SpartanNash Announces Third Quarter 2019 Financial Results
Third Quarter Net Sales Increased 6.0%, Including Positive Retail Comparable Store Sales
Profitability Consistent with Company Guidance
GRAND RAPIDS, Mich.--(BUSINESS WIRE)-- SpartanNash Company (the “Company”) (Nasdaq: SPTN) today reported financial results for the 12-week third quarter and 40-week period ended October 5, 2019.
Third Quarter Fiscal 2019 Highlights
- Net sales growth of 6.0%, to $2.00 billion from $1.89 billion in the prior year quarter
- Retail comparable store sales increased 0.1%
- EPS of $(0.01) per share; Adjusted EPS of $0.30, including $0.08 in CEO transition and supplemental incentive program costs (“Transition Costs”), which were specifically excluded from August 14, 2019 guidance
- The Company reaffirms full year guidance; quantifies previously excluded Transition Costs
“We are encouraged to have delivered third quarter profitability and sales growth in-line with the guidance we provided in August,” said Dennis Eidson, Interim President and Chief Executive Officer. “Our results were driven by a solid increase in net sales, representing our fourteenth consecutive quarter of growth and we are pleased with the return to positive retail comparable store sales. Our team is focused on driving improvements in operational execution and positioning the Company to realize profitable growth as we deliver value to our shareholders.”
Consolidated Financial Results
Consolidated net sales for the third quarter increased $113.1 million, or 6.0%, to $2.00 billion from $1.89 billion in the prior year quarter. The increase in net sales was generated through incremental volume resulting from the acquisition of Martin’s Super Markets (“Martins”) as well as higher sales within the Food Distribution segment, prior to the elimination of the intercompany sales for the acquired business.
Gross profit for the third quarter of fiscal 2019 was $290.4 million, or 14.5% of net sales, compared to $256.1 million, or 13.6% of net sales, in the prior year quarter. The growth in gross profit and improvement as a percent of net sales was primarily driven by the acquisition of Martin’s and the resulting higher mix of Retail sales.
Reported operating expenses for the third quarter were $274.6 million, or 13.7% of net sales, compared to $229.3 million, or 12.2% of net sales, in the prior year quarter. The increase in expenses as a rate of sales compared to the prior year quarter was due to additional Retail segment business associated with Martin’s and, to a lesser extent, an increase in administrative expenses, primarily related to Transition Costs, and incremental supply chain costs. Third quarter operating expenses would have been $272.3 million, or 13.6% of net sales, compared to $228.3 million, or 12.1% of net sales, in the prior year quarter, excluding the asset impairment charges and other adjustments detailed in Table 3.
The Company reported operating earnings of $15.8 million compared to $26.8 million in the prior year quarter. The decrease was primarily attributable to higher administrative expenses and supply chain costs, partially offset by incremental earnings from the newly acquired Martin’s business and growth in the Food Distribution segment. Adjusted operating earnings(1) were $20.3 million compared to $27.8 million in the prior year and were adjusted for Fresh Kitchen operating losses subsequent to the decision to exit the business at the end of the second quarter. The decrease in adjusted operating earnings was due to the factors mentioned above, partially offset by the adjustment of Fresh Kitchen operating losses. Please see the financial tables at the end of this press release for a reconciliation of each non-GAAP financial measure to the most directly comparable measure, prepared and presented in accordance with GAAP.
The Company reported a third quarter loss from continuing operations of $0.3 million, or $0.01 per share, compared to earnings of $17.5 million, or $0.49 per diluted share, in the prior year quarter. The decrease reflects $7.7 million in expense associated with the previously announced termination of the Company’s corporate pension plan as well as the operating earnings changes noted above.
Adjusted earnings from continuing operations(3) for the third quarter were $10.9 million, or $0.30 per diluted share, and include $2.9 million, or $0.08 per diluted share, in Transition Costs which were specifically excluded from the guidance provided on August 14, 2019. Adjusted earnings from continuing operations in the prior year quarter were $17.9 million, or $0.50 per diluted share. A reconciliation of reported earnings from continuing operations to adjusted earnings from continuing operations is included at Table 4.
Adjusted EBITDA(2) was $41.6 million compared to $48.3 million in the prior year quarter due to the factors mentioned above.
Segment Financial Results
Food Distribution
Net sales for Food Distribution decreased $1.2 million, or 0.1%, to $939.0 million from $940.2 million in the prior year quarter. Excluding the impact of the elimination of intercompany sales to Martin’s subsequent to the acquisition, sales increased 3.6%, primarily due to sales growth with existing customers.
Reported operating earnings for Food Distribution were $11.7 million compared to $19.8 million in the prior year quarter. The decrease in reported operating earnings was due to higher corporate administrative expenses, including Transition Costs, as well as supply chain costs, partially offset by contributions from sales growth. Third quarter adjusted operating earnings(1) were $15.5 million compared to $20.4 million in the prior year quarter primarily due to the same items. Adjusted operating earnings exclude Fresh Kitchen operating losses subsequent to the decision to exit the business and asset impairment charges in the current year quarter, and merger/acquisition and integration expenses in the prior year quarter.
Military Distribution
Net sales for Military Distribution decreased $1.0 million, or 0.2%, to $499.2 million from $500.2 million in the prior year quarter. The decrease was due to lower comparable sales at DeCA operated locations partially offset by incremental volume from new business with an existing customer that commenced late in the fourth quarter of 2018 and the continued expansion of DeCA’s private brand program.
Reported operating loss for Military Distribution was $2.6 million compared to operating earnings of $1.5 million in the prior year quarter. The decrease was primarily attributable to higher supply chain costs and corporate administrative expenses. The third quarter adjusted operating loss(1) was $2.5 million compared to earnings of $1.6 million in the prior year quarter.
Retail
Net sales for Retail increased $115.3 million, or 25.8%, to $561.6 million from $446.3 million in the prior year quarter. Comparable store sales were positive at 0.1%, however were offset by a decrease in fuel sales primarily due to a lower price per gallon.
Reported operating earnings for Retail were $6.7 million compared to operating earnings of $5.5 million in the prior year quarter. The increase in reported operating earnings was primarily attributable to the contribution of the acquired Martin’s stores, the favorable impact of closing underperforming stores and improvements in margin rates, partially offset by higher corporate administrative expenses, including Transition Costs. Adjusted operating earnings(1) were $7.3 million compared to $5.9 million in the prior year quarter and exclude restructuring charges in both periods.
