GLV - Fiscal 2011 First Quarter Results


    
                                 HIGHLIGHTS

                      First quarter ended June 30, 2010
                      ---------------------------------

    - $152.6 million in revenues compared with $113.8 million for the
      corresponding quarter of fiscal 2010, an increase owing primarily to
      the inclusion of Christ Water Technology AG (CWT).
    - Normalized EBITDA of $3.6 million compared with $3.9 million year over
      year, a decrease resulting from the inclusion of CWT and the lower
      gross margin of the Water Treatment Group, both factors partly offset
      by higher profitability in the Pulp and Paper Group (the Corporation
      did not report any items outside the normal course of business in the
      first quarter).
    - Net loss of $4.2 million ($0.09 per share, basic and diluted) compared
      with net earnings of $0.9 million ($0.03 per share, basic and diluted)
      for the first quarter of fiscal 2010, a decrease resulting primarily
      from the unfavourable mark-to-market remeasurement of derivative
      financial instruments, interest on long-term debt, lower EBITDA for the
      Water Treatment Group and higher amortization expense resulting from
      the inclusion of CWT.
    - Free cash flow of $1.8 million compared with $1.5 million a year
      earlier.
    - Total net debt to total capitalization ratio of 19.0% as at June 30,
      2010 compared with 6.9% as at March 31, 2010, an increase resulting
      from investments in working capital.

      Backlog as at June 30, 2010: $452.1 million
      -------------------------------------------

    - Compared with $229.2 million as at June 30, 2009, an increase stemming
      from the inclusion of CWT coupled with organic growth of 7.6% (at
      constant exchange rates) of the value of the Corporation's backlog.
    - Compared with $442.3 million as at March 31, 2010, an increase driven
      by organic growth (at constant exchange rates) of the value of backlogs
      for the Water Treatment Group (including CWT) and the Pulp and Paper
      Group, of 8.9% and 19.2%, respectively.
    
</pre>
<p/>
<p><span class="xn-location">MONTREAL</span>, <span class="xn-chron">Aug. 12</span> /CNW Telbec/ - (All amounts are in Canadian dollars)</p>
<p/>
<p>GLV Inc. (the "Corporation"; TSX: GLV.A, GLV.B) released its results for the first quarter of fiscal 2011 ended <span class="xn-chron">June 30, 2010</span>. The Corporation reported a substantial increase in revenues, driven mainly by the contribution of Christ Water Technology AG (CWT). However, the combination of several factors had an unfavourable impact, resulting in a net loss for the quarter.</p>
<p>"The results of the first quarter of fiscal 2011 reflect both the inclusion of CWT, acquired late in <span class="xn-chron">November 2009</span>, and market conditions that affected business at our two operational groups," said Chairman and CEO Laurent Verreault. "On one hand, the persistent fragility in certain markets and economic and financial uncertainty in <span class="xn-location">Europe</span> curtailed a portion of our business at our Water Treatment Group. On the other, the Pulp and Paper Group enjoyed a certain upswing in demand and investments by paper companies after an 18-month slump," added <span class="xn-person">Mr. Verreault</span>.</p>
<p/>
<p>Summary analysis of financial results</p>
<p/>
<p>This press release provides an overview of the analysis of the results of the first quarter of fiscal 2011. For detailed analysis, the reader is referred to the interim Management's Discussion and Analysis ("MD&A") and Consolidated Financial statements filed today on the websites of SEDAR (<a href="http://www.sedar.com">www.sedar.com</a>) and the Corporation (<a href="http://www.glv.com">www.glv.com</a>). Note that financial measures such as EBITDA and free cash flow, which are not measures determined under generally accepted accounting principles ("GAAP"), have also been used to analyze performance. See the interim MD&A for information on non-GAAP measures used.</p>
<p/>
<pre>
    
    Selected information
    -------------------------------------------------------------------------
    (in thousands of $, except per share amounts and percentages)

