- Record Q4 earnings and 2013 business performances across Retail and Financial Services
- Fourth quarter same store sales up 4.0% at Canadian Tire stores, 12.5% at FGL Sports and 5.2% at Mark's
- Consolidated diluted EPS attributable to owners of the Company up 16.4% and 13.3% for Q4 and full year, respectively
TORONTO, Feb. 13, 2014 /CNW/ - Canadian Tire Corporation, Limited (TSX:CTC, TSX:CTC.a) today released fourth quarter and full year results for the period ended December 28, 2013.
"The ongoing transformation of our company is resulting in significant momentum and record results for our businesses," said Stephen Wetmore, Chief Executive Officer, Canadian Tire Corporation, Limited. "We have made significant investments to bolster key heritage categories, our team is executing very well and our marketing initiatives are strengthening our brands and having a tremendous impact with our customers. I am proud of our entire team - our corporate employees, dealers and store staff - for delivering the best fourth quarter in our history."
FOURTH QUARTER
Consolidated retail sales in the fourth quarter increased 5.5% to $4.0 billion and consolidated revenue increased 5.1% to $3.3 billion over the same period last year. Diluted earnings per share (EPS) attributable to owners of the Company of $2.32 were up 16.4% in the fourth quarter compared to the same period the prior year. Normalizing for the one-time costs related to the formation of CT REIT in 2013 and for restructuring, banner rationalization, tax and tax provision adjustments in 2012, diluted EPS attributable to owners of the Company were $2.35, an increase of 9.8% over the same period last year. The earnings growth largely reflects strong top-line revenue and gross margin contributions from both the Retail and Financial Services segments.
FULL YEAR
Consolidated retail sales for the full year increased 3.1% to $13.2 billion due to sales growth from incremental promotional events and campaigns and a positive customer response to new assortments and merchandising efforts, such as the ProShop concept in Canadian Tire stores. Seasonal winter weather also helped to drive the increase in sales over 2012. Consolidated revenue increased 3.1% to $11.8 billion, largely a result of higher shipments to Canadian Tire stores and increased sales across all retail banners. Diluted earnings per share attributable to owners of the Company for the year increased 13.3% to $6.91. Normalizing for the one-time costs, diluted EPS attributable to owners of the Company were $7.02, an increase of 8.8% over the prior year's normalized earnings.
Consolidated financial results1
| (C$ in millions, except per share amounts) | Q4 2013 | Q4 2012 | Change | YTD Q4 2013 | YTD Q4 2012 | Change | |||||||||
| Retail sales | $ | 3,981.1 | $ | 3,774.7 | 5.5% | $ | 13,225.3 | $ | 12,824.9 | 3.1% | |||||
| Revenue | 3,328.7 | 3,166.7 | 5.1% | 11,785.6 | 11,427.2 | 3.1% | |||||||||
| Net income | 191.0 | 162.8 | 17.2% | 564.4 | 498.9 | 13.1% | |||||||||
| Net income attributable to owners of the Company |
187.8 | 162.8 | 15.3% | 561.2 | 498.9 | 12.5% | |||||||||
| Basic earnings per share attributable to owners of the Company |
2.34 | 2.00 | 16.9% | 6.96 | 6.13 | 13.5% | |||||||||
| Diluted earnings per share attributable to owners of the Company |
2.32 | 1.99 | 16.4% | 6.91 | 6.10 | 13.3% |
| 1 Retail sales is a key operating performance measure and refers to the point of sale (i.e. cash register) value of all goods and services sold to retail customers at Canadian Tire Dealer-operated, Mark's, PartSource and FGL Sports franchisee-operated, Petroleum retailer-operated and corporately-owned stores across the retail banners and through its online sales channels and, in aggregate, does not form part of the Company's consolidated financial statements. Revenue, as reported in the Company's consolidated financial statements, is comprised, primarily of the sales of goods to Canadian Tire Associate Dealers and to franchisees of Mark's, PartSource and FGL Sports, the sale of gasoline through Petroleum retailers, the sale of goods to retail customers by stores that are corporately-owned under the Mark's, PartSource and FGL Sports banners, the sale of services through the home services business, the sale of goods to customers through INA International Ltd., a business to business operation of FGL Sports, and through the Company's online sales channels, as well as revenue generated from interest, service charges, interchange and other fees and from insurance products sold to credit card holders in the Financial Services segment and rent paid by third-party tenants in the CT REIT segment. Management believes that retail sales and related year-over-year comparisons provide meaningful information to investors and are expected and valued by them to help them assess the size and financial health of the retail network of stores; these measures also serve as an indicator of the strength of the Company's brand, which ultimately impacts its consolidated financial performance. Refer to section 10.3 in the Company's Q4 2013 and full year 2013 MD&A for additional information. |
RETAIL SEGMENT
Canadian Tire retail sales increased 4.5% and same store sales improved 4.0% in the fourth quarter compared to the same period in 2012. Results for the quarter were driven by strong sales of outdoor tools, Automotive and outdoor recreation products as well as positive customer response to new promotional events and marketing initiatives. Canadian Tire saw record sales results and solid margin growth in the quarter. Seasonal weather contributed to the already strong quarter.
