ADF GROUP INC. ANNOUNCES THE RESULTS OF THE THREE-MONTH AND SIX-MONTH PERIODS ENDED JULY 31, 2025

Executive Summary

• ADF Group Inc. reported financial results for the three and six months ended July 31, 2025, showing a significant decline in revenues and net income compared to the prior year, primarily due to U.S. tariff uncertainties and a Work-Sharing program at its Terrebonne plant.
• The company announced the acquisition of Groupe LAR Inc. for $19 million (plus working capital adjustments), structured as $15 million in cash and approximately $4 million in shares, subject to court approval.
• A new five-year infrastructure contract valued between $35 million and $40 million annually (potentially totaling ~$400 million with extensions) was secured, and a semi-annual dividend of $0.02 per share was declared.

Key Details

• Q2 2025 Financials (3 months ended July 31, 2025):
  • Revenues: $53.0 million (down from $74.9 million in Q2 2024).
  • Net Income: $0.9 million ($0.03 per share), down from $16.0 million ($0.51 per share) in Q2 2024.
  • Gross Margin: 20.7% (down from 36.9% in Q2 2024).
  • Adjusted EBITDA: $3.7 million (down from $24.9 million in Q2 2024).
• H1 2025 Financials (6 months ended July 31, 2025):
  • Revenues: $108.5 million (down from $182.3 million in H1 2024).
  • Net Income: $9.6 million ($0.34 per share), down from $31.3 million ($0.98 per share) in H1 2024.
  • Gross Margin: 21.3% (down from 32.3% in H1 2024).
  • Adjusted EBITDA: $14.1 million (down from $48.0 million in H1 2024).
  • Operating Cash Flow: $7.4 million generated.
  • Working Capital: $105.5 million.
• Order Backlog:
  • Stood at $468.0 million as of July 31, 2025, an increase of 60% from January 31, 2025.
  • Projects scheduled to be carried out progressively by the end of the fiscal year ending January 31, 2027.
  • Excludes the option to extend the new major contract and the order backlog of Groupe LAR.
• New Contract:
  • Awarded a major five-year contract for steel structures in the Quebec energy sector.
  • Value: $35 million to $40 million per year.
  • Includes an option to extend for another five years.
  • Potential total value close to $400 million including inflation clauses.
  • Requires new equipment investment and hiring at the Terrebonne plant.
• Acquisition of Groupe LAR Inc.:
  • Announced September 2, 2025.
  • Consideration: $19 million purchase price plus working capital adjustments.
  • Payment Structure: $15 million in cash and issuance of 449,944 Subordinate Voting Shares (approx. $4 million based on 5-day average price prior to Aug 29, 2025).
  • LAR Group Financials: $80.9 million revenue for fiscal year ended Dec 31, 2024; $104.5 million order backlog as of July 31, 2025.
  • Transaction Structure: Reverse vesting order under the Companies' Creditors Arrangement Act (CCAA).
  • Expected Closing: Shortly after court approval.
• Dividend:
  • Semi-annual dividend of $0.02 per share approved.
  • Record Date: September 26, 2025.
  • Payment Date: October 16, 2025.

Notable Quotes

• "Considering that ADF's plant in Terrebonne, Quebec, was operating with only 30% of its usual workforce for almost the entire quarter ended July 31, 2025, owing to the previously announced Work-Sharing program, we were able to generate positive net results while maintaining a healthy financial position" — Jean Paschini, Chairman of the Board of Directors and Chief Executive Officer.
• "However, and in light of the new economic realities, we have put in place solutions, including the acquisition of LAR Group, that will allow ADF not only to continue its growth, but also to diversify its offer in the face of the uncertainties from our U.S. markets," — Jean Paschini, Chairman of the Board of Directors and Chief Executive Officer.