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 Nov 08, 2022 8:47am

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Post# 35081391

RBC

November 8, 2022

Pet Valu Holdings Ltd.
Wagging our tails: PET Q3 results and outlook raised...again

TSX: PET | CAD 36.47 | Outperform | Price Target CAD 45.00

Sentiment: Positive
Bottom line: Positive

PET Q3/F22 results once again strong and higher than expected. 2022 outlook revised upward (again), this time by 5% at high end of EPS range to reflect strong YTD 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 Q3 results:

Adjusted EPS $0.43, 16% above forecast/consensus $0.37, continuing YTD outperformance relative to forecast/guidance. Revenue 6% above forecast, benefit of revenue growth flowed through to bottom line.
SSS growth 14.7% despite normalizing prior year performance, driven by 7.6% increase in transaction count, 6.6% increase in average transaction size. Total revenue growth 22%.
Gross margins 40 bps above forecast @ 38.2%, EBITDA margin 23.3%, 70 bps above forecast.
Adjusted EBITDA $57 MM +12.4% Y/Y and 10% above forecast $52 MM.
Solid balance sheet/CF to support growth, net leverage at Q3 1.8x, -0.2x sequentially.
Inventory: +48% vs Q4/21 reflecting higher demand, inflation in produ8ct cost, heightened safety stock/accelerated purchase

of seasonal goods, and initial load-ins to support PL rollout at Chico's. 2022 Outlook revised upward all the way down the P&L:

• SSS: +15.5%-16.5% vs +13%-15% @ Q2, +9-12% at Q1, +6-9% initial guidance.
• Store openings: raised by 5 at low end to 40-45.
• Revenue: revised upward by +2-3% to $938-$947 MM, +11% vs initial guidance, implying Y/Y growth 21-22%. • Adjusted EBITDA revised upward by +3-4% to $212-$214 MM, implying Y/Y growth 16-17.5%.
• EPS vs prior 4.5-6% to $1.56-$1.58 vs prior $1.47-$1.51, implying 49-50.5% growth Y/Y.
• Capex: unchanged at $35-$40 MM.

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 Q3 performance, iii) color around surrender rates and consumer behavior against the backdrop of rising rates and high inflation, iv) comfort around inventory increase, v) update on e-Commerce initiatives and initial response to launch of subscription services in late September.