ADF Group (DRX) Q2 2026 earnings summary

Executive summary

• Revenue and profitability declined significantly year-over-year due to U.S. tariffs and reduced fabrication hours, with six-month revenues at $108.5 million and net income at $9.6 million, both down sharply from the prior year.

• Order backlog reached $468 million as of July 31, 2025, up 60% from January 31, 2025, not including the pending LAR acquisition backlog of $104.5 million.

• A work-sharing program was implemented at the Terrebonne plant, which operated at 30% workforce for most of the quarter, but all employees returned to full-time work near the end of the quarter.

• Announced a multi-year infrastructure contract in Quebec valued at $35–$40 million per year, with an option to extend for five more years, and the acquisition of Groupe LAR.

• Achieved nuclear sector certification, opening new market opportunities in Ontario.

Financial highlights

• Q2 revenue was $53 million, down $21.9 million from the prior year; year-to-date revenue was $108.5 million, down from $182.3 million.

• Q2 gross margin was 20.7% (down from 36.9%); year-to-date gross margin was 21.3% (down from 32.3%).

• Adjusted EBITDA for Q2 was $3.7 million (vs. $24.9 million last year); year-to-date adjusted EBITDA was $14.1 million (vs. $48 million).

• Q2 net income was $898,000 or $0.03 per share (vs. $16 million or $0.51 per share); year-to-date net income was $9.6 million or $0.34 per share (vs. $31.3 million or $0.98 per share).

• Cash and cash equivalents at quarter-end were $50.9 million; working capital was $105.5 million.

Outlook and guidance

• Order backlog remains strong at $468 million, not including the pending LAR acquisition backlog of $104.5 million.

• CapEx for the year is projected at approximately $11 million, mainly for new equipment at Terrebonne and ERP upgrades.

• Focus on increasing Canadian content in the backlog to reduce U.S. market exposure and diversify through the LAR Group acquisition.

• The company is investing in new equipment and hiring to support the major Quebec contract, with fabrication to begin soon.