Canam Group's Net Income Increased by 39% in the Third Quarter

SAINT-GEORGES, QC, Oct. 29, 2015 /CNW Telbec/ - Canam Group Inc. (TSX: CAM) ("Canam Group" or the "Corporation") today published its financial results for the three-month and nine-month periods ended September 26, 2015.

Highlights

  • 31.3% increase in consolidated revenues compared to the third quarter in 2014
  • 35.9% increase in Adjusted EBITDA compared to the third quarter in 2014
  • Increase in net income of 38.7% in the third quarter and of 87.1% after nine months compared to the same periods in 2014

 

Periods ended September 26, 2015 and September 27, 2014

                   Three months


(in millions of $, except per share amounts)


2015



2014


Revenues

$

432.1


$

329.2


Selling and administrative expenses

$

27.3

6.3%

$

22.9

6.9%

Adjusted EBITDA1

$

33.6

7.8%

$

24.7

7.5%

Net income2

$

14.5

3.4%

$

10.5

3.2%

Net earnings per share2 (basic and diluted)

$

0.35


$

0.25








                       Nine months


(in millions of $, except per share amounts)


2015



2014


Revenues

$

1,113.1


$

849.2


Selling and administrative expenses

$

77.5

7.0%

$

66.9

7.9%

Adjusted EBITDA1

$

78.2

7.0%

$

50.5

5.9%

Net income2

$

29.0

2.6%

$

15.5

1.8%

Net earnings per share2 (basic and diluted)

$

0.69


$

0.37


1 Refer to the section entitled Non-IFRS measures

2 Represents net income attributable to shareholders

 

Results for the third quarter and first nine months of 2015

Consolidated revenues for the third quarter of 2015 totaled $432.1M, which represents a $102.9M or 31.3% increase, compared to revenues of $329.2M for the same quarter in 2014. Consolidated revenues after the first nine months of fiscal 2015 totaled $1,113.1M, representing a $263.9M or 31.1% increase, compared to revenues of $849.2M for the corresponding period in 2014. These increases are attributable to all of the Corporation's groups of products and services, primarily structural steel and buildings, as well as to the favorable impact of the US dollar's rise against the Canadian dollar since the beginning of 2015.

Selling and administrative expenses totaled $27.3M, or 6.3% of revenues, for the third quarter of 2015 compared to $22.9M, or 6.9% of revenues, in 2014. After the first nine months of fiscal 2015, selling and administrative expenses totaled $77.5M, or 7% of revenues, compared to $66.9M, or 7.9% of revenues, for the corresponding nine-month period in 2014. These variations are attributable to the increase in salary charges in order to maintain sales growth as well as the US dollar's rise against the Canadian dollar.

Adjusted EBITDA in the third quarter of 2015 amounted to $33.6M, or 7.8% of revenues, compared to $24.7M, or 7.5% of revenues, for the same quarter in 2014. After the first nine months of 2015, Adjusted EBITDA totaled $78.2M, or 7% of revenues, compared to $50.5M, or 5.9% of revenues, for the corresponding period in 2014. These increases in Adjusted EBITDA since the beginning of 2015 are mainly attributable to the higher sales volume combined with a rise in the Adjusted gross margins of certain groups of products and services. These items were offset, however, by the compression of gross margins for the bridges' group of products and services and the increase in selling and administrative expenses.

In the third quarter of 2015, net income attributable to shareholders totaled $14.5M, or $0.35 per share, compared to $10.5M, or $0.25 per share, for the corresponding period in 2014. After the first nine months of fiscal 2015, net income attributable to shareholders totaled $29M, or $0.69 per share, compared to $15.5M, or $0.37 per share, for the same nine-month period in 2014.

Performance through execution

"With this fifth consecutive quarterly increase, we are demonstrating our ability to translate the growth in non-residential construction into higher revenues and earnings," explains Marc Dutil, President and Chief Executive Officer of Canam Group. "We plan to maintain this disciplined approach in all our areas of activity, particularly bridges, in order to continue to improve our bottom line."

Order backlog

The order backlog stood at $1,234M as at September 26, 2015, compared to $1,058M as at June 27, 2015 and $1,007M as at December 31, 2014.   

Dividend

The Board of Directors approved a dividend of $0.04 per share payable on January 4, 2016 to shareholders of record on December 17, 2015.

Acquisition of assets of Montacier International Inc.

On August 15, 2015, a subsidiary of the Corporation finalized the purchase of assets of Montacier International Inc., a company located in Boisbriand, Quebec, that specializes in erecting steel structures. This transaction is in line with the Corporation's goal to enhance and integrate its product and service offering in the construction industry. The company will henceforth operate under the corporate name St. Lawrence Erectors Inc.

Conversion of unsecured subordinated debentures

As at October 23, 2015, $66M out of $69M of convertible debentures bearing interest at 6.25% and maturing on October 31, 2015 have been converted into 5,503,658 common shares of the Corporation. At any time prior to October 24, 2015, each debenture was convertible at the holder's option into common shares at a conversion price of $12 per common share. The number of common shares outstanding as at October 28, 2015 is 47,551,043 shares. The $3M balance of outstanding debentures will be reimbursed in cash at maturity.

About Canam Group Inc.

Canam Group is the largest fabricator of steel components in North America. Specialized in designing construction solutions and fabricating customized products since 1961, Canam Group takes part on average in 10,000 buildingstructural steel and bridge projects each year. The Corporation operates 22 plants across North America and employs close to 4,100 people in Canada, the United States, Romania, India and Hong Kong.

Conference call, webcast and presentation

Canam Group will hold a conference call with financial analysts and media representatives on Thursday, October 29, 2015 at 9:00 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 measure

Earnings before interest, tax, depreciation and amortization (Adjusted EBITDA) is not defined by International Financial Reporting Standards (IFRS) and cannot be formally presented in the consolidated financial statements. Even though Adjusted EBITDA is a non-IFRS measure, it is used by managers, analysts, investors and other financial stakeholders to assess the Corporation's operative performance and management from a financial and operational standpoint. Refer to the section entitled "Non-IFRS measures" of the Corporation's 2014 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 2014 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


Periods ended September 26, 2015 and September 27, 2014



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


Three months


Nine months

(unaudited)


2015


2014


2015


2014

Revenues

$

432,141

$

329,249

$

1,113,058

$

849,168

Cost of sales, excluding depreciation and amortization(1)


368,770


280,528


951,695


729,752

Selling and administrative expenses


27,304


22,856


77,491


66,855

Profit sharing program


3,895


1,602


6,979


2,477

Depreciation of property, plant and equipment


6,605


5,886


19,059


17,326

Amortization of intangible assets


712


601


2,077


1,557

Other gains — net


(1,448)


(607)


(1,116)


(717)

Finance costs


4,048


3,828


11,834


11,017

Finance revenue


(164)


(233)


(519)


(751)

Share of loss of a joint venture and associates


347


263


1,089


584

Income before income tax


22,072


14,525


44,469


21,068

Tax expense










Current


2,950


2,973


7,203


2,384


Deferred


4,499


1,131


8,226


3,212



7,449


4,104


15,429


5,596

Net income

$

14,623

$

10,421

$

29,040

$

15,472










Net income attributable to:










Shareholders

$

14,541

$

10,486

$

28,974

$

15,490


Non-controlling interests


82


(65)


66


(18)


$

14,623

$

10,421

$

29,040

$

15,472










Net earnings per share attributable to shareholders










Basic

$

0.35

$

0.25

$

0.69

$

0.37


Diluted

$

0.35

$

0.25

$

0.69

$

0.37










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










Basic


42,023


42,025


42,002


42,050


Diluted


42,059


42,079


42,038


42,104

Number of common shares outstanding (in thousands of shares)






42,069


42,079

(1)  

As at September 26, 2015 and September 27, 2014, the cost of sales, including depreciation and amortization, was $374,449 and $285,439 respectively, for the three-month period and $968,062 and $744,341 respectively, for the nine-month period.

 

NOTICE
The Corporation's independent auditors have not performed a review of the accompanying condensed interim consolidated financial statements.

