- Comparable sales grew 4.1 percent year over year and
19.6 percent on a two-year basis, resulting in
sixteenth consecutive quarter of comparable sales
growth
- Net revenue of $1.50
billion increased 4.0 percent year over year
- Delivered net income of $19.9
million and Adjusted EBITDA1 of $137.6 million
- Earnings per share of $0.07, a
decline of $0.13 from prior year;
Adjusted Earnings Per Share1 of $0.16, a decline of $0.04 from prior year
- Generated $109.4 million of
operating cash flow in the third quarter, an increase of 27% year
over year
- Reaffirms full year guidance for net revenue of $5.975 billion to $6.05
billion and Adjusted EBITDA1 of $580.0 million to $595.0
million; Updates full year guidance for Adjusted Earnings
Per Share1 to between $0.75 and $0.79
SAN
DIEGO, Nov. 30, 2022 /PRNewswire/ -- Petco Health
and Wellness Company, Inc. (Nasdaq: WOOF), a complete partner in
pet health and wellness, today announced its third quarter 2022
financial results.
In the third quarter of 2022, Petco delivered net revenue of
$1.50 billion, up 4.0 percent versus
prior year. Net income was $19.9
million or $0.07 per share
compared to $52.8 million or
$0.20 per share in the prior year.
Adjusted Net Income1 was $42.9
million or $0.16 per share,
compared to $54.0 million or
$0.20 per share in the prior
year.
"Our Q3 results demonstrate the resilience of the pet category
through economic cycles, the competitive advantages inherent in our
model, and the Petco team's incredible execution," said Petco
CEO Ron Coughlin. "Pet parents
continue to prioritize the health and wellness of their pets with
Petco, from our high-quality food, vet care and services, to
membership programs like Vital Care
which act as drivers of value and loyalty. We remain committed to
redefining the industry through our differentiated offering and
innovative partnerships, demonstrating the attractiveness of our
one-of-a-kind ecosystem and powered by the most passionate team in
retail."
Fiscal Q3 2022 Operating
Results:
Comparisons are third quarter of 2022 ended October 29, 2022 versus third quarter of 2021
ended October 30, 2021 unless
otherwise noted.
Third quarter results reflect continued business and customer
growth and operational execution, while investing in strategic
growth initiatives.
- Net revenue increased 4.0 percent to $1.50 billion driven by comparable sales growth
of 4.1 percent
- Net income decreased $32.8
million to $19.9 million or
$0.07 per share, which was impacted
by a $19.2 million non-cash change in
the fair value of one of the company's investments
- Adjusted Net
Income1 decreased $11.1 million
to $42.9 million or $0.16 per share
- Adjusted EBITDA1 decreased $1.0 million to $137.6 million
Fiscal 2022 Guidance:
Petco has reaffirmed its full year 2022 financial guidance for
net revenue, Adjusted EBITDA1 and capital expenditures
and updated its full year 2022 financial guidance for Adjusted
Earnings Per Share1. For the full year, Petco now
expects Adjusted Earnings Per Share1 between
$0.75 and $0.79. Full details can be found in the schedules
below.
(1)
|
Adjusted EBITDA,
Adjusted Net Income and Adjusted EPS are non-GAAP financial
measures. See "Non-GAAP Financial Measures" for additional
information on non-GAAP financial measures and a reconciliation to
the most comparable GAAP measures.
|
Earnings Conference Call Webcast
Information:
Management will host an earnings conference call on November 30, 2022 at 8:30
AM Eastern Time to discuss the company's financial results.
The conference call will be accessible through live webcast.
Interested investors and other individuals can access the webcast,
earnings release, earnings presentation, and infographic via the
company's investor relations page at ir.petco.com. A replay of
the webcast will be archived on the company's investor relations
page through December 14, 2022 at
approximately 5:00 PM Eastern Time.
About Petco, The
Health + Wellness Co.:
Founded in 1965, Petco is a category-defining health and
wellness company focused on improving the lives of pets, pet
parents and our own Petco partners. We've consistently set new
standards in pet care while delivering comprehensive pet wellness
products, services and solutions, and creating communities that
deepen the pet-pet parent bond. We operate more than 1,500 pet care
centers across the U.S., Mexico
and Puerto Rico, which offer
merchandise, companion animals, grooming, training and a growing
network of on-site veterinary hospitals and mobile veterinary
clinics. Our complete pet health and wellness ecosystem is
accessible through our pet care centers and digitally at
petco.com and on the Petco app. In tandem with
Petco Love (formerly the Petco Foundation), an independent
nonprofit organization, we work with and support thousands of local
animal welfare groups across the country and, through in-store
adoption events, we've helped find homes for more than 6.6 million
animals.
