Earnings call transcript: ADF Group Q2 2025 sees earnings miss, stock dips

ADF Group Inc. reported its financial results for the second quarter of 2025, revealing a notable miss against earnings expectations. The company reported earnings per share (EPS) of $0.03, significantly below the forecasted $0.19, marking an EPS surprise of -84.21%. Revenue also fell short of expectations, coming in at $53 million compared to the anticipated $60.2 million, a surprise of -11.94%. Following the announcement, ADF Group’s stock dropped by 10.19% in pre-market trading, reflecting investor concerns over the disappointing results. According to InvestingPro analysis, the company is currently trading below its Fair Value, suggesting potential upside despite recent challenges.

Key Takeaways

• ADF Group’s Q2 2025 EPS of $0.03 missed expectations by 84.21%.
• Revenue decreased by $21.9 million compared to the previous year.
• The stock fell by 10.19% in pre-market trading.
• The company is focusing on Canadian market opportunities amidst U.S. steel tariffs.
• ADF Group is expanding into the nuclear sector with new certifications.

Company Performance

ADF Group’s performance in the second quarter of 2025 showed a significant decline compared to the same period last year. The company’s revenue decreased to $53 million from $74.9 million, and the gross margin fell to 20.7% from 36.9%. The adjusted EBITDA also saw a sharp decline, dropping to $3.7 million from $24.9 million in the previous year. These figures highlight the challenges ADF Group is facing, particularly in navigating U.S. steel tariffs and shifting market dynamics.

Financial Highlights

• Revenue: $53 million, down $21.9 million YoY
• Earnings per share: $0.03, down from $0.51 YoY
• Gross Margin: 20.7%, down from 36.9% YoY
• Adjusted EBITDA: $3.7 million, down from $24.9 million YoY
• Cash and Cash Equivalents: $50.9 million
• Working Capital: $105.5 million

Earnings vs. Forecast

ADF Group’s second-quarter results fell short of analyst expectations, with an EPS of $0.03 against a forecast of $0.19, resulting in a negative surprise of 84.21%. Revenue also missed projections, reaching $53 million compared to the anticipated $60.2 million. This marks a significant deviation from the company’s historical performance, suggesting potential operational or market challenges.

Market Reaction

Following the earnings announcement, ADF Group’s stock price declined by 10.19% in pre-market trading. This drop reflects investor disappointment with the company’s financial performance, particularly the substantial earnings miss. Despite current challenges, InvestingPro data shows the stock maintains a beta of 0.71, indicating lower volatility compared to the broader market. The company has also demonstrated strong cash flow generation, with a free cash flow yield of 23% over the last twelve months. For detailed valuation metrics and comprehensive analysis, investors can access the Pro Research Report, part of InvestingPro’s coverage of 1,400+ US equities.

Outlook & Guidance

Looking ahead, ADF Group is focusing on expanding its presence in the Canadian market, particularly in the nuclear, hydroelectric, and infrastructure sectors. The company recently received nuclear certification and announced plans to acquire Groupe LAR, which is expected to add $104.5 million to its order backlog. These strategic moves aim to mitigate the impact of U.S. steel tariffs and enhance the company’s competitive position. InvestingPro’s Financial Health Score rates the company as "GREAT" with a score of 3.42 out of 5, suggesting strong fundamentals despite current market challenges.

Executive Commentary

Jean-François Boursier, CFO, emphasized the company’s commitment to innovation, stating, "We have chosen to look ahead and find innovative solutions to these new challenges." CEO Jean Paschini highlighted ADF Group’s expertise, saying, "We’re definitely better known and really good at working on the more complex work, the heavy work, the fast-track project."

Risks and Challenges

• U.S. steel tariffs continue to impact operations and costs.
• Revenue decline raises concerns about market competitiveness.
• Dependence on the U.S. market poses risks amid geopolitical tensions.
• Potential integration challenges with the Groupe LAR acquisition.
• Fluctuations in steel prices could affect profitability.

Q&A

During the earnings call, analysts raised questions about the company’s nuclear certification and its potential market impact. The rationale behind the Groupe LAR acquisition was also discussed, highlighting its strategic importance in expanding ADF Group’s capabilities and market reach. Additionally, the impact of U.S. steel tariffs on the company’s financial performance was a key concern.