                                                              Quarters
                                                            ended June 30
                                                    -------------------------
                                                           2010         2009
    -------------------------------------------------------------------------
                                                                   (Restated)
    -------------------------------------------------------------------------
    Revenues                                            152,582      113,839
      Water Treatment                                    96,576       65,619
      Pulp and Paper                                     44,113       45,574
      Other                                              11,893        2,646
    -------------------------------------------------------------------------
    EBITDA                                                3,573        3,447
      Water Treatment                                     1,998        5,146
      Pulp and Paper                                      3,751        1,443
      Other                                              (2,176)      (3,142)
    -------------------------------------------------------------------------
    Normalized EBITDA(1)                                  3,573        3,855
      Water Treatment(1)                                  1,998        5,162
      Pulp and Paper(1)                                   3,751        1,835
      Other(1)                                           (2,176)      (3,142)
    -------------------------------------------------------------------------
    Normalized EBITDA margin(1) (% of revenues)             2.3%         3.4%
      Water Treatment(1)                                    2.1%         7.9%
      Pulp and Paper(1)                                     8.5%         4.0%
      Other(1)                                            -18.3%      -118.7%
    -------------------------------------------------------------------------
    Net earnings (loss)                                  (4,157)         871
    -------------------------------------------------------------------------
    Free cash flow                                        1,767        1,457
    -------------------------------------------------------------------------

    Per share (basic and diluted)
    -------------------------------------------------------------------------
      Net earnings (loss)                                 (0.09)        0.03
      Free cash flow                                       0.04         0.05
    -------------------------------------------------------------------------

                                                        June 30,    March 31,
    CAPITALIZATION RATIO                                   2010         2010
    -------------------------------------------------------------------------
    Net debt to total
     capitalization ratio                                  19.0%         6.9%
    -------------------------------------------------------------------------
    (1) Excluding restructuring costs
    
