ADF GROUP INC. ANNOUNCES THE RESULTS FOR THE YEAR ENDED JANUARY 31, 2026

• Earnings Release (April 16, 2026): ADF Group Inc. reported fiscal year 2026 results ending January 31, 2026.
• Financial Performance: Revenue declined to $258.7 million from $339.6 million in FY2025 (-24%). Net income dropped significantly to $26.3 million ($0.93/share) from $56.8 million ($1.84/share) in FY2025 (-54%). Adjusted EBITDA fell to $43.5 million from $91.3 million.
• Margins: Gross margin compressed sharply from 31.6% in FY2025 to 23.1% in FY2026.
• Order Backlog: Reached a record high of $561.1 million as of January 31, 2026, up from $293.1 million the prior year. This includes $138.2 million attributed to the Groupe LAR acquisition.
• Acquisition: Finalized the acquisition of Groupe LAR Inc. on September 18, 2025, for $16.4 million cash plus equity consideration.
• Cash Position: Ended the year with $62.7 million in liquidities and generated $49.4 million in operating cash flow.
• Headwinds: Management attributed revenue and margin declines primarily to U.S. tariffs and increased steel prices from U.S. mills.
• Client Concentration: 74% of revenues were realized from two clients (Client A and Client B).

• Earnings Miss: The 54% drop in net income is significant but aligns with the downward trend observed in Q3 2025 results (released December 2025), where revenue was already down 10.6% YoY and margins were compressing. This confirms a known trajectory rather than a surprise shock.
• Backlog Strength: The record backlog of $561.1 million provides visibility for future revenue, effectively doubling the prior year's level. However, high backlog does not guarantee margin recovery if input costs (steel) remain elevated or tariffs persist.
• Margin Compression: The drop in gross margin from 31.6% to 23.1% is a critical risk factor. It suggests limited pricing power against steel cost increases and tariff impacts. For a risk-averse investor, this indicates structural pressure on profitability that may not resolve quickly.
• Liquidity: Cash flow remains positive ($49.4M), and liquidity ($62.7M) covers short-term needs adequately without immediate dilution risk, though the acquisition was funded partly by cash which reduced reserves slightly from prior year levels relative to revenue size.
• Conclusion: The news is negative regarding current profitability but neutral-to-positive for future volume visibility. Given the severity of the profit decline and margin compression, it is categorized as Routine - Negative because the market had been warned of tariff headwinds in previous quarters (Q3 2025 call), making this a confirmation of expected risks rather than an unexpected catastrophe.

• Overview: ADF Group Inc. is a North American steel fabricator specializing in structural steel for commercial, industrial, and infrastructure projects.
• Flagship Project/Segment: Heavy steel structures for hydroelectric projects (leveraging Groupe LAR acquisition) and transportation infrastructure.
• Geographic Focus: Primarily Canada (Quebec, Ontario) and the United States (West Coast, Great Falls MT).
• Recent Strategic Move: Acquisition of Groupe LAR Inc. in September 2025 to expand hydroelectric capabilities and diversify backlog.