TORONTO, May 10, 2022
/CNW/ - George Weston Limited (TSX: WN) ("GWL" or the "Company")
today announced its consolidated unaudited results for the 12 weeks
ended March 26,
2022(2).
GWL's 2022 First Quarter Report has been filed on SEDAR and
is available at sedar.com and in the Investor Centre section of
the Company's website at weston.ca.
"George Weston ended 2021 with
momentum and has carried it into 2022, with both Loblaw and Choice
Properties delivering strong results in the first quarter," said
Galen G. Weston, Chairman and CEO,
George Weston Limited. "Our operating companies are delivering on
their strategic agendas, positioning us well for continued value
creation."
Loblaw Companies Limited ("Loblaw") delivered another very good
quarter in a retail environment experiencing fewer COVID-19 related
restrictions and continued inflationary pressures. Loblaw's drug
retail results were strong and drove Loblaw's margin expansion in
the quarter, as front-store and prescription sales benefited from
the loosening of social restrictions, and pharmacy services
continued to perform well. In food retail, Loblaw continued to
benefit from higher than normal eat-at-home levels and is
well-positioned with its portfolio of businesses to provide value
to meet the evolving needs of Canadians.
Choice Properties Real Estate Investment Trust ("Choice
Properties") also reported a very good quarter and start to the
year with continued high rent collections and positive leasing
momentum. Choice Properties' portfolio and financial position are
strong, as reflected in a 4.8% increase in net asset value per unit
in the quarter, driven by continued demand for essential retail,
strong industrial market dynamics and advancement in its
development pipeline. Subsequent to the end of the first quarter of
2022, Choice Properties completed the strategic sale of six
high-quality office properties to Allied Properties Real Estate
Investment Trust. With the strategic sale, Choice Properties is
well-positioned to focus its time and capital on its core asset
classes of essential retail, industrial, its growing residential
platform as well as its robust development pipeline.
GWL also announced its release of the 2021 Environmental, Social
and Governance ("ESG") report today.
2022 FIRST QUARTER
HIGHLIGHTS
George Weston Limited's net earnings available to common
shareholders of the Company from continuing operations were
$363 million in the first quarter of 2022, an increase of
$425 million compared to the first
quarter of 2021. The increase was due to the favourable
year-over-year net impact of adjusting items totaling
$388 million and an improvement in the Company's consolidated
underlying operating performance of $37 million. Diluted net
earnings per common share from continuing operations were
$2.45, an increase of $2.86 per common share when compared to the first
quarter of 2021.
Adjusted net earnings available to common shareholders of the
Company(1) from continuing operations were
$282 million in the first quarter of 2022, an increase of
$37 million, or 15.1%, compared to the first quarter of 2021.
The increase was primarily due to the improvement in the underlying
operating performance of Loblaw and lower adjusted net interest
expense and other financing charges(1).
Adjusted diluted net earnings per common share(1)
from continuing operations were $1.90
in the first quarter of 2022, an increase of $0.30 per common share, or 18.8%, compared to the
first quarter of 2021. The increase was due to the improvement in
adjusted net earnings available to common shareholders of the
Company(1) from continuing operations and the favourable
impact of share repurchases.
The quarterly common share dividend to be increased by
$0.06, or 10.0%, from $0.600 per common share to $0.660 per common share.
CONSOLIDATED RESULTS OF
OPERATIONS
The Company's results reflect the year-over-year impact of the
fair value adjustment of the Trust Unit liability as a result of
the significant changes in Choice Properties' unit price, recorded
in net interest expense and other financing charges. The Company's
results are impacted by market price fluctuations of Choice
Properties' Trust Units on the basis that the Trust Units held by
unitholders, other than the Company, are redeemable for cash at the
option of the holder and are presented as a liability on the
Company's consolidated balance sheet. The Company's financial
results are negatively impacted when the Trust Unit price rises and
positively impacted when the Trust Unit price declines.
In 2021, the Company sold its entire Weston Foods bakery
business. The Company's interest in Weston Foods is presented
separately as discontinued operations in the Company's results.
Unless otherwise indicated, all financial information represents
the Company's results from continuing operations.
(unaudited)
($ millions except
where otherwise indicated)
For the periods ended
as indicated
|
|
|
|
|
|
|
|
|
|
|
12 Weeks
Ended
|
|
|
|
|
|
Mar. 26,
2022
|
Mar. 27,
2021(3)
|
$ Change
|
|
% Change
|
|
Revenue
|
|
$
12,407
|
|
$
12,017
|
$
390
|
|
3.2%
|
|
Operating
income
|
|
$
1,166
|
|
$
828
|
$
338
|
|
40.8%
|
|
Adjusted
EBITDA(1)
|
|
$
1,422
|
|
$
1,300
|
$ 122
|
|
9.4%
|
|
Adjusted EBITDA
margin(1)
|
|
11.5%
|
|
10.8%
|
|
|
|
|
Net earnings
(loss) attributable to shareholders
of the Company from continuing
operations
|
|
$
373
|
|
$
(52)
|
$
425
|
|
817.3%
|
|
Net earnings
(loss) available to common shareholders
of the Company from continuing
operations
|
|
$
363
|
|
$
(62)
|
$
425
|
|
685.5%
|
|
Adjusted net earnings
available to common shareholders
of the Company(1) from continuing
operations
|
|
$
282
|
|
$
245
|
$
37
|
|
15.1%
|
|
Diluted net earnings
(loss) per common share from
continuing operations ($)
|
|
$
2.45
|
|
$
(0.41)
|
$
2.86
|
|
697.6%
|
|
Adjusted diluted net
earnings per common share(1) from
continuing operations ($)
|
|
$
1.90
|
|
$
1.60
|
$ 0.30
|
|
18.8%
|
|
|
|
|
|
|
|
|
|
|
In the first quarter of 2022, the Company recorded net earnings
available to common shareholders of the Company from continuing
operations of $363 million ($2.45 per common share), an increase of
$425 million ($2.86 per common
share) compared to the same period in 2021. The increase was due to
the favourable year-over-year net impact of adjusting items
totaling $388 million ($2.56 per
common share) and an improvement of $37 million ($0.30 per common share) in the consolidated
underlying operating performance of the Company described
below.
- The favourable year-over-year net impact of adjusting items
totaling $388 million ($2.56 per common share) was primarily due
to:
-
- the favourable year-over-year impact of the fair value
adjustment on investment properties of $205
million ($1.40 per common
share) primarily driven by Choice Properties, net of consolidation
adjustments in Other and Intersegment;
- the favourable year-over-year impact of the fair value
adjustment of the Trust Unit liability of $146 million ($0.94
per common share); and
- the favourable year-over-year impact of the prior year fair
value adjustment of the forward sale agreement of Loblaw common
shares of $46 million ($0.30 per common share). The Company settled the
net debt associated with the forward sale agreement in the fourth
quarter of 2021.
