Grows Revenue 4%, Increases Adjusted
EBITDA(1) 7%, and Reports Net Income of
$87 million in 2024
Raises
Quarterly Dividend 9% and Issues 2025 Outlook
MARKHAM,
ON, March 4, 2025 /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 fourth quarter and
fiscal year ended December 28, 2024.
Fourth Quarter Highlights
- System-wide sales(2) were $388.1 million, an increase of 2.4% versus Q4
2023. Same-store sales decline(2) was 0.2%.
- Revenue was $295.1 million, up
2.9% versus Q4 2023.
- Adjusted EBITDA was $68.2
million, down 4.3% versus Q4 2023, representing 23.1% of
revenue. Operating income was $47.9
million, down 0.8% versus Q4 2023.
- Net income was $28.9 million, up
from $28.8 million in Q4 2023.
- Adjusted Net Income(1) was $32.2 million or $0.45 per diluted share(3),
compared to $39.1 million or
$0.54 per diluted share,
respectively, in Q4 2023.
- Opened 19 new stores and ended the quarter with 824 stores
across the network.
- The Board of Directors of the Company declared a dividend of
$0.12 per common share.
Fiscal Year Highlights
- System-wide sales were $1,452.9
million, an increase of 2.3% versus the prior year.
Same-store sales decline was 0.5%.
- Revenue was $1,097.2 million, up
3.9% versus the prior year.
- Adjusted EBITDA was $247.1
million, up 6.9% versus the prior year, representing 22.5%
of revenue. Operating income was $155.3
million, down 3.4% versus the prior year.
- Net income was $87.4 million,
down from $89.5 million in the prior
year.
- Adjusted Net Income was $113.3
million or $1.57 per diluted
share, compared to $116.5 million or
$1.61 per diluted share,
respectively, in the prior year.
2025 Outlook
- The Company expects revenue between $1.17 and $1.20
billion, Adjusted EBITDA between $254 and $260
million, Adjusted Net Income per Diluted Share between
$1.60 and $1.66 and Net Capital
Expenditures(1) of approximately $35 million.
"We closed out a dynamic year with strong operational execution,
together with favourable revenue and profit results in the fourth
quarter," said Richard Maltsbarger,
Chief Executive Officer of Pet Valu. "These outcomes were supported
by our fully operational GTA and Surrey distribution centres, improved online
capabilities, highly relevant promotional cadence and solid cost
management across our teams.
"2025 will be another exciting year, as we complete our supply
chain transformation and deploy improved promotions and pricing
tools to enable a return to same-store sales and profit growth as
we progress through the year," concluded Mr. Maltsbarger.
Financial Results for the Fourth Quarter Fiscal 2024
All comparative figures below are for the 13-week period
ended December 28, 2024, compared to the 13-week period ended
December 30, 2023.
Revenue was $295.1 million
in Q4 2024, an increase of $8.2
million, or 2.9%, compared to $286.9
million in Q4 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 decline was 0.2% in Q4 2024,
primarily driven by a 2.1% same-store transaction
decline(2) partially offset by a 2.0% increase in
same-store average spend per transaction growth(2). This
is compared to same-store sales growth of 1.9% in Q4 2023, which
primarily consisted of a 3.0% increase in same-store average spend
per transaction growth partially offset by a 1.1% same-store
transaction decline.
Gross profit increased by $1.7
million, or 1.7%, to $100.2
million in Q4 2024, compared to $98.5
million in Q4 2023. Gross profit margin was 34.0% in Q4
2024, compared to 34.3% in Q4 2023. Excluding costs related to the
supply chain transformation of 2.2% in Q4 2023, the gross profit
margin was 36.5% in Q4 2023 and decreased by 2.5% compared to Q4
2024. The decrease was primarily driven by: (i) higher distribution
and occupancy costs from the new Greater
Toronto Area ("GTA") and Metro Vancouver Region ("MVR")
distribution centres, and (ii) higher wholesale merchandise
sales.
Selling, general and administrative ("SG&A") expenses
were $52.3 million in Q4 2024, an
increase of $2.1 million, or 4.2%,
compared to $50.2 million in Q4 2023.
SG&A expenses represented 17.7% and 17.5% of total revenue for
Q4 2024 and Q4 2023, respectively. The increase of $2.1 million in SG&A expenses was primarily
due to: (i) higher marketing and advertising expenses; (ii)
impairment charge recognized against right-of-use assets and
property and equipment; (iii) lower gain on sale of assets for
re-franchised stores; and (iv) higher depreciation and amortization
from store growth and investments in other assets; partially offset
by (v) lower administrative and technology expenditures.
