HIGHLIGHTS
- Revenues of $135.1 million, down
compared with the previous year as a results of the uncertainty
surrounding customs tariffs.
- Cash flow from operations up by $8.0
million, reaching $11.7
million.
- Net loss of $0.4 million,
compared with a net loss of $7.2
million a year ago
- The Corporation's order backlog totalled $219.5 million as at January 31, 2019, up by $134 million compared with January 31, 2018.
TERREBONNE, QC, April 11, 2019 /CNW Telbec/ - ADF GROUP
INC. ("ADF" or the "Corporation") (TSX: DRX) recorded revenues
of $135.1 million during the fiscal
year ended January 31, 2019, compared with $180.5 million the previous fiscal year. This
decrease in revenues results for the most part from the loss of
three major contracts at the beginning of the fiscal year following
the implementation of new U.S. tariffs on steel imports. Although
the Corporation was able to secure new contracts since the tariffs
took effect, the impact from the loss of these contracts on
fabrication activities could not be recovered.
Gross margin, as a percentage of revenues went from 8.9% in the
fiscal year ended January 31, 2018, to 7.1% during the
fiscal year ended January 31, 2019.
This drop in gross margin is largely explained by the impact of
above-mentioned fabrication volume decrease on the absorption of
fixed costs.
ADF recorded a net loss of $0.4
million (-$0.01 basic and
diluted per share) during the fiscal year ended
January 31, 2019, compared with a net loss of
$7.2 million (-$0.22 basic and diluted per share) a year ago. It
is important to highlight that during the fourth quarter of the
fiscal year ended January 31, 2018,
the Corporation recorded a $9.2
million non-recurrent and non-cash income tax expense,
following the change made to the U.S. federal tax rates for the
Corporation's U.S. subsidiaries, and the non-recognition of
deferred U.S. subsidiaries income tax assets following a tax
settlement.
On January 31, 2019, the Corporation had $31.8 million in working capital, whilst its cash
and cash equivalents position, net of the credit facilities,
increased by $4.7 million from the
same date a year ago.
The Corporation remains in a sound position to support its
ongoing operations and pursue its development projects.
During the fiscal year ended January 31,
2019, the Corporation was able to secure new contracts
valued at close to $200 million,
bringing its order backlog to $219.5
million on that date, and that is excluding the new
contracts worth $73 million announced
on February 12, 2019, compared with a
backlog of $85.5 million as at
January 31, 2018. Most contracts will be progressively
completed by the end of the fiscal year ending January 31,
2021.
Financial
Highlights
|
|
|
|
Fiscal Years Ended
January 31,
|
2019
|
2018
|
(In thousands of CA$,
and dollars per share)
|
$
|
$
|
|
|
|
Revenues
|
135,073
|
180,474
|
EBITDA
|
1,945
|
8,436
|
Income (loss) before
income tax expense
|
(2,393)
|
2,172
|
Net loss for the
year
|
(374)
|
(7,213)
|
— Basic
per share
|
(0.01)
|
(0.22)
|
— Diluted
per share
|
(0.01)
|
(0.22)
|
Average number of
outstanding shares (basic, in thousands)
|
32,635
|
32,633
|
Average number of
outstanding shares (diluted, in thousands)
|
32,635
|
32,633
|
Outlook
"We can draw some still positive conclusions from this past
fiscal year, even though it started with uncertainties about the
free-trade treaty negotiations and the introduction of new tariffs
on steel imports" indicated Mr. Jean Paschini,
Co-Chairman of the Board of Directors and Chief Executive
Officer.
"We have announced close to $200
million worth in new contract during the fiscal year ended
January 31, 2019, and we have secured
an additional $73 million in new
contracts since that date. We have also improved our liquidities,
which in turn improved our cash position, net of credit facilities,
by almost $5.0 million", concluded
Mr. Paschini.
Dividend
On April 10, 2019, ADF Group's
Board of Directors approved the payment of a semi-annual dividend
of $0.01 per share, which will be
paid on May 15, 2019 to shareholders
of record as at April 30, 2019.
Conference Call with Investors
A conference call with investors is scheduled for April 11, 2019 at 10 a.m.
(Eastern time) to discuss the results of Corporation fiscal
year ended January 31, 2019.
To take part in the conference call, dial 1-888-390-0549, a few
minutes prior to the conference call scheduled start time. A replay
of this conference call will be available from Thursday, April 11, 2019 at 1:00 p.m. until 11:59 p.m., Thursday, April 18, 2019, by dialing
1-888-259-6562, followed by the access code 158733 #.
