LOGISTEC ANNOUNCES ITS RESULTS FOR THE THIRD QUARTER OF 2023

MONTRÉAL, Nov. 10, 2023 /CNW/ - LOGISTEC Corporation ("LOGISTEC") (TSX: LGT.A) (TSX: 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.

Marine Services

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.

Environmental Services

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.

Outlook

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.

About LOGISTEC

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.

Non-IFRS measure

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
	September 30, 2023 $	September 24,   2022 $	September 30, 2023 $	September 24,   2022 $
Profit for the period	17,575	31,766	11,909	39,018
PLUS:
Depreciation and amortization expense	20,634	14,056	52,120	40,890
Net finance expense	10,019	4,052	22,409	9,986
Income taxes	4,937	7,827	4,187	7,466
Configuration and customization costs in a cloud computing arrangement	1,494	1,024	4,527	3,388
Transaction costs	4,220	1,154	11,344	1,154
Adjusted EBITDA	58,879	59,879	106,496	101,902

FORWARD-LOOKING STATEMENTS

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.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF EARNINGS

(in thousands of Canadian dollars, except per share amounts and number of shares)
	For the three months ended				For the nine months ended
	September 30, 2023 $		September 24, 2022 $		September 30, 2023 $		September 24, 2022 $
Revenue	307,150		284,209		710,997		644,623
Employee benefits expense	(141,623)		(129,554)		(333,958)		(310,504)
Equipment and supplies expense	(80,932)		(76,201)		(190,684)		(177,200)
Operating expense	(19,739)		(16,626)		(57,386)		(43,981)
Other expenses	(15,910)		(10,460)		(40,561)		(26,440)
Depreciation and amortization expense	(20,634)		(14,056)		(52,120)		(40,890)
Share of profit of equity accounted investments	4,960		6,342		6,488		12,411
Other losses	(741)		(9)		(4,271)		(1,549)
Operating profit	32,531		43,645		38,505		56,470
Finance expense	(10,311)		(4,178)		(23,237)		(10,380)
Finance income	292		126		828		394
Profit before income taxes	22,512		39,593		16,096		46,484
Income taxes	(4,937)		(7,827)		(4,187)		(7,466)
Profit for the period	17,575		31,766		11,909		39,018
Profit attributable to:
Owners of the Company	17,508		31,636		11,680		38,642
Non-controlling interest	67		130		229		376
Profit for the period	17,575		31,766		11,909		39,018
Basic earnings per Class A Common Share ^(1)	1.31		2.35		0.87		2.87
Basic earnings per Class B Subordinate Voting Share ^(2)	1.44		2.58		0.96		3.15
Diluted earnings per Class A share	1.30		2.34		0.86		2.85
Diluted earnings per Class B share	1.43		2.56		0.95		3.13
Weighted average number of Class A Shares outstanding, basic and diluted	7,353,396		7,361,022		7,358,480		7,369,911
Weighted average number of Class B Shares outstanding, basic	5,463,217		5,461,358		5,458,133		5,554,728
Weighted average number of Class B Shares outstanding, diluted	5,644,123		5,580,269		5,639,039		5,647,748

⁽¹⁾        Class A Common Share ("Class A share")

⁽²⁾        Class B Subordinate Voting Share ("Class B share")

