ADF Group Inc. Announces Normal Course Issuer Bid

ADF Group Inc. (TSX: DRX), a North American leader in the fabrication of steel superstructures, has announced a normal course issuer bid (NCIB) for its subordinate voting shares. This strategic move allows the company to repurchase up to 1,770,707 shares, representing approximately 10% of the public float, at market prices. The repurchases will be made through the facilities of the Toronto Stock Exchange (TSX) or alternative trading systems, subject to certain trading parameters and regulatory restrictions.

ADF Group's management believes that the repurchase of its subordinate voting shares is a desirable use of its funds, both for the corporation and its shareholders. The company's strong financial performance, with revenues of $262.2 million and net income of $47.7 million during the nine months ended October 31, 2024, up by 8.1% and 41.5% respectively from the same period last year, demonstrates its ability to generate sufficient capital for the repurchase program. Additionally, the company's cash flow from operating activities reached $53.3 million during the same period, further supporting its financial flexibility.

The NCIB also aligns with ADF Group's long-term strategic goals and shareholder value maximization. By repurchasing shares, the company can reduce its outstanding shares, potentially increasing earnings per share and shareholder value. The repurchase program also mitigates the dilutive effect of future share issuances, such as employee stock options or dividend reinvestment plans. Furthermore, the NCIB signals ADF Group's confidence in its financial position and the attractiveness of its share price, indicating to investors that the company believes its shares are undervalued.

The repurchase program is expected to have a positive impact on ADF Group's capital structure and financial flexibility. By reducing the number of outstanding shares, the company enhances the ownership percentage of remaining shareholders. Additionally, the repurchase program improves ADF Group's financial flexibility by reducing the number of shares available for issuance, which could be used to fund future acquisitions or investments. However, the repurchase program may also impact the company's capital structure by reducing the amount of capital available for distribution to shareholders in the form of dividends or share buybacks.

ADF Group's normal course issuer bid aligns with its dividend policy and shareholder returns strategy. The company aims to repurchase up to 1,770,707 subordinate voting shares, representing approximately 10% of the public float, for cancellation. This move signals ADF's confidence in its financial position and commitment to returning capital to shareholders. The repurchases will reduce the number of outstanding shares, potentially increasing earnings per share and enhancing shareholder value. Additionally, ADF's dividend policy, which targets a payout ratio of 25% to 35% of net income, remains unchanged. The NCIB complements this policy by providing an alternative means of distributing capital to shareholders when the dividend payout ratio is below the target range.

In conclusion, ADF Group Inc.'s normal course issuer bid is a strategic move that aligns with the company's strong financial performance, long-term strategic goals, and shareholder value maximization. The repurchase program is expected to have a positive impact on the company's capital structure and financial flexibility, while also complementing its dividend policy and shareholder returns strategy. As ADF Group continues to execute its strategic initiatives, investors can expect the company to maintain its position as a leader in the fabrication of steel superstructures and deliver long-term value to its shareholders.