~ Diluted Earnings per Share Increased 40.3% to
~ Enterprise Operating Margin Improved
~ Consolidated Sales Increased 6.3% to
~ Enterprise Same-Store Sales Increased 3.2% ~
~ Same-Store Sales by Segment:
"Our team delivered terrific results in the third quarter," stated
Third Quarter Results
Consolidated net sales increased 6.3% to
Gross profit increased 9.6% to
Selling, general and administrative expenses were 23.3% of sales compared to 23.6% of sales in the prior year's third quarter. The 30 basis point improvement, as a percentage of sales, was driven primarily by lower depreciation costs, lower healthcare costs and lower store operating costs resulting primarily from lower utility costs as a percentage of sales, partially offset by higher hourly payroll costs and incentive compensation as well as higher operating and corporate expenses resulting from higher advertising and store supplies costs and increased legal fees.
Operating income increased 24.2% to
The Company's effective tax rate for the quarter was 32.4% compared to
25.5% in the prior year period. The prior year's third quarter included
a one-time tax benefit of
Net income compared to the prior year's third quarter increased
During the quarter, the Company opened 169 stores, expanded or relocated 23 stores, and closed six stores. Retail selling square footage at quarter end was approximately 115.8 million square feet.
First Nine Months Results
Consolidated net sales increased 5.3% to
Gross profit increased 7.3% to
As a percentage of sales, selling, general and administrative expenses
increased to 23.2% from 23.0% in the same period last year. The increase
is the result of the
Net income increased 17.4% to
Company Outlook
The Company estimates consolidated net sales for the fourth quarter of
2017 to range from
Consolidated net sales for full-year fiscal 2017 are now expected to
range from
Philbin added, "Our stores and teams are well-prepared and energized as we enter the fourth and final quarter of 2017. We are confident in our ability to continue driving positive same-store sales, through meeting our customers' needs and wants; improving enterprise operating margin; and delivering year-over-year earnings per share growth. We believe we are well-positioned in the most attractive sector in retail and will remain intensely focused on delivering great value and convenience to our growing customer base. Both banners are ready for the holiday season, and we have an experienced leadership team, momentum in our business and a continued focus on this transformational opportunity."
Conference Call Information
On
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 2017 and full-year 2017 net sales, same-store
sales, diluted earnings per share, square footage growth, customer base,
the impact of the extra week in the current fiscal year, the benefits,
results, and effects of the merger with Family Dollar, including
integration plans and synergies, the collection of the receivable from
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Condensed Consolidated Income Statements | |||||||||||||||||
(In millions, except per share data) | |||||||||||||||||
(Unaudited) | |||||||||||||||||
13 Weeks Ended | 39 Weeks Ended | ||||||||||||||||
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Net sales | $ | 5,316.6 | $ | 5,001.6 | $ | 15,884.9 | $ | 15,083.7 | |||||||||
Cost of sales | 3,650.6 | 3,481.1 | 10,964.0 | 10,496.3 | |||||||||||||
Gross profit | 1,666.0 | 1,520.5 | 4,920.9 | 4,587.4 | |||||||||||||
31.3 | % | 30.4 | % | 31.0 | % | 30.4 | % | ||||||||||
Selling, general & administrative expenses, excluding Receivable impairment |
