Q2 2027 ADF Group Inc Earnings Call

September 10, 2026

Speaker #1: Good morning, ladies and gentlemen, and welcome to the ADF Group Inc results for the three-month and six-month periods ended July 31st. 2026 conference call.

Operator: Good morning, ladies and gentlemen, and welcome to the ADF Group Inc. results for the three-month and six-month periods ended 31 July 2026 conference call. At this time, all lines are in 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. This call is being recorded on Thursday, 10 September 2026. I would now like to turn the conference over to Mr. Jean-François Boursier, Chief Financial Officer. Please go ahead, sir.

Operator: Good morning, ladies and gentlemen, and welcome to the ADF Group Inc. results for the three-month and six-month periods ended 31 July 2026 conference call. At this time, all lines are in 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. This call is being recorded on Thursday, 10 September 2026. I would now like to turn the conference over to Mr. Jean-François Boursier, Chief Financial Officer. Please go ahead, sir.

Speaker #1: At this time, all lines are in 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.

Speaker #1: This call is being recorded on Thursday, September 10th, 2026. I would now like to conference over to Mr. Jean-François Boursier, Chief Financial Officer. Please go ahead, sir.

Speaker #2: Thank you. Good morning, and welcome to ADF's conference call covering the second quarter and six-month ended July 31st, 2026. I will first update you on our quarterly and year-to-date results, which were disclosed earlier this morning by press release, and then proceed with a quick update about our operations, including the impact of the latest U.S.

Jean-François Boursier: Thank you. Good morning, and welcome to ADF's conference call covering the Q2 and six month ended 31 July 2026. I will first update you on our quarterly and year-to-date results, which were disclosed earlier this morning by a press release, and then proceed with a quick update about our operations, including the impact of the latest US administration proclamations. First, a word of caution. Please note that some of the issues discussed today may include forward-looking statements. These are documented in ADF Group's management report for the Q2 and six months ended 31 July 2026, which were filed with SEDAR this morning. I will start by saying that we are the victim of our own success. I will provide more details later, but the DRX stock increase since the beginning of the year had a significant negative non-cash impact on our financial results.

Speaker #2: administration proclamations. First, a word of caution. Please note that some of the issues discussed today may include forward-looking statements. These are documented in ADF Group's Management Report for the second quarter, and six-month ended July 31st, 2026, which were filed with Cedar this morning.

Jean-François Boursier: These are documented in ADF Group's management report for the Q2 and six months ended 31 July 2026, which were filed with SEDAR this morning. I will start by saying that we are the victim of our own success. I will provide more details later, but the DRX stock increase since the beginning of the year had a significant negative non-cash impact on our financial results.

Speaker #2: I'll start by saying that we are the victim of our own success. I'll provide more details later, but the DRX stock increase since the beginning of the year had a significant negative, non-cash impact on our financial results.

Speaker #2: Revenues for the quarter ended July 31st, 2026 at $95 million were $42 million higher than last year. Year-to-date, revenues stood at $194.3 million, compared with $108.5 million or $79% higher than the six-month period ended July 31st, 2025.

Jean-François Boursier: Revenues for the quarter ending 31 July 2026, at CAD 95 million, were CAD 42 million higher than last year. Year-to-date, revenue stood at CAD 194.3 million, compared with CAD 108.5 million, or 79% higher than the six-month period ended 31 July 2025. It is important to recall that following the then new tariff uncertainty impacts, a work-sharing program was implemented at ADF's plant in Terrebonne, Quebec, and remained in place for virtually the entire quarter ended 31 July 2025, thus reducing fabrication hours and consequently revenues for the same quarter and year-to-date.

Speaker #2: It is important to recall that following the then-new tariffs uncertainty impacts, a work-sharing program was implemented at ADF's plant in Taubon, Quebec, and remained in place for virtually the entire quarter ended July 31st, 2025.

