Mr. Robert Sawyer reports
RONA ANNOUNCES ITS 2014 THIRD QUARTER RESULTS
- INCREASE OF 32% IN ADJUSTED NET INCOME PER SHARE FOR THE QUARTER AND 49% SINCE THE BEGINNING OF THE FISCAL YEAR
- INCREASE OF 2.0% IN RETAIL SAME-STORE SALES
Rona Inc. has released the results for its continuing operations for the 13- and 39-week periods ended Sept. 28, 2014.
Third-quarter highlights:
-
Adjusted net income per share up 32.0 per cent to 33 cents. Increase of 28.4 per cent in
adjusted net income attributable to participating shares, from $30.0-million in 2013 to $38.5-million in 2014;
- Adjusted EBITDA earnings before interest, taxes, depreciation and amortization) of $83.8-million, up 18.5 per cent from $70.7-million in 2013.
Increase in adjusted EBITDA margin of 170 basis points, to 8.6 per cent, in the
retail segment, and 110 basis points on a consolidated basis;
- Same-store sales up 2.0 per cent in the retail segment, despite the stagnant
economy and sustained pressure on housing starts in Quebec and the
Atlantic provinces;
- Increase of 8.3 per cent in same-store sales in the distribution segment due to
the improvement of the company's merchandising strategy and the sales recovery
following a late spring;
- Solid balance sheet with a ratio of net debt to adjusted EBITDA of 0.86 times
compared with 1.85 times at the same date a year ago. Net debt of $188.4-million compared with $347.8-million a year earlier;
- Purchase of 2.56 million shares in the third quarter for $35.2-million
(6.1 million shares for $77.4-million to this date since the issuer bid
was put in place) and approval by the board of directors of a new normal
course issuer bid program subject to the approval of the Toronto Stock
Exchange.
"The third-quarter results demonstrate the positive impact of having our teams focused on optimizing store operations. Despite a slow economy and strong competition, our same-store sales in the retail segment have grown by 2.0 per cent. We are satisfied with the progress of our Reno-Depot banner and the performance of our converted Totem stores. Across the country, our various banners' merchandising programs are bearing fruit and the improved management of store operations is yielding the expected results," said Robert Sawyer, president and chief executive officer of Rona.
"Given the positive trend in sales and profitability, and Rona's solid financial situation, we are in a position to start expanding again. In 2015, we will open five new stores, including two stores under the new Reno-Depot concept outside Quebec. Rona's expansion will be disciplined and will take place in environments where we must protect and reinforce our market share or where the investment is justified by a strong growth potential and a good return on invested capital," said Mr. Sawyer.
FINANCIAL HIGHLIGHTS FROM CONTINUING OPERATIONS
(in millions of dollars, except per share data)
Quarters ended Nine months ended
Sept. 28, Sept. 29, Sept. 28, Sept. 29,
2014 2013 2014 2013
Revenues $ 1,167.3 $ 1,169.2 $ 3,125.1 $ 3,251.1
EBITDA 83.7 70.7 179.8 49.2
Adjusted EBITDA 83.8 70.7 182.9 149.0
---------- ---------- ---------- ----------
Net income (loss)
attributable to
participating shares $ 38.0 $ 30.0 $ 63.5 $ (44.8)
========== ========== ========== ==========
Per share -- basic and
diluted $ 0.32 $ 0.25 $ 0.53 $ (0.37)
Adjusted net income
attributable to
participating shares $ 38.5 $ 30.0 $ 66.1 $ 45.3
Adjusted per share -- basic
and diluted $ 0.33 $ 0.25 $ 0.55 $ 0.37
2014 third-quarter results
Consolidated revenues from continuing operations amounted to $1,167.3-million, compared with revenues of $1,169.2-million in the third quarter of 2013. This stability is a result of a 3.0-per-cent growth in same-store sales across the network, despite the closure of underperforming stores. Same-store sales grew 2.0 per cent in the retail segment and 8.3 per cent in the distribution segment. The successful repositioning of the former Totem stores and the vigorous economy in Western Canada generated a strong increase in sales in in this region. In Quebec, Rona's largest market, the contribution obtained from the company's strategy on lumber and building materials generated growth in same-store sales for the entire network during the quarter, while the redeployment of the Reno-Depot stores had a positive impact on the retail segment performance.
