TORONTO, Aug. 11, 2021 /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, 2021 ("Q2 2021" and "YTD
2021", respectively).
Q2 2021 Summary
- Revenue increased 52.5% to $107.1
million, compared to $70.3
million for the three months ended June 30, 2020 ("Q2 2020");
- Operating income increased 69.5% to $18.8 million, compared to $11.1 million in Q2 2020;
- Net income and comprehensive income increased 84.7% to
$13.1 million, compared to
$7.1 million in Q2 2020;
- EBITDA¹ increased 66.7% to $30.0
million, compared to $18.0
million in Q2 2020;
- EBITDA Margin¹ was 28.0%, compared to 25.6% in Q2 2020;
- On March 1, 2021, AHG acquired
100% of Skelton Canada Inc. ("Skelton") and 49% of Skelton
USA Inc. ("Skelton USA") and an option to acquire the remaining
51% of Skelton USA for total
aggregate consideration of approximately $114.7 million, subject to customary working
capital adjustments. Skelton contributed approximately $10.5 million of revenue during Q2 2021;
- AHG continued to maintain service levels across its operations,
while monitoring the safety measures implemented in response to
COVID-19 to prioritize the health and safety of its personnel,
clients, and suppliers; and
- AHG continued to provide logistics and distribution,
specialized transportation and packaging solutions to certain of
its manufacturer, third-party logistics provider, wholesaler and
government clients that are involved in the Canadian supply of
COVID-19 vaccines and ancillary products. AHG's COVID-19
vaccine-related revenue comprised approximately 5.0% of total
revenue in Q2 2021, as the Canadian government secured additional
supply of vaccines throughout the quarter. AHG expects to continue
to support the supply chain for COVID-19 vaccines, however it is
not clear whether the level of activity experienced in Q2 2021 will
be sustained throughout the remainder of 2021.
"We had exceptional performance in both our healthcare logistics
and specialized transportation operating segments during the
quarter, supported by growth in all of our product lines and a full
quarter contribution from our acquisition of Skelton. We are very
pleased with the strategic fit of Skelton, which has proven to be a
highly complementary addition to our business," said Michael Andlauer, Chief Executive Officer of
AHG. "We continued to support the distribution of COVID-19 vaccines
and ancillary products to Canadians in the quarter, with activity
ramping up significantly as the Canadian government secured more
supply. We are proud to be a trusted service provider for this
critical mandate and our team's success in providing specialized
solutions to our clients involved in the supply of COVID-19
vaccines further demonstrates the commitment to excellence
throughout our operations."
Selected Consolidated Financial Summary
|
Three
months
ended June
30,
|
|
Six
months ended June
30,
|
|
($CAD 000s, except
per share amounts)
|
2021
|
2020
|
Variance
|
2021
|
2020
|
Variance
|
Revenue
|
|
|
|
|
|
|
Logistics &
Distribution
|
29,153
|
21,660
|
34.6 %
|
56,781
|
45,227
|
25.5 %
|
Packaging
Solutions
|
5,566
|
3,851
|
44.5 %
|
11,217
|
11,195
|
0.2 %
|
Healthcare Logistics
Segment
|
34,719
|
25,511
|
36.1 %
|
67,998
|
56,422
|
20.5 %
|
Ground
Transportation
|
62,269
|
39,504
|
57.6 %
|
115,852
|
85,833
|
35.0 %
|
Air Freight
Forwarding
|
6,434
|
5,390
|
19.4 %
|
13,035
|
10,655
|
22.3 %
|
Dedicated and Last
Mile Delivery
|
13,412
|
6,192
|
116.6 %
|
24,630
|
12,459
|
97.7 %
|
Intersegment
Revenue
|
(9,709)
|
(6,344)
|
53.0 %
|
(18,624)
|
(13,466)
|
38.3 %
|
Specialized
Transportation Segment
|
72,406
|
44,742
|
61.8 %
|
134,893
|
95,481
|
41.3 %
|
Total
revenue
|
107,125
|
70,253
|
52.5 %
|
202,891
|
151,903
|
33.6 %
|
Operating
expenses
|
88,333
|
59,164
|
49.3 %
|
167,436
|
128,410
|
30.4 %
|
Operating
income
|
18,792
|
11,089
|
69.5 %
|
35,455
|
23,493
|
50.9 %
|
Net income and
comprehensive income
|
13,051
|
7,067
|
84.7 %
|
24,662
|
15,249
|
61.7 %
|
Earnings per share –
basic
|
$ 0.34
|
$ 0.19
|
$ 0.15
|
$ 0.65
|
$ 0.41
|
$ 0.24
|
Earnings per share –
diluted
|
$ 0.33
|
$ 0.18
|
$ 0.15
|
$ 0.63
|
$ 0.40
|
$ 0.23
|
Select financial
metrics
|
|
|
|
|
|
|
EBITDA¹
|
29,973
|
17,959
|
66.9 %
|
55,460
|
36,758
|
50.9 %
|
EBITDA
Margin¹
|
28.0 %
|
25.6 %
|
240 bps
|
27.3 %
|
24.2 %
|
310 bps
|
Q2 2021 Financial Results
Revenue for Q2 2021 increased by 52.5% to $107.1 million, compared with $70.3 million in Q2 2020. The TDS Logistics Inc.
