Review of Q3 2005 Financial Results - Jean Coutu Group · 2016-02-01 · q3 2005 q3 2004 39 weeks 9...
Transcript of Review of Q3 2005 Financial Results - Jean Coutu Group · 2016-02-01 · q3 2005 q3 2004 39 weeks 9...
![Page 1: Review of Q3 2005 Financial Results - Jean Coutu Group · 2016-02-01 · q3 2005 q3 2004 39 weeks 9 months. 6 44 46 48 43 49 43 46 9.7% 10.9% 10.3% 10.7% 10.8% 11.2% 11.7% 0 10 20](https://reader033.fdocuments.us/reader033/viewer/2022050606/5fad644825f47d5d3f29f081/html5/thumbnails/1.jpg)
Review of Q3 2005Financial Results
April 12, 2005
![Page 2: Review of Q3 2005 Financial Results - Jean Coutu Group · 2016-02-01 · q3 2005 q3 2004 39 weeks 9 months. 6 44 46 48 43 49 43 46 9.7% 10.9% 10.3% 10.7% 10.8% 11.2% 11.7% 0 10 20](https://reader033.fdocuments.us/reader033/viewer/2022050606/5fad644825f47d5d3f29f081/html5/thumbnails/2.jpg)
Mr. François J. CoutuPresident and Chief Executive Officer
The Jean Coutu Group (PJC) inc.
![Page 3: Review of Q3 2005 Financial Results - Jean Coutu Group · 2016-02-01 · q3 2005 q3 2004 39 weeks 9 months. 6 44 46 48 43 49 43 46 9.7% 10.9% 10.3% 10.7% 10.8% 11.2% 11.7% 0 10 20](https://reader033.fdocuments.us/reader033/viewer/2022050606/5fad644825f47d5d3f29f081/html5/thumbnails/3.jpg)
2
Forward-Looking Statement Disclaimer
Certain statements in this presentation, including statements regardingfuture results and performance, are forward-looking statements (as suchterm is defined under the United States Private Securities LitigationReform Act of 1995) based on current expectations. The accuracy of such statements is subject to a number of risks, uncertainties andassumptions that may cause actual results to differ materially from thoseprojected, including, but not limited to, changes in foreign currencyvaluations, our ability to effectively compete and changes in competitionor other trends in the industries in which we compete and other factors. The Company disclaims any intention or obligation to update or reviseany forward-looking information contained in its communications, whether as a result of new information, future events or otherwise.
This presentation also contains certain Non-GAAP financial measures. Such information is reconciled to the most directly comparable financialmeasures in the Company’s communications with shareholders.
![Page 4: Review of Q3 2005 Financial Results - Jean Coutu Group · 2016-02-01 · q3 2005 q3 2004 39 weeks 9 months. 6 44 46 48 43 49 43 46 9.7% 10.9% 10.3% 10.7% 10.8% 11.2% 11.7% 0 10 20](https://reader033.fdocuments.us/reader033/viewer/2022050606/5fad644825f47d5d3f29f081/html5/thumbnails/4.jpg)
3
RESULTSHIGHLIGHTS / Q3 2005
Summary of Results Q3 2005 Q3 2004 39 weeks 9 months(Thousands $US, except EPS) 2005 2004
Revenue 2,815,401 786,335 6,848,945 2,261,826Gross profit 641,521 143,102 1,511,012 407,492
23.1% 19.2% 22.5% 19.0%General and operating expenses 561,247 116,488 1,335,474 336,184Operating income before amortization 125,365 66,681 304,352 187,432Net earnings 39,854 36,035 58,162 100,079Earnings per share $ 0.15 $ 0.16 $ 0.23 $ 0.44Earnings per share before unrealized losses (gains) on financing activities $ 0.10 $ 0.16 $ 0.26 $ 0.44
![Page 5: Review of Q3 2005 Financial Results - Jean Coutu Group · 2016-02-01 · q3 2005 q3 2004 39 weeks 9 months. 6 44 46 48 43 49 43 46 9.7% 10.9% 10.3% 10.7% 10.8% 11.2% 11.7% 0 10 20](https://reader033.fdocuments.us/reader033/viewer/2022050606/5fad644825f47d5d3f29f081/html5/thumbnails/5.jpg)
4
RESULTSHIGHLIGHTS / Q3 2005
During the third quarter, there was a $11.9M foreignexchange gain (YTD loss of $8.2M). We finalized thedocumentation to hedge all significant future foreign exchangerisk on these items
Improvement in gross margins in the quarter
Savings in general and operating expenses began to berealized only as of of February, following the headcountreductions completed at Eckerd at the end of January
Increase in general and operating expenses in Canada related to the Eckerd acquisition (capital tax, insurance, professionnal fees, etc.)
