ADENTRA Announces Strong Third Quarter 2025 Results

Sales of US$592.1 million, Basic EPS of US$0.42

LANGLEY, BC, Nov. 10, 2025 /CNW/ - ADENTRA Inc. ("ADENTRA" or the "Company") today announced financial results for the three and nine months ended September 30, 2025. ADENTRA is one of North America's largest distributors of architectural building products to the residential, repair and remodel, and commercial construction markets. We currently operate a network of 82 facilities in the United States and Canada. All amounts are shown in United States dollars ("US $" or "$"), unless otherwise noted.

Financial Highlights (as compared to Q3 2024 unless otherwise noted)

• Total sales increased to $592.1 million (C$815.5 million), up $23.3 million, or 4.1%, from $568.8 million (C$775.9 million)
  
  
• Gross marginpercentage increased slightly to 21.4%, from 21.3%
  
  
• Operating expenses increased by $4.9 million, or 5.0%
  
  
• Basic earnings per share of $0.42(C$0.58), compared to $0.42(C$0.57) per share
  
  
• Adjusted basic earnings per share of $0.70(C$0.97), compared to $0.74(C$1.01) per share
  
  
• Adjusted EBITDA increased to $49.9 million (C$68.8 million), up 3.9% from $48.0 million (C$65.5 million)
  
  
• Cash flow provided by operating activities of $60.6 million, as compared to $67.7 million in the prior year period
  
  
• Effectively deployed capital in Q3 2025, returning $2.7 million in cash to shareholders via dividends and $4.7 million via share repurchases
  
  
• Increased annual dividend by 6.7% to C$0.64 per share, beginning with the quarterly dividend to be paid January 30, 2026

"We achieved strong third quarter performance, with year-over-year growth in sales, gross margin, and Adjusted EBITDA," said Rob Brown, President and CEO of ADENTRA. "Our positive results underscore the continued success of our business strategies, our scalable and cost-efficient operating model, disciplined capital allocation, and our ability to capitalize on industry consolidation through acquisitions such as last year's Woolf transaction. The Woolf operations, which we acquired in July 2024, have integrated smoothly and are delivering the top- and bottom-line benefits we anticipated."

"On the market front, while demand improved modestly as the quarter progressed, conditions remain generally challenging. I am proud of our team's consistent execution and strong performance in this environment, culminating in third quarter sales of $592.1 million, including year-over-year acquisition-based growth of 2.4% and organic growth of 1.7%, a gross margin of 21.4%, and strong Adjusted EBITDA of $49.9 million."

"Robust cash generation of $60.6 million delivered on our expectations and included $35.1 million of operating cash flow before changes in working capital and $25.5 million from our planned second-half reduction in working capital. We used this cash to further reduce debt and return $7.4 million of capital to shareholders through dividends and opportunistic share repurchases. I am pleased to announce that based on our strong performance and continued expectation of steady and consistent results, our Board of Directors has increased our annual dividend to C$0.64, beginning with the quarterly dividend to be paid in January 2026."

"The third quarter also brought greater clarity regarding US tariffs on our imported products. Results of the US Department of Commerce Section 232 investigation largely excluded our products, meaning they are now subject only to country-specific tariff rates, averaging approximately 20%. Our business model is well equipped to handle tariffs at this level, and we do not foresee a material impact on product sourcing or margins as a result."

"Looking ahead to the final quarter of 2025, we anticipate continued strong cash generation even as we enter the seasonally slower winter months. Our capital allocation priorities will continue to focus on reducing leverage and further strengthening our balance sheet as we prepare to execute on our strategic priorities in fiscal 2026, including the pursuit of accretive acquisitions," concluded Mr. Brown.

Tariffs

Country Tariffs

As of November 10, 2025, we estimate 30% of our product mix will be subject to country-specific tariffs, at average rates of 20%.

Product Tariffs

The US Department of Commerce's ("Commerce") Section 232 (S232) investigation into the US national security implications of timber, lumber, and derivative product imports ("Wood Products") concluded in September 2025. Our products were largely excluded from the scope of S232, and are instead subject to country-specific rates as noted above. 

