BMTC Group Inc. Announces Financial Results for its Quarter Ended October 31st, 2019

MONTREAL, Dec. 10, 2019 /CNW Telbec/ -

Results

For the nine month period ended October 31, 2019, the Company's revenues decreased by $19,216,000 to $546,733,000, compared to $565,949,000 recorded in the corresponding 2018 period, a 3% decrease. Net earnings for the nine month period ended October 31, 2019, amounted to $20,674,000 compared to $33,352,000 for the corresponding 2018 period. Basic net earnings per share amounted to $0.60 compared to $0.95 recorded in the corresponding 2018 period.

The effect of the cost of options had no impact on basic net earnings per share for the nine month periods ended October 31, 2019 and 2018.

For the nine month period ended October 31, 2019, the share repurchase program contributed to an increase in basic net earnings of $0,02 per share whereas during the corresponding 2018 period it contributed to an increase of $0,04 on basic net earnings per share.

During the preceding year ended January 31, 2019, the Company sold its Repentigny store for an amount of $9,000,000 resulting in an after-tax gain of $4,522,000 or $0.13 per basic share.

Excluding all these effects, the variation in adjusted net earnings would have been $8,031,000 or $0.23 per basic share for the nine month period ended October 31, 2019.

The $8,031,000 variation in adjusted net earnings for the nine month period of 2019 is as follows:

	(Unaudited and $ in thousands)
	Oct. 31, 2019		Oct. 31, 2018
Net earnings	20,674		33,352
Gain on disposal of fixed assets (after-tax)	-		(4,522)
Variation in cost of options (after-tax)	(87)		(212)
Adjusted net earnings	20,587		28,618
Minus: Adjusted net earnings for 2018	28,618
Variation	(8,031)

This variation in adjusted after-tax income is allocated throughout the quarters as follows:

(Unaudited and $ in thousands)
	Increase		Increase		Increase
	(decrease)		(decrease)		(decrease)
	in retail operating		in investment		in adjusted
	earnings		income		operating earnings
As at April 30, 2019	(5,586)		1,924		(3,662)
As at July 31, 2019	(1,869)		(1,584)		(3,453)
As at Oct. 31, 2019	(3,249)		2,333		(916)
Total:	(10,704)		2,673		(8,031)

The decrease in gross profit is due to the decline in revenues and accounts for 70% of the decrease in retail operating earnings of the Company.

The retail operating earnings have also been affected by the considerable increase in delivery costs, as well as the costs associated with store openings, modifications and renovations of the banners within the Company.

Annual Financial Information
($ in thousands, except for per share amounts)
	January 31, 2019		January 31, 2018
	12 months		13 months
	$		$
Revenue	740,017		810,144
Net Earnings	45,165		49,335
Total Assets	367,624		312,569
Net Earnings Per Share
Basic	1.29		1.36
Diluted	1.29		1.36
Dividends Per Share	0.28		0.24

Financial position and dividends

Cash, net of the bank overdraft, and investments increased by $22,282,000 during the nine month period ended October 31, 2019. Investments consist of bank notes, government and corporate bonds, preferred and common shares, which at the close of the period had a market value of $129,070,000 (including cash net of the overdraft).

As at October 31, 2019, the working capital showed a deficit of $18,513,000, an increase of $16,404,000 compared to the year ended January 31, 2019. The Company's shareholders' equity increased from $244,742,000 as at January 31, 2019, to $255,950,000 as at October 31, 2019. As at October 31, 2019, the book value per share stood at $7.49, compared to $7.09 as at January 31, 2019.

Pursuant to the normal course issuer-bid put in place on April 13, 2018, and renewed on April 15, 2019, accordingly, 351,500 common shares were repurchased and cancelled by the Company. As a result of this change, the Company had as at October 31, 2019, 34,188,500 common shares issued and outstanding.

During the nine month period ended October 31, 2019, no options were granted or exercised. As at October 31, 2019, options for 197,100 common shares, representing 0.58% of the Company's outstanding shares remain issued and 5,710,864 authorized share options, representing approximately 16.70% of the Company's outstanding shares, may still be granted pursuant to the Plan. The issued and outstanding options may be exercised at a price of $17.85 per common shares.

