BMTC Group Inc. announces financial results for its quarter ended June 30th, 2015

MONTREAL, Aug. 6, 2015 /CNW Telbec/ - For the six month period ended June 30th, 2015, the Company's revenues increased by $9,654,000 to $337,653,000, compared to $327,999,000 recorded in the corresponding 2014 period, a 3% increase. Same store revenues increased by 1.5% for the same period. Net earnings for the six month period ended June 30th, 2015, amounted to $12,255,000 compared to $12,552,000 for the corresponding 2014 period. Basic net earnings per share decreased to $0.27 compared to $0.28 in 2014.

In 2015, the Company incurred new store opening costs during the second quarter, while in 2014 these same types of costs were charged during the first quarter.

The decrease in net earnings for the first semester of 2015 was due to the decrease of investment revenues. 

The effect of costing options had no impact on net basic earnings per share for the six month period ended June 30th, 2015 and 2014.

The share repurchase program had no impact on net basic earnings per share for the six month period ended June 30th, 2015 and 2014.  

Excluding the non significant effect of the costing of options, the variation the adjusted net earnings would have been $(623,000) or $(0.01) per basic share for the six month period ended June 30th, 2015.

The $(623,000) variation in adjusted net earnings in 2015 is as follows:


($ in thousands)






2015


2014




Net Earnings

12 255


12 552

Variation of cost of options (after-tax)

(201)


125

Adjusted Net Earnings

12 054


12 677





Minus: Adjusted Net Earnings for 2014

12 677







Variation

(623)



 

This variation in adjusted after-tax income is allocated as follows for the first two quarters:


($ in thousands)








Increase (decrease)


Increase (decrease)


Increase (decrease)


retail operating


investment


adjusted


earnings


income


operating earnings







1st quarter 2015

1 464


(214)


1 250

2nd quarter 2015

(1 427)


(446)


(1 873)

Total

37


(660)


(623)

 

Annual Financial Information

($ in thousands, except for per share amounts)


2014

2013


$

$

Revenue

701 356

694 743

Net Earnings

48 647

57 254

Total Assets

362 350

306 296

Net earnings Per Share




Basic

1,08

1,24


Diluted

1,08

1,24

Dividends Per Share

0,24

0,24

 

Financial Position and Dividends

Cash and investments increased by $20,161,000 during the six month period ended June 30th, 2015. Investments consist primarily of bank notes and common shares, which at the close of the period had a market value of $177,826,000 (including cash).

As of June 30th, 2015, the working capital showed a surplus of $105,614,000 an increase of $88,641,000 compared to December 31st, 2014. The Company's shareholders' equity increased from $255,426,000 in 2014 to $266,475,000 as at June 30th, 2015. As of June 30th, 2015, the book value per share stood at $5.94, compared to $5.68 as at December 31st, 2014.

The number of outstanding shares of the Company changed during the six month period ended June 30th, 2015, pursuant to the normal course issuer bids on March 12th, 2014 and renewed on March 13th, 2015 and the conversion of Class B Multiple Voting Shares. Accordingly, 67,838 Class A Subordinate Voting Shares were repurchased and cancelled by the Company. As a result of this change the Company had on June 30th, 2014, 1,748,796 Class B Multiple Voting Shares and 43,145,066 Class A Subordinate Voting Shares outstanding.

On May 11th, 2015, the Company announced the completion of the reorganization to eliminate the Company's dual-class share capital structure by way of court-approved plan of arrangement. The Company received all required approvals to complete the arrangement, including a final order from the Superior Court of Québec. Pursuant to the arrangement, all issued and outstanding Class B Multiple Voting Shares were converted into Class A Subordinate Voting Shares on a one-for-one basis, without any monetary consideration being paid. The Class A Subordinate Voting Shares were also renamed "Common Shares". As at June 30th, 2015, the Company had 44,893,862 Common Shares outstanding.

During the six month period ended June 30th, 2015, no options were granted or exercised. As at June 30th, 2015, options for 229,850 Common Shares, representing 0.51% of the Company's outstanding shares remain issued and 5,710,864 authorized share options, representing approximately 12.72% 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.

