ADENTRA Announces Annual and Fourth Quarter 2024 Results

Fourth quarter 2024 sales of US$530.8 million
Earnings per share of US$0.34 and Adjusted EBITDA of US$42.2 million

LANGLEY, BC, March 13, 2025 /CNW/ - ADENTRA Inc. ("ADENTRA" or the "Company") (TSX: ADEN) today announced financial results for the three and twelve months ended December 31, 2024. ADENTRA is one of North America's largest distributors of architectural building products to the residential, repair and remodel, and commercial construction markets. We currently operate a network of 86 facilities in the United States and Canada. All amounts are shown in United States dollars ("US $" or "$"), unless otherwise noted.

Financial Highlights

• Generated full-year sales of $2.18 billion (C$2.99 billion), as compared to $2.24 billion (C$3.02 billion) in the 2023, a decrease of 2.5%. Q4 sales grew to $530.8 million (C$742.2 million), from $514.9 million (C$701.4 million) in Q4 2023, up 3.1%.
• Gross margin percentage grew to 21.7% in 2024, a 90 bps increase from 20.8% in 2023; Q4 2024 gross margin percentage increased slightly to 21.7%, from 21.6% in Q4 2023.
• Operating expenses increased by $3.4 million to $377.2 million, from $373.8 million in 2023. Q4 2024 operating expenses increased by $8.3 million, or 9.7%.
• Basic earnings per share increased to $1.95 (C$2.67) in 2024, from $1.61 (C$2.19) in 2023. Q4 basic earnings per share decreased to $0.34 (C$0.48), from $0.40 (C$0.54) per share in Q4 2023.
• Adjusted basic earnings per share of $3.01 (C$4.12) in 2024, compared to $3.18 (C$4.33) in 2023; Q4 2024 adjusted basic earnings per share of $0.51 (C$0.71), compared to $0.66 (C$0.90) per share in Q4 2023.
• Achieved full-year Adjusted EBITDA of $184.3 million (C$252.4 million), similar to $185.2 million (C$250.0 million) in 2023; Q4 2024 Adjusted EBITDA of $42.2 million (C$59.0 million) decreased 5.1% from $44.5 million (C$60.6 million) in Q4 2023.
• Generated strong cash flow from operating activities of $142.8 million in 2024, including $41.0 million in Q4 2024.
• Effectively deployed capital, reducing our leverage ratio, purchasing Woolf Distributing Company, Inc. ("Woolf"), and returning $9.6 million in cash to shareholders via dividends during the year.
• Increased quarterly dividend by 7% to C$0.15 per share, or C$0.60 annually, effective November 13, 2024
• On July 29, 2024, announced the US$130 million acquisition of Woolf, a US Midwest-based value-added distributor of architectural building and millwork products for residential and commercial markets.

"We achieved solid operational performance in 2024, executing effectively on our strategy and building on our track record of resilience and success," said Rob Brown, President and CEO of ADENTRA.

"We achieved our results in a year that brought substantial market headwinds, including affordability constraints, a slower-than-anticipated pace of mortgage interest rate reductions in the US, and the negative impact of product price deflation, the latter of which reduced organic sales by 4%. Despite these challenges, we maintained steady product volumes, improved our gross margin percentage by 90 basis points to 21.7%, and achieved solid Adjusted EBITDA and Adjusted net income results. We also continued to generate strong cash flows with 80% of our Adjusted EBITDA converting efficiently to $142.8 million of operating cash flow before changes in working capital."

"Our strong performance supported effective execution of our capital allocation strategies. In July we closed our acquisition of Woolf, leveraging our cash flow, credit facilities and an equity raise to complete the $130 million transaction while also bolstering our balance sheet. Woolf, which was immediately accretive to EPS, expanded our footprint in the US Midwest, enhanced our product offerings in the outdoor living category, and strengthened our presence in the ProDealer channel with its favorable long-term demand profile."

"Adding to the year's achievements, we increased our dividend by 7% in November, our twelfth dividend increase in as many years. And we ended the year with a reduction in our leverage ratio to 2.4x, from 2.6x a year earlier."

