Canada NewsWire
TORONTO, Feb. 15, 2024
TORONTO, Feb. 15, 2024 /CNW/ - Canadian Tire Corporation, Limited (TSX: CTC) (TSX: CTC.A) ("CTC" or the "Company") today announced results for its fourth quarter and full year ended December 30, 2023.
"Our performance last year fell short of our expectations as our team continues to navigate a challenging macroeconomic environment. In the face of significant headwinds, we remain agile and we are flexing across our multi-category portfolio with a focus on value and the essential categories Canadians need right now. The actions we have taken, particularly in the second half of 2023, are driving efficiencies and enabling us to prioritize key investments within our Better Connected strategy, including the continued rollout of our omnichannel initiatives," said Greg Hicks, President and CEO, Canadian Tire Corporation.
"In the near-term, we are taking a measured and cautious approach to our operating plans. While the pace of our investments has slowed, we remain committed to our strategy as we balance tough short-term decisions with our long-term objectives," added Hicks.
This press release contains supplementary financial measures. References below to the Q4 and Full-Year 2023 MD&A mean the Company's Management's Discussion and Analysis for the Fourth Quarter and Full Year, which is available on SEDAR+ at http://www.sedarplus.ca and is incorporated by reference herein. Non-GAAP measures and non-GAAP ratios have no standardized meanings under GAAP and may not be comparable to similar measures of other companies.
Normalized diluted EPS, a non-GAAP ratio, is calculated by dividing Normalized Net Income Attributable to Shareholders, a non-GAAP financial measure, by total diluted shares of the Company. For information about these measures, see section 10.1 of the Company's Q4 and Full-Year 2023 MD&A.
The following table is a reconciliation of normalized net income attributable to shareholders of the Company to the respective GAAP measures:
(C$ in millions, except per share amounts) | Q4 2023 | Q4 2022 | 2023 | 2022 |
Net income | $ 197.2 | $ 562.6 | $ 339.1 | $ 1,182.8 |
Net income attributable to shareholders | 172.5 | 531.9 | 213.3 | 1,044.1 |
Add normalizing items: | ||||
Targeted headcount reduction charge | $ 15.9 | $ — | $ 15.9 | $ — |
DC fire | — | — | 8.4 | — |
GST/HST-related charge1 | — | — | 24.7 | — |
Change in fair value of redeemable financial instrument | — | — | 328.0 | — |
Operational Efficiency program | — | 14.4 | — | 34.7 |
Helly Hansen Russia exit | — | — | — | 33.4 |
Normalized net income | $ 213.1 | $ 577.0 | $ 716.1 | $ 1,250.9 |
Normalized net income attributable to shareholders1 |
$ 188.4 |
$ 546.3 |
$ 585.3 |
$ 1,112.2 |
Normalized diluted EPS | $ 3.38 | $ 9.34 | $ 10.37 | $ 18.75 |
1 | $5.0 million relates to non-controlling interests and is not included in the sum of Normalized net income attributable to shareholders. |
Consolidated Normalized Income Before Income Taxes and Retail Normalized Income before Income Taxes are non-GAAP financial measures. For information about these measures, see section 10.1 of the Company's Q4 2023 MD&A.
The following table reconciles Consolidated Normalized Income Before Income Taxes to Income Before Income Taxes:
(C$ in millions) | Q4 2023 | Q4 2022 | 2023 | 2022 |
Income before income taxes | $ 263.0 | $ 752.2 | $ 572.8 | $ 1,583.8 |
Add normalizing items: | ||||
Targeted headcount reduction charge | 21.6 | — | 21.6 | — |
DC fire | — | — | 11.3 | — |
GST/HST-related charge | — | — | 33.3 | — |
Change in fair value of redeemable financial instrument | — | — | 328.0 | — |
Operational Efficiency program | — | 19.6 | — | 47.2 |
Helly Hansen Russia exit | — | — | — | 36.5 |
Normalized Income before income taxes | $ 284.6 | $ 771.8 | $ 967.0 | $ 1,667.5 |
Retail Normalized Income before income taxes is used as an additional measure to assess the Company's underlying operating performance and assists in making decisions regarding the ongoing operations of its business.
