TORONTO, Aug. 14, 2019 /CNW/ - Leon's Furniture
Limited ("Leon's" or the "Company") (TSX:
LNF), today announced financial results for the second quarter
2019.
Financial Highlights – Q2-2019
- Total system wide sales (1) were $667,637,000 in Q2-2019 compared to $650,012,000 in Q2-2018, an increase of
2.7%.
- Achieved record revenue in the quarter of $560,872,000 compared to $546,729,000 in Q2-2018, an increase of
2.6%.
- Same-store sales (1) increased 1.9% in Q2-2019
compared to Q2-2018, an increase of $10,165,000.
- Gross profit margin improved by 40 bps to 43.53% in Q2-2019
from 43.13% in Q2-2018.
- Adjusted diluted earnings per share (1)(2) grew by
21.4% to a record $0.34 in Q2-2019
from $0.28 in Q2-2018 which excludes
the impact of IFRS 16 in Q2-2019(3)
- Adjusted EBITDA (1)(3) increased 68.7% in Q2-2019 to
$71,363,000 from $42,291,000 in Q2-2018, excluding the impact of
IFRS 16(3) adjusted EBITDA increased 16.1% in Q2-2019 to
$49,105,000.
- Net debt including the convertible debentures totaled
$50,270,000 at June 30, 2019 compared to $110,737,000 at June 30,
2018.
- Since acquiring The Brick Ltd. in 2013, over $350,000,000 in total debt has been repaid to
date.
Financial Highlights – Six months ended June 30th, 2019
- Total system wide sales (1) were $1,264,854,000 year to date June 2019 compared to $1,251,153,000 year to date June 2018, an increase of 1.1%.
- Revenue increased 1.3% to $1,060,613,000 compared to $1,047,448,000 year to date June 2018.
- Same-store sales (1) increased 0.5% year to date
June 2019 compared to year to date
June 2018.
- Gross profit margin improved by 43 bps to 43.4% year to date
June 2019 compared to 42.97% year to
date June 2018.
- Adjusted diluted earnings per share (1)(2) grew by
21.4% to $0.51 year to date
June 2019 compared to $0.42 year to date June
2018, which excludes the impact of IFRS 16 on January 1, 2019.
|
(1)
|
Refer to the
"Non-IFRS Financial Measures" section of this press release for
additional information on these measures.
|
(2)
|
For comparative
purposes to the prior year's results the adjusted diluted earnings
per share amount of $0.34 and $0.51 for the three and six months
ended June 30, 2019 in the highlights above has been adjusted to
exclude the impact of the implementation by the Company of
IFRS 16 beginning on January 1, 2019.
|
(3)
|
The Company
implemented IFRS 16, "Leases", on January 1, 2019 using the
modified retrospective approach as a result the comparative periods
have not been restated. Adjusted EBITDA for the three months
ended June 30, 2019 (excluding the impact of IFRS 16)
increased 16.1% in Q2-2019 to $49,106,000.
|
Edward Leon, President and Chief
Executive Officer of LFL Group commented, "During the second
quarter, the efforts of our associates across the country drove
record top and bottom-line performance in a challenging retail
environment. Targeted investments in innovative marketing campaigns
during the quarter generated positive same store sales, revenue
growth across all product categories and strong returns in the form
of gross margin expansion. Revenue in our e-commerce retail
channel continues to grow at a double-digit pace supported by our
strategic investment in technology and personnel. We see this pace
continuing on a sustained basis."
Mr. Leon continued, "In June, we opened our 85th
Leon's store in Coquitlam, British
Columbia. This 15,000 sq. ft. store is our first location to
be opened under our innovative smart store concept. We
are generating strong early sales and efficiency results from this
new store concept. We anticipate leveraging the best practices
from this location to drive a multi-year program across the rest of
our national retail network in our relentless pursuit of growth in
shareholder value."
The Directors have also approved, subject to obtaining
regulatory approvals, the reinstatement of the Company's Normal
Course Issuer Bid, which will expire on September 9, 2019. Pursuant to the bid, the
Company intends, in the twelve months commencing September 10, 2019, to purchase up to the lesser
of 4.99% of its Common Shares outstanding on August 31, 2019, and the amount equal to 4.99% of
its Common Shares outstanding on the date the Toronto Stock
Exchange accepts the notice of intention to make a normal course
issuer bid.
For a full explanation of the Company's use of non-IFRS
financial measures, please refer to the section of this press
release with the heading "Non-IFRS Financial
Measures".
Summary of Financial Highlights
|
|
|
For the three
months ended June 30
|
|
|
|
|
|
(000's of $ except
% and per share amounts)
|
2019
|
2018
|
$
Increase
|
%
Increase
|
Total system wide
sales (1)
|
667,637
|
650,012
|
17,625
|
2.7%
|
Franchise sales
(1)
|
106,765
|
103,283
|
3,482
|
3.4%
|
Revenue
|
560,872
|
546,729
|
14,143
|
2.6%
|
Same store sales
(1)
|
544,116
|
533,951
|
10,165
|
1.9%
|
Gross profit margin
as a percentage of revenue
|
43.53%
|
43.13%
|
|
|
SG&A(2)(3)
|
203,596
|
203,236
|
360
|
0.2%
|
SG&A(2)(3)as a percentage of
revenue
|
36.30%
|
37.17%
|
|
|
Adjusted
EBITDA(1)(2)(4)
|
71,363
|
42,291
|
29,072
|
68.7%
|
Adjusted net
income(1)(2)(5)
|
28,736
|
22,595
|
6,141
|
27.2%
|
Adjusted diluted
earnings per share(1)(2)(5)
|
$
|
0.34
|
$
|
0.28
|
$
|
0.06
|
21.4%
|
Net income
(2)
|
25,042
|
23,975
|
1,067
|
4.5%
|
Common share
dividends declared
|
$
|
0.14
|
$
|
0.12
|
$
|
0.02
|
16.7%
|
|
|
(1)
|
Refer to the
"Non-IFRS Financial Measures" section of this press release for
additional information on these measures.
|
(2)
|
The Company
implemented IFRS 16, "Leases", on January 1, 2019 using the
modified retrospective approach as a result the comparative quarter
has not been restated.
|
(3)
|
Selling, general
and administrative expenses.
|
(4)
|
Adjusted EBITDA in
Q2-2019 (excluding the impact of IFRS 16) increased
16.1% in Q1-2019 to $49,105,000.
|
(5)
|
For comparative
purposes to the prior year's quarter of 2018 the adjusted net
income of $28,736,000 and the diluted EPS amount of $0.34 in
Q2-2019 in the highlights table above has been adjusted and
presented to exclude the impact of the implementation by the
Company of IFRS 16 beginning on January 1, 2019. Refer
to the "Non-IFRS Financial Measures" section of this press
release.
|
Revenue
For the three months ended June 30,
2019, revenue was $560,872,000
compared to $546,729,000 in the prior
year's second quarter. Revenue increased $14,143,000 or 2.6% between the comparative
quarters as we had sales growth in all product categories.
Same Store Sales (1)
Overall, same store corporate sales increased 1.9% compared to
the prior year's second quarter.
Gross Profit
The gross profit margin for the second quarter 2019 increased
from 43.13% to 43.53% compared to the prior year's second quarter
as a result of a favourable product mix of furniture and mattress
sales.
Selling, general and administrative expenses
Normalized for the impacts of IFRS 16 in the current quarter,
the Company's SG&A as a percentage of revenue was 36.34% as
compared to 37.17% in the prior year's quarter. The decrease
of 83 bps quarter over quarter was due to effectively managing
payroll costs, reducing digital commerce expenses and optimizing
retail financing costs associated to interest-free promotional
sales offers while at the same time increasing advertising spend in
the current quarter that was targeted to drive customers to the
Company's websites and retail stores.
