~ Sales increased 8.8% to $2.18 billion and
Same-Store Sales increased 3.4% ~
~ Diluted EPS, including acquisition-related
costs, of $0.34 ~
~ Excluding acquisition-related costs,
diluted EPS increased 6.0% to $0.71 ~
Dollar Tree, Inc. (NASDAQ: DLTR), North America’s leading
operator of discount variety stores selling everything for $1 or
less, today reported results for the first quarter ended May 2,
2015.
First Quarter Results
Consolidated net sales increased 8.8% to $2.18 billion from
$2.00 billion in the prior year’s first quarter. Consolidated
same-store sales increased 3.4% on a constant currency basis,
compared to a 2.0% increase in the prior-year period. Adjusted for
the impact of Canadian currency fluctuations, the same-store sales
increase was 3.1%. Sales performance was negatively impacted by
delayed receipts at four of the Company’s 10 distribution centers
related to the west coast port congestion and the previously
disclosed estimate of $8 million impact from the holiday calendar
shift.
Gross profit increased 7.5% to $748.9 million from $696.6 in the
prior year’s first quarter. As a percent of sales, gross margin
decreased by 40 basis points to 34.4%. The primary contributors to
the decrease were increased freight costs, an adjustment for the
previously announced inventory accounting method change related to
Canadian operations, and higher shrink.
Selling, general and administrative expenses were 23.7% of sales
compared to 23.2% of sales in the prior year's first quarter. The
quarter included $10.4 million in acquisition-related costs
associated with the pending merger with Family Dollar Stores, Inc.
Excluding acquisition-related costs, selling, general and
administrative expenses were 23.2% of sales, flat compared to the
prior year's first quarter. Payroll costs, as a percent of sales,
increased 10 basis points related to store bonuses and health care
claims, and were partially offset by improved productivity in store
payroll. Depreciation expense, as a percent of sales, improved by
10 basis points based on leverage of same-store sales.
Net income, compared to the prior year's first quarter,
including acquisition-related costs, was $69.5 million and diluted
earnings per share were $0.34. Excluding acquisition-related costs,
net income increased approximately $8.0 million to $146.3 million
and diluted earnings per share increased 6% to $0.71.
“Comparable store sales grew as the result of increases in both
traffic and average ticket,” stated Bob Sasser, Chief Executive
Officer. “Customers are shopping with us more often and they are
buying more on each visit. Our performance continues to validate
that Dollar Tree is part of the solution for millions of customers
seeking great values for their hard-earned dollars. Despite
challenges presented by delayed receipts of merchandise related to
the west coast port congestion and the impact of the holiday
calendar shift, our team worked together to deliver solid sales and
earnings, both of which were well within our guidance range. We
entered the second quarter with fresh inventory, stocked shelves,
and greater values than ever for our customers.”
The Company opened 93 stores, expanded or relocated 10 stores,
and closed six stores during the quarter. Retail selling square
footage increased to 47.2 million square feet, a 7.1% increase
compared to the prior year.
Company Outlook
The Company estimates consolidated net sales for the second
quarter of 2015 to range from $2.17 billion to $2.23 billion, based
on a low to low-mid single-digit increase in same-store sales and
8.0% square footage growth. Diluted earnings per share, excluding
acquisition-related costs, are expected to range from $0.63 to
$0.68.
Consolidated net sales for full-year 2015 are now expected to
range from $9.24 billion to $9.42 billion compared to the Company’s
previous expected range of $9.21 billion to $9.45 billion. This
estimate is based on a low to low-mid single-digit increase in
same-store sales, and 7.3% square footage growth. Adjusted for its
first quarter results, outlook for the remainder of the year
remains unchanged from the Company’s original 2015 guidance. The
Company now anticipates net income per diluted share for full-year
2015, excluding acquisition-related costs, will range from $3.32 to
$3.47. This compares to its previous guidance, excluding
acquisition-related costs, of $3.30 to $3.50.
FTC Update
Dollar Tree continues to make progress with the Federal Trade
Commission (“FTC”) and divestiture buyers in order to complete the
Company's pending acquisition of Family Dollar. The FTC's staff has
substantially completed its review and we plan to divest
approximately 330 Family Dollar stores representing approximately
$45.5 million of operating income. The Company intends to reach an
agreement with a divestiture buyer in the coming days and secure
FTC clearance thereafter. The Company intends to close the proposed
merger in early July 2015.
