MONTRÉAL, Aug. 10,
2022 /CNW Telbec/ - METRO INC. (TSX: MRU) today
announced its results for the third quarter of fiscal 2022 ended
July 2, 2022.
2022 THIRD QUARTER HIGHLIGHTS
- Sales of $5,865.5
million, up 2.5%
- Food same-store sales up 1.1%
- Pharmacy same-store sales up 7.2%
- Net earnings of $275.0
million, up 9.0% and adjusted net earnings(1) of
$283.8 million, up 8.7%
- Fully diluted net earnings per share of $1.14, up 10.7%, and adjusted fully diluted net
earnings per share(1)
of $1.18, up 11.3%
|
16 weeks / Fiscal
Year
|
(Millions of
dollars, except for net earnings per share)
|
2022
|
%
|
|
2021
|
%
|
Change (%)
|
Sales
|
5,865.5
|
100.0
|
|
5,719.8
|
100.0
|
2.5
|
Operating income before
depreciation
and amortization
|
565.1
|
9.6
|
|
533.6
|
9.3
|
5.9
|
Net earnings
|
275.0
|
4.7
|
|
252.4
|
4.4
|
9.0
|
Fully diluted net
earnings per share
|
1.14
|
—
|
|
1.03
|
—
|
10.7
|
Adjusted net
earnings(1)
|
283.8
|
4.8
|
|
261.2
|
4.6
|
8.7
|
Adjusted fully diluted
net earnings per share(1)
|
1.18
|
—
|
|
1.06
|
—
|
11.3
|
|
|
|
|
|
|
|
|
40 weeks / Fiscal
Year
|
(Millions of
dollars, except for net earnings per share)
|
2022
|
%
|
|
2021
|
%
|
Change (%)
|
Sales
|
14,456.3
|
100.0
|
|
14,191.0
|
100.0
|
1.9
|
Operating income before
depreciation
and amortization
|
1,403.2
|
9.7
|
|
1,328.9
|
9.4
|
5.6
|
Net earnings
|
680.8
|
4.7
|
|
631.7
|
4.5
|
7.8
|
Fully diluted net
earnings per share
|
2.81
|
—
|
|
2.54
|
—
|
10.6
|
Adjusted net
earnings(1)
|
702.7
|
4.9
|
|
653.6
|
4.6
|
7.5
|
Adjusted fully diluted
net earnings per share(1)
|
2.90
|
—
|
|
2.63
|
—
|
10.3
|
PRESIDENT'S MESSAGE
"We are pleased with the performance of our food and pharmacy
businesses in the third quarter, which was achieved in a
challenging operating environment with increasing inflationary
pressures as well as ongoing labor shortages that are impacting the
supply chain and our operations. I want to thank our teams who
strive to deliver the best value possible to customers in these
inflationary times with our multiple formats, effective promotional
strategies and strong private label offering. Finally, we are on
track with our supply chain modernization program as the transition
to our fully automated frozen food distribution center in
Toronto is now complete and the
ramp-up is progressing well", declared Eric La
Flèche, President and Chief Executive Officer.
OPERATING RESULTS
SALES
Sales in the third quarter of Fiscal 2022 remained strong,
reaching $5,865.5 million, up
2.5% versus elevated sales in the third quarter of 2021 due to the
pandemic. Food same-store sales were up 1.1% (down 3.6% in 2021)
versus the same quarter last year. Online food sales were flat
versus last year (up 19.0% in 2021). Our food basket inflation was
about 8.5% (5.0% in the previous quarter). Pharmacy same-store
sales were up 7.2% (7.6% in 2021), with a 5.6% increase in
prescription drugs supported by COVID-related activities such as
the distribution of rapid tests and a 10.7% increase in
front-store sales, primarily driven by over-the-counter products
and cosmetics.
Sales in the first 40 weeks of Fiscal 2022 totalled $14,456.3 million, up 1.9% compared to
$14,191.0 million for the
corresponding period of 2021.
OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION
This earnings measurement excludes financial costs, taxes,
depreciation and amortization.
Operating income before depreciation and amortization for the
third quarter of Fiscal 2022 totalled $565.1 million, or 9.6% of sales, an
increase of 5.9% versus the corresponding quarter of Fiscal 2021.
Included in the third quarter of Fiscal 2022 are $7.7 million of direct costs related to the
one-week labour conflict and new collective agreement ratification
with our distribution center employees in Toronto offset by a non-recurring gain on the
sale of assets of $8.7 million
($5.1 million in 2021). Operating
income before depreciation and amortization for the first 40 weeks
of Fiscal 2022 totalled $1,403.2
million or 9.7% of sales, up 5.6% versus the corresponding
period of 2021.
