George Weston Limited Reports Second Quarter 2024 Results
GWL's 2024 Second Quarter Report has been filed on SEDAR+ and is available at www.sedarplus.ca and in the Investor Centre section of the Company's website at www.weston.ca.
The Company's results in the second quarter of 2024 reflected the strong performance of its operating companies and the impact of the settlement of the bread price-fixing class actions commenced in 2017 which negatively impacted net earnings by
Loblaw Companies Limited ("Loblaw") delivered strong operational performance in the quarter, as Canadian consumers remained focused on value and responded favourably to Loblaw's market leading banners, private label brands, and personalized PC Optimum™ offers. Loblaw maintained its focus on retail excellence across its businesses, driving sales growth, and maintaining a careful focus on cost control. Drug retail sales continued to outperform food retail. Drug front store sales reflected continued strength in the beauty category but were pressured by Loblaw's exit from certain low margin electronics categories. Pharmacy sales growth rates returned to more normal levels, reflecting ongoing momentum in new healthcare services. Food retail sales reflected increased customer visits in the quarter, despite lapping very strong sales growth last year. Food sales growth was led by the ongoing strength of Loblaw's Maxi and NoFrills hard discount stores. A sharp focus on value was reflected in another sequential reduction in Loblaw's internal inflation rate. Food inflation rates have been declining and remain below
Choice Properties Real Estate Investment Trust ("
"George Weston's strong results reflect the consistent operational and financial performance of its businesses," said
2024 SECOND QUARTER HIGHLIGHTS
- Revenue was
$14,091 million , an increase of$207 million , or 1.5%. - Adjusted EBITDA(1) was
$1,806 million , an increase of$73 million , or 4.2%. - Net earnings available to common shareholders of the Company were
$400 million ($2.97 per common share), a decrease of$98 million , or 19.7%. The decrease was due to the unfavourable year-over-year net impact of adjusting items including the charges related to the settlement of class action lawsuits. - Adjusted net earnings available to common shareholders of the Company(1) were
$394 million , an increase of$17 million , or 4.5%. - Adjusted diluted net earnings per common share(1) were
$2.93 , an increase of$0.25 per common share, or 9.3%. - Repurchased for cancellation 1.8 million common shares at a cost of
$339 million . - GWL Corporate free cash flow(1) was
$282 million .
CONSOLIDATED RESULTS OF OPERATIONS
The Company operates through its two reportable operating segments:
The Company's results reflect the year-over-year impact of the fair value adjustment of the Trust Unit liability as a result of the significant changes in
|
($ millions except where otherwise indicated) For the periods ended as indicated |
12 Weeks Ended |
|
|
|
|
|
|
||||||
|
Jun. 15, 2024 |
|
|
$ Change |
|
% Change |
|
|||||||
|
Revenue |
$ |
14,091 |
$ |
13,884 |
|
$ |
207 |
|
1.5 % |
|
|||
|
Operating income |
$ |
795 |
$ |
1,099 |
|
$ |
(304) |
|
(27.7) % |
|
|||
|
Adjusted EBITDA(1) from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loblaw |
$ |
1,711 |
$ |
1,638 |
|
$ |
73 |
|
4.5 % |
|
|||
|
|
$ |
240 |
$ |
238 |
|
$ |
2 |
|
0.8 % |
|
|||
|
Effect of consolidation |
$ |
(140) |
$ |
(128) |
|
$ |
(12) |
|
(9.4) % |
|
|||
|
Publicly traded operating companies |
$ |
1,811 |
$ |
1,748 |
|
$ |
63 |
|
3.6 % |
|
|||
|
GWL Corporate |
$ |
(5) |
$ |
(15) |
|
$ |
10 |
|
66.7 % |
|
|||
|
Adjusted EBITDA(1) |
$ |
1,806 |
$ |
1,733 |
|
$ |
73 |
|
4.2 % |
|
|||
|
Adjusted EBITDA margin(1) |
|
12.8 % |
|
12.5 % |
|
|
|
|
|
|
|||
|
Net earnings attributable to shareholders of the Company |
$ |
410 |
$ |
508 |
|
$ |
(98) |
|
(19.3) % |
|
|||
|
Loblaw(i) |
$ |
241 |
$ |
267 |
|
$ |
(26) |
|
(9.7) % |
|
|||
|
|
$ |
514 |
$ |
536 |
|
$ |
(22) |
|
(4.1) % |
|
|||
|
Effect of consolidation |
$ |
(154) |
$ |
(252) |
|
$ |
98 |
|
38.9 % |
|
|||
|
Publicly traded operating companies |
$ |
601 |
$ |
551 |
|
$ |
50 |
|
9.1 % |
|
|||
|
GWL Corporate |
$ |
(201) |
$ |
(53) |
|
$ |
(148) |
|
(279.2) % |
|
|||
|
Net earnings available to common shareholders of the Company |
$ |
400 |
$ |
498 |
|
$ |
(98) |
|
(19.7) % |
|
|||
|
Diluted net earnings per common share ($) |
$ |
2.97 |
$ |
3.55 |
|
$ |
(0.58) |
|
(16.3) % |
|
|||
|
Loblaw(i) |
$ |
350 |
$ |
328 |
|
$ |
22 |
|
6.7 % |
|
|||
|
|
$ |
105 |
$ |
105 |
|
$ |
— |
|
