Wheels Announces Third Quarter 2013 Results Revenue Up 12%, Gross Margin Up 30%
TORONTO, Dec. 18, 2012 /CNW/ - Wheels Group Inc. ("Wheels" or the "Company") (TSXV: WGI) today announced results for the quarter ended October 31, 2012. The results reflect the acquisition of the MSM Group of Companies ("MSM") on October 1, 2012. MSM is a provider of less than full load ("LTL") freight brokerage, LTL consolidation and LTL freight forwarding logistics services and provides the Company with solid growth opportunities by further enhancing and broadening the service capabilities available to the customers of Wheels and MSM. The acquisition was accounted for as a purchase transaction by the Company in accordance with IFRS and accordingly, the assets acquired and liabilities assumed were recorded at their fair values at the date of acquisition. The Company acquired specific assets and assumed specific liabilities of MSM's business including net working capital of $2.5 million for a purchase price of $18.6 million, of which $16.6 million was paid in cash. The remaining $2 million of the purchase price was satisfied through the issue of 2 million common shares of the Company. The purchase was funded from existing cash and the Company's expanded credit facility, which included a new $6 million non-revolving term facility. Results for the third quarter include the contribution from MSM for the month of October 2012.
|Financial Highlights||For the quarter ended||For the nine months ended|
(in millions of dollars, except per share data and number of
|October 31, 2012||October 31, 2011||October 31, 2012||October 31, 2011|
|Gross margin for the period||9.8||7.5||26.7||21.0|
|Comprehensive income for the period||(0.3)||(0.5)||(0.8)||0.6|
|Earnings per share 1||- Basic||0.00||(675.29)||(0.01)||9.69|
|Adjusted EBITDA 2||2.2||2.2||5.2||4.7|
|Adjusted EBITDA per share 1, 2||0.03||2,602.35||0.06||111.70|
|Weighted average number of common shares outstanding||88,230,481||850||87,782,845||42,004|
1 Based on weighted average number of common shares outstanding
2 See Adjusted EBITDA below
For the quarter ended October 31, 2012, revenue was $73.6 million, up 11.6% over $66.0 million for the same period in the prior year. The increase in revenue was mainly due to the contributions from the acquisition of Logistics Holdings International Inc. ("Logistics") completed on December 31, 2011 and MSM on October 1, 2012. Before the impact of the acquisitions, the remaining Canadian operations revenue increased approximately 11% with increased revenue from both existing and new customers. However this was offset by lower revenue from the US operations due to lower than expected volumes from existing customers. Similarly, gross margin increased 30.2% to $9.8 million from $7.5 million due to the increased revenues. Competitive market pressures in the US continued to impact gross margin as a percentage of revenue in the third quarter. Adjusted EBITDA was $2.2 million in the third quarter comparable with the same period in the prior year as gross margin increases were offset by public company related costs and increased investment in sales and 3PL business development to support strategic growth plans.
Comprehensive loss for the quarter ended October 31, 2012 was $0.3 million or $0.00 per share, compared with comprehensive loss for the same period in prior year of $0.5 million or $675.29 per share. This was primarily due to increases in gross margin and income tax recovery partially offset by increases in operating expenses including business combination costs and share-based compensation, net finance costs and depreciation and amortization.
"Wheels demonstrated solid growth in both revenue and gross margin in the first nine months of the year," said Doug Tozer, CEO of Wheels. "Weaker volumes experienced in the US segment during the third quarter contributed to results below expectations. Integration of Wheels MSM has gone very well, contributing positively to the Company's results in October. Economic conditions remain uncertain, however, the Company is seeing signs of recovery in customer volumes in the fourth quarter. Our recent acquisitions and increased sales and business development investments position us for strong growth next year."
The Company is undergoing an internal corporate reorganization to simplify and streamline financial reporting including a planned change in its fiscal year end to December 31st.
The term adjusted EBITDA is used to describe earnings before any deduction for income taxes, net finance cost, depreciation, amortization, one-time non-recurring expenses, share-based compensation, and business combination and other related costs. EBITDA and adjusted EBITDA are metrics used by many investors and analysts to compare organizations on the basis of ability to generate cash from operations. Wheels considers adjusted EBITDA (as defined) to be an indirect measure of operating cash flows, which is a significant indicator of the success of any business. EBITDA and adjusted EBITDA are not intended to be representative of cash flow from operations or results of operations determined in accordance with IFRS.
EBITDA and adjusted EBITDA are not recognized measures under IFRS. Wheels' method of calculating EBITDA and adjusted EBITDA may differ from methods used by other companies, and accordingly may not be comparable to similar measures presented by other companies.
Caution Regarding Forward-Looking Statements
Certain statements contained in this news release constitute forward-looking statements within the meaning of Canadian securities laws. Forward-looking statements can be generally identified by the use of words such as "anticipate", "continue", "estimate", "expect", "expected", "intend", "may", "will", "project", "plan", "should", "believe", and similar expressions. Specifically, forward looking statements in this news release include statements respecting certain future expectations about: prices and demand for services and capital expenditures. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements for a variety of reasons, including without limitation the risks and uncertainties detailed under the "RISK FACTORS" section of the Company's latest Annual Information Form and the "RISKS AND UNCERTAINTIES" section of the Company's most recent Management Discussion and Analysis.
Although the Company believes the expectations reflected in these forward-looking statements and the assumptions upon which they are based are reasonable, no assurance can be given that actual results may be consistent with such forward-looking statements, and they should not be unduly relied upon. With respect to the forward-looking statements contained in this news release, the Company has made assumptions regarding: there being no significant disruptions affecting the Company's operations whether due to labour disruptions, power disruptions, transportation disruptions, damage to equipment, adverse weather conditions or otherwise; the ability of the Company to obtain equipment, transportation, services and supplies in a timely manner to carry out its activities and at prices consistent with current levels or in line with the Company's expectations; the ability of the Company to respond to competitive pressures in the marketplace, including the entry of new competitors, direct marketing efforts by railroads or marketing efforts of asset-based carriers; the ability of the Company to successfully protect its data from cyber-attack; the ability of the Company to maintain or enhance its information technology systems; fuel shortages or fluctuations in fuel prices; the ability of the Company to access tax losses and tax attributes; the ability of the Company to obtain financing on acceptable terms; currency, exchange and interest rates being consistent with current levels or in line with the Company's expectations; and global economic performance, including the financial condition of its customers, particularly, in the retail, consumer products and durable goods sectors.
Except as required pursuant to applicable securities law, the Company disclaims any intention or obligation to update any forward-looking statement even if new information becomes available, as a result of future events or for any other reason. The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement.
Further information can be found in the disclosure documents filed by Wheels Group Inc. with the securities regulatory authorities, available under the profile of the Company at www.SEDAR.com.
Founded in 1988, Wheels Group Inc. is a leading North American 3PL, supply chain logistics provider. As a non-asset provider, the Company develops advanced supply chain solutions delivered through its qualified partner network of over 5,000 truck, rail, air and ocean carriers. Wheels Group Inc. serves consumer goods, food and beverage, manufacturing and retail clients through 24 offices throughout the US and Canada. Wheels Group Inc. has been named one of Canada's 50 Best Managed Companies since 1997, Platinum since 2003. Wheels Group has been named one of North America's Top 100 third-party logistics ("3PL"), one of the Top 100 Food 3PL's and one of the Top Five IMC's (intermodal marketing companies).
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SOURCE: Wheels Group Inc.For further information:
Chief Executive Officer
Edward R. (Ted) Irwin
Chief Financial Officer
Tel: (905) 602-2700