TORONTO, May 3, 2012 /CNW/ - General Donlee Canada Inc. ("General Donlee" or the "Company") (TSX: GDI) today announced its results for the first quarter ended March 31, 2012. The Board has declared a quarterly dividend of 8.25 cents per common share payable on July 16, 2012 to holders of record at the close of business on June 29, 2012.
Financial highlights relating to General Donlee's first quarter 2012:
- Sales of $14.1 million, up 12% compared to Q1 2011
- Gross Profit of $3.9 million, up 31% over Q1 2011
- Net income of $1.6 million or $0.149 per share, a 23% increase over Q1 2011
- Sales order backlog of $51.5 million at March 31, 2012
- Quarterly dividend of 8.25 cents per share paid to shareholders on April 16, 2012
Continuing growth in sales and positive cash flow from operations
"General Donlee's 12% increase in sales in the first quarter over the comparable period last year continues 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 first quarter we generated $2.4 million of positive cash flow from operations before changes in working capital and net of interest expenses, and paid out $0.88 million in quarterly dividends to shareholders" said Chief Executive Officer and Interim Chief Financial Officer, Garen Mikirditsian.
"At March 31, 2012, our production order backlog was at $51.5 million, reflecting the confidence our customers have in the Company's ability to consistently deliver product of the highest quality," said Mr. Mikirditsian. "We expect demand to remain robust in 2012."
Increase in Gross Profit
Gross profit for the quarter was 31% higher than in the comparable period in 2011, mainly due to higher production volumes resulting in improved overhead absorption. "Our strong gross profit for the quarter reflects our positive top line performance but also is evidence of a focused approach to controlling costs that is having real impact", said Mr. Mikirditsian.
Foreign Exchange Hedging Program
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 March 31, 2012, the Company had foreign exchange forward contracts outstanding to sell $11.9 million U.S. dollars and to buy Canadian dollars at an average exchange rate of CAD $1.0285. In addition, the Company's significant U.S. dollar purchases of raw materials and outside services provide a natural hedge in its U.S. dollar exposure.
The following summary of financial data presents General Donlee's consolidated results of operations for the three-month period ended March 31, 2012, including comparative results for the same period in 2011.
|($ millions, except Share/Unit and per Share/Unit amounts)||Three Months Ended|
|Mar. 31/12||Mar. 31/11|
|Basic income per share||$0.149(a)||$0.122(b)|
(a) Based on weighted average of 10,646,505 shares outstanding.
(b) Based on weighted average of 10,664,634 shares outstanding.
General Donlee delivered sales of $14.1 million for the three months ended March 31, 2012 - an increase of $1.5 million, or 12%, over its sales in the same period in 2011. Sales in the Company's aerospace and power generation products division during the three-months ended March 31, 2012 were $8.0 million - up by 5%, or $0.4 million, over the comparable period in 2011. General Donlee's specialty precision products division's sales during the same period were $6.1 million, an increase of $1.1 million or 22% over the same period last year.
The Company's net income during the three months ended March 31, 2012 was $1.6 million, compared to net income of $1.3 million during the same period in the previous year. This net increase in profitability reflected:
- Stronger gross profit levels due to higher production volumes resulting in improved overhead absorption
- A realized foreign exchange gain of $0.2 million in 2012 vs. a realized foreign exchange gain of $0.1 million in 2011; and
- An unrealized foreign exchange gain in 2012 of $0.2 million vs. an unrealized foreign exchange loss of $0.03 million in 2011, partially offset by
- A provision for deferred tax in 2012 of $0.5 million vs. a recovery of $0.2 million in 2011.
The Company continues to see strong demand from customers and healthy fundamentals in the end markets it serves. "Our production backlog of $51.5 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.
The Company expects demand for its services to remain robust in the near term. "With market forecasts pointing to a prolonged upcycle of orders and production in the commercial aircraft industry, we expect demand for our aerospace products to remain strong", said Mr. Mikirditsian. "We also see distinct opportunities to grow our business with certain of our current customers and expand our relationships in the aerospace, oil & gas, industrial and nuclear sectors."
General Donlee's outlook for sustainable and profitable growth is also grounded on its consistent focus on continuous improvement. "Operational excellence is key to the Company's strategy, and we are starting to see our operational improvement initiatives positively impacting our overall performance. More specifically, we are happy to note that the impressive performance of our specialty precision division compared to the comparable period last year was significantly driven by operational improvements implemented during the quarter", 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 May 7, 2012 the Company will file its unaudited Condensed Consolidated Interim Financial Statements (including the notes thereto) and Management's Discussion and Analysis for the three-month period ended March 31, 2012 with SEDAR at www.sedar.com. The 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 2011 Annual Information Form, dated March 30, 2012 (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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