HIGHLIGHTS
- Revenues of $250.9 million.
- Net income of $14.9 million,
representing a 56% increase over the fiscal year ended January 31, 2022.
- The Corporation's order backlog (1) stood at
$376.5 million on January 31, 2023.
TERREBONNE, QC, April 13,
2023 /CNW/ -
ADF GROUP INC. ("ADF" or the "Corporation") (TSX:
DRX) recorded revenues of $250.9
million during the fiscal year ended January 31, 2023,
compared with $280.7 million the
previous fiscal year. This decrease in revenues is mainly
attributable to the inclusion of high-volume projects with
accelerated production schedules that increased the revenues of the
previous fiscal year ended January 31,
2022, but with much lower margins than normally generated by
our Corporation.
Gross margin, as a percentage of revenues (2), went
from 8.8% for the fiscal year ended January
31, 2022, to 14.2% for the fiscal year ended January 31, 2023. This increase, as a percentage
of revenues, is mainly due to the projects mentioned above, as well
as by internal efficiency improvement generated by the investments
to automate fabrication processes at our plant in Terrebonne, Quebec.
Adjusted earnings before interest, taxes, depreciation, and
amortization (adjusted EBITDA) (3) for the fiscal year
ended January 31, 2023, totalled $26.1 million, which is $8.4 million or 47% higher than at the same date
a year earlier.
For the fiscal year ended January 31,
2023, ADF posted net income of $14.9
million (or $0.46 per share,
basic and diluted) compared with a net income of $9.6 million (or $0.29 per share, basic and diluted) a year
earlier.
As at January 31, 2023, the
Corporation had a working capital of $65.6
million, 69% more than at the same date a year ago. The
Corporation remains in a sound position to continue its ongoing
operations and pursue its development projects.
As at January 31, 2023, the
Corporation's order backlog (1) stood at $376.5 million, compared with $373.1 million as at January 31, 2022.
The majority of projects in hand will be completed progressively by
the middle of the fiscal year ending
January 31, 2025.
Financial Highlights
|
|
|
|
Fiscal Years Ended
January 31,
|
|
2022
|
|
(In thousands of
Canadian dollars, and dollars per share)
|
$
|
$
|
|
Revenues
|
250,890
|
280,740
|
|
Adjusted EBITDA
(3)
|
26,119
|
17,759
|
|
Income before income
tax expense
|
16,854
|
11,059
|
|
Net income for the
year
|
14,935
|
9,563
|
|
— Basic and diluted per share
|
0.46
|
0.29
|
|
Cash flows from
operating activities
|
(2,612)
|
2,669
|
|
|
|
|
(In
thousands)
|
Number
|
Number
|
|
Average number of
outstanding shares (basic and
diluted, in thousands)
|
32,640
|
32,635
|
|
|
|
|
__________________________________
|
|
1
|
The order backlog is an
additional financial measure. Refer to the "Non-GAAP Financial
Measures and Other Financial Measures" section of this press
release for the definition of this indicator.
|
|
|
|
2
|
Gross margin, as a
percentage of revenues is an additional financial measure. Refer to
the "Non-GAAP Financial Measures and Other Financial Measures"
section of this press release for the definition of this
indicator.
|
|
|
|
3
|
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.
|
New Financing Agreement
On February 10, 2023, the
Corporation reached an agreement with its Canadian financial
institution on the terms and conditions amending its Canadian
operating credit facility. Once finalized, within the next few
weeks, the credit facility will increase from $30.0 million to $40.0
million ; this amount remaining subject to a margination
calculation but only when the Corporation draws an amount greater
than $20.0 million. The other
conditions will remain similar to the current ones.
Outlook
"ADF closed its fiscal year ended January
31, 2023 with encouraging results, an increase in the order
backlog, better margins and a net income 56% higher than that of
the previous fiscal year" said Mr. Jean Paschini, Chairman of the Board
and Chief Executive Officer. He concluded by pointing out that,
"Our major investments in automation over the past two fiscal years
have now been completed and allow us to face economic challenges
with confidence".
Dividend
On April 12, 2023, ADF Group
announced the payment of a semi-annual dividend of $0.01 per subordinate voting share and per
multiple voting shares, which will be paid on May 17, 2023, to Shareholders of Record as at
April 28, 2023.
