ADF Group Inc. Announces the Results for Fiscal Year Ended January 31, 2021

HIGHLIGHTS

Net results of $6.9 million, compared with net loss during the fiscal year ended January 31, 2020.
The Corporation's order backlog stood at $436.2 million as at January 31, 2021, up $107.5 million from January 31, 2020.
Revenues of $172.6 million, down 4% from the previous fiscal year.
At the date hereof, there is no significant impact from COVID-19 on the Corporation's operations.

TERREBONNE, QC, April 8, 2021 /CNW Telbec/ - ADF GROUP INC. ("ADF" or the "Corporation") (TSX: DRX) recorded revenues of $172.6 million during the fiscal year ended January 31, 2021, compared with $179.7 million the previous fiscal year. This decrease in revenues is mainly attributable to the production schedule, as the recently signed projects have not yet reached the fabrication phase.

It should be noted that had it not been for the $7.7 million write-off recorded in the third quarter of the 2020 fiscal year resulting from a out of court settlement in a commercial dispute in Florida, the 2020 fiscal year revenues would have been $187.4 million.

Gross margin, as a percentage of revenues, increased from 9.2% for the fiscal year ended January 31, 2020, to 15.2% for the fiscal year ended January 31, 2021. This increase, as the percentage of revenues, was largely due to a better overall price on projects completed during the year, and the recognition for COVID-19-related grants in the fourth quarter of the fiscal year ended January 31, 2021.

For the fiscal year ended January 31, 2021, the Corporation benefited from grants related to COVID-19 from the Canadian and US governments. The total amount included in the results, and thus having mainly improved the gross margin, and to a lesser extent the selling and administrative expenses, and therefore the earnings before interest, taxes, depreciation and amortization (EBITDA), totaled $6.3 million. This amount does not, however, take into account the direct costs incurred by the Corporation in order to put in place the health and physical distancing measures required by the local government authorities, nor does it take into account the operational efficiency losses due to these same measures.

For the fiscal year ended January 31, 2021, ADF posted a net income of $6.9 million ($0.21 basic and diluted per share) compared with a net loss of $2.1 million (-$0.07 basic and diluted per share) a year ago.

On January 31, 2021, the Corporation had $38.5 million in working capital, The Corporation remains in a sound position to support its ongoing operations and pursue its development projects.

During the fiscal year ended January 31, 2021, the Corporation was able to secure new contracts, including certain contractual changes, valued at over $280 million, bringing its order backlog to $436.2 million on that date, compared with a backlog of $328.7 million as at January 31, 2020. Most contracts will be progressively completed by the end of the fiscal year ending January 31, 2023.

Financial Highlights



Fiscal Years Ended January 31,	2021	2020
(In thousands of Canadian dollars, and dollars per share)	$	$
Revenues	172,593	179,710
EBITDA	16,341	5,225
Income (loss) before income tax expense	9,019	(1,986)
Net income (loss) for the year	6,867	(2,132)
— Basic and diluted per share	0.21	(0.07)
Cash flows from (used in) operating activities	28,842	(894)
Average number of outstanding shares (basic and diluted, in thousands)	32,635	32,635

COVID-19

At the date hereof, the impact of COVID-19 on ADF's operations is limited. We have taken all necessary steps to protect our employees and business partners, and we will continue to follow the advice and recommendations of local authorities wherever we conduct business. These measures have resulted in operational costs and inefficiencies that have been offset by the government incentives previously mentioned. This situation is changing rapidly and we will continue to monitor and mitigate development affecting our staff, suppliers, customers and the general public to the extent we can.

Outlook

"The fiscal year that just ended is a good example of the Corporation's resilience. Despite the pandemic's impacts and its effects, not only on the economy in general but also on the way we operate, we have been able to continue to grow our order backlog and greatly improve our cash position added Mr. Jean Paschini, Co-Chair of the Board of Directors and Chief Executive Officer.

"Despite the pressure on the prices of the projects currently in the backlog that could reduce margins in coming quarters, we welcome the recent announcements regarding investments in infrastructure projects that should reduce this pressure," concluded Mr. Paschini.

Dividend

On April 7, 2021, ADF Group's Board of Directors approved the payment of a semi-annual dividend of $0.01 per share, which will be paid on May 17, 2021, to shareholders of record as at April 30, 2021.

Conference Call with Investors

A conference call with investors is scheduled for Thursday, April 8, 2021 at 10 a.m. (Montreal time) to discuss the results of Corporation fiscal year ended January 31, 2021.

