DOLLARAMA REPORTS RECORD RESULTS FOR FISCAL 2013 AND INCREASES DIVIDEND BY 27%

Transcription

1 For immediate distribution DOLLARAMA REPORTS RECORD RESULTS FOR FISCAL 2013 AND INCREASES DIVIDEND BY 27% MONTREAL, Quebec, April 12, 2013 Dollarama Inc. (TSX: DOL) ( Dollarama or the Corporation ) today reported significant increases in sales and net earnings for the quarter and fiscal year ended February 3, Financial and Operating Highlights All comparative figures below and in the "Financial Results" section that follows are for the fourth quarter and fiscal year ended February 3, 2013 compared to the fourth quarter and fiscal year ended January 29, All financial information presented in this press release has been prepared in accordance with generally accepted accounting principles in Canada ( GAAP ) as set out in the Handbook of the Canadian Institute of Chartered Accountants Part 1 which incorporates International Financial Reporting Standards ( IFRS ) as issued by the International Accounting Standards Board ( IASB ). Throughout this press release the term Normalized is used to refer to financial results that have been adjusted to exclude a non-recurring item. For a full explanation of the Corporation s use of non-gaap measures, please refer to footnote 1 of the Selected Consolidated Financial Information section of this press release. Throughout this press release, all references to Fiscal 2012 are to the Corporation s fiscal year ended January 29, 2012 and to Fiscal 2013 are to the Corporation s fiscal year ended February 3, Dividing the retail calendar into 52 weeks of seven days each, or 364 days, leaves an extra day each year to be accounted for. As a result, every five to six years a week is added to the fiscal year. Fiscal 2013 is a 53-week year, compared with a 52-week year in Fiscal The fourth quarter of Fiscal 2013 includes 14 weeks compared to 13 weeks in the fourth quarter of Fiscal For purposes of calculating comparable store sales, the Corporation excluded the sales of the 53rd week of Fiscal 2013, therefore comparing the sales of the first 52 weeks of Fiscal 2013 to the comparable sales of Fiscal 2012 and the sales of the first 13 weeks of the fourth quarter of Fiscal 2013 to the comparable sales of the 13 weeks of the fourth quarter of Fiscal Comparable store sales Comparable store sales (13 weeks) grew 4.6% in the fourth quarter of Fiscal 2013; Comparable store sales (52 weeks) grew 6.5% in Fiscal Compared to the fourth quarter of Fiscal 2012 (14 weeks compared to 13 weeks) Sales increased by 19.9% to $561.9 million; Gross margin stood at 38.7% of sales compared to 39.8% of sales; Normalized EBITDA (1) grew 20.7% to $120.9 million, or 21.5% of sales; Normalized operating income (1) grew 20.4% to $110.1 million, or 19.6% of sales; Normalized diluted net earnings per share (1) increased by 26.2%, from $0.84 to $1.06. In addition, during the fourth quarter ended February 3, 2013, the Corporation opened 24 net new stores, for a total of 81 net new stores opened since January 29, (1) Refer to footnote 1 of the Selected Consolidated Financial Information section of this press release.

