Mr. Louis Frenette reports

COLABOR GROUP REPORTS RESULTS FOR THE FOURTH QUARTER AND FISCAL 2023, COMPLETES WITH SUCCESS THE RELOCATION TO ITS NEW DISTRIBUTION CENTER AND ANNOUNCES THE ACQUISITION OF ASSETS RELATED TO FOODSERVICE SECTOR

Colabor Group Inc. has released its results for the fourth quarter and fiscal year ended Dec. 30, 2023.

Fourth quarter 2023 financial highlights:

• Sales increased by 1.6 per cent to $196.3-million, compared with $193.2-million for the corresponding period of 2022. In 2022, the quarter had an additional week. Excluding sales from the additional week of 2022, sales growth would have been 5.8 per cent.
• Decrease of net earnings from continuing operations to $400,000 compared with $1.7-million for the corresponding period of 2022;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) increased by 18.2 per cent to $11.7-million from $9.9-million for the corresponding period of 2022 and increase in adjusted EBITDA margin to 5.9 per cent of sales compared with 5.1 per cent of sales during the corresponding period of 2022.
• Cash flow from operating activities increased to $8.9-million compared with $(700,000) for the fourth quarter of 2022.
• The company has finalized the relocation of its head office and warehouse, which were located in Boucherville, to new facilities in Saint-Bruno-de-Montarville at the end of fiscal year 2023. The new industrial premises are more modern and better located to serve the company's two business segments, and will offer a stimulating work environment, ideal for the well-being of employees.

Event since the end of the quarter:

• Today, Colabor announces the acquisition of certain assets related to the food-service sector from Beaudry & Cadrin Inc. (Groupe Beaudry), effective before the end of March, 2024.

Fiscal 2023 financial highlights:

• Consolidated sales amounted to $659.1-million, up 14.8 per cent compared with fiscal year 2022. Excluding sales from the additional week of 2022, the sales growth would have been 16.4 per cent.
• Net earnings from continuing operations increased to $6.0-million compared with $4.6-million for fiscal year 2022.
• Adjusted EBITDA increased to $37.6-million or 5.7 per cent of sales compared with $29.1-million or 5.1 per cent of sales for the fiscal year 2022.
• Cash flow generated by operating activities up to $28.9-million compared with $19.3-million in 2022.
• Net debt increased to $61.5-million, compared with $47.8-million as at Dec. 31, 2022. The leverage ratio is 2.4 times as at Dec. 30, 2023, compared with 2.3 times as at Dec. 31, 2022.

"I am very pleased with our fourth quarter results. After more than two years of dedicated efforts to improve our business and profitability, I can once again affirm that our strategic investments in organic and non-organic growth are paying off. On a comparable basis, our fourth quarter results show revenue growth of 5.8 per cent, while our adjusted EBITDA increased by 18.2 per cent. Sustained demand for our differentiated offerings, combined with strategic management of our product mix, has allowed us to offset the increase in labor costs, inputs and investments in our growth," said Louis Frenette, president and chief executive officer of Colabor.

"During the fourth quarter, we also completed the relocation of our wholesale activities and our head office to our new strategic centre in Saint-Bruno-de-Montarville. We are particularly proud that this project was completed on time and on budget, and we can now consider gradually starting our new distribution activities targeting Western Quebec during the second half of the current year," added Mr. Frenette.

"Despite this significant investment, the sustained improvement in our profitability allowed us to generate significant cash flow throughout the year. This prudent management allowed us to end the year with a leverage ratio almost unchanged since the beginning of the year," added Pierre Blanchette, senior vice-president and chief financial officer.

Results for the fourth quarter of 2023

Consolidated sales for the fourth quarter were $196.3-million, an increase of 1.6 per cent compared with $193.2-million during the corresponding quarter of 2022. In 2022, the quarter had an additional week. Excluding sales from the additional week of 2022, sales growth would have been 5.8 per cent. Sales for the distribution segment increased by 9.1 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, mitigated by the additional week in the fourth quarter of 2022. Excluding sales from the additional week of 2022, the sales growth would have been 14.2 per cent. Wholesale segment sales decline of 19.0 per cent is explained by a supply optimization project between our warehouses reducing our internal sales to the distribution segment, as well as an external volume decrease caused, among other things, by the cessation of operations during the relocation of the warehouse to Saint-Bruno-de-Montarville, as well at the impact of the additional week in the fourth quarter of 2022, mitigated by the impact of inflation.

