TORONTO, ONTARIO--(Marketwired - July 19, 2016) - People Corporation (the "Company") (TSX VENTURE:PEO) today announced record financial results for the quarter- ended May 31, 2016.
"Our third quarter proved to be eventful by virtue of the Company's recently announced partnership with BPA Financial Group and reporting of record financial results." said Laurie Goldberg, Chairman and Chief Executive Officer. "We continue the trend of year-over-year increases in Adjusted EBITDA while investing in sales and leadership capabilities which strengthen our ability to execute on our strategy. We continue to see strength from our organic growth initiatives which include developing innovative client solutions and the expansion of our benefit consulting teams."
Highlights of Financial Results for the quarter-ended May 31, 2016
Financial Results from Operations
People Corporation's financial results for the quarter-ended May 31, 2016 fully reflect the effect of last year's acquisition of Coughlin & Associates Ltd. ("Coughlin") and organic growth initiatives. The effect of the acquisition of BPA Financial Group Limited ("BPA") is partially reflected in the results as the transaction closed April 13, 2016. For the three month period, revenues increased 93.1% as compared to the same period in fiscal 2015 to $20.2 million and Adjusted EBITDA increased 61.6% to $3.5 million.
|(In 000's, except percent amounts)||3 months
May 31, 2016
May 31, 2015
May 31, 2016
May 31, 2015
|Operating Income before Corporate Costs||$4,555.6||$2,943.1||$13,525.9||$9,738.5|
|Adjusted EBITDA before REI||$4,174.5||$2,142.4||$12,018.8||$6,803.1|
|Net Income (loss)||$231.7||$(351.2)||$102.4||$343.9|
For the three months ended May 31, 2016, the Company experienced revenue growth of $9.8 million (93.1 %.) The Company recognized acquired growth of $7.6 million (71.8%) and organic growth of $2.2 million (21.3%). 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.
For the nine months ended May 31, 2016, the Company experienced revenue growth of $21.4 million (63.8%). The Company recognized acquired growth of $17.2 million (51.2%) and organic growth of $4.2 million (12.6%). 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. The Company commenced a program in the past year to complement its organic growth initiatives through the recruitment and development of new consultants. Based on early results, the Company expects to expand this program in fiscal 2017.
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 May 31, 2016, the Company reported Operating Income before Corporate Costs growth of $1.6 million or 54.8%, primarily driven by the acquisition of Coughlin and organic growth. For the nine months ended May 31, 2016, growth in Operating Income before Corporate Costs was $3.8 million or 38.9% resulting from the same factors.
Adjusted EBITDA before REI is Adjusted EBITDA before considering the vendors' interest in Coughlin and BPA ("REI"), respectively. For the three months ended May 31, 2016, the Company reported Adjusted EBITDA before REI of $4,174.5 which represents a margin equal to 20.6% of revenue, as compared to 20.4% in the prior year. For the nine months ended May 31, 2016, the Company reported Adjusted EBITDA before REI of $12,018.8 which represents a margin equal to 21.9% of revenue, as compared to 20.3% in the prior year. Margin improvements were primarily a result of recent acquisitions.
Adjusted EBITDA for the third quarter of fiscal 2016 was $3.5 million representing an increase of $1.3 million (61.6%), as compared to the same period in fiscal 2015. Growth in Adjusted EBITDA for the three month period was primarily driven by contribution from acquisitions and the increase in third quarter revenue, partially offset by increases in compensation expenses tied directly to the higher revenue, expansion of the consulting team through hiring additional benefit consultants and expansion of our leadership team.
Adjusted EBITDA for the nine months ended May 31, 2016 was $10.3 million, representing an increase of $3.5 million (51.4%), as compared to the same period in fiscal 2015. Growth in Adjusted EBITDA for the nine month period was primarily driven by contribution from acquisitions and the increase in revenue, partially offset by increases in compensation expenses tied directly to the higher revenue, expansion of the consulting team through hiring additional benefit consultants and expansion of our leadership team.
For the three months ended May 31, 2016, the Company reported an increase in the Net Income of $0.6 million resulting from the increase in revenue and Adjusted EBITDA, offset by higher costs primarily related to the BPA acquisition, including an increase in acquisition, integration and reorganization costs, finance expenses and acquisition-related amortization of intangible assets and accretion of REI liabilities resulting from 2015 and 2016 acquisitions.
For the nine months ended May 31, 2016, the Company reported an decrease in the Net Income of $0.2 million resulting from higher costs primarily related to the BPA acquisition, including an increase in acquisition, integration and reorganization costs, finance expenses and acquisition-related amortization of intangible assets and accretion of REI liabilities resulting from 2015 and 2016 acquisitions, partially offset by the increase in revenue and Adjusted EBITDA.
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 $11.4 million as at May 31, 2016, an increase of $4.9 million (75.1%) as compared to August 31, 2015, primarily resulting from net cash from operating activities (after taking into account the payment of annual variable compensation and bonuses paid each year in the first quarter), offset by cash used to fund a portion of the BPA acquisition, to acquire capital and intangible assets and repay loans and borrowings. In conjunction with the acquisition of BPA, the Company's senior lender increased the Company's senior credit facility by $26.2 million to a total of $61.2 million. The amended 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"). In addition, the expanded facility continues to 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. In conjunction with the facility expansion, the term of the facility has also been extended to October 31, 2019. At May 31, 2016, the Company has $39.6 million drawn on the credit facility, comprised of $21.7 million under the Term Loan and $18.0 million on the Acquisition Revolver. No funds have been drawn on the Revolving Credit Facility.
In addition to the credit facility with its senior lender, as of May 31, 2016, the Company had $2.3 million owing to vendors from previous acquisitions, of which $1.2 million is due in the next twelve months.
The complete Financial Statements and Management's Discussion and Analysis for the three and nine months ended May 31, 2016, 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 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, 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 and nine-months ended May 31, 2016, which can be accessed via the SEDAR Web site (www.sedar.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.
Investor relations inquiries should be directed to:
Dennis Stewner, CPA, CA
Chief Financial Officer & Chief Operating Officer