Countervailing Duties (CVD) and Anti-Dumping (AD)

In Q2 2025, Commerce completed its review of certain hardwood plywood products from Vietnam, which were alleged to be circumventing existing CVD and AD orders against Chinese hardwood plywood. The review's outcome was favorable for us, as it removed the circumventing designation and associated duties on products we had imported. Consequently, we received a refund of $7.3 million in the second quarter plus interest. We expect to receive an additional $16.6 million in duty refunds and this is recorded in accounts receivable.

Also during the second quarter of 2025, Commerce initiated new CVD and AD investigations relating to hardwood and decorative plywood imports from China, Indonesia, and Vietnam into the US. Final determinations could be announced as early as the fourth quarter of 2025 for CVD, and early 2026 for AD; however, these timelines remain subject to extension. The Company does not expect the outcome of this investigation to have a material effect on its supply chain or result in duty liabilities.

Response

We are well-prepared to manage tariff impacts. Our price pass-through model allows us to offset increased product costs, including those related to tariffs, by adjusting selling prices. This approach has helped us maintain consistent gross margins and generate additional gross profit during periods of rising product costs. Our global sourcing network spans over 30 countries, providing diverse product options and different price points for our customers.. As a key partner for our US vendors, which represents the majority of our sourcing, we also have a strong domestic supply if customers prefer US products over imported ones.

In the event that tariff-related price increases reduce consumer demand, we can adjust inventories and preserve cash flow. During economic slowdowns, we release working capital and pay down debt. We believe that any short-term reduction in home building will only worsen the existing housing shortage in the US, ultimately boosting future demand for our products.

Outlook

The fourth quarter is a seasonally slower period for construction activity, and we expect our Adjusted EBITDA performance to be similar to what we achieved in the first quarter of 2025. We continue to approach the near-term outlook with measured caution. Higher US mortgage rates and limited housing inventory continue to pose affordability hurdles for prospective buyers. Additionally, the intensifying trade tensions between the US and major global partners have heightened economic uncertainty and raised the risk of renewed inflationary pressures. The recent easing of interest rates combined with long-term structural demand drivers may support a more constructive backdrop into 2026.

Despite our prudent short-term stance, we remain optimistic about the long-term trajectory of the residential construction sector. This confidence is underpinned by enduring structural undersupply, favorable demographic trends, and an aging housing stock. We continue to prioritize operational discipline and the consistent execution of our proven strategy, leveraging our extensive experience in navigating diverse economic cycles. Our broad product portfolio, national footprint, and strong supplier partnerships further enhance our ability to adapt and perform in a dynamic environment.

Moving forward, we will continue to advance our strategic priorities within our full-cycle value creation framework, as more fully described in our investor presentation. We are targeting double-digit returns on invested capital and accretive growth through a combination of platform efficiency, organic growth initiatives, and tightly managed execution of our market consolidation strategy.

Q3 2025 Investor Call

ADENTRA will hold an investor call on Monday, November 10, 2025 at 8:00 am Pacific (11:00 am Eastern). Participants should dial 1-888-510-2154 or (437) 900-0527 (GTA) at least five minutes before the call begins. A replay will be available through November 17, 2025 by calling toll free 1-888-660-6345 or (289) 819-1450 (GTA), followed by passcode 18640 #.

Summary of Results

Results from Operations - Three Months Ended September 30, 2025

For the three months ended September 30, 2025, total sales grew by $23.3 million to $592.1 million, a 4.1% increase from Q3 2024. The year-over-year improvement includes 2.4% sales growth related to the Woolf acquisition and a 1.7% increase related to higher organic sales as compared to Q3 2024, primarily due to product price appreciation.

In our US operations, third quarter sales grew by $23.2 million, or 4.4%, to $548.1 million, from $524.9 million in Q3 2024. The Woolf acquisition contributed $13.8 million of the sales growth, or a 2.6% increase, while organic growth accounted for $9.4 million, or 1.8%, primarily driven by product price appreciation.

