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Canadian Tire Corporation
2015 Fourth Quarter and Full Year
Financial Results
February 18th, 2016
1
This document contains forward-looking statements that reflect management’s current expectations related to matters such as future financial performance and operating results of the Company.
Forward-looking statements are provided for the purposes of providing information about Management’s current expectations and plans and allowing investors and others to get a better
understanding of the Company’s financial position, results of operations and operating environment. Readers are cautioned that such information may not be appropriate for other circumstances.
All statements other than statements of historical facts included in this document may constitute forward-looking statements, including but not limited to, statements concerning Management’s
current expectations relating to possible or assumed future prospects and results, the Company’s strategic goals and priorities, its actions and the results of those actions and the economic and
business outlook for the Company. Often, but not always, forward-looking statements can be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “intend”, “believe”,
“estimate”, “plan”, “can”, “could”, “should”, “would”, “outlook”, “forecast”, “anticipate”, “aspire”, “foresee”, “continue”, “ongoing” or the negative of these terms or variations of them or similar
terminology. Forward-looking statements are based on the reasonable assumptions, estimates, analyses, beliefs and opinions of Management, made in light of its experience and perception of
trends, current conditions and expected developments, as well as other factors that Management believes to be relevant and reasonable at the date that such statements are made.
By their very nature, forward-looking statements require Management to make assumptions and are subject to inherent risks and uncertainties, which give rise to the possibility that the Company’s
assumptions, estimates, analyses, beliefs and opinions may not be correct and that the Company’s expectations and plans will not be achieved. Examples of Management’s beliefs, which may
prove to be incorrect, include, but are not limited to, beliefs about the effectiveness of certain performance measures, beliefs about current and future competitive conditions and the Company’s
position in the competitive environment, beliefs about the Company’s core capabilities and beliefs regarding the availability of sufficient liquidity to meet the Company’s contractual obligations.
Although the Company believes that the forward-looking statements in this document are based on information, assumptions and beliefs that are current, reasonable and complete, these
statements are necessarily subject to a number of factors that could cause actual results to differ materially from Management’s expectations and plans as set forth in such forward-looking
statements. Some of the factors, many of which are beyond the Company’s control and the effects of which can be difficult to predict, include: (a) credit, market, currency, operational, liquidity and
funding risks, including changes in economic conditions, interest rates or tax rates; (b) the ability of the Company to attract and retain high quality employees for all of its businesses, Dealers,
Canadian Tire Petroleum retailers and Mark’s and FGL Sports franchisees, as well as the Company’s financial arrangements with such parties; (c) the growth of certain business categories and
market segments and the willingness of customers to shop at its stores or acquire its financial products and services; (d) the Company’s margins and sales and those of its competitors; (e) the
changing consumer preferences toward eCommerce, online retailing and the introduction of new technologies; (f) risks and uncertainties relating to information management, technology, cyber
threats, property management and development, environmental liabilities, supply chain management, product safety, changes in law, regulation, competition, seasonality, weather patterns,
commodity prices and business disruption, the Company’s relationships with suppliers, manufacturers, partners and other third parties, changes to existing accounting pronouncements, the risk of
damage to the reputation of brands promoted by the Company and the cost of store network expansion and retrofits; (g) the Company’s capital structure, funding strategy, cost management
programs and share price; and (h) the Company’s ability to obtain all necessary regulatory approvals. Management cautions that the foregoing list of important factors and assumptions is not
exhaustive and other factors could also adversely affect the Company’s results. Investors and other readers are urged to consider the foregoing risks, uncertainties, factors and assumptions
carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements.
For more information on the risks, uncertainties and assumptions that could cause the Company’s actual results to differ from current expectations, please refer to the “Risk Factors” section of the
Company’s Annual Information Form for fiscal 2015, as well as the Company’s other public filings, available on the SEDAR (System for Electronic Document Analysis and Retrieval) website at
www.sedar.com and at www.corp.canadiantire.ca.
Forward-looking statements do not take into account the effect that transactions or non-recurring or other special items announced or occurring after the statements are made, have on the
Company’s business. For example, they do not include the effect of any dispositions, acquisitions, asset write downs or other charges announced or occurring after such statements are made.
