ADF Group Inc.

ADF reported fiscal 2026 revenue of $258.7 million, down from $339.6 million last year. Gross margin was 23.1% versus 31.6% in fiscal 2025, and adjusted EBITDA was $43.5 million, or 16.8% of revenue, versus $91.3 million, or 26.9% of revenue a year ago. Net income was $26.3 million, or $0.93 per basic and diluted share, compared with $56.8 million, or $1.84 per share last year. For the fourth quarter, revenue was $78.8 million, gross margin was 21.5%, and net income was $6.4 million. Looking ahead, management said it expects revenue growth in fiscal 2027, but margins are likely to be somewhat stagnant in the first quarters before improving later in the year as Groupe LAR integration progresses and projects are completed.

Pierre Paschini said ADF has followed its customers into stronger Canadian infrastructure and industrial opportunities, including work in Montreal Airport, Ontario, Western Canada, bridge work, and possible data center and nuclear-related projects. He emphasized that the company still has sufficient capacity in Terrebonne and can add more work in Montana, while the Groupe LAR expansion should unlock additional capacity and growth. His tone was optimistic but tempered by repeated references to tariff-driven uncertainty and the need to stay competitive on margin.

Jean-François Boursier highlighted that the fiscal 2026 decline versus last year was driven by tariff-related raw material costs, signing delays, and a less favorable mix, while Groupe LAR added $20 million of revenue and $2 million to consolidated gross margin since the acquisition closed on September 18, 2025. He noted selling and administrative expenses were $23.2 million, up $1.1 million mainly from LAR, and that operating cash flow was $49.4 million versus $11.1 million of CapEx, mostly maintenance at Terrebonne and Great Falls. He also said cash and cash equivalents were $62.7 million, working capital was $104.8 million, and the company plans to invest close to $35 million in fiscal 2027, mainly for the LAR plant expansion and modernization, while negotiating financing for those investments.

Analysts focused on the new 4-year contract, margin trajectory, capacity for Canadian infrastructure demand, and the impact of the latest U.S. tariff change. Management said the new contract will not materially affect FY2027 because most fabrication starts next year, and that FY2027 margins should be similar to fiscal 2026 overall, with a weaker first half and better second half as synergies and equipment improvements begin to show. On tariffs, management said the new 10% charge applies to the invoice value, including profit, and could reduce margin by about 5%, though backlog mix shifts toward Canada should soften the impact.