Empire Co Ltd Class A · TSX:EMP.A
Empire Co Ltd Class A — Investor Presentation (October 2012)
41 slides from Empire Co Ltd Class A's investor presentation, October 2012
Slide 1: Investor Presentation October 2012
Investor Presentation October 2012
Slide 2: Forward-Looking Statement
Forward-Looking Statement This presentation contains forward-looking statements which reflect management’s expectations regarding the Company’s objectives, plans, goals, strategies, future growth, financial condition, results of operations, cash flows, performance, business prospects and opportuniti
Slide 3: Empire Company Profile
Empire Company Profile Since becoming a public company in 1982, Empire has created sustainable value through income and cash flow growth in businesses we know and understand – food retailing and real estate. These businesses will continue to be our foundation and focus. Food Retailing Investments &
Slide 4: Empire Company Profile
Empire Company Profile Food retailing and real estate businesses generate well over 90% of consolidated earnings and cash flow. Four Quarters Ended August 4, 2012 Sales Investments & Other EBITDA Investments & Other $16.7 Billion Operations 1.2% $906.6 Million Operations 8.9% Adjusted Net Earnings $
Slide 5: Strategic Direction
Strategic Direction Our strategic direction is to focus our energy and resources on businesses we know best – food retailing and related real estate. We value: Businesses we know and understand Strong management and dedicated people Disciplined financial management, conservative business principles
Slide 6: Our Long-Term Progress
Our Long-Term Progress $16,249.1 Steady Progress $320.6 $49.98 $9,926.5 $132.2 Sales ($ in millions) $19.47 Adjusted Net Earnings ($ in millions) Book Value ($ per share) 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Fiscal Year-End 6
Slide 7: A Legacy of Value Creation
A Legacy of Value Creation Growth in Empire’s value has been driven by: 1. A relentless focus on the improvement of its core food retail and real estate businesses through: Strategic planning, development and execution of key initiatives Reinvestment of cash flow to strengthen the business Solid gov
Slide 8: Sobeys Post-Privatization Success
Sobeys Post-Privatization Success The privatization of Sobeys has helped sustain Empire’s growth rate Pre-Privatization Actual Fiscal 2007 Fiscal 2012 Growth Revenue $ $13,032 $16,045 23% EBITDA $ $532 $802 51% % 4.08% 5.00% + 92bp EBIT $ $291 $476 64% % 2.23% 2.97% + 74bp Net Income $ $120 $304 153
Slide 9: Empire's EPS growth since 2007 attributed to privatizing Sobeys
Empire’s EPS growth since 2007 is primarily attributed to the reallocation of capital to privatize Sobeys Segmented Adjusted Net Earnings per Share Contribution (1) $5.00 $0.41 June 2007 $0.33 $4.00 Privatization $0.41 $0.49 $1.21 $1.15 $0.78 $1.05 $3.00 $0.97 $0.81 $2.00 $2.97 $3.09 $2.69 $2.51 $1.
Slide 10: Solid Track Record of Growth
Solid Track Record of Growth Consolidated Sales Adjusted Net Earnings per Share (1) ($ in billions) ($ per share) CAGR = 3.9% CAGR = 9.2% $16.0 $16.2 $4.71 $15.5 $4.45 $15.0 $3.97 $4.15 $14.1 $3.69 $13.4 $3.04 2007 2008 2009 2010 2011 2012 2007 2008 2009 2010 2011 2012 Fiscal Year-End (1) Excludes i
Slide 11: A Strong Financial Position
A Strong Financial Position Debt to Total Capital 39.8% 32.7% Balance Sheet August 4, 2012 29.3% Cash and cash equivalents $369M 26.7% 25.0% Total assets $6,839M Short-term debt $41M Long-term debt $909M Shareholders’ equity $3,513M 2008 2009 2010 2011 2012 Fiscal Year-End 11
Slide 12: Q1 Fiscal 2013
Q1 Fiscal 2013 Consolidated Highlights Segmented Highlights $4.56 billion sales, +9.7% Sobeys’ growth continues: Sales +9.6% Adjusted net earnings +$21.0 million $103.4 million adjusted net earnings Genstar operating income contribution ($1.52 per share) of $4.6 million Improved debt to capital rati
Slide 13: Investments & Other Operations
Investments & Other Operations
Slide 14: Crombie REIT
Crombie REIT 42.5% Interest (40.8% fully diluted) Market capitalization of $1.3 billion 168 high-quality, well-located properties 13.9 million square feet of rentable space High-quality cash flow and conservative financial structure 93.5% occupancy rate 14
Slide 15: Crombie REIT: Significant Growth since IPO
Crombie REIT Significant Growth since IPO At IPO June 30, ($ in millions) March 2006 2012 CAGR Investment Properties $ 790 $ 1,922 16.0% Total Assets 923 2,059 14.3% Market Cap 411 1,276 20.8% Property Revenue (Annualized) $ 127 $ 237 11.0% Net Property Income (Annualized) 77 149 11.6% FFO (Annualiz
Slide 16: An Expanding Footprint Across Canada
An Expanding Footprint Across Canada 168 properties 13.9 million feet of GLA 48 year operating history Newfoundland and 14 Labrador 9 Alberta 4 2 Saskatchewan PEI 1 49 21 Nova 46 Manitoba Ontario Québec Scotia New Brunswick 22 16
Slide 17: Crombie REIT: Significant Pipeline
Crombie REIT Significant Pipeline Pipeline of developed and developing properties that are strategically located for both Sobeys and Crombie Ongoing pipeline with an anticipated value of between $300 to $500 million High-quality assets: Primarily located in Québec, Ontario and Western Canada Focus o
Slide 18: Crombie REIT: Significant Growth Potential
