WINNIPEG, MANITOBA -- (Marketwired) -- 04/17/17 -- People Corporation (the "Company") (TSX VENTURE: PEO) today announced financial results for the quarter-ended February 28, 2017.
"Our financial results for the second quarter of 2017 are reflective of the continued successful execution of our growth plan, which includes contributions from organic initiatives as well as from acquisitions and other partnership-based transactions. These results include the effect of the expansion of our third party administration capabilities over the past two years, which is an important contributor to our strong financial performance," said Laurie Goldberg, Chairman and Chief Executive Officer. "The recently announced acquisition of Sirius Benefits Inc. is an important acquisition as it further expands on our third party administration capabilities and establishes us as a significant player in the small group market. The acquisition of Sirius Benefits Inc. and our strong quarterly results is evidence that the focus on executing our strategic priorities is providing for favourable results."
Highlights of Financial Results for the quarter-ended February 28, 2017
Financial Results from Operations
People Corporation's financial results for the quarter-ended February 28, 2017 fully reflect the effect of last year's acquisition of BPA Financial Group Ltd. ("BPA"), organic growth initiatives and operational discipline. The effect of the acquisition of Sirius Benefits Inc. ("Sirius") is not reflected in the results as the transaction closed subsequent to the end of the period. For the three month period, revenues increased 39.6% as compared to the same period in fiscal 2016 to $25.6 million, and Adjusted EBITDA increased 43.8% to $5.2 million.
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3 months 3 months 6 months 6 months
(In 000's, except ended ended ended ended
percent amounts) Feb 28, 2017 Feb 29, 2016 Feb 28, 2017 Feb 29, 2016
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Revenue $25,602.5 $ 18,336.6 $48,947.2 $34,651.5
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Adjusted EBITDA before
REI $6,508.2 $4,648.3 $11,244.1 $8,766.0
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Adjusted EBITDA $5,225.2 $3,633.2 $8,960.6 $6,837.6
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Net Income (loss) $1,638.8 $19.8 $1,363.2 ($129.3)
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For the three months ended February 28, 2017, of the $7.3 million increase in revenue, acquired growth (from the acquisition of BPA) accounted for $5.5 million (30.1%) of the increase and organic growth accounted for $1.8 million (9.5%) of the increase. Organic growth is primarily from the addition of new clients from the Company's existing and expanded benefits consulting team and natural inflationary factors.
For the six months ended February 28, 2017, the Company experienced revenue growth of $14.3 million (41.3%) due primarily to revenues from the BPA acquisition and organic growth. The Company recognized acquired growth of $11.1 million (32.1%) and organic growth of $3.2 million (9.2%).
Adjusted EBITDA before REI is net income before finance expense, income tax expense, depreciation and amortization, acquisition, integration and reorganization costs, and share-based compensation expense before considering the retained economic interest ("REI") attributable to vendors and/or principals of acquired companies. For the three months ended February 28, 2017, the Company reported Adjusted EBITDA before REI of $6.5 million, representing an increase of $1.9 million (40.0%), as compared to the same period in fiscal 2016. The increase in Adjusted EBITDA before REI is directly attributable to increased run rates from the 2016 acquisition of BPA and organic revenue growth offset by increases in compensation tied to higher revenue and expanded leadership to accommodate integration and future growth.
For the six months ended February 28, 2017, the Company reported Adjusted EBITDA before REI of $11.2 million, representing an increase of $2.5 million (28.3%), as compared to the same period in fiscal 2016. The increase in Adjusted EBITDA is primarily due to factors similar to those affecting the three month period.
Adjusted EBITDA for the second quarter of fiscal 2017 was $5.2 million, representing an increase of $1.6 million (43.8%), as compared to the same period in fiscal 2016. The increase in Adjusted EBITDA is due to the factors affecting Adjusted EBITDA before REI, net of retained economic interest attributable to vendors and/or principals of acquired companies.
For the six months ended February 28, 2017, the Company reported Adjusted EBITDA of $9.0 million representing an increase of $2.1 million (31.0%), as compared to the same period in fiscal 2016. The increase in Adjusted EBITDA is due to the factors affecting Adjusted EBITDA before REI, net of retained economic interest attributable to vendors and/or principals of acquired companies.
For the three months ended February 28, 2017, the Company reported an increase in net income of $1.6 million resulting primarily from acquired and organic revenue growth, a decrease in finance expenses related to the revaluation of Coughlin's REI liability, offset by an increase in acquisition related amortization of intangible assets; and income tax expense.
For the six months ended February 28, 2017, the Company reported an increase in net income of $1.5 million, primarily due to factors similar to those affecting the three month period.
Acquisition of Sirius
Effective on April 12, 2017, the Company purchased 100% of the shares of Sirius, for a purchase price of $15.0 million, subject to post-closing adjustments. Sirius, founded in 1996 and based in Winnipeg, Manitoba, is a leading third party administrator in the small group segment of the Canadian group benefits market, and administers the employee benefit programs of several thousand small and medium sized companies located across Canada. Sirius has relationships with over 250 third party brokers, through which its products and services are distributed.
The purchase price is comprised of a payment of $13.5 million at closing and the $1.5 million in deferred payments to be made on the first and second anniversaries of the closing. The closing purchase price was funded by a draw of $13.5 million on the Company's existing senior credit facility (see Summary Financial Position section following). The additional payments are expected to be paid from available cash resources on the anniversaries.
Summary Financial Position
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 Company had cash balances of $10.4 million as at February 28, 2017. In addition to its cash resources, the Company maintains a credit facility agreement with its senior lender that totals $61.2 million of credit capacity. The credit facility consists of a $5.0 million revolving facility (the "Revolving Credit Facility"), a $22.2 million term loan (the "Term Loan"), and a $34.0 million revolving acquisition facility (the "Acquisition Revolver"). The credit facility agreement provide for an option (the "Accordion Feature"), subject to the satisfaction of certain terms and conditions, to increase the Acquisition Revolver by an additional $15.0 million of capacity, which would result in the size of the Acquisition Revolver being increased to $49.0 million, and overall credit capacity being increased to $76.2 million. After giving effect to the acquisition of Sirius, as at April 12, 2017, the Company has $20.5 million drawn against the Term Loan and $13.5 million drawn against the Acquisition Revolver. The company has $25.5 million of unused credit capacity before considering the Accordion Feature.
In addition to the credit facility with its senior lender, as of February 28, 2017, the Company had $1.3 million owing to vendors from previous acquisitions, of which $0.5 million is due in the next twelve months.
The complete Financial Statements and Management's Discussion and Analysis for the three and six months ended February 28, 2017, 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.
Forward-Looking Information
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 news 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, REI, Adjusted EBITDA before REI, and Adjusted EBITDA 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 and six-months ended February 28, 2017, which can be accessed via the SEDAR Web site (www.sedar.com).
Investor Relations Inquiries: Contact - Dennis Stewner, CPA, CA CFO and COO - People Corporation (204) 940-3988 dennis.stewner@peoplecorporation.com www.peoplecorporation.com
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.
Contacts:
Dennis Stewner, CPA, CA
CFO and COO - People Corporation
(204) 940-3988
dennis.stewner@peoplecorporation.com
www.peoplecorporation.com