For the full year, Canadian Tire stores delivered retail sales growth of 2.5% compared to 2012 due to improvements in Automotive service performance, promotional campaigns, seasonal winter weather and enhanced Automotive, outdoor recreation and outdoor tools assortments. In 2013, Canadian Tire introduced new marketing and digital initiatives, including the 'Tested for Life in Canada' platform that solicits feedback from customers to determine the best and most innovative products, and 'We All Play for Canada,' which rallies Canadians to be more active. Digital kiosks were rolled out across the country that enable customers to look up product availability and view the digital catalogue and flyer while in-store.
FGL Sports saw retail sales increase 13.3% for the quarter and same-store sales increase 12.5% over the fourth quarter of 2012, with its core Sport Chek banner same store sales up 15.6% for the same period. For the full year, FGL Sports retail sales increased 6.8% with same-store sales growth of 7.7%. Sport Chek same store sales for the full year were up 10.3%. The positive retail sales performance in the quarter and for the full year also included the results of Pro Hockey Life, which was acquired in August 2013.
Growth at FGL Sports for the quarter was led by higher sales of new brands and strengthened assortments in casual clothing and athletic footwear, the addition of Olympic performance apparel products and reflected the continued emphasis on the Sport Chek brand and in-store execution.
At Mark's, retail sales grew 5.5% in the quarter with same-store sales growth of 5.2% over the fourth quarter of 2012. Strong sales in industrial apparel, men's and women's accessories and footwear categories drove much of the growth. New marketing programs and promotional events, improved execution in stores and seasonal winter weather also contributed to the strength in sales in the quarter. For the full year, Mark's retail sales increased 4.8% over 2012.
Petroleum retail sales increased 1.9% for the quarter over the same period last year, primarily due to higher gasoline prices and increased non-gasoline sales. For the full year, sales increased 1.6% over 2012.
Retail segment revenue increased 5.1% or $147.4 million in the quarter over the fourth quarter of 2012 as a result of higher shipments in key Automotive and Seasonal and Gardening categories at Canadian Tire, higher retail sales at FGL Sports, Mark's and Petroleum, and the addition of Pro Hockey Life results.
Retail segment fourth quarter income before income taxes of $192.8 million was up 24.5% compared to 2012. The earnings increase was reflective of strong revenue and gross margin contributions, partially offset by higher operating expenses in the quarter.
FINANCIAL SERVICES SEGMENT
Financial Services finished another strong quarter with a revenue increase of 4.7% over the same period last year. The revenue growth was due, in part, to deeper integration with the retail banners and a focus on account acquisitions. These initiatives led to an increase in the number of active accounts and higher average account balances, resulting in higher credit card charges. Income before income taxes increased 16.6% to $71.6 million, due primarily to the growth of credit card receivables and interest expense savings. For the full year, income before income taxes increased 15.6% over 2012.
CAPITAL EXPENDITURES
Capital expenditures for 2013 were $544.5 million, including $102.2 million for land purchased for future distribution capacity. The Company accelerated the expansion of the FGL Sports store network and investments in technology that will help enable future digital capabilities across the retail network.
CT REAL ESTATE INVESTMENT TRUST
On October 23, 2013, CT REIT completed its initial public offering. Canadian Tire Corporation, CT REIT's majority shareholder, owned an approximate 83.1% effective interest in CT REIT as at December 28, 2013. In December, CT REIT started to execute on its planned growth strategy and purchased two development sites for the future development of Canadian Tire stores from third-party vendors for a total of approximately $9.0 million, including acquisition costs, which were funded by cash on hand.
THE YEAR AHEAD
Current momentum is expected to be carried through 2014 as the Company continues its journey to be a brand-led organization, investing in and growing its existing retail network through the completion of new store concepts, store refurbishments and the opening of new flagship locations for Sport Chek. CTC aims to be a world leader in digitizing retail and exploring new and innovative ways to connect with its customers through continued investment in digital initiatives and the evolution of its collection and use of customer data and insights. Underpinning this work is the Company's continued focus on optimizing organizational performance and execution. This includes, in part, implementing terms of the new Dealer contract and identifying opportunities to improve productivity to generate additional earnings growth.
QUARTERLY DIVIDEND
Canadian Tire Corporation has declared a quarterly dividend of $0.4375 per share on each Common and Class A Non-Voting share. The dividend is payable on June 1, 2014 to Common and Class A shareholders of record as of April 30, 2014. The dividend is considered an "eligible dividend" for tax purposes.
The Company's full year financial report will be available in the Investors section of the Company's website at corp.canadiantire.ca and will be filed on SEDAR and available at sedar.com.
Please refer to Management's Discussion and Analysis for further detail and information on the following charts.