Cash Flow
Cash flows provided by operating activities for the 40 weeks ended October 5, 2019 were $140.0 million, materially consistent with the 40 weeks ended October 6, 2018 at $142.5 million. The Company generated $93.1 million in free cash flow(5) over the same period in the current year and $89.9 million in the prior year.
During the first three quarters of fiscal 2019, the Company returned $20.7 million to shareholders in the form of cash dividends equal to $0.57 per common share.
Strategic Business Objectives
The following are key updates to the Company’s progress towards its strategic business objectives during the third quarter of 2019:
- Sustained mid-single digit sales growth in the third quarter, realizing 6.0% net sales growth from the same quarter in the prior year and delivering its 14th consecutive quarter of net sales growth.
- Continued to implement Project One Team initiatives and remains on track to achieve a run rate of over $20.0 million in annual cost savings by April 20, 2021.
- Continued to reduce both working capital and debt compared to the prior year, despite sustaining net sales growth and the acquisition of Martin’s in early 2019.
Outlook
The Company is reaffirming its net sales and profitability outlook previously provided on August 14, 2019, and has now estimated Transition Costs which were not previously quantified. These costs are expected to range from $9.0 to $9.7 million in adjusted EBITDA(2) and $6.6 to $7.1 million in adjusted earnings from continuing operations(3), or $0.18 to $0.20 per diluted share.
|
August 14, 2019 Guidance |
|
|
|
Guidance Including Transition Costs |
|
52 Weeks Ending December 28, 2019 |
Transition costs |
|
52 Weeks Ending December 28, 2019 |
|
Net Sales Growth |
Mid-single digits |
— |
|
Mid-single digits |
|
Adjusted EBITDA(2) |
$183.0 - $195.0 million |
$9.0 - $9.7 million |
|
$173.3 - $186.0 million |
|
Adjusted EPS from Continuing Operations(4) |
$1.20 - $1.35 |
$0.18 - $0.20 |
|
$1.00 - $1.17 |
|
Reported EPS from Continuing Operations |
$0.21 - $0.47 |
$0.18 - $0.20 |
|
$0.01 - $0.29 |
|
The Company’s fiscal 2019 reported earnings guidance reflects an effective tax rate benefit of 17.0% to 20.0% and the adjusted earnings guidance reflects an effective tax rate expense of 18.0% to 18.5%. The Company expects capital expenditures for fiscal year 2019 to be in the range of $80.0 million to $89.0 million, with depreciation and amortization of $88.0 million to $89.0 million. Interest expense is expected to range from $34.5 million to $35.0 million.
The Fresh Kitchen will cease production during the fourth quarter of fiscal 2019 and the Company anticipates a disposition of the facility and related assets as early as the first quarter of fiscal 2020.
The Board of Directors has begun a formal process to identify the Company’s next Chief Executive Officer. Spencer Stuart, a leading executive search and leadership consulting firm, has been retained as an advisor in the process.
Conference Call
A telephone conference call to discuss the Company’s third quarter 2019 financial results is scheduled for Thursday, November 7, 2019 at 8:00 a.m. ET. A live webcast of this conference call will be available on the Company’s website, www.spartannash.com/webcasts. Simply click on “For Investors” and follow the links to the live webcast. The webcast will remain available for replay on the Company’s website for approximately ten days.
About SpartanNash
SpartanNash (Nasdaq: SPTN) is a Fortune 400 company whose core businesses include distributing grocery products to a diverse group of independent and chain retailers, its corporate-owned retail stores and U.S. military commissaries and exchanges; as well as premier fresh produce distribution and fresh food processing. SpartanNash serves customer locations in all 50 states and the District of Columbia, Europe, Cuba, Puerto Rico, Bahrain, Djibouti and Egypt. SpartanNash currently operates 158 supermarkets, primarily under the banners of Family Fare, Martin’s Super Markets, D&W Fresh Market, VG’s Grocery, Dan’s Supermarket and Family Fresh Market. Through its MDV military division, SpartanNash is a leading distributor of grocery products to U.S. military commissaries.
Forward-Looking Statements
This press release contains “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These include statements preceded by, followed by or that otherwise include the words “outlook,” “believe,” “anticipates,” “continue,” “expects,” “guidance,” “trend,” “on track,” “encouraged” or “plan” or similar expressions. The statements in the “Outlook” section of this press release are inherently forward looking. Forward-looking statements relating to expectations about future results or events are based upon information available to SpartanNash as of today's date, and are not guarantees of the future performance of the Company, and actual results may vary materially from the results and expectations discussed. Additional risks and uncertainties include, but are not limited to, the Company's ability to compete in the highly competitive grocery distribution, retail grocery, and military distribution industries. Additional information concerning these and other risks is contained in SpartanNash’s most recently filed Annual Report on Form 10-K, recent Current Reports on Form 8-K and other SEC filings. All subsequent written and oral forward-looking statements concerning SpartanNash, or other matters and attributable to SpartanNash or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above. SpartanNash does not undertake any obligation to publicly update any of these forward-looking statements to reflect events or circumstances that may arise after the date hereof.
(1) A reconciliation of operating earnings to adjusted operating earnings, a non-GAAP financial measure, is provided below.
(2) A reconciliation of net loss to Adjusted EBITDA, a non-GAAP financial measure, is provided below.
(3) A reconciliation of loss from continuing operations to adjusted earnings from continuing operations, a non-GAAP financial measure, is provided below.
(4) A reconciliation of projected earnings per share from continuing operations to adjusted earnings per share from continuing operations, a non-GAAP financial measure, is provided below.
(5) A reconciliation of net cash provided by operating activities to free cash flow, a non-GAAP financial measure, is provided below.
