Q2 2014 Supplementary Slides

Q2 2014 Supplementary Slides
July 24, 2014
1
Forward-looking Statements
This presentation for Loblaw Companies Limited (“Loblaw”) may contain forward-looking statements about Loblaw’s
objectives, plans, goals, aspirations, strategies, prospects and opportunities. It may also contain statements about the
acquisition by Loblaw of Shoppers Drug Mart, including, but not limited to, statements relating to the strategic benefits
expected to result from the transaction. Forward-looking statements are typically identified by words such as “expect”,
“anticipate”, “believe”, “foresee”, “could”, “estimate”, “goal”, “intend”, “plan”, “seek”, “strive”, “will”, “may” and “should” and
similar expressions. Forward-looking statements reflect current estimates, beliefs and assumptions, which are based on
management’s perception of historical trends, current conditions and expected future developments, as well as other factors it
believes are appropriate in the circumstances. Loblaw can give no assurance that such estimates, beliefs and assumptions
will prove to be correct as they are inherently subject to significant business, economic, competitive and other risks and
uncertainties, and as such, are subject to change. Information on these risks and uncertainties are included in reports filed by
Loblaw and Shoppers Drug Mart with applicable securities regulatory authorities and may be accessed through the SEDAR
website (www.sedar.com). Other risks and uncertainties not presently known to Loblaw or that Loblaw presently believes are
not material could also cause actual results or events to differ materially from those expressed in its forward-looking
statements. Readers are cautioned not to place undue reliance on these forward-looking statements. Loblaw disclaims any
obligation to update or revise any forward-looking statements, whether as a result of new information, future events or
otherwise, except as required by law.
This presentation uses certain non-GAAP measures, such as Adjusted Operating Income, Adjusted Operating Margin,
Adjusted EBITDA and Adjusted EPS which Loblaw believes provide useful information to both management and investors in
measuring financial performance. These measurers do not have a standard meaning prescribed by GAAP and therefore they
may not be comparable to similarly titled measurers presented by other publicly traded companies, and should not be
construed as an alternative to other financial measures determined in accordance with GAAP.
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Key Financial Metrics – Loblaw – Q2 2014
Consolidated Revenue
+37.1% (+2.4% ex. Shoppers Drug Mart)
Adjusted Operating Income
+65.1% (-1.8% ex. Shoppers Drug Mart)
Adjusted EBITDA
+54.2% (flat ex. Shoppers Drug Mart)
Adjusted EPS
+17.2%
Retail Revenue (ex SDM)
+1.6%
Retail Adjusted Gross Margin (ex SDM)
22.1% (-20bps)
Retail Adjusted EBITDA Margin
(ex SDM)
6.2% (-40bps)
Net Efficiencies Achieved (ex SDM)
+45bps in labour and supply chain partially offset by
~25bps franchise investments
Other notable costs (ex SDM)
~20bps incremental collective labour agreements
~15bps derivatives gain in Q2 2013
Free Cash Flow
$801M QTD, $381M YTD
Capex ($)
$338M YTD
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Key Operational Metrics–Q2 2014—Loblaw
Loblaw Square Footage Growth
0.8% – vs Q2/13
Industry STM* Square Footage Growth
3.1% – vs Q2/13
Basket Size
Increase in fresh penetration drove higher baskets
Traffic
Slight decline driven by competitive square footage growth
Tonnage
In line with the overall market
Internal Inflation
In line with CPI
PC Plus
Over 6.2 million total members
Same Store Sales
Net Promoter Score – LCL National
1.8% (excl. Shoppers Drug Mart; 1.7% adjusted for
Easter timing)
Over 70% of our banners are in the performance zone
*Supermarket Type Merchandise
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Key Financial Metrics – Q2 2014 - Shoppers Drug Mart
Revenue
+2.8%
Adjusted Operating Income
+1.9% (-2.8% excluding synergies)
Adjusted Operating Margin
8.4% (-10bps)
Adjusted EBITDA
+1.1%
Adjusted EBITDA Margin
10.8% (-20bps)
Adjusted Gross Profit
-30bps
Adjusted SG&A
-20bps
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Key Operational Metrics – Q2 2014
Shoppers Drug Mart
Retail Square Footage Growth
+1.8%
Pharmacy Sales
+2.5%
Pharmacy SSS
+2.5%
# Rx Dispensed (Rx Count)
+4.1% (+3.8% on same store sales basis)
Average Rx Value
-1.7%
Generic Penetration
62.8% (vs 61.3% Q2 2013)
Front of Store Sales
+3.0%
Front of Store SSS
+2.4%
Loyalty (Optimum)
Over 10 million active members
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Adjusted Debt by Segment
Q2 2014
Bank Indebtedness
Retail
PCF
REIT
Con. & Elim.
$ -
$ -
$ -
$ 335
$ 335
605
-
605
-
-
74
41
33
-
-
11,797
7,961
1,245
6,670
(4,079)(a)
Trust Unit Liability
715
-
-
-
715
Capital securities
224
224
-
-
-
34
34
-
-
-
$ 13,784
$ 8,595
$ 1,883
$ 6,670
($ 3,364)
Independent Securitization Trusts in S-T debt
605
-
605
-
-
Independent Securitization Trusts in L-T debt
750
-
750
-
-
Guaranteed Investment Certificates
528
-
528
-
-
Independent Funding Trusts
476
476
-
-
-
Trust Unit Liability
715
-
-
-
715
$ 10,710
$ 8,119
-
$ 6,670
($ 4,079)
Short term debt
Long term debt due within one year
Long term debt
Certain other liabilities
Less:
PCF Debt
Total Adjusted Debt
(a) REIT debt includes Class C LP units, and Class B exchangeable units held by Loblaw retail, eliminated in the consolidation and eliminations segment.
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Adjusted Debt
Q1 2014 Reported Adjusted Debt
 Capital Securities -added to the definition of Adjusted Debt
$6,434
224
$6,658
 $3.5B term loan to partially fund the cash portion of the
purchase price for Shoppers Drug Mart
3,500
 Shoppers Drug Mart MTN's assumed on acquisition
500
 Bank Indebtedness
296
 Finance Leases
145
 Transaction Costs
(41)
 Other
Adjusted Debt at Acquisition
 $1.5B Choice Properties REIT Monetization
 $1.6B repayment of term loan
 4.85% MTN matured and repaid
 Other
Q2 2014 Reported Adjusted Debt
$4,402
2
$11,060
1,500
(1,600)
(350)
($350)
100
$10,710
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