![Page 6: Review of Q3 2005 Financial Results - Jean Coutu Group · 2016-02-01 · q3 2005 q3 2004 39 weeks 9 months. 6 44 46 48 43 49 43 46 9.7% 10.9% 10.3% 10.7% 10.8% 11.2% 11.7% 0 10 20](https://reader033.fdocuments.us/reader033/viewer/2022050606/5fad644825f47d5d3f29f081/html5/thumbnails/6.jpg)
5
RESULTSSEGMENTED OPERATING INCOME BEFORE AMORTIZATION (“OIBA”)
(Thousands $US)
Franchising 37,053 10.3% 35,467 11.2% 106,450 10.3% 101,430 11.1%
Retail Sales 88,312 3.6% 31,214 6.7% 197,902 3.4% 86,002 6.4%
Consolidated 125,365 4.5% 66,681 8.5% 304,352 4.4% 187,432 8.3%
2005 200439 weeks 9 monthsQ3 2005 Q3 2004
![Page 7: Review of Q3 2005 Financial Results - Jean Coutu Group · 2016-02-01 · q3 2005 q3 2004 39 weeks 9 months. 6 44 46 48 43 49 43 46 9.7% 10.9% 10.3% 10.7% 10.8% 11.2% 11.7% 0 10 20](https://reader033.fdocuments.us/reader033/viewer/2022050606/5fad644825f47d5d3f29f081/html5/thumbnails/7.jpg)
6
4446
48
43
49
4346
9.7%10.7%10.3%10.9%11.2%10.8%
11.7%
0
10
20
30
40
50
60
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q40%
5%
10%
15%
20%
25%
443457
417437
417423
379
0
50
100
150
200
250
300
350
400
450
500
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
REVENUESREVENUES OIBAOIBA
M CAN$OIBA
margin
2004 2005
M CAN$
2004 2005
CANADIAN OPERATIONSREVENUES AND OIBA
![Page 8: Review of Q3 2005 Financial Results - Jean Coutu Group · 2016-02-01 · q3 2005 q3 2004 39 weeks 9 months. 6 44 46 48 43 49 43 46 9.7% 10.9% 10.3% 10.7% 10.8% 11.2% 11.7% 0 10 20](https://reader033.fdocuments.us/reader033/viewer/2022050606/5fad644825f47d5d3f29f081/html5/thumbnails/8.jpg)
7
9.3 9.5 10.0 8.8 9.8 9.49.712.410.48.98.4
0
5
10
15
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
376 367 388 367 407 390332334197
320315
0100200300400500
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
SalesSales
Gross MarginGross Margin
200520042003
M CAN$
200520042003
CANADIAN OPERATIONS SALES AND GROSS MARGIN
%
![Page 9: Review of Q3 2005 Financial Results - Jean Coutu Group · 2016-02-01 · q3 2005 q3 2004 39 weeks 9 months. 6 44 46 48 43 49 43 46 9.7% 10.9% 10.3% 10.7% 10.8% 11.2% 11.7% 0 10 20](https://reader033.fdocuments.us/reader033/viewer/2022050606/5fad644825f47d5d3f29f081/html5/thumbnails/9.jpg)
8
2004
%
CANADIAN NETWORKRETAIL SALES GROWTH - COMPARABLE STORES
0.0
2.0
4.0
6.0
8.0
10.0
12.0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Combined Front-End Pharmacy
2005
7.3%
5.5%
3.2%
![Page 10: Review of Q3 2005 Financial Results - Jean Coutu Group · 2016-02-01 · q3 2005 q3 2004 39 weeks 9 months. 6 44 46 48 43 49 43 46 9.7% 10.9% 10.3% 10.7% 10.8% 11.2% 11.7% 0 10 20](https://reader033.fdocuments.us/reader033/viewer/2022050606/5fad644825f47d5d3f29f081/html5/thumbnails/10.jpg)
Mr. Michel CoutuPresident and Chief Executive Officer
The Jean Coutu Group (PJC) U.S.A. Inc.