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME

(in thousands of Canadian dollars)
	For the three months ended				For the nine months ended
	September 30, 2023 $		September 24, 2022 $		September 30, 2023 $		September 24, 2022 $
Profit for the period	17,575		31,766		11,909		39,018
Other comprehensive (loss) income
Items that are or may be reclassified to the consolidated statements of earnings
Currency translation differences arising on translation of foreign operations	6,974		9,258		(442)		12,911
Unrealized gain (loss) on translating debt designated as hedging item of the net investment in foreign operations	(3,915)		(3,172)		217		(4,396)
Income taxes relating to unrealized gain on translating debt designated as hedging item of the net investment in foreign operations	518		420		(29)		582
(Losses) gains on derivatives designated as cash flow hedges	(346)		201		(570)		1,814
Income taxes relating to derivatives designated as cash flow hedges	(4)		(53)		61		(481)
Total items that are or may be reclassified to the consolidated statements of earnings	3,227		6,654		(763)		10,430
Items that will not be reclassified to the consolidated statements of earnings
Remeasurement gains (losses) on benefit obligation	2,189		(1,443)		1,475		7,796
Return on retirement plan assets	(627)		(18)		(276)		(2,902)
Income taxes on remeasurement of benefit obligation and return on retirement plan assets	(414)		387		(318)		(1,297)
Total items that will not be reclassified to the consolidated statements of earnings	1,148		(1,074)		881		3,597
Share of other comprehensive income (loss) of equity accounted investments, net of income taxes
Items that are or may be reclassified to the  consolidated statements of earnings	(6)		—		14		—
Total share of other comprehensive income (loss) of equity accounted investments, net of income taxes	(6)		—		14		—
Other comprehensive income for the period, net of income taxes	4,369		5,580		132		14,027
Total comprehensive income for the period	21,944		37,346		12,041		53,045
Total comprehensive income attributable to:
Owners of the Company	21,835		37,142		11,815		52,569
Non-controlling interest	109		204		226		476
Total comprehensive income for the period	21,944		37,346		12,041		53,045

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

(in thousands of Canadian dollars)
		As at September 30, 2023 $	As at December 31, 2022 $
Assets
Current assets
Cash and cash equivalents		23,735	36,043
Trade and other receivables		200,916	198,247
Contract assets		32,652	14,912
Current income tax assets		19,389	11,245
Inventories		29,552	20,000
Prepaid expenses and other		18,429	8,756
		324,673	289,203
Equity accounted investments		47,317	46,140
Property, plant and equipment		308,781	234,602
Right-of-use assets		175,426	167,274
Goodwill		260,593	187,430
Intangible assets		48,141	36,807
Non-current assets		1,760	2,030
Post-employment benefit assets		1,738	1,264
Non-current financial assets		6,759	6,114
Deferred income tax assets		13,843	12,808
Total assets		1,189,031	983,672
Liabilities
Current liabilities
Short-term bank loans		467	—
Trade and other payables		154,037	128,019
Contract liabilities		13,093	11,107
Current income tax liabilities		13,550	5,095
Dividends payable		1,574	1,574
Current portion of lease liabilities		23,124	18,662
Current portion of long-term debt		12,001	10,925
		217,846	175,382
Lease liabilities		163,464	157,500
Long-term debt		388,543	224,110
Deferred income tax liabilities		35,030	24,604
Post-employment benefit obligations		13,595	13,690
Contract liabilities		1,500	1,733
Non-current liabilities		6,226	25,562
Total liabilities		826,204	622,581
Equity
Share capital		49,443	49,443
Retained earnings		293,008	290,773
Accumulated other comprehensive income		18,546	19,271
Equity attributable to owners of the Company		360,997	359,487
Non-controlling interest		1,830	1,604
Total equity		362,827	361,091
Total liabilities and equity		1,189,031	983,672

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY

(in thousands of Canadian dollars)
	Attributable to owners of the Company
	Share capital issued $	Retained earnings $	Accumulated other comprehensive income $	Total $	Non- controlling interest $	Total equity $
Balance as at January 1, 2023	49,443	290,773	19,271	359,487	1,604	361,091
Profit for the period	—	11,680	—	11,680	229	11,909
Other comprehensive income (loss)
Currency translation differences arising on translation of foreign operations	—	(21)	(418)	(439)	(3)	(442)
Unrealized loss on translating debt designated as hedging item of the net investment in foreign operations, net of income taxes	—	—	188	188	—	188
Remeasurement losses on benefit obligation and return on retirement plan assets, net of income taxes	—	881	—	881	—	881
Share of other comprehensive income of equity accounted investments, net of income taxes	—	—	14	14	—	14
Cash flow hedges, net of income taxes	—	—	(509)	(509)	—	(509)
Total comprehensive income (loss) for the period	—	12,540	(725)	11,815	226	12,041
Net remeasurement of written put option liability	—	(5,567)	—	(5,567)	—	(5,567)
Class B shares to be issued under the Executive Stock Option Plan	—	364	—	364	—	364
Other dividend	—	(380)	—	(380)	—	(380)
Dividends on Class A shares	—	(2,600)	—	(2,600)	—	(2,600)
Dividends on Class B shares	—	(2,122)	—	(2,122)	—	(2,122)
Balance as at September 30, 2023	49,443	293,008	18,546	360,997	1,830	362,827

