(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
(Address of principal executive offices) | (Zip Code) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading symbol(s) | Name of each exchange on which registered |
DOLLAR TREE, INC. | ||
Date: May 28, 2020 | By: | /s/ Kevin S. Wampler |
Kevin S. Wampler | ||
Chief Financial Officer |
• | Employing enhanced cleaning protocols as recommended by the Centers for Disease Control and Prevention (CDC); |
• | Encouraging proper social distancing measures; |
• | Modifying store hours to provide adequate time for associates to clean and restock shelves; |
• | Dedicating the stores’ daily first operational hour to at-risk customers; |
• | Providing personal protective equipment (PPE); |
• | Implementing associate health screening procedures; |
• | Installing plexiglass guards at cash registers; and, |
• | Accommodating contactless payment options at checkout. |
• | Evolution of macroeconomic factors, including the escalation in unemployment rates; |
• | Variability of vendor supply chains being able to meet product demand on a timely basis; |
• | Volatility in consumer demand related to the crisis; |
• | Value and timing of government stimulus; |
• | Duration, degree, and geographic breadth of varying shelter-in-place mandates; |
• | Uncertainties related to the economic environment through the remainder of the fiscal year; and, |
• | Incremental costs related to managing the business through this unprecedented, challenging time. |
CONTACT: | Dollar Tree, Inc. |
DOLLAR TREE, INC. | ||||||||
Condensed Consolidated Income Statements | ||||||||
(In millions, except per share data) | ||||||||
(Unaudited) | ||||||||
13 Weeks Ended | ||||||||
May 2, 2020 | May 4, 2019 | |||||||
Net sales | $ | 6,286.8 | $ | 5,808.7 | ||||
Cost of sales | 4,491.9 | 4,081.5 | ||||||
Gross profit | 1,794.9 | 1,727.2 | ||||||
28.5 | % | 29.7 | % | |||||
Selling, general and administrative expenses | 1,429.0 | 1,341.7 | ||||||
22.7 | % | 23.1 | % | |||||
Operating income | 365.9 | 385.5 | ||||||
5.8 | % | 6.6 | % | |||||
Interest expense, net | 40.2 | 41.4 | ||||||
Other expense, net | 0.5 | 0.2 | ||||||
Income before income taxes | 325.2 | 343.9 | ||||||
5.2 | % | 5.9 | % | |||||
Provision for income taxes | 77.6 | 76.0 | ||||||
Income tax rate | 23.9 | % | 22.1 | % | ||||
Net income | $ | 247.6 | $ | 267.9 | ||||
3.9 | % | 4.6 | % | |||||
Net earnings per share: | ||||||||
Basic | $ | 1.05 | $ | 1.13 | ||||
Weighted average number of shares | 236.9 | 238.0 | ||||||
Diluted | $ | 1.04 | $ | 1.12 | ||||
Weighted average number of shares | 237.4 | 239.1 |
DOLLAR TREE, INC. | ||||||||
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 expenses outlined below is beneficial to the users of its financial statements in evaluating the Company's current operating results in relation to past periods. In addition, the Company's debt covenants exclude the impact of certain unusual, non-recurring expenses. The Company has included a reconciliation of this information to the most comparable GAAP measures in the following tables. | ||||||||
