Same-store sales grew 23% and Adjusted EBITDA rose 30%; Completed acquisition of Chico
First Quarter Highlights
- System-wide sales(1) were
$285.9 million , an increase of 30.2% versus the prior year. Excluding Chico(2), system-wide sales grew 25.8%, primarily driven by same-store sales growth(1) of 22.8%. On a two-year basis, same-store sales growth(1) was 29.7%. - Revenue was
$213.3 million , up 25.4% versus the prior year, in-line with system-wide sales growth. Excluding Chico, revenue grew 24.9%. - Adjusted EBITDA(3) grew 29.9% to
$46.8 million , representing 21.9% of revenue, up 70 basis points versus the prior year. Operating income was$35.2 million , up 55.4% versus the prior year. - Net income was
$22.6 million , up from$3.4 million in the prior year. - Adjusted Net Income(3) was
$24.8 million or$0.35 per diluted share. - Opened 6 new stores and acquired 66 stores through the acquisition of Chico, ending the quarter with 705 stores across the network.
- The Board of Directors declared a dividend of
$0.06 per common share.
2022 Outlook
- The Company now expects revenue between
$870 and$895 million , supported by same-store sales growth between 9% and 12% and 35-45 new store openings, Adjusted EBITDA between$191 and$198 million and Adjusted Net Income per Diluted Share(2) between$1.37 and$1.44 .
"We are very pleased with our performance in the first quarter as the business once again delivered on each element of our growth formula," said
"Factoring in our recent performance, we have raised our outlook for the full-year," continued
Financial Results for the First Quarter Fiscal 2022
All comparative figures below are for the 13-week period ended
Revenue increased by 25.4% to
Same-store sales growth(1) was 22.8% in Q1 2022 primarily driven by a 18.4% increase in same-store transactions and a 3.7% increase in same-store average spend per transaction. This is compared to same-store sales growth of 6.9% in Q1 2021 primarily consisted of a 11.2% increase in same-store average spend per transaction and a (3.8)% decrease in same-store transactions. Same-store transactions and same-store average spend per transaction in Q1 2021 were impacted by a shift in consumer behaviour associated with COVID-19 restrictions.
Gross profit increased by
Selling, general and administrative ("SG&A") expenses increased by 13.2% to
Adjusted EBITDA(3) was
Net interest expense was
Income taxes were
Net income was
Adjusted Net Income(3) increased by
Adjusted Net Income per Diluted Share(3) was
Cash and cash equivalents at the end of the first quarter totaled
Free Cash Flow(3) amounted to
Inventory at end of the first quarter of 2022 was
(1) This is a supplementary financial measure. Refer to "Non-IFRS Measures and Supplementary Financial Measures" below and to the section entitled "How We Assess the Performance of our Business" in the MD&A for the definition of same-store sales growth. |
(2) On |
(3) This is a Non-IFRS financial measure. Non-IFRS financial measures are not standardized financial measures under IFRS and might not be comparable to similar financial measures disclosed by other issuers. Refer to "Non-IFRS Measures and Supplementary Financial Measures" and "Selected Consolidated Financial Information" below, including for a reconciliation of the non-IFRS measures used in this release to the most comparable IFRS measures. Also refer to sections entitled "How We Assess the Performance of our Business", "Non-IFRS Measures and Supplementary Financial Measures" and "Selected Consolidated Financial Information and Industry Metrics" in the MD&A for the first quarter ended |
Dividends
On
Outlook
The following information, except for same-store sales growth, includes the impact of Chico, which was acquired on
- Revenue between
$870 and$895 million , supported by same-store sales growth of between 9% and 12%, and 35 to 45 new store openings; - Adjusted EBITDA between
$191 and$198 million , which incorporates a full year of public company costs, as well as incremental investments in labour as well as storage and throughput capacity, disclosed in late 2021; - Adjusted Net Income per Diluted Share between
$1.37 and$1.44 ; - Information technology expenses of approximately
$9 million and share-based compensation of approximately$7 million , both of which are excluded from Adjusted EBITDA and Adjusted Net Income per diluted share; and - Net Capital Expenditures(4) between
$35 and$40 million , including approximately$15 million in advanced payments and leasehold improvements related to the build-out of the new distribution centre in theGreater Toronto Area .
Due to the impact of various forms of government mandated operating restrictions imposed in early 2021, the Company expects year-over-year growth to be stronger in the first half of 2022, compared to year-over-year growth in the second half of the year. The relative distribution of revenue is expected to be more representative of pre-pandemic years, such as 2019.
