(TSX:NWC): The North West Company Inc. (the "Company" or
"North West") today reported its unaudited financial results for
the first quarter ended April 30, 2018. It also
announced that the Board of Directors have declared a dividend of
$0.32 per share to shareholders of record on June 29, 2018, to
be paid on July 16, 2018.
"During the quarter we completed key work that
will drive revenue this year. We've done a great job
improving our in-stock position in the BVI and St. Croix and we are
growing these businesses amidst the post-hurricane reconstruction
activity on these islands. North Star Air was still in
ramp-up phase with new aircraft and hangars all expected to be
operational by the end of June," commented President & CEO
Edward Kennedy. "Late in the quarter we started to achieve sales
gains and stable margins at Giant Tiger, which we have continued
into the second quarter. These factors should add to the
stronger performance we expect from our northern businesses over
the upcoming summer and fall construction seasons."
Financial Highlights
Sales decreased 4.1% to $465.7 million compared
to $485.8 million in the first quarter last year and were down 1.4%
excluding the impact of foreign exchange. The store
closures related to hurricanes in the Caribbean in the third
quarter last year negatively impacted sales in the quarter by
approximately $23.9 million and more than offset the acquisition of
North Star Air Ltd. ("NSA"), new stores in Canadian Operations and
same store sales gains in International Operations. Same
store sales were down 0.3% due to lower food and general
merchandise sales. Food sales1 decreased 6.0% and were down
0.3% to last year on a same store basis. General merchandise
sales1 increased 0.4% but were down 0.4% on a same store
basis.
Gross profit dollars were down 1.5% as the
decrease in sales more than offset an 84 basis point increase in
gross profit rate compared to last year. The increase in the
gross profit rate is mainly due to a higher percentage of
convenience-related sales. Selling, operating and
administrative expenses decreased 8.4% and were down 122 basis
points as a percentage to sales due to lower share-based
compensation costs, the impact of hurricane-related store closures
and $5.8 million in RTW acquisition costs last year. The RTW
acquisition costs were substantially related to stamp duties paid
to the Government of the British Virgin Islands ("BVI").
Further information on the impact of the hurricanes is provided
below.
Earnings from operations increased 52.9% to
$25.6 million compared to $16.7 million in the first quarter last
year and earnings before interest, income taxes, depreciation and
amortization (EBITDA2) increased 31.3% to $39.5 million due to the
factors previously noted. Excluding the impact of share option
expense and RTW acquisition costs, adjusted EBITDA2 was down
5.8% compared to last year and as a percentage to sales was 8.1%
compared to 8.3% last year largely due to the hurricane-related
store closures in International Operations which negatively
impacted EBITDA in the quarter by $2.0 million.
Income tax expense decreased $1.8 million to
$3.8 million and the consolidated effective tax rate was 17.0%
compared to 38.0% last year. The decrease in the effective
tax rate is primarily due to the change in non-taxable share-based
compensation in the Canadian Operations, the non-tax deductible RTW
acquisition costs last year and changes in earnings of the
Company's subsidiaries across various tax jurisdictions. The
reduction in the U.S. federal corporate income tax rate from 35.0%
to 21.0% effective January 1, 2018 as part of U.S. tax reform was
also a factor.
Net earnings increased $9.5 million or 104.8% to
$18.6 million. Net earnings attributable to shareholders of
the Company were $17.8 million and diluted earnings per share were
$0.36 per share compared to $0.17 per share last year due to the
factors noted above. Excluding the impact of share-based
compensation option expense and the RTW acquisition costs, adjusted
net earnings2 decreased 11.7% largely due to the impact of the
hurricane related store closures in International Operations.
Further information on the financial results is
available in the Company's 2018 first quarter Report to
Shareholders, Management's Discussion and Analysis and unaudited
interim period condensed consolidated financial statements which
can be found in the investor section of the Company's website at
www.northwest.ca.
First Quarter Conference
Call
North West will host a conference call for its
first quarter results on June 13, 2018 at 2:00 p.m. (Central
Time). To access the call, please dial 416-340-2217 or
800-898-3989 with a pass code of 5859656. The conference call
will be archived and can be accessed by dialing 905-694-9451 or
800-408-3053 with a pass code of 6095235 or before July 13,
2018.
Notice to
Readers
Certain forward-looking statements are made in
this news release, within the meaning of applicable securities
laws. These statements reflect North West's current expectations
and are based on information currently available to management. The
words may, will, should, believe, expect, plan, anticipate, intend,
estimate, predict, potential, continue, or the negative of these
terms, identify forward-looking matters. These statements speak
only as of the date of this press release. The actual results could
differ materially from those anticipated in these forward-looking
statements.
Reliance should not be placed on forward-looking
statements because they involve known and unknown risks,
uncertainties and other factors, which may cause the actual
results, performance, capital expenditures or achievements of North
West to differ materially from anticipated future results,
performance, capital expenditures or achievement expressed or
implied by such forward-looking statements. Factors that could
cause actual results to differ materially from those set forth in
the forward-looking statements include, but are not limited to,
business performance, fluctuations in interest rates and currency
values, legislative and regulatory developments, legal
developments, the occurrence of weather-related and other natural
catastrophes, changes in tax laws, and those risks and
uncertainties detailed in the section entitled Risk Factors in
North West's Management's Discussion and Analysis and Annual
Information Form, both for the year-ended
January 31, 2018. The preceding list is not an
exhaustive list of possible factors. These and other factors should
be considered carefully and readers are cautioned not to place
undue reliance on these forward-looking statements. North West
undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, other than as required by applicable
law.
Company
Profile
The North West Company Inc., through its
subsidiaries, is a leading retailer of food and everyday products
and services to rural communities and urban neighbourhoods in
Canada, Alaska, the South Pacific and the Caribbean. North West
operates 237 stores under the trading names Northern, NorthMart,
Giant Tiger, Alaska Commercial Company, Cost-U-Less and RiteWay
Food Markets and has annualized sales of approximately CDN$2.0
billion.
The common shares of North West
trade on the Toronto Stock Exchange under the symbol
NWC.
For more information
contact:
Edward Kennedy, President and Chief Executive
Officer, The North West Company Inc.Phone 204-934-1482; fax
204-934-1317; email ekennedy@northwest.ca
John King, Executive Vice-President and Chief
Financial Officer, The North West Company Inc.Phone 204-934-1397;
fax 204-934-1317; email jking@northwest.ca
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