CVTech Group Inc. announces its 2009 first quarter results



    
    Satisfactory due diligence audit for the Company's major acquisition
    plans
    

    DRUMMONDVILLE, QC, May 14 /CNW Telbec/ - CVTech Group Inc. ("CVTech" or
the "Company") (Toronto Stock Exchange: CVT) today announced its results for
the first quarter ended March 31, 2009. Overall, results are reflective of the
economy's softness in the Company's two segments of operations, as well as
timing issues in the awarding of contracts involving major electrical power
distribution and transmission projects. Unless otherwise indicated, all
amounts are in Canadian dollars.
    Consolidated revenues were $26.8M in the first quarter of 2009, down
$10.2M or 27.7% from $37.0M one year ago. Earnings before interest, taxes,
depreciation and amortization ("EBITDA") were $2.1M (7.9% of revenues)
compared with $4.9M (13.2% of revenues) for the first quarter of 2008. Net
earnings were $0.3M or $0.01 per diluted share compared with $1.9M or $0.03
per diluted share the previous year.

    
    -------------------------------------------------------------------------
    Financial highlights                              Quarters ended March 31
    (in $ thousands, except for per share data)           2009          2008
    -------------------------------------------------------------------------
    Revenues                                            26,772        37,038
    EBITDA(*)                                            2,125         4,887
    Net earnings for the period                            323         1,896
      Per share - basic ($)                               0.01          0.03
      Per share - diluted ($)                             0.01          0.03
    Weighted average number of shares
     outstanding (diluted, '000)                        57,920        57,350
    -------------------------------------------------------------------------
    (*) Earnings before interest, taxes, depreciation and amortization
    

    SEGMENT RESULTS

    Revenues in the CVT and related products segment totalled $6.0M, a
decline of 20.4% from $7.5M during the previous period. The decline is mainly
attributable to softer demand for recreational vehicles due to economic
uncertainty. However, the segment's profitability continued to improve as,
despite the drop in revenues, the CVT and related products segment generated
net earnings of $414,000, similar to last year's net earnings of $432,000.
    Revenues from the electricity segment declined 29.6% to $20.8M in the
first quarter of 2009, compared with $29.5M in 2008. The reduction is owed to
lower revenues from electrical power transmission contracts in the United
States, given timing issues in the awarding of contracts associated with such
major projects. About 64% of 2009 first quarter revenues stemmed from work
done in the United States. Reflecting the decline in revenues, the electricity
segment ended the first quarter of 2009 with a slight net loss of $91,000
compared with net earnings of $1.5M in the first quarter of 2008.
    As at March 31, 2009, CVTech's balance sheet was very sound, with $17.6M
in cash and cash equivalents, a long-term debt and convertible debentures of
$20.7M, including the current portion, and a net debt of $3.8M. The long-term
debt to equity ratio was 0.44 compared with 0.51 three months earlier.
    "The uncertain economic context has forced certain North American
utilities to postpone some of their planned infrastructure investments," noted
André Laramée, President and Chief Executive Officer of CVTech Group.
"However, the prospects in the electricity segment remain excellent, as shown
by a recent major contract awarded to the consortium in which our subsidiary
Thiro ltée ("Thiro") is involved in. Our services also play an integral role
in the major infrastructure projects that governments launch to give a boost
to the economy. Such actions would stimulate demand for our services, as a
number of our clients could be involved in projects such as these."

    SUBSEQUENT EVENTS

    On May 1, 2009, the GLR-Thiro G.P. consortium ("GLR-Thiro"), in which the
Company's subsidiary Thiro has a 50% interest, was awarded a contract valued
at over $57.0M by Hydro-Québec. The contract covers the development and
construction of the 315kV Chénier-Outaouais line and the relocation of a
section of the 315kV Chénier-Vignan line. The work to build 293 new
lattice-type towers over 114.2 km began on May 4, 2009. It is slated to
conclude on May 28, 2010.

    UPDATE ON THE PLANNED CORPORATE ACQUISITION

    On February 9, 2009, the Company signed a letter of intent to purchase
all of the issued and outstanding shares of a North American entity (the
"Business") which provides electrical services to the industrial markets and
utility suppliers. At the request of the sellers, the name of the Business
will only be disclosed upon closing. While the undertaking is contingent upon
the customary procedures involved in merger and acquisition operations, the
legal, accounting, tax and financial due diligence audit has been completed to
CVTech's satisfaction. The Company is now working to develop the share
purchase contract with a goal of making the transaction official on July 1,
2009.

    OVERVIEW OF THE COMPANY

    CVTech is a management company. Subsidiaries design, manufacture and sell
continuously variable power transmission systems, or CVTs. Another subsidiary,
Thiro ltée, constructs and maintains electrical power transmission and
distribution lines. It has two (2) wholly-owned subsidiaries: Thiro USA, which
provides the same services as Thiro ltée, and J.J.L. Déboisement inc., which
specializes in vegetation control around distribution lines and clearing the
lines' rights-of-way. The subsidiary CVTech-AAB specializes in rebuilding
crankshafts and cylinders, as well as distributing engine parts. CVTech
current has 715 employees, distributed as follows: 160 in the CVT systems and
related products segment and 555 in the electricity segment.

    FORWARD-LOOKING STATEMENTS

    This document may contain forward-looking statements that reflect
management's current beliefs regarding future events. Forward-looking
statements are based on a number of factors and include risks and
uncertainties. Actual results may differ from forecast results. Management has
no obligation beyond what is required under the law to update or revise
forward-looking statements pursuant to new information or future events.

    For further information regarding CVTech, the reader may consult the
SEDAR database as well as the Company's web site at: www.groupecvtech.com.




For further information:

For further information: André Laramée, MBA, President and Chief
Executive Officer, CVTech Group Inc., (819) 479-7771; Mario Trahan, CMA, Chief
Financial Officer, CVTech Group Inc., (819) 479-7771

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