TORONTO, Feb. 10, 2022
/CNW/ - Indigo Books & Music Inc. (TSX: IDG), Canada's largest book and lifestyle retailer
reported financial results for the 13-week period ended
January 1, 2022 compared to the
13-week period ended December 26,
2020.
Revenue for the quarter increased $65.3
million or 17.9% to $430.7
million compared to the same period last year, and
$47.0 million or 12.2% to
pre-pandemic levels (13-week period ended December 28, 2019.) The Company delivered on
sales growth despite disruption from the Omicron variant and the
reintroduction of severe pandemic restrictions in several key
jurisdictions during the three most critical December selling
weeks. Prior to these impacts, third-quarter results demonstrated
exceptionally strong momentum in both the retail and online
channels.
While retail traffic was challenged by the Omicron environment,
customers shopped the Company's store network with intent and its
print and general merchandise assortment strongly resonated,
driving revenues above the same period last year. The combined
efforts of its strong assortment and scaled-back promotional
strategy lifted the penetration of full-priced sales by
double-digits, delivering profitable top-line growth. The Company's
lifestyle and toy businesses performed remarkably well, driven by
the respective success of its proprietary brand program and
strategic inventory buys, while its print business benefited from
renewed interest in reading, lifting book sales across all
categories.
The Company's omnichannel growth to pre-pandemic levels was
driven by its online channel, which surged over the past two years
and delivered growth of 86.3% compared to the same quarter in
fiscal 2020 (13-week period ended December
28, 2019.)
Commenting on the results, CEO Heather
Reisman said: "These results demonstrate the success of our
efforts to provide a meaningfully curated offering to our
customers, the power of our position as the Country's leading
bookseller, and the strength of the Indigo brand. We built
incredibly strong momentum early in the holiday season and were
pleased we could still deliver growth despite being challenged by
an unrelenting set of pandemic conditions. We look forward to
seeing through this global pandemic to a place where we can fire on
all cylinders."
Adjusted EBITDA for the quarter was $52.0
million compared to $37.8
million for the same period last year, an increase of
$14.2 million. This improvement was
driven by robust sales and merchandise margin performance. It is
worth noting, that these results were achieved against
significantly elevated freight and last-mile logistics costs
associated with a challenged global supply chain, and against last
year's meaningful COVID-19 labour support for home office and field
leadership.
Indigo reported net earnings of $45.1
million ($1.62 net earnings
per basic common share) compared to net earnings of $30.7 million ($1.11 net earnings per basic common share) last
year, an improvement of $14.4 million
or 46.9%, for the reasons discussed.
With no outstanding debt and a cash balance of $189.9 million, the Company continues to be well
positioned to manage through any further uncertainty stemming from
COVID-19.
Analyst/Investor Call
Indigo will host a conference call for analysts and investors to
review these results at 10:00 a.m. (Eastern
Time) tomorrow, February 11th, 2022. The
call can be accessed by dialing 416-764-8659 from within the
Toronto area, or 1-888-664-6392
outside of Toronto. The
eight-digit participant code
is 37572134.
A playback of the call will also be available by telephone until
11:59 p.m. (ET) on February
18th, 2022. The call playback can be accessed after
12:00 p.m. (ET) on February
11th, 2022, 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 572134. 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 1,
2021 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 Canada's leading book and lifestyle retailer,
offering a curated assortment of books, gifts, baby, kids, wellness
and lifestyle products, that support their customers every day and
at key life stages by simplifying their journey to live with
intention. 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
and the literacy challenges faced by children in high-needs
communities across Canada. The
Foundation provides grants to high-needs elementary schools so they
can transform their libraries with the purchase of new books and
educational resources. Most recently, 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. With the support of the Company,
its customers, employees, and suppliers, the Foundation has
committed over $33 million to more
than 3,000 high-needs elementary schools across Canada since 2004.
To learn more about Indigo, please visit the "Our Company"
section at indigo.ca.