Speaker #2: Thus, reducing fabrication hours and consequently revenues for the same quarter and year-to-date. We closed the second quarter ended July 31st, 2026 with gross margin of $18.7% as a percentage of revenues, slightly down from the $20.7% margin of the quarter ended July 31st, 2025, while the year-to-date gross margin, as a percentage of revenues, at $21.5% were basically at the same level as last year, which then stood at $21.3%, $21.3% for the six-month period ended July 31st, 2025.

Jean-François Boursier: We closed the second quarter ended 31 July 2026, with gross margin of 18.7% as a percentage of revenues, slightly down from the 20.7% margin of the quarter ended 31 July 2025, while the year-to-date gross margin as a percentage of revenues at 21.5% were basically at the same level as last year, which then stood at 21.3% for the six-month period ended 31 July 2025. The variation in margins, both in dollar terms and as a percentage of revenues, is explained by the higher revenues contributing to a better absorption of fixed costs. The positive effect thereof was, however, mitigated by higher input costs, including the price of steel and the recent changes in tariffs. ADF revenues and gross margin for the quarter ended 31 July 2026, were both positively impacted by the final settlement of a claim against a customer of Groupe LAR inc.

Speaker #2: The variation in margins, both in dollar terms and as a percentage of revenues, is explained by the higher revenues contributing to a better absorption of fixed costs.

Speaker #2: The positive effect, thereof, was, however, mitigated by higher input costs, including the price of steel, and the recent changes in tariffs. ADF revenues and gross margin for the quarter ended July 31st, 2026 were both positively impacted by the final settlement of a claim against a customer of Group Law.

Speaker #2: The corporation had taken a cautionary approach to this settlement, and the cumulative impact is reflected in the second quarter's results. This adjustment had a cumulative positive impact of $20.2 million and $5.3 million on Group Laws and ADF Group's revenues and gross margin, respectively, for the quarter and six-month periods ended July 31, 2026.

Jean-François Boursier: The corporation had taken a cautionary approach to this settlement, and the cumulative impact is reflected in the second quarter's results. This adjustment had a cumulative positive impact of CAD 20.2 million and CAD 5.3 million on Groupe LAR inc.'s and ADF Group's revenues and gross margin, respectively, for the quarter and six-month periods ended 31 July 2026. Adjusted EBITDA for the quarter ended 31 July 2026, at CAD 8.4 million, compared with CAD 3.7 million for the same quarter ended a year ago, while year-to-date adjusted EBITDA stood at CAD 26.9 million, compared with CAD 14.1 million for the six months ended a year ago. We therefore closed our second quarter with net income of CAD 3 million, or CAD 0.10 per share, compared with CAD 0.9 million or CAD 0.03 per share for the corresponding quarter a year ago.

Speaker #2: Adjusted EBITDA for the quarter ended July 31, 2026, was $8.4 million, compared with $3.7 million for the same quarter a year ago. Year-to-date adjusted EBITDA stood at $26.9 million, compared with $14.1 million for the six months ended a year ago.

Speaker #2: We therefore close our second quarter with net income of $3 million or $0.10 per share, compared with $0.9 million or $0.03 per share for the corresponding quarter a year ago.

Speaker #2: Year-to-date, net income stood at $15 million or $0.52 per share, compared to $9.6 million or $0.34 per share for the same period ended July 31st, 2025.

Jean-François Boursier: Year-to-date, net income stood at CAD 15 million or CAD 0.52 per share, compared to CAD 9.6 million or CAD 0.34 per share for the same period ended 31 July 2025. As previously mentioned, our results for the quarter and six-month periods closed on 31 July 2026, were severely and negatively impacted by the costs associated with our deferred, performance and restricted share units, mostly coming from the mark-to-market impact following DRX stock price increase since 31 January 2026, and also by our foreign exchange loss.

Speaker #2: As previously mentioned, our results for the quarter and six-month periods closed on July 31st, 2026 were severely and negatively impacted by the costs associated with our deferred performance and restricted share units, mostly coming from the mark-to-market impact following DRX stock price increase since January 31st, 2026, and also by our foreign exchange loss.

