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1、A VITAL LINK IN HEALTHCAREANNUAL REPORT 2024PROFILE2024 HIGHLIGHTSFINANCIAL PERFORMANCE2024202320222021202020242023202220212020202420232022202120202024202320222021202027.1%26.9%25.3%25.3%25.1%314.3440.1648.4648.0110.396.1174.5163.876.366.1650.573.750.994.0119.378.9164.637.752.064.5/Revenue($millions
2、)/Operating Income($millions)/EBITDA($millions)(1,2)and Margin(%)(2)/Net Income(2)($millions)(1)EBITDA is defined as net income for the period before:(i)income tax expense;(ii)interest income;(iii)interest expense;and(iv)depreciation and amortization.(2)The EBITDA,EBITDA Margin and net income figure
3、s provided above exclude the gain of$37.9 million on the step acquisition of 51%of Skelton USA Inc.in Fiscal 2021.Including the gain,EBITDA for Fiscal 2021 was$157.2 million,EBITDA Margin was 35.7%,and net income was$90.0 million.Andlauer Healthcare Group Inc.(TSX:AND)is a leading and growing supply
4、 chain management company offering a robust platform of customized third-party logistics(“3PL”)and specialized transportation solutions for the healthcare sector.Our 3PL services include customized logistics,distribution and packaging solutions for healthcare manufacturers across Canada.Our speciali
5、zed transportation services in Canada,including air freight forwarding,ground transportation,dedicated delivery and last mile services,provide a one-stop shop for clients healthcare transportation needs.Through our complementary service offerings,available across a coast-to-coast distribution networ
6、k,we strive to accommodate the full range of our clients specialized supply chain needs on an integrated and efficient basis.We also provide specialized ground transportation services,primarily to the healthcare sector,across the 48 contiguous U.S.states./We generated record annual revenue of$650.5
7、million and an EBITDA margin of 25.3%,in line with our target range of 24%to 26%;/In January 2024,we completed a 35,000 square-foot expansion at our Logistics Support Unit facility in Laval,Qubec;/We increased our quarterly dividend twice in Fiscal 2024 and again subsequent to year end,bringing it f
8、rom$0.09 per share at the end of 2023 to the current level of$0.12 per share;/During 2024,we purchased and cancelled approximately 2,425,884 subordinate voting shares through our normal course issuer bids and a substantial issuer bid,for a total of approximately$106.7 million,in support of accretive
9、 earnings growth;/Net earnings per share increased to$1.58(diluted)for 2024,compared to$1.55 per share(diluted)for 2023;and/We repaid$10.0 million of debt and finished the year with a strong balance sheet,providing financial flexibility to pursue further opportunities to expand our platform.FELLOW S
10、HAREHOLDERS,Our consolidated revenue in 2024 totaled a record$650.5 million and our EBITDA margin was 25.3%,in line with our target range of 24%to 26%.Our financial performance for the year reflects the continued growth in our Canadian specialized transportation network and the improving performance
11、 of our logistics and distribution product line in the second half of the year,offset by lower contributions from our US-based truckload businesses(Boyle Transportation and Skelton USA).We continued to generate organic revenue growth throughout the year in our Canadian ground transportation,dedicate
12、d and last mile delivery,and air freight forwarding product lines,primarily reflecting higher volumes,partially offset by lower fuel surcharge revenue.Ground transportation revenue,excluding fuel,in our Canadian network was up 7.2%compared to 2023,and dedicated and last mile delivery,and air freight
13、 forwarding revenue increased by 7.3%and 4.4%,respectively,compared to last year.After a slow start to the year in our logistics and distribution product line due to lower volumes for certain of our Accuristix consumer health clients,revenue from our pharmaceutical and biologics clients started to i
14、ncrease in the second quarter and continued throughout the year,which offset the cyclical decline in consumer health product volumes.In the fourth quarter,revenue from our consumer health clients stabilized and we generated increased revenue from both Accuristix and Logistics Support Unit,reflecting
15、 a combination of overall higher volumes and planned rate increases.Our packaging solutions has always been more of a complementary service offering versus a core service offering,and we generated marginal growth from this product line in 2024.Subsequent to year-end,we entered into a 50/50 packaging
16、 joint venture agreement with NowPac Inc.,a privately-owned,Toronto-based company specializing in contract packaging services for the healthcare sector.NowPac is highly regarded by our shared healthcare customers.Their focus on quality and compliance,coupled with a long track record of successfully
17、delivering scalable,innovative solutions to the market,makes NowPac an attractive strategic partner for us to drive growth in our packaging operations.With greater scalability,we can address a broader range of customer demand.Well also have the opportunity to add volume to our logistics and distribu
18、tion,and transportation operations.We expect the joint venture to be immediately accretive to our cash flow and earnings per share.With regards to our U.S.operations,we thought that the U.S.truckload industry had reached the trough in the cycle in late 2023,but 2024 proved to be a weaker year.Its be
19、ing referred to as“the Great Freight Recession”in On behalf of our Board of Directors,senior management,and our team of more than 2,400 personnel and owner/operators across Canada and the United States,I am pleased to present Andlauer Healthcare Groups 2024 Annual Report.Michael Andlauer Chief Execu
20、tive Officerindustry circles in the U.S.and has now lasted longer than the bull run experienced during the pandemic.Our U.S.ground transportation revenue,excluding fuel,declined by$18.3 million in 2024 compared to 2023,and EBITDA attributable to Boyle Transportation and Skelton USA was approximately
21、$9.1 million lower compared to 2023.In response to the challenging U.S.industry conditions,we continue to focus on revenue quality in our U.S.operations,and as a result,some of our equipment remains idle.We have relocated 25 of our U.S.trailers to Canada to optimize capacity utilization and reduce o
22、ur capital expenditures in Canada.We have also started the process of amalgamating Boyle and Skelton USA to drive further efficiencies.Looking ahead,we expect the U.S.trucking industry to eventually improve from these levels,which would positively contribute to our bottom line.Our challenges south o
23、f the border resulted in our consolidated net income declining to$64.5 million in 2024,from$66.1 million in 2023.However,our earnings per share increased to$1.58(diluted)in 2024,up from$1.55(diluted)in 2023,which reflects the accretive impact of the share buybacks we have undertaken over the past tw
24、o years.We commenced our first normal course issuer bid(“NCIB”)in March 2023,purchasing and cancelling 634,090 subordinate voting shares prior to its termination in March 2024.In June 2024,we completed a substantial issuer bid purchasing and cancelling 2,000,000 subordinate voting shares.In July 202
25、4,we commenced a second NCIB that will terminate in July 2025.As of December 31,2024,we had purchased and cancelled 266,534 subordinate voting shares pursuant to our current NCIB.We believe our share buybacks represent an attractive,accretive capital allocation strategy and support the best interest
26、s of our shareholders over the long term.We also implemented two increases to our quarterly dividend during 2024,increasing our payout from$0.09 per share in the fourth quarter of 2023 to$0.10 in the first quarter of 2024,and to$0.11 in the third quarter.Effective for the first quarter of 2025,our B
27、oard approved a further increase to our quarterly dividend to$0.12 per share.We are pleased to allocate capital to these value-enhancing initiatives for our shareholders,but the expansion of our platform remains a capital allocation priority.Our asset light business model,low debt levels and strong
28、cash flow generation provides us the financial flexibility to buy back shares and regularly increase our dividend without impacting our ability to pursue complementary acquisitions.While it is difficult to control timing,we have been actively assessing a number of opportunities to expand our platfor
29、m.Our NowPac joint venture is a good example of this.As we continue to evaluate opportunities,we will maintain our focus on strengthening our existing platform or broadening our service offering to further enhance our clients connection to our platform.Spending on healthcare logistics and transporta
30、tion has been outpacing GDP growth in both Canada and the United States,and this trend is expected to continue.With our strong balance sheet,we are well positioned to capitalize on growth opportunities in this large,stable and growing market to build shareholder value.In closing,I want to thank our
31、dedicated team of people that fortify our exceptional platform of companies,and our Board of Directors for their strategic contributions and governance oversight.And to our shareholders,we appreciate your confidence and continued support.Yours in health,Michael AndlauerChief Executive OfficerLetter
32、to Shareholders(continued)ANDLAUER HEALTHCARE GROUP INC.Managements Discussion and Analysis of Financial Condition and Results of Operations for the fiscal year ended December 31,2024 February 26,2025 1Andlauer Healthcare Group Inc.2024 Annual Report TABLE OF CONTENTS Cautionary Note Regarding Forwa
33、rd-Looking Information.3 Basis of Presentation.5 Non-IFRS Measures.5 Overview.6 Summary of Factors Affecting Performance.7 How We Assess the Performance of Our Business.11 Selected Consolidated Financial Information.14 Reconciliation of Non-IFRS Measures.16 Results of Operations.16 Summary of Quarte
34、rly Results.23 Liquidity&Capital Resources.24 Cash Flows.28 Off-Balance Sheet Arrangements.30 Seasonality.30 Financial Instruments.30 Related Party Transactions.31 Critical Accounting Judgements and Estimates.34 Significant New Accounting Standards.34 Accounting Classifications and Fair Values.35 Ri
35、sk Factors.35 Outstanding Share Data.37 Disclosure Controls and Procedures and Internal Controls Over Financial Reporting.38 Additional Information.39 2Andlauer Healthcare Group Inc.2024 Annual Report Andlauer Healthcare Group Inc.Fiscal 2024 Managements Discussion and Analysis/Page 3 MANAGEMENTS DI
36、SCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This managements discussion and analysis of financial condition and results of operations(“MD&A”)for the three months and year ended December 31,2024 should be read in conjunction with Andlauer Healthcare Group Inc.s audited annu
37、al consolidated financial statements for the fiscal year ended December 31,2024,along with the related notes thereto.This MD&A is presented as of February 26,2025 and is current to that date unless otherwise stated.All references in this MD&A to the“Company”,“AHG”,“us”,“our”or“we”refer to Andlauer H
38、ealthcare Group Inc.,together with our direct and indirect subsidiaries,on a consolidated basis,which is referred to as“the Company”in our financial statements.Additionally,all references to“Q4 2024”are to the three months ended December 31,2024;“Q4 2023”are to the three months ended December 31,202
39、3;“Q4 2022”are to the three months ended December 31,2022;“Q3 2024”are to the three months ended September 30,2024;“Q3 2023”are to the three months ended September 30,2023;“Q2 2024”are to the three months ended June 30,2024;“Q2 2023”are to the three months ended June 30,2023;“Q1 2024”are to the thre
40、e months ended March 31,2024;“Q1 2023”are to the three months ended March 31,2023;“Fiscal 2025”are to the year ended December 31,2025;“Fiscal 2024”are to the year ended December 31,2024;“Fiscal 2023”are to the year ended December 31,2023;and“Fiscal 2022”are to the year ended December 31,2022.Caution
41、ary Note Regarding Forward-Looking Information This MD&A contains forward-looking information and forward-looking statements(collectively,“forward-looking information”)within the meaning of applicable securities laws.Forward-looking information may relate to our future financial outlook and anticipa
42、ted events or results and may include information regarding our financial position,business strategy,growth strategies,addressable markets,budgets,operations,financial results,taxes,dividend policy,plans,objectives,and expectations with respect to our Credit Facilities,our WMS and our ESG reporting(
43、each as defined below).Particularly,information regarding our expectations of future results,performance,achievements,facility expansions,leases,platform expansions,acquisitions,public company costs,payment of dividends,prospects,financial targets or outlook,intentions,opportunities,activity under t
44、he 2024 NCIB(as defined below)and the markets in which we operate is forward-looking information.In some cases,forward-looking information can be identified by the use of forward-looking terminology such as“plans”,“targets”,“expects”or“does not expect”,“is expected”,“an opportunity exists”,“budget”,
