MONTREAL, April 25, 2024 /CNW/ -
Results
For the year ended January 31, 2024, the Company's revenues decreased by $139,027,000 to $578,945,000 compared to $717,972,000 recorded for the year ended January 31, 2023, a decrease of 19.4%. This decrease is mainly explained by the following elements. Following the commercial reorganization and deployment of the Tanguay banner in May 2023, as of January 31, 2024, the Company operated 25 points of sale compared to the 30 operated during the previous year. Same-store-sales declined by 17% for the year ended January 31, 2024. In addition, the Company experienced a 20% drop in financed sales compared to the previous year due to the increase in interest rates and the tightening of available credit offered to consumers. Net earnings for the year ended January 31, 2024, amounted to $47,427,000 compared to $40,838,000 recorded for the year ended January 31, 2023. Basic net earnings per share amounted to $1.44 compared to $1.23 recorded for the year ended January 31, 2023. Finally, despite the decrease in revenues, the Company managed to maintain its gross margin by reducing its fixed costs thanks to the synergies created following the operational and commercial reorganization carried out in May 2023 with its Tanguay.
For the year ended January 31, 2024, the share repurchase program contributed to an increase of $0.02 on basic net earnings per share. As for the corresponding period of 2023, the share repurchase program contributed to an increase of $0.01 on basic net earnings per share.
During the period ended April 30, 2023, the Company proceeded with the sale of its Montreal distribution center for an amount of $66,500,000 resulting in an after-tax gain of $50,962,000 or $1.54 per basic share.
The variation in adjusted net earnings for non recurrent elements would be ($44,373,000) or ($1.35) per basic share for year ended January 31, 2024, as well as the comparable period ended January 31, 2023, are explained as follows:
($ in thousands)
January 31, 2024 |
January 31, 2023 |
||||||||
Net earnings |
47 427 |
40 838 |
|||||||
Gain on disposal of fixed assets (after-tax) |
(50 962) |
- |
|||||||
Adjusted net earnings |
(3 535) |
40 838 |
|||||||
Minus: Adjusted net earnings for the previous year |
40 838 |
||||||||
Variation |
(44 373) |
||||||||
The variations in net adjusted earnings is allocated as follows:
($ in thousands)
Increase |
||||||||||
Increase |
Increase |
(decrease) |
||||||||
(decrease) |
(decrease) |
in adjusted |
||||||||
in retail operations |
in investment |
net earnings |
||||||||
As at April 30, 2023 |
(15 637) |
1 885 |
(13 752) |
|||||||
As at July 31, 2023 |
(16 237) |
5 354 |
(10 883) |
|||||||
As at October 31, 2023 |
(11 348) |
(10 948) |
(22 296) |
|||||||
As at January 31, 2024 |
(710) |
3 268 |
2 558 |
|||||||
Total |
(43 932) |
(441) |
(44 373) |
|||||||
Annual financial information
($ in thousands, except for per share amounts)
January 31, 2024 |
January 31, 2023 |
|||||||
Revenue |
578 945 |
717 972 |
||||||
Net earnings |
47 427 |
40 838 |
||||||
Total assets |
621 029 |
581 694 |
||||||
Net earnings per share basic and diluted |
1,44 |
1,23 |
||||||
Dividends per share |
0,36 |
0,36 |
||||||
Financial position and dividends
Cash and investments, net of bank overdraft, increased by $43,712,000 during the year ended January 31, 2024. Investments consist of treasuries bearing interest, government and corporate bonds, common and preferred shares, which at the close of the quarter had a market value of $263,342,000 (including cash).
As at January 31, 2024, the working capital showed a surplus of $8,513,000, a decrease of $13,053,000 compared to the year ended January 31, 2023. The Company's shareholders' equity increased from $440,899,000 as at January 31, 2023, to $476,897,000 as at January 31, 2024.
As at January 31, 2024, the book value per share stood at $14.59 compared to $13.34 as at January 31, 2023.
Pursuant to the normal course issuer-bid put in place on April 15, 2022, and renewed on April 15, 2023, accordingly, 355,350 common shares were repurchased and cancelled by the Company. As a result of this change, the Company had as at January 31, 2024, 32,685,050 common shares issued and outstanding.