— % |
|
|||
|
Effect of consolidation |
$ |
(29) |
$ |
(13) |
|
$ |
(16) |
|
(123.1) % |
|
|||
|
Publicly traded operating companies |
$ |
426 |
$ |
420 |
|
$ |
6 |
|
1.4 % |
|
|||
|
GWL Corporate |
$ |
(32) |
$ |
(43) |
|
$ |
11 |
|
25.6 % |
|
|||
|
Adjusted net earnings available to common shareholders of the Company(1) |
$ |
394 |
$ |
377 |
|
$ |
17 |
|
4.5 % |
|
|||
|
Adjusted diluted net earnings per common share(1) ($) |
$ |
2.93 |
$ |
2.68 |
|
$ |
0.25 |
|
9.3 % |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i) |
Contribution from Loblaw, net of non-controlling interests. |
Net earnings available to common shareholders of the Company in the second quarter of 2024 were
The unfavourable year-over-year net impact of adjusting items totaling
- the unfavourable impact of charges related to the settlement of class action lawsuits of
$253 million ($1.89 per common share); and - the unfavourable year-over-year impact of the fair value adjustment on investment properties of
$21 million ($0.15 per common share) driven byChoice Properties , net of the effect of consolidation;
partially offset by,
- the favourable year-over-year impact of the fair value adjustment of the Trust Unit liability of
$72 million ($0.60 per common share) as a result of the decrease inChoice Properties' unit price; - the favourable impact of the reversal of a transaction related provision of
$39 million ($0.29 per common share) that was determined to be no longer required atChoice Properties ; - the favourable year-over-year impact of the deferred tax expense of
$30 million ($0.22 per common share) related to the outside basis difference in certain Loblaw shares as a result of GWL's participation in Loblaw's Normal Course Issuer Bid ("NCIB") program; and - the favourable year-over-year impact of the prior year charge related to a
President's Choice Bank ("PC Bank ") commodity tax matter at Loblaw of$15 million ($0.11 per common share).
Adjusted net earnings available to common shareholders of the Company(1) in the second quarter of 2024 were $394 million, an increase of $17 million, or 4.5%, compared to the same period in 2023. The increase was driven by the favourable year-over-year impact of $6 million from the contribution of the publicly traded operating companies and the favourable year-over-year impact of $11 million at GWL Corporate primarily due to the year-over-year impact of the fair value adjustment on other investments.
Adjusted diluted net earnings per common share(1) were
CONSOLIDATED OTHER BUSINESS MATTERS
GWL CORPORATE FINANCING ACTIVITIES The Company completed the following select GWL Corporate financing activities:
NCIB – Purchased and Cancelled Shares In the second quarter of 2024, the Company purchased and cancelled 1.8 million common shares (2023 – 1.5 million common shares) for aggregate consideration of
In the second quarter of 2024, the Company entered into an automatic share purchase plan ("ASPP") with a broker in order to facilitate the repurchase of the Company's common shares under its NCIB. During the effective period of the ASPP, the Company's broker may purchase common shares at times when the Company would not be active in the market.
Refer to note 11, "Share Capital" of the Company's second quarter 2024 unaudited interim period condensed consolidated financial statements for more information.
Participation in Loblaw's NCIB The Company participates in Loblaw's NCIB in order to maintain its proportionate percentage ownership interest. In the second quarter of 2024, Loblaw repurchased 1.3 million common shares (2023 – 2.1 million common shares) from the Company for aggregate consideration of
SUBSEQUENT EVENTS
Debenture Repayment Subsequent to the end of the second quarter of 2024, the Company redeemed in full, at par, plus accrued and unpaid interest thereon, the
Settlement of Class Action Lawsuits On
RESULTS BY OPERATING SEGMENT
The following table provides key performance metrics for the Company by segment.
|
|
|
12 Weeks Ended |
|
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|
|
|
|
|
|
|
|
||||||||||||||||
($ millions) |
|
Loblaw |
Choice Properties |
Effect of |
GWL |
Total |
|
Loblaw |
Choice Properties |
Effect of |
GWL |
Total |
|
||||||||||
Revenue |
|
$ |
13,947 |
$ |
336 |
$ |
(192) |
$ |
— |
$ |
14,091 |
|
$ |
13,738 |
$ |
330 |
$ |
(184) |
$ |
— |
$ |
13,884 |
|
Operating income |
|
$ |
866 |
$ |
273 |
$ |
(82) |
$ |
(262) |
$ |
795 |
|
$ |
925 |
$ |
290 |
$ |
(100) |
$ |
(16) |
$ |
1,099 |
|
Adjusted operating income(1) |
|
|
1,147 |
|
239 |
|
(57) |
|
(6) |
|
