2. 1
This document contains forward-looking statements that reflect management’s current expectations related to matters such as future financial performance and operating results of the Company.
Forward-looking statements are provided for the purposes of providing information about Management’s current expectations and plans and allowing investors and others to get a better
understanding of the Company’s financial position, results of operations and operating environment. Readers are cautioned that such information may not be appropriate for other circumstances.
All statements other than statements of historical facts included in this document may constitute forward-looking statements, including but not limited to, statements regarding the opportunity for
business growth from the partnership with Scotiabank, statements concerning Management’s expectations relating to possible or assumed future prospects and results, the Company’s strategic
goals and priorities, its actions and the results of those actions and the economic and business outlook for the Company. Often but not always, forward-looking statements 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. Forward-looking statements are based on the reasonable assumptions, estimates, analyses, beliefs and opinions of Management, made in
light of its experience and perception of trends, current conditions and expected developments, as well as other factors that Management believes to be relevant and reasonable at the date that
such statements are made.
By their very nature, forward-looking statements require Management to make assumptions and are subject to inherent risks and uncertainties, which give rise to the possibility that the Company’s
assumptions, estimates, analyses, beliefs and opinions may not be correct and that the Company’s expectations and plans will not be achieved. Examples of Management’s beliefs, which may
prove to be incorrect include, but are not limited to, beliefs about the effectiveness of certain performance measures, beliefs about current and future competitive conditions and the Company’s
position in the competitive environment, beliefs about the Company’s core capabilities and beliefs regarding the availability of sufficient liquidity to meet the Company’s contractual obligations.
Although the Company believes that the forward-looking statements in this document are based on information, assumptions and beliefs that are current, reasonable and complete, these
statements are necessarily subject to a number of factors that could cause actual results to differ materially from Management’s expectations and plans as set forth in such forward-looking
statements for a variety of reasons. Some of the factors – many of which are beyond the Company’s control and the effects of which can be difficult to predict – include: (a) credit, market, currency,
operational, liquidity and funding risks, including changes in economic conditions, interest rates or tax rates; (b) the ability of the Company to attract and retain high quality employees for all of its
businesses, Dealers, Canadian Tire Petroleum agents and Mark’s Work Wearhouse and FGL Sports franchisees, as well as the Company’s financial arrangements with such parties; (c) the growth
of certain business categories and market segments and the willingness of customers to shop at its stores or acquire its financial products and services; (d) the Company’s margins and sales and
those of its competitors; (e) the changing consumer preferences toward e-commerce, online retailing and the introduction of new technologies; (f) risks and uncertainties relating to information
management, technology, property management and development, supply chain, product safety, changes in law, regulation, competition, seasonality, weather patterns, commodity price and
business disruption, the Company’s relationships with suppliers manufacturers, partners and other third parties, changes to existing accounting pronouncements, the risk of damage to the
reputation of brands promoted by the Company and the cost of store network expansion and retrofits; (g) the Company’s capital structure, funding strategy, cost management programs and share
price; and (h) the possibility that the opportunity for business growth from the partnership with Scotiabank cannot be realized or may take longer to realize than expected. Management cautions that
the foregoing list of important factors and assumptions is not exhaustive and other factors could also adversely affect the Company’s results. Investors and other readers are urged to consider the
foregoing risks, uncertainties, factors and assumptions carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements.
For more information on the risks, uncertainties and assumptions that could cause the Company’s actual results to differ from current expectations, please refer to the “Risk Factors” section of the
Company’s Annual Information Form for fiscal 2014, as well as the Company’s other public filings, available on the SEDAR (System for Electronic Document Analysis and Retrieval) website at
www.sedar.com and at www.corp.canadiantire.ca.
Forward-looking statements do not take into account the effect that transactions or non-recurring or other special items announced or occurring after the statements are made, have on the
Company’s business. For example, they do not include the effect of any dispositions, acquisitions, asset write downs or other charges announced or occurring after such statements are made.
The forward-looking statements and information contained herein are based on certain factors and assumptions as of the date hereof. The Company does not undertake to update any forward-
looking statements, whether written or oral, that may be made from time to time by it or on its behalf, to reflect new information, future events or otherwise, unless required by applicable securities
laws.