Crombie REIT Significant Growth Potential Significant growth achieved via portfolio acquisition relationship including 88 additional properties acquired from Sobeys/Empire totalling 4.7 million square feet since IPO Major catalyst for growth from 44 to 168 properties over the last 6 years Significan
Slide 19: Genstar Development Partnership
Genstar Development Partnership 40.7% ownership interest $30.0 million operating income contribution Investment of $29 million in 2001 has returned approximately $400 million in cash Results are linked to management performance and continued improvement in the housing market Focused on replenishing
Slide 20: Empire Theatres
Empire Theatres 53 locations and 438 screens in 8 provinces Completed the conversion to digital technology On June 21st, announced the purchase of two AMC Entertainment theatres in Ontario Successful marketing and promotions 20
Slide 21: Marc Poulin – Sobeys CEO
Marc Poulin – Sobeys CEO 21
Slide 22: Sobeys National Reach
Sobeys National Reach National Reach (number of corporate and franchised stores by province) 22
Slide 23: Sobeys' Recipe for Success
Sobeys’ Recipe for Success Food focused strategy Differentiated store formats Always the customer Productivity: Utilizing common systems/harmonizing processes Intelligent investment/innovation Building/fostering customer loyalty Execution in the store: Employee engagement Identification of new/attra
Slide 24: This Recipe is Achieving Results
This Recipe is Achieving Results Over the last four years adjusted net earnings has grown at three times the sales growth rate Sales Adjusted Net Earnings (1) ($ in billions) ($ in millions) 4-Year CAGR = 3.8% 4-Year CAGR = 11.1% $292.5 $15.7 $16.0 $280.8 $14.8 $15.2 $13.8 $256.1 $227.9 $191.7 2008
Slide 25: Food Focused
Food Focused Full Service Formats 25
Slide 26: Differentiated Store Concept
Differentiated Store Concept Unique ambiance Faster at recognizing the customer need for: Better fresh offering Service Variety Concept has evolved with continuous improvement Migration of best practices 26
Slide 27: Other Formats Serving the Customer
Other Formats Serving the Customer 27
Slide 28: Focused on Productivity
Focused on Productivity An integrated SAP platform Enabling systems and processes Upgraded distribution network Enabling tools and training Computer Assisted Ordering Work Force Management 28
Slide 29: Upgraded Distribution Network
Upgraded Distribution Network A Second Automated Distribution Centre Opens Spring 2013 in Terrebonne, Québec 29
Slide 30: Focused on Intelligent Investment
Focused on Intelligent Investment Invested $2.3 billion over the last five years: Stores and distribution centres Business systems and processes Training, development and engagement 30
Slide 31: Significant Store Investment
Significant Store Investment Square Footage Total Retail Store Count (millions) +15% over last five years 29.3 1,575 28.7 28.1 1,332 1,348 1,343 1,334 1,337 236 27.5 27.2 0 1,339 25.4 2007 2008 2009 2010 2011 2012 2007 2008 2009 2010 2011 2012 Fiscal Year-End Note: Fiscal 2012 Retail Store Count inc
Slide 32: Significant Free Cash Flow
Significant Free Cash Flow Despite this level of investment, over the last four years Sobeys has generated approximately $1 billion in free cash flow. Fiscal Fiscal Fiscal Fiscal (1) ($ in millions) 2009 2010 2011 2012 Cash flow from operating activities $ 635 $ 682 $ 685 $ 747 Less: Net property, e
Slide 33: Focused on Innovation
Focused on Innovation Our foundation now... Distinct formats...market tailored Improved store offering Stronger product brands The way forward... Integrated customer and market intelligence, insight and initiatives Commercial programs development capacity and capability Drive customer and employee e
Slide 34: Focused on Building Customer Loyalty
Focused on Building Customer Loyalty 34
Slide 35: Focused on Employee Engagement
Focused on Employee Engagement 35
Slide 36: Focused on New Growth Opportunities
Focused on New Growth Opportunities Same-store sales Best practice execution Format based leadership Innovation Tuck-in acquisitions Improved full service format Wholesale growth Strategic acquisitions 36
Slide 37: Concluding Remarks – Marc Poulin
Concluding Remarks – Marc Poulin We have invested in our stores, supply chain and infrastructure. We have improved our offering, merchandising and execution in all our regions. We are more competitive than ever and it shows in our financial performance. We are focused on: Increasing our productivity
Slide 38: Concluding Remarks – Paul Sobey
Concluding Remarks – Paul Sobey 38
Slide 39: Why invest in Empire?
Why invest in Empire? Focused on Food Retail and Real Estate Businesses we know and understand Diversified revenue, earnings and growth opportunities across Canada A track record of delivering earnings and dividend growth Proven capital allocation decision-making and execution Well positioned for lo
Slide 40: Superior Long-Term Total Shareholder Returns
Superior Long-Term Total Shareholder Returns (1) What investing $10,000 twenty years ago would be worth today? (20-Year CAGR) $144,889 $101,953 $61,159 $59,225 14.3% 12.3% 9.5% 9.3% Empire S&P/TSX Food & S&P/TSX Composite S&P 500 Composite Staples Retailing Index Index ($USD) Index (1) Includes shar
Slide 41: EMPIRE Sobeys @
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