HIGHLIGHTS
(All amounts are in Canadian dollars unless otherwise noted.)
- Revenue of $242.6 million recorded during the 9-month period ended October 31, 2023, up 21.7% compared with the same period a year earlier.
- Net income of $11.2 million and $27.1 million recorded for the 3-month and 9-month periods ended October 31, 2023, respectively, up by $8.3 million and $14.5 million, respectively from the same periods a year ago.
- Cash flow from operating activities of $45.7 million for the 9-month period ended October 31, 2023.
- Order backlog (1) at $339.3 million as at October 31, 2023.
- Ratification of a 5-year collective bargaining agreement by the unionized employees at ADF's Terrebonne plant, on December 3, 2023.
TERREBONNE, QC, Dec. 7, 2023 /CNW/ - ADF GROUP INC. ("ADF" or the "Company") (TSX: DRX), recorded revenues of $82.1 million during the third quarter ended October 31, 2023, compared with $65.0 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% more than for the same period a year earlier.
Gross margin, as a percentage of revenues (1) went from 15.0% for the 3-month period ended October 31, 2022, to 24.4% for the same period ended October 31, 2023. Gross margin, as a percentage of revenue (1) went from 13.3% during the 9-month period ended October 31, 2022, to 21.1% in the same period ended October 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, Quebec, 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 9-month periods 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 9-month period ended October 31, 2023, at $40.4 million, were $20.2 million higher than at the same date a year ago. Adjusted EBITDA for the 9-month period ended October 31, 2022, benefited from an $0.8 million gain on disposal of assets.
For the quarter ended October 31, 2023, ADF recorded net income of $11.2 million ($0.34 per basic and diluted share) compared with net income of $2.9 million ($0.09 per share, basic and diluted) a year earlier. At the close of the 9-month period ended on October 31, 2023, net income totalled $27.1 million ($0.83 per share, basic and diluted) compared with net income of $12.6 million ($0.39 per share, basic and diluted) for the same period a year ago.
The Corporation's order backlog (1) stood at $339.3 million as at October 31, 2023, compared with $376.5 million as at January 31, 2023. Projects currently in the order backlog will extend until the end of the fiscal year ending January 31, 2025.
As at October 31, 2023, the Corporation had working capital (1) of $94.5 million. The Corporation's operating activities generated cash of $45.7 million during the 9-month period ended October 31, 2023. The Corporation remains in a good position to continue its current operations and carry out its development projects.
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(1) | Gross margin, as a percentage of revenues, working capital, as well as the order backlog are additional financial measures. Refer to the "Non-GAAP Financial Measures and Other Financial Measures" section of this press release for the definition of these indicators. |
(2) | Adjusted EBITDA is a non-GAAP financial measure. Refer to the "Non-GAAP Financial Measures and Other Financial Measures" section of this press release for the definition of this indicator. |
Financial Highlights
3 Months | 9 Months | |||
Periods ended October 31, | 2023 | 2022 | 2023 | 2022 |
(In thousands of dollars, and dollars per share) | $ | $ | $ | $ |
Revenues | 82,143 | 64,999 | 242,629 | 199,389 |
Adjusted EBITDA (1) | 17,769 | 7,543 | 40,444 | 20,246 |
Income before income tax expense | 13,277 | 3,300 | 32,151 | 12,936 |
Net income for the period | 11,198 | 2,910 | 27,111 | 12,592 |
- Per share (basic and diluted) | 0.34 | 0.09 | 0.83 | 0.39 |
(In thousands) | Number | Number | Number | Number |
Average number of outstanding shares (basic and diluted) | 32,640 | 32,640 | 32,640 | 32,640 |
(1) | Adjusted EBITDA is a non-GAAP financial measure. Refer to the "Non-GAAP Financial Measures and Other Financial Measures" section of this press release for the definition of this indicator. |
Outlook
"The good performance of the last few 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 backlog" said Mr. Jean Paschini , Chairman of the Board 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, paid on October 17, 2023, to Shareholders of Record as of September 29, 2023.
Ratification of the Collective Bargaining Agreement for Unionized Employees at ADF's 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 an agreement in principle reached on November 13, 2023. The agreement covers 189 employees.
Conference Call with Investors
An investor conference call will be held this morning, December 7, 2023, at 10 a.m. (EST) to discuss results for the third quarter and nine-month period ended October 31, 2023.
To join the conference call without operator assistance, you can register with your phone number on https://emportal.ink/40oMbin to receive an instant automated call back.
You can also join the conference call with operator assistance by dialing 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 1:00 p.m, December 7, 2023, until midnight, December 14, 2023, by dialing 1 (888) 259-6562; followed by the access code 107524 #.
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.
Forward-Looking Information | This press release contains forward-looking statements reflecting ADF's objectives and expectations. These statements are identified by the use of verbs such as "expect" as well as by the use of future or conditional tenses. By their very nature these types of statements involve risks and uncertainty. Consequently, reality may differ from ADF's expectations.
Non-GAAP 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 GAAP. In addition, readers should avoid comparing these non-GAAP 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 measure 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 tax expense;
- Foreign exchange 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, | 2023 | 2022 | 2023 | 2022 |
(In thousands of dollars) | $ | $ | $ | $ |
Net income | 11,198 | 2,910 | 27,111 | 12,592 |
Income tax expense | 2,079 | 390 | 5,040 | 344 |
Net financial expenses | 354 | 377 | 1,821 | 1,014 |
Amortization | 1,460 | 1,408 | 4,338 | 3,826 |
Foreign exchange loss | 2,678 | 2,458 | 2,134 | 2,470 |
Adjusted EBITDA | 17,769 | 7,543 | 40,444 | 20,246 |
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. Working capital is equal to current assets, less current liabilities.
SOURCE ADF Group Inc.
For further information: Jean Paschini, Chairman of the Board of Directors and Chief Executive Officer; Jean-François Boursier, CPA, Chief Financial Officer, Telephone: (450) 965-1911, Website: www.adfgroup.com