Full transcript - ADF Group Inc. (DRX) Q2 2026:

Conference Call Operator: Good morning, ladies and gentlemen, and welcome to the ADF Group Inc. Results for Three Months and Six Months ending July 31, 2025 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, September 11, 2025. I would now like to turn the conference over to Mr. Jean-François Boursier, Chief Financial Officer. Please go ahead.

Jean-François Boursier, Chief Financial Officer, ADF Group Inc.: Merci. Good morning and welcome to ADF Group Inc.’s conference call covering the second quarter and six months ended July 31, 2025. I am with Jean Paschini, Chairman of the Board and CEO of ADF Group Inc., who will be available to answer your question at the end of the call. 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 our multi-year contract announcement from last July 23 and also about last week’s acquisition announcement. 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 Inc.’s management report for the second quarter and six months ended July 31, 2025, which were filed with SEDAR this morning.

Revenues for the quarter ended July 31, 2025, at $53 million, were $21.9 million lower than last year. Year-to-date revenue stood at $108.5 million compared to $182.3 million for the six-month period ended July 31, 2024. While the corporation’s order backlog is more than adequate, exceeding $468 million as of July 31, 2025, the uncertainty surrounding the U.S. steel tariffs has created a non-recoverable delay in fabrication hours, mainly at ADF Group Inc.’s plant in Turcotte, Quebec. As such, and as previously announced, a work-sharing program was implemented at ADF Group Inc.’s plant in Turcotte, Quebec and remained in place for virtually the entire quarter ended July 31, 2025, thus reducing fabrication hours and consequently revenues for the same quarter and year to date.

We close the second quarter ended July 31, 2025, with a gross margin of 20.7% as a percentage of revenues, down from the exceptionally high 36.9% margin for the quarter ended July 31, 2024, while the year-to-date gross margin as a percentage of revenues at 21.3% is also down from the 32.3% margin for the six-month period ended last year, July 31, 2024. As I just mentioned, the decrease in revenues required ADF Group Inc. to implement a work-sharing program at its Turcotte plant. This program has allowed the corporation to mitigate the negative cost impacts of the decrease in fabrication hours, but not entirely. Steel tariffs also had an indirect negative impact on the corporation margins, impact which is caused by the increase in the price of steel set by the U.S. steel mills.

Adjusted EBITDA for the quarter ended July 31, 2025, at $3.7 million compared to $24.9 million for the same quarter ended a year ago, while year-to-date adjusted EBITDA stood at $14.1 million compared to $48 million for the six months ended a year ago. It is worth mentioning that while the financial results for the periods ending July 31, 2025 are severely impacted by the tariff and associated turmoil, last year’s results were impacted by an exceptionally favorable product mix. Again, this quarter, the mark-to-market valuation of our DSUs and PSUs impacted our SG&A expenses. For the quarter, and considering the increase in ADF Group Inc.’s share price during said quarter, SG&A expenses at $8.8 million were $4.6 million higher than last year. The stock price variation for the full six months was not as significant.

As such, year-to-date SG&A expenses stood at $12.2 million, actually $1.7 million lower than for the six months ended July 31, 2024. We therefore close our second quarter with net income of $898,000 or $0.03 per share compared to $16 million or $0.51 per share for the corresponding quarter a year ago. Year-to-date, net income stood at $9.6 million or $0.34 per share compared to $31.3 million or $0.98 per share for the same period ended July 31, 2024. We close our second quarter with $50.9 million in cash and cash equivalents, $9.1 million lower when compared to the January 31, 2025 closing balance, while working capital as of July 31, 2025 reached $105.5 million.

Year-to-date, operating cash flow reached $7.4 million for the six-month period ended July 31, 2025, while we spent $3 million on property, plant, and equipment and intangible assets acquisitions, including an update of ADF Group Inc.’s CRP system, which is scheduled to take place over the next three fiscal years. In addition, and as mentioned with the July 23 multi-year contract announcement, we will be investing in new equipment at our Turcotte site, which should bring our full-year CapEx investment at approximately $11 million. Yesterday, our Board of Directors approved the payment of the second semiannual dividend, which now stands at $0.02 per share. This dividend will be paid on October 16 to shareholders of record as of September 26, 2025. Finally, we close the quarter and six months ended July 31, 2025 with an order backlog of $468 million.

