Colabor Group Inc. (TSX: GCL, GCL.DB.A) (“Colabor” or the
“Company”) reports its results for the fourth quarter and the
fiscal year ended December 26, 2020.
Fourth Quarter 2020 Financial Highlights
and Recent Events:
-
Sales decreased by 30.9% to $133.3 million, compared to $192.9
million for the fourth quarter of 2019, mainly explained by the
mandatory closure of restaurant dining rooms in Quebec as of
October 1st resulting from the pandemic and the termination of a
contract in Specialized distribution activities since the first
quarter of 2020;
-
Net earnings from continuing operations declined to $0.6 million
compared to $1.9 million for the corresponding period of 2019;
-
Adjusted EBITDA(1) decreased to $7.5 million from $8.2 million for
the corresponding period of 2019. Adjusted EBITDA(1) margin
increased to 5.6% of sales compared to 4.2% of sales during the
corresponding period of 2019;
-
Cash flow from operating activities increased to $11.2 million
compared to $7.9 million for the fourth quarter of 2019. Excluding
the effect of IFRS 16 adoption, cash flow from operating activities
would have amounted to $8.6 million, an increase compared to 2019,
despite the decreases in sales; and
-
Strengthening the balance sheet following the recent announcement
of the conclusion of new credits agreements on February 18, 2021,
and the intention to redeem the $50.0 million convertible
debentures.
Fiscal 2020 Financial
Highlights:
-
Sales amounted to $461.3 million, declined by 30.7% compared to
fiscal year 2019, mainly explained by the termination of a contract
in Specialized distribution activities, by the effects of the
pandemic and the non-renewal of less-profitable contracts in
Broadline activities distribution in Quebec;
-
Net earnings from continuing operations declined to $3.8 million
compared to $7.5 million for the corresponding period of 2019;
-
Adjusted EBITDA(1) increased to $28.9 million or 6.3% of sales
compared to $27.6 million or 4.2% of sales for the corresponding
period of 2019. Excluding the effect of IFRS 16 adoption, adjusted
EBITDA as a proportion of sales is 4.4%, an improvement compared to
the fiscal year 2019;
-
Net debt(2) decreased to $52.1 million, compared to $72.1 million
as at December 28, 2019, bringing the financial leverage ratio(3)
to 1.8x as at December 26, 2020 (or 2.6x excluding IFRS 16
adoption), compared to 2.6x as of December 28, 2019; and
-
Closing of the sale of the majority of the assets of the Summit
division for a value of $9.5 million, subject to certain
adjustments, of which an amount of $8.2 million has already been
received. This division had incurred significant operating losses
for several years.
Table of fourth quarter and fiscal 2020
Financial Highlights:
Financial
highlights |
16 weeks |
52 weeks |
(in thousands of dollars except percentages, per share data and
financial leverage ratio) |
2020 |
|
2019 |
|
|
2020 |
|
|
2019 |
|
$ |
|
$ |
|
|
$ |
|
|
$ |
|
Sales from continuing operations |
133,317 |
|
192,900 |
|
|
461,319 |
|
|
665,959 |
|
Adjusted EBITDA(1) |
7,459 |
|
8,188 |
|
|
28,913 |
|
|
27,648 |
|
Adjusted EBITDA(1) margin
(%) |
5.6 |
|
4.2 |
|
|
6.3 |
|
|
4.2 |
|
Net earnings from continuing
operations |
620 |
|
1,945 |
|
|
3,798 |
|
|
7,502 |
|
Net earnings (loss) |
811 |
|
(288 |
) |
|
(8,612 |
) |
|
7,727 |
|
Per share - basic and diluted ($) |
0.01 |
|
— |
|
|
(0.08 |
) |
|
0.08 |
|
Cash
flow from operating activities |
11,231 |
|
7,905 |
|
|
37,299 |
|
|
31,456 |
|
Financial position |
|
|
As at |
|
|
As at |
|
|
|
|
December 26, |
|
|
December 28, |
|
|
|
|
2020 |
|
|
2019 |
|
Net debt(2) |
|
|
52,100 |
|
|
72,122 |
|
Financial leverage ratio(3) |
|
|
1.8x |
|
|
2.6x |
|
(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". |
“Despite the pandemic that has largely impacted
the restaurant industry, we are ending fiscal 2020 with a
significant cash flow increase and maintaining our debt ratios.”,
said Louis Frenette, President and Chief Executive Officer of
Colabor. “Due to our diversified business model, the sale of our
activities in Ontario, the mitigation measures quickly put in
place, the contribution of subsidies and initiatives to optimize
our operations since 2019, we are able to cope with the unforeseen
events caused by the pandemic.”
“I would also like to recognize the contribution
of our employees since the start of the pandemic and express my
deepest gratitude to them for the excellent work they have done
during this unprecedented time.”, concluded Mr. Frenette.
Results for the Fourth Quarter of
2020
Consolidated sales for the fourth quarter
amounted to $133.3 million compared to $192.9 million during the
corresponding quarter of 2019, a decrease of 30.9%. Sales for the
Distribution segment decreased by 35.5% explained by an amount of
$20.5 million related to the termination of a contract from
the Specialized distribution, an amount of $3.5 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 restaurants and chains
clients, partially mitigated by a volume increase for retail and
institutional clients. Wholesale segment sales decreased by 22.5%,
due to a volume decrease from the pandemic and lower intersegment
sales, partly mitigated by growth from some customers less affected
by the effects of the pandemic and new customers.
