Colabor Group Inc. (TSX: GCL) (“Colabor” or the “Company”) reports
its results for the fourth quarter and the fiscal year ended
December 28, 2019.
Fourth Quarter 2019 Financial Highlights:
- Increase in net earnings from continuing operations to $0.6
million compared to $(1.9) million for the corresponding period of
2018;
- Improvement of the adjusted EBITDA margin(1) to 1.7% of sales,
compared to 1.6% in the corresponding period of 2018.
Fiscal 2019 Financial Highlights:
- Increase in net earnings from continuing operations to $0.7
million compared to $(4.9) million for the corresponding period of
2018;
- Improvement of 17.3% for the adjusted EBITDA(1) to $19.0
million or 1.8% of sales, compared to $16.2 million or 1.5% of
sales for the corresponding period of 2018;
- Increase in cash flow from operating activities to $22.0
million compared to $14.2 million in the corresponding period of
2018;
- Decrease of net debt(2) to $72.1 million, compared to
$101.8 million, bringing the financial leverage ratio(3) to 3.8 as
at December 28, 2019, a significant improvement from 6.3 a year
prior.
Table of fourth quarter and fiscal 2019 Financial
Highlights:
Financial highlights |
16
weeks |
|
52
weeks |
|
(in thousands of dollars except percentages, per share data and
financial leverage ratio) |
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
$ |
|
$ |
|
$ |
|
$ |
|
Sales |
311,551 |
|
334,739 |
|
1,060,071 |
|
1,096,411 |
|
Adjusted
EBITDA(1) |
5,384 |
|
5,392 |
|
18,964 |
|
16,162 |
|
Adjusted EBITDA(1)
margin (%) |
1.7 |
|
1.6 |
|
1.8 |
|
1.5 |
|
Net earnings (loss) from continued
operations |
572 |
|
(1,873 |
) |
654 |
|
(4,901 |
) |
Net earnings (loss) |
(288 |
) |
(1,904 |
) |
7,727 |
|
(4,387 |
) |
Per share - basic and
diluted ($) |
— |
|
(0.02 |
) |
0.08 |
|
(0.04 |
) |
Cash flow from
operating activities |
5,682 |
|
8,177 |
|
21,998 |
|
14,154 |
|
Net
debt(2) |
72,122 |
|
101,780 |
|
72,122 |
|
101,780 |
|
Financial leverage ratio(3) |
3.8 |
|
6.3 |
|
3.8 |
|
6.3 |
|
(1) Non-IFRS measure. Refer to table
Reconciliation of Net Earnings to adjusted EBITDA and to MD&A
section 6 "Non-IFRS Performance Measures". Adjusted EBITDA
corresponds to net earnings before costs not related to current
operations and impairment loss on goodwill, intangible assets and
property, plant and equipment, depreciation and amortization and
expenses for stock-based compensation plan. (2) Non-IFRS measure.
Refer to table Reconciliation of net earnings to adjusted EBITDA
and to MD&A section 6 "Non-IFRS Performance Measures". Net
debt corresponds to bank indebtedness, current portion of long-term
debt, long-term debt and convertible debentures 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. Refer to MD&A section 6 "Non-IFRS Performance
Measures".
“2019 was a year of major changes for Colabor.
We focused on our distribution activities where we have a better
competitive advantage and we decided not to renew non-profitable
contracts. As a result, we are closing the 2019 fiscal year with a
clearly improved profitability and a substantially lower
indebtedness.”
“In order to continue the momentum for 2020,
several optimization measures need to be implemented, such as
improving our business processes and reviewing our marketing
approach related to a better category management, and enhancing our
private brand.” said Louis Frenette, Colabor's President and Chief
Executive Officer.
Results for the Fourth Quarter of
2019
Consolidated sales for the fourth quarter were
$311.6 million compared to $334.7 million during the corresponding
quarter of last fiscal year, representing a decrease of 6.9%. Sales
in the Distribution segment decreased by 6.4% mainly due to a $6.1
million loss of volume in Ontario and the decrease in Broadline
Distribution sales in Québec, mainly related to the decision to
cease serving some regions in Quebec and the Maritimes and
non-profitable contracts, mitigated by an increase in volume from
other clients. Sales in the Wholesale segment decreased by 9.1%,
mainly due to lower intersegment sales, the non-renewal of non-
profitable agreements and by a purchase lag by certain clients.
Adjusted EBITDA(1) for the fourth quarter of
2019 was $5.4 million, same as 2018. In percentage of sales,
adjusted EBITDA margin(1) was 1.7% compared to 1.6% for the
corresponding period of 2018, essentially explained by the
deployment of operations optimization measures and by the
rationalization plan, which reduced operating expenses in those two
segments.
Net earnings from continuing operations was $0.6
million, up 130.5% compared to $(1.9) million for the corresponding
quarter of 2018. This increase is mainly explained by lower
amortization and depreciation expense, costs not related to current
operations of $1.7 million and financial expenses.
Net earnings for the fourth quarter were $(0.3)
million, compared to $(1.9) million for the corresponding period of
last fiscal year. This improvement is mainly due to the increase in
net earnings from continuing operations as explained above,
mitigated by the sale of assets of the Viandes Décarie
division.
Results of fiscal year 2019
Consolidated sales were $1,060.1 million
compared to $1,096.4 million during the corresponding period of the
last fiscal year, a decrease of 3.3%. Sales in the Distribution
segment decreased by 3.3%, primarily attributable to lower sales
volume in Ontario for an amount of $26.9 million of which $13.2
million stemmed from the loss of a supply agreement with Recipe as
well as another customer, a decrease in Broadline Distribution
sales in Quebec, mostly related to the decision to cease serving
some regions in Quebec and the Maritimes and some non-profitable
contracts, mitigated by an increase of the Specialized Distribution
sales, mainly related to a promotion put in place by a retailer.
