Canam Group Announces Its Second Quarter Results

SAINT-GEORGES, QC, Aug. 4, 2016 /CNW Telbec/ - Canam Group Inc. (TSX: CAM) ("Canam Group" or the "Corporation") today published its financial results for the three-month and six-month periods ended July 2, 2016.

 

Periods ended July 2, 2016 and June 27, 2015

Three months

(in millions of $, except per share amounts)


2016





2015



Revenues

$

434.3




$

371.8



Selling and administrative expenses

$

30.7

7.1

%


$

26.0

7.0

%

Adjusted EBITDA1

$

(35.3)

(8.1)

%


$

26.8

7.2

%

Net income (net loss)2

$

(28.4)

(6.5)

%


$

10.0

2.7

%

Net earnings (net loss) per share2 (basic and diluted)

$

(0.61)




$

0.24














Six months

(in millions of $, except per share amounts)


2016





2015



Revenues

$

885.0




$

680.9



Selling and administrative expenses

$

61.6

7.0

%


$

50.2

7.4

%

Adjusted EBITDA1

$

(13.5)

(1.5)

%


$

44.5

6.5

%

Net income (net loss)2

$

(20.1)

(2.3)

%


$

14.4

2.1

%

Net earnings (net loss) per share2 (basic and diluted)

$

(0.43)




$

0.34



1 Refer to the section entitled "Non-IFRS measures."

2 Represents net income (net loss) attributable to shareholders.

 

Results for the second quarter and the first six months of 2016

Consolidated revenues for the second quarter of 2016 totaled $434.3M, which represents a $62.5M increase compared to revenues of $371.8M for the same quarter in 2015. Consolidated revenues in the first six months of 2016 reached $885M, a $204.1M increase compared to revenues of $680.9M for the same period in 2015. These increases are attributable to structural steel and bridge operations, as well as the appreciation of the US dollar compared to the Canadian dollar.

Selling and administrative expenses totaled $30.7M for the second quarter of 2016 compared to $26M in 2015. In the first six months of 2016, selling and administrative expenses represented $61.6M compared to $50.2M for the same period in 2015. These increases are attributable in large part to the payroll increase associated with the growth in revenues, and the US dollar's rise against the Canadian dollar.

In the second quarter of 2016, the Adjusted EBITDA was a negative $35.3M compared to $26.8M for the same quarter in 2015. After the first six months of 2016, the Adjusted EBITDA was negative $13.5M compared to $44.5M for the same period in 2015. This decrease in the Adjusted EBITDA in 2016 is mainly attributable to the recording of an after-tax allowance of $32M for a project, as announced on July 14, 2016.

In the second quarter of 2016, the net loss attributable to shareholders totaled $28.4M, or $0.61 per share, compared to a net income of $10M, or $0.24 per share, for the second quarter of 2015. After the first six months of 2016, the net loss attributable to shareholders stood at $20.1M, or $0.43 per share, compared to a net income of $14.4M, or $0.34 per share, for the corresponding period in 2015.

Order backlog

The order backlog stood at $1,248M as at July 2, 2016, compared to $1,058M as at June 27, 2015.

Dividend

The Board of Directors approved a dividend of $0.04 per share payable on September 30, 2016, to shareholders of record on September 16, 2016.

Realignment of operations

"While the performance of the building, FabSouth and the bridge operations gives us confidence for the future, the disappointing performance of the heavy structural division is forcing us to reconsider our strategy for that market," explained Marc Dutil, Canam Group's President and CEO. "While we are very proud of having the manufacturing and technical expertise for complex projects, our financial results should inevitably justify the substantial human, physical and financial resources that the Corporation invests in it." Noting that, at the end of the second quarter of 2016, the order backlog in the heavy structural division represented only 12.4% of the total backlog, Mr. Dutil said that "an action plan is in place, first to restructure these operations and, second, in looking to the future, to ascertain the continued participation of the Corporation in this type of large complex projects."