During the period ended January 31, 2024, no options were granted. The Company may still grant pursuant to the Stock Option Plan a total of 5,710,864 options, representing 17.47% of the issued and outstanding shares of the Company.
During the fiscal year ended January 31, 2024, the Company paid eligible dividends totalling $0.36 per common share to holders.
Quarterly results
($ in thousands, except for per share amounts)
April 30, |
April 30, |
July 31, |
July 31, |
||||||
2023 |
2022 |
2023 |
2022 |
||||||
$ |
$ |
$ |
$ |
||||||
Revenue |
135 102 |
175 659 |
169 075 |
218 939 |
|||||
Net earnings |
38 017 |
807 |
3 363 |
14 246 |
|||||
Net basic earnings per share |
1,15 |
0,02 |
0,10 |
0,43 |
|||||
October 31, |
October 31, |
January 31, |
January 31, |
||||||
2023 |
2022 |
2024 |
2023 |
||||||
$ |
$ |
$ |
$ |
||||||
Revenue |
140 078 |
175 559 |
134 690 |
147 815 |
|||||
Net earnings |
(8 449) |
13 847 |
14 496 |
11 938 |
|||||
Net basic earnings per share |
(0,25) |
0,42 |
0,44 |
0.67 |
|||||
For the three-month period ended January 31, 2024, the Company's revenues decreased by $13,125,000 to $134,690,000, compared to $147,815,000 recorded for the corresponding 2023 period, a 8.9% decrease. Same-store-sales decrease by 6% for the three-month period ended January 31, 2024. Net earnings for the three-month period ended January 31, 2024, amounted to $14,496,000 compared to $11,938,000 recorded for the corresponding 2023 period. The improvement of net earnings during the last quarter is mainly explained by the reduction in administrative expenses and operating costs thanks to the operational and commercial restructuring undertaken by the company last May. Basic net earnings per share increased to $0.44 compared to $0.36 for the corresponding 2023 period. The Company noted an overall improvement of in store traffic in its points of sale during the last quarter.
For the three-month period ended January 31, 2024, the share repurchase program contributed to a decrease of $0.01 on basic net earnings per share. As for the corresponding period of 2023, the share repurchase program contributed to a decrease of $0.01 on basic net earnings per share.
The variation in adjusted net earnings for non recurrent elements would be $2,558,000 or $0.07 per basic share for the three-month period ended January, 2024, as well as the comparable 2023 period, are explained as follows:
($ in thousands)
January 31, 2024 |
January 31, 2023 |
||||||||
Adjusted net earnings |
14 496 |
11 938 |
|||||||
Minus: Adjusted net earnings for 2022 |
11 938 |
||||||||
Variation |
2 558 |
||||||||
Operations
Tanguay division
On May 16, 2023, the Company announced the deployment of its Tanguay division across Quebec, with management having identified Tanguay stores as those with the greatest potential for expansion. All Brault & Martineau stores and 3 EconoMax stores have been converted. Following these changes, the Tanguay banner now has 11 new stores in the western part of the province. In addition, the Liquida Meubles banner as well as 3 EconoMax were converted into Tanguay L'Entrepôt. In total, there are 5 Tanguay L'Entrepôt stores across the province to offer clearance furniture as well as new entry-level products. To ensure this deployment, the Company had to close five EconoMax stores, namely those in Kirkland, Sainte-Thérèse, Brossard, Ste-Eustache and LaSalle.
This announcement is part of the transformation process that began in September 2022, with the migration to a single IT system, which was successfully completed last December. These IT changes have thus enabled the Company to carry out a complete reorganization of its operational and commercial structure as well as its administrative services. All these changes over the past few months have made it possible to create significant synergies, thus creating expanded and diversified teams allowing the success of this deployment.
This decision comes at an opportune time for the Company. The difficulty of obtaining qualified labour, the retail trade, which is in constant transformation and evolution, the competition which is now extended across Canada and the United States and the shift towards e-commerce, therefore this decision will allow the Company to be much more agile in its business decisions.
The Company has decided to make significant changes to transform its former Brault & Martineau and EconoMax stores into Tanguay store in order to provide a better product and service offering and a unique customer experience in its market. These renovations across our entire network were initially estimated at $28,000,000, but as of January 31, 2024, the amount was reassessed downward to $20,000,000. During the 2024 financial year, $15,500,000 of these costs were recorded in selling expenses in the Consolidated Statements of Earnings and Other Comprehensive Income, the balance of the costs will be incurred during the next financial year.