Forward-Looking Statements:
This earnings release contains "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995 as contained in Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended, concerning expectations, beliefs plans, objectives,
goals, strategies, future events or performance and underlying
assumptions and other statements that are not statements of
historical fact, including statements regarding our fiscal year
2022 guidance. Such forward-looking statements can generally be
identified by the use of forward-looking terms such as "believes,"
"expects," "may," "intends," "will," "shall," "should,"
"anticipates," "opportunity," "illustrative", or the negative
thereof or other variations thereon or comparable terminology.
Although Petco believes that the expectations and assumptions
reflected in these statements are reasonable, there can be no
assurance that these expectations will prove to be correct or that
any forward-looking results will occur or be realized. Nothing
contained in this earnings release is, or should be relied upon as,
a promise or representation or warranty as to any future matter,
including any matter in respect of the operations or business or
financial condition of Petco. All forward-looking statements are
based on expectations and assumptions about future events that may
or may not be correct or necessarily take place and that are by
their nature subject to significant uncertainties and
contingencies, many of which are outside the control of Petco.
Forward-looking statements are subject to a number of risks,
uncertainties and other factors that could cause actual results or
events to differ materially from the potential results or events
discussed in the forward-looking statements, including, without
limitation, those identified in this earnings release as well as
the following: (i) increased competition (including from
multi-channel retailers and e-Commerce providers); (ii) reduced
consumer demand for our products and/or services; (iii) our
reliance on key vendors; (iv) our ability to attract
and retain qualified employees; (v) risks arising from
statutory, regulatory and/or legal developments;
(vi) macroeconomic pressures in the markets in which we
operate including inflation; (vii) failure to effectively manage
our costs; (viii) our reliance on our information technology
systems; (ix) our ability to prevent or effectively respond to
a privacy or security breach; (x) our ability to effectively manage
or integrate strategic ventures, alliances or acquisitions and
realize the anticipated benefits of such transactions; (xi)
economic or regulatory developments that might affect our ability
to provide attractive promotional financing; (xii) business
interruptions and other supply chain issues; (xiii)
catastrophic events, political tensions, conflicts and wars
(such as the ongoing conflict in Ukraine), health crises, and pandemics; (xiv)
our ability to maintain positive brand perception
and recognition; (xv) product safety and quality concerns;
(xvi) changes to labor or employment laws or regulations;
(xvii) our ability to effectively manage our real estate portfolio;
(xviii) constraints in the capital markets or our vendor
credit terms; (xix) changes in our credit ratings; and (xx) the
other risks, uncertainties and other factors identified under "Risk
Factors" and elsewhere in Petco's Securities and Exchange
Commission filings. The occurrence of any such factors
could significantly alter the results set forth in
these statements.
Petco cautions that the foregoing list of risks, uncertainties
and other factors is not complete, and forward-looking statements
speak only as of the date they are made. Petco undertakes no duty
to update publicly any such forward-looking statement, whether as a
result of new information, future events or otherwise, except as
may be required by applicable law, regulation or other competent
legal authority.