1,323 |
|
|
1,083 |
|
237 |
|
(40) |
|
(16) |
|
1,264 |
|
Adjusted EBITDA(1) |
|
$ |
1,711 |
$ |
240 |
$ |
(140) |
$ |
(5) |
$ |
1,806 |
|
$ |
1,638 |
$ |
238 |
$ |
(128) |
$ |
(15) |
$ |
1,733 |
|
Net interest expense (income) and other financing charges |
|
$ |
190 |
$ |
(241) |
$ |
48 |
$ |
— |
$ |
(3) |
|
$ |
193 |
$ |
(246) |
$ |
127 |
$ |
(1) |
$ |
73 |
|
Adjusted net interest expense and other financing charges(1) |
|
|
190 |
|
134 |
|
(53) |
|
— |
|
271 |
|
|
193 |
|
132 |
|
(49) |
|
(1) |
|
275 |
|
Earnings before income taxes |
|
$ |
676 |
$ |
514 |
$ |
(130) |
$ |
(262) |
$ |
798 |
|
$ |
732 |
$ |
536 |
$ |
(227) |
$ |
(15) |
$ |
1,026 |
|
Income taxes |
|
$ |
180 |
$ |
— |
$ |
24 |
$ |
(73) |
$ |
131 |
|
$ |
193 |
$ |
— |
$ |
25 |
$ |
26 |
$ |
244 |
|
Adjusted income taxes(1) |
|
|
254 |
|
— |
|
25 |
|
14 |
|
293 |
|
|
233 |
|
— |
|
22 |
|
16 |
|
271 |
|
Net earnings attributable to non-controlling interests |
|
$ |
255 |
$ |
— |
$ |
— |
$ |
2 |
$ |
257 |
|
$ |
272 |
$ |
— |
$ |
— |
$ |
2 |
$ |
274 |
|
Prescribed dividends on preferred shares in share capital |
|
|
— |
|
— |
|
— |
|
10 |
|
10 |
|
|
— |
|
— |
|
— |
|
10 |
|
10 |
|
Net earnings available to common shareholders of the Company |
|
$ |
241 |
$ |
514 |
$ |
(154) |
$ |
(201) |
$ |
400 |
|
$ |
267 |
$ |
536 |
$ |
(252) |
$ |
(53) |
$ |
498 |
|
Adjusted net earnings available to common shareholders of the Company(1) |
|
|
350 |
|
105 |
|
(29) |
|
(32) |
|
394 |
|
|
328 |
|
105 |
|
(13) |
|
(43) |
|
377 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of consolidation includes the following items:
|
|
12 Weeks Ended |
|
|||||||||||||||||||
|
|
|
|
|
|
|
||||||||||||||||
($ millions) |
Revenue |
Operating Income |
Adjusted |
Net Interest Expense and Other Financing Charges |
Adjusted Net |
|
Revenue |
Operating Income |
Adjusted |
Net Interest Expense and Other Financing Charges |
Adjusted Net |
|
||||||||||
Elimination of intercompany rental revenue |
$ |
(195) |
$ |
(13) |
$ |
(13) |
$ |
— |
$ |
(11) |
|
$ |
(188) |
$ |
(6) |
$ |
(6) |
$ |
— |
$ |
(5) |
|
Elimination of internal lease arrangements |
|
3 |
|
(30) |
|
(125) |
|
(30) |
|
1 |
|
|
4 |
|
(30) |
|
(125) |
|
(26) |
|
(3) |
|
Elimination of intersegment real estate transactions |
|
— |
|
(2) |
|
(2) |
|
— |
|
(2) |
|
|
— |
|
6 |
|
3 |
|
— |
|
10 |
|
Recognition of depreciation on |
|
— |
|
(12) |
|
— |
|
— |
|
(12) |
|
|
— |
|
(7) |
|
— |
|
— |
|
(8) |
|
Fair value adjustment on investment properties |
|
— |
|
(25) |
|
— |
|
3 |
|
— |
|
|
— |
|
(63) |
|
— |
|
2 |
|
— |
|
Unit distributions on Exchangeable Units paid by |
|
— |
|
— |
|
— |
|
(75) |
|
75 |
|
|
— |
|
— |
|
— |
|
(74) |
|
74 |
|
Unit distributions on Trust Units paid by |
|
— |
|
— |
|
— |
|
52 |
|
(52) |
|
|
— |
|
— |
|
— |
|
51 |
|
(51) |
|
Fair value adjustment on |
|
— |
|
— |
|
— |
|
372 |
|
— |
|
|
— |
|
— |
|
— |
|
376 |
|
— |
|
Fair value adjustment of the Trust Unit liability |
|
— |
|
— |
|
— |
|
(274) |
|
— |
|
|
— |
|
— |
|
— |
|
(202) |
|
— |
|
Tax expense on |
|
— |
|
— |
|
— |
|
— |
|
(28) |
|
|
— |
|
— |
|
— |
|
— |
|
(30) |
|
Total |
$ |
(192) |
$ |
(82) |
$ |
(140) |
$ |
48 |
$ |
(29) |
|
$ |
(184) |
$ |
(100) |
$ |
(128) |
$ |
127 |
$ |
(13) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loblaw Operating Results
Loblaw has two reportable operating segments, retail and financial services. Loblaw's retail segment consists primarily of food retail and drug retail. Loblaw provides Canadians with grocery, pharmacy and healthcare services, health and beauty products, apparel, general merchandise and financial services.
($ millions except where otherwise indicated) For the periods ended as indicated |
|
|
12 Weeks Ended |
|
|
|
|
|
|
||||||
Jun. 15, 2024 |
|
|
|
$ Change |
|
% Change |
|
||||||||
Revenue |
|
$ |
13,947 |
|
$ |
13,738 |
|
$ |
209 |
|
1.5 % |
|
|||
Operating income |
|
$ |
866 |
|
$ |
925 |
|
$ |
(59) |
|
(6.4) % |
|
|||
Adjusted EBITDA(1) |
|
$ |
1,711 |
|
$ |
1,638 |
|
$ |
73 |
|
4.5 % |
|
|||
Adjusted EBITDA margin(1) |
|
|
12.3 % |
|
|
11.9 % |
|
|
|
|
|
|
|||
Depreciation and amortization |
|
$ |
679 |
|
$ |
671 |
|
$ |
8 |
|
1.2 % |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue Loblaw revenue in the second quarter of 2024 was
Retail sales were
- food retail sales were
$9,653 million (2023 –$9,560 million ) and food retail same-store sales growth was 0.2% (2023 – 6.1%);- the CPI for Food Purchased from Stores was 1.7% (2023 – 9.1%), which was in line with Loblaw's internal food inflation; and
- food retail traffic increased and basket size decreased.