![Page 11: Review of Q3 2005 Financial Results - Jean Coutu Group · 2016-02-01 · q3 2005 q3 2004 39 weeks 9 months. 6 44 46 48 43 49 43 46 9.7% 10.9% 10.3% 10.7% 10.8% 11.2% 11.7% 0 10 20](https://reader033.fdocuments.us/reader033/viewer/2022050606/5fad644825f47d5d3f29f081/html5/thumbnails/11.jpg)
10
REVENUESREVENUES OIBAOIBA
2,456
442 440 468 456
1,024
2,331
0
500
1,000
1,500
2,000
2,500
3,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2831
2730
80
88
27
3.6%3.4%2.9%
5.9%6.6%6.1%6.3%
0
10
20
30
40
50
60
70
80
90
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q40%
5%
10%
15%
20%
25%M $US M $US
OIBAMargin
US NETWORKREVENUES AND OIBA
2004 2005 2004 2005
![Page 12: Review of Q3 2005 Financial Results - Jean Coutu Group · 2016-02-01 · q3 2005 q3 2004 39 weeks 9 months. 6 44 46 48 43 49 43 46 9.7% 10.9% 10.3% 10.7% 10.8% 11.2% 11.7% 0 10 20](https://reader033.fdocuments.us/reader033/viewer/2022050606/5fad644825f47d5d3f29f081/html5/thumbnails/12.jpg)
11
24.6 24.9 24.9 24.1 24.4 24.924.324.824.524.724.2
0
10
20
30
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
439 467 4571,023
2,327 2,453
4394374494214510500
10001500200025003000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
SalesSales
Gross MarginGross Margin
200520042003
M US$
200520042003
US NETWORKSALES AND GROSS MARGIN
%
![Page 13: Review of Q3 2005 Financial Results - Jean Coutu Group · 2016-02-01 · q3 2005 q3 2004 39 weeks 9 months. 6 44 46 48 43 49 43 46 9.7% 10.9% 10.3% 10.7% 10.8% 11.2% 11.7% 0 10 20](https://reader033.fdocuments.us/reader033/viewer/2022050606/5fad644825f47d5d3f29f081/html5/thumbnails/13.jpg)
12
2004
%
US NETWORKRETAIL SALES GROWTH - COMPARABLE STORES
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Combined Front-End Pharmacy
2005
4.0%
3.4%
2.2%
![Page 14: Review of Q3 2005 Financial Results - Jean Coutu Group · 2016-02-01 · q3 2005 q3 2004 39 weeks 9 months. 6 44 46 48 43 49 43 46 9.7% 10.9% 10.3% 10.7% 10.8% 11.2% 11.7% 0 10 20](https://reader033.fdocuments.us/reader033/viewer/2022050606/5fad644825f47d5d3f29f081/html5/thumbnails/14.jpg)
13
The integration is progressing well and the network is performing as expected
Q3 was a consolidating quarterFocused execution throughout the network to grow salesSales growth and margin improvementLogistics and supply initiatives: DC & McKessonMultiple systems conversions and integrationFurther transfer of key functions from Florida to Rhode IslandBore the costs of running several infrastructures
The integration is progressing well and the network is performing as expected
Q3 was a consolidating quarterFocused execution throughout the network to grow salesSales growth and margin improvementLogistics and supply initiatives: DC & McKessonMultiple systems conversions and integrationFurther transfer of key functions from Florida to Rhode IslandBore the costs of running several infrastructures
