TORONTO, Feb. 24, 2021 /CNW/ - Andlauer Healthcare
Group Inc. (TSX: AND) ("AHG" or the "Company") today reported its
financial results for the three-month period ("Q4 2020") and year
ended December 31, 2020 ("Fiscal
2020").
Q4 2020 Summary
- Revenue increased 13.1% to $86.6
million, compared to $76.6
million for the three months ended December 31, 2019 ("Q4 2019");
- Operating income increased 25.8% to $14.3 million, compared to $11.3 million in Q4 2019;
- Net income and comprehensive income increased 96.0% to
$13.9 million, compared to
$7.1 million in Q4 2019;
- EBITDA(1) increased 23.9% to $22.0 million, compared to $17.7 million in Q4 2019;
- EBITDA Margin(1) was 25.4%, compared to 23.1% in Q4
2019;
- AHG continued to maintain service levels across its operations,
while monitoring the safety measures implemented in response to
COVID-19 to prioritize the health and safety of its personnel,
clients, and suppliers;
- AHG completed two tuck-in acquisitions (TDS Logistics Ltd.
("TDS") and McAllister Courier Inc. ("MCI")) for a combined
purchase price of $15.9 million;
and
- Subsequent to Q4 2020, on February 23,
2021, AHG entered into definitive agreements to acquire 100%
of Skelton Canada Inc. and 49% of Skelton USA Inc. for total aggregate consideration of
approximately $114.7 million, subject
to customary working capital adjustments. The acquisitions are
expected to close on or about March 1,
2021.
Fiscal 2020 Highlights
- Revenue increased 8.4% to $314.3
million, compared to $290.0
million in the year ended December
31, 2019 ("Fiscal 2019");
- Operating income increased 13.2% to $50.9 million, compared to $45.0 million in Fiscal 2019;
- Net income and comprehensive income increased 24.3% to
$37.7 million, compared to
$30.3 million in Fiscal 2019;
- EBITDA(1) increased 11.8% to $78.9 million, compared to $70.6 million in Fiscal 2019, despite the
absorption of approximately $2.8
million of incremental costs related to share-based
compensation arrangements and a full year of public company costs;
and
- EBITDA Margin(1) was 25.1%, compared to 24.3% in
Fiscal 2019.
"We are extremely pleased with our performance in 2020, our
first full year as a public company. We continue to demonstrate
strong organic growth from our core businesses with attractive
EBITDA margins, and we further enhanced our platform with
significant facility and route expansions, and the completion of
complementary tuck-in acquisitions. I'm proud of the success our
team has achieved while dealing with a challenging operating
environment due to the pandemic," said Michael Andlauer, Chief Executive Officer of
AHG. "We are off to a strong start in fiscal 2021 with the
announcement of the Skelton acquisitions, which will greatly
enhance our platform in Canada and
will provide us with a strategic entry into the U.S. market."
Selected Consolidated Financial Summary
($CAD
000s)
|
Three months
ended
December 31,
|
Year ended
December 31,
|
2020
|
2019
|
Variance
|
2020
|
2019
|
Variance
|
Revenue
|
|
|
|
|
|
|
|
|
Logistics &
Distribution
|
26,067
|
22,664
|
15.0
|
%
|
96,976
|
88,311
|
9.8
|
%
|
Packaging
|
3,924
|
4,892
|
(19.8)
|
%
|
19,380
|
21,307
|
(9.0)
|
%
|
Healthcare Logistics
Segment
|
29,991
|
27,556
|
8.8
|
%
|
116,356
|
109,618
|
6.1
|
%
|
Ground
Transportation
|
48,391
|
45,685
|
5.9
|
%
|
177,170
|
169,040
|
4.8
|
%
|
Air Freight
Forwarding
|
6,091
|
5,236
|
16.3
|
%
|
22,482
|
19,656
|
14.4
|
%
|
Dedicated and Last
Mile Delivery
|
10,979
|
4,828
|
127.4
|
%
|
29,795
|
16,689
|
78.5
|
%
|
Intersegment
Eliminations
|
(8,820)
|
(6,704)
|
31.6
|
%
|
(31,463)
|
(25,015)
|
25.8
|
%
|
Specialized
Transportation Segment
|
56,641
|
49,045
|
15.5
|
%
|
197,984
|
180,370
|
9.8
|
%
|
Total
Revenue
|
86,632
|
76,601
|
13.1
|
%
|
314,340
|
289,988
|
8.4
|
%
|
Operating
expenses
|
72,351
|
65,253
|
10.9
|
%
|
263,401
|
244,995
|
7.5
|
%
|
Operating
income
|
14,281
|
11,348
|
25.8
|
%
|
50,939
|
44,993
|
13.2
|
%
|
Net income and
comprehensive income
|
13,869
|
7,075
|
96.0
|
%
|
37,714
|
30,345
|
24.3
|
%
|
Select financial
metrics
|
|
|
|
|
|
|
|
|
EBITDA
(1)
|
21,964
|
17,729
|
23.9
|
%
|
78,912
|
70,554
|
11.8
|
%
|
EBITDA Margin
(1)
|
25.4%
|
23.1%
|
130 bps
|
25.1%
|
24.3%
|
80 bps
|
Q4 2020 Financial Results
Revenue for Q4 2020 increased by 13.1% to $86.6 million, compared with $76.6 million in Q4 2019. AHG's acquisitions of
TDS and MCI accounted for approximately $5.5
million of the $10.0 million
increase, with the remaining growth attributable to the factors
described below.
