TORONTO, Nov. 10,
2022 /CNW/ - Canadian Tire Corporation, Limited
(TSX: CTC) (TSX: CTC.A) ("CTC" or the "Company") today released its
third quarter results for the period ended October 1, 2022.
- Consolidated revenue grew 8.1%; Retail segment revenue was up
7.4%
- Diluted Earnings Per Share (EPS) was $3.14; normalized diluted EPS1 was
$3.34
- Annualized dividend increased to $6.90 per share; share buyback program renewed
with intention to repurchase between $500
million and $700 million Class
A Non-Voting Shares
"In the third quarter, we effectively engaged our loyalty
customers, resulting in increased spending per Triangle Member,
with total loyalty sales outpacing non-member sales – a trend we
expect to continue," said Greg
Hicks, President and CEO, Canadian Tire Corporation. "We
remain committed to the strategic growth investments we laid out as
part of our Better Connected strategy, and in the
near-term, we will face into changing customer demand and a dynamic
economic environment with the confidence that our multi-category
assortment is well-positioned to meet our customer needs."
"Throughout its long history, Canadian Tire Corporation has
consistently demonstrated the underlying strength and resilience of
its business and its ability to deliver steady growth and returns
to its shareholders," said Hicks.
THIRD QUARTER HIGHLIGHTS
- Consolidated retail sales1 were up 2.8%;
consolidated comparable sales (excluding Petroleum)1
were up 0.7%, taking year to date consolidated comparable sales
(excluding Petroleum) to 3.8%
-
- Canadian Tire Retail (CTR) comparable sales1 were up
0.7% against Q3 of 2021; Seasonal and Gardening and Automotive
drove growth in the quarter
- Mark's comparable sales1 grew 3.6% against a
strong quarter in 2021, as demand for casualwear and industrial
apparel remained robust
- SportChek cycled an exceptional back-to-school quarter in the
prior year, with a 1.0% decline in comparable sales1;
growth in categories such as cycling and casual clothing partially
offset the decline in athletic clothing and footwear
- Triangle Loyalty member sales outpaced retail sales, driven by
an increase in active members and spend per member
- The Company continued to prioritize organic growth
investments and returns to shareholders, as set out in its Better
Connected strategy
-
- Investments continue to be aimed at delivering a better
omnichannel customer experience, with the first two Remarkable
Retail stores opened in Ottawa and
in the Niagara region (Welland)
since the end of the third quarter, and pick-up lockers now rolled
out to close to 80% of CTR stores
- Strengthening the Company's supply chain fulfillment
infrastructure remains a focus. In addition to existing investments
in new distribution centres in Calgary and the Greater Toronto Area, the Company has signed a
lease on a new 385,000 square foot distribution centre in
Richmond, BC, to support
longer-term sales growth in Western
Canada.
- The Company increased its annual dividend for the 13th
consecutive year to $6.90 per share
commencing in March 2023, a
cumulative quarterly dividend increase of 33% since last year
- With the completion of its $400
million share repurchase program, the Company has announced
its intention to repurchase an additional $500 million to $700
million Class A Non-Voting shares by the end of 2023
- Diluted EPS was $3.14;
normalized diluted EPS was $3.34,
down 20.5%, reflecting lower Retail income before income taxes
(IBT), partially offset by a strong performance in Financial
Services
-
- Retail segment IBT was down $93.5
million in the quarter to $133.0
million; strong Retail segment revenue was at a lower Retail
gross margin rate, mainly due to higher freight and product cost
inflation. A further $14 million of
the IBT variance was attributable to foreign exchange impacts at
Helly Hansen.
- Financial Services delivered strong quarterly IBT, up
$21.9 million to $139.6 million on revenue growth of 17.2%
CONSOLIDATED OVERVIEW
- Revenue increased 8.1% to $4,228.8
million; Revenue (excluding Petroleum)1 increased
6.0% over the same period last year, with the Retail and Financial
Services segments both contributing to growth; on a year-to-date
basis, Revenue was up 11.8%, and Revenue (excluding Petroleum)
increased 7.8%
- Consolidated IBT was $298.6
million, down 19.3% compared to the third quarter of 2021,
and $314.5 million, down 19.1%, on a
normalized1 basis
- Normalized diluted EPS was $3.34,
compared to $4.20 in the prior year.
Q3 2022 Diluted EPS was $3.14 per
share, compared to $3.97 in the prior
year.
- Retail Return on Invested Capital (ROIC)1 calculated
on a trailing twelve-month basis, was 12.5% at the end of the third
quarter, compared to 13.2% at the end of the third quarter of 2021,
as Average Retail Invested Capital increased over the prior
period
- Refer to the Company's Q3 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 was $3,873.7
million, an increase of $266.6
million, or 7.4%, compared to the prior year. Excluding
Petroleum, Retail revenue1 increased 5.0%.
