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RONA Announces an Increase of 275% in Adjusted Net Income per Share and 6.0% in Retail Same-Store Sales in the Fourth Quarter
Increase of 71% in adjusted net income per share and first year of growth in same-store sales since 2006 for fiscal 2014
BOUCHERVILLE, QUÉBEC--(Marketwired - Feb. 17, 2015) - RONA inc. (RON.TO)(RON-PA.TO) ("RONA" or the "Corporation") announces the results for its continuing operations for the 13 and 52-week periods ended December 28, 2014. All figures in the press release are in Canadian dollars.
FOURTH QUARTER HIGHLIGHTS
Growth of 275% in adjusted basic and diluted net income per share, to $0.15, compared to $0.04 in 2013.
Increase of 6.0% in same-store sales of the Retail segment.
Increase of 45.3% in adjusted EBITDA, to $52.5 million, compared to fiscal 2013, and adjusted EBITDA margin up by 160 basis points.
Adjusted net income up by $12.7 million to $17.3 million in 2014, compared to $4.6 million in 2013.
FISCAL 2014 HIGHLIGHTS
Increase of $33.5 million in adjusted net income and of 70.7% in adjusted basic and diluted net income per share, which rose to $0.70 compared to $0.41 in 2013.
Increase of 1.1% in same-store sales of the Retail segment.
Increase of 27.2% in adjusted EBITDA, to $235.4 million, compared fiscal 2013, and adjusted EBITDA margin up by 140 basis points.
Solid financial situation with a ratio of net debt to EBITDA of 0.72x.
Repurchase of more than 7.3 million common shares in the normal course of business during the year, for a cash consideration of $94.2 million.
"RONA recorded a solid performance in the fourth quarter of 2014, with 6.0 % same-store sales growth in the Retail segment. This is the second quarter in a row where we've reported positive same-store sales. These results reflect the efforts to reposition Réno-Dépôt in Québec and TOTEM in Alberta, and the improvement of our merchandising programs across the country. The focus on in-store execution has increased both the average basket and the number of transactions. This performance has been achieved in a difficult economic environment in Québec and the Atlantic Provinces, and in a competitive environment in all regions," said Robert Sawyer, President and Chief Executive Officer of RONA.
"In fiscal 2014, RONA achieved positive growth in organic sales, which for the first time since 2006 are up 1.2%, including 1.1% in the Retail segment. In addition, the adjusted basic and diluted net income per share is up more than 70%. RONA is showing a marked improvement in profitability due to the combined impact of organic growth and the decrease in selling, general and administrative expenses. In short, the numbers show that RONA has achieved the major turnaround we embarked on in June 2013 and is making good progress towards meeting the needs of its target customers".
"For 2015, our priorities are to expand the network in a disciplined manner and increase the return on capital invested. The expansion will be targeted so that we can take advantage of business opportunities in specific markets. RONA also intends to further maximize the leverage from its organic-growth stimulation initiatives, while maintaining strict control over operating costs. With this, and the use of free cash flows to repurchase common shares, the enhanced profitability will increase the return to our shareholders," said Dominique Boies, Executive Vice President and Chief Financial Officer.
FINANCIAL HIGHLIGHTS FROM CONTINUING OPERATIONS | Quarters ended | Fiscal years ended | ||||
(in millions of dollars, except per-share data) | Dec. 28, | Dec. 29, | Dec. 28, | Dec. 29, 2013 | ||
Revenues | 971.3 | 941.1 | 4,096.4 | 4,192.2 | ||
EBITDA | 31.9 | 30.0 | 211.7 | 79.2 | ||
Adjusted EBITDA (1) | 52.5 | 36.1 | 235.4 | 185.1 | ||
Net income (loss) attributable to participating shares | 1.7 | (1.1 | ) | 65.2 | (45.9 | ) |
Per share - basic and diluted ($) | 0.02 | (0.01 | ) | 0.55 | (0.38 | ) |
Adjusted net income attributable to participating shares (1) | 17.3 | 4.6 | 83.4 | 49.9 | ||
Adjusted per share - basic and diluted ($) | 0.15 | 0.04 | 0.70 | 0.41 | ||
Weighted average number of shares outstanding (in millions) | 115.9 | 121.7 | 118.5 | 121.8 | ||
(1) | See Non-IFRS Performance Measures below |
FOURTH QUARTER RESULTS
For the 13-week period ended December 28, 2014, consolidated revenues from continuing operations amounted to $971.3 million, up 3.2% from $941.1 million for the 13-week period ended December 29, 2013. Excluding the impact of the closures of underperforming stores, the network's same-store sales grew 6.5%, with 6.0% in the Retail and 9.3% in the Distribution segments. This solid performance reflects the sustained improvement in Réno-Dépôt stores since their repositioning, strong growth in most parts of the country, and steady progress in installation services and merchandising strategies across the network.
Adjusted EBITDA from continuing operations amounted to $52.5 million, or 5.4% of revenues, compared to $36.1 million, or 3.8% of revenues a year earlier. This strong performance reflects the respective increases of $5.7 million and $4.7 million in RONA's organic Retail and Distribution operations, as well as net savings of $5.4 million from the closure of underperforming stores. In the Retail segment, the adjusted EBITDA margin increased by 150 basis points to 5.8%; in the Distribution segment it increased by 160 basis points to 4.2%.
The adjusted net income from continuing operations attributable to participating shares was $17.3 million, or $0.15 basic and diluted per share, compared to $4.6 million, or $0.04 basic and diluted per share, a year earlier.
FISCAL 2014 RESULTS
Consolidated revenues from continuing operations for fiscal 2014 amounted to $4,096.4 million, compared to $4,192.2 million in fiscal 2013. The 2.3% decrease reflects the closure of underperforming stores in the previous fiscal year. On a same-store basis, sales across the RONA network rose 1.2%, with growth of 1.1% in the Retail segment and 1.7% in the Distribution segment. This improvement reflects the successful efforts to reposition Réno-Dépôt in Québec and TOTEM in Alberta, as well as initiatives to stimulate sales through merchandising strategies.
Adjusted EBITDA from continuing operations grew 27.2% to $235.4 million, or 5.8% of revenues, compared to $185.1 million, or 4.4% of revenues in 2013. The solid increase of $50.3 million stems mainly from a contribution of $28.4 million from RONA's organic operations and $16.9 million from the closure of underperforming stores.
The adjusted net income from continuing operations attributable to participating shares for fiscal 2014 was $83.4 million, or $0.70 basic and diluted per share, compared to $49.9 million, or $0.41 basic and diluted per share, in 2013.
SOLID FINANCIAL SITUATION
As at December 28, 2014, RONA was in an excellent financial situation with net debt of $169.9 million. On that same date, the Corporation had used only $65.2 million on its authorized credit facility of $700.0 million. Reflecting the higher profitability, the ratio of net debt to adjusted EBITDA for the past 12 months was 0.72x at the close of fiscal 2014, compared to 0.90x at the close of fiscal 2013. The ratio of net debt to total capital was stable at 0.09x at December 28, 2014.
In fiscal 2014, RONA repurchased 7.3 million common shares for a total cash consideration of $94.2 million. In November 2014, the Corporation renewed its normal course issuer bid, permitting it to purchase a maximum of 9.2 million common shares until November 17, 2015. Since the renewal, and to date, the Corporation has purchased 5.4 million common shares for a total of $72.7 million.
DIVIDEND ON PREFERRED SHARES
At its meeting on February 16, 2015, RONA's Board of Directors declared a quarterly dividend of $0.3281 per share on cumulative 5-year rate reset Class A preferred shares, Series 6. The dividend will be paid on March 31, 2015 to shareholders of record on March 16, 2015.
DIVIDEND ON COMMON SHARES
At its meeting on February 16, 2015, RONA's Board of Directors declared a semi-annual dividend of $0.07 per share on the Corporation's common shares. The dividend will be paid on March 25, 2015 to shareholders of record on March 10, 2015.
ADDITIONAL INFORMATION
The Management's Discussion and Analysis (MD&A), consolidated financial statements and related notes for fiscal year 2014 can be found in the "Investor Relations" section of the Corporation's website at www.rona.ca and on the SEDAR website at www.sedar.com. The Corporation's Annual Information Form, along with other information about RONA, can also be found on the RONA and SEDAR websites.
CONFERENCE CALL WITH THE FINANCIAL COMMUNITY
On Tuesday, February 17, 2015, at 3:00 p.m. (EST), RONA will hold a conference call for the financial community. To join the conference, please call 416-340-2216 or 1-866-223-7781. To listen to the call online, please go to: http://webcasts.pqm.net/client/rona/event/1298/en/.
