Andlauer Healthcare Group Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
May 3, 2024

There are 10 speakers on the call.

Operator

Good morning. My name is Julie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Amlior Healthcare Group 20 24 First Quarter Results Conference Call. All lines have been placed on mute to prevent any background noise. Please be aware that certain information discussed today may be forward looking in nature.

Operator

Such forward looking information reflects the company's current views with respect to future events. Any such information is subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those projected in the forward looking information. For more information on risks, uncertainties and assumptions relating to forward looking information, please refer to the company's latest MD and A and Annual Information Form, which are available on SEDAR Plus. Management may also refer to certain non IFRS financial measures. Although the company believes these measures provide useful supplemental information about financial performance, they are not recognized measures and do not have standardized measures under IFRS.

Operator

Please see the company's latest MD and A for additional information regarding non IFRS financial measures, including for reconciliations to the nearest IFRS measures. Please note that unless otherwise stated, all references to any financial figures are in Canadian dollars. Following management's remarks, there will be a question and answer session. This call is being recorded on May 3, 2024. I would now like to turn the conference over to Michael Enloe.

Operator

Please go ahead, sir.

Speaker 1

Thank you, Julie, and good day, everyone. Thank you for joining us today. With me on the call is Peter Bromley, our Chief Financial Officer. Following my opening remarks, Pete will follow-up with a more detailed discussion about Q1 financial results. I'll then provide some closing comments and open the line to questions.

Speaker 1

So aside from our lower fuel surcharge revenue, our 2.2% year over year decline in our consolidated revenue for the quarter was primarily attributable to 2 factors. First, revenue in our U. S. Truckload businesses at Skelton and Boyle reflected a year over year decrease of $4,300,000 and as a result of a continuation of depressed rates for truckload services that we have experienced throughout most of 2023. Our lower revenue in the U.

Speaker 1

S. Also reflects our decision to focus on revenue quality. The trough that I described during our Q3 2023 earnings call has extended through Q1 and I would anticipate through Q2. 2nd, we experienced lower revenue in our accuristics business to the tune of about $3,200,000 year over year for this quarter, primarily due to lower volumes from certain large consumer health clients. Yes, like I said, those are the ones that are distributed mostly consumer health products.

Speaker 1

These declines were partially offset by organic growth in our Canadian specialized transportation network, excluding fuel surcharge revenue. As I've discussed previously, we are determined to drive incremental margin growth in the U. S. By leveraging our core specialized competencies in temperature, security and quality control and by focusing on certain customers and our high value products that are not as susceptible to the fluctuations in spot market rates that we're experiencing in the U. S.

Speaker 1

Today. The lower outbound order handling activities that we've experienced for Acura S. The past few quarters primarily reflects lower volumes of handling and transportation activities for these certain consumer healthcare customers. And some normal course fluctuations in the rest of our client base. We expect our LSU facility expansion in Montreal, which was completed in January this year to improve our logistics and distribution product line performance in 2024 as the year progresses.

Speaker 1

I'll turn the call over to Peter now to review our financial performance in more detail. Peter?

Speaker 2

Thank you, Michael, and good morning, everyone. Revenue for our Healthcare Logistics segment totaled $42,900,000 a decrease of 6.9% from Q1 last year. The decrease reflects a 6.4% decline in our logistics and distribution product line revenue and a 10.3% decline in packaging revenue. Michael spoke to the decline in our logistics and distribution revenue. The decline in packaging revenue primarily reflects the loss of 1 of our packaging clients in Q1 of last year.

Speaker 2

Revenue in our Specialized Transportation segment totaled $118,300,000 a slight decrease of 0.4% compared with Q1 a year ago. The decrease reflects the decline in U. S.-based truckload revenue and lower fuel surcharge revenue, partially offset by organic growth in each of our Canadian specialized transportation product lines. Average fuel prices in Q1 this year were approximately 8% below levels in Q1 a year ago. Ground transportation revenue for the quarter was 100 and $6,400,000 a decrease of 1.7 percent compared with Q1 a year ago.