Adjusted EBITDA (1)
Adjusted EBITDA increased $29,072,000 in the quarter, an increase of 68.7%
as compared to the prior year's quarter. This increase was
driven primarily by two factors, the first is the implementation of
IFRS 16 by the Company commencing on January
1, 2019 on a modified retrospective approach, which results
in the prior year's quarter to not be restated, and the second was
due to improvement in gross margin percentage in the current
quarter aided by a higher degree of operating leverage and a
reduction in net finance costs that exclude the impact of IFRS
16. Under the new lease standard, the depreciation expense on
leased assets and interest expense on lease liabilities replaced
rent expense, which was previously recognized on a straight-line
basis in operating income under IAS 17 over the term of the
lease. Therefore, excluding the impact of implementing the
new lease standard, adjusted EBITDA increased $6,814,000 in the quarter, an increase of 16.1%
over the prior year's quarter, with the remainder of the overall
increase of $22,258,000 driven solely
by the change in the lease standard implemented by the Company on
January 1, 2019.
Adjusted Net Income (1) and Adjusted Diluted
Earnings Per Share (1)
Adjusted net income increased $2,442,000 in the quarter due to the Company
implementing IFRS 16 on January 1,
2019 using the modified retrospective approach. As a result,
the Company's second quarter of 2019 reflects lease accounting
under IFRS 16, while the comparison quarter has not been restated.
Normalized for the quarter-over-quarter after tax impact of
$3,699,000 due to a net increase in
depreciation expense and lease interest expense offset by a
reduction in rent expense related to the IFRS 16 implementation in
the current quarter, adjusted net income in the current quarter
totaled $28,736,000 an increase of
$6,141,000 or 27.2% over the prior
year's quarter. As a result of these adjustments, adjusted
diluted earnings per share for the Company increased by
$0.06 to $0.34 per share, an increase of 21.4% over the
prior year's quarter.
(1)
|
Refer to the
"Non-IFRS Financial Measures" section of this press
release
|
Consolidated operating results for the six months ended
June 30, 2019 and June 30, 2018
|
|
|
For the six months
ended June 30
|
(000's of $ except
% and per share amounts)
|
2019
|
2018
|
$ Increase/
(Decrease)
|
% Increase/
(Decrease)
|
Total system wide
sales (1)
|
1,264,854
|
1,251,153
|
13,701
|
1.1%
|
Franchise sales
(1)
|
204,241
|
203,705
|
536
|
0.3%
|
Revenue
|
1,060,613
|
1,047,448
|
13,165
|
1.3%
|
Same store sales
(1)
|
1,029,265
|
1,024,020
|
5,245
|
0.5%
|
Gross profit margin
as a percentage of revenue
|
43.40%
|
42.97%
|
|
|
SG&A(2)(3)
|
400,818
|
400,138
|
680
|
0.2%
|
SG&A(2)(3)as a percentage of
revenue
|
37.79%
|
38.20%
|
|
|
Adjusted
EBITDA(1)(2)(4)
|
122,033
|
68,867
|
53,166
|
77.2%
|
Adjusted net
income(1)(2)(5)
|
42,661
|
34,140
|
8,521
|
25.0%
|
Adjusted diluted
earnings per share(1)(2)(5)
|
$
|
0.51
|
$
|
0.42
|
$
|
0.09
|
21.4%
|
Net income
(2)
|
34,376
|
38,501
|
(4,125)
|
(10.7%)
|
Common share
dividends declared
|
$
|
0.28
|
$
|
0.24
|
$
|
0.04
|
16.7%
|
|
|
(1)
|
Refer to the
"Non-IFRS Financial Measures" section of this press release for
additional information on these measures.
|
(2)
|
The Company
implemented IFRS 16, "Leases", on January 1, 2019 using the
modified retrospective approach as a result the comparative period
has not been restated.
|
(3)
|
Selling, general
and administrative expenses.
|
(4)
|
Adjusted EBITDA
for year to date June 2019 (excluding the impact of IFRS
16) increased 13% to $77,846,000.
