Good morning, ladies and gentlemen, welcome to ADF Group third quarter 2023 results conference call. At this time, all lines are in listen only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Wednesday, December 7th, 2022. I would now like to turn the conference over to Jean-François Boursier, Chief Financial Officer. Please go ahead. Thank you. Good morning. Welcome to ADF's conference call covering the third quarter and nine-month periods ended October 31, 2022. I will first update you on our quarterly and year-to-date results, which were disclosed earlier this morning by press release, and then update you on our operations. 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 31, 2022, which were filed with SEDAR this morning. Revenues for the quarter ended October 31, 2022 stood at CAD 65 million, compared with CAD 110.2 million per year earlier, while year-to-date revenues stood at CAD 199.4 million, compared with CAD 233.7 million for the same period a year ago. Revenues for the three and nine-month periods ended a year ago on October 31st, 2021 were favorably impacted by the fabrication of projects with high output but low margins. We can see when looking at the gross margin as a percentage of revenues, which went from 5.6% for the quarter ended October 31st, 2021 to 15% for the quarter ended this October 31st, 2022. Year to date, margins as a percentage of revenues also increased, standing at 13.3% for the nine months ended October 31st, 2022, compared with 8.4% for the same period a year ago. Besides the fast-track projects with lower margins I just mentioned, margins for the nine-month period ended October 31st, 2022 were favorably impacted by the forgiveness of a CAD 1.3 million loan granted to one of the corporation's U.S. affiliate. Forgiveness, which was recorded in the second quarter, ended last July 31st, 2022. It is important to note that the year-to-date period ended a year ago on October 31st, 2021 benefited from a Canadian government COVID-related subsidy, which improved gross margins during the quarter ended April 30th, 2021 by CAD 1.6 million and Adjusted EBITDA by CAD 1.9 million. Considering the improved gross margins, Adjusted EBITDA for the three and nine-month periods ended October 31, 2022 stood at CAD 7.5 million and CAD 20.2 million, respectively, compared with Adjusted EBITDA of CAD 4.7 million and CAD 13.9 million for the same periods, respectively, a year ago. Besides the element mentioned before, Adjusted EBITDA for the nine-month period ended October 31, 2022 benefited from an CAD 800,000 gain on disposal of fixed assets recorded in the second quarter, ended last July 31, 2022, which reduced selling administrative expenses by this amount. We therefore closed our 3rd quarter with net income of CAD 2.9 million or CAD 0.09 per share, compared with CAD 2.8 million or CAD 0.09 per share for the corresponding quarter a year ago. Year to date, net income stood at CAD 12.6 million or CAD 0.39 per share, compared with CAD 8.7 million or CAD 0.27 per share for the same period ended October 31, 2021. Operating activities generated cash inflows for the three-month period ended October 31, 2022 of CAD 14.5 million, bringing the year-to-date cash flows from operating activities to CAD 7.7 million. We also, as previously mentioned, continued our CapEx investment program at our Terrebonne facility. Including this investment program, year-to-date cash flows from investing activities required cash outflows of CAD 10.5 million during the ninth-month period ended October 31, 2022. Considering that our automation investment program is all but completed, we expect full-year CapEx to reach CAD 12 million. As previously confirmed, we received the first amounts of our new financing with Investissement Québec in the amount of CAD 15 million in the quarter ended April 30, 2022. Considering that the total available financing stands at CAD 20 million, we still have CAD 5 million from which we could draw in the coming quarters. Our balance sheet remains strong with working capital of CAD 58 million as at October 31, 2022, compared with CAD 38.7 million as at January 31, 2022. With this, we close our third quarter, ended October 31, 2022 with CAD 15.8 million in cash and cash equivalent. This puts us in an excellent position to pursue our backlog growth and execute our current backlog, which stood at CAD 344 million as at October 31, 2022. Although still navigating through uncertain conditions, including inflationary pressures, we have been able to yet again increase our growth margin and Adjusted EBITDA, both in dollars and as a percentage of revenues. We continue to see the positive impacts of our new investments, namely our new turbine automated fabrication line, and expect further efficiency gains in the coming quarters. We will be able to confirm new contract signing in the coming weeks. This additional volume, coupled with the efficiency improvements, bode very well for the coming quarters and will translate into improved return