US NETWORK HIGHLIGHTS / Q3 2005
![Page 15: Review of Q3 2005 Financial Results - Jean Coutu Group · 2016-02-01 · q3 2005 q3 2004 39 weeks 9 months. 6 44 46 48 43 49 43 46 9.7% 10.9% 10.3% 10.7% 10.8% 11.2% 11.7% 0 10 20](https://reader033.fdocuments.us/reader033/viewer/2022050606/5fad644825f47d5d3f29f081/html5/thumbnails/15.jpg)
14
We made progress operationally and financially during the third quarter: gross profit has improved from 24.1% in Q1, to 24.4% in Q2 and 24.9% in Q3, back to pre-Eckerd acquisition levels
After a slow start in December, the quarter benefited from cough, cold and flu season in February
We made progress operationally and financially during the third quarter: gross profit has improved from 24.1% in Q1, to 24.4% in Q2 and 24.9% in Q3, back to pre-Eckerd acquisition levels
After a slow start in December, the quarter benefited from cough, cold and flu season in February
US NETWORKHIGHLIGHTS / Q3 2005
![Page 16: Review of Q3 2005 Financial Results - Jean Coutu Group · 2016-02-01 · q3 2005 q3 2004 39 weeks 9 months. 6 44 46 48 43 49 43 46 9.7% 10.9% 10.3% 10.7% 10.8% 11.2% 11.7% 0 10 20](https://reader033.fdocuments.us/reader033/viewer/2022050606/5fad644825f47d5d3f29f081/html5/thumbnails/16.jpg)
15
US NETWORK MARKETING INITIATIVES
Focus: quality and customer serviceEmphasis on health & beauty and private label in weekly flyersCircular changes are working: Promotional sales as a % of front-end significantly reduced2 new programs: All-in-one rebate / Price breakLaunch of Eckerd TV campaign in April– Emphasis on 100 year + heritage– Core values of pharmacy, service and
customer care
![Page 17: Review of Q3 2005 Financial Results - Jean Coutu Group · 2016-02-01 · q3 2005 q3 2004 39 weeks 9 months. 6 44 46 48 43 49 43 46 9.7% 10.9% 10.3% 10.7% 10.8% 11.2% 11.7% 0 10 20](https://reader033.fdocuments.us/reader033/viewer/2022050606/5fad644825f47d5d3f29f081/html5/thumbnails/17.jpg)
16
US NETWORK OPERATING INITIATIVES
Customer FocusedStabilized staffingImproving in-stock position for everyday and promotional itemsReallocating labor dollars to better serve customer needsImproving store shopability – Project Open ViewSeasonal Merchandising Execution (Valentines & Easter)Expanding store hours to be more competitive & more convenient
Improvement in shrinkExpected effect on our reporting during the first half of fiscal 2006
![Page 18: Review of Q3 2005 Financial Results - Jean Coutu Group · 2016-02-01 · q3 2005 q3 2004 39 weeks 9 months. 6 44 46 48 43 49 43 46 9.7% 10.9% 10.3% 10.7% 10.8% 11.2% 11.7% 0 10 20](https://reader033.fdocuments.us/reader033/viewer/2022050606/5fad644825f47d5d3f29f081/html5/thumbnails/18.jpg)
17
US NETWORK INTEGRATION ACCOMPLISHMENTS
BROOKS/ECKERD TOTALHEADCOUNT AS AT APRIL 1, 2005 VARIATION
