TORONTO, Aug. 12, 2020 /CNW/ - Andlauer Healthcare Group
Inc. (TSX: AND) ("AHG" or the "Company") today reported its
financial results for the three and six-month periods ended
June 30, 2020 ("Q2 2020" and "YTD
2020", respectively).
Q2 2020 Summary
- Revenue was $70.3 million for Q2
2020, a decrease of 1.3% compared to $71.1
million for the three months ended June 30, 2019 ("Q2 2019");
- Operating income was $11.1
million for Q2 2020, a decrease of 2.8% to compared to
$11.4 million in Q2 2019;
- Net income and comprehensive income was $7.1 million, compared to $8.0 million in Q2 2019;
- EBITDA(1) increased 1.2% to $18.0 million, compared to $17.7 million in Q2 2019, despite the absorption
of approximately $1.4 million of
incremental costs related to share-based compensation arrangements
and the transition to a public company;
- EBITDA Margin(1) was 25.6% in Q2 2020, compared to
24.9% in Q2 2019;
- The Company successfully implemented its new state-of-the-art
220,000 square foot logistics and distribution facility in
Brampton, Ontario which began
operations in July 2020;
- The Company declared its second dividend as a public company on
June 22, 2020 for shareholders of
record as at June 30, 2020; and,
- AHG continued to maintain client service levels in the quarter
without disruption, while proactively implementing measures across
its operations in response to COVID-19 to prioritize the health and
safety of its personnel, clients, and suppliers.
"As expected, we experienced a slight decline in revenue
for Q2 2020 due, in part, to the accelerated purchasing
behaviour of our clients' customers in late Q1 2020 due to
COVID-19. We also generated lower fuel-related revenue primarily
from our ground transportation operations, and experienced a
significant reduction in revenue from our packaging operations as
we have temporarily limited the number of associates in our
facilities to allow for appropriate social distancing due to
COVID-19. Strong growth in our air freight forwarding and dedicated
and last mile delivery product lines partially offset these
declines," said Michael Andlauer,
Chief Executive Officer of AHG. "On a year-to-date basis, revenue
in both our healthcare logistics and specialized transportation
segments is ahead of last year, and our EBITDA Margin remains
strong. We look forward to continued growth ahead, supported by the
recent opening of our new state-of-the-art 220,000 square-foot
logistics and distribution facility in the Greater Toronto Area."
Selected Consolidated Financial Summary
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Three Months
Ended
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Six months
Ended
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($CAD
000s)
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June
30,
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June
30,
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2020
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2019
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Variance
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2020
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2019
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Variance
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Revenue
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Logistics &
Distribution
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21,660
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22,393
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(3.3%)
|
|
45,277
|
43,940
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3.0%
|
Packaging
Solutions
|
3,851
|
5,299
|
(27.3%)
|
|
11,195
|
11,714
|
(4.4%)
|
Healthcare Logistics
Segment
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25,511
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27,692
|
(7.9%)
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|
56,422
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55,654
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1.4%
|
Ground
Transportation
|
39,504
|
40,932
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(3.5%)
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|
85,833
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81,746
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5.0%
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Air Freight
Forwarding
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5,390
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4,559
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18.2%
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|
10,655
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9,572
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11.3%
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Dedicated and Last
Mile Delivery
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6,192
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4,164
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48.7%
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|
12,459
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7,846
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58.8%
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Intersegment
Eliminations
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(6,344)
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(6,200)
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2.3%
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(13,466)
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(12,275)
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9.7%
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Specialized
Transportation Segment
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44,742
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43,455
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3.0%
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95,481
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86,889
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9.9%
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Total
revenue
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70,253
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71,147
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(1.3%)
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|
151,903
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142,543
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6.6%
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Operating
expenses
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59,164
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59,743
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(1.0%)
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|
128,410
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120,217
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6.8%
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|
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Operating
income
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11,089
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11,404
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(2.8%)
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23,493
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22,326
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5.2%
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Net income and
comprehensive income
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7,067
|
7,968
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(11.3%)
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15,249
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15,507
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(1.7%)
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Select financial
metrics
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EBITDA(1)
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17,959
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17,745
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1.2%
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36,758
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34,953
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5.2%
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EBITDA
Margin(1)
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25.6%
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24.9%
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70 bps
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24.2%
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24.5%
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(30 bps)
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Q2 2020 Financial Results
Revenue for Q2 2020 totaled $70.3
million, a decrease of 1.3% compared with Q2 2019. Revenue
was impacted by the cancellation of certain healthcare activities
such as elective surgical procedures; closures of clinics which use
certain products of AHG's clients, such as dental clinics,
optometric clinics, animal health clinics and veterinary hospitals;
and the accelerated purchasing activities of AHG's client's
customers late in Q1 2020 in response to the COVID-19 pandemic.
