Welcome!

News Feed Item

RONA Announces Its 2014 Second Quarter Results

- Adjusted net income increased by 25% in the quarter and 80% year-to-date

BOUCHERVILLE, QUEBEC -- (Marketwired) -- 08/12/14 -- RONA Inc. (TSX:RON)(TSX:RON.PR.A) ("RONA" or the "Corporation") announces the results for its continuing operations for the 13- and 26-week periods ended June 29, 2014. All figures in this Press Release are in Canadian dollars.


----------------------------------------------------------------------------
SECOND QUARTER HIGHLIGHTS                                                   
                                                                            
     - Net income attributable to participating shares of $42.0 million     
       ($0.35 per share) compared to a net loss of $144.7 million (-$1.19   
       per share) in 2013. Adjusted net income up 25% or $8.3 million over  
       $33.6 million in 2013.                                               
     - Adjusted EBITDA of $89.1 million, up 16% versus $76.6 million in     
       2013. Free cash flow of $135.7 million compared to -$21.1 million in 
       2013.                                                                
     - Adjusted EBITDA margin up 140 basis points, to 7.5% from 6.1%.       
       Adjusted EBITDA margin of the retail segment up to 9.0%, a 170 basis 
       points increase.                                                     
     - Improving trend in retail segment. Same-store sales of -0.7% versus  
       -3.4% in the first quarter. Positive same-store sales of corporate   
       stores for the first quarter since 2010, coming from the strong      
       growth in Western Canada and the repositioning of TOTEM and Reno-    
       Depot stores.                                                        
     - Continued strengthening of the financial position with a net debt to 
       EBITDA ratio of 0.9x, versus 2.5x last year, following a $307 million
       reduction in total net debt during the past year.                    
----------------------------------------------------------------------------

"The second quarter results show encouraging signs in sales. Same-store sales of the corporate stores in the retail segment have grown for the first time since 2010 compared to last year, despite the very challenging environment in the first half of the quarter. The net cost savings achieved by RONA's recovery plan added $10.5 million to EBITDA in the quarter and $27.9 million year-to-date. These savings directly contributed to a 25% increase in adjusted net income in the second quarter and 80% increase year-to-date," said Robert Sawyer, President and Chief Executive Officer of RONA.

"The progress achieved to date, under our business plan, shows that we have rolled out the right initiatives to improve efficiency and turnaround underperforming business units. Given the slowdown in some areas of the country, particularly in Quebec, and the highly competitive environment, we must remain focused on improving our efficiency and increasing our market share through a better banner positioning. The repositioning of the TOTEM and Reno-Depot stores and the recent agreement announced with Ace Hardware are excellent examples of the steps we have taken to improve our value proposition. RONA will thus have a leaner infrastructure and clearer positioning to improve sales and profitability," added Mr. Sawyer.


---------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS FROM                                                  
 CONTINUING OPERATIONS                 Quarters ended     Six months ended 
(in millions of dollars, except    June 29,  June 30,   June 29,  June 30, 
 per share data)                       2014      2013       2014      2013 
---------------------------------------------------------------------------
Revenues                            1,193.5   1,249.0    1,957.8   2,081.9 
EBITDA                                 88.2       0.2       96.1     (21.5)
Adjusted EBITDA (1)                    89.1      76.6       99.1      78.3 
Net income (loss) attributable to                                          
 participating shares                  42.0     (38.7)      25.4     (74.8)
Per share - basic and diluted ($)      0.35     (0.32)      0.21     (0.61)
Adjusted net income attributable                                           
 to participating shares (1)           42.0      33.6       27.6      15.3 
Per share - basic and diluted ($)      0.35      0.28       0.23      0.13 
Weighted average number of shares                                          
 outstanding (in millions)            119.5     121.9      120.0     121.7 
---------------------------------------------------------------------------
(1) See non-IFRS performance measures below.                                

2014 second quarter results

Consolidated revenues from continuing operations amounted to $1,193.5 million, down 4.4% from $1,249.0 million for the second quarter of 2013. This decrease primarily reflects the closure of underperforming stores, a late spring in Quebec and Ontario which had an adverse impact on sales of building materials and seasonal goods in the first half of the quarter coupled to a decline in housing starts in Quebec, RONA's biggest market. Same-store sales in the retail segment were down 0.7%. However, the strength of the economy in Western Canada and successful repositioning of the TOTEM stores in this region, combined with the positive impacts of the redeployment of the Reno-Depot stores in Quebec, have generated positive same-store sales for corporate stores in the retail segment.

