~ Sales Increased 1.1% to $5.00 Billion and
Same-Store Sales Increased 1.7% ~
~ Diluted Earnings per Share Increased
105.7% to $0.72 ~
~ Earnings Include Expenses of $0.09 per
Share for Debt Refinancing ~
Dollar Tree, Inc. (NASDAQ: DLTR), North America's leading
operator of discount variety stores, today reported results for its
third fiscal quarter ended October 29, 2016. For the quarter, the
Company earned $171.6 million, or $0.72 per diluted share.
Bob Sasser, Chief Executive Officer, stated, "I am proud of our
team’s achievements in our third quarter. Our results demonstrated
a solid performance in our Dollar Tree segment, continued
meaningful progress in our integration of Family Dollar, and our
ability to refinance and pre-pay a portion of our outstanding debt
in order to reduce future interest costs. After adding back $0.09
per share of expenses related to our debt refinancing, our
operating performance of $0.81 per diluted share was near the top
end of our third quarter EPS guidance range of $0.76 to $0.82."
Third Quarter Results
Net sales increased 1.1% to $5.00 billion from $4.95 billion in
the prior year’s third quarter. The prior year’s quarter included
sales from 325 Family Dollar stores that were divested following
the third quarter of 2015. Same-store sales increased 1.7%, on a
constant currency basis, compared to a 2.1% increase in the
prior-year period. Adjusted for the impact of Canadian currency
fluctuations, the same-store sales increase was 1.8%. The
same-store sales growth, representing the Company’s 35th
consecutive quarter of positive same-store sales, was driven by
increases in comparable customer count and average ticket.
Gross profit increased 8.6% to $1.52 billion in the quarter
compared to $1.40 billion in the prior year’s third quarter. As a
percent of sales, gross margin increased to 30.4% compared to 28.3%
in the prior year. The improvement was driven primarily by lower
merchandise and freight costs. The prior year’s third quarter
included $13.0 million of markdown expense for Family Dollar
related to product assortment rationalization and planned
liquidations, and $38.4 million for Family Dollar related to the
amortization of the stepped-up inventory basis.
Selling, general and administrative expenses were 23.6% of sales
compared to 23.8% of sales in the prior year's third quarter.
Excluding $11.8 million of acquisition-related costs from the prior
year’s period, selling, general and administrative expenses, as a
percent of sales, remained consistent at 23.6%. Increases in store
hourly payroll, as a percent of sales, were offset by lower
professional fees and lower depreciation expense, as a percent of
sales.
Operating income increased 53.1% to $342.4 million compared with
$223.7 million in the same period last year. Operating income
margin increased to 6.8% in the current quarter from 4.5% in last
year’s quarter. This increase in operating income is the result of
a $61.2 million increase of operating income in the Dollar Tree
segment, and a $57.5 million increase in operating income in the
Family Dollar segment.
The Company's effective tax rate for the quarter was 25.5%
compared to 34.3% in the prior year period. The lower tax rate
included an expected one-time tax benefit of $21.4 million, or
$0.09 per share, related to a state reduction in corporate tax
rate.
Net income compared to the prior year's third quarter increased
$89.7 million, or 109.5%, to $171.6 million, and diluted earnings
per share increased to $0.72.
During the quarter, the Company opened 153 stores, expanded or
relocated 39 stores, and closed 10 stores. Additionally, as part of
its re-banner initiative, the Company opened 42 former Family
Dollar store locations as new Dollar Tree stores. Retail selling
square footage at the end of the quarter was approximately 112.0
million square feet.
First Nine Months
Results
Consolidated net sales increased 48.9% to $15.08 billion from
$10.13 billion in the first nine months of 2015. The $4.95 billion
increase was the result of $4.36 billion in incremental net sales
from Family Dollar stores, sales from new Dollar Tree stores, and a
1.7% same-store sales increase, on a constant currency basis.
Adjusted for the impact of Canadian currency fluctuations, the
same-store sales increase was 1.6%.