The conference call (audio) will also be available at
www.adfgroup.com. Members of the media are invited to listen
in.
Annual Meeting of Shareholders
ADF Group Inc. Annual Meeting of Shareholders will be held
on:
Date:
|
Wednesday, June 12,
2019
|
|
|
Time:
|
11:00 a.m.
|
|
|
Place:
|
Imperia Hotel &
Suites
2935 de la Pinière Boulevard, Terrebonne, Québec, Canada
|
Financial results for the first quarter ending April 30, 2019, will also be disclosed at the
Corporation's shareholders meeting.
About ADF Group Inc.
ADF Group Inc. is a North American leader in the design and
engineering of connections, fabrication, including the application
of industrial coatings, and installation of complex steel
structures, heavy steel built-ups, as well as in miscellaneous and
architectural metals for the non-residential infrastructure sector.
ADF Group Inc. is one of the few players in the industry capable of
handling highly technically complex mega projects on fast-track
schedules in the commercial, institutional, industrial and public
sectors. The Corporation operates two fabrication plants and two
paint shops, in Canada and in
the United States, and a
Construction Division in the United
States, which specializes in the installation of steel
structures and other related products.
Forward-Looking Information
This press release contains forward-looking statements
reflecting ADF objectives and expectations. These statements are
identified by the use of verbs such as "expect" as well as by the
use of future or conditional tenses. By their very nature these
types of statements involve risks and uncertainty. Consequently,
reality may differ from ADF's expectations.
Non-IFRS Measures
Earnings before interest, taxes, depreciation and amortization
("EBITDA") is not a performance measure recognized by IFRS
standards, and is not likely to be comparable to similar measures
presented by other issuers. Management, as well as investors,
consider this to be useful information to assist them in assessing
the Corporation's profitability and ability to generate funds to
finance its operations. Refer to the section "Non-GAAP Measures" of
the Corporation's Management's Discussion and Analysis for the
definition of this metric and reconciliation to the most comparable
IRFS measures.
All amounts are in Canadian dollars, unless otherwise
indicated.
CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION
|
|
|
|
As at January
31,
|
2019
|
2018
|
(In thousands of
Canadian dollars)
|
$
|
$
|
|
|
|
ASSETS
|
|
|
Current
assets
|
|
|
Cash and cash
equivalents
|
4,164
|
4,905
|
Accounts
receivable
|
29,919
|
33,099
|
Holdbacks on
contracts
|
6,227
|
4,933
|
Current income tax
assets
|
859
|
927
|
Contract
assets
|
17,952
|
―
|
Work in
progress
|
―
|
30,314
|
Inventories
|
8,349
|
5,150
|
Derivative financial
instruments
|
―
|
300
|
Prepaid expenses and
other current assets
|
1,638
|
2,428
|
Total current
assets
|
69,108
|
82,056
|
|
|
|
Non-current
assets
|
|
|
Property, plant and
equipment
|
89,375
|
88,378
|
Intangible
assets
|
3,312
|
3,197
|
Other non-current
assets
|
1,417
|
1,627
|
Total assets
|
163,212
|
175,258
|
|
|
|
LIABILITIES
|
|
|
Current
liabilities
|
|
|
Bank
overdraft
|
―
|
1,907
|
Credit
facilities
|
6,605
|
10,150
|
Accounts payable and
other current liabilities
|
16,857
|
29,308
|
Current income tax
liability
|
422
|
422
|
Contract
liabilities
|
10,920
|
―
|
Deferred
revenues
|
―
|
3,435
|
Derivative financial
instruments
|
184
|
―
|
Current portion of
long-term debt
|
2,272
|
2,066
|
Total current
liabilities
|
37,260
|
47,288
|
|
|
|
Non-current
liabilities
|
|
|
Long-term
debt
|
24,939
|
26,135
|
Deferred income tax
liabilities
|
3,921
