ADF Group Posts Record Backlog and Strong Q2 Earnings

ADF Group Inc. delivered a strong second quarter for fiscal 2026, with revenue climbing to C$95 million and adjusted EBITDA rising to C$8.4 million. The company’s net income reached C$3 million, or C$0.10 per share, a significant improvement from the C$0.9 million reported in the prior-year period. According to GN markets/earnings (en-US), these results were supported by increased fabrication activity and a substantial customer-claim settlement that bolstered liquidity.

For the first six months of the year, ADF Group saw revenue increase by 79% to C$194.3 million, compared with C$108.5 million in the same period of 2025. CFO Jean-François Boursier noted that the year-over-year comparison is favorable due to a work-sharing program at the Terrebonne, Quebec plant, which reduced fabrication hours during the previous year amid tariff uncertainty. The company ended the quarter with a record consolidated order backlog of C$693.7 million and C$91.4 million in cash.

Settlement Boosts Financial Performance

A key driver of the improved profitability was the final settlement of a claim against a Groupe LAR customer. This settlement provided a cumulative positive impact of C$20.2 million on Groupe LAR revenue and C$5.3 million on ADF’s gross margin for both the quarter and the first half. While the quarter’s gross margin was 18.7%, down from 20.7% a year earlier, the first-half margin of 21.5% remained broadly in line with the 21.3% recorded in the comparable prior-year period.

Despite the settlement boost, ADF Group faced headwinds from higher input costs, particularly steel prices and tariff-related charges. These factors weighed on margins, partially offsetting the benefits of higher revenue in absorbing fixed costs. Additionally, non-cash mark-to-market costs associated with deferred and performance share units reduced net income by C$4.3 million in the quarter and C$5.6 million in the first half, following an increase in the company’s share price since January 31.

Record Backlog Drives Outlook

The company’s record order backlog of C$693.7 million includes C$243.3 million at Groupe LAR, excluding a five-year extension option tied to a long-term contract announced in July 2025. Canadian projects accounted for 64% of the consolidated backlog at the end of July, a decline from approximately 72% at the end of the first quarter due to recent U.S.-based project announcements. This shift indicates a diversification of the company’s project mix toward North American markets outside Canada.

Capital Investment Amid Tariff Pressures

Looking ahead, ADF Group expects to invest more than C$40 million in capital spending for the full year, with expansions planned in Quebec and Montana. Although the company does not expect direct exposure to the latest 50% U.S. tariff, it acknowledged that higher steel costs and tariff-related charges continue to pressure margins. The strategic focus remains on leveraging the strong backlog to maintain growth while managing input cost volatility through operational efficiency and geographic diversification.