Mr. Laurie Goldberg reports
PEOPLE CORPORATION ANNOUNCES FINANCIAL RESULTS FOR THE THIRD QUARTER OF FISCAL 2019
People Corp. has provided its financial results for the quarter ended May 31, 2019.
Laurie Goldberg, executive chairman and chief executive officer, commented: "People Corp. has made solid strategic and financial progress in the first nine months of 2019. During the third quarter, a combination of execution on our acquisition strategy, integration initiatives and efforts to drive organic growth resulted in revenue growth of 27.6 per cent, of which organic revenue growth was 9.8 per cent. Aligned with Q1 and Q2, EBITDA (earnings before interest, taxes, depreciation and amortization) grew faster than revenue during Q3, with adjusted EBITDA growing by 29.0 per cent compared to the same period in fiscal 2018. For the remainder of the fiscal year and into 2020 we remain focused on the four key value-driving areas we have outlined in prior quarters, specifically: sales and service; products; integration; and strategic acquisitions. With demonstrated operating capabilities, a proven track record of organic growth and a deep acquisition pipeline, People Corp. is well positioned to drive continued growth and shareholder returns, while leveraging its increasing scale to provide clients with a leading suite of solutions and unparalleled experience."
Highlights of financial results for the quarter ended May 31, 2019
Financial results from operations
The company's financial results for the three and nine months ended May 31, 2019, fully reflect the effect of last year's acquisitions of Assurances Dalbec, Rockwater Benefits Company, Lane Quinn Benefit Consultants Ltd., and Silverberg & Associates Inc. In addition, the effect of the current year acquisitions of Benefit Partners Inc. (BPI) and Life Benefit Solutions Inc. are reflected in the current period.
Three months Nine months
ended May 31, ended May 31,
(000s of dollars) 2019 2018 2019 2018
Revenue $ 42,427 $ 33,254 $ 119,302 $ 94,239
Adjusted EBITDA before REI $ 11,868 $ 9,161 $ 32,260 $ 24,748
Adjusted EBITDA $ 9,509 $ 7,374 $ 26,145 $ 19,797
Net Income (loss) $ (644) $ 1,484 $ (5,540) $ 2,558
Net Income (loss) per share (basic) $ (0.01) $ 0.03 $ (0.09) $ 0.05
Adjusted net earnings per share (basic) $ 0.04 $ 0.05 $ 0.07 $ 0.12
The company realized revenue growth for the three months ended May 31, 2019, of $9.2-million (27.6 per cent). Organic growth of $3.2-million (9.8 per cent) was recognized primarily from gaining new clients, increasing product and service penetration with existing clients and natural inflationary factors. The company recognized growth of $5.9-million (17.8 per cent) resulting from acquired operations including Lane Quinn, Silverberg, BPI and Life.
Adjusted EBITDA before retained economic interest (REI) for the three months ended May 31, 2019, was $11.9-million, an increase of $2.7-million (29.5 per cent). Growth in adjusted EBITDA before REI for the three-month period was primarily driven by contribution from acquired operations and the increase in third quarter revenue, partially offset by increases in variable compensation expenses tied directly to the higher revenue, expanded leadership to accommodate integration and current growth, and the continued investment in sales and support staff, and related support costs incurred to drive organic growth.
Adjusted EBITDA for the three months ended May 31, 2019, was $9.5-million, an increase of $2.1-million (29.0 per cent) primarily due to the factors affecting adjusted EBITDA before REI, offset by an increase in the amount due to the holders of the REI of $600,000 (32.0 per cent), reflecting their share of the increased EBITDA in the corresponding businesses.
The company reported a net loss for the three months ended May 31, 2019, of $600,000. Net income decreased by $2.1-million, resulting from higher accretion of the non-controlling interest put options, an increase in depreciation and amortization expense primarily from acquired intangible assets, higher share-based compensation, and an increase in acquisition, integration and reorganization expenses; partly offset by adjusted EBITDA increases related to acquired operations and organic growth.
Strategic and operational highlights
The company continues to make significant progress on executing its strategic plan, while at the same time making investments to position the company for continuing future growth. Some notable milestones include:
Completed the acquisitions of Life Benefit Solutions Inc. and Benefit Partners Inc.;
Amended and increased the bank credit facility to $125-million in committed credit availability (from $93-million), with an option to increase the facility by an additional $50-million, to a total of $175-million overall to fund future growth initiatives;
Appointed Sue Tardi to the position of chief human resources officer;
Hired senior leaders in Western Canada and Ontario and established regional office support to support the client base in these regions;
Hired several new professionals to support clients with expertise in product development, underwriting, sales and service, and group retirement and two senior corporate development resources to deepen and expand the company's ability to execute acquisitions;
Completed the buildout of the new corporate office in Laval, Que., and integrated the Quebec-based businesses;
Initiated the first phase of integration related to shared support functions for the recently acquired firms, including Lane Quinn, Silverberg, BPI and Life Benefit Solutions Inc.;
Completed and launched the pilot for People Care, a new on-line Mental Health solution for clients;
Added partners to the company's market-leading preferred provider network, allowing its clients to access value-added offerings and preferred pricing at some of Canada's most recognized national retailers;
Added the "HR @ Your Service" product to its Sirius small group solution;
Enhanced the company's small group offerings by expanding its carrier partnerships.
Summary financial position
The company is well financed to execute on its growth strategy, with a strong financial position and access to capital. The company had cash balances of $25.9-million as at May 31, 2019. In addition to its cash resources, the company maintains a credit facility with its senior lenders that totals $97.8-million of credit capacity. As of May 31, 2019, the company has drawn $59.6-million on the various components of it credit facility, leaving $38.2-million of unused credit capacity.
Subsequent to quarter-end, on July 4, 2019, the company announced that it had amended and increased its credit facility to $125-million in committed credit availability (from $93-million), with an option, subject to the satisfaction of certain terms and conditions, to increase the facility by an additional $50-million, to a total of $175-million overall. In addition, the facility's term has been extended to June 1, 2022, the number of lenders in the syndicate has been increased, and improvements in other terms have been achieved, including lower borrowing costs and greater flexibility.
The complete financial statements and management's discussion and analysis for the three and nine months ended May 31, 2019, along with additional information about the company and all of its public filings, are available on SEDAR.
Grant of deferred stock units
The company permits its directors to elect to take their director's fees in the form of deferred stock units issued under the company's security-based compensation plan, in lieu of cash payments. This quarter, the company has granted 1,817 deferred stock units to directors in this regard.
People will host a conference call on Monday, July 15, 2019, at 8:30 a.m. ET to discuss its second quarter financial results and provide investors with key business highlights. The call will be chaired by Mr. Goldberg and Dennis Stewner, chief financial officer and chief operating officer.
Date: July 15, 2019
Time: 8:30 a.m. ET
Participant dial-in: 416-764-8688 or 1-888-390-0546
Replay dial-in: 416-764-8677 or 1-888-390-0541
Available for two weeks.
Conference ID: 72044749
Playback No.: 044749
About People Corp.
People is a national provider of group benefits, group retirement and human resource services. The company has offices across Canada, each led by a team of experts and backed by the resources of a national company that is traded on the TSX Venture Exchange. The company's industry experts provide uniquely valuable insight while customizing an innovative suite of services to the specific needs of its clients.
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