SPARTANNASH COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) |
||||||||||||||||||||
|
12 Weeks Ended |
|
40 Weeks Ended |
|
||||||||||||||||
|
October 5, |
|
October 6, |
|
October 5, |
|
October 6, |
|
||||||||||||
(In thousands, except per share amounts) |
2019 |
|
2018 |
|
2019 |
|
2018 |
|
||||||||||||
Net sales |
$ |
|
1,999,808 |
|
|
$ |
|
1,886,730 |
|
|
$ |
|
6,538,112 |
|
|
$ |
|
6,167,756 |
|
|
Cost of sales |
|
|
1,709,447 |
|
|
|
|
1,630,588 |
|
|
|
|
5,581,015 |
|
|
|
|
5,302,740 |
|
|
Gross profit |
|
|
290,361 |
|
|
|
|
256,142 |
|
|
|
|
957,097 |
|
|
|
|
865,016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative |
|
|
273,286 |
|
|
|
|
228,583 |
|
|
|
|
900,160 |
|
|
|
|
773,844 |
|
|
Merger/acquisition and integration |
|
|
— |
|
|
|
|
521 |
|
|
|
|
1,364 |
|
|
|
|
3,531 |
|
|
Restructuring charges and asset impairment |
|
|
1,296 |
|
|
|
|
232 |
|
|
|
|
10,215 |
|
|
|
|
5,269 |
|
|
Total operating expenses |
|
|
274,582 |
|
|
|
|
229,336 |
|
|
|
|
911,739 |
|
|
|
|
782,644 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating earnings |
|
|
15,779 |
|
|
|
|
26,806 |
|
|
|
|
45,358 |
|
|
|
|
82,372 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other expenses and (income) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
7,375 |
|
|
|
|
7,082 |
|
|
|
|
27,952 |
|
|
|
|
22,828 |
|
|
Loss on debt extinguishment |
|
|
329 |
|
|
|
|
— |
|
|
|
|
329 |
|
|
|
|
— |
|
|
Postretirement benefit expense (income) |
|
|
10,221 |
|
|
|
|
(6 |
) |
|
|
|
19,677 |
|
|
|
|
(20 |
) |
|
Other, net |
|
|
(180 |
) |
|
|
|
(189 |
) |
|
|
|
(1,071 |
) |
|
|
|
(635 |
) |
|
Total other expenses, net |
|
|
17,745 |
|
|
|
|
6,887 |
|
|
|
|
46,887 |
|
|
|
|
22,173 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
(Loss) earnings before income taxes and discontinued operations |
|
|
(1,966 |
) |
|
|
|
19,919 |
|
|
|
|
(1,529 |
) |
|
|
|
60,199 |
|
|
Income tax (benefit) expense |
|
|
(1,656 |
) |
|
|
|
2,374 |
|
|
|
|
(1,973 |
) |
|
|
|
12,381 |
|
|
(Loss) earnings from continuing operations |
|
|
(310 |
) |
|
|
|
17,545 |
|
|
|
|
444 |
|
|
|
|
47,818 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss from discontinued operations, net of taxes |
|
|
(27 |
) |
|
|
|
(80 |
) |
|
|
|
(126 |
) |
|
|
|
(238 |
) |
|
Net (loss) earnings |
$ |
|
(337 |
) |
|
$ |
|
17,465 |
|
|
$ |
|
318 |
|
|
$ |
|
47,580 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic (loss) earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
(Loss) earnings from continuing operations |
$ |
|
(0.01 |
) |
|
$ |
|
0.49 |
|
|
$ |
|
0.01 |
|
|
$ |
|
1.33 |
|
|
Loss from discontinued operations |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
(0.01 |
) |
|
Net (loss) earnings |
$ |
|
(0.01 |
) |
|
$ |
|
0.49 |
|
|
$ |
|
0.01 |
|
|
$ |
|
1.32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted (loss) earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
(Loss) earnings from continuing operations |
$ |
|
(0.01 |
) |
|
$ |
|
0.49 |
|
|
$ |
|
0.01 |
|
|
$ |
|
1.33 |
|
|
Loss from discontinued operations |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
(0.01 |
) |
|
Net (loss) earnings |
$ |
|
(0.01 |
) |
|
$ |
|
0.49 |
|
|
$ |
|
0.01 |
|
|
$ |
|
1.32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
36,340 |
|
|
|
|
35,934 |
|
|
|
|
36,248 |
|
|
|
|
36,033 |
|
|
Diluted |
|
|
36,340 |
|
|
|
|
35,946 |
|
|
|
|
36,248 |
|
|
|
|
36,045 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
SPARTANNASH COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) |
|||||||||
|
October 5, |
|
|
December 29, |
|
||||
(In thousands) |
2019 |
|
|
2018 |
|
||||
Assets |
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
|
23,436 |
|
|
$ |
|
18,585 |
|
Accounts and notes receivable, net |
|
|
374,287 |
|
|
|
|
346,260 |
|
Inventories, net |
|
|
594,676 |
|
|
|
|
553,799 |
|
Prepaid expenses and other current assets |
|
|
52,176 |
|
|
|
|
73,798 |
|
Property and equipment held for sale |
|
|
3,968 |
|
|
|
|
8,654 |
|
Total current assets |
|
|
1,048,543 |
|
|
|
|
1,001,096 |
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
618,126 |
|
|
|
|
579,060 |
|
Goodwill |
|
|
181,035 |
|
|
|
|
178,648 |
|
Intangible assets, net |
|
|
128,351 |
|
|
|
|
128,926 |
|
Operating lease assets |
|
|
272,591 |
|
|
|
|
— |
|
Other assets, net |
|
|
85,900 |
|
|
|
|
84,182 |
|
|
|
|
|
|
|
|
|
|
|
Total assets |
$ |
|
2,334,546 |
|
|
$ |
|
1,971,912 |
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
Accounts payable |
$ |
|
456,991 |
|
|
$ |
|
357,802 |
|
Accrued payroll and benefits |
|
|
59,472 |
|
|
|
|
57,180 |
|
Other accrued expenses |
|
|
45,667 |
|
|
|
|
43,206 |
|
Current portion of operating lease liabilities |
|
|
41,795 |
|
|
|
|
— |
|
Current portion of long-term debt and finance lease liabilities |
|
|
7,044 |
|
|
|
|
18,263 |
|
Total current liabilities |
|
|
610,969 |
|
|
|
|
476,451 |
|
|
|
|
|
|
|
|
|
|
|
Long-term liabilities |
|
|
|
|
|
|
|
|
|
Deferred income taxes |
|
|
43,734 |
|
|
|
|
49,254 |
|
Operating lease liabilities |
|
|
273,631 |
|
|
|
|
— |
|
Other long-term liabilities |
|
|
30,861 |
|
|
|
|
50,463 |
|
Long-term debt and finance lease liabilities |
|
|
686,055 |
|
|
|
|
679,797 |
|
Total long-term liabilities |
|
|
1,034,281 |
|
|
|
|
779,514 |
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity |
|
|
|
|
|
|
|
|
|
Common stock, voting, no par value; 100,000 shares authorized; 36,350 and 35,952 shares outstanding |
|
|
489,656 |
|
|
|
|
