Petco Health + Wellness Company, Inc. Reports Second Quarter 2024 Earnings Results
Petco Health and Wellness Company (Nasdaq: WOOF) reported its Q2 2024 financial results, showing a slight decrease in net revenue to $1.52 billion, down 0.5% year-over-year. The company experienced a GAAP net loss of $24.8 million or $(0.09) per share, compared to a loss of $14.6 million or $(0.05) per share in the prior year. Adjusted EBITDA decreased to $83.5 million from $112.6 million. Despite challenges, Petco saw growth in consumables (up 1.5%) and services (up 3.1%), offset by declines in supplies and companion animal business. The company provided Q3 2024 guidance, projecting revenue of ~$1.5 billion and Adjusted EBITDA between $76-80 million.
Petco Health and Wellness Company (Nasdaq: WOOF) ha riportato i risultati finanziari del secondo trimestre 2024, mostrando una leggera diminuzione del fatturato netto a 1,52 miliardi di dollari, in calo dello 0,5% rispetto all'anno precedente. L'azienda ha registrato una perdita netta GAAP di 24,8 milioni di dollari o $(0,09) per azione, rispetto a una perdita di 14,6 milioni di dollari o $(0,05) per azione dell'anno precedente. L'EBITDA rettificato è diminuito a 83,5 milioni di dollari da 112,6 milioni di dollari. Nonostante le sfide, Petco ha visto una crescita nei consumabili (↑1,5%) e nei servizi (↑3,1%), compensata da cali nelle forniture e nel business degli animali da compagnia. L'azienda ha fornito una previsione per il terzo trimestre 2024, stimando ricavi di circa 1,5 miliardi di dollari e un EBITDA rettificato compreso tra 76-80 milioni di dollari.
Petco Health and Wellness Company (Nasdaq: WOOF) reportó sus resultados financieros del segundo trimestre de 2024, mostrando una ligera disminución en los ingresos netos a 1.52 mil millones de dólares, lo que representa una caída del 0.5% en comparación con el año anterior. La compañía experimentó una pérdida neta GAAP de 24.8 millones de dólares o $(0.09) por acción, en comparación con una pérdida de 14.6 millones de dólares o $(0.05) por acción en el año anterior. El EBITDA ajustado disminuyó a 83.5 millones de dólares desde 112.6 millones de dólares. A pesar de los desafíos, Petco vio crecimiento en consumibles (↑1.5%) y servicios (↑3.1%), compensado por caídas en suministros y en el negocio de animales de compañía. La compañía proporcionó una guía para el tercer trimestre de 2024, proyectando ingresos de aproximadamente 1.5 mil millones de dólares y EBITDA ajustado entre 76-80 millones de dólares.
펫코 헬스 앤 웰니스 컴퍼니 (Nasdaq: WOOF)는 2024년 2분기 재무 결과를 발표하며, 순 매출이 15억 2천만 달러로 소폭 감소하였으며, 지난해 대비 0.5% 감소했다고 보고했습니다. 이 회사는 GAAP 순손실 2480만 달러 또는 주당 $(0.09) 손실을 기록하였으며, 이는 지난해 1460만 달러 또는 주당 $(0.05) 손실과 비교됩니다. 조정 EBITDA는 8천350만 달러로 감소했으며, 지난해 1억 1260만 달러에서 하락했습니다. 어려운 상황에도 불구하고 펫코는 소비재에서 1.5% 증가하고 서비스에서 3.1% 증가하는 성장을 보였지만, 공급품과 반려동물 사업에서 감소가 있었습니다. 회사는 2024년 3분기에 대한 가이드를 제공하며 약 15억 달러의 매출과 7600만~8000만 달러의 조정 EBITDA를 예상했습니다.
La Petco Health and Wellness Company (Nasdaq: WOOF) a annoncé ses résultats financiers pour le deuxième trimestre 2024, montrant une légère baisse des recettes nettes à 1,52 milliard de dollars, soit une diminution de 0,5 % par rapport à l'année précédente. L'entreprise a enregistré une perte nette GAAP de 24,8 millions de dollars ou $(0,09) par action, contre une perte de 14,6 millions de dollars ou $(0,05) par action l'année dernière. L'EBITDA ajusté a chuté à 83,5 millions de dollars, contre 112,6 millions de dollars précédemment. Malgré ces défis, Petco a observé une croissance dans les biens de consommation (en hausse de 1,5 %) et les services (en hausse de 3,1 %), compensée par des baisses dans les fournitures et l'activité des animaux de compagnie. L'entreprise a fourni des prévisions pour le troisième trimestre 2024, projetant des revenus d'environ 1,5 milliard de dollars et un EBITDA ajusté compris entre 76-80 millions de dollars.
