Wheels Announces Second Quarter 2014 Results, Revenue up 6.9% and Gross Margin up 4.9%

TORONTO, Aug. 13, 2014 /CNW/ - Wheels Group Inc. ("Wheels" or the "Company") (TSXV: WGI) today announced its results for the three months and six months ended June 30, 2014.

Revenue for the quarter ended June 30, 2014 was $94.2 million, representing an increase of $6.0 million or 6.9% over $88.2 million reported in the quarter ended June 30, 2013. Revenue for the six months ended June 30, 2014 was $182.1 million, representing an increase of $9.1 million or 5.2% over $173.1 million reported in the six months ended June 30, 2013.

Gross margin for the quarter was $12.4 million, an increase of $0.6 million or 4.9% over the prior year quarter. Gross margin for the six months was $22.9 million, an increase of $0.4 million or 1.8% over the prior year period.

Adjusted EBITDA for the quarter was $2.0 million, a decrease of $0.6 million or 23.9%, from the prior year quarter impacted by a foreign exchange loss in the quarter of $0.5 million. Adjusted EBITDA as a percentage of revenue for the quarter was 2.1%, down from 3.0% in the prior year quarter. Adjusted EBITDA for the six months was $2.9 million, a decrease of $1.2 million or 29.5% from the prior year period. Adjusted EBITDA as a percentage of revenue for the six months was 1.6%, down from 2.4% for the prior year period.




Financial Highlights

For the quarter ended

For the six months ended

(in millions of dollars, except per share data
and number of shares outstanding)

June 30, 2014

June 30, 2013

June 30, 2014

June 30, 2013

Revenue

94.2

88.2

182.1

173.1

Gross margin for the period

12.4

11.8

22.9

22.5

Net loss for the period

(0.3)

(0.1)

(1.7)

(0.8)

Net loss per share 1





- Basic

(0.00)

(0.00)

(0.02)

(0.01)

- Diluted

(0.00)

(0.00)

(0.02)

(0.01)






Adjusted EBITDA

2.0

2.6

2.9

4.1

Adjusted EBITDA per share 1, 2

0.02

0.03

0.03

0.05






Weighted average number of common shares
outstanding

89,556,568

89,556,568

89,556,568

89,556,568

1Based on weighted average number of common shares outstanding.
2See Adjusted EBITDA below.

Net loss for the quarter was $0.3 million or $0.00 per share, compared to net loss of $0.1 million or $0.00 per share in the prior year quarter. Net loss for the six months was $1.7 million or $0.02 per share, compared to a net loss of $0.8 million or $0.01 per share for the prior year period.

In the Canadian segment, revenue for the quarter increased $4.4 million or 10.9% to $45.1 million. Revenue for the six months increased $9.9 million or 12.2% to $91.1 million. In the US segment, revenue for the second quarter increased $1.8 million or 3.7% to $50.0 million. Revenue for the six months was $92.7 million compared to $93.4 million in the prior year six month period.

"The Company returned to a more normal operating environment in the second quarter following the adverse effects of the severe weather conditions and capacity constraints experienced in the first quarter. Revenue and gross margin grew in the second quarter however, results were negatively impacted by a change in mix of transportation services including reduced margin contribution from a large customer in the Canadian segment and a foreign exchange loss." said Doug Tozer, Chief Executive Officer of Wheels. "We continue to optimize and streamline Wheels' operations. A facilities consolidation initiative in Canada will see our value added warehousing and distribution and LTL operations brought under one roof in the third quarter. We expect business conditions will remain competitive through 2014 but are confident that Wheels' multi-mode, non-asset model positions us well to adapt and respond to our customer's needs."

Adjusted EBITDA

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 and share-based compensation. 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. Management 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.

The financial statements and related Management Discussion and Analysis will be available on the Company's website at www.wheelsgroup.com and on SEDAR at www.sedar.com.

Caution Regarding Forward-Looking Statements

Certain statements contained in this news release constitute forward-looking statements within the meaning of certain securities laws, including the Securities Act (Ontario). 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 commodities, products and services, capital expenditures, the ability of the Company to access tax losses and tax attributes, sources and use and sufficiency of cash flows, the Company's ability to renew its term debt at maturity, the effect of changes in the exchange and interest rates and the prices of key services. Forward-looking statements in this news release describe the expectations of the Company as of the date hereof. 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 section of the Company's most recent Management's 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 will 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, damage to equipment or otherwise; the ability of Wheels to obtain 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 successfully 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 Wheels' expectations; and global economic performance.

Wheels 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 on www.SEDAR.com.

About Wheels

Founded in 1988, Wheels 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 6,000 truck, rail, air and ocean carriers. Wheels serves consumer goods, food and beverage, manufacturing and retail clients through 20 offices throughout the US and Canada. Wheels has been named one of Canada's Best Managed Companies since 1997, Platinum since 2003. Wheels has been named one of North America's Top 100 Third-Party Logistics ("3PL") Companies and one of the Top 100 Food 3PL's.

Neither the TSX Venture Exchange, nor its Regulation Services Provider accepts responsibility for the adequacy or accuracy of this release.

SOURCE Wheels Group Inc.

For further information: Patrick J Marshall, Investor Relations, Tel: (905) 602-2700, www.wheelsgroup.com