Revenue up 25%; Adjusted
EBITDA(1) grew 23%
Raises
full-year outlook following strong performance in first half of
2022
MARKHAM,
ON, Aug. 9, 2022 /CNW/ - Pet Valu Holdings
Ltd. ("Pet Valu" or the "Company") (TSX: PET), the leading
Canadian specialty retailer of pet food and pet-related supplies,
today announced its financial results for the second
quarter ended July 2, 2022.
Second Quarter
Highlights
- System-wide sales(2) were $312.5 million, an increase of 35.0% versus the
prior year. Excluding Chico(3), system-wide sales
grew 24.4%, and same-store sales(2) grew 21.2%,
with both basket and traffic growth contributing.
- Revenue was $227.7 million, an
increase of 25.0% versus the prior year. Excluding Chico, revenue
grew 23.6%, in-line with system-wide sales growth.
- Adjusted EBITDA(1) was $52.1 million, up 23.0%, representing 22.9% of
revenue.
- Operating income was $39.3
million, up 48.0% versus the prior year.
- Net income was $25.3 million,
down from $44.3 million in the prior
year.
- Adjusted Net Income(1) was $28.1 million or $0.39 per diluted share, up 222.7% and 225.0%,
respectively, versus the prior year.
- Opened 13 new stores and ended the quarter with 717 stores
across the network.
- The Board of Directors declared a dividend of $0.06 per common share.
2022 Outlook
- The Company now expects 2022 revenue between $912 and $928
million, driven by same-store sales growth between 13% and
15% and 35-45 new store openings, Adjusted EBITDA between
$203 and $207
million and Adjusted Net Income per Diluted
Share(1) between $1.47 and $1.51.
"Pet Valu delivered very strong performance in the second
quarter, underscored by robust industry growth together with the
growing appeal of our brand within the Canadian marketplace," said
Richard Maltsbarger, President and
Chief Executive Officer. "Impressive top-line results were once
again hallmarks in the quarter, on top of the strong growth seen
last year, with system-wide sales now up almost 75% from
pre-pandemic levels in Q2 2019.
"Following strong performance in the first half of the year, we
have raised our 2022 outlook," continued Mr. Maltsbarger. "With a
staples-oriented product mix together with the value offered
through our broad proprietary brand portfolio and frequent buyers
loyalty program, we believe we are well positioned to continue
taking market share through our multi-faceted growth agenda in
today's challenging macro environment."
Financial Results for the Second
Quarter Fiscal 2022
All comparative figures below are for the 13-week period
ended July 2, 2022, compared to the 13-week period ended
July 3, 2021.
Revenue increased by 25.0% to $227.7 million, compared to $182.2 million in the second quarter last year.
The current quarter includes $2.5
million of franchise and other revenues from the acquisition
of Chico. The increase in revenue was driven by growth in
retail sales, as well as franchise and other revenues.
Same-store sales growth was 21.2% in Q2 2022
primarily driven by a 19.3% increase in same-store transactions and
a 1.5% increase in same-store average spend per transaction. This
is compared to same-store sales growth of 28.4% in Q2 2021
primarily consisted of a 25.6% increase in same-store transactions
and a 2.2% increase in same-store average spend per transaction.
Same-store transactions and same-store average spend per
transaction in Q2 2021 were impacted by a shift in consumer
behaviour associated with COVID-19 restrictions.
Gross profit increased by $18.2
million, or 27.1%, to $85.4
million in Q2 2022, compared to $67.2
million in Q2 2021. Gross profit margin was 37.5% in Q2 2022
compared to 36.9% in Q2 2021. The gross profit margin increase was
primarily driven by: (i) leverage gained on fixed costs due to
higher revenue; (ii) the acquisition of Chico; partially offset by
(iii) higher wholesale merchandise sales due to recovery from
pandemic operating restrictions in Ontario in Q2 2021 and increased franchise
penetration; and (iv) slightly lower product margins as price
adjustments were more than offset by higher costs including
incremental freight costs.