 

Condensed Interim Consolidated
Statements of Comprehensive Income


Periods ended September 26, 2015 and September 27, 2014






(in thousands of Canadian dollars)


Three months


Nine months

(unaudited)


2015


2014


2015


2014

Net income

$

14,623

$

10,421

$

29,040

$

15,472

Other comprehensive income:









Items that will be reclassified subsequently to profit or loss:










Change in unrealized gains on translating foreign operations


28,620


12,344


47,922


12,479


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


(1,519)


- -


(2,784)


- -



27,101


12,344


45,138


12,479

Available-for-sale asset:










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


27


- -


27


- -


Reclassified to statements of income


- -


- -


(2)


- -



27


- -


25


- -

Other comprehensive income


27,128


12,344


45,163


12,479

Comprehensive income

$

41,751

$

22,765

$

74,203

$

27,951

Attributable to:










Shareholders

$

41,669

$

22,835

$

74,121

$

27,971


Non-controlling interests


82


(70)


82


(20)


$

41,751

$

22,765

$

74,203

$

27,951

 

 

Condensed Interim Consolidated Balance Sheets


(in thousands of Canadian dollars)

(unaudited)

As at
September 26,
2015

As at
December 31,
2014

Assets





Current assets





Cash and cash equivalents

$

9,558

$

8,261

Accounts receivable


315,998


276,691

Costs and estimated profits in excess of billings


191,831


126,590

Inventories


176,334


156,990

Recoverable tax assets


1,454


1,346

Prepaid expenses and other assets


4,293


5,619



699,468


575,497

Non-current assets





Investments


5,172


4,593

Interests in a joint venture and associates


39,819


40,919

Property, plant and equipment


337,466


308,362

Intangible assets


11,350


10,811

Goodwill


54,022


45,097

Deferred tax assets


3,029


10,128

Long-term receivables and other assets


5,954


7,428

Total assets

$

1,156,280

$

1,002,835






Liabilities





Current liabilities





Accounts payable and accrued liabilities

$

221,206

$

183,937

Billings in excess of costs and estimated profits


91,176


74,366

Current tax liabilities


1,086


4,943

Current portion of balance of purchase price of businesses


2,244


- -

Current portion of long-term debt


22,198


17,659

Convertible debentures


68,547


67,137



406,457


348,042

Non-current liabilities





Debt


202,223


175,585

Balance of purchase price of businesses


650


- -

Provisions


8,216


7,417

Deferred tax liabilities


7,591


7,477

Other liabilities


4,782


7,090

Total liabilities


629,919


545,611






Equity





Share capital


168,503


168,162

Retained earnings


276,143


252,386

Other equity items


81,597


36,640

Total equity attributable to shareholders


526,243


457,188

Non-controlling interests


118


36

Total equity


526,361


457,224

Total equity and liabilities

$

1,156,280

$

1,002,835

 

 

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, 2014

$

2,113

$

5,005

$

- -

$

2

$

5,764

$

12,884

$

168,057

$

230,717

$

411,658

$

- -

$

411,658

Investment in a subsidiary by a non-controlling interest


- -


- -


- -


- -


- -


- -


- -


- -


- -


184


184

Net income for the period


- -


- -


- -


- -


- -


- -


- -


15,490


15,490


(18)


15,472

Comprehensive income


- -


12,481


- -


- -


- -


12,481


- -


- -


12,481


(2)


12,479

Dividends


- -


- -


- -


- -


- -


- -


- -


(4,990)


(4,990)


- -


(4,990)

Shares acquired by employees


(26)


- -


- -


- -


- -


(26)


26


- -


- -


- -


- -

Issuance of shares upon the conversion of debentures


- -


- -


- -


- -


- -


- -


73


- -


73


- -


73

Exercise of options upon the conversion of debentures


- -


- -


- -


- -


(6)


(6)


6


- -


- -


- -


- -

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


127


- -


- -


- -


- -


127


- -


- -


127


- -


127

Balance as at September 27, 2014

$

2,214

$

17,486

$

- -

$

2

$

5,758

$

25,460

$

168,162

$

241,217

$

434,839

$

164

$

435,003

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


- -


- -


- -


- -


- -


- -


- -


28,974


28,974


66


29,040

Comprehensive income


- -


47,906


(2,784)


25


- -


45,147


- -


- -


45,147


16


45,163

Dividends


- -


- -


- -


- -


- -


- -


- -


(5,003)


(5,003)


- -


(5,003)

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


- -


- -


- -


- -


- -


- -


192


- -


192


- -


192

Exercise of options upon the conversion of debentures


- -


- -


- -


- -


(16)


(16)