- Retail sales were $4,734.2
million, up 2.8%, compared to the third quarter of 2021 and
Retail sales (excluding Petroleum)1 were up 0.6%;
consolidated comparable sales increased 0.7%
- CTR retail sales1 increased 0.6% in the quarter, and
comparable sales were up 0.7% over the same period last year
- SportChek retail sales1 were down 1.5% in the
quarter, and comparable sales were down 1.0% over the same period
last year
- Mark's retail sales1 increased 3.9% in the quarter,
and comparable sales were up 3.6% over the same period last
year
- Helly Hansen revenue was up 8.4% compared to the same period in
2021
- Retail Gross margin for the third quarter was up 0.9%, or 0.6%
excluding Petroleum1
- Retail IBT was $133.0 million,
compared to $226.5 million in the
prior year. Normalized income before income taxes1 was
$148.8 million. Strong revenue growth
was offset by the impacts of higher freight and product cost
inflation on gross margin and lower other income, mainly in
relation to foreign exchange impacts.
- Refer to the Company's Q3 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 ("GAAR")1 was up
14.2% relative to prior year, and average active accounts were up
7.1%. Customer activity and account balances were both up in the
quarter
- Credit card sales growth1 was 14.1% in the quarter,
compared to 23.3% in the same quarter in the prior year
- Gross margin was $218.1 million,
an increase of $18.6 million, or 9.3%
compared to the prior year, mainly due to strong revenue growth,
partially offset by higher net impairment losses
- IBT was $139.6 million, up
$21.9 million compared to the prior
year
- Refer to the Company's Q3 2022 MD&A section 4.3.1 and 4.3.2
for additional details on events that have impacted the
Company
CT REIT OVERVIEW
- CT REIT announced three new investments totalling $47 million, which will add approximately 192,000
square feet of incremental gross leasable area to its portfolio,
including a new Canadian Tire store development in its core market
of Toronto
- Distributions per unit were $0.217, up 3.3% compared to the third quarter of
2021
- For further information, refer to the Q3 2022 CT REIT earnings release issued on
November 7, 2022
CAPITAL ALLOCATION
CAPITAL EXPENDITURES
- Operating capital expenditures1 were $203.2 million in the quarter, compared to
$203.1 million in the third quarter
of 2021
- Total capital expenditures were $231.7
million, compared to $221.2
million in the third quarter of 2021
QUARTERLY DIVIDEND
- The Company increased its annual dividend for the 13th
consecutive year to $6.90 per share,
a cumulative quarterly dividend increase of 33% since last year as
a result of dividend increases approved on May 12, 2022, and November
9, 2022
- The Company declared dividends payable to holders of Class A
Non-Voting Shares and Common Shares at a rate of $1.725 per share, payable on March 1, 2023, to shareholders of record as of
January 31, 2023. The dividend is
considered an "eligible dividend" for tax purposes
SHARE REPURCHASES
- On November 11, 2021, the Company
announced its intention to repurchase up to $400 million of its Class A Non-Voting Shares, in
excess of the amount required for anti-dilutive purposes, by the
end of 2022 (the "2021-22 share repurchase intention"). In
September 2022, the Company completed
its repurchases under the 2021-22 share repurchase intention.
- On November 10, 2022, the Company
announced its intention to repurchase an additional $500 million to $700
million of its Class A Non-Voting Shares, in excess of the
amount required for anti-dilutive purposes, by the end of 2023
- The share repurchases will commence under the Company's
previously announced normal course issuer bid, which expires on
March 1, 2023, and will thereafter be
renewed, subject to regulatory approvals
(1) NON-GAAP FINANCIAL MEASURES AND RATIOS AND
SUPPLEMENTARY FINANCIAL MEASURES
This press release contains non-GAAP financial measures and
ratios and supplementary financial measures. References below to
the Q3 2022 MD&A mean the Company's Management's Discussion and
Analysis for the Third Quarter 2022 for the 39 weeks ended
October 1, 2022, which is available
on SEDAR at www.sedar.com and is incorporated by
reference herein. Non-GAAP measures and non-GAAP ratios have no
standardized meanings under GAAP and may not be comparable to
similar measures of other companies.
(A) Non-GAAP Financial Measures and
Ratios
Normalized Diluted Earnings per Share (EPS)
Normalized diluted EPS, a non-GAAP ratio, is calculated by
dividing Normalized Net Income Attributable to Shareholders, a
non-GAAP financial measure, by total diluted shares of the Company.
For information about these measures, see section 9.1 of the
Company's Q3 2022 MD&A.
The following table is a reconciliation of normalized net income
attributable to shareholders of the Company to the respective GAAP
measures:
|
|
|
YTD
|
YTD
|
(C$ in
millions)
|
Q3
2022
|
Q3 2021
|
Q3
2022
|
Q3 2021
|
Net income
|
$
|
225.0
|
$
|
279.5
|
$
|
620.2
|
$
|
725.0
|
Net income attributable
to shareholders
|
184.9
|
243.7
|
512.2
|
619.1
|
Add normalizing
items:
|
|
|
|
|
Operational Efficiency
program
|
$
|
11.6
|
$
|
13.9
|
$
|
20.3
|
$
|
25.3
|
Helly Hansen Russia
exit
|
—
|
—
|
33.4
|
—
|
Normalized net
income
|
$
|
236.6
|
$
|
293.4
|
$
|
673.9
|
$
|
750.3
|
Normalized net
income attributable to shareholders
|
|
196.5
|
$
|
257.6
|
$
|
565.9
|
$
|
644.4
|
Normalized diluted
EPS
|
$
|
3.34
|
$
|
4.20
|
|
9.49
|
$
|
10.49
|
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 Q3 2022 MD&A.