- drug retail sales were
$4,005 million (2023 –$3,911 million ) and drug retail same-store sales growth was 1.5% (2023 – 5.7%);- pharmacy and healthcare services same-store sales growth was 5.4% (2023 – 6.3%). On a same-store basis, the number of prescriptions increased by 2.1% (2023 – 0.9%) and the average prescription value increased by 1.9% (2023 – 4.7%);
partially offset by,
-
- front store same-store sales decline of 2.4% (2023 – growth of 5.0%). The decline in front store same-store sales was primarily driven by lower sales of food and household items and the decision to exit certain low margin electronics categories, partially offset by the continued strength in beauty products.
Financial services revenue was $367 million, an increase of $19 million, or 5.5%, compared to the same period in 2023, primarily driven by higher interest income from growth in credit card receivables and higher sales attributable to The Mobile Shop.
Operating Income Loblaw operating income in the second quarter of 2024 was $866 million, a decrease of $59 million, or 6.4%, compared to the same period in 2023. The decrease was primarily driven by the unfavourable impact of charges related to the settlement of class action lawsuits.
Adjusted EBITDA(1) Loblaw adjusted EBITDA(1) in the second quarter of 2024 was
Retail adjusted EBITDA(1) increased by
- Retail gross profit percentage of 32.0% increased by 90 basis points compared to the same period in 2023, primarily driven by improvements in shrink, and an increase in drug retail gross margins mainly due to sales mix.
- Retail SG&A as a percentage of sales was 19.9%, an increase of 60 basis points compared to the same period in 2023, primarily due to lower operating leverage, the year-over-year impact of labour costs and certain real estate activities, and costs related to network optimization.
Financial services adjusted EBITDA(1) increased by $11 million compared to the same period in 2023, primarily driven by higher revenue as described above, and the year-over-year favourable impact of the expected credit loss provision, partially offset by higher contractual charge-offs due to the current macro-economic environment.
Depreciation and Amortization Loblaw depreciation and amortization in the second quarter of 2024 was $679 million, an increase of $8 million compared to the same period in 2023. The increase was primarily driven by an increase in depreciation of leased assets and information technology ("IT") assets, and an increase in depreciation of fixed assets related to conversions of retail locations, partially offset by the impact of prior year accelerated depreciation due to the reassessment of the estimated useful life of certain IT assets. Depreciation and amortization in the second quarter of 2024 included $115 million (2023 – $116 million) of amortization of intangible assets related to the acquisitions of
Choice Properties Operating Results
($ millions except where otherwise indicated) For the periods ended as indicated |
|
|
12 Weeks Ended |
|
|
|
|
|
|||
|
|
|
|
$ Change |
|
% Change |
|
||||
Revenue |
|
$ |
336 |
|
$ |
330 |
$ |
6 |
|
1.8 % |
|
Net interest income and other financing charges |
|
$ |
(241) |
|
$ |
(246) |
$ |
5 |
|
2.0 % |
|
Net income |
|
$ |
514 |
|
$ |
536 |
$ |
(22) |
|
(4.1) % |
|
Funds from Operations(1) |
|
$ |
185 |
|
$ |
184 |
$ |
1 |
|
0.5 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue Choice Properties revenue in the second quarter of 2024 was $336 million, an increase of $6 million, or 1.8%, compared to the same period in 2023 and included revenue of $193 million (2023 – $186 million) generated from tenants within Loblaw.
The increase in revenue in the second quarter of 2024 was primarily driven by:
- higher rental rates primarily in the retail and industrial portfolios;
- higher capital recoveries; and
- acquisitions and completed developments;
partially offset by,
- lower lease surrender revenue.
Net Interest Income and Other Financing Charges
Net Income Choice Properties recorded net income of
- the unfavourable year-over-year change in the adjustment to fair value of investment properties, including those held within equity accounted joint ventures of
$61 million ;
partially offset by,
- the favourable impact of the reversal of a transaction related provision of
$39 million that was determined to be no longer required.
Funds from Operations(1) Funds from Operations(1) in the second quarter of 2024 were $185 million, an increase of $1 million compared to the same period in 2023. The increase was primarily due to an increase in rental income, partially offset by higher general and administrative expenses and an increase in interest expense net of an increase in interest income.
Choice Properties Other Business Matters
Subsequent Events On
On
On
On
OUTLOOK(2)
The Company's 2024 outlook remains unchanged and it continues to expect adjusted net earnings(1) to increase due to the results from its operating segments, and to use excess cash to repurchase shares.
Loblaw Loblaw will continue to execute on retail excellence while advancing its growth initiatives with the goal of delivering consistent operational and financial results in 2024. Loblaw's businesses remain well positioned to meet the everyday needs of Canadians.
For the full-year 2024, Loblaw continues to expect:
- its retail business to grow earnings faster than sales;
- adjusted net earnings per common share(1) growth in the high single-digits;
- to continue investing in its store network and distribution centres by investing a net amount of
$1.8 billion in capital expenditures, which reflects gross capital investments of approximately$2.2 billion , net of approximately$400 million of proceeds from property disposals; and - to return capital to shareholders by allocating a significant portion of free cash flow to share repurchases.