16


- -


- -


- -


- -

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


64


- -


- -


- -


- -


64


- -


- -


64


- -


64

Balance as at September 26, 2015

$

2,061

$

77,357

$

(3,590)

$

27

$

5,742

$

81,597

$

168,503

$

276,143

$

526,243

$

118

$

526,361

 

 

Condensed Interim Consolidated
Statements of Cash Flows


Periods ended September 26, 2015 and September 27, 2014





(in thousands of Canadian dollars)


Three months

Nine months

(unaudited)


2015


2014

2015


2014

Cash flows from the following activities:









Operating activities









Net income

$

14,623

$

10,421

$

29,040

$

15,472

Adjustments:










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


21


24


64


127


Gain on disposal of an investment


- -


- -


(5)


- -


Loss (gain) on disposal of property, plant and equipment


(25)


4


(27)


77


Depreciation of property, plant and equipment


6,605


5,886


19,059


17,326


Amortization of intangible assets


712


601


2,077


1,557


Amortization of deferred financing expenses


108


112


361


300


Provisions


- -


(1)


- -


98


Interest rate swaps


(29)


(124)


(158)


(221)


Imputed interest


664


614


1,975


1,695


Pension expense


(717)


(701)


(2,299)


(2,035)


Deferred tax expense


4,499


1,131


8,226


3,212


Share of loss of a joint venture and associates


347


263


1,089


584



26,808


18,230


59,402


38,192

Net change in non-cash operating working capital balances









Increase in accounts receivable


(33,070)


(35,971)


(13,000)


(42,227)

Increase in costs and estimated profits in excess of billings


(18,080)


(10,126)


(52,265)


(36,513)

Decrease (increase) in inventories


1,434


(22,741)


(5,471)


(49,839)

Decrease (increase) in current tax assets


(67)


(195)


91


(2,063)

Decrease (increase) in prepaid expenses and other assets


2,657


(1,321)


2,196


(1,989)

Increase in accounts payable and accrued liabilities


9,703


45,158


17,842


40,505

Increase in billings in excess of costs and estimated profits


6,105


15,144


8,366


24,249

Increase in interest payable


1,922


1,017


1,918


1,209

Decrease in current tax liabilities


(824)


(45)


(3,928)


(7,637)



(30,220)


(9,080)


(44,251)


(74,305)

Cash flows from operating activities


(3,412)


9,150


15,151


(36,113)

Financing activities









Repurchase of shares


- -


- -


(319)


- -

Dividends


(1,671)


(1,669)


(5,010)


(4,991)

Increase in debt and bank loans


32,587


47,305


61,636


115,233

Repayment of debt and bank loans


(10,431)


(45,429)


(45,820)


(51,854)

Issue expenses related to long-term debt


(37)


(1,164)


(141)


(1,164)

Increase in other liabilities


11


8


31


24

Cash flows from financing activities


20,459


(949)


10,377


57,248

Investing activities









Proceeds from sale of property, plant and equipment


54


5


471


124

Additions to property, plant and equipment


(6,927)


(4,642)


(18,673)


(15,588)

Additions to intangible assets


(320)


(417)


(963)


(1,546)

Acquisition of interests in an associate


- -


- -


(150)


(1,000)

Proceeds from disposal of an investment


47


- -


48


- -

Acquisition of an investment


(449)


- -


(449)


- -

Distributions received


- -


- -


- -


156

Decrease in receivables and other assets


32


855


151


1,037

Increase in long-term receivables


(244)


(10)


(244)


(10)

Acquisition of business assets, net of cash and cash equivalents


(6,191)


- -


(6,191)


(1,136)

Cash flows from investing activities


(13,998)


(4,209)


(26,000)


(17,963)

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


1,239


1,805


1,769


433

Net change in cash and cash equivalents


4,288


5,797


1,297


3,605










Cash and cash equivalents – Beginning of period


5,270


2,498


8,261


4,690

Cash and cash equivalents – End of period

$

9,558

$

8,295

$

9,558

$

8,295

Supplementary information










Interest paid

$

1,339

$

1,593

$

5,981

$

6,846


Income taxes paid, net

$

3,762

$

3,264

$

10,856

$

12,202

 

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@canamgroupinc.com; Investors: René Guizzetti, Vice President and Chief Financial Officer, Canam Group Inc., 450-641-4000, rene.guizzetti@canamgroupinc.com


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