ADS Posts Revenues of $48.9 million for its fiscal year ended January 28, 2007



    SAINT-ELZEAR-DE-BEAUCE, QC April 11 /CNW Telbec/ -

    
    Highlights
    ----------

    - Revenues of $10.1 million during the fourth quarter - Revenues
      equivalent to those recorded during the same period one year earlier;
    - Revenues were affected by competition in the geosynthetics membrane
      installation market, as well as by the weakness of the disposable wipes
      and footwear sectors;
    - Improvement of profit margins and operational performance;
    - $2.5 million goodwill impairment during the fourth quarter;
    - $350,000 gain from performance premiums set out in sales agreements for
      composite materials sector plants.

    The Board of Directors of ADS Inc. "ADS" (TSX: AAL.A) today announced the
Company's financial results for its fourth quarter ended January 28, 2007.
    The Company's sales volume for the three-month period ended January 28,
2007 was $10.1 million, which is almost the same level as for the
corresponding quarter one year earlier. This reflects the enterprise's
turnaround at the end of the fiscal year, after three difficult preceding
quarters. For the fiscal year as a whole, ADS' sales volume was $48.9 million,
compared to $57.2 million for the preceding year. The decrease in revenues for
the fiscal year is particularly attributable to a more competitive market for
the installation of geomembranes and the lack of international opportunity for
distribution of geosynthetic products. These two elements affected ADS'
revenues by $4.7 million. Meanwhile, the disposable wipes market got off to a
difficult start this fiscal year and revenues were $2.8 million lower than
last year. In addition, the footwear industry's migration to Asia also
negatively impacted the Company's sales by more than $800,000 over the past
year.
    During the twelve-month period ended January 28, 2007, the Company's
operating profit was $806,000, compared to $2.0 million for the same period of
the preceding quarter. This is despite a more than 14% drop in the
enterprise's revenues. During the last quarter, however, ADS recorded an
operating loss of $297,000, compared to an operating loss of $958,000 during
the same period of the preceding fiscal year. Although the final quarter of
the last fiscal year showed a loss, during this period ADS posted a notable
improvement in its performance when it is considered that equivalent revenues
were earned compared to revenues for the same quarter of the preceding year.
This major improvement in the Company's direct profit margin (profit margin
before fixed manufacturing costs) could not offset the negative effects of the
significant seasonality of certain business activities, a factor that
traditionally makes it difficult to attain positive results in the fourth
quarter.
    Over the last quarter, ADS recorded a loss from continuing activities of
$2.7 million, or $0.14 per share, compared to a loss of $817,000 or $0.05 per
share. The loss for the quarter ended January 28, 2007, is mainly attributable
to the $2.5 million goodwill impairment. This impairment aims to recognize
that there is a persistent gap between the book value of the Company's shares
and their stockmarket price. This goodwill impairment will result in no
disbursement for ADS and will in no way affect the financial strength of the
enterprise. For the last fiscal year, the Company recorded a net loss from
continuing activities of $1.7 million, compared to net earnings of
$2.0 million for the same period of the preceding fiscal year. This difference
is explained by decreasing sales and the goodwill impairment. In addition,
last year the Company received a non-recurring compensation payment of $1.2
million from a client.
    For its activities as a whole, during the twelve-month period ended
January 28, 2007, the Company recorded a net loss of $1.2 million compared to
a net profit of $2.2 million, or a net loss per share of $0.06, compared to a
net profit of $0.11 per share for the preceding fiscal year. By excluding
special and non-recurring items (goodwill impairment , indemnity received by a
client, tax rate changes) which affected the last two quarters, the Company's
net profit for its continuing activities would have been $650,000 in 2007,
compared to $1.4 million in 2006. The net earnings for all activities would
have been about $1.2 million in 2007 compared to $1.6 million for the
preceding fiscal year. The improvement in results for discontinued operations
is the result of cost adjustments made by the Commission de la santé et de la
sécurité du travail while performance premiums of $350,000 set out in the
sales contracts of the composite materials sector plants are included in the
results for the two last fiscal years.
    "ADS has faced major challenges over the last year, following changes in
market conditions that impacted some of its products. To adjust to these new
realities, we took vigorous measures to relaunch our sales and improve our
operational efficiency. These efforts were rewarded when the enterprise posted
a revenue turnaround during the last quarter and succeeded to significantly
lower its operating costs over the last year. Furthermore, we are still very
actively looking for potential acquisitions, which could allow the enterprise
to acquire new technologies, expand its product line and gain access to new
commercial opportunities. Even if our search has not yet resulted in an
acquisition, these efforts have permitted us to increase our knowledge of the
market and our competitors. Also, we are confident that we will have concrete
results from this work in the near future," said Mr. Guy Drouin, President and
Chief Executive Officer of ADS.
    Moreover, the Company announced that on May 10, 2007 it will pay a defined
dividend of $0.05 per category A share to shareholders of record as at April
25, 2007.

    Forward-looking statement

    With the exception of historical information, this press release contains
forward-looking information and statements about the Company's future
performance. 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.