Speaker 2

The decrease reflects the decline in our U. S.-based truckload business, reflecting lower rates and our focus on revenue quality as well as lower fuel costs passed on to customers as a component of pricing compared to Q1 last year. These factors were partially offset by organic growth in our Canadian ground transportation network. Ground transportation revenue, excluding fuel, in our Canadian network increased by approximately 3.2% compared to Q1 last year. The 6% growth in our air freight forwarding revenue in Q1 this year reflects a 2.3% year over year increase in weight shipped.

Speaker 2

The 3.6% increase in dedicated and last mile delivery revenue in the quarter reflects continued organic growth, partially offset by a reduction in fuel surcharge revenue. Cost of transportation and services was $82,500,000 or 51.2 percent of revenue compared with $84,200,000 or 51.1 percent of revenue for Q1 last year. Lower fuel costs, in line with decreases in revenue related to fuel prices, were partially offset by idle equipment costs in our U. S.-based truckload businesses, arising from a lower volume of loads as we focused on revenue quality. Direct operating expenses were 26 $300,000 or 16.3 percent of revenue compared with $27,000,000 or 16.4 percent of revenue for Q1 a year ago.

Speaker 2

The decrease was primarily attributable to a reduction in outbound order handling activities for Acheristics in line with lower revenue. Operating income totaled $21,200,000 a decrease of 10.4% from Q1 last year. Net income was $14,900,000 or $0.35 per share diluted compared with $16,500,000 or $0.39 per share diluted a year ago Q1. Lower segment net income before eliminations in our Specialized Transportation segment was primarily attributable to reduced contributions from Boyle Transportation and Skelton USA and lower segment income from our Healthcare Logistics segment, which reflects reduced order handling and transportation activity. EBITDA for the quarter totaled $39,600,000 compared with $40,500,000 in Q1 last year, primarily reflecting lower contributions from U.

Speaker 2

S.-based truckload operations and reduced order handling activities for Acheristics, partially offset by organic growth in our Canadian specialized transportation network. EBITDA attributable to Boyle Transportation and Skelton USA was approximately $2,500,000 lower in Q1 2024 compared to Q1 2023. EBITDA margin was 24.6% for the quarter, unchanged from Q1 last year. The margins in our U. S.-based truckload operations, which were in line with our consolidated margin range throughout 2022 and into Q1 a year ago, were impacted during 2023 and Q1 this year by post pandemic macroeconomic factors such as increased equipment and driver availability.

Speaker 2

However, these lower margins were effectively offset by organic growth in our Canadian Specialized Transportation network. The performance of our 2 operating segments continues to result in industry leading EBITDA margins. Our balance sheet continues to be very strong. At quarter end, we had only $25,000,000 outstanding under our term facility and nil under our revolving facility and a conservative net leverage ratio of 0.35 times. Our NCIB terminated on March 28 this year.

Speaker 2

In all, we purchased and canceled a total of approximately 634,000 subordinate voting shares pursuant to the NCIB, representing approximately 3% of our float. Despite the NCIB commitments and debt repayment of $25,000,000 late last year, we had cash and cash equivalents of $68,200,000 and working capital of $87,700,000 at quarter end. This underlines the continued strong cash generation of our business. We remain well positioned financially to pursue growth opportunities. I'll now turn the call back to Michael for closing comments.

Speaker 1

Thank you, Peter. Our Canadian Specialized Transportation Network is performing well and in line with our expectations. We're focused on improving the performance of our specialized U. S. Truckload operations where we're executing on opportunities to upgrade this business.

Speaker 1

This will take longer than we had expected as we are somewhat reliant on the cyclical nature of the truckload market in the U. S. We're confident that our logistics and distribution product line performance will improve as the year progresses. We already see this trend changing as we enter Q2. Looking ahead, we're confident that we can continue to leverage our unique platform and core competencies to drive increased value for their shareholders, supported by positive industry growth fundamentals that characterize the healthcare, transportation and logistics markets in Canada and in the U.

Speaker 1

S. With our core strength in temperature management, quality assurance, regulatory compliance, technology enables visibility throughout the supply chain and security, combined with our coast to coast network in Canada and established presence in the specialized transportation market in the U. S, we're uniquely positioned in a stable and growing market. We continue to evaluate acquisition opportunities in both Canada and the U. S.

Speaker 1

We continue to look further to expand We continue to look further to expand our platform.