2 Compared to Fiscal 2012 (53 weeks compared to 52 weeks) Sales increased by 16.0% to $1,858.8 million; Gross margin stood at 37.4% of sales compared to 37.5% of sales; Normalized EBITDA (1) grew 21.9% to $360.0 million, or 19.4% of sales; Normalized operating income (1) grew 22.5% to $320.7 million, or 17.3% of sales; Normalized diluted net earnings per share (1) increased by 30.0%, from $2.30 to $2.99. We are very pleased with our fourth quarter and full year financial and operating results, said Larry Rossy, Chief Executive Officer of Dollarama. Our focus on execution at all levels has translated into continued double-digit growth in sales, operating income and net earnings. We are particularly happy to deliver 6.5% growth in comparable store sales in Fiscal 2013, while at the same time increasing the pace of new store openings as we have opened a record 81 net new stores during this fiscal year. Financial Results Sales for the fourth quarter of Fiscal 2013 increased by 19.9% to $561.9 million, from $468.7 million in the corresponding period of the prior fiscal year. The total sales for the fourth quarter of Fiscal 2013 include a fourteenth week, associated with the 53-week retail calendar, which accounted for $32.1 million of total sales for the quarter. Aside from the impact of the 14 th week, the increase in sales is attributable to continued organic sales growth driven by a comparable store sales growth of 4.6% in the fourth quarter of Fiscal 2013 over and above a comparable store sales growth of 7.9% in the fourth quarter of Fiscal Comparable store sales growth for the fourth quarter of Fiscal 2013 consisted of a 4.6% increase in average transaction size while the number of transactions remained stable. The increase in sales is also attributable to the 11.5% growth in the number of stores over the past twelve months as we added 81 net new stores bringing the total store count to 785 stores on February 3, In the fourth quarter of Fiscal 2013, 56% of our sales originated from products priced higher than $1.00 compared to 50% in the corresponding quarter last year. Sales increased by 16.0% from $1,602.8 million in Fiscal 2012 to $1,858.8 million in Fiscal Aside from the impact of the 53 rd week, the increase was mainly driven by the opening of 81 net new stores, as well as a 6.5% increase in comparable store sales. Comparable store sales growth consisted of a 4.3% increase in the average transaction size combined with a 2.1% increase in the number of transactions. The gross margin stood at 38.7% of sales in the fourth quarter of Fiscal 2013, compared to 39.8% of sales in the fourth quarter of Fiscal The lower gross margin is attributable to an incremental increase of approximately $4.9 million in occupancy, warehousing, distribution and outbound transportation costs associated with the acceleration of new store openings, which generated minimal sales during the quarter. The Corporation opened 26 more net new stores in the second half of Fiscal 2013 than in the corresponding period of Fiscal Gross margin in Fiscal 2013 stood at 37.4%, compared to 37.5% in Fiscal General, administrative and store operating expenses ( SG&A ) for the fourth quarter of Fiscal 2013 was 17.2% of sales on a normalized basis (1), compared to 18.4% of sales in the corresponding period of Fiscal The improvement is attributable to store labour productivity 2

3 initiatives which had a positive impact on the fourth quarter of Fiscal 2013 and to the scaling effects of certain fixed costs over the higher sales volume. Normalized SG&A expenses (1) in the fourth quarter of Fiscal 2013 stood at $96.5 million, a 11.8% increase over $86.3 million in the corresponding period of Fiscal The increase is due primarily to the opening of 81 net new stores over the past twelve months. Normalized SG&A expenses for Fiscal 2013 were $334.8 million, or 18.0% of sales, a 9.7% increase over $305.1 million, or 19.0% of sales, in Fiscal Net financing costs decreased by $0.4 million, from $3.1 million for the fourth quarter of Fiscal 2012 to $2.7 million for the fourth quarter of Fiscal This decrease is attributable to a lower debt level and lower interest rates on the long-term debt compared to the corresponding period of Fiscal For Fiscal 2013, net financing costs decreased by $5.8 million from $16.6 million to $10.8 million. This decrease is attributable to a lower debt level and lower interest rates on the long-term debt for Fiscal For the fourth quarter of Fiscal 2013, normalized net earnings (1) increased by 23.3% to $78.4 million, or $1.06 per diluted share, from $63.6 million, or $0.84 per diluted share, for the corresponding period of Fiscal For Fiscal 2013, normalized net earnings (1) increased by 29.4% to $224.5 million, or $2.99 per diluted share, from $173.5 million, or $2.30 per diluted share in Fiscal Cash flows from operating activities generated $256.3 million in liquidity in Fiscal 2013 representing an increase of $83.2 million over Fiscal This increase is mainly attributable to greater profitability ($55.3 million) and lower use of working capital through improved inventory management in Fiscal Share repurchase program On June 13, 2012, the Corporation received approval from the Toronto Stock Exchange to implement a normal course issuer bid ( the NCIB ) to purchase, for cancellation, up to 2,583,264 common shares (representing 3.5% of the total issued and outstanding shares of the Corporation as of June 1, 2012) over the twelve-month period starting on June 15, 2012 and ending on June 14, As of February 3, 2013, the Corporation had repurchased for cancellation the maximum number of common shares approved under the NCIB, for a total cash consideration of $155.9 million at an average price of $60.36 per share. Dividend Increase Given the strong results announced today to close Fiscal 2013, including cash flows well above Dollarama s needs, the Board of Directors approved a 27% increase of the quarterly dividend for holders of its common shares, from $0.11 per common share to $0.14 per common share. The increased dividend will be paid on May 7, 2013 to shareholders of record at the close of business on April 30, 2013 and is designated as an eligible dividend for Canadian tax purposes. The Board of Directors has determined that this new level of quarterly dividend is appropriate based on Dollarama s current cash flow, earnings, financial position and on other relevant factors. The dividend is expected to remain at this new level subject to the Board of Directors ongoing assessment of Dollarama s future requirements, financial performance, liquidity and outlook. The payment of each quarterly dividend will remain subject to declaration of that dividend by the Board of Directors. The actual amount of each quarterly dividend, as well 3

