CTC.A Canadian Tire Corp

TORONTO, Feb. 13, 2025 /CNW/ - Canadian Tire Corporation, Limited (TSX: CTC) (TSX: CTC.A) (CTC or the Company) today announced results for its fourth quarter and full year ended December 28, 2024.

• Strong December sales drove a return to comparable sales growth in Q4.
• Triangle spend per member was up in Q4, as members earned and redeemed at higher levels than last year.
• Q4 Diluted Earnings Per Share (EPS) was $7.37; Q4 Normalized Diluted EPS was up 20.4% to $4.07.
• Full-year Diluted EPS was $15.92; Full-Year Normalized Diluted EPS¹ was up 21.7% to $12.62.

"In the quarter, we charted strong earnings and a return to growth, while observing economic green shoots like improved consumer sentiment and spending," said Greg Hicks, President and CEO, Canadian Tire Corporation. "The strength of Triangle Rewards was on display in Q4, as loyalty sales grew 4% and we activated more personalized promotions – having attracted and engaged nearly half-a-million new and returned members in 2024.

"As we look beyond our Better Connected strategy, we have growing evidence and conviction that a deeper connection of our retail banners and our loyalty system drives higher member engagement and sales."

• Consolidated comparable sales¹ and consolidated retail sales returned to growth and were both up 1.1%, driven by strong December sales across all banners; loyalty sales¹ were up 4%.
  • Canadian Tire Retail (CTR) comparable sales¹ grew 1.1%. Strong growth was led by Automotive and offset by modest declines across other divisions. Essential categories were up 4%, while consumer demand remained constrained in discretionary categories, which were down 2%.
  • SportChek comparable sales¹ were up for a second consecutive quarter, with growth of 0.4% driven by strong franchise sales. Hockey, hydration, and lifestyle footwear were top performing categories in the quarter.
  • Mark's comparable sales¹ were up 1.8%, as the industrial businesses returned to growth and new store openings drove broad-based growth across Mark's categories.
• Consolidated income before income taxes (IBT) was $529.1 million, up $266.1 million. Normalized IBT¹ was up $39.7 million or 13.9% to $324.3 million. Improved retail segment profitability drove the increase.
  • Retail IBT was $436.7 million, up $275.0 million or $41.2 million on a normalized basis¹, driven by favourable gross margin dollars as a result of higher revenue, lower operating expenses, and lower net finance costs.
  • Financial Services IBT was down $17.7 million, or down $10.3 million on a normalized basis after accounting for costs related to the recently-completed strategic review and targeted headcount reduction in the prior year. Expected increases in net impairment losses, as well as higher funding costs, drove the remainder of the decline.

• Consolidated retail and comparable sales, excluding Petroleum¹, were down 1.7%, reflecting a weaker consumer demand environment. At CTR, essential categories were up 1%, led by Automotive, and outpaced the 5% decline in discretionary categories.
• Loyalty sales penetration¹ represented 54.4% of full-year retail sales on a direct scan basis, growing the amount of electronic Canadian Tire Money (eCTM) in the ecosystem and driving redemption to create more value for Triangle members. Canadians redeemed $360 million of eCTM in 2024, up 7%.
• Delivering an improved Retail gross margin rate, excluding Petroleum¹, up 50 bps to 36.0%, and maintaining operating expense discipline contributed to improved Retail segment profitability and Retail Return on Invested Capital¹ (ROIC) at 9.4%. Normalized Retail IBT was $558.0 million, up 27.4%; Retail IBT was $772.2 million, including the gain on the sale of a Brampton industrial property completed in December 2024.
• Continued sell through of existing inventory, partially offset by investments in newer retail inventory ahead of 2025, resulted in year-end inventory down 5% compared to year-end 2023. Working capital improvements contributed to strong retail cash generated from operating activities¹ of close to $1.7 billion, compared to $1.1 billion in 2023. At the end of Q4, CTC had fully repaid the $895 million of borrowings associated with its October 2023 repurchase of 20% of the Canadian Tire Financial Services business.

