ADF GROUP INC. ANNOUNCES THE RESULTS OF THE THREE MONTH AND NINE MONTH PERIODS ENDED OCTOBER 31, 2025
MWN-AI** Summary
ADF Group Inc. has announced its financial results for the three-month and nine-month periods ending October 31, 2025. The company reported revenues of CAD 71.4 million for Q3 and CAD 179.9 million for the nine-month period, down from CAD 80.0 million and CAD 262.2 million, respectively, for the same periods in the previous year. The decrease in revenues and gross margin, which fell to 27.6% for the third quarter and 23.8% for the nine months, has been attributed to the ongoing impacts of U.S. tariffs and heightened market uncertainty.
Net income for the third quarter was CAD 10.3 million (CAD 0.36 per share), a decline from CAD 16.4 million (CAD 0.55 per share) in Q3 2024. For the nine months, net income totaled CAD 20.0 million (CAD 0.70 per share), down from CAD 47.7 million (CAD 1.53 per share) for the same period last year. ADF reported cash flows from operations of CAD 13.4 million for the nine-month period.
A notable highlight was the first consolidation of Groupe LAR Inc. following its acquisition on September 18, 2025. This acquisition contributed CAD 6.2 million to revenues for the reported periods. ADF's order backlog stood at CAD 497.1 million as of October 31, 2025, bolstered by CAD 91.9 million from Groupe LAR Inc.
Moving forward, CEO Jean Paschini expressed confidence in ADF's resilience amid market challenges and highlighted the importance of integrating Groupe LAR while focusing on growth strategies that enhance order backlog and cash generation. Overall, despite a decline in revenue and income, ADF is positioning itself for future stability and growth.
MWN-AI** Analysis
ADF Group Inc. has recently reported its financial results for the third quarter and nine-month period ending October 31, 2025. Despite posting a revenue of $71.4 million for Q3, this marks a decline from $80 million the previous year, primarily attributed to the impact of U.S. tariffs. The nine-month revenue also decreased to $179.9 million from $262.2 million, signaling broader economic challenges. The gross margin percentages have notably fallen, dropping from 30.4% to 27.6% in Q3 and from 31.7% to 23.8% for the nine months, which raises concerns about profitability.
However, it’s vital to highlight the strategic acquisition of Groupe LAR Inc. This move is expected to bolster ADF's presence in the steel fabrication sector, contributing $6.2 million in revenue and integrating a substantial $497.1 million order backlog as of October 31, 2025. The continual growth of this backlog, particularly with projects extending until the fiscal year ending January 31, 2027, could provide a robust foundation for future growth, particularly in the flourishing hydroelectric and industrial markets.
Investors should exercise caution amid these challenges but also consider the potential benefits from the acquisition and the improvement in order backlog. Cash flows of $13.4 million from operations indicate operational strength. Thus, while ADF's immediate financial metrics suggest a cautious outlook, the strategic positioning and backlog growth present opportunities for long-term investors.
In summary, while short-term performance may be under pressure, ADF's strategic moves, especially the acquisition of Groupe LAR Inc. and maintaining a solid order backlog, could pave the way for potential recovery and sustained growth in the medium to long term. Investors may want to watch for updates regarding the integration of Groupe LAR and its anticipated impact on future earnings.
**MWN-AI Summary and Analysis is based on asking OpenAI to summarize and analyze this news release.
Canada NewsWire
FINANCIAL HIGHLIGHTS
(All amounts are in Canadian dollars unless otherwise indicated.)
- Revenues of $71.4 million and $179.9 million, respectively, for the three (3) month and nine (9) month periods ended October 31, 2025.
- Gross margin, as a percentage of revenue (1) of 27.6% and 23.8% recorded during the three (3) month and nine (9) month periods ended October 31, 2025.
- Cash flows from operations of $13.4 million for the nine (9) month period ended October 31, 2025.
- Net income of $10.3 million and $20.0 million recorded during the three (3) month and nine (9) month periods ended October 31, 2025, respectively.
- First consolidation of Groupe LAR Inc.'s results following the closing of the transaction on September 18, 2025, including revenues of $6.2 million for the three (3) month and nine (9) month periods ended October 31, 2025.
- Order Backlog (1) of $497.1 million as at October 31, 2025, including $91.9 million from Groupe LAR Inc.
TERREBONNE, QC, Dec. 11, 2025 /CNW/ - ADF GROUP INC. ("ADF" or the "Corporation") (TSX: DRX), a North American leader in the fabrication of steel superstructures, recorded revenues of $71.4 million during the third quarter ended October 31, 2025, compared with $80.0 million for the same period a year ago. After the first nine (9) months of the current fiscal year, revenues totalled $179.9 million, compared with $262.2 million for the same period last year.
