MONTREAL, April 16, 2014 /CNW Telbec/ - METRO INC. (TSX: MRU) today
announced its results for the second quarter ended March 15, 2014.
HIGHLIGHTS
-
Sales of $2,554.8 million, up 1.7% versus last year
-
Same-store sales up 1.0%
-
Net earnings of $96.9 million and fully diluted net earnings per share
of $1.07
-
Declared dividend of $0.30 per share, up 20%
Results for the first 24 weeks of 2014, of 2013, and those for the
second quarter of 2013 include non-recurring items, the most important
being a gain of $266.4 million after-tax on the sale of a portion of
our investment in Alimentation Couche-Tard in 2013.
|
12 weeks / Fiscal Year
|
(Millions of dollars, except for net earnings per share/EPS) | 2014 | | % | |
2013
| |
%
| |
Change (%)
|
Sales
| 2,554.8 | | 100.0 | |
2,512.0
| |
100.0
| |
1.7
|
Operating income before depreciation and amortization and associate's
earnings(2) | 168.7 | | 6.6 | |
176.3
| |
7.0
| |
(4.3)
|
Net earnings
| 96.9 | | 3.8 | |
362.7
| |
14.4
| |
(73.3)
|
Fully diluted EPS
| 1.07 | | — | |
3.73
| |
—
| |
(71.3)
|
Adjusted net earnings from continuing operations(1)(2) | 96.9 | | 3.8 | |
96.4
| |
3.8
| |
0.5
|
Adjusted fully diluted EPS from continuing operations(1)(2) | 1.07 | | — | |
0.98
| |
—
| |
9.2
|
| |
| |
|
24 weeks / Fiscal Year
|
(Millions of dollars, except for net earnings per share/EPS) | 2014 | | % | |
2013
| |
%
| |
Change (%)
|
Sales
| 5,256.1 | | 100.0 | |
5,216.7
| |
100.0
| |
0.8
|
Operating income before depreciation and amortization and associate's
earnings(2) | 339.8 | | 6.5 | |
360.8
| |
6.9
| |
(5.8)
|
Adjusted operating income before depreciation and amortization and
associate's earnings(2)(4) | 346.2 | | 6.6 | |
360.8
| |
6.9
| |
(4.0)
|
Net earnings
| 196.1 | | 3.7 | |
480.0
| |
9.2
| |
(59.1)
|
Fully diluted EPS
| 2.13 | | — | |
4.91
| |
—
| |
(56.6)
|
Adjusted net earnings from continuing operations(1)(2) | 200.8 | | 3.8 | |
207.3
| |
4.0
| |
(3.1)
|
Adjusted fully diluted EPS from continuing operations(1)(2) | 2.18 | | — | |
2.10
| |
—
| |
3.8
|
PRESIDENT'S MESSAGE
"We are encouraged by our improved sales performance and the increase in
our adjusted net earnings(1)(2) achieved in the second quarter in a market that remains highly
competitive. We are confident that our strategies, investments and the
commitment of our teams will allow(3) us to continue to grow in future quarters," stated Eric R. La Flèche, President and Chief Executive Officer.
2014 SECOND QUARTER RESULTS
SALES
Sales in the second quarter of 2014 totalled $2,554.8 million, up 1.7%
compared to $2,512.0 million for the same quarter last year. Same-store
sales were up 1.0%. Our aggregate food basket experienced slight
inflation. Our merchandising strategies and investments, as well as our
reorganization of our Ontario store network enabled us to increase
sales in a market that remains intensely competitive.
Sales in the first 24 weeks of fiscal 2014 totalled $5,256.1 million
versus $5,216.7 million for the corresponding period of fiscal 2013, an
increase of 0.8%.
OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION AND ASSOCIATE'S
EARNINGS(2)
Operating income before depreciation and amortization and associate's
earnings(2) for the second quarter of 2014 totalled $168.7 million or 6.6% of sales
versus $176.3 million or 7.0% of sales for the same quarter last year.
Operating income before depreciation and amortization and associate's
earnings(2) for the first 24 weeks of fiscal 2014 totalled $339.8 million versus
$360.8 million for the corresponding period of the previous fiscal
year. Non-recurring closing costs of $6.4 million were recorded in the
first quarter of 2014 as a result of our decision to consolidate our
Québec produce and dairy distribution operations in our new Laval
distribution centre and to close our decades-old Québec City produce
warehouse. Excluding this non-recurring expense, adjusted operating
income before depreciation and amortization and associate's earnings(2)(4) for the first 24 weeks of fiscal 2014 was $346.2 million, or 6.6% of
sales compared to $360.8 million or 6.9% of sales for the corresponding
period of 2013.
This lower profitability is mainly due to the decreases in gross margins
which were 19.5% and 19.1% respectively for the second quarter and
24-week period of fiscal 2014 compared to 19.8% and 19.4% for the
corresponding quarters in 2013, as part of the merchandising strategies
we adopted in 2014 to improve sales. Strong cost control enabled us to
maintain operating expenses at a level relatively similar to last
year's despite an increase in certain costs, notably energy.
