TORONTO, May 3, 2023
/CNW/ - Andlauer Healthcare Group Inc. (TSX: AND) ("AHG" or
the "Company") today reported its financial results for the
three-month period ended March 31,
2023 ("Q1 2023").
Q1 2023 Summary
- Revenue increased 11.1% to $164.8
million, compared to $148.4
million for the three-month period ended March 31, 2022 ("Q1 2022");
- Operating income was $23.7
million, compared to $24.2
million in Q1 2022;
- Net income totaled $16.5 million,
or $0.39 per share (diluted),
compared to $16.5 million, or
$0.39 per share (diluted), in Q1
2022;
- Total comprehensive income increased to $16.3 million from $13.5
million in Q1 2022;
- EBITDA increased 2.7% to $40.5
million, compared to $39.4
million in Q1 2022; and
- EBITDA Margin was 24.6% compared to 26.5% in Q1 2022.
"We generated solid revenue growth in our first quarter despite
the decline in revenue related to COVID-19 vaccines and ancillary
products. Our margins and net earnings for the quarter reflect a
year-over-year decline in contribution from our U.S. truckload
operations, as the rate premiums we were able to capture in Fiscal
2022 related to equipment and driver shortages have now
diminished," said Michael Andlauer,
Chief Executive Officer of AHG. "Looking ahead to the balance of
the year, we expect our business to continue to perform well
despite the lack of COVID-19 tailwinds. We continue to pursue
acquisitions to further expand our platform and drive incremental
growth."
Selected Consolidated Financial Summary
|
Three months ended
March 31,
|
($CAD 000s, except
per share amounts)
|
2023
|
2022
|
Variance
|
Revenue
|
|
|
|
Logistics &
distribution
|
40,523
|
33,245
|
21.9 %
|
Packaging
solutions
|
5,510
|
5,758
|
(4.3) %
|
Healthcare logistics
segment
|
46,033
|
39,003
|
18.0 %
|
Ground
transportation
|
108,260
|
97,494
|
11.0 %
|
Air freight
forwarding
|
7,542
|
7,596
|
(0.7) %
|
Dedicated and last
mile delivery
|
17,131
|
15,445
|
10.9 %
|
Intersegment
revenue
|
(14,192)
|
(11,187)
|
26.9 %
|
Specialized
transportation segment
|
118,741
|
109,348
|
8.6 %
|
Total
revenue
|
164,774
|
148,351
|
11.1 %
|
Operating
expenses
|
141,084
|
124,189
|
13.6 %
|
Operating
income
|
23,690
|
24,162
|
(2.0) %
|
Net
income
|
16,528
|
16,471
|
0.3 %
|
Foreign currency
translation adjustment
|
(200)
|
(2,967)
|
N/A
|
Total comprehensive
income
|
16,328
|
13,504
|
20.9 %
|
Earnings per share –
basic
|
$ 0.39
|
$ 0.39
|
--
|
Earnings per share –
diluted
|
$ 0.39
|
$ 0.39
|
--
|
Select financial
metrics
|
|
|
|
EBITDA¹
|
40,469
|
39,386
|
2.7 %
|
EBITDA
Margin¹
|
24.6 %
|
26.5 %
|
(190 bps)
|
Q1 2023 Financial Results
Revenue for Q1 2023 increased by 11.1% to $164.8 million, compared with $148.4 million in Q1 2022. The acquisition of
Logistics Support Unit Inc. ("LSU") accounted for approximately
$3.2 million of the $16.4 million increase, with the remaining growth
attributable to fuel surcharge revenue and organic growth as
described below. The Company's revenue related to COVID-19 vaccines
and ancillary products declined to approximately 0.8% of
consolidated revenue in Q1 2023, compared to approximately 5.5% of
revenue in Q1 2022.
