Q4 2025 ADF Group Inc Earnings Call

April 16, 2026

Speaker #1: Good morning , ladies and gentlemen , and welcome to the ADF Group results for the fiscal year ended January 31st , 2026 . Note that at this time , all lines are in a listen only mode .

Operator: Good morning, ladies and gentlemen, and welcome to the ADF Group results for the fiscal year ended 31 January 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. 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, 16 April 2026. I would like to turn the conference over to Jean-François Boursier, Chief Financial Officer. Please go ahead.

Speaker #1: Following the presentation , we will conduct a question and answer session and if at any time during this call you require me to resistance , please press star zero for the operator Also note that this call is being recorded on Thursday , April 16th , 2026 , and I would like to turn the conference over to Jean-Francois Boursier , Chief Financial Officer .

Speaker #1: Please go ahead

Speaker #2: Thank you Good morning . Welcome to Edf's conference call covering the 12 month period period ended January 31st , 2026 . I am with Pierre Pasquini , President and Chief Operating Officer of EDF , 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 tariffs change This said , let me remind you that some of the issues discussed today may include forward looking statements .

Jean-François Boursier: Thank you. Good morning. Welcome to ADF's Conference Call Covering the 12-Month Period Ended 31 January 2026. I am with Jean 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 tariffs change.

Jean-François Boursier: That said, let me remind you that some of the issues discussed today may include forward-looking statements. These are documented in ADF Group's 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.

Speaker #2: These are documented in ADF Group management report for the 2026 fiscal year, which will be filed with SEDAR in the coming days, on this very call.

Speaker #2: 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.

Speaker #2: 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 group laws , acquisition revenues for the fiscal year ended January 31st , 2026 reached $258.7 million , compared to $339.6 million last year , as a percentage of revenues .

Jean-François Boursier: A year later, considering all the tariffs-related turmoil, we can confirm that we, without a doubt, closed our fiscal 2026 with exceptional results and in a much better position to face these uncertainties in light of Groupe LAR acquisition. Revenues for the fiscal year ended 31 January 2026 reached CAD 258.7 million, compared to CAD 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 31 January 2026. As just mentioned, fiscal 2025 was an exceptionally good year with a favorable project mix.

Speaker #2: The gross margin went from 31.6% in fiscal 2025 to 23.1% during the fiscal year ended January 31st , 2026 . As just mentioned , fiscal 2025 was an exceptionally good year with a favorable product mix .

Speaker #2: 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.

Jean-François Boursier: 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.

Speaker #2: Start . As such , and as already mentioned in previous in previous calls , ADF implemented a work sharing program at its Quebec facility earlier this year , which reduced fabrication hours .

Speaker #2: But also enabled ADF to reduce the cost impact . Although not entirely . Considering that the Canadian Employment Program compensated some of these reduced hours .

Jean-François Boursier: The Groupe LAR acquisition added CAD 20 million in revenue since its acquisition was finalized on 18 September 2025, and added CAD 2 million to our consolidated gross margin for the same period. Adjusted EBITDA totaled CAD 43.5 million or 16.8% of revenues, compared with CAD 91.3 million or 26.9% of revenues a year ago.

Speaker #2: The group law acquisition added $20 million in revenue since its acquisition was finalized on September 18th , 2025 , and added $2 million to our consolidated gross margin for the same period .

Speaker #2: 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 and 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 Global.org in our consolidated SaaS .

Jean-François Boursier: The year-over-year decrease comes from the previously explained gross margin variances and the SG&A expenses, which at CAD 23.2 million were CAD 1.1 million higher than a year ago, all of the increase being explained by the inclusion of Groupe LAR Inc. in our consolidated SG&As. We closed our 31 January 2026 fiscal year with a mostly non-monetary foreign exchange gain of CAD 2.1 million, compared to a CAD 5.6 million loss a year ago, most of this variance coming from the end-of-year mark-to-market valuation of our FX contracts on end at both year ends.

Speaker #2: We closed our January 31st , 2026 fiscal year with a mostly non-monetary foreign , 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 N at both year ends , year to date , ADF posted net income of $26.3 million , or $0.93 .

Jean-François Boursier: Year to date, ADF posted net income of CAD 26.3 million or CAD 0.93 basic and diluted per share, compared with a net income of CAD 56.8 million a year ago or CAD 1.84 basic and diluted per share. Cash flows from operating activities generated CAD 49.4 million, while we invested CAD 11.1 million in CapEx, mostly for equipment maintenance at both our plants in Terrebonne, Quebec, and in Great Falls, Montana.

Jean-François Boursier: Year-to-date, ADF posted net income of CAD 26.3 million or CAD 0.93 basic and diluted per share, compared with a net income of CAD 56.8 million a year ago or CAD 1.84 basic and diluted per share. Cash flows from operating activities generated CAD 49.4 million, while we invested CAD 11.1 million in CapEx, mostly for equipment maintenance at both our plants in Terrebonne, Quebec, and in Great Falls, Montana.

Speaker #2: Basic and diluted per share , compared with a net income of 60 $56.8 million a year ago , or $1.84 . Basic and diluted per share .

Speaker #2: 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 Quebec and in Great Falls , Montana , we plan to invest close to $35 million for our 2027 fiscal year .

Jean-François Boursier: We plan to invest close to CAD 35 million for our 2027 fiscal year, the majority of this amount being for our Groupe 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 31 January 2026, working capital stood at CAD 104.8 million, just CAD 4.4 million lower than last year. Also on 31 January 2026, cash and cash equivalents stood at CAD 62.7 million, which is actually CAD 2.7 million higher than a year ago, even considering the conclusion of our NCIB and the acquisition of Groupe LAR.

Speaker #2: The majority of this amount being for our group plant expansion and modernization . In parallel , we are presently negotiating financing packages for these investments .

Speaker #2: We will be able to provide further updates on our next call . As at January 31st , 2026 , working capital stood at $104.8 million , just $4.4 million lower than last year .

Speaker #2: Also , on January 31st , 2026 , cash and cash equivalents stood at 62.7 $62.7 million , which is actually $2.7 million higher than a year ago .

Speaker #2: Even considering the conclusion of our NCIB and the acquisition of Groklaw yesterday , the Board of Directors approved the payment of a semi-annual dividend of $0.02 per share , which will be paid on May 15th , 2026 to shareholders of record as at April 27th , 20 2026 .

Jean-François Boursier: Yesterday, the board of directors approved the payment of a semiannual dividend of CAD 0.02 per share, which will be paid on 15 May 2026 to shareholders of record as at 27 April 2026. We closed the year with an order backlog of CAD 561.1 million as at 31 January 2026, excluding the new contracts totaling CAD 157.3 million announced last week.

Speaker #2: We closed the year with an order backlog of $561.1 million as at January 31st , 2026 , excluding excluding the new contracts totaling $157.3 million announced last week , the ending backlog included $138.2 million of contracts from Capella , which also excludes last week's announcement .

Jean-François Boursier: The ending backlog included CAD 138.2 million of contracts from Groupe LAR, which also excludes last week's announcement. Quickly looking at the Q4 results, ADF recorded revenues of CAD 78.8 million, up CAD 1.4 million from the Q4 of fiscal 2025. Q4 revenues this year did include CAD 13.8 million coming from Groupe LAR. The gross margin as a percentage of revenue stood at 21.5% for the Q4 ended 31 January 2026, compared with 31% for the corresponding quarter of fiscal 2025.

Speaker #2: 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 .

Speaker #2: Fourth quarter revenues this year did include $13.8 million , coming from the from Goplus . The gross margin as a percentage of revenues stood at 21.5% for the fourth quarter ended January 31st , 2026 , compared with 31% for the corresponding quarter of fiscal 2025 .

Speaker #2: The margin decreased between these two quarters is primarily explained by the mix of products and fabrication, including lower margins coming from the lower 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.

Jean-François Boursier: 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 CAD 6.4 million during Q4 of fiscal 2026, compared with net income of CAD 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.

Jean-François Boursier: 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 CAD 6.4 million during Q4 of fiscal 2026, compared with net income of CAD 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.

Speaker #2: With minimal impact coming from law , 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 or may occur from quarter to quarter .

Speaker #2: 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 .

Jean-François Boursier: 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 balance sheet, and cash situation, and with the conclusion of the LAR acquisition. As we have seen as recently as two weeks ago with the latest tariffs announcement, we are still in for more surprises, and, sadly, uncertainties.

Speaker #2: A year ago and were definitely very satisfied with how everything turned out , including our overall financial results Our ending balance sheet and cash situation .

Speaker #2: And with the conclusion of the law acquisition , as we have seen as recently as two weeks ago with the latest tariffs announcement , we are still in a we are still in for more surprises and sadly , uncertainties talking about these last tariffs modifications , we can now confirm that for the time being , our US projects fabricated in turban will now be impacted by a 10% tariff , which .

Jean-François Boursier: Talking about these last tariffs modifications, we can now confirm that for the time being, our US projects fabricated in Terrebonne will now be impacted by a 10% tariff, which is applied on the value of the commercial invoice, including profit, and this in spite that the steel used to fabricate this project comes from US mills.

Speaker #2: Which is applied on the value of the commercial invoice , including profit . And this inspired in spite the the still used fabricate these projects comes from us mills , although not ideal , we can say that our recent backlog shift from us to Canadian projects , aided by our July 2025 long term contract and our acquisition reduce what could have been a much higher cost increase for ADF .

Jean-François Boursier: Although not ideal, we can say that our recent backlog shift from US to Canadian projects, aided by our July 2025 long-term contract and Groupe LAR acquisition, reduced what could have been a much higher cost increase for ADF. Additionally, we are working with our US clients to alleviate some of these additional costs. This said, what this latest announcement definitely brings is additional uncertainties to our market as it confirms the unpredictability of the overall trade situation. Nevertheless, as we announced last week, we are still focusing on the elements that we do control, and as such, we have been able to further increase our backlog. The largest of the series of new contracts, in terms of values and duration, is for the fabrication and delivery of various heavy steel structures for a project in the hydroelectric sector in Quebec. This project is a four-year master contract for Groupe LAR.