Speaker 3

We have maintained and

Speaker 1

will continue our disciplined approach with respect to both financial and operating metrics and our constant focus on better serving our customers and supporting our unique culture. And before opening the line to questions, I'm pleased to note that this quarter we have published our inaugural sustainability report, which you can view on our website. This was an incredible collaborative effort created by many of our employees across all our companies. The report highlights our responsible business approach, which starts and ends with our people, our professional drivers, our owner operators and teams working across our network. Their commitment and passion are the engine of our success and a key to our strong industry partnerships and stakeholder relations.

Speaker 1

This report is a testimony of their hard work and will serve as a baseline against which we will measure our future progress for the communities we serve. And now I'd like to open the line to the questions. Julie, please commence the Q and A.

Operator

Thank Your first question comes from Kevin Chiang from CIBC. Please go ahead.

Speaker 3

Good morning, Michael and Peter. Thanks for taking my question here. Maybe just on the margins, look, flat year on year, but down sequentially by almost a couple of 100 basis points. I don't normally think of your margins being seasonal. So if you can clarify that if there's some seasonality here to your margin profile.

Speaker 3

But maybe just any color on the step down in margins quarter over quarter, because I would have imagined some of the pressures you highlighted in Q1 would have been present in Q4. So maybe just some color there in terms of what you think drove the sequential decline in profit margin or EBITDA margin?

Speaker 1

Yes. I think there is a bit of seasonality as you go from I mean, we've seen that with the so certainly with the consumer goods. It's not as seasonal as other commodity, other products, other industries, particularly in the retail sector. But there is a bit of that. Q1 was a bit of an anomaly we found.

Speaker 1

Interesting enough, what we did our each one of our companies did our budgets this year. We obviously, we budgeted and expected year over year growth into what we had anticipated as mid to single digit growth. But

Speaker 3

what

Speaker 1

we didn't do, the exercise that we did is we looked at it. We seem to hit plan in most of our businesses except for the U. S. Business. And we realized that when we segregated by quarter, we do this by month by the way, but when we segregated by quarter, the surprise is that we the seasonality of the Q1 didn't seem to stand out.

Speaker 1

We met plan in most of our companies. So that's why I'm not quite confident about where we're going. There were a lot less working days in Q1 of this year as more Q4 of last year or even Q1 of this year. So it's an interesting dynamic, but and that would kind of affect

Speaker 3

a bit

Speaker 1

of the margin. But when you're talking about 2 basis points, it's not it'll ebb and flow just by but it's relatively steady overall. That's my take on it, Kevin.

Speaker 3

No, that's helpful color. And obviously, gives me some sense of how margins might work through the year here. Maybe to my second question on acuristics, it sounds like you're seeing some pressure from consumer health products. Can you give us a sense of maybe what percentage or how you would level set your exposure to maybe more consumer discretionary spending versus servicing or providing an essential service or moving products that are essential services, is there a way to maybe handicap what your exposure to consumer discretionary spending is? Just given some of the concerns there.

Speaker 1

I'm not as concerned about I mean eventually people will need to take it. It's not a luxury. Even when you look at consumer health and you look at things like vitamins and other products that are part of the portfolio of these healthcare companies, even sunscreen. Those are voluminous in nature and tend to need more space and more both in the warehouse and in the truck and tend to have a cost to the customer. So to me, we saw it and we saw it last year or 2 years ago, I can't recall exactly which quarter where we had an enormous amount of returns because the cold and flu, everybody was staying at home.

Speaker 1

And obviously we weren't catching colds and the cold and flu business wasn't vibrant or the same with the vaccine. So there was a lot of returns coming. So forecasting and I think a lot of these companies are still trying to figure out what the right numbers are for consumers. I don't know. I can't really like I said, I think in the accuracy case, they had 3 less working days in Q1 compared to Q1 of the previous year.

Speaker 1

That's got to have some effect. Easter came in early in Q1 and last year was in Q2. So I'm not I think there's a bit of an anomaly there to be

Speaker 3

No, that makes sense.

Speaker 1

Sorry, Kevin. Yes, I wish I could be more definitive.

Speaker 3

No, no, that's helpful.