Conference Call with Investors
A conference call with investors is scheduled for Thursday, April 13, 2023, at 10 a.m. (Montreal time) to discuss the results of
Corporation's fiscal year ended January 31,
2023.
To join the conference call without operator assistance, you can
register with your phone number on
https://emportal.ink/3l04Il2 to receive an instant automatic
reminder.
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 this conference call will be available from 1:00
p.m. on Thursday, April 13, 2023,
until 11:59 p.m. Thursday, April 20,
2023, by dialing 1-888-259-6562, followed by access
code 047645 #.
The conference call (audio) will also be available at the
www.adfgroup.com. Members of the media are invited to join in
listening mode.
ANNUAL GENERAL MEETING OF SHAREHOLDERS FOR THE FISCAL YEAR
ENDED JANUARY 31, 2023
ADF Group Inc. will hold its Annual General Meeting of
Shareholders via webcast, on Wednesday, June
7, 2023, at 11 a.m. (EST).
Shareholders' meeting details and webcasting connection
instructions will be made available in the weeks preceding the
meeting.
Results for the first quarter ending April 30, 2023, will also be disclosed during the
Shareholders' meeting.
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 measures 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:
|
|
|
|
Fiscal Years Ended
January 31,
|
2023
|
2022
|
|
(In thousands of
Canadian dollars)
|
$
|
$
|
|
Net income
|
14,935
|
9,563
|
|
Income tax
expense
|
1,919
|
1,496
|
|
Net financial
expenses
|
1,999
|
1,174
|
|
Amortization
|
5,323
|
5,054
|
|
Foreign exchange
loss
|
1,943
|
472
|
|
Adjusted
EBITDA
|
26,119
|
17,759
|
|
|
|
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.
All amounts are in Canadian dollars unless otherwise
specified.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
|
|
|
|
As at January
31,
|
2023
|
2022
|
|
(In thousands of
Canadian dollars)
|
$
|
$
|
|
ASSETS
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
7,193
|
7,130
|
|
Accounts
receivable
|
90,921
|
40,424
|
|
Current income tax
assets
|
714
|
1,548
|
|
Contract
assets
|
42,541
|
29,998
|
|
Inventories
|
10,679
|
9,690
|
|
Prepaid expenses and
other current assets
|
2,332
|
2,312
|
|
Total current
assets
|
154,380
|
91,102
|
|
Non-current
assets
|
|
|
|
Property, plant and
equipment
|
90,378
|
83,629
|
|
Right-of-use
assets
|
21,848
|
21,587
|
|
Intangible
assets
|
3,640
|
3,357
|
|
Other non-current
assets
|
1,371
|
1,375
|
|
Total
assets
|
271,617
|
201,050
|
|
LIABILITIES
|
|
|
|
Current
liabilities
|
|
|
|
Accounts payable and
other current liabilities
|
39,985
|
34,421
|
|
Current income tax
liabilities
|
235
|
―
|
|
Contract
liabilities
|
44,533
|
13,770
|
|
Other current
liabilities
|
964
|
―
|
|
Current portion of
lease liabilities
|
806
|
841
|
|
Current portion of
long-term debt
|
2,258
|
3,357
|
|
Total current
liabilities
|
88,781
|
52,389
|
|
Non-current
liabilities
|
|
|
|
Long-term
debt
|
44,927
|
28,702
|
|
Lease
liabilities
|
3,528
|
3,772
|
|
Deferred income tax
liabilities
|
9,240
|
7,571
|
|
Other non-current
liabilities
|
156
|
166
|
|
Total
liabilities
|
146,632
|
92,600
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
Capital
stock
|
68,127
|
68,120
|
|
Contributed
surplus
|
6,435
|
6,435
|
|
Accumulated other
comprehensive income
|
8,107
|
5,861
|
|
Retained
income
|
42,316
|
28,034
|
|
Total shareholders'
equity
|
124,985
|
108,450
|
|
Total
liabilities and shareholders' equity
|
271,617
|
201,050
|
|
|
|
CONSOLIDATED STATEMENTS OF INCOME
|
|
|
|
Fiscal Years Ended
January 31,
|
2023
|
2022
|
|
(In thousands of
Canadian dollars, except the number of shares and the amounts per
share)
|
$
|
$
|
|
Revenues
|
250,890
|
280,740
|
|
Cost of goods
sold
|
215,321
|
256,046
|
|
Gross Margin
|
35,569
|
24,694
|
|
Selling and
administrative expenses
|
14,773
|
11,989
|
|
Net financial
expenses
|
1,999
|
1,174
|
|
Foreign exchange
loss
|
1,943
|
472
|
|
18,715
|
13,635
|
|
Income before income
tax expense
|
16,854
|
11,059
|
|
Income tax
expense
|
1,919
|
1,496
|
|
Net income for the
fiscal year
|
14,935
|
9,563
|
|
Earnings per
share
|
|
|
|
—
Basic and diluted per share
|
0.46
|
0.29
|
|
Average number of
outstanding basic and diluted shares (in thousands)
|
32,640
|
32,635
|
|
|
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
|
|
|
Fiscal Years Ended
January 31,
|
2023
|
2022
|
|
(In thousands of
Canadian dollars)
|
$
|
$
|
|
Net income for the
fiscal year
|
14,935
|
9,563
|
|
Other comprehensive
income (loss):
|
|
|
|
Exchange differences on
translation of foreign operations (a)
|
2,246
|
(25)
|
|
Comprehensive income
for the fiscal year
|
17,181
|
9,538
|
|
|
|
|
a) Will
subsequently be reclassified to net income.