Die Petco Health and Wellness Company (Nasdaq: WOOF) hat ihre finanziellen Ergebnisse für das zweite Quartal 2024 veröffentlicht, die einen leichten Rückgang des Nettoumsatzes auf 1,52 Milliarden Dollar zeigen, ein Rückgang von 0,5% im Vergleich zum Vorjahr. Das Unternehmen verzeichnete einen GAAP-Nettoverlust von 24,8 Millionen Dollar oder $(0,09) pro Aktie, verglichen mit einem Verlust von 14,6 Millionen Dollar oder $(0,05) pro Aktie im Vorjahr. Das bereinigte EBITDA sank auf 83,5 Millionen Dollar von 112,6 Millionen Dollar. Trotz dieser Herausforderungen verzeichnete Petco ein Wachstum bei den Verbrauchsgütern (↑1,5%) und Dienstleistungen (↑3,1%), was durch Rückgänge bei den Lieferungen und im Geschäft mit Haustieren ausgeglichen wurde. Das Unternehmen gab eine Prognose für das dritte Quartal 2024 ab und erwartet einen Umsatz von etwa 1,5 Milliarden Dollar und ein bereinigtes EBITDA zwischen 76-80 Millionen Dollar.
- Comparable sales increased 0.3% year-over-year and 3.5% on a two-year basis
- Consumables business grew 1.5% year-over-year
- Services and other business increased 3.1% year-over-year
- Operating Cash Flow of $69.4 million
- Free Cash Flow of $42.0 million
- Net revenue decreased 0.5% year-over-year to $1.52 billion
- GAAP net loss widened to $24.8 million from $14.6 million in the prior year
- Adjusted EBITDA declined to $83.5 million from $112.6 million in the prior year
- Supplies and companion animal business down 4.7% versus prior year
- Adjusted Net Income decreased to $(5.9) million from $16.3 million in the prior year
- Q3 2024 guidance projects Adjusted EPS loss of $(0.03) to $(0.04)
Insights
Petco's Q2 2024 results paint a concerning picture. Despite a slight
The decline in profitability is particularly worrying, with Adjusted Net Income swinging to a loss of
The mixed performance across Petco's business segments reveals shifting consumer trends. While consumables grew
The slight increase in comparable sales (
Petco's Q2 results highlight the challenges facing specialty retailers in the current economic environment. The decline in the supplies and companion animal segment (
The company's focus on "strengthening retail fundamentals" and "accelerating the path to improved profitability" is crucial. However, concrete strategies for margin improvement and cost management are notably absent from the report. Petco needs to clearly articulate how it plans to leverage its strengths to capture market share and deliver sustained profitability in a challenging retail landscape.
Q2 2024 Overview
- Net revenue of
decreased 0.5 percent year over year$1.52 billion - Comparable sales increased 0.3 percent year over year and increased 3.5 percent on a two-year basis
- GAAP net loss of
, or$24.8 million per share, compared to GAAP net loss of$(0.09) , or$14.6 million per share in the prior year$(0.05) - Adjusted EBITDA1 of
compared to$83.5 million million in the prior year$112.6 - Operating Cash Flow of
compared to$69.4 million in the prior year$96.6 million - Free Cash Flow 1 of
compared to$42.0 million in the prior year$44.6 million
In the second quarter of 2024, Petco delivered net revenue of
"Our second quarter results demonstrate the ongoing work of our teams to strengthen our retail fundamentals and accelerate the path to improved profitability," said Joel Anderson, Petco's Chief Executive Officer. "I could not be more excited to lead Petco at this pivotal time. Looking ahead, I see tremendous opportunities for us to significantly improve our operating and financial performance and better leverage Petco's strengths to capture greater share, deliver sustained profitability, and create value for shareholders."