Speaker #2: DSUs, PSUs, and RSUs had a negative impact on net earnings of $4.3 million and $5.6 million for the three- and six-month periods ended July 31st, 2026, respectively, and therefore $0.15 per share and $0.20 per share for the same periods while the foreign exchange loss had a negative impact of $1.8 million or $0.06 per share and $1.4 million or $0.05 per share for the same periods respectively.

Jean-François Boursier: DSUs, PSUs, and RSUs had a negative impact on net earnings of CAD 4.3 million and CAD 5.6 million for the three and six-month periods ended 31 July 2026, respectively, and therefore CAD 0.15 per share and CAD 0.20 per share for the same periods, while the foreign exchange loss had a negative impact of CAD 1.8 million or CAD 0.06 per share and CAD 1.4 million or CAD 0.05 per share for the same periods, respectively. We closed the second quarter with CAD 91.4 million in cash and cash equivalents, up by CAD 28.7 million compared with the 31 January 2026 closing balance. Working capital stood at CAD 109.5 million as of 31 July 2026. As noted earlier, the claim settlement generated a CAD 25 million cash inflow just before quarter end, which positively impacted our ending cash balance.

Speaker #2: We close the second quarter with $91.4 million in cash and cash equivalents, up by $28.7 million compared with the January 31st, 2026 closing balance.

Speaker #2: Working capitals stood at $109.5 million as of July 31st, 2026. As noted earlier, the claim settlement generated a $25 million cash inflow just before quarter-end, which positively impacted our ending cash balance.

Speaker #2: Year-to-date, operating cash flow reached $47.1 million for the six-month period ended July 31, 2026, while $15.5 million were used to acquire property, plant, and equipment, and intangible assets, including the modification of a fabrication bay at ADF’s Taubon complex, Groupe Lauréat’s plant expansion, and our ERP upgrade.

Jean-François Boursier: Year-to-date, operating cash flow reached CAD 47.1 million for the six-month period ended 31 July 2026, while CAD 15.5 million were used to acquire property, plant, and equipment and intangible assets, including the modification of a fabrication bay at ADF's Terrebonne complex, Groupe LAR's plant expansion, and our ERP upgrade. In light of the continuing trade uncertainty, we will also invest just over $10 million US to increase our Great Falls facility output and add new equipment to further improve efficiency. We now expect our full-year CapEx to total just over CAD 40 million. Yesterday, our board of directors approved the payment of the second semiannual dividend of CAD 0.02 per share. This dividend will be paid on 15 October to shareholders of record as at 25 September 2026. Finally, we closed the quarter and six month ended 31 July 2026 with yet another record high order backlog reaching CAD 693.7 million.

Speaker #2: In light of the continuing trade uncertainty, we will also invest just over $10 million USD to increase our Great Falls facility output and add new equipment to further improve efficiency.

Speaker #2: We now expect our full-year capex to total just over $40 million. Yesterday, our board of directors approved the payment of the second semiannual dividend of $0.02 per share. This dividend will be paid on October 15 to shareholders of record as of September 25, 2026.

Speaker #2: Finally, we close the quarter and six-month ended July 31st, 2026 with yet another record high order backlog reaching $693.7 million. This total also includes Group Law's order backlog, which stood at $243.3 million at the same date.

Jean-François Boursier: This total also includes Groupe LAR's order backlog, which stood at CAD 243.3 million at the same date. It should be noted that the corporation's order backlog as of 31 July 2026 does not include the five-year extension option on the long-term contract announced on 23 July 2025. It is also worth mentioning that 64% of our consolidated order backlog is for Canadian-based projects. We cannot escape from the adverse impact of the US tariffs on our year-to-date results. As of now, we can confirm that the new 50% US tariff announced a few weeks ago are not impacting ADF's products, and we can also confirm that we will be getting relief from the impact of the Canadian counter-tariffs that became effective earlier this week.

Speaker #2: It should be noted that the corporation order the corporation's order backlog as of July 31st, 2026 does not include the five-year extension option on the long-term contract announced on July 23rd, 2025.

