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Financial Analysis for candian tire

4.0 Financial Performance 4.1 Consolidated Financial Performance 4.1.1 Consolidated Financial Results (C$ in millions, except where noted) Q4 2021 Q4 2020 Change 2021 2020 Change Retail sales $ 5,661.0 $ 5,3172 6.5% $18,264.6 5 16,8644 8.3% Revenue $ 5,137.6 $ 4,874,5 54% 5 16,292.1 $ 14,871,0 9.6% Gross margin dollars $ 1,946.7 $ 1,8499 5.2% $ 5,835.2 $ 5,076,6 14.9% Gross margin rate 37.9 % 37.9% (6) bps 35.8% 34.1% 168 bps Other expense (income) $ 5.2 $ 18.9 NM' $ (23.5) $ 48.7 NM Selling general and administrative expenses 1,167.4 1,053,6 10.8% 3,934.3 3,599 3 9.3% Net finance costs 54.1 58.8 (8.1) % 222.5 2565 (133) % Income before income taxes $ 720.0 $ 718.6 0.2% $ 1,701.9 $ 1,172.1 45.2% Income tax expense 184.3 196.8 (6.4) % 441.2 309.5 42.6% Effective tax rate 25.6% 27.4% 25.9 % 26.4% Net Income $ 535.7 $ 521.8 2.7% $ 1,260.7 $ 8626 46.1% Net income attributable to: Shareholders of Canadian Tire Corporation $ 508.5 $ 488.8 4.0% $ 1,127.6 $ 751,8 50.0% Non-controlling interests 272 33.0 (174)% 133.1 110.8 20.1% $ 535.7 5 521.8 2.7% $ 1,260.7 $ 862.6 46.1% Basic EPS $ 8.40 $ 8.04 4.5% $ 18.56 $ 1235 50.3% $ Diluted EPS 8.34 $ 7.97 4.6% $ 12.31 18.38 $ 493% Weighted average nmber of Common and Class A Non-Voting Shares outstanding: Basic 60,553,762 60,807,577 NM' 60,744,440 60,896,809 Diluted 61,008,556 61,358,623 NM' 61,345,072 61,090.111 NM For further information about the measures section 8.J of this MOBA Not meaningrul Non-Controlling Interests The following table outlines the net income attributable to the Company's non-controlling interests. For additional details, refer to Note 15 to the Company's 2021 Consolidated Financial Statements Q4 2021 Q4 2020 2021 2020 (C$ in millions) Financial Services $ 9.0 $ 16.7 5 62.7 $ 472 Non-controlling interest 20.0% (2020 - 20.0%) CT REIT 16.7 15.7 66.6 62.4 Non-controlling interest 31.0% (2020 - 30.8%) Retail segment subsidiary 0.6 3.8 12 Non-controlling interest 50.0% (2020 - 50.0%) $ 27.2 $ Net income attributable to non-controlling interests 33.0 $ 1108 133.1 $ NM 1.5 5.0 Balance Sheet Analysis, Liquidity, and Capital Resources 5.1 Selected Balance Sheet Highlights Selected line items from the Company's assets and liabilities, as at January 1, 2022 and the year-over-year change versus January 2, 2021, are noted below: Total change AS 1,425.1 Year-over-year change in assets Selected Asset January 1, 2022 Cash and cash equivalents 1,751.7 424.5 581.4 Loans receivable (current portion) 5,613.2 167.7 Merchandise Inventories 2.480.6 89.4 Right-of-use assets 1,786.1 74.9 Investment property 460.7 251.1 Property and equipment 4,549.3 Total change A $ 749.0 Year-over-year change in liabilities Selected Liability January 1, 2022 384.0 3,893.7 406.0 2,914.3 Deposits Trade and other payables Short-term borrowings Loans 108.2 (572) 4275 (79.1) 2.275.8 49.3 Lease liabilities A $424.5 million Refer to section 5.2 in this MD&A for further details Assets Cash and cash equivalents Loans receivable (current portion) A $581.4 million A $167.7 million Merchandise inventories The increase was mainly attributable to increased GAAR growth in the Financial Services segment from both the number of accounts and the average balance as well as a reduction in the Company's allowance for loans receivable. The increase was primarily driven by higher inventory levels at Canadian Tire in advance of the spring and summer seasons in anticipation of potential supply chain disruptions, partially offset by reduction of Inventory at SportChek. The increase was driven by the renewal of leases, and thus longer lease terms remaining, based on an annual review of expiring leases performed in Q3 2021. The increase was attributable to land and building acquisitions by CT REIT during 2021 The increase was driven by the construction of the Greater Toronto Area and Montreal distribution centres and Canadian Tire store investments A $89.4 million A $74.9 million Right-of-use assets Investment property Property and equipment A $251.1 million 5.2 Summary Cash Flows The Company's cash and cash equivalents position, net of bank indebtedness, was $1.751.7 million as at January 1, 2022. Selected line items from the Company's Consolidated Statements of Cash Flows for the quarters and years ended January 1, 2022 and January 2, 2021 are