BMTC GROUP INC. ANNOUNCES FINANCIAL RESULTS FOR THE NINE MONTH PERIOD ENDED OCTOBER 31st, 2022

MONTRÉAL, Dec. 14, 2022 /CNW Telbec/ -

Results

For the third quarter ended October 31, 2022, the Company's revenues decreased by $52,630,000 to $570,157,000 compared to $622,787,000 recorded for the third quarter ended October 31, 2021, a 8.5% decrease. Net earnings for the third quarter ended October 31, 2022, amounted to $28,900,000 compared to $59,351,000 recorded for the third quarter ended October 31, 2021. Basic net earnings per share amounted to $0.87 compared to $1.76 recorded for the third quarter ended October 31, 2021.

For the third quarter ended October 31, 2022, the share repurchase program contributed to an increase of $0.02 on basic net earnings per share, whereas during the third quarter ended October 31, 2021, it contributed to an increase of $0.01 on basic net earnings per share.

The Company met the eligibility criteria for the Canadian Emergency Wage Subsidy (CEWS) during the last quarter ended April 30, 2021.  The Company received $1,439,000 after-tax which contributed to an increase of $0.04 on basic net earnings per share.

The variation in adjusted net earnings would be ($29,012,000) or ($0.87) per basic share for the third quarter ended October 31, 2022, as well as the comparable period ended October 31, 2021, are explained as follows:

The variations in net adjusted earnings are allocated as follows:

Annual financial information
($ in thousands, except for per share amounts)

Financial position and dividends

Cash and investments decreased by $5,902,000 during the third quarter ended October 31, 2022. Investments consist of treasuries bearing interest, government and corporate bonds and common shares, which at the close of the quarter had a market value of $231,424,000 (including cash).

As at October 31, 2022, the working capital showed a surplus of $24,286,000 an increase of $24,655,000 compared to the year ended January 31, 2022. The Company's shareholders' equity increased from $387,866,000 as at January 31, 2022, to $407,109,000 as at October 31, 2022. As at October 31, 2022, the book value per share stood at $12.27, compared to $11.60 as at January 31, 2022.

Pursuant to the normal course issuer-bid put in place on April 15, 2021, and renewed on April 15, 2022, accordingly, 251,000 common shares were repurchased and cancelled by the Company. As a result of this change, the Company had as at October 31, 2022, 33,172,000 common shares issued and outstanding.

During the third quarter ended October 31, 2022, no options were granted. The Company may still grant pursuant to the Plan a total of 5,710,864 options, representing 17.22% of the issued and outstanding shares of the Company.

A semi-annual eligible dividend of $0.18 per Common Share has been declared to holders registered at the close of business on December 22, 2022, which will be paid on January 5, 2023.

Quarterly results *
(Unaudited and $ in thousands, except for per share amounts)

For the three month period ended October 31, 2022, the Company's revenues decreased by $38,396,000 to $175,559,000, compared to $213,955,000 recorded for the corresponding 2021 period, a 18% decrease.  Net earnings for the three month period ended October 31, 2022, amounted to $13,847,000 compared to $20,189,000 recorded for the corresponding 2021 period. Basic net earnings per share decreased to $0.42 compared to $0.60 for the corresponding 2021 period.

For the three month period ended October 31, 2022, the share repurchase program contributed to an increase of $0.01 on basic net earnings per share, whereas during the corresponding period ended October 31, 2021, it had no impact on basic net earnings per share.

The Company met the eligibility criteria for the Canadian Emergency Wage Subsidy (CEWS) during the first quarter ended October 31, 2021. The Company received $195,000 after-tax.

The variation in adjusted net earnings would be ($6,147,000) or ($0.19) per basic share for the three month period ended October 31, 2022, as well as the comparable period October 31, 2021, are explained as follows:

Operations

BMTC Group Inc.

On September 12th, 2022, the Company started the migration of a single IT system for all of its banners.  We are pleased to announce that the IT system implementation and integration process, including its e-commerce platform, was successfully completed on December 5th, 2022, and is fully operational. We are very proud of our IT employees who delivered ahead of schedule, as was reported in our last management report roll out was planned by the end of the year. All our employees have received complete training on our new system and in this very short period of being fully operational, we can already notice important value added as well as time and cost efficiencies.

This IT standardisation has allowed the Company to create significant operational synergies. We have now completed the merged of our administrative and operational services of Brault & Martineau, EconoMax and Tanguay banners and therefore created broad and diversified teams that are better able to cope with the realities of business today. During the next few months of operating with only one IT system and e-commerce platform, we will continue to review our administrative and operational services and we believe we will be able to improve our efficiency and be even more cost effective.

These important changes come at an opportune time for the Company. The difficulty of obtaining skilled labour, the retail trade that is constantly changing and evolving, the competition that is now spread across Canada and the United States of America and the shift of consumer spending towards e-commerce means that this change will allow the Company to be much more agile in its business decisions. We believe that the IT standardisation as well as the organisational and structural changes will enable the Company to maintain its leadership in its market, as well as significantly improve its profitability and financial structure and continue its objectives of increasing its market share in Quebec.

The company entered into a partnership agreement for the development of its property at 500 boulevard Le Corbusier in Laval into several residential rental towers. The Company created a new subsidiary, Le Corbusier-Concorde S.E.C. for this real estate project on January 31st, 2022. We are still negotiating and waiting for permits with the city of Laval for this project. Once we obtain the green light form the city of Laval, we will therefore be able to disclose the full extent of this real estate development.

The Company has entered into an agreement for the sale of its distribution centre in Montreal for an amount of $66,500,000 resulting in an after-tax gain of $50,962,000. The Company has proceeded with a lease back agreement for 2 years and with an option of renewing the lease. The closing of this transaction is subject to certain customary conditions and is expected to occur in February 2023.

Management discussion and outlook for the Future of the Company

The Company continues to focus on online sales, which experienced a record increase since the start of the pandemic in 2020, 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 for all of the BMTC Group Inc. banners.

It is also Management's opinion that the digital platforms of our banners are 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.

Since mid-June 2021, the Company has had issues with its supply logistics. Many of the Company's suppliers, who have also been affected by the consequences of COVID-19, are unable to honour and deliver placed orders. This problem seems widespread in our industry and is not unique to the Company. 

It is difficult to predict the future level of consumer spending, although we are now seeing that the Company's  results in the last quarter are not reflecting the performance of the last two years. This downward trend continued in subsequent months. We can therefore expect a significant drop, around 20% if the trend continues. This is partly explained by the high rate of inflation in terms of the cost of food, the cost of gas and the rise in interest rates, which has a direct impact on consumer spending. Also, management is aware that the increase in the last two years was partly due to the fact that the Company benefited 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. Since these restrictions are no longer in place, consumer spending has in part transfer back to these types of spending.

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 2022 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 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.

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 press release 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 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 subsidiaries Ameublements Tanguay Inc., Le Corbusier-Concorde S.E.C. 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.