Adjusted EBITDA decreased by $3.1 million, or 4.3%, to $68.2 million in Q4 2024, compared to
$71.3 million in Q4 2023. The
decrease is explained by lower EBITDA(1) of $0.1 million and $3.0
million of net lower adjustments from EBITDA for Q4 2024
compared to Q4 2023 from lower share-based compensation, business
transformation costs, information technology transformation costs,
and other professional fees, partially offset by a higher loss on
foreign exchange, and asset impairments. Adjusted EBITDA as a
percentage of revenue(3) was 23.1% and 24.8% in Q4
2024 and Q4 2023, respectively.
Net interest expense was $6.6
million in Q4 2024, a decrease of $1.9 million, or 22.5%, compared to $8.5 million in Q4 2023. The decrease was
primarily driven by (i) lower interest expense on the Term Facility
(as defined in the Company's management's discussion and analysis
("MD&A") for the fiscal year ended December 28, 2024)
resulting from lower interest rates and lower debt outstanding
compared to Q4 2023; (ii) a gain recognized on the modification of
debt; partially offset by (iii) higher interest expense on lease
liabilities resulting primarily from store network expansion and
the new MVR distribution centre.
Income taxes were $11.2 million in Q4 2024 compared to
$11.3 million in Q4 2023, a
decrease of $0.2 million year over
year. The decrease in income taxes was primarily the result of
lower taxable earnings in Q4 2024. The effective income tax rate
was 27.8% in Q4 2024 compared to 28.2% in Q4 2023. The Q4 2024 and
Q4 2023 effective tax rates were higher than the blended statutory
rate of 26.5% due to non-deductible expenses.
Net income increased by $0.1 million to $28.9
million in Q4 2024, compared to $28.8
million in Q4 2023. The increase in net income is primarily
explained by lower net interest expense and lower income taxes,
partially offset by lower operating income and higher loss on
foreign exchange, as described above.
Adjusted Net Income decreased by $6.9 million to $32.2 million in Q4 2024, compared to
$39.1 million in Q4 2023.
Adjusted Net Income as a percentage of
revenue(3) was 10.9% in Q4 2024 and 13.6% in Q4
2023. The decrease is explained by the changes in net income
described above, and net lower adjustments for Q4 2024 compared to
Q4 2023 from lower business transformation costs, which includes
the adjustment for 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, lower share-based compensation, the gain on
modification of debt in Q4 2024, and lower information technology
transformation costs; partially offset by a higher loss on foreign
exchange, and asset impairments.
Adjusted Net Income per Diluted Share decreased by
$0.09 to $0.45 in Q4 2024, compared to $0.54 in Q4 2023. The 16.7% year over year
decrease results primarily from the changes in Adjusted Net Income
and the factors described above.
Cash at the end of the fourth quarter totaled
$35.1 million.
Net Capital Expenditures were $14.8 million in Q4 2024 compared to $11.4 million in Q4 2023, an increase of
$3.4 million primarily due to higher
expenditures on store network expansion, construction in progress
for the new Calgary distribution
centre and lower proceeds on disposal of property and
equipment from the sale of corporate-owned stores to
franchisees.
Free Cash Flow(1) amounted to $41.0 million in Q4 2024 compared to
$34.3 million in Q4 2023, an
increase of $6.8 million
primarily driven by an increase in cash from operating activities;
partially offset by an increase in payments of principal and
interest on lease liabilities due to the new MVR distribution
centre and store network expansion, and an increase in cash used
for investing activities.
Inventory at the end of Q4 2024 was $124.6 million compared to $122.1 million at the end of Q4 2023, an
increase of $2.5 million primarily to
support the growth of our store network, and due to the timing of
purchases.
Financial Results for Fiscal 2024
All comparative figures below are for the 52-week period
ended December 28, 2024, compared to the 52-week period ended
December 30, 2023.
Revenue was $1,097.2 million in Fiscal 2024, an increase
of $41.3 million, or 3.9%, compared
to $1,055.9 million in Fiscal 2023.
The increase in revenue was mostly driven by the growth in
franchise and other revenues and partially offset by a decline in
retail sales.
Same-store sales decline was 0.5% in Fiscal 2024
primarily driven by a 2.7% same-store transaction decline and
partially offset by a 2.3% increase in same-store average spend per
transaction growth. This is compared to same-store sales growth of
5.2% in Fiscal 2023, which primarily consisted of a 4.4% increase
in same-store average spend per transaction growth and a 0.7%
increase in same-store transaction growth.