This resulted in lower volume in Q2 2020 for the Company's
logistics and distribution, and ground transportation product
lines, as health care providers managed inventories down. AHG's air
freight forwarding and dedicated and last mile delivery product
lines generated year-over-year growth of 18.2% and 48.7%,
respectively, driving 3.0% overall growth in the Company's
specialized transportation segment. Growth in air freight
forwarding is primarily attributable to an increase in volume of
expedited orders due to COVID-19, and growth in dedicated and last
mile delivery reflects the Company's continued expansion of routes
for existing clients. The 27.3% decline in packaging solutions
revenue in Q2 2020 resulted primarily from AHG's decision to limit
the numbers of its associates in its operations to allow for social
distancing in accordance with public health guidelines, which has
temporarily reduced operating capacity. Following the decline in
ground transportation volume in April and May 2020 due to unusually high volumes in
March 2020, AHG experienced
accelerated ground transportation activity in June 2020.
Cost of transportation and services for Q2 2020 was $28.5 million, or 40.6% of revenue, compared with
$29.5 million, or 41.5% of revenue,
for Q2 2019. The lower cost of transportation and services
operating ratios for Q2 2020 reflect lower fuel costs in line with
the decrease in revenue related to fuel, savings achieved by the
Company's effective management of its variable costs in response to
reduced volume in April and May 2020,
and the successful management of costs as volume ramped up in
June 2020.
Direct operating expenses for Q2 2020 were $17.0 million, or 24.2% of revenue, compared with
$18.6 million, or 26.2% of revenue,
for Q2 2019. AHG incurred certain incremental costs in connection
with its COVID-19 response measures, including additional cleaning
activities for its facilities and equipment, expenses for personal
protective equipment for its associates, and other measures
impacting productivity. These incremental costs were mitigated
through operating leverage arising from incremental volume in
June 2020, productivity management
and other cost controls. During Q2 2020, the Company qualified for
government assistance under the Canada Emergency Wage Subsidy ("CEWS") program
in connection with its packaging operations. A total of
$0.8 million was recognized as a
reduction of direct operating expense for Q2 2020 as a result of
the CEWS program.
Selling, General and Administrative ("SG&A") expenses for Q2
2020 were $6.8 million, or 9.6% of
revenue, compared with $5.2 million,
or 7.4% of revenue, for Q2 2019. SG&A expenses for Q2 2020
include share-based compensation arrangements of approximately
$0.8 million, or 1.1% of revenue,
which are incremental to the Company's historical SG&A
expenses. These share-based compensation arrangements relate to the
initial option grants to AHG's senior management team and deferred
share unit grants made to the Company's board of directors, which
are intended to provide further alignment with shareholders. A
further $0.6 million, or 0.9% of
revenue, is included in Q2 2020 SG&A expenses for incremental
costs associated with being a public company. Approximately
$0.2 million of the public company
SG&A expenses reflected in Q2 2020 were one-time in nature.
Operating income for Q2 2020 was $11.1
million, a decrease of 2.8%, compared with $11.4 million for Q2 2019. Net income and
comprehensive income for Q2 2020 decreased by 11.3% to $7.1 million, from $8.0
million for Q2 2019.
