ADF Group (DRX) investor relations material

Executive summary

• Revenues for Q2 2025 were $53 million, with six-month revenue at $108.5 million, both down significantly year-over-year due to U.S. tariffs and reduced fabrication hours.

• Net income for Q2 was $898,000 ($0.03/share), and YTD net income was $9.6 million ($0.34/share), both down sharply from last year.

• Order backlog as of July 31, 2025, was $468 million, up 60% from January 31, 2025, not including pending Groupe LAR acquisition backlog.

• U.S. steel tariffs caused non-recoverable delays and reduced fabrication hours, especially at the Turcotte/Terrebonne plant.

• Announced a multi-year infrastructure contract in Quebec and the acquisition of Groupe LAR to increase Canadian content and reduce U.S. exposure.

Financial highlights

• Q2 gross margin was 20.7%, down from 36.9% last year; YTD gross margin was 21.3%, down from 32.3%.

• Adjusted EBITDA for Q2 was $3.7 million; YTD adjusted EBITDA was $14.1 million, both down year-over-year.

• SG&A expenses for Q2 were $8.8 million, up $4.6 million year-over-year due to mark-to-market DSU/PSU valuation; YTD SG&A was $12.2 million, $1.7 million lower than last year.

• Cash and cash equivalents at quarter-end were $50.9 million; working capital was $105.5 million.

• Operating cash flow for the six months was $7.4 million; $3 million spent on CapEx and intangibles.

Outlook and guidance

• Full-year CapEx expected to be approximately $11 million, mainly for new equipment at Turcotte and project requirements.

• A major five-year contract in Quebec, valued at $35–$40 million per year, was awarded, with an option to extend another five years, potentially totaling $400 million.

• Groupe LAR acquisition expected to close soon, adding $104.5 million backlog and expanding presence in hydroelectric and heavy industry markets.

• New nuclear certification positions the company for Ontario market opportunities in the next 5–10 years.

• Focus on increasing Canadian content to mitigate U.S. tariff risks.