Montréal, Québec, August 1, 2023 – LOGISTEC Corporation (“LOGISTEC”) [TSX: LGT.A and LGT.B] (the “Company”), a marine and environmental services provider, today announced its financial results for the three-month and six-month periods ended June 24, 2023. Currently in the process of a strategic review, LOGISTEC has reported strong revenue for the second quarter of the year.
Highlights From the Second Quarter of 2023
- Consolidated revenue totalled $244.9 million, up $25.9 million or 11.9%;
- Adjusted EBITDA (1) closed at $37.6 million, up $3.4 million;
- ALTRA | SANEXEN awarded first-of-its-kind contract by Waste Connections to combat PFAS;
- Successful implementation of Phase 2 of three of our enterprise resource planning (“ERP”) project;
- LOGISTEC completed the acquisition of Fednav’s terminal division (“FMT”).
Highlights From the First Half of 2023
- Consolidated revenue totalled $403.8 million, up $43.4 million or 12.1%;
- Adjusted EBITDA (1) closed at $47.6 million, up $5.6 million;
- As of June 24, 2023, environmental services’ backlog stood at $252.2 million.
“After years of record performances and successes, thanks to our people and our strong values, I’m happy to see that the LOGISTEC team was again able to deliver good operational results including a record adjusted EBITDA (1) this quarter,” said Madeleine Paquin, President and CEO, LOGISTEC. “In May, we had the great honour of receiving the 2023 Canada’s Best Managed Companies Award. I’m very proud of our people who were recognized for their resilience, agility, and ingenuity.”
“We have once again set a record for revenue, this time for the second quarter of the year,” added Carl Delisle, Chief Financial Officer and Treasurer, LOGISTEC. “Our marine services segment continued to perform, with special mentions to FMT, our latest business combination, and continued improvements in our bulk and Gulf Stream Marine, Inc. (‘’GSM’’) businesses. Our environmental business was affected by delayed starts in our ALTRA water renewal technology in Canada, but we should easily make up for these delays in the coming quarters. Unfortunately, our profitability was severely impacted by substantial costs associated to our projects and strategic review.”
Results of the Period
During the second quarter of 2023, consolidated revenue totalled $244.9 million, an increase of $25.9 million or 11.9% over the same period in 2022. The overall increase was mainly attributable to the acquisition of FMT, while our core markets remained robust, both in Canada and the USA. The scale and reach of LOGISTEC’s activities combined with the deep expertise of our teams led to strong operational results, particularly in our marine business. Excluding the additional costs this quarter related to the ongoing strategic review and our latest acquisition, the Company achieved a good quarter.
- Adjusted EBITDA is a non-IFRS measure, please refer to the non-IFRS measure section.
Marine Services
Revenue from the marine services segment reached $175.5 million in the second quarter of 2023, up $36.7 million or 26.4% compared with the same period in 2022. The growth was mainly attributable to the Company’s latest acquisition, FMT, which contributed $35.1 million in the second quarter of 2023. FMT performed well, especially its Hamilton (ON) terminal and there are significant prospective growth opportunities for the 11 strategically located terminals added in LOGISTEC’s network. Our traditional marine services segment continued to deliver a good performance. Our bulk activities were strong, despite the impact of forest fires in Québec, which caused rail challenges in Sept-Îles. We were also pleased with the results of our investments in Gulf Stream Marine, Inc.’s Brownsville (TX) terminal, where we saw increased volumes from one of our key customers in the southern USA. These largely made up for lower container volumes and some slowdown in general cargoes.
Environmental Services
Revenue from the environmental services segment reached $69.5 million, down $10.7 million or 13.3% from the same period in 2022. Although our teams delivered on multiple projects in the field, these benefits were impacted by contract project delays, namely in our renewal of underground water mains division in Canada, somewhat offset by stronger activity in the USA. The Rayrock mine remediation project in Northern Canada has been delayed due to permitting issues, but, after six months, our revenues are close to expectations. We are now entering into our busy season and the overall book of business, at $252.2 million, remains strong until the end of the year.
FER-PAL Construction Ltd. (“FER-PAL”)’s revenue and profit were below last year for the same quarter because of delayed startups. The backlog is strong, and we expect to be very busy until the end of the season, allowing us to end the year better than last year. In July 2023, the Company finalized the acquisition of the remaining interest in FER-PAL, a key strategic player in the deployment of our ALTRA water main renewal technology. This acquisition will strengthen the optimization of our environmental services segment and will lead to greater opportunities in the water industry for the future. American Process Group also performed well in the last quarter, with solid results for projects in both Canada and the United States.
In April 2023, Waste Connections awarded ALTRA | SANEXEN the first-of-its-kind continuous full-scale perfluoroalkyl and polyfluoroalkyl substances (“PFAS”) remediation solution for landfill and industrial waste management. The Company will provide and operate its modular units at Waste Connections’ landfills in Rosemount and Rich Valley (MN), for the next ten years. This agreement provides opportunities for our ALTRA PFAS Solution, and has already resulted in additional pilot projects and agreement discussions in the USA.
During this quarter, our environmental team received another prestigious award, the 2023 New Technology Award from Water Canada for our ALTRA PFAS Solution, highlighting once again our excellence in the development of innovative technologies. The proprietary foam fractionation technology allows for the most effective removal of highly concentrated PFAS streams from water.
