Consolidated Net Sales Increased 3.7% Driven by
Growth in Food Distribution SegmentReported Second Quarter EPS from
Continuing Operations Improved to $0.56 per Diluted Share;Adjusted
Second Quarter EPS from Continuing Operations Improved to $0.60 per
Diluted ShareExperienced Food Distribution Executive Mark Shamber
to Join Company as CFO in September
SpartanNash Company (the “Company”) (Nasdaq: SPTN) today
reported financial results for the 12-week second quarter and
28-week period ended July 15, 2017.
Second Quarter Results
Consolidated net sales for the second quarter increased $67.1
million to $1.89 billion from $1.83 billion in the prior year
quarter. The increase in net sales was driven by contributions from
the Caito Foods Service (“Caito”) acquisition and organic growth in
the food distribution segment.
Reported operating earnings improved to $38.9 million from $32.6
million in the prior year quarter. The increase was primarily due
to lower asset impairment and restructuring charges compared to the
prior year and continuing favorable results in the food
distribution segment. Adjusted operating earnings(1) improved to
$41.4 million from $39.3 million in the prior year quarter as
organic sales growth and favorable margins in food distribution
mitigated the impact of a challenging retail environment, with
additional favorable impacts from general cost control, supply
chain efficiency improvements and lower incentive compensation
expense. 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.
Reported earnings from continuing operations improved $3.5
million to $21.1 million, or $0.56 per diluted share, compared to
$17.6 million, or $0.47 per diluted share, in the prior year
quarter. Adjusted earnings from continuing operations(2) for the
second quarter improved to $22.6 million, or $0.60 per diluted
share, from $21.7 million, or $0.58 per diluted share, in the prior
year quarter. Current year adjusted earnings from continuing
operations exclude net after-tax charges of $0.04 per diluted share
primarily related to start-up costs associated with the new Fresh
Kitchen operation and merger/acquisition and integration activities
mainly associated with the most recent acquisition. Prior year
adjusted earnings from continuing operations exclude net after-tax
charges of $0.11 per diluted share primarily related to asset
impairment charges, restructuring activities associated with the
Company’s warehouse rationalization plan, and ongoing
merger/integration activities.
Adjusted Earnings Before Interest, Taxes, Depreciation and
Amortization (Adjusted EBITDA)(3) improved by 5.6 percent to $62.0
million, or 3.3 percent of net sales, compared to $58.7 million, or
3.2 percent of net sales, in the prior year quarter, marking the
3rd consecutive quarter of year-over-year improvement in Adjusted
EBITDA.
“We continue to be very pleased with our food distribution
segment’s performance despite challenging retail market conditions,
as the creative solutions we offer our customers continue to
contribute to their success as well as ours,” said David Staples,
President and Chief Executive Officer (“CEO”). “On a consolidated
basis, we delivered both top-line and earnings growth primarily due
to increases in our food distribution segment and from ongoing
improvements to our supply chain. As anticipated, we began to see
an easing of deflationary pressures with overall food inflation
coming in flat to slightly inflationary for the quarter, marking
the first quarter without deflation in over a year. While the
integration of our latest acquisition and the start-up of our new
Fresh Kitchen facility have been slower than anticipated, we are
excited about the potential they provide for both the fresh-cut
fruits/vegetables and freshly prepared meal solution offerings,
which are right in line with the ever-increasing consumer demand
for convenience. During the quarter, we began shipping private
brand products to U.S. military commissaries and look forward to
the continued roll out of this program in the second half of the
year. Additionally, at the beginning of the third quarter, we
entered into an agreement to obtain all of the commissary
distribution business from a DeCA provider exiting the business in
the Southwest. We expect these two events to reverse the current
military trends to positive by the fourth quarter. It is an
exciting time at SpartanNash given the growth we are experiencing
with our distribution customers and the new arenas we are entering,
the positive changes we are bringing to our military business, and
the continued enhancements we are making in our retail operations.
We remain confident in our strategy and believe our expertise
as a food wholesaler and retailer gives us a unique competitive
advantage and enables us to deliver best-in-class solutions to our
food distribution and retail customers.”
Gross profit margin for the second quarter was 14.3 percent
compared to 14.4 percent in the prior year quarter primarily due to
the mix of business operations.
Reported operating expenses for the second quarter were $232.1
million, or 12.2 percent of net sales, compared to $230.1 million,
or 12.6 percent of net sales, in the prior year quarter. The lower
expenses as a rate to net sales was primarily attributable to lower
restructuring and asset impairment costs compared to the prior year
quarter, benefits associated with supply chain improvements and
lower incentive compensation costs, partially offset by higher
expenses due to the recent acquisition and the mix of business
operations. Second quarter operating expenses would have been
$231.5 million compared to $223.4 million in the prior year
quarter, representing 12.2 percent of net sales in both periods, if
the previously mentioned adjustments were excluded.
