METRO reports 2021 first quarter results

MONTRÉAL, Jan. 26, 2021 /CNW Telbec/ - METRO INC. (TSX: MRU) today announced its results for the first quarter of fiscal 2021 ended December 19, 2020.

2021 FIRST QUARTER HIGHLIGHTS

• Sales of $4,278.2 million, up 6.2%
• Food same-store sales up 10.0%
• Pharmacy same-store sales up 1.3%
• Net earnings of $191.2 million, up 12.3% and adjusted net earnings⁽¹⁾ of $197.7 million, up 9.3%
• Fully diluted net earnings per share of $0.76, up 13.4%, and adjusted fully diluted net earnings per share⁽¹⁾ of $0.79, up 11.3%
• Negative impact of about $0.05 per share due to the labour conflict at our Jean Coutu distribution center
• Expenses related to COVID-19 totalling $28 million
• Declared dividend of $0.25 per share, up 11.1%

	12 weeks / Fiscal Year
(Millions of dollars, except for net earnings per share)	2021	%	2020	%	Change (%)
Sales	4,278.2	100.0	4,029.8	100.0	6.2
Operating income before depreciation and amortization	399.2	9.3	363.1	9.0	9.9
Adjusted operating income before depreciation and amortization^(2)	399.2	9.3	370.6	9.2	7.7
Net earnings	191.2	4.5	170.2	4.2	12.3
Fully diluted net earnings per share	0.76	—	0.67	—	13.4
Adjusted net earnings^(1)	197.7	4.6	180.9	4.5	9.3
Adjusted fully diluted net earnings per share^(1)	0.79	—	0.71	—	11.3

PRESIDENT'S MESSAGE

"We are pleased with our first quarter results, delivering continued strong food sales with good operating leverage, while working through an 8-week labour conflict at our Jean Coutu distribution center. Our contingency plan enabled us to successfully maintain the supply of medication to over 400 pharmacies. We are now back to normal operating conditions in the distribution center. I want to again sincerely thank all our front-line staff who continue to deliver the essential services of food and pharmacy to our communities during this challenging lockdown period. Our first priority remains the safety of our employees and our customers", declared Eric La Flèche, President and Chief Executive Officer.

OPERATING RESULTS

SALES

Sales in the first quarter of Fiscal 2021 reached $4,278.2 million, up 6.2% compared to $4,029.8 million in the first quarter of Fiscal 2020. Food same-store sales were up 10.0% (1.4% in 2020). Online food sales increased by about 170% versus last year. Our food basket inflation was approximately 2.5% (2.0% in 2020). Pharmacy same-store sales were up 1.3% (3.6% in 2020), with a 4.0% increase in prescription drugs and a 3.8% decrease in front-store sales, mainly due to lower traffic, the milder cold and flu season, and reduced promotional activity during the labour conflict. Our warehouse sales to franchisees were impacted by the labour conflict at our Jean Coutu distribution center which had a dampening effect on the total sales increase of the Corporation.

OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION

This earnings measurement excludes financial costs, taxes, depreciation and amortization.

Operating income before depreciation and amortization for the first quarter of Fiscal 2021 totalled $399.2 million, or 9.3% of sales, up 9.9% versus the corresponding quarter of last year. In the first quarter of Fiscal 2020 we recognized a loss of $7.5 million on disposal of our subsidiary MissFresh. Excluding this item, adjusted operating income before depreciation and amortization⁽²⁾ for the first quarter of Fiscal 2021 increased by 7.7% versus the first quarter of last year.

Operating income before depreciation and amortization adjustments (OI)⁽²⁾

	12 weeks / Fiscal Year
	2021					2020
(Millions of dollars, unless otherwise indicated)	OI	Sales	(%)			OI	Sales	(%)
Operating income before depreciation and amortization	399.2	4,278.2	9.3			363.1	4,029.8	9.0
Loss on disposal of a subsidiary	—					7.5
Adjusted operating income before depreciation and amortization^(2)	399.2	4,278.2	9.3			370.6	4,029.8	9.2

Gross margin on sales for the first quarter of Fiscal 2021 was 19.7% versus 19.6% for the corresponding quarter of 2020.

Operating expenses as a percentage of sales for the first quarter of Fiscal 2021 were 10.4% versus 10.6% (10.4% excluding the loss on disposal of our subsidiary MissFresh) for the corresponding quarter of Fiscal 2020. The costs related to COVID-19 for the first quarter of Fiscal 2021 were approximately $28 million including $8 million of gift cards to front-line employees.

DEPRECIATION AND AMORTIZATION AND NET FINANCIAL COSTS

Total depreciation and amortization expense for the first quarter of Fiscal 2021 was $107.3 million, versus $101.5 million for the corresponding quarter of Fiscal 2020.

Net financial costs for the first quarter of Fiscal 2021 were $31.4 million compared with $31.1 million for the corresponding quarter of Fiscal 2020.

INCOME TAXES

The income tax expense of $69.3 million for the first quarter of Fiscal 2021 represented an effective tax rate of 26.6% compared with an income tax expense of $60.3 million in the first quarter of Fiscal 2020 which represented an effective tax rate of 26.2%.

