Colabor Group Inc. (TSX: GCL, GCL.DB.A) (“Colabor” or the
“Company”) reports its results for the second quarter and the
24-week period ended June 13, 2020.
Second Quarter 2020 Financial
Highlights:
- Sales declined to $95.5 million, compared to $180.7 million for
the corresponding period of 2019, mainly explained by the
effects of the pandemic, non-renewal of less-profitable contracts
in Broadline activities distribution and by the termination of a
contract in Specialized distribution activities;
- Net earnings from continuing operations declined to $1.6
million compared to $2.9 million for the corresponding period of
2019;
- Sales from continuing operations of $95.5 million and adjusted
EBITDA(1) of $7.6 million are above expectations compared to
forecast sales and adjusted EBITDA(1) of between $80 to 90 million
and $5 to 6 million, respectively;
- Net debt(2) decreased to $63.0 million, compared to $68.2
million as at December 28, 2019, bringing the financial leverage
ratio(3) to 2.3x as at June 13, 2020 (or 2.6x excluding IFRS
16 adoption), compared to 2.5x as at December 28, 2019;
- Closing of the sale of the majority of the assets of the Summit
division for a value of $9.4 million, subject to certain
adjustments, of which $7.7 million was received at closing;
and
- Extension of the maturities of the credit facility in October
2021 and of the subordinated debt in February 2022.
Table of second quarter Financial
Highlights:
Financial highlights |
12
weeks |
24
weeks |
(in thousands
of dollars except percentages, per share data and financial
leverage ratio) |
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
$ |
|
$ |
|
$ |
|
$ |
|
Sales from continuing
operations |
95,458 |
|
180,713 |
|
207,071 |
|
307,256 |
|
Adjusted EBITDA(1) |
7,613 |
|
8,713 |
|
11,311 |
|
10,975 |
|
Adjusted EBITDA(1) margin
(%) |
8.0 |
|
4.8 |
|
5.5 |
|
3.6 |
|
Net earnings (loss) from continuing operations |
1,608 |
|
2,934 |
|
(263 |
) |
1,875 |
|
Net earnings (loss) |
(2,882 |
) |
9,039 |
|
(11,212 |
) |
6,305 |
|
Per share - basic and diluted ($) |
(0.03 |
) |
0.09 |
|
(0.11 |
) |
0.06 |
|
Cash
flow from operating activities |
3,217 |
|
1,198 |
|
8,830 |
|
4,985 |
|
Financial
position |
|
|
As at |
|
As at |
|
|
|
|
June 13, |
|
December 28, |
|
|
|
|
2020 |
|
2019 |
|
Net debt(2) |
|
|
62,969 |
|
68,155 |
|
Financial leverage ratio(3) |
|
|
2.3x |
|
2.5x |
|
(1) |
|
Non-IFRS measure. Refer to the
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, depreciation and amortization and expenses for
stock-based compensation plan. The adjusted EBITDA for 2019 has not
been modified to reflect the impact of IFRS 16 adoption. |
(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, 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 for the last twelve
months. Refer to MD&A section 6 "Non-IFRS Performance
Measures". |
“The second quarter was marked by the pandemic
resulting in almost complete containment of all sectors of the
economy with repercussions on our sales. The various measures,
quickly implemented by Colabor, have made it possible to achieve
financial results above our expectations.”
“The Company expects to continue to experience
certain repercussions in the coming months given the gradual
resumption of activities. However, the closing of the sale of the
majority of the activities of our Summit division and the extension
of the maturity dates of the credit facility and the subordinated
debt during the second quarter will allow us to meet the potential
needs for additional liquidity resulting from the pandemic, while
remaining proactive about any opportunities that may arise.”
commented Louis Frenette.
“Given the impact of this pandemic, we are
really satisfied with the second quarter results, the cash flow
generated, as well as the low level of debt,” concluded Mr.
Frenette.
Results for the Second Quarter of
2020
Consolidated sales for the second quarter
amounted to $95.5 million compared to $180.7 million during the
corresponding quarter of 2019, a decrease of 47.2%. Sales for the
Distribution segment decreased by 56.4% due to the Specialized
distribution activities for an amount of $50.5 million
explained by the termination of a contract for an amount of $40.0
million and a decrease in volume due to the pandemic. Québec
Broadline Distribution sales have decreased by $27.6 million, and
essentially stemming from a volume decrease related to the pandemic
for our restaurant and institutional clients and the decision to
cease serving less-profitable contracts during the last quarter of
2019 for an amount of $6.3 million partially compensated by a
volume increase for retail clients. Wholesale segment sales
decreased by 24.0%, due to a volume decrease from the pandemic and
lower intersegment sales.
Adjusted EBITDA(1) from continuing activities
reached $7.6 million or 8.0% of sales from continuing activities
compared to $8.7 million or 4.8%, a decrease of 12.6%. The
improvement, as a percentage of sales, is mainly explained by the
adoption of IFRS 16, an improvement in the gross margin, the
decrease in salaries resulting from the measures taken during the
pandemic and the Canada Emergency Wage Subsidy ("CEWS") of $4.4
million, mitigated by the impact of the sales decline related to
the pandemic and by the unfavorable effect of the provisions
reversal from favorable CNESST settlements totaling $0.4 million in
the corresponding period of 2019.
