Mr. Louis Frenette reports

COLABOR GROUP REPORTS RESULTS FOR THE SECOND QUARTER 2023

Colabor Group Inc. has released its results for the second quarter ended June 17, 2023.

Second quarter 2023 financial highlights:

• Sales increased by 19.0 per cent to $164.2-million, compared with $138.0-million for the corresponding period of 2022;
• Net earnings from continuing operations were $2.3-million compared with $1.7-million for the corresponding period of 2022;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) increased by 16.1 per cent to $9.3-million from $8.0-million for the corresponding period of 2022 with an adjusted EBITDA margin to 5.7 per cent of sales compared with 5.8 per cent of sales during the corresponding period of 2022;
• Cash flows from operating activities increased to $11.3-million compared with $(1.2)-million during the corresponding period of 2022.

Table of second quarter 2023 financial highlights

"I am very pleased with our second quarter results. After more than two years of dedicated efforts to improve our business and profitability, I can once again reaffirm that we are on the right track. Our second quarter results show revenue growth of 19.0 per cent, while our adjusted EBITDA increased by 16.1 per cent. Growing demand for our differentiated offerings combined with strategic management of our product mix, has allowed us to offset the increase in labour costs, inputs and investments in our growth," said Louis Frenette, president and chief executive officer of Colabor.

"These results show that our strategic investments in organic and non-organic growth are paying off," added Mr. Frenette.

Results for the second quarter of 2023

Consolidated sales for the second quarter were $164.2-million, an increase of 19.0 per cent compared with $138.0-million during the corresponding quarter of 2022. Sales for the distribution segment increased by 25.6 per cent, as a result of volume increase, part of which is related to the conclusion of two supply contracts with independent chains, the impact of inflation and the acquisition of assets in the Laurentians and Outaouais regions. Wholesale segment sales increased by 1.7 per cent, mainly as a result of the impact of inflation.

Adjusted EBITDA from continuing activities was $9.3-million or 5.7 per cent of sales from continuing activities compared with $8.0-million or 5.8 per cent during 2022. This change is mainly as a result of increase in sales.

Net earnings from continuing operations were $2.3-million, up from $1.7-million for the corresponding quarter of the previous year, resulting essentially from an increase of the adjusted EBITDA, combined with a decrease in costs not related to current operations, mitigated by higher depreciation and amortization, financial, and income taxes expenses.

Net earnings for the second quarter were $2.3-million, compared with $1.7-million for the corresponding period of 2022 and are primarily explained by the facts described herein.

Results for the 24-week period of 2023

Consolidated sales for the 24-week period amounted to $298.1-million compared with $235.2-million in the corresponding period of 2022, an increase of 26.8 per cent, of which 33.2 per cent from the distribution segment and 10.7 per cent from the wholesale segment. Adjusted EBITDA from continuing operations reached $14.9-million or 5.0 per cent of sales from continuing operations compared with $10.3-million or 4.4 per cent in 2022. Net earnings from continuing operations were $2.2-million, up from nil in the 24-week period of last year.

Cash flow and financial position

Cash flows from operating activities were $11.3-million for the second quarter compared with $(1.2)-million for the corresponding period of 2022. This increase is mainly due to lower utilization of working capital and higher adjusted EBITDA. The lower utilization of working capital is explained by a higher collection of receivables in 2023 related to the increase of sales and the timing of inventories purchases and supplier payments. Cash flows from operating activities amounted $12.1-million for the 24-week period of 2023 compared with $11.2-million for the corresponding period of 2022. This increase is mainly due to higher adjusted EBITDA, mitigated by a higher utilization of working capital. The higher utilization of working capital is explained by the receipt of the non-recurring gain in 2022 of $4.0-million, which was receivable as at Dec. 25, 2021, and the increase in inventory purchases related to sales growth.

As at June 17, 2023, the company's working capital was $49.5-million, up from $48.8-million at the end of the fiscal 2022. This increase is related to sales growth during 2023.

As at June 17, 2023, the company's net debt was down to $47.3-million, compared with $47.8-million at the end of the fiscal year 2022. This decrease is explained by the increase of cash, mitigated by the additional use of the credit facility for $3.3-million.

Outlook

"We intend to continue this momentum by prioritizing the acceleration of growth and the continuous improvement of our activities and processes. We are also actively working on the preparation of our new site located at Saint-Bruno-de Montarville, to which the relocation is still scheduled for the end of 2023. This highly strategic project will allow us to efficiently reach nearly 90.0 per cent of the Quebec market. It will also allow us to offer a stimulating work environment for our employees, eco-responsible and to serve more effectively our growing clientele in the west of the province," commented Mr. Frenette.

Conference call

Colabor will hold a conference call to discuss these results on Wednesday, July 26, 2023, beginning at 9:30 a.m. Eastern Time. Interested parties can join the call by dialling 1-888-390-0549 (from anywhere in North America) or 1-416-764-8682. If you are unable to participate, you can listen to a recording by dialling 1-888-390-0541 or 1-416-764-8677 and entering the code 237404 followed by the pound key on your telephone keypad. The recording will be available from 1:30 p.m. on Wednesday, July 26, 2023, until 11:59 p.m. on Aug. 2, 2023. Note that the recording will be available offline on the company's website.

About Colabor Group Inc.

Colabor is a distributor and wholesaler of food and related products serving the hotel, restaurant and institutional markets or HRI in Quebec and in the Atlantic provinces, as well as the retail market. Within its two operating segments, Colabor offers specialty food products such as meat, fresh fish and seafood, as well as food and related products through its Broadline activities.

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