GDI Integrated Facility Services Inc
TSX:GDI
US |
Fubotv Inc
NYSE:FUBO
|
Media
|
|
US |
Bank of America Corp
NYSE:BAC
|
Banking
|
|
US |
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
|
US |
C
|
C3.ai Inc
NYSE:AI
|
Technology
|
US |
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
|
CN |
NIO Inc
NYSE:NIO
|
Automobiles
|
|
US |
Fluor Corp
NYSE:FLR
|
Construction
|
|
US |
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
|
US |
TopBuild Corp
NYSE:BLD
|
Consumer products
|
|
US |
Abbott Laboratories
NYSE:ABT
|
Health Care
|
|
US |
Chevron Corp
NYSE:CVX
|
Energy
|
|
US |
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
|
US |
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
|
US |
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
|
US |
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
|
US |
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
52 Week Range |
31
39.85
|
Price Target |
|
We'll email you a reminder when the closing price reaches CAD.
Choose the stock you wish to monitor with a price alert.
Fubotv Inc
NYSE:FUBO
|
US | |
Bank of America Corp
NYSE:BAC
|
US | |
Palantir Technologies Inc
NYSE:PLTR
|
US | |
C
|
C3.ai Inc
NYSE:AI
|
US |
Uber Technologies Inc
NYSE:UBER
|
US | |
NIO Inc
NYSE:NIO
|
CN | |
Fluor Corp
NYSE:FLR
|
US | |
Jacobs Engineering Group Inc
NYSE:J
|
US | |
TopBuild Corp
NYSE:BLD
|
US | |
Abbott Laboratories
NYSE:ABT
|
US | |
Chevron Corp
NYSE:CVX
|
US | |
Occidental Petroleum Corp
NYSE:OXY
|
US | |
Matrix Service Co
NASDAQ:MTRX
|
US | |
Automatic Data Processing Inc
NASDAQ:ADP
|
US | |
Qualcomm Inc
NASDAQ:QCOM
|
US | |
Ambarella Inc
NASDAQ:AMBA
|
US |
This alert will be permanently deleted.
Ladies and gentlemen, thank you for standing by. Welcome to the GDI First Quarter ended March 31, 2018, Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, Thursday, May 10, 2018.I would now like to turn the conference over to Stéphane Lavigne, Senior Vice President and Chief Financial Officer. Please go ahead, sir.
Thank you, operator. Good morning, and welcome to GDI's conference call to discuss our results for the first quarter of 2018. My name is Stéphane Lavigne, Senior Vice President and Chief Financial Officer of GDI. I am with Claude Bigras, President and CEO; and David Hinchey, Senior Vice President, Strategic Development.Before we begin, I would like to make you aware that this call contains forward-looking information, and we ask listeners to refer to the full description of the forward-looking safe harbor provision that is fully described at the beginning in the management discussion and analysis filed on SEDAR on May 9, 2018.I would like to turn the call to Claude, who will provide further remarks for Q1.
Thank you, Stéphane. Good morning, and thank you for taking the time again to participate to our earning call. I am pleased to report that GDI reported $251 million in revenue and an adjusted EBITDA of $11.7 million, representing 10% growth in EBITDA over the same period last year. While a few of our business segments experienced a soft quarter, considering the late spring this year and the disturbance of minimum wages in some markets, I am pleased with how GDI perform and feel that we are on track to meet our growth objective for the year.In Q1 2018, we made the decision also to consolidate our Modern franchise business within our Canadian Janitorial segment. As I am sure most people listening on this call know over the past 18 months, Modern has grown from a modest regional business into a leading commercial janitorial service provider in Canada for clients with regionally diversified portfolios to -- from small to midsize properties.During 2017, Modern clients revenue or, in franchise terminology, system-wide sales surpassed the $100 million mark. Today, we consider Modern and GDI traditional commercial Janitorial services businesses as 2 complementary but distinct service delivery platforms servicing the Canadian market, and as such, it makes sense to view them together instead of apart.Our Canadian Janitorial segment performed relatively well in the quarter, recording $132 million in revenue with an adjusted EBITDA margin of 6.6%. This is a slight increase over a margin of 6.5% recorded in Q1 last year. Given the significant increase in minimum wage in Ontario that took effect on January 1, we are very happy with the perform of our business so far this year. While our work is still ongoing, we had very strong successes working closely with our client to mitigate the impact of the increase.Both our Technical Service and U.S. Janitorial segment experienced a soft start quarter this year in 2018. Historically, the first quarter is seasonally the slowest for Ainsworth as HVAC system maintenance and startup work begins to gain momentum in Q1. Due to late spring this year, much of this work that is typically executed in the first quarter was delayed, and we expect to realize this work in the second quarter. And I'm happy to say that we have seen this momentum pick up so far in Q2.This being said, both of these segments recorded revenue and adjusted EBITDA that was in line with the same quarter of 2017. Our Complementary business segment is now composed of our Superior Solutions, manufacturing and distribution business and our systematic disaster restoration business with Superior Solutions representing the majority of the segment. Both businesses performed well in the quarter, reporting growth in revenue, adjusted EBITDA and margin. I am pleased to report our Superior Solutions business completed also a regional acquisition following the end of the quarter that further strengthened its platform in Québec. Finally, our U.S. Janitorial business also delivered lower-than-expected revenue resulting in lower margins. Some of the sanitation work that are typically executed in the first quarter did not materialize. However, we expect to fulfill this work in the future quarters.So in conclusion, GDI had a relatively good first quarter of 2018. Our business continued to generate healthy level of cash flows; our balance sheet is strong; the momentum in our business remained positive; and we are well positioned to continue to execute on our business plan to deliver long-term value to our shareholders.That concludes my remark, and I will now ask the operator to open the line to analysts for questions.
