TORONTO, Nov. 3, 2020 /CNW/ - Indigo (TSX: IDG),
Canada's largest book and
lifestyle retailer announces its second quarter results.
Revenue for the second quarter ended September 26, 2020 was $205.3 million compared to revenue of
$203.4 million in the same
period last year, an increase of $1.9
million. Buoyed by continued interest in the core categories
of reading, wellness, at-home learning and entertainment, the
Company's online channel more than doubled, delivering growth of
113.6%. This growth was complemented by the retail channel's
ongoing recovery – albeit still below normal levels – and the
success of the Company's paid membership program.
Commenting on the results, CEO Heather
Reisman said: "Our team has put out extraordinary effort
over the last eight months and meaningfully pushed our business
forward notwithstanding the challenges of operating in a COVID
environment. This quarter, we successfully launched our
proprietary home brand Oui and have seen continued success in our
core categories of wellness, reading and kids entertainment. We
also launched an industry leading click-and-collect service and
on-boarded Instacart. These advances allow us to
provide our customers with 'have it your way' access
channels. We are energized by these results, and by
customers' continued affinity for our brand."
During the quarter, the Company remained focused on productivity
efforts. These actions resulted in an adjusted EBITDA (see
"Non-IFRS Measures" below) improvement of $6.5 million dollars compared to the second
quarter of last year. These savings were realized against pressures
from pandemic-related costs related to staffing for social
distancing, ongoing requirements for personal protective equipment,
and enhanced safety and security measures.
Indigo reported a loss before income taxes of $17.5 million for the second quarter ended
September 26, 2020, compared to a
loss before income taxes of $27.9
million last year, an improvement of $10.4 million. This was achieved through improved
operating performance and lower depreciation in the year.
With no outstanding debt and a cash balance of $137.5 million, the Company is well positioned to
manage through these very uncertain times.
Analyst/Investor Call
Indigo will host a conference call for analysts and investors to
review these results at 9:00 a.m. (Eastern
Time) tomorrow, November 4th, 2020. The call can be
accessed by dialing 416-764-8688 from within the Toronto area, or 1-888-390-0546 outside of
Toronto. The eight-digit
participant code
is 74471107.
A playback of the call will also be available by telephone until
11:59 p.m. (ET) on November 11,
2020. The call playback can be accessed after 12:00 p.m. (ET) on November 4, 2020, by
dialing 416-764-8677 from within the Toronto area, or 1-888-390-0541 outside of
Toronto. The six-digit replay
passcode number is 471107#. The conference call
transcript will be archived in the Investor Relations section of
the Indigo website, www.indigo.ca.
Forward-Looking Statements
Statements contained in this news release that are not historical
facts are "forward-looking information" within the meaning of
applicable Canadian securities legislation. To the extent any
forward-looking information constitutes "financial outlooks" within
the meaning of applicable Canadian securities laws, such
information is being provided as preliminary financial and
operational results. Financial outlooks, as with forward-looking
information generally, are, without limitation, based on the
assumptions and subject to various risks and uncertainties that
could cause actual results to differ materially from those
expressed in or implied in this news release. Among the key factors
that could cause such differences are: general economic, market or
business conditions; the future impacts and government response to
the COVID-19 pandemic, including any impact to online and/or retail
operations of the Company; competitive actions by other companies;
changes in laws or regulations; and other factors, many of which
are beyond the control of the Company, as set out in the Company's
annual information form dated June 23,
2020 and available on the Company's issuer profile on SEDAR
at www.sedar.com.
Undue reliance should not be placed on such forward-looking
information and no assurance can be given that such events will
occur in the disclosed time frames or at all. Any forward-looking
information included in this news release is made as of the date of
this news release and the Company does not undertake an obligation
to publicly update such forward-looking information to reflect new
information, subsequent events or otherwise unless required by
applicable securities laws.
Non-IFRS Financial Measures
The Company prepares its consolidated financial statements in
accordance with International Financial Reporting Standards
("IFRS"). In order to provide additional insight into the business,
the Company has also provided non-IFRS data, specifically adjusted
EBITDA, in this press release. These measures do not have
standardized meanings prescribed by IFRS and are therefore specific
to Indigo and may not be comparable to similar measures presented
by other companies.