Revenue for the healthcare logistics segment totaled
$30.0 million in Q4 2020, an increase
of 8.8% compared with Q4 2019. The increase was attributable to
greater inbound product volume, storage and handling activities in
the Company's logistics and distribution product line related to
its existing client contracts and the July
2020 implementation of a significant new client contract at
its new 220,000 square-foot facility in Brampton, Ontario. The increase was partially
offset by a 19.8% revenue decline in the Company's packaging
product line, the result of a temporary reduction in operating
capacity that was necessitated by safety measures implemented in
March 2020 in connection with the
COVID-19 pandemic, including limiting the number of associates in
the Company's operations to allow for physical distancing in
accordance with public health guidelines.
Revenue in the specialized transportation segment totaled
$56.6 million in Q4 2020, an increase
of 15.5% compared with Q4 2019. The increase was attributable to:
5.9% growth in the Company's ground transportation product line
driven by higher client volumes and $1.0
million in incremental revenue from the Company's
acquisition of MCI; and year-over-year growth in AHG's air freight
forwarding and dedicated and last mile delivery product lines of
16.3% and 127.4%, respectively. Growth in air freight forwarding
was attributable to contractual price increases (adjustments made
to accessorial charges and rate agreements), including new
surcharges implemented by the Company's air carriers in connection
with revised Transport Canada hours-of-service based pilot safety
rules, and a 15% increase in volumes, as customers continued to
adjust to varying levels of national demand as provincial
governments attempted to manage the COVID-19 pandemic. Growth in
dedicated and last mile delivery reflects approximately
$4.5 million in incremental revenue
from the Company's acquisition of TDS, with the remainder
attributed to expanded client routes.
Cost of transportation and services for Q4 2020 was $38.5 million, or 44.5% of revenue, compared with
$32.6 million, or 42.6% of revenue,
for Q4 2019. The higher cost of transportation and services and
operating ratio for Q4 2020 reflects the addition of the TDS and
MCI cost profiles, partially offset by lower fuel costs in line
with the decrease in revenue related to fuel, and savings achieved
by the Company's effective management of its variable costs as
volume increased by 3.5% compared to Q4 2019.
Direct operating expenses for Q4 2020 were $18.8 million, or 21.7% of revenue, compared with
$18.6 million, or 24.3% of revenue,
for Q4 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, and other measures impacting productivity;
however, these incremental costs were mitigated through effective
productivity management and other cost controls. During Q4 2020,
AHG continued to qualify for the Canada Emergency Wage Subsidy ("CEWS") program
in connection with its packaging operations. A total of
$0.6 million was recognized as a
reduction of direct operating expenses for Q4 2020 as a result of
support received from the CEWS program.
Selling, General and Administrative ("SG&A") expenses for Q4
2020 were $7.3 million, or 8.4% of
revenue, compared with $7.5 million,
or 9.8% of revenue, for Q4 2019. SG&A expenses for Q4 2020
include share-based compensation arrangements of approximately
$0.8 million, compared to
$1.4 million in Q4 2019. These
share-based compensation arrangements relate to the initial stock
option grants to AHG's directors and senior management team and
deferred share unit grants made to its board of directors, which
are intended to provide further alignment with shareholders. A
further $0.3 million is included in
Q4 2020 SG&A expenses for incremental costs associated with
being a public company, compared to $0.9
million in Q4 2019.
Operating income for Q4 2020 was $14.3
million, an increase of 25.8% compared to Q4 2019, primarily
reflecting the strong growth in total revenue, which exceeded the
10.9% increase in total operating expenses.
Net income and comprehensive income for Q4 2020 increased by
96.0% to $13.9 million, from
$7.1 million for Q4 2019. The
increase reflects a deferred income tax recovery of $4.3 million in Q4 2020 and higher segment net
income before eliminations from both the Company's healthcare
logistics and specialized transportation operating segments.