|
(5)
|
For comparative
purposes to the prior year's year to date June 2018 the adjusted
net income of $42,661,000 and the diluted EPS amount of $0.51 for
year to date June 2019 in the highlights table above has been
adjusted and presented to exclude the impact of the implementation
by the Company of IFRS 16 beginning on January 1,
2019. Refer to the "Non-IFRS Financial Measures" section of
this press release.
|
Revenue
For the six months ended June 30,
2019, revenue was $1,060,613,000 compared to $1,047,448,000 in the prior year's six-month
period, an increase of 1.3%.
Same Store Sales (1)
Overall, same store corporate sales increased 0.51% compared to
the prior year's six months ended June 30,
2018.
Gross Profit
The gross profit margin for the six months ended June 30, 2019 was 43.40% as compared to 42.97% in
the prior year's six months period, an increase of 43 bps.
This increase was due to a continued favourable product mix during
the first half of 2019.
Selling, general and administrative expenses
Excluding the impact of IFRS 16, the Company's SG&A as a
percentage of revenue for the six months ended was 37.76% as
compared to 38.20% in prior year's six months ended, a reduction of
44 bps. This was primarily due to effectively managing the
Company's payroll costs and due to the continued effectiveness of
controlling operating expenses while at the same time increasing
advertising spend to drive customer traffic, both to the online and
in-store sales channel.
Adjusted EBITDA (1)
Adjusted EBITDA increased $53,166,000 during the six months ended
June 30, 2019, an increase of 77.2%
as compared to the prior year's six month period. This
increase has been driven primarily by two factors, the first is the
implementation of IFRS 16 by the Company commencing on January 1, 2019 on a modified retrospective
approach, which results in the prior year six-month period to not
be restated, and the second was due to improvement in gross margin
percentage in the current six-month period aided by a higher degree
of operating leverage and a reduction in net finance costs that
exclude the impact of IFRS 16. Under the new lease standard,
the depreciation expense on leased assets and interest expense on
lease liabilities replaced rent expense, which was previously
recognized on a straight-line basis in operating income under IAS
17 over the term of the lease. Excluding the impact of
implementing the new lease standard, adjusted EBITDA increased
$8,979,000 in the six-month period,
an increase of 13% over the six months ended June 30, 2018, with the remainder of the overall
increase of $44,187,000 driven solely
by the change in the lease standard implemented by the Company on
January 1, 2019.
Adjusted Net Income (1) and Adjusted Diluted
Earnings Per Share (1)
The Company's results for the six months ended June 30, 2019, reflects lease accounting under
IFRS 16, while the prior year's six months ended June 30, 2018, has not been restated as permitted
using the modified retrospective approach. Therefore,
excluding the after tax impact of $8,210,000 due to a net increase in depreciation
and amortization expense and lease interest expense offset by a
reduction in rent expense related to the IFRS 16 implementation in
the current six-month period, adjusted net income in the six-month
period ending June 30, 2019 totaled
$42,661,000 an increase of
$8,521,000 or 25% over the six-month
period ending June 30, 2018. As
a result of these adjustments, adjusted diluted earnings per share
for the Company increased $0.09 to
$0.51 per share, an increase of 21.4%
over prior year-to-date adjusted diluted earnings per share.
Dividends
As previously announced, we paid a quarterly 14¢ dividend on
July 8, 2019. Today we are happy to
announce that the Directors have declared a quarterly dividend of
14¢ per common share payable on the 7th day of
October 2019 to shareholders of
record at the close of business on the 6th day of
September 2019. As of 2007, dividends
paid by Leon's Furniture Limited are "eligible dividends" pursuant
to the changes to the Income Tax Act under Bill C-28, Canada.
Outlook
Despite the uncertainty over certain key economic indicators, we
believe that the overall economy remains relatively strong.
