Colabor Group Inc. (TSX: GCL, GCL.DB.A) (“Colabor” or the
“Company”) reports its results for the third quarter and the
36-week period ended September 5, 2020.
Third Quarter 2020 Financial
Highlights:
- Sales declined to
$120.9 million, compared to $165.8 million for the corresponding
period of 2019, mainly explained by the termination of a contract
in Specialized distribution activities, non-renewal of
less-profitable contracts in Broadline activities distribution and
by the effects of the pandemic;
- Net earnings from
continuing operations declined to $3.4 million compared to $3.7
million for the corresponding period of 2019;
- Adjusted EBITDA(1)
increased to $10.1 million or 8.4% of sales from continuing
operations compared to $8.5 million or 5.1% for the corresponding
period of 2019. Excluding the impact of IFRS 16 adoption, the
adjusted EBITDA margin(1) for the third quarter of 2020 would have
been 6.8%, a significant improvement compared to 2019; and
- Net debt(2)
decreased to $56.2 million, compared to $68.2 million as at
December 28, 2019, bringing the financial leverage ratio(3) to 1.9x
as at September 5, 2020 (or 2.4x excluding IFRS 16 adoption),
compared to 2.5x as at December 28, 2019.
Table of third quarter Financial
Highlights:
Financial
highlights |
12 weeks |
36 weeks |
(in thousands of dollars
except percentages, per share data and financial leverage
ratio) |
2020 |
2019 |
2020 |
|
2019 |
|
$ |
$ |
$ |
|
$ |
Sales from continuing
operations |
120,931 |
165,803 |
328,002 |
|
473,059 |
Adjusted EBITDA(1) |
10,143 |
8,485 |
21,454 |
|
19,460 |
Adjusted EBITDA(1) margin
(%) |
8.4 |
5.1 |
6.5 |
|
4.1 |
Net earnings from continuing
operations |
3,441 |
3,682 |
3,178 |
|
5,557 |
Net earnings (loss) |
1,789 |
1,710 |
(9,423 |
) |
8,015 |
Per share - basic and diluted ($) |
0.02 |
0.02 |
(0.09 |
) |
0.08 |
Cash
flow from operating activities |
17,238 |
18,566 |
26,068 |
|
23,551 |
Financial
position |
|
|
As at |
|
As at |
|
|
|
September 5, |
|
December 28, |
|
|
|
2020 |
|
2019 |
Net debt(2) |
|
|
56,241 |
|
68,155 |
Financial leverage ratio(3) |
|
|
1.9x |
|
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".
“I am very happy with our third quarter results.
We improved profitability, generated significant cashflows, reduced
net debt and strengthened our balance sheet. Given the current
context, this demonstrates the resiliency of our diversified
business model and our ability to adapt. With the sale of our
Ontario division and associated drag on our profitability behind
us, we are in a better position operationally and financially than
we have been in many years.” commented Mr. Frenette, President
and Chief Executive Officer of Colabor.
Results for the Third
Quarter of 2020
Consolidated sales for the third quarter
amounted to $120.9 million compared to $165.8 million during the
corresponding quarter of 2019, a decrease of 27.1%. Sales for the
Distribution segment decreased by 33.5% explained by an amount of
$18.0 million related to the termination of a contract from
the Specialized distribution, an amount of $9.1 million following
the decision to cease serving less-profitable contracts during the
last quarter of 2019 in Broadline Distribution, as well as the
volume decrease related to the pandemic for our restaurant clients,
partially compensated by a volume increase for retail clients.
Wholesale segment sales decreased by 10.5%, due to a volume
decrease from the pandemic and lower intersegment sales.
Adjusted EBITDA(1) from continuing activities
reached $10.1 million or 8.4% of sales from continuing activities
compared to $8.5 million or 5.1%, up 19.5%. The improvement,
as a percentage of sales, is mainly due to gross profit margin
improvement following a decision to cease serving less-profitable
contracts, the deployment of operational optimization measures, the
IFRS 16 adoption which reduced operating expenses for both segments
in the amount of $2.0 million, the decrease in salaries resulting
from measures taken during the pandemic and the Canada Emergency
Wage Subsidy ("CEWS") of $0.9 million, mitigated by the
decrease in sales due to the pandemic and by the unfavorable effect
of the provisions reversal caused by a $0.2 million favorable
CNESST settlements during the 12-week period ended in 2019.
Excluding the impact of IFRS 16 adoption, the CEWS and the effect
of the CNESST reversal, the adjusted EBITDA margin(1) for the third
quarter of 2020 would have been 5.8%.
