(RTTNews) - Construction steel-structures builder ADF Group, Inc. (DRX.TO: News ) on Wednesday reported a 55% decline in profit for the second quarter, hurt by a nearly 22% drop in revenues as well as a 500 basis points fall in margins. However, the company expects the downward trend will be reversed during the second half of the current fiscal year.

In a statement, chairman and chief executive officer, Jean Paschini said, "These results reflect declines from the corresponding periods of the previous year. However, the decrease in revenues is in line with our forecasts considering the different mix of the contracts from one period to another, and the decrease in the margin is due to the time lag between the recognition of costs and revenues with regard to a contract."

Second Quarter Results

The Quebec, Canada-based company reported net earnings of C$1.85 million or C$0.05 per share for the second quarter, lower than C$4.09 million or C$0.11 per share in the prior-year quarter.

Revenues for the quarter declined to C$18.75 million from C$23.99 million in the same quarter last year.

Revenues from Canadian operations rose to C$3.75 million from C$2.18 million in the year-ago quarter, while revenues from U.S. operations totaled C$15.0 million, lower than C$21.81 million in the prior-year quarter.

Other Metrics

Gross margin for the second quarter was C$4.59 million, down from C$6.94 million in the year-ago quarter, while gross margin percentage dropped 500 basis points to 24% from last year's 29%.
Selling and administrative expenses for the quarter rose to C$1.01 million from C$0.86 million in the year-ago quarter.

As at the end of the second quarter, ADF Group's order backlog totaled C$151 million, up 21% from the end of the year-ago second quarter, with the orders scheduled to be executed over a period of 24 months.

During the second quarter, ADF Group redeemed 446,400 subordinate voting shares at an average price of C$2.44 per share, for a net consideration of C$1.1 million. As at July 31, 2009, the company redeemed 618,300 subordinate voting shares at an average price of C$2.35 per share, for a net consideration of C$1.4 million, since the implementation of the normal course issuer bid program.

The company ended the second quarter with cash and cash equivalents of C$9.10 million, compared to $10.55 million at end of the prior-year quarter.

Half-Yearly Highlights

For the first six months, ADF reported net earnings of C$4.09 million or C$0.11 per share, lower than C$7.28 million or C$0.20 per share in the prior-year period.

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