A semi-annual eligible dividend of $0.14 per Common Share has been declared to holders registered at the close of business on December 21st, 2019 which will be payable on January 3rd, 2020.

Quarterly results
(Unaudited and $ in thousands, except for per share amounts)
	April 30		April 30		July 31		July 31
	2019		2018		2019		2018
	$		$		$		$
Revenue	149,668		162,194		214,380		219,640
Net (loss) earnings	(3,455)		4,806		13,480		16,933
Net (loss) earnings per share
Basic	(0.10)		0.13		0.39		0.48
Diluted	(0.10)		0.13		0.39		0.48
	October 31		October 31		January 31		January 31
	2019		2018		2019		2018
					(3 months)		(4 months)
	$		$		$		$
Revenue	182,685		184,115		174,068		245,110
Net (loss) earnings	10,649		11,613		11,813		17,720
Net (loss) earnings per share
Basic	0.31		0.34		0.34		0.34
Diluted	0.31		0.34		0.34		0.34

For the quarter ended October 31st, 2019, the Company's revenues decreased by $1,430,000 to $182,685,000, compared to $184,115,000, for the corresponding 2018 period, a 1% decrease. Net earnings for the quarter ended October 31st, 2019, amounted to $10,649,000 compared to $11,613,000 for the corresponding 2018 period. Basic net earnings per share amounted to $0.31 compared to $0.34 recorded in for the corresponding 2018 period.

The effect of the cost of options had no impact on basic net earnings per share for the three month period ended October 31st, 2019 and 2018.

For the three month period ended October 31st, 2019, the share repurchase program had no effect on basic net earnings per share.

Excluding all these effects, the variation to the adjusted net earnings would have been $916,000 or $0.03 per basic share for the three month period ended October 31st, 2019.

The $916,000 variation in adjusted net earnings for the three month period ended October 31st, 2019 is as follows:

	(Unaudited and $ in thousands)
	Oct. 31, 2019		Oct. 31, 2018
Net earnings	10,649		11,613
Variation of cost of options (after-tax)	(2)		(50)
Adjusted net earnings	10,647		11,563
Minus: Adjusted net earnings for 2018	11,563
Variation	(916)

Operations

Groupe BMTC Inc.

The Company continues to restructure all of its websites and the first phase of the implementation of a distinct e-commerce platform for its banners Brault & Martineau and EconoMax is now completed and operational. The process of implementation will continue throughout 2019 for the following phases as well as the restructuring for all the other banners of the Company. The Company also reviewed its IT systems in to order standardize them throughout the banners, as well as to allow them to be more aligned with its e-commerce strategies. Following this review, the Company decided to invest and to modify its existing IT systems, the integration and implementation which will continue for a 3 to 5 year period. The cost of these modifications are estimated to be $17,000,000. A portion of these costs, $11,047,000 were incurred and the balance will be recorded in subsequent years.

The Company proceeded to change its financial year-end date from December 31 to January 31. This change came into effect with the 2018 financial year-end, therefore, the accounting period of the 2018 consolidated financial statements corresponds to a 13-month period ending January 31, 2018 compared to a 12-month period for the current consolidated financial statements. The unaudited interim financial statements will correspond to the quarters ending in April 30, October 31 and October 31.

Brault & Martineau and EconoMax Division

The new Brault & Martineau St-Rose store opened on June 12th, 2019. This store represents the new prototype for the Brault & Martineau banner. During the quarter, the old Brault & Martineau was closed and converted into an EconoMax which replaced the EconoMax on Boulevard des Laurentides in Laval.

The costs incxurred with the opening of the new St-Rose store were of $1,609,000, while the cost incurred for the conversion of the old Brault & Martineau store into an EconoMax in St-Thérèse were of $1,197,000.