New term loan

On July 28, 2016, the Corporation has set up a twenty-year term loan with Business Development Bank of Canada (BDC) for an amount of $50M. The Corporation's buildings located in Quebec have been pledged as collateral. The loan should be disbursed in September.

About Canam Group Inc.

Canam Group specializes in designing integrated solutions and fabricating customized products for the North American construction industry. Each year, Canam Group takes part in an average of 10,000 buildingstructural steel and bridge projects, which can also include the supply of preconstruction and project management services. The Corporation operates 23 plants across North America and employs over 4,300 people in Canada, the United States, Romania and India. 

Conference call, webcast and presentation

Canam Group will hold a conference call with financial analysts and media representatives on Thursday, August 4, at 9 a.m. EDT. The call can be accessed via webcast at canamgroupinc.com and newswire.ca.

Please note that the conference call will be accompanied by a complementary presentation in PDF format that can be downloaded from the Corporation's website at canamgroupinc.com

Non-IFRS measures

Earnings before interest, tax, depreciation and amortization (Adjusted EBITDA) and net debt are not defined by International Financial Reporting Standards (IFRS) and cannot be formally presented in the consolidated financial statements. Even though Adjusted EBITDA and net debt are non-IFRS measures, they are used by managers, analysts, investors and other financial stakeholders to assess the Corporation's operating performance and management from a financial and operational standpoint. Refer to the section entitled "Non-IFRS measures" of the Corporation's 2015 Annual Report for the definition of this indicator.

Caution regarding forward-looking statements

This press release may contain forward-looking statements, which include, but are not limited to, statements with respect to the Corporation's growth strategy, costs, financial position and financial results, economic and business outlook, prospects and trends of the Corporation's industry segment, expected growth in demand for products and services, the dates of expected or scheduled deliveries, orders and project execution in general, objectives, projects, targets, priorities, business strategy, and the expected impact of legislative and regulatory environment and legal proceedings. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "anticipate", "plan", "foresee", "believe", "continue" or "maintain", the negative of these terms, variations of them or similar terminology. By their nature, forward-looking statements require the Corporation to make assumptions and are subject to important known and unknown risks and uncertainties, which may cause actual results in future periods to differ materially from forecasted results. While the Corporation considers its assumptions to be reasonable and appropriate based on information currently available, there is a risk that they may not be accurate. Readers should not place undue reliance on forward-looking statements. Factors that could cause actual results to differ materially from those anticipated in the forward-looking statements include in particular the risks and uncertainties described in the Corporation's 2015 Annual Report in the section entitled "Risks and Uncertainties". The forward-looking statements contained herein are made as of the date hereof and are subject to change thereafter, and the Corporation has no intention and undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities regulations.

 



CONDENSED INTERIM CONSOLIDATED
STATEMENTS OF INCOME (LOSS)










Periods ended July 2, 2016 and June 27, 2015





(in thousands of Canadian dollars, except per share amounts)


Three months


Six months

(unaudited)


2016


2015


2016


2015

Revenues

$

434,259

$

371,815

$

884,995

$

680,917

Cost of sales, excluding depreciation and amortization(1)


437,741


315,835


834,053


582,925

Selling and administrative expenses


30,685


26,004


61,629


50,187

Profit sharing program


1,195


2,595


2,429


3,084

Depreciation of property, plant and equipment


7,144


6,236


14,119


12,454

Amortization of intangible assets


918


675


1,845


1,365

Other net losses


172


596


379


332

Finance costs


2,705


3,865


5,202


7,786

Finance revenue


(256)


(169)


(407)


(355)

Share of loss of a joint venture and associates


709


601


1,020


742

Earnings (loss) before income tax


(46,754)


15,577


(35,274)


22,397

Tax expense (income)










Current


1,846


2,465


6,847


4,253


Deferred


(20,035)


3,133


(21,932)


3,727



(18,189)


5,598


(15,085)


7,980

Net income (loss)

$

(28,565)

$

9,979

$

(20,189)

$

14,417










Net income (loss) attributable to:










