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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Canadian Tire Corp | TSX:CTC.A | Toronto | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 136.61 | 136.88 | 136.88 | 0 | 14:18:35 |
TORONTO, May 11, 2023 /CNW/ - Canadian Tire Corporation, Limited (TSX: CTC) (TSX: CTC.A) ("CTC" or the "Company") today released its first quarter results for the period ended April 1, 2023.
"Our Q1 financial results were impacted by a number of factors. Our Retail segment was impacted by the fire at our A.J. Billes distribution centre, as well as unseasonably mild winter weather and a slow start to spring in several regions of Canada," said Greg Hicks, President and CEO, Canadian Tire Corporation. "The Financial Services business historically makes a significant contribution to Canadian Tire Corporation's performance in the first quarter, and this quarter was no different. The strength of our teams and our diligent focus on our Better Connected strategy leaves us confident in our ability to deliver long term returns for shareholders and value to our customers," added Hicks.
"Our unrivalled competitive advantage lies in our deep understanding of Canadians, and in the context of a challenging macroeconomic environment, we intend to fully leverage this strength to maximize returns."
FIRST QUARTER HIGHLIGHTS
CONSOLIDATED OVERVIEW
RETAIL SEGMENT OVERVIEW
FINANCIAL SERVICES OVERVIEW
CT REIT OVERVIEW
CAPITAL ALLOCATION
CAPITAL EXPENDITURES
QUARTERLY DIVIDEND
SHARE REPURCHASES
NORMAL COURSE ISSUER BID AND AUTOMATIC SECURITIES PURCHASE PLAN
1) NON-GAAP FINANCIAL MEASURES AND RATIOS AND SUPPLEMENTARY FINANCIAL MEASURES
This press release contains non-GAAP financial measures and ratios and supplementary financial measures. References below to the Q1 2023 MD&A mean the Company's Management's Discussion and Analysis for the First Quarter ended April 1, 2023, which is available on SEDAR at www.sedar.com 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.
A) Non-GAAP Financial Measures and Ratios
Normalized Diluted Earnings per Share (EPS)
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 9.1 of the Company's Q1 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) | Q1 2023 | Q1 2022 |
Net income | $ 42.8 | $ 217.6 |
Net income attributable to shareholders | 7.8 | 182.1 |
Add normalizing items: | ||
Distribution Centre (DC) fire | 49.8 | — |
Operational Efficiency program | — | 1.5 |
Normalized net income | $ 92.6 | $ 219.1 |
Normalized net income attributable to shareholders | $ 57.6 | $ 183.6 |
Normalized diluted EPS | $ 1.00 | $ 3.06 |
Consolidated Normalized Income Before Income Taxes and Retail Normalized (Loss) Income Before Income Taxes
Consolidated Normalized Income Before Income Taxes and Retail Normalized (Loss) Income before Income Taxes are non-GAAP financial measures. For information about these measures, see section 9.1 of the Company's Q1 2023 MD&A.
The following table reconciles Consolidated Normalized Income Before Income Taxes to Income Before Income Taxes:
(C$ in millions) | Q1 2023 | Q1 2022 |
Income before income taxes | $ 66.6 | $ 294.9 |
Add normalizing items: | ||
DC fire | 67.7 | — |
Operational Efficiency program | — | 2.1 |
Normalized income before income taxes | $ 134.3 | $ 297.0 |
The following table reconciles Retail Normalized (Loss) Income Before Income Taxes to Income Before Income Taxes:
(C$ in millions) | Q1 2023 | Q1 2022 |
Income before income taxes | $ 66.6 | $ 294.9 |
Less: Other operating segments | 145.9 | 146.1 |
Retail (loss) income before income taxes | $ (79.3) | $ 148.8 |
Add normalizing items: | ||
DC fire | 67.7 | — |
Operational Efficiency program | — | 2.1 |
Retail normalized (loss) income before income taxes | $ (11.6) | $ 150.9 |
Retail Return on Invested Capital
Retail Return on Invested Capital (ROIC) is calculated as Retail return divided by the Retail invested capital. Retail return is defined as trailing annual 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 9.1 of the Company's Q1 2023 MD&A.