|
|
|
|
|
|
|
|
PETCO HEALTH AND
WELLNESS COMPANY, INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(In thousands, except
per share amounts)
|
(Unaudited and subject
to reclassification)
|
|
|
|
|
|
|
|
|
|
|
13 Weeks
Ended
|
|
|
|
October 29,
2022
|
|
October 30,
2021
|
|
Percent
Change
|
|
Net
sales
|
|
$
1,501,220
|
|
$
1,443,264
|
|
4 %
|
|
Cost of
sales
|
|
903,543
|
|
848,555
|
|
6 %
|
|
Gross
profit
|
|
597,677
|
|
594,709
|
|
0 %
|
|
Selling, general and
administrative expenses
|
|
549,622
|
|
532,760
|
|
3 %
|
|
Operating
income
|
|
48,055
|
|
61,949
|
|
(22 %)
|
|
Interest
income
|
|
(130)
|
|
(18)
|
|
622 %
|
|
Interest
expense
|
|
27,307
|
|
18,769
|
|
45 %
|
|
Other non-operating
income
|
|
(576)
|
|
(19,773)
|
|
(97 %)
|
|
Income before income
taxes and income from
equity method investees
|
|
21,454
|
|
62,971
|
|
(66 %)
|
|
Income tax
expense
|
|
4,161
|
|
14,095
|
|
(70 %)
|
|
Income from equity
method investees
|
|
(2,627)
|
|
(2,637)
|
|
(0 %)
|
|
Net
income
|
|
19,920
|
|
51,513
|
|
(61 %)
|
|
Net loss attributable
to noncontrolling interest
|
|
—
|
|
(1,239)
|
|
(100 %)
|
|
Net income
attributable to Class A and B-1 common
stockholders
|
|
$
19,920
|
|
$
52,752
|
|
(62 %)
|
|
|
|
|
|
|
|
|
|
Net income per Class
A and B-1 common share:
|
|
|
|
|
|
|
|
Basic
|
|
$
0.07
|
|
$
0.20
|
|
(62 %)
|
|
Diluted
|
|
$
0.07
|
|
$
0.20
|
|
(62 %)
|
|
|
|
|
|
|
|
|
|
Weighted average
shares used in computing net income per Class A
and B-1 common share:
|
|
|
|
|
|
|
|
Basic
|
|
265,689
|
|
264,228
|
|
1 %
|
|
Diluted
|
|
265,935
|
|
265,322
|
|
0 %
|
|
|
|
|
|
|
PETCO HEALTH AND
WELLNESS COMPANY, INC.
|
CONSOLIDATED BALANCE
SHEETS
|
(In thousands, except
per share amounts)
|
(Unaudited and subject
to reclassification)
|
|
|
|
|
|
October
29,
2022
|
|
January
29,
2022
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
148,731
|
|
$
211,602
|
Receivables, less
allowance for credit losses1
|
|
46,446
|
|
55,618
|
Merchandise
inventories, net
|
|
723,424
|
|
675,111
|
Prepaid
expenses
|
|
43,708
|
|
42,355
|
Other current
assets
|
|
56,724
|
|
86,091
|
Total current
assets
|
|
1,019,033
|
|
1,070,777
|
Fixed assets
|
|
1,937,804
|
|
1,745,691
|
Less accumulated
depreciation
|
|
(1,146,217)
|
|
(1,018,769)
|
Fixed assets,
net
|
|
791,587
|
|
726,922
|
Operating lease
right-of-use assets
|
|
1,378,336
|
|
1,338,465
|
Goodwill
|
|
2,191,891
|
|
2,183,991
|
Trade name
|
|
1,025,000
|
|
1,025,000
|
Other long-term
assets
|
|
171,045
|
|
152,786
|
Total assets
|
|
$
6,576,892
|
|
$
6,497,941
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts payable and
book overdrafts
|
|
$
384,595
|
|
$
403,976
|
Accrued salaries and
employee benefits
|
|
125,113
|
|
150,630
|
Accrued expenses and
other liabilities
|
|
220,055
|
|
210,872
|
Current portion of
operating lease liabilities
|
|
304,789
|
|
265,897
|
Current portion of
long-term debt and other lease liabilities
|
|
22,645
|
|
21,764
|
Total current
liabilities
|
|
1,057,197
|
|
1,053,139
|
Senior secured credit
facilities, net, excluding current portion
|
|
1,631,335
|
|
1,640,390
|
Operating lease
liabilities, excluding current portion
|
|
1,131,081
|
|
1,096,133
|
Deferred taxes,
net
|
|
298,380
|
|
318,355
|
Other long-term
liabilities
|
|
130,990
|
|
134,105
|
Total
liabilities
|
|
4,248,983
|
|
4,242,122
|
Commitments and
contingencies
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
Class A common
stock2
|
|
228
|
|
227
|
Class B-1 common
stock3
|
|
38
|
|
38
|
Class B-2 common
stock4
|
|
—
|
|
—
|
Preferred
stock5
|
|
—
|
|
—
|
Additional
paid-in-capital
|
|
2,131,930
|
|
2,133,821
|
Retained
earnings
|
|
200,235
|
|
142,166
|
Accumulated other
comprehensive loss
|
|
(4,522)
|
|
(2,238)
|
Total stockholders'
equity
|
|
2,327,909
|
|
2,274,014
|
Noncontrolling
interest
|
|
—
|
|
(18,195)
|
Total equity
|
|
2,327,909
|
|
2,255,819
|
Total liabilities and
equity
|
|
$
6,576,892
|
|
$
6,497,941
|
(1)
Allowances for credit losses are $1,140 and
$931, respectively
(2) Class A common
stock, $0.001 par value: Authorized - 1.0 billion shares; Issued
and outstanding - 227.9 million and 227.2 million shares,
respectively
(3) Class B-1 common
stock, $0.001 par value: Authorized - 75.0 million shares; Issued
and outstanding - 37.8 million shares
(4) Class B-2 common
stock, $0.000001 par value: Authorized - 75.0 million shares;
Issued and outstanding - 37.8 million shares
(5) Preferred stock,
$0.001 par value: Authorized - 25.0 million shares; Issued and
outstanding – none
|
PETCO HEALTH AND WELLNESS COMPANY,
INC.