To take part in the conference call, dial 1-888-390-0620, a few minutes prior to the conference call scheduled start time. A replay of this conference call will be available from Thursday, April 8, 2021 at 1:00 p.m. until 11:59 p.m., Thursday, April 15, 2021, by dialing 1-888-390-0541, followed by the access code 583306#.

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

ANNUAL GENERAL MEETING OF SHAREHOLDERS

In these exceptional circumstances, and amongst the several preventative health measures adopted by the Provincial and Federal Governments and by the Corporation to slow the spread of COVID-19, ADF Group Inc. will hold its Annual Meeting of Shareholders via webcasting, on Wednesday, June 9, 2021 at 11 :00 a.m.

Financial results for the first quarter ending April 30, 2021, will also be disclosed during this Shareholders' Meeting.

Shareholders' meeting details and webcasting connection instructions will be made available in the coming weeks.

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-IFRS Measures | Earnings before interest, taxes, depreciation and amortization ("EBITDA") is not a performance measure recognized by IFRS standards, and is not likely to be comparable to similar measures presented by other issuers. Management, as well as investors, consider this to be useful information to assist them in assessing the Corporation's profitability and ability to generate funds to finance its operations. Refer to the section "Non-GAAP Measures" of the Corporation's Management's Discussion and Analysis for the definition of this metric and reconciliation to the most comparable IFRS measures.

All amounts are in Canadian dollars, unless otherwise indicated.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION


As at January 31,	2021	2020
(In thousands of Canadian dollars)	$	$
ASSETS
Current assets
Cash and cash equivalents	17,806	3,983
Accounts receivable	50,234	39,555
Holdbacks on contracts	10,785	11,628
Current income tax assets	834	882
Contract assets	8,790	14,435
Inventories	6,960	7,898
Derivative financial instruments	517	―
Prepaid expenses and other current assets	4,670	1,581
Total current assets	100,596	79,962
Non-current assets
Property, plant and equipment	62,223	64,967
Right-of-use assets	22,478	23,818
Intangible assets	3,266	3,354
Other non-current assets	1,388	1,443
Total assets	189,951	173,544
LIABILITIES
Current liabilities
Credit facilities	―	13,105
Accounts payable and other current liabilities	34,562	30,788
Current income tax liabilities	1,161	216
Contract liabilities	23,278	3,444
Derivative financial instruments	―	123
Current portion of lease liabilities	1,143	1,070
Current portion of long-term debt	1,904	1,903
Total current liabilities	62,048	50,649
Non-current liabilities
Long-term debt	18,368	19,156
Lease liabilities	4,166	4,930
Deferred income tax liabilities	5,627	4,215
Other non-current liabilities	177	187
Total liabilities	90,386	79,137
SHAREHOLDERS' EQUITY
Capital stock	68,120	68,120
Contributed surplus	6,435	6,435
Accumulated other comprehensive income (loss)	5,886	6,942
Retained income	19,124	12,910
Total shareholders' equity	99,565	94,407
Total liabilities and shareholders' equity	189,951	173,544

CONSOLIDATED STATEMENTS OF INCOME (LOSS)


Fiscal Years Ended January 31,	2021	2020
(In thousands of Canadian dollars, except the number of shares and the amounts per share)	$	$
Revenues	172,593	179,710
Cost of goods sold	146,388	163,203
Gross Margin	26,205	16,507
Selling and administrative expenses	14,779	16,005
Net financial expenses	1,663	2,082
Foreign exchange loss	744	406
	17,186	18,493
Income (loss) before income tax expense	9,019	(1,986)
Income tax expense	2,152	146
Net income (loss) for the year	6,867	(2,132)
Earnings per share
- Basic and diluted per share	0.21	(0.07)
Average number of outstanding basic and diluted shares (in thousands)	32,635	32,635

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)


Fiscal Years Ended January 31,	2021	2020
(In thousands of Canadian dollars)	$	$
Net income (loss) for the year	6,867	(2,132)
Other comprehensive income (loss):
Exchange differences on translation of foreign operations ^(a)	(1,056)	294
Comprehensive income (loss) for the year	5,811	(1,838)

a) Will subsequently be reclassified to net income (loss).