noted in the following tables: (C$ in millions) Q4 2021 Q4 2020 Change Cash generated from operating activities 1,141.1 $ 785.3 $ 355.8 Cash (used for) investing activities (357.6) (355.2) (2.4) Cash (used for) financing activities (567.2) (398.9) (168.3) Cash generated in the period 216.3 $ 31.2 $ 185.1 (C$ in millions) 2021 2020 Change Cash generated from operating activities 1,814.4 $ 2,4428 $ (628.4) Cash (used for) investing activities (736.5) (848.0) 111.5 Cash (used for) financing activities (653.4) (462.7) (190.7) Cash generated in the period $ 424.5 $ 1.132.1 $ (707.6) $ $ Operating activities Investing activities Q4 2021 Full Year $355.8 million change $628.4 million change Excluding the impact of changes in loans Excluding the impact of changes in loans receivable, operating activities generated $573 receivable and taxes paid, operating activities million more cash in 2021 due to changes in generated $916.9 million more cash in 2021 working capital and lower income tax payments in versus 2020 due to higher net income and the quarter. During the quarter, loans receivable changes in working capital. During 2021, loans grew $226,9 million, versus $9.7 million in 24 receivable grew $486.8 million, versus a decline 2020, resulting in a year-over-year use of cash of in 2020 of $925,1 million resulting in a year-over- $217 2 million year use of cash of $1.411.9 million. In addition, income tax payments were $133.4 million higher due to improved earnings. $2.4 million change $111.5 million change The marginal increase in cash used for investing. The decrease in cash used for investing activities activities was primarily due to higher capital was primarily due to an increase in investments in expenditures offset by an increase in investments 2020 (compared to being relatively flat in 2021), in Q4 2020 (as compared to being relatively flat in partially offset by higher capital expenditures. 04 2021), A $168.3 million change A $190.7 million change The increase in cash used for financing activities The increase in cash used for financing activities was primarily due to less cash generated from of $190.7 million versus prior year was due to a deposits in the quarter, as compared to an reduction in cash generated from deposits of Increase in Q4 2020, and the resumption of the $681.6 million, partially offset by a lower share buy-back program in Q4 2021. This was repayment of short-term borrowings in 2021 and partially offset by a lower repayment of short-term the repayment of $250 million in medium term borrowings in Q4 2021 notes in 2020. Financing activities 5.5 Liquidity and Financing Management is focused on ensuring that it has sufficient liquidity, both through maintaining a strong balance sheet and the ability to access additional capital from multiple sources, if required. Several alternative financing sources are available to its Retail, Financial Services, and CT REIT segments to meet the Company's financial obligations when due and to execute its operating and strategic plans. The current economic, operating, and capital market environment continues to support an increased emphasis on liquidity and capital management. As at Q4 2021 CTC, CT REIT, CTB and Helly Hansen each complied with all financial covenants under the agreements for the committed bank lines of credit listed in the Financing Source table below. As at January 1, 2022 Financial (C$ in millions) Consolidated Retail Services CT REIT Cash and cash equivalents $ 1,751.7 $ 707.6 $ 1,040.5 $ 3.6 Short-term investments 606.2 606.2 Less: Bank indebtedness Total net cash and cash equivalents and short-term investments $ 2,357.9 $ 707.6 $ 1,646.7 $ 3.6 Committed Bank Lines of Credit 5,335.4 2,785.4 2,250.0 300.0 Less: Borrowings outstanding? 