Mr. Louis Frenette reports

COLABOR GROUP REPORTS RESULTS FOR THE THIRD QUARTER 2023

Colabor Group Inc. has released its results for the third quarter ended Sept. 9, 2023.

Third quarter 2023 financial highlights:

• Sales increased by 13.1 per cent to $164.7-million, compared with $145.7-million for the corresponding period of 2022;
• Net earnings from continuing operations were $3.5-million compared with $2.8-million for the corresponding period of 2022;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) increased by 24.1 per cent to $11.0-million from $8.9-million for the corresponding period of 2022 with an adjusted EBITDA margin to 6.7 per cent of sales compared with 6.1 per cent of sales during the corresponding period of 2022.

"I am very pleased with our third quarter results. After more than two years of dedicated efforts to improve our business and profitability, I can once again reaffirm that our strategic investments in organic and non-organic growth are paying off. Our third quarter results show revenue growth of 13.1 per cent, while our adjusted EBITDA increased by 24.1 per cent. Sustained 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.

"During the quarter, we also invested $9.1-million in fixed assets, mainly for the preparation of our new site located in Saint-Bruno-de-Montarville, while maintaining our debt ratio," added Pierre Blanchette, senior vice-president and chief financial officer.

Results for the third quarter of 2023

Consolidated sales for the third quarter were $164.7-million, an increase of 13.1 per cent compared with $145.7-million during the corresponding quarter of 2022. Sales for the distribution segment increased by 20.4 per cent, as a result of volume increase, part of which is related to the conclusion of two supply contracts with chains, and the impact of inflation. Wholesale segment sales decline of 8.6 per cent is mainly explained by a supply optimization project between our warehouses reducing the company's internal sales to the distribution segment, as well as an external volume decrease, mitigated by the impact of inflation.

Adjusted EBITDA from continuing activities was $11.0-million or 6.7 per cent of sales from continuing activities compared with $8.9-million or 6.1 per cent during 2022. This change is mainly the result of increased sales and gross margin from a better mix of products and customers.

Net earnings from continuing operations and net earnings for the third quarter were $3.5-million, up from $2.8-million for the corresponding quarter of the previous year, resulting essentially from an increased adjusted EBITDA, mitigated by higher depreciation and amortization, financial and income taxes expenses.

Results for the 36-week period of 2023

Consolidated sales for the 36-week period were $462.8-million compared with $380.8-million in the corresponding period of 2022. The distribution segment grew by 28.7 per cent and the wholesale segment grew by 3.4 per cent. Adjusted EBITDA from continuing operations was $25.9-million or 5.6 per cent of sales from continuing operations compared with $19.2-million or 5.0 per cent in 2022. Net earnings from continuing operations were $5.7-million, up from $2.9-million in the 36-week period of last year.

Cash flow and financial position

Cash flows from operating activities were $8.0-million for the third quarter compared with $8.8-million for the corresponding period of 2022. This decrease is mainly due to higher utilization of working capital, mitigated by higher adjusted EBITDA. The higher utilization of working capital is explained by higher supplier payments in 2023 related to higher inventories. Cash flows from operating activities were $20.0-million for the 36-week period of 2023 and for the corresponding period of 2022. The higher adjusted EBITDA is 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 inventories related to sales growth.

As at Sept. 9, 2023, the company's working capital was $52.2-million, up from $48.8-million at the end of the fiscal 2022. This increase is related to sales growth during 2023.

As at Sept. 9, 2023, the company's net debt was up to $53.4-million, compared with $47.8-million at the end of the fiscal year 2022. This increase is a result of the additional use of the credit facility for $6.5-million in connection with the equipment purchases related to the company's new warehouse.

Outlook

"We are now entering the second phase of our five-year strategic plan in a very good position. The preparation of our new site located at Saint-Bruno-de-Montarville is progressing at high speed and we are committed to ensuring a smooth transition of our operations. As planned, the relocation will start in the fourth quarter of 2023. This highly strategic project will allow us to efficiently reach nearly 90 per cent of the Quebec market and to begin our distribution activities in Western Quebec in the first half of 2024. I am very excited about the potential of this new facility, which will provide a stimulating and eco-responsible work environment for our employees and more effectively serve our growing clientele in the west of the province," commented Mr. Frenette.

Non-IFRS performance measures

The information provided in this release includes non-IFRS (international financial reporting standards) performance measures, notably adjusted earnings before financial expenses, depreciation and amortization and income taxes (adjusted EBITDA). As these concepts are not defined by IFRS, they may not be comparable with those of other companies.

Conference call

Colabor will hold a conference call to discuss these results on Thursday, Oct. 19, 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 082333 followed by the pound key on your telephone keypad. The recording will be available from 1:30 p.m. on Thursday, Oct. 19, 2023, until 11:59 p.m. on Oct. 26, 2023.

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 fresh fish and seafood, meat, and food and related products through its Broadline activities.

We seek Safe Harbor.