Conference Call
Information
On Thursday, May 21, 2015, the Company will host a conference
call to discuss its earnings results at 9:00 a.m. Eastern Time. The
telephone number for the call is 888-812-8589. A recorded version
of the call will be available until midnight Wednesday, May 27,
2015 and may be accessed by dialing 888-203-1112. The access code
is 5936212. A webcast of the call is accessible through Dollar
Tree's website, and will remain online until Wednesday, May 27.
Dollar Tree, a Fortune 500 Company, operated 5,454 stores across
48 states and five Canadian provinces as of May 2, 2015. Our stores
operate under the brands of Dollar Tree, Dollar Tree Canada, and
Deals. To learn more about the Company, visit
www.DollarTree.com.
A WARNING ABOUT FORWARD-LOOKING STATEMENTS: Our press release
contains "forward-looking statements" as that term is used in the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements address future events, developments or results and
typically use words such as believe, anticipate, expect, intend,
plan, forecast, or estimate. For example, our forward-looking
statements include statements regarding the merger with Family
Dollar, including acquisition related expenses and financing costs,
the benefits, results, effects, timing and certainty of the merger,
future financial and operating results, expectations concerning the
antitrust review process for the proposed transaction and the
combined company's plans, objectives, expectations (financial or
otherwise) and intentions, second quarter 2015 and full-year 2015
sales, second quarter 2015 and full-year 2015 diluted earnings per
share. Risks and uncertainties related to the proposed merger
include, among others, the risk of signing an agreement with the
divestiture buyer on the anticipated time schedule or terms, the
risk that FTC approvals required for the merger are not obtained on
the anticipated time schedule or terms including approval of the
final number and location of divested stores and approval of a
divestiture buyer or are obtained subject to conditions that are
not anticipated, the risk that the other conditions to the closing
of the merger are not satisfied, the risk that the financing
required to fund the transaction is not obtained, or is obtained on
terms other than those previously disclosed, the ability to close
the proposed merger on the proposed terms and schedule, or at all,
difficulties related to integration of the proposed merger and our
ability to obtain cost savings and synergies contemplated by the
merger, unexpected costs, charges or expenses resulting from the
proposed merger, and the outcome of pending or potential litigation
or governmental investigations. For a discussion of the risks,
uncertainties and assumptions that could affect our future events,
developments or results, you should carefully review the “Risk
Factors,” "Business," and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” sections in our
Annual Report on Form 10-K filed March 13, 2015. We are not
obligated to release publicly any revisions to any forward-looking
statements contained in this press release to reflect events or
circumstances occurring after the date of this report and you
should not expect us to do so.
DOLLAR TREE, INC. Condensed Consolidated Income
Statements (In millions, except per share data)
First Quarter Ended May 2, May
3, 2015 2014 (Unaudited)
(Unaudited)
AsReported
Adjustments (a)
AsAdjusted
As Reported Net sales $ 2,176.7 $ - $
2,176.7 $ 2,000.3 Cost of sales 1,427.8 - 1,427.8 1,303.7
Gross profit 748.9 - 748.9 696.6 34.4 % 34.4 % 34.8 %
Selling, general & administrative expenses 516.1 (10.4 ) 505.7
464.7 23.7 % -0.5 % 23.2 % 23.2 % Operating income 232.8
10.4 243.2 231.9 10.7 % 0.5 % 11.2 % 11.6 % Interest
expense, net 122.2 (114.0 ) 8.2 8.1 Other expense, net (2.6 ) -
(2.6 ) - Income before income taxes 113.2 124.4 237.6 223.8
5.2 % 5.7 % 10.9 % 11.2 % Income tax expense 43.7 47.6 91.3
85.5 Income tax rate 38.6 % 38.3 % 38.4 % 38.2 % Net income
$ 69.5 $ 76.8 $ 146.3 $ 138.3 3.2 % 3.5 % 6.7 % 6.9 % Net
earnings per share: Basic $ 0.34 $ 0.37 $ 0.71 $ 0.67 Weighted
average number of shares 206.2 206.2 206.2 206.8 Diluted $
0.34 $ 0.37 $ 0.71 $ 0.67 Weighted average number of shares 207.1
207.1 207.1 207.7 (a) The adjustments to Selling, general
and administrative expenses and Interest expense, net for the first
quarter are related to the pending acquisition of Family Dollar
Stores, Inc. NOTE: These condensed consolidated income
statements have been prepared on a basis consistent with our
previously prepared income statements filed with the Securities and
Exchange Commission for our prior quarter and annual periods, with
the exception of the footnotes required by GAAP for completed
financial statements and inclusion of certain non-GAAP adjustments
and measures as described in footnote (a) above. Management
believes the reporting of comparable results is important in
assessing the overall performance of the business and is therefore
useful for investors and prospective investors.