- stable occupancy across the portfolio, resulting in 2.5% - 3.0% year-over-year growth in Same-Asset NOI, cash basis(3);
- annual FFO(1) per unit diluted(3) in a range of
$1.02 to$1.03 , reflecting 2.0% - 3.0% year-over-year growth; and - strong leverage metrics, targeting Adjusted Debt to EBITDAFV(3) below 7.5x.
FORWARD-LOOKING STATEMENTS
This News Release contains forward-looking statements about the Company's objectives, plans, goals, aspirations, strategies, financial condition, results of operations, cash flows, performance, prospects, opportunities and legal and regulatory matters. Specific forward-looking statements in this News Release include, but are not limited to, statements with respect to the Company's anticipated future results, events and plans, strategic initiatives and restructuring, regulatory changes including further healthcare reform, future liquidity, planned capital investments, and the status and impact of IT systems implementations. These specific forward-looking statements are contained throughout this News Release including, without limitation, in the "Outlook" section of this News Release. Forward-looking statements are typically identified by words such as "expect", "anticipate", "believe", "foresee", "could", "estimate", "goal", "intend", "plan", "seek", "strive", "will", "may", "should" and similar expressions, as they relate to the Company and its management.
Forward-looking statements reflect the Company's estimates, beliefs and assumptions, which are based on management's perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. The Company's estimates, beliefs and assumptions are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and, as such, are subject to change. The Company can give no assurance that such estimates, beliefs and assumptions will prove to be correct.
Numerous risks and uncertainties could cause the Company's actual results to differ materially from those expressed, implied or projected in the forward-looking statements, including those described in the "Enterprise Risks and Risk Management" sections of the Management's Discussion and Analysis in the Company's 2023 Annual Report and the Company's Annual Information Form for the year ended
Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect the Company's expectations only as of the date of this News Release. Except as required by law, the Company does not undertake to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
DECLARATION OF QUARTERLY DIVIDENDS
Subsequent to the end of the second quarter of 2024, the Company's Board of Directors declared a quarterly dividend on GWL Common Shares, Preferred Shares, Series I, Preferred Shares, Series III, Preferred Shares, Series IV and Preferred Shares, Series V payable as follows:
Common Shares |
|
|
|
Preferred Shares, Series I |
|
|
|
Preferred Shares, Series III |
|
|
|
Preferred Shares, Series IV |
|
|
|
Preferred Shares, Series V |
|
2024 SECOND QUARTER REPORT
The Company's 2023 Annual Report and 2024 Second Quarter Report are available in the Investor Centre section of the Company's website at www.weston.ca and have been filed on SEDAR+ and are available at www.sedarplus.ca.
INVESTOR RELATIONS
Shareholders, security analysts and investment professionals should direct their requests to
Additional financial information has been filed electronically with various securities regulators in
Ce rapport est disponible en français.
|
|
Endnotes |
|
|
|
(1) |
See the "Non-GAAP and Other Financial Measures" section in Appendix 1 of this News Release, which includes the reconciliation of such non-GAAP and other financial measures to the most directly comparable GAAP measures. |
(2) |
This News Release contains forward-looking information. See "Forward-Looking Statements" section of this News Release and the Company's 2023 Annual Report for a discussion of material factors that could cause actual results to differ materially from the forecasts and projections herein and of the material factors and assumptions that were used when making these statements. This News Release should be read in conjunction with GWL's filings with securities regulators made from time to time, all of which can be found at www.weston.ca and www.sedarplus.ca. |
(3) |
For more information on |
|
APPENDIX 1: NON-GAAP AND OTHER FINANCIAL MEASURES
The Company uses non-GAAP and other financial measures and ratios as it believes these measures and ratios provide useful information to both management and investors with regard to accurately assessing the Company's financial performance and financial condition.
Further, certain non-GAAP measures and other financial measures of
Management uses these and other non-GAAP and other financial measures to exclude the impact of certain expenses and income that must be recognized under GAAP when analyzing underlying consolidated and segment operating performance, as the excluded items are not necessarily reflective of the Company's underlying operating performance and make comparisons of underlying financial performance between periods difficult. The Company adjusts for these items if it believes doing so would result in a more effective analysis of underlying operating performance. The exclusion of certain items does not imply that they are non-recurring.
These measures do not have a standardized meaning prescribed by GAAP and therefore they may not be comparable to similarly titled measures presented by other publicly traded companies, and should not be construed as an alternative to other financial measures determined in accordance with GAAP.
ADJUSTED EBITDA The Company believes adjusted EBITDA is useful in assessing and making decisions regarding the underlying operating performance of the Company's ongoing operations and in assessing the Company's ability to generate cash flows to fund its cash requirements, including its capital investment program.