Speaker #2: It is also worth mentioning that 64% of our consolidated order of our consolidated order backlog is for Canadian-based projects. We cannot escape from the adverse impact of the US tariffs on our year-to-date results.

Speaker #2: As of now, we can confirm that the new 50% US tariff announced a few weeks ago are not impacting ADF's products, and we can also confirm that we will be getting relief from the impact of the Canadian counter-tariffs that became effective earlier this week.

Speaker #2: Additionally, and based on the information available as of now, ADF will not be directly impacted by any of the proclamations signed by the US president Tuesday night.

Jean-François Boursier: Additionally, and based on the information available as of now, ADF will not be directly impacted by any of the proclamations signed by the US president Tuesday night. Although the latest changes have limited direct impact on ADF, they are definitely increasing the uncertainty. This said, and as ADF has proven over its 70 years of existence, we are resilient. As previously mentioned, our Q2 results were negatively impacted by the strong performance of our stock following the accounting of our share units and by a FX loss. Once we understand this, it is important to look at the fundamentals which, for ADF, are the backlog growth, the backlog geographic diversification, and the strength of our balance sheet. To say the least, we can say that these are strong and are the foundation to our continued growth.

Speaker #2: Although the latest changes have limited direct impact on ADF, they are definitely increasing the uncertainty. This said, and as ADF has proven over its 70 years of are resilient.

Speaker #2: As previously mentioned, our Q2 results were negatively impacted by the strong performance of our stock following the accounting of our share units and by a FX loss.

Speaker #2: Once we understand this, it is important to look at the fundamentals which, for ADF, are the backlog growth, the backlog geographic diversification, and the strength of our balance sheet.

Speaker #2: We can confidently say that these are strong and are the foundation of our continued growth. Our capital investment in the Lac-Saint-Jean region for Group Law's facility expansion is on time and on budget, and we will soon start a plant expansion and equipment upgrade at our Great Falls, Montana facility.

Jean-François Boursier: Our capital investment in the Lac-Saint-Jean region for Groupe LAR's facility expansion is on time and on budget, and we will soon start a plant expansion and equipment upgrade at our Great Falls, Montana facility. Our balance sheet strength, along with the soon-to-be-finalized additional financing, are enabling ADF to maintain and even improve its fabrication capacity and efficiency. Finally, and on a personal note, the process to find a new CFO following the announcement of my end-of-year retirement as announced in May, is going well, and we are confident that an announcement will be coming soon. As a reminder, I will retire on 31 December 2026, after more than 16 years of service with ADF, but will remain as CFO until that date, and then starting 1 January 2027, will serve as a strategic advisor until the date to be confirmed to ensure a smooth transition.

Speaker #2: Our balance sheet strength, along with the soon-to-be finalized additional financing, are enabling ADF to maintain and even improve its fabrication capacity and efficiency. Finally, and on a personal note, the processed fine and new CFO following the announcement of my end-of-year retirement as announced in May is going well, and we are confident that an announcement will be coming soon.

Speaker #2: As a reminder, I will retire on December 31st, 2026, after more than 16 years of service with ADF, but will remain as CFO until that date, and then starting January 1st, 2027, will serve as a strategic advisor until the date to be confirmed to ensure a smooth transition.

Speaker #2: Thank you for your interest and confidence in ADF. I will now answer your questions.

Jean-François Boursier: Thank you for your interest and confidence in ADF. I will now answer your questions.

Speaker #1: Thank you, sir. Ladies and gentlemen, we now begin the question-and-answer session. If you'd like to ask a question, please press star, follow up with number 1 on your telephone keypad.

Operator: Thank you, sir. Ladies and gentlemen, we now begin the question and answer session. If you would like to ask a question, please press star followed by number one on your telephone keypad. To withdraw from the queue, please press star followed by the number two. If you are using a speakerphone, please lift your handset before pressing any keys. One moment please while we compile the roster. Your first question comes from Nicholas Cortellucci with Atrium Research. Please go ahead.

