Successful execution of strategy fuels 630
basis point increase in DTC gross margin versus pre-COVID third
quarter 2019
Earnings per share of $0.25, equal to the third quarter 2020 and up
from $0.05 per share in third Quarter
2019
TORONTO, Dec. 14, 2021 /CNW/ -
Roots ("Roots," "Roots Canada" or the "Company") (TSX: ROOT),
a premium outdoor-lifestyle brand, today announced its financial
results for its third quarter ended October
30, 2021 ("Q3 2021"). All financial results are reported in
Canadian dollars unless otherwise stated. Certain metrics,
including those expressed on an adjusted basis, are non-IFRS
measures. See "Non-IFRS Measures and Industry Metrics". The Company
has presented certain metrics in this press release as compared to
its results during the third quarter ended November 2, 2019 ("Q3 2019") and to its third
quarter ended October 31, 2020 ("Q3
2020").
Fiscal 2021 Third Quarter Financial and Business
Highlights
- Total sales of $76.3 million, up
4.6% from $72.9 million in Q3 2020,
which included double-digit growth during non-promotional periods
in the Direct-to-Consumer ("DTC") segment. This comes despite a
significant reduction in promotional days, and inventory delays
resulting in supply chain disruptions.
- Drove substantial expansion in DTC gross margin despite the
negative impact of increased supply chain costs. DTC gross margin
was 65.2%, up 140 basis points ("bps") and 630 bps as compared Q3
2020 and Q3 2019, respectively.
- Reduced promotional days to four in Q3 2021, as compared to 49
in Q3 2020 and 81 in Q3 2019.
- Amplified the brand with exciting new collaborations, including
Révolutionnaire by Roots and the launch of a custom award jacket
designed by Japanese artist Mr. for the Weeknd, in celebration of
the 10th anniversary of his "Thursday" album.
- Increased Adjusted EBITDA to $19.2
million in Q3 2021 as compared to $19.0 million in Q3 2020 and $10.6 million in Q3 2019, despite a decline in
temporary rent abatements and government subsidies. Excluding these
temporary benefits, Adjusted EBITDA was $16.1 million in Q3 2021, compared to
$11.7 million in Q3 2020 and
$10.6 million in Q3 2019.
- Strengthened the balance sheet through seven consecutive
quarters of year-over-year debt reduction.
- Extended our environmental, social and governance (ESG)
commitment through the following:
-
- The launch of the ONE Collection, a collection offered in
gender-free fits, sustainable materials, and extended sizes;
- Membership in the Textile Exchange, a global nonprofit that
manages and promotes industry standards focused on sustainable
fibres and materials , such as organic cotton and recycled
polyester; and
- joining the Leather Working Group, an international
organization made up of stakeholders across the leather supply
chain, working to promote environmental best practices within
leather manufacturing and related industries.
"We are pleased to report higher gross margin and adjusted
EBITDA compared to our fiscal 2019 and 2020 third quarters. These
results reflect the successful execution of our strategy to date
with consumers embracing our brand and product offering during the
quarter," said Meghan Roach,
President and Chief Executive Officer, Roots. "Our concerted
efforts over the last seven quarters to reduce discounts resulted
in promotional days declining from 81 in Q3 2019 and 49 in Q3 2020
to four in Q3 2021. Combined with our elevated assortments and
brand-building marketing, these actions significantly improved our
key selling metrics, and we saw double-digit growth in DTC sales
during non-promotional periods. We were also pleased to achieve
these results in light of the industry-wide supply chain
disruptions, which limited our ability to showcase new products and
to merchandise our full offerings online and in-store."
"We believe we are well-positioned to capitalize on the fourth
quarter holiday season and pleased with the performance of our new
products." continued Ms. Roach. "We are prepared to meet consumer
demand with compelling gifts and healthy inventory levels in-store
and online."
Summary of Fiscal 2021 Third Quarter Results
Sales
Total Q3 2021 sales were $76.3 million, up 4.6% from total sales of
$72.9 million in Q3 2020. DTC sales
(corporate retail store and eCommerce sales) were $63.4 million in Q3 2021, in line with Q3 2020.
The DTC segment experienced strong traffic growth in the corporate
retail stores, despite the Company's continued focus on promotional
discipline, which reduced the number of promotional days in Q3 2021
to four, compared to 49 in Q3 2020. eCommerce sales continued to
demonstrate growth over pre-pandemic levels even as the increase to
in-store activity resulted in moderated demand online. Inventory
delays partially dampened the growth in the DTC segment due to
supply chain challenges.
Roots Q3 2021 Partners and Other sales (wholesale Roots-branded
products, royalties on partner retail sales, licensing to select
manufacturing partners and the sale of certain custom products)
were $12.9 million, up 34.1% from
$9.6 million in Q3 2020. The
year-over-year increase reflects strength in the Company's
Asia business due to higher
volumes, modifications to the financial terms of the
agreement with the Company's international operating partner,
and strong growth in the royalty revenue earned from the Company's
third-party licensees, partially offset by the impact of
unfavorable foreign exchange.
Gross Profit
Q3 2021 total gross profit was
$46.4 million compared to
$43.6 million in Q3 2020 and
$47.4 million in Q3 2019. The
increase in gross profit was driven by DTC gross margin expansion
and an increase in sales within our Partners and Other Segment. Q3
2021 DTC gross margin was 65.2%, up from 63.8% in Q3 2020 and 58.9%
in Q3 2019. This increase in gross margin primarily reflects the
benefits of the Company's continued promotional discipline through
a reduction in depth and breadth of promotions in its DTC segment,
as well as the positive impact of foreign exchange. These factors
were partially offset by higher freight costs associated with
supply chain challenges which reduced DTC gross margin by 160 bps,
as compared to Q3 2020. DTC gross profit also includes the benefit
of $0.5 million of government
subsidies in both Q3 2021 and Q3 2020.
Selling, General and Administrative Expenses
("SG&A")
Q3 2021 SG&A was $29.4 million, up from $26.6 million in Q3 2020. The increase in
SG&A expenses was primarily driven by a decrease in temporary
occupancy-related abatements, where $1.8
million was recorded in Q3 2021 as compared to $4.1 million in Q3 2020, and a decrease in
government subsidies year-over-year with the Company benefitting
from $0.7 million in Q3 2021,
compared to $2.7 million in Q3 2020.
Excluding these one-time impacts, SG&A expenses declined by
$1.5 million due to operating
efficiencies in the DTC segment.
Adjusted EBITDA, Net Income (Loss) & Adjusted Net Income
(Loss)
Adjusted EBITDA (which excludes the impact of IFRS 16
– Leases ("IFRS 16") and includes rent expense) was $19.2 million for Q3 2021, up slightly from
$19.0 million in Q3 2020 and
increased $8.6 million from
$10.6 million in Q3 2019, as a result
of the above factors. Excluding temporary rent abatements and
government subsidies, Adjusted EBITDA would have been $16.1 million in Q3 2021, compared to
$11.7 million in Q3 2020 and
$10.6 million in Q3 2019.
Q3 2021 net income was $10.8
million, or $0.25 per share,
compared to net income of $10.3
million, or $0.25 per share,
in Q3 2020 and $2.0 million, or
$0.05 per share in Q3 2019.
Adjusted Net Income (which excludes the impact of IFRS 16 and
includes rent expense) for Q3 2021 was $11.7
million, or $0.28 per share,
an improvement from $11.2 million, or
$0.27 per share, in Q3 2020 and
$4.1 million or $0.10 per share in Q3 2019.
COVID-19 Business Update
During Q3 2021, the Company
reopened its last remaining corporate retail store that was
temporarily closed as a result of government mandated COVID-19
restrictions and all of its other corporate retail stores remained
open for the entire quarter, consistent with Q3 2020. Conversely,
during Q3 2021, several of the Company's stores operated by its
international operating partner experienced temporary store
closures and/or restrictions and reduced operating hours. By the
end of Q3 2021, the Company's international operating partner had
reopened all stores in the previously impacted regions.
As a result of global challenges related to the ongoing COVID-19
pandemic, the retail industry is facing industry-wide supply chain
disruptions. To best mitigate the impact on its business, such as
extended lead times and product shortages, the Company is managing
its inventory and promotions, leveraging its pack-and-hold
inventory, and using air freight for key seasonal programs
resulting in higher freight costs.
Normal Course Issuer Bid
In a separate press release
issued today, the Company announced its intention to commence a
normal course issuer bid for its Common Shares through the
facilities of the Toronto Stock Exchange (or other alternative
Canadian trading systems) to repurchase for cancellation up to
2,172,928 of its Common Shares, representing approximately
10.0% of the Company's "public float", during the 12-month period
commencing December 16, 2021 and
ending December 15, 2022.
Conference Call and Webcast Information
Roots will
hold a conference call to discuss the Company's fiscal 2021 third
quarter results on December 14, 2021,
at 8:00 a.m. ET. All interested
parties can join the call by dialing 416-764-8659 or 1-888-664-6392
and using conference ID: 63111360. Please dial in 15 minutes prior
to the call to secure a line. The conference call will be archived
for replay until December 21, 2021,
at midnight, and can be accessed by dialing 416-764-8677 or
1-888-390-0541 and entering replay passcode: 111360 #.
A live audio webcast of the conference call will be available on
the Events and Presentations section of the Company's investor
website at https://investors.roots.com or by following the link
here. Please connect at least 15 minutes prior to the conference
call to ensure adequate time for any software download that may be
required to join the webcast. An archived replay of the webcast
will be available on the Company's website for one year.
See Roots Consolidated Financial Statements and the Company's
Management's Discussion and Analysis of Financial Condition and
Results of Operations for the fiscal quarter ended October 30, 2021, on the Company's investor
website at https://investors.roots.com and SEDAR at www.SEDAR.com.
Please also see the Company's Consolidated Financial Statements and
related Management's Discussion and Analysis for the fiscal quarter
ended November 2, 2019 on SEDAR at
www.SEDAR.com for additional information relating to the Company's
pre-COVID Q3 2019 financial results.
About Roots
Established in 1973, Roots is a premium
outdoor-lifestyle brand. We unite the best of cabin and city
through unmistakable style built with uncompromising comfort and
quality. We offer a broad range of products designed for life's
everyday adventures, including women's and men's apparel, leather
goods, footwear, accessories, and kids, toddler and baby apparel.
Starting from a little cabin in Algonquin
Park, Canada, Roots has grown to become a global brand. We
operate more than 100 retail stores across Canada, two in the
United States, and ship to more than 60 countries worldwide
via roots.com, our eCommerce platform. We also have more than 100
partner-operated stores and sell our products through leading
third-party retail sites in Asia.
Roots Corporation is a Canadian corporation doing business as
"Roots" and "Roots Canada".
Non-IFRS Measures and Industry Metrics
Roots has
historically reported Comparable Sales Growth (Decline) as an
additional metric to demonstrate the performance of its DTC
business. Commencing in the first quarter of fiscal 2020, the
Company's DTC segment was significantly impacted by COVID-19. As a
result of the negative impacts COVID-19 has had on the apparel
retail operating environment, including periods of store closures,
phased re-openings and retail store operating limitations, the
Company does not believe that Comparable Sales Growth (Decline) is
a representative metric of performance in affected periods.
Management will continue to monitor and evaluate the effects of
COVID-19 and will resume the evaluation of Comparable Sales Growth
(Decline) when year-over-year results are no longer significantly
impacted by COVID-19.
