PetSmart (PETM) announced Q3 2014 results and plans to reduce costs by $200 million.
Highlights include:
- GAAP net income was $92.2 million
- Adjusted net income was $102.2 million.
- EPS was $0.92, up 4.5% versus $0.88 in Q3 2013.
- Adjusted EPS was $1.02 versus $0.88 in 2013.
Cash Flow Summary:
- Generated $125.3 million in cash flows from operating activities
- Invested $37.1 million in capital expenditures
- Distributed $19.4 million in dividends
- Made no purchases of PetSmart stock during the quarter
- Ended the quarter with $254.8 million in cash
CEO David Lenhardt commented that,
"As our review of strategic alternatives continues, we remain focused on our four growth strategies and profit improvement program to continue to deliver value for customers and shareholders. I am pleased with our progress to date across our four growth strategies, and in taking decisive actions to deliver expected annualized pre-tax cost savings of $200 million under our profit improvement program."
In on my previous article I outlined why increased shareholder activist interest in PetSmart could result in the company be putting up for sale. Based on the last quarterly result, it appears activists are helping management create value through cost cutting efforts and increased free cash flow generation. In the event the company is put up for sale, it will help boost the valuation and therefore I am updating my thesis to support the idea that there could be significant upside from a takeover offer.
