STELLARTON, NS,
Sept. 13, 2012 /CNW/ - Empire Company
Limited (TSX: EMP.A) today announced financial results for its
first quarter ended August 4,
2012. For the first quarter, the Company recorded net
earnings, net of minority interest, of $108.9 million ($1.60 per share) compared to $89.2 million ($1.31 per share) in the first quarter last
year.
Adjusted net earnings, net of minority interest,
in the first quarter were $103.4
million ($1.52 per share)
compared to $84.8 million
($1.25 per share) recorded in the
first quarter last year.
First Quarter Highlights
- Sales of $4.56 billion, up
$403.5 million or 9.7 percent (up 3.5
percent excluding the impact of the acquisition of 236 retail gas
locations and related convenience store operations).
- Sobeys' same-store sales increased 1.8 percent.
- Operating income (1) of $175.1 million versus $148.9 million last year.
- Adjusted net earnings (2), net of minority
interest, of $103.4 million
($1.52 per share) versus $84.8 million ($1.25 per share) last year.
- Net earnings, net of minority interest, of $108.9 million ($1.60 per share) compared to $89.2 million ($1.31 per share) last year.
- Funded debt to total capital ratio of 21.5 percent compared
to 25.5 percent last year.
___________________
| (1) |
Certain balances have been reclassified for changes to
comparative figures (see Note 17 to the Company's first quarter
unaudited consolidated financial statements). |
| (2) |
Excludes items which are considered not indicative of
underlying business operating performance. |
"Our solid first quarter results were driven by
Sobeys' operational performance which demonstrates that our
food-focused strategy is resonating with more and more
customers. We remain committed to improving our cost
structure and productivity, and further enriching the shopping
experience of our customers," stated Paul
D. Sobey, President and CEO, Empire Company Limited.
Dividend Declaration
The Board of Directors declared a quarterly
dividend of 24.0 cents per share on
both the Non-Voting Class A shares and the Class B common shares
that will be payable on October 31,
2012 to shareholders of record on October 15, 2012. These dividends are
eligible dividends as defined for the purposes of the Income Tax
Act (Canada) and applicable
provincial legislation and, therefore, qualify for the favourable
tax treatment applicable to such dividends.
CONSOLIDATED FINANCIAL RESULTS
| |
| |
|
13 Weeks
Ended |
|
| ($ in millions, except per share amounts) |
|
|
August 4, 2012 |
|
|
August 6, 2011 |
|
|
($) Change |
|
(%) Change |
| Sales |
|
$ |
4,557.7 |
|
$ |
4,154.2 |
|
$ |
403.5 |
|
9.7% |
| EBITDA (1) (2) |
|
|
264.2 |
|
|
234.2 |
|
|
30.0 |
|
12.8% |
| Operating income (1) (2) |
|
|
175.1 |
|
|
148.9 |
|
|
26.2 |
|
17.6% |
| Adjusted net earnings, net of minority interest
(1) (3) |
|
|
103.4 |
|
|
84.8 |
|
|
18.6 |
|
21.9% |
| Net earnings, net of minority interest |
|
|
108.9 |
|
|
89.2 |
|
|
19.7 |
|
22.1% |
| EPS fully diluted |
|
$ |
1.60 |
|
$ |
1.31 |
|
$ |
0.29 |
|
22.1% |
| Adjusted EPS (fully diluted) (3) |
|
$ |
1.52 |
|
$ |
1.25 |
|
$ |
0.27 |
|
21.6% |
|
| (1) |
See Non-GAAP Financial Measures contained in
this news release. |
| (2) |
Certain balances have been reclassified for
changes to comparative figures (see Note 17 to the Company's first
quarter unaudited consolidated financial statements). |
| (3) |
Excludes items which are considered not
indicative of underlying business operating performance. |
Sales
Consolidated sales for the 13 weeks ended
August 4, 2012 were $4.56 billion compared to $4.15 billion in the first quarter last year, an
increase of $403.5 million or 9.7
percent. Sobeys contributed sales to Empire of $4.51 billion versus $4.10
billion in the first quarter last year, an increase of
$403.9 million or 9.8 percent.