Gross profit decreased by $0.5 million, or 0.1%, to $364.6 million in Fiscal 2024, compared to
$365.1 million in Fiscal 2023. Gross
profit margin was 33.2% of revenue in Fiscal 2024 compared to 34.6%
in Fiscal 2023. Excluding the costs related to the supply chain
transformation of 0.8% in Fiscal 2024 and 1.1% in Fiscal 2023, the
gross profit margin was 34.0% and 35.7% in Fiscal 2024
and Fiscal 2023, respectively, and decreased by 1.7%. The
decrease was primarily driven by (i) higher distribution and
occupancy costs from the new distribution centres, and (ii) higher
wholesale merchandise sales.
Selling, general and administrative expenses were
$209.3 million in Fiscal 2024, an
increase of $4.9 million, or 2.4%,
compared to $204.4 million in
Fiscal 2023. SG&A expenses represented 19.1% and 19.4% of total
revenue for Fiscal 2024 and Fiscal 2023, respectively. The increase
of $4.9 million in SG&A expenses
was mostly due to: (i) increased compensation costs as a result of
higher variable compensation and share-based compensation; (ii)
higher technology expenditures due to Software-as-a-Service
("SaaS") fees and project-based implementation costs associated
with new information technology systems; (iii) higher depreciation
and amortization from store growth and investments in other assets;
and (iv) higher marketing and advertising expenses; partially
offset by (v) higher gain on sale of assets for re-franchised
stores and (vi) lower real estate and professional fees.
Adjusted EBITDA increased by $16.0 million, or 6.9%, to $247.1 million in Fiscal 2024, compared to
$231.0 million in Fiscal 2023.
The increase is explained by $12.9
million of higher EBITDA in Fiscal 2024 compared to Fiscal
2023 and by $3.2 million of net
higher adjustments from EBITDA in Fiscal 2024 versus Fiscal 2023
from information technology transformation costs, loss on foreign
exchange, share-based compensation, business transformation costs,
asset impairments, and other professional fees, partially offset by
the share of loss from an investment in associate in Fiscal 2023.
Adjusted EBITDA as a percentage of revenue was 22.5% and 21.9% in
Fiscal 2024 and Fiscal 2023, respectively.
Net interest expense was $32.1
million in Fiscal 2024, an increase of $1.5 million, or 4.8%, compared to $30.6 million in Fiscal 2023. The increase was
primarily driven by (i) higher interest expense on lease
liabilities resulting from the new GTA and MVR distribution
centres, store network expansion and renewal of existing leases;
partially offset by (ii) lower interest expense on the Term
Facility resulting from lower debt outstanding and lower interest
rates compared to Fiscal 2023; (iii) a gain recognized on the
modification of debt; and (iv) higher interest income on lease
receivables.
Income taxes were $34.0 million in Fiscal 2024 compared to
$35.6 million in Fiscal 2023, a
decrease of $1.7 million year over
year. The decrease in income taxes was primarily the result of
lower taxable earnings in Fiscal 2024. The effective income tax
rate was 28.0% in Fiscal 2024 compared to 28.5% in Fiscal 2023. The
Fiscal 2024 and Fiscal 2023 effective tax rates were higher than
the blended statutory rate of 26.5% primarily because of
non-deductible expenses and, in addition, in Fiscal 2023, due to
the impairment of an investment in associate.
Net income decreased by $2.1
million to $87.4 million
in Fiscal 2024, compared to $89.5 million in Fiscal 2023. The decrease
in net income is primarily explained by the lower operating income,
higher net interest expense, and loss on foreign exchange,
partially offset by lower income taxes, as described above, and by
the impairment and loss recognized on the derecognition of the call
option related to an investment in associate included in Fiscal
2023.
Adjusted Net Income decreased by $3.2 million to $113.3 million in Fiscal 2024, compared to
$116.5 million in Fiscal 2023.
Adjusted Net Income as a percentage of revenue was 10.3% in Fiscal
2024 and 11.0% in Fiscal 2023, respectively. The decrease is
explained by the changes in net income described above, and net
lower adjustments for Fiscal 2024 compared to Fiscal 2023 from the
share of loss from investment in associate in Fiscal 2023, lower
business transformation costs, which includes 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, and the gain on
modification of debt in Fiscal 2024; partially offset by higher
information technology transformation costs, share based
compensation, asset impairments, and other professional fees.