Revenue for the healthcare logistics segment totaled
$46.0 million, an increase of 18.0%,
or approximately $7.0 million,
compared with Q1 2022. The increase was primarily attributable to
the 21.9% year-over-year growth in the Company's logistics and
distribution product line revenue, reflecting greater outbound
order handling activities for Accuristix, increases in
transportation billings impacted by fuel surcharge programs from
carriers, which are passed on to customers, and $3.2 million in incremental revenue from the
acquisition of LSU. The overall
increase in segment revenue was partially offset by a 4.3%
year-over-year decline in AHG's packaging solutions revenue,
reflecting the loss of one of the Company's packaging customers,
partially offset by organic growth from the Company's remaining
base of customers.
Revenue in the specialized transportation segment totaled
$118.7 million, an increase of 8.6%,
or approximately $9.4 million,
compared with Q1 2022. The increase was partially attributable to
the 11.0% growth in the Company's ground transportation product
line driven by higher fuel costs passed on to customers as a
component of pricing. AHG's ground transportation revenue,
excluding fuel, in its Canadian network increased by approximately
2.6%. The Company experienced downward pressure on its US-based
truckload rates as opportunities to obtain rate premiums in the
year ended December 31, 2022 ("Fiscal
2022") related to equipment and driver shortages have now
diminished. AHG believes that its US-based ground transportation
revenue and related margins have returned to pre-pandemic levels in
Q1 2023, and the Company does not foresee a return to the premiums
achieved in Fiscal 2022, which may impact AHG's comparative growth
and margins in future periods.
AHG's dedicated and last mile delivery product line also
contributed to growth in the specialized transportation segment,
with a 10.9%, or $1.7 million,
year-over-year increase in revenue, reflecting ongoing route
expansion and increases in fuel costs passed on to customers.
Air freight forwarding revenue was $7.5
million in Q1 2023 compared to $7.6
million in Q1 2022, reflecting approximately 5.5% lower
shipment volume, partially offset by higher rates and fuel costs
passed on to customers.
Cost of transportation and services was $84.2 million, or 51.1% of revenue, compared with
$72.7 million, or 49.0% of revenue,
for Q1 2022. The higher cost of transportation and services for Q1
2023 was primarily attributable to higher fuel costs in line with
the increases in revenue related to fuel prices. The increased
operating ratio reflects lower pricing in AHG's U.S. truckload
operations.
Direct operating expenses were $27.0 million, or 16.4% of revenue, compared with
$24.8 million, or 16.7% of revenue,
for Q1 2022. Direct operating expenses in Q1 2023 reflect outbound
volume growth in AHG's Accuristix logistics and distribution
operations and the acquisition of LSU
on March 1, 2022.
Selling, general and administrative ("SG&A") expenses were
$13.1 million, or 8.0% of revenue,
compared with $11.2 million, or 7.6%
of revenue, for Q1 2022. The increase reflects growth in AHG's
operations and is in line with the Company's expected SG&A
expenses as a percentage of revenue.
Operating income totaled $23.7
million, a decrease of $0.5
million, or 2.0%, compared to $24.2
million for Q1 2022. The decrease reflects reduced
contributions from Boyle Transportation and Skelton USA and the decline in COVID-19 vaccine and
related ancillary revenue.
Net income was $16.5 million, or
$0.39 per share (diluted), compared
with $16.5 million, or $0.39 per share (diluted), in Q1 2022. Higher
segment net income before eliminations for AHG's healthcare
logistics segment was offset by lower segment net income from the
Company's specialized transportation segment.
Total comprehensive income was $16.3
million, compared to $13.5
million in Q1 2022. Total comprehensive income differs from
net income due to the acquisition of foreign operations (Boyle
Transportation and Skelton USA),
which resulted in a negative foreign currency translation
adjustment of $0.2 million in Q1 2023
compared to a negative foreign currency translation adjustment of
$3.0 million in Q1 2022.
