MONTREAL – Water treatment technology company GLV Inc. missed expectations with a net loss that surged to $52.8 million in the fourth quarter as it wrote down the value of its water treatment business.
The Quebec-based company recorded a $40.9-million charge against goodwill and intangible assets, including $23.7 million attributable to its desalination segment and $15.6 million to the industrial operations.
It also took a $4.9 million restructuring charge related to its desalination segment. That’s in addition to a $1.2-million expense recorded in the past two quarters.
GLV lost $8.2 million in the fourth quarter last year.
Excluding one-time costs, the company lost $7 million or 16 cents per share, compared to a loss of $5.8 million or 13 cents per share in the prior period.
Revenues increased 3.2 per cent to $173.6 million, from $168.2 million.
The company (TSX:GLV.A) was expected to earn five cents per share on $165 million of revenues in the fourth quarter, according to analysts polled by Thomson Reuters.
The company said the results of its Ovivo water treatment group fell short of its expectations but was partly offset by good results of its pulp and paper operations.
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“The food and beverage processing division and a European desalination unit recognized additional costs to complete major contracts,” it stated.
“In addition, the Canadian municipal segment division posted losses due to low operating margins on certain contracts and lower business volume.”
GLV said it is confident that “streamlining measures” implemented during the quarter will improve profitability in the coming quarters.
The changes are expected to generate about $5 million in annual cost savings, mainly from the elimination of positions in North America, Europe and Asia-Pacific.
“Given the global economic conditions that impacted the corporation’s results for the second half of the year and the level of its backlog… management considered these initiatives to be necessary.”
It noted that additional changes are possible.
The energy, microelectronics and U.S. municipal segments met or exceeded profitability targets. But the desalination segment faced challenges due to money-losing contracts from the acquisition of Christ Water Technology. The sole remaining contract is nearing completion.
GLV sold its investment in an Austrian manufacturing subsidiary for a $300,000 loss.
For the full year ended March 31, it lost $54.1 million, compared to a loss of $23.2 million in the prior period.
The adjusted loss was $7.1 million or 16 cents per share. That compared to a loss of $12.5 million or 28 cents per share in fiscal 2011.
Analysts forecast a three cents per share profit on $651 million of revenues for the year.
The backlog was $354.8 million, down from $372.2 million a year ago and $396.1 million as of Dec. 31.
Pierre Lacroix of Desjardins Capital Markets said the results were disappointing.
“We expect the stock to be under pressure as the fourth quarter results failed to deliver meaningful signs of recovery for the water treatment business,” he wrote in a research note.
Meanwhile, the company is shaking up its executive team. Chief financial officer Marc Barbeau will head the Ovivo group. He will replace GLV chief executive Richard Verreault, who was interim division president.
France De Blois becomes chief financial officer.
On the Toronto Stock Exchange, GLV’s shares lost 22 cents, or 7.4 per cent, at $2.76 in afternoon trading.
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