This press release makes reference to certain non-IFRS measures
including certain metrics specific to the industry in which we
operate. These measures are not recognized measures under IFRS, do
not have a standardized meaning prescribed by IFRS and, therefore,
may not be comparable to similar measures presented by other
companies. Rather, these measures are provided as additional
information to complement those IFRS measures by providing further
understanding of our results of operations from management's
perspective. Accordingly, these measures are not intended to
represent, and should not be considered as alternatives to net
income or other performance measures derived in accordance with
IFRS as measures of operating performance or operating cash flows
or as a measure of liquidity. In addition to our results determined
in accordance with IFRS, we use non-IFRS measures including
Adjusted DTC Gross Profit, Adjusted DTC Gross Margin, EBITDA,
Adjusted EBITDA, Adjusted Net Income (Loss), and Adjusted Net
Income (Loss) per Share. We believe these non-IFRS measures and
industry metrics provide useful information to both management and
investors in measuring our financial performance and condition and
highlight trends in our core business that may not otherwise be
apparent when relying solely on IFRS measures. Definitions and
reconciliations of non-IFRS measures to the relevant reported
measures can be found in our MD&A for Q3 2019, Q3 2020 and Q3
2021 under "Cautionary Note Regarding Non-IFRS Measures and
Industry Metrics", which is available on SEDAR at
www.sedar.com or the Company's Investor Relations website at
https://investors.roots.com. Such reconciliations can also be found
in this press release below, under the heading "Selected
Consolidated Financial Information – Reconciliation of Net Income
(Loss) to EBITDA, Adjusted EBITDA and Adjusted Net Income
(Loss)".
Forward-Looking Information
Certain information in
this press release contains forward-looking information. This
information is based on management's reasonable assumptions and
beliefs in light of the information currently available to us and
is made as of the date of this press release. Actual results and
the timing of events may differ materially from those anticipated
in the forward-looking information as a result of various factors.
Information regarding our expectations of future results,
performance, achievements, prospects or opportunities or the
markets in which we operate is forward-looking information.
Statements containing forward-looking information are not facts but
instead represent management's expectations, estimates and
projections regarding future events or circumstances. Many factors
could cause our actual results, level of activity, performance or
achievements or future events or developments to differ materially
from those expressed or implied by the forward-looking
statements.
See "Forward-Looking Information" and "Risk Factors" in the
Company's current Annual Information Form for a discussion of the
uncertainties, risks and assumptions associated with these
statements. Readers are urged to consider the uncertainties, risks
and assumptions carefully in evaluating the forward-looking
information and are cautioned not to place undue reliance on such
information. We have no intention and undertake no obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as
required by applicable securities law.
Selected Consolidated Financial Information
In
thousands of Canadian dollars except per share amounts, unless
otherwise noted
Unaudited
Interim Condensed Consolidated Statement of Financial