Adjusted EBITDA for continuing operations totalled $89.1 million, or 7.5% of revenues, up 16.3% compared to $76.6 million, or 6.1% of revenues in the second quarter of 2013. The increase reflects the realization of $10.5 million in net cost savings as a direct outcome of the RONA recovery plan, by reducing selling, general and administrative expenses, and the net impact on operating profits of the closure of underperforming stores.

Net income from continuing operations attributable to participating shares in the second quarter of 2014 was $42.0 million, or $0.35 per basic and diluted share, up $80.7 million compared to loss of $38.7 million or ($0.32) per basic and diluted share in the second quarter of 2013. On an adjusted basis, net income from continuing operations attributable to participating shares in the second quarter of 2014 was $42.0 million, or $0.35 per basic and diluted share, up $8.4 million compared to $33.6 million, or $0.28 per basic and diluted share in 2013.

2014 first half results


----------------------------------------------------------------------------
HIGHLIGHTS                                                                  
                                                                            
     - Adjusted net income attributable to participating shares of $27.6    
       million, up 80% versus $15.3 million in 2013.                        
     - Adjusted basic and diluted net income per share increased from $0.13 
       in 2013 to $0.23 in 2014.                                            
     - Adjusted EBITDA of $99.1 million, up 27% versus 78.3 million in 2013.
     - Adjusted EBITDA margin up 130 basis points to 5.1% from 3.8%.        
       Adjusted EBITDA margin of the retail segment up to 5.5%, a 140 basis 
       points increase.                                                     
----------------------------------------------------------------------------

In the first six months of 2014, consolidated revenues from continuing operations amounted to $1,957.8 million, compared to $2,081.9 million in the first half of 2013. On a same-store basis, sales were down in the retail segment by 1.7%.

Adjusted EBITDA for continuing operations rose to $99.1 million, or 5.1% of revenues, up 26.6% versus $78.3 million, or 3.8% of revenues, in the prior period. The increase reflects the cost savings of $27.9 million achieved under the RONA recovery plan.

Net income from continuing operations attributable to participating shares for the first half of 2014 amounted to $25.4 million, or $0.21 per basic and diluted share, up $100.2 million compared to a loss of $74.8 million, or ($0.61) per basic and diluted share, in the first half of 2013. On an adjusted basis, net income from continuing operations attributable to participating shares for the first half of 2014 amounted to $27.6 million, or $0.23 per basic and diluted share, up 79.8% compared to $15.3 million, or $0.13 per basic and diluted share.

SOLID FINANCIAL SITUATION

At June 29, 2014, RONA was in a healthy financial position with cash of $26.5 million and usage of $87.1 million on its authorized credit facility of $700.0 million. On that date, net debt stood at $185.6 million, down from $492.6 million at the close of the second quarter of fiscal 2013. During the second quarter, RONA generated free cash flow of $135.7 million, compared to -$21.1 million for the same period last year. The improvement is mainly due to the Corporation's operational performance and better management of working capital.

Reflecting this decreased debt, the ratio of net debt to adjusted EBITDA for the past 12 months was 0.9x at the close of the second quarter of fiscal 2014, compared to 2.5x for the same period of fiscal 2013. The ratio of net debt to total capital was 10% at June 29, 2014, compared to 23% at June 30, 2013.

In the second quarter, RONA bought back 1,673,200 common shares for a total consideration of $18.3 million under its normal course issuer bid put in plan on November 18, 2013. Since the bid took effect, the Corporation has purchased 3,492,800 common shares for a total of $41.6 million. The arrangement authorizes RONA to purchase a maximum of 8,578,384 common shares until November 17, 2014.

Recent event

On July 29, 2014, RONA signed a long-term agreement for master licensing of the Ace Hardware brand with Ace Hardware International. Under this agreement, RONA has specific rights and privileges with respect to Ace Hardware brands, retail operating systems and web portals in Canada. The parties also signed a long-term distribution agreement giving RONA access to products available through Ace Hardware's various distribution channels.

This agreement will allow RONA to improve its offering to small dealers across the country while leveraging its existing distribution infrastructure. Furthermore, the reputation of Ace Hardware in North America will strengthen RONA's banner portfolio.

Dividend on preferred shares

At its meeting on August 12, 2014, RONA's Board of Directors declared a quarterly dividend of $0.3281 per share on cumulative 5-year rate reset Class A preferred shares, series 6. The dividend will be paid on September 30, 2014 to shareholders of record on September 15, 2014.

Dividend on common shares

At its meeting on August 12, 2014, RONA's Board of Directors declared a semi-annual dividend of $0.07 per share on the Corporation's common shares. The dividend will be paid on September 25, 2014 to shareholders of record on September 10, 2014.

