TORONTO, Feb. 15, 2024 (GLOBE NEWSWIRE) -- Unisync Corp. (“Unisync") (TSX:"UNI") (OTC:“USYNF”) announces its financial results for the first quarter ended December 31, 2023. Unisync operates through two business units: Unisync Group Limited (“UGL”) with operations throughout Canada and the USA and 90% owned Peerless Garments LP (“Peerless”), a domestic manufacturing operation based in Winnipeg, Manitoba. UGL is a leading customer-focused provider of corporate apparel, serving many leading Canadian and American iconic brands. Peerless specializes in the production and distribution of highly technical protective garments, military operational clothing, and accessories for a broad spectrum of Federal, Provincial and Municipal government departments and agencies.
Results for the quarter ended December 31, 2023 versus the quarter ended December 31, 2022
Consolidated revenue for the three months ended December 31, 2023 of $23.0 million was within $0.6 million of the normalized comparable revenue of $23.6 million for the three months ended December 31, 2022. UGL segment revenue of $20.6 million in the current quarter was below last year’s comparable quarter revenue of $26.4 million mainly due to the December 2022 sale of the non-core New Jersey division that contributed revenue of $5.3 million ($1.3 million of which was from the bulk sale of inventory to the purchaser) in the corresponding quarter last year.
As a result of the loss of revenues from the sale of the New Jersey division, the UGL segment experienced a decrease in gross profit to $3.1 million or 15.0% of segment revenue compared to $5.1 million or 19.2% of segment revenue in the same quarter in the prior year.
Peerless maintained revenues consistent with the same quarter last year, recording gross profit of $0.5 million or 20.9% of segment revenue against $0.4 million or 14.5% of segment revenue in the same quarter of the prior fiscal year on a higher margin mix of product sales.
At $3.7 million, consolidated general and administrative expenses were down $0.7 million or 15.6% from the three months ended December 31, 2022 due to the sale of the New Jersey division last year and the overhead reductions associated with the relocation of the Carleton Place, Ontario and the Saint-Laurent, Quebec operations that began in September 2023.
Interest expense of $0.9 million in the current quarter was up $0.2 million from the same quarter of fiscal 2023 due to greater borrowings required to finance operating losses coming out of the pandemic years, restructuring costs and the addition of imputed lease interest on the new Guelph distribution facility.
The Company reported a net loss before tax of $1.1 million in the quarter compared to net income of $0.7 million in the same quarter last year. Net income in the first quarter last year included a $0.4 million gain on the sale of the New Jersey division. Adjusted EBITDA in the current quarter was $1.2 million versus $2.1 million for the corresponding 3-month period last year.
Business Outlook
During the first quarter UGL successfully negotiated several positive contract pricing agreements, relocated its offshore production from many factories with higher labour costs and that were import duty subject, to those that offer lower labour costs and/or are duty-free. In addition, UGL completed the relocation and consolidation of a major portion of its Carleton Place, Ontario and the Saint-Laurent, Quebec operations into its more efficient Guelph and Mississauga, Ontario facilities. The consolidation of distribution operations at its main Guelph distribution facilities will yield UGL an estimated annual savings of $2.5 million in direct and administrative labour costs on a net reduction of about 20% in headcount. This restructuring took place over the last six months and since the last phase of staff reductions was not completed until February 2024, the full extent of the related cost saving will not get reflected in our financial results until the latter half of this fiscal year. The Company is also in the process of sourcing a tenant to lease out the resulting 40,000+ square feet of vacated space at its Saint-Laurent facility which will further reduce its direct and administrative overhead. The Company believes these measures will significantly improve UGL profitability in fiscal 2024.
UGL management continues to place strong focus on the US market and is in advanced discussions with a number of US major corporations with respect to their image wear programs totaling over US$100 million annually in potential new business. As well, UGL has been invited to bid on an extensive list of other Canadian and US based major customers that are scheduled to come to market during the 2024 calendar year.
With $38.5 million in firm contracts and options on hand as at December 31, 2023, the Peerless business segment is positioned to maintain its current level of revenues and profitability over the balance of fiscal 2024.
More detailed information is contained in the Company’s Consolidated Financial statements for the quarter ended December 31, 2023 and Management Discussion and Analysis dated February 13, 2024 which may be accessed at www.sedar.com.
On Behalf of the Board of Directors
Douglas F Good
CEO
Investor relations contact:
Douglas F Good, Director & CEO at 778-370-1725 Email: dgood@unisyncgroup.com
Adjusted EBITDA
Adjusted EBITDA does not have a standardized meaning prescribed by IFRS and is therefore unlikely to be comparable to similar measures presented by other issuers and should not be considered in isolation nor as a substitute for financial information reported under IFRS. Unisync uses non-IFRS measures, including Adjusted EBITDA, to provide shareholders with supplemental measures of its operating performance. Unisync believes adjusted EBITDA is a widely accepted indicator of an entity’s ability to incur and service debt and commonly used by the investing community to value businesses.
Forward Looking Statements
This news release may contain forward-looking statements that involve known and unknown risk and uncertainties that may cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied in these forward-looking statements. Any forward-looking statements contained herein are made as of the date of this news release and are expressly qualified in their entirety by this cautionary statement. Except as required by law, the Company undertakes no obligation to publicly update or revise any such forward-looking statements to reflect any change in its expectations or in events, conditions or circumstances on which any such forward-looking statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements. Neither the TSX nor its Regulation Services Provider (as that term is defined in the policies of the TSX) accepts responsibility for the adequacy or accuracy of this release.
