LOGISTEC Announces Its Results of the Third Quarter of 2020

November 4, 2020

By Logistec Corporation

Caption FF

Description FF

MONTRÉAL, Nov. 4, 2020 /CNW Telbec/ – LOGISTEC Corporation (TSX: LGT.A) (TSX: LGT.B) (the “Company”), a marine and environmental services provider, today announced its financial results for the nine months period ended September 26, 2020.

Highlights from the third quarter of 2020

Consolidated revenue reached $191.9 million, down $3.4 million or 1.8%;
Adjusted EBITDA ⁽¹⁾ closed at $41.7 million, up $5.7 million;
Total diluted earnings per share of $1.56, up 17.3%;
Launch of ALTRA, LOGISTEC’s field-proven innovation in water technology solutions.

Highlights from the first nine-month period of 2020

Consolidated revenue reached $424.9 million, down $41.3 million or 8.9%;
Adjusted EBITDA ⁽¹⁾ closed at $69.1 million, up $10.2 million;
Total diluted earnings per share closed at $1.50, up 36.4%.

Results of the period

During the third quarter of 2020, consolidated revenue totalled $191.9 million, a decrease of $3.4 million or 1.8% over the same period in 2019. Revenue from the marine services segment was lower at $79.3 million compared to $100.9 million in the corresponding period of 2019. As we anticipated, volumes were depressed, as global trade has slowed down following the measures put in place by governments to suppress the COVID-19 virus. In addition, volumes in the United States further suffered from an extremely active hurricane season that disrupted some of our terminals’ operations. Revenue from the environmental services segment amounted to $112.6 million, an increase of $18.2 million or 19.3% over the third quarter of 2019. Since the end of May 2020, we have resumed all businesses in this segment, and we are now operating at full capacity to execute the strong order book we have.

The adjusted EBITDA ⁽¹⁾ for the quarter closed at $41.7 million, an increase of $5.7 million or 15.8% over the comparative period. The increase stems mainly from the strong performance of our environmental services segment and from a $1.7 million wage subsidy from the Canada Emergency Wage Subsidy program.

Overall, LOGISTEC Corporation reported a profit attributable to owners of the Company of $20.4 million in the third quarter of 2020, up $3.0 million from the $17.4 million recorded in the corresponding period last year. This translated into total diluted earnings per share of $1.56, of which $1.50 was attributable to Class A shares and $1.65 to Class B shares

(1)

Adjusted EBITDA is a non-IFRS measure, please refer to the non-IFRS measure section.

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 renewal 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 September 26, 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. For the three-month and the nine-month periods ended September 26, 2020, the Company recognized a wage subsidy of $1.7 million and $12.7 million, respectively, against the salary expense qualifying for that subsidy under employee benefits expense in the condensed consolidated interim statements of earnings.

Outlook

“We view the outlook for the remainder of the year with cautious optimism considering the unprecedented impact of this pandemic. In our marine services segment, we anticipate volumes to remain somewhat depressed due to the impact of the second wave of the COVID-19 virus on the economy around the world. In our environmental services segment, we foresee a reasonable quarter as we ramp down our activities before the end of the year. In the long run, with the launch of ALTRA, our field-proven innovation in water technology solutions, we believe that it will consolidate our unique water solutions under one brand and strengthen our product offering to allow us to gain market share in key markets,” indicated Madeleine Paquin, President and Chief Executive Officer of LOGISTEC Corporation.

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 38 ports and 65 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 industry where it provides services to industrial, municipal and other governmental customers for the renewal 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.

Non-IFRS measure

In this press release, the Company uses a measure that is not in accordance with IFRS. Adjusted earnings before interest expense, income taxes, depreciation and amortization expense (“adjusted EBITDA”) is not defined by IFRS and cannot be formally presented in the consolidated financial statements. The definition of adjusted EBITDA used by the Company may differ from those used by other companies. 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. Refer to Company’s management’s discussion and analysis of the period for further information and its Non-IFRS Measures section for the definition of this indicator and the reconciliation to profit (loss) for the period.

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 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.

