CEO Comments on Fourth Quarter Results and Annual Results
“The results in the quarter reflect continued momentum in our Canadian Operations,” said President & CEO
Fourth Quarter and Annual Results
The following table provides a summary of selected information for the 2023 fourth quarter and annual results. Further information on the fourth quarter and annual financial performance is provided in the 2023 Annual Report available on the Company's website at www.northwest.ca or on SEDAR+ at www.sedarplus.com.
Selected Fourth Quarter(3) and Annual Information
Three Months | Three Months | Twelve Months | Twelve Months | |||||||||||||
Ended | Ended | Ended | Ended | |||||||||||||
($ in thousands, except per share) | ||||||||||||||||
Sales | $ | 643,109 | $ | 635,164 | $ | 2,471,678 | $ | 2,352,760 | ||||||||
Same store sales % increase/(decrease)(2) | 1.4 | % | 2.1 | % | 2.9 | % | (0.8 | )% | ||||||||
Gross profit | $ | 214,692 | $ | 201,177 | $ | 809,419 | $ | 747,915 | ||||||||
Selling, operating and administrative expenses | (162,995 | ) | (153,353 | ) | (613,522 | ) | (567,610 | ) | ||||||||
EBITDA(1) | 79,136 | 73,460 | 301,173 | 278,678 | ||||||||||||
Earnings from operations | 51,697 | 47,824 | 195,897 | 180,305 | ||||||||||||
Interest expense | (4,894 | ) | (4,192 | ) | (19,051 | ) | (14,836 | ) | ||||||||
Income taxes | (10,792 | ) | (8,503 | ) | (42,555 | ) | (39,633 | ) | ||||||||
Net earnings | 36,011 | 35,129 | 134,291 | 125,836 | ||||||||||||
Net earnings attributable to shareholders of the Company | 34,492 | 33,930 | 129,391 | 122,190 | ||||||||||||
Net earnings per share – basic | 0.72 | 0.71 | 2.71 | 2.55 | ||||||||||||
Net earnings per share – diluted | 0.71 | 0.69 | 2.67 | 2.51 | ||||||||||||
Cash flow from operating activities | 90,481 | 100,230 | 230,427 | 182,838 | ||||||||||||
Cash flow used in investing activities | (41,606 | ) | (51,907 | ) | (107,701 | ) | (106,802 | ) | ||||||||
Cash flow used in financing activities | (66,916 | ) | (38,500 | ) | (128,270 | ) | (68,298 | ) | ||||||||
Cash dividends per share | $ | 0.39 | $ | 0.38 | $ | 1.54 | $ | 1.50 |
(1) See Non-GAAP Financial Measures section below.
(2) All references to same store sales exclude the foreign exchange impact.
(3) Unaudited interim financial information.
Annual Highlights
- Six new stores were opened, four in
Canada and two in International Operations. - Sales increased 5.1%.
- Net earnings increased
$8.5 million or 6.7%. - Return on average equity(1) was 19.9%.
- Return on net assets(1) was 17.7%.
- Debt-to-Equity was 0.40 at
January 31, 2024 and has remained below 1.0 since 2000. - Quarterly dividends increased
$0.01 per share or 2.6% to$0.39 per share inSeptember 2023 and annual dividends per share have increased 3.2% on a compound annual growth basis over the past 10 years.
Fourth Quarter Results
Consolidated Fourth Quarter Sales Sales for the quarter increased 1.3% to
Gross Profit Gross profit increased 6.7% due to sales gains and a 171 basis point increase in gross profit rate compared to last year. The increase in gross profit rate was largely due to changes in sales blend, an increase in the airline gross profit rate in Canadian Operations and lower markdowns on seasonal merchandise compared to last year. A higher pass through of cost inflation in retail prices compared to last year and a lower blend of CUL sales which have a lower gross profit rate consistent with a warehouse format were also factors.
Selling, Operating and Administrative Expenses Selling, operating and administrative expenses ("Expenses") increased
Earnings from operations and EBITDA(1) Earnings from operations or earnings before interest and taxes ("EBIT") increased
Interest Expense Interest expense increased 16.7% to
Income Tax Expense Income tax expense was
Net Earnings Consolidated net earnings increased
Annual Results
Consolidated Sales Sales for the year ended
Gross Profit Gross profit increased 8.2% to
Selling, Operating and Administrative Expenses Selling, operating and administrative expenses (“Expenses”) of
Earnings from Operations (EBIT) and EBITDA(1) Earnings from operations or earnings before interest and income taxes ("EBIT”) increased 8.6% to
Interest Expense Interest expense increased 28.4% to
Income Tax Expense Income taxes increased to
Net Earnings Consolidated net earnings increased 6.7% to
Other Highlights
Modern Slavery Act Report
In compliance with the Fighting Against Forced Labour and Child Labour in Supply Chains Act (referred to as
Sustainability Report 2023
The Company's 2023 Sustainability Report outlines our Environmental, Social and Governance ("ESG") Strategy. Our ESG Strategy aims to achieve positive change through a shared-value framework that benefits people, our planet and creates strong partnerships for the future. Through our ESG strategy, we seek to drive positive change in the communities we serve by supporting their journey for improved health, nutrition and overall quality of life. We also seek to improve the experience of our employees by creating a more diverse, equitable and inclusive work environment, where employees can further develop their skills and grow their careers within our organization. The Sustainability Report 2023 is available on the Company's website at www.northwest.ca.
Non-GAAP Financial Measures
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 the other financial measures determined in accordance with IFRS.
