- Consolidated revenues of $252.5 million in 2011
- EBITDA of $20.7 million or 8.2% of revenues in 2011
- Overall reduction of $7.3 million in long-term debt and bank loans
- Order backlog of $279 million at December 31, 2011
DRUMMONDVILLE, QC, March 28, 2012 /CNW Telbec/ - CVTech Group Inc. ("CVTech" or "the Corporation") (TSX: CVT) today reported results for its fourth quarter and fiscal year ended December 31, 2011. These results are presented in accordance with International Financial Reporting Standards ("IFRS") and data for the corresponding period of the previous year have been restated. All amounts are in Canadian dollars unless otherwise indicated.
FISCAL 2011 RESULTS
Consolidated revenues were $252.5 million, versus $259.9 million in 2010. The decrease of 2.8% reflects mainly the conversion effect of fluctuations in the value of the Canadian dollar, which reduced the value of consolidated revenues denominated in foreign currencies by approximately $6.9 million relative to the previous year. Consolidated earnings before interest, taxes, depreciation, amortization and goodwill impairment ("EBITDA") were $20.7 million, or 8.2% of revenues, in 2011, compared to $26.5 million or 10.2% of revenues in 2010. EBITDA for 2010 included approximately $1.3 million in revenues from a large contract that could not be recorded previously.
Following the impairment test for the CVTech-AAB inc. cash-generating unit performed during the fourth quarter, the Corporation recognized an impairment loss and recorded a non-cash goodwill impairment charge of $2.9 million. After this charge, net earnings for 2011 were $3.1 million, or $0.04 per diluted share, compared to $9.4 million, or $0.13 per diluted share, in 2010. Because of the non-cash nature of the depreciation charge, cash flow from operations before changes in working capital items remained robust at $18.9 million.
At December 31, 2011, the Corporation's order backlog was $279 million. This amount does not include contracts valued at more than $50 million announced in January 2012.
|Financial highlights||Three months ended December 31,||Years ended December 31,|
|(in thousands of dollars, except per-share data)||2011||2010||2011||2010|
|Net earnings (loss)||(1,441)||2,984||3,091||9,419|
|Per share - basic and diluted ($)||(0.02)||0.04||0.04||0.13|
|Weighted average number of shares outstanding (basic, in thousands)||72,400||72,835||72,541||72,821|
"Given the relatively difficult economic context, results for 2011 were satisfactory," said André Laramée, President and Chief Executive Officer of CVTech. "Our subsidiaries continued to develop their markets and made considerable progress in segments with high growth potential, including renewable energy. However, the uncertain global economic climate has fostered a wait-and-see attitude in the Corporation's markets, which has to some extent slowed the awarding of large contracts. The result of these development efforts, combined with our solid relationships with the main actors of our target markets, is that we are better positioned than ever to benefit from the massive investments that will be required to maintain and expand the North American electric power infrastructure."
Revenues of the Energy segment decreased slightly to $233.2 million in 2011 from $239.7 million in 2010. The decline of $6.5 million, or 2.7%, was due mainly to the conversion effect of fluctuations in the value of the Canadian dollar, which reduced the value of U.S.-dollar-denominated revenues by $6.8 million relative to the previous year. In addition, an increase in sales related to natural disasters in 2011 relative to 2010 was offset by a slowing of contract awards in the U.S. as a result of economic uncertainty. This slowing has given rise to price competition among suppliers of electrical services and has constrained profitability accordingly. Consequently, EBITDA of the Energy segment was $17.4 million, or 7.5% of revenues, compared to $23.4 million, or 9.8% of revenues, in 2010.
Revenues of the CVT systems and related products segment were $19.3 million in 2011, down from $20.2 million in 2010. The 4.4% decrease is attributable to a decline in demand for the Corporation's systems due to the discretionary nature of purchases of the vehicles in which these systems are incorporated. EBITDA nevertheless increased to $3.3 million, or 17.1% of revenues, from $3.1 million, or 15.5% of revenues, in 2010, as a result of a tighter control of operating costs.
2011 FOURTH-QUARTER RESULTS
For the fourth quarter ended December 31, 2011, consolidated revenues were $71.6 million, compared to $69.7 million for the corresponding quarter of 2010. Energy segment revenues were $66.7 million, up 2.7% from $64.9 million a year earlier. The increase is attributable to $11.4 million in revenues related to natural disasters in the fourth quarter of 2011, compared to negligible revenues from this source in the corresponding quarter of 2010. Revenues of the CVT systems and related products segment increased 4.1% to $5.0 million, a rise attributable essentially to the CVTech-AAB inc. subsidiary.
Consolidated EBITDA for the fourth quarter of 2011 was $5.4 million, or 7.5% of revenues, compared to $8.7 million or 12.4% of revenues in the fourth quarter of 2010. EBITDA of the Energy segment was $5.0 million, or 7.5% of revenues, compared to $8.7 million or 12.4% of revenues a year earlier. EBITDA of the CVT systems and related products segment was $361,000, or 7.3% of revenues, compared to $313,000 or 6.6% of revenues a year earlier. As a result of the impairment charge noted above, the net loss for the fourth quarter of 2011 was ($1.4 million), or ($0.02) per diluted share, compared to net earnings of $3.0 million, or $0.04 per diluted share, in 2010.
SOUND FINANCIAL POSITION
As at December 31, 2011, CVTech's balance sheet remained sound, with cash of $5.4 million and long-term debt, including the current portion, of $35.2 million. During 2011, the Corporation used part of its cash flow to reduce its long-term debt and outstanding bank loans by a total of $7.3 million. Consequently, the ratio of long-term debt, including current portion, to equity was 0.48 at December 31, 2011, versus 0.57 a year earlier.
On March 26, 2012, the Corporation accepted a non-binding letter of intent with regards to the sale of its operations in the CVT systems and related products segment. The letter of intent contains certain conditions, including financing, a due diligence, as well as entering into a definitive purchase agreement. If all conditions are met, the transaction could close around July 31, 2012. The proposed purchase price amounts to $18.0 million, including a cash payment of $16.0 million and $2.0 million in preferred shares of the new entity.
"CVTech looks to the future with renewed energy. Uncertain business conditions notwithstanding, utilities are faced with the need to upgrade their networks. In addition, social pressures to increase the share of energy requirements met from renewable sources will create new opportunities for our Energy segment subsidiaries. We remain alert to possibilities for strategic acquisitions in the Energy segment that will enhance our product and service offering, our expertise and our geographic reach, but target companies will have to meet our strict selection criteria. Finally, the creation of the Riggs Distler Inc. subsidiary in Ontario will bring us attractive business opportunities in a province that plans to invest $87 billion in its electric power network over the next 20 years," Mr. Laramée concluded.
OVERVIEW OF THE CORPORATION
CVTech is a management company operating in two major sectors. Through Thirau ltée and its subsidiaries, Riggs Distler Inc. and Thirau LLC, the Corporation provides services to the electric power industry for the maintenance of transmission and distribution lines, primarily in Quebec, Ontario and the eastern United States. Another Thirau ltée 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 CVT systems. CVTech-AAB inc. specializes in rebuilding crankshafts and cylinders and in distributing engine parts.
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 presented and described in this release in order to provide additional information regarding the Corporation's liquidity and its ability to generate funds to finance its operations.
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.
For further information:
André Laramée, MBA
President and Chief Executive Officer
Mario Trahan, CMA
Chief Financial Officer
Martin Goulet, CFA