Position
|
|
|
|
October
30,
|
January
30,
|
|
2021
|
2021
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash
|
$
|
6,815
|
$
|
9,166
|
Accounts
receivable
|
|
9,985
|
|
7,165
|
Inventories
|
|
65,950
|
|
42,401
|
Prepaid
expenses
|
|
3,129
|
|
3,137
|
Total current
assets
|
|
85,879
|
|
61,869
|
|
|
|
|
|
Non-current
assets:
|
|
|
|
|
Loan
receivable
|
|
608
|
|
608
|
Lease
receivable
|
|
932
|
|
1,187
|
Fixed
assets
|
|
44,291
|
|
47,981
|
Right-of-use
assets
|
|
69,433
|
|
79,995
|
Intangible
assets
|
|
189,055
|
|
190,777
|
Goodwill
|
|
7,906
|
|
7,906
|
Total non-current
assets
|
|
312,225
|
|
328,454
|
Total
assets
|
$
|
398,104
|
$
|
390,323
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts payable and
accrued
liabilities
|
$
|
29,734
|
$
|
25,850
|
Deferred
revenue
|
|
4,914
|
|
5,759
|
Income taxes
payable
|
|
4,942
|
|
5,955
|
Current portion of
lease
liabilities
|
|
21,922
|
|
22,197
|
Current portion of
long-term debt
|
|
4,984
|
|
4,984
|
Derivative
obligations
|
|
184
|
|
418
|
Total current
liabilities
|
|
66,680
|
|
65,163
|
|
|
|
|
|
Non-current
liabilities:
|
|
|
|
|
Deferred tax
liabilities
|
|
17,191
|
|
15,891
|
Long-term portion of
lease
liabilities
|
|
68,155
|
|
78,989
|
Long-term
debt
|
|
76,401
|
|
66,100
|
Total non-current
liabilities
|
|
161,747
|
|
160,980
|
Total
liabilities
|
|
228,427
|
|
226,143
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
Share
capital
|
|
197,598
|
|
197,333
|
Contributed
surplus
|
|
4,085
|
|
3,682
|
Accumulated other
comprehensive income
(loss)
|
|
(135)
|
|
(227)
|
Retained earnings
(deficit)
|
|
(31,871)
|
|
(36,608)
|
Total shareholders'
equity
|
|
169,677
|
|
164,180
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
|
398,104
|
$
|
390,323
|
Interim Condensed Consolidated Statement of Net Income
(loss)
For the 13 and 39 week periods ended October 30, 2021, October
31, 2020, and November 2,
2019
|
October 30,
2021
(13 weeks)
|
October 31,
2020
(13 weeks)
|
November 2,
2019
(13 weeks)
|
October 30,
2021
(39 weeks)
|
October 31,
2020
(39 weeks)
|
November 2,
2019
(39 weeks)
|
Sales
|
$
|
76,291
|
$
|
72,946
|
$
|
86,377
|
$
|
152,540
|
$
|
141,109
|
$
|
202,412
|
Cost of goods
sold
|
29,870
|
29,384
|
38,998
|
62,035
|
60,224
|
95,513
|
Gross
profit
|
46,421
|
43,562
|
47,379
|
90,505
|
80,885
|
106,899
|
Selling, general and
administrative expenses
|
29,436
|
26,607
|
40,697
|
77,162
|
75,798
|
118,863
|
Gain from
deconsolidation of RTS USA Corp.
|
–
|
–
|
–
|
–
|
4,774
|
–
|
Income (loss) before
interest expense and
income taxes expense (recovery)
|
16,985
|
16,955
|
6,682
|
13,343
|
9,861
|
(11,964)
|
Interest
expense
|
2,250
|
2,783
|
4,159
|
6,787
|
9,320
|
11,605
|
Income (loss) before
income taxes
|
14,735
|
14,172
|
2,523
|
6,556
|
541
|
(23,569)
|
Income taxes expense
(recovery)
|
3,969
|
3,831
|
554
|
1,904
|
(195)
|
(6,117)
|
Net Income
(loss)
|
$
|
10,766
|
$
|
10,341
|
$
|
1,969
|
$
|
4,652
|
$
|
736
|
$
|
(17,452)
|
Basic earnings (loss)
per share
|
$
|
0.25
|
$
|
0.25
|
$
|
0.05
|
$
|
0.11
|
$
|
0.02
|
$
|
(0.41)
|
Diluted earnings
(loss) per share
|
$
|
0.25
|
$
|
0.24
|
$
|
0.05
|
$
|
0.11
|
$
|
0.02
|
$
|
(0.41)
|
Interim Condensed Consolidated Statement of Comprehensive
Income
For the 13 and 39 week periods ended October 30, 2021 and October 31, 2020
|
|
|
|
|
|
October 30,
2021
|
October 31,
2020
|
October 30,
2021
|
October 31,
2020
|
|
(13 weeks)
|
(13
weeks)
|
(39 weeks)
|
(39
weeks)
|
|
|
|
|
|
|
|
|
|
Net
income
|
$
|
10,766
|
$
|
10,341
|
$
|
4,652
|
$
|
736
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income (loss), net of taxes:
|
|
|
|