484,064 |
|
Preferred stock, no par value, 10,000 shares authorized; no shares outstanding |
|
|
— |
|
|
|
|
— |
|
Accumulated other comprehensive loss |
|
|
(748 |
) |
|
|
|
(15,759 |
) |
Retained earnings |
|
|
200,388 |
|
|
|
|
247,642 |
|
Total shareholders’ equity |
|
|
689,296 |
|
|
|
|
715,947 |
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders’ equity |
$ |
|
2,334,546 |
|
|
$ |
|
1,971,912 |
|
|
|
|
|
|
|
|
|
|
|
SPARTANNASH COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
||||||||||
|
|
40 Weeks Ended |
||||||||
(In thousands) |
|
October 5, 2019 |
|
October 6, 2018 |
||||||
Cash flow activities |
|
|
|
|
|
|
|
|
||
Net cash provided by operating activities |
|
$ |
|
140,034 |
|
|
$ |
|
142,546 |
|
Net cash used in investing activities |
|
|
|
(117,645 |
) |
|
|
|
(45,533 |
) |
Net cash used in financing activities |
|
|
|
(17,385 |
) |
|
|
|
(91,773 |
) |
Net cash used in discontinued operations |
|
|
|
(153 |
) |
|
|
|
(234 |
) |
Net increase in cash and cash equivalents |
|
|
|
4,851 |
|
|
|
|
5,006 |
|
Cash and cash equivalents at beginning of the period |
|
|
|
18,585 |
|
|
|
|
15,667 |
|
Cash and cash equivalents at end of the period |
|
$ |
|
23,436 |
|
|
$ |
|
20,673 |
|
SPARTANNASH COMPANY AND SUBSIDIARIES SUPPLEMENTAL FINANCIAL DATA
Table 1: Sales and Operating Earnings by Segment (Unaudited) |
|||||||||||||||||||||||||||||||
|
12 Weeks Ended |
|
|
40 Weeks Ended |
|
||||||||||||||||||||||||||
(In thousands) |
October 5, 2019 |
|
|
October 6, 2018 |
|
|
October 5, 2019 |
|
|
October 6, 2018 |
|
||||||||||||||||||||
Food Distribution Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
|
939,047 |
|
|
47.0 |
% |
|
$ |
|
940,183 |
|
|
49.8 |
% |
|
$ |
|
3,043,668 |
|
|
46.6 |
% |
|
$ |
|
3,037,096 |
|
|
49.3 |
% |
Operating earnings |
|
|
11,699 |
|
|
|
|
|
|
|
19,815 |
|
|
|
|
|
|
|
36,564 |
|
|
|
|
|
|
|
63,060 |
|
|
|
|
Military Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
|
499,156 |
|
|
24.9 |
% |
|
|
|
500,222 |
|
|
26.5 |
% |
|
|
|
1,661,097 |
|
|
25.4 |
% |
|
|
|
1,653,496 |
|
|
26.8 |
% |
Operating (loss) earnings |
|
|
(2,646 |
) |
|
|
|
|
|
|
1,508 |
|
|
|
|
|
|
|
(5,806 |
) |
|
|
|
|
|
|
6,120 |
|
|
|
|
Retail Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
|
561,605 |
|
|
28.1 |
% |
|
|
|
446,325 |
|
|
23.7 |
% |
|
|
|
1,833,347 |
|
|
28.0 |
% |
|
|
|
1,477,164 |
|
|
23.9 |
% |
Operating earnings |
|
|
6,726 |
|
|
|
|
|
|
|
5,483 |
|
|
|
|
|
|
|
14,600 |
|
|
|
|
|
|
|
13,192 |
|
|
|
|
Total: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
|
1,999,808 |
|
|
100.0 |
% |
|
$ |
|
1,886,730 |
|
|
100.0 |
% |
|
$ |
|
6,538,112 |
|
|
100.0 |
% |
|
$ |
|
6,167,756 |
|
|
100.0 |
% |
Operating earnings |
|
|
15,779 |
|
|
|
|
|
|
|
26,806 |
|
|
|
|
|
|
|
45,358 |
|
|
|
|
|
|
|
82,372 |
|
|
|
|
Non-GAAP Financial Measures
In addition to reporting financial results in accordance with GAAP, the Company also provides information regarding Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“adjusted EBITDA”), adjusted operating earnings, adjusted earnings from continuing operations, total net long-term debt, free cash flow and projected adjusted earnings per diluted share from continuing operations. These are non-GAAP financial measures, as defined below, and are used by management to allocate resources, assess performance against its peers and evaluate overall performance. The Company believes these measures provide useful information for both management and its investors. The Company believes these non-GAAP measures are useful to investors because they provide additional understanding of the trends and special circumstances that affect its business. These measures provide useful supplemental information that helps investors to establish a basis for expected performance and the ability to evaluate actual results against that expectation. The measures, when considered in connection with GAAP results, can be used to assess the overall performance of the Company as well as assess the Company’s performance against its peers. These measures are also used as a basis for certain compensation programs sponsored by the Company. In addition, securities analysts, fund managers and other shareholders and stakeholders that communicate with the Company request its financial results in these adjusted formats.
Current year adjusted operating earnings, adjusted earnings from continuing operations, and adjusted EBITDA exclude “Fresh Kitchen operating losses” subsequent to the decision to exit these operations at the beginning of the third quarter, costs associated with organizational realignment, which include significant changes to the Company’s management team, and fees paid to a third-party advisory firm associated with Project One Team, the Company’s initiative to drive growth while increasing efficiency and reducing costs. Pension termination costs, primarily related to non-operating settlement expense associated with the distribution of pension assets, are excluded from adjusted earnings from continuing operations, and to a lesser extent adjusted operating earnings. These items are considered “non-operational” or “non-core” in nature. Prior year adjusted operating earnings, adjusted earnings from continuing operations, and adjusted EBITDA exclude start-up costs associated with the Fresh Kitchen operation, which concluded during the first quarter of 2018. The Fresh Kitchen represented a new line of business for the Company.