Speaker #1: If you'd like to interrupt from the queue, please press star, follow up with number 2. And if you're using a speakerphone, please lift your hands up before pressing any keys.

Speaker #1: One moment, please, while we compile the roster. Your first question was from Nicholas Cortellucci with AFRIM. Please go ahead.

Speaker #2: Good morning, JF. Thanks for taking my questions and congrats on another strong quarter here. I just wanted to make sure I heard something correctly.

Nicholas Cortellucci: Good morning, JF. Thanks for taking my questions and congrats on another strong quarter here. I just wanted to make sure I heard something correctly, was on the percent of the backlog that was from Canada, was that 45%?

Speaker #2: Was on the percent of the backlog that was from Canada, was it 45%?

Speaker #3: 64. 64%.

Jean-François Boursier: 64%.

Speaker #2: Okay. Got it. Yeah. Okay. So a slight step down from Q1, it seems like?

Nicholas Cortellucci: Okay. Got it. Yeah. Okay. So a slight step down from Q1, it seems like.

Speaker #3: And from Q1, yes. And you might recall, we had some announcement at the end of June, mostly for US-based projects. So obviously, adding those, reduce, I think we were at 72% at the end of Q1.

Jean-François Boursier: From Q1, yes. You might recall, we had some announcement at the end of June, mostly for US-based projects. Obviously adding those reduced, I think we were at 72% at the end of Q1. That is why we are slightly lower. For us, anything that looks like 50/50 or close to 50 is really good. Still at 64% of Canadian-based content, definitely considering the environment we are in, definitely better than the 5% of Canadian content we were in back in April 2025, just over a year and a quarter ago.

Speaker #3: So that's why we're slightly lower. For us, anything that looks like 50/50 or close to 50 is really good. But still, it's 64. Definitely, at 64% of Canadian-based contact, definitely considering the environment we're in, definitely better than the 5% of Canadian content we're in back in April 2025.

Speaker #3: So just over a year and a quarter ago.

Speaker #2: Yeah, understood. Okay. And then with gross margin, we had some moving pieces in the quarter with the work Terrebonne did for LAR, but what do you see as the normalized gross margin for you guys going forward?

Nicholas Cortellucci: Yeah, understood. Okay. With gross margin, we had some moving pieces in the quarter with the work Terrebonne did for Groupe LAR, but what do you see as the normalized gross margin for you guys going forward? Then maybe how does that change going into next year?

Speaker #2: And then maybe how does that change going into next year?

Speaker #3: Yeah. Well, as you know, we don't necessarily provide guidelines going forward, but to your point, I think on its own, we shouldn't look at Q2 as a good indication because there were a lot of moving pieces.

Jean-François Boursier: Well, as you know, we do not necessarily provide guidelines going forward. To your point, I think on its own, we should not look at Q2 as a good indication because there were a lot of moving pieces. Year to date, we are at 21.5%. That does include the downward impact, as we already explained in previous calls, the downward impact of the Groupe LAR backlog, which we still need to sort of go through, which definitely were not at the ADF's historical level, if you want, from a margin standpoint. That will still happen in Q3 and Q4, as long as we still have to get through the Groupe LAR's legacy backlog. This said, our regular jobs and on an ongoing basis, the year-to-date margin of 21.5% are a pretty good indication of what is coming.

Speaker #3: Year to date, we're at 21.5. That does include the downward impact as we already explained in previous calls, the downward impact of the Group Law backlog, which we still need to sort of go through, which definitely we're not at the ADF's historical level, if you want, from a margin standpoint.

Speaker #3: So that will still happen in Q3 and Q3 and Q4, as long as we still have to get through the Group Law's legacy backlog.

Speaker #3: That said, with our regular jobs and on an ongoing basis, the year-to-date margin of 21.5% is a pretty good indication of what's coming. Obviously, we are impacted by the tariff indirectly, as we already explained, by the higher cost of steel.

