ADF GROUP INC. ANNOUNCES THE RESULTS FOR THE FISCAL YEAR ENDED JANUARY 31, 2024

HIGHLIGHTS

• Revenues of $331.0 million, up by $80.1 million or 32% from the previous fiscal year.
• Net income of $37.6 million, up by 152% from the fiscal year ended January 31, 2023.
• Cash flow from operations of $77.9 million for the fiscal year ended January 31, 2024.
• The Corporation's order backlog ⁽¹⁾ reached $510.9 million as at January 31, 2024.

TERREBONNE, QC, April 11, 2024 /CNW/ - 

ADF GROUP INC. ("ADF" or the "Corporation") (TSX: DRX) recorded revenues of $331.0 million during the fiscal year ended January 31, 2024, compared with $250.9 million the previous fiscal year. 

Gross margin, as a percentage of revenues ⁽¹⁾, went from 14.2% for the fiscal year ended January 31, 2023, to 22.0% for the fiscal year ended January 31, 2024. This increase as a percentage of revenues is explained by a higher fabrication volume, generating better absorption of fixed costs, and by the improvement in internal efficiency generated by investments made in recent years in robotization and increased automation of fabrication processes at ADF's plant located in Terrebonne, Quebec.

Earning before interest, taxes, depreciation, and amortization (adjusted EBITDA) ⁽²⁾ for the fiscal year ended January 31, 2024, totalled $55.9 million, which is $29.8 million or 114% higher than at the same date a year earlier.

For the fiscal year ended January 31, 2024, ADF posted net income of $37.6 million ($1.15 per share basic and diluted) compared with net income of $14.9 million ($0.46 per share, basic and diluted) a year earlier.

As at January 31, 2024, the Corporation had a working capital ⁽¹⁾ of $110.1 million, 68% more than at the same date a year ago. In addition, the Corporation generated cash flow from operating activities totalling $77.9 million during the fiscal year ended January 31, 2024.

As at January 31, 2024, the Corporation's order backlog ⁽¹⁾ stood at $510.9 million, compared with $376.5 million as at January 31, 2023. The majority of projects in hand will be completed progressively by the second semester of the fiscal year ending January 31, 2026.

Financial Highlights

Fiscal Years Ended January 31,	2024	2023
(In thousands of Canadian dollars, and dollars per share)	$	$
Revenues	331,023	250,890
Adjusted EBITDA^(2)	55,939	26,119
Income before income tax expense	46,406	16,854
Net income for the year	37,622	14,935
—    Basic and diluted per share	1.15	0.46
Cash flows from (used in) operating activities	77,860	(2,612)
(In thousands)	Number	Number
Average number of outstanding shares (basic and diluted)	32,640	32,640

Outlook

"These results reflect ADF's efforts and strategies over the past few years, from the construction of our state-of-the-art fabrication plant in Great Falls, Montana nearly 10 years ago, to our investment in robotization and increased automation of our fabrication process at our Terrebonne plant, in Québec," said Jean Paschini, Chairman of the Board of Directors and Chief Executive Officer.

Mr. Paschini concluded, "during this period, ADF has invested over $110 million to strengthen its position as one of North America's leading fabricators of all types of steel structures and heavy steel components. Today, we are reaping the fruits of this work and the sustained efforts of all ADF employees."

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1.	The order backlog, gross margin as a percentage of revenues and working capital are additional financial measures. Refer to the "Non-GAAP and Other Financial Measures" section herein 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.

Dividend

On April 10, 2024, ADF Group announced the payment of a semi-annual dividend of $0.01 per subordinate voting share and per multiple voting shares, which will be paid on May 15, 2024, to Shareholders of Record as at April 26, 2024.

Conference Call with Investors

A conference call with investors is scheduled for Thursday, April 11, 2024, at 10 a.m. (Montreal time) to discuss the results of fiscal year ended January 31, 2024.

To join the conference call without operator assistance, you can register with your phone number on https://emportal.ink/4bZ6lFj to receive an instant automatic reminder.