|
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
|
Capital
Stock
|
Contributed
Surplus
|
Accumulated
Other
Comprehensive Income
|
Retained
Income
|
Total
|
|
(In thousands of
Canadian dollars)
|
$
|
$
|
$
|
$
|
$
|
|
Balance, February 1,
2021
|
68,120
|
6,435
|
5,886
|
19,124
|
99,565
|
|
Net income for the
fiscal year
|
―
|
―
|
―
|
9,563
|
9,563
|
|
Other comprehensive
income (loss)
|
―
|
―
|
(25)
|
―
|
(25)
|
|
Comprehensive income
(loss) for
the fiscal year
|
―
|
―
|
(25)
|
9,563
|
9,538
|
|
Dividends
|
―
|
―
|
―
|
(653)
|
(653)
|
|
Balance,
January 31, 2022
|
68,120
|
6,435
|
5,861
|
28,034
|
108,450
|
|
Capital
Stock
|
Contributed
Surplus
|
Accumulated
Other
Comprehensive Income
|
Retained
Income
|
Total
|
|
(In thousands of
Canadian dollars)
|
$
|
$
|
$
|
$
|
$
|
|
Balance, February 1,
2022
|
68,120
|
6,435
|
5,861
|
28,034
|
108,450
|
|
Net income for the
fiscal year
|
―
|
―
|
―
|
14,935
|
14,935
|
|
Other comprehensive
income
|
―
|
―
|
2,246
|
―
|
2,246
|
|
Comprehensive income
for the fiscal year
|
―
|
―
|
2,246
|
14,935
|
17,181
|
|
Dividends
|
―
|
―
|
―
|
(653)
|
(653)
|
|
Shares
Issuance
|
7
|
―
|
―
|
―
|
7
|
|
Balance,
January 31, 2023
|
68,127
|
6,435
|
8,107
|
42,316
|
124,985
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
Fiscal Years Ended
January 31,
|
2023
|
2022
|
|
(In thousands of
Canadian dollars)
|
$
|
$
|
|
OPERATING
ACTIVITIES
|
|
|
|
Net income
for the fiscal year
|
14,935
|
9,563
|
|
Non-cash
items:
|
|
|
|
Amortization of
property, plant and equipment
|
4,118
|
3,543
|
|
Amortization of
right-of-use assets
|
835
|
1,013
|
|
Amortization of
intangible assets
|
370
|
498
|
|
Gain on disposal of
property, plant and equipment
|
(802)
|
(2,111)
|
|
Unrealized loss on
derivative financial instruments
|
968
|
513
|
|
Unrealized foreign
exchange (gain) loss
|
(1,158)
|
705
|
|
Share-based
compensation
|
724
|
361
|
|
Income tax
expense
|
1,919
|
1,496
|
|
Government
grants
|
(1,280)
|
―
|
|
Net financial
expenses
|
1,999
|
1,174
|
|
Others
|
(250)
|
(148)
|
|
Net income adjusted for
non-cash items
|
22,378
|
16,607
|
|
Change in non-cash
working capital items (1)
|
(25,850)
|
(12,511)
|
|
Income tax recovery
(paid)
|
860
|
(1,427)
|
|
Cash flows (used in)
from operating activities
|
(2,612)
|
2,669
|
|
INVESTING
ACTIVITIES
|
|
|
|
Acquisition of
property, plant and equipment
|
(11,463)
|
(21,477)
|
|
Acquisition of
intangible assets
|
(698)
|
(589)
|
|
Others
|
80
|
77
|
|
Cash flows used in
investing activities
|
(12,081)
|
(21,989)
|
|
FINANCING
ACTIVITIES
|
|
|
|
Issuance of long-term
debt
|
20,000
|
30,000
|
|
Repayment of long-term
debt
|
(2,216)
|
(17,878)
|
|
Payment of lease
liabilities
|
(804)
|
(963)
|
|
Dividends
paid
|
(653)
|
(653)
|
|
Interest
paid
|
(2,177)
|
(988)
|
|
Others
|
7
|
(316)
