TORONTO, Nov. 10, 2021 /CNW/ - Andlauer Healthcare
Group Inc. (TSX: AND) ("AHG" or the "Company") today reported its
financial results for the three and nine-month periods ended
September 30, 2021 ("Q3 2021" and
"YTD 2021", respectively).
Q3 2021 Summary
- Revenue increased 37.5% to $104.2
million, compared to $75.8
million in the three months ended September 30, 2020 ("Q3 2020");
-
Operating income increased 27.6% to $16.8 million, compared to $13.2 million in Q3 2020;
- Net income and comprehensive income increased 41.8% to
$12.2 million, compared to
$8.6 million in Q3 2020;
- EBITDA increased 38.8% to $28.0
million, compared to $20.2
million in Q3 2020;
- EBITDA Margin was 26.9%, compared to 26.6% in
Q3 2020;
- AHG continued to provide logistics and distribution,
specialized transportation, and packaging solutions to certain of
its manufacturer, 3PL provider, wholesaler and government clients
that are involved in the Canadian supply of COVID-19 vaccines and
ancillary products. In Q3 2021, the Company's COVID-19
vaccine-related revenue comprised approximately 2.5% of total
revenue compared with approximately 5.0% in the three months ended
June 30, 2021.
- AHG continued to maintain service levels across its operations,
while monitoring the safety measures implemented in response to
COVID-19 to prioritize the health and safety of its personnel,
clients, and suppliers; and
Subsequent Events
- On October 26, 2021, together
with Andlauer Management Group Inc. (the "Selling Shareholder"),
AHG completed a bought deal offering of 3.5 million subordinate
voting shares at a price of $48.20
per subordinate voting share for aggregate gross proceeds of
$168.7 million (the "Offering"). The
Offering was comprised of 2.0 million subordinate voting shares
issued from treasury and offered by AHG for gross proceeds of
$96.4 million, and 1.5 million
subordinate voting shares offered by the Selling Shareholder, for
gross proceeds to the Selling Shareholder of $72.3 million. AHG used proceeds from the
treasury offering to pay the cash portion of the purchase price
payable in connection with the acquisitions of T.F. Boyle
Transportation, Inc. ("Boyle Transportation") and the remaining 51%
of Skelton USA Inc. ("Skelton
USA") discussed further
below; and
- On November 1, 2021, AHG
completed the acquisitions of Boyle Transportation and 51% of
Skelton USA, increasing its
aggregate ownership of Skelton USA
to 100%. The purchase price for Boyle Transportation was
approximately US$80 million (subject
to customary purchase price adjustments) and was satisfied through
the issuance of 522,116 subordinate voting shares and cash of
approximately US$60 million. The
purchase price for the remaining 51% interest in Skelton
USA was approximately $50 million and was satisfied through the
issuance of 518,672 subordinate voting shares and cash of
approximately $25 million.
"Our strong momentum in the first half of the year was sustained
throughout the third quarter, reflecting both organic growth and
acquisitions. We generated strong revenue growth across each of our
product lines, with particularly robust performance in ground
transportation and dedicated and last mile delivery, where revenues
increased 41.5% and 110.0% respectively," said Michael Andlauer, Chief Executive Officer of
AHG. "With our recent acquisitions of Boyle Transportation and the
remaining 51% of Skelton USA, we
have now established a U.S. platform with scale. In combination
with our Canadian platform, we are now positioned to generate
enhanced returns over the long term."