In Canada, third quarter sales rose by C$0.7 million, or 1.2%, to C$60.6 million, from $59.9 million in Q3 2024. The year-over-year improvement was supported by a 3.1% increase in product pricing, partially offset by a 1.9% decrease in sales volumes.

Gross margin for the third quarter increased by $5.0 million, or 4.1%, to $126.4 million, primarily driven by the increase in sales. Gross margin percentage improved slightly to 21.4%, from 21.3% in Q3 2024.

For the three months ended September 30, 2025, operating expenses increased by $4.9 million, or 5.0%, to $101.6 million, from $96.7 million in Q3 2024. Third quarter results included a $5.1 million increase in organic operating costs and $1.7 million in additional operating expenses related to the acquired Woolf business. These increases were partially offset by $1.9 million in Woolf transaction-related costs incurred in Q3 2024 that did not repeat in the current quarter. The $5.1 million change in organic operating expenses was primarily attributable to a $2.9 million increase in leased premise costs, a $1.4 million LTIP mark-to-market adjustment, and $1.1 million in added people costs, largely driven by wage inflation.

For the three months ended September 30, 2025, depreciation and amortization increased by $2.2 million to $21.5 million, from $19.3 million in Q3 2024. This reflects a $1.8 million increase in depreciation primarily related to leased premises, and a $0.4 million increase in amortization of acquired intangible assets relating to the Woolf acquisition.

Included in third quarter depreciation and amortization is $6.7 million related to acquired intangible assets, compared to $6.3 million in Q3 2024.

For the three months ended September 30, 2025, net finance expense decreased by $0.4 million to $10.8 million, from $11.2 million in the same period last year. The year-over-year decline was primarily due to a $1.3 million improvement in unrealized foreign exchange impact on intercompany loans and $0.7 million in interest income related to duty refunds received. These gains were partially offset by a $1.2 million increase in the accretion of lease obligations, mainly related to leased premises, and a $0.4 million increase attributable to higher interest costs on external debt and receivables financing.

For the three months ended September 30, 2025, income tax expense was $3.9 million, representing an effective tax rate of approximately 27.7%, as compared to 22.7% in Q3 2024. In Q3 2025, our effective tax rate aligned with the substantively enacted statutory rate of approximately 27.5%. In contrast, the prior year's effective tax rate was favorably impacted by tax structuring initiatives.

Third quarter Adjusted EBITDA grew to $49.9 million, from $48.0 million in Q3 2024. The $1.9 million, or 3.9%, improvement reflects the $5.0 million increase in gross margin, partially offset by the $3.2 million increase in operating expenses (before changes in depreciation and amortization, transaction costs and LTIP expense).

Net income for the third quarter of 2025 was $10.1 million and basic earnings per share of $0.42, consistent with the $10.4 million and basic earnings per share of $0.42 reported in Q3 2024. The year-over-year net income decrease of $0.3 million, or 2.5%, primarily reflects the $2.2 million increase in depreciation and amortization, and the $0.8 million increase in income tax expense, partially offset by the $2.4 million improvement in EBITDA and the $0.4 million reduction in net finance expense.

Adjusted net income for the third quarter of 2025 was $17.2 million, representing a 7.5% decrease from $18.6 million compared to the same period in 2024. Adjusted basic earnings per share for Q3 2025 was $0.70, compared to $0.74 in Q3 2024.

Results from Operations - Nine Months Ended September 30, 2025

For the nine months ended September 30, 2025, total sales grew to $1.73 billion, up $78.3 million, or 4.7%, from $1.65 billion in the same period last year. The increase primarily reflects a $94.3 million revenue contribution from the acquired Woolf business, resulting in a 5.7% increase in sales. This was partially offset by a $12.3 million, or 0.7%, decline in organic sales, driven mainly by a reduction in sales volume. Foreign exchange fluctuations in the Canadian dollar negatively impacted sales by an additional $3.7 million.

Nine-month sales from our US operations increased to $1.60 billion, from $1.52 billion in the same period last year. This 5.2% sales increase reflects the $94.3 million revenue contribution from the acquired Woolf business, partially offset by a $15.4 million, or 1.0%, year-over-year decrease in organic sales, primarily driven by lower sales volumes.

