Grows Revenue by 5%, Increases Adjusted
EBITDA(1) by 13%, and Narrows 2024 Outlook
MARKHAM,
ON, Nov. 5, 2024 /CNW/ - Pet Valu Holdings
Ltd. ("Pet Valu" or the "Company") (TSX: PET), the leading
Canadian specialty retailer of pet food and pet-related supplies,
today announced its financial results for the third
quarter ended September 28, 2024.
Third Quarter Highlights
- System-wide sales(2) were $358.2 million, an increase of 0.3% versus Q3
2023. Same-store sales growth(2) was -2.5%.
- Revenue was $276.0 million, up
5.2% versus Q3 2023.
- Adjusted EBITDA was $64.6
million, up 13.0% versus Q3 2023, representing 23.4% of
revenue. Operating income was $40.4
million, up 8.0% versus Q3 2023.
- Net income was $23.2 million, up
from $18.0 million in Q3 2023.
- Adjusted Net Income(1) was $29.9 million or $0.41 per diluted share, compared to $28.2 million or $0.39 per diluted share, respectively, in Q3
2023.
- Opened 6 new stores and ended the quarter with 805 stores
across the network.
- Officially opened the new Metro Vancouver Region ("MVR")
distribution centre.
- The Board of Directors of the Company declared a dividend of
$0.11 per common share.
2024 Outlook
- The Company expects revenue between $1.08 and $1.10
billion, supported by approximately 40 new store openings
and flat same-store sales growth, Adjusted EBITDA between
$243 and $246
million, and Adjusted Net Income per Diluted
Share(3) between $1.50 and $1.53.
"Third quarter performance tells a story of continued resilience
and responsible execution as we delivered 5% revenue growth and 13%
Adjusted EBITDA growth in a constrained demand environment," said
Richard Maltsbarger, Chief Executive
Officer of Pet Valu."We also reached an important milestone in our
supply chain transformation with the successful transition and
start-up of our new Surrey DC, unlocking incremental capacity and
productivity in Western
Canada.
"As we ramp up for the holidays, our merchandising and marketing
teams have crafted an exciting slate of events delivering value and
expertise to devoted pet lovers when they need it most," continued
Mr. Maltsbarger. "Supported by hundreds of local stores, a
sharpened digital platform and an enhanced supply chain network,
our curated offering of competitively priced premium products will
help inspire magical holiday moments with pets."
Financial Results for the Third Quarter Fiscal 2024
All comparative figures below are for the 13-week period
ended September 28, 2024, compared to
the 13-week period ended September 30,
2023.
Revenue was $276.0 million
in Q3 2024, an increase of $13.7
million, or 5.2%, compared to $262.3
million in Q3 2023. The increase in revenue was mostly
driven by growth in franchise and other revenues and partially
offset by a decline in retail sales.
Same-store sales growth was -2.5% in Q3 2024 primarily
driven by a 4.1% decrease in same-store transaction
growth(2) partially offset by a 1.7% increase in
same-store average spend per transaction growth(2). This
is compared to same-store sales growth of 4.2% in Q3 2023, which
primarily consisted of 4.0% increase in same-store average spend
per transaction growth and a 0.2% increase in same-store
transaction growth.
Gross profit increased by $2.1
million, or 2.4%, to $89.4
million in Q3 2024, compared to $87.3
million in Q3 2023. Gross profit margin was 32.4% in Q3
2024, compared to 33.3% in Q3 2023. Excluding costs related to the
supply chain transformation of 1.1% in Q3 2024 and 1.8% in Q3 2023,
the gross profit margin was 33.5% and 35.1% in Q3 2024 and Q3 2023,
respectively, and decreased by 1.6%. The decrease was primarily
driven by: (i) higher distribution and occupancy costs from the new
Greater Toronto Area ("GTA") and
MVR distribution centres; (ii) higher wholesale merchandise sales;
and (iii) the unfavourable impact of the weaker Canadian dollar on
non-domestic sourced products primarily denominated in U.S.
dollars; partially offset by (iv) the allocation of promotional
funding.
Selling, general and administrative ("SG&A") expenses
were $49.0 million in Q3 2024, a
decrease of $0.9 million, or 1.8%,
compared to $49.9 million in Q3 2023.
SG&A expenses represented 17.8% and 19.0% of total revenue for
Q3 2024 and Q3 2023, respectively. The decrease of $0.9 million in SG&A expenses was primarily
due to: (i) higher gain on sale of assets for re-franchised stores;
(ii) lower real estate related expenses; and (iii) lower technology
expenditures on project-based implementation costs associated with
new information technology systems; partially offset by (iv)
increased compensation costs as a result of share-based
compensation.
