Unique Logistics International Reports Fiscal Third Quarter Financial Results

Rhea-AI Summary

Unique Logistics International reported its third fiscal quarter results, ending February 28, 2023. The company closed key acquisitions on February 21, 2023, expected to enhance revenue starting in the next quarter. The third quarter saw revenues fall to $49.6 million, down from $250.4 million year-over-year, with a net income of $0.7 million, an improvement from a loss of $4.9 million in the same quarter last year. Year-to-date net income reached $7.3 million. The company's gross profit margin improved to 12.8%, while working capital showed a deficit of $9.7 million due to short-term financing for acquisitions. The upcoming merger with Edify Acquisition Corp, valued at $360 million, is expected to provide liquidity for further M&A activities.

Positive

• Year-to-date net income increased to $7.3 million compared to $1.6 million for the prior year.
• Gross profit margin improved to 12.8% despite a decline in revenue.
• Successful acquisition strategy anticipated to enhance future revenue and net income.

Negative

• Revenue fell sharply to $49.6 million from $250.4 million year-over-year.
• Working capital deficit of $9.7 million primarily due to short-term financing for acquisitions.

- Subsidiary acquisitions closed on February 21, 2023 -

- Year to date net income of $7.3 million -

NEW YORK, April 20, 2023 /PRNewswire/ -- Unique Logistics International, Inc. (OTCMKTS: UNQL) ("Unique" or the "Company"), a global logistics and freight forwarding company, today announced results for its third fiscal quarter ended February 28, 2023. This is the reporting quarter in which the Company completed critical acquisitions. The acquisitions closed on February 21, 2023 and thus there was no discernable impact on revenue or net income in the third quarter.

"The recent acquisitions position Unique to execute our strategy to deliver a scalable operating model with what we anticipate will be a positive impact going forward. We believe the income statement will see a considerable boost from the acquisitions beginning in our fourth fiscal quarter," said Sunandan Ray, Chief Executive Officer.

Third Quarter Key Metrics
The quarter ended February 28, 2023 saw a substantial decline in the shipping market. Compared with the prior year, there was also a significant decrease in shipping prices. The combined impact is reflected in the decline in the Company's revenue. The impact of reduced shipping was particularly severe on the more expensive air freight sector.

 

(in millions)
	For the Three Months Ended February 28				For the Nine Months Ended February 28
	2023		2022		2023	2022
Revenue	$                       49.6		$                       250.4		$                       275.0	$                    845.6
Net Income (Loss)	0.7		(4.9)		7.3	1.6
Adjusted EBITDA	$                        0.5		$                          2.5		$                        10.8	$                    14.8

 

Pro-forma information is presented below on the impact the acquisitions would have had if in place for the entire reported periods.

Pro Forma Results with Acquisitions

UNIQUE LOGISTICS INTERNATIONAL, INC.
Pro Forma Information (Unaudited)
(in millions)
		For The Nine Months Ended February 28, 2023			For The Nine Months Ended February 28, 2022
Revenue, net		$	384.1		$	1,041.0
Net Income attributable to registrant		$	14.1		$	18.7

 

Third Quarter Financial Results

• Gross Profit margins improved to 12.8% in the three months ended February 28, primarily due to procurement strategies in a seasonal off-peak market.
• Operating expenses fell 80.1% in line with the reduction in revenue.
• Net Income was approximately $663 thousand for the three months ended February 28, 2023, compared to a net loss of approximately $4.9 million for the three months ended February 28, 2022. For the year to date, Net Income was $7.3 million compared with $1.6 million for the equivalent prior year period.
• Adjusted EBITDA was $534 thousand for the three months ended February 28, 2023. For the year to date adjusted EBITDA was $10.8 million.
• Working capital deficit of $9.7 million is primarily the result of our use of short-term financing to fund the acquisitions. The Company has started to pay off such short-term debt and expects to revert to a positive working capital position by the end of the current fiscal year on May 31, 2023.

"The most significant event of the third quarter was the critical closing of the acquisitions we have targeted for so long. These acquisitions will add to our net income and strategic growth potential. In the nine month period to February 28, 2023, had the acquisitions been in place at the start of the period, our share of the revenue of the acquired companies would have been $109.1 million.