Table 2: Reconciliation of Net Earnings to Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) (A Non-GAAP Financial Measure) (Unaudited) |
|||||||||||||||||||
|
12 Weeks Ended |
|
|
40 Weeks Ended |
|
||||||||||||||
(In thousands) |
October 5, 2019 |
|
|
October 6, 2018 |
|
|
October 5, 2019 |
|
|
October 6, 2018 |
|
||||||||
Net (loss) earnings |
$ |
|
(337 |
) |
|
$ |
|
17,465 |
|
|
$ |
|
318 |
|
|
$ |
|
47,580 |
|
Loss from discontinued operations, net of tax |
|
|
27 |
|
|
|
|
80 |
|
|
|
|
126 |
|
|
|
|
238 |
|
Income tax (benefit) expense |
|
|
(1,656 |
) |
|
|
|
2,374 |
|
|
|
|
(1,973 |
) |
|
|
|
12,381 |
|
Other expenses, net |
|
|
17,745 |
|
|
|
|
6,887 |
|
|
|
|
46,887 |
|
|
|
|
22,173 |
|
Operating earnings |
|
|
15,779 |
|
|
|
|
26,806 |
|
|
|
|
45,358 |
|
|
|
|
82,372 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIFO expense |
|
|
1,268 |
|
|
|
|
654 |
|
|
|
|
3,761 |
|
|
|
|
2,349 |
|
Depreciation and amortization |
|
|
20,351 |
|
|
|
|
19,247 |
|
|
|
|
67,513 |
|
|
|
|
63,272 |
|
Merger/acquisition and integration |
|
|
— |
|
|
|
|
521 |
|
|
|
|
1,364 |
|
|
|
|
3,531 |
|
Restructuring charges and asset impairment |
|
|
1,296 |
|
|
|
|
232 |
|
|
|
|
10,215 |
|
|
|
|
5,269 |
|
Fresh Kitchen start-up costs |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
1,366 |
|
Fresh Kitchen operating losses |
|
|
2,204 |
|
|
|
|
— |
|
|
|
|
2,204 |
|
|
|
|
— |
|
Stock-based compensation |
|
|
638 |
|
|
|
|
773 |
|
|
|
|
6,735 |
|
|
|
|
7,040 |
|
Non-cash rent |
|
|
(1,082 |
) |
|
|
|
(187 |
) |
|
|
|
(4,542 |
) |
|
|
|
(818 |
) |
Costs associated with Project One Team |
|
|
— |
|
|
|
|
— |
|
|
|
|
5,428 |
|
|
|
|
— |
|
Organizational realignment costs |
|
|
935 |
|
|
|
|
— |
|
|
|
|
1,812 |
|
|
|
|
— |
|
Other non-cash charges |
|
|
187 |
|
|
|
|
258 |
|
|
|
|
710 |
|
|
|
|
785 |
|
Adjusted EBITDA |
$ |
|
41,576 |
|
|
$ |
|
48,304 |
|
|
$ |
|
140,558 |
|
|
$ |
|
165,166 |
|
Table 2: Reconciliation of Net Earnings to Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization, continued (Adjusted EBITDA) (A Non-GAAP Financial Measure) (Unaudited) |
|||||||||||||||||||
|
12 Weeks Ended |
|
40 Weeks Ended |
||||||||||||||||
(In thousands) |
October 5, 2019 |
|
October 6, 2018 |
|
October 5, 2019 |
|
October 6, 2018 |
||||||||||||
Food Distribution: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating earnings |
$ |
|
11,699 |
|
|
$ |
|
19,815 |
|
|
$ |
|
36,564 |
|
|
$ |
|
63,060 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
LIFO expense |
|
|
639 |
|
|
|
|
245 |
|
|
|
|
1,869 |
|
|
|
|
929 |
|
Depreciation and amortization |
|
|
7,390 |
|
|
|
|
7,540 |
|
|
|
|
25,368 |
|
|
|
|
24,179 |
|
Merger/acquisition and integration |
|
|
— |
|
|
|
|
479 |
|
|
|
|
(130 |
) |
|
|
|
3,419 |
|
Restructuring charges (gains) and asset impairment |
|
|
1,043 |
|
|
|
|
(68 |
) |
|
|
|
10,724 |
|
|
|
|
1,292 |
|
Fresh Kitchen start-up costs |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
1,366 |
|
Fresh Kitchen operating losses |
|
|
2,204 |
|
|
|
|
— |
|
|
|
|
2,204 |
|
|
|
|
— |
|
Stock-based compensation |
|
|
302 |
|
|
|
|
351 |
|
|
|
|
3,319 |
|
|
|
|
3,318 |
|
Non-cash rent |
|
|
147 |
|
|
|
|
41 |
|
|
|
|
353 |
|
|
|
|
115 |
|
Costs associated with Project One Team |
|
|
— |
|
|
|
|
— |
|
|
|
|
2,877 |
|
|
|
|
— |
|
Organizational realignment costs |
|
|
495 |
|
|
|
|
— |
|
|
|
|
960 |
|
|
|
|
— |
|
Other non-cash charges |
|
|
14 |
|
|
|
|
119 |
|
|
|
|
391 |
|
|
|
|
466 |
|
Adjusted EBITDA |
$ |
|
23,933 |
|
|
$ |
|
28,522 |
|
|
$ |
|
84,499 |
|
|
$ |
|
98,144 |
|
Military: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating (loss) earnings |
$ |
|
(2,646 |
) |
|
$ |
|
1,508 |
|
|
$ |
|
(5,806 |
) |
|
$ |
|
6,120 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
LIFO expense |
|
|
372 |
|
|
|
|
146 |
|
|
|
|
1,034 |
|
|
|
|
544 |
|
Depreciation and amortization |
|
|
2,764 |
|
|
|
|
2,816 |
|
|
|
|
9,097 |
|
|
|
|
9,257 |
|
Merger/acquisition and integration |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
4 |
|
Restructuring charges (gains) |
|
|
— |
|
|
|
|
29 |
|
|
|
|
— |
|
|
|
|
(801 |
) |
Stock-based compensation |
|
|
114 |
|
|
|
|
155 |
|
|
|
|
1,091 |
|
|
|
|
1,181 |
|
Non-cash rent |
|
|
(80 |
) |
|
|
|
(74 |
) |
|
|
|
(283 |
) |
|
|
|
(249 |
) |
Costs associated with Project One Team |
|
|
— |
|
|
|
|
— |
|
|
|
|
706 |
|
|
|
|
— |
|
Organizational realignment costs |
|
|
122 |
|
|
|
|
— |
|
|
|
|
236 |
|
|
|
|
— |
|
Other non-cash (gains) charges |
|
|
(70 |
) |
|
|
|
31 |
|
|
|
|
(91 |
) |
|
|
|
57 |
|
Adjusted EBITDA |
$ |
|
576 |
|
|
$ |
|
4,611 |
|
|
$ |
|
5,984 |
|
|
$ |
|
16,113 |
|
Retail: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating earnings |
$ |
|
6,726 |
|
|
$ |
|
5,483 |
|
|
$ |
|
14,600 |
|
|
$ |
|
13,192 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
LIFO expense |
|
|
257 |
|
|
|
|
263 |
|
|
|
|
858 |
|
|
|
|
876 |
|
Depreciation and amortization |
|
|
10,197 |
|
|
|
|
8,891 |
|
|
|
|
33,048 |
|
|
|
|
29,836 |
|
Merger/acquisition and integration |
|
|
— |
|
|
|
|
42 |
|
|
|
|
