TORONTO, July 31, 2024 /CNW/ - Andlauer Healthcare Group Inc. (TSX: AND) ("AHG" or the "Company") today reported its financial results for the three and six-month periods ended June 30, 2024 ("Q2 2024" and "YTD 2024", respectively).
Q2 2024Summary
Revenue totaled $161.4 million, an increase of 2.6% from $157.4 million for the three-month period ended June 30, 2023 ("Q2 2023");
Operating income was $22.2 million, compared to $22.6 million in Q2 2023;
Net income totaled $15.7 million, or $0.38 per share (diluted), compared to $15.7 million, or $0.37 per share (diluted), in Q2 2023;
Total comprehensive income was $18.1 million, compared to $10.7 million in Q2 2023;
EBITDA¹ totaled $40.1 million, compared to $39.5 million in Q2 2023; and
EBITDA Margin¹ was 24.8%, compared to 25.1% in Q2 2023.
"We continue to generate solid organic growth in our Canadian specialized transportation network, and we returned to growth in our logistics and distribution, and packaging product lines in the quarter. Our U.S. truckload business revenue and margins have continued to decline in 2024 due to sustained, post-pandemic rate pressures. In response, we are maintaining our heightened focus on revenue quality," said Michael Andlauer, Chief Executive Officer of AHG. "Our low debt levels, combined with the continued strong cash generation of our business, has provided us with the financial flexibility to be active in buying back shares both through our normal course issuer bid and our recently completed substantial issuer bid. We believe that these share buybacks represent an attractive, accretive path for capital allocation and support the best interests of our shareholders over the long term. Further, our share buybacks do not hinder our ability to pursue complementary acquisitions, which we continue to evaluate."
Selected Consolidated Financial Summary
Three months ended
June 30,
Six months ended
June 30,
($CAD 000s, except per share amounts)
2024
2023
Variance
2024
2023
Variance
Revenue
Logistics and distribution
39,463
39,438
0.1 %
77,381
79,961
(3.2) %
Packaging solutions
4,786
4,236
13.0 %
9,728
9,746
(0.2) %
Healthcare Logistics segment
44,249
43,674
1.3 %
87,109
89,707
(2.9) %
Ground transportation
105,006
103,451
1.5 %
211,394
211,711
(0.1) %
Air freight forwarding
7,918
7,678
3.1 %
15,913
15,220
4.6 %
Dedicated and last mile delivery
18,329
16,339
12.2 %
36,074
33,470
7.8 %
Intersegment revenue
(14,056)
(13,785)
2.0 %
(27,906)
(27,977)
(0.3) %
Specialized Transportation segment
117,197
113,683
3.1 %
235,475
232,424
1.3 %
Total revenue
161,446
157,357
2.6 %
322,584
322,131
0.1 %
Operating expenses
139,271
134,762
3.3 %
279,166
275,846
1.2 %
Operating income
22,175
22,595
(1.9) %
43,418
46,285
(6.2) %
Net income
15,731
15,716
0.1 %
30,654
32,244
(4.9) %
Foreign currency translation adjustment
2,336
(5,039)
N/A
7,873
(5,239)
N/A
Total comprehensive income
18,067
10,677
69.2 %
38,527
27,005
42.7 %
Earnings per share – basic
$ 0.38
$ 0.37
($ 0.01)
$ 0.74
$ 0.77
($0.03)
Earnings per share – diluted
$ 0.38
$ 0.37
($ 0.01)
$ 0.73
$ 0.76
($0.03)
Select financial metrics
EBITDA¹
40,081
39,540
1.4 %
79,673
80,009
(0.4) %
EBITDA Margin¹
24.8 %
25.1 %
(30) bps
24.7 %
24.8 %
(10) bps
Q2 2024 Financial Results
Consolidated revenue for Q2 2024 increased by 2.6% to $161.4 million, compared with $157.4 million in Q2 2023. The increase was primarily attributable to organic growth in the Company's 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 $44.2 million, an increase of 1.3% compared with Q2 2023, reflecting a slight increase in the Company's logistics and distribution product line revenue and 13.0% growth in packaging revenue. The slight increase in logistics and distribution revenue was primarily attributable to higher revenue from the Company's pharmaceutical and biologics clients, largely offset by lower outbound order handling and transportation activities for certain Accuristix consumer health clients. The increase in packaging revenue was attributable to higher volume.