Although it is difficult to gauge future consumer confidence and
what impact it may have on retail, we remain confident that our
sales and profitability will increase. Given the Company's
strong financial position, our principal objective is to increase
market share and profitability. We remain focused on our commitment
to continuously invest in digital innovation that will drive more
customers to both our online eCommerce presence and our 304
physical locations across Canada.
(1)
|
Refer to the
"Non-IFRS Financial Measures" section of this press
release
|
Store Network
The Company has 304 retail stores from coast to coast in
Canada under the various banners
indicated below which also includes 98 franchise locations.
Including our franchises, there are over 10,000 employees across
Canada.
The following table illustrates the Company's store count
continuity from March 31, 2019 to
June 30, 2019 by retail banner:
Corporate
Stores
|
|
At March 31,
2019
|
Opened
|
Closed
|
At June 30,
2019
|
Leon's
|
|
50
|
1
|
—
|
51
|
Appliance
Canada
|
|
5
|
—
|
—
|
5
|
The Brick
(1)
|
|
114
|
—
|
—
|
114
|
The Brick
Mattress Store
|
|
26
|
—
|
—
|
26
|
Brick
Outlet
|
|
10
|
—
|
—
|
10
|
Corporate
Subtotal
|
|
205
|
1
|
—
|
206
|
|
|
|
|
|
|
Franchise
Stores
|
|
|
|
|
|
Leon's
|
|
34
|
—
|
—
|
34
|
The
Brick
|
|
63
|
1
|
—
|
64
|
Franchise
Subtotal
|
|
97
|
1
|
—
|
98
|
|
|
|
|
|
|
Total Corporate
& Franchise Stores
|
|
302
|
2
|
—
|
304
|
1Includes
the Midnorthern Appliance banner
|
During the second quarter, the Company opened two new stores, a
Leon's corporate store in Coquitlam,
British Columbia and a Brick Franchise store in Gravenhurst, Ontario.
The following table illustrates the Company's store count
continuity from December 31, 2018 to
June 30, 2019 by retail banner:
Corporate
Stores
|
|
At December 31,
2018
|
Opened
|
Closed
|
At June 30,
2019
|
Leon's
|
|
50
|
1
|
—
|
51
|
Appliance
Canada
|
|
5
|
—
|
—
|
5
|
The Brick
(1)
|
|
113
|
2
|
(1)
|
114
|
The Brick
Mattress Store
|
|
25
|
1
|
—
|
26
|
Brick
Outlet
|
|
10
|
—
|
—
|
10
|
Corporate
Subtotal
|
|
203
|
4
|
(1)
|
206
|
|
|
|
|
|
|
Franchise
Stores
|
|
|
|
|
|
Leon's
|
|
36
|
—
|
(2)
|
34
|
The
Brick
|
|
64
|
1
|
(1)
|
64
|
Franchise
Subtotal
|
|
100
|
1
|
(3)
|
98
|
|
|
|
|
|
|
Total Corporate
& Franchise Stores
|
|
303
|
5
|
(4)
|
304
|
1Includes
the Midnorthern Appliance banner
|
Non-IFRS Financial Measures
The Company uses financial measures that do not have
standardized meaning under IFRS and may not be comparable to
similar measures presented by other entities. The Company
calculates the non-IFRS financial measures by adjusting certain
IFRS measures for specific items the Company believes are
significant, but not reflective of underlying operations in the
period, as detailed below:
Non-IFRS
Measure
|
IFRS
Measure
|
Adjusted net
income
|
Net income
|
Adjusted income
before income taxes
|
Income before income
taxes
|
Adjusted earnings per
share – basic
|
Earnings per share –
basic
|
Adjusted earnings per
share – diluted
|
Earnings per share –
diluted
|
Adjusted
EBITDA
|
Net income
|
For a reconciliation of the Company's non-IFRS financial
measures please refer to the Company's MD&A for the quarter
ended June 30, 2019, which is
available on SEDAR at www.sedar.com.
