ADF Group Announces Results in Line With Its Expectations For its First Quarter of Fiscal 2010



    
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    Highlights of the Quarter Ended April 30, 2009:

    - Gross margin of 32% of revenues (compared with 28% last year), EBITDA
      margin of 24.4% (compared with 23.5%) and net earnings of 13% of
      revenues (13% last year);
    - Revenues of $16.8 million compared with $25.2 million last year;
    - Net earnings of $2.2 million or $0.06 per share (basic and diluted),
      compared with $3.2 million or $0.09 per share (basic and diluted) the
      year before;
    - Available liquidities (comprised of cash, cash equivalents and short-
      term investments) of $22.8 million as at April 30, 2009, exceeding by
      almost $14 million its long-term debt including the current portion;
    - Order backlog totalling $90 million as at April 30,2009, excluding the
      new contract now totalling $22 million awarded during the second
      quarter.
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    TERREBONNE, QC, June 9 /CNW Telbec/ - For the three-month period ended
April 30, 2009, despite a decrease in its revenues, ADF GROUP INC. ("ADF" or
the "Corporation") (TSX: DRX) noticeably increased its gross margin and
earnings before interest, taxes, depreciation and amortization (EBITDA) as a
percentage of revenues. Gross margin and EBITDA respectively reached $5.4
million or 32% of revenues, and $4.1 million or 24.4% of revenues, compared
with $7.1 million or 28% of revenues, and $5.9 million or 23.5% of revenues
respectively for the same period last year.
    As expected, this improvement in the gross margins reflects notably the
greater proportion in the revenue mix for the first quarter of 2010 of
contracts consisting exclusively of in-plant labour hours - ADF's main area of
expertise and source of added value - whereas revenues for the same quarter
last year included a relatively larger proportion of contracts which also
included the supply of steel, connection design and engineering and
installation services. However, as expected, the same factor together with the
general economic context contributed to lower quarterly revenues, which
amounted to $16.8 million compared with $25.2 million during the same quarter
last year.
    For their part, despite a higher effective income tax rate, which
increased from 37.2% to 43.8% between the comparative periods, net earnings as
a percentage of revenues reached a significant 13%, compared with 13% for the
same quarter of the previous year. ADF closed the quarter with net earnings of
$2.2 million or $0.06 per share (basic and diluted), compared with $3.2
million or $0.09 per share (basic and diluted) for the first quarter last
year, taking into account the decrease in revenues, increase in amortization
expense and an higher effective income tax rate. As at April 30, 2009, ADF
Group continued to benefit from a solid financial position, marked, notably,
by cash, cash equivalents and short-term investments of $22.8 million -
exceeding by almost $14 million its long-term debt including the current
portion - and shareholders' equity of $86.7 million.
    In May 2009, ADF Group was awarded a major contract now totalling $22
million, which includes the fabrication, the supply of steel and the delivery
of the steel structure of a significant portion of an office tower to be built
in the Northeastern United States. This new large-scale contract adds to the
Corporation's order backlog which stood at $90 million as at April 30, 2009,
and which consisted of 82% of fabrication hours, compared with $148 million on
the same date a year earlier. Taking into account the latest $22 million
contract, the order backlog in hand will be progressively executed over a
period of 14 months.

    Shares Redemption

    Since the implementation of the normal course issuer bid program on April
14, 2009, the Corporation has redeemed 289,300 subordinate voting shares for a
net consideration of $0.7 million, representing an average price of $2.24 per
share.

    Outlook

    In May 2009, ADF Group has taken steps to comply with the nuclear system
requirements in effect in America in order to be able to participate in the
fabrication of steel structures for nuclear power plants in North America and
abroad. The Corporation is confident it will achieve the sought qualification
by the end of 2009. Access to this new market represents promising potential
for ADF given, among others, the number of nuclear power plants in operation
in North America, which will likely be the focus of major upgrading work over
the coming years to extend their useful life cycle.
    "We look to the future with confidence and we keep firmly focused on our
long-term sustainable value-creating strategy, based on our selective
positioning in market niches highly specialized and less subject to the cyclic
fluctuations, focus on value-added fabrication activities, targeted and
sustained investments in the modernity and the capacity of our
infrastructures, and the quality of our personnel; and disciplined management
of our activities, resources and capital structure", adds Mr. Jean Paschini,
Chairman of the Board and Chief Executive Officer.