Revenue in the specialized transportation segment totaled $117.2 million, an increase of 3.1% compared with Q2 2023, reflecting organic growth in each of the Company's Canadian specialized transportation product lines, partially offset by a decline in US-based truckload revenue.
Ground transportation revenue for Q2 2024 was $105.0 million, an increase of 1.5% compared with Q2 2023. The increase was attributable to organic growth in the Company's Canadian ground transportation network and higher fuel costs passed through to customers as a component of pricing compared to Q2 2023, partially offset by a decline in AHG's US-based truckload businesses. Ground transportation revenue, excluding fuel, in the Company's Canadian network increased by approximately 7.1%.
Air freight forwarding revenue in Q2 2024 was $7.9 million, an increase of 3.1% compared to Q2 2023. The increase was attributable to approximately 4.2% higher weight shipped, partially offset by slightly lower fuel surcharge revenue. Dedicated and last mile delivery revenue was $18.3 million in Q2 2024, an increase of 12.2% compared to Q2 2023, reflecting continued organic growth and higher fuel surcharge revenue.
Cost of transportation and services was $80.9 million, or 50.1% of revenue, compared with $78.9 million, or 50.1% of revenue, for Q2 2023. The increase was in line with higher revenue, including higher fuel costs. In Q2 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 $26.6 million, or 16.5% of revenue, compared with $26.4 million, or 16.8% of revenue, for Q2 2023 and were generally in line with the increase in revenue for Q2 2024.
Operating income for Q2 2024 was $22.2 million, a decrease of 1.9% compared with $22.6 million for Q2 2023. The decrease in operating income was primarily attributable to the lower contributions from the Company's US-based truckload businesses and increased selling, general and administrative ("SG&A") expenses related to corporate development activities in the quarter.
Net income for Q2 2024 was $15.7 million, or $0.38 per share (diluted), compared with $15.7 million, or $0.37 per share (diluted) in Q2 2023. Higher segment net income before eliminations for the Company's specialized transportation segment was primarily attributable to organic growth in AHG's Canadian specialized transportation network, largely offset by lower contributions from Boyle Transportation and Skelton USA; and slightly higher segment net income from the Company's healthcare logistics operating segment primarily reflects increased revenue from its packaging solutions business, largely offset by increased SG&A expenses related to the implementation of a new warehouse management system for Accuristix.
Total comprehensive income was $18.1 million compared to $10.7 million for Q2 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 $2.3 million in Q2 2024 compared to a negative foreign currency translation adjustment of $5.0 million in Q2 2023.
Earnings before interest, taxes, depreciation and amortization ("EBITDA")¹ totaled $40.1 million in Q2 2024, an increase of 1.4% compared with $39.5 million for Q2 2023. The increase was due to the factors discussed above and primarily reflects organic growth in the Company's Canadian specialized transportation network, offset by lower contributions from AHG's US-based truckload businesses. EBITDA attributable to Boyle Transportation and Skelton USA was approximately $2.8 million lower in Q2 2024 compared to Q2 2023. EBITDA Margin¹ was 24.8% in Q2 2024 compared to 25.1% in Q2 2023. The slight decline was attributable to the reduction in US-based truckload margins.
Dividend
The Company paid a dividend (encompassing the period from April 1, 2024 to June 30, 2024) in the amount of $0.10 per subordinate voting share and multiple voting share on July 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 May 15, 2024, the Company commenced a substantial issuer bid ("SIB") under which the Company offered to purchase for cancellation up to 2,000,000 subordinate voting shares and multiple voting shares (on an as-converted basis) at a price of $45.00 per share for an aggregate purchase price not exceeding $90 million. The offer expired on June 19, 2024. Andlauer Management Group Inc. participated in the SIB and converted 1,032,045 multiple voting shares to subordinate voting shares, at their book value of $15.00 per share, which were taken up by the Company pursuant to the SIB on June 20, 2024. In aggregate, the Company purchased and cancelled 2,000,000 subordinate voting shares for a total consideration of $90 million.
On June 27, 2024, the Company announced that the TSX had approved its notice of intention to make another 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 12-month period commencing on July 2, 2024.
As at June 30, 2024, there were 18,704,628 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 Q2 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 Thursday, August 1, 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/4cfRcin 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.
To access a replay of the conference call, dial 416-764-8677 or (888) 390-0541, passcode: 571620 #. The replay will be available until August 8, 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 Q2 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.
