Dollarama Group L.P. Highlights for the Second Quarter
-- Sales Increased 13.3%
-- Comparable Store Sales Rose by 3.7%
-- Adjusted EBITDA Up 3.3%
-- Net Earnings Up 16.8%MONTREAL, Sept. 17 /CNW/ -- Dollarama Group Holdings L.P. and Dollarama
Group L.P. today announced financial results for the second quarter ended
August 3, 2008. The results of operations of Dollarama Group Holdings L.P.
are almost identical to those of Dollarama Group L.P., with the main exception
being interest expense, financing costs, and foreign exchange gain or loss
associated with Dollarama Group Holdings L.P.'s outstanding balance of senior
floating rate deferred interest notes. Note: All dollar amounts in this
press release are in Canadian dollars unless otherwise indicated.
Dollarama Group L.P. reported that sales increased $31.1 million, or
13.3%, to $264.3 million for the 13-week period ended August 3, 2008, up from
$233.2 million for the same period in the prior year. Comparable store sales
rose 3.7% driven by an increase in average transaction size of 4.3% but were
offset by a modest 0.6% decline in store traffic. The remaining portion of the
sales growth was driven primarily by 53 new store openings since the end of
the first quarter of fiscal year 2008, and by the full 13-week effect of the
stores opened during the second quarter of last year.
Gross margin for the period was at 35.2% compared with 34.8% for the same
period last year.
Dollarama Group L.P.'s net earnings grew 16.8% to $26.0 million in the
second quarter of fiscal 2009 from $22.3 million in the second quarter of
fiscal 2008.
Adjusted EBITDA (as defined in the attached tables) was $42.3 million for
the 13-week period ended August 3, 2008, up 3.3% versus the prior year.
For the 26-week period ended August 3, 2008, Dollarama Group L.P.
reported a sales increase of $52.0 million or 11.6% to $501.1 million from
$449.1 million. Comparable store sales rose 1.9%, driven by an increase in
average ticket size of 3.7%. This was offset by a 1.8% decline in store
traffic.
Gross margin increased to 33.9% for the 26-week period ended August 3,
2008 from 33.8% for the 26-week period ended August 5, 2007.
Dollarama Group L.P.'s net earnings increased $3.2 million to $35.6
million for the 26-week period ended August 3, 2008, from $32.4 million for
the same period last year.
Adjusted EBITDA (as defined in the attached tables) was $71.8 million for
the 26-week period ended August 3, 2008 up 1.9% versus the prior year.
"We are pleased to report solid revenue growth, strong comparable store
sales and an increase in Adjusted EBITDA for the quarter," said Larry Rossy,
Chief Executive Officer of Dollarama. "Given the macroeconomic environment
and the general state of the retail industry, we believe these results reflect
recent initiatives to enhance our operations."
The Company also announced plans to begin offering an additional
assortment of exciting new products in its stores during the first quarter of
2009 that will be priced between $1.00 and $2.00. While the vast majority of
products in its stores will continue to be $1.00, these new high value
products that have never been offered before at Dollarama stores, will expand
the company's merchandise selection, across many categories including
giftware, toys, glassware and plastic products.
"I am excited to announce the introduction, in the first quarter of 2009,
of new product assortments priced between $1.00 and $2.00. This new selection
will leverage Dollarama's distinct merchandising strength -- delivering
tremendous value to our customers across a broad and exciting array of
products, always at the lowest possible price points. It will also continue
to enhance our customers' shopping experience," explained Rossy.
About Dollarama
Dollarama is the leading operator of dollar discount stores in Canada.
Currently, the company operates more than 535 stores in 10 provinces, each
offering a broad assortment of quality everyday merchandise sold in individual
or multiple units primarily at a fixed price of $1.00. All stores are
company-operated, and nearly all are located in high traffic areas such as
strip malls and shopping centers in various locations, including metropolitan
areas, mid-sized cities, and small towns. In 1910, the company was
established as a single variety store in Quebec.