In Canada, sales grew to C$183.0 million in the first nine months of 2025,  up C$4.2 million, or 2.3%, from the same period in 2024. The year-over-year increase primarily reflects higher product prices.

Gross margin for the nine months ended September 30, 2025 increased to $373.5 million, up $14.7 million, or 4.1%, from the same period in 2024. This improvement was primarily driven by higher sales, partially offset by a slightly lower gross margin percentage of 21.6% compared to 21.7% in the first nine months of 2024.

Year-to-date operating expenses totaled $290.1 million, compared to $282.7 million in the same period of 2024. The $7.3 million, or 2.6%, increase reflects $12.1 million of incremental operating expenses related to the acquired Woolf business, a $2.8 million increase in premise-related costs, and a $3.1 million increase in depreciation, primarily associated with leased premises. People costs also increased $1.3 million due to inflation adjustments. These increases were partially offset by a $9.7 million net recovery of trade duties (as discussed in section 1.3), and a $1.9 million reduction in transaction costs related to the acquisition of Woolf incurred in the prior year.

For the nine months ended September 30, 2025, depreciation and amortization increased to $63.3 million, from $55.6 million in the same period in 2024.  The $7.7 million increase reflects $4.8 million in higher depreciation of leased premises, and $2.8 million attributable to the amortization of acquired intangible assets related to the acquisition of the Woolf business.

Included in depreciation and amortization for the first nine months is $20.2 million related to acquired intangible assets, compared to $17.4 million in the same period in 2024.

For the nine months ended September 30, 2025, net finance expense increased by $3.3 million to $36.0 million, from $32.7 million in the same period of 2024. This was primarily driven by a $3.3 million increase in the accretion of lease obligations, largely related to leased premises.

For the nine months ended September 30, 2025, income tax expense was $11.0 million, up from $5.3 million for the nine months ended September 30, 2025. This equates to an effective tax rate of 23.2% in the current period, up from 12.2% in the prior year. The lower effective tax rate in 2024 reflected the recognition of non-capital losses.

For the nine months ended September 30, 2025, Adjusted EBITDA grew to  $144.2 million, up $2.1 million or 1.5%, from $142.1 million in the same period in 2024. The year-over-year improvement was primarily driven by a $14.7 million increase in gross margin, partially offset by a $12.5 million increase in operating expenses (before changes in depreciation and amortization, LTIP expense and net recovery of trade duties).

Net income for the nine months ended September 30, 2025 was $36.4 million, a decrease of 4.5% from $38.1 million in the same period last year. Basic earnings per share declined to $1.47 from $1.62. The $1.7 million reduction in net income was primarily driven by a $7.7 million increase in depreciation and amortization expense, the $5.7 million increase in income tax expense, and the $3.3 million increase in net finance expense. These impacts were partially offset by the $15.0 million improvement in EBITDA.

Adjusted net income in the  nine months ended September 30, 2025 was $49.9 million, a decrease of 15.6% from $59.1 million in the prior year period. The decline is primarily driven the $5.7 million increase in income tax expense and the $3.3 million increase in net finance expense. Adjusted basic earnings per share were $2.01, compared to $2.52 in the same period in 2024, a decrease of 20.1%.

About ADENTRA

ADENTRA is one of North America's largest distributors of architectural building products to the residential, repair and remodel, and commercial construction markets. The Company operates a network of 82 facilities in the United States and Canada. ADENTRA's common shares are listed on the Toronto Stock Exchange under the symbol ADEN.

Non-GAAP and other Financial Measures

In this news release, reference is made to the following non-GAAP financial measures:

• "Adjusted EBITDA" is EBITDA before long term incentive plan ("LTIP") expense, transaction expense and net recovery of trade duties. We believe Adjusted EBITDA is a useful supplemental measure for investors, and is used by management, for evaluating our ability to meet debt service requirements and fund organic and inorganic growth, and as an indicator of relative operating performance.
  