|
6,053
|
Other non-current
liabilities
|
197
|
―
|
Total
liabilities
|
66,317
|
79,476
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
Capital
stock
|
68,120
|
68,120
|
Contributed
surplus
|
6,432
|
6,423
|
Accumulated other
comprehensive income (loss)
|
6,648
|
4,706
|
Retained
income
|
15,695
|
16,533
|
Total shareholders'
equity
|
96,895
|
95,782
|
Total
liabilities and shareholders' equity
|
163,212
|
175,258
|
CONSOLIDATED
STATEMENTS OF INCOME (LOSS)
|
|
|
|
Fiscal Years Ended
January 31,
|
2019
|
2018
|
(In thousands of
Canadian dollars and in dollars per share)
|
$
|
$
|
|
|
|
Revenues
|
135,073
|
180,474
|
Cost of goods
sold
|
125,520
|
164,352
|
Gross
Margin
|
9,553
|
16,122
|
Selling and
administrative expenses
|
12,181
|
12,109
|
Net financial
expenses
|
1,784
|
1,608
|
Foreign exchange
(gain) loss
|
(2,019)
|
233
|
|
11,946
|
13,950
|
Income (loss) before
income tax (recovery) expense
|
(2,393)
|
2,172
|
Income tax (recovery)
expense
|
(2,019)
|
9,385
|
Net loss for the
year
|
(374)
|
(7,213)
|
Earnings per
share
|
|
|
Basic and diluted per
share
|
(0.01)
|
(0.22)
|
Average number of
outstanding shares (in thousands)
|
32,635
|
32,633
|
Average number of
outstanding diluted shares (in thousands)
|
32,635
|
32,633
|
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
|
|
|
|
Fiscal Years Ended
January 31,
|
2019
|
2018
|
(In thousands of
Canadian dollars)
|
$
|
$
|
|
|
|
Net loss for the
year
|
(374)
|
(7,213)
|
Other comprehensive
income (loss) (a) :
|
|
|
Exchange differences
on translation of foreign operations
|
2,131
|
(2,035)
|
Comprehensive income
(loss) for the year
|
1,757
|
(9,248)
|
|
|
|
|
|
a)
|
Will subsequently be
reclassified to net income (loss).
|
CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Capital
Stock
|
Contributed
Surplus
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Retained
Income
|
Total
|
(In thousands of
Canadian dollars)
|
$
|
$
|
$
|
$
|
$
|
|
|
|
|
|
|
Balance, February 1,
2017
|
68,088
|
6,422
|
6,741
|
24,399
|
105,650
|
Net loss for the
year
|
―
|
―
|
―
|
(7,213)
|
(7,213)
|
Other comprehensive
income (loss)
|
―
|
―
|
(2,035)
|
―
|
(2,035)
|
Comprehensive income
(loss) for the year
|
―
|
―
|
(2,035)
|
(7,213)
|
(9,248)
|
Share-based
compensation
|
―
|
16
|
―
|
―
|
16
|
Options
exercised
|
32
|
(15)
|
―
|
―
|
17
|
Dividends
|
―
|
―
|
―
|
(653)
|
(653)
|
Balance,
January 31, 2018
|
68,120
|
6,423
|
4,706
|
16,533
|
95,782
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Stock
|
Contributed
Surplus
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Retained
Income
|
Total
|
(In thousands of
Canadian dollars)
|
$
|
$
|
$
|
$
|
$
|
|
|
|
|
|
|
Balance, February 1,
2018
|
68,120
|
6,423
|
4,706
|
16,533
|
95,782
|
Net loss for the
year
|
―
|
―
|
―
|
(374)
|
(374)
|
Other comprehensive
income (loss)
|
―
|
―
|
2,131
|
―
|
2,131
|
Comprehensive income
(loss) for the year
|
―
|
―
|
2,131
|
(374)
|
1,757
|
New IFRS 9
adoption
|
―
|
―
|
(189)
|
189
|
―
|
Share-based
compensation
|
―
|
9
|
―
|
―
|
9
|
Dividends
|
―
|
―
|
―
|
(653)
|
(653)
|
Balance,
January 31, 2019
|
68,120
|
6,432
|
6,648
|
15,695
|
96,895
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
|
Fiscal Years Ended
January 31,
|
2019
|
2018
|
(In thousands of
Canadian dollars)
|
$
|
$
|
|
|
|
OPERATING
ACTIVITIES
|
|
|
Net loss for the
year
|
(374)
|
(7,213)
|
Non-cash
items:
|
|
|
Amortization of
property, plant and equipment
|
4,206
|
4,029
|
Amortization of
intangible assets
|
367
|
394
|
Unrealized loss on
derivative financial instruments
|
484
|
396
|
Non-cash exchange
(gain) loss
|
(2,781)
|
1,744
|
Share-based
compensation
|
(533)
|
―
|
Income tax (recovery)
expense
|
(2,019)
|
9,385