</pre>
<p/>
<p>First quarter of fiscal 2011</p>
<p/>
<p>For the three-month period ended <span class="xn-chron">June 30, 2010</span>, the Corporation reported revenues totalling <span class="xn-money">$152.6 million</span> compared with <span class="xn-money">$113.8 million</span> for the corresponding quarter of fiscal 2010. The Water Treatment Group was largely behind this revenue growth due in part to the inclusion of the results of CWT. However, excluding CWT, the Water Treatment Group recorded negative organic revenue growth owing in particular to persistent weakness in the U.S. real estate market, which continues to weigh on new municipal infrastructure investments. This negative organic growth also resulted from delivery delays on a number of contracts whose revenue recognition was pushed back to the second quarter, as well as the climate of uncertainty arising from a weaker than expected economic recovery for certain sectors, including energy. Despite a slight decline in absolute terms, the Pulp and Paper Group reported organic revenue growth, at constant exchange rates, driven by improved demand, primarily for spare parts and other aftermarket services.</p>
<p>In the first quarter of fiscal 2011, the Corporation did not report any items outside the normal course of business. Normalized EBITDA stood at <span class="xn-money">$3.6 million</span>, down slightly from <span class="xn-money">$3.9 million</span> a year earlier. The decline in EBITDA resulted in large part from the operating loss at CWT, stemming mainly from narrower profit margins on some contracts than under the Corporation's usual terms and a cost structure that still prevents CWT from fully benefiting from integration with the other Water Treatment Group entities, owing in particular to European labour laws and practices. In addition, Water Treatment Group sales were down, and profitability was lower than expected on some energy sector contracts. The Pulp and Paper Group reported a significant improvement in normalized EBITDA arising from its strong aftermarket performance, the ongoing expansion of its manufacturing outsourcing network and solid overall management of operations.</p>
<p>For the first quarter of fiscal 2011, the Corporation recorded a net loss of <span class="xn-money">$4.2 million</span> (<span class="xn-money">$0.09</span> per share, basic and diluted) compared with net earnings of <span class="xn-money">$0.9 million</span> (<span class="xn-money">$0.03</span> per share, basic and diluted) a year earlier. This loss was attributable, in order of importance, to the unfavourable mark-to-market remeasurement of derivative financial instruments, lower EBITDA for the Water Treatment Group, the increase in amortization of intangible assets resulting from the inclusion of CWT and the increase in interest expense on long-term debt.</p>
<p/>
<p>Financial position</p>
<p/>
<p>For the first quarter of fiscal 2011, the Corporation reported free cash flow of <span class="xn-money">$1.8 million</span> (<span class="xn-money">$0.04</span> per share, basic and diluted) compared with <span class="xn-money">$1.5 million</span> (<span class="xn-money">$0.05</span> per share, basic and diluted) for the corresponding quarter of fiscal 2010.</p>
<p>As at <span class="xn-chron">June 30, 2010</span>, subtracting cash and cash equivalents, total net debt stood at <span class="xn-money">$61.2 million</span> for a total net debt to total capitalization ratio of 19.0% compared with total net debt of <span class="xn-money">$20.3 million</span> and a 6.9% ratio as at <span class="xn-chron">March 31, 2010</span>. This higher ratio resulted mainly from working capital investments to support operations. Note that when CWT was acquired by the Corporation, working capital at CWT was shy of what is usually required to support operations and drive growth.</p>
<p/>
<p>Backlog</p>
<p/>
<p>As at <span class="xn-chron">June 30, 2010</span>, the Corporation's backlog stood at <span class="xn-money">$452.1 million</span> compared with <span class="xn-money">$229.2 million</span> as at <span class="xn-chron">June 30, 2009</span> and <span class="xn-money">$442.3 million</span> as at <span class="xn-chron">March 31, 2010</span>.</p>
<p>The significant increase in value as at <span class="xn-chron">June 30, 2010</span> compared with <span class="xn-chron">June 30, 2009</span> resulted mainly from the acquisition of CWT along with organic growth in backlogs for both groups (at constant exchange rates). Total backlog as at <span class="xn-chron">June 30, 2010</span> was also higher than as at <span class="xn-chron">March 31, 2010</span>. This increase was wholly driven by organic growth in backlogs at both groups, but particularly by the Pulp and Paper Group.</p>
<p/>
<p>Outlook</p>
<p/>
<p>In the short term, the Corporation's main objective is to increase profitability for both operational groups and strengthen their respective positions to maximize market share. However, management will remain cautious over the next few quarters, in light of uncertain economic conditions in the U.S. and <span class="xn-location">Europe</span>.</p>
<p>"We remain confident that performance will improve over the next few quarters," said President and COO Richard Verreault. "However, the objective of a normalized EBITDA margin of 10% for the Water Treatment Group could be achieved a few quarters later than anticipated. Generally, the Corporation's management is satisfied with the integration process of the Water Treatment Group's global operations. However, CWT's financial performance for the first quarter of fiscal 2011 did not meet expectations. As well, orders booked by certain operational divisions tracked lower than anticipated, particularly in the energy sector. Management swiftly implemented robust measures to remedy the situation, including tighter controls over order bookings and contract performance, especially on turnkey contracts," added Richard Verreault.</p>
