ADF Group announces its results of the third quarter ended October 31, 2009

    
    -------------------------------------------------------------------------
    Highlights:

    - Net profit margin of 10.7% of revenues for the first nine months ended
      October 31, 2009.
    - Earnings before interest, taxes, depreciation and amortization
      ("EBITDA") of 21% of revenues during the third quarter and for the
      nine-month period ended October 31, 2009.
    - Order backlog totalling $137 million as at October 31, 2009, compared
      with $115 million at the same date last year, representing a 19%
      increase.
    - Liquidities (consisting of cash, cash equivalents and short-term
      investments) of $16.8 million as at October 31, 2009, exceeding by
      $9.7 million its long-term debt including the current portion.
    - Appointment of Me Robert Paré to ADF Group's Board of Directors.
    -------------------------------------------------------------------------
    

TERREBONNE, QC, Dec. 10 /CNW Telbec/ - ADF GROUP INC. ("ADF" or the "Corporation") (TSX: DRX) closed its third quarter ended October 31, 2009 with revenues of $15.8 million, compared with $25.1 million during the same quarter last year. The revenue decrease is explained by the different contract execution and revenue mix, as well as by certain delays attributable to clients in the progress of certain major contracts. These delays should be recovered in the upcoming quarters, which should help grow ADF's revenues, due in part to the commencement, towards the end of the third quarter, of the $77 million contract awarded last July in North America. For the nine-month period ended October 31, 2009, revenues totalled $51.3 million, compared with $74.3 million for the same period of 2008.

Third-quarter EBITDA amounted to $3.3 million, accounting for 21% of revenues, compared with $5.8 million or 23% of revenues during the third quarter of the previous fiscal year. For the first nine months of the current fiscal year, EBITDA totalled $10.9 million or 21% of revenues, compared with $17.8 million or 24% of revenues last year. These variations are attributable to a decline in revenues and the different mix of revenues and costs recognized in connection with contracts underway during these periods.

ADF Group closed the third quarter with net earnings of $1.4 million or $0.04 per share (basic and diluted), compared with $6.5 million or $0.18 per share (basic and diluted) for the same quarter last year. However, it should be noted that last year's third-quarter results included a $3.9 million net foreign exchange gain, before taxes, compared with an immaterial foreign exchange gain this year, without which net earnings of the quarter ended October 31, 2008, would have amounted to approximately $3.7 million. For the first nine months ended October 31, 2009, net earnings totalled $5.5 million or $0.15 per share (basic and diluted) compared with $13.8 million or $0.38 basic per share and $0.37 diluted per share for the same period last year.

"At a time when we are witnessing an improvement in conditions in our principal markets, we are pleased to see that ADF Group weathered the worst of the economic recession while maintaining significant profitability, as reflected by a net profit margin of 10.7% of revenues for the first nine months", indicated Mr. Jean Paschini, Chairman of the Board and Chief Executive Officer.

As at October 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 $16.8 million - exceeding by $9.7 million its long-term debt including the current portion - and shareholders' equity of $86.8 million.

    
    Redemption of Subordinate Voting Shares in the Normal Course of Business
    ("NCIB")
    

During the third quarter ended October 31, 2009, the Corporation redeemed 896,800 subordinate voting shares for a net consideration of $2.2 million, representing an average price of $2.49 per share. As at October 31, 2009, since the implementation of the NCIB program, the Corporation has redeemed 1,515,100 subordinate voting shares for a net consideration of $3.7 million, representing an average price of $2.43 per share.

Outloook

"We look to the upcoming quarters with confidence. At as October 31, 2009, our order backlog totalled $137 million, with an 18-month execution schedule, compared with $115 million at the same date last year, representing a 19% increase. In addition, we have bid, or will bid, on projects worth a total of $250 million, including a first project in the nuclear power plants segment" added Mr. Jean Paschini.

He also said that ADF is progressing as scheduled in seeking the qualification to comply with the nuclear system requirements in effect in America by the end of current fiscal year. Moreover, during the fourth quarter, ADF will complete the $6 million investment program initiated last summer, in order to diversify the production methods at its industrial complex. ADF Group will thus be positioned even more solidly to take advantage of the next economic recovery.