(1) | Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings Per Share ("Adjusted EPS"), and Free Cash Flow are non-GAAP financial measures. See "Non-GAAP Financial Measures" for additional information on non-GAAP financial measures and a reconciliation to the most comparable GAAP measures. |
Fiscal Q3 2024 Outlook
The company is providing Q3 guidance for revenue, Adjusted EBITDA, and Adjusted EPS, in addition to reaffirming full year interest expense and capital expenditure expectations.
For Fiscal Q3 2024, the company expects:
Metric* | FQ3 2024 Guidance |
Net Revenue | ~ |
Adjusted EBITDA | |
Adjusted EPS |
For Fiscal 2024 (a 52-week year), the company expects the following, both of which are unchanged:
Metric* | 2024 Guidance, YoY |
Net interest expense | |
Capital Expenditures |
*Assumptions in the guidance include that economic conditions, currency rates and the tax and regulatory landscape remain generally consistent. For fiscal 2024, our guidance anticipates a 26 percent tax rate, and 272 million weighted average diluted share count. Adjusted EBITDA and Adjusted EPS are non-GAAP financial measures and have not been reconciled to the most comparable GAAP outlook because it is not possible to do so without unreasonable efforts due to the uncertainty and potential variability of reconciling items, which are dependent on future events and often outside of management's control and which could be significant. Because such items cannot be reasonably predicted with the level of precision required, we are unable to provide outlook for the comparable GAAP measures. Forward-looking estimates of Adjusted EBITDA and Adjusted EPS are made in a manner consistent with the relevant definitions and assumptions noted herein and in our filings with the Securities and Exchange Commission.
Earnings Conference Call Webcast Information:
Management will host an earnings conference call on September 10, 2024 at 5:00 PM Eastern Time to discuss the company's financial results. The conference call will be accessible through a live webcast. Interested investors and other individuals can access the webcast, earnings release, and earnings presentation via the company's investor relations page at ir.petco.com. A replay of the webcast will be archived on the company's investor relations page through September 24, 2024 until approximately 5:00 PM Eastern Time.
About Petco, The Health + Wellness Co.:
Founded in 1965, Petco is a category-defining health and wellness company focused on improving the lives of pets, pet parents and our own Petco partners. We've consistently set new standards in pet care while delivering comprehensive pet wellness products, services and solutions, and creating communities that deepen the pet-pet parent bond. We operate more than 1,500 pet care centers across the
Forward-Looking Statements:
This earnings release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, concerning expectations, beliefs, plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements that are not statements of historical fact, including, but not limited to, statements regarding our Q3 and full year 2024 guidance, operational reset of our business, our competitive positioning, profitability, cost action plans and associated cost-savings. Such forward-looking statements can generally be identified by the use of forward-looking terms such as "believes," "expects," "may," "intends," "will," "shall," "should," "anticipates," "opportunity," "illustrative," or the negative thereof or other variations thereon or comparable terminology. Although Petco believes that the expectations and assumptions reflected in these statements are reasonable, there can be no assurance that these expectations will prove to be correct or that any forward-looking results will occur or be realized. Nothing contained in this earnings release is, or should be relied upon as, a promise or representation or warranty as to any future matter, including any matter in respect of the operations or business or financial condition of Petco. All forward-looking statements are based on current expectations and assumptions about future events that may or may not be correct or necessarily take place and that are by their nature subject to significant uncertainties and contingencies, many of which are outside the control of Petco. Forward-looking statements are subject to a number of risks, uncertainties and other factors that could cause actual results or events to differ materially from the potential results or events discussed in the forward-looking statements, including, without limitation, those identified in this earnings release as well as the following: (i) increased competition (including from multi-channel retailers, mass and grocery retailers, and e-Commerce providers); (ii) reduced consumer demand for our products and/or services; (iii) our reliance on key vendors; (iv) our ability to attract and retain qualified employees; (v) risks arising from statutory, regulatory and/or legal developments; (vi) macroeconomic pressures in the markets in which we operate, including inflation and prevailing interest rates; (vii) failure to effectively manage our costs; (viii) our reliance on our information technology systems; (ix) our ability to prevent or effectively respond to a data privacy or security breach; (x) our ability to effectively manage or integrate strategic ventures, alliances or acquisitions and realize the anticipated benefits of such transactions; (xi) economic or regulatory developments that might affect our ability to provide attractive promotional financing; (xii) business interruptions and other supply chain issues; (xiii) catastrophic events, political tensions, conflicts and wars (such as the ongoing conflicts in
Petco cautions that the foregoing list of risks, uncertainties and other factors is not complete, and forward-looking statements speak only as of the date they are made. Petco undertakes no duty to update publicly any such forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required by applicable law, regulation or other competent legal authority.
