BMTC Group Inc. announces financial results for the year ended January 31, 2019

MONTREAL, April 25, 2019 /CNW Telbec/ -

Results*

For the year ended January 31, 2019 (a 12-month period), the Company's revenues decreased by $70,127,000 to $740,017,000 compared to $810,144,000 recorded for the year ended January 31, 2018 (a 13-month period). The decrease in revenues for the comparable twelve month periods would have been 1.8%. Same store revenues for the comparable twelve month periods would have increased by 1.2%. Net earnings for the year ended January 31, 2019 (a 12-month period) amounted to $45,165,000 compared to $49,335,000 recorded for the year ended January 31, 2018 (a 13-month period). Basic net earnings per share amounted to $1.29 compared to $1.36. The contribution to net earnings for the thirteenth month of the previous year was $167,000, which had no impact on net earnings per share.

The effect of the cost of options had no impact on basic net earnings per share for the year ended January 31, 2019 (a 12-month period) and January 31, 2018 (a 13-month period).

During the year ended January 31, 2019, the Company proceeded with the sale of the 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.

For the year ended January 31, 2019 (a 12-month period), the share repurchase program contributed to an increase in basic net earnings per share of $0.06.

Excluding all these effects, the variation in adjusted net earnings would have been ($9,096,000) or ($0.26) per basic share for the year ended January 31, 2019 (a 12-month period).

The ($9,096,000) variation in adjusted net earnings is as follows:              

				($ in thousands)
				Jan. 31, 2019		Jan. 31, 2018
				12 months		13 months
Net earnings				45 165		49 335
Gain on disposal of fixed assets (after-tax)				(4 522)		-
Variation in cost of options (after-tax)				(226)		178
Adjusted net earnings				40 417		49 513
Minus: Adjusted net earnings for 2018				49 513
Variation				(9 096)

*The financial information is in Canadian dollars and has been prepared in accordance with the International Financial Reporting Standards (IFRS). Also, 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 on April 30, July 31 and October 31.

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

	($ in thousands)
	Increase  (decrease) in retail operating earnings		Increase  (decrease) in investment income		Increase                    (decrease)                  in adjusted           operating earnings
1st quarter	1 934		(1 815)		119
2^nd quarter	1 870		1 095		2 965
3rd quarter	(6 242)		231		(6 011)
4th quarter	(6 367)		198		(6 169)
	(8 805)		(291)		(9 096)

Annual Financial Information
($ in thousands, except for per share amounts)
		January 31, 2018	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 $15,940,000 during the year ended January 31, 2019. Investments consist primarily of bank notes and common stocks, which at the close of the quarter had a market value of $106,788,000 (including cash net of the overdraft).

As at January 31, 2019, the working capital showed a deficit of $2,109,000, a decrease of $6,222,000 compared to the year ended January 31, 2018. The Company's shareholders' equity increased from $204,376,000 as at January 31, 2018, to $244,742,000 as at January 31, 2019. As at January 31, 2019, the book value per share stood at $7.09, compared to $5.82 as at January 31, 2018.

Pursuant to the normal course issuer-bid put in place on March 23, 2017, and renewed on April 13, 2018, accordingly, 580,000 common shares were repurchased and cancelled by the Company. As a result of this change, the Company had as at January 31, 2019, 34,540,000 common shares issued and outstanding.

During the year ended January 31, 2019, no options were granted or exercised. During the year ended January 31, 2019, 21,900 options were cancelled. As at January 31, 2019, options for 197,100 common shares, representing 0.57% of the Company's outstanding shares remain issued and 5,710,864 authorized share options, representing approximately 16.53% 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.

During the fiscal year ended January 31, 2019, the Company paid eligible dividends totalling $0.28 per common shares to holders.

Quarterly Results
($ in thousands, except for per share amounts)
		April 30 2018	March 31 2017	July 31 2018	June 30 2017
		$	$	$	$
Revenue		162 194	161 998	219 640	199 314
Net earnings		4 806	57	16 933	14 014
Net earnings per share
	Basic	0,13	-	0,48	0,38
	Diluted	0,13	-	0,48	0,38
		October 31 2018	September 30 2017	January 31 2019	January 31 2018
				(3 months)	(4 months)
		$	$	$	$
Revenue		184 115	203 722	174 068	245 110
Net earnings		11 613	17 544	11 813	17 720
Net earnings per share
	Basic	0,34	0,48	0,34	0,50
	Diluted	0,34	0,48	0,34	0,50

For the three-month period ended January 31, 2019, the Company's revenues decreased by $71,042,000 to $174,068,000, compared to $245,110,000 recorded for the four month period ended January 31, 2018. The decrease in revenues for the comparable twelve month periods would have been 4.3%. Same store revenues for the comparable twelve month periods would have increased by 4.6%. Net earnings for the three month period ended January 31, 2019, amounted to $11,813,000 compared to net earnings of $17,720,000 recorded for the four month period ended January 31, 2018. Basic net earnings per share decreased to $0.34 compared to $0.50 for the four month period ended January 31, 2018. The contribution to net earnings for the thirteenth month of the previous year was $167,000, which had no impact on net earnings per share.

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

For the three-month period ended January 31, 2019, the share repurchase program contributed to an increase in basic net earnings per share of $0.02.

Excluding all these effects, the variation to the adjusted net earnings would have been ($6,169,000) or ($0.18) per basic share for the quarter ended January 31, 2019.

The ($6,169,000) variation in adjusted net earnings is as follows:

    

				($ in thousands)
				Jan. 31, 2019		Jan. 31, 2018
				3 months		4 months
Net earnings				11 813		17 720
Variation in cost of options (after-tax)				(14)		248
Adjusted net earnings				11 799		17 968
Minus: Adjusted net earnings for 2018				17 968
Variation				(6 169)

Operations

BMTC Inc.

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, July 31 and October 31.

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, $10,189,000 were incurred and the balance will be recorded in subsequent years.

On October 11, 2018, Raymond Chabot Grant Thornton S.E.N.C.R.L. resigned as auditor of the Company at the request of the Company. The Board of Directors of the Company, upon recommendation of the Audit Committee of the Board of Directors of the Company, approved the appointment of the successor auditor to fill the vacancy created by the resignation of the former auditor and to hold such position until the next annual meeting of shareholders of the Company.

There were no modifications of opinion by the former auditor in the former auditor's reports on the Company's consolidated financial statements for the two most recently completed fiscal years ended December 31, 2016 and January 31, 2018.

Brault & Martineau Division

During the year ended January 31, 2019, the Company proceeded with the sale of the Repentigny store for an amount of $9,000,000, resulting in an after-tax gain of $4,522,000.

The opening of the new St-Therese store has been delayed to May 2019. This store will become the new prototype for the Brault & Martineau banner. The Company is pursuing the evaluation process for different sites as well as its existing stores in order to able to modify them or in certain cases proceed with the reconstruction of a new store based on the new prototype.

Management discussion and outlook for the Future of the Company

The Quebec economy has experienced exceptional growth over the past two years. Over the course of 2018, consumer spending increased by approximately 3% for all industries, while the Company recorded 1.2% revenue growth over the same period. In the first half of 2018, an increase of 6.2% for all industries was recorded, while the company recorded 3% growth. Consumer spending in the second half of 2018 fell significantly, especially during the last quarter.

In fact, the retail sales of our southern neighbors recorded their biggest monthly drop in 10 years, with a decline of 1.2% in December 2018 compared to November 2018. Since the beginning of 2019, all retail sales sectors are down. The results for February 2019 and March 2019 have not yet experienced the expected rebound, and retail sales continue to record significant declines.

According to the majority of analysts, the risk of a recession is particularly high, and for 2019 they have announced a significant slowing down of the economy due to uncertainty about the continued rise in interest rates, the slowdown in the real estate market due to tightening mortgage financing rules and rising interest rates, labour shortages, the estimated 3.5% increase in the average grocery basket and a level of inflation that remains at 2.4% despite a slowdown in wage growth. The unemployment rate in 2018 remained near its lowest level in 40 years, and job creation remained strong. 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 a rate higher than the Canadian average. On the other hand, despite a full-employment economy in Quebec, more than a third of Quebeckers live from one paycheck to the next due to record highs in household debt levels. Quebeckers are more indebted than ever. The debt ratio of Quebec households is now close to 170%, a rate similar to what was recorded in the United States before the 2008 financial crisis. In other words, for every dollar of disposable household income, Quebeckers owe $ 1.70 in the credit market. For the last six years, the average debt of Quebec consumers, excluding mortgages, has increased by 73%. In 2018, more than 46,000 consumers and businesses in Quebec declared bankruptcy or submitted a payment agreement to their creditors, which is a record high. The significant drop in Quebec household consumption due to socio-economic factors as well as the significant increase in their level of indebtedness over the past few years has impacted the Company's results as of January 31, 2019, and continued during the course of the first fiscal quarter of 2020. If this trend continues, the Company could experience in the first fiscal semester of 2020 a revenue decline of approximately 3%.

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 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 Annual Management Report, 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.

The Company also discloses same store revenues, which have been realized in stores opened or closed for comparable months.

Adjusted net earnings as well as same store revenues are not an earnings measure recognized by IFRS and do not have a standardized meanings prescribed by IFRS. Therefore, adjusted net earnings and same store revenues as discussed in this Annual Management Report 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

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. [phone]

Related Links

www.braultetmartineau.com