GCL Colabor Group Inc

Colabor Group Inc. (TSX: GCL) (“Colabor” or the “Company”) reports its results for the second quarter ended June 17, 2023.

Second Quarter 2023 Financial Highlights:

• Sales increased by 19.0% to $164.2 million, compared to $138.0 million for the corresponding period of 2022;
• Net earnings from continuing operations were $2.3 million compared to $1.7 million for the corresponding period of 2022;
• Adjusted EBITDA(1) increased by 16.1% to $9.3 million from $8.0 million for the corresponding period of 2022 with an adjusted EBITDA(1) margin to 5.7% of sales compared to 5.8% of sales during the corresponding period of 2022; and
• Cash flows from operating activities increased to $11.3 million compared to $(1.2) million during the corresponding period of 2022.

Table of Second Quarter 2023 Financial Highlights:

Financial highlights	12 weeks			24 weeks
(in thousands of dollars, except percentages, per share data and financial leverage ratio)	2023	2022		2023	2022
	$	$		$	$
Sales from continuing operations	164,186	137,986		298,109	235,155
Adjusted EBITDA(1)	9,294	8,006		14,868	10,319
Adjusted EBITDA(1)margin (%)	5.7	5.8		5.0	4.4
Net earnings from continuing operations	2,314	1,690		2,154	37
Net earnings (loss)	2,314	1,676		2,154	(30	)
Per share - basic and diluted ($)	0.02	0.02		0.02	—
Cash flow from operating activities	11,268	(1,221	)	12,075	11,205
Financial position				As at	As at
				June 17,	December 31,
				2023	2022
Net debt(2)				47,315	47,764
Financial leverage ratio(3)				2.0x	2.3x

(1) Non-IFRS measure. Refer to the table Reconciliation of Net Earnings to adjusted EBITDA in MD&A section 5 "Non-IFRS Performance Measures". Adjusted EBITDA corresponds to net operating earnings 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 pleased with our second quarter results. After more than two years of dedicated efforts to improve our business and profitability, I can once again reaffirm that we are on the right track. Our second quarter results show revenue growth of 19.0%, while our adjusted EBITDA(1) increased by 16.1%. 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,” said Mr. Frenette, President and Chief Executive Officer of Colabor.

“These results show that our strategic investments in organic and non-organic growth are paying off,” added Louis Frenette.

Results for the Second Quarter of 2023

Consolidated sales for the second quarter were $164.2 million, an increase of 19.0% compared to $138.0 million during the corresponding quarter of 2022. Sales for the Distribution segment increased by 25.6%, as a result of volume increase, 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 1.7%, mainly as a result of the impact of inflation.

Adjusted EBITDA(1) from continuing activities was $9.3 million or 5.7% of sales from continuing activities compared to $8.0 million or 5.8% during 2022. This change is mainly as a result of increase in sales.

Net earnings from continuing operations were $2.3 million, up from $1.7 million for the corresponding quarter of the previous year, resulting essentially from an increase of the adjusted EBITDA(1), combined with a decrease in costs not related to current operations, mitigated by higher depreciation and amortization, financial and income taxes expenses.

Net earnings for the second quarter were $2.3 million, compared to $1.7 million for the corresponding period of 2022 and are primarily explained by the facts described above.

Results for the 24-week period of 2023

Consolidated sales for the 24-week period amounted to $298.1 million compared to $235.2 million in the corresponding period of 2022, an increase of 26.8%, of which 33.2% from the Distribution segment and 10.7% from the Wholesale segment. Adjusted EBITDA(1) from continuing operations reached $14.9 million or 5.0% of sales from continuing operations compared to $10.3 million or 4.4% in 2022. Net earnings from continuing operations were $2.2 million, up from $nil million in the 24-week period of last year.

Cash Flow and Financial Position

Cash flows from operating activities were $11.3 million for the second quarter compared to $(1.2) million for the corresponding period of 2022. This increase is mainly due to lower utilization of working capital(4) and higher adjusted EBITDA(1). The lower utilization of working capital(4) is explained by a higher collection of receivables in 2023 related to the increase of sales and the timing of inventories purchases and supplier payments. Cash flows from operating activities amounted $12.1 million for the 24-week period of 2023 compared to $11.2 million for the corresponding period of 2022. This increase is mainly due to higher adjusted EBITDA(1), mitigated by a higher utilization of working capital(4). 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 to sales growth.

As at June 17, 2023, the Company's working capital(4) was $49.5 million, up from $48.8 million at the end of the fiscal 2022. This increase is related to sales growth during 2023.

As at June 17, 2023, the Company's net debt(2) was down to $47.3 million, compared to $47.8 million at the end of the fiscal year 2022. This decrease is explained by the increase of cash, mitigated by the additional use of the credit facility for $3.3 million.

Outlook

“We intend to continue this momentum by prioritizing the acceleration of growth and the continuous improvement of our activities and processes. We are also actively working on the preparation of our new site located at Saint-Bruno-de Montarville, to which the relocation is still scheduled for the end of 2023. This highly strategic project will allow us to efficiently reach nearly 90.0% of the Quebec market. 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 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 Earnings to Adjusted EBITDA(1)	12 weeks		24 weeks
(in thousands of dollars)	2023	2022	2023	2022
	$	$	$	$
Net earnings from continuing operations	2,314	1,690	2,154	37
Income taxes	854	675	747	43
Financial expenses	1,383	979	2,625	1,950
Operating earnings	4,551	3,344	5,526	2,030
Expenses for stock-based compensation plan	60	123	149	202
Costs not related to current operations	2	831	51	1,145
Depreciation and amortization	4,681	3,708	9,142	6,942
Adjusted EBITDA(1)	9,294	8,006	14,868	10,319

Additional Information

The Management's 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 Wednesday, July 26, 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 237404# on your telephone keypad. The recording will be available from 1:30 p.m. on Wednesday, July 26, 2023, until 11:59 p.m. on August 2, 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/3oZ20Ow. This new link allows any participant to access the conference call by clicking on the URL link and enter their name and phone number.

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