• Since 2022, the Company has been executing its Better Connected strategy, modernizing core retail foundational elements by investing in the business, with total Operating Capital Expenditures¹ of $1.8 billion. Over that time, the Company has also returned $1.9 billion to shareholders, by way of share repurchases and dividends paid.
• The third year of the Company's Better Connected strategy has seen CTC:
  • Roll out further CTR store investment projects, with close to a quarter of the Company's 502 CTR stores updated since 2022. Combined with new store formats and refreshed stores at other banners, CTC has added an incremental ~1 million of retail square feet across its banners over the same period. The Company also drove value by monetizing redundant real estate assets during 2024.
  • Bolster its digital capabilities, better connecting digital and physical channels and supporting $1.1 billion of annual eCommerce sales¹. These enhancements have contributed to an enhanced customer experience, as demonstrated by improved customer Net Promoter Scores (NPS).
  • Continue to strengthen the Owned Brands portfolio across our banners, growing and elevating our largest brands such as MotoMaster, which delivered double-digit growth in 2024. Since 2022, an additional three brands have achieved annual sales of over $100 million, taking the total to 17. Owned Brands continued to deliver a significant margin differential vis-à-vis National Brands. Customer attachment to these brands remains strong.
  • Grow the base of active registered Triangle members from 7.8 million at the end of 2021 to 9.2 million at the end of 2024. Direct scan Loyalty Penetration¹ is up by 480 bps, delivering even stronger first-party data on which to build.
  • Continue to transform its supply chain network and invest in IT network modernization and resilience. Supply chain investments included optimized capacity utilization and automated fulfilment at existing Distribution Centres (DC) and regional capacity expansion in Western Canada with a new DC in Metro Vancouver, set to open in 2025.

• Revenue was $4,507.3 million, up 1.5% compared to $4,443.0 million in the same period last year; Revenue (excluding Petroleum)¹ was $4,002.6 million, an increase of 1.6% compared to the prior year.
• Consolidated IBT was $529.1 million, up $266.1 million compared to the prior year. On a normalized basis, consolidated IBT was up $39.7 million.
• Diluted EPS was $7.37 or $4.07 on a normalized basis, compared to $3.09 or $3.38 on a normalized basis in the prior year.
• Refer to the Company's Q4 2024 MD&A section 5.1.1 for information on normalizing items and additional details on events that have impacted the Company in the quarter.

• Consolidated retail sales were $18,177.7 million, down $326.4 million, or 1.8% over the prior year. Consolidated retail sales, excluding Petroleum, decreased 1.7% and consolidated comparable sales were down 1.7%.
• Consolidated Revenue decreased 1.8% to $16,357.8 million; Revenue (excluding Petroleum) decreased 1.7% compared to the same period last year, with the decline in the Retail segment partially offset by Financial Services growth.
• Consolidated IBT was $1,246.0 million and $1,041.2 million on a normalized basis, with increases in normalized IBT primarily due to higher Retail segment earnings.
• Diluted EPS was $15.92, compared to $3.78 in the prior year. Normalized diluted EPS was $12.62, an increase of 21.7% year-over-year compared to $10.37 on a normalized basis in the prior year.
• Refer to the Company's Q4 2024 MD&A section 5.1.1 for information on normalizing items and for additional details on events that have impacted the Company in the year.

