Canadian Tire Corporation Announces Strong Fourth Quarter and Full Year Results

Transcription

1 Canadian Tire Corporation Announces Strong Fourth Quarter and Full Year Results Consolidated same store sales up 3.9% in the fourth quarter: o Canadian Tire up 3.5%; Mark s up 3.4%; FGL up 5.8% Financial Services GAAR growth up 8.1% Fourth quarter diluted earnings per share (EPS) was $4.10, up 18.5% annual revenue of $13.4 billion, up 5.9%, or up 5.1% excluding Petroleum Full year diluted EPS of $10.67, up 15.7% TORONTO, February 15, 2018 Canadian Tire Corporation, Limited (TSX:CTC, TSX:CTC.a) today released fourth quarter and full year results for the period ended. Our ability to meet our customers expectations continues to be evident from our consistent delivery of strong results," said Stephen Wetmore, President and CEO, Canadian Tire Corporation will see us continuing to drive growth and profitability while taking advantage of the opportunities created by the new and changing retail environment. We remain committed to investing in innovative initiatives that will help us exceed the expectations of our loyal customer base. CONSOLIDATED OVERVIEW FOURTH QUARTER Consolidated retail sales increased $215.8 million, or 4.9%, in the fourth quarter. Excluding Petroleum, consolidated retail sales were up 4.1% over the same period last year. Consolidated revenue increased $323.0 million, or 8.9% in the fourth quarter. Excluding Petroleum, consolidated revenue increased 8.4%. Consolidated EBITDA increased by 10.2% in the quarter. Diluted EPS was $4.10 in the quarter, an increase of $0.64 per share, or 18.5%, compared to the prior year.

2 FULL YEAR Consolidated revenue increased $753.9 million for the full year, or 5.9%, over the prior year. Excluding Petroleum, consolidated revenue increased 5.1%. Consolidated retail sales increased $610.1 million, or 4.2%, over the prior year. Excluding Petroleum, consolidated retail sales increased 3.3%. Diluted EPS was $10.67, an increase of $1.45 per share, or 15.7%, over the prior year. RETAIL SEGMENT OVERVIEW FOURTH QUARTER Financial results reflect Q4 performance compared to Q4. Retail segment revenue increased $300.5 million, or 9.0%. Excluding Petroleum, retail segment revenue increased 8.5%. Canadian Tire Retail saw retail sales increase 3.8% and same store sales were up 3.5%. Retail and same store sales at FGL were up 5.5% and 5.8% respectively. Mark s retail sales increased 3.9% and same store sales were up 3.4%. FULL YEAR Financial results reflect performance compared to. Retail segment revenue increased $695.7 million, or 6.1%. Excluding Petroleum, retail segment revenue was up 5.1%. Canadian Tire Retail sales increased 3.4% and same store sales increased 2.7%. FGL s retail sales increased 2.4% and same store sales increased 2.0%. Mark s retail sales increased 4.7% and same store sales were up 4.2%. CT REIT OVERVIEW As disclosed in the Q4 and year-end CT REIT earnings release on February 12, 2018, CT REIT added over 1.5 million square feet of gross leasable area (GLA) in, including approximately one million square feet of GLA in the fourth quarter.

3 FINANCIAL SERVICES OVERVIEW Income before income taxes increased $4.2 million, or 4.9% in the fourth quarter, and increased $23.4 million, or 6.4%, for the full year over. Gross average credit card receivables (GAAR) was up 8.1% in Q4 and for the full year GAAR was up 7.2% over. CAPITAL ALLOCATION CAPITAL EXPENDITURES Total operating capital expenditures were $384.2 million for the year, down from $455.8 million in, and slightly below the previously disclosed range of $400 million to $425 million. For fiscal, the Company s capital expenditures required for distribution capacity of $42.5 million were within the previously announced disclosed range of $25 million to $50 million, which includes expenditures required to bring the Bolton Distribution Centre, located in the town of Caledon, Ontario (Bolton DC), into active service. QUARTERLY DIVIDEND On February 14, 2018, the Company declared dividends payable to holders of Class A Non-Voting Shares and Common Shares at a rate of $0.90 per share payable on June 1, 2018 to shareholders of record as of April 30, The dividend is considered an eligible dividend for tax purposes. SHARE REPURCHASE On November 9,, the Company announced its intention to purchase $550 million of its Class A Non-Voting Shares (the 2018 Share Purchase Intention ), in excess of the amount required for antidilutive purposes, by the end of To date, the Company has purchased $169.5 million of Class A Non-Voting Shares in partial fulfilment of its 2018 Share Purchase Intention, leaving $380.5 million that is expected to be purchased during the remainder of fiscal 2018.