Speaker #2: Additionally , we are working with our US clients to alleviate some of these additional costs . This said , what this latest announcement definitely brings is additional uncertainties to our market as it confirms the on the unpredictability of the overall trade situation .

Jean-François Boursier: This said, what this latest announcement definitely brings is additional uncertainties to our market as it confirms the unpredictability of the overall trade situation. Nevertheless, as we announced last week, we are still focusing on the elements that we do control, and as such, we have been able to further increase our backlog. The largest of the series of new contracts, in terms of values and duration, is for the fabrication and delivery of various heavy steel structures for a project in the hydroelectric sector in Quebec. This project is a four-year master contract for Groupe LAR.

Speaker #2: Nevertheless , as we announced last week , we are still focusing on the elements that we do control . And as such , we have been able to further increase our backlog .

Speaker #2: The largest of the series of new contracts in terms of values and duration is for the fabrication and delivery of various heavy steel structures .

Speaker #2: For a project in the hydroelectric sector in Quebec . This project is a four year master contract for Glowplugs . Since the acquisition , we've been able to grow larger backlog and we are still active as the hydroelectric market delivers its expected growth We are on the verge of breaking ground in Métabetchouane for our group plant expansion and modernization , which is a key step in our continued growth in light of all of this , we do anticipate revenue growth for our fiscal year ending January 31st , 2027 .

Jean-François Boursier: Since the acquisition, we've been able to grow LAR backlog, and we are still active as the hydroelectric market delivers its expected growth. We are on the verge of breaking ground in Métabetchouan for our Groupe LAR plant expansion and modernization, which is a key step in our continued growth. In light of all of this, we do anticipate revenue growth for our fiscal year ending 31 January 2027, despite the ongoing challenge of finalizing contracts with our US customers that would normally be carried out at our plant located in Terrebonne, Quebec. However, given that the capital investment that I just mentioned will not have a significant operational impact in the fiscal year ending 31 January 2027, we expect margins to somewhat stagnate in the first quarters of fiscal year 2027, especially when adding the recently announced tariff change.

Speaker #2: Despite the ongoing challenge of finalizing contracts with our US customers that would normally be carried out at our plant located in Quebec . However , given that the capital investment that I just mentioned will not have a significant operational impact in the fiscal year ending January 1st , January 31st , 2027 , we expect margins to somewhat stagnate in the first quarter of fiscal year 2027 , especially when adding the recently announced tariffs change .

Jean-François Boursier: However, given that the capital investment that I just mentioned will not have a significant operational impact in the fiscal year ending 31 January 2027, we expect margins to somewhat stagnate in the Q1 of fiscal year 2027, especially when adding the recently announced tariff change. This trend will be reversed as the integration of Groupe LAR Inc. continues and we complete the projects announced at the time of Groupe LAR Inc.'s acquisition.

Speaker #2: This trend will be reversed as the integration of PLA continues , and we complete the projects inherited at the time of Google Cloud's acquisition , the acquisition of group , the new Canadian US allocation of our order backlog and the optimal utilization of our fabrication facility in Great Falls , Montana , allow us to still look forward to fiscal year 2027 with optimism allowing us to continue our orderly growth despite tariffs , uncertainties .

Jean-François Boursier: This trend will be reversed as the integration of Groupe LAR Inc. continues and we complete the projects announced at the time of Groupe LAR Inc.'s acquisition. The acquisition of Groupe LAR Inc., the new Canadian/US allocation of our order backlog, and the optimal utilization of our fabrication facility in Great Falls, Montana, allow us to still look forward to fiscal year 2027 with optimism, allowing us to continue our orderly growth despite tariff uncertainties. Thank you all for your interest and confidence in ADF. Jean Paschini and I will now be happy to answer your questions.

Jean-François Boursier: The acquisition of Groupe LAR Inc., the new Canadian/US allocation of our order backlog, and the optimal utilization of our fabrication facility in Great Falls, Montana, allow us to still look forward to fiscal year 2027 with optimism, allowing us to continue our orderly growth despite tariff uncertainties. Thank you all for your interest and confidence in ADF. Jean Paschini and I will now be happy to answer your questions.

Speaker #2: Thank you all for your interest and confidence in ADF . Pierre and I will now be happy to answer your questions .

Speaker #1: Thank you sir . Lady , ladies and gentlemen , if you do have any questions , please press star followed by one on your touchtone phone .

Operator: Thank you, sir. Ladies and gentlemen, if you do have any questions, please press star followed by one on your touch-tone phone. You will then hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by two. If you're using a speakerphone, you will need to lift the handsets first before pressing any keys. Thank you. Please go ahead and press star one now if you have any questions. First question will be from Nicholas Cortellucci at Atrium. Please go ahead.

Speaker #1: You will then hear a prompt that your hand has been raised and should you wish to decline from the polling process , please press star followed by two .

Speaker #1: And if you're using a speakerphone, you will need to lift the handset first before pressing any keys. Thank you. Please go ahead and press star one now if you have any questions.

