Pet Valu reports Q3 net income rises to C$27M from C$24.3M last year; revenue up 21.9% to C$244.7M from C$200.7M, driven by growth in retail sales, as well as franchise and other revenues

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MARKHAM, Ontario , November 9, 2022 (press release) –

Revenue up 22%, exceeding 20% for the third consecutive quarter
Raises full-year outlook following strong performance in Q3 2022

Pet Valu Holdings Ltd. ("Pet Valu" or the "Company") (TSX: PET),  the leading Canadian specialty retailer of pet food and pet-related supplies, today announced its financial results for the third quarter ended October 1, 2022.

Third Quarter Highlights

  • System-wide sales(1) were $331.6 million, an increase of 28.3% versus the prior year. Excluding Chico(2), system-wide sales grew 17.6%, driven predominantly by same-store sales growth(1) of 14.7%, with both basket and traffic growth contributing.
     
  • Revenue was $244.7 million, an increase of 21.9% versus the prior year. Excluding Chico, revenue grew 20.3%, similar to system-wide sales growth.
     
  • Adjusted EBITDA(3) was $57.0 million, up 12.4%, representing 23.3% of revenue. Operating income was $43.3 million, up 11.2% versus the prior year.
     
  • Net income was $27.0 million, up from $24.3 million in the prior year.
     
  • Adjusted Net Income(3) was $30.7 million or $0.43 per diluted share, up 11.1% and 10.3%, respectively, versus the prior year.
     
  • Opened 13 new stores and ended the quarter with 729 stores across the network.
     
  • Launched AutoShip subscription service on September 21, 2022.
     
  • The Board of Directors declared a dividend of $0.06 per common share.

2022 Outlook

  • The Company now expects 2022 revenue between $938 and $947 million, driven by same-store sales growth between 15.5% and 16.5% and 40-45 new store openings, Adjusted EBITDA between $212 and $214 million and Adjusted Net Income per Diluted Share(3) between $1.56 and $1.58.

"Our momentum continued into Q3 as we delivered another quarter of exceptional same-store sales growth across our network, bolstered by the resilient strength of the pet industry and further market share gains," said Richard Maltsbarger, President and Chief Executive Officer of Pet Valu. "At the same time, we made significant advancements on our strategic agenda, including the rollout of our AutoShip subscription service, initial launch of our Performatrin Ultra brand in Chico stores and the introductions of what we believe are our best ever seasonable product lineups for fall, winter and the holidays.

"We continue to see robust signals from devoted pet lovers across Canada as our team and franchisees work tirelessly to provide value to our customers," continued Mr. Maltsbarger. "We have once again raised our 2022 outlook, built on recent performance and our excitement as we head into the holiday season."

Financial Results for the Third Quarter Fiscal 2022

All comparative figures below are for the 13-week period ended October 1, 2022, compared to the 13-week period ended October 2, 2021.

Revenue was $244.7 million in Q3 2022, an increase of $44.0 million, or 21.9%, as compared to $200.7 million in Q3 2021. The current quarter includes $3.3 million of franchise and other revenues from the acquisition of Chico. The increase in revenue was driven by growth in retail sales, as well as franchise and other revenues.

Same-store sales growth was 14.7% in Q3 2022 driven by a 7.6% increase in same-store transactions and a 6.6% increase in same-store average spend per transaction. This is compared to same-store sales growth of 20.3% in Q3 2021, which primarily consisted of a 12.9% increase in same-store transactions and a 6.6% increase in same-store average spend per transaction.

Gross profit increased by $15.2 million, or 19.4%, to $93.5 million in Q3 2022, compared to $78.3 million in Q3 2021. Gross profit margin was 38.2% in Q3 2022 compared to 39.0% in Q3 2021. The gross profit margin decrease was primarily driven by: (i)  lower product margins as pricing adjustments were more than offset by higher costs including incremental freight costs and rebates to our franchisees; (ii) the unfavourable impact of the weaker Canadian dollar on non-domestic sourced products primarily denominated in U.S. dollars; partially offset by (iii) a duty recovery associated to COVID relief measures;  and (iv) the acquisition of Chico.