Gross margin on sales for the third quarter and the first 40
weeks of Fiscal 2022 were 19.8% and 19.9% respectively, the
same percentages as the corresponding periods of 2021. A slight
decline in our food division margin in the third quarter was
compensated by a stronger pharmacy performance. Gross margin for
the third quarter of Fiscal 2022 also included $5.3 million of direct costs related to the
one-week labour conflict with our distribution center employees in
Toronto.
Operating expenses as a percentage of sales for the third
quarter of Fiscal 2022 were 10.1% versus 10.5% for the
corresponding quarter of 2021 mainly due to the reduction in
COVID-related costs. Operating expenses for the third quarter of
Fiscal 2022 were impacted by $2.4
million of direct costs related to the one-week labour
conflict and new collective agreement ratification with our
distribution center employees in Toronto offset by a non-recurring gain on the
sale of assets of $8.7 million
($5.1 million in 2021). For the first
40 weeks of Fiscal 2022, operating expenses as a percentage of
sales were 10.2% versus 10.5% in 2021.
DEPRECIATION AND AMORTIZATION AND NET FINANCIAL COSTS
Total depreciation and amortization expense for the third
quarter of Fiscal 2022 was $154.7 million versus $149.4 million for the corresponding quarter
of 2021. This increase reflects the additional investments in
supply chain and logistics as well as in-store technology. For the
first 40 weeks of Fiscal 2022, total depreciation and amortization
expense was $383.5 million versus
$367.5 million for the corresponding
period of 2021.
Net financial costs for the third quarter of Fiscal 2022 were
$35.8 million compared with
$42.1 million for the
corresponding quarter of 2021. For the first 40 weeks of Fiscal
2022, net financial costs were $92.3
million compared with $104.8
million for the corresponding period of 2021.The reduction
is mainly due to lower debt, lower borrowing rates on new debt and
higher capitalized interest.
INCOME TAXES
The income tax expense of $99.6 million for the third quarter of
Fiscal 2022 represented an effective tax rate of 26.6% compared
with an income tax expense of $89.7 million and an effective tax rate of
26.2% in the third quarter of Fiscal 2021. The 40-week period
income tax expense of $246.6 million
for Fiscal 2022 and $224.9 million
for Fiscal 2021 represented an effective tax rate of 26.6% and
26.3% respectively.
NET EARNINGS AND ADJUSTED NET EARNINGS(1)
Net earnings for the third quarter of Fiscal 2022 were
$275.0 million compared with
$252.4 million for the
corresponding quarter of 2021, while fully diluted net earnings per
share were $1.14 compared with
$1.03 in 2021, up 9.0% and 10.7%
respectively. Excluding the specific item shown in the table below,
adjusted net earnings(1) for the third quarter of Fiscal
2022 totalled $283.8 million
compared with $261.2 million for
the corresponding quarter of 2021, and adjusted fully diluted net
earnings per share(1) amounted to $1.18 versus $1.06,
up 8.7% and 11.3% respectively.
Net earnings for the first 40 weeks of Fiscal 2022 were
$680.8 million compared with
$631.7 million for the
corresponding period of 2021, while fully diluted net earnings per
share were $2.81 compared with
$2.54 in 2021, up 7.8% and 10.6%,
respectively. Excluding the specific item shown in the table below,
adjusted net earnings(1) for the first 40 weeks of
Fiscal 2022 totalled $702.7 million compared with $653.6 million for the corresponding period
of 2021, and adjusted fully diluted net earnings per
share(1) amounted to $2.90
versus $2.63, up 7.5% and 10.3%,
respectively.
Net earnings adjustments(1)
|
16 weeks / Fiscal
Year
|
|
|
|
|
2022
|
|
2021
|
|
Change (%)
|
|
(Millions of
dollars)
|
Fully diluted
EPS (Dollars)
|
|
(Millions of
dollars)
|
Fully diluted
EPS
(Dollars)
|
|
Net earnings
|
Fully
diluted
EPS
|
Net earnings
|
275.0
|
1.14
|
|
252.4
|
1.03
|
|
9.0
|
10.7
|
Amortization of
intangible assets acquired in
connection with the Jean Coutu Group
acquisition, after taxes
|
8.8
|
|
|
8.8
|
|
|
|
|
Adjusted net
earnings(1)
|
283.8
|
1.18
|
|
261.2
|
1.06
|
|
8.7
|
11.3
|
|
|
|
|
|
|
|
|
|
|
40 weeks / Fiscal
Year
|
|
|
|
2022
|
|
2021
|
|
Change (%)
|
|
(Millions of
dollars)
|
Fully diluted
EPS (Dollars)
|
|
(Millions of
dollars)
|
Fully diluted
EPS (Dollars)
|
|
Net earnings
|
Fully
diluted
EPS
|
Net earnings
|
680.8
|
2.81
|
|
631.7
|
2.54
|
|
7.8
|
10.6
|
Amortization of
intangible assets acquired in
connection with the Jean Coutu Group
acquisition, after taxes
|
21.9
|
|
|
21.9
|
|
|
|
|
Adjusted net
earnings(1)
|
702.7
|
2.90
|
|
653.6
|
2.63
|
|
7.5
|
10.3
|
NORMAL COURSE ISSUER BID PROGRAM
Under the current normal course issuer bid program, the
Corporation may repurchase up to 7,000,000 of its Common Shares
between November 25, 2021 and November 24, 2022. Between
November 25, 2021 and July 29,
2022, the Corporation has repurchased 3,800,000 Common Shares at an
average price of $67.38, for a total
consideration of $256.0 million.
