GCL Colabor Group Inc

Colabor Group Inc. (TSX: GCL) (“Colabor” or the “Company”) reports its results for the fourth quarter and fiscal year ended December 30, 2023.

Fourth Quarter 2023 Financial Highlights:

• Sales increased by 1.6% to $196.3 million, compared to $193.2 million for the corresponding period of 2022. In 2022, the quarter had an additional week. Excluding sales from the additional week of 2022, sales growth would have been 5.8%;
• Decrease of net earnings from continuing operations to $0.4 million compared to $1.7 million for the corresponding period of 2022;
• Adjusted EBITDA(1) increased by 18.2% to $11.7 million from $9.9 million for the corresponding period of 2022 and increase in adjusted EBITDA(1) margin to 5.9% of sales compared to 5.1% of sales during the corresponding period of 2022;
• Cash flow from operating activities increased to $8.9 million compared to $(0.7) million for the fourth quarter of 2022; and
• The Company has finalized the relocation of its head office and warehouse, which were located in Boucherville, to new facilities in Saint-Bruno-de-Montarville at the end of fiscal year 2023. The new industrial premises are more modern and better located to serve our two business segments, and will offer a stimulating work environment, ideal for the well-being of employees.

Event Since the End of the Quarter:

• Today, Colabor announces the acquisition of certain assets related to the foodservice sector from Beaudry & Cadrin Inc. (“Groupe Beaudry”), effective before the end of March 2024.

Fiscal 2023 Financial Highlights:

• Consolidated sales amounted to $659.1 million, up 14.8% compared to fiscal year 2022. Excluding sales from the additional week of 2022, the sales growth would have been 16.4%;
• Net earnings from continuing operations increased to $6.0 million compared to $4.6 million for fiscal year 2022;
• Adjusted EBITDA(1) increased to $37.6 million or 5.7% of sales compared to $29.1 million or 5.1% of sales for the fiscal year 2022;
• Cash flow generated by operating activities up to $28.9 million compared to $19.3 million in 2022; and
• Net debt(2) increased to $61.5 million, compared to $47.8 million as at December 31, 2022. The leverage ratio(3) is 2.4x as at December 30, 2023, compared to 2.3x as at December 31, 2022.

Table of Fourth Quarter and Fiscal 2023 Financial Highlights:

Financial highlights	16 weeks		17 weeks		52 weeks		53 weeks
(in thousands of dollars, except percentages, per share data and financial leverage ratio)	2023		2022		2023		2022
	$		$		$		$
Sales from continuing operations	196,320		193,246		659,129		574,071
Adjusted EBITDA(1)	11,652		9,855		37,554		29,068
Adjusted EBITDA(1) margin (%)	5.9		5.1		5.7		5.1
Net earnings from continuing operations	354		1,682		6,047		4,551
Net (loss) earnings	(101	)	1,263		5,592		4,065
Per share - basic and diluted ($)	—		0.01		0.05		0.04
Cash flow from operating activities	8,899		(663	)	28,943		19,299
Financial position					As at		As at
					December 30,		December 31,
					2023		2022
Net debt(2)					61,481		47,764
Financial leverage ratio(3)					2.4	x	2.3	x

(1)	Non-IFRS measure. Refer to the table Reconciliation of Net Earnings to adjusted EBITDA in MD&A section 6 "Non-IFRS Performance Measures". Adjusted EBITDA corresponds to net operating earnings before costs not related to current operations, depreciation and amortization and expenses for stock-based compensation plan.
(2)	Non-IFRS measure. Refer to MD&A section 6 "Non-IFRS Performance Measures". Net debt corresponds to bank indebtedness, current portion of long-term debt and long-term debt, net of cash.
(3)	Financial leverage ratio is an indicator of the Company's ability to service its long-term debt. It is defined as net debt / adjusted EBITDA less lease liability payments for the last four quarters. The corresponding figure for 2022 has been restated to reflect the new calculation method established for 2023. Refer to MD&A section 6 "Non-IFRS Performance Measures".

“I am very pleased with our fourth quarter results. After more than two years of dedicated efforts to improve our business and profitability, I can once again affirm that our strategic investments in organic and non-organic growth are paying off. On a comparable basis, our fourth quarter results show revenue growth of 5.8%, while our adjusted EBITDA(1) increased by 18.2%. Sustained demand for our differentiated offerings combined with strategic management of our product mix, has allowed us to offset the increase in labor costs, inputs and investments in our growth,” said Mr. Frenette, President and Chief Executive Officer of Colabor.

“During the fourth quarter, we also completed the relocation of our wholesale activities and our head office to our new strategic center in Saint-Bruno-de-Montarville. We are particularly proud that this project was completed on time and on budget, and we can now consider gradually starting our new distribution activities targeting Western Quebec during the second half of the current year,” added Mr. Frenette.

