Mr. Jean Paschini reports

ADF GROUP INC. ANNOUNCES RESULTS FOR THE THREE MONTHS AND SIX MONTHS ENDED JULY 31, 2023

ADF Group Inc. has released its results for the three months and six months ended July 31, 2023.

Highlights:

• Revenues of $160.5-million recorded during the six-month period ended July 31, 2023, up 19.4 per cent compared with the same period a year earlier;
• Net income of $10.5-million and $15.9-million recorded for the three-month and six-month periods ended July 31, 2023, respectively, up 94.3 per cent and 64.4 per cent respectively from the same periods a year ago;
• Cash flow from operating activities of $50.4-million for the six-month period ended July 31, 2023;
• Order backlog at $373.7-million as at July 31, 2023.

ADF Group recorded revenues of $80.2-million during the second quarter ended July 31, 2023, compared with $66.4-million for the same period a year earlier. After the first six months of the fiscal year, revenues totalled $160.5-million, which is $26.1-million, or 19.4 per cent more than for the same period a year earlier.

Gross margin, as a percentage of revenues, went from 12.9 per cent for the three-month period ended July 31, 2022, to 22.2 per cent for the same period ended July 31, 2023. Gross margin, as a percentage of revenues, went from 12.5 per cent during the first semester ended July 31, 2022, to 19.5 per cent in the same period ended July 31, 2023. These variations are mainly explained by the start of U.S. fabrication projects. It is also important to note that gross margins for the three-month and six-month periods ended a year ago on July 31, 2022, were favourably impacted by the forgiveness of a $1.3-million ($1-million (U.S.)) loan issued to a U.S. subsidiary under a U.S. pandemic relief program.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the six-month period ended July 31, 2023, at $22.7-million, were $10-million higher than at the same date a year ago. Adjusted EBITDA for the six-month period ended July 31, 2022, also benefited from an $800,000 gain on disposal of assets.

For the quarter ended July 31, 2023, ADF recorded net income of $10.5-million (32 cents per basic and diluted share), compared with net income of $5.4-million (17 cents per share basic and diluted) a year earlier. At the close of the first semester on July 31, 2023, net income totalled $15.9 million (49 cents per share basic and diluted), compared with net income of $9.7-million (30 cents per share basic and diluted) for the same period a year ago.

The corporation's order backlog stood at $373.7-million as at July 31, 2023, compared with $376.5-million as at Jan. 31, 2023. Projects currently in the order backlog will extend until the end of the fiscal year ending Jan. 31, 2025.

As at July 31, 2023, the corporation had working capital of $83-million. The corporation's operating activities generated cash of $50.4-million during the first six months ended July 31, 2023. The corporation remains in a good position to continue its current operations and carry out its development projects.

Outlook

"The improvement in internal efficiency continued, generating higher gross margins," said Jean Paschini, chairman of the board and chief executive officer. "The contracts signed at the beginning of the quarter, on May 30, 2023, allow us to maintain a very attractive order backlog, and the opportunities in our markets remain more than attractive," concluded Mr. Paschini.

Dividend

On Sept. 6, 2023, ADF Group announced the payment of a semi-annual dividend of one cent per subordinate voting share and per multiple voting share, to be paid on Oct. 17, 2023, to shareholders of record as of Sept. 29, 2023.

Conference call with investors

An investor conference call will be held this morning, Sept. 7, 2023, at 10 a.m. EST, to discuss results for the second quarter and six-month period ended July 31, 2023.

To join the conference call without operator assistance, you can register with your phone number on-line to receive an instant automated callback.

You can also join the conference call with operator assistance by dialling 1-888-390-0620 a few minutes prior to the conference call scheduled start time.

A replay of the conference call will be available from 1 p.m., Sept. 7, 2023, until midnight, Sept. 14, 2023, by dialling 1-888-259-6562, followed by the access code 912409 and the number sign.

The conference call (audio) will also be available on ADF Group's website. Members of the media are invited to join in listening mode.

About ADF Group Inc.

ADF Group is a North American leader in the design and engineering of connections, fabrication, including the application of industrial coatings; 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 is one of the few players in the industry capable of handling highly technically complex megaprojects 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.

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