First quarter 2024 sales of US$535.1 millionEarnings per share increase to US$0.48 and Adjusted EBITDA grows to US$45.6 million LANGLEY, BC, May 8, 2024 /CNW/ - ADENTRA Inc. ("ADENTRA" or the "Company") today announced financial results for the three months ended March 31, 2024. ADENTRA is one of North America's largest distributors of architectural building products to the residential, repair and remodel, and commercial construction markets. We currently operate a network of 85 facilities in the United States and Canada. All amounts are shown in United States dollars ("US $" or "$"), unless otherwise noted. Financial Highlights for Q1 2024 (as compared to Q1 2023, unless otherwise stated) Generated sales of $535.1 million (C$721.7 million), as compared to $579.9 million (C$784.3 million) Gross margin grew to $118.2 million, from $117.0 million Gross margin percentage increased to 22.1%, a 190 basis points improvement Operating expenses increased by $1.4 million, or 1.5% Net income increased by 11.2% to $10.7 million; Basic earnings per share grew 11.6% to $0.48 (C$0.65) Adjusted net income increased by 16.8% to $17.3 million; Adjusted basic earnings per share increased 18.2% to $0.78 (C$1.05) Adjusted EBITDA grew 6.3% to $45.6 million (C$61.4 million) Operating cash flow before changes in working capital increased $6.9 million to $36.9 million, from $30.0 million Declared a dividend of C$0.14 per share, payable on July 26, 2024 to shareholders of record as of July 15, 2024 "We delivered robust gross margin performance again in the first quarter, helping to drive improved bottom-line results, including 18.2% year-over-year growth in Adjusted basic earnings per share and 6.3% growth in Adjusted EBITDA" said Rob Brown, ADENTRA's President and CEO." "Our first quarter sales volumes also continued to stabilize, increasing by approximately 1% year-over-year. As expected, however, product price deflation continued to impact our top line results, resulting in a 7.7% decrease in total sales compared to the same period last year." "Overall, our results continue to demonstrate ADENTRA's ability to perform well in all business cycles. Our 22.1% gross margin performance in a deflationary product price environment was particularly meaningful, and underscores the success of our strategic initiatives, including the expansion and diversification of our product mix with higher-margin and value-added offerings, the success of our global sourcing program, and our disciplined operational performance. Operating expenses remained well controlled across our business, and were just 1.5% higher year-over-year, despite continued inflationary pressures in the economy." "As we move forward, we are sharply focused on our Destination 2028 goal of achieving US$3.5 billion of annual run-rate sales by 2028 through a combination of acquisition-based and organic growth. Our balance sheet is well positioned to support our growth strategy with a Leverage Ratio of 2.8x at quarter-end and significant unused borrowing capacity of over $445 million." "While investing in future growth, we also remain committed to providing near-term value for investors. During the first quarter we returned $2.3 million to shareholders via dividend payments, and today our board of Directors approved a dividend of C$0.14 per share to be paid July 26, 2024 to shareholders of record as at July 15, 2024," said Mr. Brown.  OutlookForecasters are anticipating a stable environment for residential construction in 2024 and a stable-to-lower year of demand for the repair and remodel market. Each of these markets represents approximately 40% of our business, respectively. Overall, the inflation and interest rate hikes of recent years are expected to continue to moderately impact economic activity. While our sales volumes have improved in recent quarters, we continue to experience softness in product pricing. Sales comparisons to 2023 are expected to improve in the latter half of the year. In this environment, we anticipate modest growth in full-year Adjusted EBITDA, driven by continued gross margin strength and disciplined management of operating expenses.  As we have demonstrated in previous business cycles and most recently in 2023, we are adept at managing our business and cash flows effectively in challenging market conditions. Our size and scale, together with the diversity in our product categories, customer channels and end-markets, provide important stability while reducing our exposure to any one geography or segment of the industry. Our strong balance sheet provides financial stability as we move through periods of changing market conditions, and our business model is expected to continue converting a high proportion of Adjusted EBITDA to operating cash flows before changes in working capital. In addition, our investment in working capital typically decreases during periods of reduced activity, resulting in an additional source of liquidity. Our balance sheet and liquidity support the continued execution of our Destination 2028 plan, which includes acquiring $800 million in run-rate revenues by 2028. We are one of the largest distributors of architectural building products in North America with approximately 6% market share. We operate in a fragmented market and have a robust pipeline. We expect the market for acquisitions to be more supportive in 2024 as compared to the previous year, and there remains significant opportunity for growth.  Over the longer term our business is supported by strong fundamentals in our end markets which include historic under-building of homes, positive demographic factors, strong home equity, and an aging housing stock. Decreases in interest rates could further support end-market demand for our products. We continue to see a multi-year runway for growth in our core repair and remodel, residential, and commercial markets. Q1 2024 Investor Call ADENTRA will hold an investor call on Thursday, May 9, 2024 at 8:00 am Pacific (11:00 am Eastern). Participants should dial 1-888-664-6392 or (416) 764-8659 (GTA) at least five minutes before the call begins. A replay will be available through May 23, 2024 by calling toll free 1-888-390-0541 or (416) 764-8677 (GTA), followed by passcode 536845. Summary of Results Three months Three months ended March 31 ended March 31 2024 2023 Total sales $                535,138 $                579,857 Sales in the US 492,470 536,184 Sales in Canada (CAD$) 57,542 59,068 Gross margin 118,234 116,993 Gross margin % 22.1 % 20.2 % Operating expenses (93,835) (92,428) Income from operations $                 24,399 $                 24,565 Add: Depreciation and amortization 18,329 17,018 Earnings before interest, taxes, depreciation and amortization ("EBITDA") $                 42,728 $                 41,583 EBITDA as a % of revenue 8.0 % 7.2 % Add (deduct): Depreciation and amortization