A replay will be available from 7:00 p.m. on Tuesday, February 17, 2015 until February 25, 2015. It can be heard by dialing 905-694-9451 or 1-800-408-3053 and entering the password 8118545 on the telephone keypad.
NON-IFRS PERFORMANCE MEASURES
RONA uses performance measures which are not prescribed by International Financial Reporting Standards ("IFRS"). Management's view is that these measures are useful in the analysis of the Corporation's operational performance. These measures must not be considered separately or as a substitute for other performance measures calculated in compliance with IFRS, but rather as additional information.
EBITDA, as defined by the Corporation, represents operating profit before finance costs, income tax expense and depreciation, amortization and impairment of non-financial assets. This measure is widely used in financial circles to measure the profitability of operations.
Same-store sales is a metric used by management and is common throughout our industry. This metric identifies sales growth generated by the existing store network and is adjusted to reflect the effect of acquisitions, store closures and openings.
Management also uses the following non-IFRS performance measures: adjusted EBITDA; adjusted EBITDA margin; adjusted gross margin; adjusted selling, general and administrative expenses; adjusted depreciation, amortization and impairment of non-financial assets; adjusted finance costs; adjusted net income attributable to participating shares, adjusted basic and diluted net income per share attributable to owners of RONA inc. and debt net of cash. These measures reflect the inclusion or exclusion of certain amounts that are viewed as not representative of the Corporation's sustainable financial performance. For more details on these measures, please see the MD&A for fiscal year 2014.
FORWARD-LOOKING STATEMENTS
This Press Release includes forward-looking statements that involve risks and uncertainties. All statements other than statements of historical facts included in this Press Release, including statements regarding the prospects of the industry and prospects, plans, financial position and business strategy of the Corporation may constitute forward-looking statements within the meaning of the Canadian securities legislation and regulations. Investors and others are cautioned that undue reliance should not be placed on any forward-looking statements.
For more information on the risks, uncertainties and assumptions that would cause the Corporation's actual results to differ from current expectations please refer to the Corporation's public filings available at sites www.rona.ca and www.sedar.com. In particular, further details and descriptions of these and other factors are disclosed in the MD&A under the "Risks and uncertainties" section and in the "Risk factors" section of the Corporation's current Annual Information Form.
The forward-looking statements in this Press Release reflect the Corporation's expectations as at February 16, 2015, and are subject to change after this date. The Corporation expressly disclaims any obligation or intention to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by the applicable securities laws.
ABOUT RONA
RONA inc. is a major Canadian distributor and retailer of hardware, building materials and home renovation products. The Corporation operates a network of over 500 corporate, franchise and independent affiliate stores of complementary formats. With its 9 distribution centers, RONA serves its own network as well as many independent dealers operating under different banners, including Ace for which RONA owns the licensing rights and is the exclusive distributor in Canada. With the help of its nearly 24,000 employees, the Corporation generates annual consolidated sales of $4.1 billion. For more information, visit rona.ca.
RONA inc. |
CONSOLIDATED STATEMENTS OF INCOME AND CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |
For the thirteen week periods and years ended December 28, 2014 and December 29, 2013 |
(in thousands of Canadian dollars, except per share amounts) |
CONSOLIDATED STATEMENTS OF INCOME |
Fourth Quarter (unaudited) | Year-to-date | |||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||
CONTINUING OPERATIONS | ||||||||||||
Revenues | $ | 971,259 | $ | 941,111 | $ | 4,096,355 | $ | 4,192,192 | ||||
Earnings before interest, taxes, depreciation, amortization, impairment of non-financial assets, restructuring costs and other charges | $ | 52,491 | $ | 36,124 | $ | 235,373 | $ | 162,088 | ||||
Restructuring costs and other charges | 20,640 | 6,132 | 23,697 | 82,879 | ||||||||
Depreciation, amortization and impairment of non-financial assets | 22,679 | 23,374 | 91,042 | 113,850 | ||||||||
Operating income (loss) | 9,172 | 6,618 | 120,634 | (34,641 | ) | |||||||
Finance costs | 3,343 | 4,615 | 16,238 | 14,000 | ||||||||
Income (loss) before income taxes | 5,829 | 2,003 | 104,396 | (48,641 | ) | |||||||
Income tax expense (recovery) | 1,143 | 523 | 27,509 | (13,044 | ) | |||||||
Net income (loss) from continuing operations | 4,686 | 1,480 | 76,887 | (35,597 | ) | |||||||
DISCONTINUED OPERATIONS | ||||||||||||
Net income (loss) from discontinued operations | 1,360 | (2,412 | ) | 1,360 | (117,417 | ) | ||||||
Net income (loss) | $ | 6,046 | $ | (932 | ) | $ | 78,247 | $ | (153,014 | ) | ||
Net income (loss) attributable to: | ||||||||||||
Owners of RONA inc. | ||||||||||||
Continuing operations | $ | 4,043 | $ | 1,260 | $ | 74,450 | $ | (36,614 | ) | |||
Discontinued operations | 1,360 | (2,412 | ) | 1,360 | (117,417 | ) | ||||||
5,403 | (1,152 | ) | 75,810 | (154,031 | ) | |||||||
Non-controlling interests | 643 | 220 | 2,437 | 1,017 | ||||||||
$ | 6,046 | $ | (932 | ) | $ | 78,247 | $ | (153,014 | ) | |||
Basic and diluted net income (loss) per share attributable to owners of RONA inc. | ||||||||||||
Continuing operations | $ | 0.02 | $ | (0.01 | ) | $ | 0.55 | $ | (0.38 | ) | ||
Discontinued operations | 0.01 | (0.02 | ) | 0.01 | (0.96 | ) | ||||||
$ | 0.03 | $ | (0.03 | ) | $ | 0.56 | $ | (1.34 | ) | |||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |
Fourth Quarter (unaudited) | Year-to-date | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Net income (loss) | $ | 6,046 | $ | (932 | ) | $ | 78,247 | $ | (153,014 | ) | ||||
Other comprehensive income (loss), net of income taxes : | ||||||||||||||
Items that will be reclassified subsequently to net income | ||||||||||||||
Cash flow hedges | ||||||||||||||
- Gain (loss) for the year | 2,796 | (1,474 | ) | 5,067 | (195 | ) | ||||||||
- Reclassification to net income | (1,152 | ) | 88 | (1,014 | ) | 1,374 | ||||||||
Impact of foreign currency translation related to the net investment in an associate | 825 | 181 | 739 | 306 | ||||||||||
2,469 | (1,205 | ) | 4,792 | 1,485 | ||||||||||
Items that will not be reclassified subsequently to net income | ||||||||||||||
Remeasurements of net defined benefit liability | (584 | ) | 887 | (8,087 | ) | 2,130 | ||||||||
Other comprehensive (loss) income | 1,885 | (318 | ) | (3,295 | ) | 3,615 | ||||||||
Comprehensive income (loss) | $ | 7,931 | $ | (1,250 | ) | $ | 74,952 | $ | (149,399 | ) | ||||
Comprehensive income (loss) attributable to: | ||||||||||||||
Owners of RONA inc. | $ | 7,288 | $ | (1,470 | ) | $ | 72,515 | $ | (150,416 | ) | ||||
Non-controlling interests | 643 | 220 | 2,437 | 1,017 | ||||||||||
$ | 7,931 | $ | (1,250 | ) | $ | 74,952 | $ | (149,399 | ) | |||||
RONA inc. |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
For the thirteen week periods and years ended December 28, 2014 and December 29, 2013 |
(in thousands of Canadian dollars) |
Fourth Quarter (unaudited) | Year-to-date | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
OPERATING ACTIVITIES | |||||||||||||
Income (loss) before income taxes | $ | 7,675 | $ | (1,273 | ) | $ | 106,242 | $ | (198,071 | ) | |||
Income (loss) before income taxes from discontinued operations | 1,846 | (3,276 | ) | 1,846 | (149,430 | ) | |||||||