  
• "Adjusted net income" is net income before LTIP expense, transaction expense, net recovery of trade duties, foreign exchange gain (loss), and amortization of intangible assets acquired in connection with an acquisition. We believe adjusted net income is a useful supplemental measure for investors, and is used by management to assist in evaluating our profitability, our ability to meet debt service and capital expenditure requirements, our ability to generate cash flow from operations, and as an indicator of relative operating performance.
  
  
• "EBITDA" is earnings before interest, income taxes, depreciation and amortization, where interest is defined as net finance income (expense) as per the consolidated statement of comprehensive income. We believe EBITDA is a useful supplemental measure for investors, and is used by management to assist in evaluating our ability to meet debt service requirements and fund organic and inorganic growth, and as an indicator of relative operating performance.
  
  
• "Organic sales" consists of quantifying the change in total sales as either related to organic or acquisition-based, or the impact of foreign exchange. Total sales earned by acquired companies in the first 12 months following an acquisition is reported as acquisition-based growth and thereafter as organic sales. Organic sales excludes the impact of acquisitions and foreign exchange impact related to the translation of Canadian sales to US dollars. From time to time, we also quantify the impacts of certain unusual events to organic sales to provide useful information to investors to help better understand our financial results.
  
  
• "Working capital" is receivables and investments, inventories, and prepaid expenses, partially offset by short-term credit provided by suppliers in the form of accounts payable and accrued liabilities. We believe working capital is a useful indicator for investors, and is used by management to evaluate the operating liquidity available to us.

In this news release, reference is also made to the following non-GAAP ratios: "adjusted basic earnings per share", "adjusted diluted earnings per share", and "Adjusted EBITDA margin". For a description of the composition of each non-GAAP ratio and how each non-GAAP ratio provides useful information to investors and is used by management, see "Non-GAAP and Other Financial Measures" in the Company's management's discussion and analysis for the quarter ended September 30, 2025 (which is incorporated by reference herein).

Such non-GAAP financial measures and non-GAAP ratios are not standardized financial measures under IFRS and might not be comparable to similar financial measures disclosed by other issuers.  For a reconciliation between non-GAAP measures and non-GAAP ratios and the most directly comparable financial measure in our financial statements, please refer to the  "Summary of Results".

Forward-Looking Statements

Certain statements in this press release contain forward-looking information within the meaning of applicable securities laws in Canada ("forward-looking information"). The words "anticipates", "believes", "budgets", "could", "estimates", "expects", "forecasts", "intends", "may", "might", "plans", "projects", "schedule", "should", "will", "would" and similar expressions are often intended to identify forward-looking information, although not all forward-looking information contains these identifying words.

Forward-looking information is included, but not limited to: On the market front, while demand improved modestly as the quarter progressed, conditions remain generally challenging; Our business model is well equipped to handle tariffs at this level, and we do not foresee a material impact on product sourcing or margins as a result; Looking ahead to the final quarter of 2025, we anticipate continued strong cash generation even as we enter the seasonally slower winter months; Our capital allocation priorities will continue to focus on reducing leverage and further strengthening our balance sheet as we prepare to execute on our strategic priorities in fiscal 2026, including the pursuit of accretive acquisitions; As of November 10, 2025, we estimate 30% of our product mix will be subject to country-specific tariffs, at average rates of 20%; Final determinations could be announced as early as the fourth quarter of 2025 for CVD, and early 2026 for AD; however, these timelines remain subject to extension; The Company does not expect the outcome of this investigation to have a material effect on its supply chain or result in duty liabilities; We are well-prepared to manage tariff impacts; Our price pass-through model allows us to offset increased product costs, including those related to tariffs, by adjusting selling prices; In the event that tariff-related price increases reduce consumer demand, we can adjust inventories and preserve cash flow; We believe that any short-term reduction in home building will only worsen the existing housing shortage in the US, ultimately boosting future demand for our products; We believe that any short-term reduction in home building will only worsen the existing housing shortage in the US, ultimately boosting future demand for our products; Additionally, the intensifying trade tensions between the US and major global partners have heightened economic uncertainty and raised the risk of renewed inflationary pressures; The recent easing of interest rates combined with long-term structural demand drivers may support a more constructive backdrop into 2026; We remain optimistic about the long-term trajectory of the residential construction sector; Our broad product portfolio, national footprint, and strong supplier partnerships further enhance our ability to adapt and perform in a dynamic environment. 

