Loyalist Group earns $1.56-million in Q1
2014-05-28 07:04 ET - News Release
Mr. Andrew Ryu reports
LOYALIST ANNOUNCES RECORD REVENUES, EARNINGS AND CASH FLOW
Loyalist Group Ltd. today released record financial results for the three months ended March 31, 2014.
First-quarter revenue for the three months ended March 31, 2014, was $15.7-million, an increase of 219 per cent over the same period in 2013. Income from operations was $1.7-million, a 68-per-cent increase over the same period in 2013, while net income was $1.6-million, an increase of 87 per cent over the same period in 2013. Cash flow from operations was $2.2-million compared with negative $895,883 a year ago.
Revenues continue to rise as a result of the acquisitions closed through March 31, 2014, as well as organic growth of $400,000, arising from higher enrolment and increased tuition fees. Net income and cash flow were adversely impacted by $500,000 of one-time acquisition, integration and restructuring costs ($200,000 in the year-ago period). Excluding these, operating income would have been $2.2-million and cash from operations $2.7-million.
"Of particular importance, the first quarter demonstrated that Loyalist can not only grow its top- and bottom line, but also generate strong cash flows from its school operations," said chief executive officer Andrew Ryu. "Ultimately, our long-term goal is to create cash with which to self fund acquisitions and, as the business matures, start to return cash to shareholders."
Speaking to the first quarter, Mr. Ryu added: "Our topline benefited from acquiring schools and from better execution in schools we owned or acquired. Our first-quarter 2014 results are in line with our expectations of the seasonal nature of the first quarter with net income at 9 per cent of gross revenues. The integration of our recent six acquisitions continues, and we expect that the next three quarters will show the results in the form of better profit margins.
"Our assets support our current run-rate expectation of $63.0-million for 2014. We continue to focus on integrating schools and improving the company's overall profitability. While our corporate costs more than doubled over the same period last year, we expect them to stay fixed, and perhaps fall, moving forward, while our revenue continues to grow, which will create the leverage needed to see meaningful profit and cash-flow growth.
"We will also aggressively pursue our student housing and franchise businesses. These are low-risk, high-margin pursuits that allow Loyalist to create greater shareholder value from its asset base. Our students collectively spend millions of dollars a year on rent, and we plan to capture a significant share of that spend over time."
Loyalist generated $120,000 of revenue from its student housing pilot program and modest initial franchise fees in the first quarter of 2014. The company expects both lines of business to accelerate.
The table summarizes and compares three-month results for the periods ended March 31, year over year.
Three months ended March 31,
Revenue $ 15,714,747 $ 4,932,219
Gross profit $ 6,555,981 $ 2,131,524
Income from operations $ 1,732,107 $ 1,030,155
Net income $ 1,562,658 $ 833,799
Adjusted EBITDA $ 1,758,028 $ 1,079,480
Loyalist has a number of fiscal goals in 2014:
To close on accretive acquisitions -- Study English in Canada and Upper Career College of Business and Technology closed with an effective date of Feb. 1, 2014;
Close on finance offerings to support the acquisition pipeline -- closed $10.01-million bought-deal private placement in January, 2014;
Centralize all accounting functions in the corporate office and roll out the company's custom-built ERP system to provide standardization of the various student databases, billing/collection and human resource functions across all schools.
With a cash balance of $3.1-million as at May 26, 2014, and anticipated profitability, the company has the funds to meet all of its operating obligations and to continue growing by acquisition without raising additional capital.
We seek Safe Harbor.
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