Mr. Peter Bromley reports

ANDLAUER HEALTHCARE GROUP REPORTS 2024 FIRST QUARTER RESULTS

Andlauer Healthcare Group Inc. has released its financial results for the three-month period ended March 31, 2024 (Q1 2024).

Q1 2024 summary

• Revenue totalled $161.1-million, a decrease of 2.2 per cent from $164.8-million for the three-month period ended March 31, 2023 (Q1 2023);
• Operating income was $21.2-million, compared with $23.7-million in Q1 2023;
• Net income totalled $14.9-million, or 35 cents per share (diluted), compared with $16.5-million, or 39 cents per share (diluted), in Q1 2023;
• Total comprehensive income was $20.5-million, compared with $16.3-million in Q1 2023;
• EBITDA (earnings before interest, taxes, depreciation and amortization) totalled $39.6-million, compared with $40.5-million in Q1 2023;
• EBITDA margin was 24.6 per cent, compared with 24.6 per cent in Q1 2023.

"Aside from lower fuel surcharge revenue, our 2.2-per-cent year-over-year decline in revenue was primarily attributable to two factors. First, revenue in our U.S. truckload businesses reflects depressed rates and our decision to focus on higher-margin business. Second, we had lower revenue in our Accuristix business attributable to lower volumes from certain consumer health clients. These declines were partially offset by organic growth in our Canadian specialized transportation network," said Michael Andlauer, chief executive officer of Andlauer. "Looking ahead, we will continue to focus on revenue quality in our U.S. truckload businesses and we believe that our recent capacity expansion at our LSU facility in Montreal will make a positive contribution to our logistics and distribution business as the year progresses. We expect continued growth in our Canadian specialized transportation network.

"Today, we also published our inaugural sustainability report. The report highlights our responsible business approach, which starts and ends with our people -- our professional drivers, owner-operators and teams working across our network. Their commitment and passion are the engine of our success and a key to our strong industry partnerships and stakeholder relations. This report will serve as a baseline against which we will measure our future progress for the communities we serve."

Q1 2024 financial results

Consolidated revenue for Q1 2024 decreased by 2.2 per cent to $161.1-million, compared with $164.8-million in Q1 2023. The decrease was primarily attributable to lower revenue in the company's United States-based truckload business (Boyle Transportation and Skelton USA) and Accuristix, and lower fuel surcharge revenue, partially offset by organic growth in the company's Canadian specialized transportation product lines, excluding fuel surcharge revenue.

Revenue for the health care logistics segment totalled $42.9-million, a decrease of 6.9 per cent, or approximately $3.2-million, compared with Q1 2023. The decrease reflects a 6.4-per-cent decline in the company's logistics and distribution product line revenue and a 10.3-per-cent decline in packaging revenue. The decline in logistics and distribution revenue was primarily attributable to lower outbound order handling and transportation activities for certain Accuristix consumer health clients. The decline in packaging revenue primarily reflects the loss of one of the company's packaging customers in Q1 2023.

Revenue in the specialized transportation segment totalled $118.3-million, a decrease of 0.4 per cent, or approximately $500,000, compared with Q1 2023. The decrease reflects a decline in United States-based truckload revenue and lower fuel surcharge revenue, partially offset by organic growth in each of the company's Canadian specialized transportation product lines.

Ground transportation revenue for Q1 2024 was $106.4-million, a decrease of 1.7 per cent, or approximately $1.9-million, compared with Q1 2023. The decrease is primarily attributable to a decline in Andlauer's United States-based truckload business, reflecting lower rates and the company's focus on revenue quality, as well as lower fuel costs passed through to customers as a component of pricing compared with Q1 2023. These factors were partially offset by organic growth in the company's Canadian ground transportation network. Ground transportation revenue, excluding fuel, in the company's Canadian network increased by approximately 3.2 per cent.

The $500,000 increase in air freight forwarding revenue in Q1 2024 compared with Q1 2023 reflects a 2.3-per-cent year-over-year increase in weight shipped. The $600,000 increase in dedicated and last-mile delivery revenue in Q1 2024 compared with Q1 2023 reflects continued organic growth, partially offset by a reduction in fuel surcharge revenue.