Adjusted EBITDA increased by $7.4
million, or 13.0%, to $64.6
million in Q3 2024, compared to $57.2
million in Q3 2023. The increase is explained by higher
EBITDA(1) of $8.8 million
partially offset by $1.4 million of
net lower adjustments from EBITDA for Q3 2024 compared to Q3 2023
including the share of loss from an investment in associate in Q3
2023, lower information technology transformation costs, gain on
foreign exchange; and higher business transformation, share-based
compensation, and other professional fees. Adjusted EBITDA as a
percentage of revenue(3) was 23.4% and 21.8% in Q3 2024
and Q3 2023, respectively.
Net interest expense was $8.3 million in Q3 2024, an increase of
$0.2 million, or 2.4%, compared to
$8.1 million in Q3 2023. The increase
was primarily driven by higher interest expense on lease
liabilities resulting primarily from the new MVR distribution
centre; partially offset by lower interest expense on the 2021 Term
Facility (as herein defined) resulting from lower debt outstanding
and lower interest rates compared to Q3 2023.
Income taxes were $9.0
million in Q3 2024 compared to $7.9
million in Q3 2023, an increase of $1.1 million year over year. The increase in
income taxes was primarily the result of higher taxable earnings in
Q3 2024. The effective income tax rate was 27.9% in Q3 2024
compared to 30.4% in Q3 2023. The Q3 2024 and Q3 2023 effective tax
rate was higher than the blended statutory rate of 26.5% due to
non-deductible expenses and, in addition for Q3 2023, due to the
impairment of an investment in associate.
Net income increased by $5.2
million to $23.2 million in Q3
2024, compared to $18.0 million in Q3
2023. The increase in net income is primarily explained by the
higher operating income partially offset by higher income taxes and
net interest expense, as described above, and by the impairment
related to an investment in associate included in Q3 2023.
Adjusted Net Income increased by $1.7 million to $29.9
million in Q3 2024, compared to $28.2
million in Q3 2023. Adjusted Net Income as a percentage of
revenue(3) was 10.8% in Q3 2024 and in Q3 2023,
respectively. The year over year change results from the factors
described above and the adjustment for the duplicative depreciation
expense on property and equipment and right-of-use assets, and
interest expense on lease liabilities related to the supply chain
transformation initiatives in Q3 2024.
Adjusted Net Income per Diluted Share increased by
$0.02 to $0.41 in Q3 2024, compared to $0.39 in Q3 2023. The 5.1% year over year
increase results primarily from the changes in Adjusted Net Income
and the factors described above.
Cash at the end of the third quarter totaled $35.4 million.
Free Cash Flow(1) amounted to $30.8 million in Q3 2024 compared to $18.1 million in Q3 2023, an increase of
$12.7 million primarily driven by an
increase in cash from operating activities and a decrease in cash
used for investing activities; partially offset by an increase in
payments of principal and interest on lease liabilities due to the
timing of quarter end in Q3 2023, the new GTA and MVR
distribution centres and store network expansion.
Inventory at the end of Q3 2024 was $134.8 million compared to $122.1 million at the end of Q4 2023, an
increase of $12.7 million primarily
to support the growth of our store network, and due to timing of
purchases.
Dividends
On November 4, 2024, the Board of
Directors of the Company declared a dividend of $0.11 per common share payable on December 16, 2024 to holders of common shares of
record as at the close of business on November 29, 2024.
Outlook
Factoring in YTD 2024 performance, together with market
conditions and actions planned in the fourth quarter, the Company
expects to achieve the following for full year 2024:
- Revenue between $1.08 and
$1.10 billion, supported by
approximately 40 new store openings, higher wholesale merchandise
sales penetration with Chico franchisees, and approximately flat
same-store sales growth;
- Adjusted EBITDA between $243 and
$246 million, supported by operating
expense leverage, partially offset by pricing investment;
- Adjusted Net Income per Diluted Share between $1.50 and $1.53,
which incorporates approximately $20
million pre-tax, or $0.20 per
diluted share, of incremental depreciation and lease liability
interest expense associated with the new GTA and MVR
distribution centres;
- Business transformation costs of approximately $17 million pre-tax, information technology costs
of approximately $7 million pre-tax,
and share-based compensation of approximately $10 million pre-tax, all of which are excluded
from Adjusted EBITDA and Adjusted Net Income per Diluted Share;
and
- Net Capital Expenditures(1) of approximately
$50 million, roughly half of which is
attributable to investments in the Company's supply chain
transformation.