For additional context see "Results of Operations" and "Non-IFRS
Financial Measures" in the Management's Discussion and Analysis
(which can be found at www.indigo.ca/investor-relations or
www.sedar.com).
About Indigo Books &
Music Inc.
Indigo is a publicly traded Canadian company listed on the Toronto
Stock Exchange (IDG). Indigo is the world's first Cultural
Department Store – a physical and digital meeting place inspired by
and filled with books, music, art, ideas, and beautifully designed
lifestyle products. Indigo believes in real books, in living life
fully and generously, in being kind to each other and that stories
– big and little – connect us.
Indigo founded the Indigo Love of Reading Foundation in 2004 to
address the underfunding of public elementary school libraries.
Every year the Foundation provides grants to high-needs elementary
schools so they can transform their libraries with the purchase of
new books and educational resources. To date, the Foundation has
committed over $32 million to more
than 3,000 elementary schools, benefitting more than 1,000,000
students. Most recently in April
2020, in the wake of the COVID-19 pandemic and unprecedented
nation-wide school closures, the Foundation committed $1.0 million to provide books to families in
need. To learn more about Indigo, please visit the "Our Company"
section at indigo.ca.
Consolidated
Balance Sheets
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
As
at
|
As
at
|
As
at
|
|
September
26,
|
September
28,
|
March 28,
|
(thousands of
Canadian dollars)
|
2020
|
2019
|
2020
|
|
|
|
|
ASSETS
|
|
|
|
Current
|
|
|
|
Cash and cash
equivalents
|
137,521
|
46,615
|
120,473
|
Short-term
investments
|
-
|
20,500
|
-
|
Accounts
receivable
|
12,022
|
19,809
|
7,640
|
Inventories
|
252,470
|
298,690
|
241,812
|
Prepaid
expenses
|
9,243
|
7,489
|
6,062
|
Income taxes
receivable
|
138
|
640
|
138
|
Derivative
assets
|
148
|
123
|
3,794
|
Other
assets
|
1,768
|
949
|
2,320
|
Total current
assets
|
413,310
|
394,815
|
382,239
|
Loan
receivable
|
446
|
-
|
446
|
Property, plant, and
equipment, net
|
84,195
|
117,375
|
91,215
|
Right-of-use assets,
net
|
363,846
|
401,928
|
382,146
|
Intangible assets,
net
|
22,277
|
30,866
|
24,571
|
Equity investment,
net
|
2,353
|
2,773
|
2,353
|
Deferred tax
assets
|
-
|
100,004
|
-
|
Total
assets
|
886,427
|
1,047,761
|
882,970
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
|
|
|
|
Accounts payable and
accrued liabilities
|
239,337
|
222,968
|
164,294
|
Unredeemed gift card
liability
|
46,550
|
42,987
|
51,673
|
Provisions
|
2,170
|
-
|
2,034
|
Deferred
revenue
|
14,428
|
8,148
|
10,682
|
Short-term lease
liabilities
|
63,376
|
65,959
|
68,402
|
Derivative
liabilities
|
25
|
199
|
-
|
Total current
liabilities
|
365,886
|
340,261
|
297,085
|
Long-term accrued
liabilities
|
1,494
|
1,761
|
1,196
|
Long-term
provisions
|
724
|
46
|
469
|
Long-term lease
liabilities
|
486,089
|
480,277
|
500,215
|
Total
liabilities
|
854,193
|
822,345
|
798,965
|
Equity
|
|
|
|
Share
capital
|
226,986