Selling, general and administrative ("SG&A") expenses were $50.2 million in Q3 2022, an increase of $10.9 million, or 27.6%, compared to $39.4 million in Q3 2021. SG&A expenses represented 20.5% and 19.6% of total revenue for Q3 2022 and Q3 2021, respectively. The $10.9 million increase in SG&A expenses was primarily due to: (i) increased compensation costs as a result of headcount and salary investments; (ii) higher technology and telecommunication costs to modernize our technology infrastructure and expand our omni-channel capabilities; (iii) higher advertising expenses; (iv) higher travel and meeting expenses; partially offset by (v) lower professional fees as Q3 2021 included fees to support post-initial public offering (the "Offering") and separation activities.

Adjusted EBITDA increased by $6.3 million, or 12.4%, to $57.0 million in Q3 2022, compared to $50.7 million in Q3 2021. The increase in Adjusted EBITDA was primarily due to higher EBITDA of $5.1 million as explained by the factors above and excludes share-based compensation, business transformation costs, readiness for the Offering and separation costs, loss on foreign exchange, information technology transformation costs, investment in associate, and other professional fees. Adjusted EBITDA as a percentage of revenue was 23.3% and 25.2% respectively in Q3 2022 and Q3 2021.

Net interest expense was $5.5 million in Q3 2022, an increase of $1.0 million, or 22.6%, compared to $4.5 million in Q3 2021. The increase was primarily driven by: (i) higher interest expense on the 2021 Term Facility (as hereinafter defined) resulting from higher interest rates on lower total debt outstanding compared to Q3 2021.

Income taxes were $10.1 million in Q3 2022 compared to $9.8 million in Q3 2021, an increase of $0.3 million year over year. The increase in income taxes was primarily the result of higher taxable earnings in Q3 2022. The effective income tax rate was 27.2% in Q3 2022 compared to 28.6% in Q3 2021. The Q3 2022 and Q3 2021 effective tax rate is higher than the blended statutory rate of 26.5% primarily because of non-deductible expenses.

Net income increased by $2.6 million to $27.0 million in Q3 2022, compared to $24.3 million in Q3 2021. The change in net income is explained by the factors described above.

Adjusted Net Income increased by $3.1 million to $30.7 million in Q3 2022, compared to $27.7 million in Q3 2021. Adjusted Net Income as a percentage of revenue was 12.6% in Q3 2022 and 13.8% in Q3 2021. The 1.2% year over year decrease results from the factors described above.

Adjusted Net Income per Diluted Share increased by $0.04 to $0.43 in Q3 2022, compared to $0.39 in Q3 2021. The 10.3% year over year increase results primarily from the factors described above.

Cash and cash equivalents at the end of the third quarter totaled $47.8 million.

Free Cash Flow(3) amounted to $19.9 million in Q3 2022 compared to $46.8 million in Q3 2021, a decrease of $26.9 million mostly driven by a decrease in cash from operating activities and investing activities, and higher repayment of principal and interest on lease liabilities given the growth in store count and the renewal of existing leases.

Inventory at end of the third quarter of 2022 was $136.0 million compared to $91.7 million at the end of Fiscal 2021, an increase of $44.3 million primarily due to higher demand, inflation in product cost, a heightened level of safety stock and accelerated purchase of seasonal goods in light of global supply chain challenges, and initial load-ins to support proprietary brand launches at Chico.

(1) This is a supplementary financial measure. Refer to "Non-IFRS Measures and Supplementary Financial Measures" below and to the section entitled "How We Assess the Performance of our Business" in the MD&A for the definitions of supplementary financial measures.

(2) On February 25, 2022, the Company acquired all of the issued and outstanding shares of Les Franchises Chico Inc. and 9353-0145 Quebec Inc. (collectively referred to as "Chico"), a franchisor of pet specialty stores in Quebec, Canada.

(3) This is a Non-IFRS financial measure. Non-IFRS financial measures are not standardized financial measures under IFRS and might not be comparable to similar financial measures disclosed by other issuers. Refer to "Non-IFRS Measures and Supplementary Financial Measures" and "Selected Consolidated Financial Information" below, including for a reconciliation of the non-IFRS measures used in this release to the most comparable IFRS measures. Also refer to the sections entitled "How We Assess the Performance of our Business", "Non-IFRS Measures and Supplementary Financial Measures" and "Selected Consolidated Financial Information and Industry Metrics" in the MD&A, incorporated by reference herein, for further details concerning Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income per Diluted Share and Free Cash Flow including definitions and reconciliations to the relevant reported IFRS measure

 

Dividends

On November 7, 2022, the Board of Directors of the Company declared a dividend of $0.06 per common share payable on December 15, 2022 to holders of common shares of record as at the close of business on November 30, 2022.