|
(1) This is
a non-IFRS financial measure. Non-IFRS financial measures are not
recognized measures under IFRS and do not have standardized
meanings prescribed by IFRS. They are therefore unlikely to be
comparable to similar measures presented by other companies. Refer
to "Non-IFRS and Other Financial Measures" and "Selected
Consolidated Financial Information" below for a reconciliation of
the non-IFRS measures (except for Net Capital Expenditures) used in
this release to the most comparable IFRS measures. Also refer to
the sections entitled "How We Assess the Performance of our
Business", "Non-IFRS and Other Financial Measures" and "Selected
Consolidated Financial Information and Industry Metrics" in the
MD&A for the third quarter ended September 28, 2024,
incorporated by reference herein, for further details concerning
EBITDA, Adjusted EBITDA, Adjusted Net Income, Free Cash Flow, and
Net Capital Expenditures including definitions and reconciliations
to the relevant reported IFRS measure.
|
|
(2) This is
a supplementary financial measure. Refer to "Non-IFRS and Other
Financial Measures" below and to the section entitled "How We
Assess the Performance of our Business" in the MD&A for the
third quarter ended September 28, 2024 for the definitions of
supplementary financial measures.
|
|
(3) This is
a non-IFRS ratio. Non-IFRS ratios are not recognized measures under
IFRS and do not have standardized meanings prescribed by IFRS. They
are therefore unlikely to be comparable to similar measures
presented by other companies. Refer to "Non-IFRS and Other
Financial Measures" below and to the section entitled "How We
Assess the Performance of our Business" in the MD&A for the
third quarter ended September 28, 2024 for the definitions of
non-IFRS ratios and each non-IFRS measure that is used as a
component of such non-IFRS ratios.
|
|
Conference Call Details
A conference call to discuss the Company's third quarter results
is scheduled for November 5, 2024, at
8:30 a.m. ET. To access Pet Valu's
conference call, please dial 1-833-950-0062 (ID: 638652). A live
webcast of the call will also be available through the Events &
Presentations section of the Company's website at
https://investors.petvalu.com/.
For those unable to participate, a playback will be available
shortly after the conclusion of the call by dialing 1-866-813-9403
(ID: 921635) and will be accessible until November 12, 2024. The webcast will also be
archived and available through the Events & Presentations
section of the Company's website at
https://investors.petvalu.com/.
About Pet Valu
Pet Valu is Canada's leading
retailer of pet food and pet-related supplies with over 800
corporate-owned or franchised locations across the country. For
more than 45 years, Pet Valu has earned the trust and loyalty of
pet parents by offering knowledgeable customer service, a premium
product offering and engaging in-store services. Through its
neighbourhood stores and digital platform, Pet Valu offers more
than 10,000 competitively-priced products, including a broad
assortment of premium, super premium, holistic and award-winning
proprietary brands. The Company is headquartered in Markham, Ontario and its shares trade on the
Toronto Stock Exchange (TSX: PET). To learn more, please visit:
www.petvalu.ca.
Non-IFRS and Other Financial Measures
This press release makes reference to certain non-IFRS measures
and non-IFRS ratios. These measures and ratios are not recognized
measures under IFRS and do not have a standardized meaning
prescribed by IFRS. They are therefore unlikely to be comparable to
similar measures presented by other companies. Rather, these
measures are provided as additional information to complement IFRS
measures by providing further understanding of the Company's
results of operations from management's perspective. Accordingly,
they should not be considered in isolation nor as a substitute for
analysis of the Company's financial information reported under
IFRS. Pet Valu uses non-IFRS measures, including "EBITDA",
"Adjusted EBITDA", "Adjusted Net Income", "Free Cash Flow" and "Net
Capital Expenditures", and non-IFRS ratios, including "Adjusted
EBITDA as a percentage of revenue", "Adjusted Net Income as a
percentage of revenue", and "Adjusted Net Income per Diluted
Share". This press release also makes reference to certain
supplementary financial measures that are commonly used in the
retail industry, including "System-wide sales", "Same-store sales",
"Same-store sales growth", and "Same-store average spend per
transaction growth". These non-IFRS measures, non-IFRS ratios and
supplementary financial measures are used to provide investors with
supplemental measures of Pet Valu's operating performance and thus
highlight trends in its core business that may not otherwise be
apparent when relying solely on IFRS financial measures. The
Company also believes that securities analysts, investors and other
interested parties frequently use non-IFRS measures, non-IFRS
ratios and these supplementary financial measures in the evaluation
of issuers. Management uses non-IFRS measures, non-IFRS ratios and
supplementary financial measures in order to facilitate operating
performance comparisons from period to period, to prepare annual
operating budgets and to determine components of management
compensation. Refer to the MD&A for the third quarter ended
September 28, 2024 for further information on non-IFRS
measures, non-IFRS ratios (including each non-IFRS measure that is
used as a component of such non-IFRS ratios) and supplementary
measures, including for their definition and, for non-IFRS
measures, a reconciliation to the most comparable IFRS measure.
