Unisync Reports 44% Increase in 2019 Fiscal Q3 Revenues
August 14 2019 - 4:27PM
Unisync Corp. (TSX: "UNI") (the “Company") operates through two
business segments: Unisync Group Limited (“UGL”) of Mississauga,
Ontario and Peerless Garments LP (“Peerless”) of Winnipeg,
Manitoba.
Consolidated revenues for the three months ended
June 30, 2019 of $21.6 million increased by $6.6 million or 44%
from the $15.0 million recorded in the three months ended June 30,
2018. Revenue was up by $4.2 million to $17.7 million in the
UGL segment and by $2.4 million to $3.9 million in the Peerless
segment. The revenue increase in the UGL segment was due to the
contribution of $5.8 million from Utility Garments Inc. (“Utility”)
and $1.3 million from the former Red The Uniform Taylor (“RTUT”)
operations that were both acquired in the current fiscal year.
Revenue from the UGL segment’s existing operations was down
$2.9 million from the same period in the prior year when a new
uniform rollout was launched for Canada’s biggest drugstore chain
and when the UGL segment disposed of the remaining discontinued
uniforms of its largest airline customer following that customer’s
new uniform rollout in the second quarter of fiscal 2018. The UGL
segment’s next significant new uniform rollout for its first major
US based airline account is expected to take place from September
2019 to March 2020. Deferred revenues at UGL increased by 14% over
the previous quarter to $12.3 million as at June 30, 2019
(September 30, 2018: $1.1 million).
The $2.4 million revenue increase in the
Peerless segment in the current quarter compares against the third
quarter last year when results were negatively effected by delays
in the release of new contracts and in the exercise of outstanding
options on existing contracts by the Department of National Defence
(“DND”). These delays continued to affect performance in Q1 and Q2
of this fiscal year. The improvement in the Peerless segment
revenue experienced in Q3 is expected to continue into the coming
year as the DND has recently exercised $8.5 million in contract
options bringing the firm portion of the $34 million in contracts
outstanding to $20.5 million.
Consolidated gross profit for the three months
ended June 30, 2019 was unchanged at $2.9 million from the previous
year’s quarter but as a percentage of revenue fell to 13.5% from
19.3%. The Peerless segment reported a $0.6 million increase
in gross profit to $0.9 million while its gross profit margin
slipped from 25.4% of revenue to 24.7% of revenue due to a change
in the mix of sales. Gross profit in the UGL segment fell by
$0.2 million to $2.3 million and its gross profit margin fell from
18.8%(Q3 2018) of revenue to 13.0%(Q3 2019) due to a) increased
fixed distribution and production labour and property costs
relative to the start-up of the Henderson, Nevada, facility in
support of the upcoming launch of new uniforms for a US based
airline and b) lower economies of scale at the existing Canadian
operations.
General and administrative expenses increased by
$2.5 million or 128% in the three months ended June 30, 2019 from
the third quarter one year ago with the inclusion of $0.7 million
of Utility and $0.5 million of new US location expenses and with
increases of $0.6 million, $0.5 million and $0.2 million across the
existing UGL, Corporate and Peerless segments respectively.
General and administrative expenses rose in the UGL segment due to
additional sales and customer service staffing, redundant online
ordering support and programing costs with the transition to a new
vendor and litigation expenses related to three former employees
terminated with cause in 2017. The increase in Corporate
expenses was mainly attributable to fees related to defending a
legal challenge to the hiring of a former executive of a competitor
and increased officer and director compensation.
The Company realized a net loss and total
comprehensive loss of $1.6 million in the quarter ended June 30,
2019 compared to net income and total comprehensive income of $2.0
million (after recording an income tax recovery of $1.7 million) in
the same quarter last year. Adjusted EBITDA (earnings before
interest expense, income taxes, depreciation and amortization,
share-based payment, and acquisition costs) was negative $0.9
million for Q3 2019 against positive $1.1 million for Q3 2018.
More detailed information is contained in the
Company’s Interim Financial Statements for the three months ended
June 30, 2019 and Management Discussion and Analysis dated August
13, 2019 which may be accessed at www.sedar.com.
On Behalf of the Board of Directors
Douglas F GoodExecutive Chairman
Investor relations
contact: Douglas F Good at
778-370-1725 Email
dgood@unisyncgroup.com
Forward Looking StatementsThis
news release may contain forward-looking statements that involve
known and unknown risk and uncertainties that may cause the
Company’s actual results, performance or achievements to be
materially different from any future results, performance or
achievements expressed or implied in these forward-looking
statements. Any forward-looking statements contained herein are
made as of the date of this news release and are expressly
qualified in their entirety by this cautionary statement.
Except as required by law, the Company undertakes no obligation to
publicly update or revise any such forward-looking statements to
reflect any change in its expectations or in events, conditions or
circumstances on which any such forward-looking statements may be
based, or that may affect the likelihood that actual results will
differ from those set forth in the forward-looking statements.
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