You can also join the conference call with operator assistance by dialing 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 1:00 p.m. on April 11, 2024, to April 18, 2024, by dialing 1-888-259-6562, followed by access code 855225 #.

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, 2024
ADF Group Inc.'s Annual Meeting of Shareholders will be held on:
Date:	Tuesday, June 11, 2024
Time:	11 a.m.
Location:	Sheraton Laval Hotel 2440, Autoroute des Laurentides, Laval, Quebec, Canada
Results for the first quarter ended April 30, 2024, will also be released at the Annual Meeting of Shareholders.
___________________________________________________________________________________________

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-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 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 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,	2024	2023
(In thousands of Canadian dollars)	$	$
Net income	37,622	14,935
Income tax expense	8,784	1,919
Net financial expenses	2,573	1,999
Amortization	5,800	5,323
Foreign exchange loss	1,160	1,943
Adjusted EBITDA	55,939	26,119

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.

All amounts are in Canadian dollars unless otherwise specified.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As at January 31,	2024	2023
(In thousands of Canadian dollars)	$	$
ASSETS
Current assets
Cash and cash equivalents	72,379	7,193
Accounts receivable	77,844	90,921
Current income tax assets	115	714
Contract assets	44,862	42,541
Inventories	13,534	10,679
Investment tax credit	3,112	―
Prepaid expenses and other current assets	3,730	2,332
Total current assets	215,576	154,380
Non-current assets
Property, plant and equipment	86,615	90,378
Right-of-use assets	21,173	21,848
Intangible assets	3,925	3,640
Deferred income tax assets	266	―
Other non-current assets	1,050	1,371
Total assets	328,605	271,617
LIABILITIES
Current liabilities
Accounts payable and other current liabilities	55,441	39,985
Current income tax liabilities	―	235
Contract liabilities	46,168	44,533
Other current liabilities	―	964
Current portion of lease liabilities	827	806
Current portion of long-term debt	3,040	2,258
Total current liabilities	105,476	88,781
Non-current liabilities
Long-term debt	42,138	44,927
Lease liabilities	2,839	3,528
Deferred income tax liabilities	15,876	9,240
Other non-current liabilities	146	156
Total liabilities	166,475	146,632
SHAREHOLDERS' EQUITY
Capital stock	68,127	68,127
Contributed surplus	6,435	6,435
Accumulated other comprehensive income	8,283	8,107
Retained income	79,285	42,316
Total shareholders' equity	162,130	124,985
Total liabilities and shareholders' equity	328,605	271,617

CONSOLIDATED STATEMENTS OF INCOME

Fiscal Years Ended January 31,	2024	2023
(In thousands of Canadian dollars, except the number of shares and the amounts per share)	$	$
Revenues	331,023	250,890
Cost of goods sold	258,102	215,321
Gross Margin	72,921	35,569
Selling and administrative expenses	22,782	14,773
Net financial expenses	2,573	1,999
Foreign exchange loss	1,160	1,943
	26,515	18,715
Income before income tax expense	46,406	16,854
Income tax expense	8,784	1,919
Net income for the fiscal year	37,622	14,935
Earnings per share
—      Basic and diluted per share	1.15	0.46
Average number of outstanding basic and diluted shares (in thousands)	32,640	32,640

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Fiscal Years Ended January 31,	2024	2023
(In thousands of Canadian dollars)	$	$
Net income for the fiscal year	37,622	14,935
Other comprehensive income:
Exchange differences on translation of foreign operations ^(a)	176	2,246
Comprehensive income for the fiscal year	37,798	17,181

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, 2022	68,120	6,435	5,861	28,034	108,450
Net income for the fiscal year	―	―	―	14,935	14,935
Other comprehensive income	―	―	2,246	―	2,246
Comprehensive income for the fiscal year	―	―	2,246	14,935	17,181
Dividends	―	―	―	(653)	(653)
Shares issuance upon exercise of options	7	―	―	―	7
Balance, January 31, 2023	68,127	6,435	8,107	42,316	124,985