NET EARNINGS AND ADJUSTED NET EARNINGS⁽¹⁾

Net earnings for the first quarter of Fiscal 2021 were $191.2 million compared with $170.2 million for the corresponding quarter of Fiscal 2020, while fully diluted net earnings per share were $0.76 compared with $0.67 in 2020, up 12.3% and 13.4%, respectively. Excluding the specific items shown in the table below, adjusted net earnings⁽¹⁾ for the first quarter of Fiscal 2021 totalled $197.7 million compared with $180.9 million for the corresponding quarter of Fiscal 2020, and adjusted fully diluted net earnings per share⁽¹⁾ amounted to $0.79 versus $0.71, up 9.3% and 11.3%, respectively. The impact of the labour conflict at the Jean Coutu distribution center was approximately $0.05 per share resulting from lower revenues and additional costs incurred to implement our contingency plan.

Net earnings adjustments⁽¹⁾

	12 weeks / Fiscal Year
	2021			2020			Change (%)
	(Millions of dollars)	Fully diluted EPS (Dollars)		(Millions of dollars)	Fully diluted EPS (Dollars)		Net earnings	Fully diluted EPS
Net earnings	191.2	0.76		170.2	0.67		12.3	13.4
Loss on disposal of a subsidiary, after taxes	—			4.2
Amortization of intangible assets acquired in connection with the Jean Coutu Group acquisition, after taxes	6.5			6.5
Adjusted net earnings^(1)	197.7	0.79		180.9	0.71		9.3	11.3

NORMAL COURSE ISSUER BID PROGRAM

Under the current normal course issuer bid program, the Corporation may repurchase up to 7,000,000 of its Common Shares between November 25, 2020 and November 24, 2021. Between November 25, 2020 and January 15, 2021, the Corporation has repurchased 1,750,000 Common Shares at an average price of $58.39, for a total consideration of $102.2 million.

DIVIDENDS

On January 25, 2021, the Board of Directors declared a quarterly dividend of $0.25 per share, an increase of 11.1% versus the same quarter last year.

FORWARD-LOOKING INFORMATION

We have used, throughout this report, different statements that could, within the context of regulations issued by the Canadian Securities Administrators, be construed as being forward-looking information. In general, any statement contained herein that does not constitute a historical fact may be deemed a forward-looking statement. Expression such as "expect" and other similar expressions are generally indicative of forward-looking statements. The forward-looking statements contained herein are based upon certain assumptions regarding the Canadian food industry, the general economy, our annual budget, as well as our 2021 action plan.

These forward-looking statements do not provide any guarantees as to the future performance of the Corporation and are subject to potential risks, known and unknown, as well as uncertainties that could cause the outcome to differ significantly. The arrival of a new competitor is an example of the risks described under the "Risk Management" section of the 2020 Annual Report which could have an impact on these statements. As with the preceding risks, the COVID-19 pandemic constitutes a risk that could have an impact on the business, operations, projects, synergies and performance of the Corporation as well as on the forward-looking statements contained in this document.

We believe these statements to be reasonable and pertinent as at the date of publication of this report and represent our expectations. The Corporation does not intend to update any forward-looking statement contained herein, except as required by applicable law.

NON-IFRS MEASUREMENTS

In addition to the International Financial Reporting Standards (IFRS) earnings measurements provided, we have included certain non-IFRS earnings measurements. These measurements are presented for information purposes only. They do not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measurements presented by other public companies.

ADJUSTED OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION, ADJUSTED NET EARNINGS AND ADJUSTED FULLY DILUTED NET EARNINGS PER SHARE

Adjusted operating income before depreciation and amortization, adjusted net earnings and adjusted fully diluted net earnings per share are earnings measurements that exclude some items that must be recognized under IFRS. They are non-IFRS measurements. We believe that presenting earnings without these items, which are not necessarily reflective of the Corporation's performance, leaves readers of financial statements better informed as to the current period and corresponding prior year's period's operating earnings, thus enabling them to better perform trend analysis, evaluate the Corporation's financial performance and judge its future outlook. The exclusion of these items does not imply that they are non-recurring.

OUTLOOK⁽³⁾

Government measures to curb the impact of the ongoing pandemic have been increased in recent weeks and continue to evolve. Restrictions on the sale of non-essential goods in Quebec and the milder cold and flu season is expected to have an unfavorable impact on our Pharmacy commercial sales. In the first four weeks of the second quarter of 2021, pharmacy front-end same store sales were down 11.7%. To mitigate this impact, we are adjusting our promotional activity and directing customers to shop online or to use the in-store order service. Prescription same store sales were up 5.7%. Furthermore, food revenues continue to grow at higher than normal rates. In the first four weeks of the second quarter of 2021, food same-store sales were up 12.0% versus the same period last year.

CONFERENCE CALL

Financial analysts and institutional investors are invited to participate in a conference call for the 2021 first quarter results at 1:30 p.m. (EST) today, January 26, 2021. To access the conference call, please dial [phone] or 1 [phone]. The media and investing public may access this conference via a listen mode only.

Notice to readers: METRO INC. first quarter of 2021 interim condensed consolidated financial statements and management's discussion and analysis are available on the Internet at www.metro.ca - Corporate Site - Investor Relations - 2021 Quarterly Results - 2021 First Quarter Results.

⁽¹⁾ See table on "Net earnings adjustments" and section on "Non-IFRS Measurements"
⁽²⁾ See table on "Operating income before depreciation and amortization adjustments" and section on "Non-IFRS Measurements"
⁽³⁾ See section on "Forward-looking Information"

SOURCE METRO INC.

Information: François Thibault, Executive Vice-President, Chief Financial Officer and Treasurer, Tel.: [phone]; Investor Relations Department: Tel.: [phone] www.metro.ca

Related Links

www.corpo.metro.ca