It should be noted that the order backlog as of July 31, 2025, does not include the option to extend the contract announced last July 31 by five years. We cannot escape from the negative impact of the U.S. tariffs on our year-to-date results. This said, we have chosen to look ahead and find innovative solutions to these new challenges. In light of the new economic realities, we have put in place solutions that will allow ADF Group Inc. to not only continue its growth, but also to protect itself against the uncertainties brought about by these changes in trade policies. First, we announced a few weeks ago a five-year term contract, including an option to extend it by five additional years for a new infrastructure project in the energy sector in Quebec. Moreover, on September 2, we also announced that ADF Group Inc.

had entered into an agreement to acquire, subject to the approval of the Superior Court of Quebec, Groupe LAR and certain of its subsidiaries. Briefly, Groupe LAR is a Canadian leader in the design, manufacture, and installation of mechanically welded steel structures, primarily focused on the rapidly expanding large-scale hydroelectric market. Groupe LAR also offers customized overhead crane solutions for the heavy industry. Groupe LAR generated close to $81 million in revenues for the fiscal year ended December 31, 2024, and had an order backlog of $104.5 million as of July 31, 2025, which should progressively be realized before the end of ADF Group Inc.’s fiscal year ending January 31, 2027. This backlog is not included in our previously confirmed July 31, 2025, $468 million backlog and will not be until the transaction is completed. We expect this transaction to close in the next few days.

Once closed, we will be able to provide you with more information. These two announcements should not only provide recurring revenues to ADF Group Inc. for the next years, but allow us to significantly increase the Canadian content of our order backlog, thus reducing our exposure to the U.S. market and recent uncertainties thereof. Thank you for your interest and confidence in ADF Group Inc. Jean and I will now answer your questions.

Conference Call Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by the one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Nicholas Cortellucci with Atrium Research Corporation. Your line is now open.

Nicholas Cortellucci, Analyst, Atrium Research Corporation: Hey, Jean. Hey, JF. Hey, JF. Hey, Jean.

Jean Paschini, Chairman of the Board and CEO, ADF Group Inc.: Hi, good morning.

Nicholas Cortellucci, Analyst, Atrium Research Corporation: Thanks for taking my questions. First thing I wanted to ask about here was, I saw in the MD&A there was mention of you guys achieving a nuclear certification. Just wanted to see if you had any more color on that and if that’s a new sector you guys are looking to break into.

Jean Paschini, Chairman of the Board and CEO, ADF Group Inc.: Yeah, we just received our certification of nuclear. There’s quite a bit of work coming in Ontario. That’s going to be a big market for the next five to ten years. Right now, we have our people working with the general contractor and companies down in Ontario, and we should see something by, I would say, the beginning of next year.

Nicholas Cortellucci, Analyst, Atrium Research Corporation: Okay, got it. You guys haven’t done work in the sector before, from what I understand.

Jean Paschini, Chairman of the Board and CEO, ADF Group Inc.: Yes, yes, we did five years ago. Okay, we did a project in Ontario. Right now, we are certified. We have everything. It’s a go for us.

Nicholas Cortellucci, Analyst, Atrium Research Corporation: Okay, awesome. All right. Shifting to Groupe LAR, maybe just walk us through the rationale behind it from a geographic perspective and how that changes your guys’ geographic mix and client mix going forward.

Jean Paschini, Chairman of the Board and CEO, ADF Group Inc.: With what’s happening right now in the U.S., it’s tougher to get work here in Turcotte, okay, because of the steel tariffs. We don’t know exactly what’s going on. It could change from one day to the other. Right now, what we’re doing, Great Falls, it’s full. They have quite a bit of work, U.S. work in California, Oregon, and all those places. They’re good for the next year. They have a nice big backlog. Here in Turcotte, we have work for the next, you know, the second half of the year is going to be good, plus then our project in infrastructure is going to kick in at the beginning of next year. That’s, and then we are looking to get more work here in Turcotte. In Metabishwan, LAR, they have good work.