Additional information relating to our Company can be found on SEDAR’s website at www.sedar.com and on LOGISTEC’s website at www.logistec.com

Q3 2020 CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(unaudited)

Condensed Consolidated Interim Statements of Earnings

(in thousands of Canadian dollars, except for per share amounts and number of shares)

	For the three months ended		For the nine months ended
	September 26, 2020	September 28, 2019	September 26, 2020	September 28, 2019
	$	$	$	$

Revenue	191,847	195,293	424,873	466,216

Employee benefits expense	(89,548)	(95,261)	(201,264)	(232,353)
Equipment and supplies expense	(45,153)	(50,756)	(109,291)	(124,374)
Operating expense	(10,588)	(11,290)	(31,191)	(30,878)
Other expenses	(6,828)	(7,059)	(19,319)	(23,736)
Depreciation and amortization expense	(11,602)	(10,497)	(33,601)	(32,059)
Share of profit of equity accounted investments	3,527	4,162	4,071	5,654
Other (losses) gains	(1,537)	951	1,244	(1,577)
Operating profit	30,118	25,543	35,522	26,893

Finance expense	(3,060)	(2,733)	(9,031)	(8,374)
Finance income	146	71	435	356
Profit before income taxes	27,204	22,881	26,926	18,875

Income taxes	(6,740)	(5,403)	(7,077)	(4,222)
Profit for the period	20,464	17,478	19,849	14,653

Profit (loss) attributable to:

Owners of the Company	20,465	17,393	19,634	14,430

Non-controlling interest	(1)	85	215	223
Profit for the period	20,464	17,478	19,849	14,653


Basic earnings per Class A Common Share ⁽¹⁾	1.52	1.31	1.46	1.09
Basic earnings per Class B Subordinate Voting Share ⁽²⁾	1.68	1.44	1.61	1.19

Diluted earnings per Class A share	1.50	1.27	1.44	1.06
Diluted earnings per Class B share	1.65	1.40	1.58	1.16

Weighted average number of Class A shares outstanding, basic and diluted	7,377,655	7,385,989	7,379,478	7,389,289
Weighted average number of Class B shares outstanding, basic	5,544,436	5,407,301	5,504,921	5,377,686
Weighted average number of Class B shares outstanding, diluted	5,703,038	5,714,471	5,696,538	5,717,871

⁽¹⁾	Class A Common Share (“Class A share”)
⁽²⁾	Class B Subordinate Voting Share (“Class B share”)

Condensed Consolidated Interim Statements of Comprehensive Income

(in thousands of Canadian dollars)

	For the three months ended		For the nine months ended
	September 26, 2020	September 28, 2019	September 26, 2020	September 28, 2019
	$	$	$	$

Profit for the period	20,464	17,478	19,849	14,653

Other comprehensive (loss) income
Items that are or may be reclassified to the consolidated statements of earnings
Currency translation differences arising on translation of foreign operations	(2,906)	1,591	3,567	(3,359)
Unrealized gain (loss) on translating debt designated as hedging item of the net investment in foreign operations	1,872	(810)	(1,675)	2,348
(Loss) gain on derivative financial instruments designated as cash flow hedges	(92)	18	(92)	(167)
Income taxes relating to derivative financial instruments designated as cash flow hedges	24	(5)	24	45
Total items that are or may be reclassified to the consolidated statements of earnings	(1,102)	794	1,824	(1,133)

Items that will not be reclassified to the consolidated statements of earnings
Remeasurement loss on benefit obligation	(1,260)	(1,056)	(2,548)	(2,136)
Return on retirement plan assets	188	2,254	21	539
Income taxes on remeasurement gain (loss) on benefit obligation and return on retirement plan assets	285	(323)	670	429
Total items that will not be reclassified to the consolidated statements of earnings	(787)	875	(1,857)	(1,168)

Share of other comprehensive income (loss) of equity accounted investments, net of income taxes
Items that are or may be reclassified to the consolidated statements of earnings	4	—	(15)	—
Items that will not be reclassified to the consolidated statements of earnings	(1)	—	4	—
Total share of other comprehensive income (loss) of equity accounted investments, net of income taxes	3	—	(11)	—

