BOUCHERVILLE, Quebec, Oct. 13, 2022 (GLOBE NEWSWIRE) -- Colabor Group Inc. (TSX: GCL) ("Colabor" or the "Company") reports its results for the third quarter ended September 3, 2022.
Third Quarter 2022 Financial Highlights and Subsequent Event:
- Sales increased by 10.4% to $145.7 million, compared to $131.9 million for the corresponding period of 2021 resulting mainly from the impact of inflation and an increase in volume resulting from business and asset acquisitions in the second quarter and given the less restrictive confinement measures in 2022 compared to 2021;
- Net earnings from continuing operations reached $2.8 million compared to $2.3 million for the corresponding period of 2021 due to the increase in adjusted EBITDA(1), mitigated by the increase in depreciation and amortization expenses;
- Adjusted EBITDA(1) increased to $8.9 million from $7.8 million for the corresponding period of 2021 and increase in adjusted EBITDA(1) margin to 6.1% of sales compared to 5.9% of sales during the corresponding period of 2021. Those increases are mainly explained by an improvement of gross margin, mitigated by increase in labor costs and other supply chain costs;
- Cash flow from operating activities increased to $8.8 million compared to $7.4 million for the third quarter of 2021, resulting from a lower utilization of working capital(4); and
- After the end of the quarter, we announced the relocation of our head office and warehouse located in Boucherville by the end of 2023 and the conclusion of a new lease located in the Saint-Bruno Industrial Ecopark. The new building's goal is to obtain LEED and Net Zero Carbon certifications and it will offer a stimulating work environment, ideal for the well-being of employees.
"I am pleased with our third quarter results, with revenues up 10.4%, gross margin up 7.5% and net income up 39.0% compared to the third quarter last year. These quarterly results, with the highest adjusted EBITDA(1) in the last eight quarters, confirm the resilience of our business model following the effects of the pandemic and inflationary pressures," said Mr. Frenette, President and Chief Executive Officer of Colabor.
"In addition, from a balance sheet perspective, we have reduced our debt since the beginning of the year, while completing two acquisitions in the second quarter. Combined with our diverse customer base, continuous improvements to our business and our ability to dynamically manage our cost structure allow us to continue to invest in the implementation of our strategic plan," added Louis Frenette.
Table of third quarter 2022 Financial Highlights:
| Financial highlights | 12 weeks | 36 weeks | |||
| (in thousands of dollars, except percentages, per share data and financial leverage ratio) | 2022 | 2021 | 2022 | 2021 | |
| $ | $ | $ | $ | ||
| Sales from continuing operations | 145,670 | 131,889 | 380,825 | 325,990 | |
| Adjusted EBITDA(1) | 8,894 | 7,821 | 19,213 | 18,340 | |
| Adjusted EBITDA(1) margin (%) | 6.1 | 5.9 | 5.0 | 5.6 | |
| Net earnings from continuing operations | 2,832 | 2,288 | 2,869 | 2,917 | |
| Net earnings | 2,832 | 2,038 | 2,802 | 2,703 | |
| Per share - basic and diluted ($) | 0.03 | 0.02 | 0.03 | 0.03 | |
| Cash flow from operating activities | 8,757 | 7,448 | 19,962 | 9,717 | |
| Financial position | As at | As at | |||
| September 3, | December 25, | ||||
| 2022 | 2021 | ||||
| Net debt(2) | 41,360 | 48,366 | |||
| Financial leverage ratio(3) | 1.6x | 1.9x | |||
| (1) | Non-IFRS measure. Refer to the table Reconciliation of Net Earnings to adjusted EBITDA in MD&A section 6 "Non-IFRS Performance Measures". Adjusted EBITDA corresponds to net operating earnings before costs not related to current operations, depreciation and amortization and expenses for stock-based compensation plan. | |
| (2) | Non-IFRS measure. Refer to MD&A section 6 "Non-IFRS Performance Measures". Net debt corresponds to bank indebtedness, current portion of long-term debt and long-term debt, net of cash. | |
| (3) | Financial leverage ratio is an indicator of the Company's ability to service its long-term debt. It is defined as net debt / adjusted EBITDA for the last four quarters. Refer to MD&A section 6 "Non-IFRS Performance Measures". | |
| (4) | Working capital is a non-IFRS performance measure. Working capital is an indicator of the Company's ability to hedge its current liabilities with its current assets. Refer to MD&A section 3.2 "Financial Position" for detailed calculation. |
Results for the Third Quarter of 2022
Consolidated sales for the third quarter amounted to $145.7 million compared to $131.9 million during the corresponding quarter of 2021, an increase of 10.4%. Sales for the Distribution segment increased by 10.0%, explained by a volume increase from restaurants, the impact of inflation and the acquisition of assets in the Laurentians and Outaouais regions. Wholesale segment sales increased by 10.7% explained by the impact of inflation, mitigated by a week-long strike at our Boucherville distribution center.