The forecasts and projections that make up the forward-looking information are based on assumptions which include, but are not limited to: there are no material exchange rate fluctuations between the Canadian and US dollar that affect our performance; the general state of the economy does not worsen; we do not lose any key personnel; there is no labor shortage across multiple geographic locations; there are no circumstances, of which we are aware that could lead to the Company incurring costs for environmental remediation; there are no decreases in the supply of, demand for, or market values of our products  that harm our business; we do not incur material losses related to credit provided to our customers; our products are not subjected to negative trade outcomes; we are able to sustain our level of sales and earnings margins; we are able to grow our business long term and to manage our growth; we are able to integrate acquired businesses; there is no new competition in our markets that leads to reduced revenues and profitability; we can comply with existing regulations and will not become subject to more stringent regulations; no material product liability claims; importation of components or other innovative products does not increase and replace products manufactured in North America; our management information systems upon which we are dependent are not impaired; we are not adversely impacted by disruptive technologies; an outbreak or escalation of a contagious disease does not adversely affect our business; and, our insurance is sufficient to cover losses that may occur as a result of our operations.

The forward-looking information is subject to risks, uncertainties and other factors that could cause actual results to differ materially from historical results or results anticipated by the forward-looking information. The factors which could cause results to differ from current expectations include, but are not limited to: exchange rate fluctuations between the Canadian and US dollar could affect our performance; tariff policies extending to regions not currently under discussion; our results are dependent upon the general state of the economy; the impacts of pandemics, further mutations thereof or other outbreaks of disease, could have significant impacts on our business; we depend on key personnel, the loss of which could harm our business; a labour shortage across multiple geographic locations could harm our business; decreases in the supply of, demand for, or market values of hardwood lumber or sheet goods could harm our business; we may incur losses related to credit provided to our customers; our products may be subject to negative trade outcomes; we may not be able to sustain our level of sales or earnings margins; we may be unable to grow our business long term or to manage any growth; we are unable to integrate acquired businesses; competition in our markets may lead to reduced revenues and profitability; we may fail to comply with existing regulations or become subject to more stringent regulations; product liability claims could affect our revenues, profitability and reputation; importation of components or other innovative products may increase, and replace products manufactured in North America; disruptive technologies could lead to reduced revenues or a change in our business model; we are dependent upon our management information systems; disruptive technologies could lead to reduced revenues or a change in our business model; our information systems are subject to cyber securities risks; our insurance may be insufficient to cover losses that may occur as a result of our operations; an outbreak or escalation of a contagious disease may adversely affect our business; our credit facility affects our liquidity, contains restrictions on our ability to borrow funds, and impose restrictions on distributions that can be made by us and certain of our subsidiaries; the market price of our Shares will fluctuate; there is a possibility of dilution of existing Shareholders; and, other risks described in our Annual Information Form, our Information Circular and in this press release.

This press release contains information that may constitute a "financial outlook" within the meaning of applicable securities laws. The financial outlook has been approved by our management as of the date of this press release. The financial outlook is provided for the purpose of providing readers with an understanding of our anticipated financial performance. Readers are cautioned that the information contained in the financial outlook may not be appropriate for other purposes.

All forward-looking information in this press release is qualified in its entirety by this cautionary statement and, except as may be required by law, we undertake no obligation to revise or update any forward-looking information as a result of new information, future events or otherwise after the date hereof.

Third-Party Information

Certain information contained in this news release includes market and industry data that has been obtained from or is based upon estimates derived from third-party sources, including industry publications, reports and websites. Although the data is believed to be reliable, we have not independently verified the accuracy, currency or completeness of any of the information from third-party sources referred to in this news release or ascertained from the underlying economic assumptions relied upon by such sources. We hereby disclaim any responsibility or liability whatsoever in respect of any third-party sources of market and industry data or information.

SOURCE ADENTRA Inc.

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