PETCO HEALTH AND WELLNESS COMPANY, INC. | ||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||
(In thousands, except per share amounts) | ||||||
(Unaudited and subject to reclassification) | ||||||
13 Weeks Ended | ||||||
August 3, | July 29, | Percent | ||||
Net sales: | ||||||
Products | $ 1,263,749 | $ 1,278,598 | (1 %) | |||
Services and other | 260,006 | 252,136 | 3 % | |||
Total net sales | 1,523,755 | 1,530,734 | (0 %) | |||
Cost of sales: | ||||||
Products | 787,103 | 789,091 | (0 %) | |||
Services and other | 155,927 | 148,639 | 5 % | |||
Total cost of sales | 943,030 | 937,730 | 1 % | |||
Gross profit | 580,725 | 593,004 | (2 %) | |||
Selling, general and administrative expenses | 578,257 | 568,967 | 2 % | |||
Operating income (loss) | 2,468 | 24,037 | (90 %) | |||
Interest income | (672) | (764) | (12 %) | |||
Interest expense | 36,805 | 37,493 | (2 %) | |||
Loss on partial extinguishment of debt | — | 305 | (100 %) | |||
Other non-operating (income) loss | — | (1,795) | (100 %) | |||
Loss before income taxes and income from | (33,665) | (11,202) | 201 % | |||
Income tax (benefit) expense | (4,651) | 6,732 | N/M | |||
Income from equity method investees | (4,191) | (3,328) | 26 % | |||
Net loss attributable to Class A and B-1 common | $ (24,823) | $ (14,606) | 70 % | |||
Net loss per Class A and B-1 common share: | ||||||
Basic | $ (0.09) | $ (0.05) | 66 % | |||
Diluted | $ (0.09) | $ (0.05) | 66 % | |||
Weighted average shares used in computing net loss per Class A | ||||||
Basic | 273,074 | 267,163 | 2 % | |||
Diluted | 273,074 | 267,163 | 2 % |
PETCO HEALTH AND WELLNESS COMPANY, INC. | ||||
CONSOLIDATED BALANCE SHEETS | ||||
(In thousands, except per share amounts) | ||||
(Unaudited and subject to reclassification) | ||||
August 3, | February 3, | |||
ASSETS | ||||
Current assets: | ||||
Cash and cash equivalents | $ 127,620 | $ 125,428 | ||
Receivables, less allowance for credit losses1 | 47,035 | 44,369 | ||
Merchandise inventories, net | 672,328 | 684,502 | ||
Prepaid expenses | 59,758 | 58,615 | ||
Other current assets | 35,152 | 38,830 | ||
Total current assets | 941,893 | 951,744 | ||
Fixed assets | 2,206,885 | 2,173,015 | ||
Less accumulated depreciation | (1,447,180) | (1,356,648) | ||
Fixed assets, net | 759,705 | 816,367 | ||
Operating lease right-of-use assets | 1,368,740 | 1,384,050 | ||
Goodwill | 980,064 | 980,297 | ||
Trade name | 1,025,000 | 1,025,000 | ||
Other long-term assets | 201,245 | 205,694 | ||
Total assets | ||||
LIABILITIES AND EQUITY | ||||
Current liabilities: | ||||
Accounts payable and book overdrafts | $ 474,496 | $ 485,131 | ||
Accrued salaries and employee benefits | 135,235 | 101,265 | ||
Accrued expenses and other liabilities | 196,518 | 200,278 | ||
Current portion of operating lease liabilities | 306,507 | 310,507 | ||
Current portion of long-term debt and other lease liabilities | 5,095 | 15,962 | ||
Total current liabilities | 1,117,851 | 1,113,143 | ||
Senior secured credit facilities, net, excluding current portion | 1,575,630 | 1,576,223 | ||
Operating lease liabilities, excluding current portion | 1,104,709 | 1,116,615 | ||
Deferred taxes, net | 219,574 | 251,629 | ||
Other long-term liabilities | 127,400 | 121,113 | ||
Total liabilities | 4,145,164 | 4,178,723 | ||
Commitments and contingencies | ||||
Stockholders' equity: | ||||
Class A common stock2 | 236 | 231 | ||
Class B-1 common stock3 | 38 | 38 | ||
Class B-2 common stock4 | — | — | ||
Preferred stock5 | — | — | ||
Additional paid-in-capital | 2,260,381 | 2,229,582 | ||
Accumulated deficit | (1,118,549) | (1,047,243) | ||
Accumulated other comprehensive (loss) income | (10,623) | 1,821 | ||
Total stockholders' equity | 1,131,483 | 1,184,429 | ||
Total liabilities and stockholders' equity |