Outlook
Our team of experts, financial strength, wide-reaching and diverse North American network of terminals, and innovative environmental technologies are the pillars on which we will continue to build our business.
Our marine services segment is doing well, and we are foreseeing a positive second half of the year. Our latest acquisition, FMT, is performing as expected and has great prospects for the future. Our cargo handling activities are driven by solid demand, which is particularly strong in the U.S. Gulf Coast.
For the environmental side of the business, the execution of the remaining backlog should allow us to make up for the slow start and finish the year with a much better performance than in 2022. We have a solid backlog and are confident in our team’s ability to deliver on large projects this year. Our first continuous full-scale PFAS remediation contract should start in the USA in the late fall, and this holds great promise for future additional contracts.
We were happy to successfully complete a key milestone in our ERP project. Phase 2 out of three has been completed, allowing the successful go-live of SANEXEN Environmental Services Inc.’s financial and project management modules. This fall, we will launch our final phase, leading to our marine business’ go-live in 2024. We take this opportunity to thank our ERP extended team for their tireless work to bring this project to conclusion.
We incurred additional costs this quarter related to the ongoing strategic review, our latest acquisition, and the ERP project. These additional non-operational costs of $6.9 million, combined with the higher finance expense materially impacted the profitability, but excluding these elements, our results are better than last year, and we can expect satisfactory results for the remainder of 2023.
Dividends
On August 1, 2023, the Board of Directors declared a dividend of $0.11782 per Class A Common Share and $0.12959 per Class B Subordinate Voting Share, for a total consideration of $1.6 million. These dividends will be paid on October 6, 2023, to shareholders of record as of September 22, 2023.
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 60 ports and 90 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 shipowners and operators serving the Canadian market. Furthermore, the Company operates in the environmental industry where it provides services to industrial, municipal and other governmental customers for the renewal of underground water mains, dredging, dewatering, contaminated soils and materials management, site remediation, risk assessment, and manufacturing of fluid transportation products.
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.
Non-IFRS measure
Adjusted earnings before interest expense, income taxes, depreciation and amortization expense (“adjusted EBITDA”) is not defined by IFRS and cannot be formally presented in financial statements. The definition of adjusted EBITDA excludes the configuration and customization costs related to the implementation of an Enterprise Resource Planning (“ERP”) system, and since the second quarter of 2023, the Company excluded professional fees incurred in a business combination and analyzing other business development opportunities (“transaction costs”). Please refer to the strategic review process section of the management’s discussion and analysis and Note 4 of the notes to the Q2 2023 condensed consolidated interim financial statements for further information on the nature of the transaction costs incurred in the first half of 2023. The definition of adjusted EBITDA used by the Company may differ from those used by other companies. The Company excludes the configuration and customization costs related to the implementation of an ERP system and transaction costs because they affect the comparability of our financial results and could potentially distort the analysis of trends in business performance. Excluding these items does not imply they are non-recurring. Even though adjusted EBITDA is a non-IFRS measure, it is used by managers, analysts, investors, and other financial stakeholders to analyze and assess the Company’s performance and management from a financial and operational standpoint. The definition of adjusted EBITDA has been applied retroactively and comparative figures have been amended accordingly to comply to the current year definition.
The following table provides a reconciliation of profit for the period to adjusted EBITDA:
|
|
$
|
2021
|
|
2021
|
|
|
|
For the three months ended |
For the six months ended |
|||
|
|
June 24, 2023 |
June 25, 2022 |
June 24, 2023 $ |
June 25, 2022 |
|
|
Profit (loss) for the period |
3,271 |
13,150 |
(5,666) |
7,252 |
|
|
PLUS: |
|
|
|
|
|
|
Depreciation and amortization expense |
17,032 |
14,037 |
31,486 |
26,834 |
|
|
Net finance expense |
7,963 |
3,105 |
12,390 |
6,934 |
|
|
Income taxes |
2,457 |
2,049 |
(750) |
(361) |
|
|
Configuration and customization costs in a cloud computing arrangement |
1,897 |
1,881 |
3,033 |
2,364 |
|
|
Transaction costs |
5,029 |
— |
7,124 |
— |
|
|
Adjusted EBITDA |
37,649 |
34,222 |
47,617 |
42,023 |
|
|
|
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FORWARD-LOOKING STATEMENTS
For the purpose of informing shareholders and potential investors about the Company’s prospects, sections of this document may contain forward-looking statements, within the meaning of securities legislation, about the Company’s activities, performance and financial position and, in particular, hopes for the success of the Company’s efforts in the development and growth of its business. These forward-looking statements express, as of the date of this document, the estimates, predictions, projections, expectations, or opinions of the Company about future events or results. Although the Company believes that the expectations produced by these forward-looking statements are founded on valid and reasonable bases and assumptions, these forward-looking statements are inherently subject to important uncertainties and contingencies, many of which are beyond the Company’s control, such that the Company’s performance may differ significantly from the predicted performance expressed or presented in such forward-looking statements. The important risks and uncertainties that may cause the actual results and future events to differ significantly from the expectations currently expressed are examined under business risks in the Company’s 2022 annual report and include (but are not limited to) the performances of domestic and international economies and their effect on shipping volumes, weather conditions, labour relations, pricing, and competitors’ marketing activities. The reader of this document is thus cautioned not to place undue reliance on these forward-looking statements. The Company undertakes no obligation to update or revise these forward-looking statements, except as required by law.