On November 7, 2019, the Company proceeded with the sale of the Kirkland store for an amount of $4,195,000 resulting in an after-tax gain of approximately $1,048,000 or $0.03 per basic share. During this same transaction, the Company purchased land along the Autoroute 40 in the city of Kirkland in order to build a new Brault & Martineau store of approximately 80,000 square feet which will replace the actual Kirkland store. On this same land, the Company is building an EconoMax store of approximately 50,000 square feet which will replace the EconoMax store in Côte-Vertu. The construction of these two stores has already begun and their openings are scheduled for fall 2020. The transfer of operations of these two existing stores will be done following the completion of these new stores.

The Company continues the evaluation process for different sites as well as its existing stores to modify them or in certain cases proceed with the reconstruction of a new store based on its new prototype. The new Kirkland store will be the second of the banner to be modified. The Company anticipates that in the next few years it will incur costs related to the modification and improvement of it's actual network is to be considered.

Management discussion and outlook for the future of the Company

According to Statistic Canada, retail sales in Quebec have dropped 1.5% since June 2019. British Colombia, Alberta and Saskachewan have also recorded a slowdown, while the other Canadian provinces have remained flat.

On the other hand, the labour market is showing signs of tightening. The employment rate in all of Quebec is close to 75%, which is higher than the Canadian average. On the other hand, despite a full-employment economy in Quebec, more than a third of Quebecers live from one paycheck to the next due to record highs in household debt levels.

Quebecers are more indebted than ever. The debt ratio of Quebec households is now close to 170%, a level similar to what was recorded in the United States before the 2008 financial crisis. In other words, for every dollar of disposable household income, Quebecers owe $ 1.70 in the credit market. For the last six years, the average debt of Quebec consumers, excluding mortgages, has increased by 73%.

Caution regarding forward-looking statements

This press release contains certain forward-looking statements with respect to the Company. These forward-looking statements are identified by the use of terms and phrases such as "anticipate", "believe", "estimate", expect", "intend", "may", "plan", "predict", "project", "will", "would", as well as the negative of these terms and similar terminology, including references to assumptions.

Forward-looking statements, by their nature, necessarily involve risks and uncertainties that could cause actual results to differ materially from those contemplated by these forward-looking statements. Results indicated in forward-looking statements may differ materially from actual results for a number of reasons which the Company has identified in the 2019 Annual Information Form under "Narrative Description of the Business - Risk Factors", and other risks detailed from time to time in the Company's continuous disclosure documents.

The reader is cautioned that the factors we refer above are not exhaustive of the factors that may affect any of the Company's forward-looking statements. The reader is also cautioned to consider these and other factors carefully and not to put undue reliance on forward-looking statements.

The Company made a number of assumptions in making forward-looking statements in this press release. The Company considers the assumptions on which these forward-looking statements are based to be reasonable.

These statements reflect current expectations regarding future events and operating performance and speak only as of the date of release of this press release, and represent the Company's expectations as of that date. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required by law.

Non International Financial Reporting Standards (IFRS) financial measures

The Company discloses adjusted net earnings, which includes or excludes certain amounts that are not considered representative of performance measures for the Company. Management believes that this measure is useful in understanding and analysing the operational performance of the Company and more appropriate to provide additional information.

Adjusted net earnings as well as same store revenues are not an earnings measure recognised by IFRS and does not have a standardised meaning prescribed by IFRS. Therefore, adjusted net earnings and same store revenues as discussed in this MD&A may not be compared to similar measures presented by other issuers. This measure of performance should not be considered as an alternative as an indicator of performance calculated according to IFRS, but rather as additional information.

The Company discloses in this MD&A under the section "Results" a reconciliation between net earnings and adjusted net earnings.

BMTC Group Inc.'s Common Shares are listed on the Toronto Stock Exchange and through its subsidiary Ameublements Tanguay Inc., and its two divisions, Brault & Martineau and EconoMax, the Company is a major retailer of furniture, electronic goods and household appliances operating in the province of Quebec.

SOURCE BMTC Group Inc.

Mme Marie-Berthe Des Groseillers, President and Chief Executive Officer, Groupe BMTC Inc., [phone]

Related Links

www.braultetmartineau.com