HIGHLIGHTS
(All amounts are in Canadian dollars unless otherwise indicated.)
- Transaction closed on September 18, 2025.
- The consideration paid consists of a purchase price of $19 million, plus a closing adjustment related to certain working capital expenses totaling $1.4 million.
- ADF aims to double, by January 31, 2027, Groupe LAR's order backlog(1), which reached $104 million as at July 31, 2025.
- To support the anticipated growth, ADF plans to invest more than $35 million over the next 24 months at Group LAR's main plant.
TERREBONNE, QC, Oct. 29, 2025 /CNW/ - ADF GROUP INC. ("ADF" or the "Corporation") (TSX: DRX) has completed the acquisition of Groupe LAR Inc. ("LAR") on September 18, 2025 (the "Transaction"). The consideration paid by ADF as part of the Transaction consists of a purchase price of $20.4 million, including a closing adjustment related to certain working capital expenses, paid as follows: (i) a cash amount of $16.4 million, including the $1.4 million closing adjustment, and (ii) the issuance of 449,944 of the Corporation's Subordinate Voting Shares, representing the equivalent of $4 million in the Corporation's Subordinate Voting Shares on the average closing price of the Corporation's shares on the Toronto Stock Exchange during the 5 trading days preceding August 29, 2025. ADF paid the consideration in cash from its available cash.
Established in 1942 and based in Métabetchouan in the Saguenay-Lac Saint-Jean region, in Quebec, LAR operates in the machining, welding, and industrial mechanics sectors. LAR is a Canadian leader in the design, fabrication, and installation of mechanically welded steel structures. Primarily focused on the rapidly expanding large-scale hydroelectricity market, LAR also offers customized overhead crane solutions for the heavy industry. LAR generated revenues of $80.9 million during its fiscal year ended December 31, 2024, and had an order backlog (1) of $104.5 million as at July 31, 2025, which is expected to be progressively delivered by the end of ADF's fiscal year ending January 31, 2027.
Markets and Order Backlog Anticipated Growth
Now that the acquisition has been finalized, ADF and LAR plan to implement a growth plan supported by the various upcoming pan Canadian projects in hydroelectric development. In Quebec alone, Hydro-Québec plans to invest more than $35 billion (2) in hydroelectric dam renovation and the construction of new projects by 2035. Large-scale projects are also planned in Ontario, British Columbia and the Atlantic provinces. At the same time, and in response to the U.S. tariffs threats, we expect that clients will prioritize local purchases, which should favor a key Canadian player in the hydropower sector, like LAR.
In light of this economic outlook and taking advantage of the expected operational synergies between ADF and LAR, the Corporation aims to double, by the end of 2027, LAR's order backlog, which stood at $104.5 million as at July 31, 2025.
| 1. |
The order backlog is an additional financial measure. Refer to the Non-IFRS and Other Financial Measures section herein for the definition of this indicator. |
| 2. |
Source : Hydro Québec – 2035 Action (Plan d'action 2035) |
Capital Investment
To support the anticipated growth, substantial investments will need to be made at LAR's fabrication plant located in Métabetchouan, in the Saguenay-Lac Saint-Jean region, Québec. ADF and LAR will not only have to increase the fabrication capacity, but will also have to modernize the equipment.
With its extensive experience and recognized for its operational excellence, LAR will benefit from these investments, which should generate operational efficiencies that reflect ADF's approach to maintaining leadership in fabrication equipment and work methods.
Subject to the Board of Directors' approval, ADF plans to invest over $35 million at LAR's main plant in Saguenay-Lac Saint-Jean over the next 24 months. ADF is expecting to start the construction of new buildings in April 2026 in order to be able to receive new equipment by December 2026.
In parallel to these investments, and in order to support this anticipated growth, the Corporation expects to increase the number of employees at LAR's Métabetchouan plant, which currently employs 200 people.
As previously mentioned, we are convinced that this Transaction will create significant synergies between ADF and LAR and will have a positive contribution to ADF's net results, and will diversify ADF's offer where U.S. tariffs threats are concern, while, maintaining 200 well-paying jobs in the greater Saguenay-Lac Saint-Jean region, and even growing this number," said Jean Paschini, Chairman of the Board of Directors and Chief Executive Officer of the Corporation.
"Both companies share common values and we intend to leverage our experience and expertise to benefit not only from operational synergies, but also in order to grow the consolidated revenues and results to the benefit of our shareholders" concluded Mr. Paschini.
Conference Call with Investors
A conference call with investors will be held today, October 29, 2025 at 10 a.m. (Montreal time) to discuss the acquisition of LAR Group.
This conference call will be held in English. However, financial analysts will be able to ask their questions in French during the question-and-answer session that will follow ADF's management presentation.
To join the conference call without operator assistance, you can register with your phone number on https://emportal.ink/3WeWncg 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, October 29, 2025, until November 5, 2025, by dialing 1-888-660-6345; followed by the access code 93016 #.
The conference call (audio) and a copy of the Corporate presentation, 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 megaprojects 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. The Corporation also operates a fabrication plant in Quebec specializing in machining, welding and industrial mechanics, through its division, LAR Group Inc., a Canadian leader in the design, fabrication and installation of mechanically welded steel structures.
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 "expects", "plans" or "anticipates" 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 regarding the Transaction, including the effects and benefits of the Transaction, as well as objectives relating to the increase of LAR's order backlog, LAR's contribution to the Corporation's net results, and growth in both consolidated revenues and results, and the Corporation's expectations regarding the increase in LAR's workforce, the potential efficiency gains from the proposed capital investment, the estimated amounts and timing of the capital investment for LAR's fabrication plant, and the starting date of construction and equipment delivery date at LAR's fabrication plant. These forward-looking statements are provided for the purpose of assisting the reader in understanding the Corporation's current expectations and plans with respect to LAR and may not be appropriate for other purposes. Forward-looking statements are based on assumptions and on management's best possible evaluation of future events, including the economic outlook and expected operational synergies between ADF and LAR 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.
These factors are 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:
-- Order Backlog
The order backlog is a measure used to assess future revenue levels. The order backlog includes firm orders by LAR, either through a firm contract or a formal notice to proceed confirmed by the client. The order backlog therefore includes the non-fabricated portion of confirmed contracts.
SOURCE ADF Group Inc.
Contacts: Jean Paschini, Chair of the Board of Directors and Chief Executive Officer; Jean-François Boursier, CPA, Chief Financial Officer, Telephone: 450-965-1911, Website: www.adfgroup.com
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