(1) Earnings Before Interest, Income Taxes, Depreciation and Amortization (EBITDA), Adjusted EBITDAand Adjusted Net Earnings are not recognized measures under IFRS. Management uses these non-GAAP financial measures to exclude the impact of certain income and expenses that must be recognized under IFRS. The excluded amounts are either subject to volatility in the Company's share price or may not necessarily be reflective of the Company's underlying operating performance. These factors can make comparisons of the Company's financial performance between periods more difficult. The Company may exclude additional items if it believes that doing so will result in a more effective analysis and explanation of the underlying financial performance. The exclusion of these items does not imply that they are non-recurring.
Reconciliation of Consolidated Earnings from Operations to EBITDA and Adjusted EBITDA
Fourth Quarter | Year-to-date | |||||||||||||||
($ in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Earnings from operations | $ | 51,697 | $ | 47,824 | $ | 195,897 | $ | 180,305 | ||||||||
Add: | ||||||||||||||||
Amortization | 27,439 | 25,636 | 105,276 | 98,373 | ||||||||||||
EBITDA | $ | 79,136 | $ | 73,460 | $ | 301,173 | $ | 278,678 | ||||||||
— | — | 3,694 | — | |||||||||||||
Gain on insurance settlement | — | — | — | — | ||||||||||||
Share-based compensation expense | 4,558 | 3,878 | 13,167 | 13,131 | ||||||||||||
Adjusted EBITDA | $ | 83,694 | $ | 77,338 | $ | 318,034 | $ | 291,809 |
Reconciliation of consolidated net earnings to adjusted net earnings:
Fourth Quarter | Year-to-Date | |||||||||||||||
($ in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Net earnings | $ | 36,011 | $ | 35,129 | $ | 134,291 | $ | 125,836 | ||||||||
— | — | 2,551 | — | |||||||||||||
Gain on insurance settlement, net of tax | — | — | — | — | ||||||||||||
Share-based compensation expense, net of tax | 3,523 | 2,976 | 10,177 | 10,213 | ||||||||||||
Adjusted Net Earnings | $ | 39,534 | $ | 38,105 | $ | 147,019 | $ | 136,049 |
On
In 2021, the Company recorded gains on insurance claims. These gains were due to the difference between the replacement cost of the assets destroyed and their book value and also for the recovery of business interruption losses on certain insurance claims
Certain share-based compensation costs are presented as liabilities on the Company's consolidated balance sheets. The Company is exposed to market price fluctuations in its share price through these share-based compensation costs. These liabilities are recorded at fair value at each reporting date based on the market price of the Company's shares at the end of each reporting period with the changes in fair value recorded in selling, operating and administrative expenses.
(2) Return on Net Assets (RONA) is not a recognized measure under IFRS. Management believes that RONA is a useful measure to evaluate the financial return on the net assets used in the business. RONA is calculated as earnings from operations (EBIT) for the year divided by average monthly net assets. The following table reconciles net assets used in the RONA calculation to IFRS measures reported in the consolidated financial statements as at
($ in millions) | 2023 | 2022 | ||||||
Total assets | $ | 1,396.0 | $ | 1,336.9 | ||||
Less: Total liabilities | (690.2 | ) | (689.0 | ) | ||||
Add: Total debt and lease liabilities | 405.5 | 402.5 | ||||||
Net Assets Employed | $ | 1,111.3 | $ | 1,050.4 |
(3) Return on Average Equity (ROE) is not a recognized measure under IFRS. Management believes that ROE is a useful measure to evaluate the financial return on the amount invested by shareholders. ROE is calculated by dividing net earnings for the year by average monthly total shareholders' equity. There is no directly comparable IFRS measure for return on equity.
Additional information regarding the financial performance of North West can be found within the 2023 Annual Report, Annual Audited Financial Statements and the Annual Information Form available on the Company's website at www.northwest.ca or on SEDAR+ at www.sedarplus.com.
Fourth Quarter Conference Call
North West will host a conference call for its fourth quarter results on
Notice to Readers
Certain forward-looking statements are made in this news release, within the meaning of applicable securities laws. These statements reflect North West's current expectations and are based on information currently available to management. The words may, will, should, believe, expect, plan, anticipate, intend, estimate, predict, potential, continue, or the negative of these terms, identify forward-looking matters. These statements speak only as of the date of this press release. The actual results could differ materially from those anticipated in these forward-looking statements.
Reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance, capital expenditures or achievements of North West to differ materially from anticipated future results, performance, capital expenditures or achievement expressed or implied by such forward-looking statements, including the Company's intentions regarding a normal course issuer bid, the potential impact of a pandemic on the Company's operations, supply chain and the Company's related business continuity plans, the realization of cost savings from cost reduction plans and possible future action by the Company. Factors that could cause actual results to differ materially from those set forth in the forward-looking statements include, but are not limited to, changes in inflation, interest and foreign exchange rates, the Company's ability to maintain an effective supply chain, changes in accounting policies and methods used to report financial condition, including uncertainties associated with critical accounting assumptions and estimates, the effect of applying future accounting changes, business competition, technological change, changes in government regulations and legislation, changes in tax laws, unexpected judicial or regulatory proceedings, catastrophic events, the Company's ability to complete and realize benefits from capital projects, E-Commerce investments, strategic transactions and the integration of acquisitions, the Company's ability to realize benefits from investments in information technology ("IT") and systems, including IT system implementations, or unanticipated results from these initiatives and the Company's success in anticipating and managing the foregoing risks and those risks and uncertainties detailed in the section entitled Risk Factors in North West's Management's Discussion and Analysis and Annual Information Form, both for the year-ended
Company Profile
The common shares of North West trade on the
For more information contact:
Phone 204-934-1482; fax 204-934-1317; email dmcconnell@northwest.ca
Phone 204-934-1397; fax 204-934-1317; email jking@northwest.ca
Source:
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