Montréal, Québec – LOGISTEC Corporation [TSX: LGT.A and LGT.B] (the “Company”), a marine and environmental services provider, today announced its financial results for the three months and six months periods ended June 27, 2020.
Highlights from the second quarter of 2020
- Consolidated revenue reached $123.6 million, down $32.6 million or 20.9%;
- Adjusted EBITDA (1) closed at $19.9 million, down $1.8 million;
- Total diluted earnings per share of $0.35, down $0.10;
- Acquisition of two additional terminals at the Port of Houston in Texas and the Port of Pascagoula in Mississippi for a total purchase price of $16.5 million;
- $1.7 million investment in cargo handling equipment at the Port of Corner Brook in Newfoundland and Labrador.
Highlights from the first half of 2020
- Consolidated revenue reached $233.0 million, down $37.9 million or 14.0%;
- Adjusted EBITDA (1) closed at $27.4 million, up $4.5 million;
- Total basic loss per share closed at $0.06.
Results of the period
During the second quarter of 2020, consolidated revenue totalled $123.6 million, a decrease of $32.6 million or 20.9% over the same period in 2019. Revenue from the marine services segment was lower at $81.4 million compared to $94.5 million in the corresponding period of 2019. Cargo handling activities are deemed essential services by the government authorities in Canada and the United States. As such, our terminal operations across our North American network remained functional under our business continuity plan; however, we noted a lower volume of trade activities as a result of the closure of economies around the world. Revenue from the environmental services segment amounted to $42.2 million, a decrease of $19.5 million or 31.6% over the second quarter of 2019. COVID-19 led to 10 weeks of delay in starting up our environmental projects, which proved very costly to our operations. Since the end of May 2020, we have resumed all businesses in this segment, and we are now operating under strict distancing and sanitation protocols.
The adjusted EBITDA (1) for the quarter closed at $19.9 million, a decrease of $1.8 million or 8.3% over the comparative period. The reduction is mainly attributable to lower revenue following the temporary halt measures on some of our lines of service imposed by government authorities, partly offset by a $11.0 million wage subsidy from the Canada Emergency Wage Subsidy program.
Overall, LOGISTEC Corporation reported a profit attributable to owners of the Company of $4.6 million in the second quarter of 2020, down $1.3 million from the $5.9 million recorded in the corresponding period last year. This translated into total diluted earnings per share of $0.35, of which $0.34 was attributable to Class A shares and $0.37 to Class B shares.
Despite the challenges associated with COVID-19, we have kept our focus on growth opportunities, both organically and through acquisitions, with four additional terminals added this quarter. The acquisition of Care terminal at the Port of Houston and the Port of Pascagoula has further expanded our footprint and anchored Gulf Stream Marine, Inc. as the terminal operator in three gulf coast states. Our cargo handling team also started to operate at the port of Kitimat, British Columbia, the largest private port in Canada. Finally, the investment in the intermodal terminal in Corner Brook, Newfoundland and Labrador, is an excellent example of how we have kept our focus on our plan and we were able to see this investment, which was started before the pandemic arrived, through to its completion.
COVID-19
During March 2020, the COVID-19 outbreak was declared a pandemic by the World Health Organization. The situation is constantly evolving, and the measures put in place have numerous economic repercussions at the global and national levels. These measures, which include travel bans, solitary confinement or quarantine, whether voluntary or not, and social distancing, have caused significant disruption in the United States and Canada, where the Company operates.
LOGISTEC rolled out its business continuity plan for its operations that are deemed essential services by the government authorities in Canada and the United States. More precisely, the Company’s marine operations are considered essential services and, as such, our terminal operations across our North American network remained open and functional. In addition, our manufacturing of woven hoses, which is essential in providing communities with drinking water and fighting forest fires, remained operational.
On the environmental services side, we are, as every year, affected by the seasonality of our operations and most activities cannot be performed in the winter season. This includes site remediation and rehabilitation of water mains. COVID-19 has nonetheless affected some of these activities, causing significant delays in our projects. However, since the end of May 2020, we have resumed all businesses in this segment, and we are now operating under strict distancing and sanitation protocols.
As at June 27, 2020, the Company believed that it qualified to receive the Canada Emergency Wage Subsidy and that there was a reasonable assurance that the amount would be received from the Canadian federal government in connection with the COVID-19 pandemic. The Company recognized a $11.0 million wage subsidy receivable against the salary expense qualified for that subsidy under employee benefits expense in the condensed consolidated interim statements of earnings for the three-month and six-month periods ended June 27, 2020.
Outlook
“The outlook for the remainder of the year is expected to be reasonably good, given the challenges associated with COVID-19. In our marine services segment, we anticipate volumes to remain somewhat depressed due to the economic slowdown that followed the measures put in place by governments to suppress the virus. Furthermore, our outlook for cargo handling may also be impacted by challenging labour negotiations at the Port of Montréal. We have been without an agreement since early 2019 and discussions have proven difficult in the last weeks, causing work stoppages. Should these situations stabilize, volumes are likely to gradually come back to normal levels in a foreseeable future. Our environmental services segment will also be impacted to a certain degree as some projects, particularly in the USA, are being postponed into the new year. Having said this, we still have a strong order book to complete before the end of the year, and unless the pandemic interferes with our activities, we should have a busy second half of 2020,” indicated Madeleine Paquin, President and Chief Executive Officer of LOGISTEC Corporation.
Dividends
On August 6, 2020, the Board of Directors declared a dividend of $0.09350 per Class A Common Share and $0.10285 per Class B Subordinate Voting Share, for a total consideration of $1.3 million. These dividends will be paid on October 9, 2020 to shareholders of record as of September 25, 2020.
About LOGISTEC
LOGISTEC Corporation is based in Montréal (QC) and provides specialized services to the marine community and industrial companies in the areas of bulk, break-bulk and container cargo handling in 36 ports and 63 terminals located in North America. LOGISTEC also offers marine transportation services geared primarily to the Arctic coastal trade as well as marine agency services to foreign shipowners and operators serving the Canadian market. Furthermore, the Company operates in the environmental industri where it provides services to industrial, municipal and other governmental customers for the rehabilitation of underground water mains, soils and materials management, site remediation, risk assessment, and manufacturing of woven hoses.
The Company has been profitable and has paid regular dividends since becoming public and payments have grown steadily over the years. A public company since 1969, LOGISTEC’s shares are listed on the Toronto Stock Exchange under the ticker symbols LGT.A and LGT.B. More information can be obtained on the Company’s website at www.logistec.com.