- Comparable sales down 2.6% (total sales down 13.6%)
- EBITDA margin increases to 3.66%
- Net earnings of $0.20 per share vs. $0.12 in Q2 2009
- Continuing strong cash flow and improved balance sheet
BOUCHERVILLE, QC, July 7 /CNW Telbec/ - Colabor Group Inc. (TSX: GCL) ("Colabor" or the "Company") today reported results for the second quarter of fiscal 2010 ended June 19, 2010. Results for Q2 2010 reflect the August 25, 2009 conversion of Colabor Income Fund to a corporation. Results for Q2 2009 reflect Colabor's former corporate structure.
SECOND QUARTER RESULTS
Sales for the 84-day period ended June 19, 2010 were $245.2 million, down 13.6% from $283.7 million for the 84-day period ended June 20, 2009. The decline was due mainly to the loss of a major supply contract in February 2010. The effect of this loss on second quarter sales was $31.2 million. Comparable sales, excluding this loss, showed a decline of 2.6%, attributable to a typical post-recession lag in the recovery of distribution-segment sales related to the foodservice industry.
Earnings before financial expenses, taxes, depreciation and amortization ("EBITDA") were $9.0 million, or 3.66% of sales, compared to $10.0 million, or 3.52% of sales, a year earlier. The slight improvement in profit margin is attributable to tight control of operating expenses. Net earnings were $4.2 million, or $0.20 per diluted share, compared to $1.7 million, or $0.12 per diluted share, in the corresponding quarter of 2009. The increase in net earnings reflects, in part, a low tax rate resulting from the acquisition of approximately $130.0 million in tax losses for which the Company paid $5.0 million to ConjuChem Biotechnologies Inc. at the time of its conversion to a corporation.
Financial highlights Quarters ended Six Months ended
(thousands of dollars except per
share data) June 19, June 20, June 19, June 20,
2010 2009 2010 2009
Sales 245,155 283,722 470,510 540,677
EBITDA* 8,981 9,977 15,854 17,701
Net earnings 4,202 1,744 6,479 2,959
Per share/unit - basic ($) 0.20 0.12 0.32 0.20
Per share/unit - diluted ($) 0.20 0.12 0.31 0.20
Weighted average number of
shares outstanding (basic, in
thousands) 21,259 14,454 20,502 14,437
* Earnings before financial expenses, taxes, depreciation and
"The second quarter results confirm the steady demand in our retail-related business, offsetting a somewhat slow recovery of the foodservice industry," said Gilles C. Lachance, Colabor President and Chief Executive Officer. "Although conditions remain fairly challenging, our proactive management of operating expenses and the improved efficiency and productivity of our warehouse operations resulted in good cash flow and satisfactory margins.
Cash flow from operations, before changes in operating assets and liabilities, was $7.9 million, compared to $7.2 million a year earlier.
The Company's balance sheet as of June 19, 2010 was sound, with only $20.5 million drawn on its $100.0 million authorized bank credit facilities versus $62.1 million at the end of the previous quarter. On April 27, 2010, the Company announced completion of a bought-deal issue of unsecured convertible subordinated debentures with total gross proceeds of $50.0 million. The net proceeds of the issue were used, among other purposes, to repay part of the bank credit facilities.
As of June 19, 2010, the ratio of total debt to EBITDA of the previous 12 months was 0.66 : 1.00, compared to the maximum of 3.00 prescribed by the Company's credit agreement. The interest coverage ratio was 6.73 : 1.00, well above the required minimum of 3.50.
Sales for the Wholesale segment were $102.4 million in Q2 2010, up 1.8% from $100.6 million in Q2 2009. Since the two periods compared contained the same number of days, the amounts are comparable. The increase was due to a 4.4% rise in sales to retailers, reflecting this sector's greater resilience in the face of economic fluctuations, and to a slight rise of 0.6% in sales to the foodservice market, which shows signs of recovery after two negative quarters.
Sales for the Distribution segment were $142.8 million in Q2 2010, compared to $183.2 million a year earlier. The decline of 22.1% is attributable mainly to the loss of a major contract in the restaurant sector served by the Summit Division. This supply contract ended at the beginning of February 2010. Sales on a comparable basis, excluding this loss, were down 5.0% as a result of difficult conditions in the foodservice market, especially in Ontario.
For the 170-day period ended June 19, 2010, sales were $470.5 million, compared to $540.7 million for the 171-day period ended June 20, 2009. Sales on a comparable basis were down 3.0%. Also on a comparable basis, Wholesale sales were up 0.1% and Distribution sales were down 4.5%.
EBITDA for the first half was $15.9 million, or 3.37% of sales, compared to $17.7 million, or 3.27% of sales, in the first half of 2009. Net earnings were $6.5 million, or $0.31 per diluted share, in the 2010 period, compared to $3.0 million or $0.20 per diluted shared, a year earlier. Cash flow from operations, before changes in operating assets and liabilities, was $13.8 million compared to $13.6 million in the year-earlier period. The per-share dividend attributable to the period amounted to 79% of cash flow per basic share and 96% per diluted share.
"The second half of the current year is encouraging due to the gradual improvement of economic conditions and the resulting effect on discretionary spending, including spending on meals taken away from home. In addition, our sound balance sheet gives us the flexibility to actively pursue our search for strategic acquisition targets with a view to expanding our product offering and our geographical reach. These efforts, like those to replace the volume left open at Summit, focus mainly on business opportunities offering higher margins," Mr. Lachance concluded.
Colabor will hold a conference call to discuss its second-quarter results on Wednesday, July 7, 2010, beginning at 10:30 a.m. Eastern Time. Interested parties can join the call by dialling 1-888-231-8191. If you are unable to participate, you can listen to a recording by dialling 1-800-642-1687 and entering the code 83281183 on your telephone keypad. The recording will be available from 1 p.m. Wednesday, July 7 to 11:59 p.m. Wednesday, July 14, 2010.
The information provided in this release includes non-GAAP measures, notably earnings before financial expenses, taxes, depreciation and amortization (EBITDA). Since these concepts are not defined in Canadian GAAP, they may not be comparable to those of other companies.
The Company's financial statements and Management's Discussion and Analysis will also be available on SEDAR (www.sedar.com) following publication of this release. Additional information about Colabor Group Inc. may also be found at SEDAR and on the Company's website at www.colabor.com.
Colabor is a wholesaler and distributor of food and non-food products serving the retail market (grocery stores, convenience stores, etc.) and the foodservice market (cafeterias, restaurants, hotels, restaurant chains, etc.).
This news release may contain forward-looking statements reflecting the opinions or current expectations of Colabor Group Inc. concerning its performance and business operations and future events. These statements are subject to risks, uncertainties and assumptions. Actual results or events may differ.
SOURCE Colabor Group Inc.
For further information: For further information: Colabor Group Inc.: Gilles C. Lachance, President and Chief Executive Officer, Tel. 450-449-0026 ext. 265, Fax 450-449-6180, firstname.lastname@example.org; Michel Loignon CA, Vice-President and Chief Financial Officer, Tel. 450-449-0026 ext. 235, Fax 450-449-6180, email@example.com; MaisonBrison Inc.: Martin Goulet, CFA, Senior Vice-President, Investor Relations, Tel. 514-731-0000 ext. 229, Fax 514-731-4525, firstname.lastname@example.org