|
|
|
|
|
Items that may be
subsequently
|
|
|
|
|
|
|
|
|
reclassified to profit or loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective portion of
changes in fair
value of cash flow
hedges
|
|
(77)
|
|
(374)
|
|
(489)
|
|
860
|
|
|
|
|
|
|
|
|
|
Cost of hedging
excluded from
cash flow
hedges
|
|
8
|
|
2
|
|
3
|
|
(27)
|
|
|
|
|
|
|
|
|
|
Tax impact of cash
flow hedges
|
|
19
|
|
99
|
|
129
|
|
(222)
|
|
|
|
|
|
|
|
|
|
Total other
comprehensive income (loss)
|
|
(50)
|
|
(273)
|
|
(357)
|
|
611
|
|
|
|
|
|
|
|
|
|
Total comprehensive
income
|
$
|
10,716
|
$
|
10,068
|
$
|
4,295
|
$
|
1,347
|
Interim Condensed Consolidated Statement of Changes in
Shareholders' Equity
For the 39 week periods ended October 30,
2021 and October 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
Retained
|
other
|
|
|
|
Share
|
Contributed
|
earnings
|
comprehensive
|
|
October 30, 2021 (39
weeks)
|
capital
|
surplus
|
(deficit)
|
income
(loss)
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 30,
2021
|
$
|
197,333
|
$
|
3,682
|
$
|
(36,608)
|
$
|
(227)
|
$
|
164,180
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment on
amendment of IFRS 16
|
|
–
|
|
–
|
|
85
|
|
–
|
|
85
|
Balance, January 31,
2021
|
|
197,333
|
|
3,682
|
|
(36,523)
|
|
(227)
|
|
164,265
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
–
|
|
–
|
|
4,652
|
|
–
|
|
4,652
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from change
in fair
|
|
|
|
|
|
|
|
|
|
|
value of cash flow hedges,
|
|
|
|
|
|
|
|
|
|
|
net of income taxes
|
|
–
|
|
–
|
|
–
|
|
(357)
|
|
(357)
|
|
|
|
|
|
|
|
|
|
|
|
Transfer of realized
gain on cash
flow hedges to inventories, net
of income
taxes
|
|
–
|
|
–
|
|
–
|
|
449
|
|
449
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation
|
|
–
|
|
633
|
|
–
|
|
–
|
|
633
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of Shares
|
|
265
|
|
(230)
|
|
–
|
|
–
|
|
35
|
|
|
|
|
|
|
|
|
|
|
|
Balance, October 30,
2021
|
$
|
197,598
|
$
|
4,085
|
$
|
(31,871)
|
$
|
(135)
|
$
|
169,677
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
Retained
|
other
|
|
|
|
Share
|
Contributed
|
earnings
|
comprehensive
|
|
|
October 31, 2020 (39
weeks)
|
capital
|
surplus
|
(deficit)
|
income
(loss)
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Balance, February 1,
2020
|
$
|
196,903
|
$
|
3,407
|
$
|
(49,688)
|
$
|
(116)
|
$
|
150,506
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
–
|
|
–
|
|
736
|
|
–
|
|
736
|
|
|
|
|
|
|
|
|
|
|
|
Net gain from change
in fair
|
|
|
|
|
|
|
|
|
|
|
value of cash flow hedges,
|
|
|
|
|
|
|
|
|
|
|
net of income taxes
|
|
–
|
|
–
|
|
–
|
|
611
|
|
611
|
|
|
|
|
|
|
|
|
|
|
|
Transfer of realized
gain on cash
flow hedges to inventories, net
of income
taxes
|
|
–
|
|
–
|
|
–
|
|
(463)
|
|
(463)
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation
|
|
–
|
|
529
|
|
–
|
|
–
|
|
529
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of
Shares
|
|
430
|
|
(430)
|
|
–
|
|
–
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
Balance, October
31, 2020
|
$
|
197,333
|
$
|
3,506
|
$
|
(48,952)
|
$
|
32
|
$
|
151,919
|
Interim Condensed Consolidated Statement of Cash
Flows
For the 39 week periods ended October 30,
2021 and October 31, 2020
|
|
|
|
October 30,
2021
|
October 31,
2020
|
|
(39 weeks)
|
(39 weeks)
|
|
|
|
|
|
Cash generated from
(used in):
|
|
|
|
|
|
|
|
|
|
Operating
activities:
|
|
|
|
|
Net
income
|
$
|
4,652
|
$
|
736
|
Items not involving
cash:
|
|
|
|
|
Depreciation and
amortization
|
|
22,603
|
|
24,664
|
Share-based
compensation
expense
|
|
633
|
|
529
|
Gain from
deconsolidation of RTS USA
Corp.
