Andlauer Healthcare Group Reports 2024 First Quarter Results

TORONTO, May 2, 2024 /CNW/ - Andlauer Healthcare Group Inc. (TSX: AND) ("AHG" or the "Company") today reported its financial results for the three-month period ended March31, 2024 ("Q1 2024").

Q1 2024Summary

• Revenue totaled $161.1 million, a decrease of 2.2% from $164.8 million for the three-month period ended March31, 2023 ("Q1 2023");
• Operating income was $21.2 million, compared to $23.7 million in Q1 2023;
• Net income totaled $14.9 million, or $0.35 per share (diluted), compared to $16.5 million, or $0.39 per share (diluted), in Q1 2023;
• Total comprehensive income was $20.5 million, compared to $16.3 million in Q1 2023;
• EBITDA1 totaled $39.6 million, compared to $40.5 million in Q1 2023; and
• EBITDA Margin1 was 24.6%, compared to 24.6% in Q1 2023.

"Aside from lower fuel surcharge revenue, our 2.2% year-over-year decline in revenue was primarily attributable to two factors. First, revenue in our U.S. truckload businesses reflects depressed rates and our decision to focus on higher margin business. Second, we had lower revenue in our Accuristix business attributable to lower volumes from certain consumer health clients. These declines were partially offset by organic growth in our Canadian specialized transportation network," said Michael Andlauer, Chief Executive Officer of AHG. "Looking ahead, we will continue to focus on revenue quality in our U.S. truckload businesses and we believe that our recent capacity expansion at our LSU facility in Montreal will make a positive contribution to our logistics and distribution business as the year progresses. We expect continued growth in our Canadian specialized transportation network."

"Today, we also published our inaugural sustainability report. The report highlights our responsible business approach, which starts and ends with our people– our professional drivers, owner-operators, and teams working across our network. Their commitment and passion are the engine of our success and a key to our strong industry partnerships and stakeholder relations. This report will serve as a baseline against which we will measure our future progress for the communities we serve."

Selected Consolidated Financial Summary

Consolidated revenue for Q1 2024 decreased by 2.2% to $161.1 million, compared with $164.8 million in Q1 2023. The decrease was primarily attributable to lower revenue in the Company's US-based truckload business (Boyle Transportation and Skelton USA) and Accuristix, and lower fuel surcharge revenue, partially offset by organic growth in the Company's Canadian specialized transportation product lines, excluding fuel surcharge revenue.

Revenue for the healthcare logistics segment totaled $42.9 million, a decrease of 6.9%, or approximately $3.2 million, compared with Q1 2023. The decrease reflects a 6.4% decline in the Company's logistics and distribution product line revenue and a 10.3% decline in packaging revenue. The decline in logistics and distribution revenue was primarily attributable to lower outbound order handling and transportation activities for certain Accuristix consumer health clients. The decline in packaging revenue primarily reflects the loss of one of the Company's packaging customers in Q1 2023.

Revenue in the specialized transportation segment totaled $118.3 million, a decrease of 0.4%, or approximately $0.5 million, compared with Q1 2023. The decrease reflects a decline in US-based truckload revenue and lower fuel surcharge revenue, partially offset by organic growth in each of the Company's Canadian specialized transportation product lines.

Ground transportation revenue for Q1 2024 was $106.4 million, a decrease of 1.7%, or approximately $1.9 million, compared with Q1 2023. The decrease is primarily attributable to a decline in AHG's US-based truckload business, reflecting lower rates and the Company's focus on revenue quality, as well as lower fuel costs passed through to customers as a component of pricing compared to Q1 2023. These factors were partially offset by organic growth in the Company's Canadian ground transportation network. Ground transportation revenue, excluding fuel, in the Company's Canadian network increased by approximately 3.2%.

The $0.5 million increase in air freight forwarding revenue in Q1 2024 compared to Q1 2023 reflects a 2.3% year-over-year increase in weight shipped. The $0.6 million increase in dedicated and last mile delivery revenue in Q1 2024 compared to Q1 2023 reflects continued organic growth, partially offset by a reduction in fuel surcharge revenue.

Cost of transportation and services was $82.5 million, or 51.2% of revenue, compared with $84.2 million, or 51.1% of revenue, for Q1 2023. Lower fuel costs in line with decreases in revenue related to fuel prices were partially offset by idle equipment costs in AHG's US-based truckload businesses arising from a lower volume of loads as the Company focused on revenue quality.

