Canada NewsWire
TORONTO, May 8, 2018
TORONTO, May 8, 2018 /CNW/ - George Weston Limited (TSX: WN) ("GWL" or the "Company") today announced its consolidated unaudited results for the 12 weeks ended March 24, 2018.
GWL's 2018 First Quarter Report to Shareholders has been filed with SEDAR and is available at sedar.com and in the Investor Centre section of the Company's website at weston.ca.
Galen Weston, Chairman and Chief Executive Officer, George Weston Limited, commented that "Loblaw delivered solid results in the face of external headwinds, and is rapidly scaling its e-Commerce offer across Canada. Weston Foods results came in as expected despite a challenging quarter in sales. We remain focused on delivering results and continuing the roll out of our transformation program."
2018 FIRST QUARTER HIGHLIGHTS
(unaudited) |
||||||
($ millions except where otherwise indicated) |
12 Weeks Ended |
|||||
For the periods ended as indicated |
Mar. 24, 2018 |
Mar. 25, 2017(3) |
Change | |||
Sales |
$ |
10,744 |
$ |
10,803 |
(0.5)% | |
Operating income |
$ |
502 |
$ |
513 |
(2.1)% | |
Adjusted EBITDA(1) |
$ |
918 |
$ |
927 |
(1.0)% | |
Adjusted EBITDA margin(1) |
8.5% |
8.6% |
||||
Net earnings attributable to shareholders of the Company |
$ |
190 |
$ |
118 |
61.0% | |
Net earnings available to common shareholders |
||||||
of the Company |
$ |
180 |
$ |
108 |
66.7% | |
Adjusted net earnings available to common shareholders |
||||||
of the Company(1) |
$ |
178 |
$ |
184 |
(3.3)% | |
Diluted net earnings per common share ($) |
$ |
1.40 |
$ |
0.84 |
66.7% | |
Adjusted diluted net earnings per common share(1) ($) |
$ |
1.38 |
$ |
1.43 |
(3.5)% | |
CONSOLIDATED RESULTS OF OPERATIONS
Net earnings available to common shareholders of the Company in the first quarter of 2018 were $180 million ($1.40 per common share), an increase of $72 million ($0.56 per common share) compared to the same period in 2017. The increase was primarily due to the favourable year-over-year net impact of adjusting items totaling $78 million ($0.61 per common share), partially offset by the decline in the underlying operating performance of $6 million ($0.05 per common share), as described below.
partially offset by,
partially offset by,
Adjusted net earnings available to common shareholders of the Company(1) decreased by $6 million ($0.05 per common share) to $178 million ($1.38 per common share) in the first quarter of 2018 compared to the same period in 2017. Normalized for the disposition of Loblaw's gas bar operations, adjusted net earnings available to common shareholders of the Company(1) decreased by approximately $1 million. Adjusted diluted net earnings per common share(1) also included the positive contribution from the increase in the Company's ownership interest in Loblaw ($0.06 per common share). Normalized for the disposition of Loblaw's gas bar operations, adjusted diluted net earnings per common share(1) decreased by approximately 0.7%, or $0.01 per common share.
REPORTABLE OPERATING SEGMENTS
The Company has two reportable operating segments, Loblaw and Weston Foods. The Company also holds cash, short term investments and a direct interest in Choice Properties of approximately 6.1%. Loblaw has three reportable operating segments: Retail, Financial Services and Choice Properties. Loblaw provides Canadians with grocery, pharmacy, health and beauty, apparel, general merchandise, financial services, and wireless mobile products and services. Loblaw also holds approximately 82.4% effective interest in Choice Properties, which owns, manages and develops well-located retail and commercial real estate across Canada. Weston Foods is a leading North American bakery that offers packaged bread and rolls in Canada as well as frozen and artisan bread and rolls, cakes, donuts, pies, biscuits and alternatives throughout Canada and the U.S.