Adjusted Net Income per Diluted Share decreased by
$0.04 to $1.57 in Fiscal 2024, compared to $1.61 in Fiscal 2023. The 2.5% year over year
decrease results primarily from changes in Adjusted Net Income and
the factors described above.
Net Capital Expenditures were $52.3 million in Fiscal 2024 and Fiscal 2023.
Free Cash Flow amounted to $102.6 million in Fiscal 2024 compared to
$48.7 million in Fiscal 2023, an
increase of $54.0 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 new GTA and MVR distribution centres,
and store network expansion.
Dividends
On March 3, 2025, the Board of
Directors of the Company declared a dividend of $0.12 per common share payable on April 15, 2025 to holders of common shares of
record as at the close of business on March
31, 2025.
Outlook
Fiscal 2025 will be a 53-week fiscal year for Pet Valu, compared
to a 52-week fiscal year in Fiscal 2024. Including the impact of
the 53rd week of operation in Fiscal 2025, the Company
expects:
- Revenue between $1.17 and
$1.20 billion, supported by
approximately 40 new store openings, same-store sales growth
between 1% and 4% and higher wholesale merchandise sales
penetration;
- Adjusted EBITDA between $254 and
$260 million, which incorporates
continued price investments and normalization of operating
expenses;
- Adjusted Net Income per Diluted Share between $1.60 and $1.66,
which incorporates approximately $12
million pre-tax, or $0.12 per
diluted share, of incremental depreciation and lease liability
interest expense associated with the new distribution centres;
- Business and information technology transformation costs of
approximately $13 million pre-tax,
and share-based compensation of approximately $11 million pre-tax, both of which are excluded
from Adjusted EBITDA and Adjusted Net Income per Diluted Share;
and
- Net Capital Expenditures of approximately $35 million.
The Company is closely monitoring the evolving governmental
foreign trade environment and believes it has the appropriate
mechanisms in place to adapt, as necessary. The above Outlook is
based on several assumptions, including, but not limited to,
governmental foreign trade policies similar to Fiscal 2024.
|
(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 fiscal year ended December 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, reconciliations to
the relevant reported IFRS measure and for an explanation of the
reason for the change in composition of Adjusted EBITDA and
Adjusted Net Income. A copy of the MD&A for the fiscal year
ended December 28, 2024 is available on SEDAR+ at
www.sedarplus.ca.
|
|
(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
fiscal year ended December 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
fiscal year ended December 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 fourth quarter
results is scheduled for March 4, 2025, at 8:30 a.m. ET. To access Pet Valu's conference
call, please dial 1-833-950-0062 (ID: 587971). 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: 515858) and will be accessible until March 11, 2025. 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
growth (decline)", "Same-store transaction growth (decline)" and
"Same-store average spend per transaction growth (decline)". 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 fiscal year ended
December 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 "2025 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 3, 2025 ("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
Consolidated Statements of Income and Comprehensive
Income
(Unaudited, expressed in thousands of Canadian dollars, except per
share amounts)
|
Quarters
Ended
|
Fiscal Years
Ended
|
|
December 28,
2024
|
December 30,
2023
|
December 28,
2024
|
December 30,
2023
|
|
13
weeks
|
13
weeks
|
52
weeks
|
52
weeks
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
Retail
sales
|
$
104,929
|
$
110,089
|
$
405,357
|
$
421,828
|
|
Franchise and other
revenues
|
190,220
|
176,819
|
691,836
|
634,039
|
|
Total
revenue
|
295,149
|
286,908
|
1,097,193
|
1,055,867
|
|
|
|
|
|
|
Cost of
sales
|
194,933
|
188,407
|
732,554
|
690,730
|
|
Gross
profit
|
100,216
|
98,501
|
364,639
|
365,137
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
52,344
|
50,236
|
209,316
|
204,411
|
|
Total operating
income
|
47,872
|
48,265
|
155,323
|
160,726
|
|
|
|
|
|
|
Interest expenses,