[Operator Instructions] The first question coming from the line of Martin Landry with GMP Securities.
First question, just to close the minimum wage discussion. You -- we don't see much of an impact on your margins in Janitorial Canada. But did it have any impact, and was it offset by something else? Or you were able to adjust perfectly? Just trying to get a little bit more color because it is a meaningful swing and just wanted to see if it had any impact at all.
Well, actually, Martin, yes, it had some impact. As you may know, the law come into effect late -- the last fourth quarter. So like usual, we had to -- there were some large clients, and so -- that we needed to work extensively in the Q1 in order to achieve our objective. So yes, there was an impact. I will not quantify it in exact dollars, but we are certainly -- me, I'd calculate a miss of probably $0.5 million in this area where we had to -- in the quarter, it was the impact. But now the good part is, now that we are in Q2, I can tell you that -- with some of the project I calculated completed as far as I'm concerned. But yes, there was some impact in Q1. We were expecting a little bit more margins there, but now it's done.
Okay, okay. And I guess, was that offset by your franchise business growing a little faster or...
It was offset because, as you know, we always work on the business segment, and we're working to improve, and we align our cost structure always to the market. So it is offset by several thing. But me, if I'm looking at the budget, what we were expecting and what was delivered, we know the gap -- actually, the first month was the biggest gap. January was the biggest gap, Marty. It was not all closed up, but now we see that it resumed to its normal course.
Okay, okay. And still on your Janitorial Canada, you had a good performance in terms of organic revenue growth, that 5.8%. Wondering, is this driven by your franchise business? Or is it driven by your legacy Janitorial business?
Well, I don't know if legacy is the right word. Anyway, so my English is not perfect. But no, I think it's a little bit of both. We had good successes in Janitorial Canada, and we had also good successes in our Modern business. Mind you that, Marty, that the minimum wage increase also has increased our revenue base in Ontario just by the increase by itself. Do you follow what I'm saying?
Yes. And can you quantify that revenue increase?
No, I don't have the exact number, but I would certainly -- I would say that probably 1/3 of the increase is based on the Ontario wages increase.
So organic growth [ 16%]? So maybe 2% related to the wage increase?
Yes, probably overall, yes.
Okay. On your Technical Services segment, you talk about seasonality impacting your top line. Looking at your EBITDA margin, is there some seasonality there? It looks like it's half the level that you recorded in Q4. Just wondering if -- is it because of a lower top line that you had lesser fixed cost absorption? Or is it a seasonal impact?
Well, actually, Martin, I think there's 2 components. One component, it's hard to compare Q4 with Q1. Q1 is usually our slowest quarter because holidays and startups and customer do not undertake project work in January. So it's -- I think it's a hard comparison. But this being said, I think what has affected us so far in Ainsworth over the budget is really that it was a slow start. I went out of my script when I said that now we have some visibility on our April, and we see that the work now is getting done, you know what I'm saying? So I think there was kind of a timing issues that work was just a bit pushed out, so this has given us a little bit of effect. And for sure, our fixed costs stays the same. So it has given us a little bit of a challenge on the EBITDA. But to be very honest, what we are -- we have good visibility that it's really a little bump for the quarter because of the late start.
[Operator Instructions] Our next question coming from the line of Leon Aghazarian with National Bank Financial.
So just to kind of touch upon the Janitorial Canada side. I mean, what's the bidding looking like? I mean, in terms of any new contracts that are coming up, what are you kind of seeing there?
Listen, there is a lot on the drawing table. What we have seen so far in Q1 is we had -- Leon, let me put it this way, is -- there is a bidding process. It's funny, we never have -- it depends from quarter-to-quarter. Sometimes we have a heavy first quarter, and sometimes we have a heavy third quarter. So -- But now it was a normal activity, nothing really outside of the ordinary in Q1. In Q2, I think that we have some good perspective, and we actually were very successful to renew some of our large accounts. So I don't see anything out of the ordinary, but I see the steady pace that we were supposed to have.
Okay. You mentioned that you acquired a distribution company in Québec as well for about $4 million. Can you tell us a little bit about that in terms of maybe the revenue margin profile and what that entails?
Okay. Well, listen, it's a small to midsized regional distributor that is working more on the Montérégie. I'm sorry if I don't know how to say it in English but the Eastern Township at Montérégie, and it covers a significant area where we can grow the business. So we're very happy, and it's a very good add-on to our distribution business. So it's going to be transforming with 2 stores as well, so we're very satisfied [ to ] have completed that.