45、“scheduled”,“estimates”,“outlook”,“forecasts”,“projection”,“prospects”,“strategy”,“intends”,“anticipates”,“does not anticipate”,“believes”,“commencing”or variations of such words and phrases or statements that certain actions,events or results“may”,“could”,“would”,“might”,“will”,“will be taken”,“occ
46、ur”or“be achieved”.In addition,any statements that refer to expectations,intentions,projections or other characterizations of future events or circumstances contain forward-looking information.Statements containing forward-looking information are not historical facts but instead represent management
47、s expectations,estimates and projections regarding future events or circumstances.Such forward-looking statements are qualified in their entirety by the inherent risks,uncertainties and changes in circumstances surrounding future expectations which are difficult to predict and many of which are beyo
48、nd the control of the Company.This forward-looking information and other forward-looking information is based on our opinions,estimates and assumptions in light of our experience and perception of historical trends,current conditions and expected future developments,as well as other factors that we
49、currently believe are appropriate and reasonable in the circumstances.Despite a careful process to prepare and review the forward-looking information,there can be no assurance that the underlying opinions,estimates and assumptions will prove to be correct.3Andlauer Healthcare Group Inc.2024 Annual R
50、eport Andlauer Healthcare Group Inc.Fiscal 2024 Managements Discussion and Analysis/Page 4 Forward-looking information is necessarily based on a number of opinions,estimates and assumptions that,while considered by the Company to be appropriate and reasonable as of the date of this MD&A,are subject
51、to known and unknown risks,uncertainties,assumptions and other factors that may cause the actual results,level of activity,performance or achievements to be materially different from those expressed or implied by such forward-looking information,including but not limited to:the impact of inflation a
52、nd interest rates together with the threats of tariffs,trade wars or recession;the impact of variation in the value of the Canadian dollar in relation to the U.S.dollar;the uncertainties in the global economy created by the war in Ukraine and in the Middle East,including the Israel-Hamas war;our abi
53、lity to comply with U.S.foreign ownership,control or influence mitigation measures;the impact of changing conditions in the healthcare logistics and transportation services market;risks and liabilities associated with the transportation of dangerous goods;our ability to execute our growth strategies
54、;increasing competition in the healthcare logistics and transportation services market in which we operate;volatility in financial markets;changes in the attitudes,financial condition and demand of our target markets;developments and changes in applicable laws and regulations;our ability to source a
55、nd complete acquisitions;our ability to successfully integrate businesses and assets that we acquire and realize synergies;our ability to retain and grow revenue with existing clients and develop new clientele;our ability to retain members of our management team and key personnel;increases in driver
56、 compensation and the ability to attract and retain employees;the availability of equipment and drivers in the markets in which we operate;the possibility of a cyber attack impacting our information systems;our ability to expand into additional markets;an epidemic or pandemic outbreak of an of an in
57、fectious disease such as the coronavirus disease in 2019 the impact of climate change;and such other factors discussed in greater detail under“Risk Factors”in this MD&A and in our Annual Information Form dated February 26,2025 for Fiscal 2024(the“AIF”)which is available on our profile on the System
58、for Electronic Document Analysis and Retrieval(“SEDAR+”)at www.sedarplus.ca.If any of these risks or uncertainties materialize,or if the opinions,estimates,or assumptions underlying the forward-looking information prove incorrect,actual results or future events might vary materially from those antic
59、ipated in the forward-looking information.The opinions,estimates or assumptions referred to above and described in greater detail in“Risk Factors”should be considered carefully by prospective investors.In addition,statements that“we believe”and similar statements reflect our beliefs and opinions on
60、the relevant subject.Forward-looking information is provided for the purpose of presenting information about managements current expectations and plans relating to the future and allowing investors and others to get a better understanding of our anticipated financial position,results of operations a
61、nd operating environment.Readers are cautioned that such information may not be appropriate for other purposes.4Andlauer Healthcare Group Inc.2024 Annual Report Andlauer Healthcare Group Inc.Fiscal 2024 Managements Discussion and Analysis/Page 5 Although we have attempted to identify important risk
62、factors that could cause actual results to differ materially from those contained in forward-looking information,there may be other risk factors not presently known to us or that we presently believe are not material that could also cause actual results or future events to differ materially from tho
63、se expressed in such forward-looking information.There can be no assurance that such information will prove to be accurate,as actual results and future events could differ materially from those anticipated in such information.Accordingly,investors should not place undue reliance on forward-looking i
64、nformation,which speaks only as of the date made.The forward-looking information contained in this MD&A represents our expectations as of the date of this MD&A(or as of the date they are otherwise stated to be made)and are subject to change after such date.However,we disclaim any intention or obliga
65、tion or undertaking to update or revise any forward-looking information whether as a result of new information,future events or otherwise,except as required under applicable securities laws.All of the forward-looking information contained in this MD&A is expressly qualified by the foregoing cautiona
66、ry statements.Basis of Presentation Our consolidated financial statements have been prepared in accordance with International Financial Reporting Standards(“IFRS”)as issued by the International Accounting Standards Board(“IASB”)and are presented in thousands of Canadian dollars unless otherwise indi
67、cated.Non-IFRS Measures This MD&A refers to certain non-IFRS measures.These measures are not recognized measures under IFRS,do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies.Rather,these measures are pro
68、vided as additional information to complement those IFRS measures by providing further understanding of our results of operations from managements perspective.Accordingly,these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under
69、 IFRS.We use non-IFRS measures including“EBITDA”and“EBITDA Margin”.These non-IFRS measures are used to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial mea
70、sures.We also believe that securities analysts,investors,and other interested parties frequently use non-IFRS measures in the evaluation of issuers.Our management also uses non-IFRS measures to facilitate operating performance comparisons from period to period,to prepare annual operating budgets and
71、 to determine components of management compensation.For a description of how we define these non-IFRS Measures and an explanation of why the non-IFRS measures provide useful information to investors,please see“How We Assess the Performance of Our Business Non-IFRS Measures”below.For quantitative rec
72、onciliations of net income to EBITDA for Q4 2024,Fiscal 2024,Q4 2023,Fiscal 2023 and Fiscal 2022 please see“Reconciliation of Non-IFRS Measures”below.5Andlauer Healthcare Group Inc.2024 Annual Report Andlauer Healthcare Group Inc.Fiscal 2024 Managements Discussion and Analysis/Page 6 Overview AHG wa
73、s incorporated under the Business Corporations Act(Ontario)on November 12,2019,with its head office located at 100 Vaughan Valley Blvd,Woodbridge,ON,L4H 3C5.The Companys subordinate voting shares(“Subordinate Voting Shares”)are listed on the Toronto Stock Exchange(the“TSX”)under the stock symbol“AND
74、”.We are a leading and growing supply chain management company with a platform of customized third-party logistics(“3PL”)and specialized transportation solutions for the healthcare sector.We offer services to healthcare manufacturers,wholesalers,distributors and 3PL providers,among others,through a
75、comprehensive platform of high quality,technology-enabled supply chain solutions for a range of products,including:pharmaceuticals,vaccines,biologics,blood products,narcotics,precursors,active pharmaceutical ingredients,over-the-counter,natural health,animal health,consumer health,cosmetics,health a
76、nd beauty aids,and medical devices.We integrate our uniquely designed Canada-wide network of facilities,vehicles,personnel,and technology systems into our clients businesses to offer holistic solutions that span all of our clients shipping needs and satisfy the requirements of the highly regulated C
77、anadian healthcare sector.During Fiscal 2021,we expanded our specialized transportation capabilities,through acquisitions,into truckload services for the healthcare sector in the United States.We differentiate our service offerings and deliver value to our clients through our competitive strengths i
78、n temperature management,quality assurance and regulatory compliance,technology-enabled visibility throughout the supply chain and security.We are committed to developing and expanding long-term strategic relationships with our clients to provide improved operational efficiencies and access to value
79、-added services.We generate revenue across five principal product lines:logistics and distribution,packaging solutions,air freight forwarding,ground transportation,and dedicated and last mile delivery.We believe that we are Canadas only national third-party service provider focused exclusively on de
80、livering customized,end-to-end logistics and specialized transportation solutions to the healthcare sector.Our 3PL services are provided under our Accuristix and LSU brands,through which we provide customized logistics,distribution and packaging solutions to various healthcare manufacturers.Our spec
81、ialized transportation solutions are offered under our ATS Healthcare,ATS Dedicated and Skelton brands in Canada,where we provide a one-stop shop for our clients healthcare transportation needs through our specialized air freight forwarding,ground transportation,dedicated delivery and last mile serv
82、ices.We believe we are a national leader in the Canadian healthcare logistics and specialized transportation markets we serve.We also provide specialized transportation services domestically in the United States under our Boyle Transportation and Skelton USA brands(each as defined below).Boyle Trans
83、portation provides specialized transportation services to clients in the life sciences(approximately 70-75%of revenue)and government/defense sectors(approximately 25-30%of revenue).Boyle Transportation adheres to stringent quality and security standards,employs highly trained and dedicated professio
84、nals,continually invests in advanced technology and equipment,and has an expansive reach across the United States.Skelton USA was launched in 2017 and has grown by successfully leveraging its Canadian reputation and brand for expertise in cold chain services.Skelton USA currently serves customers ac
85、ross the United States.In our healthcare logistics segment,we serve as an extension of our manufacturing clients,leveraging our infrastructure and expertise to manage their supply chain activities,allowing them to focus on other strategic priorities such as sales,marketing,research and development.W
86、e focus on serving our logistics clients as comprehensively as possible and incorporate multiple services from all of our related product lines into our customized logistics solutions.6Andlauer Healthcare Group Inc.2024 Annual Report Andlauer Healthcare Group Inc.Fiscal 2024 Managements Discussion a
87、nd Analysis/Page 7 In our specialized transportation segment,we leverage our national infrastructure in Canada to offer coast-to-coast delivery,including specialized facilities,multiple modes of transportation and flexible capacity to accommodate the full range of our clients logistics and/or transp
88、ortation needs on an integrated and efficient basis.By combining multiple service offerings,we can effectively provide managed and monitored movement of our clients temperature sensitive and valuable products through a closed-loop nation-wide system.Our competitive strengths in temperature managemen