Additional information

The Management's Discussion and Analysis (MD&A), interim consolidated financial statements and notes for second quarter 2014 can be found on the SEDAR website at www.sedar.com and in the "Investor Relations" section of the Corporation's website at www.rona.ca. The Corporation's Annual Information Form, along with other information about RONA, can also be found on the RONA and SEDAR websites.

Conference call with the financial community

On Tuesday, August 12, 2014, at 3:00 p.m. (EDT) RONA will hold a conference call for the financial community. To join the conference, please call 416-340-2216 or 1 866-223-7781. To listen to the call online, please go to: http://webcasts.pqm.net/client/rona/event/1122/en/.

A replay will be available from 7:00 p.m. on Tuesday, August 12, 2014 until August 19, 2014. It can be heard by dialing 905 694-9451 or 1 800-408-3053 and entering the password 7914063 on the telephone keypad.

Non-IFRS performance measures

RONA uses performance measures which are not prescribed by International Financial Reporting Standards ("IFRS"). Management's view is that these measures are useful in the analysis of the Corporation's operational performance. These measures must not be considered separately or as a substitute for other performance measures calculated in compliance with IFRS, but rather as additional information.

EBITDA, as defined by the Corporation, represents operating profit before finance costs, income tax expense and depreciation, amortization and impairment of non-financial assets. This measure is widely used in financial circles to measure the profitability of operations.

Same-store sales is a metric used by management and is common throughout our industry. This metric identifies sales growth generated by the existing store network and is adjusted to reflect the effect of acquisitions, store closures and openings.

Management also uses the following non-IFRS performance measures: adjusted EBITDA; adjusted EBITDA margin; adjusted gross margin; adjusted selling, general and administrative expenses; adjusted depreciation, amortization and impairment of non-financial assets; adjusted finance costs; adjusted net income attributable to participating shares and adjusted diluted net income per share attributable to owners of RONA inc. These measures reflect the inclusion or exclusion of certain amounts that are viewed as not representative of the Corporation's sustainable financial performance. For more details on these measures, please see the MD&A for the second quarter of 2014.

Forward-looking statements

This Press Release includes forward-looking statements that involve risks and uncertainties. All statements other than statements of historical facts included in this Press Release, including statements regarding the prospects of the industry and prospects, plans, financial position and business strategy of the Corporation may constitute forward-looking statements within the meaning of the Canadian securities legislation and regulations. Investors and others are cautioned that undue reliance should not be placed on any forward-looking statements.

For more information on the risks, uncertainties and assumptions that would cause the Corporation's actual results to differ from current expectations please refer to the Corporation's public filings available at sites www.sedar.com and www.rona.ca. In particular, further details and descriptions of these and other factors are disclosed in the MD&A under the "Risks and uncertainties" section and in the "Risk factors" section of the Corporation's current Annual Information Form.

The forward-looking statements in this Press Release reflect the Corporation's expectations as at August 12, 2014, and are subject to change after this date. The Corporation expressly disclaims any obligation or intention to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by the applicable securities laws.

About RONA

RONA inc. is a major distributor and retailer of hardware, building materials and home renovation products in Canada. The Corporation operates a network of over 500 corporate, franchise and affiliate stores under several different banners, and in a number of complementary formats. With its 8 distribution centers and its specialized TruServ Canada wholesaler, RONA serves its network as well as many independent dealers operating under other banners. With some 24,000 employees, the Corporation generates annual consolidated sales of $4.2 billion. For more information, visit www.rona.ca.

Contacts:
Medias
Media Relations
RONA Inc.
514-599-5900, ext. 5271
[email protected]

Financial Community
Stephane Milot
Vice-President - Finance and Investor Relations
514-599-5951
[email protected]

Roxanne Williams
Director - Treasury and Investor Relations
514-599-5900, ext. 5003
[email protected]

