Pet Valu Holdings Ltd T.PET

Alternate Symbol(s): PTVLF

Consumer Cyclical Specialty Retail

Pet Valu Holdings Ltd. is a Canadian specialty retailer of pet food and pet-related supplies. The Company has over 800 corporate-owned or franchised locations across the country. Through its neighborhood stores and digital platform, the Company offers more than 9,000 competitively priced products, including an assortment of premium, super premium and holistic brands. Its family of stores consists of Pet Valu, Bosley’s by Pet Valu, Total Pet and Tisol Pet Nutrition & Supply. Its product categories include puppy essentials, dog food, dog treats, dog toys, dog collars, leashes & harnesses, dog carriers & travel, kitten essentials, cat food, cat litter & litter boxes, cat bowls & feeding, small pet food, treats & hay and aquariums, kits & tanks. Its brands include Performatrin Ultra, ACANA, Royal Canin, ORIJEN, Go! Solutions, Performatrin Prime, Hill's Science Diet, Big Country Raw, Open Farm and Stella & Chewy’s, Purina Proplan, Purina Pro Plan, and Weruva.

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Pet Valu Holdings Ltd

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Post by retiredcfon Aug 09, 2022 8:58am

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Post# 34881005

RBC

August 9, 2022

Pet Valu Holdings Ltd.
Puppy love - Q2/22 FGN: Q2 results reinforce constructive investment thesis

TSX: PET | CAD 32.74 | Outperform | Price Target CAD 42.00

Sentiment: Positive Bottom line: Positive

PET Q2/F22 results were strong and higher than expected. 2022 outlook revised upward by 5% at high end of EPS range to reflect strong H1 performance, results supportive of our constructive view of PET, Company’s premium valuation, and consistent with execution of strong long-term growth opportunity outlined at IPO.

Highlights of Q2 results:

Adjusted EPS $0.39, 22% above forecast/consensus $0.32, a similar magnitude of outperformance as in Q1. Revenue 3% above forecast, benefit of revenue growth flowed through to bottom line.
SSS growth 21.2%, similar to Q1 +22.8%, driven by 19.3% increase in transaction count from depressed levels prior year (COVID restrictions), 1.5% increase in average transaction size. Total revenue growth 25%.
Gross margins 40 bps above forecast @ 37.5%, 45 bps SG&A leverage, solid sequential improvement.
Adjusted EBITDA $52 MM +23% Y/Y and 10% above forecast $47 MM.
Solid balance sheet/CF to support growth, net leverage at Q2 <2.0x vs 2.1x at Q1.

2022 Outlook revised upward all the way down the P&L:

SSS: +13%-15% vs +9-12% at Q1, +6-9% initial guidance.
Store openings: unchanged at 35-45.
Revenue: +4-5% to $912-$928 MM vs prior $870-$895 MM, initial guidance $845-$870 MM.
Adjusted EBITDA +4.5-6% to $203-$207 MM from $191-$198 MM prior, initial guidance $187-$194 MM.
EPS vs prior +5-7% to $1.47-$1.51 from $1.37-$1.44. Pre-Q2 release consensus $1.44.
Capex: Unchanged at $35-$40 MM including $15 MM in advanced payments/leasehold improvements related to build-out of new DC in GTA.

Conference call 8:30 am: 1-888-350-3870 (ID: 5518274)

Expect focus of the call to be: i) colour around assumptions underlying updated guidance, ii) key drivers of Q2 performance, iii) color around surrender rates and consumer behavior against the backdrop of rising inflation, iv) ability to pass through price increases as inflation in agricultural commodities likely drives higher cost of consumables, which represent 70% of revenues, v) update on thoughts with respect to upside from Chico’s acquisition and growth opportunities, vi) update on e-Commerce initiatives.

Table of Q2 results/highlights on the following page: