Expecting same-store sales growth above 10% in 2021, following strong Q2 performance of 28%
Second Quarter Highlights
- System-wide sales(1) grew 33.4% to
$231.5 million , driven primarily by same-store sales growth(1) of 28.4% versus the second quarter last year. On a two-year basis, same-store sales growth(1) was 24.5%, above the Q1 trend of 21.5%. - The Company opened 7 new stores in Q2 and has increased its store network by 27 stores over the last 12 months.
- Revenue increased 38.4% to
$182.2 million while Adjusted EBITDA(1) grew 52.6% to$42.3 million , representing 23.2% of revenue, up 210 basis points versus the second quarter last year. - Net income was
$44.3 million , up from$0.3 million in the second quarter last year. - Adjusted Net Income(1) was
$8.7 million or$0.12 per diluted share.
2021 Outlook
- The Company expects revenue of about
$730 million , supported by same-store sales growth slightly above 10%, Adjusted EBITDA of about$158 million and Adjusted Net Income of about$56 million , or$0.78 per share.
"We are thrilled to have completed our IPO in June, which was an important milestone for our company, as we continue our journey as
"We achieved these results despite challenging pandemic-related operating restrictions, when more than half of our stores were restricted to curbside only shopping for 10 weeks during the quarter," continued
Financial Results for the Second Quarter Fiscal 2021
All comparative figures below are for the 13-week period ended
Revenue increased by 38.4% to
Same-store sales growth(1) was 28.4% in Q2 2021 primarily driven by a 25.6% increase in same-store transactions and a 2.2% increase in same-store average spend per transaction. This is compared to same-store sales growth of (3.9)% in Q2 2020, when the business experienced significant disruptions during the onset of the COVID pandemic.
Gross profit increased to
Selling, general and administrative ("SG&A") expenses increased by 49.4% to
Adjusted EBITDA(1) was
Net interest expense was
Income taxes were
Net income was
Adjusted Net Income(1) increased by
Adjusted Net Income per Diluted Share(1) was
Cash and cash equivalents at the end of the second quarter totaled
Free Cash Flow(1) amounted to
Inventory at end of the second quarter of 2021 was
(1) Refer to "Non-IFRS Measures and Industry Metrics" 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 Industry Metrics " and "Selected Consolidated Financial Information" in the Company's Management's Discussion and Analysis ("MD&A") for the second quarter ended |
2021 Outlook
Based on year-to-date performance, and expectations for the balance of the year, the Company expects to achieve the following for the full year 2021:
- Revenue of approximately
$730 million , supported by same-store sales growth slightly above 10% and 25-30 new store openings. On a two-year basis, same-store sales growth is expected to remain above 20% through the remainder of the year; - Adjusted EBITDA of approximately
$158 million , which includes the impact of incremental public company costs; - Adjusted Net Income of approximately
$56 million or$0.78 per diluted share; and - Capital expenditures of approximately
$20 million .
Since the onset of the COVID-19 pandemic in early 2020,
Conference Call Details
A conference call to discuss the Company's second quarter results is scheduled for
For those unable to participate, a replay of the conference call will be available approximately two hours after the conclusion of the call 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 Industry Metrics
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 Company's Prospectus. A copy of the Prospectus 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 Prospectus 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 the forward-looking information and are cautioned not to place undue reliance on such information. The forward-looking information contained in this press release represents our expectations as of the date of this press release (or as the date they are otherwise stated to be made), and are subject to change after such date. However, we disclaim any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
Condensed Interim Consolidated Statements of Income and Comprehensive Income (Loss)
(Unaudited, in thousands of Canadian dollars, except per share amounts)
Quarter Ended | Year to Date Ended | ||||||||||
|
|
|
| ||||||||
13 weeks | 13 weeks | 26 weeks | 26 weeks | ||||||||
Revenue: | |||||||||||
Retail sales | $ | 82,161 | $ | 61,579 | $ | 161,805 | $ | 132,795 | |||
Franchise and other revenues | 100,021 | 70,045 | 190,449 | 152,446 | |||||||
Total revenue | 182,182 | 131,624 | 352,254 | 285,241 | |||||||
Cost of sales | 115,022 | 87,851 | 225,431 | 188,044 | |||||||
Gross profit | 67,160 | 43,773 | 126,823 | 97,197 | |||||||
Selling, general and administrative expenses | 40,603 | 27,174 | 77,644 | 56,110 | |||||||
Total operating income | 26,557 | 16,599 | 49,179 | 41,087 | |||||||
Interest expenses, net | 19,981 | 16,452 | 37,978 | 33,327 | |||||||
Gain on foreign exchange | (42,936) | (311) | (43,034) | (772) | |||||||
Income before income taxes | 49,512 | 458 | 54,235 | 8,532 | |||||||
Income taxes expense | 5,218 | 131 | 6,532 | 2,438 | |||||||
Net income | 44,294 | 327 | 47,703 | 6,094 | |||||||
Less: | |||||||||||
Net income attributable to non-controlling interests | 1,649 | 1,908 | 3,430 | 3,855 | |||||||
Net income (loss) attributable to the Company | 42,645 | (1,581) | 44,273 | 2,239 | |||||||
Other comprehensive income (loss), net of tax: | |||||||||||
Currency translation adjustments reclassified to net income | (29,665) | — | (29,665) | — | |||||||
Currency translation adjustments that may be reclassified to net income, net of tax | 11,455 | 21,583 | 21,070 | (35,469) | |||||||
Comprehensive income (loss) for the period attributable to the Company | $ | 24,435 | $ | 20,002 | $ | 35,678 | $ | (33,230) | |||
Basic net income (loss) per share attributable to the Company | $ | 0.61 | $ | (0.03) | $ | 0.63 | $ | 0.04 | |||
Diluted net income (loss) per share attributable to the Company | $ | 0.60 | $ | (0.03) | $ | 0.62 | $ | 0.04 | |||
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
(Unaudited, in thousands of Canadian dollars unless otherwise noted)
Quarter Ended | Year to Date Ended | ||||||||||||
|
|
|
| ||||||||||
13 weeks | 13 weeks | 26 weeks | 26 weeks | ||||||||||
Reconciliation of net income to Adjusted EBITDA: | |||||||||||||
Net income | $ | 44,294 | $ | 327 | $ | 47,703 | $ | 6,094 | |||||
Depreciation and amortization | 8,554 | 7,771 | 16,643 | 15,532 | |||||||||
Interest expenses, net | 19,981 | 16,452 | 37,978 | 33,327 | |||||||||
Income taxes expense | 5,218 | 131 | 6,532 | 2,438 | |||||||||
EBITDA | 78,047 | 24,681 | 108,856 | 57,391 | |||||||||
Adjustments to EBITDA: | |||||||||||||
Management fees(1) | 439 | 569 | 679 | 801 | |||||||||
Information technology transformation costs(2) | 1,305 | 2,439 | 2,557 | 3,905 | |||||||||
IPO readiness and separation costs(3) | 2,191 | 420 | 3,520 | 1,518 | |||||||||
Business transformation costs(4) | 1,100 | 593 | 1,719 | 772 | |||||||||
COVID-19 pandemic(5) | — | 1,597 | — | 1,724 | |||||||||
Other professional fees(6) | 275 | 103 | 1,463 | 136 | |||||||||
Share-based compensation(7) | 1,882 | 409 | 2,556 | 803 | |||||||||
Gain on foreign exchange(8) | (42,936) | (311) | (43,034) | (772) | |||||||||
Pro forma costs(9) | — | (2,777) | — | (6,018) | |||||||||
Adjusted EBITDA | $ | 42,303 | $ | 27,723 | $ | 78,316 | $ | 60,260 | |||||
Adjusted EBITDA as a percentage of revenue | 23.2 | % | 21.1 | % | 22.2 | % | 21.1 | % |
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 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. In Q2 2021, the Company recorded share-based compensation expense in relation to the retention bonuses of |
(4) | Predominately represents severance and recruitment 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) | Represents non-recurring costs incurred in Fiscal 2020 in response to the COVID-19 pandemic including personal protective equipment for Company employees, signage for the stores, short-term increased hourly pay and one-time bonuses for store associates and warehouse staff awarded in the second quarter of 2020, and professional fees associated with planning key initiatives for cash flow management and the negotiation of rent deferrals and abatements with landlords and franchisees. |
(6) | Professional fees incurred with respect to the CRA's examination of the Company's Canadian tax filings for the 2016 fiscal year. |
(7) | Represents non-cash, share-based compensation. Q2 2021 includes a reclassification of |
(8) | Represents foreign exchange gains. |
(9) | Represents pro forma costs to normalize for on-going expenses previously allocated to entities forming part of the Group, specifically operations in |
Reconciliation of Net Income to Adjusted Net Income
(Unaudited, in thousands of Canadian dollars unless otherwise noted)
Quarter Ended | Year to Date Ended | ||||||||||||
|
|
|
| ||||||||||
13 weeks | 13 weeks | 26 weeks | 26 weeks | ||||||||||
Reconciliation of net income to Adjusted Net Income: | |||||||||||||
Net income | $ | 44,294 | $ | 327 | $ | 47,703 | $ | 6,094 | |||||
Adjustments to net income: | |||||||||||||
Management fees(1) | 439 | 569 | 679 | 801 | |||||||||
Information technology transformation costs(2) | 1,305 | 2,439 | 2,557 | 3,905 | |||||||||
IPO readiness and separation costs(3) | 2,191 | 420 | 3,520 | 1,518 | |||||||||
Business transformation costs(4) | 1,100 | 593 | 1,719 | 772 | |||||||||
COVID-19 pandemic(5) | — | 1,597 | — | 1,724 | |||||||||
Other professional fees(6) | 275 | 103 | 1,463 | 136 | |||||||||
Share-based compensation(7) | 1,882 | 409 | 2,556 | 803 | |||||||||
Gain on foreign exchange(8) | (42,936) | (311) | (43,034) | (772) | |||||||||
Pro forma costs(9) | — | (2,777) | — | (6,018) | |||||||||
Tax effect of adjustments to net income | 145 | (800) | (1,176) | (594) | |||||||||
Adjusted Net Income | $ | 8,695 | $ | 2,569 | $ | 15,987 | $ | 8,369 | |||||
Adjusted Net Income as a percentage of revenue | 4.8 | % | 2.0 | % | 4.5 | % | 2.9 | % | |||||
Adjusted Net Income per Diluted Share(10) | $ | 0.12 | $ | 0.05 | $ | 0.22 | $ | 0.15 |
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. In Q2 2021, the Company recorded share-based compensation expense in relation to the retention bonuses of |