Other comprehensive (loss) income for the period, net of income taxes	(1,886)	1,669	(44)	(2,301)
Total comprehensive income for the period	18,578	19,147	19,805	12,352

Total comprehensive income (loss) attributable to:

Owners of the Company	18,599	19,054	19,575	12,142
Non-controlling interest	(21)	93	230	210
Total comprehensive income for the period	18,578	19,147	19,805	12,352

Condensed Consolidated Interim Statements of Financial Position

(in thousands of Canadian dollars)
	As at September 26, 2020	As at December 31, 2019
	$	$

Assets
Current assets
Cash and cash equivalents	23,657	22,608
Trade and other receivables	141,378	156,228
Contract assets	33,064	10,593
Current income tax assets	5,210	6,028
Inventories	14,055	12,569
Prepaid expenses and other	10,858	5,129
	228,222	213,155

Equity accounted investments	42,747	42,349
Property, plant and equipment	194,061	184,304
Right-of-use assets	137,184	89,581
Goodwill	146,939	140,617
Intangible assets	40,685	40,735
Non-current assets	2,430	2,417
Non-current financial assets	8,065	8,829
Deferred income tax assets	13,825	12,751
Total assets	814,158	734,738

Liabilities
Current liabilities
Trade and other payables	94,379	86,217
Contract liabilities	9,034	5,356
Current income tax liabilities	5,290	3,131
Dividends payable	1,260	1,245
Current portion of lease liabilities	11,236	9,820
Current portion of long-term debt	4,379	9,390
	125,578	115,159

Lease liabilities	129,094	81,495
Long-term debt	177,533	168,510
Deferred income tax liabilities	20,948	21,156
Post-employment benefit obligations	21,662	18,383
Contract liabilities	2,633	2,933
Non-current liabilities	40,888	46,088
Total liabilities	518,336	453,724

Equity
Share capital	45,622	40,222
Share capital to be issued	4,906	9,811
Retained earnings	232,926	220,641
Accumulated other comprehensive income	11,495	9,697
Equity attributable to owners of the Company	294,949	280,371

Non-controlling interest	873	643
Total equity	295,822	281,014

Total liabilities and equity	814,158	734,738

Condensed Consolidated Interim Statements of Changes in Equity

(in thousands of Canadian dollars)


		Attributable to owners of the Company
	Share capital		Share capital to be issued	Accumulated other comprehensive income		Retained earnings	Total	Non-controlling interest	Total equity
	$		$		$	$	$	$	$

Balance as at January 1, 2020	40,222		9,811		9,697	220,641	280,371	643	281,014

Profit for the period	—		—		—	19,634	19,634	215	19,849

Other comprehensive income (loss)
Currency translation differences arising on translation of foreign operations	—		—		3,552	—	3,552	15	3,567
Unrealized loss on translating debt designated as hedging item of the net investment in foreign operations	—		—		(1,675)	—	(1,675)	—	(1,675)
Remeasurement loss on benefit obligation and return on retirement plan assets, net of income taxes	—		—		—	(1,857)	(1,857)	—	(1,857)
Share of other comprehensive loss of equity accounted investments, net of income taxes	—		—		(11)	—	(11)	—	(11)
Cash flow hedges, net of income taxes	—		—		(68)	—	(68)	—	(68)
Total comprehensive income for the period	—		—		1,798	17,777	19,575	230	19,805

Remeasurement of written put option liabilities	—		—		—	(818)	(818)	—	(818)
Repurchase of Class A shares	(4)		—		—	(159)	(163)	—	(163)
Issuance and repurchase of Class B shares	499		—		—	(708)	(209)	—	(209)
Issuance of Class B shares capital to a subsidiary shareholder	4,905		(4,905)		—	—	—	—	—
Class B shares to be issued under the Executive Stock Option Plan	—		—		—	91	91	—	91
Other dividend	—		—		—	(121)	(121)	—	(121)
Dividends on Class A shares	—		—		—	(2,070)	(2,070)	—	(2,070)
Dividends on Class B shares	—		—		—	(1,707)	(1,707)	—	(1,707)
Balance as at September 26, 2020	45,622		4,906		11,495	232,926	294,949	873	295,822

