|By Marketwired .||
|November 6, 2012 05:30 PM EST||
EDMONTON, ALBERTA -- (Marketwire) -- 11/06/12 -- Liquor Stores N.A. Ltd (the "Company") (TSX:LIQ), North America's largest publicly traded liquor retailer today reported its results for the third quarter ended September 30, 2012.
Three months ended September 30, 2012
-- Opened two large-format, service-oriented liquor stores in Alberta (each in excess of 17,000 square feet), branded as "Wine & Beyond"; -- Consolidated sales increased 4.7% to $164.5 million (2011 - $157.1 million); -- Same-store sales increased by 2.5% in Canada and decreased by 0.4% ($0.1 million) in the US; -- Gross margin increased to 25.5% (2011 - 24.8%); -- Operating margin before non-recurring items increased by 7.0% to $14.6 million (2011 - $13.6 million); and -- Net earnings were $6.5 million (2011: $11.0 million). The decrease relates primarily to last year's $4.9 million one-time recovery from a lawsuit.
Nine months ended September 30, 2012
-- Consolidated sales increased 6.5% to $450.7 million (2011 - $423.3 million); -- Same-store sales increased by 4.1% in Canada and 2.1% in the US; -- Gross margin increased to 25.3% (2011 - 24.7%); -- Operating margin before non-recurring items increased by 11.9% to $34.9 million (2011 - $31.2 million); and -- Net earnings were $13.7 million (2011: $16.9 million). The decrease relates primarily to last year's $4.9 million one-time recovery from a lawsuit.
"Our results reflect a continuation of the strong performance we've been driving across all regions. We've achieved significant margin improvements in both our Canadian and US segments." said Jim Dinning, Chair of the Board of Directors and Interim Chief Executive Officer. "Along with our continued strong financial results, our team 'raised the bar' when we opened two new large-format stores in Alberta in September. The initial customer response has been overwhelmingly positive."
Our financial performance in the third quarter was highlighted by strong increases in gross margin and operating margin percentages. Consolidated gross margin increased from 24.8% to 25.5%, which represents the fourth consecutive quarter that the gross margin has increased over the comparative quarter. Operating margin before non-recurring items increased by 7.0% to $14.6 million, which represents the seventh consecutive quarter that operating margin percentage before non-recurring items has increased over the comparative quarter. The third quarter same-store sales increase in Canada was the eighth consecutive quarterly increase recorded by the Company. US same-store sales experienced a $0.1 million 'quarter over quarter' decline, however, both gross margin and operating margin in the US increased from the comparative period.
Management attributes these positive results primarily to our focus on improved merchandising, category management and purchasing strategies along with our expanded store hours program (with selected stores open until 2 am), and a strong emphasis on cost control.
During the last week of September 2012, the Company opened two (2) large-format Alberta liquor stores (each in excess of 17,000 square feet), branded as "Wine & Beyond", with a strong focus on wine and customer service. Management believes that these upscale Wine & Beyond stores carry the largest selection of wines, spirits and beers in Western Canada. Fashioned similar to our large-format stores located in the US, these destination stores will complement the Company's convenience-focused Liquor Depot/Liquor Barn stores in Alberta.
Third Quarter 2012 Operating Results Compared to Third Quarter 2011 Operating Results
Total sales increased by $7.4 million or 4.7% to $164.5 million in the third quarter of 2012 (2011 - $157.1 million). The increase is primarily the result of new store expansion, same-store sales growth in Canada, and a $0.5 million increase in the Canadian currency equivalent for US sales as a result of foreign exchange rate differences.
-- Canadian same-store sales increased by $2.9 million or 2.5%. -- The increase in Canadian same-store sales represents the eighth consecutive quarter over quarter increase. -- The positive results in Canada are attributable, in part, to the continued success of the Company's expanded store hours program (with stores in selected markets open until 2 am) and continued management focus on the execution of operational initiatives related to merchandising techniques, category management and purchasing strategies. -- US same store sales decreased by $0.1 million or 0.4%, which was more than offset by an increase in operating margin. -- Management believes the decrease in US same store sales is attributable primarily to unfavourable weather conditions in Kentucky during the month of September 2012 and downward pressure on sales due to certain counties in Kentucky (in proximity to certain of the Company's stores) going from 'dry' to 'wet' throughout 2012 (i.e. certain counties that did not previously permit retail package liquor sales are now permitting these sales).