|
|
–
|
|
(4,774)
|
Unrealized gain on
de-designated forward
contracts
|
|
–
|
|
(8)
|
Gain on lease
modification
|
|
(347)
|
|
(309)
|
Interest
expense
|
|
6,787
|
|
9,320
|
Income taxes expense
(recovery)
|
|
1,904
|
|
(195)
|
Rent
concessions
|
|
(2,470)
|
|
(3,112)
|
Settlement of
de-designated forward contracts
|
|
(109
|
–
|
|
Interest
paid
|
|
(2,208)
|
|
(3,537)
|
Payment of interest
on lease liabilities
|
|
(4,108)
|
|
(5,258)
|
Taxes refunded
(paid)
|
|
(1,683)
|
|
3,769
|
Change in non-cash
operating working capital:
|
|
|
|
|
Accounts
receivable
|
|
(2,820)
|
|
(161)
|
Inventories
|
|
(23,549)
|
|
(24,652)
|
Prepaid
expenses
|
|
8
|
|
2,865
|
Accounts payable and
accrued liabilities
|
|
3,884
|
|
18,406
|
Deferred
revenue
|
|
(845)
|
|
(1,199)
|
|
|
2,332
|
|
17,084
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
Issuance of long-term
debt
|
|
14,500
|
|
16,000
|
Long-term debt
financing costs
|
|
(931)
|
|
(148)
|
Repayment of
long-term
debt
|
|
(3,738)
|
|
(3,737)
|
Payment of principal
on lease liabilities, net of tenant allowance
|
|
(11,308)
|
|
(8,162)
|
Proceeds from
issuance of
Shares
|
|
35
|
|
–
|
|
|
(1,442)
|
|
3,953
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
Additions to fixed
assets
|
|
(3,241)
|
|
(2,926)
|
Deconsolidation of
RTS USA
Corp.
|
|
–
|
|
(541)
|
|
|
(3,241)
|
|
(3,467)
|
|
|
|
|
|
Increase (decrease)
in
cash
|
|
(2,351)
|
|
17,570
|
|
|
|
|
|
Cash and bank
indebtedness, beginning of
period
|
|
9,166
|
|
(6,277)
|
|
|
|
|
|
Cash and bank
indebtedness, end of
period
|
$
|
6,815
|
$
|
11,293
|
Reconciliation of Net Income (Loss) to EBITDA, Adjusted
EBITDA and Adjusted Net Income (Loss)
For the 13 and 39 week periods ended October 30, 2021, October
31, 2020, and November 2,
2019
|
Q3
2021
|
|
Q3
2020
|
|
Q3
2019
|
|
YTD
2021
|
|
YTD
2020
|
|
YTD
2019
|
Net income
(loss)
|
10,766
|
|
10,341
|
|
1,969
|
|
4,652
|
|
736
|
|
(17,452)
|
Add the impact
of:
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
2,250
|
|
2,783
|
|
4,159
|
|
6,787
|
|
9,320
|
|
11,605
|
Income taxes expense
(recovery)
|
3,969
|
|
3,831
|
|
554
|
|
1,904
|
|
(195)
|
|
(6,117)
|
Depreciation and
amortization
|
7,446
|
|
7,906
|
|
10,330
|
|
22,603
|
|
24,664
|
|
29,100
|
EBITDA
|
24,431
|
|
24,861
|
|
17,012
|
|
35,946
|
|
34,525
|
|
17,136
|
Adjust for the
impact of:
|
|
|
|
|
|
|
|
|
|
|
|
COGS: DC Relocation
Project
|
–
|
|
–
|
|
321
|
|
–
|
|
45
|
|
543
|
COGS: P&O Duty
Reimbursement
|
–
|
|
–
|
|
175
|
|
–
|
|
–
|
|
175
|
SG&A: Rent expense
excluded from net income as a result of IFRS 16