Gross margin, as a percentage of revenues (1) went from 30.4% for the 3-month period ended October 31, 2024, to 27.6% for the same period ended October 31, 2025. Gross margin, as a percentage of revenue (1) went from 31.7% during the 9-month period ended October 31, 2024, to 23.8% for the same period ended October 31, 2025.
These variations are mainly due to the impact of uncertainty related to U.S. tariffs. While fabrication volume increased during the third quarter ended October 31, 2025, explaining the increase in revenues and margins compared to previous quarters, the impact of these tariffs continues to be felt on the Corporation's cumulative results.
Adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EBITDA) (2) for the 3-month and 9-month periods ended October 31, 2025, stood at $18.4 million and $32.5 million respectively. Both of which are net of the $1.4 million fees related to business combination.
For the quarter ended October 31, 2025, ADF recorded net income of $10.3 million ($0.36 per basic and diluted share) compared with net income of $16.4 million ($0.55 per share, basic and diluted) a year earlier. After 9 months, as at October 31, 2025, net income totaled $20.0 million ($0.70 per share, basic and diluted) compared with net income of $47.7 million ($1.53 per share, basic and diluted) for the same period a year ago.
The Corporation's order backlog (1) stood at $497.1 million as at October 31, 2025, compared with $293.1 million as at January 31, 2025.
The order backlog as of October 31, 2025, includes the order backlog of Groupe LAR Inc.totaling $91.9 million, which was added pursuant to the closing of the acquisition on September 18, 2025, and does not include the option to extend the contract announced on July 23, 2025, by five (5) years. The projects currently in the order backlog will be carried out gradually by the end of the fiscal year ending January 31, 2027.
As at October 31, 2025, the Corporation had a working capital (1) of $101.4 million, whereas the operating activities generated $13.4 million in cash during the nine (9) month period ended October 31, 2025.
_______________________ | |
1. | Order backlog, gross margin as a percentage of revenue, and working capital are additional financial measures. Refer to the Non-IFRS and Other Financial Measures section below for definitions of these measures. |
2. | Adjusted EBITDA is a non-IFRS financial measure. See the "Non-IFRS and Other Financial Measures" section below for the definition of this indicator. |
Financial Highlights
3 mois | 9 mois | |||
Periods ended October 31, | 2025 | 2024 | 2025 | 2024 |
(In thousands of dollars, and in dollars per share) | $ | $ | $ | $ |
Revenues | 71,413 | 79,952 | 179,942 | 262,233 |
Adjusted EBITDA (2) | 18,354 | 24,032 | 32,451 | 72,045 |
Income before income taxes expense | 14,200 | 21,791 | 27,170 | 65,275 |
Net income for the period | 10,309 | 16,432 | 19,953 | 47,697 |
— per share, basic and diluted | 0.36 | 0.55 | 0.70 | 1.53 |
(In thousands) | Number | Number | Number | Number |
Weighted average number of shares outstanding (basic and diluted) | 28,653 | 29,874 | 28,383 | 31,227 |
Acquisition de Groupe LAR inc.
On September 18, 2025, the Corporation acquired the shares of Groupe LAR Inc., a Quebec-based company located in Métabetchouan in the Saguenay-Lac-Saint-Jean region of Quebec, which operates in the machining, welding and industrial mechanics sectors. Groupe LAR Inc. is a Canadian leader in the design, fabrication and installation of mechanically welded steel structures.
The consideration paid by ADF consists of a purchase price of $20.4 million, including a $1.4 million closing adjustment related to certain working capital adjustments, paid as follows: (i) a cash amount of $16.4 million, including the closing adjustment, and (ii) the issuance of 449,944 Subordinate Voting Shares of the Corporation, representing the equivalent of $4 million in Subordinate Voting Shares of the Corporation based on the average closing price of the Corporation's shares on the Toronto Stock Exchange during the five (5) trading days preceding August 29, 2025. ADF paid the consideration in cash from its available cash.
This acquisition has contributed $6.2 million to the Corporation's revenues and $0.2 million to net income for the period from the date of acquisition to the end of the quarter, that is, October 31, 2025.
Outlook
"Despite the continued uncertainty in the U.S. markets, ADF's results remain strong," said Jean Paschini, Chairman of the Board of Directors and Chief Executive Officer.
"We will continue our methodical and measured approach to development, including the integration of Groupe LAR Inc. into the ADF Group fold, while maintaining our tight management of operational risk, with the growth of the order backlog and cash generation remaining the pillars of our growth strategy," concluded Mr. Paschini.
Conference Call with Investors
A conference call with investors is for December 11, 2025, at 10 a.m. (Montreal time) to discuss the results of the three (3) months and nine (9) month periods ended October 31, 2025.
