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CVTech Group Inc
Symbol C : CVT
Shares Issued 72,227,336
Close 2013-03-27 C$ 1.14
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CVTech Group earns $10.17-million in 2012

2013-03-28 07:55 ET - News Release

Mr. Andre Laramee reports

CVTECH GROUP INC. REPORTS SHARPLY IMPROVED OPERATING PROFITABILITY IN 2012; RECORD RESULTS IN TERMS OF REVENUES, EBITDA AND NET EARNINGS; REVENUES FROM CONTINUING OPERATIONS OF $249.2 MILLION, UP 6.8% FROM 2011; EBITDA FROM CONTINUING OPERATIONS UP 38.0% TO $25.2 MILLION, OR 10.1% OF REVENUES; NET EARNINGS FROM CONTINUING OPERATIONS OF $12.1 MILLION OR $0.17 PER SHARE, ALMOST DOUBLE NET EARNINGS OF 2011

CVTech Group Inc. has released results for its fourth quarter and fiscal year ended Dec. 31, 2012. On Oct. 16, 2012, the corporation announced the sale of its operations in the CVT systems and related products segment. Consequently the results of this segment are presented as discontinued operations and the results of the previous year have been restated accordingly.

"Two thousand twelve was a highly rewarding year for CVTech. First, our continuing operations set new records in revenues, earnings before interest, taxes, depreciation and amortization, and net earnings, and we ended the year with an excellent financial situation. We also achieved important strategic breakthroughs by pursuing our geographic expansion in Ontario and the leadership of our subsidiaries in their respective markets won them numerous contracts. Moreover, the fourth quarter was vigorous, as our teams were called upon in response to natural disasters in the northeastern U.S.," said Andre Laramee, president and chief executive officer of CVTech.

                                         FINANCIAL HIGHLIGHTS
                            (in thousands of dollars, except per share data)

                                                               Three months ended Dec. 31,    Years ended Dec. 31,
                                                                   2012              2011       2012         2011

Revenues                                                        $82,572           $66,685   $249,201     $233,237
                                                                --------          --------  ---------    ---------
EBITDA from continuing operations                                 8,108             5,205     25,236       18,293
Net earnings from continuing operations                           3,885             1,909     12,117        6,188
Per share -- basic and diluted                                  $  0.05           $  0.03   $   0.17     $   0.09
Net earnings from discontinued operations                       $    68           $ 3,350   $  1,939     $  3,097
                                                                --------          --------  ---------    ---------
Net earnings (loss)                                             $ 3,817           $(1,441)  $ 10,178     $  3,091
                                                                ========          ========  =========    =========
Per share -- basic and diluted                                  $  0.05           $ (0.02)  $   0.14     $   0.04

Fourth-quarter results

Revenues from continuing operations were up 23.8 per cent to $82.6-million from $66.7-million in the fourth quarter of the previous year. The increase reflects revenues of $34.7-million related to natural disasters in the fourth quarter of 2012, compared with revenues of $11.4-million in the corresponding quarter of 2011. The execution of this emergency work required temporary reassignment of some workers and postponement of work on regular contracts. The corporation estimates that recognition of approximately $8.0-million in revenues was accordingly deferred from the fourth quarter of 2012 to subsequent periods. Excluding these items, revenues were relatively stable.

EBITDA from continuing operations was $8.1-million, or 9.8 per cent of revenues, in the fourth quarter of 2012, compared with $5.2-million or 7.8 per cent of revenues in the fourth quarter of 2011. The increase in EBITDA, in both dollars and percentage of revenues, was due to the increase in sales volume and to a more favourable revenue mix between the two periods compared.

Net earnings from continuing operations were $3.9-million, or five cents per diluted share, in the fourth quarter of 2012, compared with $1.9-million, or three cents per diluted share, in the fourth quarter of 2011. For discontinued operations, a net loss of $68,000 was recorded, compared with a net loss of $3.4-million a year earlier, when a goodwill impairment charge of $2.9-million was recorded. As a result, net earnings in the fourth quarter of 2012 were $3.8-million, or five cents per diluted share, compared with a net loss of $1.4-million, or two cents per diluted share, a year earlier.

At Dec. 31, 2012, the corporation had an order backlog of approximately $217.0-million.

Fiscal 2012 results

For the year ended Dec. 31, 2012, revenues from continuing operations were $249.2-million, up 6.8 per cent from $233.2-million in 2011. The increase of $16.0-million is attributable essentially to higher revenues related to natural disasters in the fourth quarter of 2012 relative to the corresponding period of 2011, offset by the postponement of revenue recognition to subsequent periods. Excluding these items, revenues were relatively stable.

EBITDA from continuing operations was $25.2-million, or 10.1 per cent of revenues, compared with $18.3-million or 7.8 per cent of revenues in 2011. EBITDA for 2012 includes a $2.2-million life insurance settlement, offset by non-recurring charges totalling $2.0-million related to a proxy fight with regard to the acceptance of a circular from a dissenting shareholder, the strategic alternatives review process, a provision for bad debts and the reimbursement of legal fees related to a judgment.

Net earnings from continuing operations in 2012 were $12.1-million, or 17 cents per diluted share, almost double the net earnings of $6.2-million, or nine cents per diluted share, recorded in 2011. With discontinued operations taken into account, net earnings in 2012 were $10.2-million, or 14 cents per diluted share, compared with $3.1-million, or four cents per diluted share, in 2011.

Solid cash flow and debt reduction

Reflecting the rise in net earnings, cash flow from operations before changes in working capital items was $24.3-million in 2012, compared with $18.9-million in 2011.

This strong cash flow, combined with the disposal of the CVT systems and related products segment, enabled the corporation to improve its financial position considerably in 2012. At Dec. 31, 2012, CVTech had $14.3-million in cash and long-term debt, including the current portion, was $25.2-million. The ratio of long-term debt to equity was 0.31 at Dec. 31, 2012, compared with 0.48 a year earlier.

Outlook

"The year's accomplishments, both in the improvement of our operating profitability and in the broadening of our service offering, signal the beginning of a new era for the corporation. With massive investment in the construction and maintenance of transmission and distribution networks projected for the coming years, our ever-increasing presence in eastern North America positions us favourably to profit from the resulting business opportunities. Beyond the projected acquisition of B.G. High Voltage Systems Ltd., which we expect to complete shortly, we remain on the lookout for potential strategic acquisitions that will enhance our service offering, our expertise and our geographic reach," concluded Mr. Laramee.

We seek Safe Harbor.

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