Market Overview

BMTC Group Inc. Announces Financial Results for the Semester Ended July 31st, 2020

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MONTRÉAL, Sept. 10, 2020 /CNW Telbec/ -

Results*

For the semester ended July 31, 2020, the Company's revenues decreased by $88,959,000 to $276,418,000 compared to $365,377,000 recorded in the corresponding 2019 period, a 24.3% decrease. Net earnings for the semester July 31, 2020 amounted to $7,152,000 compared to $10,025,000 recorded in the corresponding 2019 period. Basic net earnings per share amounted to $0.21 compared to $0.29 recorded in the corresponding 2019 period.

For the semesters ended July 31, 2020 and 2019, the share repurchase program had no impact on basic net earnings per share.

Excluding all these effects, the variation in adjusted net earnings would have been ($2,788,000) or ($0.08) per basic share for the semester ended July 31, 2020.

The ($2,788,000) variation in adjusted net earnings is as follows:



(Unaudited and $ in thousands)






July 31, 2020

July 31, 2019





Net earnings


7 152

10 025

Variation in cost of options (after-tax)


-

(85)

Adjusted net earnings


7 152

(9 940)

Minus: Adjusted net earnings for 2019


9 940






Variation


(2 788)


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


(Unaudited and $ in thousands)








Increase (decrease) in
retail operating earnings


Increase (decrease)
in investment income


Increase (decrease) in
adjusted operating earnings







April 30, 2020  

784


(9 695)


(8 911)

July 31, 2020 

1 707


4 416


6 123

Total 

2 491


(5 279)


(2 788)


* As of February 1, 2019, the Company has applied IFRS 16 retrospectively, without restating comparative information as permitted by the standard.

Despite the significant drop in sales in the first semester of 2020, the Company managed to improve its retail operating results by $2,976,000 or an after tax increase of $2,491,000.

Annual financial information

($ in thousands, except for per share amounts)







January 31, 2020

January 31, 2019

Revenue


720 169

742 474

Net earnings


36 034

45 165

Total assets


382 040

367 624

Net earnings per share




Basic


1,05

1,29

Diluted


1,05

1,29

Dividends per share


0,28

0,28

Financial position and dividends

Cash, net of the bank overdraft, and investments increased by $87,329,000 during the semester ended July 31, 2020. Investments consist of bank notes, government and corporate bonds, preferred and common shares, which at the close of the semester had a market value of $211,314,000 (including cash). As at July 31, 2020, the working capital showed a deficit of $41,350,000, an increase of $21,883,000 compared to the year ended January 31, 2020. The Company's shareholders' equity increased from $216,624,000 as at January 31, 2020, to $218,275,000 as at July 31, 2020. As at July 31, 2020, the book value per share stood at $6.42, compared to $6.35 as at January 31, 2020.

Pursuant to the normal course issuer-bid put in place on April 15, 2019, and renewed on April 15, 2020, accordingly, 82,000 common shares were repurchased and cancelled by the Company. As a result of this change, the Company had as at July 30, 2020, 34,006,000 common shares issued and outstanding.

During the semester ended July 31, 2020, no options were granted. As at April 1st, 2020, options regarding 197,100 Common Shares expired and were cancelled as they were out of money. As at April 1st, 2020, the closing price of the Common Shares on the Toronto Stock Exchange was $5.97. The Company may still grant pursuant to the Plan a total of 5,710,864 options, representing 16.79% of the issued and outstanding shares of the Company.

Quarterly results *

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







April 30,

2020

April 30,

2019

July 31,

2020

July 31,

2019

Revenue

100 445

150 310

175 973

215 067

Net (loss) earnings

(12 427)

(3 455)

19 579

13 480

Net (loss) earnings per share





Basic

(0,36)

(0,10)

0,57

0,39

Diluted

(0,36)

(0,10)

0,57

0,39







October 31,
2019

October 31,
2018

January 31,
2020

January 31,
2019

Revenue

183 312

184 718

171 480

174 634

Net earnings

10 649

11 613

15 360

11 813

Net earnings per share





Basic

0,31

0,34

0,45

0,34

Diluted

0,31

0,34

0,45

0,34


*Comparative data relating to revenue have been restated following a change in presentation.