Consolidated
Balance Sheets
|
(Unaudited)
|
|
As
at
|
As
at
|
As
at
|
|
January
1,
|
December
26,
|
April
3,
|
(thousands of
Canadian dollars)
|
2022
|
2020
|
2021
|
|
|
|
|
ASSETS
|
|
|
|
Current
|
|
|
|
Cash and cash
equivalents
|
189,872
|
229,424
|
84,935
|
Accounts
receivable
|
18,223
|
26,395
|
22,976
|
Inventories
|
274,682
|
218,163
|
215,114
|
Prepaid
expenses
|
6,579
|
7,937
|
12,278
|
Income taxes
receivable
|
-
|
138
|
-
|
Derivative
assets
|
197
|
-
|
-
|
Other
assets
|
3,520
|
3,202
|
2,120
|
Total current
assets
|
493,073
|
485,259
|
337,423
|
Loan
receivable
|
-
|
446
|
-
|
Property, plant, and
equipment, net
|
66,520
|
80,982
|
77,131
|
Right-of-use assets,
net
|
335,378
|
366,104
|
361,864
|
Intangible assets,
net
|
19,353
|
21,475
|
20,916
|
Equity investment,
net
|
2,156
|
2,350
|
2,156
|
Total
assets
|
916,480
|
956,616
|
799,490
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
|
|
|
|
Accounts payable and
accrued liabilities
|
244,424
|
249,992
|
145,193
|
Unredeemed gift card
liability
|
75,269
|
68,626
|
58,053
|
Provisions
|
1,481
|
2,185
|
2,365
|
Deferred
revenue
|
22,197
|
16,880
|
16,486
|
Short-term lease
liabilities
|
66,298
|
63,022
|
67,603
|
Derivative
liabilities
|
27
|
1,716
|
1,622
|
Total current
liabilities
|
409,696
|
402,421
|
291,322
|
Long-term accrued
liabilities
|
1,048
|
1,371
|
2,090
|
Long-term
provisions
|
649
|
696
|
827
|
Long-term lease
liabilities
|
453,088
|
491,378
|
482,671
|
Total
liabilities
|
864,481
|
895,866
|
776,910
|
Equity
|
|
|
|
Share
capital
|
227,069
|
226,986
|
226,986
|
Contributed
surplus
|
14,338
|
14,075
|
13,782
|
Retained
deficit
|
(189,954)
|
(177,202)
|
(216,668)
|
Accumulated other
comprehensive income (loss)
|
546
|
(3,109)
|
(1,520)
|
Total
equity
|
51,999
|
60,750
|
22,580
|
Total liabilities
and equity
|
916,480
|
956,616
|
799,490
|
Consolidated
Statements of Earnings (Loss) and Comprehensive Earnings
(Loss)
|
(Unaudited)
|
|
13-week
|
13-week
|
39-week
|
39-week
|
|
period
ended
|
period
ended
|
period
ended
|
period
ended
|
|
January
1,
|
December
26,
|
January
1,
|
December
26,
|
(thousands of
Canadian dollars, except per share data)
|
2022
|
2020
|
2022
|
2020
|
|
|
|
|
|
Revenue
|
430,666
|
365,426
|
841,560
|
705,786
|
Cost of
sales
|
(252,427)
|
(217,940)
|
(482,883)
|
(440,773)
|
Gross
profit
|
178,239
|
147,486
|
358,677
|
265,013
|
Operating, selling,
and other expenses
|
(127,079)
|
(110,843)
|
(313,940)
|
(264,948)
|
Operating
profit
|
51,160
|
36,643
|
44,737
|
65
|
Net interest
expense
|
(5,991)
|
(5,921)
|
(18,068)
|
(18,466)
|
Earnings (loss)
before income taxes
|
45,169
|
30,722
|
26,669
|
(18,401)
|
Income tax recovery
(expense)
|
(49)
|
-
|
45
|
-
|
Net earnings
(loss)
|
45,120
|
30,722
|
26,714
|
(18,401)
|
|
|
|
|
|
Other
comprehensive income (loss)
|
|
|
|
|
Items that are or may
be reclassified subsequently to net
earnings (loss), net of taxes:
|
|
|
|
|
Change in fair value
of cash flow hedges
|
(110)
|
(3,151)
|
116
|
(4,654)
|
Reclassification of
realized loss (gain)
|
(22)
|
(861)
|
1,632
|
(856)
|
Foreign currency
translation adjustment
|
245
|
(597)
|
318
|
(597)
|
Other
comprehensive income (loss)
|
113
|
(4,609)
|
2,066
|
(6,107)
|
|
|
|
|
|
Total
comprehensive earnings (loss)
|
45,233
|
26,113
|
28,780
|
(24,508)
|
|
|
|
|
|
Net earnings
(loss) per common share
|
|
|
|
|
Basic
|
$
|
1.62
|
$
|
1.11
|
$
|
0.96
|
$
|
(0.67)
|
Diluted
|
$
|
1.60
|
$
|
1.09
|
$
|
0.94
|
$
|
(0.67)
|
Consolidated
Statements of Cash Flows
|
(Unaudited)
|
|
13-week
|
13-week
|
39-week
|
39-week
|
|
period
ended
|
period
ended
|
period
ended
|