1,494 |
|
|
|
|
108 |
|
Restructuring charges (gains) and asset impairment |
|
|
253 |
|
|
|
|
271 |
|
|
|
|
(509 |
) |
|
|
|
4,778 |
|
Stock-based compensation |
|
|
222 |
|
|
|
|
267 |
|
|
|
|
2,325 |
|
|
|
|
2,541 |
|
Non-cash rent |
|
|
(1,149 |
) |
|
|
|
(154 |
) |
|
|
|
(4,612 |
) |
|
|
|
(684 |
) |
Costs associated with Project One Team |
|
|
— |
|
|
|
|
— |
|
|
|
|
1,845 |
|
|
|
|
— |
|
Organizational realignment costs |
|
|
318 |
|
|
|
|
— |
|
|
|
|
616 |
|
|
|
|
— |
|
Other non-cash charges |
|
|
243 |
|
|
|
|
108 |
|
|
|
|
410 |
|
|
|
|
262 |
|
Adjusted EBITDA |
$ |
|
17,067 |
|
|
$ |
|
15,171 |
|
|
$ |
|
50,075 |
|
|
$ |
|
50,909 |
|
Notes: Adjusted EBITDA is a non-GAAP operating financial measure that the Company defines as net earnings plus interest, discontinued operations, depreciation and amortization, and other non-cash items including deferred (stock) compensation, the LIFO provision, as well as adjustments for items that do not reflect the ongoing operating activities of the Company and costs associated with the closing of operational locations.
Adjusted EBITDA and adjusted EBITDA by segment are not measures of performance under accounting principles generally accepted in the United States of America and should not be considered as a substitute for net earnings, cash flows from operating activities and other income or cash flow statement data. The Company’s definitions of adjusted EBITDA and adjusted EBITDA by segment may not be identical to similarly titled measures reported by other companies.
Table 3: Reconciliation of Operating Earnings to Adjusted Operating Earnings (A Non-GAAP Financial Measure) (Unaudited) |
|||||||||||||||||||
|
12 Weeks Ended |
|
40 Weeks Ended |
||||||||||||||||
(In thousands) |
October 5, 2019 |
|
October 6, 2018 |
|
October 5, 2019 |
|
October 6, 2018 |
||||||||||||
Operating earnings |
$ |
|
15,779 |
|
|
$ |
|
26,806 |
|
|
$ |
|
45,358 |
|
|
$ |
|
82,372 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Merger/acquisition and integration |
|
|
— |
|
|
|
|
521 |
|
|
|
|
1,364 |
|
|
|
|
3,531 |
|
Restructuring charges and asset impairment |
|
|
1,296 |
|
|
|
|
232 |
|
|
|
|
10,215 |
|
|
|
|
5,269 |
|
Fresh Kitchen start-up costs |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
1,366 |
|
Fresh Kitchen operating losses |
|
|
2,204 |
|
|
|
|
— |
|
|
|
|
2,204 |
|
|
|
|
— |
|
Expenses associated with tax planning strategies |
|
|
— |
|
|
|
|
225 |
|
|
|
|
— |
|
|
|
|
225 |
|
Costs associated with Project One Team |
|
|
— |
|
|
|
|
— |
|
|
|
|
5,428 |
|
|
|
|
— |
|
Organizational realignment costs |
|
|
935 |
|
|
|
|
— |
|
|
|
|
1,812 |
|
|
|
|
— |
|
Pension termination |
|
|
28 |
|
|
|
|
— |
|
|
|
|
48 |
|
|
|
|
— |
|
Severance associated with cost reduction initiatives |
|
|
43 |
|
|
|
|
50 |
|
|
|
|
484 |
|
|
|
|
668 |
|
Adjusted operating earnings |
$ |
|
20,285 |
|
|
$ |
|
27,834 |
|
|
$ |
|
66,913 |
|
|
$ |
|
93,431 |
|
Reconciliation of operating earnings (loss) to adjusted operating earnings (loss) by segment: |
|||||||||||||||||||
Food Distribution: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating earnings |
$ |
|
11,699 |
|
|
$ |
|
19,815 |
|
|
$ |
|
36,564 |
|
|
$ |
|
63,060 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Merger/acquisition and integration |
|
|
— |
|
|
|
|
479 |
|
|
|
|
(130 |
) |
|
|
|
3,419 |
|
Restructuring charges (gains) and asset impairment |
|
|
1,043 |
|
|
|
|
(68 |
) |
|
|
|
10,724 |
|
|
|
|
1,292 |
|
Fresh Kitchen start-up costs |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
1,366 |
|
Fresh Kitchen operating losses |
|
|
2,204 |
|
|
|
|
— |
|
|
|
|
2,204 |
|
|
|
|
— |
|
Expenses associated with tax planning strategies |
|
|
— |
|
|
|
|
116 |
|
|
|
|
— |
|
|
|
|
116 |
|
Costs associated with Project One Team |
|
|
— |
|
|
|
|
— |
|
|
|
|
2,877 |
|
|
|
|
— |
|
Organizational realignment costs |
|
|
495 |
|
|
|
|
— |
|
|
|
|
960 |
|
|
|
|
— |
|
Pension termination |
|
|
15 |
|
|
|
|
— |
|
|
|
|
26 |
|
|
|
|
— |
|
Severance associated with cost reduction initiatives |
|
|
31 |
|
|
|
|
66 |
|
|
|
|
392 |
|
|
|
|
517 |
|
Adjusted operating earnings |
$ |
|
15,487 |
|
|
$ |
|
20,408 |
|
|
$ |
|
53,617 |
|
|
$ |
|
69,770 |
|
Military: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating (loss) earnings |
$ |
|
(2,646 |
) |
|
$ |
|
1,508 |
|
|
$ |
|
(5,806 |
) |
|
$ |
|
6,120 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Merger/acquisition and integration |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
4 |
|
Restructuring charges (gains) |
|
|
— |
|
|
|
|
29 |
|
|
|
|
— |
|
|
|
|
(801 |
) |
Expenses associated with tax planning strategies |
|
|
— |
|
|
|
|
28 |
|
|
|
|
— |
|
|
|
|
28 |
|
Costs associated with Project One Team |
|
|
— |
|
|
|
|
— |
|
|
|
|
706 |
|
|
|
|
— |
|
Organizational realignment costs |
|
|
122 |
|
|
|
|
— |
|
|
|
|
236 |
|
|
|
|
— |
|
Pension termination |
|
|
3 |
|
|
|
|
— |
|
|
|
|
5 |
|
|
|
|
— |
|
Severance associated with cost reduction initiatives |
|
|
— |
|
|
|
|
(1 |
) |
|
|
|
9 |
|
|
|
|
69 |
|