1
Forward looking information
3. 2
Executive participants
2
Michael Medline, President and CEO, Canadian Tire Corporation
Dean McCann, Chief Financial Officer and EVP
Allan MacDonald, Chief Operating Officer, Canadian Tire
Chad McKinnon, Chief Operating Officer, FGL Sports
Mary Turner, Chief Operating Officer, CTFS
Rick White, Chief Operating Officer, Mark’s
4. 3
Third Quarter Highlights
3
Strong third quarter performance
– Consolidated revenue increased $133.2 million, or 5.3%, excluding Petroleum
– Diluted EPS was $2.62, up 20.5%
Consolidated sales and earnings performance reflects strong operations and
retail fundamentals
– Canadian Tire SSS up 3.4%
– FGL Sports SSS up 7% (8.5% at Sport Chek)
– Mark’s SSS down 0.2%
Solid third quarter performance at Financial Services
− Gross average credit card receivables grew 1.7%
− Income before taxes down 2.8%, lapping strong results of approximately 23% in prior year
Capital Allocation
‒ Announced 9.5% increase in the annual dividend to $2.30 per share
‒ Announced intent to repurchase $550 million of Class A Non-Voting shares by the end of 2016
5. 4
Consolidated financial results
4
Diluted EPS attributable to owners of CTC was $2.62 in the quarter, an increase of $0.45 per share, or 20.5 percent, over the prior year.
Earnings reflect the impact of the sale of 20 percent of the Financial Services business in Q4 2014 which reduced earnings attributable to
owners of CTC by $13.8 million, or $0.18 per share, and the impact of a gain on the sale of a surplus property which increased earnings
attributable to owners of CTC by $25.4 million, or $0.33 per share. The remaining increase in earnings is due to strong performance in the
retail segment.
1 – Key operating performance measure. Refer to section 8.3.1 in the MD&A.
2 – Not meaningful.
6. 5
Retail segment financial results
5
Income before income taxes increased $51.4 million or 39.3 percent. This increase reflects strong sales and revenue growth in Canadian Tire,
FGL Sports, and Mark's, Petroleum's higher per litre gas margins, as well as a $29.2 million pretax gain on the sale of a surplus property during
the quarter. These increases are partially offset by a lower gross margin rate at Mark's, increased personnel and occupancy costs to support IT
initiatives and additional stores in the network, and increased depreciation and amortization relating to increased capital spending on IT initiatives.
1 – Key operating performance measure. Refer to section 8.3.1 in the MD&A.
7. 6
CT REIT segment results
6
Income before income taxes in CT REIT increased $9.8 million, or 19.7%, in the quarter, primarily due to properties acquired
during 2015 and 2014 and an increase of $5.3 million in the fair market value adjustment over the prior year.
8. 7
Financial Services segment results
7
Income before income taxes of $95.6 million decreased $3 million, or 2.8 percent, due to increased write-offs and a reduction
in interchange revenue resulting from industry wide adoption of a revised rate schedule in Q2 2015; partially offset by
increased credit card charges driven by GAAR growth and savings in operating expenses.
9. 8
Appendix
Consolidated AdjustedEBITDA1 andRetailEBITDA1
8
1 – Key operating performance measure. Refer to section 8.3.1 in the MD&A for additional information.
2 – Includes $2.2 million reported in cost of producing revenue in the quarter ($1.8 million in 2014) and $6.6 million for Q3 YTD 2015 ($5.0 million in Q3 YTD 2014).
1 – Key operating performance measure. Refer to section 8.3.1 in the MD&A for additional information.
2 – Includes $2.2 million reported in cost of producing revenue in the quarter ($1.8 million in 2014) and $6.6 million for Q3 YTD 2015 ($5.0 million in Q3 YTD 2014).
(C$ in millions) Q3 2015 Q3 2014
YTD
Q3 2015
YTD
Q3 2014
Adjusted EBITDA1
$ 415.1 $ 351.9 $ 1,044.8 $ 938.9
Change in fair value of the redeemable financial instrument
(income)/expense
_ _ _ _
EBITDA $ 415.1 $ 351.9 $ 1,044.8 $ 938.9
Less:
Depreciation and amortization2
106.0 96.0 308.4 268.6
Net finance costs 24.2 21.4 70.5 85.5
Income before income taxes $ 284.9 $ 234.5 $ 665.9 $ 584.8
Income taxes 65.0 56.3 171.5 152.1
Effective tax rate 22.8% 24.0% 25.8% 26.0%
Net income $ 219.9 $ 178.2 $ 494.4 $ 432.7
Adjusted EBITDA1
Retail Segment EBITDA1
(C$ in millions) Q3 2015 Q3 2014
YTD
Q3 2015
YTD
Q3 2014
EBITDA1
$ 259.3 $ 201.4 578.6 513.3
Less:
Depreciation and amortization2
88.1 79.1 254.3 220.0
Net finance (income) (11.0) (8.5) (30.4) (3.7)
Income before income taxes $ 182.2 $ 130.8 354.7 297.0
11. Questions
and Answers
For more information
http://investors.canadiantire.ca
lisa.greatrix@cantire.com or (416) 480-8725
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