|
CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
(In
thousands)
|
(Unaudited and
subject to reclassification)
|
|
|
|
|
|
|
|
39 Weeks Ended
|
|
|
October 29,
2022
|
|
October 30,
2021
|
Cash flows from operating
activities:
|
|
|
|
|
Net income
|
|
$ 57,178
|
|
$
132,517
|
Adjustments to
reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
Depreciation and
amortization
|
|
143,599
|
|
125,637
|
Amortization of debt
discounts and issuance costs
|
|
3,694
|
|
4,579
|
Provision for deferred
taxes
|
|
(6,413)
|
|
28,523
|
Equity-based
compensation
|
|
40,892
|
|
36,491
|
Impairments,
write-offs and losses on sale of fixed and other assets
|
|
2,299
|
|
5,918
|
Loss on extinguishment
and modification of debt
|
|
—
|
|
20,838
|
Income from equity
method investees
|
|
(7,821)
|
|
(7,490)
|
Non-cash operating
lease costs
|
|
316,492
|
|
315,930
|
Other non-operating
loss (income)
|
|
9,369
|
|
(64,934)
|
Changes in assets and
liabilities:
|
|
|
|
|
Receivables
|
|
9,171
|
|
(3,652)
|
Merchandise
inventories
|
|
(48,314)
|
|
(105,682)
|
Prepaid expenses and other
assets
|
|
(2,536)
|
|
(8,053)
|
Accounts payable and book
overdrafts
|
|
(19,381)
|
|
47,973
|
Accrued salaries and employee
benefits
|
|
(16,160)
|
|
27,673
|
Accrued expenses and other
liabilities
|
|
12,110
|
|
45,437
|
Operating lease
liabilities
|
|
(282,954)
|
|
(314,620)
|
Other long-term
liabilities
|
|
(1,762)
|
|
1,359
|
Net cash provided by operating
activities
|
|
209,463
|
|
288,444
|
Cash flows from investing
activities:
|
|
|
|
|
Cash paid for fixed
assets
|
|
(212,074)
|
|
(164,330)
|
Cash paid for
acquisitions, net of cash acquired
|
|
(7,750)
|
|
(3,545)
|
Cash paid for interest
in veterinary joint venture
|
|
(35,000)
|
|
—
|
Proceeds from sale of
assets
|
|
2,127
|
|
105
|
Net cash used in investing
activities
|
|
(252,697)
|
|
(167,770)
|
Cash flows from financing
activities:
|
|
|
|
|
Borrowings under
long-term debt agreements
|
|
123,000
|
|
1,700,000
|
Repayments of
long-term debt
|
|
(135,750)
|
|
(1,686,611)
|
Debt refinancing costs
and original issue discount
|
|
—
|
|
(24,665)
|
Payments for finance
lease liabilities
|
|
(4,174)
|
|
(2,650)
|
Proceeds from employee
stock purchase plan
|
|
3,472
|
|
2,920
|
Tax withholdings on
stock-based awards
|
|
(13,581)
|
|
(13)
|
Payment of offering
costs
|
|
—
|
|
(3,844)
|
Net cash used in financing
activities
|
|
(27,033)
|
|
(14,863)
|
|
|
|
|
|
Net (decrease) increase
in cash, cash equivalents and restricted cash
|
|
(70,267)
|
|
105,811
|
Cash, cash equivalents
and restricted cash at beginning of period
|
|
221,890
|
|
119,540
|
Cash, cash equivalents
and restricted cash at end of period
|
|
$
151,623
|
|
$
225,351
|
NON-GAAP FINANCIAL MEASURES
The following information provides definitions and
reconciliations of the non-GAAP financial measures
presented in this earnings release to
the most directly comparable financial measures calculated and
presented in accordance with generally accepted
accounting principles (GAAP). The company has provided this
non-GAAP financial information, which is not calculated or
presented in accordance with GAAP, as information supplemental and
in addition to the financial measures presented in this
earnings release that are calculated and presented
in accordance with GAAP. Such non-GAAP financial measures
should not be considered superior to, as a substitute for or
alternative to, and should be considered in conjunction with, the
GAAP financial measures presented in this earnings release.