• Retail sales¹ were $5,380.5 million, up 1.1%, compared to the fourth quarter of 2023; Retail sales (excluding Petroleum)¹ were up 1.2%. Consolidated comparable sales were up 1.1%.
• CTR retail sales¹ were up 1.3% and comparable sales were up 1.1% over the same period last year.
• SportChek retail sales¹ increased 0.2% over the same period last year, and comparable sales were up 0.4%.
• Mark's retail sales¹ increased 2.4% over the same period last year, and comparable sales were up 1.8%.
• Helly Hansen revenue was up 11.9% compared to the same period in 2023.
• Retail revenue was $4,123.2 million, an increase of $53.2 million, or 1.3%, compared to the prior year; Retail revenue (excluding Petroleum)¹ was up 1.4 %.
• Retail gross margin was $1,336.8 million, down 0.1% compared to the fourth quarter of the prior year, and down 0.1% excluding Petroleum¹. Normalized Retail gross margin increased by $16.1 million. Retail gross margin rate (excluding Petroleum) decreased 56 bps to 35.5% or 7 bps on a normalized basis to 36.0%.
• Retail IBT was $436.7 million in Q4 2024 or $222.5 million on a normalized basis, compared to $161.7 million or $181.3 million on a normalized basis in the prior year.
• ROIC calculated on a trailing twelve-month basis was 9.4% at the end of the fourth quarter of 2024, compared to 7.9% at the end of the fourth quarter of 2023, due to the increase in earnings over the prior period.
• Refer to the Company's Q4 2024 MD&A sections 5.2.1 for information on normalizing items and additional details on events that have impacted the Retail segment in the quarter.

• Normalized Financial Services IBT was $76.9 million, compared to $87.2 million in the prior year, after normalizing for costs associated with the strategic review in 2024 and costs associated with targeted headcount reduction in 2023. On a reported basis, Financial Services segment IBT was $67.5 million in the quarter, a $17.7 million decrease from the prior year.
• Revenue was up 2.4%, but gross margin was lower, due to the expected increase in net write-offs compared to the same quarter last year.
• Gross Average Accounts Receivable¹ (GAAR) was up 2.3%, compared to Q4 last year. Strong cardholder engagement was reflected in higher card spend, particularly through December, adding to average account balances¹, which were up 2.6%.
• Refer to the Company's Q4 2024 MD&A section 5.3.1 and 5.3.2 for additional details on events that have impacted the Financial Services segment in the quarter.

• Diluted Adjusted Funds from Operations¹ (AFFO) per unit was up 1.7% compared to Q4 2023; diluted net income per unit was $0.452, compared to $0.161 in Q4 2023.
• CT REIT announced three new investments totalling $59 million, which are expected to add approximately 284,000 square feet of incremental gross leasable area upon completion.
• For further information, refer to the Q4 2024 CT REIT earnings release issued on February 10, 2025.

• Total capital expenditures were $575.1 million in 2024, compared to $683.4 million in 2023.
• Operating capital expenditures were $478.4 million in 2024, compared to $615.3 million in 2023, in line with the Company's previously disclosed range of $475.0 million to $525.0 million.
• 2025 operating capital expenditures are expected to be in the range of $525 million to $575 million.

• On February 12, 2025, the Company's Board of Directors declared a dividend of $1.775 per Common and Class A Non-Voting Share, payable on June 1, 2025, to shareholders of record as of April 30, 2025. The dividend is considered an "eligible dividend" for tax purposes.

• On November 7, 2024, the Company announced its intention to repurchase up to $200 million of its Class A Non-Voting Shares, in excess of the amount required for anti-dilutive purposes, in 2025.
• Repurchases of Class A Non-Voting Shares will be made under the Company's existing Normal Course Issuer Bid (NCIB), which expires on March 1, 2025, and thereafter under a renewed NCIB and automatic securities purchase plan, subject to regulatory approvals.

1)    NON-GAAP FINANCIAL MEASURES AND RATIOS AND SUPPLEMENTARY FINANCIAL MEASURES

This press release contains non-GAAP financial measures and ratios, and supplementary financial measures. References below to the Q4 2024 MD&A mean the Company's Management's Discussion and Analysis for the Fourth Quarter ended December 28, 2024, which is available on SEDAR+ at http://www.sedarplus.ca and is incorporated by reference herein. Non-GAAP measures and non-GAAP ratios have no standardized meanings under GAAP and may not be comparable to similar measures of other companies. 