|
226,986
|
226,986
|
Contributed
surplus
|
13,576
|
12,039
|
12,822
|
Retained
deficit
|
(207,924)
|
(13,328)
|
(158,801)
|
Accumulated other
comprehensive income (loss)
|
(404)
|
(281)
|
2,998
|
Total
equity
|
32,234
|
225,416
|
84,005
|
Total liabilities
and equity
|
886,427
|
1,047,761
|
882,970
|
Consolidated
Statements of Loss and Comprehensive Loss
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
13-week
|
13-week
|
26-week
|
26-week
|
|
period
ended
|
period
ended
|
period
ended
|
period
ended
|
|
September
26,
|
September
28,
|
September
26,
|
September
28,
|
(thousands of
Canadian dollars, except per share data)
|
2020
|
2019
|
2020
|
2019
|
|
|
|
|
|
Revenue
|
205,279
|
203,364
|
340,360
|
395,920
|
Cost of
sales
|
(125,889)
|
(118,565)
|
(222,833)
|
(227,247)
|
Gross
profit
|
79,390
|
84,799
|
117,527
|
168,673
|
Operating, selling,
and other expenses
|
(90,649)
|
(106,022)
|
(154,105)
|
(209,593)
|
Operating
loss
|
(11,259)
|
(21,223)
|
(36,578)
|
(40,920)
|
Net interest
expense
|
(6,261)
|
(5,846)
|
(12,545)
|
(11,270)
|
Share of loss from
equity investments
|
-
|
(815)
|
-
|
(1,588)
|
Loss before income
taxes
|
(17,520)
|
(27,884)
|
(49,123)
|
(53,778)
|
Income tax
recovery
|
-
|
7,429
|
-
|
14,253
|
Net
loss
|
(17,520)
|
(20,455)
|
(49,123)
|
(39,525)
|
|
|
|
|
|
Other
comprehensive income (loss)
|
|
|
|
|
Items that are or may
be reclassified subsequently to net loss:
|
|
|
|
|
Net change in fair
value of cash flow hedges
[net of taxes of 0 and 0; 2019 - (275) and
92]
|
(1,503)
|
753
|
(2,412)
|
(251)
|
Reclassification of
net realized (gain) loss
[net of taxes of 0 and 0; 2019 - 48 and
215]
|
5
|
(133)
|
(1,258)
|
(588)
|
Realized gain on
discountinued cash flow hedges
[net of taxes of 0 and 0; 2019 - 0 and 0]
|
268
|
-
|
268
|
-
|
Other comprehensive
income (loss)
|
(1,230)
|
620
|
(3,402)
|
(839)
|
|
|
|
|
|
Total
comprehensive loss
|
(18,750)
|
(19,835)
|
(52,525)
|
(40,364)
|
|
|
|
|
|
Net loss per
common share
|
|
|
|
|
Basic
|
$
|
(0.63)
|
$
|
(0.74)
|
$
|
(1.78)
|
$
|
(1.44)
|
Diluted
|
$
|
(0.63)
|
$
|
(0.74)
|
$
|
(1.78)
|
$
|
(1.44)
|
Consolidated
Statements of Cash Flows
|
(Unaudited)
|
|
|
|
|
|
|
13-week
|
13-week
|
26-week
|
26-week
|
|
period
ended
|
period
ended
|
period
ended
|
period
ended
|
|
September
26,
|
September
28,
|
September
26,
|
September
28,
|
(thousands of
Canadian dollars)
|
2020
|
2019
|
2020
|
2019
|
|
|
|
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
Net loss
|
(17,520)
|
(20,455)
|
(49,123)
|
(39,525)
|
Adjustments to
reconcile net loss to cash flows from (used for) operating
activities
|
|
|
|
|
Depreciation of
property, plant, and equipment
|
4,300
|
5,891
|
8,891
|
11,824
|
Depreciation of
right-of-use assets
|
10,893
|
10,189
|
21,545
|
20,022
|
Amortization of
intangible assets
|
3,323
|
3,312
|
6,531
|
6,578
|
Loss on disposal of
capital assets
|
-
|
490
|
247
|
951
|
Share-based
compensation
|
306
|
373
|
606
|
621
|
Directors'
compensation
|
73
|
73
|
148
|
157
|
Deferred income tax
recovery
|
-
|
(7,429)
|
-
