TORONTO, May 12, 2022
/CNW/ - Canadian Tire Corporation, Limited (TSX: CTC) (TSX: CTC.A)
today released its first quarter results for the period ended
April 2, 2022.
- Consolidated Comparable sales (excluding Petroleum)1
grew 6.4% in the first quarter
- Diluted Earnings Per Share (EPS) was up 23% to $3.03; normalized diluted EPS1 was
$3.06, up 19% compared to the first
quarter of 2021
- Quarterly dividend to shareholders to be increased 25% to
$1.625 per share
"We delivered a strong first quarter against exceptional results
in Q1 last year. Our growth in sales continues to be driven by our
highly relevant, unique multi-category assortment across our
banners. Comparable store sales were up significantly, with
outstanding performances at SportChek, as more families returned to
hockey and skiing, and at Mark's, which achieved growth across all
categories in both national and owned brands. Additionally, our
Financial Services business saw growth in new accounts and
receivables as Canadians spent more on travel and entertainment,"
said Greg Hicks, President and CEO,
Canadian Tire Corporation.
"As we execute on our Better Connected strategy, we are
bolstering our omnichannel capabilities and enhancing the
integration of our banners, brands and channels to create a better
customer experience, an even stronger competitive position and
continued long-term growth," continued Hicks.
FIRST QUARTER HIGHLIGHTS
- CTC's expansive multi-category assortment drove strong
topline growth across its banners; Consolidated retail
sales1 were up 9.7% and consolidated comparable
sales (excluding Petroleum) 1 were up 6.4%
compared to the first quarter of 2021
-
- Canadian Tire Retail (CTR) comparable sales1 grew
4.5%, driven by strong performances in Automotive, hockey and
winter businesses
- Mark's and SportChek had exceptional comparable sales
growth1, up 17.1% and 10.2%, respectively; Mark's was up
double-digits across the vast majority of categories, while demand
for hockey, winter apparel, skis and snowboards drove growth at
SportChek
- eCommerce penetration rate1 remained more than
double pre-pandemic levels, at 8.2%, despite a return to in-store
shopping amid fewer COVID-19-related restrictions compared to Q1 of
2021, particularly in Ontario
- CTC is executing on its Better Connected strategy, unveiled
at the Company's March 2022 Investor
Day
-
- Owned Brands sales1 represented 36.0% of sales in
the quarter; athleisure brand, FWD (Forward with Design), designed
and developed in-house, has now launched at SportChek
- Focused on engaging and attracting Triangle Rewards members; Q1
2022 metrics remained strong, with almost 400,000 new members
joining Triangle Rewards; growth in loyalty sales1 among
the program's 11 million active members was up 13%, outpacing
non-loyalty sales
- Enabling an omnichannel customer experience, with pickup
lockers now in two-thirds of CTR stores and ship-to-home
capabilities enhanced at SportChek with the national expansion of
its DoorDash partnership
- Diluted EPS growth was 23% and 19%, on a normalized basis,
driven by Retail segment performance
-
- Normalized Retail income before income taxes (IBT) 1
grew by $39.7 million, or 35.7%,
primarily driven by a 15.9% increase in revenue
- Financial Services income before taxes was $125.3 million, down slightly compared to
$126.4 million in Q1 2021, which
included a $21.1 million reduction in
the expected credit loss (ECL) allowance
-
- Gross Average Accounts Receivables (GAAR)1 was up
11.8% in the quarter; average active accounts were up almost 8% as
customer activity increased and investments drove new card
acquisition
- Risk levels remain below historic levels
- Quarterly dividend rate to increase starting in September 2022 to $1.625 per share, up 25%, reflecting CTC's
continued focus on a balanced capital allocation approach, which
includes returns to shareholders through dividends and share
repurchases and investing in the growth of the business
(1) The
reader is referred to the notes in the section entitled "NON-GAAP
FINANCIAL MEASURES AND RATIOS AND SUPPLEMENTARY FINANCIAL MEASURES"
of this release for the definition of these items and, where
applicable, for the reconciliation to the most directly comparable
GAAP measure.