Speaker 1

I'm not going to try to bullshit my way. No, no, but that's As you know, as you know me by now, right? To share. But

Speaker 3

3 to 3 working days is obviously going impact the quarter and you make that up as we get through the year. So that's all. I'll move back in the queue. Thank you very much for taking my questions.

Speaker 1

Thanks, Kevin.

Operator

Your next question comes from Konark Gupta from Scotiabank. Please go ahead.

Speaker 4

Thanks, operator. Good morning, Michael and Peter. Again, dig into the U. S. Business a little bit.

Speaker 4

I know when you guys are not alone obviously in this, every single truckload business is feeling the pressure right now. And I think everybody's kind of surprised that it's extending into sort of the mid-twenty 24. So it's uncontrollable clearly. But from your perspective, what's your strategy now in the U. S?

Speaker 4

Like I think you have a business that's obviously under pressure right now. Would you take sort of the opportunity or advantage of the market conditions today given your balance sheet obviously to scale up in the U. S. With more ground transportation assets? Or would you like spend some time and capital on logistic aspects in the U.

Speaker 4

S. In the U. S. So that you can create some synergies that you have in Canada? Or would you kind of like to be on the sidelines in the U.

Speaker 4

S, like wait and watch, let the market rebound and all that. So how do you see the U. S?

Speaker 1

Those are excellent that's an excellent question because I think we've talked about this for our executive teams. I had both executive teams in Boston last month and this is exactly what we spoke of both the Scalton USA and Boyle. And those are exactly some of the things that we discussed. I would be lying to you if I didn't tell you that when we bought this business 3 years ago now or a little under 3 years, we were we felt that the FDA with temperature control and would follow suit with Canada, they'd be more stringent. It certainly felt that way in light of the margins of these companies were yielding and the demand for the business.

Speaker 1

And then they pulled it after COVID, the rug was kind of pulled out of their seats. And Kevin's previous question about margins and fluctuations, certainly the U. S. Took the biggest hit in margins. And we look like a truck we look like a successful truckload company, but not a great specialized transportation company that we bought.

Speaker 1

So from that perspective and can we be opportunistic and because we are going through a trough and a good balance sheet, To me that would be it could be opportunistic, but I don't feel comfortable that I understand the market well enough. And my point of differentiation has been to be focused on healthcare, which is somewhat of a recession proof business in areas where our services are required and needed all the time. And I'm nervous that if I go towards that continue to grow that business that I will be part of that cycle that we're going through right now in the truckload business in the U. S. So I'm looking more at synergistic.

Speaker 1

I look at the healthcare sector where it's more complex. So right now with the business that we have, I think I mentioned it last quarter, I can't recall off the top of my head, but we will be looking at more specialized products like some of the stuff that we do in Canada that in particular skeleton does on the 2 to 8 degree side and or frozen for that matter in the plasma business and focusing on that those areas using those resources for that. The sales cycle is a lot longer because of the regulatory requirements, but that's exactly what got us successful is because of the regulatory requirements. And so from that standpoint, we are working diligently from that to change that business to be more specialized as is categorized today. And on the Canadian side, we are active even though we haven't done a transaction, we are active on the M and A side.

Speaker 1

And in some cases, looking at things that could be very much transformational. I'm passionate about the healthcare industry in this country and want to make want to be able to make a difference.

Speaker 4

That's great, Michael. Thanks. And if I can follow-up on LSU in Montreal, obviously, you have capacity expansion there. How does that capacity expansion translate into revenue generation over the next 3, 4 quarters? Like what's your cadence for that?

Speaker 1

I feel that it's we're a bit tied in with the whole real estate market right now and a paradigm with respect to where companies are looking to pivot or not pivot, but just transform in terms of type of health care products, particularly on the pharma side. And we talked about biologics and specialty pharma. I think that's an area of growth and I think that's where we LSC specializes in Quebec. And so we're expanding. It's only about a 35,000 square foot expansion in Laval.

Speaker 1

But when it's mostly fridge products that are frozen that becomes so I feel that we'll grow organically. The opportunities there we have obviously proprietary, but I can talk to this, but we have there is attraction to it right now for this business, for the space I should say.

Speaker 4

Okay. That's great. That's all my question. Thank you.

Operator

Your next question comes from Cameron Doerksen from National Bank Financial. Please go ahead.

