ADF Group Inc. — Earnings Release 2025

Apr 10, 2025

PRESS RELEASE

CD Group Inc.

ADF GROUP INC. ANNOUNCES THE RESULTS FOR THE FISCAL YEAR ENDED JANUARY 31, 2025

HIGHLIGHTS

• Revenues of $339.6 million, up by $8.6 million from the previous fiscal year.
• Net income of $56.8 million, up by $19.2 million or 50.9% from the previous fiscal year.
• Cash flow from operations of $55.1 million for the fiscal year ended January 31, 2025.
• The Corporation's order backlog (1) totalled $293.1 million as at January 31, 2025, excluding the new orders totalling $120.0 million announced on February 26, 2025.

Terrebonne, Quebec, April 10, 2025

ADF GROUP INC. ("ADF" or the "Corporation") (TSX/DRX) recorded revenues of $339.6 million during the fiscal year ended January 31, 2025, compared with $331.0 million the previous fiscal year.

Gross margin, as a percentage of revenues (1), went from 22.0% for the fiscal year ended January 31, 2024, to 31.6% for the fiscal year ended January 31, 2025. This variation as a percentage of revenues is explained by the level of fabrication activity compared to the previous fiscal year, thus generating a better absorption of fixed costs and also by the improvement in internal efficiency gained by the investments in automation made in recent years at ADF's plant in Terrebonne, Quebec.

Adjusted earning before interest, taxes, depreciation, and amortization (2) (adjusted EBITDA) for the fiscal year ended January 31, 2025, totalled $91.3 million, which is $35.4 million or 63.2% higher than at the same date a year earlier.

For the fiscal year ended January 31, 2025, ADF posted net income of $56.8 million ($1.84 per share basic and diluted) compared with net income of $37.6 million ($1.15 per share, basic and diluted) a year earlier.

As at January 31, 2025, the Corporation had a working capital (1) of $109.2 million, practically unchanged from the same date a year earlier. In addition, the Corporation generated cash flow from operating activities totalling $55.1 million during the fiscal year ended January 31, 2025. The Corporation closed the fiscal year ended January 31, 2025, with $60.0 million in liquidity compared to $72.4 million on January 31, 2024, including the full buyback for cancellation of 3,487,589 Subordinated Voting Shares, for a total cash consideration of $54.6 million during the fiscal year ended January 31, 2025.

As at January 31, 2025, the Corporation's order backlog (1) stood at $293.1 million excluding the new orders totaling $120.0 million announced on February 26, 2025, compared with $510.9 million as at January 31, 2024. The majority of projects in hand will be progressively carried out by the second semester of the fiscal year ending January 31, 2027.

Financial Highlights

Fiscal Years Ended January 31,	2025	2024
(In thousands of Canadian dollars, and dollars per share)	$	$
Revenues	339,632	331,023
Adjusted EBITDA (2)	91,289	55,939
Income before income taxes expense	78,407	46,406
Net income for the fiscal year	56,790	37,622
— Basic and diluted per share	1.84	1.15
Cash flows from operating activities	55,056	77,860
(In thousands)	Number	Number
Average number of outstanding shares (basic and diluted)	30,852	32,640

1. The order backlog, gross margin as a percentage of revenues and working capital are additional financial measures. Refer to the "Non-IFRS and Other Financial Measures" section herein for the definition of these indicators.
2. Adjusted EBITDA is a non-IFRS financial measure. Refer to the "Non-IFRS Financial Measures and Other Financial Measures" section of this press release for the definition of this indicator.

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ADF Group Inc. | Press Release
April 10, 2025

Work-Sharing Program

Given the projects in the pipeline and the fabrication schedule, the Corporation has applied for and will soon receive authorization from Service Canada to implement a Work-Sharing program for some of its employees at its fabrication plant in Terrebonne, Quebec. The program would come into effect on April 14, 2025, and would allow some employees to benefit from the Employment Insurance program to compensate for reduced working hours. This program, as already discussed with the union executive, will be submitted to a vote of its unionized employees on April 12, 2025. This program would allow ADF to closely manage its costs until the fabrication phase of the recently announced projects begins. As a result, approximately 200 employees would see their working hours reduced between 50% and 60% ; hours which would be compensated by the government program.

Outlook

"Although we announced $120.0 million in new contracts at the very beginning of the current fiscal year, the uncertainty caused by the imposition of U.S. tariffs is delaying the conclusion of new commercial agreements, and in this context, we are compelled to analyze certain contingency measures, including the implementation of the Work-Sharing Program at our plant located in Terrebonne, Quebec. In this sense, we can already confirm that revenues for the fiscal year ending January 31, 2026, will be down, mainly in the first quarters, and that our margins will also be affected by the direct and indirect impacts of U.S. tariffs," said Mr. Jean Paschini, Chairman of the Board of Directors and Chief Executive Officer.

"Rest assured, as ADF has always done for nearly 70 years now, that our decisions will be made based on the Corporation's continued sound and prudent growth," concluded Mr. Paschini.