|
CONSOLIDATED OVERVIEW
- Retail sales were $3,421.4
million, up $303.6 million or
9.7%, compared to the first quarter of 2021; consolidated
comparable sales (excluding Petroleum) increased 6.4%
- Revenue increased $514.5 million
to $3,837.4 million, up 15.5%;
Revenue (excluding Petroleum)1 increased 12.1% over the
same period last year
- Consolidated IBT was $294.9
million, up 15.9% compared to the first quarter of 2021; and
up 12.8% on a normalized1 basis
- Diluted EPS was $3.03, compared
to $2.47 in the prior year, an
increase of $0.56 per share, or
22.7%; normalized diluted EPS in the quarter was $3.06, an increase of $0.49 per share, or 19.1%
- Retail Return on Invested Capital (ROIC)1 calculated
on a trailing twelve-month basis, was 13.8% at the end of the first
quarter, compared to 12.2% at the end of the first quarter of
2021
- Refer to the Company's Q1 2022 Management Discussion and
Analysis (MD&A) section 4.1.1 for information on normalizing
items and for additional details on events that have impacted the
Company in the quarter
RETAIL SEGMENT OVERVIEW
- Retail revenue increased $481.7
million to $3,504.5 million,
or 15.9%, compared to the prior year. Excluding Petroleum, Retail
revenue1 increased 12.2%.
- Retail sales (excluding Petroleum)1 were up
5.6%
- CTR retail sales1 increased 4.5% in the first
quarter, and comparable sales were up 4.5% over the same period
last year
- SportChek retail sales1 increased 4.5% in the first
quarter, and comparable sales were up 10.2% over the same period
last year
- Mark's retail sales1 increased 17.4% in the first
quarter, and comparable sales were up 17.1% over the same period
last year
- Helly Hansen revenue was up 24.4% compared to the same period
in 2021
- Retail Gross margin for the first quarter was up 12.1%, or
11.7% excluding Petroleum1
- Income before income taxes was $148.8
million, an increase of $46.3
million compared to $102.5
million in the prior year. Normalized income before income
taxes was $150.9 million, an increase
of $39.7 million versus the prior
year.
- Refer to the Company's Q1 2022 MD&A section 4.1.1 for
information on normalizing items and to sections 4.2.1 and 4.2.2
for additional details on events that have impacted the Company in
the quarter
FINANCIAL SERVICES OVERVIEW
- Gross average accounts receivable were up 11.8% relative to
prior year, due to increased cardholder activity with average
active accounts up 7.8% compared to the first quarter of 2021
- Credit card sales growth1 was 26.0% in the
quarter
- Gross margin improved by $9.9
million, or 4.8%, reflecting higher revenue, offset by
higher net impairment losses due to a release of ECL allowance in
Q1 2021
- Income before income taxes was $125.3
million, a decrease of $1.1
million compared to the prior year
- Refer to the Company's Q1 2022 MD&A section 4.3.1 for
additional details on events that have impacted the Company
CT REIT OVERVIEW
- As disclosed in the Q1 2022 CT
REIT earnings release, CT REIT's annual rate of distribution will
increase by 3.4% to $0.86784 per unit
beginning with the July 2022
distribution
- CT REIT announced five new investments, which will require an
estimated total investment of $60
million to complete and which will add approximately 286,000
square feet of incremental gross leasable area to the
portfolio
- CT REIT delivered 1.8% growth in Adjusted Funds From Operations
(AFFO) per unit1 on a diluted basis in the first
quarter
- For further information, refer to the Q1 2022 CT REIT earnings release issued May 9, 2022
CAPITAL ALLOCATION
CAPITAL EXPENDITURES
- Operating capital expenditures1 were $142.0 million in the quarter, compared to
$85.8 million in the first quarter of
2021
- Total capital expenditures were $154.3
million, compared to $89.3
million in the first quarter of 2021
QUARTERLY DIVIDEND
- The Company declared a quarterly dividend payable to holders of
Class A Non-Voting Shares and Common Shares at a rate of
$1.625 per share, representing an
increase of 25% compared to the $1.300 quarterly per share amount paid in the
first quarter of 2022
- The increased dividends will be payable on September 1, 2022 to shareholders of record as of
July 31, 2022. The dividend is
considered an "eligible dividend" for tax purposes.