The following table reconciles Retail Normalized Income before income taxes to Income before income taxes which is a GAAP measure reported in the consolidated financial statements:
(C$ in millions) | Q4 2023 | Q4 2022 | 2023 | 2022 |
Income before income taxes | $ 263.0 | $ 752.2 | $ 572.8 | $ 1,583.8 |
Less: Other operating segments | 101.3 | 109.8 | 165.8 | 535.8 |
Retail Income before income taxes | $ 161.7 | $ 642.4 | $ 407.0 | $ 1,048.0 |
Add normalizing items: | ||||
Targeted headcount reduction charge | 19.6 | — | 19.6 | — |
DC fire | — | — | 11.3 | — |
Operational Efficiency program | — | 19.6 | — | 47.2 |
Helly Hansen Russia exit | — | — | — | 36.5 |
Retail Normalized Income before income taxes | $ 181.3 | $ 662.0 | $ 437.9 | $ 1,131.7 |
Financial Services Normalized Income before income taxes is used as an additional measure to assess the Company's underlying operating performance and assists in making decisions regarding the ongoing operations of its business.
The following table reconciles Financial Services Normalized Income before income taxes to Income before income taxes which is a GAAP measure reported in the consolidated financial statements:
(C$ in millions) | Q4 2023 | Q4 2022 | 2023 | 2022 |
Income before income taxes | $ 263.0 | $ 752.2 | $ 572.8 | $ 1,583.8 |
Less: Other operating segments | 177.8 | 665.4 | 187.8 | 1,142.2 |
Financial Services Income before income taxes | $ 85.2 | $ 86.8 | $ 385.0 | $ 441.6 |
Add normalizing items: | ||||
Targeted headcount reduction charge | 2.0 | — | 2.0 | — |
GST/HST-related charge | — | — | 33.3 | — |
Financial Services Normalized Income before income taxes | $ 87.2 | $ 86.8 | $ 420.3 | $ 441.6 |
Retail Return on Invested Capital (ROIC) is calculated as Retail return divided by the Retail invested capital. Retail return is defined as trailing 12-month Retail after-tax earnings excluding interest expense, lease related depreciation expense, inter-segment earnings, and any normalizing items. Retail invested capital is defined as Retail segment total assets, less Retail segment trade payables and accrued liabilities and inter-segment balances based on an average of the trailing four quarters. Retail return and Retail invested capital are non-GAAP financial measures. For more information about these measures, see section 10.1 of the Company's Q4 2023 MD&A.
(C$ in millions, except where noted) | 2023 | 2022 |
Income before income taxes | $ 572.8 | $ 1,583.8 |
Less: Other operating segments | 165.8 | 535.8 |
Retail Income before income taxes | $ 407.0 | $ 1,048.0 |
Add normalizing items: | ||
Operational Efficiency program | — | 47.2 |
Helly Hansen Russia exit | — | 36.5 |
Targeted headcount reduction-related charge | 19.6 | — |
DC fire | 11.3 | — |
Retail Normalized Income before income taxes | $ 437.9 | $ 1,131.7 |
Less: | ||
Retail intercompany adjustments1 | 213.2 | 207.1 |
Add: | ||
Retail interest expense2 | 323.5 | 246.7 |
Retail depreciation of right-of-use assets | 622.7 | 589.4 |
Retail effective tax rate | 28.4 % | 25.9 % |
Add: Retail taxes | (332.2) | (456.4) |
Retail return | $ 838.7 | $ 1,304.3 |
Average total assets | $ 22,173.6 | $ 21,734.5 |
Less: Average assets in other operating segments | 4,421.3 | 4,413.5 |
Average Retail assets | $ 17,752.3 | $ 17,321.0 |
Less: | ||
Average Retail intercompany adjustments1 | 3,722.2 | 3,534.8 |
Average Retail trade payables and accrued liabilities3 | 2,841.2 | 2,924.5 |
Average Franchise Trust assets | 517.0 | 458.0 |
Average Retail excess cash | — | — |
Average Retail invested capital | $ 10,671.9 | $ 10,403.7 |
Retail ROIC | 7.9 % | 12.5 % |
1 | Intercompany adjustments include intercompany income received from CT REIT which is included in the Retail segment, and intercompany investments made by the Retail segment in CT REIT and CTFS. |
2 | Excludes Franchise Trust. |
3 | Trade payables and accrued liabilities include Trade and other payables, Short-term derivative liabilities, Short-term provisions and Income tax payables. |
Operating capital expenditures is used to assess the resources used to maintain capital assets at their productive capacity. Operating capital expenditures is most directly comparable to the Total additions, a GAAP measure reported in the consolidated financial statements.