net
|
6,552
|
8,456
|
32,103
|
30,646
|
|
Loss (gain) on foreign
exchange
|
1,265
|
(256)
|
1,836
|
188
|
|
Other loss
|
—
|
—
|
—
|
4,718
|
|
Income before income
taxes
|
40,055
|
40,065
|
121,384
|
125,174
|
|
|
|
|
|
|
Income tax
expense
|
11,150
|
11,300
|
33,964
|
35,626
|
|
Net
income
|
28,905
|
28,765
|
87,420
|
89,548
|
|
|
|
|
|
|
Other comprehensive
income, net of tax:
|
|
|
|
|
|
Currency translation
adjustments that
may be reclassified to
net income, net of tax
|
—
|
—
|
—
|
18
|
|
Comprehensive income
for the period
attributable to the
shareholders of the Company
|
$
28,905
|
$
28,765
|
$
87,420
|
$
89,566
|
|
|
|
|
|
|
Basic net income per
share attributable
to the common
shareholders
|
$
0.41
|
$
0.40
|
$
1.22
|
$
1.26
|
|
Diluted net income
per share attributable
to the common
shareholders
|
$
0.40
|
$
0.40
|
$
1.21
|
$
1.24
|
|
|
|
|
|
Reconciliation of Net Income to EBITDA and Adjusted
EBITDA
(Unaudited, in thousands of Canadian dollars unless otherwise
noted)
|
Quarters
Ended
|
Fiscal Years
Ended
|
|
December 28,
2024
|
December 30,
2023
|
December 28,
2024
|
December 30,
2023
|
|
13
weeks
|
13
weeks
|
52
weeks
|
52
weeks
|
|
Reconciliation of
net income to Adjusted EBITDA:
|
|
|
|
|
|
Net income
|
$
28,905
|
$
28,765
|
$
87,420
|
$
89,548
|
|
Depreciation and
amortization
|
16,784
|
14,999
|
65,913
|
50,718
|
|
Interest expenses,
net
|
6,552
|
8,456
|
32,103
|
30,646
|
|
Income tax
expense
|
11,150
|
11,300
|
33,964
|
35,626
|
|
EBITDA
|
63,391
|
63,520
|
219,400
|
206,538
|
|
Adjustments to
EBITDA:
|
|
|
|
|
|
Information technology
transformation costs(1)
|
539
|
864
|
5,693
|
3,309
|
|
Business transformation
costs(2)
|
1,837
|
4,037
|
10,989
|
9,689
|
|
Other professional
fees(3)
|
221
|
225
|
1,218
|
741
|
|
Share-based
compensation(4)
|
176
|
2,866
|
7,203
|
5,855
|
|
Asset
impairments(5)
|
744
|
—
|
744
|
—
|
|
Loss (gain) on foreign
exchange(6)
|
1,265
|
(256)
|
1,836
|
188
|
|
Investment in
associate(7)
|
—
|
—
|
—
|
4,718
|
|
Adjusted
EBITDA
|
$
68,173
|
$
71,256
|
$
247,083
|
$
231,038
|
|
Adjusted EBITDA as a
percentage of revenue
|
23.1 %
|
24.8 %
|
22.5 %
|
21.9 %
|
|
Notes:
|
|
(1)
|
Represents discrete,
project-based implementation costs associated with new information
technology systems and discrete SasS arrangements for
transformational initiatives supporting e-commerce and omni-channel
capabilities, merchandise planning, customer relationship
management and other key processes.
|
|
(2)
|
Represents expenses
associated with supply chain (2023, 2024) and merchandise
transformation initiatives (2024), 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 Q4 2024 and Fiscal 2024 were $nil and
$4.4 million, respectively (Q4 2023 and Fiscal 2023 – $2.4 million
and $5.0 million, respectively). The expenses included in selling,
general, and administrative expenses in Q4 2024 and Fiscal 2024
were $0.9 million and $4.3 million, respectively (Q4 2023 and
Fiscal 2023 – $0.8 million and $3.9 million, respectively).
Additionally, in Q4 2024 and Fiscal 2024, business transformation
costs include $0.9 million and $2.3 million, respectively, of
expenses, included in selling, general and administrative expenses,
predominantly related to a reorganization in the senior leadership
team and other transformation initiatives. In Q4 2023 and Fiscal
2023, business transformation costs also include $0.8 million of
severance related expenses, included in selling, general and
administrative expenses, associated with restructuring activities
in certain business support functions.
|
|
(3)
|
Represents professional
fees primarily incurred with respect to: (i) the Canada Revenue
Agency's ("CRA") examination of the Company's Canadian tax filings
discussed in the "Income Taxes" section of the Company's MD&A
for the fiscal year ended December 28, 2024; 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 non-cash
impairment charge taken mostly against the right-of-use asset and
certain other assets for a corporate store.
|
|
(6)
|
Represents foreign
exchange gains and losses.
|
|
(7)
|
Represents the
Company's share of gain or loss from an associate, including
impairment losses, and any gains or losses on a related call
option. Specifically, the Company's share of loss from
associate of $3.4 million for Fiscal 2023 and loss on the fair
value of the related call option of $1.3 million for Fiscal
2023.