Consolidated financial results
| (C$ in millions, except per share amounts) | Q4 2013 | Q4 20121 | Change | YTD Q4 2013 | YTD Q4 20121 | Change | ||||||||||
| Retail sales2,3 | $ | 3,981.1 | $ | 3,774.7 | 5.5% | $ | 13,225.3 | $ | 12,824.9 | 3.1% | ||||||
| Revenue | $ | 3,328.7 | $ | 3,166.7 | 5.1% | $ | 11,785.6 | $ | 11,427.2 | 3.1% | ||||||
| Gross margin | $ | 1,082.5 | $ | 994.4 | 8.9% | $ | 3,722.3 | $ | 3,497.9 | 6.4% | ||||||
| Other (expense) income | (6.2) | 5.2 | (217.1)% | (3.0) | 5.7 | (152.1)% | ||||||||||
| Operating expenses (excluding depreciation & amortization) |
695.3 | 662.2 | 5.0% | 2,483.6 | 2,365.5 | 5.0% | ||||||||||
| EBITDA4 | $ | 381.0 | $ | 337.4 | 12.9% | $ | 1,235.7 | $ | 1,138.1 | 8.6% | ||||||
| Depreciation and amortization | 89.7 | 87.8 | 2.2% | 345.3 | 335.1 | 3.0% | ||||||||||
| Net finance costs | 25.9 | 33.4 | (22.2)% | 105.8 | 126.2 | (16.1)% | ||||||||||
| Income before income taxes | $ | 265.4 | $ | 216.2 | 22.7% | $ | 784.6 | $ | 676.8 | 15.9% | ||||||
| Effective tax rate | 28.0% | 24.7% | 28.1% | 26.3% | ||||||||||||
| Net income | $ | 191.0 | $ | 162.8 | 17.2% | $ | 564.4 | $ | 498.9 | 13.1% | ||||||
| Net income attributable to: | ||||||||||||||||
| Owners of the Company | $ | 187.8 | $ | 162.8 | 15.3% | $ | 561.2 | $ | 498.9 | 12.5% | ||||||
| Non-controlling interests | 3.2 | - | 3.2 | - | ||||||||||||
| $ | 191.0 | $ | 162.8 | 17.2% | $ | 564.4 | $ | 498.9 | 13.1% | |||||||
| Basic earnings per share attributable to owners of the Company |
$ | 2.34 | $ | 2.00 | 16.9% | $ | 6.96 | $ | 6.13 | 13.5% | ||||||
| Diluted earnings per share attributable to owners of the Company |
$ | 2.32 | $ | 1.99 | 16.4% | $ | 6.91 | $ | 6.10 | 13.3% | ||||||
| 1 Prior year figures have been restated. Refer to section 10.2 in the Q4 2013 and full year 2013 MD&A for additional information. |
| 2 Retail sales for the prior year have been restated. Refer to section 10.3 in the Q4 2013 and full year 2013 MD&A for additional information. |
| 3 Refer to sections 10.3 in the Q4 2013 and full year 2013 MD&A for additional information on retail sales. |
| 4 Non-GAAP measure. Refer to section 10.3 in the Q4 2013 and full year MD&A for additional information. |
Consolidated Key Operating Performance Measures
| (C$ in millions, except where noted) | Q4 2013 | Q4 2012 | Change | 2013 | 2012 | Change | |||||||||
| Revenue | $ | 3,328.7 | $ | 3,166.7 | 5.1% | $ | 11,785.6 | $ | 11,427.2 | 3.1% | |||||
| ROIC1 | 7.42% | 7.34% | n/a | n/a | |||||||||||
| 1 Refer to section 10.3 in the Q4 2013 and full year 2013 MD&A for additional information. |
Retail Segment financial results
| (C$ in millions) | Q4 2013 | Q4 20121 | Change | YTD Q4 2013 | YTD Q4 20121 | Change | |||||||||
| Retail sales2,3 | $ | 3,981.1 | $ | 3,774.7 | 5.5% | $ | 13,225.3 | $ | 12,824.9 | 3.1% | |||||
| Revenue | $ | 3,048.5 | $ | 2,901.1 | 5.1% | $ | 10,691.6 | $ | 10,381.2 | 3.0% | |||||
| Gross margin | $ | 904.9 | $ | 826.9 | 9.4% | $ | 3,011.9 | $ | 2,835.3 | 6.2% | |||||
| Other (expense) income | 12.2 | 5.0 | 143.4% | 15.2 | 3.0 | 417.0% | |||||||||
| Operating expenses (excluding depreciation & amortization) | 646.7 | 573.3 | 12.8% | 2,185.9 | 2,039.9 | 7.2% | |||||||||
| EBITDA4 | $ | 270.4 | $ | 258.6 | 4.4% | $ | 841.2 | $ | 798.4 | 5.3% | |||||
| Depreciation and amortization | 75.8 | 85.2 | (11.0)% | 323.5 | 325.2 | (0.5)% | |||||||||
| Net finance (income) costs | 1.8 | 18.8 | (90.2)% | 54.1 | 73.2 | (26.2)% | |||||||||
| Income before income taxes | $ | 192.8 | $ | 154.6 | 24.5% | $ | 463.6 | $ | 400.0 | 15.9% |
| 1 Prior year figures have been restated. Refer to section 10.2 in the Q4 2013 and full year 2013 MD&A for additional information. |
| 2 Retail sales for the prior year have been restated. Refer to section 10.3 in the Q4 2013 and full year 2013 MD&A for additional information. |
| 3 Refer to section 10.3 in the Q4 2013 and full year 2013 MD&A for additional information on retail sales. |
| 4 Non-GAAP measure. Refer to section 10.3 in the Q4 2013 and full year 2013 MD&A for additional information. |