4 NORMAL COURSE ISSUER BID The Company announced its intention to make a normal course issuer bid (the 2018 NCIB ) to purchase from March 2, 2018 to March 1, 2019 up to 5.9 million Class A Non-Voting Shares, which represents 9.9% of the 59.8 million approximate public float of Class A Non-Voting Shares issued and outstanding as at February 14, There were 62,651,561 Class A Non-Voting Shares issued and outstanding as at February 14, The Company intends to purchase Class A Non-Voting Shares under the 2018 NCIB for two purposes: (i) to fulfill the 2018 Share Purchase Intention as part of its capital management plan; and (ii) to offset the dilutive effect of the issuance of Class A Non-Voting Shares pursuant to its dividend reinvestment and stock option plans, consistent with the Company s policy. Other than pursuant to private agreements under an issuer bid exemption order issued by a securities regulatory authority or such other means as may be permitted by a securities regulatory authority under applicable securities laws, purchases of Class A Non-Voting Shares pursuant to the 2018 NCIB will be made by means of open market transactions through the facilities of the TSX and/or alternative Canadian trading systems, if eligible, at the market price of the Class A Non-Voting Shares at the time of purchase or as otherwise permitted under the rules of the TSX and applicable securities laws. For open market transactions, the Company will be subject to a daily purchase limit of 46,795 Class A Non-Voting Shares, which represents 25% of 187,180, the average daily trading volume of the Class A Non-Voting Shares on the TSX, net of purchases made by the Company through the TSX, for the six months ended January 31, The Class A Non-Voting Shares purchased by the Company pursuant to the 2018 NCIB will be restored to the status of authorized but unissued shares. The Company also announced that it will enter into an automatic share purchase plan (the ASPP ) with its designated broker to facilitate purchases of Class A Non-Voting Shares under the 2018 NCIB at times when the Company would not ordinarily be permitted to make such purchases due to its internal trading black-out periods or applicable regulatory restrictions. Pursuant to the ASPP, before entering into a black-out period, the Company may, but is not required to, instruct its designated broker to make purchases of Class A Non-Voting Shares under the 2018 NCIB during the ensuing black-out period. Any such instructions will be subject to specified limits, including price, volume and frequency, as determined by the Company. Within these specified limits, the designated broker has discretion with respect to the purchase of the Class A Non-Voting Shares under the 2018 NCIB during the black-out period in accordance with the rules of the TSX.

5 The ASPP will commence on March 2, 2018 and terminate on the earliest of the date on which: (i) the purchase limit under the 2018 NCIB has been reached; (ii) the 2018 NCIB expires; and (iii) the Company terminates the ASPP in accordance with its terms. The ASPP constitutes an "automatic securities purchase plan" under applicable Canadian securities laws. The Company s proposed 2018 NCIB and ASPP are subject to regulatory approval. Under the Company s normal course issuer bid which began on March 2, and expires on March 1, 2018 (the NCIB ), the Company received approval to purchase up to 6.0 million Class A Non-Voting Shares. To date, the Company has purchased a total of 4,153,505 Class A Non- Voting Shares by means of open market transactions through the facilities of the TSX and/or alternative Canadian trading systems under the Company s NCIB, at the volume weighted average price of $ FORWARD-LOOKING STATEMENTS This press release contains forward-looking information that reflects management s current expectations related to matters such as future financial performance and operating results of the Company. Forward-looking statements are provided for the purposes of providing information about management's current expectations and plans and allowing investors and others to get a better understanding of our anticipated financial position, results of operations and operating environment. Readers are cautioned that such information may not be appropriate for other purposes. Certain statements other than statements of historical facts included in this press release may constitute forward-looking information, including but not limited to, statements concerning the Company s intentions and expectations for continued growth and profitability in 2018, the Company s intention to make a normal course issuer bid with respect to the purchase of its Class A Non-Voting Shares as well as statements concerning the Company s intention to enter into an automatic securities purchase plan pursuant to which the Company s designated broker may purchase Class A Non-Voting Shares under the Company s normal course issuer bid, under the heading Normal Course Issuer Bid. By its very nature, forward-looking information requires us to make assumptions and is subject to inherent risks and uncertainties, which give rise to the possibility that the Company's assumptions, estimates, analyses, beliefs and opinions may not be correct and that the Company's expectations and plans will not be achieved. Although the Company believes that the forward-looking information in this press release is based on information, assumptions and beliefs which are current, reasonable and complete, this information is necessarily subject to a number of factors, risks and uncertainties that could cause actual results to differ materially from management's expectations and plans as set forth in such forward-looking information. For more information on the risks, uncertainties and assumptions that could cause the Company's actual results to differ from current expectations, refer to section 2.11 (Risk Factors) of our Annual Information Form for fiscal and to sections (Retail segment business risks), (CT REIT segment business risks), (Financial Services segment business risks) and 12.0 (Enterprise risk management) and all subsections thereunder of our Management's Discussion and Analysis for the year ended, as well as the Company s other public filings, available at and at

