Bullboard - Stock Discussion Forum Pet Valu Holdings Ltd T.PET

Alternate Symbol(s): PTVLF

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... see more

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TSX:PET - Post Discussion

Pet Valu Holdings Ltd > RBC

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Post by retiredcf on Mar 05, 2024 9:05am

RBC

March 5, 2024

Pet Valu Holdings Ltd.

Happy kitty - Solid Q4/23 results, just above expectations, 2024 outlook consistent wtih forecasts

TSX: PET | CAD 29.96 | Outperform | Price Target CAD 35.00

Sentiment: Neutral
Bottom line: Neutral, with virtually all operating metrics within range of expectations.

2024 outlook largely consistent with forecast/consensus heading into the Q4 print, which should come as a relief to investors concerned that downturn in consumer spending could further moderate 2024 financial results. PET Q4 results and 2024 outlook supportive of our constructive view, and consistent with execution of strong long-term growth opportunity outlined at IPO, augmented by step-up investment to support growth.

Highlights of Q4/2023 results:

Adjusted EPS $0.54, above forecast/consensus $0.50/$0.51 and at high end of forecast range: $0.47-$0.54.
SSS growth/revenue growth slightly above forecast/consensus: SSS Q4 +1.9%, driven by 1.1% decrease in transaction count, offset by 3.0% increase in average transaction size. Decline in transaction count consistent with broader consumer spending backdrop as cash-strapped consumers endeavour to curtail total spending. Total revenue growth +7.8%, vs forecast +6.2%.
Store count: 783, +39 Y/Y, new store openings lagging forecast on timing of delivery of projects, franchised stores 71.6% of total, +100 bps sequentially.
Adjusted EBITDA $71.3 MM +20.2%, a whisker ahead of forecast/consensus $68-$69 MM.
Solid balance sheet/CF to support growth, net leverage at Q4 2.3x, +0.1x sequentially due to inclusion of lease liabilities for new GTA and Vancouver DCs.
Inventory: Well controlled, +3% Y/Y.
Dividend +10% to $0.11/share/Q, current yield 1.5%.

2024 outlook:

SSS: +2-5% vs last published RBC forecast +4%.
Store openings: 40-50 vs RBCe 40.
Revenue: $1.11-$1.14 B, +5-8% vs last published forecast $1,167 MM.
Adjusted EBITDA $248-$254 MM, +7-10% vs last published/consensus $255 MM.
EPS $1.57-$1.63, -2.5% to +1.5% due to step-up in D&PA, estimated at $0.20/share in F23, last published $1.60 but below consensus $1.68 as several estimates did not adequately reflect step-up in D&A.
Business transformation costs $17 MM, consistent with 2023.
Capex: $55 MM, unchanged vs last published $55 MM.

Conference call 8:30 am: 1-833-950-0062 (ID: 762645)

Expect focus of the call to be: i) key drivers of Q4 performance; ii) colour around consumer spending trends, notably evolution of value-seeking behaviour (trade-down, pack size, etc.) and performance of discretionary categories; iii) assumptions underpinning 2024 guidance; iv) competitive/promotional intensity and any changes post-entry of Chewy (NYSE: CHWY) into GTA; v) surrender/ adoption rate; vi) update on timing of capital projects for 2024.