Marked improvement in revenues and operating profitability
DRUMMONDVILLE, QC, May 13, 2014 /CNW Telbec/ - CVTech Group Inc. ("CVTech" or "the Corporation") (TSX: CVT) today reported results for the first quarter ended March 31, 2014. All amounts are in Canadian dollars unless otherwise indicated.
"The significant improvement in our performance reflects a rise in sales volume across our network and better profitability in the execution of our contracts. In Quebec, Thirau ltée showed a sharp increase in revenues from contracts for the construction, maintenance and repair of electricity transmission lines. Moreover, we are satisfied with the sustained progress of our Ontario operations, reflecting our increasing penetration of this market. Finally, our U.S. operations turned in a solid quarter in mechanical work and in contracts for industrial, commercial and institutional electrical energy projects", said André Laramée, President and Chief Executive Officer of CVTech.
|Financial highlights||Three months ended March 31|
|(in thousands of dollars, except per-share data)||2014||2013|
|Per share - basic and diluted ($)||0.02||0.00|
|Weighted average number of outstanding shares (basic, in thousands)||71,533||72,230|
Revenues for the quarter were $71.2 million, up 26.2% from the first quarter of 2013. The increase was mainly due to higher revenues from contracts for the construction, maintenance and repair of electricity transmission lines and underground lines, from contracts related to mechanical work and from contracts for industrial, commercial and institutional electrical energy projects. In addition, the conversion effect from fluctuations in the value of the Canadian dollar increased the value of U.S.-dollar denominated revenues for the quarter ended March 31, 2014 by $3.7 million, compared with the same period in 2013. However, revenues from contracts for the construction, maintenance and repair of electricity distribution lines were lower.
Revenues from work carried out in the U.S. were up 10.4% to $43.6 million. Revenues from contracts performed in Canada were up 63.2% to $27.6 million. Of that amount, revenues from CVTech's Quebec operations reached $20.0 million, up 25.0% from a year earlier, proving their solid presence and reputation in the electrical services industry, while revenues from Ontario operations were $7.6 million, up from just over $900,000 in the first quarter of 2013.
Earnings before interest, income taxes, depreciation and amortization ("EBITDA") were $4.6 million, or 6.4% of revenues, compared to $2.3 million, or 4.1% of revenues, in the first quarter of 2013. The increase, both in dollars and as a percentage of revenues, reflects the increase in sales volume and a more favourable revenue mix. It should be noted that EBITDA in the year-earlier quarter was affected by the start-up of projects in new market segments.
Net earnings for the first quarter of 2014 were $1.4 million, or $0.02 per diluted share, compared to a net loss of $23,000, or $0.00 per diluted share, for the first quarter of 2013.
At March 31, 2014, the value of the Corporation's order backlog was $213 million, essentially stable relative to $216 million at the end of the previous quarter.
During the first quarter of 2014, the Corporation reduced its long-term debt, including the current portion, to $17.0 million at March 31, 2014 from $18.7 million at the beginning of the year. Consequently the ratio of long-term debt to equity was 0.20 at March 31, 2014, down from 0.23 three months earlier. Also at March 31, 2014, CVTech held a cash position of $832,000 and had $34.5 million in bank credit outstanding. The Corporation has approached some financial institutions in order to obtain loans under satisfactory terms and restrictions that better suit its business model.
"In the short term, CVTech will reap further benefits from its new organizational structure. We are very confident that this new structure will enhance our efficiency and result in recurring cost savings. These savings, mainly in overhead and workforce, together with expected synergy gains, will be felt increasingly over the coming quarters and, over time, will amount to more than $2.0 million annually. In addition, the expansion of our service offering through cross-selling, combined with our solid relationships with the main players in our target markets, positions CVTech advantageously to benefit from business opportunities that will arise for its subsidiaries", concluded Mr. Laramée.
OVERVIEW OF THE CORPORATION
CVTech is a company operating in the energy sector. The Corporation is a leading provider of construction and maintenance services to the public utility and heavy industrial markets mainly in Quebec, Ontario and the eastern United States. Through its subsidiaries, the Corporation provides maintenance and construction services for electricity transmission and distribution networks, substations and electrical power houses, as well as the control of vegetation on rights-of-way for electrical lines.
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 assumes no obligation beyond what is required under the law to update or revise forward-looking statements pursuant to new information or future events.
SOURCE: CVTECH GROUP INC.
For further information:
André Laramée, MBA
President and Chief Executive Officer
Mario Trahan, CPA, CMA
Chief Financial Officer
Martin Goulet, CFA