ADS posts revenues of $19.5 million for its third quarter ended October 28, 2007



    
    This represents revenue growth of almost 40% compared to the same period
    last year

    Highlights
    ----------

    - Revenues of $19.5 million during the third quarter, an increase of
      $5.5 million, or growth of almost 40%;
    - The acquisition of Beckwith Bemis' assets generated additional sales
      of $2.6 million during the third quarter, and is expected to result in
      sales of $10 million on an annual basis;
    - Increase in revenues for overall platforms during the third quarter;
    - The Company's profitability was affected by the strength of the
      Canadian dollar;
    - The Company's profitability was also affected by successive increases
      in raw material costs;
    - Net earnings were $349,000 during the last quarter;
    - The Company is developing a new product portfolio of solutions for end
      users.
    

    SAINT-ELZEAR-DE-BEAUCE, QC, Dec. 5 /CNW Telbec/ - The board of directors
of ADS Inc. "ADS" (TSX : AAL.A) today announced the Company's financial
results for the third quarter ended October 28, 2007.
    The Company's sales volume for the three-month period ended October 28,
2007 was $19.5 million, for an increase of $5.5 million or 40% compared to
sales of $14.0 million for the third quarter of the preceding fiscal year. The
increase in third quarter revenues is notably attributable to the acquisition
of the Beckwith Bemis operations, sales from which totalled $2.6 million for
the period. In addition, the joint venture company Solmax-Texel Geosynthetics
Inc. and the Company's other platforms also posted sales volume increases.
After nine months, the Company's annual sales were $45.7 million, for an
increase of $6.9 million or almost 18% on revenues of $38.8 million for the
corresponding nine-month period of the preceding fiscal year. This increase is
also partly explained by the acquisition of Beckwith Bemis whose sales for the
period of June 18 to October 28, 2007 were $4.2 million. The Company also
performed well in the automobile, wipes and construction markets, notably
through obtaining a contract in Jamaica. It should be noted that the Company's
sales growth since the beginning of the current fiscal year occurred despite
the strength of the Canadian dollar. The strength of the dollar negatively
impacted the Company's sales by approximately $1.5 million during this period.
    During the third quarter, ADS recorded net earnings of $349,000, or
$0.02 per share on a diluted basis compared to $370,000 for the same period
last year or $0.02 per share. After nine months, the Company had recorded net
earnings of $718,000, or $0.04 per share, a decline of $216,000 compared to
net earnings of $934,000, or $0.04 per share for the same period of the
preceding fiscal year. This decline in net earnings for the first nine months
of the fiscal year is primarily attributable to a reduction of about $200,000
in the Company's tax expenses recorded in the second quarter last year,
following a decrease in federal tax rates.
    "Despite the strength of the Canadian dollar compared to the U.S. dollar,
the constant efforts of our sales team have enabled the Company to record
significant revenue growth over the past nine months, and this does not even
take into account the sales increase due to the acquisition of the Beckwith
Bemis operations. Nevertheless, our level of profitability has been affected
by the increase in our raw material costs. In order to preserve and grow our
profit margins, we are continuing to focus on the continual improvement of our
operational processes and our productivity, in addition to pursuing the
development of distinctive, value-added products," said Mr. Guy Drouin,
President and Chief Executive Officer of ADS.

    Development of new applications targeting end-users

    With this in view, ADS is pursuing its program to develop a new portfolio
of products aimed at the end users of its solutions. "This approach will
enable us to better control the distribution of our products and optimize our
profit margins. Presently, we are in the final stages of launching our own
cleansing and moisturizing wipe which will be marketed under the brand name
Hydra Bath(TM). We also have other products in development that would allow
ADS to break into promising new market segments," added Mr. Drouin.
    Hydra Bath(TM) is a system of eight wipes that can replace bathing and
allow a person to be cleaned much more effectively. The target markets cover
not only Quebec's health sector, but also the private sector and retailers.
Elderly individuals and their caregivers could also use the product. The
Canadian Army has also undertaken trials to qualify the system for its use
during missions. In the geosynthetics sector, ADS is also working on the
development and commercialization of high performance draining products. This
European patented technology will be eventually manufactured in Quebec. With
the same objective of getting closer to the end users of its products, the
Company is also working on the development of new agro-textile products.

    Forward-looking statement

    With the exception of historical information, this press release contains
forward-looking information and statements about the Company's
futureperformance. These statements are based on assumptions, uncertainties,
as well as on management's best evaluations possible in relation to future
events. These factors are subject to, but are not limited to, variations in
quarterly financial results, changes in demand for the company's products and
services, the impact of the competition on pricing and on the market in
general, in addition to setbacks that could affect economic conditions.
Readers are therefore cautioned that actual results could differ from forecast
results.

    ADS Inc., whose head office is based in Beauce, near Quebec City, is a
corporation active primarily in the manufacturing sector through subsidiaries
operating in the technical textiles field.