Selling, general and administrative ("SG&A") expenses
increased by 13.4% to $46.1 million,
compared to $40.6 million in the
second quarter last year. SG&A expenses were 20.2% of revenue
compared to 22.3% of revenue in the second quarter last year. The
increase of $5.5 million in SG&A
expenses was primarily due to: (i) increased compensation costs as
a result of headcount investments; (ii) higher advertising
expenses; (iii) additional insurance from public company
requirements; (iv) higher technology and telecommunication costs to
continue the modernization of our technology infrastructure and
expand our omni-channel capabilities; (v) lower gain on sale of
corporate-owned stores; (vi) higher depreciation and amortization;
partially offset by (vii) lower professional fees as Q2 2021
included fees to support the preparation of the initial public
offering (the "Offering") and separation activities.
Adjusted EBITDA was $52.1
million, or 22.9% of revenue, compared to $42.3 million, or 23.2% of revenue, in the
second quarter last year.
Net interest expense was $4.6
million in Q2 2022, a decrease of $15.4 million, or 77.2%, compared to $20.0 million in Q2 2021. The decrease was
primarily driven by: (i) lower interest expense on the 2021 Term
Facility (as defined in the Company's Management Discussion and
Analysis for the second quarter ended July
2, 2022 ("the MD&A")) resulting from lower interest
rates and lower total debt outstanding compared to the 2016 Term
Loan (as defined in the MD&A) which was repaid at the end of Q2
2021; and (ii) lower amortization of deferred financing costs. The
decrease in net interest expense is also attributable to the prior
year write off of $5.7 million of
unamortized deferred financing costs as debt extinguishment costs
upon repayment of the 2016 Credit Agreement (as defined in the
MD&A) at the end of Q2 2021.
Income taxes were $9.5 million in Q2 2022 compared to
$5.2 million in Q2 2021, an
increase of $4.3 million year over
year. The increase in income taxes was primarily the result of
higher taxable earnings in Q2 2022. The effective income tax rate
was 27.3% in Q2 2022 compared to 10.5% in Q2 2021. The Q2 2022
effective tax rate is higher than the blended statutory rate of
26.5% primarily because of non-deductible expenses. The Q2 2021
effective tax rate is lower than the blended statutory rate of
26.5% primarily due to favourable tax treatments of foreign
exchange gains related to the repayment of the 2016 Term Loans (as
defined in the MD&A).
Net income was $25.3 million, a decrease of $19.0 million from net income of
$44.3 million in the second
quarter last year. In addition to the factors described above, the
change in net income is also explained by a higher gain on foreign
exchange of $42.3 million in Q2 2021
from the repayment of the 2016 Term Loans and from the settlement
of a foreign exchange forward contract.
Adjusted Net Income increased by $19.4 million to $28.1 million in Q2 2022, compared to
$8.7 million in Q2 2021.
Adjusted Net Income as a percentage of revenue was 12.3% in Q2 2022
and 4.8% in Q2 2021.
Adjusted Net Income per Diluted Share was
$0.39 compared to $0.12 in the second quarter last year.
Cash and cash equivalents at the end of the second
quarter totaled $39.5 million.
Free Cash Flow(1) amounted to
$20.4 million in Q2 2022. This
compares to Free Cash Flow of $18.9 million in Q2 2021.
Inventory at end of the second quarter of 2022 was
$116.8 million compared to
$91.7 million at the end of
Fiscal 2021, an increase of $25.1
million primarily due to higher demand, inflation in product
cost, a heightened level of safety stock and accelerated purchase
of seasonal goods in light of global supply chain challenges, and
initial load-ins to support proprietary brand launches at
Chico.
(1)
This is a Non-IFRS financial measure. Non-IFRS financial
measures are not standardized financial measures under IFRS and
might not be comparable to similar financial measures disclosed by
other issuers. Refer to "Non-IFRS Measures and Supplementary
Financial Measures" and "Selected Consolidated Financial
Information" below, including for a reconciliation of the non-IFRS
measures used in this release to the most comparable IFRS measures.
Also refer to the sections entitled "How We Assess the Performance
of our Business", "Non-IFRS Measures and Supplementary Financial
Measures" and "Selected Consolidated Financial Information and
Industry Metrics" in the MD&A, incorporated by reference
herein, for further details concerning Adjusted EBITDA, Adjusted
Net Income, Adjusted Net Income per Diluted Share and Free Cash
Flow including definitions and reconciliations to the relevant
reported IFRS measure
|
(2) This is
a supplementary financial measure. Refer to "Non-IFRS Measures and
Supplementary Financial Measures" below and to the section entitled
"How We Assess the Performance of our Business" in the MD&A for
the definitions of supplementary financial measures.
|
(3) On
February 25, 2022, the Company acquired all of the issued and
outstanding shares of Les Franchises Chico Inc. and 9353-0145
Quebec Inc. (collectively referred to as "Chico"), a franchisor of
pet specialty stores in Quebec, Canada.
|
Dividends
On August 8, 2022, the Board of
Directors of the Company declared a dividend of $0.06 per common share payable on September 15, 2022 to holders of common shares of
record as at the close of business on August
31, 2022.