Retail Segment - by banner1
| (C$ in millions, except number of stores and gas bars) | Q4 2013 | Q4 2012 | Change | YTD Q4 2013 | YTD Q4 2012 | Change | |||||||||
| Canadian Tire retail sales growth | 4.5% | (0.5)% | 2.5% | 0.8% | |||||||||||
| Canadian Tire same store sales growth | 4.0% | (1.1)% | n/a | n/a | |||||||||||
| Canadian Tire revenue | $ | 1,593.4 | $ | 1,548.2 | 2.9% | $ | 5,915.5 | $ | 5,779.7 | 2.4% | |||||
| Number of Canadian Tire stores | 491 | 490 | 491 | 490 | |||||||||||
| Number of PartSource stores | 90 | 87 | 90 | 87 | |||||||||||
| Canadian Tire Petroleum retail sales growth | 1.9% | 5.0% | 1.6% | 4.0% | |||||||||||
| Canadian Tire Petroleum gasoline volume (litres) growth | (0.6)% | 2.7% | 0.4% | 1.3% | |||||||||||
| Canadian Tire Petroleum revenue | $ | 519.8 | $ | 509.8 | 2.0% | $ | 2,075.0 | $ | 2,049.6 | 1.2% | |||||
| Canadian Tire Petroleum gross margin dollars | $ | 39.4 | $ | 35.8 | 10.2% | $ | 149.8 | $ | 145.6 | 2.9% | |||||
| Number of gas bars | 300 | 299 | 300 | 299 | |||||||||||
| FGL Sports retail sales growth | 13.3% | 2.3% | 6.8% | 3.9% | |||||||||||
| FGL Sports same store sales growth | 12.5% | 2.8% | 7.7% | 4.2% | |||||||||||
| FGL Sports revenue | $ | 519.2 | $ | 444.2 | 16.9% | $ | 1,656.8 | $ | 1,550.3 | 6.9% | |||||
| Number of FGL Sports stores | 421 | 475 | 421 | 475 | |||||||||||
| Mark's retail sales growth | 5.5% | 3.7% | 4.8% | 4.2% | |||||||||||
| Mark's same store sales growth | 5.2% | 3.5% | 4.6% | 3.7% | |||||||||||
| Mark's revenue | $ | 419.3 | $ | 402.5 | 4.2% | $ | 1,060.8 | $ | 1,016.6 | 4.3% | |||||
| Number of Mark's stores | 385 | 386 | 385 | 386 |
| 1 For financial definitions refer to sections 7.4.1 and 10.3 in the Q4 2013 and full year 2013 MD&A for additional information. |
Financial Services segment financial results
| (C$ in millions) | Q4 2013 | Q4 20121 | Change | YTD Q4 2013 | YTD Q4 20121 | Change | |||||||||
| Gross average accounts receivable | $ | 4,507.0 | $ | 4,209.6 | 7.1% | $ | 4,374.3 | $ | 4,096.0 | 6.8% | |||||
| Net credit card write-off rate | 5.75% | 6.58% | n/a | n/a | |||||||||||
| Return on receivables2 | 7.32% | 6.76% | n/a | n/a | |||||||||||
| Revenue | $ | 259.6 | $ | 248.0 | 4.7% | $ | 1,025.9 | $ | 981.9 | 4.5% | |||||
| Gross margin dollars | 145.4 | 132.4 | 9.9% | 595.4 | 536.6 | 11.0% | |||||||||
| Operating expenses | 75.3 | 71.5 | 5.1% | 278.5 | 263.7 | 5.5% | |||||||||
| Income before income taxes | $ | 71.6 | $ | 61.6 | 16.6% | $ | 320.0 | $ | 276.8 | 15.6% |
| 1 Prior year figures have been restated. Refer to section 10.2 in the Q4 2013 and full year 2013 MD&A for additional information. |
| 2 Key operating performance measure. Refer to section 10.3 in the Q4 2013 and full year 2013 MD&A for additional information. |
| CT REIT Segment results | |||||
| (C$ in millions) | For the period from July 15, 2013 to December 31, 2013 |
||||
| Revenue | $ | 63.0 | |||
| Net income | 31.0 | ||||
| (C$ in millions) | For the period from July 15, 2013 to December 31, 2013 |
||||
| Net operating income1 | $ | 44.1 | |||
| Funds from operations1 | 31.5 | ||||
| Adjusted funds from operations1 | 23.5 |
| 1 Non-GAAP measures. Refer to section 10.3 in the Q4 2013 and full year 2013 MD&A for additional information. |
NORMAL COURSE ISSUER BID
CTC also announced that it intends to make a normal course issuer bid to purchase from February 26, 2014 to February 25, 2015, through the facilities of the Toronto Stock Exchange (the "TSX") or alternative trading systems, if eligible, certain of its outstanding Class A Non-Voting Shares (the "2014 NCIB"). As at February 12, 2014, there were 76,560,851 Class A Non-Voting Shares issued and outstanding. The number of Class A Non-Voting Shares which may be purchased during the period the 2014 NCIB is outstanding will not exceed 2.5 million Class A Non-Voting Shares, which is approximately 3.4% of 72.7 million shares, the approximate public float of Class A Non-Voting Shares issued and outstanding as at February 12, 2014.
