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BMTC Group Inc. Announces Financial Results for its Quarter Ended July 31st, 2019

 Results*

MONTREAL , Sept. 5, 2019 /CNW Telbec/ - For the first semester ended July 31, 2019 , the Company's revenues decreased by $17,786,000 to $364,048,000 , compared to $381,834,000 recorded in the corresponding 2018 period, a 4.7% decreased. Net earnings for the first semester ended July 31, 2019 , amounted to $10,025,000 compared to $21,739,000 for the corresponding 2018 period. Basic net earnings per share amounted to $0.29 compared to $0.61 recorded in the corresponding 2018 period.

The effect of the cost of options had no impact on basic net earnings per share for the first semester ended July 31, 2019 and 2018.

For the first semester ended July 31, 2019 , the share repurchase program contributed to an increase in basic net earnings of 0,02$ per share where during the corresponding 2018 period it contributed to an increase of 0,01$ on basic net earnings per share.

During the preceeding year ended January 31, 2019 , the Company proceeded with the sale of the Repentigny store for an amount of $9,000,000 resulting in an after-tax gain of $4,522,000 or $0.13 per basic share.

Excluding all these effects, the variation in adjusted net earnings would have been $7,115,000 or $0.21 per basic share for the first semester ended July 30, 2019 .

The $7,115,000 variation in adjusted net earnings for the first semester of 2019 is as follows:

 


 (Unaudited and $ in thousands)


July 31, 2019

July 31, 2018

Net earnings 

10,025

21,739

Gain on disposal of fixed assets (after-tax)

-

(4,522)

Variation in cost of options (after-tax)

(85)

(162)

Adjusted net earnings 

9,940

17,055

Minus: Adjusted net earnings  for 2018

17,055


Variation

(7,115)



*The financial information is in Canadian dollars and has been prepared in accordance with the International Financial Reporting Standards (IFRS).

 

This variation in adjusted after-tax income is allocated throughout the quarters as follows:

 



(Unaudited and $ in thousands)

Increase

Increase

Increase


 (decrease)

 (decrease)

(decrease)


in retail operating

in investment

in adjusted


earnings

income

 operating earnings





As at April 30, 2019

(5,586)

1,924

(3,662)

As at July 31, 2019

(1,869)

(1,584)

(3,453)

Total:

(7,455)

340

(7,115)

 

Annual Financial Information

($ in thousands, except for per share amounts)


January 31, 2019

January 31, 2018


 12 months 

13 months


$

$

Revenue

740,017

810,144

Net Earnings

45,165

49,335

Total Assets

367,624

312,569

Net Earnings Per Share



Basic

1.29

1.36

Diluted

1.29

1.36

Dividends Per Share

0.28

0.24

 

Financial position and dividends

Cash, net of the bank overdraft, and investments increased by $29,771,000 during the first semester ended July 31, 2019 . Investments consist of bank notes, corporate bonds and common shares, which at the close of the period had a market value of $136,559,000 (including cash net of the overdraft).

As at July 31, 2019 , the working capital showed a deficit of $27,013,000 , an increase of $24,904,000 compared to the year ended January 31, 2019 . The Company's shareholders' equity increased from $244,742,000 as at January 31, 2019 , to $246,413,000 as atJuly 31, 2019. As at July 31, 2019 , the book value per share stood at $7.19 , compared to $7.09 as at January 31, 2019 .

Pursuant to the normal course issuer-bid put in place on April 13, 2018 , and renewed on April 15, 2019 , accordingly, 248,100 common shares were repurchased and cancelled by the Company. As a result of this change, the Company had as at July 31, 2019 , 34,291,900 common shares issued and outstanding.

During the first semester ended July 31, 2019 , no options were granted or exercised. As at July 31, 2019 , options for 197,100 common shares, representing 0.60% of the Company's outstanding shares remain issued and 5,710,864 authorized share options, representing approximately 16.65% of the Company's outstanding shares, may still be granted pursuant to the Plan. The issued and outstanding options may be exercised at a price of $17.85 per common shares.

 

Quarterly results 

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












April 30

April 30

July 31

July 31


2019

2018

2019

2018


$

$

$

$

Revenue

149,668

162,194

214,380

219,640

Net (loss) earnings

(3,455)

4,806

13,480

16,933

Net (loss) earnings per share





Basic

(0.10)

0.13

0.39

0.48

Diluted

(0.10)

0.13

0.39

0.48







October 31

September 30

January 31

January 31


2018

2017

2019

2018




(3 months)

(4 months)


$

$

$

$

Revenue

184,115

203,722

174,068

245,110

Net (loss) earnings

11,613

17,544

11,813

17,720

Net (loss) earnings per share





Basic

0.34

0.48

0.34

0.50

Diluted

0.34

0.48

0.34

0.50

 

For the quarter ended July 31st, 2019 , the Company's revenues decreased by $5,260,000 to $214,380,000 , compared to $219,640,000 , for the corresponding 2018 period, a 2.4% decrease. Net earnings for the quarter ended July 31st, 2019 , amounted to $13,480,000 compared to $16,933,000 for the corresponding 2018 period. Basic net earnings per share amounted to $0.39 compared to $0.48 recorded in for the corresponding 2018 period.

