Montréal, Québec, November 10, 2023 – LOGISTEC Corporation (“LOGISTEC”) [TSX: LGT.A and LGT.B] (the “Company”), a marine and environmental services provider, announced today its financial results for the three-month and nine-month periods ended September 30, 2023. LOGISTEC results reflects the execution of its growth strategy and continued positive momentum.
Highlights From the Third Quarter of 2023
- Consolidated revenue totalled $307.2 million, up $23.0 million or 8.1%;
- Adjusted EBITDA (1) closed at $58.9 million;
- Total diluted earnings per share of $1.36, down $1.07;
- Successful integration of Fednav’s terminal division (“FMT”) into LOGISTEC;
- ALTRA | SANEXEN perfluoroalkyl and polyfluoroalkyl substances (“PFAS”) water technologies recognized as CLEAN50;
- Acquisition of the remaining 32.7% interest in FER-PAL Construction Ltd., a key strategic player in the deployment of our ALTRA water main renewal technology.
Highlights From the Nine-Month Period Ended September 30, 2023
- Consolidated revenue totalled $711.0 million, up $66.4 million or 10.3%;
- Adjusted EBITDA (1) closed at $106.5 million, up $4.6 million;
- Total diluted earnings per share of $0.90, down $2.07;
- Environmental services’ backlog stood at $84.3 million for the remaining of the year.
“This top line growth demonstrates the strength of our extensive network of terminals, our innovative environmental solutions and the ability of our exceptional team to deliver,” said Madeleine Paquin, President and Chief Executive Officer. “We are moving into the year’s final stretch with confidence and a renewed energy on executing our plan with discipline and agility.”
LOGISTEC’s Chief Financial Officer, Carl Delisle, added: “We have delivered a solid third quarter and continue to successfully execute our strategic plan, while we chart our path forward. Last month’s announcement to sell LOGISTEC represents the next step in our strategic transformation, positioning us for greater success and creating meaningful benefits for all stakeholders. We are very excited to partner with Blue Wolf Capital and Stonepeak to accelerate sustainable, profitable growth.”
Results of the Period
LOGISTEC delivered good operational results during the third quarter of 2023. Consolidated revenue was $307.2 million for the period, an increase of $23.0 million or 8.1% over the same period in 2022. However, the Company’s profits were negatively impacted by rising interest rates, the additional costs related to the strategic review, higher depreciation and amortization expense resulting from the business combination, and lower share of profit of equity accounted investments.
(1) Adjusted EBITDA is a non-IFRS measure, please refer to the non-IFRS measure section.
Revenue from the marine services segment reached $182.7 million in the third quarter of 2023, up $22 .1 million or 13.7% from the prior year, reflecting the full benefits of the successful integration of LOGISTEC’s latest acquisition, FMT. This increase was partly offset by lower general cargo volumes derived from the wind energy sector in the U.S. East Coast region.
Bulk activities, both in Canada and the USA once again delivered strong volumes and revenue. Port logistics activities performed well, gaining shares in new markets with their last mile initiatives.
We are seeing different trends from our equity accounted investments. On the one hand, although this was expected, our container activities are handling lower volumes in 2023 and are not seeing the substantial storage revenue as last year. On the other hand, our other joint ventures are doing well, including our marine transportation services to the northern communities, which are having a very busy year in terms of cargo carried to the Arctic.
This quarter, our marine services team further strengthened their efforts to organically grow our business, provide innovative services across our extensive network, and attract new customers – resulting in an even more diversified revenue base.
Revenue from the environmental services segment in the third quarter of 2023 was $124.5 million, a 0.7% increase compared with the same period in 2022, which is consistent with last year’s results.
Progress on all major industry-leading projects during the quarter was strong, and the remaining projects across Canada are on track to be largely completed by the end of the year. Revenue from site remediation and contaminated soils and materials management services are strong, driven by more regulated materials and waste to be managed on behalf of our industrial clients, and to some extent steady contaminated soils volumes handled. We completed the final soil disposal for the Reseau Express Metropolitan (“REM”) project in Montréal, the largest public transit project undertaken in Québec in the last 50 years, a project for which we have handled more than 500,000 metric tonnes since its inception.
Our sludge and biosolids dredging and dewatering operations achieved its best performance since the acquisition of American Process Group in 2021, boosted by good commercial momentum in all geographies, particularly in the USA.
The environmental team continued to expand its PFAS market penetration across North America. The first full-scale continuous PFAS treatment system with Waste Connections will start this November. The first-of-its kind “clean water-as-a-service” agreement also includes additional sites which are under active negotiation. Other PFAS treatment projects with major waste management companies are in the request for proposal stage.