58.0 58.0 Less: U.S. commercial paper outstanding Less: Letters of credit outstanding 5.8 5.8 Available Committed Bank Lines of Credit $ 5,271.6 $ 2,727.4 $ 2,250.0 $ 294.2 Liquidity $ 7,629.5 $ 3,435.0 $ 3,896.7 $ 297.8 This measure is a non-GAAP financial measure with no standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other is vers For further information about this measure to section 9.3 of this MDRA. The Company ended the quarter with $2.4 billion cash and short-term investments and $7.6 billion in liquidity with $3,4 billion, $3.9 billion and $297.8 million at its Retail, Financial Services, and CT REIT segments, respectively, 4.0 Financial Performance 4.1 Consolidated Financial Performance 4.1.1 Consolidated Financial Results (C$ in millions, except where noted) Q4 2021 Q4 2020 Change 2021 2020 Change Retail sales $ 5,661.0 $ 5,3172 6.5% $18,264.6 5 16,8644 8.3% Revenue $ 5,137.6 $ 4,874,5 54% 5 16,292.1 $ 14,871,0 9.6% Gross margin dollars $ 1,946.7 $ 1,8499 5.2% $ 5,835.2 $ 5,076,6 14.9% Gross margin rate 37.9 % 37.9% (6) bps 35.8% 34.1% 168 bps Other expense (income) $ 5.2 $ 18.9 NM' $ (23.5) $ 48.7 NM Selling general and administrative expenses 1,167.4 1,053,6 10.8% 3,934.3 3,599 3 9.3% Net finance costs 54.1 58.8 (8.1) % 222.5 2565 (133) % Income before income taxes $ 720.0 $ 718.6 0.2% $ 1,701.9 $ 1,172.1 45.2% Income tax expense 184.3 196.8 (6.4) % 441.2 309.5 42.6% Effective tax rate 25.6% 27.4% 25.9 % 26.4% Net Income $ 535.7 $ 521.8 2.7% $ 1,260.7 $ 8626 46.1% Net income attributable to: Shareholders of Canadian Tire Corporation $ 508.5 $ 488.8 4.0% $ 1,127.6 $ 751,8 50.0% Non-controlling interests 272 33.0 (174)% 133.1 110.8 20.1% $ 535.7 5 521.8 2.7% $ 1,260.7 $ 862.6 46.1% Basic EPS $ 8.40 $ 8.04 4.5% $ 18.56 $ 1235 50.3% $ Diluted EPS 8.34 $ 7.97 4.6% $ 12.31 18.38 $ 493% Weighted average nmber of Common and Class A Non-Voting Shares outstanding: Basic 60,553,762 60,807,577 NM' 60,744,440 60,896,809 Diluted 61,008,556 61,358,623 NM' 61,345,072 61,090.111 NM For further information about the measures section 8.J of this MOBA Not meaningrul Non-Controlling Interests The following table outlines the net income attributable to the Company's non-controlling interests. For additional details, refer to Note 15 to the Company's 2021 Consolidated Financial Statements Q4 2021 Q4 2020 2021 2020 (C$ in millions) Financial Services $ 9.0 $ 16.7 5 62.7 $ 472 Non-controlling interest 20.0% (2020 - 20.0%) CT REIT 16.7 15.7 66.6 62.4 Non-controlling interest 31.0% (2020 - 30.8%) Retail segment subsidiary 0.6 3.8 12 Non-controlling interest 50.0% (2020 - 50.0%) $ 27.2 $ Net income attributable to non-controlling interests 33.0 $ 1108 133.1 $ NM 1.5 5.0 Balance Sheet Analysis, Liquidity, and Capital Resources 5.1 Selected Balance Sheet Highlights Selected line items from the Company's assets and liabilities, as at January 1, 2022 and the year-over-year change versus January 2, 2021, are noted below: Total change AS 1,425.1 Year-over-year change in assets Selected Asset January 1, 2022 Cash and cash equivalents 1,751.7 424.5 581.4 Loans receivable (current portion) 5,613.2 167.7 Merchandise Inventories 2.480.6 89.4 Right-of-use assets 1,786.1 74.9 Investment property 460.7 251.1 Property and equipment 4,549.3 Total change A $ 749.0 Year-over-year change in liabilities Selected Liability January 1, 2022 384.0 3,893.7 406.0 2,914.3 Deposits Trade and other payables Short-term borrowings Loans 108.2 (572) 4275 (79.1) 2.275.8 49.3 Lease liabilities A $424.5 million Refer to section 5.2 in this MD&A for further details Assets Cash and cash equivalents Loans receivable (current portion) A $581.4 million A $167.7 million Merchandise inventories The increase was mainly attributable to increased GAAR growth in the Financial Services segment from both the number of accounts and the average balance as well as a reduction in the Company's allowance for loans receivable. The increase was primarily driven by higher inventory levels at Canadian Tire in advance of the spring and summer seasons in anticipation of potential supply chain disruptions, partially offset by reduction of Inventory at SportChek. The increase was driven by the renewal of leases, and thus longer lease terms remaining, based on an annual review of expiring leases performed in Q3 2021. The increase was attributable to land and building acquisitions by CT REIT during 2021 The increase was driven by the construction of the Greater Toronto Area and Montreal distribution centres and Canadian Tire store investments A $89.4 million A $74.9 million Right-of-use assets Investment property Property and equipment A $251.1 million 5.2 Summary Cash Flows The Company's cash and cash equivalents position, net of bank indebtedness, was $1.751.7 million as at January 1, 2022. Selected line items from the Company's Consolidated Statements of Cash Flows for the quarters and years ended January 1, 2022 and January 2, 2021 are noted in the following tables: (C$ in millions) Q4 2021 Q4 2020 Change