DOLLAR
TREE, INC. Condensed Consolidated Balance Sheets
(Dollars in millions) (Unaudited)
May 2, January 31, May 3, 2015
2015 2014 Cash and cash equivalents $
870.4 $ 864.1 $ 387.1 Restricted cash 7,244.1 - - Merchandise
inventories, net 1,093.5 1,035.7 1,042.9 Current deferred tax
assets, net 19.8 28.3 14.2 Other current assets 107.8
66.5 92.8 Total current assets 9,335.6 1,994.6 1,537.0
Property and equipment, net 1,226.0 1,210.5 1,115.5 Goodwill
166.1 164.6 169.6 Deferred tax assets, net 38.6 30.6 30.3 Other
assets, net 102.9 92.4 101.5 Total
assets $ 10,869.2 $ 3,492.7 $ 2,953.9 Accounts
payable $ 515.6 $ 433.6 $ 447.0 Other current liabilities 474.3
385.3 196.4 Income taxes payable 25.3 42.7
81.1 Total current liabilities 1,015.2 861.6 724.5 Long-term
debt 7,819.7 682.7 752.9 Income taxes payable, long-term 6.1 6.5
5.5 Other liabilities 157.4 156.9 153.2
Total liabilities 8,998.4 1,707.7 1,636.1
Shareholders' equity 1,870.8 1,785.0
1,317.8 Total liabilities and shareholders' equity $
10,869.2 $ 3,492.7 $ 2,953.9 STORE DATA: Number of stores
open at end of period 5,454 5,367 5,080 Total selling square
footage (in millions) 47.2 46.5 44.0 The January 31, 2015
information was derived from the audited consolidated financial
statements as of that date.
DOLLAR TREE, INC.
Condensed Consolidated Statements of Cash Flows (In
millions) (Unaudited) 13 Weeks
Ended May 2, May 3, 2015
2014 Cash flows from operating activities: Net
income $ 69.5 $ 138.3
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 52.8 50.7 Provision for deferred
taxes 1.2 (1.4 ) Amortization of debt discount and debt issuance
costs 2.6 0.6 Other non-cash adjustments to net income 22.2 17.2
Changes in operating assets and liabilities (18.5 )
(7.2 ) Total adjustments 60.3 59.9 Net
cash provided by operating activities 129.8
198.2 Cash flows from investing activities: Capital
expenditures (66.9 ) (71.9 ) Increase in restricted cash (7,244.1 )
- Proceeds from sale of fixed assets - 0.3
Net cash used in investing activities (7,311.0 )
(71.6 ) Cash flows from financing activities:
Payments on long-term debt - (12.8 ) Proceeds from long-term debt
7,180.2 - Debt issuance costs (5.2 ) -
Proceeds from stock issued pursuant to
stock-based compensation plans
2.6 1.9 Tax benefit of exercises/vesting of stock-based
compensation 9.6 3.4 Net cash provided
by (used in) financing activities 7,187.2 (7.5
) Effect of exchange rate changes on cash and cash equivalents
0.3 0.3 Net increase in cash and cash
equivalents 6.3 119.4 Cash and cash equivalents at beginning of
period 864.1 267.7 Cash and cash
equivalents at end of period $ 870.4 $ 387.1
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150521005618/en/
Dollar Tree, Inc.Randy Guiler, 757-321-5284Vice President,
Investor Relationswww.DollarTree.com
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