1,240.8 | 1,178.1 | 3,633.9 | 3,469.1 | |||||||||||||
23.3 | % | 23.6 | % | 22.9 | % | 23.0 | % | ||||||||||
Receivable impairment | - | - | 53.5 | - | |||||||||||||
0.0 | % | 0.0 | % | 0.3 | % | 0.0 | % | ||||||||||
Selling, general & administrative expenses | 1,240.8 | 1,178.1 | 3,687.4 | 3,469.1 | |||||||||||||
23.3 | % | 23.6 | % | 23.2 | % | 23.0 | % | ||||||||||
Operating income | 425.2 | 342.4 | 1,233.5 | 1,118.3 | |||||||||||||
8.0 | % | 6.8 | % | 7.8 | % | 7.4 | % | ||||||||||
Interest expense, net | 69.7 | 112.1 | 220.2 | 286.7 | |||||||||||||
Other (income) expense, net | 0.4 | 0.1 | 0.8 | (0.1 | ) | ||||||||||||
Income before income taxes | 355.1 | 230.2 | 1,012.5 | 831.7 | |||||||||||||
6.7 | % | 4.6 | % | 6.4 | % | 5.5 | % | ||||||||||
Income tax expense | 115.2 | 58.6 | 338.3 | 257.3 | |||||||||||||
Income tax rate | 32.4 | % | 25.5 | % | 33.4 | % | 30.9 | % | |||||||||
Net income (1) | $ | 239.9 | $ | 171.6 | $ | 674.2 | $ | 574.4 | |||||||||
4.5 | % | 3.4 | % | 4.2 | % | 3.8 | % | ||||||||||
Net earnings per share: | |||||||||||||||||
Basic | $ | 1.01 | $ | 0.73 | $ | 2.85 | $ | 2.44 | |||||||||
Weighted average number of shares | 236.9 | 235.8 | 236.7 | 235.6 | |||||||||||||
Diluted (1) | $ | 1.01 | $ | 0.72 | $ | 2.84 | $ | 2.43 | |||||||||
Weighted average number of shares | 237.8 | 236.9 | 237.5 | 236.7 |
(1) Excluding the |
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Segment Information | ||||||||||||||||||||||||||||||||||||||||
(In millions, except store count) | ||||||||||||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||||||||
13 Weeks Ended | 39 Weeks Ended | |||||||||||||||||||||||||||||||||||||||
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Net sales: | ||||||||||||||||||||||||||||||||||||||||
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$ | 2,685.0 | $ | 2,466.9 | $ | 7,843.6 | $ | 7,238.9 | ||||||||||||||||||||||||||||||||
Family Dollar | 2,631.6 | 2,534.7 | 8,041.3 | 7,844.8 | ||||||||||||||||||||||||||||||||||||
Total net sales | $ | 5,316.6 | $ | 5,001.6 | $ | 15,884.9 | $ | 15,083.7 | ||||||||||||||||||||||||||||||||
Gross profit: | ||||||||||||||||||||||||||||||||||||||||
|
$ | 942.6 | 35.1 | % | $ | 857.3 | 34.8 | % | $ | 2,735.0 | 34.9 | % | $ | 2,496.2 | 34.5 | % | ||||||||||||||||||||||||
Family Dollar | 723.4 | 27.5 | % | 663.2 | 26.2 | % | 2,185.9 | 27.2 | % | 2,091.2 | 26.7 | % | ||||||||||||||||||||||||||||
Total gross profit | $ | 1,666.0 | 31.3 | % | $ | 1,520.5 | 30.4 | % | $ | 4,920.9 | 31.0 | % | $ | 4,587.4 | 30.4 | % | ||||||||||||||||||||||||
Operating income: | ||||||||||||||||||||||||||||||||||||||||
|
$ | 317.3 | 11.8 | % | $ | 286.0 | 11.6 | % | $ | 921.9 | 11.8 | % | $ | 829.2 | 11.5 | % | ||||||||||||||||||||||||
Family Dollar | 107.9 | 4.1 | % | 56.4 | 2.2 | % | 311.6 | 3.9 | % | 289.1 | 3.7 | % | ||||||||||||||||||||||||||||
Total operating income | $ | 425.2 | 8.0 | % | $ | 342.4 | 6.8 | % | $ | 1,233.5 | 7.8 | % | $ | 1,118.3 | 7.4 | % | ||||||||||||||||||||||||
13 Weeks Ended | 39 Weeks Ended | |||||||||||||||||||||||||||||||||||||||
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Dollar |
Family Dollar |
Total |
Dollar |
Family Dollar |
Total |
Dollar |
Family Dollar |
Total |
Dollar |
Family |
Total | |||||||||||||||||||||||||||||
Store Count: | ||||||||||||||||||||||||||||||||||||||||
Beginning | 6,506 | 8,075 | 14,581 | 6,184 | 7,945 | 14,129 | 6,360 | 7,974 | 14,334 | 5,954 | 7,897 | 13,851 | ||||||||||||||||||||||||||||
New | 99 | 70 | 169 | 101 | 52 | 153 | 264 | 202 | 466 | 312 | 168 | 480 | ||||||||||||||||||||||||||||