The following table reconciles adjusted EBITDA to operating income, which is reconciled to GAAP net earnings attributable to shareholders of the Company reported for the periods ended as indicated.
|
|
|
12 Weeks Ended |
|
|||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
($ millions) |
|
Loblaw |
Choice |
Effect of |
GWL |
Consolidated |
|
Loblaw |
Choice |
Effect of |
GWL |
Consolidated |
|
||||||||||
Net earnings attributable to shareholders of the Company |
|
|
|
|
|
|
|
|
|
$ |
410 |
|
|
|
|
|
|
|
|
|
$ |
508 |
|
Add (deduct) impact of the following: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interests |
|
|
|
|
|
|
|
|
|
|
257 |
|
|
|
|
|
|
|
|
|
|
274 |
|
Income taxes |
|
|
|
|
|
|
|
|
|
|
131 |
|
|
|
|
|
|
|
|
|
|
244 |
|
Net interest (income) expense and other financing charges |
|
|
|
|
|
|
|
|
|
|
(3) |
|
|
|
|
|
|
|
|
|
|
73 |
|
Operating income |
|
$ |
866 |
$ |
273 |
$ |
(82) |
$ |
(262) |
$ |
795 |
|
$ |
925 |
$ |
290 |
$ |
(100) |
$ |
(16) |
$ |
1,099 |
|
Add (deduct) impact of the following: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charges related to settlement of class action lawsuits |
|
$ |
164 |
$ |
— |
$ |
— |
$ |
256 |
$ |
420 |
|
$ |
— |
$ |
— |
$ |
— |
$ |
— |
$ |
— |
|
Amortization of intangible assets acquired with Shoppers Drug Mart and Lifemark |
|
|
115 |
|
— |
|
— |
|
— |
|
115 |
|
|
116 |
|
— |
|
— |
|
— |
|
116 |
|
Fair value adjustment of investment in real estate securities |
|
|
— |
|
28 |
|
— |
|
— |
|
28 |
|
|
— |
|
31 |
|
— |
|
— |
|
31 |
|
Fair value adjustment on investment properties |
|
|
— |
|
(23) |
|
25 |
|
— |
|
2 |
|
|
— |
|
(84) |
|
63 |
|
— |
|
(21) |
|
Fair value adjustment of derivatives |
|
|
2 |
|
— |
|
— |
|
— |
|
2 |
|
|
5 |
|
— |
|
— |
|
— |
|
5 |
|
Transaction costs and other related recoveries |
|
|
— |
|
(39) |
|
— |
|
— |
|
(39) |
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
Charge related to |
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
37 |
|
— |
|
— |
|
— |
|
37 |
|
Gain on sale of non-operating properties |
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
(3) |
|
— |
|
(3) |
|
Adjusting items |
|
$ |
281 |
$ |
(34) |
$ |
25 |
$ |
256 |
$ |
528 |
|
$ |
158 |
$ |
(53) |
$ |
60 |
$ |
— |
$ |
165 |
|
Adjusted operating income |
|
$ |
1,147 |
$ |
239 |
$ |
(57) |
$ |
(6) |
$ |
1,323 |
|
$ |
1,083 |
$ |
237 |
$ |
(40) |
$ |
(16) |
$ |
1,264 |
|
Depreciation and amortization excluding the impact of the above adjustment(i) |
|
|
564 |
|
1 |
|
(83) |
|
1 |
|
483 |
|
|
555 |
|
1 |
|
(88) |
|
1 |
|
469 |
|
Adjusted EBITDA |
|
$ |
1,711 |
$ |
240 |
$ |
(140) |
$ |
(5) |
$ |
1,806 |
|
$ |
1,638 |
$ |
238 |
$ |
(128) |
$ |
(15) |
$ |
1,733 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i) |
Depreciation and amortization for the calculation of adjusted EBITDA excludes amortization of intangible assets acquired with |
The following items impacted adjusted EBITDA in 2024 and 2023:
Charges related to settlement of class action lawsuits On
Amortization of intangible assets acquired with Shoppers Drug Mart and Lifemark The acquisition of
The acquisition of Lifemark in 2022 included approximately
Fair value adjustment of investment in real estate securities
Fair value adjustment on investment properties The Company measures investment properties at fair value. Under the fair value model, investment properties are initially measured at cost and subsequently measured at fair value. Fair value is determined based on available market evidence. If market evidence is not readily available in less active markets, the Company uses alternative valuation methods such as discounted cash flow projections or recent transaction prices. Gains and losses on fair value are recognized in operating income in the period in which they are incurred. Gains and losses from disposal of investment properties are determined by comparing the fair value of disposal proceeds and the carrying amount and are recognized in operating income.
Fair value adjustment of derivatives Loblaw is exposed to commodity price and
Transaction costs and other related recoveries In the second quarter of 2024,
Charge related to
Gain on sale of non-operating properties In the second quarter of 2023,
ADJUSTED NET INTEREST EXPENSE AND OTHER FINANCING CHARGES The Company believes adjusted net interest expense and other financing charges is useful in assessing the ongoing net financing costs of the Company.
The following table reconciles adjusted net interest expense and other financing charges to GAAP net interest (income) expense and other financing charges reported for the periods ended as indicated.
($ millions) |
12 Weeks Ended |
|
|||||
|
|
|
|
||||
Net interest (income) expense and other financing charges |
|
$ |
(3) |
|
$ |
73 |
|
Add impact of the following: |
|
|
|
|
|
|
|
Fair value adjustment of the Trust Unit liability |
|
|
274 |
|
|
202 |
|
Adjusted net interest expense and other financing charges |
|
$ |
271 |
|
$ |
275 |
|
|
|
|
|
|
|
|
|
The following item impacted adjusted net interest expense and other financing charges in 2024 and 2023:
Fair value adjustment of the Trust Unit liability The Company is exposed to market price fluctuations as a result of the
ADJUSTED INCOME TAXES AND ADJUSTED EFFECTIVE TAX RATE The Company believes the adjusted effective tax rate applicable to adjusted earnings before taxes is useful in assessing the underlying operating performance of its business.
