The North West Company Inc. Announces Third Quarter Earnings and a Quarterly Dividend

by ahnationtalk on December 6, 202335 Views

Winnipeg, Manitoba, December 6, 2023 (TSX: NWC): The North West Company Inc. (the “Company” or “North West”) today reported its unaudited financial results for the third quarter ended October 31, 2023. It also announced that the Board of Directors has declared a quarterly dividend of $0.39 to shareholders of record on December 29, 2023, to be paid on January 15, 2024.

“The strong results this quarter reflect further sales gains in our Canadian Operations driven by a good in-stock position which was partially offset by more challenging economic conditions for customers in our International Operations who were impacted by lower Supplemental Nutrition Assistance Program benefits and Alaska Permanent Fund Dividend payments compared to last year,” said President & CEO Dan McConnell. “I am pleased with the progress we are making on managing costs within our business to help offset ongoing inflationary cost pressures and the positive impact these initiatives had on our results in the quarter.”

Financial Highlights

Sales Third quarter consolidated sales increased 5.1% to $616.9 million led by same store sales gains in Canadian Operations. The impact of new stores in Canadian and International Operations and an increase in other sales in Canadian Operations largely related to higher airline revenue were also factors. Excluding the foreign exchange impact, consolidated sales increased 4.9%, with food sales increasing 3.1% and general merchandise and other sales increasing 11.2% compared to last year. On a same store basis, sales increased 4.6%1 compared to the third quarter last year as a 10.1% increase in same store sales in Canadian Operations more than offset a 2.7% decrease in same store sales in International Operations.

Gross Profit Gross profit increased 10.0% due to sales gains and a 148 basis point increase in gross profit rate compared to last year. The increase in gross profit rate was largely due to changes in sales blend, including a lower blend of Cost-U-Less sales which have a lower gross profit rate consistent with a discount warehouse format, and a decrease in inventory shrink and markdowns compared to last year.

Selling, Operating and Administrative Expenses Selling, operating and administrative expenses (“Expenses”) increased $7.9 million or 5.6% compared to last year and were up 10 basis points as a percentage to sales. The increase in Expenses is mainly due to cost inflation impacts, new store expenses and an increase in depreciation.

Earnings From Operations Earnings from operations (“EBIT”) increased 24.0% to $55.7 million compared to $45.0 million last year and earnings before interest, income taxes, depreciation and amortization (“EBITDA2”) increased to $83.0 million compared to $69.8 million last year due to the sales, gross profit and Expense factors previously noted. Higher earnings in North Star Air from an increase in third party cargo and passenger volumes and improved aircraft utilization was also a factor. Adjusted EBITDA2, which excludes share-based compensation costs, increased 19.2% to $87.2 million compared to $73.2 million last year and as a percentage to sales was 14.1% compared to 12.5% last year.

Net Earnings Net earnings increased 26.1% to $38.0 million compared to $30.2 million last year. Net earnings attributable to shareholders were $37.2 million and diluted earnings per share were $0.77 per share compared to $0.61 per share last year. Adjusted net earnings2, which excludes the after-tax impact of the share-based compensation costs, increased $8.6 million or 26.1% compared to last year due to the gross profit and Expense factors previously noted.

1 Excluding the impact of foreign exchange

2 See Non-GAAP Measures Section of the news release

The common shares of North West trade on the Toronto Stock Exchange under the symbol NWC.

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For more information contact:

Dan McConnell, President and Chief Executive Officer, The North West Company Inc.

Phone 204-934-1482; fax 204-934-1317; email dmcconnell@northwest.ca

John King, Executive Vice-President and Chief Financial Officer, The North West Company Inc.

Phone 204-934-1397; fax 204-934-1317; email jking@northwest.ca

NT4

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