Forward-Looking Information
Some of the information contained in this press release is
forward-looking information. Forward-looking information is
provided as at the date of this press release and is based on
management's opinions, estimates and assumptions in light of its
experience and perception of historical trends, current trends,
current conditions and expected future developments, as well as
other factors that management believes appropriate and reasonable
in the circumstances. Such forward-looking information is intended
to provide information about management's current expectations and
plans, and may not be appropriate for other purposes. Pet Valu does
not undertake to update any such forward-looking information
whether as a result of new information, future events or otherwise,
except as required under applicable Canadian securities laws.
Actual results and the timing of events may differ materially from
those anticipated in the forward-looking information as a result of
various factors. Particularly, information regarding our
expectations of future results, targets, performance achievements,
prospects or opportunities, including the information under the
headings "2024 Outlook" and "Outlook" in this press release, is
"future-oriented financial information" or a "financial outlook"
within the meaning of applicable securities legislation, which is
based on the factors and assumptions, and subject to the risks, as
set out herein and in the Company's annual information form dated
March 4, 2024 ("AIF"). 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", "scheduled", "estimates", "outlook", "forecasts",
"projection", "prospects", "strategy", "intends", "anticipates",
"does not anticipate", "believes", "continue", or variations of
such words and phrases or statements that certain actions, events
or results "may", "could", "would", "should", "might", "will",
"will be taken", "occur" 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.
Many factors could cause our actual results, level of activity,
performance or achievements, future events or developments, or
outlook to differ materially from those expressed or implied by the
forward-looking information, including, without limitation, the
factors discussed in the "Risk Factors" section of the AIF. A copy
of the AIF and the Company's other publicly filed documents can be
accessed under the Company's profile on SEDAR+ at
www.sedarplus.ca.
The Company cautions that the list of risk factors and
uncertainties described in the AIF is not exhaustive and other
factors could also adversely affect its results. Readers are urged
to consider the risks, uncertainties and assumptions carefully in
evaluating forward-looking information and are cautioned not to
place undue reliance on such information.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
|
Condensed Interim
Consolidated Statements of Income and Comprehensive
Income
(Unaudited, expressed in thousands of Canadian dollars, except per
share amounts)
|
|
|
|
|
Quarters
Ended
|
Year to Date
Ended
|
|
September
28,
2024
|
September
30,
2023
|
September
28,
2024
|
September
30,
2023
|
|
13
weeks
|
13
weeks
|
39
weeks
|
39
weeks
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
Retail
sales
|
$
99,962
|
$
106,708
|
$
300,428
|
$
311,739
|
|
Franchise and other
revenues
|
176,068
|
155,586
|
501,616
|
457,220
|
|
Total
revenue
|
276,030
|
262,294
|
802,044
|
768,959
|
|
|
|
|
|
|
Cost of
sales
|
186,651
|
174,977
|
537,621
|
502,323
|
|
Gross
profit
|
89,379
|
87,317
|
264,423
|
266,636
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
49,023
|
49,947
|
156,972
|
154,175
|
|
Total operating
income
|
40,356
|
37,370
|
107,451
|
112,461
|
|
|
|
|
|
|
Interest expenses,
net
|
8,326
|
8,128
|
25,551
|
22,190
|
|
(Gain) loss on foreign
exchange
|
(100)
|
246
|
571
|
444
|
|
Other loss
|
—
|
3,160
|
—
|