Speaker #1: First question will be from Nick Bartolucci at Atrium . Please go ahead

Speaker #3: Good morning gentlemen . Thanks for taking my questions here .

Nicholas Cortellucci: Good morning, gentlemen. Thanks for taking my questions here.

Speaker #2: Morning , Nick .

Jean-François Boursier: Morning, Nick.

Speaker #3: Morning . Morning . First , I wanted to wonder . I was wondering about was the the new four year contract . What is the timing look like on that for for getting started .

Nicholas Cortellucci: Morning. First thing I was wondering about was the new four-year contract. What does the timing look like on that for getting started?

Speaker #2: Yeah . The most of the most of the volume that contract will not have much impact in our FY 27 . Most of the , the , the , the fabrication for will start next year .

Jean-François Boursier: Yeah. That contract will not have much impact in our FY27. Most of the fabrication will start next year. It's going to be four years, but with limited impact or close to no impact on our revenues this year for FY27.

Speaker #2: So it's going to be four years . But with limited impact or close to no impact on our revenues this year for FY 27 .

Speaker #3: Okay, thank you. And are you guys seeing anything in these kinds of growth markets you're going after—maybe being nuclear or data centers, anything like that?

Nicholas Cortellucci: Okay, thank you. Are you guys seeing anything in these growth markets you're going after, maybe being nuclear or data centers, anything like that?

Speaker #4: Yeah , we're looking at a couple of those projects . But like I said , I mean , right now we're bidding on some some stuff , data centers and stuff like that .

Jean Paschini: Yeah, we're looking at a couple of those projects. Like I say, right now we're bidding on some stuff, data centers and stuff like that, but with the tariffs right now and that new 10%, we need to be a bit more competitive. It's going to cost us 5% on our margin. There's a lot of work out there, so I think it's feasible that we should be able to get some work by the end of the year.

Pierre Paschini: Yeah, we're looking at a couple of those projects. Like I say, right now we're bidding on some stuff, data centers and stuff like that, but with the tariffs right now and that new 10%, we need to be a bit more competitive. It's going to cost us 5% on our margin. There's a lot of work out there, so I think it's feasible that we should be able to get some work by the end of the year.

Speaker #4: But with the tariffs right now and that new 10% , well , it's the we need to be a bit more competitive . So it's going to cost us 5% on our margin .

Speaker #4: So but there's a lot of work out there . So I think it's feasible that we should be able to get some work by the end of the year

Nicholas Cortellucci: Okay, thank you. Regarding the CapEx plan and operational efficiencies for LAR, how do you see that playing out, kind of sequential improvements throughout the year here?

Speaker #3: Okay . Thank you Regarding the CapEx plan and , you know , operational efficiencies for LA , how do you see that playing out kind of sequential improvements throughout the year here ?

Speaker #2: Well , the the construction will occur this year . It's really it's all the expansion itself will not really happen this year . So we shouldn't see too much efficiency gain margin wise in FY 27 because the , the , the plant will be up and running only late in the first quarter of next fiscal year .

Jean-François Boursier: Well, the construction will occur this year. The expansion itself will not really happen this year, so we shouldn't see too much efficiency gain margin-wise in FY27 because the plants will be up and running only late in Q1 of next fiscal year. As I mentioned earlier, and besides the expansion and the new equipment, we are working with LAR on optimizing the synergies between the two entities, and we're still in that process. That, as I mentioned, should start to transpire on our actual margin, probably more so in H2 of the year. Lastly, as I also mentioned, with the acquisition, there was a backlog that was in place that had a certain margin profile in it.

Speaker #2: But as I mentioned earlier , we're in in besides the , the expansion and the new equipment , we are working with our on optimization , optimizing our , the synergies between the two entities .

Speaker #2: And we're still we're still in that process . So that , as I mentioned , should start to transpire on our actual margin .

Jean-François Boursier: That, as I mentioned, should start to transpire on our actual margin, probably more so in H2 of the year. Lastly, as I also mentioned, with the acquisition, there was a backlog that was in place that had a certain margin profile in it. Obviously, you can understand that last year, while LAR was trying to cope with their situation and as we were negotiating, they were still trying to get business and maybe not have the same leverage in negotiating contract that they normally do. Some of the contracts that were signed in the past months might not have carried the usual margin.

Speaker #2: Probably more so in the second half of the year . And lastly , as I also mentioned , we did With the acquisition , there was a , a backlog that was in place that had a certain margin profile in it .

Speaker #2: Obviously , you can understand that last year , while law was trying to cope with their situation and as we were negotiating , they were still trying to to get business and maybe not at the same leverage in negotiating contract that they normally do .

Jean-François Boursier: Obviously, you can understand that last year, while LAR was trying to cope with their situation and as we were negotiating, they were still trying to get business and maybe not have the same leverage in negotiating contract that they normally do. Some of the contracts that were signed in the past months might not have carried the usual margin. They're still positive, they're still good, as you saw from the number I'm giving, it's definitely not the same level of margin. It did have a downward impact on our overall consolidated margin. This said, it's added volume. The good news is that we are growing. As we had mentioned, we're seeing huge potential from LAR on the hydroelectric side. We've been pretty successful in signing new contracts, actually, probably even better than we had anticipated. We're still seeing lots of opportunities going forward.