Food Distribution Segment
Net sales for the food distribution segment increased $121.3
million, or 14.8 percent, to $941.6 million from $820.3 million in
the prior year quarter, primarily due to contributions from the
recent acquisition and organic sales growth from new and existing
customers.
Reported operating earnings for the food distribution segment
increased to $23.2 million from $19.2 million in the prior year
quarter. The increase in reporting operating earnings was due to
sales growth, favorable margins, supply chain optimization efforts
and lower incentive compensation costs, partially offset by
start-up and integration costs related to the recent acquisition,
and higher depreciation and amortization expense. Second quarter
adjusted operating earnings increased to $25.8 million from $21.6
million in the prior year quarter. Second quarter adjusted
operating earnings in the current and prior year exclude $2.6
million and $2.4 million, respectively, of pre-tax charges
primarily related to Fresh Kitchen start-up costs and
merger/acquisition and integration costs in the current year, and
restructuring charges related to the Company’s warehouse
optimization plan in both periods. Adjusted operating earnings by
segment(4) is a non-GAAP operating financial measure.
Military Segment
Net sales for the military segment were $471.1 million compared
to $505.4 million in the prior year quarter. The decrease was
primarily due to lower sales at the Defense Commissary Agency
(“DeCA”) operated commissaries. Reported operating earnings for the
military segment were $2.5 million in both the current and prior
year quarter. Reported operating earnings were comparable to the
prior year, representing a significant improvement from the first
quarter year-over-year trend, as the impact of lower sales was
offset by favorable margins and lower incentive compensation and
health care costs. These trends are expected to improve over the
remainder of the fiscal year as the Company begins to service new
business in the Southwest and as the private brand program
continues to roll out. Adjusted operating earnings increased to
$2.5 million from $2.2 million in the prior year quarter.
Retail Segment
Net sales for the retail segment were $482.0 million in the
second quarter compared to $501.8 million for the prior year
quarter. The decrease in net sales was primarily attributable to
$11.6 million in lower sales resulting from the closures and sales
of retail stores as well as a 1.8 percent decrease in comparable
store sales for the quarter, excluding fuel, which despite the
challenging retail environment, was in line with past quarter
results.
Reported operating earnings in the retail segment increased to
$13.2 million from $10.9 million in the prior year quarter. The
increase in reported operating earnings was primarily attributable
to lower restructuring and asset impairment costs compared to the
prior year quarter. Adjusted operating earnings were $13.1 million
compared to $15.5 million in the prior year quarter. The decrease
in adjusted operating earnings reflects the difficult sales
environment and incremental margin investment in the Company’s
fresh departments. Adjusted operating earnings exclude $0.1 million
of pre-tax gains in this year’s second quarter and $4.6 million of
pre-tax asset impairment and merger integration charges in the
prior year quarter.
In connection with its store rationalization plan and obtaining
new distribution business, the Company sold two of its retail
stores in the second quarter to a new food distribution customer,
ending the quarter with 151 corporate owned retail stores compared
to 160 stores in the prior year quarter.
Balance Sheet and Cash Flow
Cash flow provided by operating activities for the year-to-date
period was $38.4 million, compared to $56.3 million provided by
operating activities in the comparable period last year. The change
in cash flow was mainly due to changes in working capital,
particularly higher accounts receivable balances at military as
certain customers were addressing system conversion issues and
payments were temporarily delayed.
Long-term debt and capital lease obligations, including current
maturities, were $660.3 million at July 15, 2017 compared to $431.1
million at December 31, 2016. The increase was a result of the
Company funding the recent acquisition with proceeds from the
Company’s Credit Agreement. Net long-term debt(5) (including
current maturities and capital lease obligations and subtracting
cash) was $637.5 million as of July 15, 2017 compared to $406.7
million at December 31, 2016. The Company's total net long-term
debt-to-capital ratio is 0.4-to-1 and net long-term debt to
Adjusted EBITDA(6) is 2.7-to-1, as of July 15, 2017.