- The improvement in the Company's consolidated underlying
operating performance of $37 million
($0.30 per common share) was due
to:
-
- the favourable underlying operating performance of Loblaw;
and
- a decrease in adjusted net interest expense and other financing
charges(1);
partially offset by,
-
- an increase in depreciation and amortization at Loblaw.
- Diluted net earnings per common share from continuing
operations also included the favourable impact of shares purchased
for cancellation over the last 12 months ($0.06 per common share) pursuant to the Company's
Normal Course Issuer Bid ("NCIB").
Adjusted net earnings available to common shareholders of the
Company(1) from continuing operations were
$282 million, an increase of $37
million, or 15.1%, compared to the same period in 2021 due
to the improvement in the Company's consolidated underlying
operating performance described above. Adjusted diluted net
earnings per common share(1) from continuing operations
were $1.90 per common share in the
first quarter of 2022, an increase of $0.30 per common share, or 18.8%, compared to the
same period in 2021. The increase was due to the favourable
performance in adjusted net earnings available to common
shareholders(1) from continuing operations and the
favourable impact of share repurchases.
CONSOLIDATED OTHER BUSINESS
MATTERS
GWL CORPORATE(4) FINANCING
ACTIVITIES The Company completed the following
financing activities during the periods indicated below. The cash
impacts of these activities are set out below:
(unaudited)
($ millions)
|
|
12 Weeks
Ended
|
|
|
Mar. 26,
2022
|
|
|
Mar. 27,
2021
|
|
GWL's credit facility
repayment
|
|
$
(121)
|
|
|
$
—
|
|
GWL's NCIB – purchased
and cancelled
|
|
(47)
|
|
|
(25)
|
|
GWL's participation in
Loblaw's NCIB
|
|
10
|
|
|
166
|
|
Net cash flow (used in)
from above activities
|
|
$
(158)
|
|
|
$
141
|
|
|
|
|
|
|
|
|
GWL's Credit Facility In the third quarter
of 2021, GWL entered into a $350
million revolving committed credit facility provided by a
syndicate of lenders with a maturity date of September 13, 2024. The credit facility contains
certain financial covenants. As at December
31, 2021, $121 million was drawn on the facility which
was repaid in the first quarter of 2022. As at
March 26, 2022, no amounts were drawn on the
facility.
GWL's NCIB – Purchased and Cancelled
Shares In the first quarter of 2022, the Company
purchased and cancelled 0.4 million shares under its NCIB
(2021 – 0.5 million shares). As at March 26,
2022, the Company had 146.5 million shares outstanding
(March 27, 2021 – 151.8 million).
In the first quarter of 2022, the Company entered into an
automatic share purchase plan ("ASPP") with a broker in order to
facilitate the repurchase of the Company's common shares under its
NCIB. During the effective period of the ASPP, the Company's broker
may purchase common shares at times when the Company would not be
active in the market.
Refer to Section 3.6, "Share Capital" of the MD&A in the
Company's 2022 First Quarter Report for more information.
GWL's Participation in Loblaw's
NCIB The Company participates in Loblaw's NCIB
in order to maintain its proportionate percentage ownership
interest. During the first quarter of 2022, GWL received proceeds
of $10 million (2021 – $166 million) from the sale of
Loblaw shares.
REPORTABLE OPERATING
SEGMENTS
The Company operates through its two reportable operating
segments: Loblaw and Choice Properties. Other and Intersegment
includes eliminations, intersegment adjustments related to the
consolidation and cash and short-term investments held by the
Company. All other company level activities that are not allocated
to the reportable operating segments, such as interest expense,
corporate activities and administrative costs are included in Other
and Intersegment.
Loblaw has two reportable operating segments, retail and
financial services. Loblaw's retail segment consists primarily of
food retail and drug retail. Loblaw provides Canadians with
grocery, pharmacy, health and beauty, apparel, general merchandise
and financial services.
Choice Properties owns, manages and develops a high-quality
portfolio of commercial retail, industrial, mixed-use and
residential properties across Canada.
Excerpt of Segment
Information
The accounting policies of the reportable operating segments are
the same as those described in the Company's 2021 audited annual
consolidated financial statements. The Company measures each
reportable operating segment's performance based on adjusted
EBITDA(1) and adjusted operating income(1).
No reportable operating segment is reliant on any single external
customer.
|
|
12 Weeks
Ended
|
|
|
|
Mar. 26,
2022
|
|
|
Mar. 27,
2021(3)
|
|
($ millions)
|
|
Loblaw
|
Choice
Properties
|
Other
and
Intersegment
|
Total
|
|
|
Loblaw
|
Choice
Properties
|
Other and
Intersegment
|
Total
|
|
Revenue
|
|
$
12,262
|
$
328
|
$
(183)
|
$
12,407
|
|
|
$ 11,872
|
$
327
|
$
(182)
|
$
12,017
|
|
Operating
income
|
|
$
736
|
$
629
|
$
(199)
|
$
1,166
|
|
|
$
615
|
$
285
|
$
(72)
|
$
828
|
|
Net interest expense
and other financing
charges
|
|
142
|
242
|
(62)
|
322
|
|
|
160
|
347
|
38
|
545
|
|
Earnings (loss)
before income taxes from
continuing operations
|
|
$
594
|
$
387
|
$
(137)
|
$
844
|
|
|
$
455
|
$
(62)
|
$
(110)
|
$
283
|
|
Operating
income
|
|
$
736
|
$
629
|
$
(199)
|
$
1,166
|
|
|
$
615
|
$
285
|
$
(72)
|
$
828
|
|
Depreciation and
amortization
|
|
631
|
1
|
(83)
|
549
|
|
|
610
|
1
|
(86)
|
525
|
|
Adjusting
items(i)
|
|
(26)
|
(405)
|
138
|
(293)
|
|
|
(9)
|
(61)
|
17
|
(53)
|
|
Adjusted
EBITDA(i)
|
|
$
1,341
|
$
225
|
$
(144)
|
$
1,422
|
|
|
$
1,216
|
$
225
|
$
(141)
|
$
1,300
|
|
Depreciation and
amortization(ii)
|
|
514
|
1
|
(83)
|
432
|
|
|
493
|
1
|
(86)
|
408
|
|
Adjusted operating
income(i)
|
|
$
827
|
$
224
|
$
(61)
|
$
990
|
|
|
$
723
|
$
224
|
$
(55)
|
$
892
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Certain items are
excluded from operating income to derive adjusted
EBITDA(1). Adjusted EBITDA(1) is used
internally by management when analyzing segment underlying
operating performance.
|
(ii)
|
Excludes $117 million
(2021 – $117 million) of amortization of intangible assets acquired
with Shoppers Drug Mart Corporation ("Shoppers Drug Mart"),
recorded by Loblaw.