Selected Consolidated Financial Summary
|
Three
months
ended Sept. 30,
|
Nine months
ended Sept. 30,
|
($CAD 000s,
except per share amounts)
|
2021
|
2020
|
Variance
|
2021
|
2020
|
Variance
|
Revenue
|
|
|
|
|
|
|
Logistics &
distribution
|
28,953
|
25,682
|
12.7 %
|
85,734
|
70,909
|
20.9 %
|
Packaging
solutions
|
4,504
|
4,261
|
5.7 %
|
15,721
|
15,456
|
1.7 %
|
Healthcare Logistics
segment
|
33,457
|
29,943
|
11.7 %
|
101,455
|
86,365
|
17.5 %
|
Ground
transportation
|
60,750
|
42,946
|
41.5 %
|
176,602
|
128,779
|
37.1 %
|
Air freight
forwarding
|
6,155
|
5,736
|
7.3 %
|
19,190
|
16,391
|
17.1 %
|
Dedicated and last
mile delivery
|
13,348
|
6,357
|
110.0 %
|
37,978
|
18,816
|
101.8 %
|
Intersegment
revenue
|
(9,511)
|
(9,177)
|
3.6 %
|
(28,135)
|
(22,643)
|
24.3 %
|
Specialized
Transportation segment
|
70,742
|
45,862
|
54.2 %
|
205,635
|
141,343
|
45.5 %
|
Total
revenue
|
104,199
|
75,805
|
37.5 %
|
307,090
|
227,708
|
34.9 %
|
Operating
expenses
|
87,403
|
62,640
|
39.5 %
|
254,839
|
191,050
|
33.4 %
|
Operating
income
|
16,796
|
13,165
|
27.6 %
|
52,251
|
36,658
|
42.5 %
|
Net income
and comprehensive income
|
12,188
|
8,596
|
41.8 %
|
36,850
|
23,845
|
54.5 %
|
Earnings per share –
basic
|
$ 0.32
|
$ 0.23
|
$ 0.09
|
$ 0.96
|
$ 0.63
|
$ 0.33
|
Earnings per share –
diluted
|
$ 0.31
|
$ 0.22
|
$ 0.09
|
$ 0.94
|
$ 0.62
|
$ 0.32
|
Select financial
metrics
|
|
|
|
|
|
|
EBITDA¹
|
28,026
|
20,190
|
38.8 %
|
83,486
|
56,948
|
46.6 %
|
EBITDA
Margin¹
|
26.9 %
|
26.6 %
|
30 bps
|
27.2 %
|
25.0 %
|
220 bps
|
|
|
|
|
|
|
|
|
|
|
|
Q3 2021 Financial Results
Revenue for Q3 2021 increased by 37.5% to $104.2 million, compared with $75.8 million in Q3 2020. The TDS Logistics Inc.
("TDS"), McAllister Courier Inc. ("MCI") and Skelton Canada Inc.
("Skelton Canada") acquisitions accounted for approximately
$18.2 million of the $28.4 million increase, with the remaining
increase attributable to organic growth as described below.
Revenue for the healthcare logistics segment totaled
$33.5 million, an increase of 11.7%
compared with Q3 2020. The increase was primarily attributable to
the 12.7% year-over-year growth in the Company's logistics and
distribution product line in Q3 2021, generated from greater
inbound product volume, storage and outbound handling activities.
AHG's packaging solutions also contributed to growth in the
healthcare logistics segment, with revenue totaling $4.5 million in the quarter, an increase of 5.7%
compared to Q3 2020, but remained approximately $0.2 million, or 4.2% below revenue in the third
quarter of 2019.
Revenue in the specialized transportation segment totaled
$70.7 million, an increase of 54.2%
compared with Q3 2020. The increase was attributable to: 41.5%
growth in the Company's ground transportation product line driven
by incremental revenue from the MCI and Skelton Canada acquisitions
of
approximately $12.3 million, higher volume from the Company's existing client base and higher fuel costs
passed on to customers as a component of pricing, and
year-over-year growth in AHG's air freight forwarding and dedicated
and last mile delivery product lines of 7.3% and 110.0%,
respectively. Growth
in air freight forwarding was attributable to increased revenue related to higher fuel costs, as volume
in Q3 2021 was consistent with Q3 2020. Growth in dedicated and
last mile delivery was primarily attributable to incremental
revenue of approximately $5.9 million
from the acquisition of TDS, with the remainder attributable to
route expansion in Western Canada
and increases in fuel costs passed on to customers.
Cost of transportation and services was $47.5 million, or 45.6% of revenue, compared with
$30.8 million, or 40.6% of revenue,
for Q3 2020. The higher cost of transportation and services for Q3
2021 reflects an approximate 7.4%% increase in volume in AHG's ATS
Healthcare business compared to Q3 2020, the acquisitions of TDS,
MCI and Skelton Canada, and higher fuel costs in line with the
increases in revenue related to fuel prices. The increase in the
operating ratio for Q3 2021 reflects the addition of the TDS, MCI
and Skelton Canada acquisitions, which have increased the relative
proportion of the specialized transportation segment as a
percentage of AHG's total consolidated revenue and cost
profiles.
Direct operating expenses were $21.4
million, or 20.5% of revenue, compared with $18.0 million, or 23.7% of revenue, for Q3 2020.
The increase was primarily attributable to the acquisitions of TDS,
MCI and Skelton Canada, however these acquisitions – which are
included in AHG's specialized transportation segment – have lower
facility-related costs compared to AHG's healthcare logistics
segment, which results in a lower direct operating expense
operating ratio in Q3 2021 as compared to Q3 2020. AHG has incurred
certain incremental costs in connection with its COVID-19 response
measures, but these incremental costs were mitigated through
effective productivity management and other cost controls.