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY (CONTINUED)

(in thousands of Canadian dollars)
	Attributable to owners of the Company
	Share capital issued $	Retained earnings $	Accumulated other comprehensive income $	Total $		Non- controlling interest $		Total equity $
Balance as at January 1, 2022	50,889	254,621	9,051	314,561		1,048		315,609
Profit for the period	—	38,642	—	38,642		376		39,018
Other comprehensive income (loss)
Currency translation differences arising on translation of foreign operations	—	—	12,811	12,811		100		12,911
Unrealized loss on translating debt designated as hedging item of the net investment in foreign operations, net of income taxes	—	—	(3,814)	(3,814)		—		(3,814)
Remeasurement gains on benefit obligation and return on retirement plan assets, net of income taxes	—	3,597	—	3,597		—		3,597
Cash flow hedges, net of income taxes	—	—	1,333	1,333		—		1,333
Total comprehensive income for the period	—	42,239	10,330	52,569		476		53,045
Net remeasurement of written put option liability	—	(5,025)	—	(5,025)		—		(5,025)
Issuance of Class B shares	683	—	—	683		—		683
Repurchase of Class B shares	(2,092)	(7,974)	—	(10,066)		—		(10,066)
Class B shares to be issued under the Executive Stock Option Plan	—	486	—	486		—		486
Other dividend	—	(127)	—	(127)		—		(127)
Dividends on Class A shares	—	(2,316)	—	(2,316)		—		(2,316)
Dividends on Class B shares	—	(1,907)	—	(1,907)		—		(1,907)
Balance as at September 24, 2022	49,480	279,997	19,381	348,858		1,524		350,382

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

(in thousands of Canadian dollars)	For the nine months ended
	September 30, 2023 $	September 24, 2022 $
Operating activities
Income for the period	11,909	39,018
Items not affecting cash and cash equivalents	76,670	48,847
Cash generated from operations	88,579	87,865
Dividends received from equity accounted investments	5,325	11,175
Contributions to defined benefit retirement plans	(710)	(542)
Settlement of provisions	(1,848)	(450)
Changes in non-cash working capital items	10,734	(55,262)
Income taxes paid	(7,501)	(15,654)
	94,579	27,132
Financing activities
Net change in short-term bank loans	467	(8,565)
Issuance of long-term debt, net of transaction costs	255,992	126,121
Repayment of long-term debt	(91,890)	(63,112)
Repayment of lease liabilities	(14,188)	(11,939)
Repayment of due to a non-controlling interest	(45,363)	(19,086)
Interest paid	(22,828)	(10,086)
Issuance of Class B shares	—	221
Repurchase of Class B shares	—	(10,013)
Dividends paid on Class A shares	(2,600)	(2,173)
Dividends paid on Class B shares	(2,122)	(1,813)
	77,468	(445)
Investing activities
Dividends paid to a non-controlling interest	(4,067)	(8,826)
Acquisition of property, plant and equipment	(47,300)	(36,238)
Proceeds from disposal of property, plant and equipment	1,597	1,005
Business combinations, net of cash acquired	(135,245)	(3,264)
Acquisition of intangible assets	(81)	(211)
Interest received	648	150
Cash receipts from other non-current financial assets	127	1,058
Net acquisition of other non-current assets	(179)	(224)
	(184,500)	(46,550)
Net change in cash and cash equivalents	(12,453)	(19,863)
Cash and cash equivalents, beginning of year	36,043	37,530
Effect of exchange rate on balances held in foreign currencies of foreign operations	145	3,855
Cash and cash equivalents, end of period	23,735	21,522
Additional information
Acquisition of property, plant and equipment included in trade and other payables	3,231	5,018
Issuance of Class B shares under the Employee Stock Purchase Plan for non-interest-bearing loans	—	462
Repurchase of Class B shares included in trade and other payables	—	53

SOURCE Logistec Corporation

Carl Delisle, cpa auditor, Chief Financial Officer and Treasurer, Logistec Corporation, [email protected], [phone]