ADF Group (TSX:DRX) released fourth-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below.
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Summary
ADF Group reported revenues of $258.7 million for the fiscal year ended January 31, 2026, down from $339.6 million the previous year, with a gross margin decrease from 31.6% to 23.1%.
The company’s results were impacted by US tariffs, which increased raw material costs and delayed projects, but the acquisition of Groupe Lahr added $20 million in revenue and $2 million to the gross margin.
Adjusted EBITDA was $43.5 million, a decrease from $91.3 million the previous year, mainly due to lower gross margins and increased selling and administrative expenses.
ADF Group’s order backlog was $561.1 million as of January 31, 2026, and the company anticipates revenue growth for fiscal year 2027 despite tariff challenges.
The company plans to invest $35 million in fiscal year 2027 for plant expansion and modernization, primarily for Groupe Lahr, and is negotiating financing for these investments.
Management expressed satisfaction with the company’s improved position despite ongoing trade uncertainties and is optimistic about future growth, particularly in the hydroelectric sector and Canadian projects.
Full Transcript
OPERATOR
Good morning ladies and gentlemen and welcome to the ADF Group’s results for the fiscal year ended January 31, 2026. Note that at this time all lines are in a listen only mode. Following the presentation we will conduct a question and answer session and if at any time during this call you require immediate assistance, please press star zero for the operator. Also note that this call is being recorded on Thursday, April 16, 2026 and I would like to turn the conference over to Jean François Bourcier, Chief Financial Officer. Please go ahead.
Jean François Bourcier
Thank you. Good morning. Welcome to ADF’s conference call covering the 12 month period ended January 31, 2026. I am with Thierry Paschini, President and Chief Operating Officer of ADF, who will be available to answer your question. At the end of the call, I will first update you on our full year results which were disclosed earlier this morning by press release and then proceed with a quick update about our operations including our recent new contracts announcement and the recent US Tariff change. This said, let me remind you that some of the issues discussed today may include forward looking statements. These are documented in ADF Groups Management report for the 2026 fiscal year which will be filed with SEDAR in the coming days. On this very call a year ago and in spite of exceptional results, we were confirming the significant uncertainties that the then recently announced US Tariffs were bringing to our markets and operations a year later and considering all the tariffs related turmoil, we can confirm that we without a doubt close our fiscal 2026 with exceptional results and in a much better position to face these uncertainties in light of Groupe LAR’s acquisition. Revenues for the fiscal year ended January 31, 2026 reach $258.7 million compared to $339.6 million last year. As a percentage of revenues, the gross margin went from 31.6% in fiscal 2025 to 23.1% during the fiscal year ended January 31, 2026. As just mentioned, fiscal 2025 was an exceptionally good year with a favorable project mix. The fiscal 2026 results have been impacted by the US tariffs both directly with higher raw material costs and indirectly with delays in project signing and fabrication start. As such, and as already mentioned in previous calls, ADF implemented a work sharing program at its Terrebonne, Quebec facility earlier this year which reduced fabrication hours but also enabled ADF to reduce the cost impact, although not entirely considering that the Canadian employment program compensated some of these reduced hours. The Groupe LAR acquisition added $20 million in revenue since its acquisition was finalized on September 18, 2025 and added $2 million to our consolidated gross margin for the same period. Adjusted EBITDA totaled $43.5 million or 16.8% of revenues, compared with $91.3 million or 26.9% of revenues a year ago. The year over year decrease comes from the previously explained gross margin variances and by the selling administrative expenses which at $23.2 million were $1.1 million higher than a year ago, all of the increase being explained by the inclusion of Group LAURE in our consolidated SGAs. We closed our January 31, 2026 fiscal year with a mostly non monetary foreign exchange gain of $2.1 million compared to a $5.6 million loss a year ago, most of this variance coming from the from the end of year mark to market valuation of our FX contracts on end at both year ends year to date, ADF posted net income of $26.3 million or $0.93 basic and diluted per share, compared with a net income of $56.8 million a year ago or $1.84 basic and diluted per share. Cash flows from operating activities generated $49.4 million, while we invested $11.1 million in capex, mostly for equipment maintenance at both our plants in Turbonne, Quebec and in Great Falls, Montana. We plan to invest close to $35 million for our 2027 fiscal year, the majority of this amount being for our Group LAR plant expansion and modernization in parallel. We are presently negotiating financing packages for these investments. We will be able to provide further updates on our next call. As of January 31, 2026, working capital stood at $104.8 million, just $4.4 million lower than last year. Also on January 31, 2026, cash and cash equivalents stood at $62.7 $62.7 million, which is actually $2.7 million higher than a year ago. Even considering the conclusion of RNCIB and the acquisition of goplau. Yesterday, the Board of Directors approved the payment of a semiannual dividend of $0.02 per share, which will be paid on May 15, 2026 to shareholders of record. As at April 27, 2026, we closed the year with an order backlog of $561.1 million as at January 31, 2026, excluding the new contracts totaling $157.3 million announced last week, the ending backlog included $138.2 million of contracts from which also excludes last week’s announcement Quickly Looking at the fourth quarter results, ADF recorded revenues of $78.8 million, up $1.4 million from the fourth quarter of 2025 fiscal year. Fourth quarter revenues this year did include $13.8 million coming from the from Groupe LAR. The gross margin as a percentage of revenue stood at 21.5% for the fourth quarter ended January 26, compared with 31% for the corresponding quarter of fiscal 2025. The margin decrease between these two quarters is primarily explained by the mix of products and fabrication, including lower margins coming from the LAR projects. We recorded a net income of $6.4 million during the last quarter of fiscal 2026, compared with net income of $9.1 million for the corresponding period of fiscal 2025, with minimal impact coming from LAR, which basically broke even for the quarter. Because the corporation carries out contracts that vary in complexity and in duration, upward and downward fluctuation may occur from quarter to quarter. In light of this, revenue and order, backlog growth must be analyzed over several quarters, not just from one period to the next. As mentioned at the beginning of the call, the situation was bleak a year ago and we’re definitely very satisfied with how everything turned out, including our overall financial results, our ending …
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