Empire Company (EMP-A) Q4 2024 earnings summary

Executive summary

• Q4 adjusted EPS was CAD 0.63, down from CAD 0.72 in Q4 last year, with disciplined cost control and operational efficiency supporting performance despite a challenging environment and adjustments for restructuring and cybersecurity insurance recoveries.

• Consumer confidence remains low but is showing early signs of improvement as interest rates decline and food inflation moderates.

• Strategic focus on profitability, especially in e-commerce, with actions to address higher-than-expected losses in Voilà and operational improvements underway.

• Fiscal 2024 share repurchases totaled CAD 400 million, up 14% from the prior year, and the annual dividend increased by 9.6%.

• Fiscal 2024 capital expenditures were CAD 720 million, below guidance, with a focus on store renovations and expansion.

Financial highlights

• Q4 F2024 sales were CAD 7,408 million, nearly flat versus last year.

• Gross margin rate (excluding fuel) grew by 68 basis points year-over-year, reaching 27.1%.

• Adjusted EBITDA for Q4 F2024 was CAD 563 million (7.6% margin), down from CAD 599 million (8.1%) in Q4 F23.

• Free cash flow for fiscal 2024 was CAD 731 million, up from CAD 192 million in fiscal 2023.

• SG&A dollars increased by 2.5% year-over-year, a slower rate than the 4.1% increase in Q3.

Outlook and guidance

• Fiscal 2025 capital spend expected to be CAD 700 million, with about half allocated to store renovations and new stores.

• Plan to repurchase up to CAD 400 million of shares in fiscal 2025.

• Pre-tax contribution from other income and share of equity earnings projected at CAD 135-155 million for fiscal 2025.

• Targeting 10-20 basis points of margin expansion per year over the next 3-4 years.

• Aiming for 8%-11% long-term EPS CAGR, with confidence in achieving this range in fiscal 2025, assuming modest market improvement.