Excluding sales of $258.1 million
related to the acquisition of 236 retail gas locations and related
convenience store operations in the fourth quarter last year,
Sobeys' sales contribution to Empire increased by $145.8 million or 3.6 percent.
Investments and other operations' sales in the
first quarter were $50.6 million
versus $51.0 million in the first
quarter last year.
EBITDA
Consolidated EBITDA in the first quarter was
$264.2 million compared to
$234.2 million in the first quarter
last year, an increase of $30.0
million or 12.8 percent. Adjusting EBITDA for items
which are considered not indicative of underlying business
operating performance, as outlined in the following table, resulted
in first quarter adjusted EBITDA of $256.7
million compared to $228.1
million in the first quarter last year.
| |
| |
|
13 Weeks
Ended |
|
| ($ in millions) |
|
|
August 4, 2012 |
|
|
August 6, 2011 |
|
|
($) Change |
|
(%) Change |
| EBITDA (consolidated)
(1) |
|
$ |
264.2 |
|
$ |
234.2 |
|
$ |
30.0 |
|
12.8% |
| Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
| |
Sobeys Québec distribution network
restructuring |
|
|
3.1 |
|
|
- |
|
|
3.1 |
|
|
| |
Sobeys' organizational realignment costs |
|
|
2.9 |
|
|
- |
|
|
2.9 |
|
|
| |
Gains on disposal of assets |
|
|
(1.4) |
|
|
(3.4) |
|
|
2.0 |
|
|
| |
Dilution gains |
|
|
(12.1) |
|
|
(2.7) |
|
|
(9.4) |
|
|
| |
|
|
(7.5) |
|
|
(6.1) |
|
|
(1.4) |
|
|
| Adjusted EBITDA |
|
$ |
256.7 |
|
$ |
228.1 |
|
$ |
28.6 |
|
12.5% |
| (1) |
Certain balances have been reclassified for changes to
comparative figures (see Note 17 to the Company's first quarter
unaudited consolidated financial statements). |
Operating Income
Consolidated operating income in the first
quarter was $175.1 million, an
increase of $26.2 million from the
$148.9 million recorded in the first
quarter last year. Adjusting operating income for items which
are considered not indicative of underlying business operating
performance, as outlined in the previous table for EBITDA, resulted
in quarterly adjusted consolidated operating income of $167.6 million compared to $142.8 million in the first quarter last year, a
17.4 percent increase.
Adjusted Net Earnings
The table below adjusts reported net earnings,
net of minority interest, for items which are considered not
indicative of underlying business operating performance.
Excluding the impact of the adjustments noted in the table, Empire
recorded adjusted net earnings, net of minority interest, of
$103.4 million ($1.52 per share) for the 13 weeks ended
August 4, 2012 compared to
$84.8 million ($1.25 per share) recorded in the first quarter
last year, an increase of $18.6
million or 21.9 percent.
| |
| |
|
13 Weeks
Ended |
|
| ($ in millions, except per share
amounts, net of tax) |
|
|
August 4, 2012 |
|
|
August 6, 2011 |
|
|
($) Change |
|
(%) Change |
| Net earnings, net of minority
interest |
|
$ |
108.9 |
|
$ |
89.2 |
|
$ |
19.7 |
|
22.1% |
| Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
| |
Sobeys Québec distribution network
restructuring |
|
|
2.3 |
|
|
- |
|
|
2.3 |
|
|
| |
Sobeys' organizational realignment costs |
|
|
2.1 |
|
|
- |
|
|
2.1 |
|
|
| |
Gains on disposal of assets |
|
|
(1.3) |
|
|
(2.5) |
|
|
1.2 |
|
|
| |
Dilution gains |
|
|
(8.6) |
|
|
(1.9) |
|
|
(6.7) |
|
|
| |
|
|
(5.5) |
|
|
(4.4) |
|
|
(1.1) |
|
25.0% |
| Adjusted net earnings, net of minority
interest |
|
$ |
103.4 |
|
$ |
84.8 |
|
$ |
18.6 |
|
21.9% |
| Adjusted net earnings, net of minority
interest, by segment: |
|
|
|
|
|
|
|
|
|
|
|
| |
Food retailing |
|
$ |
99.6 |
|
$ |
78.6 |
|
$ |
21.0 |
|
|
| |
Investments and other operations |
|
|
3.8 |
|
|
6.2 |
|
|
(2.4) |
|
|
| Adjusted net earnings, net of minority
interest |
|
$ |
103.4 |
|
$ |
84.8 |
|
$ |
18.6 |
|
21.9% |
| Adjusted EPS (fully diluted) |
|
$ |
1.52 |
|
$ |
1.25 |
|
$ |
0.27 |
|
21.6% |
Net Earnings
Consolidated net earnings, net of minority
interest, in the first quarter equalled $108.9 million ($1.60 per share) compared to $89.2 million ($1.31 per share) in the first quarter last year,
a $19.7 million or 22.1 percent
increase.