The following table reconciles the effective tax rate applicable to adjusted earnings before taxes to the GAAP effective tax rate applicable to earnings before taxes as reported for the periods ended as indicated.
|
12 Weeks Ended |
|
||||||
($ millions except where otherwise indicated) |
|
|
|
|
||||
Adjusted operating income(i) |
$ |
1,323 |
|
$ |
1,264 |
|
||
Adjusted net interest expense and other financing charges(i) |
|
271 |
|
|
275 |
|
||
Adjusted earnings before taxes |
$ |
1,052 |
|
$ |
989 |
|
||
Income taxes |
$ |
131 |
|
$ |
244 |
|
||
Add (deduct) impact of the following: |
|
|
|
|
|
|
||
Tax impact of items excluded from adjusted earnings before taxes(ii) |
|
142 |
|
|
37 |
|
||
Outside basis difference in certain Loblaw shares |
|
20 |
|
|
(10) |
|
||
Adjusted income taxes |
$ |
293 |
|
$ |
271 |
|
||
Effective tax rate applicable to earnings before taxes |
|
16.4 % |
|
|
23.8 % |
|
||
Adjusted effective tax rate applicable to adjusted earnings before taxes |
|
27.9 % |
|
|
27.4 % |
|
||
|
|
|
|
|
|
|
|
|
(i) |
See reconciliations of adjusted operating income and adjusted net interest expense and other financing charges above. |
(ii) |
See the adjusted EBITDA table and the adjusted net interest expense and other financing charges table above for a complete list of items excluded from adjusted earnings before taxes. |
In addition to certain items described in the "Adjusted EBITDA" and "Adjusted Net Interest Expense and Other Financing Charges" sections above, the following item impacted adjusted income taxes and the adjusted effective tax rate in 2024 and 2023:
Outside basis difference in certain Loblaw shares The Company recorded a deferred tax recovery of $20 million in the second quarter of 2024 (2023 – expense of $10 million) on temporary differences in respect of GWL's investment in certain Loblaw shares that are expected to reverse in the foreseeable future as a result of GWL's participation in Loblaw's NCIB.
ADJUSTED NET EARNINGS AVAILABLE TO COMMON SHAREHOLDERS AND ADJUSTED DILUTED NET EARNINGS PER COMMON SHARE The Company believes that adjusted net earnings available to common shareholders and adjusted diluted net earnings per common share are useful in assessing the Company's underlying operating performance and in making decisions regarding the ongoing operations of its business.
The following table reconciles adjusted net earnings available to common shareholders of the Company and adjusted net earnings attributable to shareholders of the Company to net earnings attributable to shareholders of the Company and then to net earnings available to common shareholders of the Company reported for the periods ended as indicated.
($ millions except where otherwise indicated) |
12 Weeks Ended |
|
|||||
|
|
|
|
|
|||
Net earnings attributable to shareholders of the Company |
|
$ |
410 |
|
$ |
508 |
|
Less: Prescribed dividends on preferred shares in share capital |
|
|
(10) |
|
|
(10) |
|
Net earnings available to common shareholders of the Company |
|
$ |
400 |
|
$ |
498 |
|
Less: Reduction in net earnings due to dilution at Loblaw |
|
|
(3) |
|
|
(3) |
|
Net earnings available to common shareholders for diluted earnings per share |
|
$ |
397 |
|
$ |
495 |
|
Net earnings attributable to shareholders of the Company |
|
$ |
410 |
|
$ |
508 |
|
Adjusting items (refer to the following table) |
|
|
(6) |
|
|
(121) |
|
Adjusted net earnings attributable to shareholders of the Company |
|
$ |
404 |
|
$ |
387 |
|
Less: Prescribed dividends on preferred shares in share capital |
|
|
(10) |
|
|
(10) |
|
Adjusted net earnings available to common shareholders of the Company |
|
$ |
394 |
|
$ |
377 |
|
Less: Reduction in net earnings due to dilution at Loblaw |
|
|
(3) |
|
|
(3) |
|
Adjusted net earnings available to common shareholders for diluted earnings per share |
|
$ |
391 |
|
$ |
374 |
|
|
|
|
|
|
|
|
|
Diluted weighted average common shares outstanding (in millions) |
|
|
133.6 |
|
|
139.5 |
|
|
|
|
|
|
|
|
|
The following table reconciles adjusted net earnings available to common shareholders of the Company and adjusted diluted net earnings per common share to GAAP net earnings available to common shareholders of the Company and diluted net earnings per common share as reported for the periods ended as indicated.