4,718
|
|
Income before income
taxes
|
32,130
|
25,836
|
81,329
|
85,109
|
|
|
|
|
|
|
Income tax
expense
|
8,972
|
7,860
|
22,814
|
24,326
|
|
Net
income
|
23,158
|
17,976
|
58,515
|
60,783
|
|
|
|
|
|
|
Other comprehensive
income, net of tax:
|
|
|
|
|
|
Currency translation
adjustments that
may be reclassified to
net income, net of tax
|
—
|
(25)
|
—
|
18
|
|
Comprehensive income
for the period
attributable to the
shareholders of the Company
|
$
23,158
|
$
17,951
|
$
58,515
|
$
60,801
|
|
|
|
|
|
|
Basic net income per
share attributable
to the common
shareholders
|
$
0.32
|
$
0.25
|
$
0.82
|
$
0.85
|
|
Diluted net income
per share attributable
to the common
shareholders
|
$
0.32
|
$
0.25
|
$
0.81
|
$
0.84
|
|
|
|
|
|
|
Reconciliation of Net Income to EBITDA and Adjusted
EBITDA
(Unaudited, in
thousands of Canadian dollars unless otherwise noted)
|
|
|
|
|
Quarters
Ended
|
Year to Date
Ended
|
|
September
28,
2024
|
September
30,
2023
|
September
28,
2024
|
September
30,
2023
|
|
13
weeks
|
13
weeks
|
39
weeks
|
39
weeks
|
|
Reconciliation of
net income to Adjusted EBITDA:
|
|
|
|
|
|
Net income
|
$
23,158
|
$
17,976
|
$
58,515
|
$
60,783
|
|
Depreciation and
amortization
|
16,531
|
14,187
|
49,129
|
35,719
|
|
Interest expenses,
net
|
8,326
|
8,128
|
25,551
|
22,190
|
|
Income tax
expense
|
8,972
|
7,860
|
22,814
|
24,326
|
|
EBITDA
|
56,987
|
48,151
|
156,009
|
143,018
|
|
Adjustments to
EBITDA:
|
|
|
|
|
|
Information technology
transformation costs(1)
|
681
|
1,294
|
5,154
|
2,445
|
|
Business transformation
costs(2)
|
4,643
|
3,124
|
9,152
|
5,652
|
|
Other professional
fees(3)
|
239
|
167
|
997
|
516
|
|
Share-based
compensation(4)
|
2,149
|
1,025
|
7,027
|
2,989
|
|
(Gain) loss on foreign
exchange(5)
|
(100)
|
246
|
571
|
444
|
|
Investment in
associate(6)
|
—
|
3,160
|
—
|
4,718
|
|
Adjusted
EBITDA
|
$
64,599
|
$
57,167
|
$
178,910
|
$
159,782
|
|
Adjusted EBITDA as a
percentage of revenue
|
23.4 %
|
21.8 %
|
22.3 %
|
20.8 %
|
|
Notes:
|
|
|
(1)
|
Represents discrete,
project-based implementation costs associated with new information
technology systems and discrete Software-as-a-Service ("SaaS")
arrangements for transformational initiatives supporting
merchandise planning, inventory and order management, e-commerce
and omni-channel capabilities, customer relationship management and
other key processes.
|
|
(2)
|
Represents expenses
associated with supply chain transformation initiatives such as
duplicative warehousing and distribution costs, implementation
costs associated with new information technology systems and other
transition costs incurred during the transition to a new
distribution centre. The expenses included in cost of sales in Q3
2024 and YTD 2024 were $2.3 million and $4.4 million, respectively
(Q3 2023 and YTD 2023 – $2.1 million and $2.6 million,
respectively). The expenses included in selling, general, and
administrative expenses in Q3 2024 and YTD 2024 were $1.2 million
and $3.4 million, respectively (Q3 2023 and YTD 2023 – $1.0 million
and $3.1 million, respectively). Additionally, business
transformation costs include $1.1 million and $1.4 million of
expenses predominantly related to a reorganization in the senior
leadership team in Q3 2024 and YTD 2024, respectively (Q3 2023 and
YTD 2023 - $nil, respectively).
|
|
(3)
|
Professional fees
primarily incurred with respect to: (i) the Canada Revenue Agency's
("CRA") examination of the Company's Canadian tax filings related
to the 2016, 2018 and 2019 fiscal years; and (ii) professional
fees incurred with respect to the secondary offerings of the
Company's common shares completed on June 1, 2023 (the "2023
Secondary Offering") and May 15, 2024 (the "2024 Secondary
Offering").
|
|
(4)
|
Represents share-based
compensation in respect of our amended and restated share option
plan, long-term incentive plan, and deferred share unit
plan.