(1) | Allowances for credit losses are |
(2) | Class A common stock, |
(3) | Class B-1 common stock, |
(4) | Class B-2 common stock, |
(5) | Preferred stock, |
PETCO HEALTH AND WELLNESS COMPANY, INC. | |||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||
(In thousands) | |||||
(Unaudited and subject to reclassification) | |||||
26 Weeks Ended | |||||
August 3, | July 29, | ||||
Cash flows from operating activities: | |||||
Net loss | $ (71,306) | $ (16,498) | |||
Adjustments to reconcile net loss to net cash provided by | |||||
Depreciation and amortization | 99,305 | 97,919 | |||
Amortization of debt discounts and issuance costs | 2,435 | 2,446 | |||
Provision for deferred taxes | (27,782) | (11,002) | |||
Equity-based compensation | 29,348 | 46,248 | |||
Impairments, write-offs and losses on sale of fixed and other assets | 7,069 | 1,035 | |||
Loss on partial extinguishment of debt | — | 746 | |||
Income from equity method investees | (9,077) | (6,458) | |||
Amounts reclassified out of accumulated other comprehensive (loss) income | (2,274) | 1,055 | |||
Non-cash operating lease costs | 207,605 | 211,576 | |||
Other non-operating (income) loss | 2,665 | (4,614) | |||
Changes in assets and liabilities: | |||||
Receivables | (2,083) | (16,679) | |||
Merchandise inventories | 11,769 | (23,011) | |||
Prepaid expenses and other assets | (7,166) | (14,237) | |||
Accounts payable and book overdrafts | (9,644) | 97,062 | |||
Accrued salaries and employee benefits | 34,591 | 1,221 | |||
Accrued expenses and other liabilities | 3,015 | (1,238) | |||
Operating lease liabilities | (209,738) | (232,518) | |||
Other long-term liabilities | 2,224 | 1,212 | |||
Net cash provided by operating activities | 60,956 | 134,265 | |||
Cash flows from investing activities: | |||||
Cash paid for fixed assets | (60,029) | (114,023) | |||
Cash paid for acquisitions, net of cash acquired | (259) | (2,040) | |||
Proceeds from investment | 998 | 10,248 | |||
Proceeds from sale of assets | 1,019 | — | |||
Cash received from partial surrender of officers' life insurance | 206 | — | |||
Net cash used in investing activities | (58,065) | (105,815) | |||
Cash flows from financing activities: | |||||
Borrowings under long-term debt agreements | 201,000 | — | |||
Repayments of long-term debt | (201,000) | (60,000) | |||
Debt refinancing costs | (3,028) | — | |||
Payments for finance lease liabilities | (3,528) | (3,349) | |||
Proceeds from employee stock purchase plan and stock option exercises | 1,630 | 2,454 | |||
Tax withholdings on stock-based awards | (3,468) | (4,873) | |||
Proceeds from issuance of common stock | 2,500 | — | |||
Net cash used in financing activities | (5,894) | (65,768) | |||
Net decrease in cash, cash equivalents and restricted cash | (3,003) | (37,318) | |||
Cash, cash equivalents and restricted cash at beginning of period | 136,649 | 213,727 | |||
Cash, cash equivalents and restricted cash at end of period | $ 133,646 | $ 176,409 |
NON-GAAP FINANCIAL MEASURES
The following information provides definitions and reconciliations of the non-GAAP financial measures presented in this earnings release to the most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles (GAAP). The company has provided this non-GAAP financial information, which is not calculated or presented in accordance with GAAP, as information supplemental and in addition to the financial measures presented in this earnings release that are calculated and presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior to, as a substitute for or alternative to, and should be considered in conjunction with, the GAAP financial measures presented in this earnings release. The non-GAAP financial measures in this earnings release may differ from similarly titled measures used by other companies.
