ADF GROUP INC. ANNOUNCES THE RESULTS OF THE THREE-MONTH AND SIX-MONTH PERIODS ENDED JULY 31, 2025

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

• Revenues of $108.5 million recorded during the six (6) month period ended July 31, 2025, down compared to the corresponding period a year earlier, in line with the uncertainty surrounding the U.S. tariffs.
• Gross margin, as a percentage of revenue ⁽¹⁾, of 20.7% and 21.3% recorded during the three (3) month and six (6) month periods ended July 31, 2025, respectively.
• Net income of $0.9 million and $9.6 million, recorded during the three (3) month and six (6) month periods ended July 31, 2025, respectively, down compared to the same periods in 2024.
• Order backlog ⁽¹⁾ at $468.0 million as at July 31, 2025, up 60% compared to January 31, 2025.

TERREBONNE, QC, Sept. 11, 2025 /CNW/ - ADF GROUP INC. ("ADF" or the "Corporation") (TSX: DRX), recorded revenues of $53.0 million in the second quarter ended July 31, 2025, compared to $74.9 million for the same period a year earlier. After the first six (6) months of the fiscal year, revenues totaled $108.5 million, $73.8 million less than for the same period a year earlier.

Gross margin, as a percentage of revenue ^(1), went from 36.9% for the three (3) months ended July 31, 2024, to 20.7% for the same period ended July 31, 2025. Gross margin, as a percentage of revenue ^(1), went from 32.3% in the first six (6) months ended July 31, 2024, to 21.3% in the same period ended July 31, 2025.

These decreases, both in terms of revenues and margins, are directly attributable to the impacts of the U.S. tariffs. As previously explained, and although these tariffs have limited direct impacts on the Corporation's costs, the uncertainty related to these tariffs, as well as the increase in the price of steel, had a negative impact on the Corporation's results. Moreover, and as previously announced, a Work-Sharing program was implemented at ADF's plant in Terrebonne, Quebec, which was in place for almost the entire quarter ended July 31, 2025, thus reducing fabrication hours and revenue for the same quarter.

Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) ⁽²⁾ for the six (6) months ended July 31, 2025, totaling $14.1 million, down compared with the same period, a year earlier.

For the three (3) months ended July 31, 2025, ADF recorded net income of $0.9 million ($0.03 per share basic and diluted) compared with net income of $16 million ($0.51 per share, basic and diluted) a year earlier. After six (6) months, net income totaled $9.6 million ($0.34 per share, basic and diluted) as at July 31, 2025, compared with a net income of $31.3 million ($0.98 per share, basic and diluted) for the same period a year earlier.

The Corporation's order backlog ⁽¹⁾ stood at $468.0 million as at July 31, 2025, up 60% compared with January 31, 2025. It should be noted that the order backlog as at July 31, 2025, does not include the option to extend the contract that was announced on July 23, 2025, by an additional five (5) years, nor the order backlog of Groupe LAR, that may be added pursuant to the completion of the Transaction (as this term is defined below). The projects currently in the order backlog will be carried out progressively by the end of the fiscal year ending January 31, 2027.

Although the order backlog is more than adequate, the uncertainty surrounding the U.S. tariffs has caused a non-recoverable delay in fabrication hours, mainly at ADF's plant in Terrebonne, Quebec. As a result, contingency measures were put in place during the first semester of the 2026 fiscal year, including the Work-Sharing program at ADF's Terrebonne plant, which allowed the Corporation to mitigate the negative impacts of reduced fabrication hours, however not entirely. This program ended near the close of the quarter ended July 31, 2025, with all employees at the Terrebonne plant back on a full-time basis.

As at July 31, 2025, the Corporation had a working capital ⁽¹⁾ of $105.5 million. The Corporation's operating activities generated $7.4 million in cash during the first six (6) months ended July 31, 2025. The Corporation remains in a good position to continue its ongoing operations and carry out its development projects.

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1.	Order backlog, gross margin as a percentage of revenue, and working capital are additional financial measures. Refer to the Non-IFRS and Other Financial Measures section below for definitions of these measures.
2.	Adjusted EBITDA is a non-IFRS financial measure.  See the "Non-IFRS and Other Financial Measures" section below for the definition of this indicator.

Financial Highlights

	3 months		6 months
Periods ended July 31,	2025	2024	2025	2024
(In thousands of dollars, and in dollars per share)	$	$	$	$
Revenues	53,006	74,881	108,529	182,281
Adjusted EBITDA ^(1)	3,702	24,914	14,097	48,013
Income before income taxes expense	1,238	22,226	12,970	43,484
Net income for the period	898	16,000	9,644	31,265
—      per share, basic and diluted	0.03	0.51	0.34	0.98
(In thousands)	Number	Number	Number	Number
Weighted average number of shares outstanding (basic and diluted)	28,438	31,197	28,416	31,911

(1)	Adjusted EBITDA is a non-IFRS financial measure. See section Non-IFRS and Other Financial Measures section hereinafter for the definition of this indicator.

New Contract

On July 23, 2025, the Corporation announced the award of a major five (5) year contract, valued between $35 million and $40 million per year, for the supply, fabrication and delivery of steel structures, as part of a new infrastructure project in the energy sector, in Quebec. This contract also includes an option to extend it another five (5) years. At maturity, and including the inflation clauses, this major contract could total close to $400 million. To meet the operational requirements of this major contract, the Corporation will invest in new equipment, and hire production personnel at its plant, in Terrebonne, Quebec. Fabrication of the steel structures is scheduled to begin in the coming months at ADF's Terrebonne plant.