The non-GAAP financial measures in this earnings release may differ
from similarly titled measures
used by other companies.
Adjusted EBITDA and Trailing
Twelve Month Adjusted EBITDA
Adjusted EBITDA, including Trailing Twelve Month Adjusted
EBITDA, is considered a non-GAAP financial measure under the
Securities and Exchange Commission's (SEC) rules because it
excludes certain amounts included in net income calculated in
accordance with GAAP. Management believes that Adjusted EBITDA is a
meaningful measure to share with investors because it facilitates
comparison of the current period performance with that of the
comparable prior period. In addition, Adjusted EBITDA affords
investors a view of what management considers to be Petco's core
operating performance as well as the ability to make a more
informed assessment of such operating performance as compared with
that of the prior period.
Please see the company's Annual Report on Form 10-K for the
fiscal year ended January 29, 2022
filed with the SEC on March 24, 2022
for additional information on Adjusted EBITDA. The tables below
reflect the calculation of Adjusted
EBITDA for the thirteen weeks and trailing twelve
months ended October 29, 2022 compared to the
thirteen weeks and trailing twelve months ended October 30, 2021, respectively, as well as the
twelve-month period ended January 29,
2022.
|
|
|
|
|
|
(dollars in
thousands)
|
|
13 Weeks
Ended
|
|
Reconciliation of
Net Income Attributable to Class A and B-1
Common Stockholders to Adjusted EBITDA
|
|
October 29,
2022
|
|
October 30,
2021
|
|
Net income
attributable to Class A and B-1 common stockholders
|
|
$
19,920
|
|
$
52,752
|
|
Add
(deduct):
|
|
|
|
|
|
Interest expense,
net
|
|
27,177
|
|
18,751
|
|
Income tax
expense
|
|
4,161
|
|
14,095
|
|
Depreciation and
amortization
|
|
48,029
|
|
42,792
|
|
Income from equity
method investees
|
|
(2,627)
|
|
(2,637)
|
|
Asset impairments and
write offs
|
|
930
|
|
3,228
|
|
Equity-based
compensation
|
|
15,775
|
|
13,381
|
|
Other non-operating
income
|
|
(576)
|
|
(19,773)
|
|
Mexico joint venture
EBITDA (1)
|
|
7,040
|
|
6,661
|
|
Store pre-opening
expenses
|
|
3,931
|
|
4,222
|
|
Store closing
expenses
|
|
1,310
|
|
1,264
|
|
Non-cash
occupancy-related costs (2)
|
|
2,496
|
|
1,540
|
|
Acquisition-related
integration costs (3)
|
|
1,592
|
|
—
|
|
Other costs
(4)
|
|
8,397
|
|
2,233
|
|
Adjusted
EBITDA
|
|
$ 137,555
|
|
$ 138,509
|
|
Net sales
|
|
$
1,501,220
|
|
$
1,443,264
|
|
Net margin
(5)
|
|
1.3 %
|
|
3.7 %
|
|
Adjusted EBITDA
Margin
|
|
9.2 %
|
|
9.6 %
|
|
(dollars in
thousands)
|
|
Trailing Twelve
Months
|
|
Reconciliation of
Net Income Attributable to Class A and B-1
Common Stockholders to Adjusted EBITDA
|
|
October 29,
2022
|
|
January 29,
2022
|
|
October 30,
2021
|
|
Net income
attributable to Class A and B-1 common stockholders
|
|
$
87,063
|
|
$ 164,417
|
|
$ 129,264
|
|
Add
(deduct):
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
87,358
|
|
77,335
|
|
108,117
|
|
Income tax
expense
|
|
30,488
|
|
53,473
|
|
53,984
|
|
Depreciation and
amortization
|
|
190,393
|
|
172,431
|
|
171,512
|
|
Income from equity
method investees
|
|
(11,214)
|
|
(10,883)
|
|
(11,020)
|
|
Loss on debt
extinguishment and modification
|
|
—
|
|
20,838
|
|
38,387
|
|
Asset impairments and
write offs
|
|
7,299
|
|
10,918
|
|
13,873
|
|
Equity-based
compensation
|
|
53,666
|
|
49,265
|
|