Adjusted Net Income
Leon's calculates comparable measures by excluding the effect of
changes in fair value of derivative instruments, related to the net
effect of USD-denominated forward contracts and an interest rate
swap on the Company's term credit facility. The Company uses
forward currency contracts to manage the risk associated with its
USD-denominated purchases and an interest rate swap to manage
interest rate risk on its term credit facility in accordance with
the Company's corporate treasury policy. Management believes
excluding from income the effect of these mark-to-market valuations
and changes thereto, until settlement, better aligns the intent and
financial effect of these contracts with the underlying cash
flows.
The following two tables reconcile reported net income and
earnings per share as stated in the Company's interim condensed
consolidated statement of income to adjusted net income and
earnings per share excluding the impact of IFRS 16. As the
Company implemented IFRS 16, "Leases", on January 1, 2019 using the modified retrospective
approach, the amounts listed in the table below related to the
three and six months ended June 30,
2019 reflect lease accounting under IFRS 16 for net income,
adjusted net income, basic and diluted earnings per share, and
adjusted basic and adjusted diluted earnings per share. The
comparative quarter of 2018 has not been restated.
See Section 10, "Recent Accounting
Pronouncements", of the Company's MD&A for additional
information on the implementation of IFRS 16.
|
For the three
months ended
|
For six months
ended
|
|
June
30
|
June
30
|
($ in thousands
except per share amounts)
|
2019
|
2018
|
2019
|
2018
|
Net Income
(1)
|
25,042
|
23,975
|
34,376
|
38,501
|
After-tax
mark-to-market (gain)/loss on financial derivative
instruments
|
(5)
|
(1,380)
|
75
|
(4,361)
|
Adjusted net
income (1)
|
25,037
|
22,595
|
34,451
|
34,140
|
Impact of IFRS 16 on
an after-tax basis
|
3,699
|
-
|
8,210
|
-
|
Adjusted Net
Income including impact of IFRS 16
|
28,736
|
22,595
|
42,661
|
34,140
|
|
|
(1)
|
The Company
implemented IFRS 16, "Leases", on January 1, 2019 using the
modified retrospective approach. As a result, the Company's
three and six months ended June 30, 2019 reflects lease accounting
under IFRS 16, the comparative periods have not been
restated.
|
|
|
For the three
months ended
|
For the six months
ended
|
|
|
June
30
|
June
30
|
|
|
|
IFRS
16
|
|
|
|
IFRS
16
|
|
|
|
|
2019
(1)
|
Adjustments
|
2019
(2)
|
2018
(1)
|
2019
|
Adjustments
|
2019
(2)
|
2018
|
Basic earnings per
share
|
|
$
0.32
|
$ 0.05
|
$
0.37
|
$ 0.31
|
$
0.44
|
$ 0.11
|
$
0.55
|
$ 0.50
|
Diluted earnings per
share
|
|
$
0.30
|
$ 0.04
|
$
0.34
|
$ 0.29
|
$
0.41
|
$ 0.10
|
$
0.51
|
$ 0.47
|
Adjusted basic
earnings per share
|
|
$
0.32
|
$ 0.05
|
$
0.37
|
$ 0.30
|
$
0.44
|
$ 0.11
|
$
0.55
|
$ 0.45
|
Adjusted diluted
earnings per share
|
|
$
0.30
|
$ 0.04
|
$
0.34
|
$ 0.28
|
$
0.41
|
$ 0.10
|
$
0.51
|
$ 0.42
|
|
|
(1)
|
As reported in the
Company's Q2 2019 Interim Condensed Consolidated Statements of
Income for basic and diluted earnings per share
amounts
|
(2)
|
These amounts
exclude the impact of IFRS 16 adjustments in the current
quarter
|
In 2016, the IASB issued IFRS 16, "Leases", replacing IAS
17 and related interpretations. The standard introduces a single,
on-balance sheet recognition and measurement model for lessees,
eliminating the distinction between operating and finance leases.