"We continue to seek other acquisition opportunities. We remain on track with our planned merger with Edify Acquisition Corporation (NASDAQ: EAC) to secure our position as a Nasdaq listed company with the liquidity to execute on M&A activities," said Sunandan Ray, Chief Executive Officer.

"Third quarter reflects market slowdown due to seasonal factors as well as excess inventory following the post-Covid build up. Nevertheless, we were able to focus on improved gross margin yields and deliver year to date Net Income of $7.3 million."

Business Outlook

"The short-term liabilities associated with the acquisitions should be substantially paid off or refinanced with long-term debt by the end of our fourth quarter with $6 million already having been paid off using operating cash flow. We believe that continuing to drive improvements in our customer and carrier experience and the expertise of our team will lead to gains in market share and growth. Ultimately, our efforts should lead to additional gains in productivity, which reduces our operating costs, and improves returns to shareholders."

Mr. Ray concluded: "The Company continues to pursue its previously announced business combination with Edify, subject to closing conditions including receipt of required regulatory and stockholder approvals. The Edify merger values the Company at an enterprise value of approximately $360 million inclusive of the international acquisitions that the Company reported on February 27, 2023. At the closing of the merger, it is expected that the Company's shareholders will receive Edify common stock equal to approximately $0.03 per share for each share of the Company's common stock that they own or into which their shares of the Company's preferred stock are convertible."

About Unique Logistics International, Inc.

Unique Logistics International, Inc. (OTC Markets: UNQL) through its wholly owned operating subsidiaries, is a global logistics and freight forwarding company providing a range of international logistics services that enable its customers to outsource to the Company sections of their supply chain process. The services provided are seamlessly managed by its network of trained employees and integrated information systems. We enable our customers to share data regarding their international vendors and purchase orders with us, execute the flow of goods and information under their operating instructions, provide visibility to the flow of goods from factory to distribution center or store and when required, update their inventory records.

For more information on UNQL and its businesses, please visit www.unique-usa.com.

About Non-GAAP Financial Measures (Adjusted EBITDA)

We define adjusted EBITDA to be earnings before interest, taxes, depreciation and amortization and other non-recurring income or expenses.

Adjusted EBITDA is not a measurement of financial performance under GAAP and may not be comparable to other similarly titled measures of other companies. We present adjusted EBITDA because we believe that adjusted EBITDA is a useful supplement to net income as an indicator of operating performance. For this reason, we believe adjusted EBITDA will also be useful to others, including our stockholders, as a valuable financial metric.

Adjusted EBITDA should not be considered as an alternative to net income as an indicator of performance or as an alternative to cash flows from operating activities as an indicator of cash flows, in each case as determined in accordance with GAAP, or as a measure of liquidity. In addition, adjusted EBITDA does not take into account changes in certain assets and liabilities as well as interest and income taxes that can affect cash flows. We do not intend the presentation of these non-GAAP measures to be considered in isolation or as a substitute for results prepared in accordance with GAAP. These non-GAAP measures should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP.

Cautionary Note Regarding Forward-Looking Statements

This press release includes express or implied statements that are not historical facts and are considered forward-looking within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. Forward-looking statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance and may contain projections of our future results of operations or of our financial information or state other forward-looking information. In some cases, you can identify forward-looking statements by the following words: "may," "will," "could," "would," "should," "expect," "intend," "plan," "anticipate," "believe," "estimate," "predict," "project," "potential," "continue," "ongoing," or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words.

Although we believe that the expectations reflected in these forward-looking statements such as the growth in revenues, along with the statements under the heading Business Outlook are reasonable, these statements relate to future events or our future operational or financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control, including, without limitation, statements about our future financial performance, including our revenue, cash flows, costs of revenue and operating expenses; our anticipated growth; our predictions about our industry; the impact of the COVID-19 pandemic on our business and our ability to attract, retain and cross-sell to clients. The forward-looking statements contained in this release are also subject to other risks and uncertainties, including those more fully described in our filings with the Securities and Exchange Commission ("SEC"), including in our Annual Report on Form 10-K for the fiscal year ended May 31, 2022. The forward-looking statements in this press release speak only as of the date on which the statements are made. We undertake no obligation to update, and expressly disclaim the obligation to update, any forward-looking statements made in this press release to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law.