6 The forward-looking statements and information contained herein are based on certain factors and assumptions as of the date hereof and do not take into account the effect that transactions or nonrecurring or other special items announced or occurring after the statements are made have on the Company's business. The Company does not undertake to update any forward-looking information, whether written or oral, that may be made from time to time by it or on its behalf, to reflect new information, future events or otherwise, except as is required by applicable securities laws. CONFERENCE CALL Canadian Tire will conduct a conference call to discuss information included in this news release and related matters at 2:00 p.m. ET on February 15, The conference call will be available simultaneously and in its entirety to all interested investors and the news media through a webcast at and will be available through replay at this website for 12 months. ABOUT CANADIAN TIRE CORPORATION Canadian Tire Corporation, Limited, (TSX:CTC.A) (TSX:CTC) or "CTC," is a family of businesses that includes a Retail segment, a Financial Services division and CT REIT. Our retail business is led by Canadian Tire, which was founded in 1922 and provides Canadians with products for life in Canada across its Living, Playing, Fixing, Automotive and Seasonal categories. PartSource and Gas+ are key parts of the Canadian Tire network. The Retail segment also includes Mark's, a leading source for casual and industrial wear, and FGL Sports (Sport Chek, Hockey Experts, Sports Experts, National Sports, Intersport, Pro Hockey Life and Atmosphere), which offers the best active wear brands. The approximately 1,700 retail and gasoline outlets are supported and strengthened by our Financial Services division and the tens of thousands of people employed across the country by the Company and its local dealers, franchisees and petroleum retailers. For more information, visit Corp.CanadianTire.ca. FOR MORE INFORMATION Media: Jane Shaw, , jane.shaw@cantire.com Investors: Lisa Greatrix, , lisa.greatrix@cantire.com

7 CANADIAN TIRE CORPORATION, LIMITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Q4

8 Condensed Consolidated Balance Sheets (Unaudited) As at (C$ in millions) ASSETS Cash and cash equivalents $ $ Short-term investments Trade and other receivables Loans receivable 5, ,138.4 Merchandise inventories 1, ,710.7 Income taxes recoverable Prepaid expenses and deposits Assets classified as held for sale Total current assets 8, ,637.7 Long-term receivables and other assets Long-term investments Goodwill and intangible assets 1, ,280.3 Investment property Property and equipment 4, ,097.2 Deferred income taxes Total assets $ 15,624.2 $ 15,302.8 LIABILITIES Bank indebtedness $ $ 5.9 Deposits Trade and other payables 2, ,859.3 Provisions Short-term borrowings Loans payable Income taxes payable Current portion of long-term debt Total current liabilities 4, ,680.9 Long-term provisions Long-term debt 3, ,667.1 Long-term deposits 1, ,230.8 Deferred income taxes Other long-term liabilities Total liabilities 10, ,565.5 EQUITY Share capital Contributed surplus Accumulated other comprehensive income (37.5) 36.7 Retained earnings 4, ,250.9 Equity attributable to shareholders of Canadian Tire Corporation 4, ,938.6 Non-controlling interests Total equity 5, ,737.3 Total liabilities and equity $ 15,624.2 $ 15,302.8

