GCL Colabor Group Inc

Colabor Group Inc. (TSX: GCL) (“Colabor” or the “Company”) reports its results for the third quarter ended September 9, 2023.

Third Quarter 2023 Financial Highlights:

• Sales increased by 13.1% to $164.7 million, compared to $145.7 million for the corresponding period of 2022;
• Net earnings from continuing operations were $3.5 million compared to $2.8 million for the corresponding period of 2022; and
• Adjusted EBITDA(1) increased by 24.1% to $11.0 million from $8.9 million for the corresponding period of 2022 with an adjusted EBITDA(1) margin to 6.7% of sales compared to 6.1% of sales during the corresponding period of 2022.

Table of Third Quarter 2023 Financial Highlights:

Financial highlights	12 weeks				36 weeks
(in thousands of dollars, except percentages, per share data and financial leverage ratio)	2023		2022		2023		2022
	$		$		$		$
Sales from continuing operations	164,700		145,670		462,809		380,825
Adjusted EBITDA(1)	11,034		8,894		25,902		19,213
Adjusted EBITDA(1) margin (%)	6.7		6.1		5.6		5.0
Net earnings from continuing operations	3,539		2,832		5,693		2,869
Net earnings	3,539		2,832		5,693		2,802
Per share - basic and diluted ($)	0.03		0.03		0.06		0.03
Cash flow from operating activities	7,969		8,757		20,044		19,962
Financial position					As at		As at
					September 9,		December 31,
					2023		2022
Net debt(2)					53,364		47,764
Financial leverage ratio(3)					2.2x		2.3x

(1) Non-IFRS measure. Refer to the table Reconciliation of Net Earnings to adjusted EBITDA in MD&A section 5 "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 5 "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 5 "Non-IFRS Performance Measures".(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.

“I am very pleased with our third quarter results. After more than two years of dedicated efforts to improve our business and profitability, I can once again reaffirm that our strategic investments in organic and non-organic growth are paying off. Our third quarter results show revenue growth of 13.1%, while our adjusted EBITDA(1) increased by 24.1%. 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 quarter, we also invested $9.1 million in fixed assets, mainly for the preparation of our new site located in Saint-Bruno-de-Montarville, while maintaining our debt ratio,” added Pierre Blanchette, Senior Vice-President and Chief Financial Officer.

Results for the Third Quarter of 2023

Consolidated sales for the third quarter were $164.7 million, an increase of 13.1% compared to $145.7 million during the corresponding quarter of 2022. Sales for the Distribution segment increased by 20.4%, 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. Wholesale segment sales decline of 8.6% is mainly explained by a supply optimization project between our warehouses reducing our internal sales to the Distribution segment, as well as an external volume decrease, mitigated by the impact of inflation.

Adjusted EBITDA(1) from continuing activities was $11.0 million or 6.7% of sales from continuing activities compared to $8.9 million or 6.1% during 2022. This change is mainly the result of increased sales and gross margin from a better mix of products and customers.

Net earnings from continuing operations and net earnings for the third quarter were $3.5 million, up from $2.8 million for the corresponding quarter of the previous year, resulting essentially from an increased adjusted EBITDA(1), mitigated by higher depreciation and amortization, financial and income taxes expenses.

Results for the 36-week period of 2023

Consolidated sales for the 36-week period were $462.8 million compared to $380.8 million in the corresponding period of 2022. The Distribution segment grew by 28.7% and the Wholesale segment grew by 3.4%. Adjusted EBITDA(1) from continuing operations was $25.9 million or 5.6% of sales from continuing operations compared to $19.2 million or 5.0% in 2022. Net earnings from continuing operations were $5.7 million, up from $2.9 million in the 36-week period of last year.

Cash Flow and Financial Position

Cash flows from operating activities were $8.0 million for the third quarter compared to $8.8 million for the corresponding period of 2022. This decrease is mainly due to higher utilization of working capital(4), mitigated by higher adjusted EBITDA(1). The higher utilization of working capital(4) is explained by higher supplier payments in 2023 related to higher inventories. Cash flows from operating activities were $20.0 million for the 36-week period of 2023 and for the corresponding period of 2022. The higher adjusted EBITDA(1) is mitigated by a higher utilization of working capital(4). The higher utilization of working capital(4) is explained by the receipt of the non-recurring gain in 2022 of $4.0 million, which was receivable as at December 25, 2021, and the increase in inventories related to sales growth.

As at September 9, 2023, the Company's working capital(4) was $52.2 million, up from $48.8 million at the end of the fiscal 2022. This increase is related to sales growth during 2023.

As at September 9, 2023, the Company's net debt(2) was up to $53.4 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 $6.5 million in connection with the equipment purchases related to our new warehouse.

Outlook

“We are now entering the second phase of our 5-year strategic plan in a very good position. The preparation of our new site located at Saint-Bruno-de-Montarville is progressing at high speed and we are committed to ensuring a smooth transition of our operations. As planned, the relocation will start in the fourth quarter of 2023. This highly strategic project will allow us to efficiently reach nearly 90% of the Quebec market and to begin our distribution activities in Western Quebec in the first half of 2024. I am very excited about the potential of this new facility, which will provide a stimulating and eco-responsible work environment for our employees and more effectively serve our growing clientele in the west of the province,” commented 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 5 "Non-IFRS Performance Measures" in the Management's Discussion and Analysis.

Reconciliation of Net Earnings to Adjusted EBITDA(1)	12 weeks				36 weeks
(in thousands of dollars)	2023		2022		2023		2022
	$		$		$		$
Net earnings from continuing operations	3,539		2,832		5,693		2,869
Income taxes	1,362		1,097		2,109		1,140
Financial expenses	1,271		1,080		3,896		3,030
Operating earnings	6,172		5,009		11,698		7,039
Expenses for stock-based compensation plan	63		111		212		313
Costs not related to current operations	99		102		150		1,247
Depreciation and amortization	4,700		3,672		13,842		10,614
Adjusted EBITDA(1)	11,034		8,894		25,902		19,213

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 2.2 "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 6 "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 Thursday, October 19, 2023, 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 082333# on your telephone keypad. The recording will be available from 1:30 p.m. on Thursday, October 19, 2023, until 11:59 p.m. on October 26, 2023. 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/3PwNtTr. 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 BlanchetteSenior Vice President and Chief Financial OfficerColabor Group IncTel.: 450-449-4911 extension 1308investors@colabor.com

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