Jean-François Boursier: Obviously, we are impacted by the tariff indirectly, as we already explained, by the higher cost of steel. It does increase our cost base. It has an impact. The tariff, although limited, but they do have an impact. We are paying, since the beginning of April 2026 proclamation, approximately 10% of the commercial invoice on the Canadian fabrication of the US for US projects. That obviously also has an impact on a portion of the project fabricated in Canada going to the US, so that lowers the margin. But these are already factored into the margin as they stand. As I said, without going into too much detail, but the year-to-date margins are a pretty good indication of what is coming. We do expect also improvement as we are getting rid of the legacy backlog.

Speaker #3: So it does bring up some of our cost base—it does increase our cost base. So it has an impact. The tariffs, although limited, do have an impact.

Speaker #3: We are paying since April, since the April, the beginning of April 2026 proclamation, approximately 10% of the commercial invoice on our the Canadian fabrication of US for US projects.

Speaker #3: So that obviously also has an impact on a portion of the project fabricated in Canada going to the US. So that lowers the margin.

Speaker #3: But these are already factored into the margin as they send. So as I said, without going into too much detail, but the year-to-date margins are a pretty good indication of what's coming and we do expect also improvement as we're getting rid of the legacy backlog.

Speaker #3: So maybe you can expect to see margins creep up in Q2 and in Q3 and Q4, bearing any other announcement on the tariffs front.

Jean-François Boursier: You can expect to see margins creep up in Q2, Q3, and Q4, barring any other announcement on the tariff front. As I confirm at the end of my text, the latest changes, either the counter tariff or the proclamation from Tuesday night, as we understand now, will not change that 10%, so no impact. But God knows what will happen in the next days, weeks, and months. We are obviously in a situation where the relationship is different. But based on what we know now, that is what we see for the coming quarters from a gross margin standpoint.

Speaker #3: As I confirm, at the end of the call, at the end of my text, really the latest changes, either the counter-tariff or the proclamation from Tuesday night, as we understand now, won't change that 10%.

Speaker #3: So no impact. But God knows what's going to be what will happen in the next days, weeks, and months. We're obviously in a situation where the relationship is different.

Speaker #3: So but based on what we know now, that's what we see for the coming quarters from a gross margin standpoint.

Speaker #2: Yeah. Okay. Yeah. Understood. And what about just an update on the CapEx plans? How are things progressing? Are you guys on time? With the LAR expansion?

Nicholas Cortellucci: Yeah. Okay. Yeah, understood. What about just an update on the CapEx plans? How are things progressing? Are you guys on time with the Groupe LAR inc. expansion?

Speaker #3: Yeah, things are going really well from that standpoint. We're on time and on budget for LAR. As I also mentioned, we've actually even started since the end of the second quarter to work on an expansion in Great Falls as well.

Jean-François Boursier: Well, things are going really well from that standpoint. We are on time, on budget for Groupe LAR inc. As I also mentioned, we have actually even started since the end of Q2 to work on an expansion in Great Falls also. It is not a huge investment, but it will add capacity and bring in additional newer equipment and additional equipment. The plant has been up and running for 12, 13 years now. So, the equipment was still good, but obviously a lot of hours on those. So it is going to be good to bring new equipment and further improve efficiency, but also add some operating changes that will facilitate the work in Great Falls and also add capacity in light of everything that is happening now. But, things are progressing well, no issues. Definitely no issues at Groupe LAR inc., much more advanced. Structure has started to go up.

Speaker #3: It's not a huge investment, but it will add capacity and bring in additional, newer equipment. The plant has been up and running for 12 or 13 years now.

Speaker #3: So the equipment we're still good, but obviously, a lot of hours on those. So it's going to be good to bring to bring new equipment and further improve efficiency, but also add some operating changes that will facilitate the work in Great Falls and also add capacity in light of everything that's happening now.

Jean-François Boursier: So, the equipment was still good, but obviously a lot of hours on those. So it is going to be good to bring new equipment and further improve efficiency, but also add some operating changes that will facilitate the work in Great Falls and also add capacity in light of everything that is happening now. But, things are progressing well, no issues. Definitely no issues at Groupe LAR inc., much more advanced. Structure has started to go up.