Speaker #2: So some of the contracts that were that were signed in the past months might not be as it might not have carried the the usual margin .

Speaker #2: So they're still positive , they're still good , as you as you saw from the number I'm giving , it's definitely not the same level of margin .

Jean-François Boursier: They're still positive, they're still good, as you saw from the number I'm giving, it's definitely not the same level of margin. It did have a downward impact on our overall consolidated margin. This said, it's added volume. The good news is that we are growing. As we had mentioned, we're seeing huge potential from LAR on the hydroelectric side. We've been pretty successful in signing new contracts, actually, probably even better than we had anticipated. We're still seeing lots of opportunities going forward.

Speaker #2: So it did have a downward impact on our overall consolidated margin . But this said , it's added volume . The good news is that we are growing , as we had mentioned , we're seeing huge potential from LA on the hydroelectric side .

Speaker #2: We've been pretty successful in signing new contracts , actually , probably even better than we had anticipated . We're still seeing lots of opportunities going forward , but obviously for all of that to , to , to work out , we do need to have a , a successful expansion .

Jean-François Boursier: Obviously, for all of that to work out, we do need to have a successful expansion. We're obviously spending a lot of time on not only finalizing the bids, and making sure that the construction starts on time and the entire project is on time so that we meet our deadline. Once that all pans out, FY 2028 and the following years will really start showing the full positive impact of that acquisition, along with what we hope will be a return to normal to our more ADF regular structural work, as we see what will come out of the US.

Speaker #2: So we'll obviously spending a lot of time on not only finalizing the bids and making sure that the construction starts on time and the project and the entire project is on time so that we meet our deadline .

Speaker #2: So once that all pans out , FY 28 and the following years are really will really start showing the full positive impact of that acquisition along with what we hope will be a return to normal , to our more ADF regular structural work as we see what will come out of the US .

Speaker #3: Right . Okay . Thank you . So . That kind of 2 million gross margin from LA , that's kind of a backwards looking number .

Nicholas Cortellucci: Right. Okay. Thank you. That kind of CAD 2 million gross margin from LAR, that's kind of a backward-looking number, and the new contracts, from what I gather, or that you guys are signing, are more up to that ADF standard or getting closer to it?

Speaker #3: And the new contracts . From what I get at are you guys are signing are more up to that ADF standard or getting closer to it ?

Speaker #2: Well , pushing that way , obviously there are things we need to do to further improve , including the actual operation . So obviously with the new equipment , they'll definitely be able to be more efficient with the work .

Jean-François Boursier: Well, pushing that way. Obviously, there are things we need to do to further improve, including the actual operation. Obviously, with the new equipment, they'll definitely be able to be more efficient with the work. That helps. This is something that ADF has been really good at doing over the years, is maintain our equipment as efficient as possible and always invest to be as optimal as we could be from an efficiency standpoint. There are things we can do now. There's definitely going to be a huge step with the new equipment and the expansion, but working and definitely negotiating with not only higher margins, but also with more favorable payment terms, and overall conditions. I think we've been talking for a number of years about how careful we are on contract signing and the risk management.

Speaker #2: So that helps . This is something that ADF has been really good at doing over the years . Is maintain our as as efficient as possible and always invest to be as optimal as we could be from an efficiency standpoint .

Speaker #2: So there are things we can do . Now . There are definitely things that will further , there's definitely going to be a a huge step with the new equipment and the expansion .

Jean-François Boursier: There are things we can do now. There's definitely going to be a huge step with the new equipment and the expansion, but working and definitely negotiating with not only higher margins, but also with more favorable payment terms, and overall conditions. I think we've been talking for a number of years about how careful we are on contract signing and the risk management. We're putting all our processes in place so that we bid projects both for LAR and ADF, or actually for LAR the same way and with the same due diligence that we did for our ADF bids. That should all translate into better terms and better margins.

Speaker #2: But working and definitely negotiating with not only higher margins , but also with more favorable payment terms and , and overall conditions . So we're really putting , I think we've been talking for a number of years about how careful we are on contract signing and our , the risk management .

Speaker #2: So we're putting all our processes in place so that we bid projects both for law and ADF, or actually for law, the same way.

Jean-François Boursier: We're putting all our processes in place so that we bid projects both for LAR and ADF, or actually for LAR the same way and with the same due diligence that we did for our ADF bids. That should all translate into better terms and better margins.

Speaker #2: And with the same due diligence that we did for our ADF bid , so that should all translate into better terms and better margins .

Speaker #3: Okay . Yeah , that makes sense . And then just last one here from the tariff commentary you had there , I think kind of the summary is that you guys qualify for the 10% tariff because the steel is purchased from from US steel mills , but because it's being applied to the total value , it's a net negative

Nicholas Cortellucci: Okay. Yeah, that makes sense. Just last one here. From the tariff commentary you had there, I think the summary is that you guys qualify for the 10% tariff because the steel is purchased from US steel mills, but because it's being applied to the total value, it's a net negative.