Weston Foods Segment Results
(unaudited) |
|||||
($ millions except where otherwise indicated) |
12 Weeks Ended |
||||
For the periods ended as indicated |
Mar. 24, 2018 |
Mar. 25, 2017 |
Change | ||
Sales |
$ |
517 |
$ |
539 |
(4.1)% |
Operating income |
$ |
10 |
$ |
23 |
(56.5)% |
Adjusted EBITDA(1) |
$ |
44 |
$ |
61 |
(27.9)% |
Adjusted EBITDA margin(1) |
8.5% |
11.3% |
|||
Depreciation and amortization(i) |
$ |
31 |
$ |
24 |
29.2% |
(i) |
Depreciation and amortization in the first quarter of 2018 includes $4 million of accelerated depreciation related to restructuring and other related costs. |
Sales Weston Foods sales in the first quarter of 2018 were $517 million, a decrease of $22 million, or 4.1%, compared to the same period in 2017. Sales included the unfavourable impact of foreign currency translation of approximately 2.6%. Excluding the unfavourable impact of foreign currency translation, sales decreased by 1.5% mainly due to a decrease in volume.
Operating Income Weston Foods operating income in the first quarter of 2018 was $10 million, a decrease of $13 million, or 56.5%, compared to the same period in 2017. The decrease was primarily due to the decline in underlying operating performance of $20 million, partially offset by the favourable year-over-year net impact of adjusting items totaling $7 million, as described below:
partially offset by,
Adjusted EBITDA(1) Weston Foods adjusted EBITDA(1) in the first quarter of 2018 was $44 million, a decrease of $17 million, or 27.9%, compared to the same period in 2017. The decrease was driven by a decrease in volume, higher input and distribution costs, and costs of the transformation program, partially offset by productivity improvements.
Weston Foods adjusted EBITDA margin(1) in the first quarter of 2018 decreased to 8.5% compared to 11.3% in the same period in 2017. The decline in adjusted EBITDA margin(1) in the first quarter of 2018 was driven by the factors as described above.
Depreciation and Amortization Weston Foods depreciation and amortization in the first quarter of 2018 was $31 million, an increase of $7 million, or 29.2% compared to the same period in 2017. Depreciation and amortization included $4 million of accelerated depreciation recorded in the first quarter of 2018 related to the previously announced closure of an unprofitable manufacturing facility in the U.S. Excluding these amounts, depreciation and amortization increased in the first quarter of 2018 by $3 million due to investments in capital.
Weston Foods Other Business Matters
Restructuring and other related costs Weston Foods continuously evaluates strategic and cost reduction initiatives related to its manufacturing assets, distribution networks and administrative infrastructure with the objective of ensuring a low cost operating structure. In the first quarter of 2018, Weston Foods recorded restructuring and other related costs of $15 million (2017 – $9 million), which were primarily related to the reorganization costs from the transformation program and the previously announced closure of an unprofitable manufacturing facility in the U.S., which was completed in the first quarter of 2018. Restructuring and other related costs recorded in the first quarter of 2018 included $11 million of severance and exit costs and $4 million of accelerated depreciation.
Loblaw Segment Results
(unaudited) |
|||||
($ millions except where otherwise indicated) |
12 Weeks Ended |
||||
For the periods ended as indicated |
Mar. 24, 2018 |
Mar. 25, 2017(3) |
Change | ||
Sales |
$ |
10,367 |
$ |
10,404 |
(0.4)% |
Operating income |
$ |
478 |
$ |
493 |
(3.0)% |
Adjusted EBITDA(1) |
$ |
874 |
$ |
866 |
0.9% |
Adjusted EBITDA margin(1) |
8.4% |
8.3% |
|||
Depreciation and amortization(i) |
$ |
369 |
$ |
360 |
2.5% |
(i) |
Depreciation and amortization in the first quarter of 2018 includes $121 million (2017 – $121 million) of amortization of intangible assets acquired with Shoppers Drug Mart Corporation ("Shoppers Drug Mart"). |
As previously announced, Loblaw's year-over-year financial performance was negatively impacted by minimum wage increases and incremental healthcare reform. In addition, the disposition of Loblaw's gas bar operations, in the third quarter of 2017, had a negative year-over-year impact on financial performance.
In addition, sales, operating income and adjusted EBITDA(1) in the first quarter of 2018 included the impacts of the consolidation of franchises as set out in "Loblaw Other Business Matters".