A)   Non-GAAP Financial Measures and Ratios

Normalized Diluted Earnings per Share

Normalized diluted EPS, a non-GAAP ratio, is calculated by dividing Normalized Net Income Attributable to Shareholders, a non-GAAP financial measure, by total diluted shares of the Company. For information about these measures, see section 10.1 of the Company's Q4 2024 MD&A.

The following table is a reconciliation of normalized net income attributable to shareholders of the Company to the respective GAAP measures:

Consolidated Normalized Income Before Income Taxes, Retail Normalized Income Before Income Taxes, and Financial Services Normalized Income Before Income Taxes

Consolidated Normalized Income Before Income Taxes, Retail Normalized Income before Income Taxes, and Financial Services Normalized Income Before Income Taxes are non-GAAP financial measures. For information about these measures, see section 10.1 of the Company's Q4 2024 MD&A.

The following table reconciles Consolidated Normalized Income Before Income Taxes to Income Before Income Taxes:

The following table reconciles Retail Normalized Income Before Income Taxes to Income Before Income Taxes:

The following table reconciles Financial Services Normalized Income before income taxes to Income before income taxes which is a GAAP measure reported in the consolidated financial statements.

Retail Normalized Gross Margin and related measures

Retail normalized gross margin, Retail normalized gross margin excluding Petroleum, Retail normalized gross margin rate, and Retail normalized gross margin rate excluding Petroleum are used as additional measures when assessing the amount of revenue retained after incurring direct costs associated with the products and services the Company provides. Retail normalized gross margin and its successive derivations are most directly comparable to gross margin, a GAAP measure reported in the consolidated financial statements.

Retail normalized gross margin rate is retail normalized gross margin divided by revenue. Retail normalized gross margin rate excluding Petroleum is retail normalized gross margin excluding Petroleum, divided by revenue excluding Petroleum.

CT REIT Adjusted Funds from Operations and AFFO per unit

AFFO per unit, a non-GAAP ratio, is calculated by dividing AFFO by the weighted average number of units outstanding on a diluted basis. AFFO is a non-GAAP financial measure. The following table reconciles GAAP Income before income taxes to FFO and further reconciles FFO to AFFO:

Retail Return on Invested Capital (ROIC)

ROIC is calculated as Retail return divided by the Retail invested capital. Retail return is defined as trailing annual Retail after-tax earnings excluding interest expense, lease related depreciation expense, inter-segment earnings, and any normalizing items. Retail invested capital is defined as Retail segment total assets, less Retail segment trade payables and accrued liabilities and inter-segment balances based on an average of the trailing four quarters. Retail return and Retail invested capital are non-GAAP financial measures. For more information about these measures, see section 10.1 of the Company's Q4 2024 MD&A.

Operating Capital Expenditures 

Operating capital expenditures is a non-GAAP financial measure. For more information about this measure, see section 10.1 of the Company's Q4 2024 MD&A.

The following table reconciles total additions from the Investing activities reported in the Consolidated Statement of Cash Flows to Operating capital expenditures:

Retail Free Cash Flow

Retail free cash flow is a measure used to assess the Company's ability to generate cash from its Retail operations.  Retail free cash flow is defined as cash generated by Retail operating activities less capital expenditures and lease rent payments.  Available Retail cash flow is free cash flow plus distributions received from Financial Services and CT REIT.  Management believes that available Retail cash flow is an important measure in evaluating the Company's ability to fund its shareholder distributions, financing activities, and potential business acquisitions. 

The following table reconciles cash generated from operating activities, a GAAP measure reported in the consolidated financial statements, to available Retail cash flow. 

The following table reconciles Retail income before income taxes to Retail cash from operating activities.

B)   Supplementary Financial Measures and Ratios

The measures below are supplementary financial measures. See Section 10.2 (Supplementary Financial Measures) of the Company's Q4 2024 MD&A for information on the composition of these measures.

