Canam wins $191 million worth of projects, including new Edmonton Oilers arena
MONTREAL - Canam Group says its heavy structural steel business is on the upswing after lining up $191 million worth of new projects in Canada and the United States over the next few years, including the new home for the Edmonton Oilers NHL hockey team.
"It's an up and down business. We feel we're going into an up period now," CEO Marc Dutil said during a conference call Wednesday after releasing the company's fourth-quarter and year-end results.
North America's largest fabricator of steel products for the construction industry said its net income surged 45 per cent to $10.8 million for the three months ended Dec. 31.
That translated into 26 cents per share of earnings, up from 18 cents per share or $7.4 million a year earlier. Revenue rose to $281.6 million from $238.5 million.
Dutil said the Quebec-based company had expected its structural steel division to performed better last year, but the pipeline of opportunities is now starting to get busy.
"We believe recent projects awarded in this division will help us continue improving results in 2014," Dutil told analysts.
Canam (TSX:CAM) said steel for Edmonton's Rogers Place that is slated to open in the fall of 2016 will be fabricated in Calgary and St. Gedeon de Beauce, Que., with deliveries starting in August.
Other projects include a retractable roof for Arthur Ashe Stadium, which is used for the U.S. Open tennis tournament, a 23-storey building at a New York University medical centre and a 47-storey high-rise office tower in New York City.
In addition to fabricating and erecting steel components, the Structal-Heavy Steel Constructive division's role will include design-build, detailing and project management services for the projects.
The projects are in addition to about $30-million worth of jobs announced earlier in the year for work related to Montreal's Turcot highway and a project in Ontario.
For the full year, the company's net profit jumped to $31.2 million or 74 cents per share from $17 million or 40 cents per share in 2012. Consolidated revenue rose to $1.028 billion from $905 million.
Canam had been expected to earn 25 cents per share on $276.7 million of revenues in the quarter, and 66 cents on $1.02 billion of revenues for the year, according to analysts polled by Thomson Reuters.
The increase in revenues last year was mainly attributable to light structural steel and joist and steel deck activities, which were helped by a gradual recovery in non-residential construction activities in the United States, and by acquisitions.
Canam ended 2013 by acquiring a 67 per cent stake in Massif Technologies, an engineering company renamed Structure Fusion, that specializes in the design and management of non-residential projects using lumber framing. Last summer, it acquired the steel joist fabrication assets of Quincy Joist Company, which employs 70 people in Arizona and Florida.
Excluding the recent project announcements, the company's backlog of orders increased 20 per cent to $592 million, up from $493 million at the end of 2012.
Canam recently settled two claims related to its work on BC Place in Vancouver, including one that abruptly ended a trial that began Feb. 17.
"We feel there are no winners in these settlements. We are just glad we can now move on to more constructive issues," Dutil told analysts.
As part of the contract awarded to rapidly relocate Lac Megantic's commercial centre following the deadly crash last summer, Canam said it donated more than $325,000 to the community with the help of suppliers.
Sara O'Brien of RBC Capital Markets said the results in the fourth-quarter were helped by a tax recovery.
"We view today's results as net neutral to negative on earnings but positive regarding backlog growth in the first quarter and continued expectation for operating leverage into the second half of the fiscal year," she wrote in a report.
Canam Group operates 21 plants across North America and employs 3,600 people in Canada, the United States, Romania, India and Hong Kong.
On the Toronto Stock Exchange, Canam's shares hit a 52-week high of $14.59 in Wednesday trading and closed at $14.35, up 41 cents or 2.94 per cent.
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