41,942
|
|
Other non-operating
loss (income)
|
|
39,806
|
|
(34,497)
|
|
(64,934)
|
|
Mexico joint venture
EBITDA (1)
|
|
28,633
|
|
26,837
|
|
25,178
|
|
Store pre-opening
expenses
|
|
14,119
|
|
14,765
|
|
13,957
|
|
Store closing
expenses
|
|
5,750
|
|
5,028
|
|
5,164
|
|
Non-cash
occupancy-related costs (2)
|
|
9,526
|
|
8,114
|
|
7,715
|
|
Acquisition-related
integration costs (3)
|
|
14,687
|
|
—
|
|
—
|
|
Other costs
(4)
|
|
26,637
|
|
33,437
|
|
34,788
|
|
Adjusted
EBITDA
|
|
$ 584,211
|
|
$ 591,478
|
|
$ 567,927
|
|
Net sales
|
|
$
5,972,365
|
|
$
5,807,149
|
|
$
5,630,505
|
|
Net margin
(5)
|
|
1.5 %
|
|
2.8 %
|
|
2.3 %
|
|
Adjusted EBITDA
Margin
|
|
9.8 %
|
|
10.2 %
|
|
10.1 %
|
|
Adjusted
Net Income and Adjusted EPS
Adjusted Net Income and Adjusted diluted earnings per share
attributable to Petco common stockholders (Adjusted EPS) are
considered non-GAAP financial measures under the SEC's rules
because they exclude certain amounts included in the net
income attributable to Petco common stockholders and
diluted earnings per share attributable to Petco common
stockholders calculated in accordance with GAAP. Management
believes that Adjusted Net Income and Adjusted EPS are meaningful
measures to share with investors because they facilitate comparison
of the current period performance with that of the comparable prior
period. In addition, Adjusted Net Income and Adjusted EPS afford
investors a view of what management considers to be Petco's core
earnings performance as well as the ability to make a more informed
assessment of such earnings performance with that of the prior
period.
The tables below reflect the calculation of Adjusted Net Income
and Adjusted EPS for the thirteen weeks ended October 29, 2022 compared to the thirteen weeks
ended October 30, 2021.
|
|
|
|
|
|
|
|
|
(in thousands,
except per share amounts)
|
|
13 Weeks
Ended
|
Reconciliation of
Diluted EPS to Adjusted EPS
|
|
October 29,
2022
|
|
October 30,
2021
|
|
|
Amount
|
|
Per
share
|
|
Amount
|
|
Per
share
|
Net income
attributable to common stockholders / diluted EPS
|
|
$
19,920
|
|
$
0.07
|
|
$
52,752
|
|
$
0.20
|
Add
(deduct):
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
4,161
|
|
0.02
|
|
14,095
|
|
0.05
|
Asset impairments and
write offs
|
|
930
|
|
0.00
|
|
3,228
|
|
0.01
|
Equity-based
compensation
|
|
15,775
|
|
0.06
|
|
13,381
|
|
0.05
|
Other non-operating
income
|
|
(576)
|
|
(0.00)
|
|
(19,773)
|
|
(0.08)
|
Store pre-opening
expenses
|
|
3,931
|
|
0.02
|
|
4,222
|
|
0.02
|
Store closing
expenses
|
|
1,310
|
|
0.00
|
|
1,264
|
|
0.00
|
Non-cash
occupancy-related costs (2)
|
|
2,496
|
|
0.01
|
|
1,540
|
|
0.01
|
Acquisition-related
integration costs (3)
|
|
1,592
|
|
0.01
|
|
—
|
|
—
|
Other costs
(4)
|
|
8,397
|
|
0.03
|
|
2,233
|
|
0.01
|
Adjusted pre-tax income
/ diluted earnings per share
|
|
$
57,936
|
|
$
0.22
|
|
$
72,942
|
|
$
0.27
|
Income tax expense at
26% normalized tax rate
|
|
15,063
|
|
0.06
|
|
18,965
|
|
0.07
|
Adjusted Net Income
/ Adjusted EPS
|
|
$
42,873
|
|
$
0.16
|
|
$
53,977
|
|
$
0.20
|
Fiscal 2022 Guidance
Metric
|
Prior Guidance
|
Reaffirmed /
Revised Guidance
|
|
Net Revenue
|
$5.975 - $6.05
billion
|
$5.975 - $6.05
billion
|
|
Adjusted EBITDA
|
$580 -
$595 million
|
$580 -
$595 million
|
|
Adjusted EPS
|
$0.77 -
$0.81
|
$0.75 -
$0.79
|
|
Capital
Expenditures
|
$250 - $275
million
|
$250 - $275
million
|
|