• Consolidated retail sales and consolidated retail sales (excluding Petroleum)
• Consolidated comparable sales and consolidated comparable sales (excluding Petroleum)
• Revenue (excluding Petroleum)
• Retail revenue (excluding Petroleum)
• Retail sales and retail sales (excluding Petroleum)
• Canadian Tire Retail comparable and retail sales
• SportChek comparable and retail sales
• Mark's comparable and retail sales
• Retail gross margin rate and retail gross margin rate (excluding Petroleum)
• Retail gross margin (excluding Petroleum)
• Gross Average Accounts Receivables
• Average account balances
• Loyalty Sales
• eCommerce Sales
• Loyalty Penetration
• Retail cash generated from operating activities

To view a PDF version of Canadian Tire Corporation's full quarterly earnings report please see: https://mma.prnewswire.com/media/2619392/2024_Combined_MDA_and_FS___Canadian_Tire_Corporation___English_ID_72a4e255769c.pdf

FORWARD-LOOKING INFORMATION

This press release contains information that may constitute forward-looking information within the meaning of applicable securities laws, including, but not limited to, information with respect to: the Company's operating capital expenditure expectations; and the Company's intention to repurchase its Class A Non-Voting Shares. Forward-looking information provides insights regarding Management's current expectations and plans and allows investors and others to better understand the Company's anticipated financial position, results of operations and operating environment. Readers are cautioned that such information may not be appropriate for other purposes. Often, but not always, forward-looking information can be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "believe", "estimate", "plan", "can", "could", "should", "would", "outlook", "target", "forecast", "anticipate", "aspire", "foresee", "continue", "ongoing" or the negative of these terms or variations of them or similar terminology. Although the Company believes that the forward-looking information in this press release is based on information, estimates and assumptions that are reasonable, such information is necessarily subject to a number of risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied in such forward-looking information. For information on the material risks, uncertainties, factors and assumptions that could cause the Company's actual results to differ materially from the forward-looking information, refer to section 14.0 (Forward-Looking Information and Other Investor Communication) of the Company's Q4 2024 MD&A and all subsections therein, as well as CTC's other public filings, available on the SEDAR+ website at http://www.sedarplus.ca and https://investors.canadiantire.ca. The Company does not undertake to update any forward-looking information, whether written or oral, except as is required by applicable laws.

CONFERENCE CALL

Canadian Tire will conduct a conference call to discuss information included in this news release and related matters at 8:00 a.m. ET on Thursday, February 13, 2025. The conference call will be available simultaneously and in its entirety to all interested investors and the news media through a webcast at https://investors.canadiantire.ca and will be available through replay at this website for 12 months.

ABOUT CANADIAN TIRE CORPORATION                                                                                 

Canadian Tire Corporation, Limited, (TSX: CTC.A) (TSX: CTC) (or "CTC"), is a group of companies that includes a Retail segment, a Financial Services division and CT REIT. Our retail business is led by Canadian Tire, which was founded in 1922 and provides Canadians with products for life in Canada across its Living, Playing, Fixing, Automotive and Seasonal & Gardening divisions. Party City, PartSource and Gas+ are key parts of the Canadian Tire network. The Retail segment also includes Mark's, a leading source for casual and industrial wear; Pro Hockey Life, a hockey specialty store catering to elite players; and SportChek, Hockey Experts, Sports Experts and Atmosphere, which offer the best active wear brands. The Company's close to 1,700 retail and gasoline outlets are supported and strengthened by CTC's Financial Services division and the tens of thousands of people employed across Canada and around the world by CTC and its local dealers, franchisees and petroleum retailers. In addition, CTC owns and operates Helly Hansen, a leading technical outdoor brand based in Oslo, Norway. For more information, visit Corp.CanadianTire.ca.

FOR MORE INFORMATION

Media: Stephanie Nadalin, (647) 271-7343, stephanie.nadalin@cantire.com
Investors: Karen Keyes, (647) 518-4461, karen.keyes@cantire.com

Consolidated Balance Sheet

Consolidated Statements of Income

Consolidated Statements of Comprehensive Income 

Consolidated Statements of Cash Flows

SOURCE CANADIAN TIRE CORPORATION, LIMITED - INVESTOR RELATIONS