The tables below reflect the calculation of Adjusted EBITDA, Adjusted Net Income, and Adjusted EPS, as applicable, for the thirteen weeks ended August 3, 2024 compared to the thirteen weeks ended July 29, 2023, respectively.
Adjusted EBITDA and Trailing Twelve Month Adjusted EBITDA
Adjusted EBITDA, including Trailing Twelve Month Adjusted EBITDA, is considered a non-GAAP financial measure under the Securities and Exchange Commission's (SEC) rules because it excludes certain amounts included in net income calculated in accordance with GAAP. Management believes that Adjusted EBITDA is a meaningful measure to share with investors because it facilitates comparison of the current period performance with that of the comparable prior period. In addition, Adjusted EBITDA affords investors a view of what management considers to be Petco's core operating performance as well as the ability to make a more informed assessment of such operating performance as compared with that of the prior period. Please see the company's Annual Report on Form 10-K for the fiscal year ended February 3, 2024 filed with the SEC on April 3, 2024 for additional information on Adjusted EBITDA.
(dollars in thousands) | 13 Weeks Ended | |||
Reconciliation of Net Loss Attributable to Class A and B-1 | August 3, | July 29, | ||
Net loss attributable to Class A and B-1 common stockholders | $ (24,823) | $ (14,606) | ||
Add (deduct): | ||||
Interest expense, net | 36,133 | 36,729 | ||
Income tax (benefit) expense | (4,651) | 6,732 | ||
Depreciation and amortization | 49,718 | 48,664 | ||
Income from equity method investees | (4,191) | (3,328) | ||
Loss on partial extinguishment of debt | — | 305 | ||
Goodwill impairment | — | — | ||
Asset impairments and write offs | 3,561 | 1,031 | ||
Equity-based compensation | 11,914 | 24,119 | ||
Other non-operating (income) loss | — | (1,795) | ||
9,902 | 8,544 | |||
Acquisition and divestiture-related costs (2) | — | — | ||
Other costs (3) | 5,960 | 6,183 | ||
Adjusted EBITDA | $ 83,523 | $ 112,578 | ||
Net sales | $ 1,523,755 | $ 1,530,734 | ||
Net margin (4) | (1.6 %) | (1.0 %) | ||
Adjusted EBITDA Margin | 5.5 % | 7.4 % |
(dollars in thousands) | Trailing Twelve Months | |||||
Reconciliation of Net (Loss) Income Attributable to Class A and B-1 | August 3, | February 3, | July 29, | |||
Net (loss) income attributable to Class A and B-1 common stockholders | $ (1,335,018) | $ (1,280,210) | $ 36,154 | |||
Add (deduct): | ||||||
Interest expense, net | 147,282 | 147,504 | 132,068 | |||
Income tax (benefit) expense | (42,465) | (27,613) | 24,433 | |||
Depreciation and amortization | 202,168 | 200,782 | 196,177 | |||
Income from equity method investees | (18,807) | (16,188) | (14,240) | |||
Loss on partial extinguishment of debt | 174 | 920 | 746 | |||
Goodwill impairment | 1,222,524 | 1,222,524 | — | |||
Asset impairments and write offs | 8,867 | 2,833 | 1,658 | |||
Equity-based compensation | 64,959 | 81,859 | 81,915 | |||
Other non-operating loss (income) | 2,552 | (4,727) | (1,892) | |||
41,346 | 38,226 | 33,583 | ||||
Acquisition and divestiture-related costs (2) | 3,719 | — | 2,219 | |||
Other costs (3) | 39,365 | 35,193 | 8,860 | |||
Adjusted EBITDA | $ 336,666 | $ 401,103 | $ 501,681 | |||
Net sales | $ 6,221,537 | $ 6,255,284 | $ 6,165,821 | |||
Net margin (4) | (21.5 %) | (20.5 %) | 0.6 % | |||
Adjusted EBITDA Margin | 5.4 % | 6.4 % | 8.1 % |
Adjusted Net Income and Adjusted EPS
Adjusted Net Income and Adjusted diluted Earnings Per Share attributable to Petco common stockholders (Adjusted EPS) are considered non-GAAP financial measures under the SEC's rules because they exclude certain amounts included in the net income attributable to Petco common stockholders and diluted earnings per share attributable to Petco common stockholders calculated in accordance with GAAP. Management believes that Adjusted Net Income and Adjusted EPS are meaningful measures to share with investors because they facilitate comparison of the current period performance with that of the comparable prior period. In addition, Adjusted Net Income and Adjusted EPS afford investors a view of what management considers to be Petco's core earnings performance as well as the ability to make a more informed assessment of such earnings performance with that of the prior period.