Gross profit increased $1.58 billion, or 52.7%, to $4.59 billion
from $3.00 billion in the first nine months of 2015. As a percent
of sales, gross margin increased by 80 basis points to 30.4%
compared to the prior year period.
Selling, general and administrative expenses were 23.0% of sales
compared to 23.9% of sales in the first nine months of 2015.
Net income increased $521.0 million, to $574.4 million, compared
to the prior year's first nine months, resulting in net income of
$2.43 per diluted share.
Company Outlook
The Company estimates consolidated net sales for the fourth
quarter of 2016 to range from $5.59 billion to $5.69 billion, based
on low single-digit increases in same-store sales for the Dollar
Tree and Family Dollar segments. Diluted earnings per share are
estimated to be in the range of $1.24 to $1.33, an increase from
the prior implied guidance of $1.21 to $1.30.
Consolidated net sales for full-year 2016 are now expected to
range between $20.67 billion and $20.77 billion compared to the
Company’s previously expected range of $20.69 billion to $20.87
billion. This estimate is based on a low single-digit increase in
same-store sales, and 3.9% square footage growth. The Company now
anticipates net income per diluted share for full-year 2016 will
range between $3.67 and $3.76. This compares to its previous EPS
guidance range of $3.67 to $3.82, which did not include the $0.09
per diluted share of expenses related to our debt refinancing
incurred in the third quarter of 2016.
Sasser added, "I am encouraged by our continued progress in
building the foundation for a larger, stronger and more profitable
Family Dollar business. The stores are cleaner, the values are
greater and our customer feedback scores regarding merchandise
assortments and in-stocks have improved. As a combined
organization, we are uniquely positioned to efficiently grow our
businesses to better serve more customers in more markets. We are
well-positioned and prepared for the upcoming fourth quarter and
holiday selling season.”
Conference Call
Information
On Tuesday, November 22, 2016, 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 888-215-7015. A
recorded version of the call will be available until midnight
Monday, November 28, 2016 and may be accessed by dialing
888-203-1112. The access code is 8794832. A webcast of the call is
accessible through Dollar Tree's website, and will remain online
through Monday, November 28, 2016.
Dollar Tree, a Fortune 200 Company, operated 14,284 stores
across 48 states and five Canadian provinces as of October 29,
2016. Stores operate under the brands of Dollar Tree, Family
Dollar, and Dollar Tree Canada. 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 fourth quarter 2016 and
full-year 2016 net sales and same-store sales, fourth quarter 2016
and full-year 2016 diluted earnings per share, square footage
growth, the benefits, results, and effects of the merger with
Family Dollar, including integration plans and synergies, and
future financial and operating results and shareholder value. 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
28, 2016 and other filings with the Securities and Exchange
Commission. 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
Statements of Income (In millions, except per share
data) (Unaudited)
13 Weeks Ended 39 Weeks Ended
October 29, 2016 October 31, 2015 (1) October 29,
2016 October 31, 2015 (1) Net sales $ 5,001.6 $
4,945.2 $ 15,083.7 $ 10,133.1 Cost of sales 3,481.1 3,545.2
10,496.3 7,129.0 Gross profit 1,520.5 1,400.0 4,587.4
3,004.1 30.4% 28.3% 30.4% 29.6% Selling, general &
administrative expenses 1,178.1 1,176.3 3,469.1 2,424.2 23.6% 23.8%
23.0% 23.9% Operating income 342.4 223.7 1,118.3 579.9 6.8%
4.5% 7.4% 5.7% Interest expense, net 112.1 98.4 286.7 484.6
Other (income) expense, net 0.1 0.6 (0.1) (0.4) Income
before income taxes 230.2 124.7 831.7 95.7 4.6% 2.5% 5.5% 0.9%
Income tax expense 58.6 42.8 257.3 42.3 Income tax rate
25.5% 34.3% 30.9% 44.2% Net income $ 171.6 $ 81.9 $ 574.4 $
53.4 3.4% 1.7% 3.8% 0.5% Net earnings per share: Basic $
0.73 $ 0.35 $ 2.44 $ 0.24 Weighted average number of shares 235.8
234.7 235.6 218.4 Diluted $ 0.72 $ 0.35 $ 2.43 $ 0.24
Weighted average number of shares 236.9 235.7 236.7 219.4
(1) For the 13 and 39 weeks ended October 31, 2015, Selling,
general & administrative expenses includes merger expenses of
$11.8 million and $38.7 million, respectively, related to the
acquisition of Family Dollar Stores, Inc. on July 6, 2015, and
Interest expense, net for the 39 weeks ended October 31, 2015
includes incremental costs incurred to the July 6, 2015 acquisition
date in connection with the repayment of pre-existing debt of
$343.2 million. Excluding these acquisition-related expenses, Net
income and Diluted earnings per share for the 13 and 39 weeks ended
October 31, 2015 were $89.2 million and $0.38, and $289.2 million
and $1.32, respectively.