-- Other Canadian stores include two large format stores ('Wine & Beyond') opened during the last week of September 2012, one store that was acquired in the second quarter of 2012, four stores that were opened in the fourth quarter of 2011 and one store that closed subsequent to June 30, 2011; other US stores include one store that was acquired in the first quarter of 2012 and one store that was opened in the fourth quarter of 2011. Sales for all of the new stores have exceeded projections and management is encouraged that this will continue throughout the remainder of 2012.
For the three months ended September 30, 2012, gross margin was $41.9 million, up 8.2% from $38.8 million for the same period last year. Gross margin as a percentage of sales increased to 25.5% from 24.7% in 2011. The quarter over quarter increase in gross margin percentage represents the fourth consecutive quarterly increase. Gross margin as a percentage of sales has increased primarily as a result of continued focus on merchandising techniques, category management and purchasing strategies, including expanding our selection and marketing of control brands/private label and exclusive products.
Operating margin before non-recurring items was $14.6 million for the three months ended September 30, 2012, up 7.0% from $13.6 million in 2011. As a percentage of total sales, operating margin before non-recurring items was 8.9%, up from 8.7% a year earlier primarily due to an improvement in gross margin percentage. Operating margin decreased 4.9% from $13.3 million in the prior year, primarily as a result of non-recurring administrative expenses, which were offset by increases in sales and gross margin percentage.
Canadian operating margin before the $2.0 million in non-recurring expenses primarily related to payments made to the Company's former President and Chief Executive Officer upon his departure effective August 31, 2012, was $12.2 million or 9.5% as a percentage of Canadian sales. Operating margin for Canadian stores for the third quarter of 2012 was $10.2 million or 8.0% as a percentage of Canadian sales compared with $11.8 million and 9.6% as a percentage of Canadian sales for 2011.
The US operating margin for the third quarter of 2012 was $2.4 million or 6.6% as a percentage of US sales compared with $1.5 million and 4.3% as a percentage of US sales for 2011.
CASH FLOW AND DIVIDENDS
For the three months ended September 30, 2012, cash provided by operating activities before changes in non-cash working capital and non-recurring items was $13.0 million ($0.57 per share), an increase of $0.9 million compared to $12.1 million ($0.54 per share) for the same quarter in 2011. The increase results primarily from an increase in operating margin before non-recurring items for the three months ended September 30, 2012. Before adjusting for non-recurring items, cash provided by operating activities before changes in non-cash working capital for the three months ended September 30, 2012 is $0.48 per share compared to $0.70 per share in the same period last year.
During the three and nine months ended September 30, 2012, the Company declared dividends of $0.27 and $0.81 per share, respectively. The Company's current annual dividend is $1.08. The Company has declared a monthly dividend consecutively since going public in 2004.
The Company has a dividend reinvestment plan (the "DRIP") to provide eligible shareholders with a convenient means of reinvesting monthly dividends into additional common shares. For further information about the DRIP and DRIP enrolment please visit the Company's website located at www.liquorstoresna.com.
EARNINGS AND EARNINGS PER SHARE
Net earnings for the three months ended September 30, 2012 were $6.5 million compared to $11.0 million for the same period in 2011. The decrease in net earnings is primarily the result of non-recurring recoveries in 2011, which included proceeds from a litigation settlement of $4.9 million, and non-recurring expenses in 2012 of $1.9 million related to the departure of the Company's former President and Chief Executive Officer, which were offset by increases in gross margin and a decrease in income taxes.
Basic and diluted earnings per share for the three and nine months ended September 30, 2012 were $0.28 and $0.59 per share respectively (2011: $0.48 and $0.74).
Liquor Stores Summary Financial Results, three and nine months ended September 30, 2012 with comparisons to 2011
---------------------------------------------------------------------------- Three months ended Nine months ended ---------------------------------------------------------------------------- (expressed in thousands of Canadian dollars) except per September September September September share amounts) 30, 2012 30, 2011 30, 2012 30, 2011 ---------------------------------------------------------------------------- Sales $ 164,490 $ 157,080 $ 450,747 $ 423,258 ---------------------------------------------------------------------------- Operating margin before non- recurring items $ 14,588 $ 13,648 $ 34,852 $ 31,230 ---------------------------------------------------------------------------- Operating margin $ 12,635 $ 13,298 $ 31,656 $ 30,201 ---------------------------------------------------------------------------- Net earnings (note 1) $ 6,481 $ 10,970 $ 13,653 $ 16,898 ---------------------------------------------------------------------------- Diluted earnings per share (note 1) $ 0.28 $ 0.48 $ 0.59 $ 0.74 ---------------------------------------------------------------------------- Cash dividends per share $ 0.27 $ 0.27 $ 0.81 $ 0.81 ---------------------------------------------------------------------------- Weighted average number of shares outstanding - diluted (000's) 22,949 22,613 22,836 22,602 ---------------------------------------------------------------------------- Stores in operation as at September 30 244 236 244 236 ----------------------------------------------------------------------------
Note 1 - Note that the decrease in net earnings and diluted earnings per share from 2011 to 2012 relates primarily to a $4.9 million one-time recovery from a lawsuit recorded in 2011.