Rolling 12 months ended | ||
(C$ in millions) | Q1 2023 | Q1 2022 |
Income before income taxes | $ 1,355.5 | $ 1,742.2 |
Less: Other operating segments | 535.5 | 520.2 |
Retail income before income taxes | $ 820.0 | $ 1,222.0 |
Add normalizing items: | ||
Operational Efficiency program | 45.0 | 34.3 |
Helly Hansen Russia exit | 36.5 | — |
DC fire | 67.7 | — |
Retail normalized income before income taxes | $ 969.2 | $ 1,256.3 |
Less: | ||
Retail intercompany adjustments1 | 211.2 | 198.2 |
Add: | ||
Retail interest expense2 | 262.8 | 245.5 |
Retail depreciation of right-of-use assets | 607.3 | 550.5 |
Retail effective tax rate | 26.4 % | 27.0 % |
Add: Retail taxes | (429.6) | (499.9) |
Retail return | $ 1,198.5 | $ 1,354.2 |
Average total assets | $ 21,884.0 | $ 21,491.6 |
Less: Average assets in other operating segments | 4,302.7 | 5,018.4 |
Average Retail assets | $ 17,581.3 | $ 16,473.2 |
Less: | ||
Average Retail intercompany adjustments1 | 3,542.8 | 3,432.5 |
Average Retail trade payables and accrued liabilities3 | 2,989.7 | 2,583.5 |
Average Franchise Trust assets | 474.7 | 482.1 |
Average Retail excess cash | — | 167.4 |
Average Retail invested capital | $ 10,574.1 | $ 9,807.7 |
Retail ROIC | 11.3 % | 13.8 % |
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
Operating capital expenditures is a non-GAAP financial measure. For more information about this measure, see section 9.1 of the Company's Q1 2023 MD&A.
The following table reconciles total additions from the Investing activities reported in the Consolidated Statement of Cash Flows to Operating capital expenditures:
(C$ in millions) | Q1 2023 | Q1 2022 |
Total additions1 | $ 129.1 | $ 160.0 |
Add: Accrued additions | (10.8) | (5.7) |
Less: | ||
Business combinations, intellectual properties and tenant | — | — |
CT REIT acquisitions and developments excluding vend-ins from | 11.6 | 12.3 |
Operating capital expenditures | $ 106.7 | $ 142.0 |
1This line appears on the Consolidated Statement of Cash Flows under Investing activities. |
B) Supplementary Financial Measures and Ratios
The measures below are supplementary financial measures. See Section 9.2 (Supplementary Financial Measures) of the Company's Q1 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 MSA 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 this quarter, the Company will begin 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. This change impacts quarterly results. There is no change to the annual reported figures.
The change in accounting estimate had a $51.8 million impact on revenue and income before income taxes, and 120 bps impact on Retail segment gross margin rate excluding Petroleum during the first quarter of 2023. Excluding the change in accounting estimate relating to the Company's MSA with its Dealers, consolidated revenue was down $182.0 million, Retail segment gross margin rate excluding Petroleum was down 17 bps, and consolidated income before income taxes was down $280.1 million.
To view a PDF version of Canadian Tire Corporation's full quarterly earnings report please see: https://mma.prnewswire.com/media/2074582/CANADIAN_TIRE_CORPORATION__LIMITED_Canadian_Tire_Corporation_Rep.pdf
FORWARD-LOOKING STATEMENTS
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 10.0 (Key Risks and Risk Management) of the Company's Q1 2023 MD&A 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.
CONFERENCE CALL
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 May 11, 2023. 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.
ABOUT CANADIAN TIRE CORPORATION
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 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, stephanie.nadalin@cantire.com
Investors: Karen Keyes, (647) 518-4461, karen.keyes@cantire.com
SOURCE CANADIAN TIRE CORPORATION, LIMITED
Copyright 2023 Canada NewsWire
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