Pet Valu (PET) Q4 2023 earnings summary

Executive summary

• Q4 revenue rose 7.8% YoY to $286.9M; Adjusted EBITDA increased 20.2% to $71.3M and Adjusted Net Income rose 25.6% to $39.1M.

• FY revenue grew 10.9% to $1,055.9M, while net income declined to $89.5M from $100.8M.

• FY system-wide sales increased 10.0% to $1,419.7M; same-store sales grew 5.2%, and the network ended Q4 with 783 stores.

Financial highlights

• Q4 net income increased 11.1% to $28.8M; Adjusted Net Income was $39.1M, or $0.54 per diluted share, up 25.6%.

• FY Adjusted Net Income rose 1.7% to $116.5M; adjusted diluted EPS increased 1.3% to $1.61.

• Q4 free cash flow rose to $34.3M from $25.0M; FY free cash flow was $48.7M versus $50.2M.

Outlook and guidance

• FY2024 revenue guidance is $1.11B–$1.14B, with same-store sales growth of 2%–5% and 40–50 planned new stores.

• FY2024 Adjusted EBITDA guidance is $248M–$254M; adjusted diluted EPS guidance is $1.57–$1.63, including ~$20M of incremental depreciation and lease interest from new distribution centres.

• FY2024 net capital expenditures are forecast at ~$55M, about half for supply-chain transformation; excluded adjusted costs include ~$17M pre-tax transformation costs, ~$7M IT costs and ~$8M share-based compensation.

• Higher wholesale sales penetration with Chico franchisees is expected in FY2024.