The Management's Discussion and Analysis (MD&A) as well as the interim consolidated financial statements and notes for the three and nine months ended September 30, 2012 are available on the Company's website at this link: www.liquorstoresna.com and on the SEDAR website at www.sedar.com.
As previously announced, Liquor Stores N.A Ltd. will conduct an investor conference call on Wednesday November 7, 2012 to discuss results for the three and nine months ended September 30, 2012. The conference call will take place at 9:00 a.m. MST. Participants in the call include Jim Dinning, Chair of the Board of Directors and Interim Chief Executive Officer, Pat de Grace, Senior Vice President and Chief Financial Officer, Scott Morrow, Chief Operating Officer, and Craig Corbett, Vice President Legal, General Counsel & Corporate Secretary.
To take part in the call, please dial toll-free 1-877-240-9772. An archived recording of the conference call will be available approximately one hour after the completion of the call until November 15, 2012, by dialling 1-905-694-9451 or toll-free 1-800-408-3053. The required pass code is 6431970.
About Liquor Stores N.A. Ltd.
The Company currently operates 246 retail liquor stores in Alberta, British Columbia, Alaska and Kentucky. The Company's common shares and convertible subordinated debentures trade on the Toronto Stock Exchange under the symbols "LIQ" and "LIQ.DB.A".
NON-IFRS FINANCIAL MEASURES
Operating margin, operating margin as a percentage of sales, operating margin before non-recurring items, EBITDA, cash provided by operating activities before changes in working capital and non-recurring items, cash provided by operating activities before changes in working capital and non-recurring items on a per share basis, and same store sales are not measures recognized by IFRS and do not have a standardized meaning prescribed by IFRS. Investors are cautioned that operating margin, operating margin as a percentage of sales, EBITDA, cash provided by operating activities before changes in working capital and non-recurring items, cash provided by operating activities before changes in working capital and non-recurring items on a per share basis, and same store sales should not replace net earnings or loss (as determined in accordance with IFRS) as an indicator of the Company's performance, of its cash flows from operating, investing and financing activities or as a measure of its liquidity and cash flows. The Company's method of calculating operating margin, operating margin as a percentage of sales, EBITDA, cash provided by operating activities before changes in working capital and non-recurring items, cash provided by operating activities before changes in working capital and non-recurring items on a per share basis, and same store sales may differ from the methods used by other issuers. Therefore, the Company's operating margin, operating margin as a percentage of sales, EBITDA, cash provided by operating activities before changes in working capital and non-recurring items, cash provided by operating activities before changes in working capital and non-recurring items on a per share basis, and same store sales may not be comparable to similar measures presented by other issuers.
EBITDA, which is used only with reference to the calculation of covenants under the Company's credit facility, is defined under the amended and restated credit facility as the net income of the Company plus the following: interest expense, provision for income taxes, any portion of expense in respect of non-cash items including any long-term incentive plan amounts not to be settled in cash, depreciation, amortization, deferred taxes, and non-recurring losses to a maximum of $3.5 million in any fiscal year, write down of goodwill and other restructuring charges for store closures, and amortization of inventory fair value adjustments. EBITDA is also less any non-recurring extraordinary or one-time gains from any capital asset sales or certain foreign currency transactions.
Cash provided by operating activities before changes in working capital and non-recurring items is a non-IFRS financial measure that does not have a standardized meaning prescribed by IFRS and therefore is unlikely to be comparable to similar measures presented by other issuers. Investors are cautioned that this should not be construed as an alternative measure of profitability.
Operating margin for purposes of disclosure under "Operating Results" has been derived by subtracting Operating and Administrative expenses from Gross Margin. Operating margin as a percentage of sales is calculated by dividing operating margin by sales. Operating margin before non-recurring items has been derived by adding non-recurring items to operating margin as described above.
