TORONTO, ONTARIO--(Marketwired - April 18, 2016) - People Corporation (the "Company") (TSX VENTURE:PEO) today announced record financial results for the quarter-ended February 29, 2016.
"Once again, I am in a position to report record financial results for People Corporation. The impacts of acquired growth combined with organic growth were the main contributors to our strong financial results", said Laurie Goldberg, Chairman and Chief Executive Officer. "These results, coming on the heels of last week's acquisition of BPA Financial Group Limited, continue to strengthen our ability 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 February 29, 2016
Financial Results from Operations
People Corporation's financial results for the quarter-ended February 29, 2016 fully reflect the effect of last year's acquisition of Coughlin & Associates Ltd. ("Coughlin"), organic growth initiatives and operational discipline. The effect of the acquisition of BPA Financial Group Limited ("BPA") is not reflected in the results as the transaction closed subsequent to the end of the period. For the three month period, revenues increased 53.1% as compared to the same period in fiscal 2015 to $18.3 million and Adjusted EBITDA increased 47.6% to $3.6 million.
|(In 000's, except percent amounts)||3 months
Feb 29, 2016
Feb 28, 2015
Feb 29, 2016
Feb 28, 2015
|Revenue||$ 18,336.6||$ 11,974.9||$34,651.5||$ 23,038.4|
|Operating Income before Corporate Costs||$4,884.0||$3,729.8||$8,970.0||$6,795.1|
|Adjusted EBITDA||$3,633.2||$ 2,461.0||$ 6,837.7||$ 4,660.4|
|Net Income (loss)||$19.8||$387.0||($129.3||)||$695.1|
For the three months ended February 29, 2016, the Company experienced revenue growth of $6.4 million or 53.1%. The Company recognized acquired growth of $4.9 million (41.2%) and organic growth of $1.4 million (11.9%). 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 six months ended February 29, 2016, the Company experienced revenue growth of $11.6 million or 50.4%. The Company recognized acquired growth of $9.6 million (41.8%) and organic growth of $2.0 million (8.6%). 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 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 February 29, 2016, the Company reported Operating Income before Corporate Costs growth of $1.2 million or 30.9%, primarily driven by the acquisition of Coughlin and organic growth. For the six months ended February 29, 2016, growth in Operating Income before Corporate Costs was $2.2 million or 32.0% resulting from the same factors.
Adjusted EBITDA for the second quarter of fiscal 2016 was $3.6 million, representing an increase of $1.2 million or 47.6%, 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 second 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 benefit 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.
Adjusted EBITDA for the six months ended February 29, 2016 was $6.8 million, representing an increase of $2.2 million or 46.7%, as compared to the same period in fiscal 2015. Growth in Adjusted EBITDA for the six month period was primarily driven by contribution from acquisitions and the increase in revenue, partially offset by increases in variable compensation expenses tied directly to the higher revenue and expansion of the consulting team through hiring additional benefit consultants.
For the three months ended February 29, 2016, the Company reported a decrease in Net Income of $0.4 million 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.
For the six months ended February 29, 2016, the Company reported a decrease in Net Income of $0.8 million primarily 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.
Acquisition of BPA Financial Group Limited
Effective on April 13, 2016, the Company purchased 100% of the voting shares of BPA. Based on the exercise by the BPA principals of the options referred to below; this represents a 67% economic interest in BPA for a purchase price of $18.7 million, subject to adjustment for working capital. The purchase price is comprised of a payment of $18.2 million at closing and $0.5 million payable in September 2018. The closing purchase price was funded by a draw of $18.2 million on the Company's expanded senior credit facility (see Summary Financial Position section following). The additional payment in September 2018 is expected to be paid from available cash resources at that time.
In addition, the Company and BPA have entered into an agreement with the BPA principals whereby they have the option to obtain, in aggregate, up to a 33% economic interest in BPA through ownership of non-voting, non- cumulative, subordinate, dividend-bearing shares of BPA ("special shares"), which for certain of the BPA principals have been made available to them by way of options to purchase such shares at a nominal price, which options vest over a period of four and a half years following the closing date. The special shares may, in the future, be acquired by the Company, or sold by the holders to the Company, at a pre-negotiated price, subject to certain terms and conditions.
Summary Financial Position
The Company had cash balances of $7.7 million as at February 29, 2016, an increase of $1.2 million or 18.0% 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 cash used to acquire capital and intangible assets and repay loans and borrowings.
In conjunction with the acquisition of BPA subsequent to the end of the quarter, the Company's senior lender has 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 provides 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. Upon the closing of the acquisition, the Company has $40.2 million drawn on the credit facility, comprised of $22.2 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 at February 29, 2016, the Company had $2.3 million owing to vendors from previous acquisitions, of which $1.1 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 and six months ended February 29, 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 six-months ended February 29, 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:
Chief Executive Officer