Dollarama Inc. · TSX:DOL
Dollarama — Merger or Acquisition (July 2019)
29 slides from Dollarama's merger presentation, Jul 2, 2019
Slide 1: Dollarama To Acquire 50.1% of Dollarcity, Establishing Second Growth Platform
Dollarama To Acquire 50.1% of Dollarcity, Establishing Second Growth Platform July 2, 2019
Slide 2: Cautionary statement
Cautionary statement Forward-Looking Statements Certain statements in this presentation, and in any discussion during or following this presentation, about current and future plans, expectations and intentions, results, levels of activity, performance, goals or achievements or any other future event
Slide 3: Cautionary statement (cont'd)
Cautionary statement (cont’d) Non-GAAP Financial Measures The Corporation reports its financial results in accordance with generally accepted accounting principles in Canada (GAAP) as set out in the CPA Canada Handbook - Accounting under Part I, which incorporates International Financial Reporting S
Slide 4: Transaction overview
Transaction overview Dollarama (DOL) to acquire 50.1% interest in Dollarcity 20181 sales of US$236M, EBITDA2 of US$36.6M (16% EBITDA margin) Estimated 2019 sales of ~US$333M and EBITDA of ~US$50M3 Closing expected in August 2019 Estimated total purchase price of US$85-95M Equity value to be
Slide 5: Transaction rationale
Transaction rationale Second Proven Strong growth platform business model local partners Favourable demographics Commercial relationship A leading business and economic fundamentals between DOL and Dollarcity group in Central America in Latin America (LATAM) since 2013 with experience in aviat
Slide 6: Dollarcity Overview
Dollarcity Overview
Slide 7: Track record of rapid growth
Track record of rapid growth Opening of first new Replenishment system concept store implemented in Colombia Dollarcity 150+ stores in three founded in 25+ stores in 70+ stores in three countries, including 65+ El Salvador El Salvador countries in Colombia 2009 2013 2014 2015 2016 2017 2018 2019 Lic
Slide 8: Dollarcity today
Dollarcity today 180 Dollarcity initially tested the Guatemala Dollarcity stores Dollarama concept in El Salvador 54 Dollarcity stores and Guatemala, and has Local warehouse successfully built an established presence in these two markets El Salvador 44 Dollarcity stores Administrative offi
Slide 9: Accelerated store network
Accelerated store network DOLLARCITY STORE NETWORK GROWTH (Number of stores) 18x Store Network 180 Growth 169 (As at respective 82 year ends) Dec. 31, 20181 Feb. 3, 2019 74 107 71 NUMBER 28 54 169 1,225 3 52 OF STORES 41 39 13 30 26 44 38 40 43 10 28 CA$309 million SALES CA$3,549 million (US$236 mil
Slide 10: San Salvador, El Salvador
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Slide 11: Guatemala City, Guatemala
Guatemala City, Guatemala 11
Slide 12: Bogota, Colombia
Bogota, Colombia | DOLLARAMA (L.)