They didn’t have any bonding the last few months, so they lost jobs, but not the job that we announced. They have $108 million, if my memory is good, $104 million on the backlog. Right now, once the acquisition is done, they’re going to get bonding. They’re going to get everything. I would say by the end of this year, backlog’s going to go up. Most of what they do is mostly in Quebec, Ontario, and BC. With the financial support, with the bonding company, with our bonding capacity, backlog will go up in the next six months. I’ve got no doubts at all. Backlog’s going to go out. Backlog’s going to go up. There’s quite a bit of work we’re going to be able to do here in Turcotte for them. I would say that it’s going to be fantastic for the Turcotte shop.

It’s going to be fantastic in Metabishwan, the LAR shop. Our U.S. facility in Great Falls, they have work and we’re bidding quite a bit of work down there. I want to book them at at least 150% of their capacity. If you look at all the three entities, it looks good for the future.

Nicholas Cortellucci, Analyst, Atrium Research Corporation: Okay. Makes sense. That’s good to hear. What are kind of the integration steps that you guys need to go through, and what are those synergies that you’re looking for?

Jean-François Boursier, Chief Financial Officer, ADF Group Inc.: As we mentioned, we’ll start by closing the deal. That’s really the first step we need to do. We obviously are in discussion with them. We’re in the process of laying out not only from a production standpoint, but also from an administrative standpoint, how we will be working together to get those synergies. I think the first one, should the deal be closed or once the deal is closed, and hopefully within the next couple of days, as we mentioned previously. One of the first synergies for Groupe LAR is that they’ll be able to bond jobs going forward. That was obviously because of their actual, the present financial position. They had a tough time getting bonding agencies to follow them. That will all be solved just because of the strength of the balance sheet of ADF Group Inc.

They’ll be able to get back on the bidding process because not only do they have a good backlog as it stands now, but the pipeline is really, really good. That’s going to be the first impact. We did mention it also in the press release. We want to invest. We’re also in discussion to make sure that we do the right thing. We want to increase their capacity. We want to provide them with additional equipment because the fact of the matter is that they were performing really well with the type of equipment they were getting. If we can improve the equipment and add their know-how and their experience, they were bound to improve on the efficiency, and obviously that would show up on the margin. This is all coming up. As we mentioned, we need to close the deal.

Once the deal is closed and we can actually move forward with what we need to do, we’ll be able to provide more color to this acquisition.

Jean Paschini, Chairman of the Board and CEO, ADF Group Inc.: I think what we’re going to do is once the deal is closed, we’ll do another conference call with all the investors to tell you exactly what’s our game plan.

Nicholas Cortellucci, Analyst, Atrium Research Corporation: Okay. No, that makes sense. Thank you for that. Just last one, JF, I know you mentioned CapEx for the full year, you’re targeting to be about $11 million. That’s a pretty big jump from the first half year. What does that entail? What are you guys looking to do with that?

Jean-François Boursier, Chief Financial Officer, ADF Group Inc.: It’s basically for the project we announced at the end of July. We need to add equipment at our Turcotte shop to be able to, especially since it is a long-term project, at least five years, most probably 10 years. We want to equip ourselves to be able to deliver that project more efficiently. Once we finalize the close, and as I just mentioned, we’re also looking at investing for Groupe LAR. The $11 million obviously doesn’t include anything that would happen between now, between the close and the end of the year specifically for LAR. That too will be done in an update once we close the deal. Based on ADF Group Inc., as we know it today, excluding LAR as of July 31, and including the requirement for the new project we announced, the $11 million is based upon these assumptions.

Nicholas Cortellucci, Analyst, Atrium Research Corporation: Perfect. Okay. Thank you for the time, guys, and I’ll jump back in the queue.

Jean-François Boursier, Chief Financial Officer, ADF Group Inc.: Thanks, Nick.

Jean Paschini, Chairman of the Board and CEO, ADF Group Inc.: Thank you.

Conference Call Operator: Ladies and gentlemen, as a reminder, should you have a question, please press star one. Your next question comes from Abigail Zimmerman with Lowell Capital. Your line is now open.

Abigail Zimmerman, Analyst, Lowell Capital: Thanks for taking my question.

Nicholas Cortellucci, Analyst, Atrium Research Corporation: Thank you.

Abigail Zimmerman, Analyst, Lowell Capital: I guess, first of all, we find the company very attractive. Our question would just be, given your exposure to fixed-price contracts and large customer concentration, what would you say are the key strategies that help you manage the contract risk?

