Highlights of the second quarter of fiscal 2015
- Revenues of $151.0 million, relatively unchanged from the same quarter last year
- Adjusted EBITDA(1) of $5.3 million, down 10% from the same quarter of the previous fiscal year
- Net loss from continuing operations attributable to shareholders of GLV Inc. of $2.5 million compared with net earnings of $1.4 million for the same quarter of fiscal 2014
- Backlog of $359.0 million, comparable to the June 30, 2014 level
- Net debt of $59.8 million, up $12.8 million from the June 30, 2014 level
(All amounts are in Canadian dollars)
MONTRÉAL, Nov. 11, 2014 /CNW Telbec/ - For the second quarter of fiscal 2015, GLV Inc. (GLV Group or the Corporation) reported revenues of $151.0 million, up 1% from the second quarter of the previous fiscal year (-2% organic growth(1) at constant exchange rates), and adjusted EBITDA(1) of $5.3 million, down 10%. The Corporation recorded a net loss from continuing operations attributable to shareholders of GLV Inc. of $2.5 million or $0.06 per share, basic and diluted, compared with net earnings of $1.4 million or $0.03 per share, basic and diluted, for the same quarter of the previous fiscal year. The net loss stemmed primarily from costs incurred for the ongoing sale transaction, the negative impact of Ovivo's non-core businesses on operating margin, a foreign exchange loss and unrealized losses related to derivative financial instruments.
Ovivo's revenues for the second quarter were down 2% from the same period of fiscal 2014 (-7% organic growth(1) at constant exchange rates). This decrease resulted largely from new equipment sales in the second quarter of fiscal 2014 which included revenues related to markets that are no longer targeted by Ovivo as well as certain projects that would have not met the selection criteria currently in effect subsequent to Ovivo's business refocusing plan. These projects had a positive impact on revenues in fiscal 2014, whereas they had a negative impact on operating margin. The decline in revenues was partially offset by growth in the Municipal North America market which has been underpinned by a high backlog since the end of the third quarter of 2014. While Ovivo's non-core businesses generated revenues of $16.2 million and $34.2 million, respectively, for the three-month and six-month periods ended September 30, 2014, they had a dampening effect on adjusted EBITDA(1) of $1.9 million and $3.7 million, respectively.
Revenues at GL&V Pulp and Paper grew 12% over the second quarter compared with the corresponding quarter of the previous fiscal year (9% organic growth(1) at constant exchange rates), bolstered mainly by the new equipment market.
For the six-month period ended September 30, 2014, the Corporation reported a net loss from continuing operations attributable to shareholders of GLV Inc. of $5.6 million or $0.13 per share, basic and diluted, compared with net earnings of $2.7 million or $0.06 per share, basic and diluted, for the same period of the previous fiscal year. The net loss stemmed primarily from costs related to the ongoing sale transaction, the negative impact of Ovivo's non-core businesses on operating margin, a foreign exchange loss and unrealized losses on derivative financial instruments.
GLV Group's backlog stood at $359.0 million as at September 30, 2014, unchanged from the June 30, 2014 level, but was down $4.7 million at constant exchange rates.
Ovivo reported a backlog of $281.6 million as at September 30, 2014, down from $287.5 million as at June 30, 2014. The decline stemmed primarily from the Electronics market which, after major contract wins in early fiscal 2014, recorded a decline in backlog owing to the percentage of completion of projects. These declines were partly offset by improved backlog in the Parts and Services market, reflecting the measures implemented to develop this key strategic niche for Ovivo as well as in the Energy and Municipal North America markets.
As at September 30, 2014, the GL&V Pulp and Paper's backlog amounted to $68.5 million, up from $61.1 million as at June 30, 2014, resulting primarily from order taking for new equipment contracts while order taking in the Parts and Services market was stable.
GLV set to become a company focused exclusively on water treatment
On September 24, 2014, GLV announced that it has executed a definitive agreement for the sale of its Pulp and Paper Division for $65 million, on a debt-free basis, to a corporation owned by Richard Verreault, the President and Chief Executive Officer of the Corporation and Laurent Verreault, the Executive Chairman of the Board of the Corporation (the "Purchaser"). With this transaction, GLV will be able to focus exclusively on water treatment products and solutions in a fast-growing sector with attractive long-term outlook. Furthermore, the transaction will considerably strengthen GLV's balance sheet and provide it with the means to accelerate its growth, both organically and through acquisitions.