DIVIDENDS
On August 9, 2022, the Board of
Directors declared a quarterly dividend of $0.275 per share, the same amount declared last
quarter.
FORWARD-LOOKING INFORMATION
We have used, throughout this report, different statements that
could, within the context of regulations issued by the Canadian
Securities Administrators, be construed as being forward-looking
information. In general, any statement contained herein that does
not constitute a historical fact may be deemed a forward-looking
statement. Expressions such as "predict", "expect" and other
similar expressions are generally indicative of forward-looking
statements. The forward-looking statements contained herein are
based upon certain assumptions regarding the Canadian food and
pharmaceutical industries, the general economy, our annual budget,
as well as our 2022 action plan.
These forward-looking statements do not provide any guarantees
as to the future performance of the Corporation and are subject to
potential risks, known and unknown, as well as uncertainties that
could cause the outcome to differ significantly. The arrival of a
new competitor is an example of the risks described under the "Risk
Management" section of the 2021 Annual Report which could
have an impact on these statements. As with the preceding risks,
the COVID-19 pandemic constitutes a risk that could have an impact
on the business, operations, projects and performance of the
Corporation as well as on the forward-looking statements contained
in this document.
We believe these statements to be reasonable and pertinent as at
the date of publication of this report and represent our
expectations. The Corporation does not intend to update any
forward-looking statement contained herein, except as required by
applicable law.
NON-IFRS MEASUREMENTS
In addition to the International Financial Reporting Standards
(IFRS) earnings measurements provided, we have included certain
non-IFRS earnings measurements. These measurements are presented
for information purposes only. They do not have a standardized
meaning prescribed by IFRS and therefore may not be comparable to
similar measurements presented by other public companies.
ADJUSTED OPERATING INCOME BEFORE DEPRECIATION AND
AMORTIZATION, ADJUSTED NET EARNINGS AND ADJUSTED FULLY DILUTED NET
EARNINGS PER SHARE
Adjusted operating income before depreciation and amortization,
adjusted net earnings and adjusted fully diluted net earnings per
share are earnings measurements that exclude some items that must
be recognized under IFRS. They are non-IFRS measurements. We
believe that presenting earnings without these items, which are not
necessarily reflective of the Corporation's performance, leaves
readers of financial statements better informed as to the current
period and corresponding prior year's period's operating earnings,
thus enabling them to better perform trend analysis, evaluate the
Corporation's financial performance and judge its future outlook.
The exclusion of these items does not imply that they are
non-recurring.
OUTLOOK(2)
We continue to face higher than normal inflationary pressures
and labor shortages, and it is difficult to predict how long this
situation will last. If prolonged, this environment could put
pressure on margins. In the short term, we expect same-store food
sales to grow at a higher rate than in recent quarters as we are
now cycling periods last year without significant pandemic
restrictions. On the pharmacy side, we expect growth in
prescriptions to moderate versus year-to-date levels given the high
number of visits to physicians in the fourth quarter last year. We
also expect front of store revenues to remain strong, namely driven
by over-the-counter product sales.
CONFERENCE CALL
Financial analysts and institutional investors are invited to
participate in a conference call for the 2022 third
quarter results at 9:00 a.m.
(EDT) today, August 10,
2022. To access the conference call, please dial (416)
764-8651 or 1 (888) 390-0620. The media and investing public may
access this conference via a listen mode only.
Notice to readers: METRO
INC. third quarter of 2022 interim condensed consolidated financial
statements and management's discussion and analysis are available
on the Internet at www.metro.ca - Corporate Site - Investors
- 2022 Quarterly Results - 2022 Third
Quarter Results.
|
|
|
(1) See
table on "Net earnings adjustments" and section on "Non-IFRS
Measurements"
|
|
(2) See
section on "Forward-looking Information"
|
|
|
SOURCE METRO INC.