What you need to know: • ADF reported Q4 & FY25 financials that were a slight miss to our estimates. • For Q4, revenue came in at $77.4M (-12% YoY) vs. our estimate of $80.0M and EBITDA came in at $19.2M (+24% YoY) vs. our estimate of $19.7M. • FY25 marked another stellar year for ADF, however, the tariff situation is impacting management’s ability to sign new contracts, who are now expecting a decline in revenue and margins in FY26. • ADF ended the quarter with $60.0M in cash and $189.6M in current assets. ADF Group (DRX:TSX, ADFJF:OTC) reported Q4 and FY25 financial results (ending January 31st) today before market open which slightly missed our estimates. In its outlook and on the conference call, management had a change of tone due to the new reality of tariffs affecting its ability to grow revenue. We are recalibrating our estimates to model a decline in FY26 and are lowering our target price to reflect the current state of the trade war. We are maintaining our BUY rating and decreasing our target price to $9.00/share on ADF Group. Key Highlights • Revenue for Q4 came in at $77.4M vs. our estimate of $80.0M and $88.4M last year, representing a 12% YoY decline. FY25 revenue was $339.6M vs. our estimate of $342.2M, equating to 3% YoY growth. • The order backlog came in at $293.1M (vs. $330.3M in Q3), extending through January 2027. This does not include the $120M of new contracts. • Gross margin for Q4 was 31% vs. our estimate of 29% and 24% in Q4 last year. FY25 gross margin came in at 32% compared to our estimate of 31%. • Q4 EBITDA came in at $19.2M (25% EBITDA margin, +24% YoY) compared to our estimate of $19.7M (25% margin) and $15.5M in Q4/24. FY25 EBITDA was $91.3M (27% margin, +63% YoY) vs. our estimate of $91.7M (27% margin). • EPS in Q4 of $0.30/share (or $9.1M in net income) compared to our estimate of $0.43/share (or $12.8M in net income). FY25 EPS was $1.84/share (+60% YoY) vs. our $2.03/share, representing a 34% ROE and 27% ROIC. • ADF posted $1.2M in capex in Q4 and $8.3M in FY25. This translated to $0.6M in FCFF in Q4 and $47.6M in FY25. • ADF purchased 721.3K shares during the quarter and 423.2K shares subsequent to the quarter (2% and 1% of its shares outstanding, respectively). • The Company ended the quarter with $60.0M in cash and $45.6M in debt.