Canam shares surge after it swings to $3M profit; wins $60 million bridge deals

MONTREAL – Canam Group’s shares hit a 52-week high Thursday after the structural steel manufacturer said it swung to a $3-million profit in the traditionally weak winter construction period.

The Quebec-based company beat expectations as it earned seven cents per share in the first quarter. That compared with loss of three cents per share or $1.3 million a year earlier.

Analysts had expected Canam (TSX:CAM) would earn a penny per share for the period ended March 30.

Canam’s shares hit $8.94 in trading on the TSX before closing at $8.92, up 57 cents or 6.83 per cent.

The company said the improvement in profits was even more pronounced because last year’s loss included a $1.8 million non-recurring gain.

Sales increased to $209.8 million from $208.3 million, largely as a result of the joist and steel deck business, but also with contributions from its bridge and light structural steel activities.

Canam CEO Marc Dutil said the results were “encouraging” given that the winter months are historically the least profitable period of the year.

Canam’s backlog of orders was $575 million, up 17 per cent from $493 million as of Dec. 31.

The company also announced Thursday that its Structal-Bridges division won two contracts worth nearly $60 million for bridges in Newfoundland and Labrador and in Massachusetts.

It will fabricate and install 1,100 tons of steel for the new Sir Ambrose Shea Lift Bridge in Placentia, NL. More than 10,000 tons of steel components will be supplied to the John Greenleaf Whittier Memorial Bridge in the New England state.

Canam plants in New Hampshire and Maryland will fabricate the steel through April 2015, with deliveries starting in December.

Frederic Bastien of Raymond James said the results were strong with gross margins of 15.9 per cent beating forecasts and last year’s level of 11.8 per cent.

“A better discipline among industry participants and a brighter macro picture for the U.S. commercial construction sector all point to an improved operating performance for the company and further share price appreciation over our forecast horizon,” he wrote in an email.

Canam Group is the largest fabricator of steel components in North America. It operates 20 plants in Canada and the U.S. and employs 3,400 people in North America, Romania, India and Hong Kong.