|
|
(5)
|
Represents foreign
exchange gains and losses.
|
|
(6)
|
Represents the
Company's share of loss from associate of $3.2 million and $3.4
million for Q3 2023 and YTD 2023, respectively and loss on the fair
value of the related call option of $nil and $1.3 million for Q3
2023 and YTD 2023, respectively.
|
|
|
|
Reconciliation of Net Income to Adjusted Net
Income
(Unaudited, in
thousands of Canadian dollars unless otherwise noted)
|
|
|
|
|
Quarters
Ended
|
Year to Date
Ended
|
|
September
28,
2024
|
September
30,
2023
|
September
28,
2024
|
September
30,
2023
|
|
13
weeks
|
13
weeks
|
39
weeks
|
39
weeks
|
|
Reconciliation of
net income to Adjusted Net Income:
|
|
|
|
|
|
Net income
|
$
23,158
|
$
17,976
|
$
58,515
|
$
60,783
|
|
Adjustments to net
income:
|
|
|
|
|
|
Information technology
transformation costs(1)
|
681
|
1,294
|
5,154
|
2,445
|
|
Business transformation
costs(2)
|
5,677
|
6,704
|
15,474
|
9,232
|
|
Other professional
fees(3)
|
239
|
167
|
997
|
516
|
|
Share-based
compensation(4)
|
2,149
|
1,025
|
7,027
|
2,989
|
|
(Gain) loss on foreign
exchange(5)
|
(100)
|
246
|
571
|
444
|
|
Investment in
associate(6)
|
—
|
3,160
|
—
|
4,718
|
|
Tax effect of
adjustments to net income
|
(1,875)
|
(2,350)
|
(6,594)
|
(3,685)
|
|
Adjusted Net
Income
|
$
29,929
|
$
28,222
|
$
81,144
|
$
77,442
|
|
Adjusted Net Income
as a percentage of revenue
|
10.8 %
|
10.8 %
|
10.1 %
|
10.1 %
|
|
Adjusted Net Income
per Diluted Share
|
$
0.41
|
$
0.39
|
$
1.12
|
$
1.07
|
|
Notes:
|
|
(1)
|
Represents discrete,
project-based implementation costs associated with new information
technology systems and discrete SaaS arrangements for
transformational initiatives supporting merchandise planning,
inventory and order management, e-commerce and omni-channel
capabilities, customer relationship management and other key
processes.
|
|
(2)
|
Represents expenses
associated with supply chain transformation initiatives such as
duplicative warehousing and distribution costs, implementation
costs associated with new information technology systems, and other
transition costs incurred during the transition to a new
distribution centre. This also includes duplicative depreciation
expense on property and equipment and right-of-use assets, and
interest expense on lease liabilities. The expenses included in
cost of sales in Q3 2024 and YTD 2024 were $3.1 million and
$8.4 million, respectively (Q3 2023 and YTD 2023 – $4.6 million and
$5.1 million, respectively). The expenses included in selling,
general, and administrative expenses in Q3 2024 and YTD 2024 were
$1.2 million and $3.4 million, respectively (Q3 2023 and YTD 2023 –
$1.0 million and $3.1 million, respectively). The interest expense
on the lease liability in Q3 2024 and YTD 2024 was $0.3 million and
$2.3 million, respectively (Q3 2023 and YTD 2023 – $1.0 million,
respectively). Additionally, business transformation costs include
$1.1 million and $1.4 million of expenses predominantly related to
a reorganization in the senior leadership team in Q3 2024 and YTD
2024, respectively (Q3 2023 and YTD 2023 - $nil,
respectively).
|
|
(3)
|
Professional fees
primarily incurred with respect to: (i) the CRA's examination of
the Company's Canadian tax filings related to the 2016, 2018, and
2019 fiscal years; and (ii) professional fees incurred with respect
to the 2023 Secondary Offering and 2024 Secondary
Offering.
|
|
(4)
|
Represents share-based
compensation in respect of our amended and restated share option
plan, long-term incentive plan, and deferred share unit
plan.
|
|
(5)
|
Represents foreign
exchange gains and losses.
|
|
(6)
|
Represents the
Company's share of loss from associate of $3.2 million and $3.4
million for Q3 2023 and YTD 2023, respectively and loss on the fair
value of the related call option of $nil and $1.3 million for Q3
2023 and YTD 2023, respectively.