89、t,quality assurance and regulatory compliance,visibility throughout the supply chain and security are deployed across our Canada-wide network of 32 secure,temperature-controlled facilities,the seven third-party owned cross-docks that we operate from and by our team of highly trained employees.Our se
90、curity,information and monitoring systems,as well as our temperature management expertise,allow us to meet and exceed Health Canada guidelines and regulations,ensuring the integrity and quality of our clients temperature sensitive healthcare goods and data.We also have four facilities in the United
91、States(Massachusetts,Ohio,Indiana,and Oklahoma).Additional information about AHG,including our AIF,can be found on our profile on SEDAR+at www.sedarplus.ca or on our website at .Summary of Factors Affecting Performance We believe that our performance and future success depend on a number of factors
92、that present significant opportunities for us.These factors are also subject to a number of inherent risks and challenges,some of which are discussed below and in the“Risk Factors”section of this MD&A and in our AIF.Service Offering We believe that offering a platform of services designed specifical
93、ly for the healthcare sector puts us in a unique position as a provider of supply chain solutions.Our competitive strengths in temperature management,quality assurance and regulatory compliance,visibility throughout the supply chain and security allow us to provide healthcare clients with specialize
94、d,integrated,end-to-end supply chain solutions.Through our five principal,complementary service offerings:logistics and distribution,packaging solutions,air freight forwarding,ground transportation,and dedicated and last mile delivery,we accommodate our clients specialized supply chain needs on an i
95、ntegrated and efficient basis.Relationships with Manufacturers and Distributors We believe that our market position is strengthened by the desire of our clients to increasingly outsource their supply-chain management to specialized service providers with the healthcare quality systems,operational ex
96、pertise,and experience to efficiently optimize their product distribution.We are committed to developing and expanding long-term strategic relationships with our clients to provide improved operational efficiencies and access to value-added services.From manufacturers to distributors to retail locat
97、ions to front doors across Canada and the United States,we store,transport,and monitor and manage the temperature conditions of a range of healthcare products.Our trained personnel comply with healthcare industry regulations and best practices.7Andlauer Healthcare Group Inc.2024 Annual Report Andlau
98、er Healthcare Group Inc.Fiscal 2024 Managements Discussion and Analysis/Page 8 New Development Projects We secure client contract wins as a foundation for growth and then add incremental warehousing and distribution square footage through capital efficient leases.Given the required lead-time to buil
99、d and license facilities,as we secure new major client contracts,we typically strategically invest in excess capacity in anticipation of growing client needs,as well as new client opportunities,which enables capital efficient growth.Demographics and Healthcare Spending We believe that we are strateg
100、ically positioned to directly benefit from the strong growth expected in the North American healthcare sector,which is driven by a number of favourable trends including an aging population,increased life expectancy,increasing healthcare spending,and an increasing number of healthcare products requir
101、ing unique logistics needs.Vaccines and biologics,for example,are generally temperature sensitive and require varying degrees of temperature conditions for transportation and storage.Regulatory Environment In order to maintain the safety,quality and efficacy of healthcare products,government regulat
102、ions set out rules relating to,among other things,the packaging,warehousing,distribution,transportation and temperature monitoring of such products.The pace of introduction and complexity of such regulations has increased in recent years,including through the introduction of,and revisions to,many He
103、alth Canada guidelines,such as Health Canadas GUI-0069-Guidelines for Environmental Control of Drugs During Storage and Transportation(“GUI-0069”),among others.Recognizing the ever-changing regulatory demands on the healthcare sector,we take a proactive approach to stay aligned with regulatory proto
104、cols,provide environments that are compliant with Good Manufacturing Practices and offer our clients real-time monitoring and reporting.By outsourcing their logistics and transportation needs to AHG and our specialized services platform,our clients can focus on their core business.While we believe t
105、he United States does not have as rigorous standards as Canada or Europe regarding the transportation of healthcare products,healthcare manufacturers are demanding high quality temperature control and monitoring as well as security and visibility for their truckload shipments in the United States,wh
106、ich aligns with our specialized transportation solutions.Both Boyle Transportation and Skelton USA comply with United States Pharmacopeia(USP)chapter Good Storage&Distribution Practices for Drug Products,to the extent applicable for transportation.Boyle Transportation complies with U.S.Federal Motor
107、 Carrier Safety Administration regulations regarding the transportation of hazardous materials.Additionally,the National Industrial Security Program Operating Manual requires that Boyle Transportation be effectively insulated from any foreign ownership,control,or influence to perform on certain U.S.
108、Department of Defense contracts and operates,under AHGs ownership,pursuant to a pending Special Security Agreement with the U.S.Defense Counterintelligence and Surveillance Agency.Competition We believe that we offer a unique set of services in the marketplace and stand apart from other outsourced h
109、ealthcare service providers and traditional logistics and transportation companies.In particular,we believe our differentiated capabilities,including our temperature management expertise,together with our coast-to-coast distribution network in Canada and multiple service offerings,uniquely positions
110、 us within our industry and sets us apart from companies specializing in global integration and supply chain management,national non-temperature managed solutions,regional temperature managed solutions as well as niche service providers and insourced transportation services.Notwithstanding the foreg
111、oing,we do compete with 8Andlauer Healthcare Group Inc.2024 Annual Report Andlauer Healthcare Group Inc.Fiscal 2024 Managements Discussion and Analysis/Page 9 UPS Healthcare,Kuehne+Nagel and Lynden Logistics in our delivery of 3PL services,and with UPS,FedEx,Purolator,and several regional players in
112、 the specialized transportation space in Canada.In the United States,Boyle Transportation and Skelton USA compete with a large number of regional carriers as well as national transportation providers,such as FedEx and CRST.Acquisitions We selectively evaluate strategically compelling acquisition opp
113、ortunities that leverage or expand our differentiated capabilities.In pursuing potential acquisition opportunities,we assess several criteria to expand our domestic platform,including:(i)complementary tuck-ins;and(ii)entry or expansion into growth verticals,new verticals and new service offerings.We
114、 will continue to assess opportunities for expansion in the U.S.or into international markets through existing platforms that align with our core capabilities and existing service offerings.On October 5,2020,we completed two tuck-in acquisitions:TDS Logistics Ltd.(“TDS”),now branded as“ATS Dedicated
115、”,and McAllister Courier Inc.(“MCI”),our first acquisitions as a public company.These two regionally focused temperature-controlled transportation businesses increased the reach of our services and expanded our market presence in Ontario.On March 1,2021,we acquired 100%of Skelton Canada Inc.(“Skelto
116、n”)and 49%of Skelton USA Inc.(“Skelton USA”and together with Skelton,the“Skelton Companies”)which enhanced our platform with expanded national 2-8C specialized temperature-controlled capabilities and provided us with a strategic entry into the U.S.market.On November 1,2021,we acquired 100%of T.F.Boy
117、le Transportation,Inc.(“Boyle Transportation”),which provides specialized transportation services to clients in the life sciences and government/defense sectors,and the remaining 51%of Skelton USA,increasing our aggregate ownership of Skelton USA to 100%.On March 1,2022,we acquired 100%of Logistics
118、Support Unit(LSU)Inc.(“LSU”).LSU is a third-party logistics provider offering specialty pharmacy,warehousing,distribution,and order management services throughout Canada to national and international companies as well as government clients in the pharmaceutical,medical,and biotechnology sectors.Mana
119、gement&Employees Our employee culture is one of our fundamental strengths and a strategic priority.Our employees are passionate about our business and are dedicated to creating and improving solutions for our clients.We empower our employees through training and professional development programs and
120、 maintain open lines of communication that encourage our employees to suggest ways in which we can improve our operations.We recognize and celebrate employees who act as leaders within our team and promote movement within our organization in an effort to retain and encourage our top talent.As a resu
121、lt of this collaborative employee culture,we have fostered strong relationships with our employees across our operating segments,none of which are subject to collective bargaining agreements.In Fiscal 2023,we implemented a new long-term incentive plan under our Omnibus Equity Incentive Plan dated De
122、cember 11,2019,for certain management members in order to further promote share ownership among our employees,ensure that our employees can participate in our growth through equity ownership,and retain employees over the long-term.9Andlauer Healthcare Group Inc.2024 Annual Report Andlauer Healthcare
123、 Group Inc.Fiscal 2024 Managements Discussion and Analysis/Page 10 Cost Management In order to provide the services that we offer,we incur various operating costs.These costs include amongst others,labour,rent,fuel,equipment,and insurance.We are susceptible to increases in the price of these items,m
124、any of which can fluctuate,often due to factors beyond our control,such as regional and global supply and demand dynamics,political events,global pandemics,terrorist activities,the strength of the Canadian dollar relative to other currencies,and natural disasters.To mitigate the risk of cost escalat
125、ion,we focus on operational excellence,synergies between our product lines and cost controls.We rely on,among other things,long-term planning,budgeting processes,and internal benchmarking to achieve our profitability targets.Additionally,we mitigate the risk of inflation by utilizing leases to finan
126、ce our network of facilities,many of our vehicles and our logistics equipment,as well as by using third-party service providers.We also mitigate our exposure to rising fuel costs through the implementation of fuel surcharge programs,which pass the majority of cost increases to our clients.In additio
127、n,we have implemented a number of policies that focus on asset efficiency,including fuel economy,asset utilization,proper repairs and maintenance of equipment,and measured equipment lease renewals.Many of our contracts include cost escalation indexes that provide for annual price adjustments which f
128、urther protect us from escalating costs.Financial and Operational Highlights We refer the reader to the section entitled“How We Assess the Performance of Our Business”of this MD&A for the definition of the items discussed below and,when applicable,to the section entitled“Reconciliation of Non-IFRS M
129、easures”for quantitative reconciliations of net income to EBITDA.Q4 2024 Compared to Q4 2023 Select highlights include the following:Revenue was$168.3 million in Q4 2024,compared to$169.1 million in Q4 2023;Operating income was$26.7 million in Q4 2024,compared to$28.0 million in Q4 2023;Net income w
130、as$17.5 million in Q4 2024,compared to$18.6 million in Q4 2023;Total comprehensive income for Q4 2024 was$32.5 million,compared to$13.5 million in Q4 2023;EBITDA was$43.6 million in Q4 2024,compared to$44.8 million in Q4 2023;and EBITDA Margin was 25.9%in Q4 2024 compared to 26.5%in Q4 2023.Fiscal 2
131、024 Compared to Fiscal 2023 Select highlights include the following:Revenue was$650.5 million,compared to$648.0 million in Fiscal 2023;Operating income was$94.0 million,compared to$96.1 million in Fiscal 2023;Net income was$64.5 million,compared to$66.1 million in Fiscal 2023;Total comprehensive inc
132、ome was$84.1 million,compared with$60.7 million in Fiscal 2023;EBITDA was$164.6 million,compared to$163.8 million in Fiscal 2023;and EBITDA Margin was 25.3%in both Fiscal 2024 and Fiscal 2023.10Andlauer Healthcare Group Inc.2024 Annual Report Andlauer Healthcare Group Inc.Fiscal 2024 Managements Dis