Sales Loblaw sales in the first quarter of 2018 were $10,367 million, a decrease of $37 million, or 0.4% compared to the same period in 2017, primarily driven by Retail. Retail sales decreased by $61 million, or 0.6%, compared to the same period in 2017 and included food retail sales of $7,221 million (2017 – $7,393 million) and drug retail sales of $2,884 million (2017 – $2,773 million).
Excluding the consolidation of franchises, Retail sales decreased by $119 million, or 1.2%, primarily driven by the following factors:
partially offset by,
The redemption of Loblaw Cards in the first quarter of 2018 resulted in the delivery of approximately $17 million of free products to customers which was provided for in the fourth quarter of 2017. The redemption did not benefit sales or Loblaw's financial performance in the first quarter of 2018.
Operating Income Loblaw operating income in the first quarter of 2018 was $478 million, a decrease of $15 million, or 3.0% compared to the same period in 2017. The decrease in operating income included a decline in underlying operating performance of $1 million, including the unfavourable impact of the disposition of gas bar operations and the unfavourable year-over-year net impact of certain adjusting items totaling $14 million, as described below:
partially offset by,
Adjusted EBITDA(1) Loblaw adjusted EBITDA(1) in the first quarter of 2018 was $874 million, an increase of $8 million, or 0.9% compared to the same period in 2017, primarily driven by Financial Services segment and Choice Properties segment net of consolidation and elimination, partially offset by Retail segment. Retail adjusted EBITDA(1) decreased $19 million driven by an increase in Retail selling, general and administrative expenses ("SG&A"), partially offset by Retail gross profit. The decrease in Retail adjusted EBITDA(1) included the unfavourable impact of the disposition of Loblaw's gas bar operations of approximately $20 million.
partially offset by,
Loblaw adjusted EBITDA(1) included an increase in Financial Services adjusted EBITDA(1) of $16 million, primarily driven by higher year-over-year interchange income due to an industry-wide reduction in interchange rates imposed on MasterCard International Incorporated® ("MasterCard®") issuers affecting the first half of 2017 and growth in credit card receivables; and the increase in Choice Properties adjusted EBITDA(1), net of consolidations and eliminations, of $11 million, primarily due to an increase in base rent and operating cost recoveries from existing properties and the expansion of the portfolio through acquisitions and development of properties.
Depreciation and Amortization Loblaw's depreciation and amortization was $369 million in the first quarter of 2018, an increase of $9 million, or 2.5% compared to the same period in 2017, primarily driven by the consolidation of franchises and an increase in information technology ("IT") assets. Depreciation and amortization in the first quarter of 2018 included $121 million (2017 – $121 million) of amortization of intangible assets related to the acquisition of Shoppers Drug Mart.
Loblaw Other Business Matters
Consolidation of Franchises Loblaw has more than 500 franchise food retail stores in its network. As at the end of the first quarter of 2018, 331 of these stores were consolidated for accounting purposes under a new, simplified franchise agreement ("Franchise Agreement") implemented in 2015.
Loblaw will convert franchises to the Franchise Agreement as existing agreements expire, at the end of which all franchises will be consolidated. The following table presents the number of franchises consolidated in the first quarter of 2018, and the total impact of the consolidation of franchises included in the consolidated results of the Company.
(unaudited) |
||||
($ millions except where otherwise indicated) |
12 Weeks Ended | |||
For the periods ended as indicated |
Mar. 24, 2018 |
Mar. 25, 2017 | ||
Number of Consolidated Franchise stores, beginning of period |
310 |
200 | ||
Add: Net Number of Consolidated Franchise stores in the period |
21 |
25 | ||
Number of Consolidated Franchise stores, end of period |
331 |
225 | ||
Sales |
$ |
199 |
$ |
141 |
Operating loss |
(5) |
(2) | ||
Adjusted EBITDA(1) |
7 |
7 | ||
Depreciation and amortization |
12 |
9 | ||
Net loss attributable to Non-Controlling Interests |
(5) |
(1) | ||
Operating loss included in the table above does not significantly impact net earnings available to common shareholders of the Company as the related loss is largely attributable to non-controlling interests.
Loblaw expects(2) that the estimated annual impact in 2018 of new and current consolidated franchises will be revenue of approximately $1,000 million, adjusted EBITDA(1) of approximately $100 million, depreciation and amortization of approximately $60 million and net earnings attributable to non-controlling interests of approximately $25 million.