Outlook

The following information, except for same-store sales growth, includes the impact of Chico, which was acquired on February 25, 2022. Based on strong performance year-to-date, and expectations for fourth quarter, the Company now expects to achieve the following for the full year 2022:

  • Revenue between $938 and $947 million, supported by same-store sales growth of between 15.5% and 16.5%, and 40 to 45 new store openings;
     
  • Adjusted EBITDA between $212 and $214 million, which incorporates a full year of public company costs, as well as incremental investments in labour as well as storage and throughput capacity, disclosed in late 2021;
     
  • Adjusted Net Income per Diluted Share between $1.56 and $1.58;
     
  • Information technology transformation costs of approximately $8 million and share-based compensation of approximately $6 million, both of which are excluded from Adjusted EBITDA and Adjusted Net Income per Diluted Share; and
     
  • Net Capital Expenditures(4) between $35 and $40 million, including approximately $15 million in advanced payments and leasehold improvements related to the build-out of the new distribution centre in the Greater Toronto Area.

(4)  Net Capital Expenditures represents purchase of property and equipment, purchase of intangible assets, proceeds on disposal of property and equipment and tenant allowances.

 

Conference Call Details

A conference call to discuss the Company's third quarter results is scheduled for November 8, 2022, at 8:30 a.m. ET. To access Pet Valu's conference call, please dial 1-888-350-3870, (access code: 5518274). A live webcast of the call will also be available through the Events & Presentations section of the Company's website at https://investors.petvalu.com/" target="_blank" >https://investors.petvalu.com/.

For those unable to participate, a playback will be available shortly after the conclusion of the call by dialing 1-800-770-2030 (ID: 5518274#) and will be accessible until November 15, 2022. The webcast will also be archived and available through the Events & Presentations section of the Company's website at https://investors.petvalu.com/" target="_blank" >https://investors.petvalu.com/.

About Pet Valu

Pet Valu is Canada's leading retailer of pet food and pet-related supplies with over 700 corporate-owned or franchised locations across the country. For more than 40 years, Pet Valu has earned the trust and loyalty of pet parents by offering knowledgeable customer service, a premium product offering and engaging in-store services. Pet Valu's neighbourhood stores offer more than 7,000 competitively-priced products, including a broad assortment of premium, super premium, holistic and award-winning proprietary brands. To learn more, please visit: www.petvalu.com.

Basis of Presentation - Carve-out Financial Information

Prior to the Offering, the Company was not operating as a stand-alone entity and as a result, the financial information for periods prior to June 30, 2021 are presented on a carve-out basis that includes only legal entities representing the Canadian operations of Pet Valu Holdings Ltd. (referred to as the "Group", prior to the distribution of its U.S. operations to its shareholder). For more information, see the Company's unaudited condensed interim consolidated financial statements and related MD&A for the 13-week and 39-week periods ended October 1, 2022 and October 2, 2021, respectively.

Non-IFRS Measures and Supplementary Financial Measures

This press release makes reference to certain non-IFRS measures. These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS. They are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement IFRS measures by providing further understanding of the Company's results of operations from management's perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the Company's financial information reported under IFRS. Pet Valu uses non-IFRS measures, including "EBITDA", "Adjusted EBITDA", "Adjusted Net Income", Adjusted Net Income per Diluted Share" and "Free Cash Flow". This press release also makes reference to certain supplementary financial measures that are commonly used in the retail industry, including "System-wide stores", "System-wide sales", "Same-store sales", and "Same-store sales growth". These non-IFRS measures and supplementary financial measures are used to provide investors with supplemental measures of Pet Valu's operating performance and thus highlight trends in its core business that may not otherwise be apparent when relying solely on IFRS financial measures. The Company also believes that securities analysts, investors and other interested parties frequently use non-IFRS measures and these supplementary financial measures in the evaluation of issuers. Management uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and to determine components of management compensation. Refer to the MD&A for the second quarter ended October 1, 2022 for further information on non-IFRS measures and industry metrics, including for their definition and, for non-IFRS measures, a reconciliation to the most comparable IFRS measure.