Slide 13: A 'localized' Dollarama
A ‘localized’ Dollarama MERCHANDISE MIX1 (As at respective year ends) Dec. 31, 20183 Feb. 3, 2019 (based on annual retail value) 41% PRICE POINT US$0.69-$3.00 35% or equivalents in CA$0.82-$4.00 RANGE4 47% local currencies 43% 18% 16% NEW STORE CA$786,000 CA$700,000 General INVESTMENT (US$600,000) M
Slide 14: Growth Opportunity
Growth Opportunity
Slide 15: An attractive market with compelling growth potential
An attractive market with compelling growth potential LATAM is second largest emerging market Dynamic growth rates compared to developed regions Young and increasingly urban population with similar spending habits as North America Showed resiliency through the 2008-2009 global financial crisis
Slide 16: Dollarcity growth plan to 2029
Dollarcity growth plan to 2029 Target of Colombia represents the largest Guatemala 600 growth opportunity within deal Opportunistic Dollarcity growth stores countries1 El Salvador Target of 600 stores in three Opportunistic countries by 2029 growth • Majority of store network growth will be
Slide 17: Operational Structure and Governance
Operational Structure and Governance
Slide 18: Operational structure and governance
Operational structure and governance DOLLARAMA BOARD OF DIRECTORS DOLLARCITY DOLLARCITY FOUNDING GROUP DOLLARAMA BOARD OF DIRECTORS STOCKHOLDERS 49.9% 50.1% Three (3) representatives appointed by Dollarama Certain strategic and operational decisions subject to 100% stockholder approval. These in
Slide 19: Stockholder options
Stockholder options DOL (50.1%) No remaining call options Ability to postpone the exercise of Dollarcity founding group put right in certain situations Ability to purchase all remaining shares not yet held by DOL if the exercise of the put results in Dollarcity founding group holding less than
Slide 20: Key Dollarcity executives
Key Dollarcity executives MARCO BALDOCCHI of the largest Central American banks, from 2003 to Chief Executive Officer, Dollarcity 2007. Additionally, he currently serves on the board of directors of other aviation-related companies such as Marco Baldocchi founded Dollarcity in 2009 and currently Vol
Slide 21: Risk management
Risk management Six years of on-the-ground Local partner with strong experience reputation and business acumen Good understanding of LATAM markets and Successful track record in other industries retail landscape Remains heavily invested in Dollarcity future Successful in adapting DOL Thorough
Slide 22: Priorities: Disciplined execution of DOL growth plan
Priorities: Disciplined execution of DOL growth plan Execute Canadian platform growth plan Open 60-70 net new Dollarama stores in FY2020 Target of 1,700 stores in Canada by 2027 Execute LATAM platform growth plan Open 40-50 net new Dollarcity stores in 2019, primarily in Colombia Target of 6
Slide 23: Appendix
Appendix fi (Qa TSS
Slide 24: A growing market with strong fundamentals
A growing market with strong fundamentals LATAM RETAIL GROWTH LATAM is second largest emerging market REAL vs. GDP REAL GROWTH GDP GROWTH2005-2022 2006-2023 (Annual (Annual%%change) change) GDP of US$5.6 trillion, ~6% of world’s global GDP 8 Population of ~644M people Dynamic growth rates comp
Slide 25: An attractive market for global retailers
An attractive market for global retailers Strong presence of global retailers and brands in LATAM with 27.1% of retail revenue in the region coming from foreign operations Of the world’s 250 top retailers, those in LATAM had the highest year-over-year revenue growth and profit margins RETAIL REV
Slide 26: A healthy appetite for value retail
A healthy appetite for value retail DISCOUNTERS MARKET SIZE IN Value retail, a rapidly growing segment SELECTED COUNTRIES REAL($M, GDPcurrent GROWTH 2005-2022 values) Discount retailers in countries of interest1 5 000 (Annual % change) showed a 25.2% CAGR from 2013-2018 in 4 000 current US$ terms
Slide 27: Select LATAM country data vs. Canada
Select LATAM country data vs. Canada REAL GDP GROWTH 2018-2023 8% 6% 4% 2% 0% 2018 2019 2020 2021 2022 2023 El Salvador Guatemala Colombia Panama Canada Average GDP Growth in Last 5 Country Population 2018 (M) Nominal GDP 2018 (US$ B) Years (%)1 El Salvador 6.6 26 2.4% Guatemala 17.3 79 3.3% Colombi
Slide 28: Recap: DOL and Dollarcity Relationship
Recap: DOL and Dollarcity Relationship 2013 2016 2019 TRANSACTION AGREEMENT AMENDMENT CALL OPTION ACCELERATION In February 2013, DOL announced that it In 2016, the agreement was amended to DOL negotiated with Dollarcity to advance had entered into an agreement, through postpone the original ca
Slide 29: Thank you
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