ADF GROUP INC. ('ADF' or the 'Company') (TSX: DRX), recorded revenues of $82.1 million for the third quarter ended October 31, 2023, compared to $65.0 million for the same period a year earlier.
After the first nine (9) months of the fiscal year, revenues totalled $242.6 million, up $43.2 million or 21.7% over the same period a year earlier.
Gross margin, as a percentage of revenue (1)increased from 15.0% for the three (3) months ended October 31, 2022 to 24.4% for the same period ended October 31, 2023. Gross margin, as a percentage of revenue (1)increased from 13.3% for the nine (9) months ended October 31, 2022, to 21.1% for the same period ended October 31, 2023.
These variances are mainly explained by the operational efficiencies generated by the commissioning of the new robotic production line and new programmable and automated equipment at ADF's plant in Terrebonne, Quebec, and also by the improvement in margins of projects recently signed and now in production. It is also important to note that gross margins for the three (3) and nine (9) months ended October 31, 2022 were positively impacted by the forgiveness of a $1.3 million (US$1.0 million) loan issued to a U.S. subsidiary as part of a U.S. pandemic relief program.
Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) (2) for the nine (9) months ended October 31, 2023, at $40.4 million, is $20.2 million higher than the same date a year earlier. Adjusted EBITDA for the nine (9) months ended October 31, 2022 had a gain on disposal of assets of $0.8 million.
For the three months ended October 31, 2023, ADF reported net income of $11.2 million ($0.34 per share, basic and diluted) compared to net income of $2.9 million ($0.09 per share, basic and diluted) a year earlier. After nine (9) months, net income as at October 31, 2023 totalled $27.1 million ($0.83 per share, basic and diluted) compared to net income of $12.6 million ($0.39 per share, basic and diluted) for the same period a year earlier.
The order book (1) was $339.3 million as at October 31, 2023, compared to $376.5 million as at January 31, 2023. The projects currently in the backlog will be carried out gradually by the end of the fiscal year ending January 31, 2025.
As at October 31, 2023, the Company had working capital (1) $94.5 million. The Company's operating activities generated cash of $45.7 million during the nine months ended October 31, 2023. The Company remains well positioned to continue its ongoing operations and carry out its development projects.
Prospects
'The strong performance of recent quarters continued in the quarter ended October 31, 2023. The number of projects under negotiation remains very active and we are confident that we will be able to continue to grow our order book,' said Jean Paschini, Chairman of the Board of Directors and Chief Executive Officer.
Dividend
On September 6, 2023, ADF Group announced the payment of a semi-annual dividend of $0.01 per subordinate voting share and per multiple voting share, which was paid on October 17, 2023 to shareholders of record on September 29, 2023.
Ratification of the collective agreement for unionized employees at the plant in Terrebonne, Quebec
On December 3, 2023, unionized employees at ADF's plant in Terrebonne, Quebec, ratified the renewal of the collective agreement for a period of five (5) years, following a tentative agreement reached on November 13, 2023. The agreement covers 189 employees.
The conference call (audio) will also be available at www.adfgroup.com. Members of the media are invited to join in listening mode.
About ADF Group Inc. | ADF Group Inc. is a North American leader in the design and engineering of connections, manufacturing, including the application of industrial coatings, the erection of complex metal structures, heavy steel assembled components, as well as fabricated and architectural metals, for the non-residential infrastructure sector. ADF Group Inc. is one of the few industry players capable of carrying out commercial, institutional, industrial and public megaprojects characterized by a very high level of technological complexity and accelerated schedules. The Company now operates two manufacturing plants and two paint shops; in Canada and the U.S., as well as a construction division in the U.S., which specializes in the erection of structural steel and related products.
Forward-Looking Statements | This press release contains forward-looking statements that reflect ADF's objectives and expectations. These statements are identified by verbs such as 'expects that' as well as by the use of future and conditional verb tenses. By their nature, these statements involve risks and uncertainties. As a result, actual facts may differ from ADF's expectations.
Non-GAAP and Other Financial Measures | Are measures derived primarily from the consolidated financial statements but are not standardized financial measures under the financial reporting framework used to prepare the Company's financial statements. Accordingly, readers should caution not to confuse or substitute for measures of performance prepared in accordance with GAAP. In addition, the auditor should avoid comparing these non-GAAP financial measures to similarly named measures provided or used by other issuers. The definition of these indicators and their reconciliation to comparable measures in International Financial Reporting Standards is as follows:
Gross margin as a percentage of revenue
The gross margin as a percentage of revenue indicator is used by the Company 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 Company's operational efficiency. The gross margin as a percentage of revenue indicator is derived from dividing gross margin by revenue.
Order book
Backlog is a measure used by the Company to assess the future level of revenues. The backlog includes firm orders obtained by the Company, either through a firm contract or a formal notice to proceed confirmed by the client. The backlog disclosed by the Company therefore includes the non-production portion of the contracts thus confirmed.
Working capital
The working capital indicator is used by the Company to assess whether current assets are sufficient to discharge current liabilities. Working capital is the excess of current assets over current liabilities.
Contact:
Tel: (450) 965-1911
Web: www.adfgroup.com
ADF GROUP INC. 
