ADF GROUP INC. ANNOUNCES THE RESULTS FOR THE FISCAL YEAR ENDED JANUARY 31, 2022

    HIGHLIGHTS

    • Revenues of $280.7 million, $108.1 million more than last year.
    • Net income of $9.6 million, representing 39.3% more than for the year ended January 31, 2021.
    • The Corporation's backlog (1) was $373.1 million as at January 31, 2022.
    • Capital Investment program progressing as planned.

    TERREBONNE, QC, April 12, 2022 /CNW Telbec/ - ADF GROUP INC. ("ADF" or the "Corporation") (TSX: DRX) recorded revenues of $280.7 million during the fiscal year ended January 31, 2022, compared with $172.6 million the previous fiscal year. This increase in revenues is mainly attributable to the fabrication schedule, including projects with accelerated production schedules.

    Gross margin, as a percentage of revenues (1), went from 15.2% for the fiscal year ended January 31, 2021, to 8.8% for the year ended January 31, 2022. This decrease, as a percentage of revenues, is mainly due to the projects mentioned above, which, given their lower complexity had lower margins, and to the recognition of COVID-19-related subsidies during the fourth quarter of the fiscal year ended January 31, 2021.

    In this regard, and for the fiscal years ended January 31, 2022 and 2021, the Corporation has benefited from COVID-19-related grants from both the Canadian and U.S. governments. The total amounts which are included in the results, and having therefore mainly improved gross margin, and to a lesser extent, selling and administrative expenses, and therefore earnings before interest, taxes, depreciation and amortization adjusted (adjusted EBITDA (2)), totalled $1.9 million and $6.3 million for the fiscal years ended January 31, 2022 and 2021, respectively.

    For the fiscal year ended January 31, 2022, ADF posted net income of $9.6 million (or $0.29 per share, basic and diluted) compared to a net income of $6.9 million (or $0.21 per share, basic and diluted) a year earlier.

    As at January 31, 2022, the Corporation had a working capital of $38.7 million. The Corporation remains in a sound position to continue its ongoing operations and pursue its development projects.

    The Corporation was able to secure new contracts totalling nearly $220.0 million during the fiscal year ended January 31, 2022, including contractual changes, which brought the order backlog (1) to $373.1 million at that date, compared with $436.2 million as at January 31, 2021. The majority of projects in hand will be completed progressively by the end of the fiscal year ending January 31, 2024.

    Financial Highlights



    Fiscal Years Ended January 31,

    2022

    2021

    (In thousands of Canadian dollars, and dollars per share)

    $

    $




    Revenues

    280,740

    172,593

    Adjusted EBITDA (2)

    17,759

    16,341

    Income before income tax expense

    11,059

    9,019

    Net income for the year

    9,563

    6,867

     

      ―  Basic and diluted per share

     

    0.29

    0.21

    Cash flows from operating activities

    2,669

    28,842

    Average number of outstanding shares (basic and diluted, in thousands)

    32,635

    32,635




    New Contracts

    On January 31, 2022, the Corporation announced the award of a series of new contracts totalling $100.0 million. Specifically, the Corporation has been selected to participate in new construction projects in the commercial building sector in Southeast and Western USA, as well as in the industrial sector in Eastern Canada. The scope of the largest of these contracts, in terms of value and tonnage, covers all the services offered by ADF, namely, the design and engineering of connections, fabrication, which also encompasses industrial coatings, the production of shop drawings and the procurement of steel, as well as the installation of the steel structures for commercial buildings in Southeastern USA.

    ____________________

    (1)

    Gross margin, as a percentage of revenues, and the order backlog are additional financial measures. Refer to the "Non-GAAP Financial Measures and Other Financial Measures" section of this press release for the definition of these indicators.

    (2)

    Adjusted EBITDA is a non-GAAP financial measure.  Refer to the "Non-GAAP Financial Measures and Other Financial Measures" section of this press release for the definition of this indicator.

    New Financing

    On November 9, 2021, the Corporation obtained from the Business Development Bank of Canada a $30.0 million bank loan, of which $16.2 million was used for the repayment of an existing loan, and $13.8 million to increase the Corporation's working capital. This loan was entirely drawn as at January 31, 2022.

    On January 14, 2022 and January 18, 2022, the Corporation obtained two bank loans from Investissement Québec totalling $20.0 million. These amounts, which were not drawn as at January 31, 2022, will be used to finance the capital investment program that begun during the fiscal year ended January 31, 2022, as already announced by the Corporation.

    Outlook

    "We added new contracts totalling $50.0 million at the very beginning of the third quarter ended October 31, 2021, and announced new contracts worth a total of $100.0 million at the end of the fiscal year, that allowed us to close fiscal 2022 with an order backlog (1) of $373.1 million. The pipeline of projects under negotiation is encouraging and we are currently finalizing negotiations on several projects we bid on" said Jean Paschini, Chairman of the Board of Directors and Chief Executive Officer.

    "The elements are therefore in place for ADF to continue its development, including growing markets, capital investments that will allow ADF to stand out and continue to improve its business processes, as well as the financing required to support these investments, and the growth and execution of the order backlog" concluded Mr. Paschini.

    Dividend

    On April 11, 2022, 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, 2022, to shareholders of record as at April 29, 2022.

    Conference Call with Investors

    A conference call with investors is scheduled for Tuesday, April 12, 2022 at 10 a.m. (Montreal time) to discuss the results of Corporation fiscal year ended January 31, 2022.

    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 Tuesday, April 12, 2022 at 1:00 p.m. until 11:59 p.m., Tuesday, April 19, 2022, by dialing 1-888-259-6562, followed by the access code 372743#.

    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 FOR THE FISCAL YEAR ENDED JANUARY 31, 2022

    ADF Group Inc. will hold its Annual General Meeting of Shareholders via webcast, on Wednesday, June 8, 2022, at 11 a.m. (EST).

    Results for the first quarter ending April 30, 2022, will also be disclosed during the Shareholders' meeting. Shareholders' meeting details and webcasting connection instructions will be made available in the weeks preceding the meeting.

    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.

    ____________________

    (1)

    The order backlog is an additional financial measure. Refer to the "Non-GAAP Financial Measures and Other Financial Measures" section of this press release for the definition of these indicators.

    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 measures to similarly titled measures provided or used by other issuers.s. 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:

    • Financial revenues and financial expenses;
    • Income tax 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,

    2022

    2021

    (In thousands of dollars)

    $

    $




    Net income

    9,563

    6,867

    Income tax expense

    1,496

    2,152

    Net financial expenses

    1,174

    1,663

    Amortization

    5,054

    4,915

    Foreign exchange loss

    472

    744

    Adjusted EBITDA

    17,759

    16,341




    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.

    All amounts are in Canadian dollars, unless otherwise indicated.

    CONSOLIDATED STATEMENTS OF FINANCIAL POSITION



    As at January 31,

    2022

    2021

    (In thousands of Canadian dollars)

    $

    $




    ASSETS



    Current assets



    Cash and cash equivalents

    7,130

    17,806

    Accounts receivable

    40,424

    61,019

    Current income tax assets

    1,548

    834

    Contract assets

    29,998

    8,790

    Inventories

    9,690

    6,960

    Prepaid expenses and other current assets

    2,312

    5,187

    Total current assets

    91,102

    100,596

    Non-current assets



    Property, plant and equipment

    83,629

    62,223

    Right-of-use assets

    21,587

    22,478

    Intangible assets

    3,357

    3,266

    Other non-current assets

    1,375

    1,388

    Total assets

    201,050

    189,951

    LIABILITIES



    Current liabilities



    Accounts payable and other current liabilities

    34,421

    34,562

    Current income tax liabilities

    ―

    1,161

    Contract liabilities

    13,770

    23,278

    Current portion of lease liabilities

    841

    1,143

    Current portion of long-term debt

    3,357

    1,904

    Total current liabilities

    52,389

    62,048

    Non-current liabilities



    Long-term debt

    28,702

    18,368

    Lease liabilities

    3,772

    4,166

    Deferred income tax liabilities

    7,571

    5,627

    Other non-current liabilities

    166

    177

    Total liabilities

    92,600

    90,386

    SHAREHOLDERS' EQUITY



    Capital stock

    68,120

    68,120

    Contributed surplus

    6,435

    6,435

    Accumulated other comprehensive income

    5,861

    5,886

    Retained income

    28,034

    19,124

    Total shareholders' equity

    108,450

    99,565

    Total liabilities and shareholders' equity

    201,050

    189,951




     CONSOLIDATED STATEMENTS OF INCOME



    Fiscal Years Ended January 31,

    2022

    2021

    (In thousands of Canadian dollars, except the number of shares and the amounts per share)

    $

    $




    Revenues

    280,740

    172,593

    Cost of goods sold

    256,046

    146,388

    Gross Margin

    24,694

    26,205

    Selling and administrative expenses

    11,989

    14,779

    Net financial expenses

    1,174

    1,663

    Foreign exchange loss

    472

    744


    13,635

    17,186

    Income before income tax expense

    11,059

    9,019

    Income tax expense

    1,496

    2,152

    Net income for the fiscal year

    9,563

    6,867

    Earnings per share



     

    Basic and diluted per share

     

    0.29

    0.21

    Average number of outstanding basic and diluted shares (in thousands)

    32,635

    32,635




    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME




    Fiscal Years Ended January 31,

    2022

    2021

    (In thousands of Canadian dollars)

    $

    $




    Net income for the fiscal year

    9,563

    6,867

    Other comprehensive income (loss):



    Exchange differences on translation of foreign operations (a)

    (25)

    (1,056)

