Mr. Stephen Wetmore reports
CANADIAN TIRE CORPORATION ANNOUNCES STRONG FOURTH QUARTER AND FULL YEAR RESULTS
Canadian Tire Corp. Ltd. has released its fourth quarter and full-year results for the period ended Dec. 30, 2017.
"Our ability to meet our customers' expectations continues to be evident from our consistent delivery of strong results," said Stephen Wetmore, president and chief executive officer, Canadian Tire. "Two thousand eighteen will see us continuing to drive growth and profitability while taking advantage of the opportunities created by the new and changing retail environment. We remain committed to investing in innovative initiatives that will help us exceed the expectations of our loyal customer base."
Consolidated overview
Fourth quarter:
- Consolidated retail sales increased $215.8-million, or 4.9 per cent, in the fourth quarter. Excluding petroleum, consolidated retail sales were up 4.1 per cent over the same period last year.
- Consolidated revenue increased $323.0-million, or 8.9 per cent in the fourth quarter. Excluding petroleum, consolidated revenue increased 8.4 per cent.
- Consolidated EBITDA (earnings before interest, taxes, depreciation and amortization) increased by 10.2 per cent in the quarter.
- Diluted EPS (earnings per share) was $4.10 in the quarter, an increase of 64 cents per share, or 18.5 per cent, compared with the prior year.
Full year:
- Consolidated revenue increased $753.9-million for the full year, or 5.9 per cent, over the prior year. Excluding petroleum, consolidated revenue increased 5.1 per cent.
- Consolidated retail sales increased $610.1-million, or 4.2 per cent, over the prior year. Excluding petroleum, consolidated retail sales increased 3.3 per cent.
- Diluted EPS was $10.67, an increase of $1.45 per share, or 15.7 per cent, over the prior year.
Retail segment overview
Fourth quarter:
-
Financial results reflect fourth quarter 2017 performance compared with the fourth quarter of 2016.
- Retail segment revenue increased $300.5-million, or 9.0 per cent. Excluding petroleum, retail segment revenue increased 8.5 per cent.
-
Canadian Tire retail saw retail sales increase 3.8 per cent and same store sales were up 3.5 per cent.
- Retail and same-store sales at FGL were up 5.5 per cent and 5.8 per cent, respectively.
- Mark's retail sales increased 3.9 per cent and same store sales were up 3.4 per cent.
Full year:
-
Financial results reflect 2017 performance compared with 2016.
-
Retail segment revenue increased $695.7-million, or 6.1 per cent. Excluding petroleum, retail segment revenue was up 5.1 per cent.
- Canadian Tire retail sales increased 3.4 per cent and same-store sales increased 2.7 per cent.
-
FGL's retail sales increased 2.4 per cent and same-store sales increased 2.0 per cent.
- Mark's retail sales increased 4.7 per cent and same-store sales were up 4.2 per cent.
CT REIT overview:
-
As disclosed in the fourth quarter and year-end 2017 CT REIT earnings release on Feb. 12, 2018, CT REIT added over 1.5 million square feet of gross leasable area (GLA) in 2017, including approximately one million square feet of GLA in the fourth quarter.
Financial services overview:
-
Income before income taxes increased $4.2-million, or 4.9 per cent in the fourth quarter, and increased $23.4-million, or 6.4 per cent, for the full year over 2016.
- Gross average credit card receivables (GAAR) was up 8.1 per cent in the fourth quarter and for the full year GAAR was up 7.2 per cent over 2016.
Capital allocation
Capital expenditures:
- Total operating capital expenditures were $384.2-million for the year, down from $455.8-million in 2016, and slightly below the previously disclosed range of $400-million to $425-million.
- For fiscal 2017, the company's capital expenditures required for distribution capacity of $42.5-million were within the previously announced disclosed range of $25-million to $50-million, which includes expenditures required to bring the Bolton Distribution Centre, located in the town of Caledon, Ont., into active service.
Quarterly dividend
On Feb. 14, 2018, the company declared dividends payable to holders of Class A non-voting shares and common shares at a rate of 90 cents per share payable on June 1, 2018, to shareholders of record as of April 30, 2018. The dividend is considered an eligible dividend for tax purposes.
Share repurchase
On Nov. 9, 2017, the company announced its intention to purchase $550-million of its Class A non-voting shares, in excess of the amount required for anti-dilutive purposes, by the end of 2018. To date, the company has purchased $169.5-million of Class A non-voting shares in partial fulfilment of its 2018 share purchase intention, leaving $380.5-million that is expected to be purchased during the remainder of fiscal 2018.
Normal course issuer bid
The company announced its intention to make a normal course issuer bid to purchase from March 2, 2018, to March 1, 2019, up to 5.9 million Class A non-voting shares, which represents 9.9 per cent of the 59.8 million approximate public float of Class A non-voting shares issued and outstanding as at Feb. 14, 2018. There were 62,651,561 Class A non-voting shares issued and outstanding as at Feb. 14, 2018.