9 Condensed Consolidated Statements of Income (Unaudited) For the 13 weeks ended 52 weeks ended (C$ in millions, except share and per share amounts) Revenue $ 3,964.0 $ 3,641.0 $ 13,434.9 $ 12,681.0 Cost of producing revenue 2, , , ,288.5 Gross margin 1, , , ,392.5 Other (income) expense (0.3) (4.3) Selling, general and administrative expenses , ,291.9 Net finance costs Income before income taxes , ,011.0 Income taxes Net income $ $ $ $ Net income attributable to: Shareholders of Canadian Tire Corporation $ $ $ $ Non-controlling interests $ $ $ $ Basic Earnings Per Share $ 4.12 $ 3.47 $ $ 9.25 Diluted Earnings Per Share $ 4.10 $ 3.46 $ $ 9.22 Weighted average number of Common and Class A Non-Voting Shares outstanding: Basic 66,985,467 71,101,887 68,678,840 72,360,303 Diluted 67,188,141 71,249,119 68,871,847 72,555,732

10 Condensed Consolidated Statements of Comprehensive Income (Unaudited) For the 13 weeks ended 52 weeks ended (C$ in millions) Net income $ $ $ $ Other comprehensive income (loss), net of taxes Items that may be reclassified subsequently to net income: Cash flow hedges and available-for-sale financial assets: Gains (losses) (85.7) (40.5) Reclassification of losses (gains) to non-financial assets 11.6 (9.8) 19.1 (67.9) Reclassification of losses (gains) to income 0.5 (0.4) (5.7) (1.7) Item that will not be reclassified subsequently to net income: Actuarial losses (6.2) (3.0) (6.2) (3.0) Other comprehensive income (loss) (78.5) (113.1) Other comprehensive income (loss) attributable to: Shareholders of Canadian Tire Corporation $ 12.4 $ 52.3 $ (80.3) $ (114.3) Non-controlling interests $ 12.8 $ 58.5 $ (78.5) $ (113.1) Comprehensive income $ $ $ $ Comprehensive income attributable to: Shareholders of Canadian Tire Corporation $ $ $ $ Non-controlling interests $ $ $ $ 634.4

11 Condensed Consolidated Statements of Cash Flows (Unaudited) For the 13 weeks ended 52 weeks ended (C$ in millions) Cash generated from (used for): Operating activities Net income $ $ $ $ Adjustments for: Depreciation of property and equipment and investment property Income tax expense Net finance costs Amortization of intangible assets Loss (gain) on disposal of property and equipment, investment property, assets held for sale, intangible assets, and lease terminations 0.4 (2.6) 0.4 (14.9) Interest paid (33.0) (31.3) (125.9) (114.0) Interest received Income taxes paid (48.6) (34.2) (294.3) (262.8) Other Total, except as noted below , ,182.2 Change in operating working capital and other Change in loans receivable (270.5) (259.3) (430.4) (306.1) Cash generated from operating activities Investing activities Additions to property and equipment and investment property (246.9) (147.6) (471.0) (617.3) Additions to intangible assets (46.8) (36.6) (161.6) (163.5) Total additions (293.7) (184.2) (632.6) (780.8) Acquisition of short-term investments (45.6) (19.5) (421.9) (422.3) Proceeds from the maturity and disposition of short-term investments Acquisition of long-term investments (20.0) (35.0) (61.4) Proceeds on disposition of property and equipment, investment property, and assets held for sale Acquisition of subsidiaries (19.3) Other 0.2 (0.5) Cash (used for) investing activities (257.2) (130.3) (639.9) (782.8) Financing activities Dividends paid (41.3) (38.8) (169.7) (157.5) Distributions paid to non-controlling interests (5.9) (20.7) (61.1) (76.4) Total dividends and distributions paid (47.2) (59.5) (230.8) (233.9) Net issuance (repayment) of short-term borrowings (83.5) 93.1 (54.8) Issuance of loans payable Repayment of loans payable (66.1) (52.5) (173.9) (243.5) Issuance of long-term debt (0.4) Repayment of long-term debt and finance lease liabilities (445.6) (5.6) (671.2) (24.5) Payment of transaction costs related to long-term debt (0.1) (4.2) (3.2) Repurchase of share capital (181.3) (116.6) (659.3) (449.4) Payments on settlement of derivatives (8.9) (8.9) Change in deposits (74.9) Cash (used for) financing activities (796.3) (81.7) (719.7) (280.4) Cash generated (used) in the period (216.4) (386.8) (76.8) Cash and cash equivalents, net of bank indebtedness, beginning of period Cash and cash equivalents, net of bank indebtedness, end of period $ $ $ $ 823.8