The Company implemented the standard on January 1, 2019 using the modified retrospective
approach. As a result, the Company's three and six month periods
ended June 30, 2019 results reflected
lease accounting under IFRS 16. Prior period results have not been
restated. See Section 10, "Recent
Accounting Pronouncements", in the Company's MD&A for more
information on the implementation of IFRS 16.
The implementation of IFRS 16 significantly increased the assets
and liabilities of the Company's balance sheet and changed the
timing and presentation of lease-related expenses in the Company's
financial results. The Company recorded a right-of-use asset
of $430,480,000 and a lease liability
of $414,940,000 under this new
standard. Under IFRS 16, the depreciation expense on leased
assets and interest expense on lease liabilities replaced rent
expense, which was previously recognized on a straight-line basis
in operating income under IAS 17 over the term of a lease.
Adjusted EBITDA
Adjusted earnings before interest, income taxes, depreciation
and amortization, mark-to-market adjustment due to the changes in
the fair value of the Company's financial derivative instruments
and any non-recurring charges to income ("Adjusted EBITDA") is a
non-IFRS financial measure used by the Company. The Company
considers adjusted EBITDA to be an effective measure of
profitability on an operational basis and is currently regarded as
an indirect measure of operating cash flow, a significant indicator
of success for many businesses. Adjusted EBITDA is a non-IFRS
financial measure used by the Company. The Company's Adjusted
EBITDA may not be comparable to the Adjusted EBITDA measure of
other companies, but in management's view appropriately reflects
Leon's specific financial condition. This measure is not
intended to replace net income, which, as determined in accordance
with IFRS, is an indicator of operating performance.
The following is a reconciliation of reported net income to
adjusted EBITDA:
|
For the three
months ended
|
For six months
ended
|
|
June
30
|
June
30
|
($ in
thousands)
|
2019
|
2018
|
2019
|
2018
|
Net
Income
|
25,042
|
23,975
|
34,376
|
38,501
|
Income tax
expense
|
8,873
|
8,683
|
12,078
|
13,787
|
Net finance
costs
|
6,662
|
1,803
|
12,959
|
3,651
|
Depreciation and
amortization
|
30,793
|
9,711
|
62,517
|
18,871
|
Mark-to-market
(gain)/loss on financial derivative instruments
|
(7)
|
(1,881)
|
103
|
(5,943)
|
Adjusted
EBITDA
|
71,363
|
42,291
|
122,033
|
68,867
|
|
|
(1)
|
The Company
implemented IFRS 16, "Leases", on January 1, 2019 using the
modified retrospective approach. As a result, the Company's
three and six month periods ended June 30, 2019 reflects lease
accounting under IFRS 16, the comparative periods have not been
restated.
|
Adjusted EBITDA excluding the impact of IFRS 16
|
For the three
months ended
|
For six months
ended
|
|
June
30
|
June
30
|
($ in
thousands)
|
2019
|
2018
|
2019
|
2018
|
Adjusted EBITDA
(1)
|
71,363
|
42,291
|
122,033
|
68,867
|
Impact of IFRS 16
(net)
|
(22,258)
|
-
|
(44,187)
|
-
|
Adjusted EBITDA
excluding the impact of IFRS 16
|
49,105
|
42,291
|
77,846
|
68,867
|
|
|
(1)
|
The Company
implemented IFRS 16, "Leases", on January 1, 2019 using the
modified retrospective approach. As a result, the Company's three
and six month periods ended June 30, 2019 reflects lease accounting
under IFRS 16, the comparative periods have not been
restated.
|
Under IFRS 16, the depreciation and amortization expense on
leased assets and interest expense on lease liabilities replaced
rent expense, which was previously recognized on a straight-line
basis in operating income under IAS 17 over the term of the
lease. Normalized for the year-over-year impact of increased
depreciation, amortization and lease interest expenses due to the
implementation of IFRS 16 on January 1,
2019, adjusted EBITDA increased $6,814,000 in the quarter, an increase of 16.1%
over the three months ended June 30,
2018 and increased $8,979,000
in the year to date, an increase of 13% increase over the six
months ended June 30, 2018.