“Despite this significant investment, the sustained improvement in our profitability allowed us to generate significant cash flow throughout the year. This prudent management allowed us to end the year with a leverage ratio almost unchanged since the beginning of the year,” added Pierre Blanchette, Senior Vice-President and Chief Financial Officer.

Results for the Fourth Quarter of 2023

Consolidated sales for the fourth quarter were $196.3 million, an increase of 1.6% compared to $193.2 million during the corresponding quarter of 2022. In 2022, the quarter had an additional week. Excluding sales from the additional week of 2022, sales growth would have been 5.8%. Sales for the Distribution segment increased by 9.1%, as a result of volume increase, part of which is related to the conclusion of two supply contracts with chains, and the impact of inflation, mitigated by the additional week in the fourth quarter of 2022. Excluding sales from the additional week of 2022, the sales growth would have been 14.2%. Wholesale segment sales decline of 19.0% is explained by a supply optimization project between our warehouses reducing our internal sales to the Distribution segment, as well as an external volume decrease caused, among other things, by the cessation of operations during the relocation of the warehouse to Saint-Bruno-de-Montarville, as well at the impact of the additional week in the fourth quarter of 2022, mitigated by the impact of inflation.

Adjusted EBITDA(1) from continuing activities was $11.7 million or 5.9% of sales from continuing activities compared to $9.9 million or 5.1% during 2022. This variation is mainly the result of increased sales and gross margin from a better mix of products and customers.

Net earnings from continuing operations for the fourth quarter were $0.4 million, down from $1.7 million for the corresponding quarter of the previous year, resulting essentially from higher depreciation and amortization expenses, costs not related to current operations related to our relocation of $0.8 million, and financial expenses, mitigated by an increase of adjusted EBITDA(1) as explained previously and lower income taxes expenses.

Net loss for the fourth quarter was $0.1 million, compared to net earnings of $1.3 million for the corresponding period of 2022 and are primarily explained by the facts described above and a net loss from discontinued operations of $0.5 million related to an actuarial loss of the defined benefit pension plan.

Results for Fiscal Year 2023

Consolidated cumulative sales were $659.1 million compared to $574.1 million in the corresponding period of 2022. The Distribution segment grew by 21.8% and the Wholesale segment declined by 3.3%.

Adjusted EBITDA(1) from continuing operations was $37.6 million or 5.7% of sales from continuing operations compared to $29.1 million or 5.1% in 2022. These variations are mainly explained by the increased sales and gross margin from a better mix of products and customers.

Net earnings from continuing operations were $6.0 million, up from $4.6 million in the previous fiscal year. The variation is explained by an increase of the adjusted EBITDA(1) as explained previously, combined with a decrease in costs not related to current operations, mitigated by higher depreciation and amortization, financial and income taxes expenses.

Net earnings were $5.6 million, up from $4.1 million in the previous fiscal year, as explained previously.

Cash Flow and Financial Position

Cash flows from operating activities were $28.9 million for fiscal year 2023 compared to $19.3 million for the corresponding period of 2022. This increase is mainly due to lower utilization of working capital(4), and by higher adjusted EBITDA(1). The lower utilization of working capital(4) is explained by a higher collection of receivables in 2023 related to the increase of sales and timing of inventories purchases and supplier payments.

As at December 30, 2023, the Company's working capital(4) was $54.0 million, up from $48.8 million at the end of the fiscal 2022. This increase is related to sales growth during 2023.

As at December 30, 2023, the Company's net debt(2) was up to $61.5 million, compared to $47.8 million at the end of the fiscal year 2022. This increase is a result of the additional use of the credit facility for $12.0 million in connection with the equipment purchases related to our new warehouse.

Event Since the End of the Quarter

The Company is pleased to announce today the completion of a contract for the acquisition of certain assets from Groupe Beaudry, the transaction will be effective before the end of March 2024.

The acquisition includes assets related to foodservice activities (restaurants, hotels, institutions and others for on-site consumption by customers) of Groupe Beaudry in Quebec, and the related inventories. These activities represent approximately $15.0 million in annual revenues and will be served mainly from our facility located in Saint-Nicolas. Groupe Beaudry has been a distributor since 1899 and a business partner of Colabor for many years, being a customer of Colabor’s wholesale segment. The acquisition of this new clientele will allow the Company to consolidate its presence in Eastern Quebec.

“We are pleased with this strategic acquisition which will allow us to welcome new customers to Colabor,” said Louis Frenette, President and CEO of Colabor. “This customer acquisition fits perfectly into our growth plan for our Distribution segment across Quebec. Our new customers will be able to rely on an exceptional service and a dedicated team to serve them.”

Outlook

“We enter 2024 in an excellent position to weather macroeconomic changes. Our renewed offering focused on local sourcing and an approach focused on our customers sets us apart from the competition. Efforts to diversify our clientele into institutional and retail niches have also served us well since the pandemic. We are now in the second part of our five-year strategic plan and intend to act on several fronts to continue to improve our productivity and operational efficiency. We will also pursue a strategy of prudent allocation of our cash flows by prioritizing debt repayment, while remaining on the lookout for investment opportunities that will maximize shareholder returns,” concluded Louis Frenette.