(C$ in millions) | 2023 | 2022 |
Total additions1,2 | $ 668.6 | $ 735.1 |
Add: Accrued additions | 14.8 | 113.6 |
Less: CT REIT acquisitions and developments excluding vend-ins from CTC | 68.1 | 101.1 |
Operating capital expenditures | $ 615.3 | $ 747.6 |
1 | This line appears on the Consolidated Statement of Cash Flows under Investing activities. |
2 | Certain prior year figures have been restated to conform to the current year presentation. |
The measures below are supplementary financial measures. See Section 10.2 (Supplementary Financial Measures) of the Company's Q4 and Full-Year 2023 MD&A for information on the composition of these measures.
The Company's contract with its Dealers governs how margin and expenses are shared between the two groups.
Beginning in the first quarter of 2023, the Company implemented a change to accounting estimates associated with one component of the contract, the Margin Sharing Arrangement with the Dealers. The Company already records a portion of its margin relating to revenue and margin on shipments to its Dealers in the quarter incurred, but the majority of the MSA has historically been accrued in the fourth quarter of every year.
Effective with the first quarter of 2023, the Company began to record the MSA throughout the year to better reflect the pattern over which the MSA is earned. This change simply reflects a change in the timing of this revenue and will result in less quarterly fluctuation in Retail segment gross margin and income before income taxes throughout the year.
In the fourth quarter of 2023, the unfavourable impact to Revenue in the Retail segment due to the change in accounting estimate relating to the Company's MSA with its Dealers was $171.0 million. Excluding this impact, Consolidated fourth quarter Revenue was down $726.4 million, Consolidated Income before income taxes was down $318.2 million and Retail segment Gross margin rate excluding Petroleum was down 88 bps.
To view a PDF version of Canadian Tire Corporation's full quarterly earnings report please see: https://mma.prnewswire.com/media/2340974/CANADIAN_TIRE_CORPORATION__LIMITED___INVESTOR_RELATIONS_Canadian.pdf
This press release contains information that may constitute forward-looking information within the meaning of applicable securities laws. Forward-looking information provides insights regarding Management's current expectations and plans and allows investors and others to better understand the Company's anticipated financial position, results of operations and operating environment. Readers are cautioned that such information may not be appropriate for other purposes. Although the Company believes that the forward-looking information in this press release is based on information, assumptions and beliefs that are current, reasonable, and complete, such information is necessarily subject to a number of business, economic, competitive and other risk factors that could cause actual results to differ materially from Management's expectations and plans as set forth in such forward-looking information. The Company cannot provide assurance that any financial or operational performance, plans, or aspirations forecast will actually be achieved or, if achieved, will result in an increase in the Company's share price. For information on the material risk factors and uncertainties and the material factors and assumptions applied in preparing the forward-looking information that could cause the Company's actual results to differ materially from predictions, forecasts, projections, expectations or conclusions, refer to section 14.0 (Forward-Looking Information and Other Investor Communications) of our Management's Discussion and Analysis for the Fourth Quarter and Full- Year ended December 30, 2023 as well as CTC's other public filings, available at http://www.sedar.com and at https://investors.canadiantire.ca. 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.
Canadian Tire will conduct a conference call to discuss information included in this news release and related matters at 8:00 a.m. ET on February 15, 2024. The conference call will be available simultaneously and in its entirety to all interested investors and the news media through a webcast at https://investors.canadiantire.ca and will be available through replay at this website for 12 months.