Safe Harbor for Forward-Looking and Cautionary Statements
This release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended. As such, final results could
differ from estimates or expectations due to risks and uncertainties,
including among others, changes in customer demand for products, changes in
raw material and equipment costs and availability, seasonal changes in
customer demand, pricing actions by competitors and general changes in
economic conditions; and other risks. For any of these factors, the Company
claims the protection of the safe harbor for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995, as amended.DOLLARAMA GROUP HOLDINGS L.P.
SUMMARY CONSOLIDATED FINANCIAL DATA
13-Week 13-Week 26-Week 26-Week
Period Period Period Period
Ended Ended Ended Ended
August 3, August 5, August 3, August 5,
(dollars in thousands) 2008 2007 2008 2007
Statement of Operations
Data:
Sales $264,271 $233,205 $501,086 $449,080
Cost of sales 171,142 152,117 331,347 297,413
Gross profit 93,129 81,088 169,739 151,667
Expenses:
General administrative
and store operating
expenses 52,238 41,527 100,767 84,844
Amortization(1) 5,565 4,239 10,338 8,338
Total expenses 57,803 45,766 111,105 93,182
Operating income/(loss) 35,326 35,322 58,634 58,485
Other (income)/expense:
Amortization of deferred
financing costs 1,479 2,169 2,722 3,784
Interest expense 13,186 16,613 27,301 33,875
Foreign exchange loss
(gain) on derivative
financial instruments
and long-term debt 1,102 (9,396) 9,556 (23,624)
Earnings before income
taxes 19,559 25,936 19,055 44,450
Income taxes 149 177 194 219
Net earnings $19,410 $25,759 $18,861 $44,231
Statement of Cash Flows
Data:
Cash flows provided by
(used in):
Operating activities $37,855 $(18,295) $66,885 $(5,811)
Investing activities (7,730) (9,328) (16,821) (19,909)
Financing activities (7,544) (7,420) (21,453) (9,346)
Other Financial Data:
Adjusted EBITDA(2) $42,249 $40,901 $71,796 $70,449
Capital expenditures $7,759 $9,383 $16,912 $20,002
Rent expenses(3) $16,633 $13,749 $33,268 $27,545
Gross margin(4) 35.2% 34.8% 33.9% 33.8%
Number of stores (at end
of period) 536 486 536 486
Comparable store
sales growth(5) 3.7% 0.7% 1.9% (0.6%)
(dollars in thousands) As of As of
August 3, August 5,
2008 2007
Balance Sheet Data:
Cash and cash equivalents $54,825 $12,637
Merchandise inventories 191,039 194,394
Property and equipment 118,031 96,493
Total assets 1,232,875 1,166,994
Long-term debt 665,139 700,950
Partners' capital 359,558 283,026(1)Amortization represents amortization of tangible and amortizable
intangible assets, including amortization of favourable and unfavourable lease
rights.
(2)EBITDA represents net income (loss) before net interest expense,
income taxes, and depreciation and amortization expense. Adjusted EBITDA
represents EBITDA as further adjusted to reflect items set forth in the table
below, all of which are required in determining our compliance with financial
covenants under our senior secured credit facility. We have included EBITDA
and Adjusted EBITDA to provide investors with a supplemental measure of our
operating performance and information about the calculation of some of the
financial covenants that are contained in the senior secured credit facility.
We believe EBITDA is an important supplemental measure of operating
performance because it eliminates items that have less bearing on our
operating performance and thus highlights trends in our core business that may
not otherwise be apparent when relying solely on Canadian GAAP financial
measures. We also believe that securities analysts, investors and other
interested parties frequently use EBITDA in the evaluation of issuers, many of
which present EBITDA when reporting their results. Adjusted EBITDA is a
material component of the covenants imposed on us by the senior secured credit
facility. Under the senior secured credit facility, we are subject to
financial covenant ratios that are calculated by reference to Adjusted EBITDA.