Forward-Looking Information

Some of the information contained in this press release is forward-looking information. Forward-looking information is provided as of the date of this press release and is based on management's opinions, estimates and assumptions in light of its experience and perception of historical trends, current trends, current conditions and expected future developments, as well as other factors that management believes appropriate and reasonable in the circumstances. Pet Valu does not undertake to update any such forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable Canadian securities laws. Actual results and the timing of events may differ materially from those anticipated in the forward-looking information as a result of various factors. Particularly, information regarding our expectations of future results, targets, performance achievements, prospects or opportunities, including the information under the heading "Outlook" in this press release, is forward-looking information, which is based on the factors and assumptions, and subject to the risks, as set out herein and in the Company's annual information form ("AIF") dated March 8, 2022. Often but not always, forward-looking information can be identified by the use of forward-looking terminology such as "may", "will", "expect", "believe", "estimate", "plan", "could", "should", "would", "outlook", "forecast", "anticipate", "foresee", "continue" or the negative of these terms or variations of them or similar terminology.

Many factors could cause our actual results, level of activity, performance or achievements, future events or developments, or outlook to differ materially from those expressed or implied by the forward-looking information, including, without limitation, the factors discussed in the "Risk Factors" section of the AIF. A copy of the AIF and the Company's other publicly filed documents can be accessed under the Company's profile on the System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.com.

The Company cautions that the list of risk factors and uncertainties described in the AIF is not exhaustive and other factors could also adversely affect its results. Readers are urged to consider the risks, uncertainties and assumptions carefully in evaluating forward-looking information and are cautioned not to place undue reliance on such information.

SELECTED CONSOLIDATED FINANCIAL INFORMATION

Condensed Interim Consolidated Statements of Income and Comprehensive Income
(Unaudited, expressed in thousands of Canadian dollars, except per share amounts)

 

Quarters Ended

Year to Date Ended

 

October 1,
2022

October 2,
2021

October 1,
2022

October 2,
2021

 

13 weeks

13 weeks

39 weeks

39 weeks

         

Revenue:

       

Retail sales

$      103,167

$         88,836

$       293,297

$          250,641

Franchise and other revenues

141,557

111,870

392,356

302,319

Total revenue

244,724

200,706

685,653

552,960

         

Cost of sales

151,182

122,374

429,660

347,805

Gross profit

93,542

78,332

255,993

205,155

         

Selling, general and administrative expenses

50,231

39,371

138,212

117,015

Total operating income

43,311

38,961

117,781

88,140

         

Interest expenses, net

5,508

4,492

14,049

42,470

Loss (gain) on foreign exchange

832

369

931

(42,665)

Other income

(83)

(207)

Income before income taxes

37,054

34,100

103,008

88,335

         

Income taxes expense

10,068

9,751

28,123

16,283

Net income

26,986

24,349

74,885

72,052

         

Less:

       

Net income attributable to non-controlling

interests

3,430

Net income attributable to the shareholders

of the Company

26,986

24,349

74,885

68,622

         

Other comprehensive income, net of tax:

       

Currency translation adjustments

reclassified to net income

(29,665)

Currency translation adjustments that

may be reclassified to net income, net of tax

22

10

25

21,080

Comprehensive income for the period

attributable to the shareholders of the Company

$        27,008

$         24,359

$         74,910

$            60,037

         

Basic net income per share attributable to

the common shareholders

$             0.38

$              0.35

$              1.06

$                0.98

Diluted net income per share attributable to

the common shareholders

$             0.38

$              0.34

$              1.04

$                0.96

         
         

Reconciliation of Net Income to EBITDA and Adjusted EBITDA
(Unaudited, in thousands of Canadian dollars unless otherwise noted)

 

Quarters Ended

Year to Date Ended

 

October 1,
2022

October 2,
2021

October 1,
2022

October 2,
2021

 

13 weeks

13 weeks

39 weeks

39 weeks

Reconciliation of net income to Adjusted EBITDA:

       