133、cussion and Analysis/Page 11 How We Assess the Performance of Our Business We have historically operated and managed our healthcare logistics and specialized transportation segments as separate businesses with separate management teams.Our healthcare logistics segment operates under the brand names
134、Accuristix and LSU;and our specialized transportation segment operates under the brand names ATS Healthcare,ATS Dedicated,Boyle Transportation and Skelton Truck Lines.Following our initial public offering(“IPO”)completed December 11,2019,both Accuristix Inc.(“Accuristix”)and ATS Healthcare Inc.(“ATS
135、 Healthcare”)have continued to operate autonomously,each having its own management.Skelton,which we acquired on March 1,2021,and Boyle Transportation and Skelton USA,which we acquired on November 1,2021,which are reported in the specialized transportation segment,also operate autonomously,as they di
136、d prior to their respective acquisitions.Similarly,LSU,which we acquired on March 1,2022,operates autonomously and is included in our healthcare logistics segment.Over time,as we grow,our operating segments may change.If this occurs,we will reflect the change in our reporting practices.Except for tr
137、actors(with respect to periods prior to Q3 2023)and trailers purchased by Skelton and Boyle Transportation,our operating segments conduct their businesses in a manner that limits capital investments.We prefer to lease facilities and certain equipment rather than allocating significant cash flows to
138、capital expenditures.We believe our business model provides us with greater flexibility,cost savings and lower risks,as compared to more capital expenditure intensive models.Accordingly,lease costs comprise a significant component of our expenses.Under IFRS 16 Leases(“IFRS 16”),leases have been capi
139、talized,resulting in the costs associated with our leases being recorded as depreciation and interest expense.We believe that the cash flows associated with our lease payments are a relevant metric in evaluating the performance of our business.Revenue We generate revenue from the provision of supply
140、 chain solutions to the Canadian and United States healthcare sectors.Across our healthcare logistics and specialized transportation operating segments,we generate revenue across five principal product lines:logistics and distribution,packaging solutions,air freight forwarding,ground transportation,
141、and dedicated and last mile delivery.Our healthcare logistics segment,which offers services under our Accuristix and LSU brands,generates revenue from the provision of logistics and distribution services and packaging solutions to our clients.Services are typically provided under master service agre
142、ements with terms that range from three to five years in length.Our logistics contracts typically include a single performance obligation that is satisfied over time as clients simultaneously receive and consume the benefits of our services.For this performance obligation,we recognize revenue at the
143、 invoiced amount since this amount corresponds directly to our performance and the value to the client.In some cases,our agreements include other performance obligations related to managing transportation and other client services which are included in our logistics and distribution product line.The
144、se services are typically priced at their stand-alone selling prices and are recognized over time as the client simultaneously receives and consumes the benefits of our services.Intersegment revenue generated by Credo Systems Canada Inc.from the sale of thermal packaging containers to ATS Healthcare
145、,as well as intra-segment revenue between Accuristix and Nova Pack Ltd.(“Nova Pack”)is eliminated on consolidation.Our specialized transportation segment,which offers services under our ATS Healthcare,ATS Dedicated,Boyle Transportation and Skelton Truck Lines brands,generates revenue from the provis
146、ion of specialized temperature-controlled,as well as non-temperature controlled,ground transportation,air freight forwarding and dedicated and last mile transportation services to our clients.Certain additional services are provided to clients as requested as part of their transportation contracts,s
147、uch as chain of custody and other incidental 11Andlauer Healthcare Group Inc.2024 Annual Report Andlauer Healthcare Group Inc.Fiscal 2024 Managements Discussion and Analysis/Page 12 services.Transportation revenue is recognized proportionally as a shipment moves from origin to destination and the re
148、lated costs are recognized as incurred.Performance obligations are short-term,with transit typically taking less than one week.Generally,clients are billed upon shipment of the freight,and remit payment according to approved payment terms.Intersegment revenue generated by ATS Healthcare and Skelton
149、from the provision of transportation services to Accuristix and LSU,on behalf of their logistics clients,is eliminated on consolidation.Our Boyle Transportation and Skelton USA subsidiaries provide specialized temperature-controlled services to healthcare companies in the United States,and,in the ca
150、se of Boyle Transportation,to certain defense contractors and the U.S.Department of Defense.These companies,acquired in Fiscal 2021,align with our specialized transportation segment in all material respects except that they focus on full truckload ground transportation services,which traditionally r
151、ealize lower margins than our ground transportation businesses in Canada.As is customary in our industry,most of our client contracts and transportation pricing terms include fuel-surcharge revenue programs or cost recovery mechanisms to mitigate the effect of fuel price increases over base amounts
152、established in the contract.However,these fuel surcharge mechanisms may not capture the entire amount of changes in fuel prices,and there is also a lag between the payment for fuel and collection of surcharge revenue.Increases or decreases in fuel prices increase or reduce the cost of transportation
153、 and services,and will accordingly increase or reduce our revenues and may reduce or increase margins for certain product lines.During Fiscal 2022 and Fiscal 2023,fluctuations in diesel fuel prices impacted both revenue and cost of transportation and services more significantly than in prior periods
154、.This trend continued in Fiscal 2024,as average diesel fuel prices in Q1 2024 were more than 10%lower than in Q1 2023;in Q2 2024,they were approximately 8%higher than in Q2 2023;in Q3 2024,they were approximately 5%lower than in Q3 2023;and in Q4 2024,they were approximately 11%lower than in Q4 2023
155、.For Fiscal 2024,average diesel fuel prices were approximately 5%lower than in Fiscal 2023.Cost of Transportation and Services Our cost of transportation and services expense includes the cost of providing or procuring freight transportation to our clients.The cost of transportation and services for
156、 our specialized transportation segment includes:linehaul costs to connect our national network;pick-up and delivery costs paid to brokers,agents,and our drivers;fuel,toll fees and maintenance costs;and inbound and outbound handling costs which are largely comprised of hourly paid dock labour.The co
157、st of transportation and services for our healthcare logistics segment includes purchased transportation services,including fuel surcharges,sourced from carriers.ATS Healthcare is the largest provider of transportation services to Accuristix and LSU,followed by Skelton.Intersegment purchased transpo
158、rtation expense is eliminated on consolidation.Direct Operating Expenses Direct operating expenses are both fixed and variable and consist of operating costs related to our facilities(including our distribution centres,branches and the cross-docks that we operate from).Direct operating expenses cons
159、ist mainly of personnel costs and facility and equipment expenses such as property taxes,utilities,equipment maintenance and repair,costs of materials and supplies,security and insurance expenses.We note that under IFRS 16 the costs associated with our leases are not recognized in our direct operati
160、ng expenses.12Andlauer Healthcare Group Inc.2024 Annual Report Andlauer Healthcare Group Inc.Fiscal 2024 Managements Discussion and Analysis/Page 13 Selling,General and Administrative Expenses Selling,General and Administrative(“SG&A”)expenses primarily consist of the cost of salaries and benefits f
161、or executive and certain administration functions,including information technology,sales and client service,finance and accounting,professional fees,facility costs,legal costs and other expenses related to the corporate infrastructure required to support our business.Depreciation&Amortization Deprec
162、iation and amortization charges comprise non-cash charges expensed on the statement of income and comprehensive income to spread the purchase price of assets over their useful lives.Within both of our operating segments,we lease facilities and certain equipment rather than allocating significant cas
163、h flows to capital expenditures.We believe this approach provides us with greater flexibility and lower risks and results in cost savings as compared to capital expenditure intensive models.Accordingly,lease costs comprise a significant component of our expenses.Under IFRS 16,leases have been capita
164、lized,resulting in depreciation and interest expense rather than direct operating expense.Operating Income Operating Income measures the amount of profit derived from our operations after deducting operating expenses such as cost of transportation and services,direct operating expense,SG&A,and depre
165、ciation and amortization.We do not typically measure“cost of sales or gross profit”as we are a service business.Interest Expense Interest expense comprises interest charged to the statement of income and comprehensive income primarily in connection with leased facilities and equipment under IFRS 16,
166、and for borrowings under our Credit Facilities.Interest Income Interest income comprises interest earned on cash and cash equivalents.Other Income/Expense Other income(expense)comprises income or expenses that do not arise from our main business,such as exchange gains(losses)and gains(losses)resulti
167、ng from the sale of property,plant and equipment and certain other insignificant sources.Income Tax Expense/Recovery Income tax expense(recovery)comprises the amount that we have recognized in the accounting period related to our taxable income.Our effective tax rate is generally close to the statut
168、ory rate,but certain differences between income for tax and accounting income are recognized in the deferred income tax provision.Foreign Currency Translation Adjustment In preparing our consolidated financial statements,the financial statements of each entity are translated into Canadian dollars.Th
169、e assets and liabilities of foreign operations are translated to Canadian dollars at exchange rates as at the balance sheet date.Revenues and expenses of foreign operations are translated to Canadian dollars at exchange rates that approximate those on the date of the underlying transaction.Foreign e
170、xchange differences are recognized in other comprehensive income and accumulated in equity in accumulated other comprehensive income.13Andlauer Healthcare Group Inc.2024 Annual Report Andlauer Healthcare Group Inc.Fiscal 2024 Managements Discussion and Analysis/Page 14 Non-IFRS Measures EBITDA We de
171、fine EBITDA as net income for the period before:(i)income tax expense(recovery);(ii)interest income;(iii)interest expense;and(iv)depreciation and amortization.Net income is the most directly comparable IFRS financial measure disclosed in our financial statements to which EBITDA relates,and a reconci
172、liation with this measure is presented under“Reconciliation of Non-IFRS Measures”.We believe EBITDA is a useful measure to assess our financial performance because it provides a more relevant picture of operating results by excluding the effects of expenses that are not reflective of our underlying
173、business performance.EBITDA Margin We define EBITDA Margin as EBITDA divided by revenue.EBITDA Margin represents a measure of our profitability expressed as a percentage of revenue.We believe EBITDA Margin is a useful measure to assess our financial performance because it helps quantify our ability
174、to convert revenues generated from clients into EBITDA.Selected Consolidated Financial Information The following table summarizes our results of operations for the periods indicated.The selected consolidated financial information for Fiscal 2024,Fiscal 2023 and Fiscal 2022 has been derived from our
175、consolidated financial statements and the related notes thereto.The selected consolidated information for Q4 2024 and Q4 2023 has been derived from our unaudited interim condensed consolidated financial statements and related notes thereto.See“Reconciliation of Non-IFRS Measures”for quantitative rec