|
Other and Intersegment includes the following items:
|
|
12 Weeks
Ended
|
|
|
|
Mar. 26,
2022
|
|
|
Mar. 27,
2021(3)
|
|
($ millions)
|
|
Revenue
|
Operating
Income
|
Net
Interest
Expense
and Other
Financing
Charges
|
|
|
Revenue
|
Operating
Income
|
Net
Interest
Expense
and Other
Financing
Charges
|
|
Elimination of internal
lease arrangements
|
|
$
(134)
|
$
(38)
|
$
(22)
|
|
|
$
(128)
|
$
(39)
|
$
(25)
|
|
Elimination of cost
recovery
|
|
(49)
|
—
|
—
|
|
|
(54)
|
—
|
—
|
|
Recognition of
depreciation on Choice Properties'
investment properties classified as fixed
assets by
the Company and measured at cost
|
|
—
|
(10)
|
—
|
|
|
—
|
(6)
|
—
|
|
Fair value adjustment
on investment properties
|
|
—
|
(119)
|
3
|
|
|
—
|
(15)
|
—
|
|
Fair value adjustment
on Choice Properties'
Exchangeable Units
|
|
—
|
—
|
(119)
|
|
|
—
|
—
|
(218)
|
|
Fair value adjustment
on Trust Unit liability
|
|
—
|
—
|
93
|
|
|
—
|
—
|
239
|
|
Unit distributions on
Exchangeable Units paid by
Choice Properties to GWL
|
|
—
|
—
|
(73)
|
|
|
—
|
—
|
(74)
|
|
Unit distributions on
Trust Units paid by Choice
Properties, excluding amounts paid to GWL
|
|
—
|
—
|
51
|
|
|
—
|
—
|
51
|
|
Reversal of Loblaw gain
on sale of disposition of
property to Choice Properties
|
|
—
|
(19)
|
—
|
|
|
—
|
—
|
—
|
|
Fair value adjustment
of the forward sale agreement of
Loblaw common shares
|
|
—
|
—
|
—
|
|
|
—
|
—
|
53
|
|
Other
|
|
—
|
(13)
|
5
|
|
|
—
|
(12)
|
12
|
|
Total
|
|
$
(183)
|
$
(199)
|
$
(62)
|
|
|
$
(182)
|
$ (72)
|
$ 38
|
|
|
|
|
|
|
|
|
|
|
|
|
Loblaw Operating
Results
(unaudited)
($ millions except
where otherwise indicated)
For the periods ended
as indicated
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks
Ended
|
|
|
|
|
|
|
Mar. 26,
2022
|
|
Mar. 27,
2021
|
$ Change
|
|
% Change
|
|
Revenue
|
|
$
12,262
|
|
$
11,872
|
$
390
|
|
3.3%
|
|
Operating
income
|
|
$
736
|
|
$
615
|
$
121
|
|
19.7%
|
|
Adjusted
EBITDA(1)
|
|
$
1,341
|
|
$
1,216
|
$
125
|
|
10.3%
|
|
Adjusted EBITDA
margin(1)
|
|
10.9%
|
|
10.2%
|
|
|
|
|
Depreciation and
amortization(i)
|
|
$
631
|
|
$
610
|
$
21
|
|
3.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Depreciation and
amortization in the first quarter of 2022 includes $117 million
(2021 – $117 million) of amortization of intangible assets acquired
with Shoppers Drug Mart.
|
Revenue Loblaw revenue in the first quarter of 2022
was $12,262 million, an increase
of $390 million, or 3.3%, compared to the same period in
2021, driven by an increase in retail sales and in financial
services revenue.
Retail sales were $12,045 million, an increase of
$375 million, or 3.2%, compared to the same period
in 2021. The increase was primarily driven by the following
factors:
- food retail sales were $8,682
million (2021 – $8,479
million) and food retail same-store sales grew by 2.1% (2021
– 0.1%) for the quarter. Food retail basket size decreased and
traffic increased in the quarter;
- the Consumer Price Index ("CPI") as measured by The Consumer
Price Index for Food Purchased from Stores was 7.5% (2021 – 0.9%),
which was slightly lower than Loblaw's internal food inflation;
and
- drug retail sales were $3,363
million (2021 – $3,191
million) and drug retail same-store sales grew by 5.2% (2021
– decreased by 1.7%) for the quarter. Pharmacy same-store sales
growth benefited from strong sales in pharmacy related services.
Front store same-store sales growth benefited from the continued
economic re-opening. Pharmacy same-store sales growth was 6.8%
(2021 – 3.5%) and front store same-store sales increased by 3.6%
(2021 – decreased by 6.4%).
During the first quarter of 2022, 9 food and drug stores were
opened, and 10 food and drug stores were closed, resulting in a net
decrease in retail square footage of 0.1 million square feet, or
0.1%.
Financial services revenue in the first quarter of 2022
increased by $21 million compared to the same period in 2021.
The increase was primarily driven by higher interest income
from growth in credit card receivables and higher interchange
income from an increase in customer spending, partially offset by
lower sales attributable to The Mobile Shop.
Operating income Loblaw operating income in the
first quarter of 2022 was $736 million, an increase of
$121 million, or 19.7%, compared to the same period in 2021.
The increase included improvements in underlying operating
performance of $104 million and the favourable year-over-year
net impact of adjusting items totaling $17 million, as
described below:
- the improvement in underlying operating performance of
$104 million was primarily due to the
following:
-
- an improvement in the underlying operating performance of
retail due to an increase in retail gross profit, partially offset
by an increase in selling, general and administrative expenses
("SG&A") and depreciation and amortization;
partially offset by,
-
- a decline in the underlying operating performance of financial
services primarily due to the year-over-year impact of the expected
credit loss provision from lapping a larger prior year release of
$20 million versus the current
quarter release of $5 million and the
prior year reversal of certain commodity tax accrued.
- the favourable year-over-year net impact of adjusting items
totaling $17 million was primarily due to:
-
- the favourable year-over-year impact of restructuring and other
related costs of $19 million; and
- the favourable year-over-year impact of the fair value
adjustment of derivatives of $6 million;
partially offset by,
- the unfavourable year-over-year impact in net gain on sale of
non-operating properties of $5 million; and
- the unfavourable impact of the Lifemark Health Group
("Lifemark") transaction costs of $3 million.
Adjusted EBITDA(1) Loblaw adjusted
EBITDA(1) in the first quarter of 2022 was
$1,341 million, an increase of
$125 million, or 10.3%, compared to the same period in 2021.
The increase was primarily due to an increase in retail of
$140 million, partially offset by a
decrease in financial services of $15
million.
Retail adjusted EBITDA(1) in the first
quarter of 2022 increased by $140 million driven by an
increase in retail gross profit of $210 million, partially
offset by an unfavourable increase in SG&A of $70 million.
- Retail gross profit percentage of 31.1% increased by 80 basis
points compared to the same period in 2021, driven by favourable
changes in the drug retail sales mix, with underlying improvements
in business initiatives across retail.
- Retail SG&A as a percentage of sales was 20.4%, a decrease
of 10 basis points compared to the same period of 2021. The
favourable decrease was primarily due to lower COVID-19 related
expenses, partially offset by higher costs incurred in drug retail
from providing pharmacy related services.
Financial services adjusted EBITDA(1)decreased by
$15 million compared to the same period in 2021. Financial
services continues to benefit from the economic re-opening but the
decrease was due to the year-over-year impact of the expected
credit loss provision from lapping a larger prior year release of
$20 million versus the current
quarter release of $5 million and the
prior year reversal of certain commodity tax accrued.
Depreciation and Amortization Loblaw depreciation
and amortization in the first quarter of 2022 was
$631 million, an increase of $21 million compared to the
same period in 2021, primarily driven by an increase in
depreciation of information technology ("IT") and leased assets.
Included in depreciation and amortization is the amortization of
intangible assets acquired with Shoppers Drug Mart of
$117 million (2021 – $117
million).
Consolidation of Franchises Loblaw has more than
500 franchise food retail stores in its network. Non-controlling
interests at Loblaw represent the share of earnings that relates to
Loblaw's food retail franchisees and is impacted by the timing of
when profit sharing with franchisees is agreed and finalized under
the terms of the agreements. Loblaw's net earnings attributable to
non-controlling interests were $33 million in the first
quarter of 2022. When compared to the first quarter of 2021, this
represented an increase of $14 million or 73.7%. The increase
in non-controlling interests at Loblaw was primarily driven by an
improvement in franchisee earnings in comparison to the same period
in 2021.
Loblaw Other Business
Matters
Lifemark Health Group During the quarter, Loblaw
agreed to acquire Lifemark for aggregate cash consideration of
$845 million. Lifemark is the leading
provider of outpatient physiotherapy, massage therapy, occupational
therapy, chiropractic, mental health, and other ancillary
rehabilitation services through its more than 300 clinics across
Canada. Regulatory approvals have
been received and the transaction is expected to close on or about
May 10, 2022.
Choice Properties Operating
Results
(unaudited)
($ millions except
where otherwise indicated)
For the periods ended
as indicated
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks
Ended
|
|
|
|
|
|
|
Mar. 26,
2022
|
|
|
Mar. 27,
2021
|
|
$ Change
|
|
% Change
|
|
Revenue
|
|
$
328
|
|
|
$
327
|
|
$
1
|
|
0.3%
|
|
Net interest expense
and other financing charges(i)
|
|
$
242
|
|
|
$
347
|
|
$
(105)
|
|
(30.3) %
|
|
Net income
(loss)
|
|
$
387
|
|
|
$
(62)
|
|
$
449
|
|
724.2%
|
|
Funds from
Operations(1)
|
|
$
175
|
|
|
$
171
|
|
$
4
|
|
2.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Net interest expense
and other financing charges includes a fair value adjustment on
Exchangeable Units.
|
Revenue Revenue in the first quarter of 2022 was
$328 million, an increase of
$1 million, or 0.3%, compared to the
same period in 2021, and included $184
million (2021 – $182 million)
generated from tenants within Loblaw.
The increase in revenue in the first quarter of 2022 was
primarily driven by:
- higher rental rates on renewals in the retail portfolio;
and
- increased capital recoveries;
partially offset by,
- foregone revenue from dispositions; and
- a decrease in lease surrender revenue.
Net Interest Expense and Other Financing Charges
Net interest expense and other financing charges in the first
quarter of 2022 were $242 million compared to
$347 million in the same period in 2021. The decrease of
$105 million was primarily driven by the favourable
year-over-year impact of the fair value adjustment on the Class B
LP units ("Exchangeable Units") of $99 million, a general
reduction in indebtedness and refinancing over the past year at
lower interest rates.
Net Income (Loss) Net income in the first quarter
of 2022 was $387 million, compared to a net loss of
$62 million in the same period in 2021. The increase of
$449 million was primarily driven by:
- the favourable change in the adjustment to fair value of
investment properties, including those held within equity accounted
joint ventures;
- lower net interest expense and other financing charges as
described above;
- a decline in expected credit loss provisions; and
- an increase in rental revenue as described above.
Funds from Operations(1) Funds from
Operations(1) in the first quarter of 2022 was
$175 million, an increase of $4 million compared to the
same period in 2021, primarily due to an increase in revenue as
described above, a decline in expected credit loss provisions,
lower interest expense due to a general reduction in indebtedness,
partially offset by an increase in general and administrative
expenses.
Choice Properties Other Business
Matters
Strategic Disposition Subsequent to the end of the
Company's first quarter of 2022, on March
31, 2022, Choice Properties disposed of its interests in a
portfolio of six office properties to Allied Properties Real Estate
Investment Trust ("Allied"). The consideration received consisted
of 11,809,145 exchangeable Class B limited partnership units of
Allied Properties Exchangeable Limited Partnership ("Allied Class B
Units"), an affiliated entity of Allied, with a fair value of
$551 million on the transaction date,
and a promissory note with a fair value of $193 million (face value of $200 million). Following the transaction, Choice
Properties holds approximately an 8.5% effective interest in Allied
through its ownership of the Allied Class B Units. Choice
Properties does not have significant influence over
Allied.
The Allied Class B Units are exchangeable into, and are
economically equivalent to, the publicly traded trust units of
Allied ("Allied Units"), and were accompanied by a corresponding
number of special voting units of Allied. There are no restrictions
on the exchange of Allied Class B Units into Allied Units, but the
Allied Units (if exchanged) are subject to a lock-up from the
closing of the transaction, such that 25% of the Allied Class B
Units or Allied Units, as applicable, will be released from lock up
every three months following the first anniversary of closing of
the transaction. As a holder of the Allied Class B Units, Choice
Properties is entitled to distributions paid by Allied.
The promissory note is secured by the six office assets and
bears interest at a rate of 1% for the remainder of the 2022
calendar year and 2% subsequently until its maturity on
December 31, 2023.
At the end of the first quarter of 2022, these properties were
classified as Assets Held for Sale on the Company's consolidated
balance sheet.
Land Acquisition Subsequent to the end of the first
quarter of 2022, on April 19, 2022,
Choice Properties completed the acquisition of land in Caledon, Ontario within one of its equity
accounted joint ventures. Choice Properties' share of the purchase
price, at its 85% ownership interest, was $85 million.
OUTLOOK(2)
For 2022, the Company expects adjusted net
earnings(1) from continuing operations to increase due
to the results from its operating segments, and to use excess cash
to repurchase shares.
Loblaw Loblaw will continue to execute on retail
excellence in its core grocery and pharmacy businesses while
advancing its growth initiatives in 2022. In the third year of the
pandemic, Loblaw's businesses remain well placed to service the
everyday needs of Canadians. However, Loblaw cannot predict the
precise impacts of COVID-19 and the current industry volatility on
its 2022 financial results. Loblaw anticipates that in the first
half of 2022 sales will benefit from the continued impact of the
pandemic and elevated industry-wide inflation. As societies and
economies reopen and Loblaw starts to lap elevated 2021
inflationary prices and COVID-19 related pharmacy services, year on
year revenue growth will be more challenged.
Loblaw continues to expect:
- its retail business to grow earnings faster than sales;
- Earnings Per Share growth in the low double digits, with higher
growth in the first half of the year;
- to invest approximately $1.4
billion in capital expenditures, net of proceeds from
property disposals, reflecting incremental store and distribution
network investments; and
- to return capital to shareholders by allocating a significant
portion of free cash flow to share repurchases.
Choice Properties Choice Properties' goal is to
provide net asset value appreciation, stable net operating income
growth and capital preservation, all with a long-term focus. Choice
Properties' business model, stable tenant base, strong balance
sheet, and disciplined approach to financial management will
continue to position it well for future success.
At the end of the first quarter of 2022, Choice Properties'
diversified portfolio of retail, industrial, residential and
mixed-use properties was 97.0% occupied and leased to high-quality
tenants across Canada. Choice
Properties' portfolio is primarily leased to necessity-based
tenants, and logistics providers, who are less sensitive to
economic volatility and therefore provide stability to Choice
Properties' overall portfolio. That stability is evident in Choice
Properties' financial results over the past year and in the most
recent quarter. Choice Properties is encouraged by the continued
COVID-19 reopening measures and high vaccination rates. That
optimism is reflected in Choice Properties' tenant base with
positive leasing momentum observed across its portfolio.
Choice Properties continues to advance its development program,
which provides Choice Properties with the best opportunity to add
high-quality real estate to its portfolio at a reasonable cost and
drive net asset value appreciation over time. Choice Properties has
a mix of active development projects ranging in size, scale, and
complexity, including retail intensification projects, industrial
development and rental residential projects located in urban
markets with a focus on transit accessibility.
Since the start of 2022, there has been a significant increase
in interest rates. Choice Properties continues to monitor the
impact of the overall rising rate environment on Choice Properties'
operating results and financial condition. Choice Properties'
strong balance sheet, ample liquidity, unencumbered assets and
staggered debt maturity provides the Trust with flexibility in the
current environment.
DECLARATION OF QUARTERLY
DIVIDENDS
Subsequent to the end of the first quarter of 2022, 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
|
$0.660 per share
payable July 1, 2022, to shareholders of
record June 15, 2022;
|
|
|
|
|
|
|
Preferred Shares,
Series I
|
$0.3625 per share
payable June 15, 2022, to shareholders of
record May 31, 2022;
|
|
|
|
|
|
|
Preferred Shares,
Series III
|
$0.3250 per share
payable July 1, 2022, to shareholders of
record June 15, 2022;
|
|
|
|
|
|
|
Preferred Shares,
Series IV
|
$0.3250 per share
payable July 1, 2022, to shareholders of
record June 15, 2022;
|
|
|
|
|
|
|
Preferred Shares,
Series V
|
$0.296875 per share
payable July 1, 2022, to shareholders of
record June 15, 2022.
|
|
NON-GAAP FINANCIAL
MEASURES
The Company uses non-GAAP financial measures and ratios as it
believes these measures and ratios provide useful information to
both management and investors with regard to accurately assessing
the Company's financial performance and financial condition.
Further, certain non-GAAP measures of Loblaw and Choice
Properties are included in this document. For more information on
these measures, refer to the materials filed by Loblaw and Choice
Properties, which are available on sedar.com or at loblaw.ca or
choicereit.ca, respectively.
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 underlying consolidated and
segment operating performance, as the excluded items are not
necessarily reflective of the Company's underlying operating
performance and make comparisons of underlying financial
performance between periods difficult. The Company excludes
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 should
not be construed as an alternative to other financial measures
determined in accordance with GAAP. Unless otherwise indicated, all
financial information represents the Company's results from
continuing operations.
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 (loss)
attributable to shareholders of the Company from continuing
operations reported for the periods ended as indicated.
|
|
12 Weeks
Ended
|
|
|
|
|
|
Mar. 26, 2022
|
|
|
|
|
Mar. 27,
2021(3)
|
|
(unaudited)
($ millions)
|
|
Loblaw
|
Choice
Properties
|
Other &
Intersegment
|
Consolidated
|
|
|
Loblaw
|
Choice
Properties
|
Other &
Intersegment
|
Consolidated
|
|
Net earnings (loss)
attributable to shareholders
of the Company from continuing operations
|
|
|
|
|
$
373
|
|
|
|
|
|
$
(52)
|
|
Add impact of the
following:
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling
interests
|
|
|
|
|
242
|
|
|
|
|
|
170
|
|
Income
taxes
|
|
|
|
|
229
|
|
|
|
|
|
165
|
|
Net interest
expense and other
financing charges
|
|
|
|
|
322
|
|
|
|
|
|
545
|
|
Operating
income
|
|
$
736
|
$
629
|
$
(199)
|
$
1,166
|
|
|
$
615
|
$
285
|
$
(72)
|
$
828
|
|
Add impact of the
following:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets acquired
with Shoppers Drug Mart
|
|
$
117
|
$
—
|
$
—
|
$
117
|
|
|
$
117
|
$
—
|
$
—
|
$
117
|
|
Fair value
adjustment on investment
properties
|
|
—
|
(410)
|
119
|
(291)
|
|
|
—
|
(61)
|
15
|
(46)
|
|
Fair value
adjustment of derivatives
|
|
(14)
|
—
|
—
|
(14)
|
|
|
(8)
|
—
|
—
|
(8)
|
|
Restructuring and other related (recoveries)
costs
|
|
(15)
|
—
|
19
|
4
|
|
|
4
|
—
|
—
|
4
|
|
Lifemark
transaction costs
|
|
3
|
—
|
—
|
3
|
|
|
—
|
—
|
—
|
—
|
|
Transaction costs and other related expenses
|
|
—
|
5
|
—
|
5
|
|
|
—
|
—
|
—
|
—
|
|
(Gain)
loss on sale of non-operating properties
|
|
—
|
—
|
—
|
—
|
|
|
(5)
|
—
|
2
|
(3)
|
|
Adjusting
items
|
|
$
91
|
$
(405)
|
$
138
|
$
(176)
|
|
|
$
108
|
$
(61)
|
$
17
|
$
64
|
|
Adjusted operating
income
|
|
$
827
|
$
224
|
$
(61)
|
$
990
|
|
|
$
723
|
$
224
|
$
(55)
|
$
892
|
|
Depreciation and
amortization excluding the
impact of the above
adjustments(i)
|
|
514
|
1
|
(83)
|
432
|
|
|
493
|
1
|
(86)
|
408
|
|
Adjusted
EBITDA
|
|
$
1,341
|
$
225
|
$
(144)
|
$
1,422
|
|
|
$ 1,216
|
$
225
|
$
(141)
|
$
1,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Depreciation and
amortization for the calculation of adjusted EBITDA excludes $117
million (2021 – $117 million) of amortization of intangible
assets, acquired with Shoppers Drug Mart, recorded by
Loblaw.
|
The following items impacted adjusted EBITDA in the first
quarters of 2022 and 2021:
Amortization of intangible assets acquired with Shoppers
Drug Mart The acquisition of Shoppers Drug Mart
in 2014 included approximately $6 billion of definite
life intangible assets, which are being amortized over their
estimated useful lives. Annual amortization associated with the
acquired intangible assets will be approximately $500 million
until 2024 and will decrease thereafter.