Outlook
The following information, except for same-store sales growth,
includes the impact of Chico, which was acquired on February 25, 2022. Based on strong performance in
the first half of the year, and expectations for the balance of the
year, the Company now expects to achieve the following for the full
year 2022:
- Revenue between $912 and
$928 million, supported by same-store
sales growth of between 13% and 15%, and 35 to 45 new store
openings;
- Adjusted EBITDA between $203 and
$207 million, which incorporates a
full year of public company costs, as well as incremental
investments in labour as well as storage and throughput capacity,
disclosed in late 2021;
- Adjusted Net Income per Diluted Share between $1.47 and $1.51;
- Information technology expenses of approximately $8 million and share-based compensation of
approximately $7 million, both of
which are excluded from Adjusted EBITDA and Adjusted Net Income per
Diluted Share; and
- Net Capital Expenditures(4) between
$35 and $40
million, including approximately $15
million in advanced payments and leasehold improvements
related to the build-out of the new distribution centre in the
Greater Toronto Area.
Due to the impact of various forms of government mandated
operating restrictions imposed in early 2021, the Company expects
year-over-year growth to ease in the second half of 2022, compared
to year-over-year growth in the first half of the year. The
relative distribution of revenue by quarter is expected to be more
representative of pre-pandemic years, such as 2019.
(4)
Net Capital Expenditures represents purchase of property and
equipment, purchase of intangible assets, proceeds on disposal of
property and equipment and tenant allowances.
|
Conference Call Details
A conference call to discuss the Company's second quarter
results is scheduled for August 9,
2022, at 8:30 a.m. ET. To
access Pet Valu's conference call, please dial 1-888-350-3870,
(access code: 5518274). A live webcast of the call will also be
available through the Events & Presentations section of the
Company's website at https://investors.petvalu.com/.
For those unable to participate, a playback will be available
shortly after the conclusion of the call by dialing 1-800-770-2030
(ID: 5518274#) and will be accessible until August 16, 2022. The webcast will also be
archived and available through the Events & Presentations
section of the Company's website at
https://investors.petvalu.com/.
About Pet Valu
Pet Valu is Canada's leading
retailer of pet food and pet-related supplies with over 700
corporate-owned or franchised locations across the country. For
more than 40 years, Pet Valu has earned the trust and loyalty of
pet parents by offering knowledgeable customer service, a premium
product offering and engaging in-store services. Pet Valu's
neighbourhood stores offer more than 7,000 competitively-priced
products, including a broad assortment of premium, super premium,
holistic and award-winning proprietary brands. To learn more,
please visit: www.petvalu.com.
Basis of Presentation - Carve-out
Financial Information
Prior to the Offering, the Company was not operating as a
stand-alone entity and as a result, the financial information for
periods prior to June 30, 2021 are presented on a carve-out
basis that includes only legal entities representing the Canadian
operations of Pet Valu Holdings Ltd. (referred to as the "Group",
prior to the distribution of its U.S. operations to its
shareholder). For more information, see the Company's unaudited
condensed consolidated financial statements and related MD&A
for the 13-week and 26-week periods ended July 2, 2022 and
July 3, 2021, respectively.
Non-IFRS Measures and
Supplementary Financial Measures
This press release makes reference to certain non-IFRS measures.
