Presentation is loading. Please wait.

Presentation is loading. Please wait.

A Great Strategic Fit August 28, 2007. Conference Call Participants Edward Kennedy President & CEO The North West Company Jeffrey Meder President & CEO.

Similar presentations


Presentation on theme: "A Great Strategic Fit August 28, 2007. Conference Call Participants Edward Kennedy President & CEO The North West Company Jeffrey Meder President & CEO."— Presentation transcript:

1 A Great Strategic Fit August 28, 2007

2 Conference Call Participants Edward Kennedy President & CEO The North West Company Jeffrey Meder President & CEO Cost-U-Less Léo Charrière Executive Vice-President & CFO The North West Company Martin Moore Vice-President & CFO Cost-U-Less

3 Caution Concerning Forward Looking Statements This report may contain forward-looking statements about the North West Company Fund, including its business operations, strategy and expected financial performance and condition. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as expects, anticipates, plans, believes, estimates, intends, targets, projects, forecasts or negative versions thereof and other similar expressions, or future or conditional future financial performance (including revenues, earnings or growth rates), ongoing business strategies or prospects, and possible future Fund action, is also a forward-looking statement. Forward-looking statements are based on current expectations and projections about future events and are inherently subject to, among other things, risks, uncertainties and assumptions about the Fund, economic factors and the retail industry generally. They are no guarantees of future performance, and actual events and results could differ materially from those expressed or implied by forward-looking statements made by the Fund due to, but not limited to, important factors such as general economic, political and market factors in North America and internationally, interest and foreign exchange rates, changes in accounting policies and methods used to report financial condition, including uncertainties associated with critical accounting assumptions and estimates, the effect of applying future accounting changes, business competition, technological change, changes in government regulations and legislation, changes in tax laws, unexpected judicial or regulatory proceedings, catastrophic events, the Funds ability to complete strategic transactions and integrate acquisitions and the Companys success in anticipating and managing the foregoing risks. The reader is cautioned that the foregoing list of important factors is not exhaustive. Other risks are outlined in the Risk Management section of the MD&A included in the Funds 2006 Managements Discussion & Analysis and Consolidated Financial Statements report. The reader is also cautioned to consider these and other factors carefully and not place undue reliance on forward-looking statements. Other than as specifically required by applicable law, the Company has no specific intention to update any forward-looking statements whether as a result of new information, future events or otherwise.

4 Non-GAAP Financial Measures This report may also contain non-GAAP financial measures. Non-GAAP financial measures are used to provide management and investors with additional measures of performance. However, we caution that non-GAAP financial measures do not have standard meanings prescribed by GAAP and are not directly comparable to similar measures used by other companies. Specific instances of such measures that may be referred to within this document includes Trading Profit. We refer you to the appropriate reconciliation in the Managements Discussion & Analysis of these non-GAAP financial measures to measures prescribed by GAAP.

5 Documents Incorporated by Reference Readers of this presentation are directed to the following documents relating to North West Company Funds (NWF) results: NWF 2006 Summary Annual Report, Annual Information Form and Information Circular issued April 20, 2007 NWF 2006 Managements Discussion & Analysis and Consolidated Financial Statements NWF Q1 2007 Report to Unitholders issued June 5, 2007 Each of these documents are made available on the Companys website at www.northwest.ca and also at www.sedar.com.

6 Cost-U-Less Acquisition Summary Convergence of CULs strategic review and NWCs new market development activities All cash, US $11.75 per share, US $52.2 million transaction 8.0X EBITDA pre-integration, 5.0-5.50X EBITDA post In line with precedent transactions

7 In Line With Sample Precedent Transactions DATETARGETBUYER(S)TEVTEV / LTM REVENUES / EBITDA 03/20/07Mrs. GreensPlanet Organic340.9X7.0X 03/01/07Beverage & MoreTower Brook2050.6XN/A 04/20/06MarshSun Capital2960.2X8.9X 12/27/05Goodys GMM Capital2350.2X9.7X 12/23/05Party CityBerkshire Partners3500.7X12.5X 12/01/05FoodaramaManagement2940.2X7.0X 10/04/05BrookstoneOSIM Intl3910.8X8.3X 01/26/04Uni-MartsManagement890.3X13.0X 27/08/07Cost-U-LessNorth West600.3X8.0X

8 Cost-U-Less Acquisition Summary Convergence of CULs strategic review and NWCs new market development activities All cash, US $11.75 per share, US $52.2 million transaction 8.0X EBITDA pre-integration, 5.0-5.50X EBITDA post In line with precedent transactions Closing by end of November 2007, subject to CUL shareholder, SEC approval

9 Cost-U-Less Overview Founded in 1989 with one store in Maui Went public in 1998 New management team retrenched and refocused in 2000 Currently 11 warehouse stores with 12 th to open in November