Appointment To The Corporation's Board Of Directors

Mr. Paschini announced today the appointment of Me Robert Paré as a member of ADF Group's Board of Directors, effective December 9, 2009. Recognized as one of Canada's most eminent lawyers in business law, Me Paré is Senior Partner of the law firm Fasken Martineau DuMoulin. On behalf of ADF Group, Mr. Paschini welcomes him and thanks him in advance for his contribution to our Corporation's future development.

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.

    
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                       CONFERENCE CALL WITH INVESTORS:

                       TO DISCUSS ADF GROUP'S RESULTS
                 FOR THE THIRD QUARTER AND FIRST NINE MONTHS
                           ENDED OCTOBER 31, 2009

           Thursday, December 10, 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 Thursday, December 10, 2009 at noon until 23:59
           Thursday, December 17, 2009, by dialing 1-800-642-1687;
                            access code 44248228.

     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.
    -------------------------------------------------------------------------


    CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
    -------------------------------------------------------------------------
                                    Three (3) Months         Nine (9) Months
                                 --------                --------
                                 --------------------------------------------
    Periods ended October 31,       2009        2008        2009        2008
                                 --------------------------------------------
    (In thousands of $, except
     per-share amounts)                $           $           $           $

    Revenues                      15,769      25,104      51,269      74,257
    Cost of goods sold            11,837      17,809      37,367      52,904
    -------------------------------------------------------------------------
    Gross margin                   3,932       7,295      13,902      21,353
    Selling and administrative
     expenses                        656       1,519       2,965       3,596
    -------------------------------------------------------------------------
    Earnings before undernoted
     items:                        3,276       5,776      10,937      17,757
    Amortization
      Property, plant and
       equipment                     686         535       2,017       1,718
      Intangible assets               84          15         238          41
    -------------------------------------------------------------------------
                                     770         550       2,255       1,759
    Gain on foreign exchange        (120)     (3,944)     (1,446)     (4,585)
    -------------------------------------------------------------------------
                                     650      (3,394)        809      (2,826)
    -------------------------------------------------------------------------
    Earnings before financial
     charges and income taxes      2,626       9,170      10,128      20,583
    -------------------------------------------------------------------------
    Financial charges
      Interest on long-term
       debt                           43         130         153         369
      Interest income               (110)        (81)       (435)       (213)
      Other interest                  19          29          19         101
    -------------------------------------------------------------------------
                                     (48)         78        (263)        257
    -------------------------------------------------------------------------
    Earnings before income
     taxes                         2,674       9,092      10,391      20,326
    -------------------------------------------------------------------------
    Income taxes
      Current                        108           3         283         174
      Future                       1,186       2,571       4,643       6,350
    -------------------------------------------------------------------------
                                   1,294       2,574       4,926       6,524
    -------------------------------------------------------------------------
    Net earnings and
     comprehensive income          1,380       6,518       5,465      13,802
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic earnings per share        0.04        0.18        0.15        0.38
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Diluted earnings per share      0.04        0.18        0.15        0.37
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Average number of
     outstanding shares
     (in thousands)               35,322      36,171      35,498      36,141
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Average number of
     outstanding diluted
     shares (in thousands)        36,187      37,097      36,323      37,267
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------


    CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (DEFICIT)
    -------------------------------------------------------------------------
                                    Three (3) Months         Nine (9) Months
                                 --------                --------
                                 --------------------------------------------
    Periods ended October 31,       2009        2008        2009        2008
                                 --------------------------------------------
    (In thousands of $)                $           $           $           $

    Retained earnings (deficit),
     beginning of the period       5,857     (68,254)      1,772     (75,538)
    Net earnings                   1,380       6,518       5,465      13,802
    -------------------------------------------------------------------------
    Retained earnings (deficit),
     end of the period             7,237     (61,736)      7,237     (61,736)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                 --------                --------


