Mr. Jean Paschini reports

ADF GROUP INC. ANNOUNCES THE RESULTS FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED OCTOBER 31, 2023

ADF Group Inc. had revenues of $82.1-million during the third quarter ended Oct. 31, 2023, compared with $65-million for the same period a year earlier. After the first nine months of the fiscal year, revenues totalled $242.6-million, which is $43.2-million or 21.7 per cent more than for the same period a year earlier.

Gross margin, as a percentage of revenues, went from 15 per cent for the three-month period ended Oct. 31, 2022, to 24.4 per cent for the same period ended Oct. 31, 2023. Gross margin, as a percentage of revenues, went from 13.3 per cent during the nine-month period ended Oct. 31, 2022, to 21.1 per cent in the same period ended Oct. 31, 2023.

These variances are mainly explained by the operational efficiency generated by the commissioning of the new robotic production line and the new programmable and automated equipment at ADF's plant in Terrebonne, Que., and also by the improvement in margins of projects recently signed and now in fabrication. It is also important to note that gross margins for the quarter and the nine-month period ended Oct. 31, 2022, were positively impacted by the forgiveness of a $1.3-million ($1-million (U.S.)) 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) for the nine-month period ended Oct. 31, 2023, at $40.4-million, were $20.2-million higher than at the same date a year ago. Adjusted EBITDA for the nine-month period ended Oct. 31, 2022, benefited from an $800,000 gain on disposal of assets.

For the quarter ended Oct. 31, 2023, ADF recorded net income of $11.2-million (34 cents per basic and diluted share) compared with net income of $2.9-million (nine cents per share, basic and diluted) a year earlier. At the close of the nine-month period ended on Oct. 31, 2023, net income totalled $27.1-million (83 cents per share, basic and diluted) compared with net income of $12.6-million (39 cents per share, basic and diluted) for the same period a year ago.

The corporation's order backlog stood at $339.3-million as at Oct. 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 Oct. 31, 2023, the corporation had working capital of $94.5-million. The corporation's operating activities generated cash of $45.7-million during the nine-month period ended Oct. 31, 2023. The corporation remains in a good position to continue its current operations and carry out its development projects.

Outlook

"The good performance of the last few quarters continued in the quarter ended Oct. 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 backlog," said Jean Paschini, chairman of the board and chief executive officer.

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, paid on Oct. 17, 2023, to shareholders of record as of Sept. 29, 2023.

Ratification of the collective bargaining agreement for unionized employees at ADF's plant in Terrebonne, Que.

On Dec. 3, 2023, unionized employees at ADF's plant in Terrebonne, Que., ratified the renewal of the collective agreement for a period of five years, following an agreement in principle reached on Nov. 13, 2023. The agreement covers 189 employees.

Conference call with investors

An investor conference call will be held this morning, Dec. 7, 2023, at 10 a.m. (EST) to discuss results for the third quarter and nine-month period ended Oct. 31, 2023.

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

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, Dec. 7, 2023, until midnight, Dec. 14, 2023, by dialling 1-888-259-6562, followed by the access code 107524 followed by the pound key.

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.

We seek Safe Harbor.