Colabor Group Inc.
TSX : GCL

Colabor Group Inc.

January 26, 2016 08:30 ET

Colabor Group Inc. Announces Rationalization Plan

BOUCHERVILLE, QUEBEC--(Marketwired - Jan. 26, 2016) - Colabor Group Inc. (TSX:GCL) ("Colabor" or the "Company") today announced a plan to rationalize and optimize its operations. The plan, approved by the Board of Directors, is intended to further improve Colabor's operating efficiency and profitability despite difficult business conditions in the foodservice distribution industry, and to complete the integration of its acquisitions of recent years. This plan follows up the Board of Director's decision, announced on March 12, 2015, to suspend the declaration of a dividend in order to deploy more financial resources to its operations, while applying excess funds to debt repayment.

The plan encompasses most of Colabor's divisions and consists mainly of centralizing and consolidating certain operations at the head office of the Company or of its divisions. It will entail the elimination of approximately 120 jobs, or 8% of the Company's headcount. In addition to a reduction of current personnel, some vacant positions will be eliminated. Essentially reflecting these layoffs, Colabor will record a charge not related to current operations of approximately $3.0 million, before taxes, in its results for the first quarter of fiscal 2016.

The rationalization measures are expected to result in cost reductions estimated at more than $6.0 million annually, before taxes. These savings will be progressively realized during fiscal 2016 and will take full effect during fiscal 2017.

For fiscal 2015, Colabor expects to report adjusted earnings before financial expenses, income taxes, depreciation and amortization ("EBITDA") of slightly more than $26 million.

"This detailed plan, which stems from the analysis of our profitability and indebtedness, will enable Colabor to remain a leader in the foodservice distribution industry in eastern Canada. We regret the consequences of personnel reduction for the employees concerned and their families and we have taken equitable measures to provide them with all the support they deserve. The plan will result in a leaner and more flexible operating structure to the benefit our customers and suppliers. Its execution will facilitate the achievement of our strategic priorities in the short and medium term, while promoting long-term growth," said Claude Gariépy, President and Chief Executive Officer of Colabor.

NON-IFRS MEASURES

The information provided in this release includes non-IFRS performance measures, notably adjusted earnings before financial expenses, income taxes, depreciation and amortization (EBITDA), presented in the financial statements under "Operating earnings before costs not relating to current operations, depreciation and amortization." Since these concepts are not defined by IFRS, they may not be comparable to those of other companies.

ABOUT COLABOR

Colabor is a wholesaler and distributor of food and non-food products serving the foodservice market (cafeterias, restaurants, hotels, restaurant chains) in Quebec, Ontario and the Atlantic provinces and the retail market (grocery and convenience stores).

FORWARD-LOOKING STATEMENTS

This news release may contain forward-looking statements reflecting the opinions or current expectations of Colabor Group Inc. concerning its performance and business operations and future events. These statements are subject to risks, uncertainties and assumptions, including the risks related to implementation of the rationalization plan and those noted in the Company's Annual Information Form available under the Company's Profile at SEDAR (www.sedar.com). Actual results or events may differ. For example, the estimate of cost reductions is based on certain assumptions, including, notably, that the regrouping of operations, centralization of certain services and reduction of personnel will be completed according to plan and on schedule and that all other plan components will be implemented in timely fashion and according to plan. These assumptions could prove mistaken or inaccurate. The cost reductions resulting from the plan could differ materially from the estimated amount. Except as required by law, the Company assumes no obligation to update these forward-looking statements in the event that management's beliefs, estimates or opinions or other factors change.

Contact Information

  • Investors: Colabor Group Inc.
    Jean-François Neault, CPA, CMA, MBA
    Vice-President and Chief Financial Officer
    450-449-0026 ext. 308
    450-449-6180 (FAX)
    jean-francois.neault@colabor.com

    Media: MaisonBrison Inc.
    Martin Goulet, CFA
    Senior Vice-President, Investor Relations
    514-731-0000 ext. 229
    514-731-4525 (FAX)
    martin@maisonbrison.com