Fair value adjustment on investment properties The
Company measures investment properties at fair value. Under the
fair value model, investment properties are initially measured at
cost and subsequently measured at fair value. Fair value is
determined based on available market evidence. If market evidence
is not readily available in less active markets, the Company uses
alternative valuation methods such as discounted cash flow
projections or recent transaction prices. Gains and losses on fair
value are recognized in operating income in the period in which
they are incurred. Gains and losses from disposal of investment
properties are determined by comparing the fair value of disposal
proceeds and the carrying amount and are recognized in operating
income.
Fair value adjustment of
derivatives Loblaw is exposed to commodity
price and U.S. dollar exchange rate fluctuations. In
accordance with Loblaw's commodity risk management policy, Loblaw
enters into exchange traded futures contracts and forward contracts
to minimize cost volatility related to fuel prices and the U.S.
dollar exchange rate. These derivatives are not acquired for
trading or speculative purposes. Pursuant to Loblaw's derivative
instruments accounting policy, changes in the fair value of these
instruments, which include realized and unrealized gains and
losses are recorded in operating income. Despite the impact of
accounting for these commodity and foreign currency derivatives on
Loblaw's reported results, the derivatives have the economic impact
of largely mitigating the associated risks arising from price and
exchange rate fluctuations in the underlying commodities and U.S.
dollar commitments.
Restructuring and other related (recoveries) costs
The Company continuously evaluates strategic and cost reduction
initiatives related to its store infrastructure, distribution
networks and administrative infrastructure with the objective of
ensuring a low cost operating structure. Only restructuring
activities that are publicly announced related to these initiatives
are considered adjusting items.
In the first quarter of 2022, Loblaw recorded approximately
$15 million (2021 – $4 million
costs) of restructuring and other related recoveries in connection
to the previously announced closure of two distribution centres in
Laval and Ottawa. Loblaw disposed of one of the
distribution centres for proceeds of $26 million and
recognized a gain of $19 million,
which was partially offset by $4
million of restructuring and other related costs. Loblaw is
investing to build a modern and efficient expansion to its
Cornwall distribution centre to
serve its food and drug retail businesses in Ontario and Quebec. Volumes from the distribution centre
in Laval were transferred to
Cornwall and Loblaw will record
any remaining restructuring costs in the second quarter of 2022
related to these closures.
Included in Loblaw's restructuring and other related recoveries
was a gain of $19 million related to
the disposition of a property to Choice Properties. On
consolidation, the $19 million
recovery recorded by Loblaw was reversed as it was an intercompany
transaction.
Lifemark transaction costs In connection with the
agreement to acquire Lifemark Health Group, in the first quarter of
2022 Loblaw recorded $3 million of
acquisition costs.
Transaction costs and other related expenses During
the first quarter of 2022, Choice Properties recorded advisory,
legal, personnel, and other costs related to the disposal of its
interests in a portfolio of six office assets to Allied totaling
$5 million.
(Gain) loss on sale of non-operating properties In
the first quarter of 2021, Loblaw disposed of non-operating
properties to a third party and recorded a gain of $5 million related to the sale.
In the first quarter of 2021, Choice Properties disposed of a
property and incurred a nominal loss which was recognized in fair
value adjustment of investment properties. On consolidation, the
Company recorded the property as fixed assets and was recognized at
cost less accumulated depreciation. As a result, in the first
quarter of 2021, on consolidation, an incremental $2 million
loss was recognized in Other and Intersegment.
ADJUSTED NET INTEREST EXPENSE AND OTHER FINANCING
CHARGES The Company believes adjusted net interest
expense and other financing charges is useful in assessing the
ongoing net financing costs of the Company.
The following table reconciles adjusted net interest expense and
other financing charges to GAAP net interest expense and other
financing charges reported for the periods ended as indicated.
(unaudited)
($ millions)
|
12 Weeks
Ended
|
|
|
Mar. 26,
2022
|
|
|
Mar. 27,
2021(3)
|
|
Net interest expense
and other financing charges
|
|
$
322
|
|
|
$
545
|
|
Add: Fair value
adjustment of the Trust Unit liability
|
|
(93)
|
|
|
(239)
|
|
Recovery related to Glenhuron
|
|
11
|
|
|
—
|
|
Fair value adjustment of the forward sale agreement
for Loblaw common shares
|
|
—
|
|
|
(53)
|
|
Adjusted net interest
expense and other financing charges
|
|
$
240
|
|
|
$
253
|
|
|
|
|
|
|
|
|
In addition to certain items described in the "Adjusted EBITDA"
section above, the following items impacted adjusted net interest
expense and other financing charges in the first quarters of 2022
and 2021:
Fair value adjustment of the Trust Unit
liability The Company is exposed to market price
fluctuations as a result of the Choice Properties Trust Units held
by unitholders other than the Company. These Trust Units are
presented as a liability on the Company's consolidated balance
sheets as they are redeemable for cash at the option of the holder,
subject to certain restrictions. This liability is recorded at fair
value at each reporting date based on the market price of
Trust Units at the end of each period. An increase (decrease)
in the market price of Trust Units results in a charge (income) to
net interest expense and other financing charges.
Recovery related to Glenhuron In the
first quarter of 2022, Loblaw reversed $35 million of previously recorded charges, of
which $33 million was recorded as
income tax recovery and $2 million
was recorded as interest income. In addition, interest of
$9 million, before taxes was recorded
in respect of interest income earned on expected cash tax
refunds.
Fair value adjustment of the forward sale agreement for
Loblaw common shares The fair value adjustment of the
forward sale agreement for Loblaw common shares is included in net
interest expense and other financing charges. The adjustment is
determined by changes in the value of the underlying Loblaw
common shares. An increase (decrease) in the market price of Loblaw
common shares results in a charge (income) to net interest expense
and other financing charges. The Company settled the net debt
associated with the forward sale agreement in the fourth quarter of
2021.
