CVTECH GROUP INC. REPORTS RESULTS FOR FIRST QUARTER 2011

  • Consolidated revenues of $62.8 million
  • EBITDA of $6.7 million or 10.7% of revenues, compared to $6.1 million or 7.9% of revenues in 2010
  • Profit for the period of $2.6 million or $0.04 per share, compared to $2.2 million or $0.03 per share in 2010

DRUMMONDVILLE, QC, June 13, 2011 /CNW Telbec/ - CVTech Group Inc. ("CVTech" or the "Corporation") (TSX: CVT) today reported results for its first quarter ended March 31, 2011. These results are the first that CVTech presented following the adoption of International Financial Reporting Standards ("IFRS") on January 1, 2011. Results for the corresponding period of the previous year have been restated. All amounts are in Canadian dollars unless otherwise indicated.

Consolidated revenues were $62.8 million, down $14.5 million or 18.8% from $77.3 million in the first quarter of 2010. The variation was due to a $5.3-million decrease in revenues related to winter storms in the Northeastern United States in 2011, relative to the year-earlier quarter. In addition, the GLR-Thiro G.P. consortium recorded revenues of $7.1 million in the first quarter of 2010 from a contract that has since ended. No revenues from this consortium were recorded in the first quarter of 2011. Finally, the conversion effect from fluctuations in the value of the Canadian dollar reduced the value of consolidated revenues denominated in foreign currencies by approximately $2.1 million relative to the same period a year earlier.

Consolidated earnings before interest, taxes, depreciation and amortization ("EBITDA") were $6.7 million, or 10.7% of revenues, in the first quarter of 2011 compared to $6.1 million, or 7.9% of revenues, in the first quarter of 2010. Profit for the period was $2.6 million or $0.04 per diluted share, compared to $2.2 million or $0.03 per diluted share in the year-earlier period. The Corporation's order backlog as at March 31, 2011 amounted to approximately $317 million.

 
  Financial highlights     Quarters ended March 31  
  (in thousands of dollars, except per-share data)     2011    2010  
  Revenues         62,757     77,274  
  EBITDA         6,746     6,106  
  Profit for the period         2,643     2,247  
  Per share - basic ($)         0.04     0.03  
  Per share - diluted ($)         0.04     0.03  
  Weighted average number of shares outstanding (basic, in thousands)   72,681     72,250  

SEGMENT RESULTS
Revenues of the Energy segment declined $14.2 million to $56.7 million for the first quarter of 2011, from $70.9 million for the first quarter of 2010. The decrease is attributable to a reduction in revenues related to winter storms, to the absence of revenues from the GLR-Thiro G.P. consortium and to the conversion effect from fluctuations in the value of the Canadian dollar, which reduced the value of U.S.-dollar-denominated revenues by approximately $2.0 million. Excluding these factors, revenues were essentially stable relative to the year-earlier period. Reflecting a more favourable revenue mix and increased operating efficiency, EBITDA of the Energy segment was $5.2 million, or 9.2% of revenues, compared to $4.5 million, or 6.3% of revenues, last year.

Revenues of the CVT systems and related products segment were $6.1 million in the first quarter of 2011, down from $6.4 million for the corresponding quarter of 2010. The slight decline is attributable to the operations of the CVTech-IBC Inc. subsidiary and to unfavourable movements of the Canadian dollar against the U.S. dollar and the euro. Also as a result of this exchange-rate variation, EBITDA was down slightly to $1.5 million, or 25.0% or revenues, from $1.6 million, or 25.4% of revenues, a year earlier.

"The success of initiatives to increase our operating efficiency led to a further significant improvement in our operating margin," said André Laramée, President and Chief Executive Officer of CVTech. "CVTech reduced its total debt by more than $7.8 million in the first quarter of 2011. This strength in the Corporation's financial position leaves it well-positioned to take advantage of business opportunities that will create shareholder value."

FINANCIAL POSITION
As at March 31, 2011, CVTech's financial position remained sound, with cash of $5.1 million and long-term debt, including the current portion, of $35.9 million, a reduction of $3.2 million from December 31, 2010. During the quarter, the Corporation used part of its cash position to reduce short-term bank loans outstanding by $4.6 million. As a result, the ratio of net debt to equity was 0.51 at March 31, 2011, compared to 0.52 at the beginning of the year.

OUTLOOK
"In the short term, CVTech aims to maximize the cross-selling effects of its Energy segment subsidiaries to both existing and prospective customers. We also see opportunities for expansion in this segment, through the development of new territories adjacent to those where we are already present, as well as through new strategic acquisitions. Finally, we are actively pursuing efforts to divest our interests in the CVT systems and related products segment in order to focus exclusively on the Energy segment, although opportunities for our CVT systems on the Asian market seem to be in the process of materializing," Mr. Laramée concluded.

OVERVIEW OF THE CORPORATION
CVTech is a management company operating in two major sectors. Through Thirau ltée and its subsidiary Thirau LLC, the Corporation provides services to the electric power industry for the maintenance of transmission and distribution lines, primarily in Quebec and the eastern United States. Thirau ltée's subsidiary, J.J.L. Déboisement inc., specializes in control of vegetation surrounding power lines and in clearing rights of way. Thirau LLC's wholly owned subsidiary Riggs Distler & Company, Inc. is a leading provider of maintenance and construction services to the utility and heavy industrial markets. In the CVT systems and related products segment, the Corporation, through CVTech-IBC Inc., designs, manufactures and sells continuously variable power transmission systems, or CVTs. CVTech-AAB inc. specializes in rebuilding crankshafts and cylinders and in distributing engine parts.

NON-IFRS MEASURE
EBITDA is a measure that has no standardized meaning prescribed by IFRS and is thus considered to be a non-IFRS measure. Therefore, this measure may not be comparable to similar measures presented by other issuers. This measure is described and presented in this release in order to provide additional information regarding the Corporation's liquidity and its ability to generate funds to finance its operations.

FORWARD-LOOKING STATEMENTS
This document may contain forward-looking statements that reflect management's current expectations 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.

Further information regarding CVTech is available in the SEDAR database (www.sedar.com) and on the Corporation's website at www.cvtech.ca

 

SOURCE CVTECH GROUP INC.

For further information:

Source: CVTech Group Inc.

Contacts:
André Laramée, MBA 
President and Chief Executive Officer 
819-479-7771 
a.laramee@cvtech.ca 
  Mario Trahan, CMA 
Chief Financial Officer 
819-479-7771 
m.trahan@cvtech.ca 
  MaisonBrison
Martin Goulet, CFA
514-731-0000
martin@maisonbrison.com

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