Mr. Claude Gariepy reports

COLABOR GROUP REPORTS RESULTS FOR THE THIRD QUARTER OF 2014

Colabor Group Inc. has released results for the third quarter of fiscal 2014 ended Sept. 6, 2014.

"Third quarter results illustrate the progress related to the execution of our action plan and a growing penetration of our target markets. Our sales of meat, fish and seafood have continued to grow solidly in all of our markets, and sales in eastern Quebec once again grew appreciably following the reorganization of our sales force last year. As a result, in spite of market conditions that remain difficult and oblige us to remain pro-active, Colabor is gradually harvesting the fruits of its initiatives to improve operating efficiency and optimize its asset utilization," said Claude Gariepy, president and chief executive officer of Colabor.

                                             FINANCIAL HIGHLIGHTS            
                                (in thousands of dollars except per-share data)

                                                                   Quarters ended              Nine months ended 
                                                     Sept. 6, 2014  Sept. 7, 2013  Sept. 6, 2014   Sept. 7, 2013

Sales                                                      345,164        343,584        971,682         982,981 
EBITDA                                                      10,162         10,228         19,814          22,265 
Charges not related to current operations                    2,888          8,123          2,888           8,370 
Write-off of deferred income tax assets                     15,149              0         15,149               0 
Net (loss)                                                 (15,042)        (3,883)       (18,978)         (4,851)
Per share -- basic                                           (0.56)         (0.14)         (0.70)          (0.19)
Cash flow from operations*                                   9,174         (1,730)        22,721          (5,659)

*After net change in working capital

Third quarter results

Consolidated sales for the 84-day period ended Sept. 6, 2014, were $345.2-million, up 0.5 per cent from $343.6-million for the 84-day period ended Sept. 7, 2013. This increase, achieved on a fully comparable basis, mainly reflects sales growth in the meat, fish and seafood categories, as well as continuing improvement in the overall performance of the eastern Quebec and Maritimes division. These factors were partially offset by lower sales in Ontario and a decline in sales at the Boucherville division.

On a segmented basis, sales of the distribution segment were $227.1-million, down 1.5 per cent from $230.5-million a year earlier, while sales of the wholesale segment were up 4.4 per cent to $118.1-million, from $113-million a year earlier.

Earnings before financial expenses, income taxes, depreciation and amortization (EBITDA) were stable at $10.2-million, as the favourable effect of greater business volume and sales growth in higher-margin categories was offset by investments made to stimulate organic sales growth. EBITDA amounted to 2.94 per cent of sales in the third quarter of 2014 compared with 2.98 per cent a year earlier.

As announced by news release on Oct. 2, the company recorded a non-cash charge of $15.1-million related to the write-off of certain deferred income tax assets following an agreement with the Canada Revenue Agency. In addition, Colabor incurred expenses not related to current operations of $2.9-million related to the settlement of litigations, the internal restructuring of operations and the costs of the acquisition of Marcotte Alimentation announced on Sept. 11. Consequently, the company recorded a net loss of $15-million in the third quarter of 2014, versus a net loss of $3.9-million in 2013.

Cash flow from operations was $9.2-million, versus a negative cash flow of $1.7-million a year earlier. The significant improvement between the two periods reflects a net change in working capital that was more typical of seasonal variations this year relative to last year.

Nine-month results

For the 249-day period ended Sept. 6, 2014, total sales were $971.7-million, down 1.1 per cent from $983-million for the 250-day period ended Sept. 7, 2013. Comparable sales increased 0.1 per cent.

EBITDA in the first nine months of 2014 was $19.8-million, or 2.04 per cent of sales, compared with $22.3-million, or 2.27 per cent of sales, in the first nine months of 2013. A net loss of $19-million was recorded for the first nine months of 2014, compared with a net loss of $4.9-million a year earlier. Finally, cash flow from operations was $22.7-million in the first nine months of 2014, compared with a net cash outflow of $5.7-million for the same period in 2013.

Financial position

As at Sept. 6, 2014, Colabor had drawn $85.3-million on its authorized bank credit facilities. The average daily indebtedness in the third quarter of 2014 was $91-million, compared with $90-million in the second quarter of 2014 and $111-million in the third quarter of 2013. The improvement from a year earlier reflects better working capital management and the generation of free cash flow after dividend payments.

Declaration of a quarterly dividend of six cents per share

The board of directors of the company has declared a cash dividend of six cents per share, to be paid on Nov. 17, 2014, to shareholders of record at the close of business on Oct. 31, 2014.

Outlook

"Colabor's strengths in customer service and overall execution position it well to further increase the value of its offering. In Ontario, we have begun the repositioning of our sales force and are confident of stimulating sales growth by providing a better market coverage. In addition, the supply of Popeyes Louisiana Kitchen establishments beginning on Dec. 1 will enable us to optimize the utilization of our distribution infrastructure. In Quebec, we are pursuing the deployment of our offering in the meat, fish and seafood product categories, while the acquisition of Marcotte Alimentation will enhance our regional density and yield synergies. The initiatives taken under our action plan have provided Colabor with greater operational and financial flexibility. This will allow the company to pursue its growth, both organic and by acquisition, to create value for its shareholders," concluded Mr. Gariepy.

Conference call

Colabor will hold a conference call to discuss these results on Wednesday, Oct. 22, beginning at 10:30 a.m. Eastern Time. Interested parties can join the call by dialling 514-807-9895 (from Montreal and overseas) or 1-888-231-8191 (from elsewhere in North America). If you are unable to participate, you can listen to a recording by dialling 1-855-859-2056 and entering the code 94436555 on your telephone keypad. The recording will be available from 1:30 p.m. on Wednesday, Oct. 22, 2014, to 11:59 p.m. on Wednesday, Oct. 29, 2014.

Additional information

Management's discussion and analysis, and the company's financial statements will be available on SEDAR following the publication of this release. Additional information about Colabor Group may also be found on SEDAR and on the company's website.

We seek Safe Harbor.