Adjusted operating (loss) earnings |
$ |
|
(2,521 |
) |
|
$ |
|
1,564 |
|
|
$ |
|
(4,850 |
) |
|
$ |
|
5,420 |
|
Retail: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating earnings |
$ |
|
6,726 |
|
|
$ |
|
5,483 |
|
|
$ |
|
14,600 |
|
|
$ |
|
13,192 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Merger/acquisition and integration |
|
|
— |
|
|
|
|
42 |
|
|
|
|
1,494 |
|
|
|
|
108 |
|
Restructuring charges (gains) and asset impairment |
|
|
253 |
|
|
|
|
271 |
|
|
|
|
(509 |
) |
|
|
|
4,778 |
|
Expenses associated with tax planning strategies |
|
|
— |
|
|
|
|
81 |
|
|
|
|
— |
|
|
|
|
81 |
|
Costs associated with Project One Team |
|
|
— |
|
|
|
|
— |
|
|
|
|
1,845 |
|
|
|
|
— |
|
Organizational realignment costs |
|
|
318 |
|
|
|
|
— |
|
|
|
|
616 |
|
|
|
|
— |
|
Pension termination |
|
|
10 |
|
|
|
|
— |
|
|
|
|
17 |
|
|
|
|
— |
|
Severance associated with cost reduction initiatives |
|
|
12 |
|
|
|
|
(15 |
) |
|
|
|
83 |
|
|
|
|
82 |
|
Adjusted operating earnings |
$ |
|
7,319 |
|
|
$ |
|
5,862 |
|
|
$ |
|
18,146 |
|
|
$ |
|
18,241 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Notes: Adjusted operating earnings is a non-GAAP operating financial measure that the Company defines as operating earnings plus or minus adjustments for items that do not reflect the ongoing operating activities of the Company and costs associated with the closing of operational locations.
Adjusted operating earnings is not a measure of performance under accounting principles generally accepted in the United States of America and should not be considered as a substitute for operating earnings, cash flows from operating activities and other income or cash flow statement data. The Company’s definition of adjusted operating earnings may not be identical to similarly titled measures reported by other companies.
Table 4: Reconciliation of Earnings from Continuing Operations to Adjusted Earnings from Continuing Operations (A Non-GAAP Financial Measure) (Unaudited) |
|||||||||||||||||||
|
12 Weeks Ended |
|
|||||||||||||||||
|
October 5, 2019 |
|
October 6, 2018 |
|
|||||||||||||||
|
|
|
per diluted |
|
|
|
per diluted |
|
|||||||||||
(In thousands, except per share amounts) |
Earnings |
|
share |
|
Earnings |
|
share |
|
|||||||||||
(Loss) earnings from continuing operations |
$ |
|
(310 |
) |
|
$ |
|
(0.01 |
) |
|
$ |
|
17,545 |
|
|
$ |
|
0.49 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Merger/acquisition and integration |
|
|
— |
|
|
|
|
|
|
|
|
521 |
|
|
|
|
|
|
|
Restructuring charges and asset impairment |
|
|
1,296 |
|
|
|
|
|
|
|
|
232 |
|
|
|
|
|
|
|
Fresh Kitchen operating losses |
|
|
2,204 |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
Expenses associated with tax planning strategies |
|
|
— |
|
|
|
|
|
|
|
|
225 |
|
|
|
|
|
|
|
Organizational realignment costs |
|
|
935 |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
Loss on debt extinguishment |
|
|
329 |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
Severance associated with cost reduction initiatives |
|
|
43 |
|
|
|
|
|
|
|
|
50 |
|
|
|
|
|
|
|
Pension termination |
|
|
10,159 |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
Total adjustments |
|
|
14,966 |
|
|
|
|
|
|
|
|
1,028 |
|
|
|
|
|
|
|
Income tax effect on adjustments (a) |
|
|
(3,751 |
) |
|
|
|
|
|
|
|
(176 |
) |
|
|
|
|
|
|
Impact of Tax Cuts and Jobs Act (b) |
|
|
— |
|
|
|
|
|
|
|
|
(494 |
) |
|
|
|
|
|
|
Total adjustments, net of taxes |
|
|
11,215 |
|
|
|
|
0.31 |
|
|
|
|
358 |
|
|
|
|
0.01 |
|
Adjusted earnings from continuing operations |
$ |
|
10,905 |
|
|
$ |
|
0.30 |
|
|
$ |
|
17,903 |
|
|
$ |
|
0.50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
40 Weeks Ended |
|
|||||||||||||||||
|
October 5, 2019 |
|
October 6, 2018 |
|
|||||||||||||||
|
|
|
per diluted |
|
|
|
per diluted |
|
|||||||||||
(In thousands, except per share amounts) |
Earnings |
|
share |
|
Earnings |
|
share |
|
|||||||||||
Earnings from continuing operations |
$ |
|
444 |
|
|
$ |
|
0.01 |
|
|
$ |
|
47,818 |
|
|
$ |
|
1.33 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Merger/acquisition and integration |
|
|
1,364 |
|
|
|
|
|
|
|
|
3,531 |
|
|
|
|
|
|
|
Restructuring charges and asset impairment |
|
|
10,215 |
|
|
|
|
|
|
|
|
5,269 |
|
|
|
|
|
|
|
Fresh Kitchen start-up costs |
|
|
— |
|
|
|
|
|
|
|
|
1,366 |
|
|
|
|
|
|
|
Fresh Kitchen operating losses |
|
|
2,204 |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
Expenses associated with tax planning strategies |
|
|
— |
|
|
|
|
|
|
|
|
225 |
|
|
|
|
|
|
|
Costs associated with Project One Team |
|
|
5,428 |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
Organizational realignment costs |
|
|
1,812 |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
Loss on debt extinguishment |
|
|
329 |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
Severance associated with cost reduction initiatives |
|
|
484 |
|
|
|
|
|
|
|
|
668 |
|
|
|
|
|
|
|
Pension termination |
|
|
19,510 |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
Total adjustments |
|
|
41,346 |
|
|
|
|
|
