GCL Colabor Group Inc

Colabor Group Inc. (TSX: GCL) (“Colabor” or the “Company”) reports its results for the first quarter ended March 25, 2023.

First Quarter 2023 Financial Highlights:

• Sales increased by 37.8% to $133.9 million, compared to $97.2 million for the corresponding period of 2022;
• Net loss from continuing operations was $0.2 million compared to $1.7 million for the corresponding period of 2022;
• Adjusted EBITDA(1) increased by 141.0% to $5.6 million from $2.3 million for the corresponding period of 2022 and increase in adjusted EBITDA(1) margin to 4.2% of sales compared to 2.4% of sales during the corresponding period of 2022.

Table of first quarter 2023 Financial Highlights:

Financial highlights	12 weeks
(in thousands of dollars, except percentages, per share data and financial leverage ratio)	2023		2022
	$		$
Sales from continuing operations	133,923		97,169
Adjusted EBITDA(1)	5,574		2,313
Adjusted EBITDA(1) margin (%)	4.2		2.4
Net loss from continuing operations	(160	)	(1,653	)
Net loss	(160	)	(1,706	)
Per share - basic and diluted ($)	0.00		(0.02	)
Cash flow from operating activities	807		12,426
Financial position	As at		As at
	March 25,		March 19,
	2023		2022
Net debt(2)	52,415		47,764
Financial leverage ratio(3)	2.3	x	2.3	x

(1) Non-IFRS measure. Refer to the table Reconciliation of Net Loss to adjusted EBITDA in MD&A section 5 "Non-IFRS Performance Measures". Adjusted EBITDA corresponds to net operating earnings (loss) before costs not related to current operations, depreciation and amortization and expenses for stock-based compensation plan. (2) Non-IFRS measure. Refer to MD&A section 5 "Non-IFRS Performance Measures". Net debt corresponds to bank indebtedness, current portion of long-term debt and long-term debt, 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 less lease liability payments for the last four quarters. The corresponding figure for 2022 has been restated to reflect the new calculation method established for 2023. Refer to MD&A section 5 "Non-IFRS Performance Measures".(4) Working capital is a non-IFRS performance measure. 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.

“I am very proud of the profitable growth we have achieved over the past two years. First quarter results show that the new management team is on the way to completing the first phase of the transformation of Colabor's business. Revenues were up for a 8th consecutive quarter, showing a growth of 37.8%, while our adjusted EBITDA(1) increased by141.0%. Growing demand for our differentiated offerings combined with strategic management of our product mix, has allowed us to offset the increase in labor costs, inputs and investments in our growth. So we start the year of 2023 on strong basis,” said Mr. Frenette, President and Chief Executive Officer of Colabor.

“Our increased footprint in Quebec allows us to gradually penetrate the independent channel market in a more competitive manner. To this end, we began supplying a full service restaurant chain operating 38 establishments across the province as well as a group operating approximately 200 food counters located in retail locations,” added Louis Frenette.

Results for the First Quarter of 2023

Consolidated sales for the first quarter were $133.9 million, an increase of 37.8% compared to $97.2 million during the corresponding quarter of 2022. During the first quarter of 2022, restaurant dining rooms were closed for four weeks due to Covid-19 measures. Sales for the Distribution segment increased by 43.9%, as a result of volume increases, part of which is related to the conclusion of two supply contracts with independent chains, the impact of inflation and the acquisition of assets in the Laurentians and Outaouais regions. Wholesale segment sales increased by 23.9%, as a result of volume increases and the impact of inflation.

Adjusted EBITDA(1) from continuing activities was $5.6 million or 4.2% of sales from continuing activities compared to $2.3 million or 2.4% during 2022. These variations are mainly explained by the increase in sales and an improvement of gross margin, mitigated by increase in labor costs and other supply chain costs.

