298)
        Income taxes                      (213)       64      (246)       24
        Prepaid expenses                  (613)     (582)     (273)     (645)
        Accounts payable, accrued
         charges, salaries and fringe
         benefits payable               (1,508)    2,428    (4,918)    4,426
        Deferred revenues                 (281)    2,186       880     2,746
    -------------------------------------------------------------------------
                                        (1,951)    3,184    (9,503)      694
    -------------------------------------------------------------------------
        Cash flows from operating
         activities                      1,221     8,983    (1,956)   11,933
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    INVESTING ACTIVITIES
      Acquisition of property, plant
       and equipment                      (332)   (5,476)     (722)   (7,476)
      Acquisition of intangible
       assets                             (127)     (372)     (465)     (639)
      Investment purchase               (7,000)        -    (6,400)        -
      Decrease (increase) in
       other items                           4        (1)        4        (1)
    -------------------------------------------------------------------------
    Cash flows applied to investing
     activities                         (7,455)   (5,849)   (7,583)   (8,116)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    FINANCING ACTIVITIES
      Redemption of shares              (1,087)        -    (1,453)        -
      Repayment of long-term debt         (703)     (606)   (1,467)   (1,013)
      Issuance of subordinate voting
       shares                               30        38        47        47
    -------------------------------------------------------------------------
    Cash flows applied to financing
     activities                         (1,760)     (568)   (2,873)     (966)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Impact of fluctuations in
     foreign exchange rate on cash        (255)       62      (975)       15
    -------------------------------------------------------------------------
    Net cash (outflows) inflows         (8,249)    2,628   (13,387)    2,866
    Cash and cash equivalents,
     beginning of the period            17,352     7,924    22,490     7,686
    -------------------------------------------------------------------------
    Cash and cash equivalents, end
     of the period (1)                   9,103    10,552     9,103    10,552
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Supplemental cash flow
     information
      Income taxes paid                      -         -       204       162
      (Received) interest paid             (95)      146      (113)      204
      Non-cash financing and
       investing activities:
        Property, plant and
         equipment given in
         exchange for new
         equipment                           -     1,524         -     2,261
    -------------------------------------------------------------------------
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                                     ---------          ----------

    (1) At July 31, 2009, cash and cash equivalents were composed of
        $9,032,000 in cash and $71,000 in cash equivalents ($5,052,000 in
        cash and $5,500,000 in cash equivalents as at July 31, 2008.)


    SEGMENTED INFORMATION

    The Corporation operates in the non-residential construction sector,
primarily in the United States and Canada. Its operations include the
connections design and engineering, fabrication and selective installation of
complex steel structures, heavy built-ups as well as miscellaneous and
architectural metal work.

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                                       Three (3) Months     Six (6) Months
                                     ---------          ----------
                                     ----------------------------------------
    Periods ended July 31,                2009      2008      2009      2008
                                     ----------------------------------------
                                             $         $         $         $
    Revenues
    - Canada                             3,752     2,181     7,693     3,054
    - United States                     14,996    21,813    27,807    46,099
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                                        18,748    23,994    35,500    49,153
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                                     ---------          ----------


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                                                                          At
                                                                At   January
                                                           July 31,  31 2009
                                                              2009  (Audited)
                                                         --------------------
    	                                                             $         $
    Property, Plant and Equipment
    - Canada                                                39,555    40,148
    - United States                                            196       212
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                                                            39,751    40,360
    -------------------------------------------------------------------------
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                                                         ---------
    

    During the first semester ended July 31, 2009, 76% of the Corporation's
revenues were recorded with four clients (67% with two clients during the same
period in 2008), each of which accounted for more than 10% of revenues.




For further information:

For further information: Jean Paschini, Chairman of the Board and Chief
Executive Officer, (450) 965-1911, 1-800-263-7560; Louis Potvin, Chief
Financial Officer, (450) 965-1911, 1-800-263-7560; www.adfgroup.com; Media:
Caroline Couillard, Morin Relations Publiques, (514) 289-8688, ext. 233;
Source: ADF Group Inc.


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