These measures are not recognized measures under IFRS and do not
have a standardized meaning prescribed by IFRS. They are therefore
unlikely to be comparable to similar measures presented by other
companies. Rather, these measures are provided as additional
information to complement IFRS measures by providing further
understanding of the Company's results of operations from
management's perspective. Accordingly, they should not be
considered in isolation nor as a substitute for analysis of the
Company's financial information reported under IFRS. Pet Valu uses
non-IFRS measures, including "EBITDA", "Adjusted EBITDA", "Adjusted
Net Income", Adjusted Net Income per Diluted Share" and "Free Cash
Flow". This press release also makes reference to certain
supplementary financial measures that are commonly used in the
retail industry, including "System-wide stores", "System-wide
sales", "Same-store sales", and "Same-store sales growth". These
non-IFRS measures and supplementary financial measures are used to
provide investors with supplemental measures of Pet Valu's
operating performance and thus highlight trends in its core
business that may not otherwise be apparent when relying solely on
IFRS financial measures. The Company also believes that securities
analysts, investors and other interested parties frequently use
non-IFRS measures and these supplementary financial measures in the
evaluation of issuers. Management uses non-IFRS measures in order
to facilitate operating performance comparisons from period to
period, to prepare annual operating budgets and to determine
components of management compensation. Refer to the MD&A for
the second quarter ended July 2, 2022 for further information
on non-IFRS measures and industry metrics, including for their
definition and, for non-IFRS measures, a reconciliation to the most
comparable IFRS measure.
Forward-Looking
Information
Some of the information contained in this press release is
forward-looking information. Forward-looking information is
provided as of the date of this press release and is based on
management's opinions, estimates and assumptions in light of its
experience and perception of historical trends, current trends,
current conditions and expected future developments, as well as
other factors that management believes appropriate and reasonable
in the circumstances. Pet Valu does not undertake to update any
such forward-looking information whether as a result of new
information, future events or otherwise, except as required under
applicable securities laws in Canada. Actual results and the timing of
events may differ materially from those anticipated in the
forward-looking information as a result of various factors.
Particularly, information regarding our expectations of future
results, targets, performance achievements, prospects or
opportunities, including the information under the heading
"Outlook" in this press release, is forward-looking information,
which is based on the factors and assumptions, and subject to the
risks, as set out herein and in the Company's annual information
form ("AIF") dated March 8, 2022.
Often but not always, forward-looking information can be identified
by the use of forward-looking terminology such as "may", "will",
"expect", "believe", "estimate", "plan", "could", "should",
"would", "outlook", "forecast", "anticipate", "foresee", "continue"
or the negative of these terms or variations of them or similar
terminology.
Many factors could cause our actual results, level of activity,
performance or achievements, future events or developments, or
outlook to differ materially from those expressed or implied by the
forward-looking information, including, without limitation, the
factors discussed in the "Risk Factors" section of the AIF. A copy
of the AIF and the Company's other publicly filed documents can be
accessed under the Company's profile on the System for Electronic
Document Analysis and Retrieval ("SEDAR") at www.sedar.com.
The Company cautions that the list of risk factors and
uncertainties described in the AIF is not exhaustive and other
factors could also adversely affect its results. Readers are urged
to consider the risks, uncertainties and assumptions carefully in
evaluating forward-looking information and are cautioned not to
place undue reliance on such information.
SELECTED CONSOLIDATED FINANCIAL
INFORMATION
Condensed Interim Consolidated Statements of Income and
Comprehensive Income
(Unaudited, expressed in thousands