    Annual General Meeting of Shareholders

    The Annual General Meeting of Shareholders of ADF Group Inc. will be held
on Tuesday, June 9, 2009, at 11:00 am at the Omni Mont-Royal Hotel in
Montreal.

    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 THREE-MONTH PERIOD ENDED APRIL 30, 2009

              Tuesday, June 9, 2009 at 10:00 am (Montreal time)

     To participate in the conference call, please dial 1-800-732-9303.
     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
    Tuesday, June 9, 2009 at noon until 11:59 p.m. Tuesday, June 16, 2009,
       by dialing 1-877-289-8525; access code 21307311 #.

            The conference call will be simultaneously webcast at
                  www.adfgroup.comand archived for 90 days.

               Members of the media are invited to listen in.
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    Consolidated Statements of Earnings and Comprehensive Income

                                                  -------------
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    Periods ended April 30,                        Three-Month   Three-Month
    (In thousands of $,                                   2009          2008
    except per-share amounts)                     ---------------------------
                                                             $             $

    Revenues                                            16,752        25,159
    Cost of goods sold                                  11,368        18,044
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    Gross margin                                         5,384         7,115
    Selling and administrative expenses                  1,304         1,215
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    Earnings before undernoted items:                    4,080         5,900
    Amortization
      Property, plant and equipment                        664           583
      Intangible assets                                     73            13
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                                                           737           596
    Gain (Loss) on foreign exchange                       (561)           60
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                                                           176           656
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    Earnings before financial charges and income taxes   3,904         5,244
    -------------------------------------------------------------------------
    Financial charges
      Interest on long-term debt                            60           126
      Interest income                                     (159)          (85)
      Other interest                                        18            54
    -------------------------------------------------------------------------
                                                           (81)           95
    -------------------------------------------------------------------------
    Earnings before income taxes                         3,985         5,149
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    Income taxes
      Current                                              168           168
      Future                                             1,577         1,747
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                                                         1,745         1,915
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    Net earnings and comprehensive income                2,240         3,234
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    Basic earnings per share                              0.06          0.09
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    Diluted earnings per share                            0.06          0.09
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    Average number of outstanding shares
     (in thousands)                                     36,196        36,106
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    Average number of outstanding diluted shares
     (in thousands)                                     36,890        37,309
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                                                  -------------


    Consolidated Statements of Retained Earnings (Deficit)

                                                  -------------
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    Periods ended April 30,                        Three-Month   Three-Month
    (In thousands of $)                                   2009          2008
                                                  ---------------------------
                                                             $             $
    Retained earnings (deficit),
     beginning of the period                             1,772       (75,274)
    Net earnings                                         2,240         3,234
    -------------------------------------------------------------------------
    Retained earnings (deficit),
     end of the period                                   4,012       (72,040)
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                                                  -------------


    Consolidated Statements of Contributed Surplus

                                                  -------------
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    Periods ended April 30,                        Three-Month   Three-Month
    (In thousands of $)                                   2009          2008
                                                  ---------------------------
                                                             $             $
    Contributed surplus, beginning of the period         2,175         1,965
    Stock-based compensation                                61            49
    Exercise of options and warrants                        (7)            -
    Excess of the book value over the acquisition
     cost of redeemed subordinate voting shares            144             -
    -------------------------------------------------------------------------
    Contributed surplus, end of the period               2,373         2,014
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                                                  -------------


    Consolidated Balance Sheets
                                                  -------------
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                                                            At            At
                                                      April 30,   January 31,
                                                          2009          2009
                                                                    (Audited)
                                                 ----------------------------
    (In thousands of $)                                      $             $

    ASSETS
    Current
      Cash and cash equivalents                         17,352        22,490
      Short-term Investments                             5,400         6,000
      Accounts receivable                               16,489        11,165
      Holdbacks on contracts                             2,481         3,462
      Work in progress                                   1,570           628
      Inventories                                        3,248         3,271
      Prepaid expenses                                     320           660
      Derivative financial instruments                     125             -
      Future income tax assets                           6,413         6,666
    -------------------------------------------------------------------------
                                                        53,398        54,342
    Holdbacks on long-term contracts                     1,477         1,129
    Property, plant and equipment                       40,086        40,360
    Intangible assets                                    2,667         2,402
    Other assets                                           185           185
    Future income tax assets                            11,717        13,444
    Investment tax credits                               2,505         2,505
    -------------------------------------------------------------------------
                                                       112,035       114,367
    -------------------------------------------------------------------------
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    LIABILITIES
    Current
      Accounts payable                                   3,503         5,170
      Accrued charges                                    3,339         4,716
      Salaries and fringe benefits payable               3,396         3,762
      Deferred revenues                                  5,928         4,767
      Income taxes                                         193           226
      Derivative financial instruments                       -         1,058
      Current portion of long-term debt                  2,935         3,018
    -------------------------------------------------------------------------
                                                        19,294        22,717
    Long-term debt                                       5,933         6,827
    Future income tax liabilities                           80            47
    -------------------------------------------------------------------------
                                                        25,307        29,591
    -------------------------------------------------------------------------