On July 10th, 2015, the Company announced that it has repurchased for cancellation 6,980,012 common shares at a price of $15.50 per share, for a total consideration of $108,190,186, which was paid from BMTC's cash on hand. This price represents a discount of 5.5% to the trading price of the last independent transaction on the Toronto Stock Exchange and a discount of 1.2% to the simple average of the closing price of the Company's common shares on the Toronto Stock Exchange for the 20 days ending on July 9th, 2015 on which common shares of the Company were traded

A favorable decision was obtained from the Autorité des marchés financiers to exempt the Company from the issuer bid requirements under applicable securities legislation in connection with the transaction. Post-transaction, there are 37,913,850 common shares issued and outstanding (compared with 44,893,862 common shares pre-transaction), representing a decrease of approximately 15.5% of the total number of common shares issued and outstanding.

This repurchase had the effect of reducing the book value per share by 1.77$, while the accretive effect is 0.05$ per share.

In the context of the share repurchase, the Company amended its normal course issuer bid that will be in effect until March 12th, 2016 in order to specifically authorize purchases effected outside the facilities of the Toronto Stock Exchange pursuant to exemption orders issued by Canadian securities regulatory authorities. The price that the Company will pay for purchases effected outside the facilities of the Toronto Stock Exchange pursuant to exemption orders issued by securities regulatory authorities will be at discount to the prevailing market prices in compliance with the requirements under such exemption orders. In accordance with the rules of the Toronto Stock Exchange, because the number of common shares repurchased exceeds the annual aggregate limit of shares that the Company may repurchase by March 12th, 2016 under its current normal course issuer bid, the Company may no longer repurchase shares under its current normal course issuer bid.

A semi annual eligible dividend of $0.12 per Common Share has been declared to holders registered at the close of business on August 17th, 2015 which will be payable on August 21st, 2015.

 

Quarterly Results (Unaudited)

($ in thousands, except for per share amounts)


   March

   June

  September

 December


2015

2014

2015

2014

2014

2013

2014

2013


$

$

$

$

$

$

$

$










Revenue

149 280

145 118

188 373

182 881

190 207

187 315

183 150

174 168










Net (loss) earnings

59

(1 468)

12 196

14 020

18 271

15 840

17 824

26 625

Net (loss) earnings per share



















Basic

0,00

(0,03)

0,27

0,31

0,40

0,34

0,40

0,58


Diluted

0,00

(0,03)

0,27

0,31

0,40

0,34

0,40

0,58

 

For the three month period ended June 30th, 2015, the Company's revenues increased by $5,492,000 to $188,373,000, compared to $182,881,000 recorded in the corresponding 2014 period. Net earnings for the three month period ended June 30th, 2015, amounted to $12,196,000 compared to $14,020,000 for the corresponding 2014 period. Basic net earnings per share amounted to $0.27 compared to $0.31 in 2014.

The effect of costing options had no impact on net basic earnings per share for the three month period ended June 30th, 2015 and 2014.

The share repurchase program had no impact on basic net earnings per share during the three month period ended June 30th, 2015 and 2014.

Excluding the non significant effect of the costing of options, the variation the adjusted net earnings would have been $(1,873,000) or $(0.04) per basic share for the three month period ended June 30th, 2015.

The $(1,873,000) variation in adjusted net earnings in 2015 is as follows:


($ in thousands)






2015


2014



Net Earnings

12 196


14 020

Variation of cost of options (after-tax)

(71)


(22)

Adjusted Net Earnings

12 125


13 998





Minus: Adjusted Net Earnings for 2014

13 998







Variation

(1 873)



 

Operations

BMTC Group Inc.

On July 10th, 2015, the Company proceeded with a simplified vertical merger with its subsidiary Groupe ATBM Inc. (Brault & Martineau and EconoMax division).

The Company has started the restructuration of all of its websites. The first phase of the implementation of a distinct e-commerce platform for its banner Brault & Martineau will be completed and operational during the last quarter of 2015. The process of implementation will continue throughout 2016 for the second phase as well as for all the other banners of the Company. The Company is also reviewing its IT systems in order standardise them throughout the banners, as well as to allow them to be more aligned with our e-commerce strategies. The costs related to these modifications are estimated to be $10,600,000 and will be charged in 2015 and 2016.

Brault & Martineau Division

The Company is presently evaluating the refitting its furniture and electronic departments in all of its stores. The objective of this improvement is to offer our clients a unique shopping experience which will help differentiate us from online shopping. The costs related to these renovations for the next two years, 2016 and 2017, are estimated to be $15,000,000.