Earnings before interest, taxes, depreciation and amortization
("EBITDA")(1) for Q2 2020 increased by 1.2% to
$18.0 million, from $17.7 million for Q2 2019 and reflects the
absorption of approximately $1.4
million of incremental costs related to share-based
compensation arrangements and other public company costs not
incurred in Q2 2019, as referenced above. EBITDA
Margin(1) for Q2 2020 was 25.6% compared with 24.9% for
Q2 2019, as operating ratios for AHG's two most significant
operating costs (cost of transportation and services and direct
operating expenses) were lower in Q2 2020 versus Q2 2019,
notwithstanding slightly lower revenue.
Q2 2020 Dividend
The Company paid a dividend (encompassing the period from
April 1, 2020 to June 30, 2020) in the amount of $0.05 per subordinate voting share and multiple
voting share on July 15, 2020 to
shareholders of record as at June 30,
2020.
Subject to financial results, capital requirements, available
cash flow, corporate law requirements and any other factors that
the Company's Board of Directors may consider relevant, it is the
Company's intention to declare a quarterly dividend of $0.05 per subordinate voting share and multiple
voting share on an ongoing basis.
Shares Outstanding
As at June 30, 2020, there were
12,500,000 subordinate voting shares and 25,100,000 multiple voting
shares outstanding.
Financial Statements
AHG's unaudited interim condensed consolidated financial
statements and related Management's Discussion & Analysis
("MD&A") for Q2 2020 are available on the Company's website at
www.andlauerhealthcare.com and on the Company's profile on SEDAR at
www.sedar.com.
Conference call
Michael Andlauer, Chief Executive
Officer, and Peter Bromley, Chief
Financial Officer, will host a conference call for analysts and
investors on Thursday, August 13,
2020 at 8:30 a.m. (ET). The
dial-in numbers for the conference call are (416) 764-8650 or (888)
664-6383. A live webcast of the call is available at:
www.andlauerhealthcare.com/presentations-events.
To listen to a replay of the conference call, dial (416)
764-8677 or (888) 390-0541, passcode: 338000 #. The replay will be
available until August 20, 2020. The
webcast will be archived on the Company's website following
conclusion of the call.
About AHG
AHG is a leading and growing supply chain management company
offering a robust platform of customized third-party logistics
("3PL") and specialized transportation solutions for the healthcare
sector. The Company's 3PL services include customized logistics,
distribution and packaging solutions for healthcare manufacturers
across Canada. AHG's specialized
transportation services, including air freight forwarding, ground
transportation, dedicated delivery and last mile services, provide
a one-stop shop for clients' healthcare transportation needs.
Through its complementary service offerings, available across a
coast-to-coast distribution network, the Company strives to
accommodate the full range of its clients' specialized supply chain
needs on an integrated and efficient basis. For more information on
AHG, please visit: www.andlauerhealthcare.com.
Forward-looking Information
This news release contains forward-looking information and
forward-looking statements (collectively, "forward-looking
information") within the meaning of applicable securities laws.
Forward-looking information may relate to the Company's future
financial outlook and anticipated events or results and may include
information regarding the Company's financial position, business
strategy, growth strategies, addressable markets, budgets,
operations, financial results, taxes, dividend policy, plans,
objectives and responses to the outbreak of COVID-19. Particularly,
information regarding the Company's expectations of future results,
performance, achievements, facility expansions, leases, platform
expansions, acquisitions, public company costs, payment of
dividends, prospects, financial targets or outlook, intentions,
opportunities or the potential impact of, and response measures to
be taken with respect to, COVID-19 is forward-looking information.