|
Reconciliation of Net Income to Adjusted Net
Income
(Unaudited, in thousands of Canadian dollars unless otherwise
noted)
|
Quarters
Ended
|
Fiscal Years
Ended
|
|
December 28,
2024
|
December 30,
2023
|
December 28,
2024
|
December 30,
2023
|
|
13
weeks
|
13
weeks
|
52
weeks
|
52
weeks
|
|
Reconciliation of
net income to Adjusted Net Income:
|
|
|
|
|
|
Net income
|
$
28,905
|
$
28,765
|
$
87,420
|
$
89,548
|
|
Adjustments to net
income:
|
|
|
|
|
|
Information technology
transformation costs(1)
|
539
|
864
|
5,693
|
3,309
|
|
Business transformation
costs(2)
|
1,957
|
9,558
|
17,431
|
18,790
|
|
Other professional
fees(3)
|
221
|
225
|
1,218
|
741
|
|
Share-based
compensation(4)
|
176
|
2,866
|
7,203
|
5,855
|
|
Asset
impairments(5)
|
744
|
—
|
744
|
—
|
|
Gain on modification of
debt(6)
|
(1,019)
|
—
|
(1,019)
|
—
|
|
Loss (gain) on foreign
exchange(7)
|
1,265
|
(256)
|
1,836
|
188
|
|
Investment in
associate(8)
|
—
|
—
|
—
|
4,718
|
|
Tax effect of
adjustments to net income
|
(605)
|
(2,926)
|
(7,199)
|
(6,611)
|
|
Adjusted Net
Income
|
$
32,183
|
$
39,096
|
$
113,327
|
$
116,538
|
|
Adjusted Net Income
as a percentage of revenue
|
10.9 %
|
13.6 %
|
10.3 %
|
11.0 %
|
|
Adjusted Net Income
per Diluted Share
|
$
0.45
|
$
0.54
|
$
1.57
|
$
1.61
|
|
Notes:
|
|
(1)
|
Represents discrete,
project-based implementation costs associated with new information
technology systems and discrete SaaS arrangements for
transformational initiatives supporting e-commerce and omni-channel
capabilities, merchandise planning, customer relationship
management and other key processes.
|
|
(2)
|
Represents expenses
associated with supply chain (2023, 2024) and merchandise
transformation initiatives (2024), 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 Q4 2024 and Fiscal 2024
were $0.2 million and $8.5 million, respectively (Q4 2023 and
Fiscal 2023 – $6.3 million and $11.4 million, respectively). The
expenses included in selling, general, and administrative expenses
in Q4 2024 and Fiscal 2024 were $0.9 million and $4.3 million,
respectively (Q4 2023 and Fiscal 2023 – $0.8 million and $3.9
million, respectively). The interest expense on the lease liability
in Q4 2024 and Fiscal 2024 was $nil and $2.3 million, respectively
(Q4 2023 and Fiscal 2023 – $1.7 million and $2.7 million,
respectively). Additionally, in Q4 2024 and Fiscal 2024, business
transformation costs include $0.9 million and $2.3 million,
respectively, of expenses, included in selling, general and
administrative expenses, predominantly related to a reorganization
in the senior leadership team and other transformation initiatives.
In Q4 2023 and Fiscal 2023, business transformation costs also
included $0.8 million of severance related expenses, included in
selling, general and administrative expenses, associated with
restructuring activities in certain business support
functions.
|
|
(3)
|
Represents professional
fees primarily incurred with respect to: (i) the CRA's examination
of the Company's Canadian tax filings discussed in the "Income
Taxes" section of the Company's MD&A for the fiscal year
ended December 28, 2024; 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 non-cash
impairment charge taken mostly against the right-of-use asset and
certain other assets for a corporate store.
|
|
(6)
|
Represents a gain on
debt modification recognized in interest expenses, net in
connection with the third amendment of the credit agreement as
discussed in the "Liquidity and Capital Resources – Credit
Facilities" section of the Company's MD&A for the fiscal
year ended December 28, 2024.
|
|
(7)
|
Represents foreign
exchange gains and losses.
|
|
(8)
|
Represents the
Company's share of gain or loss from an associate, including
impairment losses, and any gains or losses on a related call
option. Specifically, the Company's share of loss from
associate of $3.4 million for Fiscal 2023 and loss on the fair
value of the related call option of $1.3 million for Fiscal
2023.
