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.

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(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.

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(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: [phone], Website: www.adfgroup.com