In some cases, forward-looking information can be identified by the
use of forward-looking terminology such as "plans", "targets",
"expects", "budget", "scheduled", "estimates", "outlook",
"forecasts", "projection", "prospects", "strategy", "intends",
"anticipates", "believes", "commencing" or variations of such words
and phrases or statements that certain actions, events or results
"may", "could", "would", "might", "will", "will be taken", "occur"
or "be achieved". In addition, any statements that refer to
expectations, intentions, projections or other characterizations of
future events or circumstances contain forward-looking information.
Statements containing forward-looking information are not
historical facts but instead represent management's expectations,
estimates and projections regarding future events or circumstances.
Such forward-looking statements are qualified in their entirety by
the inherent risks, uncertainties and changes in circumstances
surrounding future expectations which are difficult to predict and
many of which are beyond the control of the Company.
Forward-looking information is necessarily based on a number
of opinions, estimates and assumptions, including but not limited
to those assumptions described under the heading "Cautionary Note
Regarding Forward-Looking Information" in the MD&A for Q2 2020.
Forward-looking information is subject to known and unknown risks,
uncertainties, assumptions and other factors that may cause the
actual results, level of activity, performance or achievements to
be materially different from those expressed or implied by such
forward-looking information, including but not limited to factors
discussed under the heading "Risk Factors" in the Company's annual
information form dated March 12,
2020, which is available, together with the Q2 2020
MD&A, on the Company's profile on SEDAR at www.sedar.com. If
any of these risks or uncertainties materialize, or if the
opinions, estimates or assumptions underlying the forward-looking
information prove incorrect, actual results or future events might
vary materially from those anticipated in the forward-looking
information. Accordingly, investors should not place undue reliance
on forward-looking information, which speaks only as of the date
made. The forward-looking information contained in this news
release represents the Company's expectations as of the date of
this news release, and are subject to change after such date and
the Company disclaims any intention or obligation or undertaking to
update or revise any forward-looking information whether as a
result of new information, future events or otherwise, except as
required under applicable securities laws.
(1) Non-IFRS Financial Measures
This news release contains certain non-IFRS measures. These
measures are not recognized measures under IFRS, do not have a
standardized meaning prescribed by IFRS and are therefore unlikely
to be comparable to similar measures presented by other companies.
Rather, these measures are provided as additional information to
complement those IFRS measures by providing further
understanding of the Company's results of operations from
management's perspective. Accordingly, these measures should not be
considered in isolation nor as a substitute for analysis of the
Company's financial information reported under IFRS. AHG uses
non-IFRS measures including "EBITDA", and "EBITDA Margin". These
non-IFRS measures are used to provide investors with supplemental
measures of the Company's operating performance and thus highlight
trends in its core business that may not otherwise be apparent when
relying solely on IFRS financial measures. AHG also believes that
securities analysts, investors and other interested parties
frequently use non-IFRS measures in the evaluation of issuers. AHG
management also uses non-IFRS measures in order to facilitate
operating performance comparisons from period to period, to prepare
annual operating budgets and to determine components of management
compensation.
EBITDA
AHG defines EBITDA as net income (loss) and comprehensive
income (loss) for the period before: (i) income tax (recovery)
expense; (ii) interest income; (iii) interest expense; and (iv)
depreciation and amortization.
AHG believes EBITDA is a useful measure to assess the
Company's financial performance because it provides a more relevant
picture of operating results by excluding the effects of expenses
that are not reflective of the Company's underlying business
performance.
EBITDA Margin
AHG defines EBITDA Margin as EBITDA divided by revenue.
EBITDA Margin represents a measure of the Company's profitability
expressed as a percentage of revenue.
AHG believes EBITDA Margin is a useful measure to assess the
Company's financial performance because it helps quantify the
Company's ability to convert revenues generated from clients into
EBITDA.
For quantitative reconciliations of net income and
comprehensive income to EBITDA for Q2 2020 and Q2 2019, please see
"Reconciliation of Non-IFRS Measures" in the Company's MD&A for
Q2 2020, available on the Company's profile on SEDAR
(www.sedar.com), or the Company's website
(www.andlauerhealthcare.com).
SOURCE Andlauer Healthcare Group Inc.