4 as each declaration date, record date and payment date is subject to the discretion of the Board of Directors. Dollarama completed a very successful fiscal year, said Larry Rossy, Dollarama s Chief Executive Officer. Our healthy balance sheet and strong and improving free cash flows support our decision to increase the quarterly dividend. This increase reflects management s and Board s confidence in Dollarama s ability to return value to shareholders concurrently with pursuing its growth strategy. About Dollarama Dollarama is Canada s leading dollar store operator with 785 locations across the country. Our stores provide customers with compelling value in convenient locations, including metropolitan areas, mid-sized cities and small towns. Dollarama aims to provide customers with a consistent shopping experience, offering a broad assortment of everyday consumer products, general merchandise and seasonal items. Products are sold in individual or multiple units at select fixed price points up to $3.00. Forward-Looking Statements Certain statements in this press release about our current and future plans, expectations and intentions, results, levels of activity, performance, goals or achievements or any other future events or developments constitute forward-looking statements. The words may, will, would, should, could, expects, plans, intends, trends, indications, anticipates, believes, estimates, predicts, likely or potential or the negative or other variations of these words or other comparable words or phrases, are intended to identify forward-looking statements. Forward-looking statements are based on information currently available to us and on estimates and assumptions made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we believe are appropriate and reasonable in the circumstances, but there can be no assurance that such estimates and assumptions will prove to be correct. Many factors could cause our actual results, level of activity, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the following factors, which are discussed in greater detail in the Risks and Uncertainties section of the Corporation s management s discussion and analysis (MD&A) for Fiscal 2013 and in its continuous disclosure filings (available on SEDAR at future increases in operating and merchandise costs, inability to sustain assortment and replenishment of our merchandise, increase in the cost or a disruption in the flow of imported goods, disruption of distribution infrastructure, inventory shrinkage, inability to renew store, warehouse, distribution center and head office leases on favourable terms, inability to increase our warehouse and distribution center capacity in a timely manner, seasonality, market acceptance of our private brands, failure to protect trademarks and other proprietary rights, foreign exchange rate fluctuations, potential losses associated with using derivative financial instruments, level of indebtedness and inability to generate sufficient cash to service our debt, interest rate risk associated with variable rate indebtedness, competition in the retail industry, current economic conditions, failure to attract and retain qualified employees, departure of senior executives, disruption in information technology systems, unsuccessful execution of our growth strategy, holding company structure, adverse weather, natural disasters and geo-political events, unexpected costs associated with our current insurance program, litigation, product liability claims and product recalls, and environmental and regulatory compliance. 4

