Release Date: May 02, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Colabor Group Inc (COLFF, Financial) reported a 0.4% increase in total revenues for the first quarter of 2025, driven by a 3% growth in distribution sales.
- The company successfully gained market share in the HRI market, particularly in western Quebec, despite challenges in the restaurant industry.
- Colabor Group Inc (COLFF) managed to reduce operating expenses and further reimburse debt, demonstrating prudent capital management.
- The strategic acquisition announced in February 2025 aims to consolidate Colabor Group Inc (COLFF)'s position as the largest Quebec food distributor.
- The company's private label brand continues to grow, benefiting from a demand tailwind and market share gains with independent restaurants.
Negative Points
- Colabor Group Inc (COLFF) experienced a significant impact on its adjusted EBITDA margin due to softness in the restaurant industry and repricing of a major contract.
- Wholesale revenues declined by 3.8%, although at a slower pace than previous quarters.
- Net loss from continuing operations increased to $4 million, or $0.04 per share, compared to a net loss of $1.8 million, or $0.01 per share, in the same quarter last year.
- Cash flow from operating activities decreased to $6.2 million from $11.7 million in the equivalent quarter of last year.
- The leverage ratio increased to 2.8 times adjusted EBITDA, up from 2.4 times at the end of the last fiscal quarter, indicating higher financial leverage.
Q & A Highlights
Q: Can you clarify the impact of the institutional client contract repricing on your Q1 revenue, given its higher proportion during this period?
A: Yes, the institutional client represented 11% of 2024 revenue, and its proportion was higher in Q1 due to lower restaurant volumes. This seasonality dynamic affected our margins, but it should adjust over the year as restaurant activity increases.
Q: Were the cost mitigation efforts, particularly regarding wages, fully realized in Q1, or will we see more benefits in Q2?
A: The full effect of our cost mitigation efforts, including wage adjustments, was not fully realized in Q1. We continue to focus on operational efficiencies, and further benefits are expected in Q2.
Q: Are there additional strategies beyond wage adjustments to improve margins with the institutional client?
A: Yes, we are working to improve our margin mix by selling more products outside the contract, such as private labels, which help raise margins. This strategy began in Q1 and will continue to develop.
Q: How should we think about gross margin trends for the rest of 2025?
A: The mix will improve due to seasonality and new independent restaurant customers. While it may not reach last year's levels due to the institutional contract's impact, we expect margins to improve as the year progresses.
Q: Are there emerging opportunities with national chains in Quebec?
A: Yes, we see favorable trends with national chains in Quebec, driven by our ability to compete with larger distributors like Cisco and JFS. Our local presence and the tariff situation are creating opportunities for us.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