"Market headwinds are expected to persist in 2025, and our business is positioned for stability. We are in nine distinct product categories, with an expanded reach across multiple end markets. This broad participation strengthens our ability to respond to shifting demand patterns across different regions. In addition, our potential tariff exposure could be limited, with 90% of our operations based in the US and an estimated 92% of purchases not impacted by tariffs that were declared in March, or those expected to come into effect in April. And in the event tariffs lead to renewed inflationary pressures, we operate a pricing pass-through revenue model, and expect to adjust pricing in response to market fluctuations within a reasonable timeframe."

"While the economic outlook remains unpredictable, we are confident in our ability to navigate these conditions from a position of strength, leveraging our scale, financial discipline, and operational excellence to continue driving value for our stakeholders,"  said Mr. Brown.

Outlook

In the first two months of Q1 2025 our organic sales were down 6% as compared to the same period in the prior year, primarily due to lower volumes. Unfavorable winter weather resulted in fewer sales days for some of our operations in January. In addition, market headwinds have persisted into early 2025, with elevated US mortgages rates and constrained housing supply contributing to continued affordability issues, and the onset of a trade war between the US and its key trading partners increasing the prospect of renewed inflationary pressure and economic uncertainty.

Despite these challenges, we believe ADENTRA's potential tariff exposure at this time is limited, with 90% of our operations based in the US and an estimated 92% of purchases not anticipated to be impacted by tariffs that were declared in March, or those expected to come into effect in April. In the event tariffs are implemented that lead to renewed inflationary pressures, the Company operates under a pricing pass-through revenue model, allowing it to adjust pricing in response to market fluctuations within a reasonable timeframe.

The broader economic impact of tariffs, including inflationary pressures and potential constraints on growth, adds uncertainty to the near-term outlook. US housing activity, already facing affordability challenges, may experience further headwinds. Long-term fundamentals however remain intact, supported by historic undersupply, favorable demographics, strong home equity levels, and an aging housing stock.

With pricing trends stabilizing following declines in 2024, we remain focused on enhancing operational efficiency and implementing our strategic plan. Our focus on cost control, global sourcing, vendor management, and high-value, installation-ready products, combined with advanced data analytics and digital capabilities, strengthens our ability to optimize asset management, maintain pricing discipline, and capitalize on market opportunities as they arise.

ADENTRA's strong balance sheet, diversified portfolio, national presence, and robust supplier network, set it apart from the smaller, regional competitors that comprise the majority of the industry. Well-equipped to navigate any potential near-term volatility, the company remains steadfast in its commitment to long-term growth and value creation for shareholders.

Q4 and Year-end 2024 Investor Call

ADENTRA will hold an investor call on Friday, March 14, 2025 at 8:00 am Pacific (11:00 am Eastern). Participants should dial 1-888-510-2154 or [phone] (GTA) at least five minutes before the call begins. A replay will be available through March 28, 2025 by calling toll free 1-888-660-6345 or [phone] (GTA), followed by passcode 06762 #.

Summary of Results

	Three months		Three months		For the year		For the year
	ended December 31		ended December 31		ended December 31		ended December 31
	2024		2023		2024		2023
Total sales	$         530,809		$         514,859		$      2,184,258		$      2,239,324
Sales in the US	489,865		475,978		2,011,895		2,069,660
Sales in Canada (CAD$)	57,134		53,014		235,926		228,995
Gross margin	115,228		111,353		474,064		466,102
Gross margin %	21.7 %		21.6 %		21.7 %		20.8 %
Operating expenses	(94,415)		(86,090)		(377,156)		(373,797)
Income from operations	$           20,813		$           25,263		$           96,908		$           92,305
Add: Depreciation and amortization	20,518		17,736		76,099		69,857
Earnings before interest, taxes, depreciation and
amortization ("EBITDA")	$           41,331		$           42,999		$         173,007		$         162,162
EBITDA as a % of revenue	7.8 %		8.4 %		7.9 %		7.2 %
Add (deduct):
Depreciation and amortization	(20,518)		(17,736)		(76,099)		(69,857)
Net finance expense	(8,878)		(12,420)		(41,614)		(49,406)
Income tax recovery (expense)	(3,547)		(3,846)		(8,816)		(6,851)
Net income for the period	$             8,388		$             8,997		$           46,478		$           36,048
Basic earnings per share	$               0.34		$               0.40		$               1.95		$               1.61
Diluted earnings per share	$               0.33		$               0.40		$               1.92		$               1.59
Average US dollar exchange rate for one Canadian dollar	$             0.715		$             0.734		$             0.730		$             0.741