Direct operating expenses were $26.3 million, or 16.3% of revenue, compared with $27.0 million, or 16.4% of revenue, for Q1 2023. The decrease was primarily attributable to a reduction in outbound order handling activities for Accuristix in line with lower revenue.

Operating income totaled $21.2 million, a decrease of $2.4 million compared to Q1 2023. The decrease was primarily attributable to reduced contributions from Boyle Transportation and Skelton USA.

Net income was $14.9 million, or $0.35 per share (diluted), compared with $16.5 million, or $0.39 per share (diluted), in Q1 2023. Lower segment net income before eliminations for AHG's specialized transportation segment was primarily attributable to reduced contributions from Boyle Transportation and Skelton USA, and lower segment net income from the Company's healthcare logistics segment reflects reduced order handling and transportation activity.

Total comprehensive income was $20.5 million compared to $16.3 million for Q1 2023. Total comprehensive income differs from net income due to the acquisition of foreign operations (Boyle Transportation and Skelton USA), which resulted in a positive foreign currency translation adjustment of $5.5 million in Q1 2024 compared to a negative foreign currency translation adjustment of $0.2 million in Q1 2023.

Earnings before interest, taxes, depreciation and amortization ("EBITDA")¹ totaled $39.6 million compared with $40.5 million for Q1 2023. The decrease was due to the factors discussed above and primarily reflects lower contributions from the Company's US-based truckload operations and reduced outbound order handling activities for Accuristix, partially offset by organic growth in the Company's Canadian specialized transportation network. EBITDA1 attributable to Boyle Transportation and Skelton USA was approximately $2.5 million lower in Q1 2024 compared to Q1 2023. EBITDA Margin¹ of 24.6% was unchanged from Q1 2023, as a reduction in US-based truckload margins were offset by higher margins in the Company's Canadian specialized transportation network.

The Company paid a dividend (encompassing the period from January 1, 2024 to March 31, 2024) in the amount of $0.10 per subordinate voting share and multiple voting share on April 15, 2024.

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 $0.10 per subordinate voting share and multiple voting share on an ongoing basis.

On March 24, 2023, the Company announced that the Toronto Stock Exchange had approved its notice of intention to make a normal course issuer bid ("NCIB") for up to a maximum of 1,856,857 of its subordinate voting shares, or approximately 10% of its public float as of March 23, 2023, over the 12-month period commencing on March29, 2023. As at March31, 2024, 634,090 Subordinated Voting Shares, or approximately 3% of AHG's public float, had been purchased and cancelled pursuant to the NCIB. The NCIB was terminated on March 28, 2024.

As at March 31, 2024, there were 19,483,920 subordinate voting shares and 21,840,000 multiple voting shares issued and outstanding.

AHG's unaudited interim condensed consolidated financial statements and related Management's Discussion & Analysis ("MD&A") for Q12024 are available on the Company's website at www.andlauerhealthcare.com and under AHG's profile on SEDAR+ at www.sedarplus.ca.

Michael Andlauer, Chief Executive Officer, and Peter Bromley, Chief Financial Officer, will host a conference call for analysts and investors on Friday, May3, 2024 at 8:30a.m.(ET). To join the conference call without operator assistance, you may register and enter your phone number at: https://emportal.ink/43SbyuG to receive an instant automated call back. Alternatively, you can dial (416) 764-8650 or (888) 664-6383 to reach a live operator that will join you into the call.

You can access a live webcast of the call under the Presentations & Events section of AHG's investor website at:
https://andlauerhealthcare.com/andlauer-healthcare-presentations-events/

To access a replay of the conference call, dial 416-764-8677 or (888) 390-0541, passcode: 534181 #. The replay will be available until May10, 2024. The webcast will be archived on the Company's website following the conclusion of the call.

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 in Canada, 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, AHG strives to accommodate the full range of its clients' specialized supply chain needs on an integrated and efficient basis. The Company also provides specialized ground transportation services, primarily to the healthcare sector, across the 48 contiguous U.S. states. For more information on AHG, please visit: www.andlauerhealthcare.com.

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 expectations with respect to COVID-19. Particularly, information regarding the Company's growth expectations, performance, achievements, payment of dividends, prospects, potential acquisitions, financial targets or outlook 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, targets, 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 Q1 2024. 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 March 5, 2024, which is available on the Company's profile on SEDAR+ at www.sedarplus.ca. 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 for the period before: (i) income tax expense (recovery); (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.

Reconciliation of EBITDA

SOURCE Andlauer Healthcare Group Inc.

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