Condensed Consolidated Interim Statements of Changes in Equity (Continued)

(in thousands of Canadian dollars)

		Attributable to owners of the Company
	Share capital	Share capital to be issued	Accumulated other comprehensive income	Retained earnings	Total	Non-controlling interest	Total equity
	$	$	$	$	$	$	$

Balance as at January 1, 2019	35,016	14,717	12,061	200,404	262,198	2,191	264,389

Profit for the period	—	—	—	14,430	14,430	223	14,653

Other comprehensive (loss) income
Currency translation differences arising on translation of foreign operations	—	—	(3,346)	—	(3,346)	(13)	(3,359)
Unrealized gain on translating debt designated as hedging item of the net investment in foreign operations	—	—	2,348	—	2,348	—	2,348
Remeasurement loss on benefit obligation and return on retirement plan assets, net of income taxes	—	—	—	(1,168)	(1,168)	—	(1,168)
Cash flow hedges, net of income taxes	—	—	(122)	—	(122)	—	(122)
Total comprehensive (loss) income for the period	—	—	(1,120)	13,262	12,142	210	12,352

Remeasurement of written put option liabilities	—	—	—	(697)	(697)	—	(697)
Repurchase of Class A shares	(5)	—	—	(286)	(291)	—	(291)
Issuance and repurchase of Class B shares	352	—	—	(1,146)	(794)	—	(794)
Issuance of Class B share capital to a subsidiary shareholder	4,906	(4,906)	—	—	—	—	—
Dividends on Class A shares	—	—	—	(2,032)	(2,032)	—	(2,032)
Dividends on Class B shares	—	—	—	(1,635)	(1,635)	—	(1,635)
Balance as at September 28, 2019	40,269	9,811	10,941	207,870	268,891	2,401	271,292

Condensed Consolidated Interim Statements of Cash Flows

(in thousands of Canadian dollars)

	For the nine months ended
	September 26, 2020	September 28, 2019
	$	$

Operating activities
Profit for the period	19,849	14,653
Items not affecting cash and cash equivalents	45,824	45,293
Cash generated from operations	65,673	59,946
Dividends received from equity accounted investments	3,600	3,770
Contributions to defined benefit retirement plans	(674)	(698)
Settlement of provisions	(371)	(217)
Changes in non-cash working capital items	(7,900)	(16,333)
Income taxes paid	(4,392)	(9,857)
	55,936	36,611

Financing activities
Net change in short-term bank loans	—	(13,577)
Issuance of long-term debt, net of transaction cost	59,639	81,969
Repayment of long-term debt	(57,465)	(50,607)
Repayment of other non- current liability	(2,447)	(310)
Repayment of lease liabilities	(9,641)	(7,374)
Interest paid	(7,424)	(8,635)
Issuance of Class B shares	190	258
Repurchase of Class A shares	(163)	(291)
Repurchase of Class B shares	(903)	(1,350)
Dividends paid on Class A shares	(2,070)	(2,012)
Dividends paid on Class B shares	(1,692)	(1,606)
	(21,976)	(3,535)

Investing activities
Acquisition of property, plant and equipment	(16,290)	(29,919)
Acquisition of intangible assets	(89)	(53)
Proceeds from disposal of property, plant and equipment	340	1,676
Business combinations	(16,457)	—
Repayment of due to shareholders	(121)	(5,386)
Interest received	205	226
Repayment of other non-current financial assets	165	157
Acquisition of other non-current assets	(496)	(276)
Proceeds from disposal of other non-current assets	79	123
	(32,664)	(33,452)

Net change in cash and cash equivalents	1,296	(376)
Cash and cash equivalents, beginning of period	22,608	15,393
Effect of exchange rate on balances held in foreign currencies of foreign operations	(247)	1,085
Cash and cash equivalents, end of period	23,657	16,102

Additional information

Acquisition of property, plant and equipment included in trade and other payables	3,297	645
Issuance of Class B shares under the Employee Stock Purchase Plan for non-interest-bearing loans	504	298