TORONTO, March 9, 2012 /CNW/ - General Donlee Canada Inc. ("General Donlee" or the "Company") (TSX: GDI) today announced its results for the fourth quarter and year ended December 31, 2011. The Board has declared a quarterly dividend of $0.0825 per common share payable on April 16, 2012 to holders of record at the close of business on March 30, 2012.
Financial highlights relating to General Donlee's fourth quarter 2011:
- Sales of $11.8 million, up 10% compared to Q4 2010
- Net income of $1.7 million or $0.159 per share, an increase of $0.3 million over Q4 2010
- Sales order backlog of $55.4 million at December 31, 2011, up $10.6 million from year-end 2010
- Quarterly dividend of $0.0825 per share paid to shareholders on January 16, 2012
Financial highlights relating to the year 2011:
- Sales of $48.9 million, up 19% compared to 2010
- Net income of $4.6 million or $0.433 per share, an increase of $1.7 million over 2010
- Dividends totaling $0.33 per share declared to shareholders in 2011
On February 29, 2012, the Company announced that it has renewed its Long-Term Agreement (LTA) with an existing major aerospace customer with total revenue relating to the LTA estimated at approximately US$95 million over the 4-year term of the extension, representing a significant increase in annual volume compared to 2011.
Consistent growth in sales and positive cash flow from operations
"General Donlee's 10% increase in sales in the fourth quarter and 19% increase in sales year-to-date over the comparable periods last year continue to reflect strong fundamentals in the industries we serve and our ability to grow our business with current and new customers. As a result, in the fourth quarter we generated $1.5 million of positive cash flow from operations before changes in working capital, and paid out $0.88 million in quarterly dividends to shareholders" said Chief Executive Officer and Interim Chief Financial Officer, Garen Mikirditsian.
"At December 31, 2011, our production order backlog was at a 4-year high of $55.4 million, up by $10.6 million or 24% relative to our backlog at the end of 2010," said Mr. Mikirditsian. "The strong backlog supports a positive outlook and is evidence of the confidence our customers have in the Company's ability to consistently deliver product of the highest quality. We expect demand to remain robust in 2012."
Impact of stronger Canadian dollar at year-end
"Our net income for the quarter reflects a net foreign exchange gain of $0.6 million mainly resulting from a non-cash mark-to-market gain on our long-term hedging program due to the strength of the Canadian dollar. Net income was $1.7 million for the quarter, an increase of $0.3 million or 21% over the similar period in 2010," said Mr. Mikirditsian.
To mitigate its exposure to currency fluctuations, General Donlee has a rolling hedging program with a chartered Canadian bank through which it reduces its U.S. dollar exposure by entering into foreign exchange forward contracts. As of December 31, 2011, the Company had foreign exchange forward contracts outstanding to sell $18.4 million U.S. dollars and to buy Canadian dollars at an average exchange rate of CAD $1.0285. In addition, the Company's significant U.S. dollar purchases of raw materials and outside services provide a natural hedge in its U.S. dollar exposure.
The following summary of financial data presents General Donlee's consolidated results of operations for the three-and twelve month periods ended December 31, 2011, including comparative results for the same periods in 2010.
| ($ millions, except Share/Unit and
per Share/Unit amounts)
|Three Months Ended||Twelve Months Ended|
|Dec. 31/11||Dec. 31/10||Dec. 31/11||Dec. 31/10|
|Basic income per share/Unit||$0.159(a)||$0.127(b)||$0.433(a)||$0.272(b)|
|(a)||Based on weighted average of 10,664,465 shares outstanding.|
|(b)||Based on weighted average of 10,664,634 units outstanding.|
General Donlee delivered sales of $48.9 million for the year ended December 31, 2011 - an increase of $7.8 million, or 19%, over its sales in the same period in 2010. Sales in the Company's aerospace and power generation products division during the year ended December 31, 2011 were $29.8 million - up by 23%, or $5.5 million, over the comparable period in 2010. General Donlee's specialty precision products division's sales during the same period were $19.1 million, an increase of $2.3 million or 14% over the same period last year.
The Company's net income during the year ended December 31, 2011 was $4.6 million, compared to net income of $2.9 million during the same period in the previous year. This net increase in profitability reflected:
- Stronger gross profit levels resulting from improved sales
- The recording of a SR&ED tax credit in 2011
- A realized foreign exchange gain of $0.6 million in 2011 vs. a realized foreign exchange gain of $0.04 million in 2010; and
- An accounting gain of $0.9 million on pension curtailment recorded in 2011
- An unrealized foreign exchange loss in 2011 of $0.3 million vs. an unrealized foreign exchange loss of $0.5 million in 2010, partially offset by
- A provision for deferred tax in 2011 of $1.1 million vs. a recovery of $0.9 million in 2010.
The Company continues to see strong demand from customers and robust fundamentals in the end markets it serves. "Our 4-year high production backlog of more than $55 million is evidence of the confidence our customers have in the Company's ability to consistently deliver product of the highest quality," said Chief Executive Officer and Interim Chief Financial Officer, Garen Mikirditsian.
As announced on February 29, 2012, the Company has renewed its Long Term Agreement (LTA) with an existing major aerospace customer. The extension covers all current parts and includes additional work with total revenue relating to the LTA estimated at approximately US$95 million over the 4-year term of the extension, representing a significant increase in annual volume compared to 2011. Mr. Mikirditsian noted: "This extension, which cements our Company as a key and leading supplier to this major customer beyond 2012 through to the end of 2016, is a strong testament to the quality focus and customer commitment of General Donlee."
General Donlee's outlook for sustainable and profitable growth is also grounded on its consistent focus on continuous improvement. As part of its strategy of achieving operational excellence, and as announced on February 13, 2012, the Company appointed Bruce Van Nus, a seasoned operations executive with over twenty years of manufacturing experience, as its Chief Operating Officer. "We are committed to investing in people, capital equipment and technology, in order to serve our customers and meet and exceed their stringent requirements for excellent quality and impeccable delivery. With a highly skilled workforce and an experienced and driven management team, we are confident that we will continue to satisfy our customers and achieve our growth targets," added Mr. Mikirditsian.
General Donlee Canada Inc. is a leading diversified manufacturer of precision-machined products for the military, commercial and general aerospace industries, and a specialist in the manufacture of precision-machined products for the industrial products and power generation industries. General Donlee's operating strategy focuses on targeting niche markets for products that are aligned with its sophisticated manufacturing capabilities and skilled workforce.
On March 12, 2012 the Company will file its audited Consolidated Financial Statements (including the notes thereto) and Management's Discussion and Analysis for the year ended December 31, 2011 with SEDAR at www.sedar.com. These documents will also be available on the Company's website at www.generaldonlee.com on the Financial Reports page.
As with all forward-looking statements, caution must be exercised to ensure that appropriate interpretation is made. Certain forward-looking statements are based on information currently available to Management, but are subject to a number of uncertainties and risks that could cause actual results to differ materially from the results discussed in the forward-looking statements. These uncertainties and risks include, but are not limited to those listed under the "Risk Factors" section of the Company's 2010 Annual Information Form, dated March 25, 2011 (which can be found at www.sedar.com).
Further information can be found in the disclosure documents filed by General Donlee Canada Inc. with the securities regulatory authorities, available at www.sedar.com or through the Company's website at www.generaldonlee.com.
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