|
|
|
12 Weeks Ended |
|
|||||||||||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||||||||
|
|
|
Net Earnings Available
|
|
|
Diluted
|
|
|
Net Earnings Available |
|
|
Diluted |
|
||||||||||||||||
($ millions except where otherwise indicated) |
|
Loblaw(i) |
Choice |
Effect of |
GWL |
Consol- |
|
Consol- |
|
Loblaw(i) |
Choice |
Effect of |
GWL |
Consol- |
|
Consol- |
|
||||||||||||
As reported |
|
$ |
241 |
$ |
514 |
$ |
(154) |
$ |
(201) |
$ |
400 |
|
$ |
2.97 |
|
$ |
267 |
$ |
536 |
$ |
(252) |
$ |
(53) |
$ |
498 |
|
$ |
3.55 |
|
Add (deduct) impact of the following(ii): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charges related to settlement of class action lawsuits |
|
$ |
64 |
$ |
— |
$ |
— |
$ |
189 |
$ |
253 |
|
$ |
1.89 |
|
$ |
— |
$ |
— |
$ |
— |
$ |
— |
$ |
— |
|
$ |
— |
|
Amortization of intangible assets acquired with Shoppers Drug Mart and Lifemark |
|
|
43 |
|
— |
|
— |
|
— |
|
43 |
|
|
0.33 |
|
|
44 |
|
— |
|
— |
|
— |
|
44 |
|
|
0.32 |
|
Fair value adjustment of investment in real estate securities |
|
|
— |
|
28 |
|
(3) |
|
— |
|
25 |
|
|
0.19 |
|
|
— |
|
31 |
|
(3) |
|
— |
|
28 |
|
|
0.20 |
|
Fair value adjustment on investment properties |
|
|
— |
|
(26) |
|
30 |
|
— |
|
4 |
|
|
0.03 |
|
|
— |
|
(86) |
|
69 |
|
— |
|
(17) |
|
|
(0.12) |
|
Fair value adjustment of derivatives |
|
|
2 |
|
— |
|
— |
|
— |
|
2 |
|
|
0.01 |
|
|
2 |
|
— |
|
— |
|
— |
|
2 |
|
|
0.01 |
|
Transaction costs and other related recoveries |
|
|
— |
|
(39) |
|
— |
|
— |
|
(39) |
|
|
(0.29) |
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
Charge related to |
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
|
15 |
|
— |
|
— |
|
— |
|
15 |
|
|
0.11 |
|
Gain on sale of non-operating properties |
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
|
— |
|
— |
|
(1) |
|
— |
|
(1) |
|
|
(0.01) |
|
Fair value adjustment of the Trust Unit liability |
|
|
— |
|
— |
|
(274) |
|
— |
|
(274) |
|
|
(2.05) |
|
|
— |
|
— |
|
(202) |
|
— |
|
(202) |
|
|
(1.45) |
|
Outside basis difference in certain Loblaw shares |
|
|
— |
|
— |
|
— |
|
(20) |
|
(20) |
|
|
(0.15) |
|
|
— |
|
— |
|
— |
|
10 |
|
10 |
|
|
0.07 |
|
Fair value adjustment on |
|
|
— |
|
(372) |
|
372 |
|
— |
|
— |
|
|
— |
|
|
— |
|
(376) |
|
376 |
|
— |
|
— |
|
|
— |
|
Adjusting items |
|
$ |
109 |
$ |
(409) |
$ |
125 |
$ |
169 |
$ |
(6) |
|
$ |
(0.04) |
|
$ |
61 |
$ |
(431) |
$ |
239 |
$ |
10 |
$ |
(121) |
|
$ |
(0.87) |
|
Adjusted |
|
$ |
350 |
$ |
105 |
$ |
(29) |
$ |
(32) |
$ |
394 |
|
$ |
2.93 |
|
$ |
328 |
$ |
105 |
$ |
(13) |
$ |
(43) |
$ |
377 |
|
$ |
2.68 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i) |
Contribution from Loblaw, net of non-controlling interests. |
(ii) |
Net of income taxes and non-controlling interests, as applicable. |
GWL CORPORATE FREE CASH FLOW GWL Corporate free cash flow is generated from dividends received from Loblaw, distributions received from
|
|
12 Weeks Ended |
|||||
($ millions) |
|
|
|
|
|
||
Dividends from Loblaw |
|
$ |
73 |
|
$ |
69 |
|
Distributions from |
|
|
56 |
|
|
83 |
|
GWL Corporate cash flow from operating businesses |
|
$ |
129 |
|
$ |
152 |
|
Proceeds from participation in Loblaw's NCIB |
|
|
218 |
|
|
250 |
|
GWL Corporate, financing, and other costs(i) |
|
|
(21) |
|
|
(16) |
|
Income taxes paid |
|
|
(44) |
|
|
(21) |
|
GWL Corporate free cash flow |
|
$ |
282 |
|
$ |
365 |
|
|
|
|
|
|
|
|
|
(i) |
GWL Corporate, financing, and other costs includes all other company level activities that are not allocated to the reportable operating segments such as net interest expense, corporate activities and administrative costs. Also included are preferred share dividends. |
CHOICE
PROPERTIES' FUNDS FROM OPERATIONS
Funds from Operations is calculated in accordance with the
The following table reconciles
($ millions) |
12 Weeks Ended |
|
|||||
|
|
|
|
|
|||
Net income |
|
$ |
514 |
|
$ |
536 |
|
Add (deduct) impact of the following: |
|
|
|
|
|
|
|
Amortization of intangible assets |
|
|
1 |
|
|
1 |
|
Transaction costs and other related recoveries |
|
|
(39) |
|
|
— |
|
Adjustment to fair value of unit-based compensation |
|
|
(1) |
|
|
(1) |
|
Fair value adjustment on Exchangeable Units |
|
|
(372) |
|
|
(376) |
|
Fair value adjustment on investment properties |
|
|
(28) |
|
|
(86) |
|
Fair value adjustment on investment property held in equity accounted joint ventures |
|
|
2 |
|
|
— |
|
Fair value adjustment of investment in real estate securities |
|
|
28 |
|
|
31 |
|
Capitalized interest on equity accounted joint ventures |
|
|
3 |
|
|
3 |
|
Unit distributions on Exchangeable Units |
|
|
75 |
|
|
74 |
|
Internal expenses for leasing |
|
|
2 |
|
|
2 |
|
Funds from Operations |
|
$ |
185 |
|
$ |
184 |
|
|
|
|
|
|
|
|
|
SOURCE