Adjusted EBITDA(1) from continuing activities was $8.9 million or 6.1% of sales from continuing activities compared to $7.8 million or 5.9% during 2021. These variations are mainly explained by the increase in sales and an improvement of gross margin, mitigated by increase in labor costs and other supply chain costs and our investments for the repositioning of our private brand.
Net earnings from continuing operations were $2.8 million, up from $2.3 million for the corresponding quarter of the previous year, resulting essentially from the increase of the adjusted EBITDA(1) as explained previously, mitigated by higher depreciation and amortization expenses.
Net earnings for the third quarter were $2.8 million, compared to $2.0 million for the corresponding period of 2021 and are explained by the facts described above.
Results for the 36-week period of 2022
Consolidated sales for the 36-week period were $380.8 million compared to $326.0 million in the corresponding period of 2021, an increase of 16.8%, of which 18.0% from the Distribution segment and 13.2% from the Wholesale segment. Adjusted EBITDA(1) from continuing operations reached $19.2 million or 5.0% of sales from continuing operations compared to $18.3 million or 5.6% in 2021. These variations are mainly due to an increase in sales and gross margin, mitigated by a decrease in subsidies obtained of $2.6 million. Excluding the impact of subsidies obtained, the adjusted EBITDA margin(1) would have been 5.0% in 2022 and 4.8% in 2021. Net earnings from continuing operations were $2.9 million, comparable to the 36-week period of last year.
Cash Flow and Financial Position
Cash flows from operating activities reached $8.8 million and $20.0 million for the 12 and 36-week periods of 2022, respectively, compared to $7.4 million and $9.7 million for the corresponding periods of 2021. This increase is mainly due to lower utilization of working capital(4) and a higher adjusted EBITDA(1). The lower utilization of working capital(4) is explained by the receipt of the non-recurring gain which was receivable as at December 25, 2021 and by a higher collection of receivables in 2022 in connection with the increase in sales in the fourth quarter of 2021.
As at September 3, 2022, the Company's working capital(4) was $36.8 million, down from $40.8 million at the end of the fiscal year 2021. This variation is explained by the receipt of the non-recurring gain which was receivable as at December 25, 2021, mitigated by the seasonality effect.
As at September 3, 2022, the Company's net debt(2) was down to $41.4 million, compared to $48.4 million at the end of the fiscal year 2021. This decrease is mainly due to credit facility repayment of $7.3 million, of which $5.0 million as optional repayment.
Outlook
"I am very proud of the recent announcement of the relocation of our head office and warehouse located in Boucherville. This marks an important milestone and as we set out to accelerate the achievement of our strategic plan. This new modern and perfectly located distribution center will allow us from 2024, to increase our capacity to develop western Quebec. We remain cautious and focused on managing our cost structure and our business model allows us to be confident facing various market pressures," commented Louis Frenette.