The following table presents Empire's segmented
net earnings, net of minority interest, for the 13 weeks ended
August 4, 2012 compared to the 13
weeks ended August 6, 2011.
| |
| |
|
13 Weeks
Ended |
|
| ($ in millions, net of tax) |
|
|
August 4, 2012 |
|
|
August 6, 2011 |
|
|
($) Change |
|
(%) Change |
| Food retailing |
|
$ |
97.0 |
|
$ |
81.6 |
|
$ |
15.4 |
|
18.9% |
| Investments and other operations |
|
|
11.9 |
|
|
7.6 |
|
|
4.3 |
|
56.6% |
| Consolidated |
|
$ |
108.9 |
|
$ |
89.2 |
|
$ |
19.7 |
|
22.1% |
SEGMENTED FINANCIAL RESULTS
The Company operates and reports on two business
segments:
| 1) |
Food Retailing, which consists of wholly-owned Sobeys
Inc. ("Sobeys"), and |
| |
| 2) |
Investments and Other Operations, the principal
components of which include investments in Crombie REIT (42.5
percent ownership interest; 40.8 percent fully diluted), an
approximate 40.0 percent ownership interest in Genstar, as well as
wholly-owned ETL Canada Holdings Limited ("Empire Theatres"). |
FOOD RETAILING
The following table presents the food retailing
segment's contribution to Empire's consolidated sales, EBITDA,
adjusted EBITDA, operating income, adjusted operating income, net
earnings, net of minority interest, and adjusted net earnings, net
of minority interest.
| |
| |
|
13 Weeks
Ended(1) |
|
| ($ in millions) |
|
|
August 4, 2012 |
|
|
August 6, 2011 |
|
|
($) Change |
|
(%) Change |
| Sales |
|
$ |
4,507.1 |
|
$ |
4,103.2 |
|
$ |
403.9 |
|
9.8% |
| EBITDA (2) |
|
|
241.2 |
|
|
216.7 |
|
|
24.5 |
|
11.3% |
| Adjusted EBITDA (3) |
|
|
245.1 |
|
|
212.6 |
|
|
32.5 |
|
15.3% |
| Operating income (2) |
|
|
156.3 |
|
|
135.4 |
|
|
20.9 |
|
15.4% |
| Adjusted operating income (3) |
|
|
160.2 |
|
|
131.3 |
|
|
28.9 |
|
22.0% |
| Net earnings, net of minority interest |
|
|
97.0 |
|
|
81.6 |
|
|
15.4 |
|
18.9% |
| Adjusted net earnings, net of minority interest
(3) |
|
|
99.6 |
|
|
78.6 |
|
|
21.0 |
|
26.7% |
| (1) |
Net of consolidation adjustments
which includes a purchase price allocation from the privatization
of Sobeys. |
| (2) |
Certain balances have been reclassified for changes to
comparative figures (see Note 17 to the Company's first quarter
unaudited consolidated financial statements). |
| (3) |
Excludes items which are considered not indicative of
underlying business operating performance. |
Sales
Empire's food retailing segment contributed
sales of $4.51 billion in the first
quarter of fiscal 2013 compared to $4.10
billion in the same period last year, an increase of
$403.9 million or 9.8 percent.