The forward-looking statements and information contained herein are based on certain factors and assumptions as of the date hereof. The Company does not undertake to update any forward-
looking statements, whether written or oral, that may be made from time to time by it or on its behalf, to reflect new information, future events or otherwise, unless required by applicable securities
laws.
1
Forward looking information
2
Executive participants
2
 Michael Medline, President and CEO, Canadian Tire Corporation
 Dean McCann, Chief Financial Officer and EVP
 Allan MacDonald, Chief Operating Officer, Canadian Tire
 Chad McKinnon, Chief Operating Officer, FGL Sports
 Mary Turner, Chief Operating Officer, CTFS
 Rick White, Chief Operating Officer, Mark’s
3
Fourth Quarter and FullYear Highlights
3
 Fourth quarter and full year results reflect one less week of retail operations vs. prior year
 Strong fourth quarter and full year results reflecting strength of business fundamentals
– Consolidated revenue down 5.8% in the fourth quarter, excluding Petroleum and up 1.6% for the full year,
excluding Petroleum
– Fourth quarter diluted EPS was $3.01, up 23.3% and up 13.6% normalized
– Full year diluted EPS up 13.5% to $8.61; and up 8.4% normalized
 Full year same store sales
─ Canadian Tire up 3.2%
─ FGL Sports up 4.4% (up 6.3% at Sport Chek)
─ Mark’s down 0.5%
 Solid fourth quarter and full year performance at Financial Services
− Gross average credit card receivables grew 0.5% in the fourth quarter, up 3.3% for the full year
− Income before taxes up 11.1% in the quarter, up 8.4% for the full year
 Capital Allocation
‒ Announced intention to file a normal course issuer bid to purchase up to 6.0 million Class A Non-Voting Shares
from March 2, 2016 to March 1, 2017
4
Consolidated financial results
4
Q4 and full year 2015 results reflect one less week of retail operations compared to the prior year.
Fourth quarter earnings performance reflects strong gross margin contribution from Canadian Tire, a reduction in the allowance for
future write-offs of the credit card portfolio in the Financial Services segment and, a decline in selling, general and administrative
expenses across both the Retail and Financial Services segments.
1 – Key operating performance measure. Refer to section 11.3.1 in the MD&A for additional information.
2 – Not meaningful.
5
Retail segment financial results
5
Q4 and full year 2015 results reflect one less week of retail operations compared to the prior year.
Higher income before income taxes primarily attributable to an increase in the gross margin rate at Canadian Tire,
Petroleum’s higher per litre gas margins, and lower selling, general and administrative expenses during the quarter.
1 – Retail sales is a key operating performance measure. Refer to section 11.3.1 in this MD&A for additional information.
6
CT REIT segment results
6
Higher income before income taxes, primarily due to properties acquired during 2015 and 2014 and an increase of
$5.4 million in the fair market value adjustment over the prior year.
7
Financial Services segment results
7
Higher income before income taxes due to savings in marketing expenses, lower variable compensation expense and
a reduction in the allowance for future write-offs of the credit card portfolio; partially offset by increased insolvency
write-offs and a reduction in interchange revenue resulting from regulatory changes that came into effect in Q2 2015.
8
Appendix
Consolidated AdjustedEBITDA1 andRetailEBITDA1
8
1 – Key operating performance measure. Refer to section 11.3.1 in the Q4 2015 MD&A for additional information.
2 – Includes $2.3 million reported in cost of producing revenue in the quarter ($2.0 million in 2014) and $8.9 million for Q4 YTD 2015 ($7.0 million in Q4 YTD 2014).
Adjusted EBITDA1
Retail Segment EBITDA1
1 – Key operating performance measure. Refer to section 11.3.1 in the Q4 2015 MD&A for additional information.
2 – Includes $2.3 million reported in cost of producing revenue in the quarter ($2.0 million in 2014) and $8.9 million for Q4 YTD 2015 ($7.0 million in Q4 YTD 2014).