CTC has a policy of purchasing Class A Non-Voting Shares to offset the dilutive effect of the issuance of Class A Non-Voting Shares pursuant to its stock option plan and dividend reinvestment plan. CTC intends to continue that policy. CTC may also purchase additional Class A Non-Voting Shares if, after consideration of various factors, CTC determines that the purchase would be expected to be in the best interests of CTC and contribute to enhancing the value of the remaining Class A Non-Voting Shares.
CTC expects to utilize a minimum of $100 million of its anticipated free cash flow in fiscal 2014 to purchase Class A Non-Voting Shares, in addition to those to be purchased pursuant to its anti-dilutive policy, under the remainder of its current normal course issuer bid and/or the 2014 NCIB. CTC will not purchase more than 2.5 million Class A Non-Voting Shares, in the aggregate, under the 2014 NCIB.
The number of Class A Non-Voting Shares purchased to date by CTC pursuant to its current normal course issuer bid, which expires on February 25, 2014, is 1,228,670. This figure includes 1,159,550 Class A Non-Voting Shares that were purchased by CTC in addition to those purchased pursuant to its anti-dilutive policy. The weighted average price at which the purchases were made was $86.16 per Class A Non-Voting Share.
Any purchases of Class A Non-Voting Shares by CTC pursuant to the 2014 NCIB will be made through open market transactions at the market price of the Class A Non-Voting Shares at the time of the acquisition or as otherwise permitted under the rules of the TSX. For open market transactions, CTC will be subject to a daily repurchase restriction of 47,659 Class A Non-Voting Shares, which represents 25% of the average daily trading volume of the Class A Non-Voting Shares on the TSX for the six months ended January 31, 2014. The Class A Non-Voting Shares acquired by CTC pursuant to the 2014 NCIB will be restored to the status of authorized but unissued shares.
CTC's 2014 NCIB is subject to regulatory approval.
To view a PDF version of Canadian Tire Corporation's full fourth quarter and year-end earnings report please see: http://files.newswire.ca/116/Q4CanadianTire.pdf
FORWARD-LOOKING STATEMENTS
This document 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 financial position, results of operations and operating environment. Readers are cautioned that such information may not be appropriate for other circumstances.
All statements other than statements of historical facts included in this document may constitute forward-looking information, including but not limited to, statements concerning management's plans for 2014 under the heading "The Year Ahead", statements regarding the Company's intention to make a normal course issuer bid (including statements regarding the Company's intention to continue its policy of purchasing Class A Non-Voting Shares to offset the dilutive effect of the issuance of Class A Non-Voting Shares pursuant to its stock option plan and dividend reinvestment plan and statements regarding the Company's expectations about the amount of its anticipated free cash flow to be utilized in acquiring Class A Non-Voting Shares pursuant to the normal course issuer bid) under the heading "Normal Course Issuer Bid" and other statements concerning management's expectations relating to possible or assumed future prospects and results, our strategic goals and priorities, our actions and the results of those actions and the economic and business outlook for us. Often but not always, forward-looking information can be identified by the use of forward-looking terminology such as "may", "will", "expect", "believe", "estimate", "plan", "could", "should", "would", "outlook", "forecast", "anticipate", "foresee", "continue" or the negative of these terms or variations of them or similar terminology. Forward-looking information is based on the reasonable assumptions, estimates, analyses, beliefs and opinions of management made in light of its experience and perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable at the date that such information is provided.