To join the conference call without operator assistance, you can register with your phone number on https://emportal.ink/4q3FBu3 to receive an instant automatic reminder.
You can also join the conference call with operator assistance by dialing 1-800-990-4777 a few minutes prior to the conference call scheduled start time.
A replay of the conference call will be available from 1:00 p.m, December 11, 2025, until December 18, 2025, by dialing 1-888-660-6345; followed by the access code 76272 #.
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, fabrication, including the application of industrial coatings, and 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 Inc. is one of the few players in the industry capable of handling highly technically complex mega projects 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.
About Groupe LAR Inc. | Established in 1942 and based in Métabetchouan in the Saguenay-Lac-Saint-Jean region, in Quebec, Groupe LAR Inc. operates in the machining, welding, and industrial mechanics sectors. Groupe LAR Inc. is a Canadian leader in the design, manufacture and installation of mechanically welded steel structures. Primarily focused on the rapidly expanding large-scale hydroelectricity market, Groupe LAR Inc. also offers customized overhead crane solutions for the heavy industry.
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" as well as 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-IFRS Financial Measures and Other Financial Measures | Are measures derived primarily from the consolidated financial statements but are not a standardized financial measure under the financial reporting framework used to prepare the Corporation's financial statements. Therefore, readers should be careful not to confuse or substitute them with performance measures prepared in accordance with IFRS. In addition, readers should avoid comparing these non-IFRS financial measures to similarly titled measures provided or used by other issuers. The definition of these indicators and their reconciliation with comparable International Financial Reporting Standards measures issued by the International Accounting Standards Board ("IFRS Accounting Standards") is as follows:
Adjusted EBITDA
Adjusted EBITDA shows the extent to which the Corporation generates profits from operations, without considering the following items:
- Net financial expenses;
- Income taxes expense;
- Fees related to business combination;
- Foreign exchange gains or losses, and
- Depreciation and amortization of property, plant and equipment, intangible assets, and right-of-use assets.
Net income is reconciled with adjusted EBITDA in the table below:
3 months | 9 months | |||
Periods Ended October 31 | 2025 | 2024 | 2025 | 2024 |
(In thousands of dollars) | $ | $ | $ | $ |
Net income | 10,309 | 16,432 | 19,953 | 47,697 |
Income taxes expense | 3,891 | 5,359 | 7,217 | 17,578 |
Net financial expenses | 332 | 244 | 423 | 910 |
Amortization | 1,738 | 1,535 | 4,890 | 4,552 |
Fees related to business combination | 1,379 | - | 1,379 | - |
Foreign exchange loss (gain) | 705 | 462 | (1,411) | 1,308 |
Adjusted EBITDA | 18,354 | 24,032 | 32,451 | 72,045 |
Gross Margin as a Percentage of Revenues
Gross margin as a percentage of revenue indicator is used by the Corporation 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 operational efficiency of the Corporation. The indicator of gross margin as a percentage of revenues results from dividing gross margin by revenues.
Order Backlog
The order backlog is a measure used by the Corporation to assess future revenue levels. The order backlog includes firm orders obtained by the Corporation, either through a firm contract or a formal notice to proceed confirmed by the client. The order backlog disclosed by the Corporation therefore includes the portion of confirmed contracts that have not been put into production.
Working Capital
The working capital indicator is used by the Corporation to assess whether current assets are sufficient to meet current liabilities. It is therefore equal to current assets, less current liabilities.
Website: www.adfgroup.com
SOURCE ADF Group Inc.
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FAQ**
Given the decrease in revenues from $80 million to $71.4 million for the three-month period ended October 32025, what strategies does ADF Group Inc. plan to employ to improve revenue, considering the impact of tariffs on profitability associated with ADF Group Inc. Subordinate Voting Shares DRX:CC?
How does the integration of Groupe LAR Inc. influence ADF Group Inc.'s growth trajectory, and what measures will be taken to realize the anticipated benefits of this acquisition for ADF Group Inc. Subordinate Voting Shares DRX:CC?
With a significant drop in net income from $16.4 million to $10.3 million year-over-year, what operational adjustments is ADF Group Inc. making to enhance profitability in future quarters, particularly for stakeholders in ADF Group Inc. Subordinate Voting Shares DRX:CC?
Considering the existing order backlog of $497.1 million, how does ADF Group Inc. plan to convert this backlog into actual revenue streams while addressing the challenges faced in the market, particularly for investors in ADF Group Inc. Subordinate Voting Shares DRX:CC?
**MWN-AI FAQ is based on asking OpenAI questions about ADF Group Inc. Subordinate Voting Shares (TSXC: DRX:CC).
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