The North West Company (NWC) Q2 2024 earnings summary

Executive summary

• Second quarter saw consolidated sales up 4.6% and gross profit up 7.5% year-over-year, with adjusted EBITDA increasing 6.1% and adjusted net earnings rising 1.6%, though net earnings decreased 3% due to non-comparable factors and higher taxes.

• Dividend raised to $0.40 per share, up 2.6%, payable October 15, 2024.

• Canadian operations benefited from increased consumer demand linked to government settlement payments and social programs, while international operations faced headwinds from weaker economic conditions.

• Operational excellence and Canadian business momentum expected to offset near-term uncertainty in International Operations.

Financial highlights

• Consolidated sales rose 4.6% year-over-year to $646.5 million; gross profit increased 7.5% to $219.8 million, with a 91 basis point improvement in gross margin.

• Net earnings decreased 3% to $36.9 million, with diluted EPS at $0.73, down from $0.76 last year.

• Adjusted EBITDA up 6.1% to $88.4 million; adjusted net earnings up 1.6% to $40.7 million year-over-year.

• Effective tax rate increased to 27.0% from 24.0% due to new Canadian tax legislation.

Outlook and guidance

• Expect continued benefit from Canadian government settlement payments into late 2024 and 2025.

• Macroeconomic uncertainty remains, especially in international, tourism-dependent markets.

• Next 100 program initiatives to drive incremental EBIT, with one-time costs expected in the back half of 2024 and into 2025.

• Optimism for continued operational improvements and Canadian business strength.