Shareholders

$

(28,382)

$

10,036

$

(20,054)

$

14,433


Non-controlling interests


(183)


(57)


(135)


(16)


$

(28,565)

$

9,979

$

(20,189)

$

14,417










Net earnings (loss) per share attributable to shareholders










Basic

$

(0.61)

$

0.24

$

(0.43)

$

0.34


Diluted

$

(0.61)

$

0.24

$

(0.43)

$

0.34










Weighted average number of common shares (in thousands of shares)










Basic


46,826


42,013


47,134


41,998


Diluted


46,826


42,055


47,134


42,040

Number of common shares outstanding (in thousands of shares)






46,707


42,055

(1)

As at July 2, 2016 and June 27, 2015, the cost of sales, including depreciation and amortization, was $443,773 and $321,172 respectively, for the three-month period and $846,075 and $593,613 respectively, for the six-month period.

 


CONDENSED INTERIM CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)


Periods ended July 2, 2016 and June 27, 2015

(in thousands of Canadian dollars)


Three months


Six months

(unaudited)


2016


2015


2016


2015

Net income (loss)

$

(28,565)

$

9,979

$

(20,189)

$

14,417

Other comprehensive income (loss):









Items that will be reclassified subsequently to profit or loss:










Change in unrealized gains (losses) on translating foreign operations


(3,009)


(7,803)


(26,238)


19,302


Change in unrealized gain (loss) on translating debt designated as
hedging item of the net investment in foreign operations


120


472


1,138


(1,265)



(2,889)


(7,331)


(25,100)


18,037

Available-for-sale asset:










Unrealized losses on available-for-sale financial assets
arising during the period


(330)


- -


(135)


- -


Reclassified to statements of income


- -


(2)


- -


(2)

Other comprehensive income (loss)


(3,219)


(7,333)


(25,235)


18,035

Comprehensive income (loss)

$

(31,784)

$

2,646

$

(45,424)

$

32,452










Comprehensive income (loss) attributable to:










Shareholders

$

(31,487)

$

2,658

$

(45,175)

$

32,452


Non-controlling interests


(297)


(12)


(249)


- -


$

(31,784)

$

2,646

$

(45,424)

$

32,452

 


CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS










(in thousands of Canadian dollars)

(unaudited as at July 2, 2016)


As at
July 2,
2016


As at
December 31,
2015

Assets





Current assets





Cash and cash equivalents

$

10,513

$

7,050

Accounts receivable


325,657


320,517

Costs and estimated profits in excess of billings


246,235


194,298

Inventories


135,003


166,833

Recoverable tax assets


683


1,573

Prepaid expenses and other assets


9,294


3,230



727,385


693,501

Non-current assets





Investments


9,732


6,173

Interests in a joint venture and associates


38,355


39,370

Property, plant and equipment


364,502


348,391

Intangible assets


9,850


11,500

Goodwill


56,918


56,023

Deferred tax assets


20,137


4,007

Long-term receivables and other assets


5,458


5,564

Total assets

$

1,232,337

$

1,164,529

Liabilities





Current liabilities





Accounts payable and accrued liabilities

$

282,300

$

223,580

Billings in excess of costs and estimated profits


81,106


73,465

Current tax liabilities


2,003


4,156

Current portion of balance of purchase price of businesses and redemption liability


5,085


1,282

Current portion of debt


40,869


43,083



411,363


345,566

Non-current liabilities





Debt


222,899


164,356

Balance of purchase price of businesses and redemption liability


8,362


650

Provisions


18,485


19,485

Deferred tax liabilities


8,747


8,897

Other liabilities


1,017


1,208

Total liabilities


670,873


540,162

Equity





Share capital


235,866


239,777

Retained earnings


253,011


294,458

Other equity items


64,635


90,090

Total equity attributable to shareholders


553,512


624,325

Non-controlling interests


7,952


42

Total equity


561,464


624,367

Total equity and liabilities

$

1,232,337

$

1,164,529

 

CONDENSED INTERIM CONSOLIDATED
STATEMENTS OF CHANGES IN EQUITY
























(in thousands of Canadian dollars)

(unaudited)


Employee
benefits
paid
in equity
instruments


Exchange
differences
resulting from
the translation
of foreign
operations


Exchange
difference
resulting from
the translation
of the debt
designated as
hedging item


Available-for-
sale financial
assets


Debenture
conversion
options


Total other
equity items


Share capital


Retained
earnings


Total
share capital
attributable to
shareholders


Non-
controlling
interests


Total
equity

Balance as at January 1, 2015

$

2,235

$

29,451

$

(806)

$

2

$

5,758

$

36,640

$

168,162

$

252,386

$

457,188

$

36

$

457,224

Net income for the period


- -


- -


- -


- -


- -


- -


- -


14,433


14,433


(16)


14,417

Comprehensive income


- -


19,286


(1,265)


(2)


- -


18,019


- -


- -


18,019


16


18,035

Dividends


- -


- -


- -


- -


- -


- -


- -


(3,332)


(3,332)


- -


(3,332)

Repurchase of shares


- -


- -


- -


- -


- -


- -


(105)


- -


(105)


- -


(105)

Excess of acquisition cost over carrying amount of acquired common shares


- –


- -


- -


- -


- -


- -


- -


(214)


(214)


- -


(214)

Shares acquired by employees


(238)


- -


- -


- -


- -


(238)


238


- -


- -


- -


- -

Issuance of shares upon the conversion of debentures


- -


- -


- -


- -


- -


- -


18


- -


18


- -


18

Exercise of options upon the conversion of debentures


- -


- -


- -


- -


(1)


(1)


1


- -


- -


- -


- -

Amortization of compensation costs related to the profit sharing program - stock ownership component


43


- -


- -


- -


- -


43


- -


- -


43


- -


43

Balance as at June 27, 2015

$

2,040

$

48,737

$

(2,071)

$

- -

$

5,757

$

54,463

$

168,314

$

263,273

$

486,050

$

36

$

486,086

Balance as at January 1, 2016

$

2,082

$

92,088

$

(4,279)

$

199

$

- -

$

90,090

$

239,777

$

294,458

$

624,325

$

42

$

624,367

Investment in subsidiaries by non-controlling interests


- -


- -


- -


- -


- -


- -


- -


- -


- -


8,159


8,159

Purchase obligation


- -


- -


- -


- -


- -


- -


- -


(11,080)


(11,080)


- -


(11,080)

Net loss for the period


- -


- -


- -


- -


- -


- -


- -


(20,054)


(20,054)


(135)


(20,189)

Comprehensive loss


- -


(26,124)


1,138


(135)


- -


(25,121)


- -


- -


(25,121)


(114)


(25,235)

Dividends


- -


- -


- -


- -


- -


- -


- -


(3,760)


(3,760)


- -


(3,760)

Repurchase of shares


- -


- -


- -


- -


- -


- -


(4,287)


- -


(4,287)


- -


(4,287)

Excess of acquisition cost over carrying amount of acquired common shares


- -


- -


- -


- -


- -


- -


- -


(6,553)


(6,553)


- -


(6,553)

Shares acquired by employees


(376)


- -


- -


- -


- -


(376)


376


- -


- -


- -


- -

Amortization of compensation costs related to the profit sharing program - stock ownership component


42


- -


- -


- -


- -


42


- -


- -


42


- -


42

Balance as at July 2, 2016

$

1,748

$

65,964

$

(3,141)

$

64

$

- -

$

64,635

$

235,866

$

253,011

$

553,512

$

7,952

$

561,464

 

CONDENSED INTERIM CONSOLIDATED
STATEMENTS OF CASH FLOWS










Periods ended July 2, 2016 and June 27, 2015





(in thousands of Canadian dollars)


Three months


Six months

(unaudited)


2016


2015


2016


2015

Cash flows from the following activities:









