Analysis Using data from Capital IQ, here are common size SG&A and Op Margin figures from 2012-2018 (exlcuded 19 due to potential Q4 distortions0:
SG&A
Q1 - 62.81%
Q2 - 52.73%
Q3 - 55.79%
Q4 - 58.54%
Op Margin:
Q1 - (2.74%)
Q2 - 4.11%
Q3 - 1.06%
Q4 - (0.74%)
As others have said, this company's profit comes loaded in Q2/Q3. We're looking at an Op. margin of (2%) this quarter and SG&A of 53.3%. Gross margins are down pre-restructure but could be explained by 20 year high in USD across 2022. The company has paused its hedging program in 2021. Weak USD is a massive tailwind and gross margins likely have quite a bit of air in them. I'd imagine that we see gross margins improve as USD comes off on back of rate peak (provided no credit crises).
Transition to variable lease payments, based on volumes is likely a draw compared to pre-CCCA (not sure, but makes econ sense if negotiation from lthe leasee's perspective).
Bottom line, there are still tailwinds to margins here. If I'm the Reitman fam I'm paying myself first post CCAA. I wouldn't be surpsied if we this management payout is front-loaded.
And the kicker. The deferred tax assets are now being recognized and have been audited by KPMG. Anyone doubting future profitability is ignoring the following - per KPMG:
"The recognition of these previously unrecognized deferred tax assets resulted from the Entity’s revision of its estimate of future taxable profits, as the Entity determined it is probable that they will be sufficient to utilize the tax benefits"
AND
"We evaluated the appropriateness of the Entity’s significant judgements and assumptions used in the determination of the Entity’s future taxable profits by comparing sales growth rates assumptions to (i) the sales growth rates assumptions used in non-financial assets impairment analysis and to (ii) sales growth rates of peer companies per industry research reports."
and after all of this.. we still get: "In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated financial position of the Entity"
This company is back to profitability. As others have said, you're getitng the Op.Co for free if you take into cash and various estimates of FMV on RE...it's your money - keep selling, I want your liquidity.