Excluding sales of $258.1 million
related to the acquisition of 236 retail gas locations and related
convenience store operations in the fourth quarter last year, the
food retailing segment realized a sales increase of $145.8 million or 3.6 percent.
During the first quarter, same-store sales
increased 1.8 percent.
Gross Profit
Sobeys recorded gross profit of $1,040.8 million in the quarter, an increase of
$48.1 million over the first quarter
last year. Gross margin, which is gross profit divided by
sales, decreased 105 basis points, from 24.20 percent in the first
quarter of fiscal 2012 to 23.15 percent in the current quarter, due
primarily to lower margins on the fuel business. Excluding the
impact of lower margin fuel sales, gross margin was 24.23 percent
in the first quarter of fiscal 2013 compared to 24.30 percent in
the same quarter last year.
EBITDA
Sobeys contributed EBITDA to Empire in the first
quarter of $241.2 million compared to
$216.7 million last year, an 11.3
percent increase. Adjusting for items which are considered not
indicative of underlying business operating performance, as
outlined in the following table, resulted in an adjusted EBITDA
contribution from Sobeys to Empire of $245.1
million in the first quarter compared to a $212.6 million contribution in the first quarter
last year.
| |
| |
|
13 Weeks
Ended |
|
| ($ in millions) |
|
|
August 4, 2012 |
|
|
August 6, 2011 |
|
|
($) Change |
|
(%) Change |
| EBITDA (contributed by Sobeys)
(1) |
|
$ |
241.2 |
|
$ |
216.7 |
|
$ |
24.5 |
|
11.3% |
| Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
| |
Sobeys Québec distribution network
restructuring |
|
|
3.1 |
|
|
- |
|
|
3.1 |
|
|
| |
Sobeys' organizational realignment costs |
|
|
2.9 |
|
|
- |
|
|
2.9 |
|
|
| |
Gains on disposal of assets |
|
|
(1.4) |
|
|
(4.0) |
|
|
2.6 |
|
|
| |
Dilution gains |
|
|
(0.7) |
|
|
(0.1) |
|
|
(0.6) |
|
|
| |
|
|
3.9 |
|
|
(4.1) |
|
|
8.0 |
|
|
| Adjusted EBITDA |
|
$ |
245.1 |
|
$ |
212.6 |
|
$ |
32.5 |
|
15.3% |
| (1) |
Certain balances have been reclassified for changes to
comparative figures (see Note 17 to the Company's first quarter
unaudited consolidated financial statements). |
Operating Income
Sobeys' operating income contribution to Empire
in the first quarter was $156.3
million compared to $135.4
million in the same quarter last year, an increase of
$20.9 million or 15.4 percent.
Adjusting Sobeys' operating income for items
which are considered not indicative of underlying business
operating performance, as outlined in the previous table for
EBITDA, resulted in adjusted operating income contribution of
$160.2 million in the first quarter
compared to $131.3 million in the
first quarter last year.
Net Earnings
During the first quarter of fiscal 2013, Sobeys
contributed net earnings, net of minority interest, to Empire of
$97.0 million versus $81.6 million in the first quarter last year, an
increase of $15.4 million or 18.9
percent. Sobeys contributed adjusted net earnings, net of
minority interest, to Empire of $99.6
million versus $78.6 million
in the first quarter last year, an increase of $21.0 million or 26.7 percent.
INVESTMENTS AND OTHER OPERATIONS
The table below presents the investments and
other operations segment's contribution to Empire's consolidated
sales, EBITDA, adjusted EBITDA, operating income, net earnings and
adjusted net earnings.