Operating activities









Net income (loss)

$

(28,565)

$

9,979

$

(20,189)

$

14,417

Adjustments:










Amortization of compensation costs related to the profit sharing program – stock ownership component


21


22


42


43


Gain on disposal of an investment


- -


(5)


- -


(5)


Gain on disposal of property, plant and equipment


(178)


(25)


(172)


(2)


Depreciation of property, plant and equipment


7,144


6,236


14,119


12,454


Amortization of intangible assets


918


675


1,845


1,365


Amortization of deferred financing expenses


97


127


200


253


Provisions


335


- -


335


- -


Interest rate swaps


(65)


(103)


(130)


(129)


Imputed interest


181


657


369


1,311


Pension expense


(585)


(734)


(1,252)


(1,582)


Deferred tax expense (income)


(20,035)


3,133


(21,932)


3,727


Share of loss of a joint venture and associates


709


601


1,020


742



(40,023)


20,563


(25,745)


32,594

Net change in non-cash operating working capital balances









Decrease (increase) in accounts receivable


(17,816)


(39,546)


1,867


20,070

Increase in costs and estimated profits in excess of billings


(21,212)


(12,520)


(51,967)


(34,185)

Decrease (increase) in inventories


12,501


(3,620)


26,181


(6,905)

Decrease (increase) in current tax assets


(18)


(17)


984


158

Decrease (increase) in prepaid expenses and other assets


(5,722)


884


(6,053)


(461)

Increase in accounts payable and accrued liabilities


48,839


20,697


53,418


8,139

Increase (decrease) in billings in excess of
costs and estimated profits


14,685


(10)


12,143


2,261

Increase (decrease) in interest payable


750


(5)


456


(4)

Decrease in current tax liabilities


(2,623)


(414)


(2,086)


(3,104)



29,384


(34,551)


34,943


(14,031)

Cash flows from operating activities


(10,639)


(13,988)


9,198


18,563

Financing activities









Repurchase of shares


(6,526)


- -


(10,840)


(319)

Dividends


(1,869)


(1,670)


(5,651)


(3,339)

Increase in debt and bank loans


54,272


29,049


104,272


29,049

Repayment of debt and bank loans


(13,957)


(6,506)


(58,017)


(35,389)

Issue expenses related to debt


- -


(7)


(378)


(104)

Increase in other liabilities


- -


10


(17)


20

Cash flows from financing activities


31,920


20,876


29,369


(10,082)

Investing activities









Proceeds from sale of property, plant and equipment


280


31


370


417

Additions to property, plant and equipment


(10,964)


(6,862)


(22,084)


(11,746)

Additions to intangible assets


(294)


(401)


(673)


(643)

Proceeds from disposal of an investment


- -


1


- -


1

Acquisition of an investment


(1,650)


- -


(3,958)


(150)

Distribution received


264


- -


264


- -

Decrease in receivables and other assets


33


87


33


119

Acquisition of business assets, net of cash and cash equivalents


(9,896)


- -


(9,896)


- -

Cash flows from investing activities


(22,227)


(7,144)


(35,944)


(12,002)

Effects of changes in foreign exchange rate
on cash and cash equivalents


373


389


840


530

Net change in cash and cash equivalents


(573)


133


3,463


(2,991)










Cash and cash equivalents – Beginning of period


11,086


5,137


7,050


8,261

Cash and cash equivalents – End of period

$

10,513

$

5,270

$

10,513

$

5,270

Supplementary information










Interest paid

$

1,165

$

3,441

$

3,080

$

4,642


Income taxes paid, net

$

4,680

$

2,797

$

9,121

$

7,094

 

SOURCE Canam Group Inc.

For further information: Media: François Bégin, Vice President, Communications, Canam Group Inc., 418-228-8031 / 418-225-1355 (mobile phone), francois.begin@groupecanam.com; Investors: René Guizzetti, Vice President and Chief Financial Officer, Canam Group Inc., 450-641-4000, rene.guizzetti@groupecanam.com


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