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. Examples of management's beliefs, which may prove to be incorrect include, but are not limited to, beliefs about the effectiveness of certain performance measures, beliefs about current and future competitive conditions and the Company's position in the competitive environment, beliefs about the Company's core capabilities and beliefs regarding the availability of sufficient liquidity to meet the Company's contractual obligations. Although the Company believes that the forward-looking information in this document is based on information, assumptions and beliefs which are current, reasonable and complete, this information is necessarily subject to a number of factors that could cause actual results to differ materially from management's expectations and plans as set forth in such forward-looking information for a variety of reasons. Some of the factors - many of which are beyond our control and the effects of which can be difficult to predict - include (a) credit, market, currency, operational, liquidity and funding risks, including changes in economic conditions, interest rates or tax rates; (b) the ability of CTC to attract and retain high quality employees for all of its businesses, Dealers, Canadian Tire Petroleum agents and Mark's Work Wearhouse and FGL Sports franchisees, as well as our financial arrangements with such parties; (c) the growth of certain business categories and market segments and the willingness of customers to shop at our stores or acquire our financial products and services; (d) our margins and sales and those of our competitors; (e) the changing consumer preferences toward e-commerce, online retailing and the introduction of new technologies; (f) risks and uncertainties relating to information management, technology, property management and development, supply chain, product safety, changes in law, regulation, competition, seasonality, weather patterns, commodity price and business disruption, our relationships with suppliers, manufacturers, partners and other third parties, changes to existing accounting pronouncements, the risk of damage to the reputation of brands promoted by CTC and the cost of store network expansion and retrofits; and (g) our capital structure, funding strategy, cost management programs and share price. We caution that the foregoing list of important factors and assumptions is not exhaustive and other factors could also adversely affect our results. Investors and other readers are urged to consider the foregoing risks, uncertainties, factors and assumptions carefully in evaluating the forward-looking information and are cautioned not to place undue reliance on 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, please refer to the "Risk Factors" section of our Annual Information Form for fiscal 2013 and our 2013 Management's Discussion and Analysis, as well as the Company's other public filings, available at www.sedar.com and at www.corp.canadiantire.ca.
Statements that include forward-looking information do not take into account the effect that transactions or non-recurring or other special items announced or occurring after the statements are made have on the Company's business. For example, they do not include the effect of any dispositions, acquisitions, asset write-downs or other charges announced or occurring after such statements are made.
The forward-looking statements and information contained herein are based on certain factors and assumptions as of the date hereof. 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, unless 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 12:00 p.m. ET on February 13, 2014. The conference call will be available simultaneously and in its entirety to all interested investors and the news media through a webcast at http://investors.canadiantire.ca, and will be available through replay at this website for 12 months.
ABOUT CANADIAN TIRE
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 nearly 1700 retail and gasoline outlets are supported and strengthened by our Financial Services division and the approximately 85,000 people employed across the Company. For more information, visit Corp.CanadianTire.ca.
CANADIAN TIRE CORPORATION, LIMITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Q4 2013
Condensed Consolidated Balance Sheets (Unaudited)
| As at (C$ in millions) |
December 28, 2013 | December 29, 2012 | ||||
| (Note 1) | ||||||
| ASSETS | ||||||
| Cash and cash equivalents | $ | 643.2 | $ | 1,015.5 | ||
| Short-term investments | 416.6 | 168.9 | ||||
| Trade and other receivables | 758.5 | 750.6 | ||||
| Loans receivable | 4,569.7 | 4,265.7 | ||||
