DRX ADF Group Inc

HIGHLIGHTS
(All amounts are in Canadian dollars unless otherwise indicated.)

• Revenues of $262.2 million recorded during the nine (9) months ended October 31, 2024, an increase of 8.1% compared with the corresponding period a year ago.
• Net income of $16.4 million and $47.7 million recorded during the three (3) month and nine (9) month periods ended October 31, 2024, up by $5.2 million and $20.6 million respectively, compared with the same periods a year ago.
• Cash flow from operating activities reached $53.3 million during the nine (9) months ended October 31, 2024.
• Announcing a Normal Course Issuer Bid.

TERREBONNE, QC, Dec. 12, 2024 /CNW/ - ADF GROUP INC. ("ADF" or the "Corporation") (TSX: DRX), a North American leader in the fabrication of steel superstructures, recorded revenues of $80.0 million during the third quarter ended October 31, 2024, compared with $82.1 million for the same period a year ago. After the first nine months of the current fiscal year, revenues reached $262.2 million, which is $19.6 million or 8.1% higher than the same period last year. Considering that the Corporation carries out projects that vary in complexity and duration, upward or downward fluctuations from quarter to quarter may occur. In light of this, changes in revenues and in the order backlog must be analyzed over several quarters and not only from one quarter to the next.

Gross margin, as a percentage of revenues ⁽¹⁾ went from 24.4% for the 3-month period ended October 31, 2023, to 30.4% for the same period ended October 31, 2024. Gross margin, as a percentage of revenue ⁽¹⁾ went from 21.1% during the 9-month period ended October 31, 2023, to 31.7% for the same period ended October 31, 2024.

These improvements are largely attributable to a better absorption of fixed costs, in line with the increase in the fabrication volume, the continued favorable impact of the investments in automation at ADF's plant in Terrebonne, Quebec, and a favorable project mix. In fact, since the beginning of the current fiscal year, the mix of products in fabrication was particularly favorable.

Adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EBITDA) ⁽²⁾ for the 9-month period ended October 31, 2024, at $72.0 million, is $31.6 million, or 78.1% higher than at the same date a year ago.

For the quarter ended October 31, 2024, ADF recorded net income of $16.4 million ($0.55 per basic and diluted share) compared with net income of $11.2 million ($0.34 per share, basic and diluted) a year earlier. After 9 months, as at October 31, 2024, net income totalled $47.7 million ($1.53 per share, basic and diluted) compared with net income of $27.1 million ($0.83 per share, basic and diluted) for the same period a year ago.

The Corporation's order backlog ⁽¹⁾ stood at $330.3 million as at October 31, 2024 compared with $510.9 as at January 31, 2024. Projects currently in the order backlog will extend until the end of the fiscal year ending January 31, 2026.

As at October 31, 2024, the Corporation had working capital ⁽¹⁾ of $105.4 million. The Corporation's operating activities generated cash of $53.3 million during the 9-month period ended October 31, 2024. The Corporation remains in a good position to continue its current operations and carry out its development projects.

Financial Highlights

Outlook

"Once again, we closed the three-month and nine-month periods ended October 31, 2024, with excellent results," said Mr. Jean Paschini, Chairman of the Board of Directors and Chief Executive Officer. He added that "It is still early to fully understand the impacts of the U.S. election, including the potential impact of tariffs. However, we have the assets and personnel to face these challenges, including our fabrication plant in Great Falls, Montana, USA. We will continue to monitor the situation and take the necessary decisions to pursue ADF Group's growth," concluded Mr. Paschini.

Normal Course Issuer Bid (NCIB)

On December 11, 2024, the Corporation's Board of Directors authorized a share repurchase bid. On December 11, 2024, the Corporation also announced that the Toronto Stock Exchange (TSX) had accepted its Notice of Intention to Proceed with a NCIB. Please refer to the press release issued by the Corporation, a copy of which can be found on the Corporation's website under the section "Investors/Documentation Center".

Certification ISO 14001:2015 (ISO 14001)

On December 2, 2024, the Corporation obtained its ISO 14001 certification for its complex located in Terrebonne, Quebec. ISO 14001 is a recognized international standard for environmental management. This achievement illustrates the Corporation's commitment to adopting and promoting sustainable practices throughout its operations, solidifying its position as a responsible leader in the steel industry.

Conference call with Investors

An investor conference call will be held today, December 12, 2024, at 10 a.m. (EST) to discuss results for the third quarter and 9-month period ended October 31, 2024.

To join the conference call without operator assistance, you can register with your phone number on https://emportal.ink/4hMY0Ht to receive an instant automated call back. You can also join the conference call with operator assistance by dialing 1 (800) 990 4777 a few minutes prior to the conference call scheduled start time.

A replay of the conference call will be available from 1:00 p.m. December 12, 2024, until midnight, December 19, 2024, by dialing 1 (888) 660-6345; followed by the access code 45246 #.

The conference call (audio) will also be available at www.adfgroup.com. Members of the media are invited to join in listening mode.

About ADF Group Inc. | ADF Group Inc. is a North American leader in the design and engineering of connections, fabrication, including the application of industrial coatings, and installation of complex steel structures, heavy steel built-ups, as well as in miscellaneous and architectural metals for the non-residential infrastructure sector. ADF Group Inc. is one of the few players in the industry capable of handling highly technically complex mega projects on fast-track schedules in the commercial, institutional, industrial and public sectors. The Corporation operates two fabrication plants and two paint shops, in Canada and in the United States, and a Construction Division in the United States, which specializes in the installation of steel structures and other related products.

Forward-Looking Information | This press release contains forward-looking statements reflecting ADF's objectives and expectations. These statements are identified by the use of verbs such as "expect" as well as by the use of future or conditional tenses. By their very nature these types of statements involve risks and uncertainty. Consequently, reality may differ from ADF's expectations.

Non-GAAP Financial Measures and Other Financial Measures | Are measures derived primarily from the consolidated financial statements but are not a standardized financial measure under the financial reporting framework used to prepare the Corporation's financial statements. Therefore, readers should be careful not to confuse or substitute them with performance measures prepared in accordance with GAAP. In addition, readers should avoid comparing these non-GAAP financial measures to similarly titled measures provided or used by other issuers. The definition of these indicators and their reconciliation with comparable International Financial Reporting Standards measure is as follows:

Adjusted EBITDA

Adjusted EBITDA shows the extent to which the Corporation generates profits from operations, without considering the following items:

• Net financial expenses;
• Income taxes expense ;
• Foreign exchange losses, and
• Depreciation and amortization of property, plant and equipment, intangible assets, and right-of-use assets.

The following table reconciles net income to Adjusted EBITDA:

Gross Margin as a Percentage of Revenues

Gross margin as a percentage of revenue indicator is used by the Corporation to assess the level of profitability for a given period based on the project mix for that same period. This indicator is subject to fluctuations in project prices and also in the operational efficiency of the Corporation. The indicator of gross margin as a percentage of revenues results from dividing gross margin by revenues.

Order Backlog

The order backlog is a measure used by the Corporation to assess future revenue levels. The order backlog includes firm orders obtained by the Corporation, either through a firm contract or a formal notice to proceed confirmed by the client. The order backlog disclosed by the Corporation therefore includes the portion of confirmed contracts that have not been put into production.

Working Capital

The working capital indicator is used by the Corporation to assess whether current assets are sufficient to meet current liabilities. It is therefore equal to current assets, less current liabilities.

All amounts are in Canadian dollars unless otherwise specified.

SOURCE ADF Group Inc.