Canadian Tire Corporation, Limited, (TSX: CTC.A) (TSX: CTC) or "CTC", is a group of companies 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 & Gardening divisions. Party City, 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; Pro Hockey Life, a hockey specialty store catering to elite players; and SportChek, Hockey Experts, Sports Experts and Atmosphere, which offer the best active wear brands. The Company's close to 1,700 retail and gasoline outlets are supported and strengthened by CTC's Financial Services division and the tens of thousands of people employed across Canada and around the world by CTC and its local dealers, franchisees, and petroleum retailers. In addition, CTC owns and operates Helly Hansen, a leading technical outdoor brand based in Oslo, Norway. For more information, visit Corp.CanadianTire.ca.
FOR MORE INFORMATION
Media: Stephanie Nadalin, (647) 271-7343, [email protected]
Investors: Karen Keyes, (647) 518-4461, [email protected]
As at (C$ in millions) |
December 30, 2023 |
December 31, 2022 |
ASSETS | ||
Cash and cash equivalents | $ 311.2 | $ 331.3 |
Short-term investments | 177.2 | 176.3 |
Trade and other receivables | 1,151.3 | 1,309.9 |
Loans receivable | 6,568.3 | 6,271.1 |
Merchandise inventories | 2,693.7 | 3,216.1 |
Income taxes recoverable | 125.9 | 27.4 |
Prepaid expenses and deposits | 246.6 | 195.7 |
Assets classified as held for sale | 18.9 | 2.6 |
Total current assets | 11,293.1 | 11,530.4 |
Long-term receivables and other assets | 645.8 | 676.7 |
Long-term investments | 108.2 | 62.6 |
Goodwill and intangible assets | 2,254.7 | 2,341.6 |
Investment property | 443.7 | 421.5 |
Property and equipment | 5,219.5 | 4,994.1 |
Right-of-use assets | 1,933.8 | 1,932.0 |
Deferred income taxes | 79.5 | 143.4 |
Total assets | $ 21,978.3 | $ 22,102.3 |
LIABILITIES | ||
Bank indebtedness | $ — | $ 5.0 |
Deposits | 1,041.7 | 1,226.3 |
Trade and other payables | 2,689.4 | 3,200.9 |
Provisions | 219.9 | 197.2 |
Short-term borrowings | 965.7 | 576.2 |
Loans | 519.9 | 472.9 |
Current portion of lease liabilities | 378.5 | 381.2 |
Income taxes payable | 13.4 | 47.1 |
Current portion of long-term debt | 560.5 | 1,040.2 |
Total current liabilities | 6,389.0 | 7,147.0 |
Long-term provisions | 59.8 | 66.1 |
Long-term debt | 4,404.0 | 3,217.5 |
Long-term deposits | 2,322.6 | 1,739.4 |
Long-term lease liabilities | 1,986.0 | 2,026.4 |
Deferred income taxes | 182.1 | 132.1 |
Other long-term liabilities | 190.0 | 734.6 |
Total liabilities | 15,533.5 | 15,063.1 |
EQUITY | ||
Share capital | 598.7 | 587.8 |
Contributed surplus | 2.9 | 2.9 |
Accumulated other comprehensive (loss) | (181.8) | (42.4) |
Retained earnings | 5,128.2 | 5,070.2 |
Equity attributable to shareholders of Canadian Tire Corporation | 5,548.0 | 5,618.5 |
Non-controlling interests | 896.8 | 1,420.7 |
Total equity | 6,444.8 | 7,039.2 |
Total liabilities and equity | $ 21,978.3 | $ 22,102.3 |
For the | 13 weeks ended | 52 weeks ended | ||
(C$ in millions, except per share amounts) | December 30, 2023 | December 31, 2022 | December 30, 2023 | December 31, 2022 |
Revenue Cost of producing revenue | $ 4,443.0 2,906.2 | $ 5,340.4 3,322.0 | $ 16,656.5 10,952.9 | $ 17,810.6 11,712.7 |