Jean-François Boursier, Chief Financial Officer, ADF Group Inc.: Historically, this is something that’s really part of the way our business is done. We are signing few contracts, and we’ve always had the concentration from a revenue standpoint. It’s been the case for the past years. I’ve been with the company for 15 years and even longer than that. Obviously, in light of that, we have a certain set of rules when we negotiate and sign contracts. First, we only deal with really major clients, general contractors, and clients, which by themselves are financially strong and with a strong balance sheet. Additionally, when we sign contracts, there are a number of contractual clauses that we just won’t budge from or deviate from. Considering that although getting bigger, we do sign big contracts, and there’s always the huge potential of the contract going sideways, we manage the risk pretty closely.

We do spend a lot of time making sure that we are not only comfortable with the operational requirements from each project, but most importantly, that we are 100% comfortable with the contractual clauses. In the past, we have passed on a really interesting contract that would have provided good revenues, good margin, but the contractual clauses were just not acceptable for us. We passed on those projects. This is something that ADF Group Inc. has been doing for the past years and has enabled us to be able to be 100% comfortable with our backlog and the fact that the backlog would deliver positive results and not have a really huge backlog with so many risks that you end up announcing contracts, but then you end up a year, a year and a half, two years later announcing write-offs.

From a strategy standpoint, this is well known in the market. This has been the mantra for ADF Group Inc. for the longest time. At the end of the day, it might not be as sexy from a contract announcement standpoint, but it does assure a steady growth to our company and also a profitable growth to our company. This is really the way we handle these contracts and the fact that we are bound and we are stuck with having year over year one, two, or three major projects being the majority of our revenues. This is something also that’s part of our market. Hopefully, it answered your question.

Abigail Zimmerman, Analyst, Lowell Capital: Yes. Thank you. That’s helpful. My other question is just, given your exposure to these government and large-scale corporate projects, would you say that you would describe yourselves as more of an infrastructure company, or is that the right way to think about the business, or is there a different way you’d prefer investors to kind of frame ADF Group Inc.’s role in the market?

Jean-François Boursier, Chief Financial Officer, ADF Group Inc.: I’m not sure how to answer that question. We’re really not specific to, we’re in the industrial commercial market. We’ve done airports. We’ve done sports complex. We’ve done, so we’re basically pretty much in all the complex structure market. We do work on the private side. We also do private public work, obviously. For public work in the U.S., most of the public projects are tied to the Buy American Act. Those projects, we are able to take, but they need to be manufactured from our Montana plant. We’re compliant with the Buy American Act from that standpoint. We’re able to tackle pretty much all the projects. It’s just that over the years, because of our experience, because of our equipment, we’re definitely better known and really good at working on the more complex work, the heavy work, the fast-track project. That’s really where we differentiate ourselves from the others.

That would explain the environment and the market that we’re working in.

Abigail Zimmerman, Analyst, Lowell Capital: Okay. Thank you. That’s helpful. That’s all from me. Appreciate your time.

Jean-François Boursier, Chief Financial Officer, ADF Group Inc.: Thanks.

Conference Call Operator: Your next question comes from Jesus Sanchez Leon with Castaner Investment. Your line is now open.

Jesus Sanchez Leon, Analyst, Castaner Investment: Hi. How are you? Thank you very much for taking my question. I want to get your insight about the current situation. Obviously, there is a lot of talk about tariffs, a lot of talk about how contracts are lost, how contracts will have to stop. I see a growing backlog in our company. I see $468 million plus $100 million of LAR plus $40 million of the big contract we won recently that puts us at $600 million. It’s kind of like my numbers are telling something different than the narrative. I’m losing something in the narrative, or what’s your take on that?

Jean-François Boursier, Chief Financial Officer, ADF Group Inc.: Just to clarify, the $468 million does include our announcement from last July. The $468 million is as of July 31. LAR, the $100 million from LAR, that’s their backlog. As long as the acquisition, as I mentioned, is not closed, this is not part of the backlog. To your point, as of July 31, including the contract we announced at the end of July, our backlog in Canadian dollars, ADF Group is $468 million. Should we close, or once we close the deal by consolidating LAR, yes, we’ll be picking up about $100 million of new backlog once we’re done. The nice thing about that backlog is it’s entirely Canadian volume. It will reduce our exposure to the U.S. market. I just want to clarify. This said, considering in light of the tariffs, the negotiation historically, and still today, from a steel manufacturing standpoint, the U.S.

