People Corporation Announces Financial Results for the Third Quarter of Fiscal 2015

TORONTO, ONTARIO--(Marketwired - July 24, 2015) - People Corporation (the "Company") (TSX VENTURE:PEO) today announced financial results for the third quarter of fiscal 2015.

"The Company continues to be well served by the fundamentals of its business model and strategic direction," commented Laurie Goldberg, Chairman and Chief Executive Officer. "We continue our trend of year-over-year increases in quarterly Adjusted EBITDA. Furthermore, organizational changes at the senior level, a significantly expanded credit facility announced in the first quarter, a private placement to raise capital for acquisitions, and the acquisition of Coughlin & Associates Ltd. resulting in the expansion of our TPA platform services, have strengthened our ability to execute on this strategy and we expect to see significant growth to revenue and EBITDA in the upcoming fiscal year."

Highlights of Financial Results for the three and nine months ended May 31, 2015

Financial Results from Operations

Driven by organic growth and ongoing margin improvements, the Company announced financial results for the third quarter, continuing its trend of year-over-year growth in quarterly Adjusted EBITDA. The effect of the acquisition of Coughlin & Associates Ltd. is not reflected in the Company's third quarter results as the transaction closed subsequent to the end of the period. For the quarter ended May 31, 2015, revenues decreased 9.4% to $10.5 million, and Adjusted EBITDA increased 9.0% to $2.1 million.

		3 months ended May 31, 2015			3 months ended May 31, 2014				9 months ended May 31, 2015				9 months ended May 31, 2014
Revenue		$	10,487.6		$	11,577.0			$	33,526.0			$	32,567.5
Operating Income before Corporate Costs		$	2,772.1		$	2,961.1			$	9,526.8			$	8,818.6
Operating Income before Corporate Costs as a % of revenue			26.4	%		25.6	%			28.4	%			27.1	%
Adjusted EBITDA		$	2,142.5		$	1,964.8			$	6,803.0			$	6,147.4
Adjusted EBITDA as a % of revenue			20.4	%		17.0	%			20.3	%			18.9	%

Revenue for the nine months ended May 31, 2015 totaled $33.5 million, which represents an increase of $1.0 million, or 2.9%, over the first nine months of fiscal 2014. The Company recognized acquired growth of $0.6 million (1.8%) and organic growth of $0.4 million (1.1%). Organic growth included increases in revenue resulting from the addition of new clients and natural inflationary factors offset by reduced sales volumes in the Human Resource Solutions division, differences in the timing of revenue received from carriers for certain disability benefit products and the effect of a depressed labour market in Alberta on certain premium product lines.

For the three months ended May 31, 2015, the Company reported decrease in revenue of $1.1 million or 9.4%. Excluding acquired growth of $0.2 million (1.7%), the decrease was $1.3 million (11.1%). The decrease in revenue for the quarter, as compared to the same period of 2014, was primarily driven by differences between periods of the timing of certain revenue received from carriers, reduced sales volume in the Human Resource Solutions division and the effect of a depressed labour market in Alberta on certain premium product lines, partially offset by continued organic and acquired growth in the Company's other divisions.

The Company has made significant organizational investments to build scale in a sector where such investments are increasingly a competitive advantage. Accordingly, the Company has historically reported Operating Income before Corporate Costs in order to assess the results of operations before consideration of these ongoing corporate investments. For the nine months ended May 31, 2015, Operating Income before Corporate Costs totaled $9.5 million, an increase of $0.7 million, or 8.0%, over the same period of 2014. For the quarter ended May 31, 2015, Operating Income before Corporate Costs was $2.8 million, which represents a decrease of $0.2 million, or 6.4%, over the comparative period in fiscal 2014. Changes in Operating Income before Corporate Costs for the three and nine month periods are primarily driven by the corresponding change in revenue for the same periods.

For the nine months ended May 31, 2015, Adjusted EBITDA totalled $6.8 million, an increase of $0.7 million, or 10.7%, over the same period of the previous year and Adjusted EBITDA margin increased to 20.3% compared to 18.9%. The increase in Adjusted EBITDA for the nine months was driven by acquired growth of $0.6 million representing the increased contribution to run rates from 2014 acquisitions and organic growth of $0.4 million representing the increase in revenue from the addition of new clients and natural inflationary factors. The increase was partially offset by reduced sales volumes in the Human Resource Solutions division, differences in timing of revenue received from carriers for certain disability benefit products and the effect of a depressed labour market in Alberta on certain premium product lines as well as increased operating and corporate costs including professional fees for the long-term incentive plan and increased claims administration costs, net of a reduction in certain compensation expenses.

Adjusted EBITDA for the quarter ended May 31, 2015 was $2.1 million, representing an increase of 9.0%, or $0.2 million, as compared to the same period of the previous year. Adjusted EBITDA as a percentage of revenue increased to 20.4% from 17.0% in the same period of the previous year. Adjusted EBITDA for the three months was driven by cost reductions of $1.3 million primarily in variable compensation expenses tied directly to the lower revenue, lower fixed compensation expense and non-acquisition travel expenses as well as acquired growth of $0.2 million representing the increased contribution to run rates from 2014 acquisitions. The cost savings were offset by a reduction in non-acquired revenue of $1.3 million which was a result from differences between periods in timing of certain revenue received from carriers compared to the same period last year, reduced sales volumes in the Human Resource Solutions division and the effect of a depressed labour market in Alberta on certain premium product lines. The Company can experience fluctuations in timing of revenue between quarters and as a result Adjusted EBITDA as a percentage of revenue is less meaningful on a quarterly basis.

Summary Financial Position

The Company continues to be well-positioned to execute on its growth strategy, with a strong financial position and ready access to financial capital.