Speaker 5

Yes. Thanks very much. Good morning. Just a follow-up, I guess, on the U. S.

Speaker 5

Business. I mean, clearly, it makes sense to focus more on kind of the specialty 2 to 8 and frozen. Just wondering if you can talk about kind of the time line to kind of pivoting to that business. I mean, you kind of indicated that Q2 you're seeing similar trends in the U. S.

Speaker 5

Business. But how long does it, I guess, take to kind of materially change the business to focus on some higher margin more stable business?

Speaker 1

This is a good question, Cameron. But I where focus is there, discussions are there. It could very well take one distributor to make that decision and transform us. I'm not going to say overnight because that it takes time. But there's a lot of work in progress with customers who are familiar with our services, obviously, international companies and it's a matter of positioning and setting things up.

Speaker 1

There's a lot of regulatory aspect to it, QA requirements that when you're dealing with this type of product. So I'm intrigued with it. There's also the aspect that we're doing at oil non healthcare product with the Department of Defense business. Is that an area that looks to be segregated and expanded upon? That's why when Konark brought up the question earlier on, it's a strategy session and it's something that I'm not going to ultimately make the final decision, but I'm looking at the collaborative effort of our executive teams both at Boyle and Skelton USA and others here at AIG to figure out what's in the best interest of our shareholders.

Speaker 5

Okay. No, that makes sense. And maybe just secondly for me, just on the NCIB, I mean, place? Just wondering why you wouldn't have renewed that? I'll ask Peter why we didn't renew it.

Speaker 1

I'll ask Peter for why we didn't renew it. But absolutely, I think as you can see our balance sheet even though we're in a really we're in the best position balance sheet wise we've ever been. And that's despite having bought our shares back and we will. I mean, obviously, it's those are all things that we need to that we will behave I think we'll behave accordingly on that. My only concern is that the flow is getting smaller and smaller, so because I'm not selling.

Speaker 1

So anyway.

Speaker 5

Right. Okay. No, that's helpful. Thanks very much.

Speaker 4

Thank you.

Operator

Your next question comes from Ty Collin from 8 Capital. Please go ahead.

Speaker 6

Hey, good morning guys. Thanks for the question. My first one I'll just ask on the Canadian ground transportation business. You called out around 3% organic growth year over year in the quarter. That's a bit of a slowdown from what you guys have been putting up in recent quarters.

Speaker 6

Just wondering if you could comment on that there, any kind of one timers, any seasonality to take note of or maybe a bigger picture trend as we're thinking about the rest of the year?

Speaker 1

Yes, Ty. I'm not concerned about it at all. I think it's days in the quarter might have affected a little bit. It seems to and in talking to a lot of other businesses that seem to be saying the same thing, didn't really notice that it would have an impact. 3 days on 60 working days is 5%.

Speaker 1

So I'm not and by the way the fuel surcharge was a lot less. So sometimes it's the revenues might have a little bit of that impact as well. That would have impacted that percent growth. But all in all, it's steady. It's not a sexy business.

Speaker 1

It's pretty mature, but it's steady. Our service levels are as good as they've ever been. We've had which has helped with the fact that the winter was mild with temperature management as well as health service, not much 50 Northern Ontario. But no, I'm not overly concerned with that.

Speaker 6

Okay, great. That's helpful. And I think it sounds like the number of working days did move the needle there. And then just for my follow-up on the U. S.

Speaker 6

Business, obviously, you guys have talked about kind of tactically downsizing certain areas of that to focus on more high margin value added work. And you mentioned that that's maybe created a little bit of slack from a capacity utilization standpoint right now. Is the plan to kind of just grow back into the capacity you have now? Or are there any thoughts of actually maybe downsizing the fleet, getting kind of less exposed to the truckload market as you mentioned earlier in the call? Just your thoughts around the future of your asset base in the U.

Speaker 6

S.

Speaker 1

Yes. I think, Todd, that the capacity is fine. We could if we felt compelled to grow at higher margins than we would, but we're not going to go and grow just because of we've got typical truckload margins. We took it's been quite a difference in margins quarter over quarter in that business. And the cash flow positive businesses, but I'm not worried about that as a little bit easier.