Analysis of Specific Items Affecting Comparability (in thousands of Canadian dollars)
	Three months		Three months		For the year		For the year
	ended December 31		ended December 31		ended December 31		ended December 31
	2024		2023		2024		2023
Earnings before interest, taxes, depreciation and
amortization ("EBITDA"), per table above	$           41,331		$           42,999		$         173,007		$         162,162
LTIP expense	853		1,454		9,309		7,440
Accrued trade duties	—		—		—		15,640
Transaction expense	—		—		1,935		—
Adjusted EBITDA	$           42,184		$           44,453		$         184,251		$         185,242
Adjusted EBITDA as a % of revenue	7.9 %		8.6 %		8.4 %		8.3 %
Net income for the period, as reported	$             8,388		$             8,997		$           46,478		$           36,048
LTIP expense, net of tax	627		1,344		6,842		6,812
Accrued trade duties, net of tax	—		—		—		11,495
Transaction expenses, net of tax	—		—		1,422		—
Foreign exchange loss, net of tax	(1,246)		441		(642)		681
Amortization of acquired intangible assets, net of tax	4,946		4,062		17,723		16,248
Adjusted net income for the period	$           12,715		$           14,844		$           71,823		$           71,284
Basic earnings per share, as reported	$               0.34		$               0.40		$               1.95		$               1.61
Net impact of above items per share	0.17		0.26		1.06		1.57
Adjusted basic earnings per share	$               0.51		$               0.66		$               3.01		$               3.18
Diluted earnings per share, as reported	$               0.33		$               0.40		$               1.92		$               1.59
Net impact of above items per share	0.17		0.27		1.05		1.56
Adjusted diluted earnings per share	$               0.50		$               0.67		$               2.97		$               3.15

⁽¹⁾ Prior year comparative figures have been restated to add back amortization of acquired intangible assets, foreign exchange (gain) loss, and LTIP tax deductibility to conform with current year presentation. 

Results from Operations - Year Ended December 31, 2024

For the year ended December 31, 2024, we generated total sales of $2.18 billion, compared to $2.24 billion in 2023, a decrease of $55.1 million or 2.5%. Organic sales decreased by $118.2 million, or 5.3%, with product prices representing 4% of the decrease and lower sales volumes representing approximately 1%. The decline in organic sales was partially offset by $65.7 million, or 2.9%, of acquisition-based revenue growth generated by the acquired Woolf business. Foreign exchange fluctuations in the Canadian dollar negatively impacted sales results by $2.6 million.

Our US operations generated annual sales of $2.01 billion in 2024, compared to $2.07 billion in 2023. This included a $123.5 million, or 6.0%, year-over-year decrease in organic sales, with product price deflation representing approximately 4% of the decrease and lower sales volumes accounting for approximately 2%. The decrease in organic sales was partially offset by the addition of the Woolf operations, which added $65.7 million, or 3.2% to 2024 US sales.

In Canada, sales for the 2024 year increased to C$235.9 million, up C$6.9 million, or 3.0%, from 2023. The year-over-year improvement reflects an approximate 8% increase in sales volume, partially offset by a 5% decrease in product prices.

Gross margin for the year ended December 31, 2024 increased to $474.1 million, up $8.0 million, or 1.7%, from 2023. This improvement was driven by an increase in gross margin percentage to 21.7%, from 20.8% in 2023, partially offset by lower sales year over year. The improvement in gross margin percentage primarily reflects the positive impact of our strategic initiatives, operating efficiency, and a reduction in inventory write-downs.

For the year ended December 31, 2024, operating expenses increased to $377.2 million, up modestly from  $373.8 million in 2023. The $3.4 million, or 0.9% increase, reflects $7.6 million of additional operating expenses and $1.9 million of transaction costs related to the Woolf acquisition, together with an $8.4 million increase in people costs related to inflation. These increases were partially offset by $15.6 million of accrued trade duties recognized in 2023, which did not recur in the current year (discussed further in section 7.0) and a $5.1 million reduction in premise costs. 

For the year ended December 31, 2024, depreciation and amortization increased to $76.1 million, up from $69.9 million in 2023. The year-over-year increase was attributed to higher depreciation of premise leases and additional amortization of intangible assets. Included in the depreciation and amortization was $24.1 million of amortization on acquired intangible assets, an increase of $2.1 million from 2023, driven by intangible assets acquired as a result of the Woolf acquisition.   

