Petco Health and Wellness pany(WOOF) - 2023 Q1 - Quarterly Report

Financial Performance - Net sales increased from $1.41 billion to $1.48 billion, representing a period-over-period growth of 4.3%[83] - Comparable sales growth was 5.1%, driven by strong execution and an increase in new pet ownership[83] - Operating income rose from $47.7 million to $49.9 million, reflecting a growth of 4.6%[83] - Net income attributable to Class A and B-1 common stockholders increased from $7.6 million to $24.7 million, a significant improvement of 226.6%[83] - Adjusted EBITDA grew from $125.7 million to $132.6 million, marking a 5.4% increase[83] - Gross profit increased by $10.7 million to $607.7 million, with a gross profit rate of 41.2%[88] - Adjusted EBITDA for the thirteen weeks ended April 30, 2022, was $132.6 million, compared to $125.7 million for the same period in 2021, reflecting an Adjusted EBITDA margin of 9.0%[98] - Net sales for the thirteen weeks ended April 30, 2022, were $1,476.0 million, compared to $1,415.0 million for the same period in 2021, indicating a growth of approximately 4.3%[98] Sales and Revenue Growth - E-commerce and digital sales increased by 10.5%, supported by initiatives like repeat delivery and the mobile app[87] - Services sales, including veterinary hospitals, increased by 18.9%, reflecting the expansion of the veterinary hospital footprint[87] Expenses and Costs - SG&A expenses rose by 1.5% to $557.7 million, representing 37.8% of net sales, indicating operating leverage from sales growth[89] - Interest expense decreased by 4.4% to $19.6 million due to principal payments on the First Lien Term Loan[90] - Loss on extinguishment and modification of debt was $20.8 million for the thirteen weeks ended May 1, 2021, with no loss recognized for the same period in 2022[91] Tax and Income - The effective tax rate increased to 28.8%, resulting in an income tax expense of $10.0 million for the thirteen weeks ended April 30, 2022, compared to 26.2% and $2.7 million for the same period in 2021[93] Cash Flow and Liquidity - Free Cash Flow was $(8.4) million for the thirteen weeks ended April 30, 2022, compared to $67.7 million for the same period in 2021[103] - Liquidity as of April 30, 2022, was $629.7 million, including cash and cash equivalents of $190.9 million and $438.8 million available on the ABL Revolving Credit Facility[105] - Net cash provided by operating activities was $57.5 million for the thirteen weeks ended April 30, 2022, down from $115.0 million for the same period in 2021[109] - Cash used in investing activities was $65.9 million for the thirteen weeks ended April 30, 2022, compared to $47.4 million for the same period in 2021, primarily for transformation initiatives[111] - Net cash used in financing activities was $15.3 million for the thirteen weeks ended April 30, 2022, compared to $7.2 million for the same period in 2021, mainly for quarterly repayments on the term loan[112] Debt and Interest Rates - As of April 30, 2022, the company had $1,683.0 million outstanding under the First Lien Term Loan[122] - An increase of 100 basis points in variable rates would increase annual cash interest by approximately $17.1 million[122] Risk Management - The company does not currently hold any instruments for trading purposes, indicating a conservative approach to market risks[121] - Cash and cash equivalents are maintained at major financial institutions, likely exceeding insured limits, with minimal credit risk[124] - Substantially all business is conducted in U.S. dollars, with no material effect expected from a 10% fluctuation in currency value[125]