Assumptions in the company's Fiscal 2022 guidance include that
economic conditions, currency rates and the tax and regulatory
landscape remain generally consistent. Adjusted EPS guidance
assumes approximately $100 million of
interest expense (prior guidance assumed $90
million), a 26 percent tax rate and a 267 million weighted
average diluted share count. Adjusted EBITDA and Adjusted EPS are
non-GAAP financial measures and have not been reconciled to the
most comparable GAAP outlook because it is not possible to do so
without unreasonable efforts due to the uncertainty and potential
variability of reconciling items, which are dependent on future
events and often outside of management's control and which could be
significant. Because such items cannot be reasonably predicted with
the level of precision required, we are unable to provide outlook
for the comparable GAAP measures. Forward-looking estimates of
Adjusted EBITDA and Adjusted EPS are made in a manner consistent
with the relevant definitions and assumptions noted herein and in
our filings with the SEC.
Adjusted EBITDA, Adjusted Net
Income and Adjusted EPS Footnotes
(1)
|
Mexico Joint Venture
EBITDA represents 50 percent of the entity's operating results for
all periods, as adjusted to reflect the results on a basis
comparable to Adjusted EBITDA. In the financial statements, this
joint venture is accounted for as an equity method investment and
reported net of depreciation and income taxes. Because such a
presentation would not reflect the adjustments made in the
calculation of Adjusted EBITDA, we include the 50 percent interest
in the company's Mexico joint venture on an Adjusted EBITDA basis
to ensure consistency. The table below presents a reconciliation of
Mexico joint venture net income to Mexico joint venture
EBITDA.
|
|
|
|
|
|
|
|
|
13 Weeks
Ended
|
|
(in
thousands)
|
|
October 29,
2022
|
|
October 30,
2021
|
|
Net income
|
|
$
5,251
|
|
$
5,274
|
|
Depreciation
|
|
4,861
|
|
3,660
|
|
Income tax
expense
|
|
2,957
|
|
3,277
|
|
Foreign currency
gain
|
|
(395)
|
|
(60)
|
|
Interest expense,
net
|
|
1,406
|
|
1,171
|
|
EBITDA
|
|
$
14,080
|
|
$
13,322
|
|
50% of
EBITDA
|
|
$
7,040
|
|
$
6,661
|
|
(2)
|
Non-cash
occupancy-related costs include the difference between cash and
straight-line rent for all periods.
|
(3)
|
Acquisition/integration
costs include direct costs resulting from acquiring and integrating
businesses. These include third-party professional and legal fees
and other integration-related costs that would not have otherwise
been incurred as part of the company's operations. For the thirteen
weeks ended October 29, 2022, approximately $1.0 million of Thrive
integration costs were recorded in cost of sales and $0.6 million
of integration costs were recorded in selling, general and
administrative expenses.
|
(4)
|
Other costs include:
severance; legal reserves and related fees; one-time consulting and
other costs associated with our strategic transformation
initiatives; discontinuation and liquidation costs; and costs
related to our initial public offering and refinancing.
|
(5)
|
We define net margin as
net income attributable to Class A and B-1 common stockholders
divided by net sales and Adjusted EBITDA margin as Adjusted EBITDA
divided by net sales.
|
WOOF-F
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SOURCE Petco Health and Wellness Company, Inc.