For the year ended December 31, 2024, net finance expense was $7.8 million lower at $41.6 million, as compared to $49.4 million in 2023. This improvement was primarily driven by a reduction in our average bank indebtedness balance and, to a lesser extent, lower interest rates during the period. The decrease in net finance expense was partially offset by higher interest associated with leases.

For the year ended December 31, 2024, income tax expense was $8.8 million, up from $6.9 million in 2023. This equates to an effective tax rate 15.9% for 2024, and 16.0% for 2023. In May 2024, Canada substantively enacted the Excessive Interest and Financing Expenses Limitation ("EIFEL") legislation which limits our ability to deduct interest and increases our expected taxable income in Canada.  During the year ended December 31, 2024, we recognized $4.3 million (C$5.8 million) of deferred tax assets based on the expected utilization of operating loss carry forwards.

Excluding this tax recovery, income tax expense was $13.1 million, representing an effective tax rate of 23.7%, compared to 16.0% in 2023. The increase in the effective tax rate is due to the EIFEL legislation, and the OECD Pillar Two global minimum tax ("Pillar Two tax"), which came into effect in 2024 and added $2.7 million to our current income tax expense.

For the year ended December 31, 2024, we generated Adjusted EBITDA of $184.3 million, a $1.0 million or 0.5% decrease from $185.2 million in 2023. The modest year-over-year decrease reflects the $8.9 million increase in operating expenses (before changes in depreciation and amortization, LTIP expense, accrued trade duties, and transaction costs), largely offset by the $8.0 million increase in gross margin.

Net income for the year ended December 31, 2024 grew 28.9% to $46.5 million (basic earnings per share of $1.95), from $36.0 million (basic earnings per share of $1.61) in 2023. The $10.4 million increase was driven by the $10.8 million improvement in  EBITDA and the $7.8 million decrease in net finance expense, partially offset by the $6.2 million increase in depreciation and amortization and income tax expense that was $2.0 million higher year over year.  

Adjusted net income grew 0.8% to $71.8 million in 2024, from $71.3 million in the prior year. Adjusted basic earnings per share were $3.01, compared to $3.18 in 2023, a decrease of 5.4%.

Results from Operations - Three Months Ended December 31, 2024

For the three months ended December 31, 2024, total sales grew by $16.0 million to $530.8 million, from $514.9 million in Q4 2023. The year-over-year growth was driven by our the acquired Woolf business, which contributed sales of $34.3 million during the Q4 2024 period. This was partially offset by a $17.3 million, or 3.4%, decrease in organic sales, reflecting an approximate 1% decrease in product prices and a 2% decrease in sales volumes compared to Q4 2023. Foreign exchange fluctuations in the Canadian dollar had an additional $1.1 million unfavorable impact on sales results.

In our US operations, fourth quarter sales increased by $13.9 million to $489.9 million, from $476.0 million in the same period in 2023. The year-over-year improvement was driven by the $34.3 million contribution from the acquired Woolf business, partially offset by a $20.4 million, or 4.3%, decrease in organic sales. Approximately 1% of the change in organic sales was due to product price deflation, with 3% attributable to lower sales volumes.

In Canada, fourth quarter sales of C$57.1 million increased by C$4.1 million, or 7.8%, from Q4 2023 levels. The year-over-year improvement in Canadian sales reflects an approximate 11% increase in sales volumes, partially offset by a 3% decrease in product prices.

Third quarter gross margin increased to $115.2 million, a $3.9 million, or 3.5%, improvement from Q4 2023, primarily driven by higher sales. Gross margin percentage of 21.7% was 10 basis points higher than the same period in 2023.

For the three months ended December 31, 2024, operating expenses increased to $94.4 million, from $86.1 million in Q4 2023. This $8.3 million, or 9.7%, increase reflects the addition of $4.5 million of expense related to the acquired Woolf business. People costs were also $2.5 million higher in the current period, primarily due to inflationary adjustments and an increase in employee benefits expense.  The remaining $1.3 million increase is mainly attributable to a one-time insurance accrual reversal in Q4 2023.

For the three months ended December 31, 2024, depreciation and amortization increased to $20.5 million, from $17.7 million in Q4 2023. The year-over-year increase was mainly due to higher premise lease costs and an additional $1.2 million in amortization of acquired intangible assets related to the Woolf acquisition. Depreciation and amortization included $6.7 million of amortization on acquired intangible assets.