Dividend

On April 9, 2025, ADF Group announced the payment of a semi-annual dividend of $0.02 per subordinate voting share and per multiple voting shares, which will be paid on May 15, 2025, to Shareholders of Record as at April 24, 2025.

Conference Call with Investors

A conference call with investors is scheduled for Thursday, April 10, 2025, at 10 a.m. (Montreal time) to discuss the results of fiscal year ended January 31, 2025.

To join the conference call without operator assistance, you can register with your phone number on https://emportal.ink/42lwHZF to receive an instant automatic reminder.

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 this conference call will be available from 1:00 p.m. on April 10, 2025, until April 17, 2025, by dialing 1-888-660-6345, followed by access code 49276 #. The conference call (audio) will also be available at the www.adfgroup.com. Members of the media are invited to join in listening mode.

ANNUAL GENERAL MEETING OF SHAREHOLDERS FOR THE FISCAL YEAR ENDED JANUARY 31, 2025

ADF Group Inc.'s Annual Meeting of Shareholders will be held on:

Date: June 10, 2025

Time: 11 a.m.

Location: Imperia Hotel and Suites
2935 de La Pinière Boulevard, Terrebonne, Quebec

Results for the first quarter ended April 30, 2025, will also be released at the Annual Meeting of Shareholders.

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.

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ADF Group Inc. | Press Release
April 10, 2025

Non-IFRS 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 IFRS. In addition, readers should avoid comparing these non-IFRS 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 measures issued by the International Accounting Standards Board ("IFRS Accounting Standards") 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.

Net income is reconciled with adjusted EBITDA in the table below:

Fiscal Years Ended January 31,	2025	2024
(In thousands of Canadian dollars)	$	$
Net income	56,790	37,622
Income taxes expense	21,617	8,784
Net financial expenses	1,116	2,573
Amortization	6,160	5,800
Foreign exchange loss	5,606	1,160
Adjusted EBITDA	91,289	55,939

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.

Contact: Jean Paschini, Chairman of the Board of Directors and Chief Executive Officer
Jean-François Boursier, CPA, Chief Financial Officer

Telephone: (450) 965-1911

Website: www.adfgroup.com

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ADF Group Inc. | Press Release
April 10, 2025

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As at January 31,	2025	2024
(In thousands of Canadian dollars)	$	$
ASSETS
Current assets
Cash and cash equivalents	59,983	72,379
Accounts receivable	83,910	77,844
Current income taxes assets	1,586	115
Contract assets	26,491	44,862
Inventories	13,489	13,534
Investment taxes credit	834	3,112
Prepaid expenses and other current assets	3,271	3,730
Total current assets	189,564	215,576
Non-current assets
Property, plant and equipment	91,886	86,615
Right-of-use assets	22,119	21,173
Intangible assets	4,328	3,925
Deferred income tax assets	—	266
Other non-current assets	—	1,050
Total assets	307,897	328,605
LIABILITIES
Current liabilities
Accounts payable and other current liabilities	50,236	55,441
Current income taxes liabilities	6,454	—
Contract liabilities	11,484	46,168
Derivative financial instruments	7,198	—
Current portion of lease liabilities	821	827
Current portion of long-term debt	4,177	3,040
Total current liabilities	80,370	105,476
Non-current liabilities
Long-term debt	38,208	42,138
Lease liabilities	2,423	2,839
Deferred income taxes liabilities	17,449	15,876
Other non-current liabilities	135	146
Total liabilities	138,585	166,475
SHAREHOLDERS' EQUITY
Capital stock	61,754	68,127
Contributed surplus	6,179	6,435
Accumulated other comprehensive income	15,536	8,283
Retained income	85,843	79,285
Total shareholders' equity	169,312	162,130
Total liabilities and shareholders' equity	307,897	328,605

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ADF Group Inc. | Press Release
April 10, 2025

CONSOLIDATED STATEMENTS OF INCOME

Fiscal Years Ended January 31,	2025	2024
(In thousands of Canadian dollars, except the number of shares and the amounts per share)	$	$
Revenues	339,632	331,023
Cost of goods sold	232,391	258,102
Gross Margin	107,241	72,921
Selling and administrative expenses	22,112	22,782
Net financial expenses	1,116	2,573
Foreign exchange loss	5,606	1,160
	28,834	26,515
Income before income taxes expense	78,407	46,406
Income taxes expense	21,617	8,784
Net income for the fiscal year	56,790	37,622
Earnings per share
— Basic and diluted per share	1.84	1.15
Weighted average number of outstanding basic and diluted shares (in thousands)	30,852	32,640

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Fiscal Years Ended January 31,	2025	2024
(In thousands of Canadian dollars)	$	$
Net income for the fiscal year	56,790	37,622
Other comprehensive income (loss):
Exchange differences on translation of foreign operations (a)	7,253	176
Comprehensive income for the fiscal year	64,043	37,798

(a) Will subsequently be reclassified to net income.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