Jean Paschini: Well, it's been applied to the fabrication and the material, even though it's from the States. We're penalized, $300 a ton, basically, which amounts to maybe 5% on the margin. Depends the kind of margin, depends the work. There's a lot of work in the States right now. Most of the plants are busy, so we'll be able to charge a bit more and compensate for that 5%. That's what I think. Right now, the bigger guys out there, five or six of the biggest companies are busy for the next two years, which is a good sign for us because there's more work coming up. We'll see. I think there's an opportunity because cashflow-wise and financial-wise, we're very sound. It's just a question of hitting the right job with the right margin.

Pierre Paschini: Well, it's been applied to the fabrication and the material, even though it's from the States. We're penalized, $300 a ton, basically, which amounts to maybe 5% on the margin. Depends the kind of margin, depends the work. There's a lot of work in the States right now. Most of the plants are busy, so we'll be able to charge a bit more and compensate for that 5%.

Speaker #4: It's been applied to to the fabrication and the material , even though it's from the state . So we're penalized . I mean , $300 a ton basically , which amounts to maybe 5% on the margin .

Speaker #4: Depends on the kind of margin , depends . The work . There's a lot of work in the states right now . I mean , most of the plants are busy .

Speaker #4: So we'll be able to charge a bit more and compensate for that 5% . That's what I think . So right now , the bigger guys out there , five and six are the biggest companies are busy for the next two years , which is a good sign for us because they're more work coming up .

Pierre Paschini: That's what I think. Right now, the bigger guys out there, five or six of the biggest companies are busy for the next two years, which is a good sign for us because there's more work coming up. We'll see. I think there's an opportunity because cashflow-wise and financial-wise, we're very sound. It's just a question of hitting the right job with the right margin.

Speaker #4: So , so we'll see . I mean , I think it is I think there's an opportunity because cash flow wise and financial wise , we're very sound .

Speaker #4: It's just a question of adding the right job with the right margin

Speaker #2: Just to further explain on the tariffs . Next , the with the previous there were tariffs , but more specifically on the steel and aluminum .

Jean-François Boursier: Just to further explain on the tariffs, Nick. With the previous, there were tariffs, but more specifically on the steel and the aluminum, if we were buying our steel from US mills, there were basically no tariffs. We had the exemption. Now, in spite of buying all the steel, there is that additional 10%, and that 10% applies not just on the material, but on the commercial invoice, including profit. I think it just highlights the fact that it is still nobody knows, and there were no advance notice. From all we understood, things were sort of moving along, and then all of a sudden you've got, coming out of nowhere, that 10% announcement that nobody saw coming.

Speaker #2: If we're buying our steel from us . They were we were basically they were basically no tariffs . We we had the exemption .

Speaker #2: Now, in spite of buying all the steel, there is that additional 10%. And that 10% applies not just on the material, but on the commercial invoice, including profit.

Speaker #2: So I think it just highlights the fact that it is still nobody knows . And there were no advance notice from all we understood , things were sort of moving along .

Jean-François Boursier: From all we understood, things were sort of moving along, and then all of a sudden you've got, coming out of nowhere, that 10% announcement that nobody saw coming. As I mentioned on the call, we're not thrilled with it, but obviously the moves we made over the past year are definitely paying off because the same 10% announcement with our old setup, 85% volume, and the majority of the Terrebonne fabrication going to US, that announcement could have had the potential of being a really significant negative impact on us.

Speaker #2: And then all of a sudden you've got coming out of nowhere that that 10% announcement that nobody saw coming . So as as I mentioned on the call , we're not thrilled with it .

Jean-François Boursier: As I mentioned on the call, we're not thrilled with it, but obviously the moves we made over the past year are definitely paying off because the same 10% announcement with our old setup, 85% volume, and the majority of the Terrebonne fabrication going to US, that announcement could have had the potential of being a really significant negative impact on us. Luckily, considering the mix, the portion of volume fabricated in Terrebonne going to the US is much lower. As I mentioned also, we will be working really hard with our clients. We think we've got a couple of opportunities maybe to pass some of those costs along to the clients. For the upcoming contracts, as Pierre just explained, we'll have that discussion, and obviously, everybody's in the same boat. This is not something that's just specific to ADF.

Speaker #2: But obviously the moves we made over the past year are definitely paying off because the same 10% announcement with our old setup , 85% volume and the majority of the turbine fabrication going to us , that announcement could have had the potential of being a really significant negative impact on us .

Speaker #2: Luckily . Well , luckily , considering the mics , the portion of volume fabricating going to the US is much lower . And as I mentioned , also , we will be working really hard with our clients .

Jean-François Boursier: Luckily, considering the mix, the portion of volume fabricated in Terrebonne going to the US is much lower. As I mentioned also, we will be working really hard with our clients. We think we've got a couple of opportunities maybe to pass some of those costs along to the clients. For the upcoming contracts, as Pierre just explained, we'll have that discussion, and obviously, everybody's in the same boat. This is not something that's just specific to ADF.