	Capital Stock	Contributed Surplus	Accumulated Other Comprehensive Income	Retained Income	Total
(In thousands of Canadian dollars)	$	$	$	$	$
Balance, February 1, 2023	68,127	6,435	8,107	42,316	124,985
Net income for the fiscal year	―	―	―	37,622	37,622
Other comprehensive income	―	―	176	―	176
Comprehensive income for the fiscal year	―	―	176	37,622	37,798
Dividends	―	―	―	(653)	(653)
Balance, January 31, 2024	68,127	6,435	8,283	79,285	162,130

CONSOLIDATED STATEMENTS OF CASH FLOWS

Fiscal Years Ended January 31,	2024	2023
(In thousands of Canadian dollars)	$	$
OPERATING ACTIVITIES
Net income for the fiscal year	37,622	14,935
Non-cash items:
Amortization of property, plant and equipment	4,612	4,118
Amortization of right-of-use assets	753	835
Amortization of intangible assets	435	370
Gain on disposal of property, plant and equipment	(31)	(802)
Unrealized (gain) loss on derivative financial instruments	(1,168)	968
Unrealized foreign exchange gain	(176)	(1,158)
Share-based compensation	4,576	724
Income tax expense	8,784	1,919
Government grants	―	(1,280)
Net financial expenses	2,573	1,999
Others	811	(250)
Net income adjusted for non-cash items	58,791	22,378
Change in non-cash working capital items ^(1)	19,162	(25,850)
Income tax recovery (paid)	(93)	860
Cash flows from (used in) operating activities	77,860	(2,612)
INVESTING ACTIVITIES
Acquisition of property, plant and equipment	(5,768)	(11,463)
Acquisition of intangible assets	(720)	(698)
Others	222	80
Cash flows used in investing activities	(6,266)	(12,081)
FINANCING ACTIVITIES
Issuance of long-term debts	―	20,000
Repayment of the long-term debt	(2,296)	(2,216)
Payment of lease liabilities	(686)	(804)
Dividends paid	(653)	(653)
Interest paid	(3,053)	(2,177)
Others	―	7
Cash flows (used in) from financing activities	(6,688)	14,157
Impact of fluctuations in foreign exchange rate on cash and cash equivalents	280	599
Net change in cash and cash equivalents during the fiscal year	65,186	63
Cash and cash equivalents, beginning of fiscal year	7,193	7,130
Cash and cash equivalents, end of fiscal year	72,379	7,193

(1)	The following table sets out in detail the components of the "Change in non-cash working capital items":

Fiscal Years Ended January 31,	2024	2023
(In thousands of Canadian dollars)	$	$
Accounts receivable	13,589	(48,647)
Contract assets	(2,217)	(12,011)
Inventories	(2,849)	(550)
Prepaid expenses and other current assets	(1,213)	103
Accounts payable and other current liabilities	10,749	5,478
Contract liabilities	1,113	29,787
Others	(10)	(10)
Change in non-cash working capital items	19,162	(25,850)

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,	2024	2023
(In thousands of Canadian dollars)	$	$
Revenues
Canada	36,060	36,913
United States	294,963	213,977
	331,023	250,890

As at January 31,	2024	2023
(In thousands of Canadian dollars)	$	$
Non-current assets ^(1)
Canada	69,359	74,424
United States	43,404	42,813
	112,763	117,237

(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, 2024, 69% of the Corporation's revenues was realized with four (4) clients, each representing 10% and more of its revenues (62% with three (3) clients during the fiscal year ended January 31, 2023).

The following table presents the breakdown of revenues for each of these clients:

Fiscal Years Ended January 31,	2024 ^(1)	2023 ^(1)
(In thousands of Canadian dollars)	$	$
Client A	45,739	―
Client B	―	57,386
Client C	42,086	―
Client D	―	46,069
Client E	92,240	52,886
Client F	48,723	―
	228,788	156,341

(1)	From the United States

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