North West Company Inc. · TSX:NWC

North West — The North West Company — Corporate Update (March 2020)

13 slides from North West's corporate update, Mar 30, 2020

  1. Slide 1: The North West Company Investor Update

    The North West Company Investor Update March 30, 2020

  2. Slide 2: Forward Looking Statements

    Forward Looking Statements This presentation for The North West Company (“North West” or “the Company”) contains forward-looking statements about the Company, including its business operations, strategy and expected financial performance and financial condition. Specific forward-looking statements i

  3. Slide 3: Agenda

    Agenda 1. COVID-19 Impact 2. Giant Tiger Sale/Restructure 3. North Star Air Performance 3

  4. Slide 4: COVID-19 Impact: High Essential Product & Service Retail Sales Blend

    1. COVID-19 Impact High “Essential” Product & Service Retail Sales Blend (1) = Strong Consumer C-19 Demand • 91% of sales are in essential product & service categories Other(2) 11% • NWC (including GT & NSA) remains Discretionary GM open in all jurisdictions 9% • Drastic drop in travel means higher

  5. Slide 5: Other C-19 impacts on our business: Order Fulfillment

    1. COVID-19 Impact Other C-19 impacts on our business: • Order Fulfillment 1.0 – stores are offering online / phone ordering with pick-up or delivery service for vulnerable customer groups • Order Fulfillment 2.0 – where in-store shopping is no longer feasible or online exceeds capacity, stores will

  6. Slide 6: Other C-19 impacts on our business: pricing, hires, cost reductions

    1. COVID-19 Impact Other C-19 impacts on our business: • Canadian price investments – planned for 2020 will be redirected to price reductions to support community C-19 response and build new customer relationships. Forecast gross profit dollar increases are expected to offset rate erosion • Addition

  7. Slide 7: COVID-19 Impact: Liquidity

    1. COVID-19 Impact Liquidity Debt-to-Equity Available Capacity Debt(1) Fiscal year, $ in millions 700 2.5 • Debt-to-equity less than 1.0 since 2000 600 2.0 • $190 million capacity on existing 500 $190 $232 facilities $267 1.5 400 • Capex will reduce to $65 million range 300 0.89 0.96 in 2020 0.82 1.

  8. Slide 8: Giant Tiger Sale/Restructure Overview

    2. Giant Tiger Sale/ Restructure Overview • 34 stores to be sold to Giant Tiger Stores Limited (GTSL) for $45 million plus up to $22.5 million in contingent consideration • Five stores in northern “gateway” communities continue to be owned and operated by NWC plus one conversion to a clearance centr

  9. Slide 9: Giant Tiger Sale/Restructure: Discontinued stores EBITDA

    2. Giant Tiger Sale/ Restructure Discontinued stores impaired …while we preserved our Canadian EBITDA (1) performance… franchise exclusivity Discontinued GT EBITDA ($ in millions) • Average annual capex spend of 15 13.1 $6.7 15 million 11.1 10 • Slow 10 new store maturation = losses 7.2 over years 1

  10. Slide 10: Giant Tiger Sale/Restructure: Discontinued stores revenue and food scale

    2. Giant Tiger Sale/ Restructure Discontinued stores = 14% of …but food buying and 2019 Consolidated Revenue… distribution scale is protected ($ in millions) • Sold GT stores equal 40% of NWC- west food volumes 290 293 297 290 300 278 • Ongoing NWC supply ensures buying 250 scale and DC productivity

  11. Slide 11: NSA Performance: supply chain and logistics strengths

    3. NSA Performance Supply chain and logistics are NWC core competencies. NSA gives us key strengths in these areas… • 2-3 x weekly cargo service to 40 NWC northern Canadian retail stores, using three owned Basler, two owned ATR 72-500 and additional leased ATR aircraft as required • Passenger servic

  12. Slide 12: NSA Performance: 2019 EBIT shortfall

    3. NSA Performance NSA’s 2019 EBIT performance was $4.5 million short of plan and is at risk to be a further $2 million lower in 2020 (annualized) due to the following: • $3 million in charter cargo aircraft usage due to Basler and ATR downtime and reduced Basler revenue due to new operating procedu

  13. Slide 13: NSA Performance: Q1-Q2 actions

    3. NSA Performance Q1 - Q2 Actions to address: • Third owned ATR 72-500 will be in service in early Q2, replacing $1-1.5 million in third party aircraft expense and helping to scale ATR parts inventory utilization • Ongoing plane load optimization is expected to generate $0.5 million - $1.5 million

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