|
Inventories
depreciation allowance
|
352
|
(55)
|
Net financial
expenses
|
1,784
|
1,608
|
Others
|
7
|
(39)
|
Net income adjusted
for non-cash items
|
1,493
|
10,249
|
Change in non-cash
working capital items (1)
|
10,182
|
(7,243)
|
Income tax
recovery
|
―
|
656
|
Cash flows from
operating activities
|
11,675
|
3,662
|
|
|
|
INVESTING
ACTIVITIES
|
|
|
Acquisition of
property, plant and equipment
|
(3,273)
|
(4,831)
|
Acquisition of
intangible assets
|
(482)
|
(671)
|
Revenues from
disposals of property, plant and equipment
|
35
|
175
|
Disposal of equity
investments
|
217
|
―
|
Government
grants
|
210
|
―
|
Others
|
13
|
9
|
Cash flows used in
investing activities
|
(3,280)
|
(5,318)
|
|
|
|
FINANCING
ACTIVITIES
|
|
|
Variation in credit
facilities
|
(3,545)
|
(3,159)
|
Issuance of long-term
debt
|
―
|
10,702
|
Repayment of long-term
debt
|
(1,544)
|
(945)
|
Issuance of
subordinate voting shares
|
―
|
17
|
Dividends
paid
|
(653)
|
(653)
|
Interest
paid
|
(1,774)
|
(1,603)
|
Cash flows (used in)
from financing activities
|
(7,516)
|
4,359
|
Impact of
fluctuations in foreign exchange rate on cash flow
|
287
|
(39)
|
Net change in cash
and cash equivalents during the year
|
1,166
|
2,664
|
Cash, and cash
equivalents, beginning of year
|
2,998
|
334
|
Cash and cash
equivalents, end of year
|
4,164
|
2,998
|
|
|
(1)
|
The following table
sets out in detail the components of the "Change in non-cash
working capital items":
|
|
|
|
Fiscal Years Ended
January 31,
|
2019
|
2018
|
(In thousands of
CA$)
|
$
|
$
|
|
|
|
Accounts
receivable
|
5,601
|
(11,514)
|
Holdbacks on
contracts
|
(936)
|
(1,516)
|
Contract assets/ Work
in progress
|
13,477
|
(10,121)
|
Inventories
|
(3,413)
|
1,760
|
Prepaid expenses and
other current assets
|
851
|
(1,330)
|
Accounts payable and
other current liabilities
|
(12,553)
|
13,203
|
Contract
liabilities/Deferred revenues
|
6,955
|
2,275
|
Other non-current
liabilities
|
200
|
―
|
Change in non-cash
working capital items
|
10,182
|
(7,243)
|
SEGMENTED INFORMATION
The Corporation operates one operational sector, being, the
non-residential construction industry, primarily in the United States and Canada. This sector includes the following
areas of expertise: the design and engineering of connections,
fabrication, including industrial coating, and installation of
complex steel structures, heavy steel built-ups, as well as
miscellaneous and architectural metalwork.
|
|
|
Fiscal Years Ended
January 31,
|
2019
|
2018
|
(In thousands of
CA$)
|
$
|
$
|
|
|
|
Revenues
|
|
|
Canada
|
3,518
|
16,027
|
United
States
|
131,555
|
164,447
|
|
135,073
|
180,474
|
|
|
|
|
|
|
As at January
31,
|
2019
|
2018
|
(In thousands of
CA$)
|
$
|
$
|
|
|
|
Non-current assets
(1)
|
|
|
Canada
|
48,750
|
49,508
|
United
States
|
45,355
|
43,694
|
|
94,105
|
93,202
|
|
|
(1)
|
The non-current
assets mainly include property, plant and equipment, intangible
assets, investment tax credits and others non-current
assets.
|
Revenues from external clients were allocated to each country on
the basis of the project's location.
During the fiscal year ended January 31, 2019, 79% of
the Corporation's revenues were realized with three (3) clients,
each representing 10% and more of its revenues (85% with three (3)
clients during the fiscal year ended January
31, 2018).
The following table, presents the breakdown of revenues for each
these clients:
|
|
|
Fiscal Years Ended
January 31,
|
2019
|
2018
|
|
United
States
|
United
States
|
(In thousands of
CA$)
|
$
|
$
|
|
|
|
Client A
|
60,503
|
81,120
|
Client B
|
―
|
43,106
|
Client C
|
32,480
|
―
|
Client D
|
―
|
29,375
|
Client E
|
13,168
|
―
|
|
106,151
|
153,601
|
SOURCE ADF Group Inc.