Non-compliance with the financial covenants contained in our senior secured
credit facility could result in a default, an acceleration in the repayment of
amounts outstanding under the senior secured credit facility, and a
termination of the lending commitments under the senior secured credit
facility. Generally, any default under the senior secured credit facility that
results in the acceleration in the repayment of amounts outstanding under the
senior secured credit facility would result in a default under the indentures
governing the 8.875% senior subordinated notes and the senior floating rate
deferred interest notes. While an event of default under the senior secured
credit facility or the indentures is continuing, we would be precluded from,
among other things, paying dividends on our capital stock or borrowing under
the revolving credit facility. Our management also uses EBITDA and Adjusted
EBITDA in order to facilitate operating performance comparisons from period to
period, prepare annual operating budgets and assess our ability to meet our
future debt service, capital expenditure and working capital requirements and
our ability to pay dividends on our capital stock.
EBITDA and Adjusted EBITDA are not presentations made in accordance with
Canadian GAAP. As discussed above, we believe that the presentation of EBITDA
and Adjusted EBITDA in this summary consolidated financial data section is
appropriate. However, EBITDA and Adjusted EBITDA have important limitations as
analytical tools, and you should not consider them in isolation, or as
substitutes for analysis of our results as reported under Canadian GAAP. For
example, neither EBITDA nor Adjusted EBITDA reflect (a) our cash expenditures,
or future requirements for capital expenditures or contractual commitments;
(b) changes in, or cash requirements for, our working capital needs; (c) the
significant interest expense, or the cash requirements necessary to service
interest or principal payments, on our debt; and (d) tax payments or
distributions to our parent to make payments with respect to taxes
attributable to us that represent a reduction in cash available to us. Because
of these limitations, we primarily rely on our results as reported in
accordance with Canadian GAAP and use EBITDA and Adjusted EBITDA only
supplementally. In addition, because other companies may calculate EBITDA and
Adjusted EBITDA differently than we do, EBITDA may not be, and Adjusted EBITDA
as presented in this summary consolidated financial data section is not,
comparable to similarly titled measures reported by other companies.
A reconciliation of net earnings (loss) to EBITDA and to Adjusted EBITDA
is included below13-Week 13-Week 26-Week 26-Week
Period Period Period Period
Ended Ended Ended Ended
August 3, August 5, August 3, August 5,
(dollars in thousands) 2008 2007 2008 2007
Net earnings $19,410 $25,759 $18,861 $44,231
Income taxes 149 177 194 219
Interest expense 13,186 16,613 27,301 33,875
Amortization of
deferred financing
costs 1,479 2,169 2,722 3,784
Amortization of fixed
tangible and
intangible assets 5,565 4,239 10,338 8,338
EBITDA 39,789 48,957 59,416 90,447
Foreign exchange loss
(gain) on derivative
financial instruments
and long-term debt 1,102 (9,396) 9,556 (23,624)
Management
fees(a) 795 790 1,590 1,624
Deferred lease
inducements(b) 342 425 791 1,134
Stock-based
compensation
expense(c) 221 125 443 868
Adjusted EBITDA $42,249 $40,901 $71,796 $70,449(a)Reflects the management fees incurred and paid or payable to the
company's majority owners.
(b)Represents the elimination of non-cash straight-line rent expense.
(c)Represents the elimination of non-cash stock-based compensation
expense.
(3)Rent expense represents (i) basic rent expense on a straight-line
basis and (ii) contingent rent expense, net of amortization of inducements
received from landlords.
(4)Gross margin represents gross profit as a percentage of sales.
(5)Comparable store sales is a measure of the percentage increase or
decrease of the sales of stores open for at least the prior13 complete fiscal
months and that remain open at the end of the reporting period relative to the
same period in the prior year. We include sales from stores expanded or
relocated in the calculation of comparable store sales. To provide more
meaningful results, the company measures comparable store sales over periods
containing an integral number of weeks beginning on a Monday and ending on a
Sunday that best approximate the fiscal period to be analyzed.