Net earnings from continuing operations were
$3.4 million, a decrease of 6.5% compared to $3.7 million for the
corresponding quarter of 2019 resulting essentially from the
increase in depreciation expense and income taxes, mitigated by the
increase in adjusted EBITDA(1) and the decrease in financial
expenses.
Net earnings for the third quarter were $1.8
million, compared to net earnings of $1.7 million for the
corresponding period of 2019. The increase is mainly due to the
above-mentioned explanations and to the net loss decrease related
to discontinued operations of $0.3 million.
Results for the 36 week period of
2020
Cumulative consolidated sales amounted to $328.0
million compared to $473.1 million for the corresponding period of
2019, a decrease of 30.7% mainly due to the Distribution segment.
Cumulative adjusted EBITDA(1) from continuing operations reached
$21.5 million compared to $19.5 million for the corresponding
period of 2019, up 10.2%. Cumulative net income from continuing
operations was $3.2 million, or $0.03 per share, compared to $5.6
million, or $0.06 per share in the corresponding period of
2019.
Cash Flow and Financial
Position
Cash flows from operating activities reached
$17.2 million during the third quarter compared to $18.6 million in
the corresponding period of 2019. This decrease is mainly due to a
higher use of working capital(4), mitigated by the reclassification
to financing activities of simple contract payments following the
IFRS 16 adoption and by the increase in adjusted EBITDA(1).
As at September 5, 2020, the Company's
working capital(4) was $34.9 million, down from $58.1 million at
the end of the previous fiscal year. This variance is mainly due to
the end of activities in Ontario and the reduced level of
activities caused by the pandemic.
As at September 5, 2020, the Company's Net
debt(2), including convertible debentures and bank indebtedness,
down to $56.2 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 during the 36-week
period 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 and increase our cash.
Outlook
Covid-19 pandemic
Although the almost complete reopening and the
gradual resumption of activities took place during the third
quarter, the Company continued to be impacted by the pandemic given
the measures required by the public health. With the arrival of the
second wave and the partial closure of restaurants in some regions
in the province of Quebec, the Company expects to continue to
experience certain repercussions in the coming months without
having a significant negative impact on its available liquidity.
During the second quarter, the Company extended the maturity of its
credit facility and subordinated debt which, combined with the
results of the first three quarters of 2020, will allow Colabor to
pursue its 2020 plan.
“Despite the uncertainty surrounding the
pandemic and its second wave, Colabor remains confident about the
results for the coming months. We will continue to closely monitor
the evolution of the pandemic and quickly put in place the
necessary measures, just as we did during the first wave in order
to minimize the impacts. Our priorities remain the same, namely to
help and protect our customers, suppliers and employees while
working on our objectives initially planned for 2020, which are to
increase profitability and consequently to create value for our
shareholders.” commented Mr. Frenette.
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 to Adjusted
EBITDA(1) |
12 weeks |
|
36 weeks |
(in thousands of dollars) |
2020 |
|
2019 |
|
2020 |
2019 |
|
|
$ |
|
$ |
|
$ |
$ |
|
Net earnings from continuing operations |
3,441 |
|
3,682 |
|
3,178 |
5,557 |
|
Income taxes |
1,938 |
|
705 |
|
1,491 |
1,864 |
|
Financial expenses |
1,443 |
|
1,572 |
|
4,737 |
5,215 |
|
Operating earnings |
6,822 |
|
5,959 |
|
9,406 |
12,636 |
|
Expenses for stock-based compensation plan |
48 |
|
244 |
|
225 |
(24 |
) |
Costs not related to current
operations |
(121 |
) |
— |
|
1,467 |
178 |
|
Depreciation and amortization |
3,394 |
|
2,282 |
|
10,356 |
6,670 |
|
|
|
|
|
|
|
Adjusted EBITDA(1) |
10,143 |
|
8,485 |
|
21,454 |
19,460 |
|
(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 Friday October 16, 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
1547595 on your telephone keypad. The recording will be available
from 1:30 p.m. on Friday October 16, 2020, until 11:59 p.m. on
Friday October 23, 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, in the Atlantic provinces
and in Ontario, 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:
Marie-France LabergeCorporate Controller and
Interim Chief Financial OfficerColabor Group IncTel.: 450-449-4911
extension 1272investors@colabor.com |
Danielle Ste-MarieSte-Marie Strategy and
Communications Inc.Investor RelationsTel.: 450-449-0026, extension
1180 |
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