    Shareholders' equity
      Retained earnings                                  4,012         1,772
      Accumulated other comprehensive income               144           144
    -------------------------------------------------------------------------
                                                         4,156         1,916
    Capital stock                                       80,199        80,685
    Contributed surplus                                  2,373         2,175
    -------------------------------------------------------------------------
                                                        86,728        84,776
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                                                       112,035       114,367
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                                                  -------------


    Consolidated Statements of Cash Flows
                                                  -------------
    -------------------------------------------------------------------------
    Periods ended April 30,                        Three-Month   Three-Month
    (In thousands of $)                                   2009          2008
                                                  ---------------------------
                                                             $             $
    OPERATING ACTIVITIES
      Net earnings                                       2,240         3,234
      Adjustments for:
        Amortization of property, plant and
         equipment                                         664           583
        Amortization of intangible assets                   73            13
        Gain on disposal of property, plant and
         equipment                                           -          (211)
        Unrealized gain on derivative financial
         instruments                                    (1,183)            -
        Non-cash exchange loss (gain)                      292           (30)
        Future income taxes                              1,577         1,747
        Interest capitalized on interest-free
         long-term debt                                      5             5
        Stock-based compensation                            61            49
    -------------------------------------------------------------------------
      Net earnings adjusted                              3,729         5,390
    -------------------------------------------------------------------------
    Changes in non-cash operating working
     capital items
      Accounts receivable                               (5,324)       (5,224)
      Short-term and long-term holdbacks
       on contracts                                        633          (446)
      Work in progress                                    (942)          794
      Inventories                                           23           (69)
      Income taxes                                         (33)          (40)
      Prepaid expenses                                     340           (63)
      Accounts payable, accrued charges,
       salaries and fringe benefits payable             (3,410)        1,998
      Deferred revenues                                  1,161           560
    -------------------------------------------------------------------------
                                                        (7,552)       (2,490)
    -------------------------------------------------------------------------
    Cash flows from operating activities                (3,823)        2,900
    -------------------------------------------------------------------------
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    INVESTING ACTIVITIES
      Disposal of short-term investments                   600             -
      Acquisition of property, plant and equipment        (390)       (2,000)
      Acquisition of intangible assets                    (338)         (267)
    -------------------------------------------------------------------------
    Cash flows applied to investing activities            (128)       (2,267)
    -------------------------------------------------------------------------
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    FINANCING ACTIVITIES
      Repayment of long-term debt                         (764)         (407)
      Redemption of shares                                (366)            -
      Issuance of subordinate voting shares                 17             9
    -------------------------------------------------------------------------
    Cash flows applied to financing activities          (1,113)         (398)
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    Impact of fluctuations in foreign exchange
     rate on cash                                          (74)            3
    -------------------------------------------------------------------------
    Net cash (outflows) inflows                         (5,138)          238
    Cash and cash equivalents,
     beginning of the period                            22,490         7,686
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of the period                                  17,352         7,924
    -------------------------------------------------------------------------
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    Supplemental cash flow information
      Income taxes paid                                    204           162
      (Received) interest paid                             (18)           58
      Non-cash financing and investing activities:
        Property, plant and equipment given in
         exchange for new equipment                          -           737
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    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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                                   Revenues                    Property,
                          Three-month periods ended              Plant
                                   April 30,                 and Equipment
                       ------------------------------------------------------
                                                             At           At
                               2009          2008      April 30,  January 31,
                                                           2009         2009
                                                                    (audited)
                       ------------------------------------------------------
                                  $             $             $            $

    Canada                    3,941           873        39,890       40,148
    United States            12,811        24,286           196          212
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                             16,752        25,159        40,086       40,360
    -------------------------------------------------------------------------
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                            --------                    --------
    

    During the three-month periods ended April 30, 2009, 93% of the
Corporation's revenues were recorded with five clients (77% with three clients
during the three-month periods ended April 30, 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; 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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