Outlook
Mr. Staples continued, “Our first half results demonstrate the
continuing execution of our business strategy, and we are excited
about the growth opportunities developing in our food distribution
and military segments. As we integrate the operations of our recent
acquisition, refine and expand production in our new Fresh Kitchen
facility, and onboard new military business, the positive momentum
in our distribution operations will continue to drive growth as
more customers will benefit from our expanded product offering and
innovative solutions. Our strong track record of customer
satisfaction and supply chain capabilities provide a solid
foundation for continued organic growth and a healthy pipeline of
prospects. In our retail segment, we are committed to providing a
great shopping experience for our customers and continue to pursue
other channels for providing quality products in a convenient and
affordable manner while ensuring our merchandising efforts are
aligned with ever-changing consumer demands. During the quarter we
introduced Fast Lane, our new online ordering and curbside pick-up
service, and anticipate rolling out the service to as many as 50
corporate-owned retail stores by the end of the year. Despite the
difficult retail environment, we believe we are well positioned
against the market backdrop and will continue to evolve our
merchandising efforts and customer personalization initiatives to
deliver an even better experience for our customers. As
anticipated, we are beginning to see an easing of the recent
deflationary pressures; however, we do not see a return to
originally expected levels of inflation at this time. Given this
trend and the difficult retail environment existing currently, we
expect comparable store sales to be negative for the remainder of
the year. As we move into the second half of the year, we remain
committed to both top-line and earnings growth and delivering
long-term value to our shareholders.”
Based on the first half results and outlook for the remainder of
the year, the Company is refining its guidance for fiscal 2017. The
Company expects adjusted earnings per share from continuing
operations(7) of approximately $2.18 to $2.28, excluding
merger/acquisition and integration costs and other adjusted
expenses and gains, and reported earnings from continuing
operations of approximately $1.83 to $1.90 per diluted share. For
the third quarter of fiscal 2017, the Company anticipates earnings
to be flat to slightly ahead of the prior year as continued strong
performance in distribution operations will be partially offset by
slower-than-anticipated contributions from the recent acquisition
and a challenging marketplace at retail. On the acquisition front,
the Company continues to see progress integrating operations, has
begun limited production at the Fresh Kitchen facility, and remains
confident about the ultimate growth potential and long-term vision
for this business and its ready-to-eat categories. The performance
of these operations, however, is currently not anticipated to meet
original expectations for the current fiscal year but is projected
to be accretive in fiscal 2018. To address the challenging retail
landscape, the Company is continuing to invest in its store base,
personalized marketing initiatives, customer convenience and
experience, and the launch of its Our Family® brand into the
Michigan region, which will provide the Company with a high
quality, company-wide private brand program. For the military
segment, the recently secured new business, together with
increasing contributions from the DeCA private brand program, are
expected to grow military’s sales and earnings in the second half
of the fiscal year.
The Company continues to expect an easing of deflationary
pressures with modest food inflation anticipated in the second half
of the year. Accordingly, and depending on the variability
associated with inflation by commodity and its related impact on
LIFO, the Company does not expect the prior year deflation-related
LIFO benefit of $0.07 per diluted share to repeat in the fourth
quarter of fiscal 2017.
Due to changes in the timing of capital projects and several
emerging long-term growth opportunities materializing more quickly
than anticipated, the Company now expects capital expenditures for
fiscal year 2017 to be in the range of $75.0 million to $78.0
million, depreciation and amortization to be approximately $83.0
million to $85.0 million, and total interest expense to be in the
range of $23.0 million to $25.0 million.
Recent Developments
SpartanNash announced today that the Company has appointed Mark
Shamber as Executive Vice President (“EVP”) and Chief Financial
Officer (“CFO”), effective September 11, 2017. Mr. Shamber
previously served as CFO for United Natural Foods, Inc., a
specialty and organic food distributor (Nasdaq: UNFI). Following
his departure from UNFI at the end of 2015, Mark has been working
as an independent consultant and serving as the Vice Chairman,
Board of Directors of Day Kimball Healthcare, Inc. Earlier in his
career, Mr. Shamber worked in the audit practice of Ernst &
Young, and in the finance department of Reebok International.
As SpartanNash's EVP and CFO, Shamber will direct finance,
mergers & acquisitions, treasury, internal audit, real estate,
and risk management. He will report to David Staples, SpartanNash’s
President and CEO.
Conference Call
A telephone conference call to discuss the Company’s second
quarter of fiscal 2017 financial results is scheduled for 9:00 a.m.