<p>In the pulp and paper industry, signs of recovery in the global market in the third and fourth quarters of fiscal 2010 have strengthened since the beginning of the current fiscal year. After an 18-month spending freeze on capital assets and equipment maintenance, a number of paper companies have started investing in their facilities once again. For the Pulp and Paper Group, this trend initially resulted in renewed demand for replacement parts and upgrading services, particularly in <span class="xn-location">North America</span>. "In recent weeks, we've also seen a spike in demand for new equipment. We believe that the increase in the group's backlog and the resulting revenue growth should gradually help restore its profit margins, given its flexible and competitive cost structure," indicated Richard Verreault.</p>
<p>In light of current backlogs for both groups and prevailing economic conditions, the Corporation's management expects consolidated revenues to range from <span class="xn-money">$700 million to $750 million</span> (at current exchange rates) for the fiscal year ending <span class="xn-chron">March 31, 2011</span>. Management will also strive to reach and maintain its normalized EBITDA margin target of 10% over a long-term horizon for all its operational groups.</p>
<p/>
<p>About GLV Inc.</p>
<p/>
<p>GLV Inc., a leading global provider of technological solutions used in water treatment as well as in pulp and paper production, operates in some 30 countries with approximately 2,300 employees as at <span class="xn-chron">June 30, 2010</span>. GLV is a public company whose shares trade on the <span class="xn-location">Toronto</span> Stock Exchange (TSX) under the ticker symbols GLV.A and GLV.B; it is a constituent of the S&P/TSX Clean Technology Index.</p>
<p/>
<p>Notice regarding forward-looking statements</p>
<p/>
<p>Certain information and statements in this press release and other public communications regarding management's objectives, projections, estimates, expectations or forecasts may constitute forward-looking statements within the meaning of applicable securities legislation. Forward-looking statements concern analyses and other information based on forecasted future results and estimates of amounts that cannot yet be determined. These may be observations concerning, in particular, strategies, expectations, planned activities or future actions. Forward-looking statements are recognized by the use of terms such as "forecast," "project," "could," "plan," "aim," "estimate" and other similar terms, possibly used in the future or conditional, particularly with regard to certain assumptions.</p>
<p>The management of GLV would like to point out that forward-looking statements involve a number of uncertainties and known and unknown risks such that GLV's actual and future results could differ considerably from those stated. Factors of uncertainty and risk that might result in such differences include the risks related to acquisitions and contracts with clients, dependence on key personnel, exchange rate fluctuations, credit, market and liquidity risks, competition, supplier-related risks, availability of the financing required to carry on the business and strategic plan, concentration risk, availability of raw materials, fluctuations in interest rates, potential lawsuits regarding intellectual property rights, asset impairment risk and risks associated with GLV's holding company structure. There can be no assurance as to the materialization of the results, performance or achievements as expressed in or underlying the forward-looking statements. In addition, unless otherwise indicated, the forward-looking statements included in this press release were set forth at the date hereof, and unless required to do so pursuant to applicable securities legislation, GLV's management assumes no obligation as to the updating or revision of the forward-looking statements as a result of new information, future events or other changes. Forward-looking statements are designed to provide the reader with a description of management's expectations regarding the Company's financial performance during fiscal 2011 and may not be appropriate for other purposes.</p>
<p/>
<p>Additional information about the risk factors to which GLV is exposed is provided under "Risk management and risk factors" in the MD&A for the fiscal year ended <span class="xn-chron">March 31, 2010</span> available on SEDAR (<a href="http://www.sedar.com">www.sedar.com</a>) and the Corporation's website (<a href="http://www.glv.com">www.glv.com</a>). The significant factors and assumptions used to draw conclusions or prepare forecasts or projections are also discussed in the MD&A for the fiscal year ended <span class="xn-chron">March 31, 2010</span>.</p>
<p/>
<pre>
    
    -------------------------------------------------------------------------

                               CONFERENCE CALL
                               ---------------

                  Thursday, August 12, 2010 at 2 p.m. (EDT)
                       Dial-in number: 1-888-231-8191

                 An audio webcast of the conference call will
                       be streamed live on www.glv.com.
             An audio recording will be accessible on demand from
         5 p.m. (EDT) August 12, 2010 until midnight August 19, 2010
                 at 1-800-642-1687 (access code: 89173013).
    -------------------------------------------------------------------------
    

For further information: For further information: Investors: Marc Barbeau, CA, Executive Vice-President and Chief Financial Officer, +1 514-284-2224, courrier@glv.com; Media: Yves Doucet, Director, Communications, +1 514-284-7202, yves.doucet@glv.com

Organization Profile

GLV Inc.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890