Cost of transportation and services was $82.5-million, or 51.2 per cent of revenue, compared with $84.2-million, or 51.1 per cent of revenue, for Q1 2023. Lower fuel costs in line with decreases in revenue related to fuel prices were partially offset by idle equipment costs in Andlauer's U.S.-based truckload businesses arising from a lower volume of loads as the company focused on revenue quality.

Direct operating expenses were $26.3-million, or 16.3 per cent of revenue, compared with $27.0-million, or 16.4 per cent of revenue, for Q1 2023. The decrease was primarily attributable to a reduction in outbound order handling activities for Accuristix in line with lower revenue.

Operating income totalled $21.2-million, a decrease of $2.4-million compared with Q1 2023. The decrease was primarily attributable to reduced contributions from Boyle Transportation and Skelton USA.

Net income was $14.9-million, or 35 cents per share (diluted), compared with $16.5-million, or 39 cents per share (diluted), in Q1 2023. Lower segment net income before eliminations for Andlauer's specialized transportation segment was primarily attributable to reduced contributions from Boyle Transportation and Skelton USA, and lower segment net income from the company's health care logistics segment reflects reduced order handling and transportation activity.

Total comprehensive income was $20.5-million compared with $16.3-million for Q1 2023. Total comprehensive income differs from net income due to the acquisition of foreign operations (Boyle Transportation and Skelton USA), which resulted in a positive foreign currency translation adjustment of $5.5-million in Q1 2024 compared with a negative foreign currency translation adjustment of $200,000 in Q1 2023.

Earnings before interest, taxes, depreciation and amortization (EBITDA) totalled $39.6-million compared with $40.5-million for Q1 2023. The decrease was due to the factors discussed herein and primarily reflects lower contributions from the company's U.S.-based truckload operations and reduced outbound order handling activities for Accuristix, partially offset by organic growth in the company's Canadian specialized transportation network. EBITDA attributable to Boyle Transportation and Skelton USA was approximately $2.5-million lower in Q1 2024 compared with Q1 2023. EBITDA margin of 24.6 per cent was unchanged from Q1 2023, as a reduction in U.S.-based truckload margins were offset by higher margins in the company's Canadian specialized transportation network.

Dividend

The company paid a dividend (encompassing the period from Jan. 1, 2024, to March 31, 2024) in the amount of 10 cents per subordinate voting share and multiple voting share on April 15, 2024.

Subject to financial results, capital requirements, available cash flow, corporate law requirements and any other factors that Andlauer's board of directors may consider relevant, it is the company's intention to declare a quarterly dividend of 10 cents per subordinate voting share and multiple voting share on a continuing basis.

Shares outstanding

On March 24, 2023, the company announced that the Toronto Stock Exchange had approved its notice of intention to make a normal course issuer bid (NCIB) for up to a maximum of 1,856,857 of its subordinate voting shares, or approximately 10 per cent of its public float as of March 23, 2023, over the 12-month period commencing on March 29, 2023. As at March 31, 2024, 634,090 subordinated voting shares, or approximately 3 per cent of Andlauer's public float, had been purchased and cancelled pursuant to the NCIB. The NCIB was terminated on March 28, 2024.

As at March 31, 2024, there were 19,483,920 subordinate voting shares and 21.84 million multiple voting shares issued and outstanding.

Financial statements

Andlauer's unaudited interim condensed consolidated financial statements and related management's discussion and analysis (MD&A) for Q1 2024 are available on the company's website and under Andlauer's profile on SEDAR+.

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 Friday, May 3, 2024, at 8:30 a.m. ET. To join the conference call without operator assistance, you may register and enter your phone number on-line 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.

To access a replay of the conference call, dial 416-764-8677 or 888-390-0541, pass code: 534181 followed by the pound key. The replay will be available until May 10, 2024. The webcast will be archived on the company's website following the conclusion of the call.

About Andlauer Healthcare Group Inc.

Andlauer Healthcare 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 health care sector. The company's 3PL services include customized logistics, distribution and packaging solutions for health care manufacturers across Canada. Andlauer Healthcare'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' health care transportation needs. Through its complementary service offerings, available across a coast-to-coast distribution network, Andlauer Healthcare 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 health care sector, across the 48 contiguous U.S. states.

We seek Safe Harbor.