Unisync Reports 60% Increase in Q1 2020 Revenues
February 13 2020 - 8:00AM
Unisync Corp. (TSX: "UNI") (the “Company") operates through two
business segments: Unisync Group Limited (“UGL”) of Mississauga,
Ontario and Peerless Garments LP (“Peerless”) of Winnipeg,
Manitoba.
Consolidated revenue for the three months ended
December 31, 2019 of $27.1 million increased by $10.1 million or
60% over the three months ended December 31, 2018 on a $7.1 million
revenue increase in the UGL segment and a $3.0 million revenue
improvement in the Peerless segment. First quarter 2020 UGL
segment revenue of $22.5 million increased by 47% over the same
period in the prior year with the addition of $7.1 million in US
market sales.
The Company reported a net income of $0.1
million in the quarter ended December 31, 2019 compared to a net
loss of $0.9 million in the same quarter last year. Net
income before interest, taxes, depreciation and amortization
(“EBITDA”) was $1.8 million for the three months ended December 31,
2019 versus negative $0.4 million for the three-month period ended
December 31, 2018. More detailed information is contained in the
Company’s Interim Financial Statements for the three months ended
December 31, 2019 and Management Discussion and Analysis dated
February 10, 2020 which may be accessed at www.sedar.com.
The level of improvement in net income and
EBITDA was adversely impacted by a buildup in our professional
sales staff and significant non-recurring costs associated with
upgrading our various systems to accommodate the Company’s growth
opportunities domestically and in the US. These non-recurring costs
included the impact of redundant online ordering support and
programming costs associated with the conversion of existing
clients to the Company’s new proprietary state-of-the-art
electronic storefront, testing and ongoing customization associated
with the implementation of the new ERP system, professional fees
related to the successful completion of the segment’s first SOC II
audit over its data security, and the costs associated with the
preparation of the Company’s bid response to the estimated $1
billion Operational Clothing and Footwear Contract (“OCFC2”)
solicitation by the Department of National Defense. Some of these
one-time costs will continue to cause net income and EBITDA
improvement to trail top-line growth well into fiscal 2020 but are
expected to establish a systems platform for improved capacity,
efficiency and more pro-active management capabilities going
forward.
Business Outlook
The UGL segment is seeing significant
opportunities to expand its market share both in Canada and the
United States. Following the October 1, 2018 Utility
acquisition, the Company leased a new 45,000 square foot
distribution and service facility in Henderson, Nevada and acquired
the hospitality assets of RTUT in Lakewood, New Jersey (since
relocated to Farmingdale, New Jersey).
In fiscal 2017 and 2018 Unisync successfully
launched newly designed uniforms to the 30,000 employees of Air
Canada. In the first quarter of fiscal 2020 UGL assumed
distribution of WestJet’s current uniform program from a competitor
and has been working on field testing a new uniform design.
It is expected that the manufacture of WestJet’s new uniform
will take place during fiscal 2020 with the rollout of the new
uniform program to start in early fiscal 2021.
In addition, UGL’s began a rollout of new
uniforms to the 19,000 uniformed employees of its first U.S. based
airline account, Alaska Airlines, starting in mid-September 2019
for completion by March 2020. UGL is responsible for all
aspects of the program including manufacturing, quality, inventory
planning, online ordering, customer service, and warehouse and
distribution. UGL is distributing the new uniforms to the employees
of Alaska Airlines from its Henderson Nevada distribution
center. UGL intends to use this location to expand its
marketing efforts to other potential US customers in industry
sectors where UGL has built a strong knowledge base, such as in
food service, hospitality, private security, retail and
transportation.
Unisync is not expecting any material effect on
our fiscal 2020 performance from the coronavirus epidemic currently
centered in the Hubei Province of China as a result of a
combination of current high levels of inventory and our recent
diversification of production to other countries. Although some
shipping delays may be expected, this would affect only a limited
amount of our 2020 production requirements.
With $26 million in firm contracts and options
on hand as at December 31, 2019 and a number of large potential
contracts expected to go to public bid in the near future, the
Peerless business segment is well positioned to maintain more
normal levels of revenues and profitability for the balance of
fiscal 2020 and beyond.
On Behalf of the Board of Directors
Matthew GrahamCEO
Investor relations
contact: Douglas F Good, Chairman at
778-370-1725 Email
dgood@unisyncgroup.com
Forward Looking StatementsThis
news release may contain forward-looking statements that involve
known and unknown risk and uncertainties that may cause the
Company’s actual results, performance or achievements to be
materially different from any future results, performance or
achievements expressed or implied in these forward-looking
statements. Any forward-looking statements contained herein are
made as of the date of this news release and are expressly
qualified in their entirety by this cautionary statement.
Except as required by law, the Company undertakes no obligation to
publicly update or revise any such forward-looking statements to
reflect any change in its expectations or in events, conditions or
circumstances on which any such forward-looking statements may be
based, or that may affect the likelihood that actual results will
differ from those set forth in the forward-looking statements.
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