    
    Interim Consolidated Statement of Earnings and Comprehensive Income
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (unaudited)
    (in thousands of dollars,
     except per share amounts)

                              Three-Month Periods       Nine-Month Periods
                           October 28,  October 29,  October 28,  October 29,
                                 2007         2006         2007         2006
                                    $            $            $            $

    Revenues                   19,521       13,971       45,736       38,832
                           --------------------------------------------------
    Cost of sales and
     operating expenses
     before the following
     items                     17,472       12,359       40,825       34,613

    Research and
     development costs            318          207          771          607
    Depreciation of property,
     plant and equipment          909          747        2,490        2,200
    Amortization of
     intangible assets            160          105          408          309
                           --------------------------------------------------
                               18,859       13,418       44,494       37,729
                           --------------------------------------------------
    Operating income              662          553        1,242        1,103
                           --------------------------------------------------

    Financial expenses
     (revenues)
    Interest on
     long-term debt               124            7          186           19
    Interest and bank
     charges                       53           42          101          103
    Interest income               (46)         (55)        (147)        (164)
                           --------------------------------------------------
                                  131           (6)         140          (42)
                           --------------------------------------------------

    Earnings before
     income taxes                 531          559        1,102        1,145

    Income tax expense            169          180          358          180
                           --------------------------------------------------

    Net earnings from
     continuing operations        362          379          744          965

    Net loss from
     discontinued
     operations                   (13)          (9)         (26)         (31)
                           --------------------------------------------------

    Net earnings and
     comprehensive income
     for the period               349          370          718          934
                           --------------------------------------------------
                           --------------------------------------------------

    Basic and diluted
     net earnings per
     Class A share from
     continuing operations       0.02         0.02         0.04         0.05
                           --------------------------------------------------
                           --------------------------------------------------

    Basic and diluted
     net earnings per
     Class A share               0.02         0.02         0.04         0.04
                           --------------------------------------------------
                           --------------------------------------------------


    Interim Consolidated Statement of Retained Earnings
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (unaudited)
    (in thousands of dollars)
                                                        Nine-Month Periods
                                                    October 28,   October 29,
                                                          2007          2006
                                                             $             $

    Balance - Beginning of period                       10,862        12,991
    After-tax adjustment related to the
     implementation of the new standard on
     financial instruments                                  25             -
    Net earnings for the period                            718           934
                                                    -------------------------
                                                        11,605        13,925

    Dividends on Class A shares                           (954)         (954)
                                                    -------------------------

    Balance - End of period                             10,651        12,971
                                                    -------------------------
                                                    -------------------------


    Interim Consolidated Balance Sheet
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (unaudited)
    (in thousands of dollars)

                                                         As at         As at
                                                    October 28,   January 28,
                                                          2007          2007
                                                             $             $

    ASSETS

    Current assets  Cash                                     -             2
    Short-term investment                                    -         1,506
    Accounts receivable                                 12,073         6,136
    Inventory                                            7,351         5,671
    Income taxes recoverable                               535           175
    Prepaid expenses                                       343           431
    Future income tax assets                                23            23
    Unrealized foreign exchange gain on forward
     exchange contracts                                    262             -
    Current portion of balances of sales price
     receivable                                            809           924
    Current assets of discontinued operations              347           278
                                                    -------------------------
                                                        21,743        15,146

    Research and development tax credits recoverable       314           182
    Long-term assets of discontinued operations              8             8
    Balances of sales price receivable                   1,685         2,399
    Property, plant and equipment                       27,042        22,148
    Intangible assets                                    3,034         1,975
    Future income tax assets                                86            86
    Goodwill                                                75            75
                                                    -------------------------
                                                        53,987        42,019
                                                    -------------------------
                                                    -------------------------

    LIABILITIES

    Current liabilities
    Excess of outstanding cheques over bank balance      1,197             -
    Bank loans                                           1,495            30
    Accounts payable and accrued liabilities             7,860         4,811
    Future income tax liabilities                           15            15
    Current portion of long-term debt                      323           159
    Current liabilities of discontinued operations          71           318
                                                    -------------------------
                                                        10,961         5,333

    Long-term debt                                       6,481           230
    Future income tax liabilities                        2,650         2,394
                                                    -------------------------
                                                        20,092         7,957
                                                    -------------------------
    SHAREHOLDERS' EQUITY

    Capital stock                                       22,722        22,722
    Contributed surplus                                    522           478
    Retained earnings                                   10,651        10,862
                                                    -------------------------
                                                        33,895        34,062
                                                    -------------------------
                                                        53,987        42,019
                                                    -------------------------
                                                    -------------------------
    




For further information:

For further information: Mr. Paul Drouin, Chairman of the board; Mr. Guy
Drouin, President and Chief Executive Officer, (418) 387-3383; Source: ADS
Inc.

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