SHARE PURCHASES
- On November 11, 2021, the Company
announced its intention to purchase up to $400 million of its Class A Non-Voting Shares
(Shares), in excess of the amount required for anti-dilutive
purposes, by the end of fiscal 2022. As at April 2, 2022, the Company had purchased
$225.6 million of the $400 million.
NORMAL COURSE ISSUER BID AND AUTOMATIC SECURITIES
PURCHASE PLAN
- On February 17, 2022, the TSX
accepted the Company's: 1) notice of intention to make a normal
course issuer bid to purchase up to 5.3 million Shares between
March 2, 2022 and March 1, 2023 (the 2022-23 NCIB); and 2) new
automatic securities purchase plan which expires on March 1, 2023 and which allows a designated
broker to purchase Shares under the 2022-23 NCIB during the
Company's blackout periods
(1) NON-GAAP FINANCIAL MEASURES AND RATIOS AND
SUPPLEMENTARY FINANCIAL MEASURES
This press release contains non-GAAP financial measures and
ratios and supplementary financial measures. References below to
the Q1 2022 MD&A mean the Company's Management's Discussion and
Analysis for the First Quarter 2022 for the 13 weeks ended
April 2, 2022, which is available on
SEDAR at www.sedar.com and is incorporated by reference
herein. Non-GAAP measures and non-GAAP ratios have no standardized
meanings under GAAP and may not be comparable to similar measures
of other companies.
(A) Non-GAAP Financial Measures and
Ratios
Normalized Diluted Earnings Per Share (EPS)
Normalized diluted EPS, a non-GAAP ratio, is calculated by
dividing Normalized Net Income Attributable to Shareholders, a
non-GAAP financial measure, by total diluted shares of the Company.
For information about these measures, see section 9.1 of the
Company's Q1 2022 MD&A.
The following table is a reconciliation of normalized net income
attributable to shareholders of the Company to the respective GAAP
measures:
(C$ in
millions)
|
Q1
2022
|
Q1 2021
|
Net income
|
$
217.6
|
$
186.4
|
Net income attributable
to shareholders
|
182.1
|
151.8
|
Add normalizing items:
Operational Efficiency program
|
1.5
|
6.4
|
Normalized net
income
|
$
219.1
|
$
192.8
|
Normalized net
income attributable to shareholders
|
$
183.6
|
$
158.2
|
Normalized diluted
EPS
|
$
3.06
|
$
2.57
|
Consolidated Normalized Income Before Income Taxes and Retail
Normalized Income Before Income Taxes
Consolidated Normalized Income Before Income Taxes and Retail
Normalized Income before Income Taxes are non-GAAP financial
measures. For information about these measures, see section
9.1 of the Company's Q1 2022 MD&A.
The following table reconciles Consolidated Normalized Income
Before Income Taxes to Income Before Income Taxes, which is a GAAP
measure reported in the consolidated financial
statements.
(C$ in
millions)
|
Q1
2022
|
Q1 2021
|
Income before income
taxes
|
$
294.9
|
$
254.5
|
Add normalizing items:
Operational Efficiency program
|
2.1
|
8.7
|
Normalized income
before income taxes
|
$
297.0
|
$
263.2
|
The following table reconciles Retail Normalized Income Before
Income Taxes to Retail Income Before Income Taxes, which is a GAAP
measure reported in the consolidated financial
statements.
(C$ in
millions)
|
Q1
2022
|
Q1 2021
|
Income before income
taxes
|
$
294.9
|
$
254.5
|
Less: Other operating
segments
|
146.1
|
152.0
|
Retail income before
income taxes
|
$
148.8
|
$
102.5
|
Add normalizing items:
Operational Efficiency program
|
2.1
|
8.7
|
Retail normalized
income before income taxes
|
$
150.9
|
$
111.2
|
CT REIT Adjusted Funds from Operations (AFFO) per
unit
AFFO per unit is a non-GAAP ratio that is calculated by dividing
AFFO by the weighted average number of units outstanding on a
diluted basis. AFFO is a non-GAAP financial measure. For more
information about these measures, see section 9.1 of the Company's
Q1 2022 MD&A.