|
|
Cash flows from
financing activities
|
14,157
|
9,202
|
|
Impact of fluctuations
in foreign exchange rate on cash flow
|
599
|
(558)
|
|
Net change in cash and
cash equivalents during the fiscal year
|
63
|
(10,676)
|
|
Cash, and cash
equivalents, beginning of fiscal year
|
7,130
|
17,806
|
|
Cash and cash
equivalents, end of fiscal year
|
7,193
|
7,130
|
|
|
|
(1) The following table sets out in detail the components of the
"Change in non-cash working capital items":
|
|
|
|
Fiscal Years Ended
January 31,
|
2023
|
2022
|
|
(In thousands of
Canadian dollars)
|
$
|
$
|
|
Accounts
receivable
|
(48,647)
|
20,342
|
|
Contract
assets
|
(12,011)
|
(21,099)
|
|
Inventories
|
(550)
|
(2,714)
|
|
Prepaid expenses and
other current assets
|
103
|
2,382
|
|
Accounts payable and
other current liabilities
|
5,478
|
(2,041)
|
|
Contract
liabilities
|
29,787
|
(9,366)
|
|
Others
|
(10)
|
(15)
|
|
Change in non-cash
working capital items
|
(25,850)
|
(12,511)
|
|
|
|
Segmented Information
The Corporation operates one operational sector, being, the
non-residential construction industry, primarily in the United States and Canada. This sector includes the following
areas of expertise: the design and engineering of connections,
fabrication, including industrial coating, and installation of
complex steel structures, heavy steel built-ups, as well as
miscellaneous and architectural metalwork.
|
|
|
|
Fiscal Years Ended
January 31,
|
2023
|
2022
|
|
(In thousands of
Canadian dollars)
|
$
|
$
|
|
Revenues
|
|
|
|
Canada
|
36,913
|
39,810
|
|
United
States
|
213,977
|
240,930
|
|
250,890
|
280,740
|
|
|
|
|
|
|
|
As at January
31,
|
2023
|
2022
|
|
(In thousands of
Canadian dollars)
|
$
|
$
|
|
Non-current
assets (1)
|
|
|
|
Canada
|
74,424
|
68,907
|
|
United
States
|
42,813
|
41,041
|
|
117,237
|
109,948
|
|
|
|
|
(1)
|
The non-current assets
mainly include property, plant and equipment, intangible assets,
right-of-use assets, investment tax credits and others non-current
assets.
|
Revenues from external clients were allocated to each country on
the basis of the project's location.
During the fiscal year ended January 31, 2023, 62% of
the Corporation's revenues was realized with three (3) clients,
each representing 10% and more of its revenues (86% with three (3)
clients during the fiscal year ended January
31, 2022).
The following table presents the breakdown of revenues for each
of these clients:
|
|
|
|
Fiscal Years Ended
January 31,
|
2023
|
2022
|
|
(In thousands of
Canadian dollars)
|
$
|
$
|
|
Client A
(1)
|
―
|
168,950
|
|
Client B
(1)
|
57,386
|
40,610
|
|
Client C
(2)
|
―
|
31,381
|
|
Client D
(1)
|
46,069
|
―
|
|
Client E
(1)
|
52,886
|
―
|
|
156,341
|
240,941
|
|
|
|
|
(1)
|
From the United
States
|
|
(2)
|
From Canada
|
SOURCE ADF Group Inc.