Wind-down of PC Financial banking services In the third quarter of 2017, President's Choice Bank ("PC Bank") entered into an agreement to end its business relationship with a major Canadian chartered bank, which represented the personal banking services offered under the PC Financial brand. As a result of this agreement, PC Bank will receive a payment of approximately $43 million, net of certain costs incurred, $17 million of which was recognized in the first quarter of 2018 and $24 million of which was recognized in 2017. The remaining amounts will be recognized in the second quarter of 2018.
PC Bank will continue to operate the PC MasterCard® program and customers will earn PC Optimum points. PC Bank remains committed to providing payment products to its customers and continues to strengthen its credit card services and loyalty program.
Choice Properties' Acquisition of CREIT On May 4, 2018, Choice Properties acquired all the assets and assumed all the liabilities of CREIT, including long term debt and all residual liabilities for a total consideration of approximately $3.7 billion, comprised of approximately 183 million Choice Properties' Trust Units ("Units") and $1.65 billion in cash consideration. CREIT redeemed all of its outstanding units for an aggregate of $22.50 in cash and 2.4904 Units per unit of CREIT on a fully prorated basis.
Choice Properties financed the cash portion of the transaction with $1.3 billion net proceeds from issuances of senior unsecured debentures and $0.35 billion of unsecured term loan facilities. Additionally, Choice Properties has arranged a new $1.5 billion committed revolving credit facility. Choice Properties repaid and cancelled the existing credit facilities of Choice Properties and CREIT concurrently with the closing of the acquisition.
Also concurrent with the closing of the acquisition, Loblaw, Choice Properties' controlling unitholder, converted all of its outstanding Class C LP Units with the face value of $925 million into Class B LP Units of Choice Properties Limited Partnership. Choice Properties issued to Loblaw approximately 70.9 million Class B LP Units upon the conversion and the shortfall of approximately $100 million was paid in cash. Following the transaction, the Company and Loblaw own approximately 4% and 62% of Choice Properties, respectively.
In the first quarter of 2018, Choice Properties incurred costs of $12 million related to the acquisition of CREIT which was recorded in SG&A.
The Company will account for the acquisition of CREIT in accordance with the requirements of IFRS 3, "Business Combinations" and will record the assets and liabilities assumed at fair value as of the acquisition date. Due to the timing of the closing of the acquisition, the Company will provide the preliminary purchase price equation in the Quarterly Report to Shareholders in the second quarter of 2018.
OUTLOOK(2)
Weston Foods' three year strategic framework is focused on becoming a premier North American bakery and delivering solid financial results. In 2018, Weston Foods will focus on key fundamental areas by growing the core business, selectively innovating in new segments and markets, and strengthening key processes in the organization.
In 2018, on a full-year comparative basis, Weston Foods expects
Loblaw is focused on its strategic framework, delivering best in food and health and beauty, using data driven insights underpinned by process and efficiency excellence. This framework is supported by Loblaw's financial plan of maintaining a stable trading environment that targets positive same-store sales and stable gross margin, creating efficiencies to deliver operating leverage, investing for the future and returning capital to shareholders.
Headwinds from minimum wage increases and healthcare reform will negatively impact Loblaw's financial performance in 2018.
In 2018, on a full-year comparative basis, normalized for the disposition of Loblaw's gas bar business, Loblaw expects to:
For 2018, the Company expects adjusted net earnings(1) to be essentially flat due to the results of Loblaw and Weston Foods, as described above.
DECLARATION OF QUARTERLY DIVIDENDS
Subsequent to the end of the first quarter of 2018, the Company's Board of Directors declared a quarterly dividend on GWL Common Shares, Preferred Shares, Series I, Preferred Shares, Series III, Preferred Shares, Series IV and Preferred Shares, Series V payable as follows:
Common Shares |
$0.49 per share payable July 1, 2018, to | |
Preferred Shares, Series I |
$0.3625 per share payable June 15, 2018, to | |
Preferred Shares, Series III |
$0.3250 per share payable July 1, 2018, to | |
Preferred Shares, Series IV |
$0.3250 per share payable July 1, 2018, to | |
Preferred Shares, Series V |
$0.296875 per share payable July 1, 2018, to . |
NON-GAAP FINANCIAL MEASURES
The Company uses the following non-GAAP financial measures: adjusted EBITDA and adjusted EBITDA margin, adjusted net earnings attributable to shareholders of the Company, adjusted net earnings available to common shareholders of the Company, adjusted diluted net earnings per common share. In addition to these items, the following measures are used by management in calculating adjusted diluted net earnings per common share: adjusted operating income, adjusted net interest expense and other financing charges, adjusted income taxes and adjusted income tax rate. The Company believes these non-GAAP financial measures provide useful information to both management and investors in measuring the financial performance of the Company for the reasons outlined below.