|
|
|
11,059 |
|
|
|
|
|
|
|
Income tax effect on adjustments (a) |
|
|
(10,166 |
) |
|
|
|
|
|
|
|
(2,564 |
) |
|
|
|
|
|
|
Impact of Tax Cuts and Jobs Act (b) |
|
|
— |
|
|
|
|
|
|
|
|
(494 |
) |
|
|
|
|
|
|
Total adjustments, net of taxes |
|
|
31,180 |
|
|
|
|
0.86 |
|
|
|
|
8,001 |
|
|
|
|
0.22 |
|
Adjusted earnings from continuing operations |
$ |
|
31,624 |
|
|
$ |
|
0.87 |
|
|
$ |
|
55,819 |
|
|
$ |
|
1.55 |
|
| (a) | The income tax effect on adjustments is computed by applying the applicable tax rate to the adjustments. |
||
(b) |
Includes a $1.1 million tax benefit attributable to tax planning strategies related to the Tax Cuts and Jobs Act. |
Notes: Adjusted earnings from continuing operations is a non-GAAP operating financial measure that the Company defines as earnings from continuing operations plus or minus adjustments for items that do not reflect the ongoing operating activities of the Company and costs associated with the closing of operational locations.
Adjusted earnings from continuing operations is not a measure of performance under accounting principles generally accepted in the United States of America and should not be considered as a substitute for net earnings, cash flows from operating activities and other income or cash flow statement data. The Company’s definition of adjusted earnings from continuing operations may not be identical to similarly titled measures reported by other companies.
Table 5: Reconciliation of Long-Term Debt and Capital Lease Obligations to Total Net Long-Term Debt and Capital Lease Obligations (A Non-GAAP Financial Measure) (Unaudited) |
|||||||||
|
October 5, |
|
December 29, |
||||||
(In thousands) |
2019 |
|
2018 |
||||||
Current portion of long-term debt and finance lease liabilities |
$ |
|
7,044 |
|
|
$ |
|
18,263 |
|
Long-term debt and finance lease liabilities |
|
|
686,055 |
|
|
|
|
679,797 |
|
Total debt |
|
|
693,099 |
|
|
|
|
698,060 |
|
Cash and cash equivalents |
|
|
(23,436 |
) |
|
|
|
(18,585 |
) |
Total net long-term debt |
$ |
|
669,663 |
|
|
$ |
|
679,475 |
|
Notes: Total net debt is a non-GAAP financial measure that is defined as long-term debt and capital lease obligations plus current maturities of long-term debt and capital lease obligations less cash and cash equivalents. The Company believes both management and its investors find the information useful because it reflects the amount of long-term debt obligations that are not covered by available cash and temporary investments. Total net debt is not a substitute for GAAP financial measures and may differ from similarly titled measures of other companies.
Table 6: Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow (A Non-GAAP Financial Measure) (Unaudited) |
||||||||||||
|
|
|
|
40 Weeks Ended |
|
|||||||
(In thousands) |
|
|
|
October 5, 2019 |
|
|
October 6, 2018 |
|
||||
Net cash provided by operating activities |
|
|
|
$ |
|
140,034 |
|
|
$ |
|
142,546 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
|
|
|
46,905 |
|
|
|
|
52,600 |
|
Free cash flow |
|
|
|
$ |
|
93,129 |
|
|
$ |
|
89,946 |
|
Notes: Free cash flow is a non-GAAP financial measure calculated by subtracting capital expenditures from cash flows provided by operating activities, the most directly comparable GAAP measure. The Company believes it is a useful indicator of liquidity that provides information to both management and investors about the amount of cash generated from operations that, after capital expenditures, can be used for strategic business objectives, including the repayment of long-term debt. Free cash flow is not a substitute for GAAP financial measures and may differ from similarly titled measures of other companies.
Table 7: Reconciliation of Projected Earnings per Diluted Share from Continuing Operations to Projected Adjusted Earnings per Diluted Share from Continuing Operations (A Non-GAAP Financial Measure) (Unaudited) |
|||||||||
|
52 Weeks Ending December 28, 2019 |
|
|||||||
|
Low |
|
|
High |
|
||||
Earnings from continuing operations |
$ |
|
0.01 |
|
|
$ |
|
0.29 |
|
Adjustments, net of taxes: |
|
|
|
|
|
|
|
|
|
Merger/acquisition and integration expenses |
|
|
0.04 |
|
|
|
|
0.03 |
|
Gain on sale of assets |
|
|
(0.15 |
) |
|
|
|
(0.15 |
) |
Termination of frozen pension plan |
|
|
0.41 |
|
|
|
|
0.38 |
|
Costs associated with Project One Team |
|
|
0.12 |
|
|
|
|
0.11 |
|
Exit of Fresh Kitchen |
|
|
0.12 |
|
|
|
|
0.10 |
|
Restructuring and asset impairment |
|
|
0.38 |
|
|
|
|
0.36 |
|
Severance associated with cost reduction initiatives |
|
|
0.03 |
|
|
|
|
0.02 |
|
Organizational realignment costs |
|
|
0.04 |
|
|
|
|
0.03 |
|
Adjusted earnings from continuing operations |
$ |
|
1.00 |
|
|
$ |
|
1.17 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20191106005999/en/
Investor Contacts:
Mark Shamber
Chief Financial Officer and Executive Vice President
(616) 878-8023
Katie Turner
Partner, ICR
(646) 277-1228
Media Contact:
Meredith Gremel
Vice President Corporate Affairs and Communications
(616) 878-2830
Source: SpartanNash Company