|
|
|
|
Condensed Interim Consolidated Statements of Cash
Flows
(Unaudited, in
thousands of Canadian dollars)
|
|
|
|
|
Quarters
Ended
|
Year to Date
Ended
|
|
September
28,
2024
|
September
30,
2023
|
September
28,
2024
|
September
30,
2023
|
|
13
weeks
|
13
weeks
|
39
weeks
|
39
weeks
|
|
Cash provided by
(used in):
|
|
|
|
|
|
Operating
activities:
|
|
|
|
|
|
Net income for the
period
|
$
23,158
|
$
17,976
|
$
58,515
|
$
60,783
|
|
Adjustments for items
not affecting cash:
|
|
|
|
|
|
Depreciation and
amortization
|
16,531
|
14,187
|
49,129
|
35,719
|
|
Deferred franchise
fees
|
181
|
74
|
88
|
137
|
|
Gain on disposal of
property and equipment
|
(1,200)
|
(1,017)
|
(2,810)
|
(1,321)
|
|
Loss on sale of
right-of-use assets
|
(180)
|
155
|
(32)
|
689
|
|
(Gain) loss on foreign
exchange
|
(100)
|
246
|
571
|
444
|
|
Loss on financial
instruments
|
—
|
—
|
—
|
1,302
|
|
Share-based
compensation expense
|
2,149
|
1,025
|
7,027
|
2,989
|
|
Share of loss from
associate
|
—
|
3,160
|
—
|
3,416
|
|
Interest expenses,
net
|
8,326
|
8,128
|
25,551
|
22,190
|
|
Income tax
expense
|
8,972
|
7,860
|
22,814
|
24,326
|
|
Income taxes
paid
|
(8,881)
|
(9,360)
|
(24,881)
|
(43,130)
|
|
Changes in non-cash
operating working capital:
|
|
|
|
|
|
Accounts
receivable
|
979
|
(601)
|
(1,515)
|
(1,740)
|
|
Inventories
|
(1,150)
|
(4,261)
|
(12,505)
|
(16,541)
|
|
Prepaid
expenses
|
10,155
|
(8,151)
|
8,023
|
(4,589)
|
|
Accounts payable and
accrued liabilities
|
(3,241)
|
5,023
|
2,364
|
(4,544)
|
|
Net cash provided by
operating activities
|
55,699
|
34,444
|
132,339
|
80,130
|
|
Financing
activities:
|
|
|
|
|
|
Proceeds from exercise
of share options
|
3,270
|
5
|
4,089
|
4,349
|
|
Shares repurchased for
cancellation
|
(2,043)
|
—
|
(2,043)
|
—
|
|
Dividends paid on
common shares
|
(7,907)
|
(7,146)
|
(23,638)
|
(21,390)
|
|
Repayment of 2021 Term
Facility
|
(4,437)
|
(4,438)
|
(13,312)
|
(41,312)
|
|
Interest paid on
long-term debt
|
(8,493)
|
(3,797)
|
(19,805)
|
(7,664)
|
|
Repayment of principal
on lease liabilities
|
(16,541)
|
(8,210)
|
(48,108)
|
(39,068)
|
|
Interest paid on lease
liabilities
|
(5,865)
|
(4,554)
|
(17,494)
|
(11,151)
|
|
Standby letter of
credit commitment fees
|
—
|
(209)
|
—
|
(872)
|
|
Net cash used in
financing activities
|
(42,016)
|
(28,349)
|
(120,311)
|
(117,108)
|
|
Investing
activities:
|
|
|
|
|
|
Business acquisition,
net of cash acquired
|
—
|
—
|
—
|
(3,000)
|
|
Purchases of property
and equipment
|
(16,661)
|
(14,881)
|
(43,139)
|
(42,262)
|
|
Purchase of intangible
assets
|
(254)
|
(714)
|
(1,518)
|
(2,689)
|
|
Proceeds on disposal
of property and equipment
|
2,848
|
1,669
|
6,104
|
2,870
|
|
Right-of-use asset
initial direct costs
|
(474)
|
(464)
|
(1,418)
|
(1,454)
|
|
Tenant
allowances
|
177
|
537
|
1,046
|
1,185
|
|
Notes
receivable
|
154
|
157
|
505
|
1,050
|
|
Lease
receivables
|
8,890
|
7,692
|
25,829
|
22,269
|
|
Interest received on
lease receivables and other
|
2,949
|
2,556
|
8,939
|
8,065
|
|
Repurchase of
franchises
|
—
|
—
|
(971)
|
(512)
|
|
Net cash used in
investing activities
|
(2,371)
|
(3,448)
|
(4,623)
|
(14,478)
|
|
Effect of exchange