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

	Capital Stock	Contributed Surplus	Accumulated Other Comprehensive Income (Loss)	Retained Income	Total
(In thousands of Canadian dollars)	$	$	$	$	$
Balance, February 1, 2019	68,120	6,432	6,648	15,695	96,895
Net loss for the year	―	―	―	(2,132)	(2,132)
Other comprehensive income (loss)	―	―	294	―	294
Comprehensive income (loss) for the year	―	―	294	(2,132)	(1,838)
Share-based compensation	―	3	―	―	3
Dividends	―	―	―	(653)	(653)
Balance, January 31, 2020	68,120	6,435	6,942	12,910	94,407

	Capital Stock	Contributed Surplus	Accumulated Other Comprehensive Income (Loss)	Retained Income	Total
(In thousands of Canadian dollars)	$	$	$	$	$
Balance, February 1, 2020	68,120	6,435	6,942	12,910	94,407
Net income for the year	―	―	―	6,867	6,867
Other comprehensive income (loss)	―	―	(1,056)	―	(1,056)
Comprehensive income (loss) for the year	―	―	(1,056)	6,867	5,811
Dividends	―	―	―	(653)	(653)
Balance, January 31, 2021	68,120	6,435	5,886	19,124	99,565

CONSOLIDATED STATEMENTS OF CASH FLOWS


Fiscal Years Ended January 31,	2021	2020
(In thousands of Canadian dollars)	$	$
OPERATING ACTIVITIES
Net income (loss) for the year	6,867	(2,132)
Non-cash items:
Amortization of property, plant and equipment	3,465	3,387
Amortization of right-of-use assets	1,001	926
Amortization of intangible assets	449	410
Unrealized gain on derivative financial instruments	(640)	(61)
Unrealized foreign exchange loss (gain)	359	(134)
Share-based compensation	998	491
Income tax expense	2,152	146
Government grants	(6,158)	(243)
Net financial expenses	1,663	2,082
Others	49	(111)
Net income adjusted for non-cash items	10,205	4,761
Change in non-cash working capital items ⁽¹⁾	18,637	(5,655)
Cash flows from (used in) operating activities	28,842	(894)
INVESTING ACTIVITIES
Acquisition of property, plant and equipment	(1,460)	(1,186)
Acquisition of intangible assets	(361)	(452)
Government grants	―	826
Others	68	142
Cash flows used in investing activities	(1,753)	(670)
FINANCING ACTIVITIES
Variation in credit facilities	(13,105)	6,500
Issuance of long-term debt	5,654	―
Repayment of long-term debt	(1,918)	(1,884)
Payment of lease liabilities	(961)	(771)
Dividends paid	(653)	(653)
Interest paid	(1,460)	(1,827)
Cash flows (used in) from financing activities	(12,443)	1,365
Impact of fluctuations in foreign exchange rate on cash flow	(823)	18
Net change in cash and cash equivalents during the year	13,823	(181)
Cash, and cash equivalents, beginning of year	3,983	4,164
Cash and cash equivalents, end of year	17,806	3,983

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


Fiscal Years Ended January 31,	2021	2020
(In thousands of Canadian dollars)	$	$
Accounts receivable	(11,378)	(10,360)
Holdbacks on contracts	508	(5,491)
Contract assets	5,236	3,660
Inventories	830	554
Prepaid expenses and other current assets	(922)	74
Accounts payable and other current liabilities	3,580	13,597
Contract liabilities	20,793	(7,679)
Other	(10)	(10)
Change in non-cash working capital items	18,637	(5,655)

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,	2021	2020
(In thousands of Canadian dollars)	$	$
Revenues
Canada	32,025	13,906
United States	140,568	165,804
	172,593	179,710


As at January 31,	2021	2020
(In thousands of Canadian dollars)	$	$
Non-current assets ⁽¹⁾
Canada	46,794	48,281
United States	42,561	45,301
	89,355	93,582

(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, 2021, 66% of the Corporation's revenues was realized with three (3) clients, each representing 10 % and more of its revenues (72% with four (4) clients during the fiscal year ended January 31, 2020).

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


Fiscal Years Ended January 31,	2021 ⁽¹⁾	2020 ⁽²⁾
(In thousands of Canadian dollars)	$	$
Client A	―	20,518
Client B	―	32,812
Client C	―	43,415
Client D	―	31,894
Client E	63,613	―
Client F	28,141	―
Client G	21,517	―
	113,271	128,639

(1) All from the United States, except for an amount of $21,517,000 from Canada.

(2) All from the United States.

SOURCE ADF Group Inc.

Jean Paschini, Co-Chairman of the Board of Directors and Chief Executive Officer; Jean-François Boursier, CPA, CA, Chief Financial Officer; Telephone: (450) 965-1911

Press release

ADF Group Inc. Announces the Results for Fiscal Year Ended January 31, 2021

DIVISIONS

Certifications

ADF Group inc.

ADF Structural Steel Inc.

ADF International Inc.

ADF Industrial Coating Inc.

ADF STEEL CORP Inc.

Group ADF inc.