market is the biggest market for us, and that will remain. Because of the tariffs, signing contracts in the U.S. is really, really difficult. We know, and Jean mentioned that before in the call, we know the rules and the exclusion and how the tariffs work today. What we don’t know is how long those exclusions or these rules will be in place because there’s nothing that tells us that the administration won’t change the way they applied the tariffs. There’s nothing telling us that they won’t change the actual rate of the tariffs or altogether get rid of the tariffs. We can only work on what we know now. That’s what’s created the issue because obviously, when you negotiate a contract with a U.S. client today, we’re able to confirm what the reality is today. When they ask what happens if they change their mind, the U.S.

administration changes their mind in the next week, two months, or what have you. Since we sign a contract that normally between the time we sign the contract and we end the project, it’s anywhere between a year or two years, sometimes more. We can promise them that if the tariffs rules change and we end up having an additional 35% or even 50% or even 85% additional tariffs should they be added together, we can’t tell the client that we’ll absorb all these costs. That’s when you get into these what-if discussions that the negotiations start stalling and take forever. Factually, the market, the U.S. market is still good. There’s still lots of opportunities. It definitely takes longer. We’ve been able to announce contracts. The July 31, the end of July contract we announced, the multi-year contract, is a contract in Quebec. That’s Canadian content.

As I just mentioned, Groupe LAR, if once we close, would bring additional Canadian content also. As much as we can, we try to steer away from the, at least to add Canadian content to balance out, to not be as subject to U.S. tariffs. The fact is that we do have a plant in Great Falls. We’ll try to maximize the plant in Great Falls with U.S. volume, and that’s really the approach we were taking. We’ll see it in the next quarters. The market or the contract signing or the negotiation process are definitely tougher than they’ve been. It creates a lot of uncertainty. Clients are obviously concerned about potential additional costs going forward, as are we. You try to navigate through all of these, which makes for longer negotiations. We’ll try to optimize. We have the chance to have a really efficient plant here in Turcotte.

We do have a chance to have a really efficient plant in Montana that’s able to handle those U.S. contracts without tariffs issues. We’ll maximize our operation. We’ll maximize the different solutions we have to all of these concerns and go from there. As you’ve seen in our results, it did put a strain on the results. It does add costs to our cost base. It’s a tough environment.

Jesus Sanchez Leon, Analyst, Castaner Investment: Understood. Just another one for me. We have an NCIB in place, but we stopped buying back at the end of May. Now, in retrospective, we see that there was an acquisition there that we now are facing more CapEx expenditures to fulfill this big contract. On the other hand, we are a no-debt company, cash-generated. What are your thoughts about the NCIB? What is it going to be?

Jean-François Boursier, Chief Financial Officer, ADF Group Inc.: As you mentioned, we did complete the NCIB that was put in place in December. It was in total just under $1.8 million. We completed it at the beginning of our second quarter. The NCIB we initiated last December is done. By TSX rules, we cannot put a new NCIB in place before next December. To your point, considering the acquisition, considering the additional CapEx, and we haven’t discussed the second NCIB, but should the deal go through, we will also look at additional CapEx investment for Groupe LAR. We’ll also need to support the initial working capital of LAR just to keep them going from an operational standpoint.

We haven’t made a final decision on NCIB, but if I’d be putting something in, if you want to have my take on it for now, I don’t think we’ll be putting a new NCIB program in place when December comes, when we would be able to do it in light of everything I just mentioned.

Jesus Sanchez Leon, Analyst, Castaner Investment: Perfect. Perfect. Thank you very much.

Jean-François Boursier, Chief Financial Officer, ADF Group Inc.: Thanks.

Conference Call Operator: Your next question comes from Richard Cochon, an investor. Your line is now open.

Jesus Sanchez Leon, Analyst, Castaner Investment: Yes. Good morning. I would love to do this in French, but we’ll stick with English, and Monsieur Boursier, je vous appelais au courant de la suite.

Jean Paschini, Chairman of the Board and CEO, ADF Group Inc.: You can do it in French if you want.

Jesus Sanchez Leon, Analyst, Castaner Investment: Okay. Bye.

Jean Paschini, Chairman of the Board and CEO, ADF Group Inc.: I’m clear. Quelques questions. L’opération au Montana, est-ce qu’il y a un shift de capacité? Is there a capacity number at which Montana is running right now?