The following table reconciles Income before Income Taxes to
AFFO:
(C$ in
millions)
|
Q1
2022
|
Q1 2021
|
Income before income
taxes
|
$
294.9
|
$
254.5
|
Less: Other operating
segments
|
201.8
|
179.9
|
CT REIT income before
income taxes
|
$
93.1
|
$
74.6
|
Add:
|
|
|
CT REIT
fair value (gain) adjustment
|
(22.1)
|
(4.3)
|
CT REIT
deferred taxes
|
0.5
|
0.7
|
CT REIT
lease principal payments on right-of-use assets
|
(0.1)
|
(0.2)
|
CT REIT
fair value of equity awards
|
0.2
|
0.4
|
CT REIT
internal leasing expense
|
0.2
|
0.2
|
CT REIT funds from
operations
|
$
71.8
|
$
71.4
|
Add:
|
|
|
CT REIT
properties straight-line rent adjustment
|
(0.5)
|
(1.7)
|
CT REIT
capital expenditure reserve
|
(6.3)
|
(6.2)
|
CT REIT adjusted funds
from operations
|
$
65.0
|
$
63.5
|
Retail Return on Invested Capital
Retail Return on Invested Capital (ROIC) is calculated as Retail
return divided by the Retail invested capital. Retail return is
defined as trailing annual Retail after-tax earnings excluding
interest expense, lease related depreciation expense, inter-segment
earnings, and any normalizing items. Retail invested capital is
defined as Retail segment total assets, less Retail segment trade
payables and accrued liabilities and inter-segment balances based
on an average of the trailing four quarters. Retail return and
Retail invested capital are non-GAAP financial measures. For more
information about these measures, see section 9.1 of the Company's
Q1 2022 MD&A.
|
Rolling 12 months
ended
|
(C$ in
millions)
|
Q1
2022
|
Q1 2021
|
Income before income
taxes
|
$ 1,742.2
|
$ 1,423.7
|
Less: Other operating
segments
|
520.2
|
483.3
|
Retail income before
income taxes
|
$ 1,222.0
|
$
940.4
|
Add normalizing items:
Operational Efficiency program
|
34.3
|
57.9
|
Retail normalized
income before income taxes
|
$ 1,256.3
|
$
998.3
|
Less:
|
|
|
Retail
intercompany adjustments1
|
198.2
|
191.6
|
Add:
|
|
|
Retail
interest expense2
|
245.5
|
273.2
|
Retail
depreciation of right-of-use assets
|
550.5
|
523.0
|
Retail effective tax
rate
|
27.0
%
|
29.0 %
|
Add: Retail
taxes
|
(499.9)
|
(465.2)
|
Retail
return
|
$ 1,354.2
|
$ 1,137.7
|
|
|
|
Average total
assets
|
$
21,491.6
|
$
20,337.5
|
Less:
|
|
|
Average
Financial Services assets
|
7,620.1
|
7,271.9
|
Average
CT REIT assets
|
6,444.9
|
6,154.5
|
Average
Eliminations and adjustments
|
(9,046.6)
|
(8,812.2)
|
Average Retail
assets
|
$
16,473.2
|
$
15,723.3
|
Less:
|
|
|
Average
Retail intercompany adjustments1
|
3,432.5
|
3,397.9
|
Average
Retail trade payables and accrued
liabilities3
|
2,583.5
|
2,405.9
|
Average
Franchise Trust assets
|
482.1
|
553.9
|
Average
Retail excess cash
|
167.4
|
14.0
|
Average Retail
invested capital
|
$ 9,807.7
|
$ 9,351.6
|
Retail
ROIC
|
13.8
%
|
12.2 %
|
1
Intercompany adjustments include
intercompany income received from CT REIT which is included in the
Retail segment, and intercompany investments made by the Retail
segment in CT REIT and CTFS.
|
2
Excludes Franchise
Trust.
|
3
Trade payables and accrued
liabilities include trade and other payables, short-term derivative
liabilities, short-term provisions and income tax
payables.
|
Operating Capital Expenditures
Operating capital expenditures is a non-GAAP financial measure.
For more information about this measure, see section 9.1 of the
Company's Q1 2022 MD&A.