(in thousands, except per share amounts) | 13 Weeks Ended | |||||||
Reconciliation of Diluted EPS to Adjusted EPS | August 3, 2024 | July 29, 2023 | ||||||
Amount | Per share | Amount | Per share | |||||
Net loss attributable to common stockholders / diluted EPS | $ (24,823) | $ (0.09) | $ (14,606) | $ (0.05) | ||||
Add (deduct): | ||||||||
Income tax (benefit) expense | (4,651) | (0.01) | 6,732 | 0.02 | ||||
Loss on partial extinguishment of debt | — | — | 305 | 0.00 | ||||
Goodwill impairment | — | — | — | — | ||||
Asset impairments and write offs | 3,561 | 0.01 | 1,031 | 0.01 | ||||
Equity-based compensation | 11,914 | 0.04 | 24,119 | 0.09 | ||||
Other non-operating income | — | — | (1,795) | (0.01) | ||||
Other costs (3) | 5,960 | 0.02 | 6,183 | 0.02 | ||||
Adjusted pre-tax (loss) income / diluted (loss) earnings per share | $ (8,039) | $ (0.03) | $ 21,969 | $ 0.08 | ||||
Income tax (benefit) expense at | (2,090) | (0.01) | 5,712 | 0.02 | ||||
Adjusted Net (Loss) Income / Adjusted EPS | $ (5,949) | $ (0.02) | $ 16,257 | $ 0.06 |
Free Cash Flow
Free Cash Flow is a non-GAAP financial measure that is calculated as net cash provided by operating activities less cash paid for fixed assets. Management believes that Free Cash Flow, which measures the ability to generate additional cash from business operations, is an important financial measure for use in evaluating the company's financial performance.
The table below reflects the calculation of Free Cash Flow for the thirteen and twenty-six weeks ended August 3, 2024 compared to the thirteen and twenty-six weeks ended July 29, 2023, respectively.
(in thousands) | 13 Weeks Ended | 26 Weeks Ended | ||||||
August 3, | July 29, | August 3, | July 29, | |||||
Net cash provided by operating activities | $ 69,370 | $ 96,614 | $ 60,956 | $ 134,265 | ||||
Cash paid for fixed assets | (27,388) | (51,973) | (60,029) | (114,023) | ||||
Free Cash Flow | $ 41,982 | $ 44,641 | $ 927 | $ 20,242 |
Non-GAAP Financial Measures Footnotes
(1) | Mexico Joint Venture EBITDA represents 50 percent of the entity's operating results for all periods, as adjusted to reflect the results on a basis comparable to Adjusted EBITDA. In the financial statements, this joint venture is accounted for as an equity method investment and reported net of depreciation and income taxes because such a presentation would not reflect the adjustments made in the calculation of Adjusted EBITDA, we include the 50 percent interest in the company's |
13 Weeks Ended | |||||
(in thousands) | August 3, | July 29, | |||
Net income | $ 8,822 | $ 6,656 | |||
Depreciation | 6,996 | 6,443 | |||
Income tax expense | 3,903 | 2,364 | |||
Foreign currency (gain) loss | (380) | 395 | |||
Interest expense, net | 463 | 1,230 | |||
EBITDA | $ 19,804 | $ 17,088 | |||
$ 9,902 | $ 8,544 |
(2) | Acquisition and divestiture-related costs include direct costs resulting from acquiring, integrating, or divesting businesses. These include third-party professional and legal fees, losses on sales of divestitures, and other integration-related costs that would not have otherwise been incurred as part of the company's operations. |
(3) | Other costs include, as incurred: restructuring costs and restructuring-related severance costs; legal reserves associated with significant, non-ordinary course legal or regulatory matters; and costs related to certain significant strategic transactions. |
(4) | We define net margin as net income attributable to Class A and B-1 common stockholders divided by net sales and Adjusted EBITDA margin as Adjusted EBITDA divided by net sales. |
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SOURCE Petco - Investor Relations
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