Apollo Global Management Inc.-owned retailer Michaels Cos. used a windfall from tariff refunds to help cut its leverage, according to people familiar with the matter. The company said in preliminary second-quarter earnings that it received more than $170 million related to IEEPA tariff refunds, including interest, and bought back $101 million of debt, said the people, who asked not to be identified discussing private information. Net leverage shrank to 4.8 times earnings from 6.3 times the prior year, they added.

The refund also boosted Michaels’ adjusted earnings before interest, taxes, depreciation and amortization to $178 million, compared with about $104 million last year. Without it, that measure would have been roughly $94 million, some of the people said. Similarly, gross profit was $522 million, or a 46.6% margin, when including the tariff refund, but without it, would have dipped from a year ago to 33.1%, the people familiar said. Comparable sales were up 4.5% year over year, while net sales rose 4.8% to $1.12 billion.

Michaels, which Apollo took over about five years ago, has emerged as an unlikely success story in the retail sector. It has stockpiled assets from bankrupt competitors like Party City and fabrics retailer Joann, while also benefitting from a revival in demand for arts and crafts. Apollo is reaching the point at which it would usually look to exit an equity investment. In the case of Michaels, the most likely route would be an initial public offering, Bloomberg previously reported. The company’s 11% second lien notes, the securities that were bought back, traded at 97 cents on the dollar on Monday, up about 1 cent from last week, according to data compiled by Bloomberg.