ADENTRA Announces First Quarter 2025 Results

First quarter 2025 sales of US$542.5 million

ADENTRA Inc. (“ADENTRA” or the “Company”) announced financial results for the three months ended March 31, 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 84 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 Q1 2024 unless otherwise noted)

• Generated sales of $542.5 million (C$778.6 million), up $7.4 million, or 1.4% from $535.1 million (C$721.7 million)
• Gross margin percentage of 21.6%, compared to 22.1% in Q1 2024
• Operating expenses increased by $6.1 million, or 6.5%
• Basic earnings per share of $0.16 (C$0.23), compared to $0.48 (C$0.65) per share
• Adjusted basic earnings per share of $0.42 (C$0.60), compared to $0.76 (C$1.02) per share.
• Adjusted EBITDA of $40.0 million (C$57.4 million), compared to $45.6 million (C$61.4 million), a decrease of 12.3%
• Declared a dividend of C$0.15 per share, payable on July 25, 2025 to shareholders of record as of July 14, 2025
• Shareholder returns included $2.6 million in dividends and $1.9 million in share repurchases

“We demonstrated strong operating stability in difficult conditions through the first quarter of 2025,” said Rob Brown, President and CEO of ADENTRA. “Drawing on our strategies, operating discipline and proven business model, we successfully met challenges including the negative impact of adverse winter weather conditions, a softer residential construction market driven by elevated US mortgage rates, consumer affordability challenges and increasing economic uncertainty related to the volatile US trade landscape.”

“Total first quarter sales grew by 1.4% with acquisition-based growth from our new Woolf Distributing operations offsetting a volume-related decline in organic sales. We also maintained stable product pricing, signaling a positive shift following the deflationary pressures of 2023 and 2024. Importantly, our operations were not significantly impacted by recent US tariff actions, with approximately 92% of our product mix unaffected.”

“I am particularly proud of our success in achieving a 21.6% gross profit margin percentage, which was consistent with our fiscal 2024 performance of 21.7%. Our ability to maintain strong gross margins in the current environment underscores the resilience of our business model and the effective execution of our pricing and procurement strategies. Additionally, we maintained tight control of our organic expenses, increasing by just 1% year-over-year, well below the rate of inflation.”

“While successfully managing the immediate challenges of the first quarter, we also prepared the business for ongoing tariff and trade uncertainties. In addition to executing our normal spring inventory build, we took modest additional stocking positions in certain areas as a precautionary measure in anticipation of potential trade disruptions. As a result, we are well positioned with inventory heading into the 2025 building season, and have created added flexibility to help us manage during a period of heightened global trade uncertainty.”

“Overall, while we are conservative in our outlook given our belief that a sustained improvement in demand will require better housing affordability and a rebound in consumer confidence, ADENTRA is uniquely positioned to navigate the current environment. We have the size, the diversification, and above all, the experience to manage effectively through challenging market conditions. Our price pass-through revenue model historically enables us to achieve higher product prices and therefore generate increased gross profit dollars during periods of inflationary pressure. At the same time, our disciplined working capital management enables us to release cash, protect the balance sheet and safeguard free cash flow, ensuring we remain well positioned to invest in growth and deliver shareholder returns. As we move forward, we are fully committed to creating continued long-term value for our investors,” said Mr. Brown.

Trade

We estimate that 8% of our product mix is subject to current tariff actions, at an average tariff rate of 10%.

Additionally, there is an ongoing Section 232 (“S232”) investigation initiated by the US Department of Commerce (“Commerce”) on March 10, 2025 to determine the effects on national security of imports of timber, lumber, and derivative products. Commerce has until December 5, 2025, to make a recommendation to the President related to it’s S232 investigation. Commerce can render their recommendation sooner, and the timing and amount of potential S232 tariffs, if any, is uncertain. We estimate that if S232 tariffs are imposed the proportion of our product mix impacted by tariffs could rise to 35%.

We are well-equipped to manage potential tariffs. Our business operates a price pass-through model. We expect to offset tariff-related product cost increases by raising selling prices, thereby maintaining normal gross margins and generating additional gross profit. Moreover, our global sourcing network spans over 30 countries, offering a diverse range of product options for our customers if tariff rates differ by country. Additionally, we are a key partner for our US vendors, often ranking among their largest customers, which ensures a robust domestic supply to the extent our customers choose a US supply solution versus an off-shore one.

Increased product pricing due to tariffs may lead to a reduction in consumer demand for goods, including our products. In this instance, we expect to adjust inventories and preserve cash flow. During periods of slower economic activity, we release working capital and pay down debt. Furthermore, we believe that near-term reductions in home building will only exacerbate the long-term housing undersupply, which could be a positive for future demand.

Outlook

Persistent macroeconomic headwinds continue to weigh on our markets. Elevated US mortgage rates and constrained housing supply remain central to ongoing affordability challenges, while the escalating trade war between the US and key partners has introduced greater economic uncertainty and the prospect of renewed inflationary pressures.

Considering these factors, we maintain a conservative near-term outlook, even as we remain confident in the long-term fundamentals of the residential construction market, supported by structural undersupply, favorable demographics, and an aging housing stock. Our focus remains firmly on operational efficiency and executing our proven strategy, drawing on our deep experience navigating through varied economic conditions. Our diversified portfolio, national scale, and strong supplier relationships further reinforce our resilience.

To ensure our guidance framework remains aligned with the current macroeconomic landscape, which is marked by unprecedented trade tensions and heightened market volatility, we are transitioning from our Destination 2028 fixed 5-year targets to a full-cycle performance framework. This is not a shift in strategy, but a measured response to a shift in economic conditions. Our priorities remain firmly intact and include disciplined execution, double-digit capital returns, and long-term sustainable earnings per share growth.

Full-Cycle Target Financial KPIs

• Average annual organic growth: Low-to-Mid Single Digit
• M&A spend per year: $50-150 million
• Gross profit margin: +20%
• Adjusted EBITDA margin: +8-10%
• Return on invested capital: +10-12%

This adjustment in guidance provides the flexibility to advance our strategic priorities without being constrained by short-term market volatility, while reaffirming our unwavering commitment to long-term shareholder value creation.

For further details, please refer to our investor presentation available on our website.

For the full first quarter results, click here.

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 84 facilities in the United States and Canada. ADENTRA’s common shares are listed on the Toronto Stock Exchange under the symbol ADEN.

Source: ADENTRA Inc.