EconoMax Division

In April 2015, the Company proceeded with the opening of a new store in Granby, the costs related this opening were charged in the period ended June 30th, 2015. Finally, the Company purchased land in Drummondville and the construction of the store started during the second quarter of 2015 for an opening in 2015. Following the opening of the Drummondville store, the EconoMax banner will now have 11 stores in the province of Quebec.

Risk Factors and Market Tendencies

The Company operates a furniture, electronic and household appliance retail business, and is therefore subject to many risk factors such as:

  1. Sensitivity to general economic conditions
  2. Reliance on key personnel
  3. Investment portfolio risks
  4. Third-party credit providers for financing solutions to clients
  5. Labour relations with employees, some of whom are unionized
  6. Maintaining profitability and managing growth :
    • Highly competitive nature of the retail industry
    • Effectiveness of our marketing programs
    • Capacity to anticipate changes in fashion trends and consumer tastes in a timely manner
    • Retention of senior management

The Company is also dependent on its management information systems, its distribution operations, as well as its suppliers.

For a number of years, we have seen an increasing presence of strong competitors operating on a national and international level. Furthermore, the Company witnessed a deflationary trend in many products that it sells, forcing it to innovate by introducing new products.

The majority of sales are realized using financing solutions offered by third-party credit providers. A significant increase in interest rates or a tightening of credit conditions could have a significant impact on the Company's sales. There are no guaranties the Company will be able to continue procuring such advantageous financing solutions for its customers, which in the past has permitted the Company to maintain its current growth rates.

It is impossible to isolate and measure the importance of each individual risk to which the Company is exposed. In the past, the Company has managed to adapt to these changes and maintain its market share notably by aggressive marketing campaigns and efficient management.

As at June 30th, 2015, options for 229,850 Class A Subordinate Voting Shares remain outstanding for a total liability of $450,702. Due to the calculation based on the Black-Scholes method, it is impossible to predict the future value of this liability. As to the liability's redemption, it rests on the willingness of the option holders to exercise their options. The number of months before the remaining options come to maturity is 59 months.

Management Discussion and Outlook for the Future of the Company 

In spite of a difficult economic context, the Quebec economy has seen a slight growth in 2014. The loss of more than 100,000 jobs in Quebec as well as government austerity measures caused a slowdown in consumer spending. According to the Conseil québécois du commerce de detail (CQCD), the Quebec economy progressed by nearly 3.5% during 2014 and forecasts for 2015 are not very promising. It is expected that 2015 will be one of the worst years since 2010 for bankruptcy chapters in the retail industry. The decrease in the purchasing power of Quebec consumers is therefore making them look for deals and they tend to purchase more affordable products. This is putting a downward pressure on our sales as well as on our average invoices.

During 2015, the Company intends to continue its expansion of the EconoMax banner. Following the opening of the Granby store in April 2015, and a new store in Drummondville, this will bring up to a total of eleven EconoMax stores in the metropolitan area of Montreal, giving the banner the visibility needed to properly develop.

Management feels that the Company's financial position provides the Company with a competitive advantage, particularly in difficult market conditions. It permits the Company to continue its aggressive marketing campaigns, allowing it to remain a leading participant in its market, while continuing to offer a superior financial performance.

Caution regarding forward-looking statements

This Quarterly Management Report 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 2014 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 Quarterly Management Report. 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 Quarterly Management Report, 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 includs or excluds certain amounts that are not considered representative of performance measures and financial recurrence of the Company. Management believes that this measure is useful in understanding and analysing the operational performance of the Company.

The Company discloses in this MD&A under the section "Results" a reconciliation between net earnings and adjusted net earnings.

Adjusted net earnings are not an earnings measure recognised by IFRS and does not have a standardised meaning prescribed by IFRS. Therefore, adjusted net earnings 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, but rather as additional information.

Same store revenues are not an earnings measure recognised by IFRS and does not have a standardised meaning prescribed by IFRS. Therefore, same store sales as discussed in this MD&A may not be compared to similar measures presented by other issuers.

BMTC Group Inc.'s Common Shares are listed on the Toronto Stock Exchange and through its subsidiary, Ameublements Tanguay Inc., is a major retailer of furniture, electronic goods and household appliances operating in the province of Quebec.

 

SOURCE BMTC Group Inc.

For further information: Mr. Yves Des Groseillers, Chairman, President and Chief Executive Officer, BMTC Group Inc., (514) 648-5757

RELATED LINKS
www.braultetmartineau.com

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