of Canadian dollars, except per share amounts)
|
Quarters
Ended
|
Year to Date
Ended
|
|
July 2,
2022
|
July 3,
2021
|
July 2,
2022
|
July 3,
2021
|
|
13
weeks
|
13
weeks
|
26
weeks
|
26
weeks
|
|
|
|
|
|
Revenue:
|
|
|
|
|
Retail
sales
|
$
97,055
|
$
82,161
|
$
190,130
|
$
161,805
|
Franchise and other
revenues
|
130,621
|
100,021
|
250,799
|
190,449
|
Total
revenue
|
227,676
|
182,182
|
440,929
|
352,254
|
|
|
|
|
|
Cost of
sales
|
142,305
|
115,022
|
278,478
|
225,431
|
Gross
profit
|
85,371
|
67,160
|
162,451
|
126,823
|
|
|
|
|
|
Selling, general and
administrative expenses
|
46,062
|
40,603
|
87,981
|
77,644
|
Total operating
income
|
39,309
|
26,557
|
74,470
|
49,179
|
|
|
|
|
|
Interest expenses,
net
|
4,560
|
19,981
|
8,541
|
37,978
|
Loss (gain) on foreign
exchange
|
120
|
(42,936)
|
99
|
(43,034)
|
Other income
|
(152)
|
—
|
(124)
|
—
|
Income before income
taxes
|
34,781
|
49,512
|
65,954
|
54,235
|
|
|
|
|
|
Income taxes
expense
|
9,503
|
5,218
|
18,055
|
6,532
|
Net
income
|
25,278
|
44,294
|
47,899
|
47,703
|
|
|
|
|
|
Less:
|
|
|
|
|
Net income attributable
to non-controlling
interests
|
—
|
1,649
|
—
|
3,430
|
Net income
attributable to the shareholders
of the
Company
|
25,278
|
42,645
|
47,899
|
44,273
|
|
|
|
|
|
Other comprehensive
income, net of tax:
|
|
|
|
|
Currency translation
adjustments
reclassified to net
income
|
—
|
(29,665)
|
—
|
(29,665)
|
Currency translation
adjustments that
may be reclassified to
net income, net of tax
|
5
|
11,455
|
3
|
21,070
|
Comprehensive income
for the period
attributable to the
shareholders of the Company
|
$
25,283
|
$
24,435
|
$
47,902
|
$
35,678
|
|
|
|
|
|
Basic net income per
share attributable to
the common
shareholders
|
$
0.36
|
$
0.61
|
$
0.68
|
$
0.63
|
Diluted net income
per share attributable to
the common
shareholders
|
$
0.35
|
$
0.60
|
$
0.67
|
$
0.62
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Income to EBITDA and Adjusted
EBITDA
(Unaudited, in thousands of Canadian dollars
unless otherwise noted)
|
Quarters
Ended
|
Year to Date
Ended
|
|
July 2,
2022
|
July 3,
2021
|
July 2,
2022
|
July 3,
2021
|
|
13
weeks
|
13
weeks
|
26
weeks
|
26
weeks
|
Reconciliation of
net income to Adjusted EBITDA:
|
|
|
|
|
Net income
|
$
25,278
|
$
44,294
|
$
47,899
|
$
47,703
|
Depreciation and
amortization
|
9,270
|
8,554
|
18,146
|
16,643
|
Interest expenses,
net
|
4,560
|
19,981
|
8,541
|
37,978
|
Income taxes
expense
|
9,503
|
5,218
|
18,055
|
6,532
|
EBITDA
|
48,611
|
78,047
|
92,641
|
108,856
|
Adjustments to
EBITDA:
|
|
|
|
|
Management
fees(1)
|
—
|
439
|
—
|
679
|
Information technology
transformation costs(2)
|
1,007
|
1,305
|
2,077
|
2,557
|
IPO readiness and
separation costs(3)
|
—
|
2,191
|
—
|
3,520
|
Business transformation
costs(4)
|
381
|
1,100
|
381
|
1,719
|
Other professional
fees(5)
|
348
|
275
|
996
|
1,463
|
Share-based
compensation(6)
|
1,492
|
1,882
|
2,519
|
2,556
|
Loss (gain) on foreign
exchange(7)
|
120
|
(42,936)
|
99
|
(43,034)
|
Share of loss from
associate
|
92
|
—
|
120
|
—
|
Adjusted
EBITDA
|
$
52,051
|
$
42,303
|
$
98,833
|
$
78,316
|
Adjusted EBITDA as a
percentage of revenue
|
22.9 %
|
23.2 %
|
22.4 %
|
22.2 %
|
Notes:
|
(1)
|
Represents management
fees paid to entities affiliated with Roark Capital Management, LLC
("Roark"). Concurrent with the closing of the Offering, the Company
terminated the management agreement with Roark.
|
(2)
|
Represents discrete,
project-based implementation costs associated with new information
technology systems and discrete SaaS arrangements for
transformational initiatives supporting merchandise planning,
inventory and order management, e-commerce and omni-channel
capabilities, customer relationship management and other key
processes.
|
(3)
|
Represents expenses
incurred related to the following: (i) consulting, legal and
accounting fees for projects and process improvements incurred in
the preparation of the Offering and the legal restructuring to
separate the Company from the Group; and (ii) retention bonuses for
certain key management personnel in connection with the
Offering.
|
(4)
|
For Fiscal 2022,
represents expenses associated to supply chain transformation
initiatives including the new distribution centre. For Fiscal 2021,
predominately represents severance, recruitment, and consulting
expenses associated to the strategic reorganization in the senior
leadership team and key functional departments as part of the
Company's separation from the Group.