Outlook

"Considering that ADF's plant in Terrebonne, Quebec, was operating with only 30% of its usual workforce for almost the entire quarter ended July 31, 2025, owing to the previously announced Work-Sharing program, we were able to generate positive net results while maintaining a healthy financial position" said Mr. Jean Paschini, Chairman of the Board of Directors and Chief Executive Officer.

"However, and in light of the new economic realities, we have put in place solutions, including the acquisition of LAR Group, that will allow ADF not only to continue its growth, but also to diversify its offer in the face of the uncertainties from our U.S. markets," concluded Mr. Paschini.

Agreement to acquire Groupe LAR inc.

On September 2, 2025, the Corporation announce that it has entered into an agreement (the "Agreement") to acquire (the "Transaction") Groupe LAR inc. and certain of its subsidiaries (collectively, the "LAR Group"), subject to, among other things, approval by the Superior Court of Québec (Commercial Division) (the "Court").

Established in 1942 and based in Métabetchouan in the Saguenay-Lac-Saint-Jean region, in Quebec, the LAR Group operates in the machining, welding, and industrial mechanics sectors. The LAR Group is a Canadian leader in the design, manufacture and installation of mechanically welded steel structures. Primarily focused on the rapidly expanding large-scale hydroelectricity market, the LAR Group also offers customized overhead crane solutions for the heavy industry. The LAR Group generated $80.9 million in revenue for the fiscal year ended December 31, 2024, and had an order backlog of $104.5 million as at July 31, 2025, which should be progressively realized before the end of ADF's fiscal year ending January 31, 2027.

The consideration payable by ADF for the Transaction consists of a purchase price of $19 million, plus a closing adjustment linked to certain working capital expenses, payable as follows: (i) $15 million in cash, plus the closing adjustment, and (ii) the issuance of 449,944 Subordinate Voting Shares of the Corporation, representing the equivalent of $4 million in subordinate voting shares of the Corporation based on the average closing price of the Corporation's shares on the Toronto Stock Exchange during the five (5) trading days preceding August 29, 2025. ADF will pay the cash consideration using its available cash.

The Transaction is to be completed by way of a reverse vesting order to be sought from the Court as part of LAR Group's restructuring proceedings under the Companies' Creditors Arrangement Act (Canada) and conducted under the supervision of the Court and a monitor to be appointed by the Court. The Agreement and the transactions contemplated therein will need to be approved by the reverse vesting order.

The LAR Group will apply to the Court for the reverse vesting order and expects that such application will be heard shortly. The Transaction is expected to close shortly after approval by the Court, subject to the satisfaction or waiver, as applicable, of the other closing conditions customary for transactions of this nature, including approval by the Toronto Stock Exchange.

Dividend

On September 10, 2025, the Board of Directors of ADF Group approved the payment of a semi-annual dividend of $0.02 per Subordinate Voting Share and per Multiple Voting Share, to be paid on October 16, 2025, to Shareholders of Record on September 26, 2025.

Conference Call with Investors

A conference call with investors is for September 11, 2025, at 10 a.m. (Montreal time) to discuss the results of the three (3) months and six (6) month periods ended July 31, 2025.

To join the conference call without operator assistance, you can register with your phone number on https://emportal.ink/44eurKc 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 the conference call will be available from 1:00 p.m, September 11, 2025, until September 18, 2025, by dialing 1-888-660-6345; followed by the access code 17801 #.

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

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. Forward-looking information includes, but is not limited to, statements about the Transaction, including the expected timing thereof, the receipt of the required approvals, including approval by the Court and the Toronto Stock Exchange, as well as the anticipated impact and benefits of the Transaction. Forward-looking statements are based on assumptions and on management's best possible evaluation of future events and are subject to risks, uncertainties and other important factors that could cause the Corporation's actual performance to differ materially from expected results expressed in or implied by such statements. Such factors include, but are not limited to, the possibility that the Transaction will not be completed on the terms and conditions, or on the timing currently contemplated, and that it may not be completed at all, due to a failure to satisfy, in a timely manner or otherwise, the closing conditions of the Transaction or for any other reason, as well as the other factors set out under the "Current Economic Environment" and "External Factors to which the Corporation's Performance is Exposed" sections of the MD&A Report of the Financial Position and Operating Results of the Corporation for the fiscal year ended January 31, 2025. Readers are cautioned that the foregoing list of factors is not exhaustive and undue reliance should not be placed on forward-looking statements. As a result, readers are advised that actual results may differ materially from expected results. Unless otherwise required by applicable securities laws, the Corporation expressly disclaims any intention, and assumes no obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

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 gains and 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:

	3 months		6 months
Periods Ended July 31	2025	2024	2025	2024
(In thousands of Canadian dollars)	$	$	$	$
Net income	898	16,000	9,644	31,265
Income taxes expense	340	6,226	3,326	12,219
Net financial expenses	74	268	91	666
Amortization	1,563	1,528	3,152	3,017
Foreign exchange loss (gain)	827	892	(2,116)	846
Adjusted EBITDA	3,702	24,914	14,097	48,013

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