DOLLAR TREE, INC.
Segment Information (In millions, except store count)
(Unaudited)
13 Weeks
Ended 39 Weeks Ended October 29, 2016
October 31, 2015 October 29, 2016 October 31, 2015
(a)
Net sales: Dollar Tree $ 2,466.9 $ 2,271.7 $ 7,238.9 $
6,648.0 Family Dollar
2,534.7
2,673.5 7,844.8
3,485.1 Total net sales
$
5,001.6 $ 4,945.2
$ 15,083.7 $
10,133.1 Gross profit: Dollar
Tree $ 857.3 $ 772.2 $ 2,496.2 $ 2,270.4 Family Dollar
663.2 627.8
2,091.2 733.7 Total
gross profit
$ 1,520.5
$ 1,400.0 $
4,587.4 $ 3,004.1
Operating income (loss): Dollar Tree (b) $
286.0 $ 224.8 $ 829.2 $ 676.0 Family Dollar
56.4 (1.1 )
289.1 (96.1
) Total operating income
$
342.4 $ 223.7
$ 1,118.3 $
579.9
13 Weeks Ended 39 Weeks Ended
October 29, October 31, October 29, October
31, 2016 2015 2016 2015
DollarTree
Family
Dollar
Total
DollarTree
Family
Dollar
Total
DollarTree
Family
Dollar
Total
DollarTree
Family
Dollar
Total Store Count: Beginning 6,184 7,945
14,129 5,583 8,281 13,864 5,954 7,897 13,851 5,367 8,284 13,651 New
101 52 153 118 86 204 312 168 480 337 101 438 Rebanner (c) 42 (30 )
12 143 (167 ) (24 ) 83 (84 ) (1 ) 147 (185 ) (38 ) Closings
(7 ) (3
) (10 ) (3
) (3 )
(6 ) (29 )
(17 ) (46
) (10 )
(3 ) (13 )
Ending
6,320 7,964
14,284 5,841
8,197 14,038
6,320 7,964
14,284 5,841
8,197 14,038 Selling Square
Footage (in millions)
54.4
57.6 112.0
50.3 59.3
109.6 54.4
57.6 112.0
50.3 59.3
109.6 Growth Rate (Square Footage)
8.2 % -2.9
% 2.2 % 9.8
% 100.0 %
139.3 % 8.2 %
-2.9 % 2.2
% 9.8 %
100.0 % 139.3 %
(a) The results of Family
Dollar's operations are included from the July 6, 2015 acquisition
date.
(b) For the 13 and 39 weeks ended October
31, 2015, Selling, general & administrative expenses includes
merger expenses of $11.8 million and $38.7 million, respectively,
for the Dollar Tree segment related to the acquisition of Family
Dollar Stores, Inc. on July 6, 2015. Excluding these
acquisition-related expenses, Operating income for the 13 and 39
weeks ended October 31, 2015 was $236.6 million and $714.7 million,
respectively, for the Dollar Tree segment.
(c) Stores are included as rebanners when they close or open,
respectively.