Management uses these and other non-GAAP financial measures to exclude the impact of certain expenses and income that must be recognized under GAAP when analyzing consolidated and segment underlying operating performance. The excluded items are not necessarily reflective of the Company's underlying operating performance and make comparisons of underlying financial performance between periods difficult. From time to time, the Company may exclude additional items if it believes doing so would result in a more effective analysis of underlying operating performance. The exclusion of certain items does not imply that they are non-recurring.
These measures do not have a standardized meaning prescribed by GAAP and therefore they may not be comparable to similarly titled measures presented by other publicly traded companies, and they should not be construed as an alternative to other financial measures determined in accordance with GAAP.
For details on the nature of items excluded in the calculation of any of the non-GAAP financial measures detailed below, see the "Non-GAAP Financial Measures" section of the Company's 2018 First Quarterly Report to Shareholders.
Adjusted EBITDA The Company believes adjusted EBITDA is useful in assessing and making decisions regarding the underlying operating performance of the Company's ongoing operations and in assessing the Company's ability to generate cash flows to fund its cash requirements, including its capital investment program.
The following table reconciles adjusted EBITDA to operating income, which is reconciled to GAAP net earnings attributable to shareholders of the Company reported for the periods ended as indicated.
12 Weeks Ended | ||||||||||||||||||||
Mar. 24, 2018 |
Mar. 25, 2017(3) | |||||||||||||||||||
(unaudited) |
Weston |
Loblaw |
Other |
Consolidated |
Weston |
Loblaw |
Other |
Consolidated | ||||||||||||
Net earnings attributable to shareholders |
||||||||||||||||||||
of the Company |
$ |
190 |
$ |
118 | ||||||||||||||||
Add impact of the following: |
||||||||||||||||||||
Non-controlling interests |
188 |
124 | ||||||||||||||||||
Income taxes |
106 |
101 | ||||||||||||||||||
Net interest expense and other |
||||||||||||||||||||
financing charges |
18 |
170 | ||||||||||||||||||
Operating income |
$ |
10 |
$ |
478 |
$ |
14 |
$ |
502 |
$ |
23 |
$ |
493 |
$ |
(3) |
$ |
513 | ||||
Add impact of the following: |
||||||||||||||||||||
Amortization of intangible assets acquired |
||||||||||||||||||||
with Shoppers Drug Mart |
121 |
121 |
121 |
121 | ||||||||||||||||
Loblaw Card Program |
19 |
19 |
— | |||||||||||||||||
Impact of healthcare reform on inventory |
||||||||||||||||||||
balances |
19 |
19 |
— | |||||||||||||||||
CREIT acquisition and other related costs |
12 |
12 |
— | |||||||||||||||||
Restructuring and other related costs |
15 |
(1) |
14 |
9 |
9 | |||||||||||||||
Fair value adjustment of derivatives |
(8) |
(5) |
(13) |
5 |
6 |
11 | ||||||||||||||
Wind-down of PC Financial banking services |
(17) |
(17) |
— | |||||||||||||||||
Pension annuities and buy-outs |
— |
7 |
7 | |||||||||||||||||
Foreign currency translation(i) |
(14) |
(14) |
3 |
3 | ||||||||||||||||
Adjusting items |
$ |
7 |
$ |
148 |
$ |
(14) |
$ |
141 |
$ |
14 |
$ |
134 |
$ |
3 |
$ |
151 | ||||
Adjusted operating income |
$ |
17 |
$ |
626 |
$ |
— |
$ |
643 |
$ |
37 |
$ |
627 |
$ |
— |
$ |
664 | ||||
Depreciation and amortization excluding the |
||||||||||||||||||||
impact of the above adjustments(ii) |
27 |
248 |
275 |
24 |
239 |
263 | ||||||||||||||
Adjusted EBITDA |
$ |
44 |
$ |
874 |
$ |
— |
$ |
918 |
$ |
61 |
$ |
866 |
$ |
— |
$ |
927 | ||||
(i) |
Represents the effect of foreign currency translation on a portion of the U.S. dollar denominated cash and cash equivalents and short term investments held by foreign operations. |
(ii) |
Depreciation and amortization for the calculation of adjusted EBITDA excludes $121 million (2017 – $121 million) of amortization of intangible assets, acquired with Shoppers Drug Mart, recorded by Loblaw and $4 million of accelerated depreciation recorded by Weston Foods in the first quarter of 2018, related to restructuring and other related costs. |
The following new items impacted operating income in the first quarter of 2018:
CREIT acquisition and other related costs In the first quarter of 2018, Loblaw recorded acquisition and other related costs in connection with the agreement to acquire all of the assets and assume all of the liabilities of CREIT.
Impact of healthcare reform on inventory balances In the first quarter of 2018, Loblaw recorded an inventory provision for the write-down of inventories below cost to net realizable value, related to its generic drug inventory, as a result of healthcare reform announced in the first quarter of 2018, effective April 1, 2018.
Adjusted Net Interest Expense and Other Financing Charges The Company believes adjusted net interest expense and other financing charges is useful in assessing the ongoing net financing costs of the Company.
The following table reconciles adjusted net interest expense and other financing charges to GAAP net interest expense and other financing charges reported for the periods ended as indicated.
(unaudited) ($ millions) |
12 Weeks Ended | ||||
Mar. 24, 2018 |
Mar. 25, 2017 | ||||
Net interest expense and other financing charges |
$ |
18 |
$ |
170 | |
Add: |
Fair value adjustment of the Trust Unit liability |
81 |
(24) | ||
Fair value adjustment of the forward sale agreement for 9.6 million Loblaw common shares |
42 |
(17) | |||
Adjusted net interest expense and other financing charges |
$ |
141 |
$ |
129 | |
Adjusted Income Taxes and Adjusted Income Tax Rate The Company believes the adjusted income tax rate applicable to adjusted earnings before taxes is useful in assessing the underlying operating performance of its business.
The following table reconciles the effective income tax rate applicable to adjusted earnings before taxes to the GAAP effective income tax rate applicable to earnings before taxes as reported for the periods ended as indicated.
(unaudited) ($ millions except where otherwise indicated) |
12 Weeks Ended | ||||
Mar. 24, 2018 |
Mar. 25, 2017(3) | ||||
Adjusted operating income(i) |
$ |
643 |
$ |
664 | |
Adjusted net interest expense and other financing charges(i) |
141 |
129 | |||
Adjusted earnings before taxes |
$ |
502 |
$ |
535 | |
Income taxes |
$ |
106 |
$ |
101 | |
Add: |
Tax impact of items excluded from adjusted earnings before taxes(ii) |
29 |
45 | ||
Adjusted income taxes |
$ |
135 |
$ |
146 | |
Effective income tax rate applicable to earnings before taxes |
21.9% |
29.4% | |||
Adjusted income tax rate applicable to adjusted earnings before taxes |
26.9% |
27.3% | |||
(i) |
See reconciliations of adjusted operating income and adjusted net interest expense and other financing charges above. |
(ii) |
See the adjusted EBITDA table and the adjusted net interest expense and other financing charges table above for a complete list of items excluded from adjusted earnings before taxes. |
Adjusted Net Earnings Available to Common Shareholders and Adjusted Diluted Net Earnings Per Common Share The Company believes that adjusted net earnings available to common shareholders and adjusted diluted net earnings per common share are useful in assessing the Company's underlying operating performance and in making decisions regarding the ongoing operations of its business.
The following table reconciles adjusted net earnings available to common shareholders of the Company and adjusted net earnings attributable to shareholders of the Company to net earnings attributable to shareholders of the Company and then to net earnings available to common shareholders of the Company reported for the periods ended as indicated.