Non-IFRS Performance Measures
The information provided in this release includes non-IFRS performance measures, notably adjusted earnings before financial expenses, depreciation and amortization and income taxes ("Adjusted EBITDA")(1). As these concepts are not defined by IFRS, they may not be comparable to those of other companies. Refer to Section 6 "Non-IFRS Performance Measures" in the Management's Discussion and Analysis.
| Reconciliation of Net Earnings to Adjusted EBITDA(1) | 12 weeks | 36 weeks | |||
| (in thousands of dollars) | 2022 | 2021 | 2022 | 2021 | |
| $ | $ | $ | $ | ||
| Net earnings from continuing operations | 2,832 | 2,288 | 2,869 | 2,917 | |
| Income taxes | 1,097 | 1,130 | 1,140 | 1,454 | |
| Financial expenses | 1,080 | 984 | 3,030 | 3,823 | |
| Operating earnings | 5,009 | 4,402 | 7,039 | 8,194 | |
| Expenses for stock-based compensation plan | 111 | 81 | 313 | 148 | |
| Costs not related to current operations | 102 | 75 | 1,247 | 230 | |
| Depreciation and amortization | 3,672 | 3,263 | 10,614 | 9,768 | |
| Adjusted EBITDA(1) | 8,894 | 7,821 | 19,213 | 18,340 | |
Additional Information
The Management Discussion and Analysis and the consolidated financial statements of the Company are available on SEDAR (www.sedar.com). Additional information, including the annual information form, about Colabor Group Inc. can also be found on SEDAR and on the Company's website at www.colabor.com.
Forward-Looking Statements
This press release contains certain forward-looking statements as defined under applicable securities law. Forward-looking information may relate to Colabor's future outlook and anticipated events, business, operations, financial performance, financial condition or results and, in some cases, can be identified by terminology such as "may"; "will"; "should"; "expect"; "plan"; "anticipate"; "believe"; "intend"; "estimate"; "predict"; "potential"; "continue"; "foresee"; "ensure" or other similar expressions concerning matters that are not historical facts. Particularly, statements regarding the Company's financial guidelines, future operating results and economic performance, objectives and strategies are forward-looking statements. These statements are based on certain factors and assumptions including expected growth, results of operations, performance and business prospects and opportunities, which Colabor believes are reasonable as of the current date. Refer in particular to section 2.2 "Development Strategies and Outlook" of the Company's MD&A. While Management considers these assumptions to be reasonable based on information currently available to the Company, they may prove to be incorrect. Forward-looking information is also subject to certain factors, including risks and uncertainties that could cause actual results to differ materially from what Colabor currently expects. For more exhaustive information on these risks and uncertainties, the reader should refer to section 7 "Risks and Uncertainties" of the Company's MD&A. These factors, which include the risks related to the pandemic of Covid-19 and the different underlying variants ("pandemic") as well as the possible impacts on consumers and the economy, are not intended to represent a complete list of the factors that could affect Colabor and future events and results may vary significantly from what Management currently foresees. The reader should not place undue importance on forward-looking information contained in this press release, information representing Colabor's expectations as of the date of this press release (or as of the date they are otherwise stated to be made) and are subject to change after such date. While Management may elect to do so, the Company is under no obligation (and expressly disclaims any such obligation) and does not undertake to update or alter this information at any particular time, whether as a result of new information, future events or otherwise, except as required by law.
Conference Call
Colabor will hold a conference call to discuss these results on Friday, October 14, 2022, beginning at 9:30 a.m. Eastern time. Interested parties can join the call by dialing 1-888-390-0549 (from anywhere in North America) or 1-416-764-8682. If you are unable to participate, you can listen to a recording by dialing 1-888-390-0541 or 1-416-764-8677 and entering the code 675595# on your telephone keypad. The recording will be available from 1:30 p.m. on Friday, October 14, 2022, until 11:59 p.m. on October 21, 2022.
Those wishing to join the webcast can do so by clicking on the following link:
http://www.colabor.com/en/investisseurs/evenements-et-presentations/
About Colabor
Colabor is a distributor and wholesaler of food and related products serving the hotel, restaurant and institutional markets or "HRI" in Quebec and in the Atlantic provinces, as well as the retail market. Within its two operating segments, Colabor offers specialty food products such as meat, fresh fish and seafood, as well as food and related products through its Broadline activities.
Further information:
| Pierre Blanchette Senior Vice President and Chief Financial Officer Colabor Group Inc Tel.: 450-449-4911 extension 1308 investors@colabor.com | Danielle Ste-Marie Ste-Marie Strategy and Communications Inc. Investor Relations Tel.: 450-449-0026 extension 1180 |