	Capital Stock	Contributed Surplus	Accumulated Other Comprehensive Income	Retained Income	Total
(In thousands of Canadian dollars)	$	$	$	$	$
Balance, February 1, 2023	68,127	6,435	8,107	42,316	124,985
Net income for the fiscal year	—	—	—	37,622	37,622
Other comprehensive income	—	—	176	—	176
Comprehensive income for the fiscal year	—	—	176	37,622	37,798
Dividends	—	—	—	(653)	(653)
Balance, January 31, 2024	68,127	6,435	8,283	79,285	162,130
	Capital Stock	Contributed Surplus	Accumulated Other Comprehensive Income	Retained Income	Total
---	---	---	---	---	---
(In thousands of Canadian dollars)	$	$	$	$	$
Balance, February 1, 2024	68,127	6,435	8,283	79,285	162,130
Net income for the fiscal year	—	—	—	56,790	56,790
Other comprehensive income	—	—	7,253	—	7,253
Comprehensive income for the fiscal year	—	—	7,253	56,790	64,043
Repurchase and cancellation of shares	(6,373)	(256)	—	(49,308)	(55,937)
Dividends	—	—	—	(924)	(924)
Balance, January 31, 2025	61,754	6,179	15,536	85,843	169,312

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ADF Group Inc. | Press Release
April 10, 2025

CONSOLIDATED STATEMENTS OF CASH FLOWS

Fiscal Years Ended January 31,	2025	2024
(In thousands of Canadian dollars)	$	$
OPERATING ACTIVITIES
Net income for the fiscal year	56,790	37,622
Non-cash items:
Amortization of property, plant and equipment	4,917	4,612
Amortization of right-of-use assets	745	753
Amortization of intangible assets	498	435
Loss (gain) on derivative financial instruments	7,403	(1,168)
Non-cash foreign exchange gain	(5,298)	(176)
Share-based compensation	1,386	4,576
Income taxes expense	21,617	8,784
Investment tax credit	(1,601)	—
Net financial expenses	1,116	2,573
Interest income	2,590	1,363
Others	(362)	(583)
Net income adjusted for non-cash items	89,801	58,791
Change in non-cash working capital items (1)	(24,855)	19,162
Income taxes paid	(9,890)	(93)
Cash flows from operating activities	55,056	77,860
INVESTING ACTIVITIES
Acquisition of property, plant and equipment	(8,283)	(5,768)
Acquisition of intangible assets	(810)	(720)
Others	384	222
Cash flows used in investing activities	(8,709)	(6,266)
FINANCING ACTIVITIES
Repurchase and cancellation of shares	(54,574)	—
Repayment of the long-term debt	(3,076)	(2,296)
Payment of lease liabilities	(700)	(686)
Dividends paid	(924)	(653)
Interest paid	(2,795)	(3,053)
Cash flows used in financing activities	(62,069)	(6,688)
Impact of fluctuations in foreign exchange rate on cash and cash equivalents	3,326	280
Net change in cash and cash equivalents during the fiscal year	(12,396)	65,186
Cash, and cash equivalents, beginning of fiscal year	72,379	7,193
Cash and cash equivalents, end of fiscal year	59,983	72,379

(1) The following table sets out in detail the components of the "Change in non-cash working capital items":

Fiscal Years Ended January 31,	2025	2024
(In thousands of Canadian dollars)	$	$
Accounts receivable	159	13,589
Contract assets	20,210	(2,217)
Inventories	456	(2,849)
Prepaid expenses and other current assets	118	(1,213)
Accounts payable and other current liabilities	(9,398)	10,749
Contract liabilities	(36,389)	1,113
Others	(11)	(10)
Change in non-cash working capital items	(24,855)	19,162

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ADF Group Inc. | Press Release
April 10, 2025

Segmented Information

The Corporation operates one operational sector, being, the non-residential construction industry, primarily in the United States and Canada. This sector includes the following areas of expertise: the design and engineering of connections, fabrication, including industrial coating, and installation of complex steel structures, heavy steel built-ups, as well as miscellaneous and architectural metalwork.

Fiscal Years Ended January 31,	2025	2024
(In thousands of Canadian dollars)	$	$
Revenues
Canada	40,836	36,060
United States	298,796	294,963
	339,632	331,023
As at January 31,	2025	2024
---	---	---
(In thousands of Canadian dollars)	$	$
Non-current assets (1)
Canada	68,624	69,359
United States	49,709	43,404
	118,333	112,763

(1) The non-current assets mainly include property, plant and equipment, intangible assets, right-of-use assets, investment tax credits and others non-current assets.

Revenues from external clients were allocated to each country on the basis of the project's location.

During the fiscal year ended January 31, 2025, 78% of the Corporation's revenues was realized with two (2) clients, each representing 10% and more of its revenues (69% with four (4) clients during the fiscal year ended January 31, 2024).

The following table presents the breakdown of revenues for each of these clients:

Fiscal Years Ended January 31,	2025 (1)	2024 (1)
(In thousands of Canadian dollars)	$	$
Client A	—	45,739
Client B	170,351	—
Client C	—	42,086
Client D	—	92,240
Client E	93,383	48,723
	263,734	228,788

(1) From the United States.

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