Same Store Sales
Same store sales are defined as sales generated by stores that
have been open for more than 12 months on a fiscal basis. Same
store sales is not an earnings measure recognized by IFRS, and does
not have a standardized meaning prescribed by IFRS, but it is
a key indicator used by the Company to measure performance against
prior period results. Same store sales as discussed in this
MD&A may not be comparable to similar measures presented by
other issuers, however this measure is commonly used in the retail
industry. We believe that disclosing this measure is
meaningful to investors because it enables them to better
understand the level of growth of our business.
Total System Wide Sales
Total system wide sales refer to the aggregation of revenue
recognized in the Company's consolidated financial statements plus
the franchise sales occurring at franchise stores to their
customers which are not included in the revenue figure presented in
the Company's consolidated financial statements. Total system wide
sales is not a measure recognized by IFRS and does not have a
standardized meaning prescribed by IFRS, but it is a key indicator
used by the Company to measure performance against prior period
results. Therefore, total system wide sales as discussed in this
MD&A may not be comparable to similar measures presented by
other issuers. We believe that disclosing this measure is
meaningful to investors because it serves as an indicator of the
strength of the Company's overall store network, which ultimately
impacts financial performance.
Franchise Sales
Franchise sales figures refer to sales occurring at franchise
stores to their customers which are not included in the revenue
figures presented in the Company's consolidated financial
statements, or in the same store sales figures in this MD&A.
Franchise sales is not a measure recognized by IFRS, and does not
have a standardized meaning prescribed by IFRS, but it is a key
indicator used by the Company to measure performance against prior
period results. Therefore, franchise sales as discussed in this
MD&A may not be comparable to similar measures presented by
other issuers. Once again, we believe that disclosing this
measure is meaningful to investors because it serves as an
indicator of the strength of the Company's brands, which ultimately
impacts financial performance.
About Leon's Furniture Limited
Leon's Furniture Limited is the largest retailer of furniture,
appliances and electronics in Canada. Our retail banners include: Leon's;
The Brick; Brick Outlet; and The Brick Mattress Store.
Finally, with The Brick's Midnorthern Appliance banner alongside
with Leon's Appliance Canada banner, this makes the Company the
country's largest commercial retailer of appliances to builders,
developers, hotels and property management companies. The Company
has 304 retail stores from coast to coast in Canada under various banners. The Company
operates three websites: leons.ca, thebrick.com and
furniture.ca.
Forward-Looking Statements
Information in this press release that is not current or
historical factual information may constitute forward-looking
information within the meaning of securities laws, including
future-oriented financial information and financial outlooks. This
information is based on certain assumptions regarding expected
growth, results of operations, performance, and business prospects
and opportunities. While the Company considers these assumptions to
be reasonable, based on information currently available, they may
prove to be incorrect. Forward-looking information is subject to a
number of risks, uncertainties and other factors that could cause
actual results to differ materially from what the Company currently
expects. These risks, uncertainties and other factors include, but
are not limited to: credit, market, currency, operational,
liquidity and funding risks, including changes in economic
conditions, interest rates or tax rates, the timing and market
acceptance of future products, and competition in the Company's
markets.
To the extent any forward-looking information in this press
release constitutes future-oriented financial information or
financial outlooks, within the meaning of securities laws, such
information is being provided to demonstrate the potential of the
Company and readers are cautioned that this information may not be
appropriate for any other purpose. Future-oriented financial
information and financial outlooks, as with forward-looking
information generally, are based on assumptions and subject to
risks, uncertainties and other factors. Actual results may differ
materially from what the Company currently expects. Other than as
required under applicable securities laws, the Company does not
undertake to update any forward-looking information at any
particular time. The reader should not place undue importance on
forward-looking information and should not rely upon this
information as of any other date. All forward-looking information
contained in this press release is expressly qualified in its
entirety by this cautionary statement.
SOURCE Leon's Furniture Limited