QUARTER HIGHLIGHT
- Revenues of $55.5 million, down from the same period last year, in line with the uncertainty related to the U.S. tariffs.
- Gross margin, as a percentage of revenue (1) stood at 22.0%, compared to 29.2% a year ago.
- Cash flow from operations of $25.3 million.
- Net income of $8.7 million, down compared to April 30, 2024.
- Order Backlog (1) at $330.4 million as at April 30, 2025, up compared with January 31, 2025.
All amounts are in Canadian dollars unless otherwise noted.
TERREBONNE, QC, June 10, 2025 /CNW/ - ADF GROUP INC. ("ADF" or the "Corporation") (TSX: DRX), a North American leader in the fabrication of steel superstructures, recorded revenues of $55.5 million for the first quarter ended April 30, 2025, compared to $107.4 million for the same period a year earlier.
Gross margin, as a percentage of revenue (1) went from 29.2% for the three (3) months ended April 30, 2024, to 22.0% for the same period ended April 30, 2025.
These variations are attributable to the direct and indirect impacts of the U.S. tariffs. Although the Corporation's order backlog (1) is more than adequate, exceeding $300 million as at April 30, 2025, the uncertainty surrounding the application and functioning of these tariffs has caused an unrecoverable delay in fabrication hours, mainly at ADF's plant in Terrebonne, Quebec. The decline in revenues forced the Corporation to take contingency measures and initiate a work-sharing program at its Terrebonne plant. This program has allowed the Corporation to mitigate the negative impacts of the decrease in fabrication hours, however not entirely. The tariffs also had an indirect negative impact on the Corporation's margins, which is caused by the increase in the price of steel sold by U.S. steel mills.
Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) (2) amounted to $10.4 million, or 18.7% of revenues, compared with $23.1 million or 21.5% of revenues on April 30, 2024.
For the first quarter ended April 30, 2025, ADF recorded net income of $8.7 million ($0.30 per share basic and diluted) compared to net income of $15.3 million ($0.47 per share basic and diluted) for the same period a year earlier.
As at April 30, 2025, the Corporation's order backlog (1) was $330.4 million, up compared with January 31, 2025, when the order backlog stood at $293.1 million.
As at April 30, 2025, the Corporation had working capital (1) of $108.6 million while operating activities generated cash of $25.3 million during the three (3) month period ended April 30, 2025, closing the same quarter with cash and cash equivalents of $75.3 million.
_______________________________ |
|
(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. |
Financial Highlights
Three-Month Period Ended April 30, |
2025 |
2024 |
(In thousands of Canadian dollars, and dollars per share) |
$ |
$ |
Revenues |
55,523 |
107,400 |
Adjusted EBITDA (1) |
10,395 |
23,099 |
Income before income taxes expense |
11,732 |
21,258 |
Net income for the period |
8,746 |
15,265 |
— Basic and diluted per share |
0.30 |
0.47 |
Number |
Number |
|
Weighted average number of outstanding shares (basic and diluted) (In thousands) |
28,751 |
32,640 |
(1) |
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. |
U.S. Tariffs
In recent months, the tariff measures put in place by the US authorities have been marked by frequent and sometimes unpredictable developments. In this context, and now that the official documents have been published and interpreted by the Corporation's customs experts, Management has a clearer view of the different impacts of these tariffs, including the impact of the announcements in the recent weeks.
The products exported by ADF comply with the requirements of the Canada-United States-Mexico Agreement (USMCA). As a result, they are only subject to the specific steel tariffs, set at 25% by U.S. Government Proclamation 10896. These duties only apply if the raw materials used are not smelted and poured in the United States. However, ADF generally obtains steel from US-based mills and has done so for several years. Thus, when this condition is met, ADF's exports are exempt from these duties, allowing the Corporation to maintain its competitiveness in the U.S. market.
At the same time, the Canadian government introduced countermeasures in the form of surtaxes on steel imports from the United States. However, these surcharges are recoverable upon exports. To facilitate the management of these costs for manufacturers, a remission order has been issued, allowing for immediate relief from these surtaxes at the time of import.
Outlook
"Given the circumstances, and more particularly the uncertainty related to U.S. tariffs, we are pleased with the results of the first quarter of our current fiscal year, which ended on April 30, 2025. We were able to generate cash, while continuing our normal course issuer bid program, which we have completed since the close of the first quarter" indicated Mr. Jean Paschini, Chairman of the Board of Directors and Chief Executive Officer. " We closed our first quarter with an order backlog (1) of $330.4 million, allowing us to expect an increase in revenue and profitability for the second half of our fiscal year ending January 31, 2026" concluded Mr. Jean Paschini.
1 |
The order backlog is an additional financial measure. Refer to the "Non-IFRS and Other Financial Measures" section herein for the definition of these indicators. |
Dividend
On April 9, 2025, ADF Group's Board of Directors approved the payment of a semi-annual dividend of $0.02 per share, which was 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 today, April 10, 2025, at 10 a.m. (Montreal time) to discuss the results of the quarter ended April 30, 2025.
To join the conference call without operator assistance, you can register with your phone number on https://emportal.ink/4hSDjbU 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 June 10, 2025, until June 17, 2025, by dialing 1-888-660-6345, followed by access code 63247#.
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 |
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 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:
Three-Month Period Ended April 30, |
2025 |
2024 |
(In thousands of Canadian dollars) |
$ |
$ |
Net income |
8,746 |
15,265 |
Income taxes expense |
2,986 |
5,993 |
Net financial expenses |
17 |
398 |
Amortization |
1,589 |
1,489 |
Foreign exchange gain |
(2,943) |
(46) |
Adjusted EBITDA |
10,395 |
23,099 |
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.
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
Share this article