MONTRÉAL, Dec. 10, 2020 /CNW Telbec/ -
Results*
For the nine month period ended October 31, 2020, the Company's revenues decreased by $77,919,000 to $470,770,000 compared to $548,689,000 recorded in the corresponding 2019 period, a 14.2% decrease. Net earnings for the nine month period ended October 31, 2020 amounted to $27,927,000 compared to $20,674,000 recorded in the corresponding 2019 period. Basic net earnings per share amounted to $0.82 compared to $0.60 recorded in the corresponding 2019 period.
The variation in adjusted net earnings would be $7,340,000 or $0.22 per basic share for the nine month period ended October 31, 2020 and is explained as follows:
(Unaudited and $ in thousands) |
||
October 31, 2020 |
October 31, 2019 |
|
Net earnings |
27 927 |
20 674 |
Variation in cost of options (after-tax) |
- |
(87) |
Adjusted net earnings |
27 927 |
20 587 |
Minus: Adjusted net earnings for 2019 |
20 587 |
|
Variation |
7 340 |
|
This variation in adjusted after-tax income is allocated throughout the quarters as follows:
(Unaudited and $ in thousands) |
|||
Increase (decrease) in |
Increase (decrease) |
Increase (decrease) in |
|
April 30, 2020 |
784 |
(9 695) |
(8 911) |
July 31, 2020 |
1 707 |
4 416 |
6 123 |
October 31, 2020 |
11 744 |
(1 616) |
10 128 |
Total |
14 235 |
(6 895) |
7 340 |
* As of February 1, 2019, the Company has applied IFRS 16 retrospectively, without restating comparative information as permitted by the standard. |
|||
Despite the significant drop in sales during the first semester of 2020, following the temporary store closures due to COVID-19, the Company managed to improve its retail operating results for the nine month period ended October 31, 2020 by $19,056,000 or an after tax increase of $14,235,000.
Annual financial information
($ in thousands, except for per share amounts)
January 31, 2020 |
January 31, 2019 |
|
Revenue |
720 169 |
742 474 |
Net earnings |
36 034 |
45 165 |
Total assets |
382 040 |
367 624 |
Net earnings per share |
||
Basic |
1,05 |
1,29 |
Diluted |
1,05 |
1,29 |
Dividends per share |
0,28 |
0,28 |
Financial position and dividends
Cash, net of the bank overdraft, and investments increased by $84,688,000 during the nine month period ended October 31, 2020. Investments consist of bank notes, government and corporate bonds and common shares, which at the close of the period had a market value of $208,673,000 (including cash).
As at October 31, 2020, the working capital showed a deficit of $28,715,000, an increase of $9,248,000 compared to the year ended January 31, 2020. The Company's shareholders' equity increased from $216,624,000 as at January 31, 2020, to $238,661,000 as at October 31, 2020. As at October 31, 2020, the book value per share stood at $7.03, compared to $6.35 as at January 31, 2020.
Pursuant to the normal course issuer-bid put in place on April 15, 2019, and renewed on April 15, 2020, accordingly, 123,300 common shares were repurchased and cancelled by the Company. As a result of this change, the Company had as at October 31, 2020, 33,964,700 common shares issued and outstanding.
During the nine month period ended October 31, 2020, no options were granted. As at April 1st, 2020, options regarding 197,100 Common Shares expired and were cancelled as they were out of money. As at April 1st, 2020, the closing price of the Common Shares on the Toronto Stock Exchange was $5.97. The Company may still grant pursuant to the Plan a total of 5,710,864 options, representing 16.8% of the issued and outstanding shares of the Company.
A semi-annual eligible dividend of $0.15 per Common Share has been declared to holders registered at the close of business on December 21st, 2020, which will be paid on January 4th, 2021.
Quarterly results *
(Unaudited and $ in thousands, except for per share amounts)
April 30, |
April 30, |
July 31, |
July 31, |
|
Revenue |
100 445 |
150 310 |
175 973 |
215 067 |
Net (loss) earnings |
(12 427) |
(3 455) |
19 579 |
13 480 |
Net (loss) earnings per share |
||||
Basic |
(0,36) |
(0,10) |
0,57 |
0,39 |
Diluted |
(0,36) |
(0,10) |
0,57 |
0,39 |
October 31, |
October 31, |
January 31, |
January 31, |
|
Revenue |
194 342 |
183 312 |
171 480 |
174 634 |
Net earnings |
20 775 |
10 649 |
15 360 |
11 813 |
Net earnings per share |
||||
Basic |
0,61 |
0,31 |
0,45 |
0,34 |
Diluted |
0,61 |
0,31 |
0,45 |
0,34 |
*Comparative data relating to revenue have been restated following a change in presentation. |
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For the three-month period ended October 31, 2020, the Company's revenues increased by $11,040,000 to $194,352,000, compared to $183,312,000 recorded for the corresponding period, a 6% increase. Net earnings for the three-month period ended October 31, 2020, amounted to $20,775,000 compared to $10,649,000 recorded for the corresponding 2019 period. Basic net earnings per share increased to $0.61 compared to $0.31 for the corresponding 2019 period.
The variation to the adjusted net earnings would be $10,128,000 or $0.30 per basic share for the quarter ended October 31, 2020 and is explained as follows:
(Unaudited and $ in thousands) |
||
October 31, 2020 |
October 31, 2019 |
|
Net earnings |
20 775 |
10 649 |
Variation in cost of options (after-tax) |
- |
(2) |
Adjusted net earnings |
20 775 |
10 647 |
Minus: Adjusted net earnings for 2019 |
10 647 |
|
Variation |
10 128 |
|
Operations
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 2020 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.
Brault & Martineau Division
On November 6, 2019, the Company proceeded with the sale of the Kirkland store. 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 replaced the actual Kirkland store. On this same land, the Company built an EconoMax store of approximately 50,000 square feet which replaced the EconoMax store on Côte-Vertu. The new stores opened on October 27th, 2020.
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 its actual network is to be considered.
Management discussion and outlook for the Future of the Company
On March 11th, 2020, the World Health Organization declared COVID-19 a global pandemic. The financial impact of COVID-19 began to manifest itself by a decrease in store traffic and consequently store revenues in the early weeks of March 2020. Following the rapid rise of COVID-19 cases in the province of Quebec, our priority during this difficult period remains at all times the health and safety of our employees and clients. In order to protect the Quebec population and to prevent the spread of COVID-19 by encouraging social distancing initiatives recommended by both levels of government, the Company decided on March 18th, 2020, to temporarily close its retail sales network, namely our Ameublements Tanguay banner in the Quebec City area and the Brault & Martineau and EconoMax banners in the Montreal area. On March 23rd, 2020, the Quebec government announced, for the same reason, the closure of all non-essential retail stores across the province.
In order to address the devastating effects of COVID-19 and to assure its short and long-term financial health, the Company decided to maintain its operations at a strict minimum level while preserving its presence in our market and controlling its working capital position. The following actions were undertaken by the Company during these last weeks in order to support its operating and working capital objectives:
- Following the closure of our retail sales network on March 18th, 2020, the Company temporarily laid off approximately 75% of its personnel, the vast majority stemming from our retail stores.
- Our online and delivery services remained operational across Quebec to ensure the population in confinement the ability to rely on essential goods while respecting government-mandated security protocols. We modified our services to offer contactless home delivery.
- During this period, the Company introduced several measures and protocols in preparation for the reopening of our stores across our sales network to ensure and protect the health and security of our employees and our clients. These new measures and protocols will be in effect until the end of the COVID-19 pandemic.
- The Company has also made technological and operational improvements to its sales network. These modifications will allow us to reduce our fixed costs and will contribute to our initiatives of effective cost controls.
- The Company applied for the Canada Emergency Wage Subsidy given the 30% or more decrease in revenues during the prescribed period.
During the nine month period ended October 31st, 2020, the company delivered strong operational results, despite the negative financial impact of COVID-19.
The decrease in revenues during this period was recorded during the first semester of 2020 and was entirely due to the temporary physical store closures. During the first quarter of 2020, the Company had all its 32 points of sale closed for a period of 43 consecutive days, leaving only online sales operational. The loss of revenues arising from the first quarter store closures amounted to $52,029,000. During the second quarter of 2020, the Company had a total of 15 points of sale closed for a period of 25 consecutive days while the other 17 points of sale were closed for the first 5 days of the quarter, again leaving only online sales operational. The loss of revenues arising from the second quarter store closures amounted to $25,465,000.
During the closure of our retail stores, from March 19th to May 3rd, 2020, online sales increased significantly. Despite this significant increase, the online sales only partially compensated for in-store sales for the 2019 corresponding period.
During this second quarter the Company was able to reopen all of its 32 points of sale and in order to mitigate the loss of revenues during the closure, the Company proactively aligned its cost structure accordingly. These steps were taken throughout the first semester in order to protect the Company's viability and preserve its working capital during these highly uncertain times. Thanks to these new measures the Company believes it will be able to produce positive operating results.
In-store sales increased significantly, between 45% and 80%, in the days following their reopening, on May 4th, May 25th and June 1st, 2020, compared to the same periods in 2019. The new measure related to COVID-19 which the Company had to implement in its stores and distribution centers and the effects of the closures and re-openings of our stores had a significant impact on the Company's financial results in the first semester. Despite these additional costs, the Company still managed to improve its operating results by approximately $19,370,000 or $14,235,000 after tax. In addition, online sales continued to grow significantly despite the gradual reopening of our stores compared to the 2019 corresponding period.
Despite a context that remains difficult for many retailers in Quebec, the Company managed to increase its revenues by 6% during the 3rd quarter of 2020 compared to the 2019 corresponding period. The Company continued to focus on online sales, which experienced a record increase since the start of the pandemic, by actively pursuing the improvement of its digital platforms, its live chat initiative with online customers as well as the improvement of our telephone sales department for all of the BMTC Group Inc. banners.
It is also Management's opinion that the digital platforms of our banners are essential in order to allow the Company to increase its market shares as well as to allow customers to start their shopping experience online to then complete their purchases in one of our stores with the help of our sales representatives.
The significant increase in revenues is partly due to improvements in marketing and strategic measures implemented, our extensive store network and the strength of digital platforms, which have enabled the Company to increase its market share in Quebec. On the other hand, Management is aware that this increase is also partly due to the fact that it has benefited from a transfer of consumer spending related to the restrictions imposed by the various levels of government due to COVID-19 pandemic, more precisely the restrictions related to travel, the closure of restaurants and all forms of entertainment in the cultural and sporting world.
The new measure related to COVID-19 which the Company had to implement in its stores and distribution centers and the effects of the closures and re-openings of our stores had a significant impact on the Company's operational costs in the nine month period ended October 31st, 2020. Despite these additional costs, the Company still managed to improve its operating results by approximately $19,370,000 or $14,235,000 after tax.
During the 3rd quarter of 2020, the Company also managed to significantly improve its net earnings, by recording an increase of 95% compared to the corresponding period of 2019. This increase was in part possible due to technological improvements and the constant attention put on operational efficiency. The Company also benefited from the Emergency Wage Subsidy from Canada following a drop in sales of more than 30% in the 1st and 2nd quarters of 2020.
As at October 31, 2020, cash and investments had a market value of $208,673,000. The Company's financial position will allow it to weather through this period of uncertainty with more ease. Also, the Company owns nearly all its stores and distribution centers, which reduces pressure on cash flow requirements.
As a result of the increase in sales since the gradual reopening of our stores, the Company was able to call-back about 75% of it's sales staff. The Company must continue to respect social distancing as well as the maximum number of people allowed in a commercial establishment due to the regulations set by the provincial government with COVID-19, thus limiting the number of possible sales staff per store.
The rehiring of temporarily laid-off employees is in progress and proceeding as the situation evolves. The Company has actively worked to promote a call-back of its employees as soon as possible and according to operational needs.
Finally, since mid-June, the Company has had issues with its supply logistics. Many of the Company's suppliers, who have also been affected by the consequences of COVID-19, are unable to honour and deliver placed orders. This problem seems widespread in our industry and is not unique to the Company. Therefore, it is possible that this could have a negative impact on future results because orders on hand may not be able to be delivered due to this shortcoming.
In this new economy the widespread cost restructuring as well as technological and operational improvements have produced a massive increase in unemployment rate in response to the COVID-19 pandemic. In addition, the increase in the cost of living and the high level of Quebecers who are in debt are all factors which could inhibit consumer spending in the near future.
It is difficult to predict the future level of consumer confidence and the possible impact on sales of BMTC Group Inc. Management is confident that the Company's operational efficiency during this crisis, its market leadership and solid financial position will allow us to emerge a stronger organization despite these difficult market conditions and maintain its objectives increasing its market share and profitability in Quebec.
We would like to take this opportunity to thank all our fellow citizens who are relentlessly working day and night with extreme dedication to reduce spread of COVID-19 and who are caring for those who have been infected. Our thoughts are also with all those who have in any way been affected by the virus.
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 opposites 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 2020 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 the performance measures and financial recurrence of the Company. Management believes that this measure is useful in understanding and analyzing the operational performance of the Company and that it can provide additional information.
Adjusted net earnings as well as same store revenues are not an earnings measure recognized by IFRS and do not have standardized meanings prescribed by IFRS. Therefore, adjusted net earnings and same store revenues as discussed in this press release may not be compared to similar measures presented by other issuers. These measures of performance should not be considered as alternatives to indicators of performance calculated according to IFRS, but rather as a source of additional information.
The Company discloses in this press release 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.
Marie-Berthe Des Groseillers, President and Chief Executive Officer, Groupe BMTC Inc., (514) 648-5757
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