The company intends to purchase Class A non-voting shares under the 2018 NCIB for two purposes: (i) to fulfill the 2018 share purchase intention as part of its capital management plan; and (ii) to offset the dilutive effect of the issuance of Class A non-voting shares pursuant to its dividend reinvestment and stock option plans, consistent with the company's policy.
Other than pursuant to private agreements under an issuer bid exemption order issued by a securities regulatory authority or such other means as may be permitted by a securities regulatory authority under applicable securities laws, purchases of Class A non-voting shares pursuant to the 2018 NCIB will be made by means of open-market transactions through the facilities of the Toronto Stock Exchange and/or alternative Canadian trading systems, if eligible, at the market price of the Class A non-voting shares at the time of purchase or as otherwise permitted under the rules of the TSX and applicable securities laws. For open-market transactions, the company will be subject to a daily purchase limit of 46,795 Class A non-voting shares, which represents 25 per cent of 187,180, the average daily trading volume of the Class A non-voting shares on the TSX, net of purchases made by the company through the TSX, for the six months ended Jan. 31, 2018. The Class A non-voting shares purchased by the company pursuant to the 2018 NCIB will be restored to the status of authorized but unissued shares.
The company also announced that it will enter into an automatic share purchase plan (ASPP) with its designated broker to facilitate purchases of Class A non-voting shares under the 2018 NCIB at times when the company would not ordinarily be permitted to make such purchases due to its internal trading blackout periods or applicable regulatory restrictions. Pursuant to the ASPP, before entering into a blackout period, the company may, but is not required to, instruct its designated broker to make purchases of Class A non-voting shares under the 2018 NCIB during the ensuing blackout period. Any such instructions will be subject to specified limits, including price, volume and frequency, as determined by the company. Within these specified limits, the designated broker has discretion with respect to the purchase of the Class A non-voting shares under the 2018 NCIB during the blackout period in accordance with the rules of the TSX.
The ASPP will commence on March 2, 2018, and terminate on the earliest of the date on which: (i) the purchase limit under the 2018 NCIB has been reached; (ii) the 2018 NCIB expires; and (iii) the company terminates the ASPP in accordance with its terms. The ASPP constitutes an automatic securities purchase plan under applicable Canadian securities laws.
The company's proposed 2018 NCIB and ASPP are subject to regulatory approval.
Under the company's normal course issuer bid which began on March 2, 2017, and expires on March 1, 2018, the company received approval to purchase up to 6.0 million Class A non-voting shares. To date, the company has purchased a total of 4,153,505 Class A non-voting shares by means of open-market transactions through the facilities of the TSX and/or alternative Canadian trading systems under the company's 2017 NCIB, at the volume-weighted average price of $155.37.
Conference call
Canadian Tire will conduct a conference call to discuss information included in this news release and related matters at 2 p.m. Eastern Time on Feb. 15, 2018. The conference call will be available simultaneously and in its entirety to all interested investors and the news media through a webcast at the company's website and will be available through replay at this website for 12 months.
About Canadian Tire Corp. Ltd.
Canadian Tire is a family of businesses that includes a retail segment, a financial services division and CT REIT. The company's 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 categories. 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, and FGL Sports (Sport Chek, Hockey Experts, Sports Experts, National Sports, Intersport, Pro Hockey Life and Atmosphere), which offers the best active wear brands.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except share and per-share amounts)
13 weeks ended 52 weeks ended
Dec. 30, 2017 Dec. 31, 2016 Dec. 30, 2017 Dec. 31, 2016
Revenue $3,964.0 $3,641.0 $13,434.9 $12,681.0
Cost of producing revenue 2,570.1 2,344.3 8,796.5 8,288.5
------- ------- -------- --------
Gross margin 1,393.9 1,296.7 4,638.4 4,392.5
Other (income) expense (0.3) 2.4 0.2 (4.3)
Selling, general and administrative expenses 959.8 910.8 3,413.1 3,291.9
Net finance costs 30.1 25.4 112.6 93.9
------- ------- -------- --------
Income before income taxes 404.3 358.1 1,112.5 1,011.0
Income taxes 108.9 93.0 293.7 263.5
------- ------- -------- --------
Net income 295.4 265.1 818.8 747.5
------- ------- -------- --------
Net income attributable to
shareholders of Canadian Tire 275.7 246.8 735.0 669.1
Net income attributable to
non-controlling interests 19.7 18.3 83.8 78.4
------- ------- -------- --------
295.4 265.1 818.8 747.5
------- ------- -------- --------
Basic earnings per share 4.12 3.47 10.70 9.25
------- ------- -------- --------
Diluted earnings per share 4.10 3.46 10.67 9.22
We seek Safe Harbor.
© 2024 Canjex Publishing Ltd. All rights reserved.