Speaker 1

But it's yes, so for me it's just stabilize it, understand it more, focus on other pieces of business and don't say yes to all any business comes along which will require you to get more trucks. And then when you win the site, then it create when trust on the fence, it's not working. And by the way, since in the last year that everything's gone up. So your lease costs, your truck interest rates are up, truck costs are up, wages have gone up because of inflation. And so there's but and the rates haven't.

Speaker 1

So we're like I said, we're in that part of the cycle and we don't want to we're going to keep things status quo from a fee standpoint. Okay. That's helpful. Thanks for the questions.

Operator

Your next question comes from Justin Keywood from Stifel. Please go ahead.

Speaker 2

Good morning. Thanks for taking my call. I guess just first a follow-up

Speaker 7

on the consumer health customer or customers that saw some pressure in Q1. I know there was a strike with the market share leader in the VMS space. Did that have an impact at all? And is that transitionary where we should see more normalized results in Q2?

Speaker 1

I think we'll see more normalized results in Q2, but I don't know if the strike had anything to do with it.

Speaker 7

Okay. And then just more broadly looking at 2024, is it still possible to achieve the 4% to 7% organic growth target on the year?

Speaker 1

I personally believe so because when I segregate all our business plans for all the companies by quarter, I realize that that's like I said earlier in the call, we're making plans on all the businesses. So I still feel confident.

Speaker 7

Okay. And then just finally, just on the M and A pursuits and I think I heard correctly, possibly some adjacent industries. I assume this would be in Canada primarily, given the cold chain focus in the U. S. Are you able just to detail what some of these adjacent areas could be?

Speaker 7

And would it be a near term pursuit or more medium and long term?

Speaker 1

It's a constant pursuit. But certainly, we have the differentiation of having an incredible national network in Canada and leveraging that in other areas in the healthcare sector, I think it could be opportunistic. And interesting enough, I'm going to Scottsdale for a pharma conference and all the major players are going to be there. And that's some of the initiatives, it's listening, it's strategy, it's partnering. And I think you're seeing that.

Speaker 1

I mean, if you look at the specialty pharma business, for example, and the patient care and the network required and getting the product to the patient. And there's the whole logistics play of this. The fact that you have to get blood work before you go and get

Speaker 4

treated.

Speaker 1

Those are all areas that listing and understanding the fact that we have such a network, such a broad network and that we to help complement and is I think an opportunity for Enviro Healthcare Group moving forward.

Speaker 7

Very interesting. Thanks for taking my questions.

Speaker 1

Thanks, Vasyl.

Operator

Your next question comes from Michael Simpson from NCM Investments. Please go

Speaker 8

ahead. Hello there. Mr. Hanlauer, can you give me an update on Shoppers, if there's opportunities for you to increase your business with Shoppers? You've got a long term relationship with Shoppers.

Speaker 1

Hi, good morning, Michael. Well, we do have a relationship with Loblaw Shoppers more specifically. You probably see our trucks go in there on a daily basis. But I don't know if I can really elaborate much more than that front as we do with other pharma clients or retailers, I should say, or distributors.

Speaker 8

Okay, fair enough. Second question is on the front of biologics and regenerative medicine, can you talk about the opportunities in Canada and mostly the U. S?

Speaker 1

To what extent, Michael?

Speaker 8

To the extent to grow revenue or if these are new growth opportunities, verticals for you?

Speaker 1

Yes. I think I referred to that in Justin's questions earlier on about specialty pharma and biologics and working closer. I mean, our manufacturing clients that we warehouse and distribute for, we're seeing an increase in warehouse and logistics space. I think last quarter, I might have mentioned that our Calgary facility, we've actually doubled our fridge space in Calgary. I just alluded to LSU earlier on about 35,000 square foot expansion.

Speaker 1

A lot of it is fridge space. And it's obviously back to your question about biologics. We see that space growing. We're well positioned to support our clients at Acuristics who are a lot of them are pivoting from the traditional pharma pills to more biologics. So that's it, trying to understand the customer and offer that network to our customers.

Speaker 1

Great. Thank

Speaker 8

you for your time.

Speaker 1

Thanks, Michael.

Operator

Your next question comes from Tim James from TD Cowen. Please go ahead.