    Consolidated Statement of Earnings
    -------------------------------------------------------------------------
    (in thousands of dollars, except per share amounts)

                                   Three-Month Periods  Twelve-Month Periods
                                    January    January    January    January
                                         28,        29,        28,        29,
                                       2007       2006       2007       2006
                                          $          $          $          $

    Revenues                         10,113     10,310     48,945     57,229
                                    -----------------------------------------
    Cost of sales and operating
     expenses before the
     following items                  9,359      9,969     43,972     50,828

    Research and development costs      195        349        802      1,022
    Depreciation of property,
     plant and equipment                751        848      2,951      3,171
    Amortization of intangible
     assets                             105        102        414        186
                                    -----------------------------------------

                                     10,410     11,268     48,139     55,207
                                    -----------------------------------------

    Operating income (loss)            (297)      (958)       806      2,022

    Writeoff of goodwill             (2,498)         -     (2,498)         -
    Compensation received
     from a customer                      -          -          -      1,210
                                    -----------------------------------------

    Earnings (loss) before
     the following items             (2,795)      (958)    (1,692)     3,232
                                    -----------------------------------------

    Financial expenses (revenues)
    Interest on long-term debt            7         46         26        117
    Interest and bank charges            24         19        127         91
    Interest income                     (53)       (95)      (217)      (262)
                                    -----------------------------------------

                                        (22)       (30)       (64)       (54)
                                    -----------------------------------------

    Earnings (loss) before
     income taxes                    (2,773)      (928)    (1,628)     3,286

    Income taxes                       (117)      (111)        63      1,298
                                    -----------------------------------------

    Net earnings (loss) from
     continuing operations           (2,656)      (817)    (1,691)     1,988

    Net earnings from
     discontinued operations            547        285        516        190
                                    -----------------------------------------

    Net earnings (loss)
     for the period                  (2,109)      (532)    (1,175)     2,178
                                    -----------------------------------------
                                    -----------------------------------------

    Basic and diluted net earnings
     (loss) per Class A share
     from continuing operations       (0.14)     (0.05)     (0.09)      0.10
                                    -----------------------------------------
                                    -----------------------------------------
    Basic and diluted net earnings
     (loss) per Class A share         (0.10)     (0.03)     (0.06)      0.11
                                    -----------------------------------------
                                    -----------------------------------------

    Weighted average number
     of shares outstanding
     (in thousands)                  19,076     19,076     19 076     19,001
                                    -----------------------------------------
                                    -----------------------------------------


    Consolidated Statement of Retained Earnings
    -------------------------------------------------------------------------
    (in thousands of dollars)
                                                        Twelve-month Periods
                                                          January    January
                                                               28,        29,
                                                             2007       2006
                                                                $          $

    Balance - Beginning of period                          12,991     25,120

    Net earnings (loss) for the period                     (1,175)     2,178
                                                        ---------------------

                                                           11,816     27,298

    Dividends on Class A shares                              (954)   (14,307)
                                                        ---------------------

    Balance - End of period                                10,862     12,991
                                                        ---------------------
                                                        ---------------------


    Consolidated Balance Sheets
    -------------------------------------------------------------------------
    (in thousands of dollars)

                                                            As at      As at
                                                          January    January
                                                               28,        29,
                                                             2007       2006
                                                                $          $

    ASSETS

    Current assets
    Cash                                                        2          -
    Short-term investment                                   1,506          -
    Accounts receivable                                     6,136      6,868
    Inventory                                               5,671      5,836
    Income taxes recoverable                                  175          -
    Prepaid expenses                                          431        434
    Future income tax assets                                   23          -
    Current portion of balances of sales price
     receivable                                               924        962
    Current assets of discontinued operations                 278        206
                                                        ---------------------

                                                           15,146     14,306

    Research and development tax credit recoverable           182          -
    Long-term assets of discontinued operations                 8        449
    Balances of sales price receivable                      2,399      3,018
    Property, plant and equipment                          22,148     23,476
    Intangible assets                                       1,975      2,299
    Future income tax assets                                   86         92
    Goodwill                                                   75      2,573
                                                       ----------------------

                                                           42,019     46,213
                                                       ----------------------
                                                       ----------------------

    LIABILITIES

    Current liabilities
    Excess of outstanding cheques over bank balance             -        221
    Bank loans                                                 30        390
    Accounts payable and accrued liabilities                4,811      5,129
    Future income tax liabilities                              15        105
    Current portion of long-term debt                         159        159
    Current liabilities of discontinued operations            318        949
                                                       ----------------------

                                                            5,333      6,953

    Long-term debt                                            230        389
    Future income tax liabilities                           2,394      2,699
                                                       ----------------------

                                                            7,957     10,041
                                                       ----------------------
    SHAREHOLDERS' EQUITY

    Capital stock                                          22,722     22,722

    Contributed surplus                                       478        459

    Retained earnings                                      10,862     12,991
                                                       ----------------------

                                                           34,062     36,172
                                                       ----------------------

                                                           42,019     46,213
                                                       ----------------------
                                                       ----------------------
    




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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