DOLLARAMA GROUP L.P.
SUMMARY CONSOLIDATED FINANCIAL DATA13-Week 13-Week 26-Week 26-Week
Period Period Period Period
Ended Ended Ended Ended
August 3, August 5, August 3, August 5,
(dollars in thousands) 2008 2007 2008 2007
Statement of Operations
Data:
Sales $264,271 $233,205 $501,086 $449,080
Cost of sales 171,142 152,117 331,347 297,413
Gross profit 93,129 81,088 169,739 151,667
Expenses:
General administrative
and store operating
expenses 52,227 41,526 100,756 84,843
Amortization(1) 5,565 4,239 10,338 8,338
Total expenses 57,792 45,765 111,094 93,181
Operating income/(loss) 35,337 35,323 58,645 58,486
Other (income)/expense:
Amortization of
deferred financing
costs 1,086 1,078 2,083 2,146
Interest expense 8,574 10,836 17,440 21,863
Foreign exchange loss
(gain) on derivative
financial instruments
and long-term debt (466) 976 3,302 1,842
Earnings before income
taxes 26,143 22,433 35,820 32,635
Income taxes 126 158 171 200
Net earnings $26,017 $22,275 $35,649 $32,435
Statement of Cash Flows
Data:
Cash flows provided by
(used in):
Operating activities $37,855 $(6,586) $66,677 $5,678
Investing activities (7,730) (9,328) (16,821) (19,909)
Financing activities (7,545) (19,131) (21,247) (20,838)
Other Financial Data:
Adjusted
EBITDA(2) $42,260 $40,902 $71,807 $70,450
Capital expenditures $7,759 $9,383 $16,912 $20,002
Rent expenses(3) $16,633 $13,749 $33,268 $27,545
Gross margin(4) 35.2% 34.8% 33.9% 33.8%
Number of stores (at
end of period) 536 486 536 486
Comparable store
sales growth(5) 3.7% 0.7% 1.9% (0.6%)
(dollars in thousands) As of As of
August 3, August 5,
2008 2007
Balance Sheet Data:
Cash and cash equivalents $54,809 $12,626
Merchandise inventories 191,039 194,394
Property and equipment 118,031 96,493
Total assets 1,232,846 1,167,291
Long-term debt 470,262 511,801
Partners' capital 558,333 475,913(1)Amortization represents amortization of tangible and amortizable
intangible assets, including amortization of favourable and unfavourable lease
rights.
(2)EBITDA represents net income (loss) before net interest expense,
income taxes, and depreciation and amortization expense. Adjusted EBITDA
represents EBITDA as further adjusted to reflect items set forth in the table
below, all of which are required in determining our compliance with financial
covenants under our senior secured credit facility. We have included EBITDA
and Adjusted EBITDA to provide investors with a supplemental measure of our
operating performance and information about the calculation of some of the
financial covenants that are contained in the senior secured credit facility.
We believe EBITDA is an important supplemental measure of operating
performance because it eliminates items that have less bearing on our
operating performance and thus highlights trends in our core business that may
not otherwise be apparent when relying solely on Canadian GAAP financial
measures. We also believe that securities analysts, investors and other
interested parties frequently use EBITDA in the evaluation of issuers, many of
which present EBITDA when reporting their results. Adjusted EBITDA is a
material component of the covenants imposed on us by the senior secured credit
facility. Under the senior secured credit facility, we are subject to
financial covenant ratios that are calculated by reference to Adjusted EBITDA.