Gross margin Other expense (income) Selling, general and administrative expenses1 Depreciation and amortization1 Net finance costs (income) Change in fair value of redeemable financial instrument | 1,536.8 3.2 983.5 196.3 90.8 — | 2,018.4 0.2 1,012.0 188.1 65.9 — | 5,703.6 34.4 3,675.7 771.2 321.5 328.0 | 6,097.9 61.6 3,502.5 719.0 231.0 — |
Income before income taxes Income tax expense (recovery) | 263.0 65.8 | 752.2 189.6 | 572.8 233.7 | 1,583.8 401.0 |
Net income | $ 197.2 | $ 562.6 | $ 339.1 | $ 1,182.8 |
Net income attributable to: Shareholders of Canadian Tire Corporation Non-controlling interests |
$ 172.5 24.7 |
$ 531.9 30.7 |
$ 213.3 125.8 |
$ 1,044.1 138.7 |
$ 197.2 | $ 562.6 | $ 339.1 | $ 1,182.8 | |
Basic earnings per share | $ 3.10 | $ 9.13 | $ 3.79 | $ 17.70 |
Diluted earnings per share | $ 3.09 | $ 9.09 | $ 3.78 | $ 17.60 |
Weighted average number of Common and Class A Non-Voting Shares outstanding: Basic Diluted |
55,623,542 55,761,553 |
58,237,893 58,499,745 |
56,228,680 56,457,450 |
58,983,364 59,336,919 |
1 | Certain prior-year figures have been restated to conform to the current-year presentation. |
For the | 13 weeks ended | 52 weeks ended | ||
(C$ in millions) | December 30, 2023 | December 31, 2022 | December 30, 2023 | December 31, 2022 |
Net income | $ 197.2 | $ 562.6 | $ 339.1 | $ 1,182.8 |
Other comprehensive income (loss), net of taxes | ||||
Items that may be reclassified subsequently to Net income (loss): | ||||
Net fair value gains (losses) on hedging instruments entered into for cash flow hedges not subject to basis adjustment | (57.6) | (8.2) | (38.4) | 77.1 |
Deferred cost of hedging not subject to basis adjustment – Changes in fair value of the time value of an option in relation to time-period related hedged items
| 10.4 | (8.6) | 38.5 | 4.1 |
Reclassification of losses (gains) to income | (0.6) | — | 0.8 | 5.7 |
Currency translation adjustment | 21.9 | 71.4 | (51.1) | (26.0) |
Item that will not be reclassified subsequently to Net income (loss): | ||||
Actuarial (losses) gains | (6.4) | 41.3 | (6.4) | 41.3 |
Net fair value (losses) gain on hedging instruments entered into for cash flow hedges subject to basis adjustment | (45.1) | (39.6) | (7.2) | 165.8 |
Other comprehensive income (loss) | (77.4) | 56.3 | (63.8) | 268.0 |
Other comprehensive income (loss) attributable to: Shareholders of Canadian Tire Corporation Non-controlling interests |
$ (77.9) 0.5 |
$ 58.3 (2.0) |
$ (74.0) 10.2 |
$ 249.2 18.8 |
$ (77.4) | $ 56.3 | $ (63.8) | $ 268.0 | |
Comprehensive income | $ 119.8 | $ 618.9 | $ 275.3 | $ 1,450.8 |
Comprehensive income attributable to: Shareholders of Canadian Tire Corporation Non-controlling interests |
$ 94.6 25.2 |
$ 590.2 28.7 |
$ 139.3 136.0 |
$ 1,293.3 157.5 |
$ 119.8 | $ 618.9 | $ 275.3 | $ 1,450.8 |
For the | 13 weeks ended | 52 weeks ended | ||
(C$ in millions) | December 30, 2023 | December 31, 2022 | December 30, 2023 | December 31, 2022 |
Cash (used for) generated from:
Operating activities Net income Adjustments for: Depreciation of property and equipment, investment property and right-of-use assets Impairment on property and equipment, investment property and right-of-use assets Income taxes Net finance costs Amortization of intangible assets (Gain) loss on disposal of property and equipment, investment property, assets held for sale and right-of-use assets Change in fair value of redeemable financial instrument Non-cash loss on exit of Helly Hansen operations in Russia Non-cash charge related to fire at A.J. Billes Distribution Centre Total except as noted below Interest paid Interest received Income taxes paid Change in loans receivable Change in operating working capital and other1 |