ADJUSTED INCOME TAXES AND ADJUSTED EFFECTIVE TAX
RATE The Company believes the adjusted effective tax rate
applicable to adjusted earnings before taxes is useful in assessing
the underlying operating performance of its business.
The following table reconciles the effective tax rate applicable
to adjusted earnings before taxes to the GAAP effective tax rate
applicable to earnings before taxes as reported for the periods
ended as indicated.
(unaudited)
($ millions except
where otherwise indicated)
|
|
12 Weeks
Ended
|
|
|
Mar. 26,
2022
|
|
Mar 27,
2021(3)
|
Adjusted operating
income(i)
|
|
$
990
|
|
$
892
|
Adjusted net interest
expense and other financing charges(i)
|
|
240
|
|
253
|
Adjusted earnings
before taxes
|
|
$
750
|
|
$
639
|
Income taxes
|
|
$
229
|
|
$
165
|
Add:
|
Tax impact of items
excluded from adjusted earnings before
taxes(ii)
|
|
(20)
|
|
28
|
|
Recovery related to
Glenhuron
|
|
33
|
|
—
|
|
Outside basis
difference in certain Loblaw shares
|
|
(37)
|
|
(16)
|
Adjusted income
taxes
|
|
$
205
|
|
$
177
|
Effective tax rate
applicable to earnings before taxes
|
|
27.1%
|
|
58.3%
|
Adjusted effective tax
rate applicable to adjusted earnings before taxes
|
|
27.3%
|
|
27.7%
|
|
|
|
|
|
|
|
|
|
|
(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.
|
In addition to certain items described in the "Adjusted EBITDA"
and "Adjusted Net Interest Expense and Other Financing Charges"
sections above, the following items impacted adjusted income taxes
and the adjusted effective tax rate in the first quarters of 2022
and 2021:
Recovery related to Glenhuron In the first quarter
of 2022, Loblaw reversed $35
million of previously recorded charges, of which
$33 million was recorded as income
tax recovery and $2 million was
recorded as interest income. In addition, interest of
$9 million, before taxes was recorded in respect of interest
income earned on expected cash tax refunds.
Outside basis difference in certain Loblaw
shares The Company recorded a deferred tax expense of
$37 million (2021 – $16 million) in the first quarter of
2022 on temporary differences in respect of GWL's investment in
certain Loblaw shares that are expected to reverse in the
foreseeable future as a result of GWL's participation in Loblaw's
NCIB.
ADJUSTED NET EARNINGS AVAILABLE TO COMMON SHAREHOLDERS FROM
CONTINUING OPERATIONS AND ADJUSTED DILUTED NET EARNINGS PER COMMON
SHARE FROM CONTINUING OPERATIONS The Company believes
that adjusted net earnings available to common shareholders from
continuing operations and adjusted diluted net earnings per common
share from continuing operations are useful in assessing the
Company's underlying operating performance and in making decisions
regarding the ongoing operations of its business.
The following table reconciles adjusted net earnings available
to common shareholders of the Company from continuing operations
and adjusted net earnings attributable to shareholders of the
Company from continuing operations to net earnings (loss)
attributable to shareholders of the Company and then to net
earnings (loss) available to common shareholders of the Company
from continuing operations reported for the periods ended as
indicated.
(unaudited)
($ millions except
where otherwise indicated)
|
12 Weeks
Ended
|
|
|
Mar. 26,
2022
|
|
|
Mar. 27,
2021(3)
|
|
Net earnings (loss)
attributable to shareholders of the Company
|
|
$
373
|
|
|
$
(52)
|
|
Less: Net
earnings from discontinued operations
|
|
—
|
|
|
—
|
|
Net earnings (loss)
attributable to shareholders of the Company from continuing
operations
|
|
$
373
|
|
|
$
(52)
|
|
Less: Prescribed
dividends on preferred shares in share capital
|
|
(10)
|
|
|
(10)
|
|
Net earnings (loss)
available to common shareholders of the Company from
continuing
operations
|
|
$
363
|
|
|
$
(62)
|
|
Less: Reduction
in net earnings due to dilution at Loblaw
|
|
(2)
|
|
|
(1)
|
|
Net earnings (loss)
available to common shareholders from continuing operations for
diluted earnings per share
|
|
$
361
|
|
|
$
(63)
|
|
|
|
|
|
|
|
|
Net earnings (loss)
attributable to shareholders of the Company from
continuing
operations
|
|
$
373
|
|
|
$
(52)
|
|
Adjusting items (refer
to the following table)
|
|
(81)
|
|
|
307
|
|
Adjusted net earnings
attributable to shareholders of the Company from
continuing
operations
|
|
$
292
|
|
|
$
255
|
|
Less: Prescribed
dividends on preferred shares in share capital
|
|
(10)
|
|
|
(10)
|
|
Adjusted net earnings
available to common shareholders of the Company from continuing
operations
|
|
$
282
|
|
|
$
245
|
|
Less: Reduction
in net earnings due to dilution at Loblaw
|
|
(2)
|
|
|
(1)
|
|
Adjusted net earnings
available to common shareholders for diluted earnings per share
from continuing operations
|
|
$
280
|
|
|
$
244
|
|
|
|
|
|
|
|
|
Diluted weighted
average common shares outstanding (in millions)
|
|
147.3
|
|
|
152.1
|
|
|
|
|
|
|
|
|
The following table reconciles adjusted net earnings available
to common shareholders of the Company from continuing operations
and adjusted diluted net earnings per common share from continuing
operations to GAAP net earnings (loss) available to common
shareholders of the Company from continuing operations and diluted
net earnings (loss) per common share from continuing operations as
reported for the periods ended as indicated.
|
12 Weeks
Ended
|
|
|
Mar. 26,
2022
|
|
Mar. 27,
2021(3)
|
(unaudited)
($ except where
otherwise indicated)
|
Net
Earnings
Available
to Common
Shareholders of
the Company
($ millions)
|
|
Diluted
Net
Earnings
Per
Common Share
|
|
|
Net
Earnings (Loss)
Available to
Common
Shareholders of
the Company
($ millions)
|
|
Diluted
Net
Earnings (Loss)
Per
Common Share
|
|
Continuing
Operations
|
|
$
363
|
|
$
2.45
|
|
|
$
(62)
|
|
$
(0.41)
|
|
Add (deduct) impact of
the following(i):
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangible assets acquired with Shoppers
Drug Mart
|
|
$
46
|
|
$
0.31
|
|
|
$
45
|
|
$
0.29
|
|
Fair value
adjustment on investment properties
|
|
(243)
|
|
(1.65)
|
|
|
(38)
|
|
(0.25)
|
|
Fair value
adjustment of derivatives
|
|
(6)
|
|
(0.04)
|
|
|
(3)
|
|
(0.02)
|
|
Restructuring
and other related costs
|
|
10
|
|
0.08
|
|
|
2
|
|
0.01
|
|
Lifemark
transaction costs
|
|
1
|
|
0.01
|
|
|
—
|
|
—
|
|
Transaction
costs and other related expenses
|
|
4
|
|
0.02
|
|
|
—
|
|
—
|
|
Fair value
adjustment of the Trust Unit liability
|
|
93
|
|
0.63
|
|
|
239
|
|
1.57
|
|
Fair value
adjustment of the forward sale agreement for Loblaw
common shares
|
|
—
|
|
—
|
|
|
46
|
|
0.30
|
|
Outside basis
difference in certain Loblaw shares
|
|
37
|
|
0.25
|
|
|
16
|
|
0.11
|
|
Recovery related
to Glenhuron
|
|
(23)
|
|
(0.16)
|
|
|
—
|
|
—
|
|
Adjusting items
Continuing Operations
|
|
$
(81)
|
|
$
(0.55)
|
|
|
$
307
|
|
$
2.01
|
|
Adjusted Continuing
Operations
|
|
$
282
|
|
$
1.90
|
|
|
$
245
|
|
$
1.60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Net of income taxes and
non-controlling interests, as applicable.
|
FREE CASH FLOW FROM CONTINUING OPERATIONS The
Company believes free cash flow is useful in assessing the
Company's cash available for additional financing and investing
activities.
The following table reconciles free cash flow to GAAP measures
reported for the periods ended as indicated.
(unaudited)
($ millions)
|
|
12 Weeks
Ended
|
|
$ Change
|
|
|
Mar. 26,
2022
|
|
|
Mar. 27,
2021(3)
|
|
|
Cash flows from
operating activities
|
|
$
757
|
|
|
$
911
|
|
$
(154)
|
|
Less: Cash flows used
in operating activities from discontinued operations
|
|
—
|
|
|
(3)
|
|
3
|
|
Cash flows from
operating activities from continuing operations
|
|
$
757
|
|
|
$
914
|
|
$ (157)
|
|
Less: Interest
paid
|
|
214
|
|
|
244
|
|
(30)
|
|
Capital investments(i)
|
|
207
|
|
|
223
|
|
(16)
|
|
Lease payments, net
|
|
143
|
|
|
140
|
|
3
|
|
Free cash
flow from continuing operations
|
|
$
193
|
|
|
$
307
|
|
$ (114)
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
In the first quarter of
2021, additions to fixed assets in Loblaw included prepayments that
were made in 2020 and transferred from other assets of $1
million.
|
CHOICE PROPERTIES' FUNDS FROM OPERATIONS Choice
Properties considers Funds from Operations to be a useful measure
of operating performance as it adjusts for items included in net
income that do not arise from operating activities or do not
necessarily provide an accurate depiction of its performance.
Funds from operations is calculated in accordance with the Real
Property Association of Canada's
Funds from Operations & Adjusted Funds from Operations for
International Financial Reporting Standards ("IFRS") issued in
January 2022.
The following table reconciles Choice Properties' Funds from
Operations to net income for the periods ended as
indicated.
(unaudited)
($ millions)
|
12 Weeks
Ended
|
|
|
Mar. 26,
2022
|
|
|
Mar. 27,
2021
|
|
Net income
(loss)
|
|
$
387
|
|
|
$
(62)
|
|
Add
(deduct) impact of the following:
|
|
|
|
|
|
|
Fair value
adjustment on Exchangeable Units
|
|
119
|
|
|
218
|
|
Unit
distributions on Exchangeable Units
|
|
73
|
|
|
73
|
|
Fair value
adjustment on investment properties
|
|
(303)
|
|
|
(59)
|
|
Fair value
adjustment on investment property held in equity accounted joint
ventures
|
|
(110)
|
|
|
(2)
|
|
Internal
expenses for leasing
|
|
2
|
|
|
2
|
|
Capitalized interest on equity accounted joint
ventures
|
|
—
|
|
|
1
|
|
Transaction costs and other related expenses
|
|
5
|
|
|
—
|
|
Other fair
value gains, net
|
|
1
|
|
|
—
|
|
Other
|
|
1
|
|
|
—
|
|
Funds from
Operations
|
|
$
175
|
|
|
$
171
|
|
|
|
|
|
|
|
|
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, opportunities and legal and regulatory
matters. 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 further
healthcare reform, future liquidity, planned capital investments,
and the status and impact of IT systems implementation. 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", "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 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 MD&A in the Company's 2021 Annual Report and the
Company's Annual Information Form for the year ended
December 31, 2021.
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.
2022 FIRST QUARTER
REPORT
The Company's 2021 Annual Report and 2022 First Quarter Report
are available in the Investor Centre section of the Company's
website at www.weston.ca and have been filed on SEDAR and are
available at www.sedar.com.
INVESTOR RELATIONS
Shareholders, security analysts and investment professionals
should direct their requests to Roy
MacDonald, Group Vice-President, Investor Relations, at the
Company's Executive Office or by e-mail at investor@weston.ca.
Additional financial information has been filed electronically
with various securities regulators in Canada through SEDAR. This News Release
includes selected information on Loblaw, a public company with
shares trading on the Toronto Stock Exchange ("TSX"). For
information regarding Loblaw, readers should refer to the materials
filed by Loblaw on SEDAR from time to time. These filings are also
maintained on Loblaw's corporate website at www.loblaw.ca.
This News Release also includes selected information on Choice
Properties, a public real estate investment trust with units
trading on the TSX. For information regarding Choice Properties,
readers should refer to the materials filed by Choice Properties on
SEDAR from time to time. These filings are also maintained on
Choice Properties' website at www.choicereit.ca.
ANNUAL MEETING
The George Weston Limited Annual Meeting of Shareholders will be
held on Tuesday, May 10, 2022 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. Shareholders who are
not able to attend in person will be able to listen, participate
and vote at the meeting in real time through a web-based platform
at https://web.lumiagm.com/209646589 (meeting
password: george2022). To access via audio-conference please dial
(416) 764-8688 or 1-888-390-0546. Playback will be available two
hours after the event at (416) 764-8677 or 1-888-390-0541,
password: 347847#.
Ce rapport est disponible en français.
|
|
Endnotes
|
|
|
(1)
|
See the "Non-GAAP
Financial Measures" section of this News Release, which includes
the reconciliation of such non-GAAP measures to the most directly
comparable GAAP measures.
|
(2)
|
This News Release
contains forward-looking information. See "Forward-Looking
Statements" section of this News Release and the Company's 2022
First Quarter Report 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 and assumptions
that were used when making these statements. This News Release
should 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)
|
Comparative figures
have been restated to conform with current year
presentation.
|
(4)
|
GWL Corporate refers to
the non-consolidated financial results and metrics of GWL. GWL
Corporate is a subset of Other and Intersegment.
|
|
|
SOURCE George Weston Limited