ADF Group Inc. (DRX:TSX)

ADF has a solid track record of growing revenue through its history; however, we believe it has entered a multi-year growth phase given the tailwinds in its key markets and expanded facility capacity. While growth has been bumpy because of the U.S. tariffs, we believe there is still large growth ahead.
The Company’s topline growth is supported by significant tailwinds in government infrastructure spending and non-residential construction growth.
ADF has acquired LAR Group, which has diversified its revenue further into Canada and into the growing hydroelectricity market.
ADF has a clean balance sheet, with a cash position of $62.1M in Q1. This allows the Company to take on larger-scale projects and weather the tariff situation.
ADF is a family-owned business with Jean, Pierre, and Marise Paschini holding 42% of the shares outstanding and >80% of the voting rights. As such, management is highly incentivized to optimize returns and not dilute shareholders.

Investment Summary

Company Description

ADF Group is a North American leader in the design, engineering, fabrication, and installation of complex steel structures, heavy steel built-ups, as well as in architectural metals for the non-residential infrastructure sector. ADF is one of the few players capable of handling highly technically complex mega projects on fast-track schedules in the commercial, industrial and public sectors. The Company operates two fabrication plants and two paint shops (in Canada and the U.S.).

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