LARGO -1 211
WARWICK 327
FIELD & DC -379
TOTAL -1 263 Note: These numbers exclude 130 additional employees added to the IT Centre in Longueuil
![Page 19: Review of Q3 2005 Financial Results - Jean Coutu Group · 2016-02-01 · q3 2005 q3 2004 39 weeks 9 months. 6 44 46 48 43 49 43 46 9.7% 10.9% 10.3% 10.7% 10.8% 11.2% 11.7% 0 10 20](https://reader033.fdocuments.us/reader033/viewer/2022050606/5fad644825f47d5d3f29f081/html5/thumbnails/19.jpg)
18
US NETWORK REAL ESTATE PIPELINE & 24-HOUR INITIATIVE
Real EstateIn Q4 (to May 31, 2005), we will open 20 new stores and relocate 15 existing stores In 2005-2006, we will open 24 new stores and relocate 32 stores
24-Hour initiative14 24-hour stores opened since August 1, 2004Goal: open a 24-hour store in each strategic market
![Page 20: Review of Q3 2005 Financial Results - Jean Coutu Group · 2016-02-01 · q3 2005 q3 2004 39 weeks 9 months. 6 44 46 48 43 49 43 46 9.7% 10.9% 10.3% 10.7% 10.8% 11.2% 11.7% 0 10 20](https://reader033.fdocuments.us/reader033/viewer/2022050606/5fad644825f47d5d3f29f081/html5/thumbnails/20.jpg)
19
US NETWORK IT CONVERSION
Financial systems conversion
Supply chain software and systemsPurchasingLogisticsMerchandising
Data warehouse
Point-of-sale systems and Pharmacy
Retek systems
![Page 21: Review of Q3 2005 Financial Results - Jean Coutu Group · 2016-02-01 · q3 2005 q3 2004 39 weeks 9 months. 6 44 46 48 43 49 43 46 9.7% 10.9% 10.3% 10.7% 10.8% 11.2% 11.7% 0 10 20](https://reader033.fdocuments.us/reader033/viewer/2022050606/5fad644825f47d5d3f29f081/html5/thumbnails/21.jpg)
20
April 2004
July 2004
November 2004
January 2005
June 2005
Agreement Signed Closing
CVS Support Ended
Most Corporate Functions
Moved to RI
Florida HQ
Closed
Due Diligence / Transition
Prep
Execute IntegrationBegin Winding Down Florida
HQ Operations
Complete Remaining Integration Activities
and Close Florida HQ
US NETWORK ECKERD INTEGRATION TIMELINE
![Page 22: Review of Q3 2005 Financial Results - Jean Coutu Group · 2016-02-01 · q3 2005 q3 2004 39 weeks 9 months. 6 44 46 48 43 49 43 46 9.7% 10.9% 10.3% 10.7% 10.8% 11.2% 11.7% 0 10 20](https://reader033.fdocuments.us/reader033/viewer/2022050606/5fad644825f47d5d3f29f081/html5/thumbnails/22.jpg)
21
US NETWORK A HIGH PERFORMANCE NETWORK
Clear direction – strategy
Associate expectations and participation
Detailing, Feedback and Benchmarking
Communication and Accountability
A drive for excellence and success
![Page 23: Review of Q3 2005 Financial Results - Jean Coutu Group · 2016-02-01 · q3 2005 q3 2004 39 weeks 9 months. 6 44 46 48 43 49 43 46 9.7% 10.9% 10.3% 10.7% 10.8% 11.2% 11.7% 0 10 20](https://reader033.fdocuments.us/reader033/viewer/2022050606/5fad644825f47d5d3f29f081/html5/thumbnails/23.jpg)
Mr. André BelzileSenior Vice-President Finance and Corporate Affairs
The Jean Coutu Group (PJC) inc.