Speaker #2: I think we , we think we've got a couple of opportunities maybe to pass some of those costs along to , to the clients and for the , for the upcoming contracts , as Pierre just explained .

Speaker #2: Well, we'll have that discussion. And obviously, everybody's in the same boat. This is not something that's just specific to ADF.

Speaker #2: All the Canadians still manufacturer have the same . The same , the same tariffs . And actually all Canadian fabricators doing business with the US have the same that have still in aluminum in their components have the same impact .

Jean-François Boursier: All the Canadian steel manufacturers have the same tariffs, and actually, all Canadian fabricators doing business with the US that have steel and aluminum in their components have the same impact. As we've always did, we'll negotiate, make sure that it makes sense. It's just that it won't reduce the time the negotiation of signing new contracts will take. It's too bad because we're starting slowly but surely. I think everybody was starting to get used to this setup. As I mentioned, the announcement that happened just reconfirmed to everybody that we're still in an unknown and uncertain situation.

Speaker #2: So as we've always did , we'll negotiate , make sure that it makes sense . It's just that it it won't help from the it won't reduce the time , the negotiation of signing new contracts will , will take .

Speaker #2: And it's it's too bad because we're starting slowly but surely , I think everybody was starting to get used to the setup . But as I mentioned , the announcement of that happened just reconfirmed to everybody that we're still in a an unknown and uncertain situation .

Speaker #3: Okay . Understood . Well , I think you guys have definitely made some major improvements , as you said , from where we were at a year ago .

Nicholas Cortellucci: Okay. Understood. Well, I think you guys have definitely made some major improvements, as you said, from where we were at a year ago. Definitely better positioning going into this, and hopefully it all ends up in your guys' favor. Thanks for answering my questions, and I'll hop back in the queue.

Speaker #3: So definitely better positioning going into this . And hopefully it all ends up in your guys's favor . So thanks for answering my questions and I'll hop back into Q

Speaker #2: Thanks , Nick

Jean-François Boursier: Thanks, Nick.

Speaker #1: Ladies and gentlemen, a reminder to please press star one should you have any questions. Thank you. Next, we'll go to Anis at Bastion Asset Management.

Operator: Ladies and gentlemen, a reminder to please press star one should you have any questions. Thank you. Next will be Aniss Gamassi at Bastion Asset Management. Please go ahead.

Speaker #1: Please go ahead .

Speaker #5: Hi . Thank you for taking my question . Maybe just to wrap up the gross margin commentary . So as I look at the next fiscal year , you know , you've done 23% this year .

Aniss Gamassi: Hi. Thank you for taking my question. Maybe just to wrap up the gross margin commentary. As I look at the next fiscal year, you've done 23% this year. Do you expect sort of the full year for next year to be similar, with the H1 being lower and the H2 maybe higher? Or do you expect the full year overall gross margins to be lower than the current fiscal year?

Speaker #5: Do you expect sort of the full year for next year to be similar , with the first half being lower in the second half , maybe higher ?

Speaker #5: Or do you expect for the full year overall , gross margins to be lower than fiscal ? The current fiscal year ?

Speaker #2: Well , we don't we don't provide guidelines , margin guidelines , but suffice to say that we're not we're definitely not expecting huge improvements .

Jean-François Boursier: Well, we don't provide margin guidelines. Suffice to say that we're definitely not expecting huge improvements, so I'd really be satisfied to maintain the same type of margins for the full year, with maybe margin being a bit more sluggish in H1 of the year and improving in H2. It all, I think, will depend on what happens next, how successful we are in signing new contracts and avoiding these new tariffs. Based on what we're seeing now, based on the backlog, I'd be satisfied to maintain or slightly improve year to date on a full year basis, what we've been able to do this year, really in two steps.

Jean-François Boursier: Well, we don't provide margin guidelines. Suffice to say that we're definitely not expecting huge improvements, so I'd really be satisfied to maintain the same type of margins for the full year, with maybe margin being a bit more sluggish in H1 of the year and improving in H2. It all, I think, will depend on what happens next, how successful we are in signing new contracts and avoiding these new tariffs. Based on what we're seeing now, based on the backlog, I'd be satisfied to maintain or slightly improve year-to-date on a full year basis, what we've been able to do this year, really in two steps.

Speaker #2: So I really be satisfied to maintain the same type of margins for the full year with maybe margin being a bit more sluggish in the first half of the year and improving in the second .

Speaker #2: But all I think it will depend on on what happens next How successful we are in signing new contracts and avoiding these new tariffs .

Speaker #2: But based on what we're seeing now , based on the backlog , based on the I'd be satisfied to maintain or slightly improve year to date on a full year basis .

Speaker #2: What we've been able to do this year , but it really in two steps

Speaker #5: Understood . Maybe second question , you know , broader picture question here . You know , we're witnessing sort of a significant acceleration in Canadian infrastructure activity activity .

Aniss Gamassi: Understood. Maybe second question, broader picture question here. We're witnessing sort of a significant acceleration in Canadian infrastructure activity. I'm interested in your perspective on how ADF's current capacity and footprint aligns with the demand shift. Are you seeing this momentum translate into your bidding pipeline within your traditional projects and maybe beyond that in Canada specifically?

