Fiscal year ended january 31, 2011 - financial results that attest to a sound financial and operational performance - initial dividend payment

Apr. 14, 2011 (Canada NewsWire Group) --

TERREBONNE, QC, April 14 /CNW Telbec/ - ADF GROUP INC. ("ADF" or the "Corporation") (TSX: DRX) recorded revenues of $55.3 million for the fiscal year ended January 31, 2011, compared with $65.7 million the previous year. This decrease reflects the economic conditions prevailing in the Corporation's market segments, as well as a shift in the schedules attributable to the clients.

It should be noted that despite lower revenues, the gross profit margin as a percentage of revenues was higher than in the previous two years. It reached 31% in fiscal 2011, compared with 28.4% and 29.8 % in the 2010 and 2009 fiscal years respectively, reflecting the significant value-added content of ADF's current projects, coupled with the investments made over the past three years to increase the efficiency and flexibility of its production facilities.

Earnings before interest, income taxes, depreciation and amortization (or EBITDA), excluding gains or losses on foreign exchange, remained high as a percentage of revenues, standing at 19.7% in 2011 versus 21.5% in 2010.

Net earnings amounted to $3.7 million or $0.11 per share (basic and diluted), compared with net earnings of $7.0 million or $0.20 basic per share ($0.19 diluted per share) in 2010. In addition to the decrease in business volume due mostly to the difficult economic climate, the decline in net earnings is attributable, notably, to a less favourable exchange rate, the increase in certain expenses following the significant investments in the facilities over the past few years and a higher tax rate than in 2010.

ADF closed the 2011 fiscal year with working capital of $41.7 million, of which $21.5 million in the form of short-term available liquidities (consisting of cash, cash equivalents and short-term investments), notably as a result of the $8.4 million cash flows provided by operating activities. Consequently, as at January 31, 2011, ADF Group's short-term available liquidities exceeded its total interest-bearing debt by $12.8 million.

Mr. Jean Paschini, Chairman of the Board of Directors and Chief Executive Officer indicated that "these results reflect the Corporation's strategy aimed at fostering sustainable growth, but not at the expense of targeted profitability. During fiscal 2011, we pursued our selective and disciplined approach with respect to our business development, strengthened our positioning in highly specialized and strong value-added market niches, and maintained a rigorous and prudent management of our liquidities, capital structure and business risks."

Implementation of a Dividend Policy

In recognition of the steadfast confidence of ADF Group's shareholders over the years, and considering the liquidities generated by the Corporation, the Board of Directors has approved the implementation of a semi-annual dividend payment policy. Consequently, ADF Group declares today a first semi-annual dividend of $0.01 per share, which will be paid on May 16, 2011 to shareholders of record as at April 29, 2011.

Order Backlog

In March 2011, ADF announced new orders worth US$23 million at the World Trade Center (WTC) in New York, U.S.A. These new mandates include the design and engineering of connections, fabrication and delivery to site of additional heavy steel built-up components, for the different projects ADF is currently carrying out at the WTC.

As of January 31, 2011, ADF's order backlog stood at $67 million, with contracts in hand extending over an execution period of 12 to 15 months. It should be noted that the backlog as of January 31, 2011, does not include the aforementioned additional contracts at the WTC, the execution of which will equally extend over a period of 12 to 15 months, nor does it totally reflect the revenues likely to be recognized in upcoming quarters, as it only includes the contractual changes requested by clients at that date. Accordingly, based on current data, the Corporation expects its revenues for the next few quarters to be comparable or slightly superior to those of recent quarters.

Outlook

In regard to business development, ADF has taken steps with a local partner over the past year to set up a plant in Western Canada. Through this strategic move, not only will the Corporation benefit from its partner's expertise and market knowledge, but it will also be in a stronger position to take advantage of the high-potential industrial, commercial and institutional construction market in this region, driven by the dynamic energy industry.

The solid financial performance and achievements over the past years are a direct result of ADF Group's niche positioning strategy, its operational excellence and its selective approach to projects, which are targeted according to their potential for differentiation and the generation of good profit margins and strong cash flows. This value creation strategy will continue to guide ADF Group's development over the long term. For the 2012 fiscal year, however, the Corporation will adapt its action plan to the current business environment, which will likely remain affected by the slow economic recovery and the scarcity of new projects in its niches, especially in the United States. In this context, one of the Corporation's primary objectives for fiscal 2012 will be to grow its order backlog in order to sustain its future business volume. Hence, while concentrating on the optimal execution of its ongoing contracts and pursuing its development efforts in Western Canada, the Corporation will seek to increase its production capacity utilization rate by targeting high-volume projects. This approach could temporarily lower the average gross profit margin of the Corporation's contract portfolio (expressed as a percentage of revenues), which would be offset by the revenue growth and a better fixed cost absorption rate.

"Although the current conditions in our markets prompt us to remain cautious, we are more confident than ever as to ADF's future. We will enter the next upward economic cycle with strong fundamentals, including a highly productive and efficient fabrication plant, an extremely competent and motivated workforce, and a worldwide reputation enhanced by our performance in connection with New York's WTC projects. In fact, along with ADF's financial health, our confidence in the Corporation's future is one of the key reasons behind our decision to implement the practice of paying dividends and our determination to establish a presence in Western Canada" concluded Mr. Jean Paschini.

Annual Meeting of Shareholders

ADF Group Inc. Annual Meeting of Shareholders will be held on June 15, 2011 at 11:00 a.m. at the Omni Mont-Royal Hotel in Montreal. Financial results for the first quarter ending April 30, 2011 will also be disclosed at the Corporation's Annual Meeting.

About ADF Group Inc.

ADF Group Inc. is a North American leader in the design and engineering of connections, fabrication and installation of complex steel structures, heavy steel built-ups, as well as in miscellaneous and architectural metals for the non-residential construction industry. ADF 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.

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-GAAP Measures

EBITDA is not a performance measure recognized by Canadian Generally Accepted Accounting Principles (GAAP) and consequently, it may not 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.

All amounts are in Canadian dollars, unless otherwise indicated.

SEGMENTED INFORMATION

The Corporation operates in the non-residential construction sector, primarily in the United States and Canada. Its operations include the connections design and engineering, fabrication and installation of complex steel structures, heavy steel built-ups, as well as miscellaneous and architectural metal work.

During the fiscal year ended January 31, 2011, one client accounted for 90% of the Corporation's revenues (70% of revenues were realized with two clients, each of which accounted for more than 10% of revenues, during the fiscal year ended January 31, 2010). However, revenues were recorded on five distinct contracts with one client during fiscal year ended January 31, 2011.