|
(5)
|
Professional fees
primarily incurred with respect to: (i) the CRA's examination of
the Company's Canadian tax filings for the 2016 fiscal year; and
(ii) acquisition and integration costs incurred in relation to
Chico in Fiscal 2022.
|
(6)
|
Represents share-based
compensation in respect of our amended and restated share option
plan, long-term incentive plan, and deferred share unit
plan.
|
(7)
|
Represents foreign
exchange gains and losses.
|
Reconciliation of Net Income to Adjusted Net
Income
(Unaudited, in thousands of Canadian dollars
unless otherwise noted)
|
Quarters
Ended
|
Year to Date
Ended
|
|
July 2,
2022
|
July 3,
2021
|
July 2,
2022
|
July 3,
2021
|
|
13
weeks
|
13
weeks
|
26
weeks
|
26
weeks
|
Reconciliation of
net income to Adjusted Net Income:
|
|
|
|
|
Net income
|
$
25,278
|
$
44,294
|
$
47,899
|
$
47,703
|
Adjustments to net
income:
|
|
|
|
|
Management
fees(1)
|
—
|
439
|
—
|
679
|
Information technology
transformation costs(2)
|
1,007
|
1,305
|
2,077
|
2,557
|
IPO readiness and
separation costs(3)
|
—
|
2,191
|
—
|
3,520
|
Business transformation
costs(4)
|
381
|
1,100
|
381
|
1,719
|
Other professional
fees(5)
|
348
|
275
|
996
|
1,463
|
Share-based
compensation(6)
|
1,492
|
1,882
|
2,519
|
2,556
|
Loss (gain) on foreign
exchange(7)
|
120
|
(42,936)
|
99
|
(43,034)
|
Share of loss from
associate
|
92
|
—
|
120
|
—
|
Tax effect of
adjustments to net income
|
(663)
|
145
|
(1,217)
|
(1,176)
|
Adjusted Net
Income
|
$
28,055
|
$
8,695
|
$
52,874
|
$
15,987
|
Adjusted Net Income
as a percentage of revenue
|
12.3 %
|
4.8 %
|
12.0 %
|
4.5 %
|
Adjusted Net Income
per Diluted Share
|
$
0.39
|
$
0.12
|
$
0.74
|
$
0.22
|
Notes:
|
(1)
|
Represents management
fees paid to entities affiliated with Roark. Concurrent with the
closing of the Offering, the Company terminated the management
agreement with Roark.
|
(2)
|
Represents discrete,
project-based implementation costs associated with new information
technology systems and discrete SaaS arrangements for
transformational initiatives supporting merchandise planning,
inventory and order management, e-commerce and omni-channel
capabilities, customer relationship management and other key
processes.
|
(3)
|
Represents expenses
incurred related to the following: (i) consulting, legal and
accounting fees for projects and process improvements incurred in
the preparation of the Offering and the legal restructuring to
separate the Company from the Group; and (ii) retention bonuses for
certain key management personnel in connection with the
Offering.
|
(4)
|
For Fiscal 2022,
represents expenses associated to supply chain transformation
initiatives including the new distribution centre. For Fiscal 2021,
predominately represents severance, recruitment, and consulting
expenses associated to the strategic reorganization in the senior
leadership team and key functional departments as part of the
Company's separation from the Group.
|
(5)
|
Professional fees
primarily incurred with respect to: (i) the CRA's examination of
the Company's Canadian tax filings for the 2016 fiscal year; and
(ii) acquisition and integration costs incurred in relation to
Chico in Fiscal 2022.
|
(6)
|
Represents share-based
compensation in respect of our amended and restated share option
plan, long-term incentive plan, and deferred share unit
plan.
|
(7)
|
Represents foreign
exchange gains and losses.