period
ended
|
|
January
1,
|
December
26,
|
January
1,
|
December
26,
|
(thousands of
Canadian dollars)
|
2022
|
2020
|
2022
|
2020
|
|
|
|
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
Net earnings
(loss)
|
45,120
|
30,722
|
26,714
|
(18,401)
|
Adjustments to
reconcile net earnings (loss) to cash flows
from operating activities
|
|
|
|
|
Depreciation of
property, plant, and equipment
|
3,992
|
4,129
|
12,043
|
13,020
|
Depreciation of
right-of-use assets
|
7,549
|
10,183
|
26,697
|
31,728
|
Amortization of
intangible assets
|
2,785
|
3,187
|
9,269
|
9,718
|
Loss on disposal of
capital assets
|
6
|
-
|
36
|
247
|
Share-based
compensation
|
(23)
|
425
|
578
|
1,031
|
Directors'
compensation recognized in contributed surplus
|
-
|
74
|
-
|
222
|
Deferred income tax
expense (recovery)
|
49
|
-
|
(45)
|
-
|
Rent
concessions
|
-
|
(462)
|
-
|
(4,141)
|
Other
|
942
|
(787)
|
338
|
(899)
|
Net change in
non-cash working capital balances related to
operations
|
71,310
|
54,853
|
69,538
|
111,540
|
Interest
expense
|
6,123
|
6,154
|
18,617
|
19,107
|
Interest
income
|
(132)
|
(233)
|
(549)
|
(641)
|
Cash flows from
operating activities
|
137,721
|
108,245
|
163,236
|
162,531
|
|
|
|
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
Net purchases of
property, plant, and equipment
|
(523)
|
(1,543)
|
(1,546)
|
(3,528)
|
Addition of
intangible assets
|
(2,059)
|
(2,385)
|
(7,707)
|
(6,635)
|
Proceeds from
disposal of equity investment
|
-
|
-
|
516
|
-
|
Interest
received
|
132
|
233
|
549
|
641
|
Cash flows used
for investing activities
|
(2,450)
|
(3,695)
|
(8,188)
|
(9,522)
|
|
|
|
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
Repayment of
principal on lease liabilities
|
(10,273)
|
(7,052)
|
(31,316)
|
(25,890)
|
Interest
paid
|
(6,123)
|
(6,154)
|
(18,617)
|
(19,107)
|
Proceeds from share
issuances
|
32
|
-
|
61
|
-
|
Cash flows used
for financing activities
|
(16,364)
|
(13,206)
|
(49,872)
|
(44,997)
|
|
|
|
|
|
Effect of foreign
currency exchange rate changes on cash and
cash equivalents
|
(940)
|
559
|
(239)
|
939
|
|
|
|
|
|
Net increase in
cash and cash equivalents during the period
|
117,967
|
91,903
|
104,937
|
108,951
|
Cash and cash
equivalents, beginning of period
|
71,905
|
137,521
|
84,935
|
120,473
|
Cash and cash
equivalents, end of period
|
189,872
|
229,424
|
189,872
|
229,424
|
Non-IFRS Financial
Measures
|
|
The following table
reconciles adjusted EBITDA to net earnings (loss) before income
taxes, the most comparable IFRS measure:
|
|
|
|
|
|
|
13-week
|
13-week
|
39-week
|
39-week
|
|
period
ended
|
period
ended
|
period
ended
|
period
ended
|
|
January
1,
|
December
26,
|
January
1,
|
December
26,
|
(millions of Canadian
dollars)
|
2022
|
2020
|
2022
|
2020
|
Revenue
|
430.7
|
365.4
|
841.6
|
705.8
|
Cost of
sales
|
(252.4)
|
(217.9)
|
(482.9)
|
(440.8)
|
Cost of
operations
|
(80.0)
|
(69.4)
|
(186.6)
|
(154.2)
|
Selling, general and
administrative expenses
|
(32.7)
|
(23.9)
|
(79.3)
|
(57.2)
|
Depreciation of
right-of-use assets
|
(7.5)
|
(10.2)
|
(26.7)
|
(31.7)
|
Finance charges
related to leases
|
(6.1)
|
(6.2)
|
(18.6)
|
(19.1)
|
Adjusted
EBITDA1
|
52.0
|
37.8
|
47.5
|
2.8
|
Depreciation of
property, plant and equipment
|
(4.0)
|
(4.1)
|
(12.0)
|
(13.0)
|
Amortization of
intangible assets
|
(2.8)
|
(3.2)
|
(9.3)
|
(9.7)
|
Gain on disposal of
capital assets
|
-
|
-
|
-
|
0.9
|
Net interest
income
|
0.1
|
0.2
|
0.5
|
0.6
|
Earnings (loss)
before income taxes
|
45.2
|
30.7
|
26.7
|
(18.4)
|
1Earnings
before interest, taxes, depreciation, amortization, 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.