ADF Group Inc. Announces the Results for the Three-Month and Nine-Month Periods Ended October 31, 2019

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

• Quarterly and year-to-date results negatively impacted by a non-recurrent charge of $7.7 million following an out-of-court settlement related to a commercial dispute.
• Despite this adjustment, revenues for the nine-month period closed on October 31, 2019 totalled $133.4 million, representing a $27.1 million increase compared with the same period a year ago.
• Net income down during the three-month and nine-month periods ended October 31, 2019, compared with the same periods a year ago, as a result of the above-mentioned out-of-court settlement.
• Order backlog at $360.5 million as at October 31, 2019, up from January 31, 2019.

TERREBONNE, QC, Dec. 5, 2019 /CNW Telbec/ - ADF GROUP INC. ("ADF" or the "Corporation") Ticker symbol: (TSX: DRX), recorded revenues of $42.1 million during the third quarter ended October 31, 2019, compared with $45.6 million for the same period a year ago. For the nine-month period ended October 31, 2019, the Corporation recorded revenues of $133.4 million, up from the same period last year.

For the third quarter ended October 31, 2019, ADF recorded a net loss of $4.1 million (-$0.12 per share, basic and diluted) compared to a net income of $1.9 million ($0.06 per share, basic and diluted) a year earlier. After nine months, the Corporation recorded a net loss of $2.0 million (-$0.06 per share, basic and diluted), compared to a net income of $0.5 million ($0.01 per share, basic and diluted) for the same period a year ago.

On October 9, 2019, the Corporation announced the out-of-court settlement of a litigation in Florida, USA. This settlement ends a legal dispute opposing ADF to one of its clients with regard to a structural steel fabrication and installation contract in Florida, USA. ADF's Management and its Board of Directors, deemed it appropriate, considering all the factors involved, to settle out-of-court. Thus, ADF collected a total sum of $13.9 million (US$10.5 million). This settlement has however generated a pre-tax loss of $7.7 million (US$5.8 million) which is recognized in the results for the quarter ended October 31, 2019.

Had it not been for this adjustment, and considering that it is tax-free, revenues and net income for the three-month and nine-month periods ended October 31, 2019, would have been $7.7 million higher, which would have brought the earnings per share (basic and diluted) for these same periods to $0.11 per share and $0.18 per share, respectively.

On October 31, 2019, the Corporation's working capital stood at $30.0 million. The Corporation remains well positioned to support its ongoing operations and pursue its development projects.

The order backlog of the Corporation stood at $360.5 million as at October 31, 2019, compared with $219.5 million as at January 31, 2019. The current order backlog will extend until the end of the next fiscal year ending January 31, 2021.

Financial Highlights
	3 Months		9 Months
Periods ended October 31,	2019	2018	2019	2018
(In thousands of dollars, and dollars per share)	$	$	$	$
Revenues	42,103	45,570	133,368	106,267
Earnings before interest, taxes, depreciation and amortization (EBITDA)	(2,424)	2,594	3,607	1,517
Net income (loss)	(4,059)	1,900	(2,022)	458
— Per share (basic and diluted)	(0.12)	0.06	(0.06)	0.01
Cash flows from (used in) operating activities	4,571	13,247	5,325	13,119
(In thousands)	Number	Number	Number	Number
Average number of outstanding shares (basic)	32,635	32,635	32,635	32,635
Average number of outstanding shares (diluted)	32,635	32,636	32,635	32,636

New Orders

On October 15, 2019, ADF announced the award of a series of major contracts valued at a total of $70.0 million. The largest of this series of contracts was won in the public infrastructure sector in the U.S. Midwest and consists in the design and engineering of connections, the fabrication, including the procurement of raw material (steel) and industrial coating, as well as the installation of complex steel structures and heavy steel components, including architecturally exposed structural steel (AESS) elements. This contract will be carried out at ADF's complex located in Terrebonne, Quebec. Fabrication work is scheduled to start in January 2020 and will extend until the end of 2020.

Outlook

"Although the settlement resulted in a negative impact of $7.7 million on our results, we have since been able to collect $13.9 million, which alleviate some of the pressure on our working capital and allows us to continue to grow our backlog " said Mr. Jean Paschini, Co-Chairman of the Board and Chief Executive Officer. "This litigation, which significantly increased legal fees, is now behind us, allowing us to look ahead and pursue the growth started a few quarters ago" concluded Mr. Paschini.

Conference Call with Investors

A conference call with investors is scheduled for today at 10 a.m. (Eastern time) to discuss the results of the three-month and nine-month periods ended October 31, 2019.

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 1:00 p.m. today until 11:59 p.m., December 12, 2019, by dialing 1 [phone], followed by the access code 090072 #.

Members of the media are invited to listen in.

The conference call (audio) will also be available at www.adfgroup.com.

About ADF Group Inc.

ADF Group Inc. is a North American leader in the design and engineering of connections, fabrication, including industrial coatings, and installation of complex steel structures, heavy steel built-ups, as well as in miscellaneous and architectural metals for the non-residential construction industry. 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.

Non-IFRS Measures

Earnings before interest, taxes, depreciation and amortization ("EBITDA") is not a performance measure recognized by IFRS standards, and is not likely to be comparable to similar measures presented by other issuers. Management, as well as investors, consider this to be useful information to assist them in assessing the Corporation's profitability and ability to generate funds to finance its operations. Refer to the section "Non-GAAP Measures" of the Corporation's Management's Discussion and Analysis for the definition of this metric and reconciliation to the most comparable IFRS measures.

Forward-Looking Information

This press release contains forward-looking statements reflecting ADF 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.

SOURCE ADF Group Inc.

Mr. Jean Paschini, Co-Chair of the Board of Directors and Chief Executive Officer; Mr. Jean-François Boursier, CPA, CA, Chief Financial Officer, Telephone: [phone] / Website: www.adfgroup.com

Related Links

www.adfgroup.com