5 These factors are not intended to represent a complete list of the factors that could affect us; however, they should be considered carefully. The purpose of the forward-looking statements is to provide the reader with a description of management s expectations regarding the Corporation s financial performance and may not be appropriate for other purposes; readers should not place undue reliance on forward-looking statements made herein. Furthermore, unless otherwise stated, the forward-looking statements contained in this press release are made as of April 12, 2013, and we have no intention and undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement For further information: Investors Michael Ross, FCPA, FCA Chief Financial Officer and Secretary (514) x1237 michael.ross@dollarama.com Media Lyla Radmanovich NATIONAL Public Relations (514)

6 Selected Consolidated Financial Information 14-Week 13-Week 53-Week 52-Week (dollars in thousands, except per share amounts) Feb. 3, 2013 Jan. 29, 2012 Feb. 3, 2013 Jan. 29, 2012 Earnings Data Sales... $ 561,879 $ 468,706 $ 1,858,818 $ 1,602,827 Cost of sales , ,307 1,163,979 1,002,487 Gross profit , , , ,340 SG&A... 98,233 86, , ,121 Depreciation and amortization... 10,806 8,721 39,284 33,336 Operating income ,305 91, , ,883 Net financing costs... 2,694 3,052 10,839 16,555 Earnings before income taxes ,611 88, , ,328 Provision for income taxes... 28,481 24,724 84,069 71,854 Net earnings... $ 77,130 $ 63,607 $ 220,985 $ 173,474 Basic net earnings per common share... $ 1.05 $ 0.86 $ 3.00 $ 2.35 Diluted net earnings per common share... $ 1.04 $ 0.84 $ 2.94 $ 2.30 Weighted average number of common shares outstanding during the period: Basic (in thousands)... 73,402 73,741 73,660 73,684 Diluted (in thousands)... 73,809 75,651 75,190 75,563 Other Data Year-over-year sales growth % 14.7% 16.0% 12.9% Comparable store sales growth (2) % 7.9% 6.5% 5.4% Gross margin (3) % 39.8% 37.4% 37.5% Normalized SG&A as a % of sales (1) (3) % 18.4% 18.0% 19.0% Normalized EBITDA (1)... $ 120,873 $ 100,104 $ 360,011 $ 295,219 Normalized operating margin (1) (3) % 19.5% 17.3% 16.3% Normalized net earnings (1)... $ 78,407 $ 63,607 $ 224,490 $ 173,474 Capital expenditures... $ 22,524 $ 17,323 $ 75,007 $ 52,957 Number of stores (4) Average store size (gross square feet) (4)... 9,942 9,905 9,942 9,905 Declared dividends per common share (5)... $ 0.11 $ 0.09 $ 0.42 $ 0.27 As of (dollars in thousands) Feb. 3, 2013 Jan. 29, 2012 Statement of Financial Position Data Cash and cash equivalents... $ 52,566 $ 70,271 Merchandise inventories , ,873 Property and equipment , ,053 Total assets... 1,453,692 1,407,741 Total debt (6) , ,997 Net debt (7) , ,726 6

