- Consolidated revenues from continuing operations of $51.6 million
- EBITDA from continuing operations of $5.7 million, or 11.1% of revenues
- Net income from continuing operations of $3.2 million, or $0.04 per share
- Order backlog of $260 million as at March 31, 2012
DRUMMONDVILLE, QC, May 10, 2012 /CNW Telbec/ - CVTech Group Inc.
("CVTech" or "the Corporation") (TSX: CVT) today reported its results
for the first quarter ended March 31, 2012. The Corporation also
announced that its Board of Directors has initiated a review of
strategic and financial alternatives to enhance shareholder value.
Further to the acceptance of a letter of intent regarding the sale of
operations in the CVT systems and related products sector, results from
this sector are presented as discontinued operations and data from the
corresponding period of the previous fiscal year have been restated.
All amounts are in Canadian dollars unless otherwise indicated.
|Financial highlights||Three months ending March 31,|
|(in thousands of dollars, except per-share data)||2012||2011|
|Revenues from continuing operations||51,554||56,667|
|EBITDA from continuing operations||5,725||5,394|
|Net earnings from continuing operations||3,193||2,154|
|Per share - basic and diluted ($)||0.04||0.03|
|Net earnings (loss) from discontinued operations||(1,254)||489|
|Per share - basic and diluted ($)||0.03||0.04|
|Weighted average number of outstanding shares (basic, in thousands)||72,413||72,681|
FIRST QUARTER RESULTS
Revenues from continuing operations totaled $51.6 million, versus $56.7 million for the first quarter of the previous year. This 9.0% decrease primarily reflects lower revenues related to electricity transmission line construction contracts, as a major project in the Gaspésie region, in progress during the first quarter of the previous year, has since been completed. Furthermore, economic uncertainty continues to give rise to delays in awarding large-scale contracts and in the execution of certain regular contracts in the United States.
Earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations reached $5.7 million, or 11.1% of revenues for the first quarter of 2012, versus $5.4 million, or 9.5 % of revenues for the first quarter of 2011. EBITDA for the first quarter of 2012 includes an amount of $2.2 million related the payment of a life insurance claim. Excluding this payment, the decrease, both in terms of dollars and as a percentage of revenues, reflects a lower business volume and stiffer competition for available contracts.
Net earnings from continuing operations in the first quarter of 2012 stood at $3.2 million, or $0.04 per diluted share, compared with $2.2 million, or $0.03 per diluted share in the first quarter of 2011. Net earnings from discontinued operations were ($1.3) million, versus $489,000 a year earlier, due to a charge for remeasurement to fair value of $1.9 million, net of related income taxes, during the quarter ended March 31, 2012. As a result, net earnings stood at $1.9 million, or $0.03 per diluted share, versus $2.6 million, or $0.04 per diluted share a year earlier. As at March 31, 2012, the Corporation's order backlog stood at $260 million.
"CVTech's subsidiaries were awarded many contracts during the initial months of 2012, several of which are in high-growth potential niches, including renewable energy sources. This success reflects the solid reputation of our subsidiaries and an increasingly deeper penetration of their respective markets. More importantly, this tends to suggest an upcoming resumption in the awarding of large-scale contracts, even though a certain degree of economic uncertainty persists in the United States," said André Laramée, President and Chief Executive Officer of CVTech.
SOLID CASH FLOW GENERATION
Cash flow related to operating activities, before changes in items of working capital, remained solid, reaching $6.1 million during the quarter ended March 31, 2012, compared with $4.3 million for the corresponding period in fiscal 2011.
As at March 31, 2012, CVTech's financial situation remained sound, with a cash position of $4.7 million and a long-term debt, including the current portion, of $25.1 million. These figures exclude the cash position and long-term debt related to assets held for sale. Accordingly, the ratio of long-term debt to equity was 0.34 as at March 31, 2012, versus 0.48 three months earlier.
REVIEW OF STRATEGIC ALTERNATIVES
The Corporation's Board of Directors has initiated a review of strategic and financial alternatives with the objective of enhancing shareholder value. The Corporation has appointed an independent committee to review and consider such alternatives. This committee is composed of CVTech's independent directors, namely Jacques Joly (Chairman of the committee), Robert Beaudoin, Serge Chiasson, André Lepage and Luc Reny. The committee has also retained the services of financial and legal advisors to assist in carrying out its mandate.
CVTech's Board of Directors has not set any deadline for completing the review of such strategic alternatives, and may ultimately determine that its current business plan is the best means to enhance shareholder value. Accordingly, there can be no assurance that the strategic review will result in the consummation of any agreement or transaction. The Corporation does not intend to make further announcements regarding the strategic review process unless it concludes they are warranted by the circumstances or are expressly required by law.
"In the short-term, we are aiming to successfully conclude the sale of our activities in the CVT systems and related products sector. If this transaction is completed, we will be able to exclusively focus our activities on the Energy sector and concentrate the elaboration of our strategic plan on the growth vectors identified. We are aiming to enhance our product and service offering, our expertise and our geographic reach. In this regard, we will seek business opportunities in the vast Ontario market by way of our new subsidiary Riggs Distler Inc., while remaining on the lookout for strategic acquisitions that meet our strict selection criteria," concluded Mr. Laramée.
OVERVIEW OF THE CORPORATION
CVTech is a management company operating in two major sectors. Through Thirau ltée and its subsidiaries, Riggs Distler Inc. and Thirau LLC, the Corporation provides services to the electric power industry for the maintenance of transmission and distribution lines, primarily in Quebec, Ontario and the eastern United States. Another Thirau ltée subsidiary, J.J.L. Déboisement inc., specializes in control of vegetation surrounding power lines and in clearing rights of way. Thirau LLC's wholly owned subsidiary Riggs Distler & Company, Inc. is a leading provider of maintenance and construction services to the utility and heavy industrial markets. In the CVT systems and related products segment, the Corporation, through CVTech-IBC Inc., designs, manufactures and sells continuously variable power transmission systems, or CVT systems. CVTech-AAB inc. specializes in rebuilding crankshafts and cylinders and in distributing engine parts.
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 has no obligation beyond what is required under the law to update or revise forward-looking statements pursuant to new information or future events.
Further information regarding CVTech is available in the SEDAR database (www.sedar.com) and on the Corporation's website at www.cvtech.ca.
For further information:
Source: CVTech Group inc.
André Laramée, MBA
President and Chief Executive Officer
Mario Trahan, CMA
Chief Financial Officer
Martin Goulet, CFA