176、onciliations of net income to EBITDA.14Andlauer Healthcare Group Inc.2024 Annual Report Andlauer Healthcare Group Inc.Fiscal 2024 Managements Discussion and Analysis/Page 15 Consolidated Statements of Income and Comprehensive Income ($CAD 000s)Three Months Ended1 December 31,Year Ended December 31,2
177、024 2023 2024 2023 2022 Revenue Logistics&distribution 44,594 40,851 162,925 159,168 155,575 Packaging solutions 4,094 3,269 16,943 16,761 21,290 Healthcare logistics segment 48,688 44,120 179,868 175,929 176,865 Ground transportation 108,764 113,607 424,507 429,174 422,236 Air freight forwarding 8,
178、276 8,013 31,929 30,595 34,383 Dedicated and last mile delivery 19,006 18,324 73,848 68,821 66,896 Intersegment revenue(16,441)(14,997)(59,675)(56,567)(51,957)Specialized transportation segment 119,605 124,947 470,609 472,023 471,558 Total revenue 168,293 169,067 650,477 647,952 648,423 Operating ex
179、penses Cost of transportation and services 83,538 85,790 326,576 328,493 322,844 Direct operating expense 27,634 25,083 105,763 103,829 102,280 Selling,general and administrative expenses 12,761 12,829 53,241 51,428 48,502 Depreciation&amortization 17,621 17,321 70,934 68,149 64,452 141,554 141,023
180、556,514 551,899 538,078 Operating income 26,739 28,044 93,963 96,053 110,345 Interest expense(2,111)(2,476)(7,585)(8,207)(6,858)Interest income 260 770 2,152 3,170 599 Other income(788)(592)(332)(409)(328)Income tax expense(6,572)(7,185)(23,730)(24,467)(27,483)Net income 17,528 18,561 64,468 66,140
181、76,275 Other comprehensive income Net income 17,528 18,561 64,468 66,140 76,275 Foreign currency translation adjustment 14,924(5,021)19,627(5,448)14,743 Total comprehensive income 32,452 13,540 84,095 60,692 91,018 Earnings per share Earnings per share basic$0.45$0.45$1.60$1.58$1.82 Earnings per sha
182、re diluted$0.44$0.44$1.58$1.55$1.79 Select financial metrics2 EBITDA 43,572 44,773 164,565 163,793 174,469 EBITDA Margin 25.9%26.5%25.3%25.3%26.9%1 Unaudited 2 These are non-IFRS financial measures.See“How We Assess the Performance of Our Business Non-IFRS Measures”for further information on these m
183、easures.15Andlauer Healthcare Group Inc.2024 Annual Report Andlauer Healthcare Group Inc.Fiscal 2024 Managements Discussion and Analysis/Page 16 Consolidated Balance Sheets($CAD 000s)As at December 31,2024 2023 2022 Select financial position data Total assets 696,916 682,426 712,460 Total non-curren
184、t liabilities 159,555 143,364 185,690 Consolidated Statements of Changes in Equity ($CAD 000s)Three Months Ended1 December 31,Year Ended December 31,2024 2023 2024 2023 2022 Select financial data Dividends 4,318 3,732 16,723 14,202 10,833 1 Unaudited Reconciliation of Non-IFRS Measures The following
185、 table provides a reconciliation of net income to EBITDA for the periods indicated:($CAD 000s)Three Months Ended1 December 31,Year Ended December 31,2024 2023 2024 2023 2022 Net income 17,528 18,561 64,468 66,140 76,275 Income tax expense 6,572 7,185 23,730 24,467 27,483 Interest expense 2,111 2,476
186、 7,585 8,207 6,858 Interest income(260)(770)(2,152)(3,170)(599)Depreciation and amortization 17,621 17,321 70,934 68,149 64,452 EBITDA2 43,572 44,773 164,565 163,793 174,469 1 Unaudited 2 This is a non-IFRS financial measure.See“How We Assess the Performance of Our Business Non-IFRS Measures”for fur
187、ther information on this measure.Results of Operations Three months ended December 31,2024 compared with 2023 The following section provides an overview of our financial performance for Q4 2024 compared to Q4 2023.Revenue Revenue for Q4 2024 decreased by 0.5%to$168.3 million,compared with$169.1 mill
188、ion in Q4 2023.The decrease was primarily attributable to lower revenue in our US-based truckload businesses(Boyle Transportation and Skelton USA)and lower fuel surcharge revenue,partially offset by higher revenue in our Canadian specialized transportation network and healthcare logistics segment.16
189、Andlauer Healthcare Group Inc.2024 Annual Report Andlauer Healthcare Group Inc.Fiscal 2024 Managements Discussion and Analysis/Page 17 Healthcare Logistics Segment Revenue in our healthcare logistics segment for Q4 2024 was$48.7 million,an increase of 10.4%,or approximately$4.6 million,compared with
190、 Q4 2023.The increase in revenue for this segment was primarily driven by the factors set out below.Logistics&Distribution Logistics and distribution revenue for Q4 2024 was$44.6 million,an increase of 9.2%,or approximately$3.7 million,compared with Q4 2023.The increase was attributable to higher re
191、venue from our Accuristix and LSU clients comprising a combination of higher volume and planned rate increases taking effect in Q4 2024.Packaging Solutions Packaging revenue for Q4 2024 was$4.1 million,an increase of 25.2%,or approximately$0.8 million,compared with Q4 2023.The increase primarily ref
192、lects increased volume from our packaging customers during Q4 2024 compared with Q4 2023.Specialized Transportation Segment Revenue in our specialized transportation segment for Q4 2024 was$119.6 million,a decrease of 4.3%,or approximately$5.3 million,compared with Q4 2023.The decrease in revenue fo
193、r this segment was primarily driven by the factors set out below.Ground Transportation Ground transportation revenue for Q4 2024 was$108.8 million,a decrease of 4.3%,or approximately$4.8 million,compared with Q4 2023.The decrease was primarily attributable to a decline in revenue for our US-based tr
194、uckload business and lower fuel surcharge revenue across our network,partially offset by organic growth in our Canadian transportation network.Ground transportation revenue,excluding fuel,in our Canadian network increased by approximately 6.3%.Ground transportation revenue,excluding fuel,in our US-b
195、ased truckload business declined by$4.8 million,or 17.0%,in Q4 2024 compared with Q4 2023.Air Freight Forwarding Air freight forwarding revenue for Q4 2024 was$8.3 million,an increase of 3.3%,or approximately$0.3 million,compared to Q4 2023.The increase was attributable to an increase in shipments b
196、y our customers in Q4 2024 compared with Q4 2023.Dedicated and Last Mile Delivery Dedicated and last mile delivery revenue for Q4 2024 was$19.0 million,an increase of 3.7%,or approximately$0.7 million,compared with Q4 2023.The increase reflects organic growth from our existing customers.17Andlauer H
197、ealthcare Group Inc.2024 Annual Report Andlauer Healthcare Group Inc.Fiscal 2024 Managements Discussion and Analysis/Page 18 Cost of Transportation and Services Cost of transportation and services for Q4 2024 was$83.5 million,or 49.6%of revenue,compared with$85.8 million,or 50.7%of revenue,for Q4 20
198、23.Our operating ratio is in line with revenue and lower fuel costs in Q4 2024 compared with Q4 2023.In Q4 2024,we continued to carry certain idle equipment costs in our U.S.-based truckload businesses arising from a lower volume of truckloads as we focused on revenue quality.Direct Operating Expens
199、es Direct operating expenses were$27.6 million,or 16.4%of revenue,compared with$25.1 million,or 14.8%of revenue,for Q4 2023.The$2.6 million increase was primarily attributable to growth in our logistics and distribution product line.Selling,General and Administrative Expenses SG&A expenses for Q4 20
200、24 were$12.8 million,or 7.6%of revenue,compared with$12.8 million,or 7.6%of revenue,for Q4 2023.Our SG&A expense is in line with our expectations.Depreciation and Amortization Depreciation and amortization for Q4 2024 was$17.6 million,or 10.5%of revenue,compared with$17.3 million,or 10.2%of revenue
201、for Q4 2023.Total depreciation and amortization expense is consistent as a percentage of our revenue at approximately 10%to 11%.Interest Expense Interest expense for Q4 2024 was$2.1 million compared with$2.5 million for Q4 2023.Interest expense related to leased facilities and equipment comprises th
202、e majority of interest expense;however,$0.8 million of interest expense for Q4 2024 was incurred in connection with our Credit Facilities,compared with$0.6 million in Q4 2023.The increase in interest expense related to our Credit Facilities was attributable to larger amounts drawn,on average,during
203、Q4 2024 compared with Q4 2023,slightly offset by lower interest rates.Interest Income Interest income for Q4 2024 was$0.3 million compared with approximately$0.8 million in Q4 2023.Interest income is generated on our cash and cash equivalents balances.Other Expenses Other expenses were approximately
204、$0.8 million in Q4 2024 compared with approximately$0.6 million in Q4 2023.These amounts vary from quarter to quarter and are not material to our overall performance for Q4 2024 and Q4 2023.Income Tax Expense Income tax expense for Q4 2024 was$6.6 million compared with$7.2 million in Q4 2023.Our eff
205、ective tax rate was close to the statutory rate of 26.5%for Q4 2024 and Q4 2023 after adjusting for non-deductible items such as share-based compensation expenses,taxes relating to previous years,and other negligible adjustments.18Andlauer Healthcare Group Inc.2024 Annual Report Andlauer Healthcare
206、Group Inc.Fiscal 2024 Managements Discussion and Analysis/Page 19 Operating Income and Net Income Operating income for Q4 2024 was$26.7 million,a decrease of$1.3 million,or 4.7%,compared with$28.0 million for Q4 2023.The decrease in operating income was primarily attributable to lower contributions
207、from our Boyle Transportation and Skelton USA operations,partially offset by organic growth in our Canadian specialized transportation,logistics and distribution,and packaging product lines.Income before tax for the specialized transportation segment was$18.4 million for Q4 2024 compared with$20.0 m
208、illion for Q4 2023.The decrease was primarily attributable to lower contributions from Boyle Transportation and Skelton USA,partially offset by growth in our Canadian specialized transportation businesses.Operating income for our U.S.-based truckload business was approximately$2.1 million lower in Q
209、4 2024 compared with Q4 2023.Income before tax for the healthcare logistics segment was$5.8 million for Q4 2024 compared with$4.7 million for Q4 2023.The increase was primarily attributable to higher revenue from our logistics and distribution and packaging clients,partially offset by increased SG&A
210、 costs related to the implementation of a new WMS for Accuristix.Net income for Q4 2024 was$17.5 million compared with$18.6 million in Q4 2023.Higher segment net income for our healthcare logistics operating segment primarily reflects increased revenue from our logistics and distribution and packagi
211、ng clients,partially offset by increased SG&A costs related to the implementation of a new WMS for Accuristix.Lower segment net income before eliminations for our specialized transportation segment was primarily attributable to lower contributions from Boyle Transportation and Skelton USA,partially
212、offset by organic growth in our Canadian specialized transportation business.Foreign Currency Translation Adjustment Foreign exchange differences of$14.9 million and$(5.0)million have been recognized in other comprehensive income for Q4 2024 and Q4 2023,respectively.These differences reflect assets
213、and liabilities of Boyle Transportation and Skelton USA which have been translated to Canadian dollars at the exchange rates as at December 31,2024 and 2023,respectively,and revenues and expenses which have been translated to Canadian dollars at exchange rates that approximate those on the date of t
214、he underlying transactions.Foreign exchange rates averaged approximately$1.3990 during Q4 2024 and approximately$1.3619 during Q4 2023.Total Comprehensive Income Total comprehensive income was$32.5 million for Q4 2024 compared to$13.5 million for Q4 2023.Total comprehensive income differs from net i
215、ncome due to our foreign operations(Boyle Transportation and Skelton USA)resulting in foreign currency translation adjustments as described above.EBITDA EBITDA for Q4 2024 was$43.6 million compared with$44.8 million for Q4 2023.The decrease was due to the factors discussed above and primarily reflec
216、ts lower contributions from our US-based truckload businesses partially offset by organic growth in our Canadian specialized transportation network and healthcare logistics segment.EBITDA attributable to Boyle Transportation and Skelton USA was approximately$2.5 million lower in Q4 2024 compared to
217、Q4 2023.19Andlauer Healthcare Group Inc.2024 Annual Report Andlauer Healthcare Group Inc.Fiscal 2024 Managements Discussion and Analysis/Page 20 EBITDA Margin EBITDA Margin for Q4 2024 was 25.9%compared with 26.5%for Q4 2023.The decrease in EBITDA Margin was primarily attributable to lower margins i
218、n our US-based truckload businesses,partially offset by the strong performance of our Canadian network in both operating segments.The performance of our two operating segments continues to result in industry-leading EBITDA Margins.The margin profiles of Boyle Transportation and Skelton USA,which wer
219、e previously in line with our consolidated EBITDA Margins,have been impacted during Fiscal 2023 and Fiscal 2024 by post-pandemic macroeconomic factors such as increased equipment and driver availability,resulting in fewer opportunities to obtain rate premiums relative to Fiscal 2021 and Fiscal 2022.