Real estate division
The Company entered into a partnership agreement with Urbania, who will be responsible for the development and construction of its property at 500 boulevard Le Corbusier in Laval into several residential rental towers. The Company intends to finance this real estate project at 75% with a long-term mortgage. The estimated value of the entire project is approximately $600,000,000. The Company created a new subsidiary, Le Corbusier-Concorde S.E.C. for this real estate project on January 31st, 2022. This real estate project should begin in the summer of 2025 as we are still waiting on approval of all permits with the city of Laval before we begin the construction phase. Once construction begins, the project should span over a period of 8 to 10 years with the construction of 5 rental residential towers for a total of approximately 1,200 doors.
As announced on February 1, 2023, the Company concluded the sale of its distribution center in Montreal for an amount of $66,500,000, resulting in an after-tax gain of $50,962,000, or $1.54 per basic share. The Company remains a tenant and uses this distribution center for its operations in the Montreal metropolitan region. The initial lease was for 2 years and in February 2024, the company renewed its lease.
On April 15th, 2024, the Company finalised the purchase of the RONA distribution center bearing the civic address 2055, boulevard des Entreprises in the city of Terrebonne. The transaction was in the amount $96,000,000 before taxes which includes a lease-back agreement with RONA. The transaction was paid in full in cash from investments held by the Company. The Company intends to continue on a long-term basis to create lease revenues with this property. In the next few months, the Company will be evaluating if renovations in order to make the distribution center more efficient by automating it would create greater lease value.
The Company intends to proceed with the real estate development of several rental residential towers on its property located at 125 boul. Desjardins Est in Sainte-Thérèse. This real estate project is currently in the exploratory phase and the Company has identified a potential developer for the project. We should be able to announce during this financial year the details of this real estate project.
Management discussion and outlook for the Future of the Company
In the last few years, e-commerce has developed exponentially in Quebec. The Company continues to focus on online sales 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.
It is also Management's opinion that the digital platform of our banner is 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.
It is difficult to predict the future level of consumer spending, however the results of the last year demonstrate a significant slowdown in the Quebec economy. This downward economic trend is the result of high inflation and interest rates. This economic slowdown has not affected all provinces and sectors in the same way. Real estate and financed products, have been the most affected sectors and are expected to continue to bear the brunt of this economic situation. According to the latest statistics from January 2024, construction projects in Quebec fell by 40%, but in fact they returned to the historical average of the last 50 years, after two exceptional years in 2021 and 2022. This explains the same phenomenon experienced by the company during the 2021 and 2022 financial years where the increase in its revenues came from a 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 other forms of entertainment in the cultural and sporting world.
According to statistics published by CMHC in January 2024, Quebec households are spending less due to the rise in interest rates, in fact their average mortgage payment increased by 19% in 2023. In addition, 40% of Quebec mortgage holders have renewed their loans at higher rates. Therefore, we should not expect the situation to improve until we see the policy interest rate decrease. According to economists, the province of Quebec has been the most affected by this economy and will continue to underperform compared to the rest of Canada, due to the debt level of Quebec households and of the slow demographic growth of the province compared to the rest of Canada, which favorably stimulated the economy and helped support the labor market.
The last observation, but not the least, the year 2023 saw a decline of around 20% in the profits of Quebec companies. This decline is partly explained by the drop in purchasing power due to the increase in household debt and the inflationary impact of essential goods, despite the increase in wages paid due to the labor shortage.
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 2024 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 elements that are not considered representative or recurrent 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 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 source of additional information.
The Company discloses in this Annual Management Report under the section "Results" a reconciliation between net earnings and adjusted net earnings.
BMTC Group Inc. is a company governed the Business Companies Act (Quebec). Its registered office and principal place of business is located at 8500 Place Marien, Montréal East, Quebec, H1B 5W8. Its common shares are listed on the Toronto Stock Exchange. The Company, through its subsidiary Le Corbusier-Concorde S.E.C. and its Tanguay division, manages and operates a retail network of furniture, household appliances and electronic products, in Quebec.
SOURCE BMTC Group Inc.
Marie-Berthe Des Groseillers, President and Chief Executive Officer, Groupe BMTC Inc., (514) 648-5757
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