Selling, General and Administrative ("SG&A") expenses were
$8.3 million, or 7.9% of revenue,
compared with $6.8 million, or 9.0%
of revenue, for Q3 2020. Increased SG&A expenses for Q3 2021
are attributable to the acquisitions of TDS, MCI and Skelton
Canada, and approximately $0.3
million in professional fees related to AHG's acquisition of
Boyle Transportation, partially offset by a $0.3 million reduction in the costs attributable
to share-based compensation expenses related to AHG's initial
public offering. The decrease in SG&A expenses as a percentage
of revenue reflects operating leverage generated within SG&A
functions compared to revenue growth.
Operating income for Q3 2021 was $16.8
million, an increase of 27.6% compared to Q3 2020, primarily
reflecting the growth in total revenue.
Net income and comprehensive income increased by 41.8% to $12.2 million, or $0.31 per share (diluted),
from $8.6 million, or $0.22 per share (diluted), in Q3 2020. The
increase reflects higher segment net income before eliminations
from both the Company's healthcare logistics and specialized
transportation operating segments, and a $1.0 million contribution from AHG's 49% interest
in Skelton USA.
Earnings before interest, taxes, depreciation and amortization
("EBITDA")¹ increased by 38.8% to $28.0
million, from $20.2 million in
Q3 2020, reflecting the factors discussed above and incremental
contributions from the TDS, MCI and Skelton Canada acquisitions.
EBITDA margin¹ improved to 26.9% from 26.6% in Q3 2020. The
performance of AHG's two operating segments continued to result in
strong and stable EBITDA margins at the higher end of the Company's
historical range. Further, Skelton
Canada's higher margin profile has positively impacted AHG's
overall margin.
Dividend
The Company paid a dividend (encompassing the period from
July 1, 2021 to September 30, 2021) in the amount of $0.05 per subordinate voting share and multiple
voting share on October 15, 2021.
Subject to financial results, capital requirements, available
cash flow, corporate law requirements and any other factors that
AHG's Board of Directors may consider relevant, it is the Company's
intention to declare a quarterly dividend of $0.05 per subordinate voting share and multiple
voting share on an ongoing basis.
Shares Outstanding
As at September 30, 2021, there
were 13,379,571 subordinate voting shares and 25,100,000 multiple
voting shares outstanding.
As at November 10, 2021, following
the Offering and the completion of the acquisitions of Boyle
Transportation and 51% of Skelton USA, there were 17,920,359 subordinate voting
shares and 23,600,000 multiple voting shares outstanding.
Financial Statements
AHG's unaudited interim condensed consolidated financial
statements and related Management's Discussion & Analysis
("MD&A") for Q3 2021 and YTD 2021 are available on the
Company's website at www.andlauerhealthcare.com and on the
Company's profile on SEDAR at www.sedar.com.
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 Thursday, November 11,
2021 at 8:30 a.m. (ET). The
dial-in numbers for participants are (647) 792-1240 or (888)
394-8218. The call will be webcast live at:
www.andlauerhealthcare.com/presentations-events.
To access a replay of the conference call dial (647) 436-0148 or (888) 203-1112, passcode: 2719334 #. The
replay will be available until November 18, 2021. The webcast will be archived on the Company's website
following conclusion of the call.
About AHG
AHG 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 healthcare
sector. The Company's 3PL services include customized logistics,
distribution and packaging solutions for healthcare manufacturers
across Canada. AHG's specialized transportation services, including
air freight forwarding, ground transportation, dedicated
delivery and last mile services, provide a one-stop shop for
clients' healthcare transportation needs. Through its complementary
service offerings, available across a coast-to-coast distribution
network, the Company strives to accommodate the full range of its
clients' specialized supply chain needs on an integrated and
efficient basis. For more information on AHG, please visit:
www.andlauerhealthcare.com.
Forward-looking Information
This news release contains forward-looking information and
forward-looking statements (collectively, "forward-looking
information") within the meaning of applicable securities laws.
Forward-looking information may relate to the Company's future
financial outlook and anticipated events or results and may include
information regarding the Company's financial position, business
strategy, growth strategies, addressable markets, budgets,
operations, financial results, taxes, dividend policy, plans,
objectives and responses to the outbreak of COVID-19. Particularly,
information regarding the Company's expectations of future results,
performance, achievements, facility expansions, leases, platform
expansions, acquisitions, public company costs, payment of
dividends, prospects, financial targets or outlook, intentions,
opportunities or the potential impact of, and response measures to
be taken with respect to, COVID-19 is forward-looking information.