Non-recurring items include costs incurred and recoveries received by the Company that are not part of on-going operations and that are not expected to recur. Among others, these non-recurring items include costs associated with a store investment that was not completed, and professional fees paid in respect of lawsuits that originated following and arising from the Company's acquisition of Liquor Barn Income Fund in 2007 and the proceeds received on settlement of these matters.
Liquor Stores N.A. Ltd.
Patrick de Grace, CA
Senior Vice President and Chief Financial Officer
Naturally, new and exciting technologies and trends like software defined networking, the Internet of Things and the cloud tend to get the lion’s share of attention these days, including when it comes to security. However, it’s important to never forget that at the center of it all is still the enterprise network. And as evidenced by the ever-expanding landslide of data breaches that could have been prevented or at least their impact lessened by better practicing network security basics, it’s ...
Nov. 30, 2015 04:30 AM EST Reads: 270
PubNub has announced the release of BLOCKS, a set of customizable microservices that give developers a simple way to add code and deploy features for realtime apps.PubNub BLOCKS executes business logic directly on the data streaming through PubNub’s network without splitting it off to an intermediary server controlled by the customer. This revolutionary approach streamlines app development, reduces endpoint-to-endpoint latency, and allows apps to better leverage the enormous scalability of PubNu...
Nov. 30, 2015 04:00 AM EST Reads: 344
Put the word continuous in front of many things and we help define DevOps: continuous delivery, continuous testing, continuous assessment, and there is more. The next BriefingsDirect DevOps thought leadership discussion explores the concept of continuous processes around the development and deployment of applications and systems. Put the word continuous in front of many things and we help define DevOps: continuous delivery, continuous testing, continuous assessment, and there is more.
Nov. 30, 2015 04:00 AM EST Reads: 177
Growth hacking is common for startups to make unheard-of progress in building their business. Career Hacks can help Geek Girls and those who support them (yes, that's you too, Dad!) to excel in this typically male-dominated world. Get ready to learn the facts: Is there a bias against women in the tech / developer communities? Why are women 50% of the workforce, but hold only 24% of the STEM or IT positions? Some beginnings of what to do about it! In her Day 2 Keynote at 17th Cloud Expo, San...
Nov. 30, 2015 04:00 AM EST Reads: 600
In today's enterprise, digital transformation represents organizational change even more so than technology change, as customer preferences and behavior drive end-to-end transformation across lines of business as well as IT. To capitalize on the ubiquitous disruption driving this transformation, companies must be able to innovate at an increasingly rapid pace. Traditional approaches for driving innovation are now woefully inadequate for keeping up with the breadth of disruption and change facin...
Nov. 30, 2015 03:00 AM EST Reads: 510
I recently attended and was a speaker at the 4th International Internet of @ThingsExpo at the Santa Clara Convention Center. I also had the opportunity to attend this event last year and I wrote a blog from that show talking about how the “Enterprise Impact of IoT” was a key theme of last year’s show. I was curious to see if the same theme would still resonate 365 days later and what, if any, changes I would see in the content presented.
Nov. 30, 2015 02:00 AM EST Reads: 448
You may have heard about the pets vs. cattle discussion – a reference to the way application servers are deployed in the cloud native world. If an application server goes down it can simply be dropped from the mix and a new server added in its place. The practice so far has mostly been applied to application deployments. Management software on the other hand is treated in a very special manner. Dedicated resources are set aside to run the management software components and several alerting syst...
Nov. 30, 2015 01:00 AM EST Reads: 227
Culture is the most important ingredient of DevOps. The challenge for most organizations is defining and communicating a vision of beneficial DevOps culture for their organizations, and then facilitating the changes needed to achieve that. Often this comes down to an ability to provide true leadership. As a CIO, are your direct reports IT managers or are they IT leaders? The hard truth is that many IT managers have risen through the ranks based on their technical skills, not their leadership ab...
Nov. 30, 2015 12:00 AM EST Reads: 418
It's been a busy time for tech's ongoing infatuation with containers. Amazon just announced EC2 Container Registry to simply container management. The new Azure container service taps into Microsoft's partnership with Docker and Mesosphere. You know when there's a standard for containers on the table there's money on the table, too. Everyone is talking containers because they reduce a ton of development-related challenges and make it much easier to move across production and testing environm...
