Colabor Group Reports Results for the Second Quarter 2022

BOUCHERVILLE, Quebec, July 21, 2022 (GLOBE NEWSWIRE) — Colabor Group Inc. (TSX: GCL) (“Colabor” or the “Company”) reports its results for the second quarter ended June 11, 2022.

Second Quarter 2022 Financial Highlights:

• Sales increased by 27.4% to $138.0 million, compared to $108.3 million for the corresponding period of 2021 resulting mainly from an increase in volume given the less restrictive confinement measures in 2022 compared to 2021, the impact of high inflation and the acquisitions described below;
• Net earnings from continuing operations reached $1.7 million compared to $1.6 million for the corresponding period of 2021, as the increase in adjusted EBITDA⁽¹⁾ was mitigated by the increase in costs not related to current operations and depreciation and amortization expenses;
• Adjusted EBITDA⁽¹⁾ increased to $8.0 million from $6.7 million for the corresponding period of 2021. Excluding the impact of subsidies obtained of $1.2 million in 2021, adjusted EBITDA⁽¹⁾ margin would have been 5.0% of sales in 2021 compared to 5.8% in 2022;
• Cash flow used in operating activities decreased to $1.2 million compared to $2.9 million for the second quarter of 2021, resulting from a lower utilization of working capital⁽⁴⁾; and
• Acquisition on April 4, 2022 of Le Groupe Resto-Achats Inc. and its subsidiaries and acquisition on April 22, 2022 of certain assets, including the customers list in the Laurentians and Outaouais regions, representing total revenues of $2.8 million during the second quarter.

Table of second quarter 2022 Financial Highlights:

“I am proud of our second quarter results, which continue to demonstrate the resiliency of our business model in the wake of a pandemic and rising inflationary pressures,” said Mr. Frenette, President and Chief Executive Officer of Colabor. “Revenues were up 27.4% and our gross margin was up 8.3% from the second quarter of last year.”

“Our diversified customer base, continuous improvements to our business and our ability to dynamically manage our cost structure, allow us to continue to invest in the implementation of our strategic plan. In April, we completed two acquisitions that aim to grow our distribution activities in the province. The closing of these two acquisitions, which represent approximately $17.0 million in annual revenues, will help us enhance the depth of our offering and gain market share in existing and new territories. These two acquisitions will create value and accelerate our strategic growth plan,” added Louis Frenette.

Results for the Second Quarter of 2022

Consolidated sales for the second quarter amounted to $138.0 million compared to $108.3 million during the corresponding quarter of 2021, an increase of 27.4%. Sales for the Distribution segment increased by 27.7%, explained by a volume increase from restaurants, given there are no restrictions for dining rooms during the second quarter of 2022, the impact of high inflation and the acquisition of assets in the Laurentians and Outaouais regions. Wholesale segment sales increased by 23.1% explained by an increase in volume as explained above, as well as by new customers and the impact of high inflation.

Adjusted EBITDA⁽¹⁾ from continuing activities was $8.0 million or 5.8% of sales from continuing activities compared to $6.7 million or 6.2% during 2021. These variations are mainly explained by the increase in sales and improvement of gross margin, mitigated by the decrease in subsidies obtained of $1.2 million, an increase in labor costs and other supply chain costs. Excluding the impact of subsidies obtained in 2021, the adjusted EBITDA⁽¹⁾ margin would have been 5.8% in 2022 and 5.0% in 2021.

Net earnings from continuing operations were $1.7 million, similar to $1.6 million for the corresponding quarter of the previous year, resulting essentially from the increase of the adjusted EBITDA⁽¹⁾ as explained previously, combined with lower financial expenses, mitigated by higher costs not related to current operations, income taxes and depreciation and amortization expenses.

Net earnings for the second quarter were $1.7 million in 2022 and for the corresponding period of 2021 and is explained by the facts described above.

Results for the 24-week period of 2022

Consolidated sales for the 24-week period were $235.2 million compared to $194.1 million in the corresponding period of 2021, an increase of 21.2% mainly from the Distribution segment. Adjusted EBITDA⁽¹⁾ from continuing operations reached $10.3 million or 4.4% of sales from continuing operations compared to $10.5 million or 5.4% in 2021. These variations are mainly due to an increase in gross margin and sales, mitigated by a decrease in subsidies obtained of $2.5 million. Net earnings from continuing operations were $nil million, down from a net earnings of $0.6 million in the 24-week period of last year. Excluding the impact of subsidies obtained, the adjusted EBITDA⁽¹⁾ margin would have been 4.4% in 2022 and 4.1% in 2021.

Cash Flow and Financial Position

Cash flows from operating activities reached $(1.2) million and $11.2 million for the 12 and 24-week periods of 2022, respectively, compared to $(2.9) million and $2.5 million for the corresponding periods of 2021. This increase is mainly due to lower utilization of working capital⁽⁴⁾ and a higher adjusted EBITDA⁽¹⁾. The lower utilization of working capital⁽⁴⁾ is explained by the receipt of the non-recurring gain which was receivable as at December 25, 2021 and by a higher collection of receivables in 2022 in connection with the increase in sales in the fourth quarter of 2021.

As at June 11, 2022, the Company’s working capital⁽⁴⁾ was $37.4 million, down from $40.8 million at the end of the fiscal year 2021. This variation is explained by the receipt of the non-recurring gain which was receivable as at December 25, 2021, mitigated by the seasonality effect.

As at June 11, 2022, the Company’s net debt⁽²⁾ was down to $46.1 million, compared to $48.4 million at the end of the fiscal year 2021. This decrease is mainly due to credit facility repayments.

Outlook

“Looking ahead, with an improved product mix, a wider distribution network, an improved efficiency and a robust balance sheet, we anticipate a further recovery of the restaurant and hospitality industry. As always, we remain cautious and focused on managing our cost structure in the face of current inflationary pressures, labor shortage and supply chain disruptions,” 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.

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 8 “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 Friday, July 22, 2022, 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 370535# on your telephone keypad. The recording will be available from 1:30 p.m. on Friday, July 22, 2022, until 11:59 p.m. on July 29, 2022.

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: