Results of the Second Quarter Ended July 31, 2008 - ADF Group Inc. continued to forge ahead in the second quarter posting excellent growth



    TERREBONNE, QC, Sept. 8 /CNW Telbec/ - ADF GROUP INC. ("ADF" or the
"Corporation") (ticker symbol: DRX) announces its results of the second
quarter and first six-month period ended July 31, 2008.
    As a result of the significant increase in its order backlog, the
Corporation's revenues rose 74% to $24 million for the second quarter ended
July 31, 2008, versus $13.8 million for the corresponding period in 2007.
Revenues for the first half nearly doubled, reaching $49.2 million.
    Earnings from continuing operations before interest, taxes, depreciation
and amortization, excluding exchange gains or losses (EBITDA) for the second
quarter totalled $6.1 million or 25% or revenues, compared with EBITDA of
$4.1 million or 30% of revenues for the second quarter of the previous year.
For the first six months of the current fiscal year, EBITDA rose 77% to
$12 million or 24% of revenues, compared with $6.8 million or 27% of revenues
for the same period in 2007.
    Net income for the second quarter increased by 83% to $4.1 million
($0.11 basic and diluted per share), compared with $2.2 million ($0.07 basic
and diluted per share) for the second quarter of 2007. For the first
six months of the current fiscal year, net income more than doubled to
$7.3 million ($0.20 per basic and diluted per share), as opposed to
$3.6 million ($0.11 basic and diluted per share) for the corresponding period
in 2007.
    The long-term debt was further reduced and stood at $9.5 million at the
end of the second quarter. At July 31, 2008, the Corporation's cash and cash
equivalents outpaced its long-term debt, reaching $10.6 million.
    Commenting on ADF's performance, Mr. Jean Paschini, Chairman of the Board
and Chief Executive Officer, said "We continued to forge ahead in the second
quarter, once again posting excellent growth. All performance indicators were
up sharply and in accordance with forecasts. The results for the first half of
the fiscal year ending January 31, 2009 reflect our commitment to grow ADF in
a sustained and profitable manner, and we are confident that our growth will
continue during the second half. We are solidly positioned to achieve our
revenue objectives and an EBITDA margin of between 23% and 25% for the
2008-2009 fiscal year."

    Outlook

    As at July 31, 2008, the order backlog stood at $125 million, up 45% over
that on the same date a year earlier. The total value of projects currently
under negotiation remained stable at $395 million, attesting to the favourable
outlook this year for the markets where ADF operates. "We continue to target
contracts with good profitability potential and that comply with ADF's
profitability and risk selection criteria. We are satisfied with the progress
of negotiations and expect to announce other contracts in the near future"
added Mr. Paschini.

    Capital Investments

    The Corporation continued the automation of our fabrication processes
through the start-up of new robotized equipment commissioned in late 2007 and
early 2008. Thanks to careful planning, the installation of the new equipment
did not disrupt or affect the plant's activities.
    The plant's annual fabrication capacity is increasing through the
integration of new equipment and as a result of the reengineering of certain
production areas. Management expects all new equipment to be operational by
the end of the year, which will increase the overall annual fabrication
capacity by 54% to 100,000 tons under one roof. Moreover, these investments
will increase the plant's efficiency, as well as the speed of execution and
the overall quality in the execution of contracts: the cornerstone of ADF
Group's competitive strategy.

    About ADF

    ADF Group Inc. is a North American leader in the design, engineering,
fabrication and selective installation in the non-residential construction
industry of complex steel superstructures, as well as in architectural metal
work. ADF is one of the few players in the industry capable of handling highly
technically complex mega projects on fast-track schedules in the commercial,
institutional, industrial and public sectors.

    Forward-Looking Information

    This press release contains forward-looking statements reflecting ADF
objectives and expectations. These statements are identified by the use of
verbs such as "expect" as well as by the use of future or conditional tenses.
By their very nature these types of statements involve risks and uncertainty.
Consequently, reality may differ from ADF's expectations.

    All amounts are in Canadian dollars.

    
    -------------------------------------------------------------------------
                       CONFERENCE CALL WITH INVESTORS:

                       TO DISCUSS ADF GROUP'S RESULTS
              FOR THE SECOND QUARTER AND FIRST SIX-MONTH PERIOD
                             ENDED JULY 31, 2008

            Monday, September 8, 2008 at 11:00 am (Montreal time)

    To participate in the conference call, dial 1-800-733-7571 a few minutes
    before the start of the call. For those unable to participate, a taped
    re-broadcast will be available from Monday, September 8, 2008 at
    1:00 p.m., until midnight, Monday, September 15, 2008, by dialing
    1-877-289-8525; access code 21282147#. The conference call
    (audio) will also be available at www.adfgroup.com

               Members of the media are invited to listen in.
    -------------------------------------------------------------------------


    CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
    ------------------------------------------------------------
    -------------------------------------------------------------------------

    Periods ended July 31,          Three (3) Months         Six (6) Months
                                ----------              ----------
                                    2008        2007        2008        2007
    (In thousands of $,         ---------------------------------------------
     except per-share amounts)         $           $           $           $

    REVENUES                      23,994      13,767      49,153      24,686
    Cost of good sold             17,051       8,486      35,095      15,475
    -------------------------------------------------------------------------
    Gross margin before foreign
     exchange variation            6,943       5,281      14,058       9,211
    (Gain) loss on foreign
     exchange                       (701)        597        (641)      1,036
    -------------------------------------------------------------------------
    Gross margin                   7,644       4,684      14,699       8,175
    Selling and administrative
     expenses                        862       1,187       2,077       2,427
    -------------------------------------------------------------------------
    Earnings before the
     undernoted items:             6,782       3,497      12,622       5,748
    Amortization
      Amortization of intangible
       assets                         13          88          26         212
      Amortization of property,
       plant and equipment           600         558       1,183       1,124
    -------------------------------------------------------------------------
                                     613         646       1,209       1,336
    -------------------------------------------------------------------------
    Earnings before financial
     charges and income taxes      6,169       2,851      11,413       4,412
    -------------------------------------------------------------------------
    Financial charges
      Interest on long-term debt     113         477         239         984
      Interest income                (46)        (67)       (132)       (106)
      Other interest and
       financial charges              17          21          72          46
    -------------------------------------------------------------------------
                                      84         431         179         924
    -------------------------------------------------------------------------
    Earning before income taxes    6,085       2,420      11,234       3,488
    -------------------------------------------------------------------------
    Income taxes
      Current                          3          (1)        171          39
      Future                       2,032         210       3,779        (165)
    -------------------------------------------------------------------------
                                   2,035         209       3,950        (126)
    -------------------------------------------------------------------------
    Net earnings and
     comprehensive income          4,050       2,211       7,284       3,614
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic earnings per              0.11        0.07        0.20        0.11
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Diluted earnings per share      0.11        0.07        0.20        0.11
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Average number of outstanding
     shares (in thousands)        36,145      32,405      36,126      31,646
    -------------------------------------------------------------------------
    Average number of diluted
     outstanding shares
     (in thousands)               37,258      33,725      37,290      33,007
    -------------------------------------------------------------------------


    CONSOLIDATED STATEMENTS OF DEFICIT
    ----------------------------------
    -------------------------------------------------------------------------

    Periods ended July 31,          Three (3) Months         Six (6) Months
                                ----------              ----------
                                    2008        2007        2008        2007
                                ---------------------------------------------
    (In thousands of $)                $           $           $           $

    Deficit, beginning of the
     period                      (72,304)   (106,962)    (75,538)   (108,365)
    Net earnings                   4,050       2,211       7,284       3,614
    Share issuance costs, net
     of taxes of $292,000              -        (622)          -        (622)
    -------------------------------------------------------------------------
    Deficit, end of the period   (68,254)   (105,373)    (68,254)   (105,373)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    CONSOLIDATED STATEMENTS OF CONTRIBUTED SURPLUS
    ----------------------------------------------
    -------------------------------------------------------------------------

    Periods ended July 31,          Three (3) Months         Six (6) Months
                                ----------              ----------
                                    2008        2007        2008        2007
                                ---------------------------------------------
    (In thousands of $)                $           $           $           $

    Contributed surplus,
     beginning of the period       2,014       2,032       1,965       1,988
    Stock options-based
     compensation                     62          44         111          88
    Exercise of options              (17)          -         (17)          -
    -------------------------------------------------------------------------
    Contributed surplus, end
     of the period                 2,059       2,076       2,059       2,076
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    CONSOLIDATED BALANCE SHEETS
    ---------------------------
    -------------------------------------------------------------------------
                                                              At          At
                                                         July 31, January 31,
                                                            2008        2008
                                                                    (Audited)
                                                       ----------------------
    (In thousands of $)                                        $           $