Earnings before interest, taxes, depreciation and amortization
("EBITDA")¹ totaled $40.5 million
compared with $39.4 million for Q1
2022. The increase is due to the factors discussed above and
reflects organic growth in Canada,
partially offset by lower contributions from the Company's US-based
truckload operations and lower revenue related to COVID-19 vaccines
and ancillary products. EBITDA Margin¹ was 24.6%, compared to 26.5%
in Q1 2022.
Dividend
The Company paid a dividend (encompassing the period from
January 1, 2023 to March 31, 2023) in the amount of $0.08 per subordinate voting share and multiple
voting share on April 17, 2023.
Subject to financial results, capital requirements, available
cash flow, corporate law requirements and any other factors that
AHG's Board of Directors may consider relevant, it is the Company's
intention to declare a quarterly dividend of $0.08 per subordinate voting share and multiple
voting share on an ongoing basis.
Shares Outstanding
As at March 31, 2023, there were
20,074,253 subordinate voting shares and 21,840,000 multiple voting
shares issued and outstanding.
Financial Statements
AHG's unaudited interim condensed consolidated financial
statements and related Management's Discussion & Analysis
("MD&A") for Q1 2023 are available on the Company's website at
www.andlauerhealthcare.com and on the Company's profile on SEDAR at
www.sedar.com.
Conference call and webcast
Michael Andlauer, Chief Executive
Officer, and Peter Bromley, Chief
Financial Officer, will host a conference call for analysts and
investors on Thursday, May 4, 2023 at
8:30 a.m. (ET).
To join the conference call without operator assistance, you may
register and enter your phone number at:
https://emportal.ink/3nEWG1H to receive an instant automated call
back. Alternatively, you can dial (416) 764-8650 or (888) 664-6383
to reach a live operator that will join you into the call.
You can access a live webcast of the call under the
Presentations & Events section of AHG's investor website at:
www.andlauerhealthcare.com/andlauer-healthcare-presentations-events.
To access a replay of the conference call, dial
416-764-8677 or (888) 390-0541, passcode: 258596 #. The replay
will be available until May 11, 2023.
The webcast will be archived on the Company's website following the
conclusion of the call.
About AHG
AHG is a leading and growing supply chain management company
offering a robust platform of customized third-party logistics
("3PL") and specialized transportation solutions for the healthcare
sector. The Company's 3PL services include customized logistics,
distribution and packaging solutions for healthcare manufacturers
across Canada. AHG's specialized
transportation services in Canada,
including air freight forwarding, ground transportation, dedicated
delivery and last mile services, provide a one-stop shop for
clients' healthcare transportation needs. Through its complementary
service offerings, available across a coast-to-coast distribution
network, AHG strives to accommodate the full range of its clients'
specialized supply chain needs on an integrated and efficient
basis. The Company also provides specialized ground transportation
services, primarily to the healthcare sector, across the 48
contiguous U.S. states. For more information on AHG, please
visit: www.andlauerhealthcare.com.
Forward-looking Information
This news release contains forward-looking information and
forward-looking statements (collectively, "forward-looking
information") within the meaning of applicable securities laws.
Forward-looking information may relate to the Company's future
financial outlook and anticipated events or results and may include
information regarding the Company's financial position, business
strategy, growth strategies, addressable markets, budgets,
operations, financial results, taxes, dividend policy, plans,
objectives and expectations with respect to COVID-19. Particularly,
information regarding the Company's growth expectations,
performance, achievements, payment of dividends, prospects,
potential acquisitions, financial targets or outlook, intentions,
and expectations with respect to the distribution of COVID-19
vaccines and ancillary products is forward-looking information. In
some cases, forward-looking information can be identified by the
use of forward-looking terminology such as "plans", "targets",
"expects", "budget", "scheduled", "estimates", "outlook",
"forecasts", "projection", "prospects", "strategy", "intends",
"anticipates", "believes", "commencing" or variations of such words
and phrases or statements that certain actions, events or results
"may", "could", "would", "might", "will", "will be taken", "occur"
or "be achieved". In addition, any statements that refer to
expectations, intentions, projections or other characterizations of
future events or circumstances contain forward-looking information.