Income (loss) before income taxes from continuing operations | 5,829 | 2,003 | 104,396 | (48,641 | ) | ||||||||
Adjustments: | |||||||||||||
Depreciation, amortization and impairment of non-financial assets | 22,679 | 23,374 | 91,042 | 113,850 | |||||||||
Net change in provision for restructuring costs | 16,523 | (1,494 | ) | (11,458 | ) | 52,130 | |||||||
Change in fair value of derivative financial instruments | (3,798 | ) | 55 | (6,896 | ) | 3,062 | |||||||
Net gains on disposal of assets | (874 | ) | (852 | ) | (6,204 | ) | (4,640 | ) | |||||
Net gains on disposal of an investment in an associate | (1,840 | ) | - | (1,840 | ) | - | |||||||
Share of income of equity-accounted investees | 574 | (489 | ) | (865 | ) | (1,599 | ) | ||||||
Share-based payment | 8,444 | (124 | ) | 18,087 | 6,688 | ||||||||
Defined benefit plan contributions, net of expense | (50 | ) | (749 | ) | (759 | ) | (851 | ) | |||||
Reversal of straight-line lease provisions | - | - | − | (3,468 | ) | ||||||||
Other | 1,095 | (687 | ) | 1,204 | (760 | ) | |||||||
48,582 | 21,037 | 186,707 | 115,771 | ||||||||||
Net change in working capital | 17,486 | 14,362 | (46,446 | ) | (33,497 | ) | |||||||
66,068 | 35,399 | 140,261 | 82,274 | ||||||||||
Interest received | 417 | 763 | 2,518 | 3,945 | |||||||||
Income taxes paid | (844 | ) | (2,959 | ) | (3,935 | ) | (11,107 | ) | |||||
Cash flows from continuing operating activities | 65,641 | 33,203 | 138,844 | 75,112 | |||||||||
INVESTING ACTIVITIES | |||||||||||||
Business combinations | (1,889 | ) | (22,284 | ) | (6,036 | ) | (28,567 | ) | |||||
Proceeds on disposal of a business | − | 213,667 | 5,943 | 213,667 | |||||||||
Proceeds on disposal of an investment in an associate | 5,493 | - | 5,493 | - | |||||||||
Acquisition of property, plant and equipment | (13,689 | ) | (12,203 | ) | (43,503 | ) | (35,825 | ) | |||||
Acquisition of intangible assets | (5,367 | ) | (5,777 | ) | (17,654 | ) | (25,925 | ) | |||||
Proceeds on disposal of property, plant and equipment and non-current assets held for sale | 1,038 | 9,101 | 36,973 | 29,106 | |||||||||
Proceeds on disposal of intangible assets | 111 | 41 | 217 | 784 | |||||||||
Net change in other financial assets | (325 | ) | 1,348 | 1,891 | 542 | ||||||||
Dividends received from equity-accounted investees | 775 | 2,004 | 775 | 2,004 | |||||||||
Interest received | 170 | 214 | 564 | 868 | |||||||||
Cash flows (used for) from continuing investing activities | (13,683 | ) | 186,111 | (15,337 | ) | 156,654 | |||||||
FINANCING ACTIVITIES | |||||||||||||
Bank loans | 275 | (6,314 | ) | (1,478 | ) | (7,533 | ) | ||||||
Net change in credit facility | (1,574 | ) | (208,296 | ) | 20,271 | (176,068 | ) | ||||||
Financing costs | (89 | ) | - | (741 | ) | - | |||||||
Repayment of other long-term debt | (259 | ) | (5,534 | ) | (1,552 | ) | (9,573 | ) | |||||
Proceeds from issuance of common shares | 545 | 624 | 1,720 | 4,713 | |||||||||
Repurchase of common shares | (32,847 | ) | (15,375 | ) | (94,232 | ) | (15,375 | ) | |||||
Dividends on common shares | - | - | (16,644 | ) | (17,043 | ) | |||||||
Dividends on preferred shares | (2,264 | ) | (2,495 | ) | (9,075 | ) | (9,263 | ) | |||||
Cash dividends paid by a subsidiary to non-controlling interests | - | (3,430 | ) | (2,450 | ) | (3,430 | ) | ||||||
Interest paid | (696 | ) | (19 | ) | (10,629 | ) | (10,546 | ) | |||||
Cash flows used for continuing financing activities | (36,909 | ) | (240,839 | ) | (114,810 | ) | (244,118 | ) | |||||
Net increase (decrease) in cash from continuing operations | 15,049 | (21,525 | ) | 8,697 | (12,352 | ) | |||||||
Net increase in cash from discontinued operations | - | - | − | 7 | |||||||||
Net increase (decrease) in cash during the year | 15,049 | (21,525 | ) | 8,697 | (12,345 | ) | |||||||
Cash, beginning of period | 1,893 | 29,770 | 8,245 | 20,590 | |||||||||
Cash, end of year | $ | 16,942 | $ | 8,245 | $ | 16,942 | $ | 8,245 | |||||