(4) Net Capital Expenditures represents purchase of property and equipment, purchase of intangible assets, proceeds on disposal of property and equipment and tenant allowances. |
Conference Call Details
A conference call to discuss the Company's first quarter results is scheduled for
For those unable to participate, a playback will be available shortly after the conclusion of the call by dialing 1-800-770-2030 (ID: 5518274#) and will be accessible until
About
Basis of Presentation - Carve-out Financial Information
Prior to the Offering, the Company was not operating as a stand-alone entity and as a result, the financial information for periods prior to
Non-IFRS Measures and Supplementary Financial Measures
This press release makes reference to certain non-IFRS measures. These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS. They are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement IFRS measures by providing further understanding of the Company's results of operations from management's perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the Company's financial information reported under IFRS.
Forward-Looking Information
Some of the information contained in this press release is forward-looking information. Forward-looking information is provided as of the date of this press release and is based on management's opinions, estimates and assumptions in light of its experience and perception of historical trends, current trends, current conditions and expected future developments, as well as other factors that management believes appropriate and reasonable in the 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 information, including, without limitation, the factors discussed in the "Risk Factors" section of the AIF. A copy of the AIF and the Company's other publicly filed documents can be accessed under the Company's profile on the System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.com.
The Company cautions that the list of risk factors and uncertainties described in the AIF is not exhaustive and other factors could also adversely affect its results. Readers are urged to consider the risks, uncertainties and assumptions carefully in evaluating forward-looking information and are cautioned not to place undue reliance on such information.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
Condensed Interim Consolidated Statements of Income and Comprehensive Income
(Unaudited, expressed in thousands of Canadian dollars, except per share amounts)
Quarters Ended | ||
|
| |
13 weeks | 13 weeks | |
Revenue: | ||
Retail sales | $ 93,075 | $ 79,644 |
Franchise and other revenues | 120,178 | 90,428 |
Total revenue | 213,253 | 170,072 |
Cost of sales | 136,173 | 110,409 |
Gross profit | 77,080 | 59,663 |
Selling, general and administrative expenses | 41,919 | 37,041 |
Total operating income | 35,161 | 22,622 |
Interest expenses, net | 3,981 | 17,997 |
Gain on foreign exchange | (21) | (98) |
Share of loss from associate | 28 | — |
Income before income taxes | 31,173 | 4,723 |
Income taxes expense | 8,552 | 1,314 |
Net income | 22,621 | 3,409 |
Less: | ||
Net income attributable to non-controlling interests | — | 1,781 |
Net income attributable to the shareholders of the Company | 22,621 | 1,628 |
Other comprehensive income, net of tax: | ||
Currency translation adjustments that may be reclassified to net income, net of tax | (2) | 9,615 |
Comprehensive income for the period attributable to the shareholders of the Company | $ 22,619 | $ 11,243 |
Basic net income per share attributable to the common shareholders | $ 0.32 | $ 0.03 |
Diluted net income per share attributable to the common shareholders | $ 0.32 | $ 0.03 |
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
(Unaudited, in thousands of Canadian dollars unless otherwise noted)
Quarters Ended | |||
|
| ||
13 weeks | 13 weeks | ||
Reconciliation of net income to Adjusted EBITDA: | |||
Net income | $ 22,621 | $ 3,409 | |
Depreciation and amortization | 8,876 | 8,089 | |
Interest expenses, net | 3,981 | 17,997 | |
Income taxes expense | 8,552 | 1,314 | |
EBITDA | 44,030 | 30,809 | |
Adjustments to EBITDA: | |||
Management fees(1) | — | 240 | |
Information technology transformation costs(2) | 1,070 | 1,252 | |
IPO readiness and separation costs(3) | — | 1,329 | |
Business transformation costs(4) | — | 619 | |
Other professional fees(5) | 648 | 1,188 | |
Share-based compensation(6) | 1,027 | 674 | |
Gain on foreign exchange(7) | (21) | (98) | |