for our shareholders. Ladies and gentlemen, thank you for your interest and confidence in ADF. I will now answer your questions. Thank you. Ladies and gentlemen, we will now begin the question-and-answer session for analysts only. Should you have a question, please press the star followed by the one on your touchtone phone. If you'd like to withdraw your question, please press the star followed by the two. If you're using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. Your first question comes from Edward Collery from Pelham Investment Partners. Please go ahead. Hi, Jean-François. Morning. I just have two quick questions for you. First one is, I just was hoping you could give an update on the company's views of a capital allocation, in particular, you know, any potentially increased shareholder returns, and maybe something on timing on when that might be. I think last time you'd sort of mentioned that, you know, given the backlog growth, that might be a little ways off, but just wanted to make sure nothing had changed. Yeah. And it hasn't changed short term and probably for the next year, really. First, from our side, capital investment is gonna be going back to our more normal terms. We haven't started working on budget yet, but I can see CapEx going down, going back around the CAD 5 million levels for the next fiscal year because which will mainly be maintenance CapEx. As for the rest, we're still trying to grow the backlog. We're still mindful of our the working capital requirements to grow that backlog. At least for the short term, we wanna start generating free cash flow, make sure that we keep a strong balance sheet. Once we achieve that, hopefully, next year with what we have in backlog and what we see coming up at a lower CapEx, we should be able to generate free cash flow. Maybe further down the line next year, we'll be able to start looking at the other option with our free cash flow. As it stands now, we're still trying to remain prudent from that approach, considering that we still have goals to maintain and actually grow the backlog levels. Okay. On that point, you know, have the changes in economic conditions over the last, you know, as you call it, three or six months, impacted the company's views on its ability to grow the backlog? So far, we haven't seen any major changes, no shifts, no project being delayed, no project being pushed to the right. As I mentioned in just a few minutes ago, we do expect to be in a position to announce new contracts in the coming weeks. We're really optimistic about the prospect of other contracts for at least the next few, maybe the first six months of the next fiscal year. We haven't seen any. As I said, we haven't seen any pushback. Obviously, depending on future news and knowing what we know now, we're still optimistic that the market is still gonna be pretty active. We still see lots of projects. The Architecture Billings Index remains above the 50 level, which is positive, which means that projects are coming on stream. We're still optimistic. There are some, as I mentioned also on the call, there are some uncertainties. Inflation is still there. There's still obviously a lot of questions surrounding the situation in Ukraine, the impact that it will have. We know what we know now, but we also know that a lot of people, there's a lot of infrastructure program that wanna get started. The U.S. government has put a lot of money forward. People wanna use those. In spite of the interest rates increase, in spite of the inflation, we still see a lot of project. At one point, will we reach a point where people will say, "Oops, let's hold on." Maybe, but we're still not seeing it. We're really optimistic, definitely for the next... Well, for the remainder of this fiscal year and next fiscal year, but remain prudent for the rest of the way. As far as we can see now, things are still looking good. Great. My only other question is just on the disclosure around the backlog and the fabrication hours in the backlog. you know, maybe getting too in the weeds here, but last quarter the backlog was CAD 348 million, and the Q said that 59% of that was fabrication hours. This quarter, it's CAD 344 million, of which 48% is fabrication hours. you know, the fabrication hours in the backlog went from CAD 205 million to CAD 165 million. In the quarter, we only recognized about CAD 12 million of fabrication. Sorry, CAD 14 million of fabrication. I'm just sort of wondering what's going on there that drove the big reduction in fabrication hours in the backlog. actual fabrication hours during the quarter, there's the backlog also, we recognize our backlog at, in Canadian dollars. As you understand, a lot of our backlog is. Mm-hmm. comes from U.S. projects, so there was a significant currency impact on our backlog that might also skew the number when you look at them. Got it. an overall perspective quarter-over-quarter. Basically, it's not unusual when no new projects come on stream that quarter-over-quarter, when