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATION
(Unaudited)
		For the			For the				For the				For the
		Three Months Ended			Three Months Ended				Nine Months Ended				Nine Months Ended
		28-Feb-23			28-Feb-22				28-Feb-23				28-Feb-22
Revenues:
Airfreight services		$	13,206,112			127,787,167			$	64,721,816			$	455,020,012
Ocean freight and ocean services			23,106,949			104,379,472				159,292,026				343,102,200
Contract logistics			755,034			725,932				2,499,459				2,659,652
Customs brokerage and other services			12,559,407			17,543,324				48,460,306				44,856,580
Total revenues			49,627,502			250,435,895				274,973,607				845,638,444
Costs and operating expenses:
Airfreight services			11,964,314			127,220,095				59,465,104				447,865,096
Ocean freight and ocean services			19,722,259			99,620,036				142,806,034				323,381,733
Contract logistics			215,245			459,492				846,226				1,529,318
Customs brokerage and other services			11,397,398			16,011,938				44,773,324				41,330,633
Salaries and related costs			3,076,221			2,551,481				10,036,200				8,120,799
Professional fees			39,082			190,765				1,213,807				669,091
Rent and occupancy			883,681			508,621				2,026,363				1,478,600
Selling and promotion			1,471,236			899,097				2,033,668				4,591,715
Depreciation and amortization			203,390			196,347				606,030				585,019
Other			323,747			524,933				993,508				1,975,000
Total costs and operating expenses			49,296,573			248,182,805				264,800,264				831,527,004
Income from operations			330,929			2,253,090				10,173,343				14,111,440
Other income (expenses)
Interest expense			(546,791)			(1,395,396)				(2,876,776)				(4,566,876
Amortization of debt discount			-			-				-				(776,515
Loss on extinguishment of convertible notes payable			-			(1,344,087)				-				(564,037
Gain on forgiveness of promissory note			-			-				-				358,236
Change in fair value of derivative liabilities			64,955			(4,275,986)				809,611				(4,275,986
Other Income			-			60,000				-				60,000
Total other income (expenses)			(481,836)			(6,955,469)				(2,067,165)				(9,765,178
Net income (loss) before income taxes			(150,907)			(4,702,379)				8,106,178				4,346,262
Income tax (credit) expense			(814,080)			228,207				849,967				2,765,207
Net income (loss)			663,173			(4,930,586)				7,256,211				1,581,055
Deemed Dividend			-			(4,565,725)				-				(4,565,725
Net income (loss) available to common shareholders		$	663,173		$	(9,496,311)			$	7,256,211			$	(2,984,670

 