Share of loss from associate | 28 | — | |
Adjusted EBITDA | $ 46,782 | $ 36,013 | |
Adjusted EBITDA as a percentage of revenue | 21.9% | 21.2% |
Notes: | |
(1) | Represents management fees paid to entities affiliated with |
(2) | Represents discrete, project-based implementation costs associated with new information technology systems and discrete software-as-a-service ("SaaS") arrangements for transformational initiatives supporting merchandise planning, inventory and order management, e-commerce and omni-channel capabilities, customer relationship management and other key processes. |
(3) | Represents expenses incurred related to the following: (i) consulting, legal and accounting fees for projects and process improvements incurred in the preparation of the Offering and the legal restructuring to separate the Company from the Group; and (ii) retention bonuses for certain key management personnel in connection with the Offering. |
(4) | Predominately represents severance, recruitment, and consulting expenses associated to the strategic reorganization in the senior leadership team and key functional departments as part of the Company's separation from the Group. |
(5) | Professional fees primarily incurred with respect to: (i) the CRA's examination of the Company's Canadian tax filings for the 2016 fiscal year; and (ii) acquisition costs incurred in relation to Chico in Q1 2022. |
(6) | Represents share-based compensation in respect of our amended and restated share option plan, long-term incentive plan, and deferred share unit plan. |
(7) | Represents foreign exchange gains and losses. |
Reconciliation of Net Income to Adjusted Net Income
(Unaudited, in thousands of Canadian dollars unless otherwise noted)
Quarters Ended | |||
|
| ||
13 weeks | 13 weeks | ||
Reconciliation of net income to Adjusted Net Income: | |||
Net income | $ 22,621 | $ 3,409 | |
Adjustments to net income: | |||
Management fees(1) | — | 240 | |
Information technology transformation costs(2) | 1,070 | 1,252 | |
IPO readiness and separation costs(3) | — | 1,329 | |
Business transformation costs(4) | — | 619 | |
Other professional fees(5) | 648 | 1,188 | |
Share-based compensation(6) | 1,027 | 674 | |
Gain on foreign exchange(7) | (21) | (98) | |
Share of loss from associate | 28 | — | |
Tax effect of adjustments to net income | (554) | (1,321) | |
Adjusted Net Income | $ 24,819 | $ 7,292 | |
Adjusted Net Income as a percentage of revenue | 11.6% | 4.3% | |
Adjusted Net Income per Diluted Share(8) | $ 0.35 | $ 0.13 |
Notes: | |
(1) | Represents management fees paid to entities affiliated with Roark. Concurrent with the closing of the Offering, the Company terminated the management agreement with Roark. |
(2) | Represents discrete, project-based implementation costs associated with new information technology systems and discrete SaaS arrangements for transformational initiatives supporting merchandise planning, inventory and order management, e-commerce and omni-channel capabilities, customer relationship management and other key processes. |
(3) | Represents expenses incurred related to the following: (i) consulting, legal and accounting fees for projects and process improvements incurred in the preparation of the Offering and the legal restructuring to separate the Company from the Group; and (ii) retention bonuses for certain key management personnel in connection with the Offering. |
(4) | Predominately represents severance, recruitment, and consulting expenses associated to the strategic reorganization in the senior leadership team and key functional departments as part of the Company's separation from the Group. |
(5) | Professional fees primarily incurred with respect to: (i) the CRA's examination of the Company's Canadian tax filings for the 2016 fiscal year; and (ii) acquisition costs incurred in relation to Chico in Q1 2022. |
(6) | Represents share-based compensation in respect of our amended and restated share option plan, long-term incentive plan, and deferred share unit plan. |
(7) | Represents foreign exchange gains and losses. |
(8) | Adjusted Net Income per Diluted Share for Q1 2021 is calculated on a pro-forma basis using the weighted average common shares outstanding based on the capital reorganization and the amended and restated share option plan immediately prior to the Offering. |
Condensed Interim Consolidated Statements of Cash Flows
(Unaudited, in thousands of Canadian dollars)
Quarters Ended | ||
|
| |
13 weeks | 13 weeks | |