Rebanner (a) | - | - | - | 42 | (30 | ) | 12 | - | - | - | 83 | (84 | ) | (1 | ) | |||||||||||||||||||||||||
Closings | (1 | ) | (5 | ) | (6 | ) | (7 | ) | (3 | ) | (10 | ) | (20 | ) | (36 | ) | (56 | ) | (29 | ) | (17 | ) | (46 | ) | ||||||||||||||||
Ending | 6,604 | 8,140 | 14,744 | 6,320 | 7,964 | 14,284 | 6,604 | 8,140 | 14,744 | 6,320 | 7,964 | 14,284 | ||||||||||||||||||||||||||||
Selling Square Footage (in millions) | 56.9 | 58.9 | 115.8 | 54.4 | 57.6 | 112.0 | 56.9 | 58.9 | 115.8 | 54.4 | 57.6 | 112.0 | ||||||||||||||||||||||||||||
Growth Rate (Square Footage) | 4.6 | % | 2.3 | % | 3.4 | % | 8.2 | % | -2.9 | % | 2.2 | % | 4.6 | % | 2.3 | % | 3.4 | % | 8.2 | % | -2.9 | % | 2.2 | % | ||||||||||||||||
(a) Stores are included as rebanners when they close or open, respectively. |
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Condensed Consolidated Balance Sheets | |||||||||
(In millions) | |||||||||
(Unaudited) | |||||||||
|
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2017 | 2017 | 2016 | |||||||
Cash and cash equivalents | $ | 400.1 | $ | 866.4 | $ | 733.8 | |||
Short-term investments | - | 4.0 | 4.0 | ||||||
Merchandise inventories, net | 3,397.8 | 2,865.8 | 3,273.9 | ||||||
Other current assets | 174.7 | 201.8 | 330.7 | ||||||
Total current assets | 3,972.6 | 3,938.0 | 4,342.4 | ||||||
Property, plant and equipment, net | 3,178.9 | 3,115.8 | 3,176.3 | ||||||
Assets available for sale | 8.6 | 9.0 | 11.6 | ||||||
|
5,024.3 | 5,023.5 | 5,022.9 | ||||||
Favorable lease rights, net | 398.0 | 468.6 | 493.8 | ||||||
Tradename intangible asset | 3,100.0 | 3,100.0 | 3,100.0 | ||||||
Other intangible assets, net | 4.9 | 5.1 | 5.2 | ||||||
Other assets | 42.9 | 41.6 | 42.8 | ||||||
Total assets | $ | 15,730.2 | $ | 15,701.6 | $ | 16,195.0 | |||
Current portion of long-term debt | $ | 165.9 | $ | 152.1 | $ | 145.8 | |||
Accounts payable | 1,181.3 | 1,119.6 | 1,266.4 | ||||||
Other current liabilities | 692.7 | 744.2 | 722.0 | ||||||
Income taxes payable | - | 90.0 | - | ||||||
Total current liabilities | 2,039.9 | 2,105.9 | 2,134.2 | ||||||
Long-term debt, net, excluding current portion | 5,557.0 | 6,169.7 | 6,938.0 | ||||||
Unfavorable lease rights, net | 105.7 | 124.0 | 130.2 | ||||||
Deferred tax liabilities, net | 1,472.4 | 1,458.9 | 1,495.5 | ||||||
Income taxes payable, long-term | 45.1 | 71.2 | 72.3 | ||||||
Other liabilities | 393.6 | 382.4 | 377.1 | ||||||
Total liabilities | 9,613.7 | 10,312.1 | 11,147.3 | ||||||
Shareholders' equity | 6,116.5 | 5,389.5 | 5,047.7 | ||||||
Total liabilities and shareholders' equity | $ | 15,730.2 | $ | 15,701.6 | $ | 16,195.0 | |||
The |
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Condensed Consolidated Statements of Cash Flows | ||||||||
(In millions) | ||||||||
(Unaudited) | ||||||||
39 Weeks Ended | ||||||||
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2017 | 2016 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 674.2 | $ | 574.4 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization | 454.6 | 481.8 | ||||||
Provision for deferred taxes | 15.8 | (91.1 | ) | |||||
Amortization of debt discount and debt-issuance costs | 12.0 | 39.5 | ||||||
Receivable impairment | 53.5 | - | ||||||
Other non-cash adjustments to net income | 61.6 | 58.6 | ||||||
Changes in operating assets and liabilities | (679.1 | ) | (407.9 | ) | ||||
Total adjustments | (81.6 | ) | 80.9 | |||||
Net cash provided by operating activities | 592.6 | 655.3 | ||||||
Cash flows from investing activities: | ||||||||
Capital expenditures | (449.4 | ) | (451.5 | ) | ||||
Purchase of restricted investments | - | (36.1 | ) | |||||