Nov. 29, 2015 09:00 PM EST Reads: 629
As organizations shift towards IT-as-a-service models, the need for managing & protecting data residing across physical, virtual, and now cloud environments grows with it. CommVault can ensure protection & E-Discovery of your data - whether in a private cloud, a Service Provider delivered public cloud, or a hybrid cloud environment – across the heterogeneous enterprise.
Nov. 29, 2015 06:00 PM EST Reads: 237
Hiring the wrong candidate can cost a company hundreds of thousands of dollars, and result in lost profit and productivity during the search for a replacement. In fact, the Harvard Business Review has found that as much as 80 percent of turnover is caused by bad hiring decisions. But when your organization has implemented DevOps, the job is about more than just technical chops. It’s also about core behaviors: how they work with others, how they make decisions, and how those decisions translate t...
Nov. 29, 2015 04:45 PM EST Reads: 200
In today’s pharmaceutical supply chain, counterfeit activity is thriving. As pharma companies have expanded target markets and outsourced production over the last decade, the supply chain has become increasingly global, virtual, and vulnerable. Illicit activity has thrived, and patients have suffered, with hundreds of thousands dying each year from counterfeit and contaminated drugs. More than 40 countries have responded with new laws that regulate prescription medications as they travel throug...
Nov. 29, 2015 04:00 PM EST Reads: 303
In his General Session at DevOps Summit, Asaf Yigal, Co-Founder & VP of Product at Logz.io, explored the value of Kibana 4 for log analysis and provided a hands-on tutorial on how to set up Kibana 4 and get the most out of Apache log files. He examined three use cases: IT operations, business intelligence, and security and compliance. Asaf Yigal is co-founder and VP of Product at log analytics software company Logz.io. In the past, he was co-founder of social-trading platform Currensee, which...
Nov. 29, 2015 04:00 PM EST Reads: 255
People want to get going with DevOps or Continuous Delivery, but need a place to start. Others are already on their way, but need some validation of their choices. A few months ago, I published the first volume of DevOps and Continuous Delivery reference architectures which has now been viewed over 50,000 times on SlideShare (it's free to download...no registration required). Three things helped people in the deck: (1) the reference architectures, (2) links to the sources for each architectur...
Nov. 29, 2015 03:30 PM EST Reads: 262
The Internet of Things (IoT) is growing rapidly by extending current technologies, products and networks. By 2020, Cisco estimates there will be 50 billion connected devices. Gartner has forecast revenues of over $300 billion, just to IoT suppliers. Now is the time to figure out how you’ll make money – not just create innovative products. With hundreds of new products and companies jumping into the IoT fray every month, there’s no shortage of innovation. Despite this, McKinsey/VisionMobile data...
Nov. 29, 2015 02:00 PM EST Reads: 488
Just over a week ago I received a long and loud sustained applause for a presentation I delivered at this year’s Cloud Expo in Santa Clara. I was extremely pleased with the turnout and had some very good conversations with many of the attendees. Over the next few days I had many more meaningful conversations and was not only happy with the results but also learned a few new things. Here is everything I learned in those three days distilled into three short points.
Nov. 29, 2015 01:00 PM EST Reads: 358
One of the most important tenets of digital transformation is that it’s customer-driven. In fact, the only reason technology is involved at all is because today’s customers demand technology-based interactions with the companies they do business with. It’s no surprise, therefore, that we at Intellyx agree with Patrick Maes, CTO, ANZ Bank, when he said, “the fundamental element in digital transformation is extreme customer centricity.” So true – but note the insightful twist that Maes adde...
Nov. 29, 2015 01:00 PM EST Reads: 456
DevOps is about increasing efficiency, but nothing is more inefficient than building the same application twice. However, this is a routine occurrence with enterprise applications that need both a rich desktop web interface and strong mobile support. With recent technological advances from Isomorphic Software and others, rich desktop and tuned mobile experiences can now be created with a single codebase – without compromising functionality, performance or usability. In his session at DevOps Su...
Nov. 29, 2015 12:45 PM EST Reads: 423
Nov. 29, 2015 12:30 PM EST Reads: 244
As organizations realize the scope of the Internet of Things, gaining key insights from Big Data, through the use of advanced analytics, becomes crucial. However, IoT also creates the need for petabyte scale storage of data from millions of devices. A new type of Storage is required which seamlessly integrates robust data analytics with massive scale. These storage systems will act as “smart systems” provide in-place analytics that speed discovery and enable businesses to quickly derive meaningf...
Nov. 29, 2015 12:30 PM EST Reads: 427