For the three months ended December 31, 2024, net finance expense decreased to $8.9 million, from $12.4 million in Q4 2023. The $3.5 million improvement was partially attributable to a $1.7 million change in unrealized foreign exchange gains (losses) from intercompany loans held in foreign currencies.  Lower interest rates also contributed to the reduced finance expense.

For the three months ended December 31, 2024, income tax expense was $3.5 million, representing an effective tax rate of approximately 29.7%, comparable to 29.8% in Q4 2023. 

We generated fourth quarter Adjusted EBITDA of $42.2 million, as compared to $44.5 million in Q4 2023. This $2.3 million, or 5.1%, change reflects a $6.2 million increase in operating expenses (before changes in depreciation and amortization, LTIP expense, accrued trade duties, and transaction expense), partially offset by the $3.9 million improvement in gross margin.

Net income for the fourth quarter of 2024 decreased 6.8% to $8.4 million (basic earnings per share of $0.34), from $9.0 million (basic earnings per share of $0.40) in Q4 2023. The $0.6 million decrease reflects the $1.7 million decrease in EBITDA and a $2.8 million increase in depreciation and amortization, partially offset by a $3.5 million reduction in net finance expense and a $0.3 million decrease in income tax expense.

Fourth quarter adjusted net income was $12.7 million, a decrease of 14.3% from $14.8 million in the same period in 2023. Adjusted basic earnings per share for Q4 2024 were $0.51, compared to $0.66 in Q4 2023, a decrease of 22.7%.

About ADENTRA

ADENTRA is one of North America's largest distributors of architectural building products to the residential, repair and remodel, and commercial construction markets. The Company operates a network of 86 facilities in the United States and Canada. ADENTRA's common shares are listed on the Toronto Stock Exchange under the symbol ADEN.

Non-GAAP and other Financial Measures

In 2024, we revised our calculations of Adjusted net income, Adjusted basic earnings per share, and Adjusted diluted earnings per share to exclude the amortization of acquired intangible assets and foreign exchange gain (loss).  The historical presentation of these measures within this news release has also been updated to reflect the revised calculations.  We believe that excluding the amortization of acquired intangible assets and foreign exchange gain (loss) from these non-GAAP financial measures helps management and investors in understanding our underlying operating performance.  

In this news release, reference is made to the following non-GAAP financial measures:

• "Adjusted EBITDA" is EBITDA before long term incentive plan ("LTIP") expense, accrued trade duties, and transaction costs. We believe Adjusted EBITDA is a useful supplemental measure for investors, and is used by management, for evaluating our ability to meet debt service requirements and fund organic and inorganic growth, and as an indicator of relative operating performance.
  
  
• "Adjusted net income" is net income before LTIP expense, accrued trade duties, transaction costs, foreign exchange gain (loss), and amortization of intangible assets acquired in connection with an acquisition. We believe adjusted net income is a useful supplemental measure for investors, and is used by management to assist in evaluating our profitability, our ability to meet debt service and capital expenditure requirements, our ability to generate cash flow from operations, and as an indicator of relative operating performance.
  
  
• "EBITDA" is earnings before interest, income taxes, depreciation and amortization, where interest is defined as net finance income (expense) as per the consolidated statement of comprehensive income. We believe EBITDA is a useful supplemental measure for investors, and is used by management to assist in evaluating our ability to meet debt service requirements and fund organic and inorganic growth, and as an indicator of relative operating performance.
  
  
• "Organic sales" consists of quantifying the change in total sales as either related to organic or acquisition-based, or the impact of foreign exchange. Total sales earned by acquired companies in the first 12 months following an acquisition is reported as acquisition-based growth and thereafter as organic sales. Organic sales excludes the impact of acquisitions and foreign exchange impact related to the translation of Canadian sales to US dollars. From time to time, we also quantify the impacts of certain unusual events to organic sales to provide useful information to investors to help better understand our financial results.
  
  
• "Working capital" is accounts receivable, inventory, and prepaid expenses, partially offset by short-term credit provided by suppliers in the form of accounts payable and accrued liabilities. We believe working capital is a useful indicator for investors, and is used by management to evaluate the operating liquidity available to us.