UNIQUE LOGISTICS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
		28-Feb-23				31-May-22
		(Unaudited)				(Audited)
ASSETS
Current Assets:
Cash and cash equivalents		$	14,402,666			$	1,422,393
Accounts receivable, net			40,438,290				74,746,036
Contract assets			3,859,562				30,970,581
Other current assets and prepaids			3,769,572				1,404,021
Total current assets			62,470,090				108,543,031
Property and equipment, net			1,691,248				188,889
Other long-term assets:
Goodwill			8,449,454				4,463,129
Identifiable intangible assets, net			13,322,344				7,337,704
Equity-method investments			10,861,111				-
Operating lease right-of-use assets, net			10,931,331				2,408,098
Deferred tax asset, net			1,193,610				942,748
Other noncurrent assets			2,021,926				1,028,336
Total other long-term assets			46,779,776				16,180,015
Total assets		$	110,941,114			$	124,911,935
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable		$	17,462,662			$	49,028,862
Accrued expenses and current liabilities			10,178,857				5,666,159
Accrued freight			8,056,941				9,240,650
Contract Liabilities			358,365				468,209
Revolving credit facility			9,882,529				38,141,451
Current portion of notes payable			17,804,500				608,333
Current portion of noncurrent debt due to related parties			325,478				301,308
Current portion of operating lease liability			2,422,306				912,618
Other current liabilities			5,710,057				-
Total current liabilities			72,201,695				104,367,590
Noncurrent liabilities:
Noncurrent portion of notes payable			1,500,000				-
Noncurrent debt due to related parties, net of current portion			150,655				397,968
Derivative liabilities			11,628,383				12,437,994
Operating lease liability, net of current portion			8,813,569				1,593,873
Other noncurrent liabilities			-				282,666
Total noncurrent liabilities			22,092,607				14,712,501
Total liabilities			94,294,302				119,080,091
Commitments and contingencies			-				-
Stockholders' Equity:
Preferred Stock, $0.001 par value: 5,000,000 shares authorized
Series A Convertible Preferred stock, $0.001 par value; 120,065 and 130,000, issued and outstanding as of February 28, 2023, and May 31, 2022, respectively. Liquidation preference $120 on February 28, 2023			120				130
Series B Convertible Preferred stock, $0.001 par value; 820,800 shares issued and outstanding as of February 28, 2023, and May 31, 2022, respectively. Liquidation preference $821 on February 28, 2023			821				821
Series C Convertible Preferred stock, $0.001 par value; 195 shares, issued and outstanding as of February 28, 2023, and May 31, 2022, respectively. Liquidation preference $18.5 million on February 28, 2023			-				-
Series D Convertible Preferred stock, $0.001 par value; 180 and 187, issued and outstanding as of February 28, 2023, and May 31, 2022, respectively. Liquidation preference $17.3 million on February 28, 2023			-				-
Preferred stock, value
Common stock $0.001 par value; 800,000,000 shares authorized, 799,141,770 and 687,196,478 common shares issued and outstanding as of February 28, 2023, and May 31, 2022, respectively.			799,143				687,197
Additional paid-in capital			180,220				292,155
Retained earnings			12,107,752				4,851,541
Total Stockholders' equity attributable to registrant			13,088,055				5,831,844
Equity attributable to noncontrolling interests			3,558,757				-
Total Stockholder's Equity			16,646,812				5,831,844
Total Liabilities and Stockholders' Equity		$	110,941,114			$	124,911,935

 

UNIQUE LOGISTICS INTERNATIONAL, INC.
Adjusted EBITDA
		For the Three				For the Three
		Months Ended				Months Ended
		28-Feb-23				28-Feb-22
Net income (loss)		$	663,173			$	(4,930,586
Add Back:
Income tax			(814,080)				228,207
Depreciation and amortization			203,390				196,347
(Gain) loss on extinguishment of convertible notes			-				1,344,087
Interest expense (including accretion of debt discount)			546,791				1,395,396
Change in fair value of derivative liabilities			(64,955)				4,275,986
Adjusted EBITDA		$	534,319			$	2,509,437
		For the Nine				For the Nine
		Months Ended				Months Ended
		28-Feb-23				28-Feb-22
Net income		$	7,256,211			$	1,581,055
Add Back:
Income tax			849,967				2,765,207
Depreciation and amortization			606,030				585,019
Gain on forgiveness of promissory notes							(358,236
Loss on extinguishment of convertible notes							564,037
Factoring fees							27,000
Change in fair value of derivative liabilities			(809,611)				4,275,986
Interest expense (including accretion of debt discount)			2,876,776				5,343,391
Adjusted EBITDA		$	10,752,373			$	14,783,459

 

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SOURCE Unique Logistics International, Inc.

FAQ

What were Unique Logistics International's earnings results for the third quarter ended February 28, 2023?

Unique Logistics reported revenues of $49.6 million and a net income of $0.7 million.

How did the acquisitions affect Unique Logistics International's financials?

The acquisitions closed on February 21, 2023, and are expected to positively impact revenue starting in the fourth fiscal quarter.

What is the significance of the Edify Acquisition Corporation merger for Unique Logistics?

The merger values Unique Logistics at an enterprise value of approximately $360 million, aiding in future M&A activities.

What are the projected financial outcomes after the acquisitions for Unique Logistics?

Projected to increase revenue and net income significantly starting in the next fiscal quarter.