Good morning, ladies and gentlemen, and welcome to ADF Group Third Quarter results 2024 conference call. At this time, all lines on a 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 Thursday, December 7th, 2023. I would now like to turn the conference over to Jean-François Boursier, Chief Financial Officer. Please go ahead.
Thank you. Good morning, and welcome to ADF's conference call covering the third quarter and nine months ended October 31st, 2023. I will first update you on our quarterly and year-to-date results, which were disclosed earlier this morning by press release, and then proceed with a quick update about our operation. 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 months ended October 31st, 2023, which were filed with SEDAR+ this morning. After posting two consecutive quarters of CAD 80 million in revenues, we closed our third quarter, ended October 31st, 2023, with revenues of CAD 82.1 million, CAD 17.1 million, or 26.4% higher than last year.
Year to date, revenues stood at CAD 242.6 million compared to CAD 199.4 million for the nine-month period ended October 31st, 2022. These increases are in line with the past quarter's trend and our increased backlog. Gross margin as a percentage of revenues at 24.4%, is up from the 15% margin for the quarter ended October 31st, 2022, while Adjusted EBITDA at CAD 17.8 million, is CAD 10.2 million higher than the third quarter ended last year.
Year to date, gross margin as a percentage of revenues at 21.1% is up from the 13.3% margin for the ninth-month period, the nine-month period ended October 31st, 2022, while Adjusted EBITDA at CAD 40.4 million was CAD 20.2 million higher than the ninth-month period ended last year. Gross margins for the three-month and nine-month periods ended October 31st, 2023, benefited primarily from the operational efficiencies generated by the commissioning of the new robotic production line and new programmable and automated equipment at ADF's plant in Terrebonne, and also by the improvement in margins of recently signed projects that are now in fabrication. Year to date, these favorable gross margin variances did not entirely trickle down to Adjusted EBITDA, considering the increase in selling and administrative expenses for the nine-month period ended October 31st, 2023.
For the three- and nine-month periods ended October 31st, 2023, SG&A expenses stood at CAD 3.8 million and CAD 15.2 million, respectively, CAD 119,000 and CAD 5.1 million higher than for the corresponding periods a year earlier. The year-to-date increases comes from the higher salary levels in line with the recent inflation trends and share-based compensation fair market valuation in line with ADF stock price increase. In addition, selling and administrative expenses for the nine-month periods ended last year on October 31st, 2022, benefited from a CAD 888,000 gain on disposal of fixed assets. We therefore closed our third quarter with net income of CAD 11.2 million or CAD 0.34 per share, compared to CAD 2.9 million, or CAD 0.09 per share for the corresponding quarter a year ago.
Year to date, net income stood at CAD 27.1 million, or CAD 0.83 per share, compared to CAD 12.6 million, or CAD 0.39 per share for the same period ended October 31, 2022. As at October 31st, 2023, cash and cash equivalents stood at CAD 44 million, CAD 36.8 million higher than as at January 31st, 2023, while working capital stood at CAD 94.5 million, CAD 44.1 higher than the January 31st, 2023 level. Now that our investment program for the automation of our fabrication facility in Terrebonne is finalized, we expect full-year CapEx to be under CAD 6 million dollar, CAD 6 million, with CAD 5.2 million being spent year to date. Finally, we closed the quarter with a backlog of CAD 339.3 million.
On the workforce front, we are happy to confirm that our 189 unionized Terrebonne facility employees ratified this December 3rd, a five-year renewal of their labor agreement. We are now turning our attention to closing our fiscal 2024 year. We are still seeing a good bidding pipeline and are confident that we will be able to announce new contracts in the coming weeks. With a strong backlog, sound balance sheet, and a recently ratified union agreement for our Terrebonne facility employees, we are well-positioned to maintain our past quarters positive trend and pursue our growth. Thank you for your interest and confidence in ADF. We will now answer your questions.
Thank you. Ladies and gentlemen, we will now take questions from analysts only. Should you have a question, please press the star followed by the one on your touch-tone 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 Nicholas Cortellucci from Atrium Research. Please go ahead. Nicholas, your line is open.
Hi there, can you hear me?
Yes, Nick.
Morning, guys, and congrats on another great quarter here.
Thank you.
My first question was about capital allocation. With the cash balance at CAD 44 million, how do you plan on thinking about capital allocation in 2024, whether it's increasing the dividend, buying back stock, or reinvesting back into the business?
Well, we're still in a growing mode from a backlog standpoint, so at least for the time being, still at these levels, still trying to keep our cash and working capital to support the backlog growth. Obviously, the trend in cash flow generation is positive. We do expect that to keep going for the coming quarter. So obviously, as we look at FY 25 and start looking at budget, we will, as a group, look at this and start having those discussions about when we really get into what we consider excess cash, so that we've got sufficient working capital to support the backlog growth, what will we do with the excess? So it's a bit early.
Obviously, we will, once we turn the new year, be looking at finalizing our FY 2025 budget. As a group with our board, we will, at that time, look at capital allocation going forward.
Understood. Thank you. And then my other question was: It's been about two years since the U.S. Infrastructure Bill got passed. Are you guys starting to see those projects start to join the pipeline, or is that still something for 2024?
Yes, we, we do. But to tell you the truth... Well, yes, we do. I think there is still a lot that will come in the future. Obviously, a lot of these infrastructure packages are allocated to public projects, which are subject to, most often, to the Buy American Act. So these would be projects that would be handled by our Great Falls plant. What we do see and because there are different packages out there, but what we do see is a lot of overseas manufacturing that is being brought back to the States.
So these are not—well, they might be, in some instances, financed by some of those subsidies, but a lot are coming just by the fact that there's a push from the U.S. administration to bring back manufacturing. But so long story short, we still expect to see in the future some direct or indirect impact from these infrastructure packages. So it's good news for us and actually for the entire industry.
Okay, great. Those were all my questions, and congrats on another great quarter. I'll jump back in the queue here. Thanks.
Thanks, Nick.
Ladies and gentlemen, as a reminder, should you have a question, please press the star followed by the one. Mr. Boursier, there are no further questions at this time. Oh, one moment, please. We have a question from Murray Knight-Engel, Private Investor. Please go ahead.
Thank you. Great numbers, guys. What are your plans, if any, for bringing automation to your U.S. plant?
We are looking into it. We've started doing some inquiries. Obviously, we wanna finish, because although the automation process is going well in Terrebonne, we're still learning and still improving on those processes. So, it's something at one point that we will look, but the markets are different. As we've explained, the automation is really for the more standard work. Historically, our Great Falls shop has done more complex work, so the automation would not be as, at least based on historical production trend, the automation would not be as significant in Great Falls. So we are looking into it. It's definitely not in the short-term plan, and if and when it wouldn't be the same size.
The Great Falls facility is smaller than the Terrebonne shop, but we've seen what automation brings in Terrebonne, so we're not saying no. This is definitely something we'll look, but I think it's too early to predict if and when, and definitely not in the cards for the next fiscal year.
Okay, thank you.
There are no further questions at this time. I will turn the call back over to Mr. Boursier for closing remarks.
Thank you. Again, we wish to thank you for your interest in and support of ADF Group. I would also like to take this opportunity in ADF's and my behalf to wish you all a safe and happy holiday season. Thank you.
Ladies and gentlemen, this concludes your conference call for today. We thank you for joining, and you may now disconnect your lines. Thank you.