The following table reconciles Consolidated Normalized Income
Before Income Taxes to Income Before Income Taxes:
|
|
|
YTD
|
YTD
|
(C$ in
millions)
|
Q3
2022
|
Q3 2021
|
Q3
2022
|
Q3 2021
|
Income before income
taxes
|
$
|
298.6
|
$
|
369.9
|
$
|
831.6
|
$
|
981.9
|
Add normalizing
items:
|
|
|
|
|
Operational Efficiency
program
|
15.8
|
18.9
|
27.6
|
34.4
|
Helly Hansen Russia
exit
|
—
|
—
|
36.5
|
—
|
Normalized income
before income taxes
|
$
|
314.4
|
$
|
388.8
|
$
|
895.7
|
$
|
1,016.3
|
The following table reconciles Retail Normalized Income Before
Income Taxes to Retail Income Before Income Taxes:
|
|
|
YTD
|
YTD
|
(C$ in
millions)
|
Q3
2022
|
Q3 2021
|
Q3
2022
|
Q3 2021
|
Income before income
taxes
|
$
|
298.6
|
$
|
369.9
|
$
|
831.6
|
$
|
981.9
|
Less: Other operating
segments
|
165.6
|
143.4
|
426.0
|
444.3
|
Retail income before
income taxes
|
$
|
133.0
|
$
|
226.5
|
$
|
405.6
|
$
|
537.6
|
Add normalizing
items:
|
|
|
|
|
Operational Efficiency
program
|
15.8
|
18.9
|
27.6
|
34.4
|
Helly Hansen Russia
exit
|
—
|
—
|
36.5
|
—
|
Retail normalized
income before income taxes
|
$
|
148.8
|
$
|
245.4
|
$
|
469.7
|
$
|
572.0
|
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
Q3 2022 MD&A.
|
Rolling 12 months
ended
|
(C$ in
millions)
|
Q3
2022
|
Q3 2021
|
Income before income
taxes
|
$
|
1,551.6
|
$
|
1,700.5
|
Less: Other operating
segments
|
507.9
|
584.9
|
Retail income before
income taxes
|
$
|
1,043.7
|
$
|
1,115.6
|
Add normalizing
items:
|
|
|
Operational Efficiency
program
|
34.1
|
69.6
|
Helly Hansen Russia
exit
|
36.5
|
—
|
Retail normalized
income before income taxes
|
$
|
1,114.3
|
$
|
1,185.2
|
Less:
|
|
|
Retail intercompany
adjustments1
|
203.5
|
194.7
|
Add:
|
|
|
Retail interest
expense2
|
238.5
|
259.2
|
Retail depreciation of
right-of-use assets
|
574.8
|
535.1
|
Retail effective tax
rate
|
26.7 %
|
28.2 %
|
Add: Retail
taxes
|
(459.8)
|
(503.4)
|
Retail
return
|
$
|
1,264.3
|
$
|
1,281.4
|
|
|
|
Average total
assets
|
$
|
21,633.1
|
$
|
21,007.8
|
Less: Average assets in
other operating segments
|
4,590.2
|
4,870.9
|
Average Retail
assets
|
$
|
17,042.9
|
$
|
16,136.9
|
Less:
|
|
|
Average Retail
intercompany adjustments1
|
3,521.4
|
3,415.3
|
Average Retail trade
payables and accrued liabilities3
|
2,855.2
|
2,439.2
|
Average Franchise Trust
assets
|
446.2
|
527.4
|
Average Retail excess
cash
|
114.4
|
67.1
|
Average Retail
invested capital
|
$
|
10,105.7
|
$
|
9,687.9
|
Retail
ROIC
|
12.5 %
|
13.2 %
|
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 Q3 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:
|
YTD
|
YTD
|
(C$ in
millions)
|
Q3
2022
|
Q3 2021
|
Total
additions1
|
$
|
539.3
|
$
|
435.3
|
Add: Accrued
additions
|
34.9
|
45.5
|
Less:
|
|
|
Business combinations,
intellectual properties and tenant allowances
|
—
|
(14.3)
|
CT REIT acquisitions
and developments excluding vend-ins from CTC
|
60.2
|
46.2
|
Operating capital
expenditures
|
$
|
514.0
|
$
|
448.9
|
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 Q3 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 and retail sales (excluding Petroleum)
- CTR comparable and retail 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
To view a PDF version of Canadian Tire Corporation's full
quarterly earnings report please see:
https://mma.prnewswire.com/media/1943423/CANADIAN_TIRE_CORPORATION__LIMITED_Canadian_Tire_Corporation_Rep.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 Q3
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 November 10, 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