Net income

$          26,986

$          24,349

$          74,885

$          72,052

Depreciation and amortization

9,595

8,434

27,741

25,077

Interest expenses, net

5,508

4,492

14,049

42,470

Income taxes expense

10,068

9,751

28,123

16,283

EBITDA

52,157

47,026

144,798

155,882

Adjustments to EBITDA:

       

Management fees(1)

679

Information technology transformation costs(2)

1,252

1,239

3,329

3,796

IPO readiness and separation costs(3)

709

4,229

Business transformation costs(4)

834

205

1,215

1,924

Other professional fees(5)

163

80

1,159

1,543

Share-based compensation(6)

1,799

1,023

4,318

3,579

Asset impairments(7)

17

17

Loss (gain) on foreign exchange(8)

832

369

931

(42,665)

Investment in associate(9)

(83)

(207)

Adjusted EBITDA

$          56,954

$          50,668

$        155,543

$        128,984

Adjusted EBITDA as a percentage of revenue

23.3 %

25.2 %

22.7 %

23.3 %

Notes:

 

(1)

Represents management fees paid to entities affiliated with Roark Capital Management, LLC ("Roark"). Concurrent with the closing of the Offering, the Company terminated the management agreement with Roark.

(2)

Represents discrete, project-based implementation costs associated with new information technology systems and discrete SaaS arrangements for transformational initiatives supporting merchandise planning, inventory and order management, e-commerce and omni-channel capabilities, customer relationship management and other key processes.

(3)

Represents expenses incurred related to the following: (i) consulting, legal and accounting fees for projects and process improvements incurred in the preparation of the Offering and the legal restructuring to separate the Company from the Group; and (ii) retention bonuses for certain key management personnel in connection with the Offering.

(4)

For Fiscal 2022, represents expenses associated to supply chain transformation initiatives including the new distribution centre. For Fiscal 2021, predominately represents severance, recruitment, and consulting expenses associated to the strategic reorganization in the senior leadership team and key functional departments as part of the Company's separation from the Group.

(5)

Professional fees primarily incurred with respect to: (i) the CRA's examination of the Company's Canadian tax filings for the 2016 fiscal year; and (ii) acquisition and integration costs incurred in relation to Chico in Fiscal 2022.

(6)

Represents share-based compensation in respect of our amended and restated share option plan, long-term incentive plan, and  deferred share unit plan.

(7)

Non-cash impairment charge taken against certain leasehold improvements and right-of-use assets for stores.

(8)

Represents foreign exchange gains and losses.

(9)

Represents the Company's share of loss from associate (Q3 2022 and YTD 2022 — $0.2 million and $0.3 million, respectively) and the gain on the fair value of the related call option (Q3 2022 and YTD 2022 — $0.3 million and $0.5 million, respectively). During Q3 2022, the Company revised its definition of Adjusted EBITDA to exclude the gain on the fair value of the related call option. Comparative figures prior to Q2 2022 are not impacted by the change in definition. Refer to the section entitled "– Selected Quarterly Results and Performance Measures" in the MD&A for additional details.

   

Reconciliation of Net Income to Adjusted Net Income
(Unaudited, in thousands of Canadian dollars unless otherwise noted)

 

Quarters Ended

Year to Date Ended

 

October 1,
2022

October 2,
2021

October 1,
2022

October 2,
2021

 

13 weeks

13 weeks

39 weeks

39 weeks

Reconciliation of net income to Adjusted Net Income:

       

Net income

$          26,986

$          24,349

$          74,885

$          72,052

Adjustments to net income:

       

Management fees(1)

679

Information technology transformation costs(2)

1,252

1,239

3,329

3,796

IPO readiness and separation costs(3)

709

4,229

Business transformation costs(4)

834

205

1,215

1,924

Other professional fees(5)

163

80

1,159

1,543

Share-based compensation(6)

1,799

1,023

4,318

3,579

Asset impairments(7)

17

17

Loss (gain) on foreign exchange(8)

832

369

931

(42,665)

Investment in associate(9)

(83)

(207)

Tax effect of adjustments to net income

(1,034)

(304)

(2,186)

(1,480)

Adjusted Net Income

$          30,749

$          27,687

$          83,444

$          43,674

Adjusted Net Income as a percentage of revenue

12.6 %

13.8 %

12.2 %

7.9 %

Adjusted Net Income per Diluted Share

$              0.43

$              0.39

$              1.16

$              0.61

Notes:

 

(1)

Represents management fees paid to entities affiliated with Roark. Concurrent with the closing of the Offering, the Company terminated the management agreement with Roark.

(2)

Represents discrete, project-based implementation costs associated with new information technology systems and discrete SaaS arrangements for transformational initiatives supporting merchandise planning, inventory and order management, e-commerce and omni-channel capabilities, customer relationship management and other key processes.

(3)

Represents expenses incurred related to the following: (i) consulting, legal and accounting fees for projects and process improvements incurred in the preparation of the Offering and the legal restructuring to separate the Company from the Group; and (ii) retention bonuses for certain key management personnel in connection with the Offering.

(4)

For Fiscal 2022, represents expenses associated to supply chain transformation initiatives including the new distribution centre. For Fiscal 2021, predominately represents severance, recruitment, and consulting expenses associated to the strategic reorganization in the senior leadership team and key functional departments as part of the Company's separation from the Group.

(5)

Professional fees primarily incurred with respect to: (i) the CRA's examination of the Company's Canadian tax filings for the 2016 fiscal year; and (ii) acquisition and integration costs incurred in relation to Chico in Fiscal 2022.

(6)

Represents share-based compensation in respect of our amended and restated share option plan, long-term incentive plan, and deferred share unit plan.

(7)

Non-cash impairment charge taken against certain leasehold improvements and right-of-use assets for stores.

(8)

Represents foreign exchange gains and losses.

(9)

Represents the Company's share of loss from associate (Q3 2022 and YTD 2022 — $0.2 million and $0.3 million, respectively) and the gain on the fair value of the related call option (Q3 2022 and YTD 2022 — $0.3 million and $0.5 million, respectively). During Q3 2022, the Company revised its definition of Adjusted Net Income to exclude the gain on the fair value of the related call option. Comparative figures prior to Q2 2022 are not impacted by the change in definition. Refer to the section entitled "– Selected Quarterly Results and Performance Measures" in the MD&A for additional details.

Condensed Interim Consolidated Statements of Cash Flows
(Unaudited, in thousands of Canadian dollars)

 

Quarters ended

Year to Date ended

 

October 1,
2022

October 2,
2021

October 1,
2022

October 2,
2021

 

13 weeks

13 weeks

39 weeks

39 weeks

Cash provided by (used in):

       

Operating activities:

       

Net income for the period

$        26,986

$        24,349

$        74,885

$        72,052

Adjustments for items not affecting cash:

       

Depreciation and amortization

9,595

8,434

27,741

25,077

Impairment of right-of-use assets

17

17

Deferred franchise fees

160

336

66

665

Gain on disposal of property and equipment

(277)

(430)

(319)

(858)

Loss (gain) on sale of right-of-use assets

300

(109)

460

(285)

Loss (gain) on foreign exchange

832

369

931

(42,665)

Gain on financial instruments

(255)

(499)

Share-based compensation expense

1,799

1,023

4,318

1,045

Share of loss from associate

172

292

Interest expenses, net

5,508

4,492

14,049

42,470

Income taxes expense

10,068

9,751

28,123

16,283

Income taxes paid

(5,550)

(2,719)

(31,123)

(10,398)

Security deposits paid

(5,073)

Change in non-cash operating working capital:

       

Accounts receivable

(1,927)

1,999

(5,606)

(2,604)

Inventories

(19,191)

(1,333)

(43,747)

(10,110)

Prepaid expenses

(1,378)

(1,922)

(3,215)

(1,742)

Accounts payable and accrued liabilities

6,982

12,184

15,301

(3,879)

Net cash provided by operating activities

33,824

56,441

76,584

85,068

Financing activities:

       

Issuance of common shares, net of transaction costs

295,210

Proceeds from exercise of share options

511

62

4,694

62

Dividends paid on common shares

(4,236)

(12,676)

Proceeds of 2021 Term Facility

355,000

Repayment of 2021 Term Facility

(2,218)

(2,219)

(6,656)

(2,219)

Proceeds of 2021 Revolving Credit Facility

40,000

Repayment of 2021 Revolving Credit Facility

(40,000)

(40,000)

Repayment of 2016 Term Loans

(680,424)

Interest paid on long-term debt

(5,468)

(2,560)

(12,639)