you look at the total backlog, the percentage, we first do fabrication and then installation. Fabrication as a percentage of the total backlog will go down quicker than the installation. As new projects come on stream, and as I mentioned, as we hope to be able to do in the coming weeks, you'll see the fabrication component go back to a higher level. In normal situation, and again, with the type of projects we see now, it's not unusual to. On a 12-month basis. Okay. On a longer run basis, to see for 45%-50% of our backlog being fabrication and 45%-50% being installation, ± the rest being design and raw materials. You'll have the quarter-over-quarter movement. Okay. No, I understand that you're gonna draw it down. I guess all I'm saying is that it went down by CAD 40 million. The backlog, the fabrication backlog went down by CAD 40 million, but I think only 21% of the revenues in the quarter were fabrication, so only about CAD 14 million of revenue for the quarter was fabrication. As you say, maybe it was the FX. I haven't looked at that. Well, it did have an impact, so it might be it. Yeah. need to get into the. Okay. that level of detail, It might be explaining a big chunk of it. Okay. All right. That's helpful. That's all I had. Thank you very much. Thanks. Ladies and gentlemen, as a reminder, should you have a question, please press the star followed by the one. Your next question comes from Murray Knight Engel from Private Investor. Please go ahead. Thank you. Congratulations on the numbers, guys. I have a question with respect to going forward. We're seeing a lot of new projects being announced in the States. I mean, there's the infrastructure spending, which the government, the U.S. government, announced last year. I'm wondering, are you starting to see some business from that? You're seeing a lot of companies, new companies being. There's sort of this reshoring back in America, and that's all non-residential stuff. It's all commercial stuff. Are you starting to see some interest from those kind of projects that perhaps you wouldn't have anticipated, say, two or three years ago? Those are my questions. For the first questions, yes, as I mentioned on the previous question. We still see a lot of the bidding activity is still really active. And yes, those level of activities do include projects coming from the different infrastructure programs that have been put forward in the States and even to some extent in Canada too. A lot of these are public funding, so obviously they're subject to the Buy American Act, so we can bid on them, but need to fabricate them from our Great Falls plant. This said, a lot of these public infrastructure also drive private investment around these public investments, so which is also good for us, and those could actually be, since they are not subject to the Buy American Act, can be fabricated out of our Terrebonne plant. All in all, yes, we do see a significant improvement. We still see a good market. I don't think the full effect of the infrastructure program coming from the different governments have fully impacted the entire market. Some of that might be to some extent offset by what we're seeing from the interest rate standpoint and the pricing increase. Obviously, it's one thing to have access to subsidies or to infrastructure program, but the fact of the matter is project costs are going up just because of the inflation. Overall, still seeing lots of opportunities from a bidding aspect. As for your second question, I wouldn't be able to. I'd need to ask specifically. I think that in general term, the market, I wouldn't be able to quantify exactly where the additional or where the strong opportunities are coming from. I'm sure some of it might be coming from the aspect of bringing back some of the fabrication. To tell you the truth, there's a lot of capacity in North America for steel fabrication. I think that for U.S., Canadian or U.S. project, it wasn't that much that there was a lot of offshoring. I'm sure, and I know that there was a lot of European fabricator or outside Canada and U.S. fabricator that were bidding on bigger projects in North America because this is really the strongest steel, the strongest steel fabrication market in the world. It is, it is stronger than in Europe for at least for the time being, just from a capacity standpoint. I mean, without going into the, all the details, and as I said, I don't have personally that level, but I'm sure that they're probably part of those projects coming back in North America that are also included in the improved backlog pipe, backlog pipeline that we see presently. I see. Okay. Thank you. Thanks. Mr. Boursier, there are no further questions at this time. Please proceed. I wish to thank you for your interest in ADF Group. We hope you will have a safe and happy holiday season. Have a nice day. Ladies and gentlemen, this concludes your conference call for today. We thank you for joining, and ask that you please disconnect your lines. Thank you.