|
Consolidated Statements of Cash Flows
(Unaudited, in thousands of Canadian dollars)
|
Quarters
Ended
|
Fiscal Years
Ended
|
|
December 28,
2024
|
December 30,
2023
|
December 28,
2024
|
December 30,
2023
|
|
13
weeks
|
13
weeks
|
52
weeks
|
52
weeks
|
|
Cash provided by
(used in):
|
|
|
|
|
|
Operating
activities:
|
|
|
|
|
|
Net income for the
period
|
$
28,905
|
$
28,765
|
$
87,420
|
$
89,548
|
|
Adjustments for items
not affecting cash:
|
|
|
|
|
|
Depreciation and
amortization
|
16,784
|
14,999
|
65,913
|
50,718
|
|
Impairment of property
and equipment
|
216
|
—
|
216
|
—
|
|
Impairment of
right-of-use assets
|
528
|
—
|
528
|
—
|
|
Deferred franchise
fees
|
41
|
196
|
129
|
333
|
|
Gain on disposal of
property and equipment
|
(755)
|
(1,837)
|
(3,565)
|
(3,158)
|
|
(Gain) loss on sale of
right-of-use assets
|
(17)
|
417
|
(49)
|
1,106
|
|
Loss (gain) on foreign
exchange
|
1,265
|
(256)
|
1,836
|
188
|
|
Loss on financial
instruments
|
—
|
—
|
—
|
1,302
|
|
Share-based
compensation expense
|
176
|
2,866
|
7,203
|
5,855
|
|
Share of loss from
associate
|
—
|
—
|
—
|
3,416
|
|
Interest expenses,
net
|
6,552
|
8,456
|
32,103
|
30,646
|
|
Income tax
expense
|
11,150
|
11,300
|
33,964
|
35,626
|
|
Income taxes
paid
|
(6,332)
|
(13,321)
|
(31,213)
|
(56,451)
|
|
Changes in non-cash
operating working capital:
|
|
|
|
|
|
Accounts
receivable
|
(5,836)
|
(3,209)
|
(7,351)
|
(4,949)
|
|
Inventories
|
10,246
|
12,978
|
(2,259)
|
(3,563)
|
|
Prepaid
expenses
|
795
|
1,637
|
8,818
|
(2,952)
|
|
Accounts payable and
accrued liabilities
|
4,019
|
(7,777)
|
6,383
|
(12,321)
|
|
Net cash provided by
operating activities
|
67,737
|
55,214
|
200,076
|
135,344
|
|
Financing
activities:
|
|
|
|
|
|
Proceeds from exercise
of share options
|
—
|
—
|
4,089
|
4,349
|
|
Shares repurchased for
cancellation
|
(27,964)
|
—
|
(30,007)
|
—
|
|
Dividends paid on
common shares
|
(7,832)
|
(7,146)
|
(31,470)
|
(28,536)
|
|
Repayment of long-term
debt
|
—
|
(4,438)
|
(13,312)
|
(45,750)
|
|
Interest paid on
long-term debt
|
(3,042)
|
(5,862)
|
(22,847)
|
(13,526)
|
|
Repayment of principal
on lease liabilities
|
(16,790)
|
(13,876)
|
(64,898)
|
(52,944)
|
|
Interest paid on lease
liabilities
|
(5,915)
|
(5,347)
|
(23,409)
|
(16,498)
|
|
Financing
costs
|
(1,971)
|
—
|
(1,971)
|
—
|
|
Standby letter of
credit commitment fees
|
—
|
—
|
—
|
(872)
|
|
Net cash used in
financing activities
|
(63,514)
|
(36,669)
|
(183,825)
|
(153,777)
|
|
Investing
activities:
|
|
|
|
|
|
Business acquisition,
net of cash acquired
|
—
|
—
|
—
|
(3,000)
|
|
Purchases of property
and equipment
|
(17,473)
|
(15,029)
|
(60,612)
|
(57,291)
|
|
Purchase of intangible
assets
|
(603)
|
(568)
|
(2,121)
|
(3,257)
|
|
Proceeds on disposal
of property and equipment
|
2,074
|
3,709
|
8,178
|
6,579
|
|
Right-of-use asset
initial direct costs
|
(1,131)
|
(1,173)
|
(2,549)
|
(2,627)
|
|
Tenant
allowances
|
1,226
|
450
|
2,272
|
1,635
|
|
Notes
receivable
|
93
|
38
|
598
|
1,088
|
|
Lease
receivables
|
9,347
|
8,075
|
35,176
|
30,344
|
|
Interest received on
lease receivables and other
|
2,975
|
2,822
|
11,914
|
10,887
|
|
Repurchase of
franchises
|
(407)
|
—
|
(1,378)
|
(512)
|
|
Net cash used in