Proceeds from sale of restricted and unrestricted investments | 4.0 | 118.1 | ||||||
Proceeds from (payments for) fixed asset disposition | (0.1 | ) | 1.2 | |||||
Net cash used in investing activities | (445.5 | ) | (368.3 | ) | ||||
Cash flows from financing activities: | ||||||||
Principal payments for long-term debt | (610.8 | ) | (3,258.5 | ) | ||||
Proceeds from long-term debt, net of discount | - | 2,962.5 | ||||||
Debt-issuance costs | - | (6.1 | ) | |||||
Repayments of revolving credit facility | - | (140.0 | ) | |||||
Proceeds from revolving credit facility | - | 140.0 | ||||||
Proceeds from stock issued pursuant to stock-based compensation plans | 24.4 | 33.3 | ||||||
Cash paid for taxes on exercises/vesting of stock-based compensation | (27.2 | ) | (21.2 | ) | ||||
Net cash used in financing activities | (613.6 | ) | (290.0 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 0.2 | 0.7 | ||||||
Net decrease in cash and cash equivalents | (466.3 | ) | (2.3 | ) | ||||
Cash and cash equivalents at beginning of period | 866.4 | 736.1 | ||||||
Cash and cash equivalents at end of period | $ | 400.1 | $ | 733.8 |
|
Reconciliation of Non-GAAP Financial Measures |
(In millions, except per share data) |
(Unaudited) |
From time-to-time, the Company's financial results include certain financial measures not derived in accordance with generally accepted accounting principles ("GAAP"). Non-GAAP financial measures should not be used as a substitute for GAAP financial measures, or considered in isolation, for the purposes of analyzing operating performance, financial position or cash flows. However, the Company believes providing additional information in the form of non-GAAP measures that exclude the unusual, non-recurring expense outlined below is beneficial to the users of its financial statements in evaluating the Company's current operating results in relation to past periods. The Company has included a reconciliation of this information to the most comparable GAAP measures in the following tables. |
In the first quarter of 2017, the Company evaluated the
collectability of its divestiture-related receivable from Dollar
Express, which acquired the stores that the |
During the second quarter of 2017, Dollar Express completed the
liquidation of its stores and continued to be in default of its
obligations to the Company, including its obligation to pay the
receivable. An additional |
Reconciliation of Adjusted Net Income: | ||||
39 Weeks Ended | ||||
|
||||
Net income (GAAP) | $ | 674.2 | ||
SG&A adjustment: | ||||
Receivable impairment | 53.5 | |||
Provision for income taxes on adjustment | (20.3 | ) | ||
Adjusted Net income (Non-GAAP) | $ | 707.4 | ||
Reconciliation of Adjusted EPS: | ||||
39 Weeks Ended | ||||
|
||||
Diluted earnings per share (GAAP) | $ | 2.84 | ||
Adjustment, net of tax | 0.14 | |||
Adjusted EPS (Non-GAAP) | $ | 2.98 | ||
Reconciliation of Adjusted Operating Income: | ||||
39 Weeks Ended | ||||
|
||||
Operating income (GAAP) | $ | 1,233.5 | ||
SG&A adjustment: | ||||
Receivable impairment | 53.5 | |||
Adjusted Operating income (Non-GAAP) | $ | 1,287.0 | ||
Reconciliation of Adjusted Operating Income - Family Dollar segment: | ||||
39 Weeks Ended | ||||
|
||||
Operating income (GAAP) | $ | 311.6 | ||
SG&A adjustment: | ||||
Receivable impairment | 53.5 | |||
Adjusted Operating income (Non-GAAP) | $ | 365.1 |
View source version on businesswire.com: http://www.businesswire.com/news/home/20171121005481/en/
Vice President,
Investor Relations
www.DollarTree.com
DLTR-E
Source:
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