(4) | Predominately represents severance and recruitment 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) | Represents non-recurring costs incurred in Fiscal 2020 in response to the COVID-19 pandemic including personal protective equipment for Company employees, signage for the stores, short-term increased hourly pay and one-time bonuses for store associates and warehouse staff awarded in the second quarter of 2020, and professional fees associated with planning key initiatives for cash flow management and the negotiation of rent deferrals and abatements with landlords and franchisees. |
(6) | Professional fees incurred with respect to the CRA's examination of the Company's Canadian tax filings for the 2016 fiscal year. |
(7) | Represents non-cash, share-based compensation. Q2 2021 includes a reclassification of |
(8) | Represents foreign exchange gains. |
(9) | Represents pro forma costs to normalize for on-going expenses previously allocated to entities forming part of the Group, specifically operations in |
(10) | Adjusted Net Income per Diluted Share for Q2 2020 and YTD 2020 are calculated on a pro-forma basis using the weighted average common shares outstanding based on the capital reorganization and the legacy stock option compensation plan immediately prior to the Offering. |
Condensed Interim Consolidated Statements of Cash Flows
(Unaudited, in thousands of Canadian dollars)
Quarter Ended | Year to Date Ended | ||||||||||
|
|
|
| ||||||||
13 weeks | 13 weeks | 26 weeks | 26 weeks | ||||||||
Cash provided by (used in): | |||||||||||
Operating activities: | |||||||||||
Net income for the period | $ | 44,294 | $ | 327 | $ | 47,703 | $ | 6,094 | |||
Adjustments for: | |||||||||||
Depreciation and amortization | 8,554 | 7,771 | 16,643 | 15,532 | |||||||
Deferred franchise fees | 116 | 125 | 329 | 89 | |||||||
Gain on disposal of property and equipment | (297) | (40) | (428) | (75) | |||||||
Gain on sale of right-of-use assets | (137) | (44) | (176) | (25) | |||||||
Gain on foreign exchange | (42,936) | (311) | (43,034) | (772) | |||||||
Share-based compensation expense | 22 | — | 22 | — | |||||||
Interest expenses, net | 19,981 | 16,452 | 37,978 | 33,327 | |||||||
Income taxes expense | 5,218 | 131 | 6,532 | 2,438 | |||||||
Income taxes paid | (2,464) | — | (7,679) | (2,490) | |||||||
Change in non-cash operating working capital: | |||||||||||
Accounts receivable | (1,965) | 238 | (4,603) | 3,149 | |||||||
Inventories | (1,444) | 3,876 | (8,777) | 5,644 | |||||||
Prepaid expenses | (352) | (574) | 180 | (760) | |||||||
Accounts payable and accrued liabilities | 3,079 | 9,896 | (16,063) | 31,025 | |||||||
Net cash provided by operating activities | 31,669 | 37,847 | 28,627 | 93,176 | |||||||
Financing activities: | |||||||||||
Issuance of common shares, net of transaction costs | 295,210 | — | 295,210 | — | |||||||
Proceeds of 2021 Term Facility | 355,000 | — | 355,000 | — | |||||||
Proceeds of 2021 Revolving Credit Facility | 40,000 | — | 40,000 | — | |||||||
Repayment of 2016 Term Loans | (676,717) | (2,059) | (680,424) | (3,983) | |||||||
Proceeds of 2016 Revolving Credit Facility | — | — | — | 28,112 | |||||||
Interest paid on long-term debt | (13,800) | (14,331) | (36,415) | (29,474) | |||||||
Repayment of principal on lease liabilities | (11,620) | (10,133) | (23,806) | (20,339) | |||||||
Interest paid on lease liabilities | (2,881) | (2,675) | (5,761) | (5,331) | |||||||
Financing costs | (5,672) | — | (6,589) | — | |||||||
Standby letter of credit commitment fees | (613) | — | (4,303) | — | |||||||
Net distributions | (2,007) | (3,473) | (16,983) | (13,963) | |||||||
Net cash used in financing activities | (23,100) | (32,671) | (84,071) | (44,978) | |||||||
Investing activities: | |||||||||||
Purchases of property and equipment | (6,120) | (1,548) | (10,280) | (3,186) | |||||||