Adjusted EBITDA from continuing activities was $11.7-million or 5.9 per cent of sales from continuing activities compared with $9.9-million or 5.1 per cent during 2022. This variation is mainly the result of increased sales and gross margin from a better mix of products and customers.

Net earnings from continuing operations for the fourth quarter were $400,000, down from $1.7-million for the corresponding quarter of the previous year, resulting essentially from higher depreciation and amortization expenses, costs not related to current operations related to the company's relocation of $800,000, and financial expenses, mitigated by an increase of adjusted EBITDA as explained previously and lower income taxes expenses.

Net loss for the fourth quarter was $100,000, compared with net earnings of $1.3-million for the corresponding period of 2022 and are primarily explained by the facts described herein and a net loss from discontinued operations of $500,000 related to an actuarial loss of the defined benefit pension plan.

Results for fiscal year 2023

Consolidated cumulative sales were $659.1-million compared with $574.1-million in the corresponding period of 2022. The distribution segment grew by 21.8 per cent and the wholesale segment declined by 3.3 per cent.

Adjusted EBITDA from continuing operations was $37.6-million or 5.7 per cent of sales from continuing operations compared with $29.1-million or 5.1 per cent in 2022. These variations are mainly explained by the increased sales and gross margin from a better mix of products and customers.

Net earnings from continuing operations were $6.0-million, up from $4.6-million in the previous fiscal year. The variation is explained by an increase of the adjusted EBITDA as explained previously, combined with a decrease in costs not related to current operations, mitigated by higher depreciation and amortization, financial, and income taxes expenses.

Net earnings were $5.6-million, up from $4.1-million in the previous fiscal year, as explained previously.

Cash flow and financial position

Cash flows from operating activities were $28.9-million for fiscal year 2023 compared with $19.3-million for the corresponding period of 2022. This increase is mainly due to lower utilization of working capital, and by 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 timing of inventories purchases and supplier payments.

As at Dec. 30, 2023, the company's working capital was $54.0-million, up from $48.8-million at the end of the fiscal 2022. This increase is related to sales growth during 2023.

As at Dec. 30, 2023, the company's net debt was up to $61.5-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 $12.0-million in connection with the equipment purchases related to the company's new warehouse.

Event since the end of the quarter

The company is pleased to announce today the completion of a contract for the acquisition of certain assets from Groupe Beaudry, the transaction will be effective before the end of March, 2024.

The acquisition includes assets related to food-service activities (restaurants, hotels, institutions and others for on-site consumption by customers) of Groupe Beaudry in Quebec, and the related inventories. These activities represent approximately $15.0-million in annual revenues and will be served mainly from the company's facility located in Saint-Nicolas. Groupe Beaudry has been a distributor since 1899 and a business partner of Colabor for many years, being a customer of Colabor's wholesale segment. The acquisition of this new clientele will allow the company to consolidate its presence in Eastern Quebec.

"We are pleased with this strategic acquisition which will allow us to welcome new customers to Colabor," said Louis Frenette, president and CEO of Colabor. "This customer acquisition fits perfectly into our growth plan for our Distribution segment across Quebec. Our new customers will be able to rely on an exceptional service and a dedicated team to serve them."

Outlook

"We enter 2024 in an excellent position to weather macroeconomic changes. Our renewed offering focused on local sourcing and an approach focused on our customers sets us apart from the competition. Efforts to diversify our clientele into institutional and retail niches have also served us well since the pandemic. We are now in the second part of our five-year strategic plan and intend to act on several fronts to continue to improve our productivity and operational efficiency. We will also pursue a strategy of prudent allocation of our cash flows by prioritizing debt repayment, while remaining on the lookout for investment opportunities that will maximize shareholder returns," concluded Mr. Frenette.

Additional information

The management's discussion and analysis and the consolidated financial statements of the company are available on SEDAR+. Additional information, including the annual information form, about Colabor Group can also be found on SEDAR+ and on the company's website.

Conference call

Colabor will hold a conference call to discuss these results on Friday, March 1, 2024, 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 043579 followed by the pound key on your telephone keypad. The recording will be available from 1:30 p.m. on Friday, March 1, 2024, until 11:59 p.m. on March 8, 2024. 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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