DOLLAR TREE, INC. Condensed
Consolidated Balance Sheets (In millions)
(Unaudited) October 29, January
30, October 31, 2016 2016 2015
Cash and cash equivalents $ 733.8 $ 736.1 $ 1,106.9
Short-term investments 4.0 4.0 4.0 Merchandise inventories, net
3,273.9 2,885.5 3,185.3 Current deferred tax assets, net - - 96.6
Other current assets 330.7 310.3 235.2 Total
current assets 4,342.4 3,935.9 4,628.0 Property and
equipment, net 3,176.3 3,125.5 3,141.0 Assets available for sale
11.6 12.1 10.1 Goodwill 5,022.9 5,021.7 5,024.1 Deferred tax
assets, net - - 19.2 Favorable lease rights, net 493.8 569.4 595.0
Tradename intangible asset 3,100.0 3,100.0 3,100.0 Other intangible
assets, net 5.2 5.8 6.1 Other assets 42.8 130.8
175.5 Total assets $ 16,195.0 $ 15,901.2 $ 16,699.0
Current portion of long-term debt $ 145.8 $ 108.0 $
95.5 Accounts payable 1,266.4 1,251.9 1,259.3 Other current
liabilities 722.0 722.6 785.3 Income taxes payable -
12.9 21.1 Total current liabilities 2,134.2 2,095.4 2,161.2
Long-term debt, net, excluding current portion 6,938.0
7,238.4 8,248.0 Unfavorable lease rights, net 130.2 149.3 155.5
Deferred tax liabilities, net 1,495.5 1,586.6 1,634.7 Income taxes
payable, long-term 72.3 71.4 33.9 Other liabilities 377.1
353.2 323.5 Total liabilities 11,147.3
11,494.3 12,556.8 Shareholders' equity
5,047.7 4,406.9 4,142.2 Total liabilities and
shareholders' equity $ 16,195.0 $ 15,901.2 $ 16,699.0 The
January 30, 2016 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) 39
Weeks Ended October 29, October 31,
2016 2015 Cash flows from operating
activities: Net income $ 574.4 $ 53.4
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization 481.8 312.5 Provision for deferred
taxes (91.1 ) (67.4 ) Amortization of debt discount and
debt-issuance costs 39.5 9.8 Other non-cash adjustments to net
income 58.6 47.2 Changes in operating assets and liabilities
(407.9 ) (384.5 ) Total adjustments 80.9
(82.4 ) Net cash provided by (used in) operating activities
655.3 (29.0 ) Cash flows from investing
activities: Capital expenditures (451.5 ) (336.5 )
Acquisition of Family Dollar, net of
common stock issued, equity compensation and cash acquired
- (6,527.7 ) Purchase of restricted investments (36.1 ) (12.0 )
Proceeds from sale of restricted investments 118.1 - Proceeds from
(payments for) fixed asset disposition 1.2
(0.4 ) Net cash used in investing activities (368.3 )
(6,876.6 ) Cash flows from financing activities: Principal
payments for long-term debt (3,258.5 ) (956.0 ) Proceeds from
long-term debt, net of discount 2,962.5 8,200.0 Debt-issuance costs
(6.1 ) (90.0 ) Repayments of revolving credit facility (140.0 ) -
Proceeds from revolving credit facility 140.0 - Proceeds from stock
issued pursuant to stock-based compensation plans 33.3 6.2 Cash
paid for taxes on exercises/vesting of stock-based compensation
(21.2 ) (21.5 ) Tax benefit of exercises/vesting of stock-based
compensation - 10.2 Net cash provided
by (used in) financing activities (290.0 ) 7,148.9
Effect of exchange rate changes on cash and cash equivalents
0.7 (0.5 ) Net increase (decrease) in cash and
cash equivalents (2.3 ) 242.8 Cash and cash equivalents at
beginning of period 736.1 864.1 Cash
and cash equivalents at end of period $ 733.8 $ 1,106.9
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161122005599/en/
Dollar Tree, Inc.Randy Guiler, 757-321-5284Vice President,
Investor Relationswww.DollarTree.comDLTR-E
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