![Page 24: Review of Q3 2005 Financial Results - Jean Coutu Group · 2016-02-01 · q3 2005 q3 2004 39 weeks 9 months. 6 44 46 48 43 49 43 46 9.7% 10.9% 10.3% 10.7% 10.8% 11.2% 11.7% 0 10 20](https://reader033.fdocuments.us/reader033/viewer/2022050606/5fad644825f47d5d3f29f081/html5/thumbnails/24.jpg)
23
FINANCIAL POSITIONCONSOLIDATED HIGHLIGHTS
Balance Sheet Q3 2005 F 2004 F 2003(Thousands $US, except NBV)
Long Term Debt 2,522,585 169,609 192,154Shareholders' Equity 1,378,628 853,443 738,078Total Assets 5,585,874 1,343,754 1,252,020Net Book Value per share $ 5.27 $ 3.76 $ 3.25
![Page 25: Review of Q3 2005 Financial Results - Jean Coutu Group · 2016-02-01 · q3 2005 q3 2004 39 weeks 9 months. 6 44 46 48 43 49 43 46 9.7% 10.9% 10.3% 10.7% 10.8% 11.2% 11.7% 0 10 20](https://reader033.fdocuments.us/reader033/viewer/2022050606/5fad644825f47d5d3f29f081/html5/thumbnails/25.jpg)
24
Financial Ratios Q3 2005 F 2004 F 2003Pro Forma
Net Debt / Book Capitalization 63.5% 18.4% 26.7%Net Debt / Market Capitalization 37.0% 5.2% 7.1%
Net Debt / LTM OIBA 5.0 0.8 1.3LTM OIBA / LTM Interest 2.8 17.2 11.4
FINANCIAL POSITIONCONSOLIDATED HIGHLIGHTS
(1) Market capitalization based on 261.4 million shares at the closing price of April 6, 2005 of $CAN19.00 per share and a currency exchange rate of $CAN/$US of 0.82
(1)
![Page 26: Review of Q3 2005 Financial Results - Jean Coutu Group · 2016-02-01 · q3 2005 q3 2004 39 weeks 9 months. 6 44 46 48 43 49 43 46 9.7% 10.9% 10.3% 10.7% 10.8% 11.2% 11.7% 0 10 20](https://reader033.fdocuments.us/reader033/viewer/2022050606/5fad644825f47d5d3f29f081/html5/thumbnails/26.jpg)
25
RESULTSADDITIONAL INFORMATION ON NON-GAAP MEASURES
Non-GAAP Measures Q3 2005 Q3 2004 39 weeks 9 months(Thousands $US) 2005 2004
Net earnings 39,854 36,035 58,162 100,079Interest on long term debt 46,873 2,874 106,722 8,929Other financial expenses -2,149 881 -345 2,255Unrealized foreign exchange loss (gain) on monetary items -11,879 - 8,221 -Income Taxes -5,666 16,429 -9,352 45,677Operating Income 67,033 56,219 163,408 156,940Amortization 58,332 10,462 140,944 30,492Operating income before amortization 125,365 66,681 304,352 187,432
![Page 27: Review of Q3 2005 Financial Results - Jean Coutu Group · 2016-02-01 · q3 2005 q3 2004 39 weeks 9 months. 6 44 46 48 43 49 43 46 9.7% 10.9% 10.3% 10.7% 10.8% 11.2% 11.7% 0 10 20](https://reader033.fdocuments.us/reader033/viewer/2022050606/5fad644825f47d5d3f29f081/html5/thumbnails/27.jpg)
26
RESULTSADDITIONAL INFORMATION ON NON-GAAP MEASURES
Non-GAAP Measures Q3 2005 Q3 2004 39 weeks 9 months(Thousands $US) 2005 2004
Net earnings 39,854 36,035 58,162 100,079Unrealized gain on derivative instruments (1) -610 - - -Unrealized foreign exchange loss (gain) on monetary items (1) -11,879 - 8,221 -Earnings before unrealized losses (gains) on financing activities 27,365 36,035 66,383 100,079
Earnings per share 0.15 0.16 0.23 0.44Unrealized gain on derivative instruments (1) - - - -Unrealized foreign exchange loss (gain) on monetary items (1) -0.05 - 0.03 -Earnings per share before unrealized losses (gains) on financing activities 0.10 0.16 0.26 0.44
(1) These items are calculated on an after-tax basis
![Page 28: Review of Q3 2005 Financial Results - Jean Coutu Group · 2016-02-01 · q3 2005 q3 2004 39 weeks 9 months. 6 44 46 48 43 49 43 46 9.7% 10.9% 10.3% 10.7% 10.8% 11.2% 11.7% 0 10 20](https://reader033.fdocuments.us/reader033/viewer/2022050606/5fad644825f47d5d3f29f081/html5/thumbnails/28.jpg)
Review of Q3 2005Financial Results
April 12, 2005