Cash generated from operating activities 1,141.1 $ 785.3 $ 355.8 Cash (used for) investing activities (357.6) (355.2) (2.4) Cash (used for) financing activities (567.2) (398.9) (168.3) Cash generated in the period 216.3 $ 31.2 $ 185.1 (C$ in millions) 2021 2020 Change Cash generated from operating activities 1,814.4 $ 2,4428 $ (628.4) Cash (used for) investing activities (736.5) (848.0) 111.5 Cash (used for) financing activities (653.4) (462.7) (190.7) Cash generated in the period $ 424.5 $ 1.132.1 $ (707.6) $ $ Operating activities Investing activities Q4 2021 Full Year $355.8 million change $628.4 million change Excluding the impact of changes in loans Excluding the impact of changes in loans receivable, operating activities generated $573 receivable and taxes paid, operating activities million more cash in 2021 due to changes in generated $916.9 million more cash in 2021 working capital and lower income tax payments in versus 2020 due to higher net income and the quarter. During the quarter, loans receivable changes in working capital. During 2021, loans grew $226,9 million, versus $9.7 million in 24 receivable grew $486.8 million, versus a decline 2020, resulting in a year-over-year use of cash of in 2020 of $925,1 million resulting in a year-over- $217 2 million year use of cash of $1.411.9 million. In addition, income tax payments were $133.4 million higher due to improved earnings. $2.4 million change $111.5 million change The marginal increase in cash used for investing. The decrease in cash used for investing activities activities was primarily due to higher capital was primarily due to an increase in investments in expenditures offset by an increase in investments 2020 (compared to being relatively flat in 2021), in Q4 2020 (as compared to being relatively flat in partially offset by higher capital expenditures. 04 2021), A $168.3 million change A $190.7 million change The increase in cash used for financing activities The increase in cash used for financing activities was primarily due to less cash generated from of $190.7 million versus prior year was due to a deposits in the quarter, as compared to an reduction in cash generated from deposits of Increase in Q4 2020, and the resumption of the $681.6 million, partially offset by a lower share buy-back program in Q4 2021. This was repayment of short-term borrowings in 2021 and partially offset by a lower repayment of short-term the repayment of $250 million in medium term borrowings in Q4 2021 notes in 2020. Financing activities 5.5 Liquidity and Financing Management is focused on ensuring that it has sufficient liquidity, both through maintaining a strong balance sheet and the ability to access additional capital from multiple sources, if required. Several alternative financing sources are available to its Retail, Financial Services, and CT REIT segments to meet the Company's financial obligations when due and to execute its operating and strategic plans. The current economic, operating, and capital market environment continues to support an increased emphasis on liquidity and capital management. As at Q4 2021 CTC, CT REIT, CTB and Helly Hansen each complied with all financial covenants under the agreements for the committed bank lines of credit listed in the Financing Source table below. As at January 1, 2022 Financial (C$ in millions) Consolidated Retail Services CT REIT Cash and cash equivalents $ 1,751.7 $ 707.6 $ 1,040.5 $ 3.6 Short-term investments 606.2 606.2 Less: Bank indebtedness Total net cash and cash equivalents and short-term investments $ 2,357.9 $ 707.6 $ 1,646.7 $ 3.6 Committed Bank Lines of Credit 5,335.4 2,785.4 2,250.0 300.0 Less: Borrowings outstanding? 58.0 58.0 Less: U.S. commercial paper outstanding Less: Letters of credit outstanding 5.8 5.8 Available Committed Bank Lines of Credit $ 5,271.6 $ 2,727.4 $ 2,250.0 $ 294.2 Liquidity $ 7,629.5 $ 3,435.0 $ 3,896.7 $ 297.8 This measure is a non-GAAP financial measure with no standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other is vers For further information about this measure to section 9.3 of this MDRA. The Company ended the quarter with $2.4 billion cash and short-term investments and $7.6 billion in liquidity with $3,4 billion, $3.9 billion and $297.8 million at its Retail, Financial Services, and CT REIT segments, respectively

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