Speaker #5: I'm interested in your perspective on sort of how Edf's current capacity and , you know , footprint Aligns with the demand shift . Are you seeing this momentum translate into your bidding pipeline within your traditional projects ?

Speaker #5: And maybe beyond that in Canada, specifically.

Speaker #4: Yeah , basically , we're following our customers . I mean , these guys are Pomerleau and all the big guys , E , b , c l s Don .

Jean Paschini: Yeah. Basically, we're following our customers. These guys like the Pomerleau and all the big guys, EBC, Ledcor, they've been chasing us and looking at some work. Right now, we're looking at major work in the Montréal airport, some more of the work in Ontario also. There's some work out west. We're looking basically with the oil right now, which is going up. There's going to be some major investments. We've got our feet in the right place right now, and we know these customers. I think that probably right now, we get 57% of our work is here in Canada. Maybe it's going to be more than 50%. We got work in the States, but our plant in Montana right now is busy, but we still can add more work in there. I think infrastructure-wise, we can do bridge work.

Pierre Paschini: Yeah. Basically, we're following our customers. These guys like the Pomerleau and all the big guys, EBC, Ledcor, they've been chasing us and looking at some work. Right now, we're looking at major work in the Montréal airport, some more of the work in Ontario also. There's some work out west. We're looking basically with the oil right now, which is going up.

Speaker #4: I mean , they've been chasing us and looking at some work right now we're looking at major work in the Montreal airport , some of them working on Ontario .

Speaker #4: Also, some work out West. We're looking basically with the oil right now, which is up. There's going to be some major investments.

Pierre Paschini: There's going to be some major investments. We've got our feet in the right place right now, and we know these customers. I think that probably right now, we get 57% of our work is here in Canada. Maybe it's going to be more than 50%. We got work in the States, but our plant in Montana right now is busy, but we still can add more work in there. I think infrastructure-wise, we can do bridge work. We can do any type of work with our facility here in Terrebonne. Like I say, the work is there, the bids are coming in, and we'll be looking at getting more work on the Canadian side.

Speaker #4: So we're we're getting our feet in the right place right now . So and we know these customers . So I think that probably right now we're at 57% of our work is here in Canada .

Speaker #4: Maybe it's going to be more than 50%. We've got work in the States, but our plan in Montana right now is busy, though we still can add more work in there.

Speaker #4: So I think infrastructure wise , we can do bridge work , we can do any type of work with our facility here in so like I said , the work is there , the bids are coming in and we'll be looking at getting more work under in the Canadian side .

Jean Paschini: We can do any type of work with our facility here in Terrebonne. Like I say, the work is there, the bids are coming in, and we'll be looking at getting more work on the Canadian side.

Speaker #2: And .

Jean-François Boursier: Capacity-wise.

Speaker #5: Thank .

Speaker #2: You very much . We don't have any capacity wise . There's no issue . We've got we still have sufficient capacity . So we've got room to add Intel bun .

Aniss Gamassi: Thank you very much.

Jean-François Boursier: ... there's no issue. We still have sufficient capacity, so we've got room to add in Terrebonne. Obviously, with Gocla expansion that we'll be doing this year, we will provide them with the additional capacity. It's definitely not a problem to further grow the backlog with the facilities as they are today.

Speaker #2: And obviously with Copeland expansion , that we'll be doing this year , we will provide them with the additional capacity . So not it's definitely not a problem to grow further , grow the backlog with the with the facilities as they are today

Speaker #5: Thank you very much. That was it for me.

Aniss Gamassi: Thank you very much. That was it for me.

Speaker #2: Thank you .

Jean-François Boursier: Thank you.

Speaker #1: And at this time, as you will see, it appears we have no other questions registered. Please proceed.

Operator: At this time, Monsieur Boursier, it appears we have no other questions registered. Please proceed.

Speaker #2: Thank you . Before we conclude today's conference call , I would like to remind you that ADF will hold its shareholders meeting on June 9th at 11 a.m.

Jean-François Boursier: Thank you. Before we conclude today's conference call, I would like to remind you that ADF will hold its shareholders meeting on 9 June at 11:00AM, and our AGM will be held this year at our corporate office here in Terrebonne, Quebec. Financial results for Q1 ending 30 April 2026 will also be disclosed during our shareholders meeting. Additional meeting information will be made available in the coming weeks. Thank you again for your interest towards ADF.

Speaker #2: and and our AGM will be held this year at our corporate office here in Quebec . Financial results for the first quarter ending April 30th , 2020 , 2026 will also be disclosed during our shareholders meeting .

Speaker #2: Additional meeting information will be made available in the coming weeks. Thank you again for your interest in ADF.

Speaker #1: Thank you sir . Ladies and gentlemen , this does indeed conclude your conference call for today . Once again , thank you for attending and at this time we do ask that you disconnect your lines .

Operator: Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending, and at this time, we do ask that you please disconnect your lines. Enjoy the rest of your day.

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