Operating income before depreciation and amortization and associate's
earnings adjustments (OI)(2)
|
24 weeks / Fiscal Year
|
| 2014 | |
2013
|
(Millions of dollars, unless otherwise indicated) | OI | | Sales | | (%) | |
OI
| |
Sales
| |
(%)
|
Operating income before depreciation and amortization and associate's
earnings
| 339.8 | | 5,256.1 | | 6.5 | |
360.8
| |
5,216.7
| |
6.9
|
Closure costs
| 6.4 | | | | | |
—
| | | | |
Adjusted operating income before depreciation and amortization and
associate's earnings(2) | 346.2 | | 5,256.1 | | 6.6 | |
360.8
| |
5,216.7
| |
6.9
|
DEPRECIATION AND AMORTIZATION AND NET FINANCIAL COSTS
Total depreciation and amortization expenses for the second quarter and
the first 24 weeks of 2014 amounted to $40.5 million and $81.5 million
respectively versus $41.4 million and $83.3 million in 2013. Net
financial costs for the second quarter of 2014 totalled $11.4 million
compared to $11.9 million for the corresponding quarter last year. Net
financial costs for the first 24 weeks of fiscal 2014 totalled
$21.7 million compared to $24.9 million in 2013. The average financing
rate was 5.0% for the first 24 weeks of 2014 versus 4.6% for the
corresponding period last fiscal year. This increase in the average
rate was due to the repayment in the second quarter of 2013 of our
revolving credit facility of $330.4 million which carried a lower
interest rate than our other debts. The repayment was made out of our
operating activity cash flows and the proceeds on disposal of a portion
of the investment in Alimentation Couche-Tard.
SHARE OF AN ASSOCIATE'S EARNINGS
Our share of earnings in Alimentation Couche-Tard was $11.0 million for
the second quarter of 2014 versus $8.0 million for the corresponding
period of 2013.
Our share of earnings for the first 24 weeks of fiscal 2014 was
$24.1 million versus $27.0 million in 2013. This decline results from
our reduced holding compared to last year following the sale of nearly
half of our investment in the second quarter of 2013.
INCOME TAXES
Second quarter and 24-week period income tax expenses of $30.9 million
and $64.6 million in 2014 represented effective tax rates of 24.2% and
24.8% compared with second quarter and 24-week period tax expenses of
$76.0 million and $113.7 million respectively in 2013 for effective tax
rates of 17.3% and 19.4%. Excluding the $307.8 million gain on disposal
of part of our investment in Alimentation Couche-Tard and related
income tax of $41.4 million, effective tax rates for the second quarter
and 24-week period of 2013 were 26.4% and 25.9% respectively.
NET EARNINGS
Net earnings for the second quarter of 2014 were $96.9 million, down
73.3% from net earnings of $362.7 million for the same quarter of 2013.
Fully diluted net earnings per share were down 71.3% to $1.07 from
$3.73 last year.
Net earnings for the first 24 weeks of 2014 were $196.1 million, down
59.1% from $480.0 million for the corresponding period of 2013. Fully
diluted net earnings per share were $2.13 compared with $4.91 last
year, a decrease of 56.6%.
ADJUSTED NET EARNINGS FROM CONTINUING OPERATIONS(2)
Excluding the after-tax gain of $266.4 million on disposal of part of
our investment in Alimentation Couche-Tard as well as the $0.1 million
net loss on discontinued operation following the sale of our Distagro
division in the second quarter of 2013, 2014 second quarter adjusted
net earnings from continuing operations(1)(2) and adjusted fully diluted net earnings per share from continuing
operations(1)(2) were up 0.5% and 9.2% respectively compared to the corresponding
quarter of 2013.
Excluding after-tax Québec produce warehouse closing costs of
$4.7 million in the 24-week period of 2014 as well as the after-tax
gain of $266.4 million on disposal of part of our investment in
Alimentation Couche-Tard and net gain of $6.3 million on discontinued
operation following the sale of our Distagro division in the 24-week
period of 2013, adjusted net earnings from continuing operations(1)(2) for the 24-week period of 2014 were down 3.1% while adjusted fully
diluted net earnings per share from continuing operations(1)(2) were up 3.8% compared to the corresponding period of 2013.