The ALTRA | SANEXEN team received the 2024 Clean50 Award, in the Clean Technology category on September 28. This prestigious award recognizes leaders from across Canada who have done the most to advance climate action and develop smart climate solutions.
Our third quarter results highlight the long-term runway for LOGISTEC, driven by our unique combination of an extensive network of marine terminals, innovative environmental solutions, and our people’s ingenuity. As we look ahead, these competitive advantages will be an essential element of our continued good performance – against a backdrop of strong secular demand drivers.
Our marine services team will continue to add to its range of solutions to address key challenges and respond to customers’ needs. In order to support fluid and resilient supply chains, they will capitalize on a growing network of port terminals in North America, a depth of expertise in cargo handling, strong long-term partnerships, and innovative solutions.
The environmental team is focused on delivering improved operational performance, against a robust set of opportunities and increased backlog. The PFAS market represents a significant long-term opportunity for our environmental services segment, which is driven by its leading position in the marketplace, its deep expertise and unique “clean water-as-a-service” solution.
Our good operational performance for the first nine months of the year, combined with our expectation for the remainder of the year, the resilience of our business model, and the effectiveness of our growth strategies, are leading us to be confident for the future.
LOGISTEC Corporation is based in Montréal (QC) and provides specialized services to the marine community and industrial companies in the areas of bulk, break-bulk and container cargo handling in 60 ports and 90 terminals located in North America. LOGISTEC also offers marine transportation services geared primarily to the Arctic coastal trade as well as marine agency services to shipowners and operators serving the Canadian market. Furthermore, the Company operates in the environmental industry where it provides services to industrial, municipal and other governmental customers for the renewal of underground water mains, dredging, dewatering, contaminated soils and materials management, site remediation, risk assessment, and manufacturing of fluid transportation products.
The Company has been profitable and has paid regular dividends since becoming public and payments have grown steadily over the years. A public company since 1969, LOGISTEC’s shares are listed on the Toronto Stock Exchange under the ticker symbols LGT.A and LGT.B. More information can be obtained on the Company’s website at www.logistec.com.
Adjusted earnings before interest expense, income taxes, depreciation and amortization expense (“adjusted EBITDA”) is not defined by IFRS and cannot be formally presented in financial statements. The definition of adjusted EBITDA excludes the configuration and customization costs related to the implementation of an Enterprise Resource Planning (“ERP”) system, and since the second quarter of 2023, the Company excluded professional fees incurred in a business combination and analyzing other business development opportunities (“transaction costs”). Please refer to the arrangement agreement section of the management’s discussion and analysis and Note 4 of the notes to the Q3 2023 condensed consolidated interim financial statements for further information on the nature of the transaction costs incurred in the first nine months of 2023. The definition of adjusted EBITDA used by the Company may differ from those used by other companies. The Company excludes the configuration and customization costs related to the implementation of an ERP system and transaction costs because they affect the comparability of our financial results and could potentially distort the analysis of trends in business performance. Excluding these items does not imply they are non-recurring. Even though adjusted EBITDA is a non-IFRS measure, it is used by managers, analysts, investors, and other financial stakeholders to analyze and assess the Company’s performance and management from a financial and operational standpoint. The definition of adjusted EBITDA has been applied retroactively and comparative figures have been amended accordingly to comply to the current year definition.
The following table provides a reconciliation of profit for the period to adjusted EBITDA:
|For the three months ended||For the nine months ended|
|Profit for the period||17,575||31,766||11,909||39,018|
|Depreciation and amortization expense||20,634||14,056||52,120||40,890|
|Net finance expense||10,019||4,052||22,409||9,986|
|Configuration and customization costs in a cloud computing arrangement||1,494||1,024||4,527||3,388|
For the purpose of informing shareholders and potential investors about the Company’s prospects, sections of this document may contain forward-looking statements, within the meaning of securities legislation, about the Company’s activities, performance and financial position and, in particular, hopes for the success of the Company’s efforts in the development and growth of its business. These forward-looking statements express, as of the date of this document, the estimates, predictions, projections, expectations, or opinions of the Company about future events or results. Although the Company believes that the expectations produced by these forward-looking statements are founded on valid and reasonable bases and assumptions, these forward-looking statements are inherently subject to important uncertainties and contingencies, many of which are beyond the Company’s control, such that the Company’s performance may differ significantly from the predicted performance expressed or presented in such forward-looking statements. The important risks and uncertainties that may cause the actual results and future events to differ significantly from the expectations currently expressed are examined under business risks in the Company’s 2022 annual report and include (but are not limited to) the performances of domestic and international economies and their effect on shipping volumes, weather conditions, labour relations, pricing, and competitors’ marketing activities. The reader of this document is thus cautioned not to place undue reliance on these forward-looking statements. The Company undertakes no obligation to update or revise these forward-looking statements, except as required by law.