Adjusted EBITDA(1) from continuing activities
reached $7.5 million or 5.6% of sales from continuing activities
compared to $8.2 million or 4.2% in 2019. The improvement, as
a percentage of sales, is mainly due to gross profit margin
improvement following the decisions to cease serving
less-profitable contracts, the deployment of operational
optimization measures, the IFRS 16 adoption which reduced operating
expenses for both segments amounting to $2.6 million, the decrease
in salaries resulting from measures taken during the pandemic and
the subsidies of $1.8 million, mitigated by the decrease in
sales due to the pandemic.
Net earnings from continuing operations were
$0.6 million, a decrease of 68.1% compared to $1.9 million for the
corresponding quarter of 2019 resulting essentially from the
decrease in adjusted EBITDA(1) and the increase in depreciation and
amortization expenses, mitigated by the decrease in costs not
related to current operations and the income tax expenses.
Net earnings for the fourth quarter were $0.8
million, compared to net loss of $(0.3) million for the
corresponding period of 2019. The variation is explained by the
elements mentioned above and to the net loss decrease of $2.4
million related to discontinued operations.
Results of Fiscal Year 2020
Cumulative consolidated sales amounted to $461.3
million compared to $666.0 million for the corresponding period of
last fiscal year, a decrease of 30.7%. Sales in the Distribution
segment decreased by 37.1%, explained by an amount of
$84.0 million related to the termination of a contract from
the Specialized Distribution, an amount of $27.1 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.
Sales in the Wholesale segment decreased by 16.3% due to a decrease
in volume due to the pandemic and lower intersegment sales
partially mitigated by the growth of some customers less affected
by the effects of the pandemic and by new customers.
Adjusted EBITDA(1) from continuing operations
reached $28.9 million, or 6.3% of sales from continuing operations,
compared to $27.6 million, or 4.2% of sales from continuing
operations in 2019, an increase of 4.6%. These percentage
improvements come mainly from the adoption of IFRS 16, the
subsidies of $7.1 million, the deployment of operational
optimization measures and the decrease in salaries and other
expenses resulting from measures taken during the pandemic,
mitigated by the sales drop due to the pandemic.
Cumulative net earnings from continuing
operations for fiscal year 2020 was $3.8 million, or $0.04 per
share, down from $7.5 million, or $0.08 per share, for the
last fiscal year. The variation is mainly explained by the increase
in depreciation and amortization expenses and costs not related to
current operations, mitigated by the increase in adjusted
EBITDA(1), as explained previously, and the decrease in financial
expenses and income tax expenses. Net loss for fiscal year 2020 was
$(8.6) million, or $(0.08) per share, a decrease of $16.3 million
compared to net earnings of $7.7 million, or $0.08 per share during
the last fiscal year. The variation is mainly explained by the
items mentioned above and by the increase of $12.6 million in the
net loss from discontinued operations.
Cash Flow and Financial
Position
Cash flows from operating activities for fiscal
year 2020 reached $37.3 million compared to $31.5 million for the
corresponding period of 2019. This increase is mainly due to a
lower utilization of working capital(4), by the reclassification to
financing activities of the payments relating to operating leases
after IFRS 16 adoption and by the increase in adjusted
EBITDA(1).
As at December 26, 2020, the Company's
working capital(4) was $31.2 million, down from $58.1 million at
the end of the fiscal year 2019. This variance is mainly due to the
end of activities in Ontario and the reduced level of activities
caused by the pandemic.
As at December 26, 2020, the Company's net
debt(2), including convertible debentures and bank indebtedness,
down to $52.1 million, compared to $72.1 million at the end of
the fiscal year 2019. This decrease is mainly due to the increase
in cash flows generated by current operations during the fiscal
year 2020, allowing the repayment of $3.0 million of subordinated
debt, as well as $2.0 million of the credit facility during fiscal
2020 and by the effect of the IFRS 16 adoption.
(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. |
Outlook
“We start 2021 on solid grounds despite the
current pandemic. We are ready for the eventual recovery once the
containment measures are released while continuing to adapt in
order to minimize its impacts. In addition, following the recent
refinancing announced on February 18, 2021, we are consolidating
the support of our financial partners and thus have access to the
necessary liquidity in order to pursue our strategic growth when
the time is right”, commented Louis 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) |
16 weeks |
|
52 weeks |
(in thousands of dollars) |
2020 |
|
|
2019 |
|
|
2020 |
|
2019 |
|
|
$ |
|
|
$ |
|
|
$ |
|
$ |
|
Net earnings from continuing operations |
620 |
|
|
1,945 |
|
|
3,798 |
|
7,502 |
|
Income taxes (recovered) |
(320 |
) |
|
741 |
|
|
1,171 |
|
2,605 |
|
Financial expenses |
1,975 |
|
|
1,808 |
|
|
6,712 |
|
7,023 |
|
Operating earnings |
2,275 |
|
|
4,494 |
|
|
11,681 |
|
17,130 |
|
Expenses for stock-based compensation plan |
84 |
|
|
56 |
|
|
309 |
|
32 |
|
Costs not related to current
operations |
344 |
|
|
703 |
|
|
1,811 |
|
881 |
|
Depreciation and
amortization |
4,756 |
|
|
2,935 |
|
|
15,112 |
|
9,605 |
|
|
|
|
|
|
|
Adjusted EBITDA(1) |
7,459 |
|
|
8,188 |
|
|
28,913 |
|
27,648 |
|
Additional Information
The Management Discussion and Analysis and the
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 2.3 "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 March 1st, 2021, 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
9276187 on your telephone keypad. The recording will be available
from 1:30 p.m. on Monday March 1st, 2021, until 11:59 p.m. on
Monday March 8, 2021.
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 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:
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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