Andlauer Healthcare Group Reports 2024 Third Quarter Results

TORONTO, Nov. 5, 2024 /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, 2024 ("Q3 2024" and "YTD 2024", respectively).

Q3 2024Summary

• Revenue totaled $159.6 million, an increase of 1.8% from $156.8 million for the three-month period ended September 30, 2023 ("Q3 2023");
• Operating income was $23.8 million, an increase of 9.6% compared to $21.7 million in Q3 2023;
• Net income totaled $16.3 million, or $0.41 per share (diluted), compared to $15.3 million, or $0.36 per share (diluted), in Q3 2023;
• EBITDA¹ totaled $41.3 million, an increase of 5.9% compared to $39.0 million in Q3 2023; and
• EBITDA Margin¹ was 25.9%, compared to 24.9% in Q3 2023.

"Our results for the quarter reflect the strong performance of our logistics and distribution and Canadian specialized transportation product lines. Our Canadian ground transportation revenue, excluding fuel, increased by approximately 8.5% in the quarter. This positive momentum was partially offset by the continued impact of the challenging operating conditions on our US-based truckload businesses," said Michael Andlauer, Chief Executive Officer of AHG. "With interest rates easing, we are seeing a more active acquisition market. We are well positioned with a strong balance sheet to capitalize on opportunities to expand our platform."

Selected Consolidated Financial Summary

Q3 2024 Financial Results

Consolidated revenue for Q3 2024 increased by 1.8% to $159.6 million, compared with $156.8 million in Q3 2023. The increase was primarily attributable to organic growth in the Company's logistics and distribution and Canadian specialized transportation product lines, excluding fuel surcharge revenue, partially offset by lower revenue in the Company's US-based truckload businesses (Boyle Transportation and Skelton USA).

Revenue for the healthcare logistics segment totaled $44.1 million, an increase of 4.7% compared with Q3 2023. The increase reflects 6.8% year-over-year growth in the Company's logistics and distribution product line revenue, partially offset by a 16.7% decline in packaging revenue. The increase in logistics and distribution revenue was attributable to higher revenue from the Company's pharmaceutical and biologics clients, partially offset by lower outbound order handling and transportation activities for certain Accuristix consumer health clients. The decline in packaging revenue was attributable to lower volume.

Revenue in the specialized transportation segment totaled $115.5 million, an increase of 0.8% compared with Q3 2023. Ground transportation revenue for Q3 2024 was $104.3 million, an increase of 0.5% compared with Q3 2023. The increase was attributable to organic growth in the Company's Canadian ground transportation network, partially offset by a decline in revenue for AHG's US-based truckload businesses. Ground transportation revenue, excluding fuel, in the Company's Canadian network increased by approximately 8.5%. Air freight forwarding revenue for Q3 2024 increased by 5.1% compared to Q3 2023, reflecting increased shipments. Dedicated and last mile delivery revenue increased 10.2% compared to Q3 2023, reflecting continued organic growth.

Cost of transportation and services was $79.7 million, or 50.0% of revenue, compared with $79.6 million, or 50.1% of revenue, for Q3 2023. The increase was in line with revenue growth and lower fuel costs. In Q3 2024, AHG continued to carry certain idle equipment costs in its US-based truckload businesses arising from a lower volume of truckloads as the Company focused on revenue quality.

Direct operating expenses were $25.3 million, or 15.9% of revenue, compared with $25.3 million, or 16.2% of revenue, for Q3 2023 and were generally in line with revenue for Q3 2024.

Operating income for Q3 2024 was $23.8 million, an increase of 9.6% compared with $21.7 million for Q3 2023. The increase was primarily attributable to organic growth in the Company's logistics and distribution and Canadian specialized transportation product lines, partially offset by lower contributions from the Company's US-based truckload businesses.

Net income for Q3 2024 was $16.3 million, or $0.41 per share (diluted), compared with $15.3 million, or $0.36 per share (diluted) in Q3 2023. Higher segment net income before eliminations for the Company's specialized transportation segment reflects organic growth in AHG's Canadian specialized transportation business, largely offset by lower contributions from Boyle Transportation and Skelton USA; and slightly higher segment net income from the Company's healthcare logistics segment primarily reflects increased revenue from AHG's pharmaceutical and biologics clients, partially offset by increased SG&A costs related to the implementation of a new warehouse management system for Accuristix.

Total comprehensive income was $13.1 million compared to $20.1 million for Q3 2023. Total comprehensive income differs from net income due to the acquisition of foreign operations (Boyle Transportation and Skelton USA), which resulted in a negative foreign currency translation adjustment of $3.2 million in Q3 2024, compared to a positive foreign currency translation adjustment of $4.8 million in Q3 2023.

Earnings before interest, taxes, depreciation and amortization ("EBITDA")¹ totaled $41.3 million in Q3 2024, an increase of 5.9% compared with $39.0 million in Q3 2023. The increase was due to the factors discussed above and primarily reflects organic growth in the Company's Canadian specialized transportation network, partially offset by lower contributions from AHG's US-based truckload businesses. EBITDA attributable to Boyle Transportation and Skelton USA was approximately $1.5 million lower in Q3 2024 compared to Q3 2023. EBITDA Margin¹ was 25.9% in Q3 2024 compared to 24.9% in Q3 2023. The increase reflects the strong performance of AHG's Canadian network in both operating segments, partially offset by lower margins in the Company's US-based truckload businesses.

Dividend

The Company paid a dividend (encompassing the period from July 1, 2024 to September 30, 2024) in the amount of $0.11 per subordinate voting share and multiple voting share on October 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 $0.11 per subordinate voting share and multiple voting share on an ongoing basis.

Shares Outstanding

On March 29, 2023, AHG commenced its first normal course issuer bid (the "NCIB 2023"). The Company purchased and cancelled 634,090 subordinate voting shares, or approximately 3% of its public float, pursuant to the NCIB 2023. The NCIB 2023 terminated on March 28, 2024.

On June 20, 2024, AHG completed a substantial issuer bid ("SIB") under which the Company purchased and cancelled 2,000,000 subordinate voting shares for a total consideration of $90 million. Andlauer Management Group Inc. participated in the SIB and converted 1,032,045 multiple voting shares to subordinate voting shares, which were taken up by AHG pursuant to the SIB.

On July 2, 2024, the Company commenced its second normal course issuer bid for up to a maximum of 1,770,429 of its subordinate voting shares, or approximately 10% of its public float as of June 26, 2024, over the following 12-month period. As of September 30, 2024, a total of 220,534 subordinate voting shares, for a total of approximately $8.6 million, have been purchased and cancelled pursuant to the Company's current NCIB.

As at September 30, 2024, there were 18,484,094 subordinate voting shares and 20,807,955 multiple voting shares issued and outstanding.

Financial Statements

AHG's unaudited interim condensed consolidated financial statements and related Management's Discussion & Analysis ("MD&A") for Q3 2024 are available on the Company's website at www.andlauerhealthcare.com and under AHG's profile on SEDAR+ at www.sedarplus.ca.

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 Wednesday, November 6, 2024 at 8:30 a.m. (ET). To join the conference call without operator assistance, you may register and enter your phone number at https://emportal.ink/3YfYcHm to receive an instant automated call back. Alternatively, you can dial (437) 900-0527 or (888) 510-2154 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 (289) 819-1450 or (888) 660-6345, passcode: 46043 #. The replay will be available until November 13, 2024. The webcast will be archived on the Company's website following the 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 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.

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 expectations. Particularly, information regarding the Company's growth expectations, performance, achievements, payment of dividends, activity under the normal course issuer bid, 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 Q3 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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