Purchase of intangible assets | (925) | (429) | (1,133) | (1,075) | |||||||
Proceeds on disposal of property and equipment | 1,639 | 51 | 2,203 | 108 | |||||||
Right-of-use asset initial direct costs | (457) | (152) | (837) | (152) | |||||||
Tenant allowances | — | 299 | 271 | 520 | |||||||
Notes receivable | 161 | 141 | 221 | 162 | |||||||
Lease receivables | 5,901 | 5434 | 11,632 | 10,902 | |||||||
Interest received on lease receivables and other | 1,676 | 1,477 | 3,357 | 3,059 | |||||||
Repurchase of franchises | — | (283) | — | (283) | |||||||
Net cash provided by investing activities | 1,875 | 4,990 | 5,434 | 10,055 | |||||||
Effect of exchange rate on cash | (16) | (957) | 11 | (1,221) | |||||||
Net (decrease) increase in cash | 10,428 | 9,209 | (49,999) | 57,032 | |||||||
Cash, beginning of period | 11,054 | 91,660 | 71,481 | 43,837 | |||||||
Cash, end of period | $ | 21,482 | $ | 100,869 | $ | 21,482 | $ | 100,869 |
Free Cash Flows
(Unaudited, in thousands of Canadian dollars)
Quarter Ended | Year to Date Ended | |||||||||||
|
|
|
| |||||||||
13 weeks | 13 weeks | 26 weeks | 26 weeks | |||||||||
Cash provided by operating activities | $ | 31,669 | $ | 37,847 | $ | 28,627 | $ | 93,176 | ||||
Cash provided by investing activities | 1,875 | 4,990 | 5,434 | 10,055 | ||||||||
Repayment of principal on lease liabilities | (11,620) | (10,133) | (23,806) | (20,339) | ||||||||
Interest paid on lease liabilities | (2,881) | (2,675) | (5,761) | (5,331) | ||||||||
Notes receivables | (161) | (141) | (221) | (162) | ||||||||
Free Cash Flow | $ | 18,882 | $ | 29,888 | $ | 4,273 | $ | 77,399 | ||||
Condensed Interim Consolidated Statements of Financial Position
(Unaudited, in thousands of Canadian dollars)
As at | As at | ||||
Assets | |||||
Current assets: | |||||
Cash | $ | 21,482 | $ | 71,481 | |
Accounts and other receivables | 17,254 | 12,629 | |||
Inventories, net | 86,789 | 78,012 | |||
Prepaid expenses and other assets | 10,984 | 8,585 | |||
Current portion of lease receivable | 24,323 | 23,145 | |||
Total current assets | 160,832 | 193,852 | |||
Non-current assets: | |||||
Lease receivables | 102,747 | 96,743 | |||
Right-of-use assets | 81,118 | 84,950 | |||
Property and equipment | 57,824 | 55,738 | |||
Intangible assets | 36,748 | 36,072 | |||
93,101 | 93,276 | ||||
Other assets | 1,267 | 1,488 | |||
Total non-current assets | 372,805 | 368,267 | |||
Total assets | $ | 533,637 | $ | 562,119 | |
Liabilities and Shareholders' Deficit | |||||
Current liabilities: | |||||
Accounts payable and accrued liabilities | $ | 70,398 | $ | 99,954 | |
Income taxes payable | 467 | 1,042 | |||
Current portion of deferred franchise fees | 944 | 891 | |||
Current portion of lease liabilities | 43,914 | 42,753 | |||
Current portion of long-term debt | 8,875 | 7,448 | |||
Total current liabilities | 124,598 | 152,088 | |||
Non-current liabilities: | |||||
Long-term deferred franchise fees | 2,751 | 2,475 | |||
Long-term lease liabilities | 174,913 | 173,906 | |||
Long-term debt | 380,417 | 698,912 | |||
Deferred tax liabilities | 3,145 | 4,282 | |||
Total non-current liabilities | 561,226 | 879,575 | |||
Total liabilities | 685,824 | 1,031,663 | |||
Shareholders' deficit: | |||||
Common shares | 301,991 | — | |||
Contributed surplus | 22 | — | |||
Deficit | (454,009) | — | |||
Currency translation reserve | (191) | — | |||
Group's net investment | — | (588,530) | |||
Non-controlling interests | — | 118,986 | |||
Total shareholders' deficit | (152,187) | (469,544) | |||
Total liabilities and shareholders' deficit | $ | 533,637 | $ | 562,119 | |
SOURCE
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