BOUCHERVILLE, QUEBEC–(Marketwired – May 8, 2017) – Colabor Group Inc. (TSX:GCL) (“Colabor” or the “Corporation”) today reported its results for the first quarter of fiscal 2017 ended March 25, 2017.
“Colabor significantly reduced its seasonal net loss in the first quarter of 2017. However, the Wholesale segment was particularly affected, due in part to lower sales for the Decarie division as a result of beef price deflation and increased competitive pressures in the meat market, which overshadowed a marked improvement in the performance of the Distribution segment. In addition, the debt reduction that resulted from the recapitalization transactions we closed last October resulted in a significant decrease in our financial expenses,” said Claude Gariépy, President and Chief Executive Officer of Colabor.
| Financial highlights | Quarter ended | ||||
| (thousands of dollars except per-share data) | March 25, 2017 | March 19, 2016 | |||
| Sales1 | 267,187 | 284,811 | |||
| Adjusted EBITDA | 900 | 1,905 | |||
| Operating earnings before the following items | (1,640 | ) | (814 | ) | |
| Charges not related to current operations | 869 | 3,337 | |||
| Net loss | (3,446 | ) | (5,298 | ) | |
| Per share – basic and diluted ($) | (0.03 | ) | (0.19 | ) | |
| Cash flow from operations2 | (4,534 | ) | 2,166 | ||
| Weighted average number of shares outstanding (basic, in thousands) (basic, in thousands) | 102,074 | 27,454 | |||
| 1 | The Corporation early adopted IFRS 15, Revenue from Contracts with Customers, as at December 31, 2016. Figures for the prior year have been reclassified. |
| 2 | After the net change in working capital. |
FIRST QUARTER RESULTS
Consolidated sales were $267.2 million for the 84-day period ended March 25, 2017, down 6.2% from $284.8 million for the 84-day period ended March 19, 2016.
Sales of the Distribution segment decreased by 5.1% to $204.5 million from $215.5 million a year earlier. The decline in sales reflects the loss of three supply contracts in Ontario and at the CDA division in Eastern Canada, which was partially offset by steady growth at the Norref division and higher sales to other customers.
Sales for the Wholesale segment were $62.7 million, down 9.5% from $69.3 million the previous year. The decrease was primarily due to a significant decline in sales for the Decarie division, in part due to high price deflation for beef and increased competitive pressures across the sector.
Adjusted EBITDA was $0.9 million or 0.34% of sales compared to $1.9 million or 0.67% of sales in the first quarter of 2016. The decrease primarily reflects strong competitive pressures in the meat market, which affected the profitability of the Decarie division. This factor was partially offset by lower operating costs and the improved performance of certain divisions.
In the first quarter of 2017, Colabor recorded $869,000 in charges not related to current operations, primarily related to the closure of the Vaughan, Ontario, warehouse on April 30, 2017, whereas in the first quarter of 2016 it had recorded charges of $3.3 million, essentially in connection with the internal restructuring of operations. In addition, the Corporation enjoyed a significant reduction in financial expenses, which fell from $3.0 million in the first quarter of 2016 to $1.8 million in the first quarter of 2017. This substantial decrease reflects the year-over-year debt reduction.
Colabor significantly reduced its seasonal net loss, concluding the first quarter of 2017 with a net loss of $3.4 million, compared with a net loss of $5.3 million last year.
CASH FLOW AND FINANCIAL POSITION
The Corporation used cash flow of $4.5 million in operations in the first quarter of 2017, compared with a $2.2 million cash flow generation for the same period in 2016. The year-over-year difference was mainly due to a negative change in working capital in 2017 caused by a more important inventory reduction in the first quarter of 2016, combined with a significant reduction in trade and other receivables in the first quarter of 2017.
As at March 31, 2017, total debt including convertible debentures and the bank overdraft amounted to $124.9 million, down sharply from $187.1 million twelve months earlier. This reduction reflects the success of the recapitalization transactions closed on October 13, 2016, and strong cash flow generation over the last twelve months.
RENEWAL OF A MAJOR SUPPLY CONTRACT
In the first quarter of 2017, a major contract to supply fresh fish and seafood to Sobeys Québec Inc.’s food stores has been renewed. The three-year agreement extends until February 2020. Colabor expects the agreement to generate approximately $90 million in annual sales for its Norref division.
OUTLOOK
“Colabor continues to rigorously execute its business plan in order to further improve its operating efficiency and profit margins. The reorganization of the distribution network in Ontario should help us achieve those objectives. In addition, the investments we have made in our operations, particularly in our sales teams, will gradually begin to generate positive results in the second half of 2017, at which point we anticipate to see steady improvement in gross margins and organic growth in comparable sales. Historically, due to seasonal factors, adjusted EBITDA for the first quarter of the fiscal year represents only a very small proportion of our annual results,” concluded Mr. Gariépy.
CONFERENCE CALL
Colabor will hold a conference call to discuss these results on Monday, May 8, 2017, beginning at 10:00 a.m. Eastern time. Interested parties can join the call by dialling 647-788-4922 (from Toronto and overseas) or 1-877-223-4471 (from elsewhere in North America). If you are unable to participate, you can listen to a recording by dialling 1-800-585-8367 and entering the code 13713896 on your telephone keypad. The recording will be available from 1:00 p.m. Monday, May 8, 2017, until 11:59 p.m. Monday, May 15, 2017.
Those interested in participating in the webcast and in viewing a presentation should click on this link: http://www.colabor.com/en/investisseurs/evenements-et-presentations/
NON-IFRS MEASURES
The information provided in this release includes non-IFRS performance measures, notably adjusted earnings before financial expenses, income taxes, depreciation and amortization (“EBITDA”) and cash flow. As these concepts are not defined by IFRS, they may not be comparable to those of other companies.
ADDITIONAL INFORMATION
The Management Discussion and Analysis and the financial statements of the Corporation will also be available on SEDAR (www.sedar.com) following publication of this release. Additional information about Colabor Group Inc. can be found on SEDAR and on the Corporation’s website at www.colabor.com.
FORWARD-LOOKING STATEMENTS
This news release contains certain statements that may be deemed forward-looking statements reflecting the opinions or current expectations of Colabor Group Inc. concerning its performance, business operations and future events. Such statements are subject to risks, uncertainties and assumptions and the analysis of the debt structure and available alternatives, and risks mentioned in the Corporation’s annual information form found under its profile on SEDAR (www.sedar.com), such as the risk of dilution for existing shareholders. As such, these statements are not guarantees of future performance, and actual results, realities, or events may differ materially. Except as required by law, the Corporation assumes no obligation to update these forward-looking statements in the event that management’s beliefs, estimates or opinions or other factors change.
ABOUT COLABOR
Colabor is a distributor and wholesaler of food and non-food products serving the foodservice market (cafeterias, restaurants, hotels, restaurant chains) in Québec, Ontario and the Atlantic provinces, as well as the retail market (grocery stores and convenience stores).
Colabor Group Inc.
Jean-Francois Neault, CPA, CMA, MBA
Vice President and Chief Financial Officer
450-449-6180 (FAX)
450-449-0026 Ext 1308
[email protected]
Media:
Maison Brison Inc.
Martin Goulet, CFA
Senior Vice President, Investor Relations
514-731-4525 (FAX)
514-731-0000 Ext 229
[email protected]
