ADF GROUP INC. ANNOUNCES THE RESULTS FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED OCTOBER 31, 2022

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

• Revenues of $65.0 million and $199.4 million recorded in the 3-month and 9-month periods ended October 31, 2022,
  respectively.
• Net income of $12.6 million, for the 9-month period ended October 31, 2022, up 45% from the same period a year earlier.
• Order backlog of $344.0 million as at October 31, 2022.

TERREBONNE, QC, Dec. 7, 2022 /CNW Telbec/ -

ADF GROUP INC. ("ADF" or the "Corporation") (Ticker symbol: (TSX: DRX), recorded revenues of $65.0 million during the third quarter ended October 31, 2022, compared with $110.2 million for the same period a year earlier. After the first 9 months of the fiscal year, revenues totaled $199.4 million, compared with $233.7 million for same period a year earlier.

Gross margin, as a percentage of revenues ⁽¹⁾, went from 5.6% for the 3-month period ended October 31, 2021, to 15.0% for the same period ended October 31, 2022. Gross margin, as a percentage of revenues ⁽¹⁾, went from 8.4%, during the 9-month period ended October 31, 2021, to 13.3% for the same period ended October 31, 2022.

The improvement in margins for the quarter and the 9-month period ended October 31, 2022, compared to the corresponding periods a year earlier, is explained by the fabrication of high-volume projects with lower margins during the prior year; the type of projects as well as the level of margins for the periods ended October 31, 2022, which are now returning to more usual levels.

Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) ⁽²⁾ for the 9-month period ended October 31, 2022, at $20.2 million, is $6.4 million higher than as at October 31, 2021. The 9-month period ended October 31, 2022, benefited from a $0.8 million gain on disposal of assets which was recognized during the quarter ended July 31, 2022, whereas the 9-month period ended October 31, 2021, benefited from a $1.9 million COVID-related grant which improved gross margin by $1.6 million, and reduced selling and administrative expenses by $0.3 million.

For the quarter ended October 31, 2022, ADF recorded a net income of $2.9 million ($0.09 per share, basic and diluted) compared with a net income of $2.8 million ($0.09 per share, basic and diluted) a year earlier. At the close of the 9-month period, that is October 31, 2022, net income totaled $12.6 million ($0.39 per share, basic and diluted) compared to net income of $8.7 million ($0.27 per share, basic and diluted) for the same period one year earlier.

The Corporation's order backlog ⁽¹⁾ stood at $344.0 million as at October 31, 2022, compared with $373.1 million as at January 31, 2022. The current order backlog will extend until end of the fiscal year ending January 31, 2024.

As of October 31, 2022, the Corporation's working capital ⁽¹⁾ stood at $58.0 million. Operating activities generated $7.7 million in cash during the first 9-month period ended October 31, 2022. The Corporation remains in a good position to continue its current operations and carry out its development projects.

Financial Highlights

 

Outlook

"The results of the three (3) months and nine (9) months ended October 31, 2022, are in line with our expectations and are in continuity with the last quarters" mentioned Mr. Jean Paschini, Chairman of the Board of Directors and Chief Executive Officer. "We are also starting to see the positive impacts of our automation investments at our Terrebonne plant, which will allow us to generate better margins in the coming quarters," concluded Mr. Paschini.

Dividend

On September 7, 2022, ADF Group announced the payment of a semi-annual dividend of $0.01 per subordinate voting share and per multiple voting shares, which was paid on October 18, 2022, to Shareholders of Record as of September 29, 2022.

Conference Call with Investors

A conference call with investors is scheduled for this morning, December 7, 2022, at 10 a.m. (Montreal time) to discuss the results of Corporation's third quarter and 9-month period ended October 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.

Members of the media are invited to listen in.

A replay of this conference call will be available from 1:00 p.m. today, until Wednesday, December 14, 2022, by dialing 1 (888) 259- 6562, followed by the access code 128614 #. The conference call (audio) will also be available at www.adfgroup.com.

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 tax expense (recovery);
• Foreign exchange (gains) 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:

 

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. Working capital is equal to current assets, less current liabilities.

SOURCE ADF Group Inc.

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