220、Year Ended December 31,2024 compared with 2023 The following section provides an overview of our financial performance for Fiscal 2024 and Fiscal 2023.Revenue Revenue for Fiscal 2024 increased by 0.4%to$650.5 million compared with$648.0 million in Fiscal 2023.Organic growth in our Canadian specializ
221、ed transportation network and healthcare logistics segment was largely offset by lower revenue from our US-based truckload businesses.Healthcare Logistics Segment Revenue in our healthcare logistics segment for Fiscal 2024 was$179.9 million,an increase of 2.2%,or approximately$3.9 million,compared w
222、ith Fiscal 2023.The increase in revenue in this segment was primarily driven by the factors set out below.Logistics&Distribution Logistics and distribution revenue for Fiscal 2024 was$162.9 million compared with$159.2 million for Fiscal 2023.The increase was primarily attributable to a combination o
223、f higher volumes and planned rate increases in Q4 2024,partially offset by lower outbound order handling and transportation activities for certain Accuristix consumer health clients in the first half of the year.Revenue growth in the second half of 2024 contributed to Fiscal 2024 logistics and distr
224、ibution revenue exceeding Fiscal 2023 logistics and distribution revenue.Packaging Solutions Packaging revenue for Fiscal 2024 was$16.9 million,an increase of 1.1%,or approximately$0.2 million,compared with Fiscal 2023.The increase reflects relatively stable volume from our packaging clients through
225、out Fiscal 2024.Specialized Transportation Segment Revenue in our specialized transportation segment for Fiscal 2024 was$470.6 million,a decrease of 0.3%,or approximately$1.4 million,compared with Fiscal 2023.The decrease in revenue for this segment was primarily driven by the factors set out below.
226、20Andlauer Healthcare Group Inc.2024 Annual Report Andlauer Healthcare Group Inc.Fiscal 2024 Managements Discussion and Analysis/Page 21 Ground Transportation Ground transportation revenue for Fiscal 2024 was$424.5 million compared with$429.2 million for Fiscal 2023.The$4.7 million decrease is attri
227、butable to approximately$18.3 million lower truckload revenue from our US subsidiaries,Boyle Transportation and Skelton USA in Fiscal 2024 compared with Fiscal 2023,partially offset by organic growth for ATS Healthcare and Skelton.Average fuel prices for Fiscal 2024 were approximately 5%lower than f
228、or Fiscal 2023.Air Freight Forwarding Air freight forwarding revenue for Fiscal 2024 was$31.9 million,an increase of 4.4%,or approximately$1.3 million,compared with Fiscal 2023.The increase was attributable to higher volumes of air shipments in Fiscal 2024 compared to Fiscal 2023.Dedicated and Last
229、Mile Delivery Dedicated and last mile delivery revenue for Fiscal 2024 was$73.8 million,an increase of 7.3%,or approximately$5.0 million,compared with Fiscal 2023.The increase is attributable to growth in volume and routes from our existing clients.Cost of Transportation and Services Cost of transpo
230、rtation and services for Fiscal 2024 was$326.6 million,or 50.2%of revenue,compared with$328.5 million,or 50.7%of revenue,for Fiscal 2023.Lower variable costs in our US-based truckload operations were partially offset by increased variable costs arising from organic growth in our Canadian specialized
231、 transportation network.Our operating ratio remained relatively consistent despite lower pricing and idle equipment in our US-based truckload businesses,reflecting a lower volume of truckloads as we focused on revenue quality.Direct Operating Expenses Direct operating expenses for Fiscal 2024 were$1
232、05.8 million,or 16.3%of revenue,compared with$103.8 million,or 16.0%of revenue,for Fiscal 2023.Direct operating expenses remained at a relatively consistent operating ratio in Fiscal 2024 and Fiscal 2023.Selling,General and Administrative Expenses SG&A expenses for Fiscal 2024 were$53.2 million,or 8
233、.2%of revenue,compared with$51.4 million,or 7.9%of revenue,for Fiscal 2023.The increase reflects legal and other professional fees in connection with corporate development activities during Q2 2024,and increased expenses related to our implementation of a new WMS for Accuristix.Depreciation and Amor
234、tization Depreciation and amortization for Fiscal 2024 was$70.9 million,an increase of 4.1%,or$2.8 million,compared with$68.1 million for Fiscal 2023.The increase was primarily attributable to organic growth and is consistent as a percentage of our revenue at approximately 10-11%.Fiscal 2024 depreci
235、ation and amortization was impacted by changes to the estimated useful lives and related depreciation methods of certain tangible assets arising from a reassessment of their expected usefulness to AHG and recent experience related to their economic lives.The changes in estimates were made on a prosp
236、ective basis.The full-year impact of the changes in estimates resulted in a net reduction in depreciation expense attributable to these assets of approximately$0.9 million.21Andlauer Healthcare Group Inc.2024 Annual Report Andlauer Healthcare Group Inc.Fiscal 2024 Managements Discussion and Analysis
237、/Page 22 Interest Expense Interest expense for Fiscal 2024 was$7.6 million compared with$8.2 million for Fiscal 2023.Interest expense related to leased facilities and equipment comprises the majority of interest expense;however,$2.7 million in interest expense was incurred in Fiscal 2024 in connecti
238、on with our Credit Facilities,compared to$3.0 million in Fiscal 2023.At this time,we expect to continue to hold debt under our Credit Facilities,which does not have any repayment schedule except as a single repayment at the end of the term and will incur interest expense on our Credit Facilities unt
239、il either early repayment or until maturity on March 1,2026.Interest Income Interest income for Fiscal 2024 was$2.2 million compared with$3.2 million for Fiscal 2023.Interest income is generated on our cash and cash equivalents balances.Other Expenses Other expenses for Fiscal 2024 were$0.3 million
240、compared with other income of$0.4 million for Fiscal 2023.These amounts are immaterial to our overall performance for these periods.Income Tax Expense Income tax expense for Fiscal 2024 was$23.7 million compared with$24.5 million for Fiscal 2023.Our effective tax rate was close to the statutory rate
241、 of 26.5%for both Fiscal 2024 and Fiscal 2023 after removing the effect of non-deductible share-based compensation expenses.Operating Income and Net Income Operating income for Fiscal 2024 was$94.0 million,a decrease of$2.1 million,or 2.2%,compared with$96.1 million for Fiscal 2023.The decrease was
242、attributable to lower revenue and margins in our US-based truckload businesses as described above resulting in a reduction in operating income of$8.5 million attributable to Boyle Transportation and Skelton USA combined,partially offset by organic growth in our Canadian specialized transportation ne
243、twork and healthcare logistics segment.We believe that our US-based truckload rates and related margins returned to pre-pandemic levels in Fiscal 2023 but have further declined throughout Fiscal 2024.We do not foresee a return to the premium levels we experienced in Fiscal 2022,which may impact our
244、comparative growth and margins in future periods.Net income for Fiscal 2024 decreased by 2.5%,or$1.7 million,to$64.5 million,from$66.1 million for Fiscal 2023.Lower US-based truckload rates and related margins in Fiscal 2024 compared to Fiscal 2023 resulted in approximately$5.6 million lower net inc
245、ome in our specialized transportation segment compared with Fiscal 2023.This year-over-year decline was partially offset by organic growth in our Canadian specialized transportation network.Net income for our healthcare logistics operating segment in Fiscal 2024 was$14.3 million compared with$14.1 m
246、illion in Fiscal 2023,recovering in Q4 2024 from reduced order handling and shipping activities from our consumer healthcare clients in Q1 2024 through Q3 2024.Foreign Currency Translation Adjustment Foreign exchange adjustments of$19.6 million have been recognized in other comprehensive income for
247、Fiscal 2024 compared to$(5.4)million for Fiscal 2023.This reflects assets and liabilities of Skelton USA and Boyle Transportation which have been translated to Canadian dollars at the exchange rate as at December 31,2024 and 2023,respectively,and revenues and expenses which have been translated to C
248、anadian dollars at exchange rates that approximate those on the date of the underlying transaction.22Andlauer Healthcare Group Inc.2024 Annual Report Andlauer Healthcare Group Inc.Fiscal 2024 Managements Discussion and Analysis/Page 23 Total Comprehensive Income Total comprehensive income was$84.1 m
249、illion for Fiscal 2024 compared to$60.7 million for Fiscal 2023.Total comprehensive income differs from net income due to our foreign operations(Skelton USA and Boyle Transportation)resulting in foreign currency translation adjustments as described above.EBITDA EBITDA for Fiscal 2024 increased by 0.