(unaudited) ($ millions except where otherwise indicated) |
12 Weeks Ended | ||||
Mar. 24, 2018 |
Mar. 25, 2017(3) | ||||
Net earnings attributable to shareholders of the Company |
$ |
190 |
$ |
118 | |
Less: |
Prescribed dividends on preferred shares in share capital |
(10) |
(10) | ||
Net earnings available to common shareholders of the Company |
$ |
180 |
$ |
108 | |
Less: |
Reduction in net earnings due to dilutive instruments at Loblaw |
(1) |
(1) | ||
Net earnings available to common shareholders for diluted earnings per share |
$ |
179 |
$ |
107 | |
Net earnings attributable to shareholders of the Company |
$ |
190 |
$ |
118 | |
Adjusting items (refer to the following table) |
(2) |
76 | |||
Adjusted net earnings attributable to shareholders of the Company |
$ |
188 |
$ |
194 | |
Less: |
Prescribed dividends on preferred shares in share capital |
(10) |
(10) | ||
Adjusted net earnings available to common shareholders of the Company |
$ |
178 |
$ |
184 | |
Less: |
Reduction in net earnings due to dilutive instruments at Loblaw |
(1) |
(1) | ||
Adjusted net earnings available to common shareholders for diluted earnings per share |
$ |
177 |
$ |
183 | |
Weighted average common shares outstanding (millions)(i) |
128.1 |
128.2 | |||
(i) |
Includes impact of dilutive instruments for purposes of calculating adjusted diluted net earnings per common share. |
The following table reconciles adjusted net earnings available to common shareholders of the Company and adjusted diluted net earnings per common share to GAAP net earnings available to common shareholders of the Company and diluted net earnings per common share as reported for the periods ended as indicated.
12 Weeks Ended | ||||||||||
Mar. 24, 2018 |
Mar. 25, 2017(3) | |||||||||
(unaudited) |
Net Earnings |
Diluted |
Net Earnings |
Diluted | ||||||
As reported |
$ |
180 |
$ |
1.40 |
$ |
108 |
$ |
0.84 | ||
Add impact of the following(i): |
||||||||||
Amortization of intangible assets acquired with |
||||||||||
Shoppers Drug Mart |
44 |
0.35 |
42 |
0.33 | ||||||
Loblaw Card Program |
7 |
0.05 |
||||||||
Impact of healthcare reform on inventory balances |
7 |
0.05 |
||||||||
CREIT acquisition and other related costs |
4 |
0.03 |
||||||||
Restructuring and other related costs |
11 |
0.08 |
7 |
0.05 | ||||||
Fair value adjustment of derivatives |
(8) |
(0.06) |
6 |
0.05 | ||||||
Wind-down of PC Financial banking services |
(5) |
(0.04) |
||||||||
Pension annuities and buy-outs |
2 |
0.02 | ||||||||
Fair value adjustment of the Trust Unit liability |
(19) |
(0.15) |
5 |
0.03 | ||||||
Fair value adjustment of the forward sale agreement |
||||||||||
for 9.6 million Loblaw common shares |
(31) |
(0.24) |
12 |
0.09 | ||||||
Foreign currency translation |
(12) |
(0.09) |
2 |
0.02 | ||||||
Adjusting items |
$ |
(2) |
$ |
(0.02) |
$ |
76 |
$ |
0.59 | ||
Adjusted |
$ |
178 |
$ |
1.38 |
$ |
184 |
$ |
1.43 | ||
(i) |
Net of income taxes and non-controlling interests, as applicable. |
FORWARD-LOOKING STATEMENTS
This News Release contains forward-looking statements about the Company's objectives, plans, goals, aspirations, strategies, financial condition, results of operations, cash flows, performance, prospects and opportunities. Specific forward-looking statements in this News Release include, but are not limited to, statements with respect to the Company's anticipated future results, events and plans, strategic initiatives and restructuring, regulatory changes including minimum wage increases and further healthcare reform, future liquidity, planned capital investments, and the status and impact of IT systems implementations. These specific forward-looking statements are contained throughout this News Release including, without limitation, in the "Outlook" section of this News Release. Forward-looking statements are typically identified by words such as "expect", "anticipate", "believe", "foresee", "could", "estimate", "goal", "intend", "plan", "seek", "strive", "will", "may", "maintain", "achieve", "grow", "should" and similar expressions, as they relate to the Company and its management.