| Merchandise inventories | 1,481.0 | 1,503.3 | ||||
| Income taxes recoverable | 31.5 | 47.5 | ||||
| Prepaid expenses and deposits | 68.2 | 39.1 | ||||
| Assets classified as held for sale | 9.1 | 5.5 | ||||
| Total current assets | 7,977.8 | 7,796.1 | ||||
| Long-term receivables and other assets | 686.0 | 681.2 | ||||
| Long-term investments | 134.7 | 182.7 | ||||
| Goodwill and intangible assets | 1,185.5 | 1,089.9 | ||||
| Investment property | 93.5 | 95.1 | ||||
| Property and equipment | 3,516.1 | 3,343.5 | ||||
| Deferred income taxes | 36.4 | 40.1 | ||||
| Total assets | $ | 13,630.0 | $ | 13,228.6 | ||
| LIABILITIES | ||||||
| Bank indebtedness | $ | 69.0 | $ | 86.0 | ||
| Deposits | 1,178.4 | 1,311.0 | ||||
| Trade and other payables | 1,817.4 | 1,631.3 | ||||
| Provisions | 196.1 | 185.8 | ||||
| Short-term borrowings | 120.3 | 118.9 | ||||
| Loans payable | 611.2 | 623.7 | ||||
| Income taxes payable | 57.5 | 53.0 | ||||
| Current portion of long-term debt | 272.2 | 661.9 | ||||
| Total current liabilities | 4,322.1 | 4,671.6 | ||||
| Long-term provisions | 38.2 | 54.8 | ||||
| Long-term debt | 2,339.1 | 2,336.0 | ||||
| Long-term deposits | 1,152.0 | 1,111.8 | ||||
| Deferred income taxes | 100.4 | 77.7 | ||||
| Other long-term liabilities | 228.3 | 212.4 | ||||
| Total liabilities | 8,180.1 | 8,464.3 | ||||
| EQUITY | ||||||
| Share capital | 587.0 | 688.0 | ||||
| Contributed surplus | 6.2 | 2.9 | ||||
| Accumulated other comprehensive income (loss) | 47.4 | (1.7) | ||||
| Retained earnings | 4,526.7 | 4,075.1 | ||||
| Equity attributable to owners of the Company | 5,167.3 | 4,764.3 | ||||
| Non-controlling interests | 282.6 | - | ||||
| Total equity | 5,449.9 | 4,764.3 | ||||
| Total liabilities and equity | $ | 13,630.0 | $ | 13,228.6 | ||
| Note 1 Certain of the prior period's figures have been restated to correspond to the current year presentation or as a result of the retrospective implementation of IAS 19 - Employment Benefits. At December 29, 2012, deferred income tax asset decreased by $0.3 million, other long-term liabilities decreased by $1.0 million and retained earnings increased by $0.7 million. Retained earnings at December 31, 2011 increased by $1.0 million. |
Condensed Consolidated Statements of Income (Unaudited)
| 13 weeks ended | 52 weeks ended | |||||||||||
| (C$ in millions, except per share amounts) | December 28, 2013 | December 29, 2012 | December 28, 2013 | December 29, 2012 | ||||||||
| (Note 2) | (Note 2) | |||||||||||
| Revenue | $ | 3,328.7 | $ | 3,166.7 | $ | 11,785.6 | $ | 11,427.2 | ||||
| Cost of producing revenue | (2,246.2) | (2,172.3) | (8,063.3) | (7,929.3) | ||||||||
| Gross margin | 1,082.5 | 994.4 | 3,722.3 | 3,497.9 | ||||||||
| Other (expense) income | (6.2) | 5.2 | (3.0) | 5.7 | ||||||||
| Operating expenses | ||||||||||||
| Distribution costs | (86.8) | (88.4) | (342.0) | (356.2) | ||||||||
| Sales and marketing expenses | (504.1) | (461.6) | (1,737.6) | (1,636.4) | ||||||||
| Administrative expenses (Note 2) | (194.1) | (200.0) | (749.3) | (708.0) | ||||||||
| Total operating expenses | (785.0) | (750.0) | (2,828.9) | (2,700.6) | ||||||||
| Operating income | 291.3 | 249.6 | 890.4 | 803.0 | ||||||||
| Finance income | 4.9 | 5.1 | 20.1 | 18.1 | ||||||||
| Finance costs | (30.8) | (38.5) | (125.9) | (144.3) | ||||||||
| Net finance costs | (25.9) | (33.4) | (105.8) | (126.2) | ||||||||
| Income before income taxes | 265.4 | 216.2 | 784.6 | 676.8 | ||||||||
| Income taxes (Note 2) | (74.4) | (53.4) | (220.2) | (177.9) | ||||||||
| Net income | $ | 191.0 | $ | 162.8 | $ | 564.4 | $ | 498.9 | ||||
| Net income attributable to: | ||||||||||||
| Owners of the Company | $ | 187.8 | $ | 162.8 | $ | 561.2 | $ | 498.9 | ||||
| Non-controlling interests | 3.2 | - | 3.2 | - | ||||||||
| $ | 191.0 | $ | 162.8 | $ | 564.4 | $ | 498.9 | |||||
| Basic earnings per share attributable to owners of the Company | $ | 2.34 | $ | 2.00 | $ | 6.96 | $ | 6.13 | ||||
| Diluted earnings per share attributable to owners of the Company | $ | 2.32 | $ | 1.99 | $ | 6.91 | $ | 6.10 | ||||
| Weighted average number of Common and | ||||||||||||
| Class A Non-Voting Shares outstanding: | ||||||||||||
| Basic | 80,234,988 | 81,394,420 | 80,652,472 | 81,435,218 | ||||||||
| Diluted | 80,927,347 | 81,725,054 | 81,180,863 | 81,805,594 | ||||||||
| Note 2 Certain of the prior period's figures have been restated as a result of the retrospective implementation of IAS 19 - Employment Benefits. For the 13 weeks ended and 52 weeks ended December 29, 2012, administrative expenses increased by $0.4 million and income taxes decreased by $0.1 million, retrospectively. |
Condensed Consolidated Statements of Cash Flows (Unaudited)