| |
| |
|
13 Weeks
Ended |
|
| ($ in millions) |
|
|
August 4, 2012 |
|
|
August 6, 2011 |
|
|
($) Change |
| Sales |
|
$ |
50.6 |
|
$ |
51.0 |
|
$ |
(0.4) |
| EBITDA |
|
|
23.0 |
|
|
17.5 |
|
|
5.5 |
| Adjusted EBITDA (1) |
|
|
11.6 |
|
|
15.5 |
|
|
(3.9) |
| Operating income |
|
|
|
|
|
|
|
|
|
| |
Crombie REIT (2) |
|
|
5.5 |
|
|
4.8 |
|
|
0.7 |
| |
Real estate partnerships (3) |
|
|
4.6 |
|
|
7.5 |
|
|
(2.9) |
| |
Other operations, net of corporate expenses
(4) |
|
|
8.7 |
|
|
1.2 |
|
|
7.5 |
| |
|
|
18.8 |
|
|
13.5 |
|
|
5.3 |
| Net earnings |
|
|
11.9 |
|
|
7.6 |
|
|
4.3 |
| Adjusted net earnings
(1) |
|
|
3.8 |
|
|
6.2 |
|
|
(2.4) |
| (1) |
Excludes items which are considered not indicative of
underlying business operating performance. |
| (2) |
42.5 percent equity accounted interest in Crombie REIT
(August 6, 2011 - 45.9 percent interest). |
| (3) |
40.7 percent equity accounted interest in Genstar
Development Partnership, 45.9 percent equity accounted interest in
Genstar Development Partnership II, 42.1 percent equity accounted
interests in each of GDC Investments 4, L.P., GDC Investments 5,
L.P. and GDC Investments 6, L.P., and a 45.8 percent equity
accounted interest in GDC Investments 7, L.P. (collectively
referred to as "Genstar"). |
| (4) |
Other operations' (net of corporate expenses) operating
income for the 13 weeks ended August 4, 2012 includes dilution
gains of $11.4 million (fiscal 2012 - $2.6 million) and a loss on
the disposal of assets of $nil (fiscal 2012 - $0.6
million). |
Sales
Investments and other operations' sales were
$50.6 million in the first quarter
ended August 4, 2012 versus
$51.0 million in the first quarter
last year, a $0.4 million or 0.8
percent decline. The decline was primarily driven by lower sales in
the Company's other operations, partially offset by an increase in
sales at Empire Theatres.
EBITDA
Investments and other operations contributed
EBITDA to Empire in the first quarter of $23.0 million compared to $17.5 million last year. Adjusting for items
which are considered not indicative of underlying business
operating performance, as outlined in the following table, resulted
in adjusted EBITDA from investments and other operations of
$11.6 million compared to
$15.5 million last year.
| |
| |
|
13 Weeks
Ended |
|
| ($ in millions) |
|
|
August 4, 2012 |
|
|
August 6, 2011 |
|
|
($) Change |
| EBITDA (investments and other
operations) |
|
$ |
23.0 |
|
$ |
17.5 |
|
$ |
5.5 |
| Adjustments: |
|
|
|
|
|
|
|
|
|
| |
Dilution gains |
|
|
(11.4) |
|
|
(2.6) |
|
|
(8.8) |
| |
Loss on disposal of assets |
|
|
- |
|
|
0.6 |
|
|
(0.6) |
| |
|
|
(11.4) |
|
|
(2.0) |
|
|
(9.4) |
| Adjusted EBITDA |
|
$ |
11.6 |
|
$ |
15.5 |
|
$ |
(3.9) |
Operating Income
Investments and other operations contributed
operating income of $18.8 million in
the first quarter ended August 4,
2012 compared to $13.5 million
in the first quarter last year, an increase of $5.3 million.
Adjusting investments and other operations'
operating income for items which are considered not indicative of
underlying business operating performance, as outlined in the
previous table for EBITDA, resulted in an adjusted operating income
contribution during the first quarter of $7.4 million versus $11.5
million last year.
Net Earnings
Investments and other operations contributed net
earnings of $11.9 million to Empire's
consolidated first quarter fiscal 2013 net earnings compared to a
$7.6 million contribution in the
first quarter last year. Adjusted net earnings contribution
from investments and other operations was $3.8 million versus $6.2
million in the first quarter last year.