Net earnings from continuing operations adjustments
|
12 weeks / Fiscal Year
|
| 2014 | |
2013
| |
Change (%) |
| (Millions of dollars) | Fully diluted EPS (Dollars) | | (Millions of dollars) |
Fully diluted
EPS (Dollars) | |
Net
earnings
|
Fully diluted
EPS
|
Net earnings
| 96.9 | 1.07 | |
362.7
|
3.73
| |
(73.3)
|
(71.3)
|
Net loss from discontinued operation
| — | — | |
0.1
|
—
| | | |
Net earnings from continuing operations
| 96.9 | 1.07 | |
362.8
|
3.73
| |
(73.3)
|
(71.3)
|
Gain on disposal of a portion of the investment in an associate after
taxes
| — | — | |
(266.4)
|
(2.75)
| | | |
Adjusted net earnings from continuing operations(2) | 96.9 | 1.07 | |
96.4
|
0.98
| |
0.5
|
9.2
|
| | | | | |
| | | | | |
|
24 weeks / Fiscal Year
|
| 2014 | |
2013
| |
Change (%) |
| (Millions of dollars) | Fully diluted EPS (Dollars) | | (Millions of dollars) |
Fully diluted
EPS (Dollars) | |
Net
earnings
|
Fully diluted
EPS
|
Net earnings
| 196.1 | 2.13 | |
480.0
|
4.91
| |
(59.1)
|
(56.6)
|
Net earnings from discontinued operation
| — | — | |
(6.3)
|
(0.07)
| | | |
Net earnings from continuing operations
| 196.1 | 2.13 | |
473.7
|
4.84
| |
(58.6)
|
(56.0)
|
Gain on disposal of a portion of the investment in an associate after
taxes
| — | — | |
(266.4)
|
(2.74)
| | | |
Closure costs after taxes
| 4.7 | 0.05 | |
—
|
—
| | | |
Adjusted net earnings from continuing operations(2) | 200.8 | 2.18 | |
207.3
|
2.10
| |
(3.1)
|
3.8
|
NORMAL COURSE ISSUER BID PROGRAM
Under its normal course issuer bid program, the Corporation may
repurchase up to 7,000,000 of its Common Shares between September 10,
2013 and September 9, 2014. As at April 4, 2014, the Corporation has
repurchased 4,800,100 Common Shares at an average price of $62.86 for a
total of $301.8 million.
DIVIDENDS
On April 15, 2014, the Corporation's Board of Directors declared a
quarterly dividend of $0.30 per Common Share payable June 6, 2014, an
increase of 20% over the dividend declared for the same quarter last
year. On an annualized basis, this dividend represents approximately
23% of 2013 adjusted net earnings from continuing operations(2).
FORWARD-LOOKING INFORMATION
We have used, throughout this press release, different statements that
could, within the context of regulations issued by the Canadian
Securities Administrators, be construed as being forward-looking
information. In general, any statement contained herein, which does not
constitute a historical fact, may be deemed a forward-looking
statement. Expression such as "allow" and other similar expressions are
generally indicative of forward-looking statements. The forward-looking
statements contained herein are based upon certain assumptions
regarding the Canadian food industry, the general economy, our annual
budget, as well as our 2014 action plan.
These forward-looking statements do not provide any guarantees as to the
future performance of the Corporation and are subject to potential
risks, known and unknown, as well as uncertainties that could cause the
outcome to differ significantly. An economic slowdown or recession, or
the arrival of a new competitor, are examples described under the "Risk
Management" section of the 2013 Annual Report which could have an
impact on these statements. We believe these statements to be
reasonable and pertinent as at the date of publication of this report
and represent our expectations. The Corporation does not intend to
update any forward-looking statement contained herein, except as
required by applicable law.
IFRS AND NON-IFRS MEASUREMENTS
In addition to the IFRS earnings measurements provided, we have included
certain IFRS and non-IFRS earnings measurements. These measurements are
presented for information purposes only. They do not have a
standardized meaning prescribed by IFRS and therefore may not be
comparable to similar measurements presented by other public companies.
OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION AND ASSOCIATE'S
EARNINGS
Operating income before depreciation and amortization and associate's
earnings is a measurement of earnings before financial costs, taxes,
depreciation and amortization (EBITDA) and associate's earnings. It is an additional IFRS measurement and it
is presented separately in the condensed consolidated statements of
income. We believe that this measurement helps readers of financial
statements to better evaluate the Corporation's operational
cash-generating capacity.
ADJUSTED OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION AND
ASSOCIATE'S EARNINGS, ADJUSTED NET EARNINGS FROM CONTINUING OPERATIONS
AND ADJUSTED FULLY DILUTED NET EARNINGS PER SHARE FROM CONTINUING
OPERATIONS
Adjusted operating income before depreciation and amortization and
associate's earnings, adjusted net earnings from continuing operations
and adjusted fully diluted net earnings per share from continuing
operations are earnings measurements that exclude non-recurring items.
They are non-IFRS measurements. We believe that presenting earnings
without non-recurring items leaves readers of financial statements
better informed as to the current period and corresponding period's
earnings, thus enabling them to better evaluate the Corporation's
performance and judge its future outlook.
CONFERENCE CALL
Financial analysts and institutional investors are invited to
participate in a conference call on the 2014 second quarter results at 10:00 a.m. (EDT) on Wednesday, April 16, 2014. To access the conference call, please dial (647) 427-7450 or
(888) 231-8191. The media and investing public may access this
conference via a listen mode only.
Notice to readers: METRO INC. second quarter of 2014 interim condensed consolidated
financial statements and management's discussion and analysis are
available on the Internet at www.metro.ca - Corporate Site - Annual Report and Other Documents -
Quarterly Results - 2014 Second Quarter Results.
(1) See table on "Net earnings from continuing operations adjustments"
(2) See section on "IFRS and Non-IFRS Measurements"
(3) See section on "Forward-looking Information"
(4) See table on "Operating income before depreciation and amortization and
associate's earnings adjustments"
SOURCE METRO INC.