|
Condensed Interim Consolidated Statements of Cash
Flows
(Unaudited, in thousands of Canadian dollars)
|
Quarters
ended
|
Year to Date
ended
|
|
July 2,
2022
|
July 3,
2021
|
July 2,
2022
|
July 3,
2021
|
|
13
weeks
|
13
weeks
|
26
weeks
|
26
weeks
|
|
|
|
|
|
Cash provided by
(used in):
|
|
|
|
|
Operating
activities:
|
|
|
|
|
Net income for the
period
|
$
25,278
|
$
44,294
|
$
47,899
|
$
47,703
|
Adjustments for items
not affecting cash:
|
|
|
|
|
Depreciation and
amortization
|
9,270
|
8,554
|
18,146
|
16,643
|
Deferred franchise
fees
|
(46)
|
116
|
(94)
|
329
|
Gain on disposal of
property and equipment
|
(34)
|
(297)
|
(42)
|
(428)
|
Loss (gain) on sale of
right-of-use assets
|
122
|
(137)
|
160
|
(176)
|
Loss (gain) on foreign
exchange
|
120
|
(42,936)
|
99
|
(43,034)
|
Gain on financial
instruments
|
(244)
|
—
|
(244)
|
—
|
Share-based
compensation expense
|
1,492
|
22
|
2,519
|
22
|
Share of loss from
associate
|
92
|
—
|
120
|
—
|
Interest expenses,
net
|
4,560
|
19,981
|
8,541
|
37,978
|
Income taxes
expense
|
9,503
|
5,218
|
18,055
|
6,532
|
Income taxes
paid
|
(6,248)
|
(2,464)
|
(25,573)
|
(7,679)
|
Security deposits
paid
|
(5,073)
|
—
|
(5,073)
|
—
|
Change in non-cash
operating working capital:
|
|
|
|
|
Accounts
receivable
|
(3,964)
|
(1,965)
|
(3,679)
|
(4,603)
|
Inventories
|
(16,319)
|
(1,444)
|
(24,556)
|
(8,777)
|
Prepaid
expenses
|
(1,167)
|
(352)
|
(1,837)
|
180
|
Accounts payable and
accrued liabilities
|
15,947
|
3,079
|
8,319
|
(16,063)
|
Net cash provided by
operating activities
|
33,289
|
31,669
|
42,760
|
28,627
|
Financing
activities:
|
|
|
|
|
Issuance of common
shares, net of transaction costs
|
—
|
295,210
|
—
|
295,210
|
Proceeds from exercise
of share options
|
3,596
|
—
|
4,183
|
—
|
Dividends paid on
common shares
|
(8,440)
|
—
|
(8,440)
|
—
|
Proceeds of 2021 Term
Facility
|
—
|
355,000
|
—
|
355,000
|
Repayment of 2021 Term
Facility
|
(2,220)
|
—
|
(4,438)
|
—
|
Proceeds of 2021
Revolving Credit Facility
|
—
|
40,000
|
—
|
40,000
|
Repayment of 2016 Term
Loans
|
—
|
(676,717)
|
—
|
(680,424)
|
Interest paid on
long-term debt
|
(4,216)
|
(13,800)
|
(7,171)
|
(36,415)
|
Repayment of principal
on lease liabilities
|
(12,046)
|
(11,620)
|
(23,815)
|
(23,806)
|
Interest paid on lease
liabilities
|
(2,911)
|
(2,881)
|
(5,818)
|
(5,761)
|
Financing
costs
|
—
|
(5,672)
|
—
|
(6,589)
|
Standby letter of
credit commitment fees
|
—
|
(613)
|
(314)
|
(4,303)
|
Net
distributions
|
—
|
(2,007)
|
—
|
(16,983)
|
Net cash used in
financing activities
|
(26,237)
|
(23,100)
|
(45,813)
|
(84,071)
|
Investing
activities:
|
|
|
|
|
Business acquisition,
net of cash
|
—
|
—
|
(12,829)
|
—
|
Purchases of property
and equipment
|
(4,532)
|
(6,120)
|
(9,652)
|
(10,280)
|
Purchase of intangible
assets
|
(1,360)
|
(925)
|
(1,973)
|
(1,133)
|
Proceeds on disposal
of property and equipment
|
713
|
1,639
|
775
|
2,203
|
Right-of-use asset
initial direct costs
|
(278)
|
(457)
|
(618)
|
(837)
|
Tenant
allowances
|
57
|
—
|
555
|
271
|
Notes
receivable
|
108
|
161
|
298
|
221
|
Lease
receivables
|
6,707
|
5,901
|
13,229
|
11,632
|
Interest received on