FORWARD-LOOKING INFORMATION
This news release contains forward-looking
information that reflects management's current expectations related
to matters such as future financial performance and operating
results of the Company. Expressions such as "anticipates",
"expects", "believes", "estimates", "could", "intend", "may",
"plans", "will", "would" and other similar expressions or the
negative of these terms are generally indicative of forward-looking
statements. Forward-looking statements contained in this
press release include those relating to our expectations that we
will continue to focus on disciplined cost management and
productivity initiatives, as well as initiatives that will continue
to enrich the customers' experience, all of which may be impacted
by economic and competitive conditions.
By its very nature, forward-looking information
requires the Company to make assumptions and is subject to inherent
risks and uncertainties which give rise to the possibility that the
Company's expectations or objectives will not prove to be
accurate. These forward-looking statements are subject to
uncertainties and other factors that could cause actual results to
differ materially from such statements. These uncertainties
and risks are discussed in the Company's materials filed with the
Canadian securities regulatory authorities from time to time,
including the Risk Management section of the annual Management's
Discussion and Analysis.
Readers are urged to consider these and other
risks, uncertainties and assumptions carefully in evaluating the
forward-looking information and are cautioned not to place undue
reliance on such forward-looking information. The
forward-looking information in this press release reflects the
Company's expectations as of September 13,
2012 and is subject to change after this date. The
Company does not undertake to update any forward-looking statements
that may be made from time to time by or on behalf of the Company
other than as required by applicable securities laws.
NON-GAAP FINANCIAL MEASURES
There are measures included in this press
release that do not have a standardized meaning under GAAP and
therefore may not be comparable to similarly titled measures
presented by other publicly traded companies. The Company
includes these measures because it believes certain investors use
these measures as a means of assessing financial performance.
Empire's definition of the non-GAAP terms are as
follows:
- Same-store sales are sales from stores in the same locations in
both reporting periods.
- Gross profit is calculated as sales less cost of sales.
- Operating income, or earnings before interest and taxes
("EBIT"), is calculated as net earnings before minority interest,
finance costs (net of finance income) and income taxes.
- Adjusted operating income is operating income excluding items
which are considered not indicative of underlying business
operating performance.
- Earnings before interest, taxes, depreciation and amortization
("EBITDA") is calculated as EBIT plus depreciation and amortization
of intangibles.
- Adjusted EBITDA is EBITDA excluding items which are considered
not indicative of underlying business operating performance.
- Funded debt is all interest bearing debt, which includes bank
loans, bankers' acceptances and long-term debt.
- Total capital is calculated as funded debt plus shareholders'
equity, net of minority interest.
- Adjusted net earnings are net earnings excluding items which
are considered not indicative of underlying business operating
performance.
CONFERENCE CALL INFORMATION
The Company will hold an analyst call on
Thursday, September 13, 2012
beginning at 1:30 p.m. (Eastern Daylight
Time) during which senior management will discuss the
Company's financial results for the first quarter ended
August 4, 2012. To join this
conference call dial (888) 231-8191 outside the Toronto area or (647) 427-7450 from within the
Toronto area. You may also listen
to a live audiocast of the conference call by visiting the
Company's website located at www.empireco.ca. Replay will be
available by dialing (855) 859-2056 and entering passcode 25302169
until midnight September 20, 2012, or
on the Company's website for 90 days following the conference
call.
UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
To view and download the Company's unaudited
consolidated financial statements for the first quarter of fiscal
2013 ended August 4, 2012, please
access the following link:
Q1 Fiscal 2013 Unaudited Consolidated Financial
Statements
This information will be available to be
downloaded at www.sedar.com or by accessing the Investor Centre of
the Company's website at www.empireco.ca.
ABOUT EMPIRE
Empire Company Limited (TSX: EMP.A) is a
Canadian company headquartered in Stellarton, Nova Scotia. Empire's core
businesses include food retailing and related real estate.
With over $16 billion in annual sales
and approximately $6.8 billion in
assets, Empire and its subsidiaries directly employ approximately
47,000 people.
Additional financial information relating to
Empire, including the Company's Annual Information Form, can be
found on the Company's website at www.empireco.ca or at
www.sedar.com.
SOURCE EMPIRE COMPANY LIMITED
PDF available at:
http://stream1.newswire.ca/media/2012/09/13/20120913_C4310_DOC_EN_17782.pdf