Revenues Grows 47.5% and Adjusted EBITDA Up 45.7% (Including Impact of Coughlin Acquisition)
TORONTO, ONTARIO--(Marketwired - Jan. 25, 2016) - People Corporation (the "Company") (TSX VENTURE:PEO) today announced record financial results for the quarter-ended November 30, 2015.
"Once again, I am in a position to report record financial results for People Corporation. The impact of the acquisition of Coughlin combined with organic growth were the main contributors to our strong financial results", said Laurie Goldberg, Chairman and Chief Executive Officer. "We continue to move forward on delivering superior client service and our unique value proposition to our clients and I believe that we are extremely well positioned to continue to enjoy an industry leading position and successfully grow our firm well into the future."
Highlights of Financial Results for the quarter-ended November 30, 2015
Financial Results from Operations
People Corporation's financial results for the quarter-ended November 30, 2015 fully reflect the effect of the acquisition of Coughlin & Associates Ltd. ("Coughlin"), organic growth initiatives and operational discipline. For the three month period, revenues increased 47.5% as compared to the same period in fiscal 2015 to $16.3 million and Adjusted EBITDA increased 45.7% to $3.2 million.
|(In 000's, except percent amounts)||Aug 31, 2015||Aug 31, 2014||(Decrease)|
|Operating Income before Corporate Costs||$4,086.2||$3,065.5||33.3||%|
|Operating Income before Corporate Costs as a % of revenue||25.0||%||27.7||%|
|Adjusted EBITDA as a % of revenue||19.6||%||19.9||%|
|Net Income (loss)||($149.1||)||$308.2||(148.4||)%|
For the three months ended November 30, 2015, the Company experienced revenue growth of $5.3 million (47.5%), as compared to the same period last year. The Company recognized acquired growth of $4.7 million (42.5%) related to the Coughlin acquisition in June 2015 and organic growth of $0.6 million (5.0%). Organic growth is primarily comprised of the increase in revenue resulting from the addition of new clients from the Company's existing and expanded benefits consulting team and natural inflationary factors, partially offset by the effect of a depressed labour market in Alberta on certain premium product lines and non-recurring revenues recognized in the prior year.
The Company monitors Operating Income before Corporate Costs in order to assess the results of operations before consideration of the ongoing corporate investments required to position the Company for future growth. For the three months ended November 30, 2015, the Company reported Operating Income before Corporate Costs growth of $1.0 million (31.8%), primarily driven by the acquisition of Coughlin during the fourth quarter and organic growth during the year. Changes in corporate costs as compared to the previous year are due to increases in public company costs and run-rates on increased salaries and wages as a result of the investment in leadership positions during the 2015 fiscal year, offset by a decrease in professional fees.
Adjusted EBITDA for the three months ended November 30, 2015 was $3.2 million, representing an increase of $1.0 million (45.7%) as compared to the same period in fiscal 2015. Growth in Adjusted EBITDA for the quarter was primarily driven by contribution from acquisitions and the increase in first quarter revenue, partially offset by increases in variable compensation expenses tied directly to the higher revenue and expansion of the consulting team through hiring additional sales consultants. The Company may experience fluctuations in timing of revenue between quarters and, as a result, Adjusted EBITDA as a percentage of revenue is less meaningful on a quarterly basis.
For the three months ended November 30, 2015, the Company reported a decrease in Net Income of $0.5 million (148.4%) resulting from acquisition-related amortization of intangible assets, an increase in finance expenses and acquisition, integration and reorganization costs primarily related to the Coughlin acquisition, partially offset by the increase in Adjusted EBITDA.
Summary Financial Position
The Company had cash balances of $6.6 million as at November 30, 2015, an increase of $0.1 million (1.6%) as compared to August 31, 2015, primarily resulting from net cash from operating activities (including payment of annual variable compensation and bonuses paid each year in the first quarter), offset by acquired capital and intangible assets and repayment of loans and borrowings. In addition to its cash resources, the Company maintains a credit facility agreement with its senior lender that totals $35.0 million of credit capacity, including a $7.0 million term loan, a $5.0 million revolving operating facility and a $23.0 million revolving acquisition facility. As of November 30, 2015, the Company had a balance of $6.4 million drawn against the term loan and a balance of $15.8M drawn against the revolving acquisition facility, resulting in $12.2 million of unused credit capacity available. The credit facility agreement also has an Accordion Feature, which provides for an option, subject to the satisfaction of certain terms and conditions, to increase the revolving acquisition facility by up to $15.0 million of additional capacity bringing the overall credit capacity up to $50.0 million.
In addition to the credit facility with its senior lender, as of August 31, 2015, the Company had $3.1 million owing to vendors from previous acquisitions, of which $1.8 million is due in the next twelve months.
The Company continues to be well-positioned to execute on its growth strategy, with a strong financial position and ready access to financial capital. In addition, the financial position of the Company will accommodate the ongoing operational investments required to ensure the Company is delivering upon its value proposition to its clients, and achieving operational excellence and enhanced profitability.
The complete Financial Statements and Management's Discussion and Analysis for the three months ended November 30, 2015, along with additional information about the Company and all of its public filings are available at www.sedar.com.
About People Corporation
People Corporation is a national provider of group benefits, group retirement and human resource services. The Company has offices across Canada, each led by a team of experts and backed by the resources of a national company that is traded on the TSX-V. The Company's industry experts provide uniquely valuable insight while customizing an innovative suite of services to the specific needs of its clients. Whatever your sector, whatever your scale, putting People Corporation's expertise and proven track record to work will make a difference to your people and your bottom line.
Further information is available at www.peoplecorporation.com.
This news release contains "forward-looking statements" within the meaning of applicable securities laws, such as statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Use of words such as "may", "will", "expect", "believe", "intends", "likely", or other words of similar effect may indicate a "forward-looking" statement. These statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including those described in the Company's publicly filed documents (available on SEDAR at www.sedar.com). Those risks and uncertainties include the ability to maintain profitability and manage organic or acquisition growth, reliance on information systems and technology, reputation risk, dependence on key clients, reliance on key professionals and general economic conditions. Many of these risks and uncertainties can affect the Company's actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statement made by the Company or on its behalf. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. All forward-looking statements in this news release are qualified by these cautionary statements. These statements are made as of the date of this new release and, except as required by applicable law, the Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Additionally, the Company undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of the Company, its financial or operating results or its securities.
Non-IFRS Financial Measures
The Company reports non-IFRS financial measures, including Standardized EBITDA, Adjusted EBITDA and Operating Income before Corporate Costs as key measures used by management to evaluate performance of the business, to compensate employees and to facilitate a comparison of quarterly and annual results of ongoing operations. Adjusted EBITDA is also a concept utilized in measuring compliance with debt covenants. The Adjusted EBITDA measure is commonly reported and widely used by investors and lending institutions as an indicator of a company's operating performance and ability to incur and service debt, and as a valuation metric. While used to assist in evaluating the operating performance and debt servicing ability of the Company, readers are cautioned that Adjusted EBITDA as reported by the Company may not be comparable in all instances to Adjusted EBITDA as reported by other companies. For a detailed explanation of how the Company's non-IFRS measures are calculated, please refer to the Company's MD&A filing for the three-months ended November 30, 2015, which can be accessed via the SEDAR Web site (www.sedar.com).
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