Speaker 9

Thanks. Good morning, Michael and Peter. I just have one really big picture question for you, Michael, that kind of attempts to wrap up a number of topics that you've discussed. Could you talk about the growth potential for the Canadian temperature controlled healthcare transportation market? Comparing it to kind of let's call it the 10 years pre pandemic and looking forward at this point for the next 5 years.

Speaker 9

And I'm just trying to understand any structural changes in the industry, number 1, and then secondly for Ann Lauer within the industry. Just a comparison if there are any changes in the potential sort of normalized rate of

Speaker 8

growth? Yes. I think,

Speaker 1

I mean, the data tends to be a little bit that we get is and you can get that data by the way, Technivio data or whatever it's we're looking at I think I read something that was Peter maybe correct me if I'm honest, 4% to 6%.

Speaker 3

Yes.

Speaker 2

It's in that range for

Speaker 1

the next 5 years plus. So it's predictable, it's steady, it's not sexy, but it's growth. I mean, I would the amount of integration coming in as well as the country and the like. So I think we feel it's a nice conservative numbers that we kind of rely on. And then you got aging population.

Speaker 1

I mean, you can do that. I'm not saying anything that's groundbreaking that you wouldn't already probably know Tim, but I can't really have a hard time expanding more on that. I think people are living longer. So that's going to be that's got to be helpful.

Speaker 9

So from a regulatory perspective, obviously, correct me if I'm wrong, I don't believe there's been a lot of change, if any, from a competitive perspective, outsourcing trend, those dynamics are very similar to the way they were pre pandemic as you look forward. Is that am I interpreting that correctly?

Speaker 1

Yes, absolutely. I think it's the competitive landscape. In Canada, it's become quite mature. I mean, obviously, pharma companies are consolidating sometimes, particularly on the consumer health aspect of things. We're seeing some changes there.

Speaker 1

Generic companies come and go and the big ones are still here, but they're pivoting with bio simulators instead of and I think the pharmacy industry is strong. And I personally, I think it's going to get even stronger because that's going to be the point of contact for Canadians for more so moving forward as lack of doctors that we have in this country. So I think it's just a matter of adjusting, but we've built a nice network, that national network that's it's hard to duplicate because once you have the economies of scale that we have. So as long as we continue to take care of the customer and listen to the customer. I think the predictability is there for our business.

Speaker 1

At least the way it stays right now as warehousing and transportation distribution packaging.

Speaker 4

Okay. Thank you very much. Thanks, Tim.

Operator

And there are no further questions at this time. I will turn the call back over to Michael for closing remarks.

Speaker 1

Thank you, Julie, and I appreciate all of you joining today. And I would ask of you to please take a look at our sustainability report on our website. As a company, we're pretty proud of it. And thank you for joining us today.

Operator

Ladies and gentlemen, this concludes today's conference call. Thank you for joining. And you may now disconnect your lines. Thank you.

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Key Takeaways

  • The company reported a 2.2% year-over-year decline in consolidated revenue for Q1, driven by depressed rates in its US truckload operations (-$4.3 M) and lower volumes in its Acuristics business (-$3.2 M), partly offset by organic growth in Canada’s specialized transportation network (ex-fuel surcharges).
  • US truckload margins remained under pressure due to lower spot market rates and idle equipment costs, prompting management to prioritize revenue quality and shift focus toward higher-margin, temperature-controlled, security-sensitive specialty services.
  • In Canada, ground transportation revenue (excluding fuel) rose by 3.2%, air freight forwarding grew by 6%, and dedicated/last-mile delivery was up 3.6%, reflecting continued organic expansion across the specialized transportation network.
  • The balance sheet is robust, with net leverage at 0.35x, $68.2 M in cash, $87.7 M in working capital, and a completed NCIB that retired ~634,000 shares (~3% of float); EBITDA margin remained steady at 24.6%.
  • Management expects logistics and distribution performance to improve as 2024 progresses (including the newly expanded Montreal facility), will pursue targeted US specialty opportunities and acquisitions, and released its inaugural sustainability report highlighting responsible business practices.
AI Generated. May Contain Errors.
Earnings Conference Call
Andlauer Healthcare Group Q1 2024
00:00 / 00:00