rate on cash
|
31
|
(113)
|
(419)
|
(237)
|
|
Net increase
(decrease) in cash
|
11,343
|
2,534
|
6,986
|
(51,693)
|
|
Cash, beginning of
period
|
24,087
|
8,807
|
28,444
|
63,034
|
|
Cash, end of
period
|
$
35,430
|
$
11,341
|
$
35,430
|
$
11,341
|
|
|
Free Cash Flows
(Unaudited, expressed
in thousands of Canadian dollars)
|
|
|
Quarters
Ended
|
Year to Date
Ended
|
|
September
28,
2024
|
September
30,
2023
|
September
28,
2024
|
September
30,
2023
|
|
13
weeks
|
13
weeks
|
39
weeks
|
39
weeks
|
|
|
|
|
|
|
Cash provided by
operating activities
|
$
55,699
|
$
34,444
|
$
132,339
|
$
80,130
|
|
Cash used in investing
activities
|
(2,371)
|
(3,448)
|
(4,623)
|
(14,478)
|
|
Repayment of principal
on lease liabilities
|
(16,541)
|
(8,210)
|
(48,108)
|
(39,068)
|
|
Interest paid on lease
liabilities
|
(5,865)
|
(4,554)
|
(17,494)
|
(11,151)
|
|
Notes
receivable
|
(154)
|
(157)
|
(505)
|
(1,050)
|
|
Free Cash
Flow
|
$
30,768
|
$
18,075
|
$
61,609
|
$
14,383
|
|
|
|
|
Condensed Interim Consolidated Statements of
Financial Position
(Unaudited, expressed
in thousands of Canadian dollars)
|
|
|
|
|
As at September
28,
2024
|
As at December
30,
2023
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
Cash
|
$
35,430
|
$
28,444
|
|
Accounts and other
receivables
|
29,327
|
27,875
|
|
Inventories,
net
|
134,750
|
122,069
|
|
Income taxes
recoverable
|
8,286
|
6,012
|
|
Prepaid expenses and
other assets
|
11,380
|
19,403
|
|
Current portion of
lease receivables
|
38,062
|
34,332
|
|
Total current
assets
|
257,235
|
238,135
|
|
|
|
|
Non-current
assets:
|
|
|
|
Long-term lease
receivables
|
165,579
|
159,101
|
|
Right-of-use assets,
net
|
233,843
|
237,941
|
|
Property and
equipment, net
|
145,324
|
120,493
|
|
Intangible assets,
net
|
50,751
|
52,205
|
|
Goodwill
|
97,969
|
97,562
|
|
Deferred tax
assets
|
7,230
|
7,230
|
|
Other
assets
|
3,904
|
4,240
|
|
Total non-current
assets
|
704,600
|
678,772
|
|
|
|
|
Total
assets
|
$
961,835
|
$
916,907
|
|
|
|
|
Liabilities and
shareholders' equity
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable and
accrued liabilities
|
$
102,203
|
$
88,416
|
|
Provisions
|
343
|
669
|
|
Current portion of
deferred franchise fees
|
1,427
|
1,344
|
|
Current portion of
lease liabilities
|
68,479
|
64,068
|
|
Current portion of
long-term debt
|
17,750
|
17,750
|
|
Total current
liabilities
|
190,202
|
172,247
|
|
|
|
|
Non-current
liabilities:
|
|
|
|
Long-term deferred
franchise fees
|
4,480
|
4,166
|
|
Long-term lease
liabilities
|
385,474
|
379,833
|
|
Long-term
debt
|
262,995
|
275,474
|
|
Deferred tax
liabilities
|
8,864
|
8,864
|
|
Other
liabilities
|
2,766
|
3,977
|
|
Provisions
|
3,536
|
2,626
|
|
Total non-current
liabilities
|
668,115
|
674,940
|
|
|
|
|
Total
liabilities
|
858,317
|
847,187
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
Common
shares
|
319,629
|
321,752
|
|
Contributed
surplus
|
9,652
|
6,877
|
|
Deficit
|
(225,622)
|
(258,768)
|
|
Currency translation
reserve
|
(141)
|
(141)
|
|
Total shareholders'
equity
|
103,518
|
69,720
|
|
|
|
|
Total liabilities
and shareholders' equity
|
$
961,835
|
$
916,907
|
|
|
|
SOURCE Pet Valu Canada Inc.