The Company had cash balances of $17.0 million as at May 31, 2015, an increase of $14.3 million as compared to August 31, 2014, resulting from a private placement of shares completed in the third quarter. In addition to its cash resources, as previously disclosed, during the first quarter the Company entered into an expanded credit facility agreement with its senior lender that totals $35.0 million of credit capacity, including a $7.0 million term loan, a $5.0 million operating revolving facility and a $23.0 million acquisition revolving facility. As of May 31, 2015, the Company had drawn the $7.0 million term loan and had $28.0 million of unused credit capacity available. The credit facility agreement also has an Accordion Feature, which provides for an option, subject to the satisfaction of certain terms and conditions, to increase the Acquisition Revolver by up to $15.0 million of additional capacity bringing the overall credit capacity up to $50.0 million. Subsequent to the end of the quarter, the Company increased its draw-down on the senior credit facility by $15.8 million representing a portion of the consideration paid for the acquisition of Coughlin & Associates Ltd.

In addition to the credit facility with its senior lender, as of May 31, 2015, the Company had $3.0 million owing to vendors from previous acquisitions, of which $0.4 million is due in the next twelve months.

The complete Financial Statements and Management's Discussion and Analysis for the quarter ended May 31, 2015, along with additional information about the Company and all of its public filings are available at www.sedar.com.

Strategic and Operational Highlights for the First Nine Months of Fiscal 2015

The Company continues to make significant progress in executing its strategic plan, pursuing growth opportunities both organically and through acquisitions in which new operating entities become part of the People Corporation group of companies. As part of this, the Company continues to invest in people, technology and other organizational resources to build its organizational capabilities. Some of the notable milestones from the first nine months of fiscal 2015 include:

• Subsequent to the end of the quarter, on June 12, 2015, acquired 100% of the voting interest and 66% of the economic interest of Coughlin & Associates Ltd., one of Canada's preeminent independent full service national benefit and pension consulting and administration firms, based in Ottawa, Ontario and Winnipeg, Manitoba.
  
  
• Completed a bought deal private placement financing, issuing 4,232,000 common shares at $3.40 per share.
  
  
• Appointment of Mr. Keith McMahon, CA as the Company's Chief Financial Officer;
  
  
• Entered into new expanded Credit Facility with $35.0 million of senior credit available, a significant increase over the Company's previous senior credit facility of $24.5 million. The agreement also provides for the potential to increase the facility by a further $15.0 million to a total of $50.0 million of available credit, effectively doubling the Company's senior credit capacity;
  
  
• Strengthened the organizational structure to position the Company for continued growth, including appointing Ms. Bonnie Chwartacki as President and Mr. Brevan Canning as Executive Vice President and Group Head - Benefit Solutions; and,
  
  
• Appointment of Mr. Eric Stefanson to the Company's Board of Directors.

About People Corporation

People Corporation is a national provider of group benefits, group retirement and human resource services. The Company has offices across Canada, each led by a team of experts and backed by the resources of a national company that is traded on the TSX-V. The Company's industry experts provide uniquely valuable insight while customizing an innovative suite of services to the specific needs of its clients. Whatever your sector, whatever your scale, putting People Corporation's expertise and proven track record to work will make a difference to your people and your bottom line.

Further information is available at www.peoplecorporation.com.

Forward-Looking Information

This news release contains "forward-looking information" within the meaning of applicable securities laws, such as information concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Use of words such as "may", "will", "expect", "believe", "intends", "likely", or other words of similar effect may indicate forward-looking information including the completion of the transaction, the impact of that transaction on our earnings and cash flow, and the anticipated benefits of the transaction. This information is not a guarantee of future performance and is subject to numerous risks and uncertainties, including those described in our publicly filed documents (which are available on SEDAR at www.sedar.com). Those risks and uncertainties include: our ability to maintain profitability and manage growth; strong competition from other consultants and changes in the current legislation could result in significant competition from the banking industry; failure of information systems and technology; dependence on key clients; seasonality of revenues and the resulting possible impairment on working capital; reliance on key professionals; additional financing may be required and may not be available under terms favourable to us; there can be no assurance that any suitable future acquisition will be available to us or that, if available, the terms of the acquisition will be favourable to us; and a change in general economic conditions. Many of these risks and uncertainties can affect our actual results and could cause our actual results to differ materially from those expressed or implied in any forward-looking information made by us or on our behalf. Given these risks and uncertainties, investors should not place undue reliance on forward looking information as a prediction of actual results. All forward-looking information in this news release is qualified by these cautionary statements. This information is made as of the date of this news release and, except as required by applicable law, we undertake no obligation to publicly update or revise any forward looking information, whether as a result of new information, future events or otherwise. Additionally, we undertake no obligation to comment on analyses, expectations or statements made by third parties in respect of the Company, its financial or operating results or its securities.

Non-IFRS Financial Measures

The Company reports non-IFRS financial measures, including Adjusted EBITDA and Operating Income before Corporate Costs as key measures used by management to evaluate performance of the business, to compensate employees and to facilitate a comparison of quarterly and annual results of ongoing operations. Adjusted EBITDA is also a concept utilized in measuring compliance with debt covenants. The Adjusted EBITDA measure is commonly reported and widely used by investors and lending institutions as an indicator of a company's operating performance and ability to incur and service debt, and as a valuation metric. While used to assist in evaluating the operating performance and debt servicing ability of the Company, readers are cautioned that Adjusted EBITDA as reported by the Company may not be comparable in all instances to Adjusted EBITDA as reported by other companies. For a detailed explanation of how the Company's non-IFRS measures are calculated, please refer to the Company's MD&A filing for the nine months ended May 31, 2015, which can be accessed via the SEDAR Web site (www.sedar.com).

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.