Cash provided by (used in): | ||
Operating activities: | ||
Net income for the period | $ 22,621 | $ 3,409 |
Adjustments for: | ||
Depreciation and amortization | 8,876 | 8,089 |
Deferred franchise fees | (48) | 213 |
Gain on disposal of property and equipment | (8) | (131) |
Loss (gain) on sale of right-of-use assets | 38 | (39) |
Loss on foreign exchange | (21) | (98) |
Share-based compensation expense | 1,027 | — |
Share of loss from associate | 28 | — |
Interest expenses, net | 3,981 | 17,997 |
Income taxes expense | 8,552 | 1,314 |
Income taxes paid | (19,325) | (5,215) |
Change in non-cash operating working capital: | ||
Accounts receivable | 285 | (2,638) |
Inventories | (8,237) | (7,333) |
Prepaid expenses | (670) | 532 |
Accounts payable and accrued liabilities | (7,628) | (19,142) |
Net cash provided by operating activities | 9,471 | (3,042) |
Financing activities: | ||
Proceeds from exercise of share options | 587 | — |
Repayment of 2021 Term Facility | (2,218) | — |
Repayment of 2016 Term Loans | — | (3,707) |
Interest paid on long-term debt | (2,955) | (22,615) |
Repayment of principal on lease liabilities | (11,769) | (12,186) |
Interest paid on lease liabilities | (2,907) | (2,880) |
Financing costs | — | (917) |
Standby letter of credit commitment fees | (314) | (3,690) |
Net distributions | — | (14,976) |
Net cash used in financing activities | (19,576) | (60,971) |
Investing activities: | ||
Business acquisition, net of cash | (12,829) | — |
Purchases of property and equipment | (5,120) | (4,160) |
Purchase of intangible assets | (613) | (208) |
Proceeds on disposal of property and equipment | 62 | 564 |
Right-of-use asset initial direct costs | (340) | (380) |
Tenant allowances | 498 | 271 |
Notes receivable | 190 | 60 |
Lease receivables | 6,522 | 5,731 |
Interest received on lease receivables and other | 1,912 | 1,681 |
Net cash provided by investing activities | (9,718) | 3,559 |
Effect of exchange rate on cash | (17) | 27 |
Net decrease in cash | (19,840) | (60,427) |
Cash, beginning of period | 50,068 | 71,481 |
Cash, end of period | $ 30,228 | $ 11,054 |
Free Cash Flows
(Unaudited, expressed in thousands of Canadian dollars)
Quarters Ended | ||
|
| |
13 weeks | 13 weeks | |
Cash provided by (used in) operating activities | $ 9,471 | $ (3,042) |
Cash (used in) provided by investing activities | (9,718) | 3,559 |
Repayment of principal on lease liabilities | (11,769) | (12,186) |
Interest paid on lease liabilities | (2,907) | (2,880) |
Notes receivables | (190) | (60) |
Free Cash Flow | $ (15,113) | $ (14,609) |
Consolidated Statements of Financial Position
(Unaudited, expressed in thousands of Canadian dollars)
As at | As at | |
Assets | ||
Current assets: | ||
Cash | $ 30,228 | $ 50,068 |
Accounts and other receivables | 15,580 | 14,398 |
Inventories, net | 100,454 | 91,699 |
Prepaid expenses and other assets | 11,742 | 10,432 |
Current portion of lease receivable | 26,986 | 26,621 |
Total current assets | 184,990 | 193,218 |
Non-current assets: | ||
Lease receivables | 120,685 | 121,936 |
Right-of-use assets, net | 85,332 | 80,757 |
Property and equipment, net | 63,724 | 62,067 |
Intangible assets, net | 51,184 | 37,359 |
| 98,061 | 92,938 |
Deferred tax assets | 5,565 | 5,601 |
Investment in associate | 2,124 | 2,179 |
Other assets | 2,936 | 3,118 |
Total non-current assets | 429,611 | 405,955 |
Total assets | $ 614,601 | $ 599,173 |
Liabilities and Shareholders' Deficit | ||
Current liabilities: | ||
Accounts payable and accrued liabilities | $ 88,238 | $ 86,977 |
Income taxes payable | 3,444 | 13,553 |
Current portion of deferred franchise fees | 1,147 | 1,032 |
Current portion of lease liabilities | 47,781 | 41,960 |
Current portion of long-term debt | 11,094 | 8,875 |
Total current liabilities | 151,704 | 152,397 |
Non-current liabilities: | ||
Long-term deferred franchise fees | 3,506 | 3,183 |
Long-term lease liabilities | 194,677 | 196,954 |
Long-term debt | 332,484 | 336,621 |
Deferred tax liabilities | 6,975 | 4,540 |
Other liabilities | 133 | — |
Total non-current liabilities | 537,775 | 541,298 |
Total liabilities | 689,479 | 693,695 |
Shareholders' deficit: | ||
Common shares | 308,084 | 307,497 |
Contributed surplus | 2,427 | 1,779 |
Deficit | (385,208) | (403,619) |
Currency translation reserve | (181) | (179) |
Total shareholders' deficit | (74,878) | (94,522) |
Total liabilities and shareholders' deficit | $ 614,601 | $ 599,173 |
SOURCE
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