Forward-looking statements reflect the Company's estimates, beliefs and assumptions, which are based on management's perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. The Company's expectation of operating and financial performance in 2018 is based on certain assumptions including assumptions about sales and volume growth, anticipated cost savings, operating efficiencies, anticipated benefits from strategic initiatives, anticipated minimum wage increases and healthcare reform impacts. The Company's estimates, beliefs and assumptions are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and as such, are subject to change. The Company can give no assurance that such estimates, beliefs and assumptions will prove to be correct.
Numerous risks and uncertainties could cause the Company's actual results to differ materially from those expressed, implied or projected in the forward-looking statements, including those described in the "Enterprise Risks and Risk Management" section of the Management's Discussion and Analysis in the Company's 2017 Annual Report and the Company's Annual Information Form ("AIF") for the year ended December 31, 2017. Such risks and uncertainties include:
This is not an exhaustive list of the factors that may affect the Company's forward-looking statements. Other risks and uncertainties not presently known to the Company or that the Company presently believes are not material could also cause actual results or events to differ materially from those expressed in its forward-looking statements. Additional risks and uncertainties are discussed in the Company's materials filed with the Canadian securities regulatory authorities from time to time, including without limitation, the section entitled "Operating and Financial Risks and Risk Management" in the Company's AIF for the year ended December 31, 2017. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect the Company's expectations only as of the date of this News Release. Except as required by law, the Company does not undertake to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
2018 FIRST QUARTER REPORT TO SHAREHOLDERS
The Company's 2017 Annual Report and 2018 First Quarter Report to Shareholders are available in the Investor Centre section of the Company's website at www.weston.ca and have been filed with SEDAR and are available online at www.sedar.com.
INVESTOR RELATIONS
Shareholders, security analysts and investment professionals should direct their requests to Mr. Geoffrey H. Wilson, Senior Vice President, Investor Relations, Business Intelligence and Communications, at the Company's Executive Office or by e-mail at [email protected].
Additional financial information has been filed electronically with various securities regulators in Canada through SEDAR. This News Release includes selected information on Loblaw Companies Limited, a public company with shares trading on the Toronto Stock Exchange. For information regarding Loblaw, readers should also refer to the materials filed by Loblaw with SEDAR from time to time. These filings are also maintained at Loblaw's corporate website at www.loblaw.ca.
FIRST QUARTER CONFERENCE CALL AND WEBCAST
George Weston Limited will host a conference call as well as an audio webcast on Tuesday, May 8, 2018 at 9:00 a.m. (ET). To access via tele-conference, please dial (647) 427-7450 or 1-888-231-8191. The playback will be available two hours after the event at (416) 849-0833 or 1-855-859-2056, passcode: 7187439#. To access via audio webcast, please visit the Investor Centre section of www.weston.ca. Pre-registration will be available.
Annual Meeting
The George Weston Limited Annual and Special Meeting of Shareholders will be held on Tuesday, May 8, 2018 at 11:00 a.m. (ET) at The Royal Conservatory, TELUS Centre for Performance and Learning, Koerner Hall, 273 Bloor Street West, Toronto, Ontario, Canada. To access via tele-conference, please dial (647) 427-7450 or 1-888-231-8191. The playback will be available two hours after the event at (416) 849-0833 or 1-855-859-2056, passcode: 8428207#. To access via audio webcast, please visit the Investor Centre section of www.weston.ca.
Endnotes | |
(1) |
See "Non-GAAP Financial Measures" section of this News Release. |
(2) |
This News Release contains forward-looking information. See the "Forward-Looking Statements" section of this News Release for a discussion of material factors that could cause actual results to differ materially from the forecasts and projections herein and of the material factors, estimates, beliefs and assumptions that were applied in presenting the conclusions, forecasts and projections presented herein. This News Release must be read in conjunction with GWL's filings with securities regulators made from time to time, all of which can be found at www.weston.ca and www.sedar.com. |
(3) |
Certain figures have been restated as a result of IFRS 15, "Revenue from Contracts with Customers". See Note 2 in the Company's 2018 first quarter unaudited interim period condensed consolidated financial statements. |
SOURCE George Weston Limited
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