Net earnings from continuing operations were
$1.6 million, a decrease of 45.2% compared to $2.9 million for the
corresponding quarter of 2019 resulting essentially from the
decrease in adjusted EBITDA(1), the increase in depreciation
expense and costs not related to current operations, mitigated by
the decrease in financial expenses and income taxes.
Net loss for the second quarter were $(2.9)
million, compared to net earnings of $9.0 million for the
corresponding period of 2019. The decline is mainly due to the
above-mentioned explanations and to the net loss increase related
to discontinued operations of $10.6 million.
Results for the 24 week period of
2020
Cumulative consolidated sales amounted to $207.1
million compared to $307.3 million for the corresponding period of
2019, a decrease of 32.6% mainly due to the Distribution segment.
Cumulative adjusted EBITDA(1) from continuing operations reached
$11.3 million compared to $11.0 million for the corresponding
period of 2019, up 3.1%. Cumulative net income from continuing
operations was $(0.3) million, or $0.00 per share, compared to $1.9
million, or $0.02 per share in the corresponding period of
2019.
Cash Flow and Financial
Position
Cash flows from operating activities reached
$3.2 million during the second quarter compared to $1.2 million in
the corresponding period of 2019. This increase is mainly due to a
lower use of working capital(4) and by the reclassification to
financing activities of simple contract payments following the IFRS
16 adoption.
As at June 13, 2020, the Company's working
capital(4) was $41.6 million, down from $58.1 million at the end of
the previous fiscal year. This variance is essentially explained by
the termination of the contract with Recipe Unlimited, by the sale
of some assets of the Ontario division and the reduced level of
activities caused by the pandemic.
As at June 13, 2020, the Company's Net
debt(2), including convertible debentures and bank indebtedness,
down to $63.0 million, compared to $68.2 million at the end of
the 2019 fiscal year. This decrease is mainly due to the increase
in cash flows generated by current operations and the sale of the
majority of the assets of the Summit division making it possible to
repay the credit facility during the first quarters of 2020.
Outlook
Covid-19 pandemic
Although the almost complete deconfinement began
at the end of the second quarter, the Company expects to continue
to suffer from certain repercussions for the next few months, given
the gradual recovery of activities, particularly in sales and
adjusted EBITDA. The Company does not expect a significant negative
impact on its available cash. As previously mentioned, the Company
has extended the term of its credit facility and its subordinated
debt, which combined with the results of the first half, will allow
Colabor to pursue its 2020 plan.
“Colabor remains confident about the coming
months, despite uncertainties that remain about the possibility of
a second wave of the pandemic, its magnitude and its economic
repercussions. The human and financial resources available allow us
to pursue our 2020 plan and to continue the transformation and
optimization measures implemented at the end of 2019.” commented
Mr. Frenette, President and Chief Executive Officer of Colabor.
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 (Loss) to Adjusted
EBITDA |
12 weeks |
|
24 weeks |
|
|
|
|
|
|
|
|
|
|
(in thousands of dollars) |
2020 |
|
2019 |
|
|
2020 |
|
2019 |
|
|
$ |
|
$ |
|
|
$ |
|
$ |
|
Net earnings (loss) from continuing
operations |
1,608 |
|
2,934 |
|
|
(263 |
) |
1,875 |
|
Income taxes (recovered) |
403 |
|
1,607 |
|
|
(447 |
) |
1,159 |
|
Financial expenses |
1,598 |
|
1,851 |
|
|
3,294 |
|
3,643 |
|
Operating earnings |
3,609 |
|
6,392 |
|
|
2,584 |
|
6,677 |
|
Expenses for stock-based
compensation plan |
78 |
|
(50 |
) |
|
177 |
|
(268 |
) |
Costs not related to current
operations |
508 |
|
178 |
|
|
1,588 |
|
178 |
|
Depreciation and amortization |
3,418 |
|
2,193 |
|
|
6,962 |
|
4,388 |
|
|
|
|
|
|
|
Adjusted EBITDA |
7,613 |
|
8,713 |
|
|
11,311 |
|
10,975 |
|
(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. |
Additional Information
The Management Discussion and Analysis and the
condensed interim 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 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
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 Monday July 27, 2020, beginning at 9:30 a.m.
Eastern time. Interested parties can join the call by dialing
1-888-231-8191 (from anywhere in North America) or 1-647-427-7450.
If you are unable to participate, you can listen to a recording by
dialing 1-855-859-2056 or 1-416-849-0833 and entering the code
5524799 on your telephone keypad. The recording will be available
from 1:30 p.m. on Monday July 27, 2020, until 11:59 p.m. on Monday
August 3, 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 extension
1308investors@colabor.com |
Danielle
Ste-MarieSte-Marie Strategy and Communications
Inc.Investor RelationsTel. : 450-449-0026, extension 1180 |
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