("TDS"), McAllister Courier Inc. ("MCI") and Skelton acquisitions
accounted for approximately $17.7
million of the $36.9 million
increase, with the remaining increase attributable to organic
growth as described below.
Revenue for the healthcare logistics segment totaled
$34.7 million, an increase of 36.1%
compared with Q2 2020. The increase was primarily attributable to
the 34.6% year-over-year growth in the Company's logistics and
distribution product line in Q2 2021 generated from greater inbound
product volume, storage and handling activities related to its
existing client contracts, the July
2020 implementation of a significant new client contract and
its 220,000 square-foot facility in Brampton, Ontario. AHG's packaging solutions
also contributed to growth in the healthcare logistics segment,
with revenue totaling $5.6 million in
Q2 2021, an increase of 44.5% compared to Q2 2020. The increase was
partially attributable to the near-complete restoration of
operating capacity to pre-pandemic levels as AHG was able to
gradually and safely ease limitations on the number of its
associates in its operations in accordance with public health
guidelines. The increase also reflects retailers restoring their
previously deferred orders for certain consumer healthcare products
in connection with travel restrictions to vacation destinations.
Revenue in the specialized transportation segment totaled
$72.4 million, an increase of 61.8%
compared with Q2 2020. The increase was attributable to: 57.6%
growth in the Company's ground transportation product line driven
by incremental revenue from the MCI and Skelton acquisitions of
approximately $11.9 million, higher
volume from the Company's existing client base and higher fuel
costs passed on to customers as a component of pricing; and
year-over-year growth in AHG's air freight forwarding and dedicated
and last mile delivery product lines of 19.4% and 116.6%,
respectively. Growth in air freight forwarding was attributable to
volume increases and increased fuel revenue related to higher fuel
costs. Growth in dedicated and last mile delivery was
primarily attributable to incremental revenue of approximately
$5.8 million from the acquisition of
TDS, with the remainder attributable to route expansion in
Western Canada and increases in
fuel costs passed on to customers.
Cost of transportation and services was $47.3 million, or 44.1% of revenue, compared with
$28.5 million, or 40.6% of revenue,
for Q2 2020. The higher cost of transportation and services for Q2
2021 reflects an approximate 20% increase in volume in AHG's ATS
Healthcare business compared to Q2 2020, the acquisitions of TDS,
MCI and Skelton, and higher fuel costs in line with the increases
in revenue related to fuel prices. The increase in the operating
ratio for Q2 2021 reflects the addition of TDS and MCI cost
profiles, partially offset by savings achieved through the
effective management of variable costs with the increased
volumes.
Direct operating expenses were $21.6
million, or 20.1% of revenue, compared with $17.0 million, or 24.2% of revenue, for Q2 2020.
The increase was primarily attributable to the acquisitions of TDS,
MCI and Skelton, however these acquisitions – which are included in
AHG's specialized transportation segment – have lower
facility-related costs in relation to AHG's healthcare logistics
segment, which results in a lower direct operating expense
operating ratio in Q2 2021 as compared to Q2 2020. AHG has incurred
certain incremental costs in connection with its COVID-19 response
measures, but these incremental costs were mitigated through
effective productivity management and other cost controls.
Selling, General and Administrative ("SG&A") expenses were
$9.2 million, or 8.6% of revenue,
compared with $6.8 million, or 9.6%
of revenue, for Q2 2020. SG&A expenses for Q2 2021 include
share-based compensation arrangements of approximately $0.5 million, compared to $0.8 million in Q2 2020. 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 directors, which are intended to provide
further alignment with shareholders.
Operating income for Q2 2021 was $18.8
million, an increase of 69.5% compared to Q2 2020, primarily
reflecting the growth in total revenue, which exceeded the 49.3%
increase in total operating expenses.
Net income and comprehensive income increased by 84.7% to
$13.1 million, or $0.33 per share (diluted), from $7.1 million, or $0.18 per share (diluted), in Q2 2020. The
increase reflects higher segment net income before eliminations
from both the Company's healthcare logistics and specialized
transportation operating segments, and a $0.8 million contribution from AHG's 49% interest
in Skelton USA.
Earnings before interest, taxes, depreciation and amortization
("EBITDA")¹ increased by 66.7% to $30.0
million, from $18.0 million in
Q2 2020, reflecting the factors discussed above and incremental
contributions from the TDS, MCI and Skelton acquisitions. EBITDA
margin¹ improved to 28.0% from 25.6% in Q2 2020. 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. Further, Skelton's higher margin profile has positively
impacted AHG's overall margin.
Dividend
The Company paid a dividend (encompassing the period from
April 1, 2021 to June 30, 2021) in the amount of $0.05 per subordinate voting share and multiple
voting share on July 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 June 30, 2021, there were
13,375,379 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 2021 and YTD 2021 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 and webcast
Michael Andlauer, Chief Executive
Officer, and Peter Bromley, Chief
Financial Officer, will host a conference call for analysts and
investors on Thursday, August 12,
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: 357629 #. The replay will be available
until August 19, 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 Company's MD&A
for the three and six--month periods ended June 30, 2021. 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
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 2021, YTD 2021, Q2 2020 and
YTD 2020 please see "Reconciliation of Non-IFRS Measures" in the
Company's MD&A for the three and six-month periods ended
June 30, 2021, available on the
Company's profile on SEDAR (www.sedar.com), or the Company's
website (www.andlauerhealthcare.com).
SOURCE Andlauer Healthcare Group Inc.