    CONSOLIDATED STATEMENTS OF CONTRIBUTED SURPLUS
    -------------------------------------------------------------------------
                                    Three (3) Months         Nine (9) Months
                                 --------                --------
                                 --------------------------------------------
    Periods ended October 31,       2009        2008        2009        2008
                                 --------------------------------------------
    (In thousands of $)                $           $           $           $

    Contributed surplus,
     beginning of the period       2,653       2,059       2,175       1,965
    Stock-based compensation          89          62         216         173
    Exercise of options and
     warrants                         (5)          -         (29)        (17)
    Excess of the book value
     over the acquisition cost
     of redeemed subordinate
     voting shares                   415           -         790           -
    -------------------------------------------------------------------------
    Contributed surplus, end
     of the period                 3,152       2,121       3,152       2,121
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                 --------                --------


    CONSOLIDATED BALANCE SHEETS
                                                    ------------
    -------------------------------------------------------------------------
                                                             At           At
                                                     October 31,  January 31
                                                           2009         2009
                                                                    (Audited)
                                                    -------------------------
    (In thousands of $)                                       $            $

    ASSETS
    Current
      Cash and cash equivalents                           4,438       22,490
      Short-term Investments                             12,400        6,000
      Accounts receivable                                18,689       11,165
      Holdbacks on contracts                              3,294        3,462
      Work in progress                                    1,282          628
      Inventories                                         2,890        3,271
      Prepaid expenses                                      622          660
      Derivative financial instruments                    1,781            -
      Future income tax assets                            6,854        6,666
    -------------------------------------------------------------------------
                                                         52,250       54,342
      Holdbacks on long-term contracts                      348        1,129
      Property, plant and equipment                      40,125       40,360
      Intangible assets                                   2,727        2,402
      Other assets                                          241          185
      Future income tax assets                            7,113       13,444
      Investment tax credits                              2,505        2,505
    -------------------------------------------------------------------------
                                                        105,309      114,367
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    LIABILITIES
    Current
      Accounts payable                                    2,527        5,170
      Accrued charges                                     1,802        4,716
      Salaries and fringe benefits payable                2,070        3,762
      Deferred revenues                                   4,326        4,767
      Income taxes                                           89          226
      Derivative financial instruments                        -        1,058
      Current portion of long-term debt                   2,450        3,018
    -------------------------------------------------------------------------
                                                         13,264       22,717
    Long-term debt                                        4,726        6,827
    Future income tax liabilities                           492           47
    -------------------------------------------------------------------------
                                                         18,482       29,591
    -------------------------------------------------------------------------
    Shareholders' equity
      Retained earnings                                   7,237        1,772
      Accumulated other comprehensive income                144          144
    -------------------------------------------------------------------------
                                                          7,381        1,916
      Capital stock                                      76,294       80,685
      Contributed surplus                                 3,152        2,175
    -------------------------------------------------------------------------
                                                         86,827       84,776
    -------------------------------------------------------------------------
                                                        105,309      114,367
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                    ------------


    CONSOLIDATED STATEMENTS OF CASH FLOWS
    -------------------------------------------------------------------------
                                    Three (3) Months         Nine (9) Months
                                 --------                --------
                                 --------------------------------------------
    Periods ended October 31,       2009        2008        2009        2008
                                 --------------------------------------------
    (In thousands of $)                $           $           $           $