(C$ in millions) Q4 2015 Q4 2014 2015 2014
Adjusted EBITDA1
$ 474.0 $ 437.5 $ 1,518.8 $ 1,376.4
Change in fair value of the redeemable financial instrument
(income)/expense
_ 17.0 _ 17.0
EBITDA $ 474.0 $ 420.5 $ 1,518.8 $ 1,359.4
Less:
Depreciation and amortization2
116.3 103.7 424.7 372.3
Net finance costs 22.3 23.4 92.8 108.9
Income before income taxes $ 335.4 $ 293.4 $ 1,001.3 $ 878.2
Income taxes 93.9 86.8 265.4 238.9
Effective tax rate 28.0% 29.6% 26.5% 27.2%
Net income $ 241.5 $ 206.6 $ 735.9 $ 639.3
(C$ in millions) Q4 2015 Q4 2014 2015 2014
EBITDA1
$ 334.4 $ 310.7 913.0 824.0
Less:
Depreciation and amortization2
96.3 84.4 350.6 304.4
Net finance (income) (12.1) (8.2) (42.5) (11.9)
Income before income taxes $ 250.2 $ 234.5 604.9 531.5
9
Appendix (cont’d)
ConsolidatedandRetailRevenueExcludingPetroleumRevenue
9
Consolidated Revenue excluding Petroleum Revenue
(C$ in millions, except where noted) Q4 2015 Q4 2014 Change 2015 2014 Change
Revenue $ 3,380.2 $ 3,653.8 (7.5)% $ 12,279.6 $ 12,462.9 (1.5)%
Petroleum Revenue 400.6 489.8 (18.2)% 1,735.0 2,079.3 (16.6)%
Revenue (excluding Petroleum) $ 2,979.6 $ 3,164.0 (5.8)% $ 10,544.6 $ 10,383.6 1.6%
Retail Revenue excluding Petroleum Revenue
(C$ in millions, except where noted) Q4 2015 Q4 2014 Change 2015 2014 Change
Revenue $ 3,087.0 $ 3,360.8 (8.2)% $ 11,075.3 $ 11,304.6 (2.0)%
Petroleum Revenue 400.6 489.8 (18.2)% 1,735.0 2,079.3 (16.6)%
Revenue (excluding Petroleum) $ 2,686.4 $ 2,871.0 (6.4)% $ 9,340.3 $ 9,225.3 1.2%
Questions
and Answers
For more information
http://investors.canadiantire.ca
lisa.greatrix@cantire.com or (416) 480-8725
Follow us on twitter @CTCShares

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Q4 2015 conf call slides

  • 1. Canadian Tire Corporation 2015 Fourth Quarter and Full Year Financial Results February 18th, 2016
  • 2. 1 This document contains forward-looking statements that reflect management’s current expectations related to matters such as future financial performance and operating results of the Company. Forward-looking statements are provided for the purposes of providing information about Management’s current expectations and plans and allowing investors and others to get a better understanding of the Company’s financial position, results of operations and operating environment. Readers are cautioned that such information may not be appropriate for other circumstances. All statements other than statements of historical facts included in this document may constitute forward-looking statements, including but not limited to, statements concerning Management’s current expectations relating to possible or assumed future prospects and results, the Company’s strategic goals and priorities, its actions and the results of those actions and the economic and business outlook for the Company. Often, but not always, forward-looking statements can be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “intend”, “believe”, “estimate”, “plan”, “can”, “could”, “should”, “would”, “outlook”, “forecast”, “anticipate”, “aspire”, “foresee”, “continue”, “ongoing” or the negative of these terms or variations of them or similar terminology. Forward-looking statements are based on the reasonable assumptions, estimates, analyses, beliefs and opinions of Management, made in light of its experience and perception of trends, current conditions and expected developments, as well as other factors that Management believes to be relevant and reasonable at the date that such statements are made. By their very nature, forward-looking statements require Management to make assumptions and are subject to inherent risks and uncertainties, which give rise to the possibility that the Company’s assumptions, estimates, analyses, beliefs and opinions may not be correct and that the Company’s expectations and plans will not be achieved. Examples of Management’s beliefs, which may prove to be incorrect, include, but are not limited to, beliefs about the effectiveness of certain performance measures, beliefs about current and future competitive conditions and the Company’s position in the competitive environment, beliefs about the Company’s core capabilities and beliefs regarding the availability of sufficient liquidity to meet the Company’s contractual obligations. Although the Company believes that the forward-looking statements in this document are based on information, assumptions and beliefs that are current, reasonable and complete, these statements are necessarily subject to a number of factors that could cause actual results to differ materially from Management’s expectations and plans as set forth in such forward-looking statements. Some of the factors, many of which are beyond the Company’s control and the effects of which can be difficult to predict, include: (a) credit, market, currency, operational, liquidity and funding risks, including changes in economic