A 45-day go-shop period from September 24 to November 7, 2014 took place, during which time National Bank Financial Inc, serving as financial advisor to GLV Inc., surveyed third-party interest in making a proposal to outbid the Purchaser for the Pulp and Paper Division. No higher offers were received during this go-shop period. However, at the request of the independent committee of the board of directors of GLV, the Purchaser accepted to increase the purchase price payable under the proposed sale transaction from $65 million to $67 million. An amendment to the share purchase agreement was executed on November 9, 2014 for this purpose.
The completion of the transaction is subject to the approval of 66 2/3% of the votes cast by Class A subordinate voting and Class B multiple voting shareholders present in person or by proxy at a special meeting of shareholders of GLV scheduled for November 14, 2014, voting as a class, and by a majority (50% + 1) of the Corporation's disinterested shareholders, namely all the shareholders of the Corporation barring Laurent and Richard Verreault, in accordance with applicable rules governing related party transactions. The transaction is also subject to customary closing conditions and, if approved by the shareholders, is expected to close in the third quarter of fiscal 2015.
For further information on the transaction terms and conditions, refer to the notice of special meeting and the information circular regarding the sale of the Pulp & Paper Division of GLV Inc., which can be viewed under GLV's profile at www.sedar.com and at the Corporation's website at www.glv.com.
To ensure future growth, the Corporation is focusing on Ovivo's three core markets: Municipal, Electronics, and Energy, while giving high priority to developing its Upgrading, Parts and Services segment. The Electronics and Municipal North America markets are already doing very well while the Energy market has been experiencing a slowdown in order taking in recent months. However, this market has high potential as demand for energy is growing in many regions across the world and as Ovivo is creating more and more opportunities in the Upgrading, Parts and Services segment with its impressive pool of operating equipment. The Corporation intends to leverage opportunities in this market by continuing to optimize its approach with its clients.
Between now and March 31, 2015, in line with its strategic plan, management's priorities are: (i) carry out the ongoing sale transaction; (ii) complete the streamlining initiatives at Ovivo by divesting non-core businesses; and (iii) restructure the corporate functions.
Furthermore, the Corporation will continue to review opportunities for acquisitions that could complement Ovivo's products offering or could further develop its market penetration. The Corporation is confident that, once the streamlining process is completed, the investments made during the past two years will start to pay off in terms of higher profitability and increased shareholder value.
This press release discusses the highlights for the second quarter ended September 30, 2014. For a detailed analysis, see the interim management's discussion and analysis and unaudited interim condensed consolidated financial statements, filed today on the websites of SEDAR (www.sedar.com) and the Corporation (www.glv.com). Note that non-IFRS financial measures were used to analyze performance, as management considers that they provide useful information for investors seeking to assess the Corporation's performance and financial position.
About Group GLV (GLV Inc.)
GLV Group is made up of international companies operating primarily in the water treatment (Ovivo) and pulp and paper (GL&V Pulp and Paper) industries that offer comprehensive technological solutions as well as services and equipment tailored to specific client needs. GLV Group's business units operate in more than 25 countries and have approximately 1,680 employees. GLV Inc. is a public company whose shares trade on the Toronto Stock Exchange under the ticker symbols GLV.A and GLV.B.
Notice regarding forward-looking statements
Certain statements in this press release and other public communications regarding management's objectives, projections, estimates, expectations or forecasts may constitute forward-looking statements within the meaning of applicable securities legislation. Forward-looking statements are recognized by the use of terms such as "forecast," "project," "could," "plan," "aim," "estimate" and other similar terms, possibly used in the future or conditional, particularly with regard to certain assumptions. The management of GLV would like to point out that forward-looking statements involve a number of uncertainties and known and unknown risks such that the actual and future results of GLV could differ considerably from those stated. There can be no assurance as to the materialization of the results, performance or achievements as expressed in or underlying the forward-looking statements. The forward-looking statements included in this press release were made as of the date hereof, and unless required to do so pursuant to applicable securities legislation, management of GLV assumes no obligation to update them.
Additional information about the risk factors to which GLV Inc. is exposed is provided under section 11, "Risks and uncertainties," of the MD&A for the fiscal year ended March 31, 2014 available on SEDAR (www.sedar.com) and the Corporation's website (www.glv.com).
This is a non-IFRS measure. See Section 12, "Reconciliation of non-IFRS financial measures" in the Corporation's management's discussion and analysis for the quarter ended September 30, 2014.
SOURCE: GLV Inc.
For further information: François Dufresne, Chief Financial Officer, Tel.: +1 514-842-7236, Francois.Dufresne@glv.com