DECT Dectron International (MM)

NASDAQ: DECT TSX: DTL MONTREAL, May 23 /PRNewswire-FirstCall/ -- Dectron Internationale, Inc. (NASDAQ:DECTNASDAQ:andNASDAQ:TSX:NASDAQ:DTL), a leader in the heating, ventilation and air conditioning, indoor air security and water generation markets, is pleased to announce its financial results for the fiscal year ended January 31, 2006 (in thousands of USD). In 2006 we had a significant increase in sales; moreover the increase was apparent in every major division of the Company. Gross margin percentage, although lower than last year, rebounded in the fourth quarter. Selling, general and administrative expenses were held in check and as a percentage of sales dropped from last year. We completed our divestment of the assets of IPAC 2000. The company thus finishes the year on these positive notes as well as an order book over 60% higher than the previous year. The Company's EBITDA increased 38% to $3,375 or 7.1% of consolidated sales. Total sales rose 15.8% to $47,366 during the fiscal year ended January 31, 2006, up $6,455 from $40,911 in 2005. The Company's sales growth reflects the revenues arising primarily from its stronger presence in the US and international markets for commercial HVAC products and related services. The increase was across all divisions with Circul-Aire up 23.7% on the strength of Ecosaire precision air conditioners and in overseas markets followed by Refplus up 11.0%, Thermoplus up 10.5% and Dectron up 3.8%. Geographically sales outside Canada accounted for 48.3% of total sales in 2006, compared with 44.4% the previous year. Gross profit increased $980 (8.4 %) to $12,630 in 2006 from $11,650 in 2005, despite a gross profit margin that decreased to 26.7% from 28.5%. Throughout the year the Company realized certain productivity gains, however the gross profit margin was still adversely affected by higher metal material costs and aggressive pricing strategies in certain HVAC markets. Additionally the company forwent purchase discounts which in the past it had taken. The continued appreciation of the Canadian dollar also adversely affected gross margin. Selling expenses increased by 4.8%, to $5,544 in 2006 from $5,289 in 2005. This change is primarily due to higher commissions payable on the higher sales level offset in part by continued cost-cutting. General and administrative expenses rose 10.2% to $3,711 in 2006 from $3,369 in 2005. However as a percent of sales, selling, general and administrative expenses decreased to 19.5% in 2006 versus 21.1% the previous year. Overall, total operating expenses (including depreciation, amortization and interest) increased slightly to $11,540 in 2006 from $11,514 in 2005. In relation to sales, operating expenses totalled 24.4%, a significant improvement over 28.1% recorded last year. Operating income was up significantly to $1,090 from $136 in fiscal 2005; a more than eightfold increase. Along with a write-down of $66 of a loan receivable, the Company recorded a loss from discontinued operations, net of taxes, amounted to $898 in fiscal 2006, compared with $1,429 in fiscal 2005, resulting mostly from the discontinuation and sales of Liberty Drive Property, Inc. (formerly IPAC 2000 Inc.). In 2005, Liberty Drive Property sold the remaining building and land, representing the last of the assets. Significantly most of the loss was non-cash either foreign exchange related or depreciation. Dectron recorded a gain on disposal of the remaining building and equipment, net of tax, of $231 in 2006 versus $890 in fiscal 2005. Net loss shrunk to $294 (or $0.09 per share) from a net loss of $988 ($0.32 per share) in fiscal 2005 as a result of the improved sales and reduced expenses, offset in part by higher income taxes. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is a non-GAAP measure used by many in the industry as a measurement of operational performance. For the year ended January 31, 2006 EBITDA increased 38.3% over the previous year to $3,375 from $2,440. The Company also reports that the order backlog continues to track significantly ahead of last year. As of the end of March the consolidated order backlog was over $17 million or 78% higher than the same time a year ago. Ness Lakdawala, president and CEO of Dectron states "it is particularly good news that the increase is seen across all division, especially Dectron Inc. which is over double the same time last year." Outlook While the demand for its products has increased steadily due to a favourable economic environment in recent years, the Company has nevertheless faced fierce competition in the North American HVAC industry, a significant appreciation in the Canadian dollar and a sharp rise in raw material costs. The Company's results have therefore been adversely affected by several divestitures in recent years. Management believes that great progress has been made in regard to productivity. In fact, various manufacturing operations have been consolidated and certain non-strategic low-yielding assets have been sold. Accordingly, the Company does not expect to incur any loss from discontinued operations for the current fiscal year. Based on selective price increases and continued improvements in efficiency, management is confident in believing that the Company will increase profit margins to higher and sustainable levels. In addition, Dectron's growth avenues, namely indoor air security and water generation, will eventually bring substantial sales, which would have a direct impact on the Company's overall profitability. All in all, management feels that the worst is over and that Dectron now benefits from a stronger foundation to drive sustained growth and profitability. More detailed information on the Company and its results are available through the Form 10K filed with the SEC (http://www.sec.gov/) or with the TSX (http://www.sedar.com/). Dectron also announced that the annual shareholders meeting would be held June 7th, 2006 in Montreal. Further information is will be available in the management proxy circular to be sent to shareholders and TSX (http://www.sedar.com/). Dectron Internationale, Inc. is a global provider of custom and semi-custom IAQ (indoor air quality) and HVAC (heating, ventilation and air conditioning) products and services to the building systems, food processing, medical, petrochemical, and various industrial and commercial markets. Established in Montreal, the Company has 400 employees in its manufacturing facilities. Its shares are listed on the NASDAQ (DECT) and the TSX (DCT). DATASOURCE: DECTRON INTERNATIONALE INC. CONTACT: Dectron Internationale, Inc.: Mauro Parissi, Glenn La Rusic, (514) 334-9609; http://www.dectron.com/; Renmark Financial Communications Inc.: Tina Cameron, ; Henri Perron, ; Media - Lynda Martineau: , (514) 939-3989, Fax: (514) 939-3717; http://www.renmarkfinancial.com/

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