On February 3, 2019, the Company adopted Financial Accounting Standards Board Accounting Standards Update No. 2016-02, "Leases (Topic 842)" and subsequent amendments ("ASC 842") which requires lessees to recognize right-of-use assets on the balance sheet. The Company did not elect the hindsight practical expedient; therefore, the adoption also resulted in the recognition of an estimate of the embedded impairment of right-of-use assets as a reduction to Retained earnings. In March 2019, the Company announced a store optimization program which included the closing of up to 390 under-performing stores in 2019. Under ASC 842, the right-of-use assets must be amortized over the remaining operating terms which resulted in the acceleration of rent expense for the stores that the Company closed in 2019. The accelerated rent expense net of the rent foregone as a result of the embedded lease impairment was $6.7 million and this amount will be excluded in calculating the Company's compliance with its debt covenants, which requires reporting in accordance with GAAP as of the date of the Credit Agreement. | ||||||||
Reconciliation of Adjusted Net Income: | 13 Weeks Ended | |||||||
May 2, 2020 | May 4, 2019 | |||||||
Net income (GAAP) | $ | 247.6 | $ | 267.9 | ||||
Accelerated rent expense | — | 6.7 | ||||||
Provision for income taxes on adjustment | — | (1.5 | ) | |||||
Adjusted Net income (Non-GAAP) | $ | 247.6 | $ | 273.1 | ||||
Reconciliation of Adjusted EPS: | 13 Weeks Ended | |||||||
May 2, 2020 | May 4, 2019 | |||||||
Diluted earnings per share (GAAP) | $ | 1.04 | $ | 1.12 | ||||
Adjustment, net of tax | — | 0.02 | ||||||
Adjusted EPS (Non-GAAP) | $ | 1.04 | $ | 1.14 |
DOLLAR TREE, INC. | ||||||||||||||
Segment Information | ||||||||||||||
(In millions, except store count) | ||||||||||||||
(Unaudited) | ||||||||||||||
13 Weeks Ended | ||||||||||||||
May 2, 2020 | May 4, 2019 | |||||||||||||
Net sales: | ||||||||||||||
Dollar Tree | $ | 3,077.5 | $ | 2,959.3 | ||||||||||
Family Dollar | 3,209.3 | 2,849.4 | ||||||||||||
Total net sales | $ | 6,286.8 | $ | 5,808.7 | ||||||||||
Gross profit: | ||||||||||||||
Dollar Tree | $ | 980.7 | 31.9 | % | $ | 1,021.2 | 34.5 | % | ||||||
Family Dollar | 814.2 | 25.4 | % | 706.0 | 24.8 | % | ||||||||
Total gross profit | $ | 1,794.9 | 28.5 | % | $ | 1,727.2 | 29.7 | % | ||||||
Operating income (loss): | ||||||||||||||
Dollar Tree | $ | 282.0 | 9.2 | % | $ | 394.2 | 13.3 | % | ||||||
Family Dollar | 175.5 | 5.5 | % | 91.9 | 3.2 | % | ||||||||
Corporate and support | (91.6 | ) | (1.5 | %) | (100.6 | ) | (1.7 | %) | ||||||
Total operating income | $ | 365.9 | 5.8 | % | $ | 385.5 | 6.6 | % |
13 Weeks Ended | ||||||||||||||||||
May 2, 2020 | May 4, 2019 | |||||||||||||||||
Dollar Tree | Family Dollar | Total | Dollar Tree | Family Dollar | Total | |||||||||||||
Store Count: | ||||||||||||||||||
Beginning | 7,505 | 7,783 | 15,288 | 7,001 | 8,236 | 15,237 | ||||||||||||
New stores | 67 | 32 | 99 | 65 | 26 | 91 | ||||||||||||
Re-bannered stores (a) | (3) | — | (3) | 45 | (84) | (39) | ||||||||||||
Closings | (7) | (7) | (14) | (9) | (16) | (25) | ||||||||||||
Ending | 7,562 | 7,808 | 15,370 | 7,102 | 8,162 | 15,264 | ||||||||||||
Selling Square Footage (in millions) | 65.2 | 56.9 | 122.1 | 61.2 | 59.2 | 120.4 | ||||||||||||
Growth Rate (Square Footage) | 6.5 | % | (3.9 | %) | 1.4 | % | 5.7 | % | (0.8 | %) | 2.4 | % | ||||||
(a) Stores are included as re-banners when they close or open, respectively. |
DOLLAR TREE, INC. | ||||||||||||
Condensed Consolidated Balance Sheets | ||||||||||||
(In millions) | ||||||||||||
(Unaudited) | ||||||||||||
May 2, | February 1, | May 4, | ||||||||||
2020 | 2020 | 2019 | ||||||||||
Cash and cash equivalents | $ | 1,755.1 | $ | 539.2 | $ | 725.8 | ||||||
Merchandise inventories | 3,198.5 | 3,522.0 | 3,325.5 | |||||||||
Other current assets | 211.8 | 208.2 | 194.8 | |||||||||