Statements containing forward-looking information are not
historical facts but instead represent management's expectations,
estimates and projections regarding future events or circumstances.
Such forward-looking statements are qualified in their entirety by
the inherent risks, uncertainties and changes in circumstances
surrounding future expectations which are difficult to predict and
many of which are beyond the control of the Company.
Forward-looking information is necessarily based on a number
of opinions, estimates and assumptions, including but not limited
to those assumptions described under the heading "Cautionary Note
Regarding Forward-Looking Information" in the Company's MD&A
for the three-month period ended March 31,
2023. Forward-looking information is subject to known and
unknown risks, uncertainties, assumptions and other factors that
may cause the actual results, level of activity, performance or
achievements to be materially different from those expressed or
implied by such forward-looking information, including but not
limited to factors discussed under the heading "Risk Factors" in
the Company's annual information form dated March 2, 2023, which is available on the
Company's profile on SEDAR at www.sedar.com. If any of these risks
or uncertainties materialize, or if the opinions, estimates or
assumptions underlying the forward-looking information prove
incorrect, actual results or future events might vary materially
from those anticipated in the forward-looking information.
Accordingly, investors should not place undue reliance on
forward-looking information, which speaks only as of the date made.
The forward-looking information contained in this news release
represents the Company's expectations as of the date of this news
release and are subject to change after such date and the Company
disclaims any intention or obligation or undertaking to update or
revise any forward-looking information whether as a result of new
information, future events or otherwise, except as required under
applicable securities laws.
(1) Non-IFRS Financial Measures
This news release contains
certain non-IFRS measures. These measures are not recognized
measures under IFRS, do not have a standardized meaning prescribed
by IFRS and are therefore unlikely to be comparable to similar
measures presented by other companies. Rather, these measures are
provided as additional information to complement those IFRS
measures by providing further understanding of the Company's
results of operations from management's perspective. Accordingly,
these measures should not be considered in isolation nor as a
substitute for analysis of the Company's financial information
reported under IFRS. AHG uses non-IFRS measures including "EBITDA"
and "EBITDA Margin". These non-IFRS measures are used to provide
investors with supplemental measures of the Company's operating
performance and thus highlight trends in its core business that may
not otherwise be apparent when relying solely on IFRS financial
measures. AHG also believes that securities analysts, investors and
other interested parties frequently use non-IFRS measures in the
evaluation of issuers. AHG management also uses non-IFRS measures
in order to facilitate operating performance comparisons from
period to period, to prepare annual operating budgets and to
determine components of management compensation.
EBITDA
AHG defines
EBITDA as net income for the period
before: (i) income tax expense (recovery); (ii) interest
income; (iii) interest expense; and (iv) depreciation and
amortization.
AHG believes EBITDA is a useful measure to assess the
Company's financial performance because it provides a more relevant
picture of operating results by excluding the effects of expenses
that are not reflective of the Company's underlying business
performance.
EBITDA Margin
AHG defines EBITDA Margin as EBITDA divided by revenue.
EBITDA Margin represents a measure of the Company's
profitability expressed as a percentage of revenue. AHG
believes EBITDA Margin is a useful measure to assess the Company's
financial performance because it helps quantify the
Company's ability to convert revenues generated from clients into
EBITDA.
Reconciliation of EBITDA
($CAD
000s)
|
Three Months
Ended
March 31,
|
|
2023
|
2022
|
Net
income
|
16,528
|
16,471
|
Income tax
expense
|
5,847
|
5,982
|
Interest
expense
|
1,933
|
1,544
|
Interest
income
|
(599)
|
(102)
|
Depreciation and
amortization
|
16,760
|
15,491
|
EBITDA1
|
40,469
|
39,386
|
SOURCE Andlauer Healthcare Group Inc.