|
(14,253)
|
Rent
concessions
|
(1,268)
|
-
|
(3,679)
|
-
|
Other
|
(371)
|
102
|
(113)
|
356
|
Net change in
non-cash working capital balances related to operations
|
40,221
|
(2,078)
|
56,687
|
(19,531)
|
Interest
expense
|
6,455
|
6,324
|
12,953
|
12,401
|
Interest
income
|
(194)
|
(520)
|
(408)
|
(1,173)
|
Share of loss from
equity investments
|
-
|
815
|
-
|
1,588
|
Cash flows from
(used for) operating activities
|
46,218
|
(2,913)
|
54,285
|
(19,984)
|
|
|
|
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
Net purchases of
property, plant, and equipment
|
(1,487)
|
(1,383)
|
(1,985)
|
(4,232)
|
Addition of
intangible assets
|
(2,545)
|
(2,443)
|
(4,250)
|
(4,925)
|
Change in short-term
investments
|
-
|
17,500
|
-
|
66,650
|
Interest
received
|
194
|
173
|
408
|
826
|
Cash flows from
(used for) investing activities
|
(3,838)
|
13,847
|
(5,827)
|
58,319
|
|
|
|
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
Repayment of
principal on lease liabilities
|
(9,606)
|
(10,602)
|
(18,838)
|
(20,615)
|
Interest
paid
|
(6,455)
|
(6,325)
|
(12,953)
|
(12,402)
|
Cash flows used
for financing activities
|
(16,061)
|
(16,927)
|
(31,791)
|
(33,017)
|
|
|
|
|
|
Effect of foreign
currency exchange rate changes on cash and cash
equivalents
|
639
|
264
|
381
|
7
|
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents during the
period
|
26,958
|
(5,729)
|
17,048
|
5,325
|
Cash and cash
equivalents, beginning of period
|
110,563
|
52,344
|
120,473
|
41,290
|
Cash and cash
equivalents, end of period
|
137,521
|
46,615
|
137,521
|
46,615
|
Non-IFRS Financial
Measures
|
|
|
|
|
|
|
The following table
reconciles adjusted EBITDA to loss before income taxes, the most
comparable IFRS measure:
|
|
|
13-week
|
13-week
|
26-week
|
26-week
|
|
period
ended
|
period
ended
|
period
ended
|
period
ended
|
|
September
26,
|
September
28,
|
September
26,
|
September
28,
|
(millions of Canadian
dollars)
|
2020
|
2019
|
2020
|
2019
|
Revenue
|
205.3
|
203.4
|
340.4
|
395.9
|
Cost of
sales
|
(125.9)
|
(118.6)
|
(222.8)
|
(227.2)
|
Cost of
operations
|
(52.6)
|
(60.9)
|
(84.8)
|
(119.6)
|
Selling, general and
administrative expenses
|
(20.7)
|
(25.2)
|
(33.3)
|
(50.6)
|
Depreciation of
right-of-use assets
|
(10.9)
|
(10.2)
|
(21.5)
|
(20.0)
|
Finance charges
related to leases
|
(6.5)
|
(6.3)
|
(13.0)
|
(12.4)
|
Adjusted
EBITDA1
|
(11.3)
|
(17.8)
|
(35.0)
|
(33.9)
|
Depreciation of
property, plant and equipment
|
(4.3)
|
(5.9)
|
(8.9)
|
(11.8)
|
Amortization of
intangible assets
|
(3.3)
|
(3.3)
|
(6.5)
|
(6.6)
|
Gain (loss) on
disposal of capital assets
|
1.2
|
(0.5)
|
0.9
|
(1.0)
|
Net interest
income
|
0.2
|
0.5
|
0.4
|
1.2
|
Share of loss from
equity investments
|
-
|
(0.8)
|
-
|
(1.6)
|
Loss before income
taxes
|
(17.5)
|
(27.9)
|
(49.1)
|
(53.8)
|
1Earnings
before interest, taxes, depreciation, amortization, impairment,
asset disposals, and share of loss from equity investments, and
includes IFRS 16 right-of-use asset depreciation and associated
finance charges.
|
SOURCE Indigo Books & Music
Inc.