7 (1) In this press release, Normalized operating income, Normalized EBITDA, Normalized SG&A and Normalized net earnings are collectively referred to as the Non-GAAP measures. Normalized operating income represents operating income, in accordance with GAAP, adjusted for significant non-recurring charges. Normalized EBITDA represents Normalized operating income plus amortization. Normalized SG&A represents SG&A, in accordance with GAAP, adjusted for significant non-recurring charges. Normalized net earnings represents net earnings, in accordance with GAAP, adjusted for significant non-recurring charges, net of tax impacts. The Non-GAAP measures are not generally accepted measures under GAAP and do not have a standardized meaning under GAAP. The Non-GAAP measures, as calculated by the Corporation, may not be comparable to those of other issuers and should be considered as a supplement to, not a substitute for, or superior to, the comparable measures calculated in accordance with GAAP. We have included the Non-GAAP measures to provide investors with supplemental measures of our operating and financial performance. We believe the Non-GAAP measures are important supplemental metrics of operating and financial performance because they eliminate items that have less bearing on our operating and financial performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on GAAP measures. We also believe that securities analysts, investors and other interested parties frequently use non-gaap measures in the evaluation of issuers, many of which present non-gaap measures when reporting their results. Our management also uses the Non- GAAP measures in order to facilitate operating and financial performance comparisons from period to period, to prepare annual budgets, and to assess our ability to meet our future debt service, capital expenditure and working capital requirements. 14-Week 13-Week 53-Week 52-Week (dollars in thousands) Feb. 3, 2013 Jan. 29, 2012 Feb. 3, 2013 Jan. 29, 2012 A reconciliation of operating income to Normalized operating income is included below: Operating income... $ 108,305 $ 91,383 $ 315,893 $ 261,883 Add: non-recurring charges: Payroll taxes on exercise of options (a)... 1,762 4,834 Normalized operating income... $ 110,067 $ 91,383 $ 320,727 $ 261,883 Normalized operating margin % 19.5% 17.3% 16.3% A reconciliation of Normalized operating income to Normalized EBITDA is included below: Normalized operating income... $ 110,067 $ 91,383 $ 320,727 $ 261,883 Add: Depreciation and amortization... 10,806 8,721 39,284 33,336 Normalized EBITDA... $ 120,873 $ 100,104 $ 360,011 $ 295,219 Normalized EBITDA margin % 21.4% 19.4% 18.4% A reconciliation of SG&A to Normalized SG&A is included below: SG&A... $ 98,233 $ 86,295 $ 339,662 $ 305,121 Deduct: non-recurring charges: Payroll taxes on exercise of options (a)... (1,762) (4,834) Normalized SG&A... $ 96,471 $ 86,295 $ 334,828 $ 305,121 Normalized SG&A as a % of sales % 18.4% 18.0% 19.0% 7

8 14-Week 13-Week 53-Week 52-Week (dollars in thousands) Feb. 3, 2013 Jan. 29, 2012 Feb. 3, 2013 Jan. 29, 2012 A reconciliation of net earnings to Normalized net earnings is included below: Net earnings... $ 77,130 $ 63,607 $ 220,985 $ 173,474 Diluted net earnings per common share... $ 1.04 $ 0.84 $ 2.94 $ 2.30 Add non-recurring charges (pre-tax): Payroll taxes on exercise of options (a)... 1,762 4,834 Tax impact... (485) (1,329) Normalized net earnings... $ 78,407 $ 63,607 $ 224,490 $ 173,474 Diluted Normalized net earnings per common share... $ 1.06 $ 0.84 $ 2.99 $ 2.30 (a) During the third and fourth quarters of Fiscal 2013, the Corporation incurred non-recurring payroll-related charges resulting from the exercise of stock options by senior management. (2) Comparable store sales represents sales of stores, including relocated and expanded stores, open for at least 13 complete fiscal months relative to the same period in the prior year. For the purposes of calculating comparable store sales, the Corporation excluded the sales of the 53rd week of Fiscal (3) Gross margin represents gross profit divided by sales. Normalized SG&A as a % of sales represents Normalized SG&A (see note 1) divided by sales. Normalized operating margin represents Normalized operating income (see note 1) divided by sales. (4) At the end of the period. (5) The Corporation s first quarterly dividend, in the amount of $0.09 per common share, was declared by the Board of Directors on June 8, On April 11, 2012, the Corporation announced that its Board of Directors had approved a 22% increase of the quarterly dividend, from $0.09 to $0.11 per common share. (6) Total debt is comprised of the current portion of long-term debt, and long-term debt before debt issue costs and discounts. (7) Net debt is defined as total debt minus cash and cash equivalents. 8