250、5%to$164.6 million,from$163.8 million for Fiscal 2023.The increase in EBITDA was due to the factors discussed above.EBITDA attributable to Boyle Transportation and Skelton USA was approximately$9.1 million lower in Fiscal 2024 compared to Fiscal 2023.EBITDA Margin EBITDA Margin for Fiscal 2024 and F
251、iscal 2023 was 25.3%and is in line with our pre-pandemic historical range of EBITDA Margins.Our US-based truckload businesses have negatively impacted our consolidated EBITDA Margins throughout Fiscal 2024 compared with Fiscal 2023.Summary of Quarterly Results While there is no significant seasonali
252、ty to our business,our results are impacted by our clients storage and shipping activities throughout the year as well as the timing of new client implementations or exits.The table below sets out our results for each of the eight most recently completed quarters(unaudited):($CAD 000s)except per sha
253、re data Q4-24 Q3-24 Q2-24 Q1-24 Q4-23 Q3-23 Q2-23 Q1-23 Total revenue 168,293 159,600 161,446 161,138 169,067 156,754 157,357 164,774 Operating income 26,739 23,806 22,175 21,243 28,044 21,724 22,595 23,690 Net income 17,528 16,286 15,731 14,923 18,561 15,335 15,716 16,528 Total comprehensive income
254、 32,452 13,116 18,067 20,460 13,540 20,147 10,677 16,328 EBITDA1 43,572 41,320 40,081 39,592 44,773 39,011 39,540 40,469 Earnings per share basic$0.45$0.41$0.38$0.36$0.45$0.37$0.37$0.39 Earnings per share-diluted$0.44$0.41$0.38$0.35$0.44$0.36$0.37$0.39 1 This is a non-IFRS financial measure.See“How
255、We Assess the Performance of Our Business Non-IFRS Measures”for further information on this measure.Generally,changes in revenue generated through the past eight quarters reflect changes in shipping volumes from our clients,variable fuel surcharge rates,declining U.S.ground transportation rates sinc
256、e Fiscal 2022,and the impact of price increases which are contractually implemented in both of our operating segments annually or as contracts are renegotiated.Average diesel fuel prices remained stable in Q4 2024 compared with Q3 2024;were approximately 3-4%lower in Q3 2024 than in Q2 2024 and rema
257、ined unchanged in Q2 2024 from Q1 2024.Average fuel prices decreased by approximately 7%in Q1 2024 from Q4 2023 and were approximately 8%below levels experienced in Q1 2023.Average fuel prices increased in Q1 2023 before declining in Q2 2023 and then increased again in Q3 2023 and Q4 2023.23Andlauer
258、 Healthcare Group Inc.2024 Annual Report Andlauer Healthcare Group Inc.Fiscal 2024 Managements Discussion and Analysis/Page 24 Operating income,net income,comprehensive income,and EBITDA have continued to perform in line with revenue over the past eight quarters.Fiscal 2023 EBITDA margins in our US-
259、based truckload businesses returned to more normalized,pre-pandemic levels and negatively impacted our consolidated margins in Fiscal 2023 relative to Fiscal 2022 by approximately 2.0%.Our consolidated EBITDA margin improved in Q4 2023 due to new business growth in our ATS Healthcare business.Our EB
260、ITDA margin in Q1 2024 remained unchanged compared to Q1 2023 reflecting the gains made in our ATS Healthcare business offset by lower margins in our US-based truckload businesses.Our EBITDA margin throughout Fiscal 2024 continued to be negatively impacted by our US-based truckload businesses.Liquid
261、ity&Capital Resources Overview Our principal uses of funds are for operating expenses,taxes,interest,capital expenditures,lease payments and dividends.We believe that cash generated from our operations,together with amounts available under our Credit Facilities will be sufficient to meet our future
262、operating expenses,taxes,interest,capital expenditures,lease payments and any dividends that may be declared by our board of directors.However,our ability to fund operating expenses,taxes,interest,capital expenditures and future lease payments will depend on,among other things,our future operating p
263、erformance,which will be affected by general economic,financial and other factors,including factors beyond our control.See“Accounting Classifications and Fair Values”,“Summary of Factors Affecting Performance”and“Risk Factors”in this MD&A.We review potential acquisitions and investment opportunities
264、 in the normal course of our business and may make select acquisitions and investments to implement our growth strategy when suitable opportunities arise.Our tuck-in acquisitions of TDS and MCI in October 2020 for a purchase price of approximately$15.9 million in cash were funded from existing cash
265、flow from operations.We financed the acquisitions of Skelton and the initial 49%of Skelton USA in March 2021 through a combination of cash on hand and by drawing$50.0 million on our Revolving Credit Facility and$25.0 million on our Term Facility,and by issuing$25.0 million of Subordinate Voting Shar
266、es to the shareholders of Skelton and Skelton USA.During Fiscal 2021,we repaid$39.0 million of the$50.0 million initially drawn on our Revolving Credit Facility in connection with the Skelton and Skelton USA acquisitions.On November 1,2021,we completed the acquisitions of 100%of Boyle Transportation
267、 and the remaining 51%of Skelton USA,increasing our aggregate ownership of Skelton USA to 100%.The aggregate purchase price for the acquisition of Boyle Transportation was approximately US$83.0 million($104.7 million),of which approximately US$63.0 million was paid in cash and US$20.0 million was sa
268、tisfied by issuing 522,116 Subordinate Voting Shares to the shareholders of Boyle Transportation.The aggregate purchase price for the acquisition of the remaining 51%interest in Skelton USA was approximately$44.8 million,of which$19.8 million was paid in cash and$25.0 million was satisfied by issuin
269、g 518,672 Subordinate Voting Shares to the shareholders of Skelton USA.The cash portion of the purchase price for each acquisition was funded through the completion of a bought deal equity offering on October 26,2021,pursuant to which AHG issued 2.0 million Subordinate Voting Shares from treasury fo
270、r gross proceeds of$96.4 million to the Company,with the remaining amounts funded from existing cash flow from operations.On March 1,2022,we acquired LSU for approximately$26.7 million.We satisfied the purchase price through the issuance of 154,639 Subordinate Voting Shares to the shareholders of LS
271、U and cash of approximately$19.2 million comprising the cash portion of the purchase price net of provisional customary working capital adjustments.We financed the cash portion of the purchase price through a combination of cash on hand and by drawing on our Revolving Credit Facility.During Fiscal 2
272、022,we repaid$23.0 million of the amounts drawn on our Revolving Credit Facility in connection with the LSU and Skelton acquisitions.24Andlauer Healthcare Group Inc.2024 Annual Report Andlauer Healthcare Group Inc.Fiscal 2024 Managements Discussion and Analysis/Page 25 During Fiscal 2023,cash from o
273、perating activities continued to build our cash and cash equivalents balance.On March 29,2023,we commenced the 2023 NCIB(as defined below).A total of 634,090 Subordinate Voting Shares,for a total of approximately$25.1 million,were purchased and cancelled pursuant to the 2023 NCIB,which terminated on
274、 March 28,2024.We subsequently entered into the 2024 NCIB(as defined below)which commenced on July 2,2024.Further details regarding the 2023 NCIB and 2024 NCIB are set out below.During Q2 2024,we undertook a SIB as described below.A total of 2,000,000 Subordinate Voting Shares(including 1,032,045 Mu
275、ltiple Voting Shares on an as-converted basis),at a price of$45.00 per Share,for a total of$90.0 million,were purchased and cancelled pursuant to the SIB.The SIB expired on June 19,2024.We used$50.0 million of cash on hand and a$40.0 million draw on our Revolving Credit Facility to finance the SIB.A
276、s at December 31,2024,there was$30.0 million drawn on the Revolving Credit Facility.On July 2,2024,we commenced the 2024 NCIB.As of December 31,2024,a total of 266,534 Subordinate Voting Shares,for a total of approximately$10.4 million,have been purchased and cancelled pursuant to the 2024 NCIB.Work
277、ing Capital The following table presents our working capital position as at December 31,2024 and 2023:($CAD 000s)As at December 31,2024 2023 Cash and cash equivalents 40,483 59,740 Trade and other receivables 110,447 102,206 Income taxes receivable 2,670 1,230 Inventories 8,934 5,329 Prepaid expense
278、s and other 6,373 6,605 Due from related parties 18 1 Revolving Credit Facility(30,000)-Accounts payable and accrued liabilities(44,500)(41,795)Current portion of lease liabilities(31,729)(27,697)Working Capital 62,696 105,619 As at December 31,2024,we had working capital of$62.7 million compared wi
279、th working capital of$105.6 million as at December 31,2023.The decrease in working capital was primarily attributable to the use of cash on hand and the$40.0 million draw on our Revolving Credit Facility to finance the SIB and purchases of Subordinate Voting Shares under our 2023 NCIB and 2024 NCIB,
280、offset by ordinary fluctuations in working capital and a receivable balance for income taxes arising from tax installments remitted based on Fiscal 2022 earnings.During Q3 2024,we made a$10.0 million payment to reduce our borrowings under the Revolving Credit Facility.Credit Facilities We entered in
281、to credit facilities upon closing of our IPO,comprised of a revolving credit facility(the“Revolving Credit Facility”)in the aggregate principal amount of up to$75.0 million and a term facility(the“Term Facility”,and together with the Revolving Credit Facility,the“Credit Facilities”)in the aggregate
282、principal amount of up to$25.0 million.On February 19,2021,in connection with our acquisitions of Skelton and 49%of Skelton USA,we amended our Credit Facilities to increase the amounts available to be drawn under the Revolving Credit Facility and the Term Facility each by$25.0 million.On June 26,202
283、4,we further 25Andlauer Healthcare Group Inc.2024 Annual Report Andlauer Healthcare Group Inc.Fiscal 2024 Managements Discussion and Analysis/Page 26 amended our Credit Facilities to extend the term by one year.The amended Credit Facilities comprise a Revolving Credit Facility in the aggregate princ
284、ipal amount of up to$100.0 million and a Term Facility in the aggregate principal amount of up to$25.0 million.The remaining terms and conditions of the Credit Facilities remain unchanged,except that they will mature and be due and payable on March 1,2026,and bankers acceptances loans were replaced
285、by Canadian overnight repo rate average(“CORRA”)loans.Although the Credit Facilities are payable on March 1,2026,the Revolving Credit Facility has been classified as a current liability on our balance sheet as at December 31,2024 as we intend to repay any drawn amounts within 12 months.As at Decembe
286、r 31,2024,the aggregate amount outstanding before financing costs under the Credit Facilities was$25.0 million under the Term Facility and$30.0 million under the Revolving Credit Facility.The Revolving Credit Facility is available to be drawn in Canadian dollars by way of prime rate loans,CORRA loan
287、s and letters of credit,and in U.S.dollars by way of base rate loans and letters of credit,in each case,plus the applicable margin in effect from time to time.The Term Facility was drawn in a single Canadian dollar advance of$25.0 million on closing of the IPO by way of prime rate loans and was subs
288、equently converted to bankers acceptances and increased by a single Canadian dollar advance of$25.0 million by way of bankers acceptances in connection with the Skelton acquisitions on March 1,2021.The initial Term Facility advance of$25.0 million was repaid on August 1,2023 leaving$25.0 million out
289、standing,drawn by way of CORRA loans.The Credit Facilities are subject to customary negative covenants and include financial covenants requiring us to maintain at all times a maximum net leverage ratio and a minimum interest coverage ratio,tested on a quarterly basis.As at December 31,2024,we were i
290、n compliance with all of the covenants under the Credit Facilities.In order to support future potential growth through acquisitions,the Credit Facilities also include an accordion feature to allow us to increase the commitment under one or both of the Credit Facilities in an aggregate principal amou
291、nt of up to$100.0 million,such that any amounts drawn under the accordion feature would be in addition to the amounts ordinarily available,subject to the agreement of participating lenders and provided that we are not,or would not,be in default under the Credit Facilities,or in non-compliance with a