Total current assets | 5,165.4 | 4,269.4 | 4,246.1 | |||||||||
Property, plant and equipment, net | 3,964.8 | 3,881.8 | 3,525.0 | |||||||||
Restricted cash | 46.9 | 46.8 | 24.7 | |||||||||
Operating lease right-of-use assets | 6,147.0 | 6,225.0 | 6,111.0 | |||||||||
Goodwill | 1,981.4 | 1,983.3 | 2,295.9 | |||||||||
Trade name intangible asset | 3,100.0 | 3,100.0 | 3,100.0 | |||||||||
Deferred tax asset | 23.3 | 24.4 | — | |||||||||
Other assets | 43.0 | 43.9 | 51.6 | |||||||||
Total assets | $ | 20,471.8 | $ | 19,574.6 | $ | 19,354.3 | ||||||
Current portion of long-term debt | $ | 1,050.0 | $ | 250.0 | $ | 750.0 | ||||||
Current portion of operating lease liabilities | 1,265.0 | 1,279.3 | 1,215.9 | |||||||||
Accounts payable | 1,336.9 | 1,336.5 | 1,186.5 | |||||||||
Income taxes payable | 84.2 | 62.7 | 125.2 | |||||||||
Other current liabilities | 768.1 | 618.0 | 701.7 | |||||||||
Total current liabilities | 4,504.2 | 3,546.5 | 3,979.3 | |||||||||
Long-term debt, net, excluding current portion | 3,223.3 | 3,522.2 | 3,516.9 | |||||||||
Operating lease liabilities, long-term | 4,885.2 | 4,979.5 | 4,849.5 | |||||||||
Deferred income taxes, net | 1,037.7 | 984.7 | 954.2 | |||||||||
Income taxes payable, long-term | 30.2 | 28.9 | 35.8 | |||||||||
Other liabilities | 270.6 | 258.0 | 262.7 | |||||||||
Total liabilities | 13,951.2 | 13,319.8 | 13,598.4 | |||||||||
Shareholders' equity | 6,520.6 | 6,254.8 | 5,755.9 | |||||||||
Total liabilities and shareholders' equity | $ | 20,471.8 | $ | 19,574.6 | $ | 19,354.3 | ||||||
The February 1, 2020 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 4, | |||||||||||
2020 | 2019 | |||||||||||
Cash flows from operating activities: | ||||||||||||
Net income | $ | 247.6 | $ | 267.9 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 165.5 | 151.2 | ||||||||||
Provision for deferred income taxes | 52.7 | 3.0 | ||||||||||
Stock-based compensation expense | 32.6 | 30.5 | ||||||||||
Amortization of debt discount and debt-issuance costs | 1.1 | 1.6 | ||||||||||
Other non-cash adjustments to net income | 2.0 | 2.9 | ||||||||||
Changes in operating assets and liabilities | 457.5 | 157.0 | ||||||||||
Total adjustments | 711.4 | 346.2 | ||||||||||
Net cash provided by operating activities | 959.0 | 614.1 | ||||||||||
Cash flows from investing activities: | ||||||||||||
Capital expenditures | (235.8 | ) | (209.2 | ) | ||||||||
Proceeds from governmental grant | — | 16.5 | ||||||||||
Proceeds from (payments for) fixed asset disposition | (0.1 | ) | 0.3 | |||||||||
Net cash used in investing activities | (235.9 | ) | (192.4 | ) | ||||||||
Cash flows from financing activities: | ||||||||||||
Principal payments for long-term debt | (250.0 | ) | — | |||||||||
Proceeds from revolving credit facility | 750.0 | — | ||||||||||
Proceeds from stock issued pursuant to stock-based compensation plans | 9.7 | 5.8 | ||||||||||
Cash paid for taxes on exercises/vesting of stock-based compensation | (16.1 | ) | (23.3 | ) | ||||||||
Payments for repurchase of stock | — | (100.0 | ) | |||||||||
Net cash provided by (used in) financing activities | 493.6 | (117.5 | ) | |||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (0.7 | ) | (0.4 | ) | ||||||||
Net increase in cash, cash equivalents and restricted cash | 1,216.0 | 303.8 | ||||||||||
Cash, cash equivalents and restricted cash at beginning of period | 586.0 | 446.7 | ||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 1,802.0 | $ | 750.5 |
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