Net loss from continuing operations was $0.2 million, down from $1.7 million for the corresponding quarter of the previous year, resulting essentially from an increase of the adjusted EBITDA(1) as explained previously, combined with a decrease in costs not related to current operations, mitigated by higher depreciation and amortization and financial expenses, and lower income taxes recovery.

Net loss for the first quarter was $0.2 million, compared to $1.7 million for the corresponding period of 2022 and are primarily explained by the facts described above.

Cash Flow and Financial Position

Cash flows from operating activities were $0.8 million compared to $12.4 million for the corresponding period of 2022. This decrease is mainly due to higher utilization of working capital(4) of $4.5 million, mitigated by higher adjusted EBITDA(1). The higher utilization of working capital(4) is explained by the receipt of the non-recurring gain in 2022 of $4.0 million, which was receivable as at December 25, 2021, and the increase in inventory purchases related with sales growth and in anticipation of the summer season.

As at March 25, 2023, the Company's working capital(4) was $53.3 million, up from $48.8 million at the end of the fiscal 2022. This variation is explained by the increase in inventories, as explained above.

As at March 25, 2023, the Company's net debt(2) was up to $52.4 million, compared to $47.8 million at the end of the fiscal year 2022. This increase is explained by the additional use of the credit facility for $4.0 million.

Outlook

“We intend to continue this momentum by prioritizing the acceleration of growth and the continuous improvement of our activities and processes. The planned relocation at the end of 2023 of our head office and warehouse located in Boucherville to a new site better suited to the distribution operations, in addition to wholesale operations, will allow us to efficiently reach nearly 90.0% of the Quebec market. This project is highly strategic for Colabor. It will also allow us to offer a stimulating work environment for our employees, eco-responsible and to serve more effectively our growing clientele in the west of the province,” commented Louis Frenette.

Non-IFRS Performance Measures

The information provided in this release includes non-IFRS performance measures, notably adjusted earnings (loss) 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 5 "Non-IFRS Performance Measures" in the Management's Discussion and Analysis.

Reconciliation of Net Loss to Adjusted EBITDA(1)	12 weeks
(in thousands of dollars)	2023		2022
	$		$
Net loss from continuing operations	(160	)	(1,653	)
Income taxes recovery	(107	)	(632	)
Financial expenses	1,242		971
Operating earnings (loss)	975		(1,314	)
Expenses for stock-based compensation plan	89		79
Costs not related to current operations	49		314
Depreciation and amortization	4,461		3,234
Adjusted EBITDA(1)	5,574		2,313

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 2.2 "Development Strategies and Outlook" of the Company's MD&A. 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 6 "Risks and Uncertainties" of the Company's MD&A. These factors, which include the risks related to the pandemic of Covid-19 and the different underlying variants ("pandemic") as well as the possible impacts on consumers and the economy, 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, May 4, 2023, beginning at 9:30 a.m. Eastern time. Interested parties can join the call by dialing 1-888-390-0549 (from anywhere in North America) or 1-416-764-8682. If you are unable to participate, you can listen to a recording by dialing 1-888-390-0541 or 1-416-764-8677 and entering the code 372236# on your telephone keypad. The recording will be available from 1:30 p.m. on Thursday, May 4, 2023, until 11:59 p.m. on March 11, 2023. Note that the recording will be available offline on our website at the following address: https://colabor.com/en/investisseurs-en/evenements-et-presentations/

You can also use the QuickConnect link: https://emportal.ink/3ZPSnxT. This new link allows any participant to access the conference call by clicking on the URL link and enter their name and phone number.

Those wishing to join the webcast can do so by clicking on the following link: https://colabor.com/en/investisseurs-en/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:

Pierre BlanchetteSenior Vice President and Chief Financial OfficerColabor Group IncTel.: 450-449-4911 extension 1308investors@colabor.com

Danielle Ste-MarieSte-Marie Strategy and Communications Inc.Investor RelationsTel.: 450-449-0026 extension 1180