Mr. Mike Walsh reports

LFL, CANADA'S LARGEST HOME RETAILER, RELEASES FINANCIAL RESULTS FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2023, AND HAS INCREASED ITS DIVIDEND BY 12.5%

Leon's Furniture Ltd. has released financial results for the quarter ended Sept. 30, 2023.

Financial highlights -- third quarter 2023

All comparisons are made with Q3 2022 unless otherwise indicated:

• Revenue for the third quarter 2023 was $661.0-million, comparable with the prior-year quarter, despite continued macroeconomic challenges.
• Gross profit margin in the quarter decreased 188 basis points to 44.04 per cent.
• Adjusted net income for the quarter totalled $51.7-million, a decrease of 12.7 per cent.
• Adjusted diluted earnings per share of 75 cents, a decrease of 13.8 per cent.
• The company reduced inventory levels to $430-million, down $72-million or 14.3 per cent from the prior year.
• Cash provided by operating activities was $107.6-million for the third quarter in comparison with $49.3-million in the prior-year quarter, reflecting the strong cash flow generation of the business.
• The company received $20-million in proceeds in connection with Curo Intermediate Holdings' sale of Flexiti to Questrade.
• The company repaid $50-million in long-term debt during the period.
• At Sept. 30, 2023, unrestricted liquidity was $385.1-million, composed of cash, cash equivalents, debt and equity instruments, and the undrawn revolving credit facility.

Leon's board of directors approved the company's resolution to create a real estate investment trust through an initial public offering. The timing is subject to prevailing market conditions and receipt of required regulatory approvals.

Mike Walsh, president and chief executive officer of Leon's, commented: "During Q3, the combination of lower-cost inventory and targeted marketing enabled us to drive sales momentum while balancing gross margin within an acceptable range. We saw an increase in year-over-year written order activity that has continued early into [fourth quarter]. We also expect to see better leverage on our operating costs over the next two quarters despite higher ongoing retail point-of-sale finance costs. The third quarter was another example of the strong cash flow generation of the business. We are focused on investing to ensure the company is positioned to both grow share as the consumer environment improves while generating value for shareholders by paying down debt."

Mr. Walsh continued: "We are in the early stages of surfacing the significant underlying value in the company's assets as we look for additional pathways to better leverage our scale into value for shareholders. The value realized by the company on Curo's sale of Flexiti to Questrade is just one example of the additional returns we can generate by partnering with parties that access our scale, and we see the opportunity for meaningful synergies with Questrade moving forward."

The board of directors of Leon's also announces that Mark J. Leon has chosen to retire as chairman of the board, effective the end of 2023. He will continue to sit on the board and assume the title of chairman emeritus.

Mark Leon issued the following statement: "It has been an honour to serve as the chairman of Leon's for over 20 years. I am humbled by the faith, loyalty and trust that has been accorded to me by our company associates, management teams and our board of directors. Also, I would be remiss if I didn't acknowledge the unyielding support over many years from the entire Leon family. My heartfelt gratitude goes out to each and every one of them. Our board has decided that Terrence Leon will assume the role of chairman, and Edward Leon will serve as vice-chairman. For many years, Terrence and Edward have both demonstrated a fervent desire to increase our company's growth and shareholder value. We have every confidence that Leon's will continue to prosper under their stewardship. Our CEO, Mike Walsh, and our CFO, Costa Pefanis, lead a truly capable management team. There is no denying we believe the best is yet to come. May God bless this truly great and iconic Canadian success story with continued good fortune."

Terrence Leon, vice-chairman of Leon's, made the following comment: "Mark Leon is a truly inspirational leader for our company and our family. His strength, wisdom, goodwill and humility are examples we can only hope to emulate. There are no words that can adequately show our deep appreciation for all that he has done, but on behalf of all of us who you have touched, thank you Mark."

Dividends

As previously announced, the company paid a quarterly dividend of 16 cents per common share on Oct. 10, 2023. Today, the directors have declared an increase in the quarterly dividend of two cents to 18 cents per common share payable on Jan. 8, 2024, to shareholders of record at the close of business on Dec. 8, 2023. In addition, the annual dividend on the convertible non-voting preferred shares of 32 cents will be payable on Jan. 8, 2024, to the shareholders of record at the close of business on Dec. 8, 2023. As of 2007, dividends paid by Leon's are eligible dividends pursuant to the changes to the Income Tax Act under Bill C-28, Canada.

Outlook

Given the company's strong and continuously improving financial position, its principal objective is to increase our market share and profitability. It remains focused on its commitment to effectively manage its costs but to also continuously invest in the business to drive growth initiatives that will drive more customers to both its on-line e-commerce sites and its 303 store locations across Canada.

About Leon's Furniture Ltd.

Leon's is the largest retailer of furniture, appliances and electronics in Canada. Its 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 303 retail stores from coast to coast in Canada under various banners. The company operates six websites.

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