Good morning and welcome to ADF's conference call covering the third quarter and nine-month ended October 31st, 2025. I am with Jean Paschini, Chairman of the Board and CEO of ADF, 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 the first-time consolidation of Groupe Lyr, the acquisition of which was finalized on September 18th. 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 third quarter and nine-month ended October 31st, 2025, which were filed with SEDAR this morning.

Revenues for the quarter ended October 31st, 2025, at $71.4 million, were only $8.5 million lower than last year. Year-to-date, revenues stood at $179.9 million, compared with $262.2 million for the nine-month for the nine-month period ended October 31st, 2024.

While the corporation's order backlog is more than adequate, and as we already mentioned in previous communications, the uncertainty surrounding the US tariffs has created an unrecoverable delay in fabrication hours, mainly at ADF's plant in Terrebonne, Quebec. We closed the third quarter ended October 31st, 2025, with gross margin of 27.6% as a percentage a percentage of revenues, down from 30.4% for the quarter ended October 31st, 2024, while the year-to-date gross margin as a percentage of revenues at 23.8% is also down from the 31.7% margins for the nine nine-month period ended October 31st, 2024.

The decrease in revenues required ADF to implement a work-sharing program during the second quarter ended July 31st, 2025, at its Terrebonne plant. This program has allowed the corporation to mitigate the negative cost impact of the decrease in fabrication hours, but not entirely.

Tariffs also had an indirect negative impact on the corporation's margins, which is caused by the increase in the price of steel set by the US steel mills. Adjusted EBITDA for the quarter ended October 31st, 2025, at $18.4 million, compared to $24 million for the same quarter ended a year ago, while year-to-date adjusted EBITDA stood at $32.5 million, compared to $72 million for the nine-month ended a year ago.

Again, it is worth mentioning that while the financial results for the period ending October 31st October 31st, 2025, are severely impacted by the tariff and associated turmoil, last year's results benefited from an exceptionally an exceptionally favorable product mix. Selling and administrative expenses for the three months ended October 31st, 2025, stood at $3.1 million, posting a $1.3 million increase compared to the same period ended a year ago.

This variation is mostly explained by the adjustment in the market value of DSUs and PSUs, in line with the corporation share price during the the period analyzed. Year-to-date, these expenses stood at $15.3 million, which is $0.5 million lower than the same period a year earlier.

This variation, although to a lesser degree, is also due to the adjustment in the market value of DSUs and PSUs. We therefore close our third quarter with net income of $10.3 million or 36 cents per share, compared with $16.4 million or 55 cents per share for the corresponding quarter a year ago.

Year-to-date, net income stood at $20 million or 70 cents per share, compared with $47.7 million or $1.53 per share for the same period ended October 31st, 2024. As previously as previously mentioned, the October 31st, 2025 quarter-end included the first for the first time, the inclusion of Groupe Lyr into our consolidated results.

As such, and for the period starting September 18th, 2025 to the end of the quarter on October 31st, 2025, Lyr increased our revenues by $6.2 million, adjusted EBITDA by $0.5 million, and net income by $0.2 million. We close our third quarter with $37.7 million in cash and cash equivalents, $27.3 million lower when compared to the January 31st, 2025 closing balance.

The Groupe Lyr acquisition explains $16.4 million of this variance, plus the working capital we invested to support Lyr operations since the acquisition. Working capital as at October 31st, 2025 reached $101.4 million for a ratio of 2.27 to 1, compared with a working capital of $109.2 million or a ratio a ratio of 2.36 to 1 as at January 31st, 2025.

Year-to-date, operating cash flow reached $13.4 million for the nine-month period ended October 31st, 2025, while we spent $8.7 million on property, plant and equipment, and intangible assets acquisitions, including the upgrade of ADF's ERP system, which is scheduled to take place over the next three fiscal years. In addition, and as mentioned with the July 20 23rd multi-year contract announcement, we will be investing in new equipment at our Terrebonne site, which should bring our full-year CapEx investment at approximately $11 million.

Finally, we close the quarter and nine-month ended October 31st, 2025, with an order backlog of $497.1 million, compared with $330.3 million on the same date a year earlier, and $293.1 million on January 31st, 2025. It should be noted that ADF's order backlog as at October 31st, 2025, includes the order backlog of Groupe Lyr, totaling $91.9 million, and does not include the option to extend the long-term contract announced last July by five years.

Although still not at last year's level, our third quarter results have improved when compared to recently closed quarters. We are still seeing the effect of the new U of the new US trade policies, as they continue creating uncertainties in our markets.

This said, and as we have explained at our last quarter-end call, and also in more detail on our October 20 October 29th analyst call, we are now working hard on Groupe Lyr's integration into our operations. We are already seeing the impact from our acquisition, as our consolidated backlog's US content, which made up 95% of our January 31st, 2025 backlog, is now only representing 43% of our October 31st, 2025 backlog.

This is the first of many positive impacts we will see in the coming quarters, as we fully integrate Groupe Lyr and execute our investment plan. We are still finalizing the final detail of this important investment, but we will provide additional information in future communication as it becomes available.

The US market remains a key market for ADF, but we are now better positioned to face the new North American landscape. We will continue our methodical and measured development approach, while maintaining our tight management of operational risks, delivering solid results to our shareholders.

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

Hey, Jean and JF. Congrats on the quarter here.

Good morning.

Thanks for answering my questions. First one is just on the Lyr Group acquisition.

Maybe just walk us through the steps of integration you guys are going through right now and what that looks like and what kind of synergies we can expect on the revenue and the cost side.

As we mentioned on the call at the end of October, still, well, besides the financial integration and the first consolidation, we're working hard looking at how we will invest at Lyr's plant in the Lac-Saint-Jean region. We need to increase capacity in light of the upcoming volume.

Obviously a lot of emphasis being put on this investment and also how to finance that investment. That's really the emphasis we're putting now.

Also working with them on the bidding process, trying to go back, because obviously through the acquisition process, they had to sort of slow down their bidding process because of other operating issues they had while we were doing the acquisition. Now that everything is behind us and that everybody's fully on board, we're back on the bidding trend.

Good things are coming, as we also mentioned on our October call with the analysts. Really working with them on the bidding process, we're hopeful to be able to have nice announcement in the coming quarters.

If we're successful at signing those jobs, we need to make sure also that we're able to have sufficient capacity. Working with all of that.

A lot of work going on. Obviously, the fact that the both operation have similar values really helped on the integration process.

That the process really goes well and everybody's eager to get Lyr back on its usual trend and actually even better. As for synergies, we're still evaluating them.

Obviously, some of them will come as the integration goes. Just from an administrative perspective, there will be synergies also as we combine the operation.

Obviously, once we are able to have the new investment in with the new equipment, we can actually expect further efficiency improvement and additional synergies.

Right. Perfect.

Thank you for that. Then maybe just a bit on margins.

If we calculate the Lyr Group margins from the numbers you guys reported, it was a bit lower than what you guys report. Where do you see that going over the long term?

What is kind of the target EBITDA margins or even gross margins for the acquisition?

Like Jean-François said before, that facility, that shop was almost bankrupt. Right now, we are working with everybody, putting up systems, a lot of integration that we're doing.

I want this shop at Lyr to be able to do the same margin as us here in Terrebonne and in Great Falls. By investing the money that we're going to invest, if the board of director approves it, the new facility is going to be very sophisticated, and margins are going to be, like I said, as high as we have them here.

Perfect. Then, I know you guys have made the big shift over to Canada, but if we are to get some type of resolution on the trade front over the next year, how quickly can you flip the switch and get back to what you guys were doing last year and the year before with a lot of these US contracts?

It's when the switch when

when the switch is on, we have a lot of clients in the US on the other side of the border. Right now, the the the those clients, I'm not able to guarantee that there's not going to be any tariffs.

By doing that, they're shifting work to somebody else. Whenever there's there's an agreement between Canada and the US, then, listen, we're going to return and we're going to we're going to make sure that we will we will get work and and, get work and produce.

Still, what happened what happened with the with the new resident, it could happen years it it could happen it could it could happen again. We're working hard to diversify our backlog.

I think at the beginning of the year, it was 90% US. Now, we're up to Now, we're up to 57%.

57%. We have to keep Canada and we have to keep all North America to make sure that we won't get shifted again.

Nick, the goal is really not to exit the US market. From a steel manufacturing standpoint, US market is still the biggest market and a key market.

Obviously, there are some struggles now, as Jean explained, because of the tariff and the uncertainty, but definitely the idea is to have a better-balanced backlog, which we achieve, but not shifting the US volume to Canadian volume. It's just increasing the Canadian volume and increasing the overall backlog.

By doing that, we were still keeping the US market as a key market. We have to.

This said, we need also to be smart about it, and I think with the acquisition and the better balance, we are definitely reducing, mitigating the risk coming from the tariff uncertainty.

Yeah. Absolutely.

Okay. That makes sense.

Then just last one for me. If you could give us some commentary on Q4 and how that's shaping up.

What should investors expect?

Q4 should be similar to Q3. We're expecting again a good quarter.

I'll leave it at that. Q4 is going to be a good quarter.

Got it. Okay.

Thanks for the time, guys, and congrats on the improvements.

Thanks, Nick.

Thank you. Again, we wish to thank you for your interest in and support of ADF Group.

Jean and I would also like to take this opportunity to wish you all a safe and happy holiday season. Have a nice day.