The following table reconciles total additions from the
Investing activities reported in the Consolidated Statement of Cash
Flows to Operating capital expenditures:
(C$ in
millions)
|
Q1
2022
|
Q1 2021
|
Total
additions1
|
$
160.0
|
$
111.8
|
Add: Accrued
additions
|
(5.7)
|
(22.5)
|
Less:
|
|
|
Business
combinations, intellectual properties and tenant
allowances
|
—
|
—
|
CT REIT
acquisitions and developments excluding vend-ins from
CTC
|
12.3
|
3.5
|
Operating capital
expenditures
|
$
142.0
|
$
85.8
|
1 This line appears on
the Consolidated Statement of Cash Flows under Investing
activities.
|
(B) Supplementary Financial Measures and Ratios
The measures below are supplementary financial measures.
See Section 9.2 (Supplementary
Financial Measures) of the Company's Q1 2022 MD&A for
information on the composition of these measures.
- Consolidated retail sales
- Consolidated Comparable sales (excluding Petroleum)
- Revenue (excluding Petroleum)
- Retail revenue (excluding Petroleum)
- Retail sales
- CTR comparable and retail sales
- eCommerce penetration rate
- Owned Brands sales
- SportChek comparable and retail sales
- Mark's comparable and retail sales
- Retail Gross Margin (excluding Petroleum)
- Gross Average Accounts Receivables (GAAR)
- Credit card sales growth
- Loyalty sales
To view a PDF version of Canadian Tire Corporation's full
quarterly earnings report please see:
https://mma.prnewswire.com/media/1816367/Q1_2022_Combined_MDA_and_Financial_Statements__Final_Release.pdf
FORWARD-LOOKING STATEMENTS
Certain statements made in
this press release may constitute forward-looking information under
applicable securities laws. These statements are being provided for
the purposes of providing information about management's current
expectations and plans and allowing investors and others to get a
better understanding of our anticipated financial position, results
of operations and operating environment. Readers are cautioned that
such information may not be appropriate for other purposes.
Although CTC believes that the forward-looking information in this
press release is based on information, assumptions and beliefs
which are current, reasonable and complete, this information is
necessarily subject to a number of factors, risks and
uncertainties, that could cause actual results to differ materially
from management's expectations and plans as set forth in such
forward-looking information. For more information on the
risks, uncertainties and assumptions that could cause CTC's actual
results to differ from current expectations, refer to section 10.0
(Key Risks and Risk Management) of the Company's Q1 2022 MD&A
as well as CTC's other public filings, available at
www.sedar.com and at https://investors.canadiantire.ca. CTC
does not undertake to update any forward-looking information,
whether written or oral, that may be made from time to time by it
or on its behalf, to reflect new information, future events or
otherwise, except as is required by applicable securities laws.
CONFERENCE CALL
Canadian Tire will conduct a
conference call to discuss information included in this news
release and related matters at 8:00 a.m.
ET on May 12, 2022. The
conference call will be available simultaneously and in its
entirety to all interested investors and the news media through a
webcast at https://investors.canadiantire.ca and will be
available through replay at this website for 12 months.
ABOUT CANADIAN TIRE CORPORATION
Canadian Tire
Corporation, Limited, (TSX: CTC.A) (TSX: CTC) or "CTC", is a group
of companies that includes a Retail segment, a Financial Services
division and CT REIT. Our retail business is led by Canadian Tire,
which was founded in 1922 and provides Canadians with products for
life in Canada across its Living,
Playing, Fixing, Automotive and Seasonal & Gardening divisions.
Party City, PartSource and Gas+ are key parts of the Canadian Tire
network. The Retail segment also includes Mark's, a leading source
for casual and industrial wear; Pro Hockey Life, a hockey specialty
store catering to elite players; and SportChek, Hockey Experts,
Sports Experts and Atmosphere, which offer the best active wear
brands. The more than 1,700 retail and gasoline outlets are
supported and strengthened by CTC's Financial Services
division and the tens of thousands of people employed across
Canada and around the world by CTC
and its local dealers, franchisees and petroleum retailers. In
addition, CTC owns and operates Helly Hansen, a leading technical
outdoor brand based in Oslo,
Norway. For more information, visit
Corp.CanadianTire.ca.
FOR MORE INFORMATION
Media: Jane
Shaw, (416) 480-8581, jane.shaw@cantire.com
Investors: Karen Keyes, (647)
518-4461, karen.keyes@cantire.com
SOURCE CANADIAN TIRE CORPORATION, LIMITED