conditions, interest rates or tax rates; (b) the ability of the Company to attract and retain high quality employees for all of its businesses, Dealers, Canadian Tire Petroleum retailers and Mark’s and FGL Sports franchisees, as well as the Company’s financial arrangements with such parties; (c) the growth of certain business categories and market segments and the willingness of customers to shop at its stores or acquire its financial products and services; (d) the Company’s margins and sales and those of its competitors; (e) the changing consumer preferences toward eCommerce, online retailing and the introduction of new technologies; (f) risks and uncertainties relating to information management, technology, cyber threats, property management and development, environmental liabilities, supply chain management, product safety, changes in law, regulation, competition, seasonality, weather patterns, commodity prices and business disruption, the Company’s relationships with suppliers, manufacturers, partners and other third parties, changes to existing accounting pronouncements, the risk of damage to the reputation of brands promoted by the Company and the cost of store network expansion and retrofits; (g) the Company’s capital structure, funding strategy, cost management programs and share price; and (h) the Company’s ability to obtain all necessary regulatory approvals. Management cautions that the foregoing list of important factors and assumptions is not exhaustive and other factors could also adversely affect the Company’s results. Investors and other readers are urged to consider the foregoing risks, uncertainties, factors and assumptions carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. For more information on the risks, uncertainties and assumptions that could cause the Company’s actual results to differ from current expectations, please refer to the “Risk Factors” section of the Company’s Annual Information Form for fiscal 2015, as well as the Company’s other public filings, available on the SEDAR (System for Electronic Document Analysis and Retrieval) website at www.sedar.com and at www.corp.canadiantire.ca. Forward-looking statements do not take into account the effect that transactions or non-recurring or other special items announced or occurring after the statements are made, have on the Company’s business. For example, they do not include the effect of any dispositions, acquisitions, asset write downs or other charges announced or occurring after such statements are made. The forward-looking statements and information contained herein are based on certain factors and assumptions as of the date hereof. The Company does not undertake to update any forward- looking statements, whether written or oral, that may be made from time to time by it or on its behalf, to reflect new information, future events or otherwise, unless required by applicable securities laws. 1 Forward looking information
  • 3. 2 Executive participants 2  Michael Medline, President and CEO, Canadian Tire Corporation  Dean McCann, Chief Financial Officer and EVP  Allan MacDonald, Chief Operating Officer, Canadian Tire  Chad McKinnon, Chief Operating Officer, FGL Sports  Mary Turner, Chief Operating Officer, CTFS  Rick White, Chief Operating Officer, Mark’s
  • 4. 3 Fourth Quarter and FullYear Highlights 3  Fourth quarter and full year results reflect one less week of retail operations vs. prior year  Strong fourth quarter and full year results reflecting strength of business fundamentals – Consolidated revenue down 5.8% in the fourth quarter, excluding Petroleum and up 1.6% for the full year, excluding Petroleum – Fourth quarter diluted EPS was $3.01, up 23.3% and up 13.6% normalized – Full year diluted EPS up 13.5% to $8.61; and up 8.4% normalized  Full year same store sales ─ Canadian Tire up 3.2% ─ FGL Sports up 4.4% (up 6.3% at Sport Chek) ─ Mark’s down 0.5%  Solid fourth quarter and full year performance at Financial Services − Gross average credit card receivables grew 0.5% in the fourth quarter, up 3.3% for the full year − Income before taxes up 11.1% in the quarter, up 8.4% for the full year  Capital Allocation ‒ Announced intention to file a normal course issuer bid to purchase up to 6.0 million Class A Non-Voting Shares from March 2, 2016 to March 1, 2017
  • 5. 4 Consolidated financial results 4 Q4 and full year 2015 results reflect one less week of retail operations compared to the prior year. Fourth quarter earnings performance reflects strong gross margin contribution from Canadian Tire, a reduction in the allowance for future write-offs of the credit card portfolio in the Financial Services segment and, a decline in selling, general and administrative expenses across both the Retail and Financial Services segments. 1 – Key operating performance measure. Refer to section 11.3.1 in the MD&A for additional information. 2 – Not meaningful.