The effect of the cost of options had no impact on basic net earnings per share for the three month period ended July 31st, 2019 and 2018.

For the three month period ended July 31st, 2019 , the share repurchase program contributed to an increase in basic net earnings per share of $0.01 .

Excluding all these effects, the variation to the adjusted net earnings would have been $3,453,000 or $0.10 per basic share for the three month period ended July 31st, 2019 .

The $3,453,000 variation in adjusted net earnings for the three month period ended July 31st, 2019 is as follows:

 


(Unaudited and $ in thousands)


July 31, 2019

July 31, 2018

Net earnings

13,480

16,933

Variation of cost of options (after-tax)

(24)

(24)

Adjusted net earnings

13,456

16,909

Minus: Adjusted net earnings for 2018

16,909


Variation

(3,453)


 

Operations

Groupe BMTC Inc.

The Company continues to restructure all of its websites and the first phase of the implementation of a distinct e-commerce platform for its banners Brault & Martineau and EconoMax is now completed and operational. The process of implementation will continue throughout 2019 for the following phases as well as the restructuring for all the other banners of the Company. The Company also reviewed its IT systems in to order standardize them throughout the banners, as well as to allow them to be more aligned with its e-commerce strategies. Following this review, the Company decided to invest and to modify its existing IT systems, the integration and implementation which will continue for a 3 to 5 year period. The cost of these modifications are estimated to be $17,000,000 . A portion of these costs, $10,732,000 were incurred and the balance will be recorded in subsequent years.

The Company proceeded to change its financial year-end date from December 31 to January 31 . This change came into effect with the 2018 financial year-end, therefore, the accounting period of the 2018 consolidated financial statements corresponds to a 13-month period ending January 31, 2018 compared to a 12-month period for the current consolidated financial statements. The unaudited interim financial statements will correspond to the quarters ending in April 30 , July 31 and October 31 .

Brault & Martineau and EconoMax Division

The new St-Therese store opened on June 12th, 2019 . This store represents the new prototype for the Brault & Martineau banner.

The old Brault & Martineau store in St-Therese will be converted to an EconoMax and the opening is scheduled during the month of October 2019 .

The Company is pursuing the evaluation process for different sites as well as its existing stores in order to able to modify them or in certain cases proceed with the reconstruction of a new store based on the new prototype.

Management discussion and outlook for the future of the Company

The Quebec economy has experienced exceptional growth in 2016, 2017 and the first semester of 2018. Consumer spending in the second half of 2018 fell significantly, especially during the last quarter.

In fact, the retail sales of our southern neighbors recorded their biggest monthly drop in 10 years, with a decline of 1.2% in December 2018 compared to November 2018 . Since the beginning of 2019, all retail sales sectors are down. The results for the first semester of 2019, have not yet experienced the expected rebound, and retail sales continue to record significant declines.

According to the majority of analysts, the risk of a recession is particularly high, and for 2019 they have announced a significant slowing down of the economy due to uncertainty about the continued rise in interest rates, the slowdown in the real estate market due to tightening mortgage financing rules, labour shortages, the estimated 3.5% increase in the average grocery basket and a level of inflation that remains at 2.4% despite a slowdown in wage growth. Nevertheless, the unemployment rate in 2018 remained near its lowest level in 40 years and job creation remained strong.

On the other hand, the labour market is showing signs of tightening. The employment rate in all of Quebec is close to 75%, which is a rate higher than the Canadian average. On the other hand, despite a full-employment economy in Quebec , more than a third of Quebecers live from one paycheck to the next due to record highs in household debt levels. Quebecers are more indebted than ever. The debt ratio of Quebec households is now close to 170%, a rate similar to what was recorded in the United States before the 2008 financial crisis. In other words, for every dollar of disposable household income, Quebecers owe $ 1.70 in the credit market. For the last six years, the average debt of Quebec consumers, excluding mortgages, has increased by 73%. In 2018, more than 46,000 consumers and businesses in Quebec declared bankruptcy or submitted a payment agreement to their creditors, which is a record high.

The significant drop in Quebec household consumption due to socio-economic factors as well as the significant increase in their level of indebtedness over the past few years has impacted the Company's results as of January 31, 2019 , as well as those of the first fiscal semester of 2020.  

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 negative 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 2018 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 performance measures for the Company. Management believes that this measure is useful in understanding and analysing the operational performance of the Company and more appropriate to provide additional information.

Adjusted net earnings as well as same store revenues are not an earnings measure recognised by IFRS and does not have a standardised meaning prescribed by IFRS. Therefore, adjusted net earnings and same store revenues as discussed in this MD&A may not be compared to similar measures presented by other issuers. This measure of performance should not be considered as an alternative as an indicator of performance calculated according to IFRS, but rather as additional information.

The Company discloses in this MD&A 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 subsidiary Ameublements Tanguay Inc., 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.


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