Jean-François Boursier, Chief Financial Officer, ADF Group Inc.: Right now, we’re running, I would say we’re running right now at about 60%.

Jean Paschini, Chairman of the Board and CEO, ADF Group Inc.: Okay. D’accord. This is more of a political nature, and I don’t want to, you probably won’t be able to answer. Even though you’re based in the U.S., knowing that you’re a Canadian-owned company, do you feel any resistance bidding for projects out there with your, obviously, your big one was Lilly, I think, in the past? Is this all about pricing and delivering the goods on time?

Jean-François Boursier, Chief Financial Officer, ADF Group Inc.: No, right now, we don’t see. It’s the price and delivering the good on time. We don’t see any resistance because we’re a Canadian company. Bear in mind, over there, it’s all U.S. It’s all U.S. people. When we sign a contract, they want to make sure that it’s going to be done in Montana and not in Turcotte. There’s no problem.

Jean Paschini, Chairman of the Board and CEO, ADF Group Inc.: With all these pharmaceutical announcements of new plants and data processing centers, are these things that you could be potentially bidding in the short term, or that’s par for the course?

Jean-François Boursier, Chief Financial Officer, ADF Group Inc.: It’s part of next year bidding.

Jean Paschini, Chairman of the Board and CEO, ADF Group Inc.: Okay. Merci. In dernière, I guess it’s fair to say with our friends at Hydro-Québec going full tilt with the CapEx for the next 10 years, and our friend, Mr. Carney, our Prime Minister, announcing all these infra, that these are the two main, I guess, guiding avenues on which you’re going to be focusing on in the next year or two?

Jean-François Boursier, Chief Financial Officer, ADF Group Inc.: Yes, we would be focusing on all the projects in Canada.

Jean Paschini, Chairman of the Board and CEO, ADF Group Inc.: Okay. Just one last question, and this is more technical from an accounting point of view. The revenues and gross margins were more or less as expected, a little weak. Where the net income and EBITDA were down a lot because of the PSU and the DSU, I mean, these are like your performance share units and your deferred share units. Is this going to continue being either an expense, or will the volatility of stock determine how you account for that?

Jean-François Boursier, Chief Financial Officer, ADF Group Inc.: Actually, I should be asking you the question because that depends on how the market reacts. Obviously, if the stock goes up, it means that we need to increase our DSU and PSU provision because we need to carry the DSUs and PSUs at market value. Market values are established per the stock price. If the stock goes up, it means my provision goes up and my SG&A goes up. If the stock goes down, the provision goes down and the SG&A goes down. It’s sort of a good news, bad news. If the stock goes up, everybody’s happy. It just does have an impact on our SG&A provision and the provision we carry for those DSUs and PSUs.

Jean Paschini, Chairman of the Board and CEO, ADF Group Inc.: Okay. Et peut-être une dernière question, peut-être pour Monsieur Paschini. Maybe to reassure the market because there was a lot of noise, as you know, in the last year and a half. What % of shares does the family own as we speak today?

Jean-François Boursier, Chief Financial Officer, ADF Group Inc.: We own about 13 million shares. It’s about 40% of the total shares and it’s 85% of the voting shares.

Jean Paschini, Chairman of the Board and CEO, ADF Group Inc.: Okay. It is fair to say you still have skin in the game.

Jean-François Boursier, Chief Financial Officer, ADF Group Inc.: Absolutely. Actually, even a bit more than skin.

Jean Paschini, Chairman of the Board and CEO, ADF Group Inc.: Okay. Okay. Those were my questions. Good luck with Mr. Carney and good luck with our friends at Hydro-Québec.

Jean-François Boursier, Chief Financial Officer, ADF Group Inc.: Thank you.

Jean Paschini, Chairman of the Board and CEO, ADF Group Inc.: Merci.

Jesus Sanchez Leon, Analyst, Castaner Investment: Merci.

Conference Call Operator: There are no further questions at this time. I will now turn the call over to Mr. Jean-François Boursier for closing remarks.

Jean-François Boursier, Chief Financial Officer, ADF Group Inc.: Thank you for your interest and confidence in ADF. We wish you to thank you for your interest and support of ADF Group. Have a nice day.

Conference Call Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

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