MONTREAL – GLV said its restructuring plan is succeeding as it reported its best operating performance in two years, prompting its share price to surge.
The water treatment and pulp and paper company ended its fiscal year with a small $396,000 profit, a big improvement from the loss recorded a year earlier but short of analyst estimates.
GLV (TSX:GLV.A) said Thursday the profit for the period ended March 31 amounted to a penny per share.
It compared with a loss of $52.8 million, or $1.20 per share, a year ago when the company took a $40.9-million writedown.
Revenue totalled $152.4 million, down from $168.5 million, primarily due to order challenges at its pulp and paper division.
The company was expected to earn three cents per share on $160.6 million in revenues, according to analysts polled by Thomson Reuters.
On the Toronto Stock Exchange, GLV’s shares gained 25 cents or 10 per cent, to $2.75 in Thursday afternoon trading.
GLV’s backlog stood at $380 million, the highest level in five quarters, driven by three large contracts announced in April.
“While the refocusing plan will gradually improve our financial performance over the next fiscal year, the progress achieved so far has already positively impacted our operating results,” chief executive Richard Verreault said during a conference call.
Normalized adjusted pre-tax operating earnings (EBITDA) were $7.9 million, the best in two years, due mainly to improved margins in most of Ovivo’s core segments.
He said the “encouraging global performance” was achieved despite a lower backlog in the pulp and paper group caused by the continuing economic slowdown in Europe and Asia.
“If fiscal 2013 was a transition year, fiscal 2014 will be a year of investment to support the growth of GLV group globally,” Verreault told analysts.
For the full financial year, the company said it lost $12.8 million, or 29 cents per share, on $585.2 million in revenue. That compared with a loss of $54.1 million, or $1.23 per share, on $643.4 million the previous year.
GLV expects revenues in fiscal 2014 will increase to between $600 million and $625 million.
Pierre Lacroix of Desjardins Capital Markets said solid execution in the quarter supports his view that margin recovery is underway at GLV.
“We are encouraged by the sequential improvement in backlog, especially as GLV reorients the Ovivo division toward its core competencies (electronics, metals, energy and municipal) and the lower risk aftermarket parts and services market,” he wrote in a report.
Lacroix said he’s confident that sustained pulp prices should boost the pulp and paper division’s results.
“We believe the key for GLV will be to show consistency in its results over the coming quarters in order to regain credibility with investors.”