Canam criticizes Quebec City amphitheatre bidding process won by ADF

MONTREAL – Structural steel provider Canam Group Inc. criticized the bid process for Quebec City’s new amphitheatre Wednesday and said its losing submission was “relatively aggressive.”

“The Quebec bid was the most difficult bid conditions we’ve seen in the last 20 years,” CEO Marc Dutil told analysts during a conference call to discuss its fourth-quarter and 2012 results.

He pointed specifically to a requirement prohibiting companies from publicly talking about their bid.

Although the Quebec-based company wanted to win the contract for the provincial capital’s new hockey arena, Dutil said the company couldn’t go lower given the project risk. He said its contract to build an arena in Pittsburgh, Pa., suggests that the “right price” for Quebec City was $52 million.

“So at $50.8 million, we felt we were relatively aggressive in spite of the general conditions which were fairly risky.”

Ultimately, ADF Group (TSX:DRX) won the contract earlier this month with a reported bid of nearly $47 million.

“It’s funny nobody ever congratulates you for having done something which results in nothing but sometimes that’s a good decision too,” Dutil said, adding that Canam could still provide ADF with joists and decks for the amphitheatre.

Canam met expectations Wednesday as it reported a more than doubling of profits to $7.4 million in the fourth quarter despite a nearly 17 per cent drop in sales.

The Quebec-based company earned 18 cents per share for the period ended Dec. 31, up from seven cents per share or $3.3 million last year.

Sales were $238.5 million, down from $285.6 million.

For the full year, it reversed last year’s loss by earning $17 million, or 40 cents per share. That compared with a loss of $32.5 million, 72 cents per share in 2011. The 2011 results contained a $25 million after-tax provision related to work on BC Place.

Consolidated sales increased 2.8 per cent to $905.4 million, from $881 million in 2011.

Canam (TSX:CAM) was expected to earn 18 cents per share on $282 million of revenues in the quarter, according to analysts polled by Thomson Reuters.

For the full year, analysts forecast the company would earn 38 cents per share on $949.6 million of revenues.

Canam’s order backlog at year-end hit a five-year high of $493 million, up from $462 million at the end of 2011.

Dutil said higher 2012 sales was primarily due to joist and steel deck activities in Canada and the United States, and to contributions by FabSouth, a U.S. subsidiary.

The bridge and structural steel fabricator, which has been struggling because of the slowdown in non-residential construction in North America, sees opportunities for gross margins to recover as U.S. demand picks up and the Canadian dollar continues to weaken.

“Take away bad jobs, bring back a little more work in the U.S., drop the Canadian dollar to 90 cents and 18.5 per cent (gross margin achieved in the fourth quarter) is certainly something we can achieve on a more regular basis,” he said.

“We can do better but none of us would safely forecast that we would return to 20s any time soon.”

Canam recently announced the sale of its 49 per cent ownership interest held since 2007 in a Chinese company, United Steel Structures Ltd., for US$13.5 million.

The buyers are two Chinese companies, Guangzhou Shipyard International Co. Ltd. and Glory Group Development Ltd.

United Steel operates a bridge and structural steel fabrication plant in Guangzhou, in southeastern China.

Canam said the transaction is in line with its strategy to “dispose of certain investments in order to focus on its core activities in North America” and follows the sale of its ownership interest in the Canadian joint venture, Amcan-Jumax, and the Canam Asia joint venture in 2012.

The company repurchased nearly 1.35 million of its shares last year, and 3.26 million shares since Nov. 1, 2011.

Canam Group, which employs almost 3,500 people in Canada, the U.S., Romania, India and Hong Kong, specializes in designing and fabricating customized products for the construction industry focusing on buildings, structural steel and bridges.

On the Toronto Stock Exchange, its shares briefly hit a new 52-week high, closing up 12 cents to $7.38 in Wednesday trading.