  • 6. 5 Retail segment financial results 5 Q4 and full year 2015 results reflect one less week of retail operations compared to the prior year. Higher income before income taxes primarily attributable to an increase in the gross margin rate at Canadian Tire, Petroleum’s higher per litre gas margins, and lower selling, general and administrative expenses during the quarter. 1 – Retail sales is a key operating performance measure. Refer to section 11.3.1 in this MD&A for additional information.
  • 7. 6 CT REIT segment results 6 Higher income before income taxes, primarily due to properties acquired during 2015 and 2014 and an increase of $5.4 million in the fair market value adjustment over the prior year.
  • 8. 7 Financial Services segment results 7 Higher income before income taxes due to savings in marketing expenses, lower variable compensation expense and a reduction in the allowance for future write-offs of the credit card portfolio; partially offset by increased insolvency write-offs and a reduction in interchange revenue resulting from regulatory changes that came into effect in Q2 2015.
  • 9. 8 Appendix Consolidated AdjustedEBITDA1 andRetailEBITDA1 8 1 – Key operating performance measure. Refer to section 11.3.1 in the Q4 2015 MD&A for additional information. 2 – Includes $2.3 million reported in cost of producing revenue in the quarter ($2.0 million in 2014) and $8.9 million for Q4 YTD 2015 ($7.0 million in Q4 YTD 2014). Adjusted EBITDA1 Retail Segment EBITDA1 1 – Key operating performance measure. Refer to section 11.3.1 in the Q4 2015 MD&A for additional information. 2 – Includes $2.3 million reported in cost of producing revenue in the quarter ($2.0 million in 2014) and $8.9 million for Q4 YTD 2015 ($7.0 million in Q4 YTD 2014). (C$ in millions) Q4 2015 Q4 2014 2015 2014 Adjusted EBITDA1 $ 474.0 $ 437.5 $ 1,518.8 $ 1,376.4 Change in fair value of the redeemable financial instrument (income)/expense _ 17.0 _ 17.0 EBITDA $ 474.0 $ 420.5 $ 1,518.8 $ 1,359.4 Less: Depreciation and amortization2 116.3 103.7 424.7 372.3 Net finance costs 22.3 23.4 92.8 108.9 Income before income taxes $ 335.4 $ 293.4 $ 1,001.3 $ 878.2 Income taxes 93.9 86.8 265.4 238.9 Effective tax rate 28.0% 29.6% 26.5% 27.2% Net income $ 241.5 $ 206.6 $ 735.9 $ 639.3 (C$ in millions) Q4 2015 Q4 2014 2015 2014 EBITDA1 $ 334.4 $ 310.7 913.0 824.0 Less: Depreciation and amortization2 96.3 84.4 350.6 304.4 Net finance (income) (12.1) (8.2) (42.5) (11.9) Income before income taxes $ 250.2 $ 234.5 604.9 531.5
  • 10. 9 Appendix (cont’d) ConsolidatedandRetailRevenueExcludingPetroleumRevenue 9 Consolidated Revenue excluding Petroleum Revenue (C$ in millions, except where noted) Q4 2015 Q4 2014 Change 2015 2014 Change Revenue $ 3,380.2 $ 3,653.8 (7.5)% $ 12,279.6 $ 12,462.9 (1.5)% Petroleum Revenue 400.6 489.8 (18.2)% 1,735.0 2,079.3 (16.6)% Revenue (excluding Petroleum) $ 2,979.6 $ 3,164.0 (5.8)% $ 10,544.6 $ 10,383.6 1.6% Retail Revenue excluding Petroleum Revenue (C$ in millions, except where noted) Q4 2015 Q4 2014 Change 2015 2014 Change Revenue $ 3,087.0 $ 3,360.8 (8.2)% $ 11,075.3 $ 11,304.6 (2.0)% Petroleum Revenue 400.6 489.8 (18.2)% 1,735.0 2,079.3 (16.6)% Revenue (excluding Petroleum) $ 2,686.4 $ 2,871.0 (6.4)% $ 9,340.3 $ 9,225.3 1.2%
  • 11. Questions and Answers For more information http://investors.canadiantire.ca lisa.greatrix@cantire.com or (416) 480-8725 Follow us on twitter @CTCShares