$ 197.2 |
$ 562.6 |
$ 339.1 |
$ 1,182.8 |
170.6 |
162.2 |
675.2 |
621.0 | |
4.2 | 3.1 | 6.3 | 3.1 | |
65.8 | 189.6 | 233.7 | 401.0 | |
90.8 | 65.9 | 321.5 | 231.0 | |
32.6 | 32.1 | 127.0 | 122.5 | |
(1.2) | (13.7) | (2.7) | (22.1) | |
— | — | 328.0 | — | |
— | — | — | 20.8 | |
(1.6) | — | 53.2 | — | |
558.4 | 1,001.8 | 2,081.3 | 2,560.1 | |
(64.0) | (67.2) | (366.1) | (254.6) | |
9.8 | 6.1 | 38.8 | 21.3 | |
(38.0) | (80.2) | (210.5) | (529.3) | |
(189.4) | (196.0) | (289.3) | (657.1) | |
593.1 | 246.7 | 99.5 | (673.9) | |
Cash generated from operating activities | 869.9 | 911.2 | 1,353.7 | 466.5 |
Investing activities Additions to property and equipment and investment property1 Additions to intangible assets Total additions Acquisition of short-term investments Proceeds from the maturity and disposition of short-term investments Proceeds on disposition of property and equipment, investment property and assets held for sale Lease payments received for finance subleases (principal portion) Acquisition of long-term investments and other Change in Franchise Trust loans receivable |
(258.0) |
(161.7) |
(580.9) |
(612.5) |
(14.0) | (34.1) | (87.7) | (122.6) | |
(272.0) | (195.8) | (668.6) | (735.1) | |
(89.9) | (32.2) | (210.9) | (166.9) | |
97.0 | 63.5 | 269.9 | 713.1 | |
0.1 | (0.5) | 0.1 | 5.2 | |
4.5 | 3.7 | 19.8 | 16.3 | |
(103.9) | — | (110.9) | (17.4) | |
11.2 | (21.0) | (47.2) | (45.6) | |
Cash used for investing activities | (353.0) | (182.3) | (747.8) | (230.4) |
Financing activities | ||||
Dividends paid | (88.7) | (89.4) | (360.8) | (325.8) |
Distributions paid to non-controlling interests | (38.6) | (41.8) | (142.1) | (143.0) |
Net issuance of short-term borrowings | (286.0) | (263.9) | 389.6 | 468.0 |
Issuance of loans | 31.9 | 55.4 | 270.5 | 267.8 |
Repayment of loans | (43.2) | (34.4) | (223.3) | (222.2) |
Issuance of long-term debt | 650.0 | — | 1,750.0 | 700.0 |
Repayment of long-term debt | (0.1) | (0.1) | (1,040.1) | (720.1) |
Payment of lease liabilities (principal portion) | (93.0) | (86.9) | (425.2) | (357.2) |
Payment of transaction costs relating to long-term debt | (1.8) | (0.6) | (6.0) | (3.7) |
Purchase of Class A Non-Voting Shares | (7.6) | (127.6) | (376.1) | (425.4) |
Repurchase of Scotiabank's 20 percent interest in CTFS Holdings | ||||
Limited | (904.5) | — | (904.5) | — |
Net receipts (payments) on financial instruments | 3.5 | 2.4 | 53.5 | 32.6 |
Change in deposits | 113.5 | (118.6) | 393.5 | (932.5) |
Cash used for financing activities | (664.6) | (705.5) | (621.0) | (1,661.5) |
Cash generated (used) in the period | (147.7) | 23.4 | (15.1) | (1,425.4) |
Cash and cash equivalents, net of bank indebtedness, beginning | ||||
of period | 458.9 | 302.9 | 326.3 | 1,751.7 |
Cash and cash equivalents, net of bank indebtedness, end of period |
$ 311.2 |
$ 326.3 |
$ 311.2 |
$ 326.3 |
1 | Certain prior year figures have been restated to conform to the current year presentation. |
SOURCE CANADIAN TIRE CORPORATION, LIMITED - INVESTOR RELATIONS
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