10 Cost-U-Less Overview

11 SALES ($ in millions)

12 Cost-U-Less Overview TRADING PROFIT ($ in millions)

13 Cost-U-Less Overview NET EARNINGS ($ in millions)

14 Cost-U-Less Overview Average store size is 32,000 square feet Dominant warehouse store format in 9 of 11 markets Expertise in logistics, buying and local market knowledge Stores are in good physical condition Recently upgraded store information systems

15 Cost-U-Less Overview Your -- The right mix for each market to become their store Best Value -- EDLP-driven, fair price for all items offered Warehouse Store -- Defines core merchandise mix (with no club fees) YOUR BEST VALUE WAREHOUSE STORE

16 Cost-U-Less Overview 3,000 SKUs of branded and local product Non-perishable food: 40% of sales Dry groceries, soda, beer, wine, candy, snacks Fresh food: 27% of sales Frozen, cooler, dairy, meat, produce Non-food: 33% of sales Sundries, health and beauty, electronics, furniture and housewares

17 Cost-U-Less Overview

18

19

20

21

22

23 Two store market: Dededo open 15 years, Tamuning 11 years Economic outlook positive with military build-up Customer loyalty program a key strategy GUAM

24 Cost-U-Less Overview AMERICAN SAMOA Open 12 years Tuna industry drives economy U.S. Congress recently extended key tax breaks for two years

25 Cost-U-Less Overview HILO Open 14.5 years Strong economy: Significant population & housing growth Evaluating relocation opportunities

26 Cost-U-Less Overview ST. CROIX In market for 12.5 years, relocated May 2005 Stable economy based on oil refinery industry Improving performance of relocated store New prototypical layout

27 Cost-U-Less Overview ST. MAARTEN In market for almost 7 years Tourism-based economy improving: Airport expansion, new Marriott Hotel project Growing business segment: Off-island, mega yachts French business increasing Occupy strong market position

28 Cost-U-Less Overview Maintaining EDLP leadership Low costs as an integral part of CUL culture Managing risk (weather, political, economic, competitive) Shifting to a growth focus CURRENT KEYS TO SUCCESS

29 Cost-U-Less Strategic Fit with North West Compatible size and company values Shared focus on remote, second world markets Brings dedicated resources to support activities, i.e. store development, human resources Brings financial strength and flexibility to grow Offers opportunity for CUL merchandising people to apply skills to NWCs Alaska and Canadian markets THE CUL PERSPECTIVE:

30 Similar demographic and psychographic customer profiles Similar high entry barriers (regulation, supply chain, climate, size) Shared focus on food and everyday needs Shared focus on localized approach to product mix and empowered local management THE NWC PERSPECTIVE: Cost-U-Less Strategic Fit with North West

31 Intrapreneurial culture Leading market position Post turnaround with stable cash flow, low maintenance capex Need for operational and public company scale = opportunity to leverage NWC capability Opportunity for growth and further performance enhancement THE NWC PERSPECTIVE: Cost-U-Less Strategic Fit with North West

32 Projected Cost Synergies Consolidation of executive positions Consolidation of admin and support Combining of U.S. merchandising groups Consolidation of warehouse and office space between Anchorage and Seattle Elimination of CUL public company expenses Current cost synergy target is $3 million annualized, beginning in 2008

33 Attractive Opportunities for Growth New store openings in Cayman Islands (Q4/07) and Aruba (2008) Multi-format growth strategy in South Pacific beginning in 2008 New warehouse and complementary format stores in Caribbean beginning in 2009-2010 Assess CUL capabilities to bring small-format warehouse stores to rural centres in Alaska and Western Canada

34 South Pacific Market

35 Carribbean Market

36 Same Store Enhancement Opportunities Shift to NWC-style pay for performance Enhance store merchandise selection and ordering capability Leverage Supervalu, NWC Canada and Giant Tiger procurement strengths Test / Introduce more opening price points, smaller sizes, trend, financial services and big ticket products Bring CUL warehouse product expertise to existing Canadian and Alaskan store formats

37 Risk Assessment New store performance Large-box competitive entry Achieving cost synergies Complexity of AC / CUL / NWC integration Shortfalls to growth analysis and assumptions Higher maintenance capex

38 Summary An attractive medium- to long-term growth driver Accretion to NWC earnings beginning in 2008 Similar strategy and competitive strengths Similar high entry barriers, remoteness and challenging physical environment Favourable demographics or economic trends Stable earnings reflects compatible business risk Weve done this before (AC acquisition and Giant Tiger roll-out)

39 Questions?


Download ppt "A Great Strategic Fit August 28, 2007. Conference Call Participants Edward Kennedy President & CEO The North West Company Jeffrey Meder President & CEO."

Similar presentations


Ads by Google