In this news release, reference is also made to the following non-GAAP ratios: "adjusted basic earnings per share", "adjusted diluted earnings per share", "Adjusted EBITDA margin" and "Leverage Ratio". For a description of the composition of each non-GAAP ratio and how each non-GAAP ratio provides useful information to investors and is used by management, see "Non-GAAP and Other Financial Measures" in the Company's management's discussion and analysis for the year ended December 31, 2024 (which is incorporated by reference herein).

Such non-GAAP financial measures and non-GAAP ratios are not standardized financial measures under IFRS and might not be comparable to similar financial measures disclosed by other issuers.  For a reconciliation between non-GAAP measures and non-GAAP ratios and the most directly comparable financial measure in our financial statements, please refer to the "Summary of Results".

Forward-Looking Statements

Certain statements in this press release contain forward-looking information within the meaning of applicable securities laws in Canada ("forward-looking information"). The words "anticipates", "believes", "budgets", "could", "estimates", "expects", "forecasts", "intends", "may", "might", "plans", "projects", "schedule", "should", "will", "would" and similar expressions are often intended to identify forward-looking information, although not all forward-looking information contains these identifying words.

Forward-looking information is included, but not limited to: In the current evolving and uncertain economic landscape, we are well-positioned to navigate challenges; our pricing pass-through revenue models ensures that cost fluctuations are reflected expeditiously, minimizing risk exposure; Looking ahead, we expect to generate additional cash flow in fiscal 2025, enabling further debt repayment; Our capital priorities include a focused approach to executing our robust pipeline of acquisition opportunities; Dividends and opportunistic share repurchases are also an important part of our capital allocation plan; This acquisition also enhances our access to the attractive Pro Dealer customer channel, where we anticipate strong and sustained demand from the new residential and repair and remodel markets; Market headwinds have persisted into early 2025, with elevated US mortgage rates and constrained housing supply contributing to continued affordability issues, and the onset of a trade war between US and its key trading partners increasing the prospect of renewed inflationary pressure and economic uncertainty; ADENTRA's potential tariff exposure could be limited; an estimated 92% of purchases not anticipated to be impacted by tariffs that were declared in March, or those expected to come into effect in April; In the event tariffs are implemented that lead to renewed inflationary pressures, the Company operates under a pricing pass-through revenue model, allowing it to adjust pricing in response to market fluctuations within a reasonable timeframe; The broader economic impact of tariffs, including inflationary pressures and potential constraints on growth, adds uncertainty to the near-term outlook; US housing activity, already facing affordability challenges, may experience further headwinds, Long-term fundamentals however remain intact, supported by historic undersupply, favorable demographics, strong home equity levels, and an aging housing stock; Our focus on cost control, global sourcing, vendor management, and high-value, installation-ready products, combined with advanced data analytics and digital capabilities, strengthens our ability to optimize asset management, maintain pricing discipline, and capitalize on market opportunities as they arise; Historically, the first and fourth quarters can be seasonally slower periods for our business; In addition, net earnings reported in each quarter may be impacted by acquisitions, foreign currency fluctuations, and changes in customer buying patterns, sales force, competition, pricing inputs, and supply constraint; Our investment in working capital may fluctuate from quarter-to-quarter based on factors such as sales demand, strategic purchasing decisions taken by management, and the timing of collections from customers; Historically, the first and fourth quarters can be seasonally slower periods for construction activity, resulting in reduced demand for architectural building products; Our debt management strategy is to repay a portion of our credit facilities related to acquisitions, and maintain a base level of debt as part of our capital structure; Our intent is to roll and renew our credit facilities when they expire; We do not intend to restrict future dividends in order to fully extinguish our debt obligations upon their maturity; The amount of debt that will actually be drawn on our available revolving credit facilities will depend upon the seasonal and cyclical needs of the business and our cash generating capacity going forward; When making future dividend and share repurchase decisions, we will consider the amount of financial leverage, and therefore debt, we believe is appropriate given existing and expected market conditions and available business opportunities; We do not target a specific financial leverage amount; We believe our current credit facilities are sufficient to finance our working capital needs and market expansion strategy; The fair value of non-current receivables, notes payable, other liabilities and finance lease obligations are not expected to differ materially from carrying value given the interest rates being charged and term to maturity; We intend to vigorously pursue recovery of the duties paid. The appeal process is typically a multi-year procedure, however, and the actual timing and outcome of the appeal is not estimable at this time; To the extent we are unsuccessful in challenging the out-of-scope notices and are unable to recover the related payments, then such payments would instead be recorded as selling, distribution and administration expenses; The timing and outcome of our challenge is not estimable at this time; we may be eligible for a refund on a significant portion of the duties paid; In issuing its preliminary results Commerce noted that their findings are provisional and subject to change; We expect Commerce to issue a final decision on the results of their administrative review in 2025; and the timing of the final determination could change and the outcome is not estimable at this time.