For the three-month period ended July 31, 2020, the Company's revenues decreased by $39,094,000 to $175,973,000, compared to $215,067,000 recorded for the corresponding period, a 18.2 % decrease. Net earnings for the three-month period ended July 31, 2020, amounted to $19,579,000 compared to $13,480,000 recorded for the corresponding 2019 period. Basic net earnings per share increased to $0.57 compared to $0.39 for the corresponding 2019 period.

For the three-month period ended July 31, 2020, the share repurchase program had no impact on basic net earnings per share.

Excluding all these effects, the variation to the adjusted net earnings would have been $6,123,000 or $0.18 per basic share for the quarter ended July 31, 2020.

The $6,123,000 variation in adjusted net earnings is as follows:



  (Unaudited and $ in thousands)







July 31, 2020

July 31, 2019





Net earnings


19 579

13 480

Variation in cost of options (after-tax)


-

(24)

Adjusted net earnings


19 579

13 456

Minus: Adjusted net earnings for 2019


13 456






Variation


6 123


Operations

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 2020 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.

Brault & Martineau Division

On November 6, 2019, the Company proceeded with the sale of the Kirkland store. During this same transaction, the Company purchased land along the Autoroute 40 in the city of Kirkland in order to build a new Brault & Martineau store of approximately 80,000 square feet which will replace the actual Kirkland store. On this same land, the Company is building an EconoMax store of approximately 50,000 square feet which will replace the EconoMax store on Côte-Vertu. The construction of these two stores has already begun, and their openings are scheduled for fall 2020. The transfer of operations of these two existing stores will be done following the completion of these new stores.

The Company continues the evaluation process for different sites as well as its existing stores to modify them or in certain cases proceed with the reconstruction of a new store based on its new prototype. The new Kirkland store will be the second of the banner to be modified. The Company anticipates that in the next few years it will incur costs related to the modification and improvement of its actual network is to be considered.

Management discussion and outlook for the Future of the Company

The Company's first and second quarters of 2020 delivered strong operational results, despite the negative financial impact of COVID-19. The decrease in revenues during the first semester was totally due to the temporary physical store closures. During this second quarter the Company was able to reopen all of its 32 points of sale and in order to mitigate the loss of revenues during the closure, the Company proactively aligned its cost structure accordingly. These steps were taken throughout the first semester in order to protect the Company's viability and preserve its working capital during these highly uncertain times. Thanks to these new measures the Company was able to produce positive operating results. This new cost structure will remain effective throughout the remainder of the 2020 fiscal year.

On March 11th, 2020, the World Health Organization declared COVID-19 a global pandemic. The financial impact of COVID-19 began to manifest itself by a decrease in store traffic and consequently store revenues in the early weeks of March 2020. Following the rapid rise of COVID-19 cases in the province of Quebec, our priority during this difficult period remains at all times the health and safety of our employees and clients. In order to protect the Quebec population and to prevent the spread of COVID-19 by encouraging social distancing initiatives recommended by both levels of government, the Company decided on March 18th, 2020, to temporarily close its retail sales network, namely our Ameublements Tanguay banner in the Quebec City area and the Brault & Martineau and EconoMax banners in the Montreal area. On March 23rd, 2020, the Quebec government announced, for the same reason, the closure of all non-essential retail stores across the province.

In order to address the devastating effects of COVID-19 and to assure its short and long-term financial health, the Company decided to maintain its operations at a strict minimum level while preserving its presence in our market and controlling its working capital position. The following actions were undertaken by the Company during these last weeks in order to support its operating and working capital objectives:

  • Following the closure of our retail sales network on March 18th, 2020, the Company temporarily laid off approximately 75% of its personnel, the vast majority stemming from our retail stores.
  • Our online and delivery services remained operational across Quebec to ensure the population in confinement the ability to rely on essential goods while respecting government-mandated security protocols. We modified our services to offer contactless home delivery.
  • During this period, the Company introduced several measures and protocols in preparation for the reopening of our stores across our sales network to ensure and protect the health and security of our employees and our clients. These new measures and protocols will be in effect until the end of the COVID-19 pandemic.
  • The Company has also made technological and operational improvements to its sales network. These modifications will allow us to reduce our fixed costs and will contribute to our initiatives of effective cost controls.
  • The Company applied for the Canada Emergency Wage Subsidy given the 30% or more decrease in revenues during the prescribed period.

During the closure of our retail stores, from March 19th to May 3rd, 2020, online sales increase significantly. Despite this significant increase, the online sales only partially compensated for in-store sales for the 2019 corresponding period.

During the first quarter of 2020, the Company had all of its 32 points of sale closed for a period of 43 consecutive days, leaving only online sales operational. The loss of revenues arising from the first quarter closure produced a revenue decrease of $52,029,000. During the second quarter of 2020, the Company had a total of 15 points of sale closed for a period of 25 consecutive days while the other 17 points of sale were closed for the first 5 days of the quarter, again leaving only online sales operational. The loss of revenues arising from the second quarter closure produced a revenue decrease of $25,465,000.

On May 4th, 2020, the Quebec government authorized the reopening of non-essential businesses situated outside of the Greater Montreal Area. The Ameublements Tanguay banner was able to reopen all retail locations, except for one. The EconoMax banner was able to reopen the Drummondville, Joliette and Granby stores, while the Brault & Martineau banner reopened the Sherbrooke and Gatineau stores. As at May 4th, 2020, the Company had 16 of 32 stores operational. In the days following the reopening on May 4th, in-store sales increased between 45% and 65% compared to the same period in 2019. This increase, however, has slowed down in recent weeks to stabilize to comparable results to the 2019 period. In addition, online sales continued to increase significantly during this period compared to the corresponding period of 2019.

On May 25th, 2020, the Quebec government authorized the reopening of non-essential businesses situated in the Greater Montreal Area. This allowed the Company to reopen a total of 31 of 32 stores across the province of Quebec. Finally on June 1st, 2020 the Quebec government authorized the reopening of commercial centers, therefore Ameublements Tanguay was able to reopen its 11th store. As at June 1st, 2020, all of the 32 stores were fully operational. In-store sales in the Greater Montreal Area increased by 83% in the days following their reopening on May 25th, 2020. However, the in-store sales has slowed down in recent weeks to stabilize to comparable results to the 2019 period. During the month of May 2020, the Company's online sales continued to grow despite the gradual reopening of its stores.

The rehiring of temporarily laid-off employees is in progress and proceeding as the situation evolves. The Company has actively worked to promote a call-back of its employees as soon as possible and according to operational needs.

As a result of the increase in sales since the gradual reopening of our stores, the Company was able to call-back about 75% of its sales staff. The Company must continue to respect social distancing as well as the maximum number of people allowed in a commercial establishment due to the regulations set by the provincial government with COVID-19, thus limiting the number of possible sales staff per store.

The new measure related to COVID-19 which the Company had to implement in its stores and distribution centers and the effects of the closures and re-openings of our stores had a significant impact on the Company's financial results in the first semester. Despite these additional costs, the Company still managed to improve its operating results by approximately $2,976,000 before tax. Finally, since mid-June, 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. Therefore, it is possible that this could have a negative impact on future results, because the Company has orders on hand it may not be able to deliver due to this short coming.

In this new economy the widespread cost restructuring as well as technological and operational improvements has produced a massive increase in unemployment rate in response to the COVID-19 pandemic. In addition, to the increase in the cost of living and the high level of Quebecers who are in debt are all factors which could inhibit consumer spending in the near future.

As at July 31, 2020, cash and investments had a market value of $211,314,000. The Company's financial position will allow it to weather through this period of uncertainty with more ease. Also, the Company owns nearly all of its stores and distribution centers, which reduces pressure on cash flow requirements.

Management is confident that the Company's operational efficiency during this crisis, its market leadership and solid financial position will allow us to emerge a stronger organization even in these difficult market conditions.

We would like to take this opportunity to thank all our fellow citizens who are relentlessly working day and night with extreme dedication to reduce spread of COVID-19 and who to caring for those who have been infected. Our thoughts are also with all those who have in any way been affected by the virus.

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 2020 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 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.

Cision View original content: http://www.newswire.ca/en/releases/archive/September2020/10/c5680.html

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