Unisync Corp. (TSX: "UNI") (“Unisync") is pleased
to report on a number of positive developments in spite of one of
the worst economic slow-downs being experienced by a number of its
larger accounts, particularly in the transportation and hospitality
industry segments.
Unisync operates through two business units:
Unisync Group Limited (“UGL”) with operations throughout Canada and
the USA and 90% owned Peerless Garments LP (“Peerless”) based in
Winnipeg, Manitoba. The Canadian operations of UGL and Peerless
were considered essential services and, as such, have continued to
operate through shutdowns caused by COVID-19.
UGL
Continues To Build On Its
Base Of Long-Term Contracts
Prior to the COVID-19 outbreak, the UGL business
unit had built a strong base of long-term contracts that supported
a consolidated forward revenue base for Unisync exceeding $100
million. Although UGL has not lost any of these major accounts as a
result of the pandemic, revenues dropped precipitously in hard-hit
business sectors such as airlines and hospitality. Although these
industries are starting to gradually improve, we expect that
overall employee uniform orders from these business sectors will
only gradually increase over the ensuing year and possibly not
return to pre-COVID-19 normality until mid-late 2021.
The early signs of improvement that we
referenced in our April update for the transit, grocery and drug
store business segments as well as the public safety sectors
continue. For example, we are experiencing a build-up in new
long-term contract opportunities involving US Transit agencies,
Mid-tier US Airlines, Canadian Municipalities, Canadian Transit
agencies, Urban and Regional Law Enforcement Agencies, and
Corporate Imagewear for high profile Canadian Corporations. During
fiscal 2020 UGL has launched or won new long term contracts with
the Canadian Coast Guard, Bell Communications and the Ontario
Liquor Control Board, and competed successfully in the renewal of
existing long-term contracts such as Air Canada, Shoppers Drug Mart
and Purolator.
Peerless
Awarded $3.8
Million Contract With
DND
In September Peerless was awarded a two year
contract with three one year options for the provision of Special
Operations Forces Distinctive Service Uniform accessory clothing
outerwear to the Department of Defense (DND) . The firm component
amounts to $2.9 million with 80% scheduled for delivery in the
first year of the contract. The total contract with options amounts
to $3.8 million.
Revenues at Peerless have improved substantially
and are expected to reach $20 million for the fiscal year ended
September 30, 2020 - an increase of approximately 70% over fiscal
2019 revenues of $11.8 million.
A
Successful PPE
Pivot
In our April 30th press release Unisync advised
it was moving aggressively to capture a share of the personal
protective equipment (“PPE”) market and on Aug 14, 2020 announced
that it had generated PPE related sales with existing and new
customers of $3.0 million in Q3 2020. To date UGL and Peerless have
now exceeded $15 million in firm PPE orders and are recognized as
significant suppliers of PPE products, including but not limited to
millions of reusable face masks certified to the independent and
internationally recognized STANDARD 100 OEKO-TEX®, disposable
masks, nitrile gloves and domestically manufactured gowns. A recent
order for 20 million nitrile gloves is scheduled for delivery over
the next two months. Other large PPE related bids presented in
response to government RFPs are still outstanding and
unawarded.
Preliminary Results for Fiscal Year
Ended Sept 30, 2020
Consolidated revenues for Q4 2020 are expected
to come in at $21 million, a 3% increase over Q4 2019, resulting in
expected revenues of $92 million for the 2020 fiscal year ended
September 30, 2020 – an 18% increase over fiscal 2019.
In response to the drop in conventional revenues
caused by COVID-19, the UGL segment reduced staffing at the
beginning of Q3 2020 and began accessing the Canadian Emergency
Wage Subsidy and the United States Paycheck Protection programs to
support the payroll costs of the remaining employees. The pivot to
PPE requires less administrative support staff and has resulted in
a number of permanent staff reductions at both the support staff
and senior management levels that should contribute to improved
profitability going forward.
Adjusted EBITDA (comprehensive income before
interest expense, income taxes, depreciation and amortization,
share-based payment, and acquisition related costs) is expected to
exceed $5.0 million for the 2020 fiscal year.
Adjusted EBITDA does not have a standardized
meaning prescribed by IFRS and is therefore unlikely to be
comparable to similar measures presented by other issuers and
should not be considered in isolation nor as a substitute for
financial information reported under IFRS. Uniysnc uses non-IFRS
measures, including Adjusted EBITDA, to provide shareholders with
supplemental measures of its operating performance. Unisync
believes adjusted EBITDA is a widely accepted indicator of an
entity’s ability to incur and service debt and commonly used by the
investing community to value businesses.
These preliminary results remain subject to
finalization and closing of Unisync’s accounting books and records
for the period, to audit by Unisync’s independent auditor and final
review and approval by Unisync’s Audit Committee and Board of
Directors. Preliminary results should not be viewed as a substitute
for audited annual financial statements prepared in accordance with
International Financial Reporting Standards. The Company expects to
release its annual financial statements and management’s discussion
and analysis on or about December 22, 2020.
We want to again thank our shareholders for
their continued support and our management and staff for their
efforts in continuing to build value for Unisync through these
difficult times.
On Behalf of the Board of Directors
Matthew Graham,
CEO
Investor relations contact:
Douglas F Good, Executive Chairman |
778-370-1725 |
or Email dgood@unisyncgroup.com |
Forward Looking
StatementsForward-looking statements in this news release
include statements with respect to expected revenues for Q4 2020
and expected revenues and Adjusted EBITDA for the fiscal year ended
September 30, 2020; the Company’s expectation as to the recovery of
employee uniform orders from its customers and the timing thereof;
the expectation as to quantum and significance of PPE sales; and
the expectation of improved profitability from permanent staff
reductions. These forward-looking statements 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. Material risk factors
that could cause actual results, performance or achievements to be
different include, but are not limited to, finalization and audit
of Q4 2020 and fiscal year-end results; duration and effect of the
COVID-19 pandemic, operational risk, a change in timing or bidding
conditions of future government contracts, customers
concentration/economic dependence, working capital, disruptions in
production, government budgetary restraint, operating cost
fluctuations, increases in interest rates, decreases in value of
the Canadian dollar against the US dollar and other foreign
currencies, access to credit, potential unknown liabilities., For a
description of these and other risk factors associated with the
Company’s business, please refer to the “Risk Factors” section of
the Company’s most recent Annual Information Form. 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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