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
Web Real-Time Communication APIs have quickly revolutionized what browsers are capable of. In addition to video and audio streams, we can now bi-directionally send arbitrary data over WebRTC's PeerConnection Data Channels. With the advent of Progressive Web Apps and new hardware APIs such as WebBluetooh and WebUSB, we can finally enable users to stitch together the Internet of Things directly from their browsers while communicating privately and securely in a decentralized way.
All organizations that did not originate this moment have a pre-existing culture as well as legacy technology and processes that can be more or less amenable to DevOps implementation. That organizational culture is influenced by the personalities and management styles of Executive Management, the wider culture in which the organization is situated, and the personalities of key team members at all levels of the organization. This culture and entrenched interests usually throw a wrench in the work...
Keeping pace with advancements in software delivery processes and tooling is taxing even for the most proficient organizations. Point tools, platforms, open source and the increasing adoption of private and public cloud services requires strong engineering rigor - all in the face of developer demands to use the tools of choice. As Agile has settled in as a mainstream practice, now DevOps has emerged as the next wave to improve software delivery speed and output. To make DevOps work, organization...
DevOps is often described as a combination of technology and culture. Without both, DevOps isn't complete. However, applying the culture to outdated technology is a recipe for disaster; as response times grow and connections between teams are delayed by technology, the culture will die. A Nutanix Enterprise Cloud has many benefits that provide the needed base for a true DevOps paradigm.
What sort of WebRTC based applications can we expect to see over the next year and beyond? One way to predict development trends is to see what sorts of applications startups are building. In his session at @ThingsExpo, Arin Sime, founder of WebRTC.ventures, will discuss the current and likely future trends in WebRTC application development based on real requests for custom applications from real customers, as well as other public sources of information,
SYS-CON Events announced today that Interoute, owner-operator of one of Europe's largest networks and a global cloud services platform, has been named “Bronze Sponsor” of SYS-CON's 20th Cloud Expo, which will take place on June 6-8, 2017 at the Javits Center in New York, New York. Interoute is the owner-operator of one of Europe's largest networks and a global cloud services platform which encompasses 12 data centers, 14 virtual data centers and 31 colocation centers, with connections to 195 add...
Historically, some banking activities such as trading have been relying heavily on analytics and cutting edge algorithmic tools. The coming of age of powerful data analytics solutions combined with the development of intelligent algorithms have created new opportunities for financial institutions. In his session at 20th Cloud Expo, Sebastien Meunier, Head of Digital for North America at Chappuis Halder & Co., will discuss how these tools can be leveraged to develop a lasting competitive advanta...
TechTarget storage websites are the best online information resource for news, tips and expert advice for the storage, backup and disaster recovery markets. By creating abundant, high-quality editorial content across more than 140 highly targeted technology-specific websites, TechTarget attracts and nurtures communities of technology buyers researching their companies' information technology needs. By understanding these buyers' content consumption behaviors, TechTarget creates the purchase inte...
With the introduction of IoT and Smart Living in every aspect of our lives, one question has become relevant: What are the security implications? To answer this, first we have to look and explore the security models of the technologies that IoT is founded upon. In his session at @ThingsExpo, Nevi Kaja, a Research Engineer at Ford Motor Company, will discuss some of the security challenges of the IoT infrastructure and relate how these aspects impact Smart Living. The material will be delivered i...
In his session at @ThingsExpo, Eric Lachapelle, CEO of the Professional Evaluation and Certification Board (PECB), will provide an overview of various initiatives to certifiy the security of connected devices and future trends in ensuring public trust of IoT. Eric Lachapelle is the Chief Executive Officer of the Professional Evaluation and Certification Board (PECB), an international certification body. His role is to help companies and individuals to achieve professional, accredited and worldw...
My team embarked on building a data lake for our sales and marketing data to better understand customer journeys. This required building a hybrid data pipeline to connect our cloud CRM with the new Hadoop Data Lake. One challenge is that IT was not in a position to provide support until we proved value and marketing did not have the experience, so we embarked on the journey ourselves within the product marketing team for our line of business within Progress. In his session at @BigDataExpo, Sum...
Your homes and cars can be automated and self-serviced. Why can't your storage? From simply asking questions to analyze and troubleshoot your infrastructure, to provisioning storage with snapshots, recovery and replication, your wildest sci-fi dream has come true. In his session at @DevOpsSummit at 20th Cloud Expo, Dan Florea, Director of Product Management at Tintri, will provide a ChatOps demo where you can talk to your storage and manage it from anywhere, through Slack and similar services ...
SYS-CON Events announced today that SoftLayer, an IBM Company, has been named “Gold Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2016, at the Javits Center in New York, New York. SoftLayer, an IBM Company, provides cloud infrastructure as a service from a growing number of data centers and network points of presence around the world. SoftLayer’s customers range from Web startups to global enterprises.
SYS-CON Events announced today that Ocean9will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Ocean9 provides cloud services for Backup, Disaster Recovery (DRaaS) and instant Innovation, and redefines enterprise infrastructure with its cloud native subscription offerings for mission critical SAP workloads.
Have you ever noticed how some IT people seem to lead successful, rewarding, and satisfying lives and careers, while others struggle? IT author and speaker Don Crawley uncovered the five principles that successful IT people use to build satisfying lives and careers and he shares them in this fast-paced, thought-provoking webinar. You'll learn the importance of striking a balance with technical skills and people skills, challenge your pre-existing ideas about IT customer service, and gain new in...