Adjusted EBITDA for continuing operations totalled $83.8-million (7.2-per-cent margin), up 18.5 per cent compared with $70.7-million (6.1-per-cent margin) in 2013. The increase reflects the $11.4-million contribution from Rona's organic operations, higher gross margin stemming from the increase in same-store sales, and lower selling, general and administrative expenses following the impact of the company's recovery plan. Furthermore, the closure of underperforming stores raised adjusted EBITDA by $2.8-million. In the retail segment, the adjusted EBITDA margin is up 170 basis points to 8.6 per cent.
For the third quarter of 2014, adjusted net income from continuing operations attributable to participating shares was $38.5-million, up 28.4 per cent compared with $30.0-million. Adjusted net income per basic and diluted share is up 32 per cent from 25 cents to 33 cents.
Results for the first nine months of 2014
Highlights:
-
Adjusted net income attributable to participating shares of $66.1-million, up 45.8 per cent compared with $45.3-million in 2013;
- Increase of 48.9 per cent in adjusted net income per basic and diluted share,
from 37 cents in 2013 to 55 cents in 2014;
- Adjusted EBITDA of $182.9-million, up 22.8 per cent from $149.0-million in 2013;
- Adjusted consolidated EBITDA margin up 130 basis points at 5.9 per cent, versus
4.6 per cent, and increase of 150 basis points in adjusted EBITDA margin in the
retail segment to 6.7 per cent.
In the first nine months of 2014, consolidated revenues from continuing operations amounted to $3,125.1-million, compared with $3,251.1-million for the first nine months of 2013. Rona's organic revenues were up $7.4-million. This increase occurred mainly in the retail segment and is due in part to the repositioning of the Reno-Depot and Totem stores, the strong advances in Western Canada, and the improved merchandising strategies for both contractors in Western Canada and Ontario and the company's dealer-owner network.
Adjusted EBITDA from continuing operations was $182.9-million (5.9-per-cent margin) up 22.8 per cent compared with $149.0-million (4.6-per-cent margin) for the corresponding period in 2013. The increase includes $18.0-million from Rona's organic operations and a contribution of $11.5-million from the closure of underperforming stores.
Adjusted net income from continuing operations attributable to participating shares for the first nine months of 2014 amounted to $66.1-million, or 55 cents per basic and diluted share, up 45.8 per cent compared with $45.3-million, or 37 cents per basic and diluted share, for the first nine months of 2013.
Solid financial situation
At Sept. 28, 2014, Rona was in a healthy financial situation with net debt of $188.4-million, down from $347.8-million at the end of the third quarter of fiscal 2013. On that same date, Rona had used only $66.8-million of its authorized credit facility of $700.0-million.
Reflecting this decreased debt level, the ratio of net debt to adjusted EBITDA for the past 12 months was 0.86 times at the close of the third quarter of fiscal 2014, compared with 1.85 times for the same period of fiscal 2013. The ratio of net debt to total capital was 10 per cent at Sept. 28, 2014, compared with 17 per cent at Sept. 29, 2013.
In the third quarter, Rona bought back 2,559,100 common shares for a total consideration of $35.2-million under its normal course issuer bid put in place on Nov. 18, 2013. The arrangement authorizes Rona to purchase a maximum of 8,578,384 common shares until Nov. 17, 2014. To this date, the corporation has purchased 6,097,500 common shares for a total of $77.4-million since the bid took effect.
Dividend on preferred shares
At its meeting on Nov. 11, 2014, Rona's board of directors declared a quarterly dividend of 32.82 cents per share on cumulative five-year rate reset Class A preferred shares, Series 6. The dividend will be paid on Dec. 31, 2014, to shareholders of record on Dec. 15, 2014.
Additional information
The management's discussion and analysis, interim consolidated financial statements, and notes for third quarter 2014 can be found on the SEDAR website and in the investor relations section of the corporation's website. The corporation's annual information form, along with other information about Rona, can also be found on the Rona and SEDAR websites.
Conference call with the financial community
On Tuesday, Nov. 11, 2014, at 3 p.m. (EST), Rona will hold a conference call for the financial community. To join the conference, please call 416-340-2216 or 1-866-223-7781.
A replay will be available from 7 p.m. on Tuesday, Nov. 11, 2014, until Nov. 18, 2014. It can be heard by dialling 905-694-9451 and entering the password 6731408 on the telephone keypad.
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