Speaker #3: But so things are progressing well. No issues. Definitely no issues at Group Law, much more advanced structure has started to go up. So we're on time.

Jean-François Boursier: We are on time, we are on budget. The equipment has been all ordered. The schedule is still good. Actually not only tracking to budget, but actually even slightly better than budget, which is great news.

Speaker #3: We're on budget. The equipment has been all order. The schedule still good. And actually track not only tracking to budget, but actually even slightly better than budget, which is great news.

Speaker #2: Understood. Okay, very good. And then just last one, if I can squeeze it in, would be on the SG&A increase—whether it's the impact of the DSUs and the RSUs—but what are you just generally seeing with the SG&A line in terms of inflationary increases, salaries, labor, that kind of stuff?

Nicholas Cortellucci: Understood. Okay, very good. Just last one, if I could squeeze it in, would be on the SG&A increase for the impact of the DSUs and the RSUs. What are you just generally seeing with the SG&A line in terms of inflationary increases, salaries, labor, that kind of stuff?

Speaker #3: Yeah. Well, our SG&A—excluding the DSUs, or the share units variation—but the core SG&A per se, besides just inflation or salary increases, the base of this SG&A should not change drastically.

Jean-François Boursier: Well, our SG&A, excluding the DSUs or the share units variation, but the core, the SG&A per se, besides just inflation or salary increases, the base of this SG&A should not change drastically. Obviously, year over year, and again for Q2, last year, we didn't have Lau consolidated into our results. So obviously, there's an impact on our SG&A just from the consolidation of Lau. When we'll publish Q3, actually, 18 September is going to be the one-year anniversary of the acquisition. So Q3, the comparable quarter, will include a portion of SG&A, but the base of the SG&A for us, even if volume is increasing and our revenue are increasing, we don't need to drastically increase the SG&A to meet these additional volume or the increased backlog.

Speaker #3: Obviously, year over year, and again, for Q2, last year we didn't have LAW in the consolidation—consolidated into our results. So, obviously, there's an impact on our SG&A just from the consolidation of LAW.

Speaker #3: When we'll publish Q3, actually September 18th is going to be the one-year anniversary of the acquisition. So Q3 will the comparable quarter will include a portion of SG&A.

Speaker #3: But the base of the FG&A for us, even if volume is increasing and our revenue are increasing, we don't need to drastically increase the SG&A to meet that these additional volume or the increased backlog.

Speaker #3: So from the core of the SG&A, again, excluding share units variation, the SG&A should be pretty stable besides the usual obviously, a lot of salaries included in SG&A.

Jean-François Boursier: So from the core of the SG&A, again, excluding share units variation, the SG&A should be pretty stable besides the usual, obviously, a lot of salaries included in SG&A. So the yearly salary increases, which are around the 3% level or should be around the 3% level for the coming year also. So besides that, there's no real need to increase SG&A to meet the expected revenue growth in line with the backlog.

Speaker #3: So the yearly salary increases, which are around the 3% level or should be around the 3% level for the coming year also. So besides that, there's no real need to increase SG&A to meet the expected revenue growth in line with the backlog.

Speaker #2: Fantastic. Okay. That's all for me. Thanks for answering my questions.

Nicholas Cortellucci: Fantastic. Okay. That's all for me. Thanks for answering my questions.

Speaker #3: Thanks, Nick.

Jean-François Boursier: Thanks, Nick.

Speaker #1: Thank you. There are no further questions on the phone line, Mr. Bussi. You may proceed.

Operator: Thank you. There are no further questions on the phone line, Mr. Broussard. You may proceed.

Speaker #3: Again, we wish to thank you for your interest in and support of ADF Group. Have a nice day.

Jean-François Boursier: Again, we wish to thank you for your interest in and support of ADF Group. Have a nice day.

Speaker #1: Ladies and gentlemen, this concludes your gathering call for today. We thank participating and ask that you please disconnect your lines. Have a great day.

Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a great day.