Sales in the Wholesale segment were down 5.3% compared to the
corresponding period of 2018. This reduction is explained by a
decrease of $5.4 million in intersegment sales, by the non-renewal
of non-profitable contracts and by a purchase lag by certain
clients.
Adjusted EBITDA(1) was $19.0 million, up by
17.3% or $2.8 million compared to the corresponding period of the
last fiscal year. In percentage of sales, adjusted EBITDA margin(1)
was 1.8% compared to 1.5% for the corresponding period of 2018.
This improvement is mostly due to the deployment of operations
optimization measures and by the rationalization plan, which
reduced operating expenses.
Net earnings for the 2019 period were $7.7
million or $0.08 per share, up $12.1 million from $4.4 million net
loss or $(0.04) per share for the corresponding period of 2018. Net
earnings for the Viandes Décarie division from discontinued
operations of $7.1 million contributed to this growth, as did
the improvement in adjusted EBITDA(1), a lower impairment loss on
goodwill, intangible assets and property, plant and equipment of
$2.7 million, a decreased depreciation expense and decreased costs
not related to current operations of $0.3 million, mitigated by an
increase in income taxes. Net earnings from continuing operations
was $0.7 million or $0.01 per share, compared to $(4.9) million or
$(0.05) per share in fiscal 2018.
Cash Flow and Financial
Position
Cash flows from operating activities were $22.0
million during the fiscal year, compared to $14.2 million for the
corresponding period of 2018. This increase is mainly due to a
lower use of working capital(4), lower financial expenses and
increased adjusted EBITDA(1).
As at December 28, 2019, the Company's
working capital(4) was $58.1 million, an improvement from $71.7
million at the end of the previous fiscal year. This variance is
essentially explained by the sale of assets of the Viandes Décarie
division and an improved inventory level and trade receivables
management.
As at December 28, 2019, the Company's Net
debt(2), including convertible debentures and bank indebtedness,
amounted to $72.1 million, compared to $101.8 million for the
2018 fiscal year. The amount received of $17.8 million coming from
the sale of the assets of Viandes Décarie division, as well as
higher cash flows from current operations allowed a $10.0 million
subordinated debt repayment and a $32.0 million diminution on
the credit facility.
Outlook
“We are entering 2020 positively and we intend
to continue our transformation and optimization efforts put in
place over the past few months to meet our objective, which is to
increase our profitability and consequently to create value for our
shareholders. To do so, our action plan is based on three pillars:
a profitable growth in the Broadline Distribution activities, a
continuous improvement of operational efficiency of employee
engagement.” said Mr. Frenette.
Non-IFRS Performance Measures
The information provided in this release
includes non-IFRS performance measures, notably adjusted earnings
before financial expenses, income taxes, depreciation and
amortization ("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 annual 2019 Management's Discussion and Analysis.
Reconciliation of net
earnings (loss) to adjusted EBITDA |
16 weeks |
|
52 weeks |
(in thousands of dollars) |
2019 |
|
2018 |
|
|
2019 |
|
2018 |
|
|
$ |
|
$ |
|
|
$ |
|
$ |
|
|
|
|
|
|
|
Net earnings (loss) from continuing
operations |
572 |
|
(1,873 |
) |
|
654 |
|
(4,901 |
) |
|
|
|
|
|
|
Income taxes (recovered) |
(1,026 |
) |
(984 |
) |
|
195 |
|
(1,686 |
) |
Financial expenses |
1,849 |
|
2,315 |
|
|
7,158 |
|
7,882 |
|
Operating earnings |
1,395 |
|
(542 |
) |
|
8,007 |
|
1,295 |
|
Depreciation and
amortization |
3,058 |
|
3,393 |
|
|
9,801 |
|
10,658 |
|
Impairment loss on goodwill,
intangible assets and property, plant and equipment |
171 |
|
132 |
|
|
243 |
|
2,916 |
|
Expenses for stock-based
compensation plan |
57 |
|
(10 |
) |
|
32 |
|
68 |
|
Costs not related to current
operations |
703 |
|
2,419 |
|
|
881 |
|
1,225 |
|
|
|
|
|
|
|
Adjusted EBITDA(1) |
5,384 |
|
5,392 |
|
|
18,964 |
|
16,162 |
|
Additional Information
The Management Discussion and Analysis and the
financial statements of the Company are available on SEDAR
(www.sedar.com). Additional information, including the annual
information form, about Colabor Group Inc. can be found on SEDAR
and on the Company’s website at www.colabor.com.
(4) 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.
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 2.3 "Development
Strategies and Outlook" of the Company's 2019 MD&A available on
SEDAR (www.sedar.com). 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 10 "Risks and Uncertainties" of the Company's 2019
MD&A. These factors 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 Thursday February 27, 2020, beginning at 10:30
a.m. Eastern time. Interested parties can join the call by dialing
1-877-223-4471 (from anywhere in North America) or 1-647-788-4922.
If you are unable to participate, you can listen to a recording by
dialing 1-800-585-8367 or 1-416-621-4642 and entering the code
8476895 on your telephone keypad. The recording will be available
from 1:30 p.m. on Thursday February 27, 2020, to 11:59 p.m. on
Thursday March 19, 2020.
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, Ontario 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
GagnéSenior Vice President and Chief Financial
OfficerColabor Group Inc450-449-4911 poste
1308investors@colabor.com |
Danielle
Ste-MarieSte-Marie Strategy and Communications
Inc.Investor RelationsTel. : 450-449-0026, ext. 1180 |
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