The forecasts and projections that make up the forward-looking information are based on assumptions which include, but are not limited to: there are no material exchange rate fluctuations between the Canadian and US dollar that affect our performance; the general state of the economy does not worsen; we do not lose any key personnel; there is no labor shortage across multiple geographic locations; there are no circumstances, of which we are aware that could lead to the Company incurring costs for environmental remediation; there are no decreases in the supply of, demand for, or market values of our products  that harm our business; we do not incur material losses related to credit provided to our customers; our products are not subjected to negative trade outcomes; we are able to sustain our level of sales and earnings margins; we are able to grow our business long term and to manage our growth; we are able to integrate acquired businesses; there is no new competition in our markets that leads to reduced revenues and profitability; we can comply with existing regulations and will not become subject to more stringent regulations; no material product liability claims; importation of components or other innovative products does not increase and replace products manufactured in North America; our management information systems upon which we are dependent are not impaired; we are not adversely impacted by disruptive technologies; an outbreak or escalation of a contagious disease does not adversely affect our business; and, our insurance is sufficient to cover losses that may occur as a result of our operations.

The forward-looking information is subject to risks, uncertainties and other factors that could cause actual results to differ materially from historical results or results anticipated by the forward-looking information. The factors which could cause results to differ from current expectations include, but are not limited to: exchange rate fluctuations between the Canadian and US dollar could affect our performance; tariff policies extending to regions not currently under discussion; our results are dependent upon the general state of the economy; the impacts of COVID-19, further mutations thereof or other outbreaks of disease, could have significant impacts on our business; we depend on key personnel, the loss of which could harm our business; a labour shortage across multiple geographic locations could harm our business; decreases in the supply of, demand for, or market values of hardwood lumber or sheet goods could harm our business; we may incur losses related to credit provided to our customers; our products may be subject to negative trade outcomes; we may not be able to sustain our level of sales or earnings margins; we may be unable to grow our business long term or to manage any growth; we are unable to integrate acquired businesses; competition in our markets may lead to reduced revenues and profitability; we may fail to comply with existing regulations or become subject to more stringent regulations; product liability claims could affect our revenues, profitability and reputation; importation of components or other innovative products may increase, and replace products manufactured in North America; disruptive technologies could lead to reduced revenues or a change in our business model; we are dependent upon our management information systems; disruptive technologies could lead to reduced revenues or a change in our business model; our information systems are subject to cyber securities risks; our insurance may be insufficient to cover losses that may occur as a result of our operations; an outbreak or escalation of a contagious disease may adversely affect our business; our credit facility affects our liquidity, contains restrictions on our ability to borrow funds, and impose restrictions on distributions that can be made by us and certain of our subsidiaries; the market price of our Shares will fluctuate; there is a possibility of dilution of existing Shareholders; and, other risks described in our Annual Information Form, our Information Circular and in this press release.

This press release contains information that may constitute a "financial outlook" within the meaning of applicable securities laws. The financial outlook has been approved by our management as of the date of this press release. The financial outlook is provided for the purpose of providing readers with an understanding of our anticipated financial performance. Readers are cautioned that the information contained in the financial outlook may not be appropriate for other purposes.

All forward-looking information in this press release is qualified in its entirety by this cautionary statement and, except as may be required by law, we undertake no obligation to revise or update any forward-looking information as a result of new information, future events or otherwise after the date hereof.

Third-Party Information

Certain information contained in this news release includes market and industry data that has been obtained from or is based upon estimates derived from third-party sources, including industry publications, reports and websites. Although the data is believed to be reliable, we have not independently verified the accuracy, currency or completeness of any of the information from third-party sources referred to in this news release or ascertained from the underlying economic assumptions relied upon by such sources. We hereby disclaim any responsibility or liability whatsoever in respect of any third-party sources of market and industry data or information.

SOURCE ADENTRA Inc.

For further information: Maggie MacDougall - Capital Markets Advisor, Phone: [phone], Email: [email protected], Website: www.adentragroup.com