292、ny financial covenants and an event of default does not or would not exist,after giving effect thereto and provided that all representations and warranties are true and correct immediately prior to,and after giving effect to,such increase.As of the date of this MD&A,this accordion feature remains un
293、committed.Capital Expenditures Capital expenditures for Q4 2024 and Fiscal 2024 were$3.8 million and$17.6 million,respectively,compared with$7.6 million and$23.5 million,respectively,for Q4 2023 and Fiscal 2023.Capital expenditures have historically been funded through cash flows from operations.We
294、have traditionally divided our capital expenditures into two subcategories,maintenance capital expenditures and growth capital expenditures,which are discussed further below.The Company will generally seek to lease trucks and tractors for the foreseeable future to ensure that its fleet continues to
295、run the most fuel efficient and latest diesel engines;and will generally seek to purchase trailers to ensure that their underlying useful lives are maximized.26Andlauer Healthcare Group Inc.2024 Annual Report Andlauer Healthcare Group Inc.Fiscal 2024 Managements Discussion and Analysis/Page 27 Maint
296、enance Capital Expenditures Maintenance capital expenditures refers to capital expenditures necessary for us to sustain our assets in order to continue operating in our current form.We generally seek to maintain our facilities and equipment at a level consistent with the needs of the sector we opera
297、te within and ensure that preventative maintenance programs are in place to achieve the performance expected from our facilities and equipment.Outlays for maintenance capital expenditures for Q4 2024 and Fiscal 2024 were$3.0 million and$16.1 million,respectively,compared with$7.2 million and$12.2 mi
298、llion,respectively,for Q4 2023 and Fiscal 2023.These capital expenditures were funded through cash flows from operations and are largely comprised of expenditures relating to purchases of specialized trailers for ATS Healthcare,Skelton,and Boyle Transportation and specialized Crdo packaging to maint
299、ain ATS Healthcares specialized packaging rental program.Growth Capital Expenditures Growth capital expenditures comprise expenditures on new assets that are intended to grow our productive capacity.These capital expenditures are made to acquire or expand leasehold improvements,transportation and lo
300、gistics equipment(including pick-up and delivery equipment,warehouse racking,material handling equipment,warehouse automation equipment and specialized logistics equipment such as coolers or vaults,among others),furniture and fixtures,and computer equipment to support new contracts or additional vol
301、ume from new business.Outlays for growth capital expenditures for Q4 2024 and Fiscal 2024 were$0.8 million and$1.4 million,respectively,compared with$0.4 million and$11.3 million,respectively,in Q4 2023 and Fiscal 2023.Growth capital expenditures can aggregate to over$15.0 million in any given fisca
302、l year,depending on the underlying expansion need,however in Fiscal 2024 we have not expanded our specialized transportation network due to the decline in our US-based truckload business and have redeployed certain assets from the U.S.to our Canadian network.Growth capital expenditures have historic
303、ally been funded through cash flows from operations.Growth capital expenditures for Fiscal 2024 were primarily attributable to cooler and vault expansions in our Accuristix facility network.We are implementing the Tecsys Itopia platform,a healthcare logistics software as a service platform,to replac
304、e our prior warehouse management system(“WMS”).Tecsys Inc.(“Tecsys”)is a supply chain management software company,and its technology stack will provide us with updated warehouse management and transportation management capabilities as well as end-to-end analytics and business intelligence.Our first
305、client went live on our new WMS in Q1 2023.Implementations continued throughout Fiscal 2023 and Fiscal 2024 and will continue throughout Fiscal 2025.Our new WMS implementation has extended beyond our original project timeline due,in part,to delays in the delivery of required 3PL functionality in the
306、 base application code.We are working closely with Tecsys to address our functionality requirements.We expect the implementation will be materially complete by the end of Fiscal 2025.In Q4 2024 and Fiscal 2024,we capitalized$0.5 million and$1.7 million,respectively,to intangible assets in connection
307、 with our new WMS.We also capitalized$0.5 million and$0.6 million for software development for Boyle Transportation and ATS Healthcare,respectively,in Fiscal 2024.27Andlauer Healthcare Group Inc.2024 Annual Report Andlauer Healthcare Group Inc.Fiscal 2024 Managements Discussion and Analysis/Page 28
308、Cash Flows The following table presents cash flows for the three months and year ended December 31,2024 and 2023:($CAD 000s)Three Months Ended1 December 31,Year Ended December 31,2024 2023 2024 2023 Cash flows Cash from Operating Activities 22,625 25,164 124,402 104,419 Cash(used in)Financing Activi
309、ties(13,990)(25,263)(126,242)(86,182)Cash(used in)Investing Activities(4,978)(7,941)(18,855)(23,848)Effect of foreign currency translation2 832(505)1,438(504)Net change in cash 4,489(8,545)(19,257)(6,115)Select cash flow data Capital expenditures(3,814)(7,630)(17,559)(23,523)Lease payments(9,626)(8,
310、182)(35,944)(32,358)1 Unaudited 2 Comprises the effect of differences in exchange rates for U.S.dollar opening balance sheet cash balances on January 1,2024 and 2023 versus December 31,2024 and 2023 for Boyle Transportation and Skelton USA.Cash Flow Generated From Operating Activities Cash flow gene
311、rated from operating activities for Q4 2024 and Fiscal 2024 totaled$22.6 and$124.4 million,respectively,compared with$25.2 million and$104.4 million for Q4 2023 and Fiscal 2023,respectively.The increase in cash flows generated from operating activities relates principally to normal fluctuations in t
312、rade accounts receivable,trade accounts payable and other working capital balances.During Fiscal 2024 and Fiscal 2023,we made income tax installments based on Fiscal 2023 and Fiscal 2022 income taxes,respectively,resulting in an over installment of income taxes for Fiscal 2024 and Fiscal 2023 due to
313、 reduced operating income from our US-based truckload businesses.Accordingly,we have$2.7 million and$1.2 million of income taxes receivable as at December 31,2024 and 2023,respectively.Cash Flow Used In Financing Activities Cash flow used in financing activities for Q4 2024 and Fiscal 2024 totaled$1
314、4.0 million and$126.2 million,respectively,compared with$25.3 million and$86.2 million for Q4 2023 and Fiscal 2023,respectively.The increase was primarily attributable to our purchase of 159,350 Subordinate Voting Shares for$6.3 million pursuant to our 2023 NCIB in Q1 2024 as described below,and our
315、 purchase of 2,000,000 Subordinate Voting Shares for$90.0 million in Q2 2024 financed,in part,by a$40.0 million draw on our Revolving Credit Facility.During Q3 2024 we repaid$10.0 million on our Revolving Credit Facility and repurchased,for cancellation,220,534 Subordinate Voting Shares for$8.6 mill
316、ion under the 2024 NCIB.During Q4 2024,we repurchased 46,000 Subordinate Voting Shares for$1.8 million.The remaining cash flows used in financing activities in Q4 2024 and Fiscal 2024 and Q4 2023 and Fiscal 2023 relate to ordinary course repayments of lease liabilities and dividends.In Q3 2024 and Q
317、1 2024,we increased our quarterly dividend to$0.11(from$0.10)and to$0.10(from$0.09),respectively,per Subordinate Voting Share and Multiple Voting Share,respectively.28Andlauer Healthcare Group Inc.2024 Annual Report Andlauer Healthcare Group Inc.Fiscal 2024 Managements Discussion and Analysis/Page 2
318、9 Cash Flow Used In Investing Activities Cash flow used in investing activities for Q4 2024 and Fiscal 2024 totaled$5.0 million and$18.9 million,respectively,compared with$7.9 million and$23.8 million for Q4 2023 and Fiscal 2023,respectively.The increase was primarily attributable to normal course e
319、xpenditures on property,plant and equipment and software development.Contractual Obligations As at December 31,2024,we had the following contractual commitments:Outstanding letters of guarantee in the amount of$0.4 million(December 31,2023$0.4 million);Commitments relating to the leasing of fleet eq
320、uipment,ranging from 72 to 84 months,beginning upon delivery to us of the equipment during Fiscal 2024,for total lease commitments of$5.5 million(December 31,2023$12.9 million);and Commitments to purchase fleet equipment expected to be delivered during Fiscal 2024 totaling$3.0 million(December 31,20
321、23$4.8 million).Credit facilities As at December 31,2024,the aggregate amounts outstanding under the Credit Facilities were$25.0 million under the Term Facility(December 31,2023$25.0 million)and$30.0 million under the Revolving Credit Facility(December 31,2023$nil)before capitalized financing costs.
322、The Credit Facilities will mature and be due and payable on March 1,2026.The Revolving Credit Facility has been classified as a current liability on our balance sheet as at December 31,2024 as we intend to repay any drawn amounts within 12 months.Leases We lease buildings and equipment in the operat
323、ion of our healthcare logistics and specialized transportation operating segments.Building lease terms range from five to ten years,with many leases including optional extension periods.For Fiscal 2024,facility lease liabilities are calculated using our average incremental borrowing rate of 5.35%(Fi
324、scal 2023 5.76%).Equipment lease terms range from one to seven years.For Fiscal 2024,equipment lease liabilities are calculated using our average incremental borrowing rate of 5.56%(Fiscal 2023 5.94%)for our specialized transportation segment and 6.20%(Fiscal 2023 5.74%)for our healthcare logistics
325、segment.The following table summarizes our contractual obligations as at December 31,2024 based on undiscounted cash flows:($CAD 000s)Total Less than 1 Year 1-5 Years More than 5 years Credit facilities 55,000-55,000-Lease liabilities 143,096 36,403 87,838 18,855 Equipment purchases and lease commit
326、ments 8,519 3,858 4,661-Other obligations 84,574 44,500 40,074-Total contractual obligations 291,189 84,761 187,573 18,855 29Andlauer Healthcare Group Inc.2024 Annual Report Andlauer Healthcare Group Inc.Fiscal 2024 Managements Discussion and Analysis/Page 30 Off-Balance Sheet Arrangements We have n
327、o off-balance sheet arrangements that have,or are reasonably expected to have,a current or future material impact on our financial condition,revenues or expenses,results of operations,liquidity,capital expenditures or capital resources.Seasonality There is no significant seasonality to our business.
328、Financial Instruments Financial assets Accounts receivable are initially recognized when they originate.All other financial assets and financial liabilities are initially recognized when we become a party to the contractual provisions of the instrument.A financial asset(unless it is an account recei
329、vable without a significant financing component)or financial liability is initially measured at fair value plus,for an item not at fair value through profit and loss,transaction costs that are directly attributable to its acquisition or issue.An account receivable without a significant financing com
330、ponent is initially measured at the transaction price.Our financial assets are comprised of cash and cash equivalents,accounts receivable,and long-term deposits.On initial recognition,we classify these financial assets as measured at amortized cost,when both of the following conditions are met:it is
331、 held within a business model whose objective is to hold assets to collect contractual cash flows;and its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.These financial assets are subsequently measur
332、ed at amortized cost using the effective interest method.The amortized cost is reduced by impairment losses.Interest income,foreign exchange gains and losses and impairment are recognized in profit or loss.Any gain or loss on de-recognition is recognized in profit or loss.Impairment of financial ass
333、ets Financial assets are assessed for indicators of impairment at the end of each reporting period.Financial assets are considered to be impaired when there is objective evidence that,as a result of one or more events that occurred after the initial recognition of the financial asset,the estimated future cash flows of the investment have been decreased.For accounts receivable,we apply a simplified
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