Non-IFRS Performance Measures

The information provided in this release includes non-IFRS performance measures, notably adjusted earnings before financial expenses, depreciation and amortization and income taxes ("Adjusted EBITDA")(1). As these concepts are not defined by IFRS, they may not be comparable to those of other companies. Refer to Section 6 "Non-IFRS Performance Measures" in the Management's Discussion and Analysis.

Reconciliation of Net Earnings to Adjusted EBITDA(1)	16 weeks		17 weeks		52 weeks		53 weeks
(in thousands of dollars)	2023		2022		2023		2022
	$		$		$		$
Net earnings from continuing operations	354		1,682		6,047		4,551
Income taxes	190		686		2,299		1,826
Financial expenses	2,729		1,750		6,625		4,780
Operating earnings	3,273		4,118		14,971		11,157
Expenses for stock-based compensation plan	79		162		291		475
Costs not related to current operations	787		107		937		1,354
Depreciation and amortization	7,513		5,468		21,355		16,082
Adjusted EBITDA(1)	11,652		9,855		37,554		29,068

Additional Information

The Management's Discussion and Analysis and the consolidated financial statements of the Company are available on SEDAR+ (www.sedarplus.ca). Additional information, including the annual information form, about Colabor Group Inc. can also be found on SEDAR+ and on the Company’s website at www.colabor.com.

Forward-Looking Statements

This press release contains certain forward-looking statements as defined under applicable securities law. Forward-looking information may relate to Colabor's future outlook and anticipated events, business, operations, financial performance, financial condition or results and, in some cases, can be identified by terminology such as "may"; "will"; "should"; "expect"; "plan"; "anticipate"; "believe"; "intend"; "estimate"; "predict"; "potential"; "continue"; "foresee"; "ensure" or other similar expressions concerning matters that are not historical facts. Particularly, statements regarding the Company’s financial guidelines, future operating results and economic performance, objectives and strategies are forward-looking statements. These statements are based on certain factors and assumptions including expected growth, results of operations, performance and business prospects and opportunities, which Colabor believes are reasonable as of the current date. Refer in particular to section 2.3 "Development Strategies and Outlook" of the Company's MD&A. While Management considers these assumptions to be reasonable based on information currently available to the Company, they may prove to be incorrect. Forward-looking information is also subject to certain factors, including risks and uncertainties that could cause actual results to differ materially from what Colabor currently expects. For more exhaustive information on these risks and uncertainties, the reader should refer to section 9 "Risks and Uncertainties" of the Company's MD&A. These factors, which include the risks related to the pandemic of Covid-19 and the different underlying variants ("pandemic") as well as the possible impacts on consumers and the economy, are not intended to represent a complete list of the factors that could affect Colabor and future events and results may vary significantly from what Management currently foresees. The reader should not place undue importance on forward-looking information contained in this press release, information representing Colabor's expectations as of the date of this press release (or as of the date they are otherwise stated to be made), which are subject to change after such date. While Management may elect to do so, the Company is under no obligation (and expressly disclaims any such obligation) and does not undertake to update or alter this information at any particular time, whether as a result of new information, future events or otherwise, except as required by law.

Conference Call

Colabor will hold a conference call to discuss these results on Friday, March 1st, 2024, beginning at 9:30 a.m. Eastern time. Interested parties can join the call by dialing 1-888-390-0549 (from anywhere in North America) or 1-416-764-8682. If you are unable to participate, you can listen to a recording by dialing 1-888-390-0541 or 1-416-764-8677 and entering the code 043579# on your telephone keypad. The recording will be available from 1:30 p.m. on Friday, March 1st, 2024, until 11:59 p.m. on March 8, 2024. Note that the recording will be available offline on our website at the following address: https://colabor.com/en/investisseurs-en/evenements-et-presentations/

You can also use the QuickConnect link: https://emportal.ink/3TXWysv. This new link allows any participant to access the conference call by clicking on the URL link and enter their name and phone number.

About Colabor

Colabor is a distributor and wholesaler of food and related products serving the hotel, restaurant and institutional markets or "HRI" in Quebec and in the Atlantic provinces, as well as the retail market. Within its two operating segments, Colabor offers specialty food products such as meat, fresh fish and seafood, as well as food and related products through its Broadline activities.

Further information:

Pierre Blanchette Senior Vice President and Chief Financial Officer Colabor Group Inc Tel.: 450-449-4911 extension 1308 investors@colabor.com

Danielle Ste-Marie Ste-Marie Strategy and Communications Inc. Investor Relations Tel.: 450-449-0026 extension 1180

(4)	Working capital is a non-IFRS performance measure. Working capital is an indicator of the Company's ability to hedge its current liabilities with its current assets. Refer to MD&A section 3.2 "Financial Position" for detailed calculation.