Earnings before interest, taxes, depreciation and amortization
("EBITDA")(1) for Q4 2020 increased by 23.9% to
$22.0 million, from $17.7 million for Q4 2019. EBITDA
margin(1) for Q4 2020 improved to 25.4% from 23.1%
for Q4 2019. Certain SG&A expenses and other costs related to
the Company's initial public offering contributed to lower EBITDA
margins in Q4 2019, but the performance of AHG's two operating
segments continued to result in strong and stable EBITDA margins at
the higher end of the Company's historical range. Approximately
0.7% of the higher Q4 2020 EBITDA margin is attributable to support
received form the CEWS program. It is uncertain whether we will
continue to qualify for the CEWS program.
2020 Financial Results
Revenue for Fiscal 2020 increased 8.4% to $314.3 million, compared with $290.0 million in Fiscal 2019. Although revenue
within and between the Company's first and second quarters of 2020
was impacted by the COVID-19 pandemic, revenue growth in 2020 is
within the range of AHG's historical growth trend, as revenue
growth (excluding the TDS and MCI acquisitions) was approximately
6.5%.
Revenue for the healthcare logistics segment for Fiscal 2020 was
$116.4 million, an increase of 6.1%,
compared with Fiscal 2019. The increase was primarily attributable
to increased volumes in the Company's logistics and distribution
product line. The implementation of a large new client contract in
July 2020 contributed approximately
$6.8 million of the overall
$8.7 million increase in the
logistics and distribution product line. This growth was partially
offset by a 9.0%, or $1.9 million,
year-over-year decline in revenue for the packaging product line,
as the Company temporarily reduced operating capacity to allow for
physical distancing in accordance with public health guidelines, as
outlined above.
Revenue for the specialized transportation segment for Fiscal
2020 was $198.0 million, an increase
of 9.8% compared with Fiscal 2019. The increase was primarily
attributable to: increased volumes in the Company's ground
transportation product line, including $1.0
million of incremental revenue from the acquisition of MCI
in Q4 2020; and year-over-year growth in AHG's air freight
forwarding and dedicated and last mile delivery product lines of
14.4% and 78.5%, respectively.
Operating expenses for Fiscal 2020 totaled $263.4 million, an increase of 7.5% compared with
Fiscal 2019. The increase in operating expenses was attributable to
increases in SG&A expenses, cost of transportation and
services, direct operating expenses and depreciation and
amortization expenses, in line with the Company's growth. Operating
expenses for Fiscal 2020 also reflect a full year of public company
costs and a $1.7 million increase in
share-based compensation arrangements for directors and senior
management. Incremental costs in connection with the
Company's COVID-19 response measures were also incurred, including:
compensation premiums for certain operational associates,
additional facility and equipment cleaning activities, expenses for
personal protective equipment, and other measures impacting
productivity; however, these incremental costs were mitigated
through operating leverage arising from incremental volume,
productivity management and other cost controls.
Operating income for Fiscal 2020 was $50.9 million, an increase of 13.2% compared with
$45.0 million for Fiscal 2019. Net
income and comprehensive income for Fiscal 2020 increased by 24.3%
to $37.7 million, from $30.3 million for Fiscal 2019. Segment net income
before eliminations for both the Company's specialized
transportation and healthcare logistics operating segments were in
line with segment revenue as margins were materially consistent
compared with the prior year.
Dividend
The Company paid a dividend (encompassing the period from
October 1, 2020 to December 31, 2020) in the amount of $0.05 per subordinate voting share and multiple
voting share on January 15, 2021.
Subject to financial results, capital requirements, available
cash flow, corporate law requirements and any other factors that
AHG'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 December 31, 2020, there
were 12,502,805 subordinate voting shares and 25,100,000 multiple
voting shares outstanding.
Financial Statements
AHG's audited consolidated financial statements and related
Management's Discussion & Analysis ("MD&A") for the year
ended December 31, 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, February 25,
2021 at 8:30 a.m. (ET). The
dial-in numbers for participants are (416) 764-8650 or (888)
664-6383. The call will be webcast live at:
www.andlauerhealthcare.com/presentations-events.
To access a replay of the conference call dial (416) 764-8677 or
(888) 390-0541, passcode: 332304 #. The replay will be available
until March 4, 2021. 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 timing, completion and anticipated
benefits of the proposed Skelton acquisitions, 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 the year
ended December 31, 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 February 24,
2021, which is available, together with the MD&A for the
year ended December 31, 2020, 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 Q4 2020, Fiscal 2020, Q4 2019
and Fiscal 2019, please see "Reconciliation of Non-IFRS Measures"
in the Company's MD&A for the year ended December 31, 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.