And that was under which segment then? That was under the Janitorial Canada?
I'm sorry, sir?
That would fall under which category -- under which segment, pardon me, Janitorial Canada or would that...
No, no. It's going to be our Complementary business.
Okay, perfect. You also made an acquisition, another kind of tuck-in one in the U.S. as well. Can you give us a little bit of color there in terms of the area, I believe it's in Detroit?
Yes, actually, it says in [indiscernible]. It's around Detroit, but it's to service our Michigan business. As you may know, we have a significantly important client in this region. And as we're growing with this client, it was for us a must to complete our service offering by offering Technical Services because we had a high demand from this particular client. So it was a great opportunity to partner with a business that we deal with -- that we were dealing with already. So now we integrated this mechanical and Technical Service business within our geography, and this would be -- and it is part of -- it will be part of Ainsworth. So it's actually to continue to offer a complete service line to our clients.
Okay. So is this the first time that you get kind of technical and mechanical services in the U.S? I mean, is this because there's an opportunity there? Or is this going to be a focus going forward in terms of [indiscernible]?
No, that's a very good question. No, I would tell you we do not have an objective at this time to grow us a large platform in the U.S. on mechanical. This was an opportunistic approach based on a client-focused strategy.
Okay, fair enough. And then one last question for me would be on the Janitorial U.S.A. side. I mean, you mentioned work-related timing issues and then, periodically, that it didn't materialize. Can you give us a bit of insight as to what happened there, and should we be seeing some of that business resurface in Q2?
Yes, okay. So no, but what we have seen in our results and internal reporting is that, usually, typically, after the holidays, we undertake several sanitation -- what we call the large sanitation work in plants and everything. And as you know, for this quarter, there was probably half of that usually. And I know that now we are starting to execute on this work, but it was not seasonal. It's just that it happened like this. The project did not materialize, but they're working on it. But again, the U.S. business segment is always our focus, Leon, and we will make sure that the job gets done, and the work gets done because it's important.
Our next question coming from the line of Varun Choyah with CIBC.
Going back to the minimum wage discussion, so -- are you largely completing negotiations with all your clients for adjusting the contracts for minimum wage? Or you still have room for -- to complete all that exercise?
We are. Listen, we had one large outstanding client relationship, which we have not settled, and I'm happy to report that we have finalized that. So I can say that the minimum wage increase is more or less behind us at this time.
Okay, great. And looking at the Complementary Services business, nice year-over-year margin improvement. How much of that is attributed to the restructuring activities in that division?
Well, actually, we did not restructure. [ In actuality, if you allow me ], is we just took one business unit, and it was all separate cost. There was no shared structure between the business unit that were in Complementary. So we just move, actually, revenues and all the numbers, we moved them into our Canadian Janitorial segment. So there is no restructuring per se. The margin improvement is really more or less the manufacturing and distribution segment that is improving. This was the idea behind creating that business segment, and I'm happy to say that it's really getting to be an interesting segment as it grows and we will invest time and energy into developing it further.
Okay. And a final one for me on the acquisition pipeline. I mean, you've been doing some nice tuck-ins here on out. What sort of -- what does the environment look like? And what sort of regions or like service areas that look attractive to you?
Okay. Well, listen, we -- as you know, we have 3 large service lines, so we have opportunities in both. But I would say that we're focusing on completing our mechanical -- geography and our mechanical business segment. So we're growing in both trades offering in different markets. So this is a big focus for us to grow -- continue to grow the mechanical group and also our U.S. group that we're focusing on. Again, it's always -- it's not to acquire businesses. Acquiring is easy. Acquiring the right business at the right price takes a little bit more work, but we're very focused into that. And again, I don't want to be a teaser, but this team is very busy.
Our next question is a follow-up question coming from the line of Leon Aghazarian with National Bank Financial.
Yes, just one kind of housekeeping question that I would have is more of a question for you guys. You did reclassify the Complementary Services within the Janitorial Canada for the quarter. Would it be possible to get the reclassified numbers for your rest -- for the balance of 2017 as well, like for the Q2, Q3 and Q4? Would that be something that you could provide for us?
Yes, I think we can provide a guideline on that, Leon. But I think the number that you saw in the first quarter is pretty stable across the year. It's just a matter of the business so...
But if you are -- if I understand, you'd like to have the 2017 reclassified numbers for your modeling?
Yes, correct.
So maybe you can take it off-line with Stéphane, and we can see how we can manage to help you there.
Thank you. Mr. Lavigne, Mr. Bigras, there are no further questions at this time. I will now turn the call back to you. Please continue with your presentation or closing remarks.
Well, ladies and gentlemen, there's not much closing remark. I would just like to say that, on the growth side, we're very busy. Everybody's working full steam. We're working extensively in the business -- on the business, on the operational side. For the ones that would be at our AGM, we will share a little bit more on our strategy. But again, a little slow start to the year because of XYZ, little things, but the horizon for me is good, and we're pushing the business as we have structured or planned. We say planned. So thank you very much for your call.
Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line. Have a great day.