(38,975)

Repayment of principal on lease liabilities

(12,026)

(11,361)

(35,841)

(35,167)

Interest paid on lease liabilities

(2,970)

(2,888)

(8,788)

(8,649)

Financing costs

(6,589)

Standby letter of credit commitment fees

(314)

(52)

(628)

(4,355)

Net distributions

(16,983)

Net cash used in financing activities

(26,721)

(59,018)

(72,534)

(143,089)

Investing activities:

       

Business acquisition, net of cash

291

(12,538)

Purchases of property and equipment

(7,041)

(4,490)

(16,693)

(14,770)

Purchase of intangible assets

(713)

(461)

(2,686)

(1,594)

Proceeds on disposal of property and equipment

607

2,240

1,382

4,443

Right-of-use asset initial direct costs

(600)

(598)

(1,218)

(1,435)

Tenant allowances

117

(25)

672

246

Notes receivable

597

16

895

237

Lease receivables

6,788

6,118

20,017

17,750

Interest received on lease receivables and other

2,237

1,775

6,052

5,132

Investment in associate

(645)

(1,779)

Net cash provided by (used in) investing activities

1,638

4,575

(5,896)

10,009

Effect of exchange rate on cash

(426)

(168)

(440)

(157)

Net increase (decrease) in cash

8,315

1,830

(2,286)

(48,169)

Cash, beginning of period

39,467

21,482

50,068

71,481

Cash, end of period

$        47,782

$        23,312

$        47,782

$        23,312

Free Cash Flows
(Unaudited, expressed in thousands of Canadian dollars)

 

Quarters Ended

Year to Date Ended

 

October 1,
2022

October 2,
2021

October 1,
2022

October 2,
2021

 

13 weeks

13 weeks

39 weeks

39 weeks

         

Cash provided by operating activities

$           33,824

$           56,441

$           76,584

$           85,068

Cash provided by (used in) investing activities

1,638

4,575

(5,896)

10,009

Repayment of principal on lease liabilities

(12,026)

(11,361)

(35,841)

(35,167)

Interest paid on lease liabilities

(2,970)

(2,888)

(8,788)

(8,649)

Notes receivables

(597)

(16)

(895)

(237)

Free Cash Flow

$           19,869

$           46,751

$           25,164

$           51,024

Consolidated Statements of Financial Position
(Unaudited, expressed in thousands of Canadian dollars)

 

As at October 1,
2022

As at January 1,
2022

     

Assets

   

Current assets:

   

Cash

$                47,782

$                50,068

Accounts and other receivables

21,653

14,398

Inventories, net

136,024

91,699

Prepaid expenses and other assets

16,724

10,432

Current portion of lease receivables

28,389

26,621

Total current assets

250,572

193,218

     

Non-current assets:

   

Lease receivables

132,218

121,936

Right-of-use assets, net

80,757

80,757

Property and equipment, net

66,594

62,067

Intangible assets, net

52,171

37,359

Goodwill

97,673

92,938

Deferred tax assets

5,565

5,601

Investment in associate

4,494

2,179

Other assets

7,304

3,118

Total non-current assets

446,776

405,955

     

Total assets

$              697,348

$              599,173

     

Liabilities and Shareholders' Deficit

   
     

Current liabilities:

   

Accounts payable and accrued liabilities

$              108,127

$                86,977

Income taxes payable

11,186

13,553

Current portion of deferred franchise fees

1,651

1,032

Current portion of lease liabilities

45,155

41,960

Current portion of long-term debt

15,531

8,875

Total current liabilities

181,650

152,397

     

Non-current liabilities:

   

Long-term deferred franchise fees

3,712

3,183

Long-term lease liabilities

204,908

196,954

Long-term debt

324,205

336,621

Deferred tax liabilities

6,973

4,540

Other liabilities

1,240

Total non-current liabilities

541,038

541,298

Total liabilities

722,688

693,695

     

Shareholders' deficit:

   

Common shares

312,191

307,497

Contributed surplus

4,033

1,779

Deficit

(341,410)

(403,619)

Currency translation reserve

(154)

(179)

Total shareholders' deficit

(25,340)

(94,522)

Total liabilities and shareholders' deficit

$              697,348

$              599,173

     

SOURCE Pet Valu Canada Inc.

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