    ASSETS
    Current
      Cash and cash equivalents                           10,552       7,686
      Accounts receivable                                 22,845      17,877
      Holdbacks on contracts                               4,184       3,158
      Work in progress                                       810       1,312
      Inventories                                          2,849       2,551
      Prepaid expenses                                       911         266
      Income taxes                                           157         181
      Future income tax assets                            11,177      11,660
    -------------------------------------------------------------------------
                                                          53,485      44,691
    Holdbacks on long-term contracts                         412         345
    Property, plant and equipment                         40,350      33,082
    Intangible assets                                      1,766       1,153
    Other assets                                             329         328
    Future income tax assets                              10,115      13,066
    Investment tax credits                                 2,514       2,514
    -------------------------------------------------------------------------
                                                         108,971      95,179
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    LIABILITIES
    Current
      Credit facility - -
      Accounts payable and accrued charges                14,201       9,775
      Deferred revenues                                    8,812       6,066
      Current portion of long-term debt                    2,511       2,228
    -------------------------------------------------------------------------
                                                          25,524      18,069
    Long-term debt                                         6,984       8,089
    -------------------------------------------------------------------------
                                                          32,508      26,158
    -------------------------------------------------------------------------
    Shareholders' Equity
      Deficit                                            (68,254)    (75,538)
      Accumulated other comprehensive income                 264         264
    -------------------------------------------------------------------------
                                                         (67,990)    (75,274)
      Capital stock                                      142,394     142,330
      Contributed surplus                                  2,059       1,965
    -------------------------------------------------------------------------
                                                          76,463      69,021
    -------------------------------------------------------------------------
                                                         108,971      95,179
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    CONSOLIDATED STATEMENTS OF CASH FLOWS
    -------------------------------------
    -------------------------------------------------------------------------
    Periods ended July 31,          Three (3) Months         Six (6) Months
                                ----------              ----------
                                    2008        2007        2008        2007
                                ---------------------------------------------
    (In thousands of $)                $           $           $           $
    OPERATING REVENUES
      Net earnings                 4,050       2,211       7,284       3,614
      Adjustments for:
        Amortization of property,
         plant and equipment         600         558       1,183       1,124
        Amortization of
         intangible assets            13          88          26         212
        Amortization of other
         assets                        -           3           -         143
        Gain on disposal of
         property, plant and
         equipment                  (764)        (21)       (975)        (21)
        Non-cash exchange (gain)
         loss                       (198)         11        (178)         57
        Future income taxes        2,032         210       3,779        (165)
        Capitalized interest on
         the interest-free
         long-term debt                4           5           9           7
        Stock option-based
         compensation                 62          44         111          88
    -------------------------------------------------------------------------
      Net earnings adjusted        5,799       3,109      11,239       5,059
    -------------------------------------------------------------------------
    Changes in non-cash operating
     working capital items
      Accounts receivable            256        (959)     (4,968)     (3,087)
      Short-term and long-term
       holdbacks on contracts       (647)      1,702      (1,093)      1,785
      Work in progress              (292)        (93)        502       1,759
      Inventories                   (229)        222        (298)        921
      Income taxes                    64          26          24          29
      Prepaid expenses              (582)       (477)       (645)       (197)
      Accounts payable and
      accrued charges              2,428        (602)      4,426      (3,400)
      Deferred revenues            2,186      (3,630)      2,746      (4,424)
    -------------------------------------------------------------------------
                                   3,184      (3,811)        694      (6,614)
    -------------------------------------------------------------------------
    Cash flows applied to
     operating activities          8,983        (702)     11,933      (1,555)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
      Acquisition of property,
       plant and equipment        (5,476)       (602)     (7,476)     (1,264)
      Acquisition of intangible
       assets                       (372)       (299)       (639)       (369)
      Disposal of capital assets,
       net                             -          29           -          29
      Decrease in other assets        (1)          -          (1)          2
    -------------------------------------------------------------------------
    Cash flows applied to
     investing activities         (5,849)       (872)     (8,116)     (1,602)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
      Repayment of bank
       indebtedness                    -           -           -        (263)
      Increase in long-term debt       -         219           -         489
      Repayment of long-term debt   (606)     (8,105)     (1,013)     (8,710)
      Issuance of subordinate
       voting shares                  38      10,692          47      10,707
    -------------------------------------------------------------------------
    Cash flows applied to
     financing activities           (568)      2,806        (966)      2,223
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Impact of fluctuation in
     foreign exchange rate
     on cash                          62         (11)         15         (57)
    -------------------------------------------------------------------------
    Net cash inflows (outflows)    2,628       1,221       2,866        (991)
    Cash and cash equivalents,
     at the beginning of the
     period                        7,924       3,804       7,686       6,016
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     at the end of the period     10,552       5,025      10,552       5,025
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Supplemental cash flow
     information
      Income taxes paid                -           -         162          23
      Interest paid                  146         411         204         926
      Non-cash financing and
       investing activities:
        Property, plant and
         equipment given in
         exchange for new ones     1,524           -       2,261           -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Segmented Information

    The Corporation operates in the non-residential construction sector,
primarily in the United States and in Canada. Its operations include the
connections design and engineering, fabrication and selective installation of
complex steel structures, heavy built-ups as well as miscellaneous and
architectural metal works.
    During the first six-month period ended July 31, 2008, 67% of the
Corporation's revenues was achieved with two clients, each of which accounted
for more than 10% of revenues.


    -------------------------------------------------------------------------
                                                   Revenues
    Periods ended July 31,          Three (3) Months         Six (6) Months
                                ----------              ----------
                                    2008        2007        2008        2007
                                ---------------------------------------------

                                       $           $           $           $
    Canada                         2,181       1,621       3,054       2,640
    United States                 21,813      12,146      46,099      22,046
    -------------------------------------------------------------------------
                                  23,994      13,767      49,153      24,686
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                               Property, Plant and Equipment
                                               ------------------
                                                              At          At
                                                         July 31, January 31,
                                                            2008        2008
                                                                    (Audited)
                                               ------------------------------
                                                               $           $
    Canada                                                40,083      32,889
    United States                                            267         193
    -------------------------------------------------------------------------
                                                          40,350      33,082
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    




For further information:

For further information: Jean Paschini, Chairman of the Board and Chief
Executive Officer; Louis Potvin, Chief Financial Officer; (450) 965-1911,
1-800-263-7560;www.adfgroup.com; Media: Caroline Couillard, Morin Relations
Publiques, (514) 289-8688, ext. 233; Source: ADF Group Inc.


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