    Comprehensive income for the fiscal year

    9,538

    5,811




    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, 2020

    68,120

    6,435

    6,942

    12,910

    94,407

    Net income for the fiscal year

    ―

    ―

    ―

    6,867

    6,867

    Other comprehensive income (loss)

    ―

    ―

    (1,056)

    ―

    (1,056)

    Comprehensive income (loss) for the fiscal year

    ―

    ―

    (1,056)

    6,867

    5,811

    Dividends

    ―

    ―

    ―

    (653)

    (653)

    Balance, January 31, 2021

    68,120

    6,435

    5,886

    19,124

    99,565

     


    Capital Stock

    Contributed Surplus

    Accumulated Other
    Comprehensive
    Income

    Retained Income

    Total

    (In thousands of Canadian dollars)

    $

    $

    $

    $

    $







    Balance, February 1, 2021

    68,120

    6,435

    5,886

    19,124

    99,565

    Net income for the fiscal year

    ―

    ―

    ―

    9,563

    9,563

    Other comprehensive income (loss)

    ―

    ―

    (25)

    ―

    (25)

    Comprehensive income (loss) for the fiscal year

    ―

    ―

    (25)

    9,563

    9,538

    Dividends

    ―

    ―

    ―

    (653)

    (653)

    Balance, January 31, 2022

    68,120

    6,435

    5,861

    28,034

    108,450

    CONSOLIDATED STATEMENTS OF CASH FLOWS



    Fiscal Years Ended January 31,

    2022

    2021

    (In thousands of Canadian dollars)

    $

    $




    OPERATING ACTIVITIES



    Net income for the fiscal year

    9,563

    6,867

    Non-cash items:



    Amortization of property, plant and equipment

    3,543

    3,465

    Amortization of right-of-use assets

    1,013

    1,001

    Amortization of intangible assets

    498

    449

    Gain on disposal of property, plant and equipment

    (2,111)

    ―

    Unrealized loss (gain) on derivative financial instruments

    513

    (640)

    Unrealized foreign exchange loss

    705

    359

    Share-based compensation

    361

    998

    Income tax expense

    1,496

    2,152

    Government grants

    ―

    (6,158)

    Net financial expenses

    1,174

    1,663

    Others

    (148)

    49

    Net income adjusted for non-cash items

    16,607

    10,205

    Change in non-cash working capital items (1)

    (12,511)

    18,637

    Income tax paid

    (1,427)

    ―

    Cash flows from operating activities

    2,669

    28,842

    INVESTING ACTIVITIES



    Acquisition of property, plant and equipment

    (21,477)

    (1,460)

    Acquisition of intangible assets

    (589)

    (361)

    Others

    77

    68

    Cash flows used in investing activities

    (21,989)

    (1,753)

    FINANCING ACTIVITIES



    Variation in credit facilities

    ―

    (13,105)

    Issuance of long-term debt

    30,000

    5,654

    Repayment of long-term debt

    (17,878)

    (1,918)

    Payment of lease liabilities

    (963)

    (961)

    Dividends paid

    (653)

    (653)

    Interest paid

    (988)

    (1,460)

    Others

    (316)

    ―

    Cash flows from (used in) financing activities

    9,202

    (12,443)

    Impact of fluctuations in foreign exchange rate on cash flow

    (558)

    (823)

    Net change in cash and cash equivalents during the fiscal year

    (10,676)

    13,823

    Cash, and cash equivalents, beginning of fiscal year

    17,806

    3,983

    Cash and cash equivalents, end of fiscal year

    7,130

    17,806




    (1)

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




    Fiscal Years Ended January 31,

    2022

    2021

    (In thousands of CA$)

    $

    $




    Accounts receivable

    20,342

    (10,870)

    Contract assets

    (21,099)

    5,236

    Inventories

    (2,714)

    830

    Prepaid expenses and other current assets

    2,382

    (922)

    Accounts payable and other current liabilities

    (2,041)

    3,580

    Contract liabilities

    (9,366)

    20,793

    Others

    (15)

    (10)

    Change in non-cash working capital items

    (12,511)

    18,637




    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,

    2022

    2021

    (In thousands of CA$)

    $

    $




    Revenues



    Canada

    39,810

    32,025

    United States

    240,930

    140,568


    280,740

    172,593




     




    As at January 31,

    2022

    2021

    (In thousands of CA$)

    $

    $




    Non-current assets (1)



    Canada

    68,907

    46,794

    United States

    41,041

    42,561


    109,948

    89,355




    (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, 2022, 86% of the Corporation's revenues was realized with three (3) clients, each representing 10 % and more of its revenues (66% with three (3) clients during the fiscal year ended January 31, 2021).

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




    Fiscal Years Ended January 31,

    2022

    2021

    (In thousands of CA$)

    $

    $




    Client A (1)

    168,950

    63,613

    Client B (1)

    40,610

    28,141

    Client C (2)

    31,381

    21,517


    240,941

    113,271




    (1)

    From the United States

    (2)

    From Canada

     

    SOURCE ADF Group Inc.

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