In some cases, forward-looking information can be identified by the
use of forward-looking terminology such as "plans", "targets",
"expects", "budget", "scheduled", "estimates", "outlook",
"forecasts", "projection", "prospects", "strategy", "intends",
"anticipates", "believes", "commencing" or variations of such words
and phrases or statements that certain actions, events or results
"may", "could", "would", "might", "will", "will be taken", "occur"
or "be achieved". In addition, any statements that refer to
expectations, intentions, projections or other characterizations of
future events or circumstances contain forward-looking information.
Statements containing forward-looking information are not
historical facts but instead represent management's expectations,
estimates and projections regarding future events or circumstances.
Such forward-looking statements are qualified in their entirety by
the inherent risks, uncertainties and changes in circumstances
surrounding future expectations which are difficult to predict and
many of which are beyond the control of the Company.
Forward-looking information is necessarily based on a number of
opinions, estimates and assumptions, including but not limited to
those assumptions described under the heading "Cautionary Note
Regarding Forward-Looking Information" in the Company's MD&A
for the three and nine-month periods ended September 30, 2021. Forward-looking information
is subject to known and unknown risks, uncertainties, assumptions
and other factors that may cause the actual results, level of
activity, performance or achievements to be materially different
from those expressed or implied by such forward-looking
information, including but not limited to factors discussed under
the heading "Risk Factors" in the Company's annual information form
dated February 24, 2021, which is
available on the Company's profile on SEDAR at
www.sedar.com. If any of these risks or
uncertainties materialize, or if the opinions, estimates or
assumptions underlying the forward-looking information prove
incorrect, actual results or future events might vary materially
from those anticipated in the forward-looking information.
Accordingly, investors should not place undue reliance on
forward-looking information, which speaks only as of the date made.
The forward-looking information contained in this news release
represents the Company's expectations as of the date of this news
release, and are subject to change after such date and the Company
disclaims any intention or obligation or undertaking to update or
revise any forward-looking information whether as a result of new
information, future events or otherwise, except as required under
applicable securities laws.
(1) Non-IFRS Financial Measures
This news release contains certain non-IFRS measures. These measures are not recognized measures under
IFRS, do not have a standardized meaning prescribed by IFRS and are
therefore unlikely to be comparable to similar measures presented
by other companies. Rather, these measures are provided as
additional information to complement those IFRS measures by
providing further understanding of the Company's results of
operations from management's perspective. Accordingly, these
measures should not be considered in isolation nor as a substitute
for analysis of the Company's financial information reported under
IFRS. AHG uses non-IFRS measures including "EBITDA", and "EBITDA
Margin". These non-IFRS measures are used to provide investors with
supplemental measures of the Company's operating performance and
thus highlight trends in its core business that may not otherwise
be apparent when relying solely on IFRS financial measures. AHG
also believes that securities analysts, investors and other
interested parties frequently use non-IFRS measures in the
evaluation of issuers. AHG management also uses non-IFRS measures
in order to facilitate operating performance comparisons from
period to period, to prepare annual operating budgets and to
determine components of management compensation.
EBITDA
AHG defines EBITDA as net income (loss) and comprehensive income (loss) for the period before: (i) income
tax (recovery) expense; (ii) interest income; (iii) interest
expense; and (iv) depreciation and amortization.
AHG believes EBITDA is a useful measure to assess the
Company's financial performance because it provides a more relevant
picture of operating results by excluding the effects of expenses
that are not reflective of the Company's underlying business
performance.
EBITDA Margin
AHG defines EBITDA Margin as EBITDA divided by revenue.
EBITDA Margin represents a measure of the Company's
profitability expressed as a percentage of revenue. AHG
believes EBITDA Margin is a useful measure to assess the Company's
financial performance because it helps quantify the
Company's ability to convert revenues generated from clients into
EBITDA.
For quantitative reconciliations of net income and
comprehensive income to EBITDA for Q3 2021, YTD 2021, Q3 2020 and
the nine-month period ended September 30,
2020 please see "Reconciliation of Non-IFRS Measures" in the
Company's MD&A for the three and nine-month periods ended
September 30, 2021, available on the
Company's profile on SEDAR (www.sedar.com), or the Company's
website (www.andlauerhealthcare.com).
SOURCE Andlauer Healthcare Group Inc.