| 13 weeks ended | 52 weeks ended | |||||||||||
| (C$ in millions) | December 28, 2013 | December 29, 2012 | December 28, 2013 | December 29, 2012 | ||||||||
| (Note 3) | (Note 3) | |||||||||||
| Cash generated from (used for): | ||||||||||||
| Operating activities | ||||||||||||
| Net income | $ | 191.0 | $ | 162.8 | $ | 564.4 | $ | 498.9 | ||||
| Adjustments for: | ||||||||||||
| Gross impairment loss on loans receivable | 87.4 | 82.0 | 326.1 | 323.7 | ||||||||
| Depreciation on property and equipment and investment property | 66.8 | 66.1 | 253.8 | 248.9 | ||||||||
| Income tax expense | 74.4 | 53.4 | 220.2 | 177.9 | ||||||||
| Net finance costs | 25.9 | 33.4 | 105.8 | 126.2 | ||||||||
| Amortization of intangible assets | 22.9 | 21.7 | 91.5 | 86.2 | ||||||||
| Changes in fair value of derivative instruments | (25.3) | (2.4) | (37.9) | (7.7) | ||||||||
| Loss (gain) on disposal of property and equipment, investment property and | ||||||||||||
| assets held for sale | 1.4 | (5.4) | (10.3) | (7.9) | ||||||||
| Other | 5.3 | 8.5 | 15.1 | 21.3 | ||||||||
| 449.8 | 420.1 | 1,528.7 | 1,467.5 | |||||||||
| Change in operating working capital and other | 188.9 | 273.7 | 270.2 | (29.8) | ||||||||
| Change in loans receivable | (236.5) | (245.8) | (600.2) | (521.7) | ||||||||
| Change in deposits | (135.1) | 70.4 | (96.2) | 134.7 | ||||||||
| Cash generated from operating activities before interest and income taxes | 267.1 | 518.4 | 1,102.5 | 1,050.7 | ||||||||
| Interest paid | (39.3) | (41.0) | (126.5) | (155.3) | ||||||||
| Interest received | 2.9 | 3.0 | 12.0 | 8.9 | ||||||||
| Income taxes paid | (48.0) | (49.0) | (191.2) | (161.3) | ||||||||
| Cash generated from operating activities | 182.7 | 431.4 | 796.8 | 743.0 | ||||||||
| Investing activities | ||||||||||||
| Acquisition of Pro Hockey Life Sporting Goods Inc. | - | - | (58.0) | - | ||||||||
| Acquisition of short-term investments | (269.7) | (46.2) | (339.2) | (264.0) | ||||||||
| Proceeds from the maturity and disposition of short-term investments | 57.3 | 129.1 | 193.8 | 360.7 | ||||||||
| Acquisition of long-term investments | (25.1) | (25.6) | (55.1) | (130.0) | ||||||||
| Proceeds from the disposition of long-term investments | - | - | 0.4 | 4.7 | ||||||||
| Additions to property and equipment and investment property | (111.1) | (62.8) | (404.3) | (222.3) | ||||||||
| Proceeds on disposition of property and equipment, investment property and assets held for sale | 1.4 | 24.3 | 20.6 | 45.0 | ||||||||
| Additions to intangible assets | (56.5) | (20.8) | (105.9) | (64.3) | ||||||||
| Long-term receivables and other assets | 12.8 | 25.2 | (21.5) | 17.6 | ||||||||
| Purchases of stores | (12.4) | - | (17.3) | (9.3) | ||||||||
| Other | 0.1 | - | 0.1 | 0.4 | ||||||||
| Cash (used for) generated from investing activities | (403.2) | 23.2 | (786.4) | (261.5) | ||||||||
| Financing activities | ||||||||||||
| Net issuance (repayment) of short-term borrowings | 0.3 | (14.6) | (20.4) | (233.7) | ||||||||
| Issuance of loans payable | 50.7 | 58.9 | 235.9 | 235.3 | ||||||||
| Repayment of loans payable | (70.3) | (85.4) | (248.5) | (240.3) | ||||||||
| Issuance of share capital | 1.6 | 1.1 | 5.8 | 12.4 | ||||||||
| Repurchase of share capital | (35.8) | (21.9) | (105.9) | (33.1) | ||||||||
| Issuance of long-term debt | 265.0 | 423.2 | 265.8 | 637.4 | ||||||||
| Repayment of long-term debt and finance lease liabilities | (3.9) | (8.3) | (659.2) | (30.1) | ||||||||
| Dividends paid | (28.1) | (24.4) | (113.0) | (97.7) | ||||||||
| Issuance of trust units to non-controlling interests | 303.0 | - | 303.0 | - | ||||||||
| Trust unit issue costs | (24.1) | - | (24.1) | - | ||||||||
| Distributions paid to non-controlling interests | (3.6) | - | (3.6) | - | ||||||||
| Payment of transaction costs related to long-term debt | (1.3) | (2.0) | (1.3) | (3.2) | ||||||||
| Cash generated from (used for) financing activities | 453.5 | 326.6 | (365.5) | 247.0 | ||||||||
| Cash generated (used) in the period | 233.0 | 781.2 | (355.1) | 728.5 | ||||||||
| Cash and cash equivalents, net of bank indebtedness, beginning of period | 341.0 | 148.4 | 929.5 | 201.0 | ||||||||
| Effect of exchange rate fluctuations on cash held | 0.2 | (0.1) | (0.2) | - | ||||||||
| Cash and cash equivalents, net of bank indebtedness, end of period | $ | 574.2 | $ | 929.5 | $ | 574.2 | $ | 929.5 | ||||
| Note 3 Certain of the prior period's figures have been restated to correspond to the current year presentation. There was no impact to cash generated. |
PDF available at: http://stream1.newswire.ca/media/2014/02/13/20140213_C9838_DOC_EN_36669.pdf
SOURCE: CANADIAN TIRE CORPORATION, LIMITED
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