    OPERATING ACTIVITIES
      Net earnings                 1,380       6,518       5,465      13,802
      Adjustments for:
        Amortization of property,
         plant and equipment         686         535       2,017       1,718
        Amortization of
         intangible assets            84          15         238          41
        Loss (gain) on disposal
         of property, plant and
         equipment                     -           1           -        (974)
        Unrealized loss (gain)
         on derivative financial
         instruments                 689         970      (2,839)        970
        Non-cash exchange loss
         (gain)                        2      (1,725)      1,178      (1,792)
        Future income taxes        1,186       2,571       4,643       6,350
        Interest capitalized on
         interest-free long-term
         debt                          5           5          15          14
        Stock-based compensation      89          62         216         173
    -------------------------------------------------------------------------
      Net earnings adjusted        4,121       8,952      10,933      20,302
    -------------------------------------------------------------------------
    Changes in non-cash
     operating working capital
     items
        Accounts receivable       (2,499)     (2,733)     (7,524)     (7,701)
        Short-term and long-
         term holdbacks on
         contracts                   135        (849)        949      (1,942)
        Work in progress             127      (2,119)       (654)     (1,617)
        Inventories                  335        (357)        381        (655)
        Income taxes                 109          33        (137)         57
        Prepaid expenses             311         268          38        (377)
        Accounts payable,
         accrued charges,
         salaries and fringe
         benefits payable         (2,331)        223      (7,249)      4,649
        Deferred revenues         (1,321)       (326)       (441)      2,420
    -------------------------------------------------------------------------
                                  (5,134)     (5,860)    (14,637)     (5,166)
    -------------------------------------------------------------------------
    Cash flows from operating
     activities                   (1,013)      3,092      (3,704)     15,136
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    INVESTING ACTIVITIES
      Acquisition of property,
       plant and equipment        (1,060)       (830)     (1,782)     (8,306)
      Acquisition of
       intangible assets             (98)       (303)       (563)       (942)
      Investment purchase              -           -      (6,400)          -
      Decrease (increase) in
       other items                   (60)          7         (56)          6
    -------------------------------------------------------------------------
    Cash flows applied to
     investing activities         (1,218)     (1,126)     (8,801)     (9,242)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    FINANCING ACTIVITIES
      Redemption of shares        (2,234)          -      (3,687)          -
      Repayment of long-term
       debt                         (217)       (607)     (1,684)     (1,620)
      Issuance of subordinate
       voting shares                  10           2          57          49
    -------------------------------------------------------------------------
    Cash flows applied to
     financing activities         (2,441)       (605)     (5,314)     (1,571)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Impact of fluctuations
     in foreign exchange rate
     on cash                           7         245        (233)        149
    -------------------------------------------------------------------------
    Net cash (outflows)
     inflows                      (4,665)      1,606     (18,052)      4,472
    Cash and cash equivalents,
     beginning of the period       9,103      10,552      22,490       7,686
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of the period(1)          4,438      12,158       4,438      12,158
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Supplemental cash flow
     information
      Income taxes paid                2           -         206         162
      Interest paid (received)         6          58        (107)        262
      Non-cash financing and
       investing activities:
        Property, plant and
         equipment given in
         exchange for new
         equipment                     -           -           -       2,261
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                 --------                --------

    (1) At October 31, 2009, cash and cash equivalents were composed of
        $4,416,000 in cash and $22,000 in cash equivalents ($4,398,000 in
        cash and $7,760,000 in cash equivalents as at October 31, 2008.)
    

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 selective installation of complex steel structures, heavy built-ups as well as miscellaneous and architectural metal work.

    
    -------------------------------------------------------------------------
                                    Three (3) Months        Nine (9) Months
                                 --------                --------
                                 --------------------------------------------
    Periods ended October 31,       2009        2008        2009        2008
                                 --------------------------------------------
                                       $           $           $           $
    Revenues
    - Canada                       1,413       2,506       9,106       5,560
    - United States               14,356      22,598      42,163      68,697
    -------------------------------------------------------------------------
                                  15,769      25,104      51,269      74,257
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                  --------                --------


                                                    ------------
    -------------------------------------------------------------------------
                                                          As at        As at
                                                     October 31,  January 31,
                                                           2009         2009
                                                                    (Audited)
                                                    ------------------------
                                                              $            $
    Property, Plant and Equipment
    - Canada                                             39,945       40,148
    - United States                                         180          212
    -------------------------------------------------------------------------
                                                         40,125       40,360
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                    ------------
    

During the first nine months ended October 31, 2009, 72% of the Corporation's revenues were recorded with four clients (75% with three clients during the same period in 2008), each of which accounted for more than 10% of revenues.

SOURCE ADF Group Inc.

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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