ADF Group Inc. Announces the Results for the Three-Month and Nine-Month Periods Ended October 31, 2021

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

• Revenues of $110.2 million and $233.7 million recorded in the three (3) month and nine (9) month periods ended October 31, 2021, respectively, representing significant increases compared with the corresponding periods a year earlier.
• Order backlog of $310.3 million as at October 31, 2021.
• Net income of $8.7 million, for the nine-month period ended October 31, 2021, up 82% from the same period a year earlier.
• Limited impact of COVID-19 on ADF's operations during the nine-month period ended October 31, 2021.

Terrebonne, QC, Dec. 8, 2021 /CNW Telbec/ - ADF GROUP INC. ("ADF" or the "Corporation") (TSX: DRX), recorded revenues of $110.2 million during the third quarter ended October 31, 2021, compared with $47.2 million for the same period a year earlier. After the first nine months of the fiscal year, revenues totaled $233.7 million, which is $98.3 million more than the same period a year earlier, in line with the growth of the order backlog in recent quarters.

Gross margin, as a percentage of revenues, went from 15.9% for the 3-month period ended October 31, 2020, to 5.6% for the same period ended October 31, 2021. Gross margin, as a percentage of revenues, went from 14.6%, during the nine-month period ended October 31, 2020, to 8.4% for the same period ended October 31, 2021. As indicated in the press release of the previous quarter, these variations are mainly explained by the pressure on margins brought by the start of fabrication of a number of projects signed at lower prices.

For the quarter ended October 31, 2021, ADF recorded a net income of $2.8 million ($0.09 per share, basic and diluted) compared with a net income of $2.6 million ($0.08 per share, basic and diluted) a year earlier. At the close of the nine-month period, that is October 31, 2021, net income totaled $8.7 million ($0.27 per share, basic and diluted) compared to net income of $4.8 million ($0.15 per share, basic and diluted) for the same period one year earlier.

The Corporation's backlog stood at $310.3 million as at October 31, 2021, compared with $436.2 million as at January 31, 2021. The current order backlog will extend until end of the fiscal year ending January 31, 2023.

As of October 31, 2021, the Corporation's working capital stood at $33.3 million. Operating activities generated $16.0 million in cash during the first nine months ended October 31, 2021. The Corporation remains in a good position to continue its current operations and carry out its development projects.

Financial Highlights

New Contracts

	3 Months		9 Months
Periods ended October 31,	2021	2020	2021	2020
(In thousands of dollars, and dollars per share)	$	$	$	$
Revenues	110,189	47,158	233,747	135,451
Earnings before interest, taxes, depreciation and amortization (EBITDA)	4,698	5,020	13,884	12,564
Net income	2,788	2,579	8,681	4,759
— Per share (basic and diluted)	0.09	0.08	0.27	0.15
Cash flows from operating activities	5,659	6,193	16,035	27,815
(In thousands)	Number	Number	Number	Number
Average number of outstanding shares (basic and diluted)	32,635	32,635	32,635	32,635

On September 9, 2021, the Corporation announced the award of new contracts totalling nearly $50.0 million, in Canada and the United States, including an important one in the transportation infrastructure sector in the Western USA. Fabrication work is scheduled to begin in early 2022 at both ADF's fabrication plants located in Terrebonne, Quebec and in Great Falls, Montana, and run until the fall of 2022, followed by the steel erection work of this new structure at the job site, which is scheduled to extend approximately over a 10-month period.

New Financing

The Corporation entered into a new financing agreement after October 31, 2021.

The agreement was signed on November 9, 2021, in the amount of $30.0 million, of which $16.2 million will be used for the repayment of an existing debt, and an amount of $13.8 million to increase the Corporation's working capital. The Corporation will be able to draw from this new source of financing once all the statutory requirements and documents are finalized. The Corporation is also working on other financing packages that should be finalized before year-end.

Outlook

"The quarter ended October 31, 2021, was, like the previous one, impacted by the signing of lower-priced contracts. Although these projects generate lower margins that normally achieved by ADF, the significant volume of steel being fabricated and erected still generates adequate dollars," said Jean Paschini, Chairman of the Board of Directors and Chief Executive Officer.

"We have added new contracts worth a total of $50.0 million to our order backlog at the start of the quarter ended October 31, 2021 and we are currently finalizing negotiation on several projects currently at bid stage. The project pipeline in the markets served by ADF, allows us to be optimistic and confident that we can continue the growth of our order backlog'' concluded Mr. Paschini.

Dividend

On September 8, 2021, ADF Group announced the payment of a semi-annual dividend of $0.01 per subordinate voting share and per multiple voting shares, which was paid on October 15, 2021 to shareholders of record as of September 30, 2021.

COVID-19

The Corporation has taken all necessary steps to protect its employees and business partners, and will continue to follow the advice and recommendations of local authorities wherever the Corporation conducts business. These measures have resulted in operational costs and inefficiencies that have been offset by the government incentives previously mentioned. This situation is changing rapidly and the Corporation will continue to monitor and mitigate development affecting its personnel, suppliers, customers and the general public to the extent it can.

Conference Call with Investors

A conference call with investors is scheduled for this morning, December 8, 2021 at 10 a.m. (Montreal time) to discuss the results of Corporation third quarter and nine-month period ended October 31, 2021.

To take part in the conference call, dial 1 [phone], a few minutes prior to the conference call scheduled start time. Members of the media are invited to listen in.

A replay of this conference call will be available from 1:00 p.m. today, until Wednesday, December 15, 2021, by dialing 1 [phone], followed by the access code 067141#.

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 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-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.

All amounts are in Canadian dollars, unless otherwise indicated.

SOURCE ADF Group Inc.

ADF GROUP INC.: Jean Paschini, Chairman of the Board of Directors and Chief Executive Officer; Jean-François Boursier, CPA, CA, Chief Financial Officer, Tel.: [phone] (#2283) / Website: www.adfgroup.com