lease receivables and other
|
1,903
|
1,676
|
3,815
|
3,357
|
Investment in
associate
|
(1,134)
|
—
|
(1,134)
|
—
|
Net cash provided by
(used in) investing activities
|
2,184
|
1,875
|
(7,534)
|
5,434
|
Effect of exchange
rate on cash
|
3
|
(16)
|
(14)
|
11
|
Net increase
(decrease) in cash
|
9,239
|
10,428
|
(10,601)
|
(49,999)
|
Cash, beginning of
period
|
30,228
|
11,054
|
50,068
|
71,481
|
Cash, end of
period
|
$
39,467
|
$
21,482
|
$
39,467
|
$
21,482
|
Free Cash Flows
(Unaudited, expressed in
thousands of Canadian dollars)
|
Quarters
Ended
|
Year to Date
Ended
|
|
July 2,
2022
|
July 3,
2021
|
July 2,
2022
|
July 3,
2021
|
|
13
weeks
|
13
weeks
|
26
weeks
|
26
weeks
|
|
|
|
|
|
Cash provided by
operating activities
|
$
33,289
|
$
31,669
|
$
42,760
|
$
28,627
|
Cash provided by (used
in) investing activities
|
2,184
|
1,875
|
(7,534)
|
5,434
|
Repayment of principal
on lease liabilities
|
(12,046)
|
(11,620)
|
(23,815)
|
(23,806)
|
Interest paid on lease
liabilities
|
(2,911)
|
(2,881)
|
(5,818)
|
(5,761)
|
Notes
receivables
|
(108)
|
(161)
|
(298)
|
(221)
|
Free Cash
Flow
|
$
20,408
|
$
18,882
|
$
5,295
|
$
4,273
|
Consolidated Statements of Financial
Position
(Unaudited, expressed in thousands of Canadian
dollars)
|
As at July 2,
2022
|
As at January 1,
2022
|
Assets
|
|
|
Current
assets:
|
|
|
Cash
|
$
39,467
|
$
50,068
|
Accounts and other
receivables
|
19,621
|
14,398
|
Inventories,
net
|
116,773
|
91,699
|
Prepaid expenses and
other assets
|
14,130
|
10,432
|
Current portion of
lease receivables
|
27,517
|
26,621
|
Total current
assets
|
217,508
|
193,218
|
|
|
|
Non-current
assets:
|
|
|
Lease
receivables
|
125,007
|
121,936
|
Right-of-use assets,
net
|
83,987
|
80,757
|
Property and
equipment, net
|
63,791
|
62,067
|
Intangible assets,
net
|
52,072
|
37,359
|
Goodwill
|
98,061
|
92,938
|
Deferred tax
assets
|
5,565
|
5,601
|
Investment in
associate
|
3,500
|
2,179
|
Other
assets
|
7,902
|
3,118
|
Total non-current
assets
|
439,885
|
405,955
|
Total
assets
|
$
657,393
|
$
599,173
|
Liabilities and
Shareholders' Deficit
|
|
|
Current
liabilities:
|
|
|
Accounts payable and
accrued liabilities
|
$
100,718
|
$
86,977
|
Income taxes
payable
|
6,704
|
13,553
|
Current portion of
deferred franchise fees
|
1,148
|
1,032
|
Current portion of
lease liabilities
|
48,795
|
41,960
|
Current portion of
long-term debt
|
13,312
|
8,875
|
Total current
liabilities
|
170,677
|
152,397
|
|
|
|
Non-current
liabilities:
|
|
|
Long-term deferred
franchise fees
|
3,472
|
3,183
|
Long-term lease
liabilities
|
196,760
|
196,954
|
Long-term
debt
|
328,345
|
336,621
|
Deferred tax
liabilities
|
6,973
|
4,540
|
Other
liabilities
|
600
|
—
|
Total non-current
liabilities
|
536,150
|
541,298
|
Total
liabilities
|
706,827
|
693,695
|
|
|
|
Shareholders'
deficit:
|
|
|
Common
shares
|
311,680
|
307,497
|
Contributed
surplus
|
3,222
|
1,779
|
Deficit
|
(364,160)
|
(403,619)
|
Currency translation
reserve
|
(176)
|
(179)
|
Total shareholders'
deficit
|
(49,434)
|
(94,522)
|
Total liabilities
and shareholders' deficit
|
$
657,393
|
$
599,173
|
|
|
|
SOURCE Pet Valu Canada Inc.