investing activities
|
(3,899)
|
(1,676)
|
(8,522)
|
(16,154)
|
|
Effect of exchange
rate on cash
|
(613)
|
234
|
(1,032)
|
(3)
|
|
Net (decrease)
increase in cash
|
(289)
|
17,103
|
6,697
|
(34,590)
|
|
Cash, beginning of
period
|
35,430
|
11,341
|
28,444
|
63,034
|
|
Cash, end of
period
|
$
35,141
|
$
28,444
|
$
35,141
|
$
28,444
|
Free Cash Flows
(Unaudited, expressed in thousands of Canadian dollars)
|
Quarters
Ended
|
Fiscal Years
Ended
|
|
December 28,
2024
|
December 30,
2023
|
December 28,
2024
|
December 30,
2023
|
|
13
weeks
|
13
weeks
|
52
weeks
|
52
weeks
|
|
|
|
|
|
|
Cash provided by
operating activities
|
$
67,737
|
$
55,214
|
$
200,076
|
$
135,344
|
|
Cash used in investing
activities
|
(3,899)
|
(1,676)
|
(8,522)
|
(16,154)
|
|
Repayment of principal
on lease liabilities
|
(16,790)
|
(13,876)
|
(64,898)
|
(52,944)
|
|
Interest paid on lease
liabilities
|
(5,915)
|
(5,347)
|
(23,409)
|
(16,498)
|
|
Notes
receivable
|
(93)
|
(38)
|
(598)
|
(1,088)
|
|
Free Cash
Flow
|
$
41,040
|
$
34,277
|
$
102,649
|
$
48,660
|
Consolidated Statements of Financial
Position
(Audited, expressed in thousands of Canadian dollars)
|
As at December
28,
2024
|
As at December
30,
2023
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
Cash
|
$
35,141
|
$
28,444
|
|
Accounts and other
receivables
|
34,963
|
27,875
|
|
Inventories,
net
|
124,577
|
122,069
|
|
Income taxes
recoverable
|
905
|
6,012
|
|
Prepaid expenses and
other assets
|
10,585
|
19,403
|
|
Current portion of
lease receivables
|
40,339
|
34,332
|
|
Total current
assets
|
246,510
|
238,135
|
|
|
|
|
Non-current
assets:
|
|
|
|
Long-term lease
receivables
|
170,052
|
159,101
|
|
Right-of-use assets,
net
|
242,796
|
237,941
|
|
Property and
equipment, net
|
151,462
|
120,493
|
|
Intangible assets,
net
|
50,248
|
52,205
|
|
Goodwill
|
98,180
|
97,562
|
|
Deferred tax
assets
|
7,814
|
7,230
|
|
Other
assets
|
3,869
|
4,240
|
|
Total non-current
assets
|
724,421
|
678,772
|
|
|
|
|
Total
assets
|
$
970,931
|
$
916,907
|
|
|
|
|
Liabilities and
shareholders' equity
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable and
accrued liabilities
|
$
105,757
|
$
88,416
|
|
Provisions
|
355
|
669
|
|
Current portion of
deferred franchise fees
|
1,427
|
1,344
|
|
Current portion of
lease liabilities
|
76,881
|
64,068
|
|
Current portion of
long-term debt
|
—
|
17,750
|
|
Total current
liabilities
|
184,420
|
172,247
|
|
|
|
|
Non-current
liabilities:
|
|
|
|
Long-term deferred
franchise fees
|
4,522
|
4,166
|
|
Long-term lease
liabilities
|
394,393
|
379,833
|
|
Long-term
debt
|
278,020
|
275,474
|
|
Deferred tax
liabilities
|
7,551
|
8,864
|
|
Other
liabilities
|
2,711
|
3,977
|
|
Provisions
|
3,565
|
2,626
|
|
Total non-current
liabilities
|
690,762
|
674,940
|
|
|
|
|
Total
liabilities
|
875,182
|
847,187
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
Common
shares
|
313,829
|
321,752
|
|
Contributed
surplus
|
10,376
|
6,877
|
|
Deficit
|
(228,315)
|
(258,768)
|
|
Currency translation
reserve
|
(141)
|
(141)
|
|
Total shareholders'
equity
|
95,749
|
69,720
|
|
|
|
|
Total liabilities
and shareholders' equity
|
$
970,931
|
$
916,907
|
|
|
|
SOURCE Pet Valu Canada Inc.