|
(5,780)
|
|
(6,160)
|
|
(7,930)
|
|
(17,736)
|
|
(19,748)
|
|
(21,906)
|
SG&A: Gain from
the deconsolidation of RTS USA Corp
|
–
|
|
–
|
|
–
|
|
–
|
|
(4,774)
|
|
–
|
SG&A: Chapter 7
filing costs
|
–
|
|
26
|
|
–
|
|
–
|
|
1,240
|
|
–
|
SG&A: Purchase
accounting adjustments
|
26
|
|
42
|
|
286
|
|
66
|
|
127
|
|
524
|
SG&A: Stock option
expense
|
265
|
|
198
|
|
(468)
|
|
633
|
|
529
|
|
527
|
SG&A: DC
Relocation Project
|
–
|
|
–
|
|
341
|
|
–
|
|
–
|
|
1,648
|
SG&A: Changes in
key personnel
|
56
|
|
46
|
|
651
|
|
237
|
|
712
|
|
1,174
|
SG&A: Other
non-recurring items
|
160
|
|
–
|
|
176
|
|
372
|
|
1
|
|
194
|
Adjusted
EBITDA
|
19,158
|
|
19,013
|
|
10,564
|
|
19,518
|
|
12,657
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3
2021
|
|
Q3
2020
|
|
Q3
2019
|
|
YTD
2021
|
|
YTD
2020
|
|
YTD
2019
|
Net income
(loss)
|
10,766
|
|
10,341
|
|
1,969
|
|
4,652
|
|
736
|
|
(17,452)
|
|
|
|
|
|
|
|
|
|
|
|
|
Reverse the impact
of IFRS 16:
|
|
|
|
|
|
|
|
|
|
|
|
Rent expense excluded
from net income
|
(5,780)
|
|
(6,160)
|
|
(7,930)
|
|
(17,736)
|
|
(19,748)
|
|
(21,906)
|
Depreciation on ROU
assets
|
4,604
|
|
4,869
|
|
6,306
|
|
13,855
|
|
15,427
|
|
18,477
|
Interest on lease
liabilities
|
1,314
|
|
1,515
|
|
2,312
|
|
4,108
|
|
5,258
|
|
6,787
|
Deferred tax
impact
|
(36)
|
|
(61)
|
|
(183)
|
|
(60)
|
|
(230)
|
|
(895)
|
Total IFRS 16 impacts
reversed
|
102
|
|
163
|
|
505
|
|
167
|
|
707
|
|
2,463
|
Add the impact
of:
|
|
|
|
|
|
|
|
|
|
|
|
COGS: DC Relocation
Project
|
–
|
|
–
|
|
321
|
|
–
|
|
45
|
|
543
|
COGS: P&O Duty
Reimbursement
|
–
|
|
–
|
|
175
|
|
–
|
|
–
|
|
175
|
SG&A: Gain from
the deconsolidation of RTS USA Corp
|
–
|
|
–
|
|
–
|
|
–
|
|
(4,774)
|
|
–
|
SG&A: Chapter 7
filing costs
|
–
|
|
26
|
|
–
|
|
–
|
|
1,240
|
|
–
|
SG&A: Purchase
accounting adjustments
|
26
|
|
42
|
|
286
|
|
66
|
|
127
|
|
524
|
SG&A: Stock option
expense
|
265
|
|
198
|
|
(468)
|
|
633
|
|
529
|
|
527
|
SG&A: DC
Relocation Project
|
–
|
|
–
|
|
343
|
|
–
|
|
–
|
|
1,646
|
SG&A: Changes in
key personnel
|
56
|
|
46
|
|
651
|
|
237
|
|
712
|
|
1,174
|
SG&A: Other
non-recurring items
|
160
|
|
–
|
|
176
|
|
372
|
|
1
|
|
198
|
SG&A: Amortization
of intangible assets acquired by Searchlight
|
575
|
|
577
|
|
949
|
|
1,722
|
|
1,727
|
|
2,847
|
Total
adjustments
|
1,082
|
|
889
|
|
2,433
|
|
3,030
|
|
(393)
|
|
7,634
|
Tax effect of
adjustments
|
(216)
|
|
(184)
|
|
(773)
|
|
(634)
|
|
(811)
|
|
(1,894)
|
Adjusted Net
Income (Loss)
|
11,734
|
|
11,209
|
|
4,134
|
|
7,215
|
|
239
|
|
(9,249)
|
SOURCE Roots Corporation