Non-compliance with the financial covenants contained in our senior secured
credit facility could result in a default, an acceleration in the repayment of
amounts outstanding under the senior secured credit facility, and a
termination of the lending commitments under the senior secured credit
facility. Generally, any default under the senior secured credit facility that
results in the acceleration in the repayment of amounts outstanding under the
senior secured credit facility would result in a default under the indenture
governing the 8.875% senior subordinated notes. While an event of default
under the senior secured credit facility or the indenture is continuing, we
would be precluded from, among other things, paying dividends on our capital
stock or borrowing under the revolving credit facility. Our management also
uses EBITDA and Adjusted EBITDA in order to facilitate operating performance
comparisons from period to period, prepare annual operating budgets and assess
our ability to meet our future debt service, capital expenditure and working
capital requirements and our ability to pay dividends on our capital stock.
EBITDA and Adjusted EBITDA are not presentations made in accordance with
Canadian GAAP. As discussed above, we believe that the presentation of EBITDA
and Adjusted EBITDA in this summary consolidated financial data section is
appropriate. However, EBITDA and Adjusted EBITDA have important limitations as
analytical tools, and you should not consider them in isolation, or as
substitutes for analysis of our results as reported under Canadian GAAP. For
example, neither EBITDA nor Adjusted EBITDA reflect (a) our cash expenditures,
or future requirements for capital expenditures or contractual commitments;
(b) changes in, or cash requirements for, our working capital needs; (c) the
significant interest expense, or the cash requirements necessary to service
interest or principal payments, on our debt; and (d) tax payments or
distributions to our parent to make payments with respect to taxes
attributable to us that represent a reduction in cash available to us. Because
of these limitations, we primarily rely on our results as reported in
accordance with Canadian GAAP and use EBITDA and Adjusted EBITDA only
supplementally. In addition, because other companies may calculate EBITDA and
Adjusted EBITDA differently than we do, EBITDA may not be, and Adjusted EBITDA
as presented in this summary consolidated financial data section is not,
comparable to similarly titled measures reported by other companies.
A reconciliation of net earnings (loss) to EBITDA and to Adjusted EBITDA
is included below(dollars in 13-Week 13-Week 26-Week 26-Week
thousands) Period Period Period Period
Ended Ended Ended Ended
August 3, August 5, August 3, August 5,
2008 2007 2008 2007
Net earnings $26,017 $22,275 $35,649 $32,435
Income taxes 126 158 171 200
Interest expense 8,574 10,836 17,440 21,863
Amortization of
deferred financing
costs 1,086 1,078 2,083 2,146
Amortization of
fixed tangible and
intangible assets 5,565 4,239 10,338 8,338
EBITDA 41,368 38,586 65,681 64,982
Foreign exchange
loss (gain) on
derivative
financial
instruments and
long-term debt (466) 976 3,302 1,842
Management
fees(a) 795 790 1,590 1,624
Deferred lease
inducements(b) 342 425 791 1,134
Stock-based
compensation
expense(c) 221 125 443 868
Adjusted EBITDA $42,260 $40,902 $71,807 $70,450(a)Reflects the management fees incurred and paid or payable to the
company's majority owners.
(b)Represents the elimination of non-cash straight-line rent expense.
(c)Represents the elimination of non-cash stock-based compensation
expense.
(3)Rent expense represents (i) basic rent expense on a straight-line
basis and (ii) contingent rent expense, net of amortization of inducements
received from landlords.
(4)Gross margin represents gross profit as a percentage of sales.
(5)Comparable store sales is a measure of the percentage increase or
decrease of the sales of stores open for at least the prior 13 complete fiscal
months and that remain open at the end of the reporting period relative to the
same period in the prior year. We include sales from stores expanded or
relocated in the calculation of comparable store sales. To provide more
meaningful results, the company measures comparable store sales over periods
containing an integral number of weeks beginning on a Monday and ending on a
Sunday that best approximate the fiscal period to be analyzed.
For further information: Investors, Robert Coallier, Chief Financial
Officer of Dollarama, +1-514-737-1006 x1238; or Media, Alex Stanton of Stanton
Crenshaw Communications for Dollarama, +1-212-780-0701,
alex@stantoncrenshaw.com
