Davie Yards Inc.

Davie Yards Inc.

November 11, 2009 09:09 ET

Davie Yards Inc. Releases Third Quarter 2009 Results

LEVIS, QUEBEC--(Marketwire - Nov. 11, 2009) - Davie Yards Inc. ("Davie" or the Corporation") (TSX:DAV) announced its results today for the third quarter and nine-month periods ended September 30, 2009.

Net loss for the third quarter of 2009 was $6.3 million ($0.02 loss per share on a diluted basis), compared to a net income of $3.3 million ($0.03 per share on a diluted basis) for the third quarter of 2008.

For the nine-month period ended September 30, 2009, net loss was reduced by 69% to $15.8 million ($0.06 loss per share on a diluted basis), compared to a net loss of $51.5 million ($0.44 loss per share on a diluted basis) for the same period in 2008.

The net loss for the third quarter of 2009 was mainly due to foreign currency exposures, which negatively impacted results of operations by approximately $4.0 million during the quarter compared to a positive foreign currency gain of approximately $11.0 million for the same period one year ago.

Year-to-date revenues for the nine-month period ended September 30, 2009 were higher at $80.6 million compared to $51.4 million for the nine-month period ended September 30, 2008, mainly reflecting an increase in the operating activities on the three vessels currently under construction.

"Despite our net loss, we have achieved good results in the third quarter of 2009. Our Company is currently unable to protect itself against currency fluctuations, which contributed to our loss for the period. We will pursue foreign currency coverage when we can put in place the appropriate banking facilities," said Steinar Kulen, President and Chief Executive Officer. "We are pleased with the operational execution of our projects, which are all within budgeted costs, excluding the impact of foreign currency fluctuations."

Total backlog remains solid at $531.4 million at the end of September 2009, compared to $567.4 million at the end of June 2009 and $606.6 million at the end of December 2008.

Future Outlook

Davie is well positioned for the new opportunities coming up. Following the finalization of the financial restructuring, management has been strengthened and an organizational restructuring has taken place focusing on attracting competencies needed for the execution of multiple, concurrent and large projects.

"We are well underway. Production output and progress are according to plan and supporting the schedule agreed with our client Cecon ASA. We also expect to start production of the two vessels for Ocean Hotels Plc. soon, as a loan agreement with Export Development Canada has been signed, and capacity of 1650 employees is built up for it", says Steinar Kulen, Davie's Chief Executive Officer, and he continues;

"The foundation is strong and the future looks promising. The Canadian Government requirement for new ships for the Navy, Transport Canada and the Coast Guard provides opportunities that our European competitors do not have, since the commercial shipbuilding markets continue to be affected by the ongoing financial crises".

Going Concern

The Corporation's cash may not be presently sufficient to fund expected cash requirements throughout the next 12 months. The ability of the Corporation to continue as a going concern is dependent upon raising additional financing, which is related to one of the Corporation's clients, Ocean Hotels Plc., finalizing financing from Export Development Canada to meet its contractual obligations towards the Corporation and pay the instalments due under its construction contracts. Ocean Hotels Plc. has informed through a press release that it has signed an agreement of a $100 million loan facility with Export Development Canada, where the condition precedence needs to be fulfilled. The outcome of these matters is dependent on a number of items outside the Corporation's control. As a result, there is uncertainty as to whether the Corporation will have the ability to continue as a going concern.

About Davie Yards Inc.

Davie Yards Inc. owns and operates the Davie yard in Quebec. With over 180 years of operating experience and approximately 1650 employees, the shipyard is the largest in Canada and among the largest and most sophisticated in North America. The Corporation has a focus on building large and complex offshore service vessels and rigs, and other sophisticated vessels for commercial and governmental use. Its shares are traded on the Toronto Stock Exchange (DAV). News and information are available at www.davie.ca.

Forward-Looking Statements

This news release contains forward-looking information within the meaning of applicable Canadian securities legislation. These statements include those relating to statements that are not historical facts, and reflect the current intentions, plans, expectations and beliefs of Davie's management ("Management"). Such forward-looking statements reflect Management's current beliefs and are based on information currently available to Management. Forward-looking statements involve known and unknown risks, uncertainties and other factors outside Management's control. A number of factors could cause actual results of Davie to differ materially from the results predicted in the forward-looking statements, including, but not limited to, risks associated with the Corporation's fiscal results, conditions to the completion of the refinancing plan, working capital requirements, major disruptions of production, a downturn in economic conditions, competition and sensitivity to the oil and gas industry and other factors.

Although the forward-looking statements contained herein are based upon what Management believes to be reasonable assumptions, Management cannot assure investors that actual results will be consistent with these forward-looking statements. Certain assumptions underlying the forward-looking statements contained in this news release include Management's assumptions regarding market outlook for the construction of complex offshore vessels as well as the assumptions that new vessels will be delivered on schedule and that the Corporation will attract and retain key personnel in key positions. These forward-looking statements are made as of the date of this release, and Management assumes no obligation to update or revise them to reflect new events or circumstances, except as required pursuant to applicable securities laws. Readers are cautioned not to place undue reliance on these forward-looking statements. For additional information with respect to certain of these and other assumptions and risks, please refer to the Corporation's Management's Discussion and Analysis for quarter ended March 31, 2009 and the year ended December 31, 2008 as well as the Financial Statements for the quarter ended March 31, 2009 and the year ended December 31, 2008, and the Corporation's Annual Information Form dated March 29, 2009.

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