Eastern Time, Thursday, August 17, 2017. 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 independent
grocery retailers, national accounts, its corporate owned retail
stores and U.S. military commissaries. SpartanNash serves customer
locations in 47 states and the District of Columbia, Europe, Cuba,
Puerto Rico, Bahrain and Egypt. As of today, SpartanNash currently
operates 150 supermarkets, primarily under the banners of Family
Fare Supermarkets, VG’s Food and Pharmacy, D&W Fresh Market,
Sun Mart, and Family Fresh Market. Through its MDV military
division, SpartanNash is the 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," "momentum," "believe," "anticipates," "continue,"
"expects," "guidance," "potential," "trend," 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 earnings from continuing operations to adjusted
earnings from continuing operations, a non-GAAP financial measure,
is provided below.(3) A reconciliation of net earnings to Adjusted
EBITDA, a non-GAAP financial measure, is provided below.(4) A
reconciliation of operating earnings to adjusted operating earnings
by segment, a non-GAAP financial measure, is provided below.(5) A
reconciliation of long-term debt and capital lease obligations to
total net long-term debt and capital lease obligations, a non-GAAP
financial measure, is provided below.(6) The net long-term debt to
Adjusted EBITDA ratio has not been adjusted for the recent
acquisition’s results on a pro forma or annualized basis.(7) 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.
SPARTANNASH COMPANY AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF EARNINGS
(In thousands, except per share data)
(Unaudited)
12 Weeks Ended 28 Weeks Ended July
15, July 16, July 15, July 16,
2017 2016 2017 2016 Net sales $
1,894,709 $ 1,827,562 $ 4,297,213 $
4,106,332
Cost of sales 1,623,683
1,564,863 3,668,811 3,509,391
Gross profit 271,026 262,699 628,402 596,941
Operating expenses Selling, general and administrative
231,476 223,418 554,170 519,799 Merger/acquisition and integration
622 913 4,638 1,810 Restructuring (gains) charges and asset
impairment (14 ) 5,748
1,008 21,052
Total operating expenses
232,084 230,079 559,816
542,661
Operating earnings 38,942 32,620
68,586 54,280
Other (income) and expenses Interest
expense 5,682 4,437 12,997 10,260 Other, net (67 )
(120 ) (172 ) (270 )
Total other expenses, net 5,615
4,317 12,825 9,990
Earnings
before income taxes and discontinued operations 33,327 28,303
55,761 44,290 Income taxes 12,267
10,743 19,636 16,770
Earnings from
continuing operations 21,060 17,560 36,125 27,520
Loss from discontinued operations, net of taxes
(31 ) (76 ) (71 )
(185 )
Net earnings $ 21,029 $ 17,484 $
36,054 $ 27,335
Basic earnings per share:
Earnings from continuing operations $ 0.56 $ 0.47 $ 0.96 $ 0.73
Loss from discontinued operations — — *
— * — Net earnings $ 0.56 $
0.47 $ 0.96 $ 0.73
Diluted earnings
per share: Earnings from continuing operations $ 0.56 $ 0.47 $
0.96 $ 0.73 Loss from discontinued operations —
— (0.01 ) * — Net
earnings $ 0.56 $ 0.47 $ 0.95 $ 0.73
Weighted average shares outstanding: Basic 37,809
37,475 37,742 37,483 Diluted 37,832 37,547 37,787 37,541
* Includes rounding
SPARTANNASH COMPANY AND SUBSIDIARIES CONDENSED
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
July 15, July 16, 2017
2016
Assets
Current assets Cash and cash equivalents $
22,726 $ 23,816 Accounts and notes receivable, net 349,279 306,418
Inventories, net 555,578 536,299 Prepaid expenses and other current
assets 32,712 28,862 Property and equipment held for sale
173 —
Total current assets 960,468
895,395
Property and equipment, net 621,618 575,063
Goodwill 366,636 322,686
Intangible assets, net
130,048 61,228
Other assets, net 119,765
69,491
Total assets $ 2,198,535
$ 1,923,863
Liabilities and
Shareholders’ Equity
Current liabilities Accounts payable $ 394,276 $ 339,084
Accrued payroll and benefits 60,363 62,687 Other accrued expenses
41,166 42,788 Current maturities of long-term debt and capital
lease obligations 19,001 19,106
Total current liabilities 514,806 463,665
Long-term liabilities Deferred income taxes 137,219 121,352
Postretirement benefits 16,689 16,061 Other long-term liabilities
39,496 45,519 Long-term debt and capital lease obligations
641,257 473,399
Total long-term
liabilities 834,661 656,331
Commitments and
contingencies Shareholders’ equity
Common stock, voting, no par value;
100,000 shares authorized; 37,536 and 37,468 shares outstanding
522,046 518,702
Preferred stock, no par value, 10,000
shares authorized; no shares outstanding
— — Accumulated other comprehensive loss (11,392 ) (11,445 )
Retained earnings 338,414 296,610
Total shareholders’ equity 849,068
803,867
Total liabilities and shareholders’
equity $ 2,198,535 $ 1,923,863
SPARTANNASH COMPANY AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
28 Weeks Ended July 15,
July 16, 2017 2016
Cash flow activities Net cash provided by
operating activities $ 38,357 $ 57,182 Net cash used in investing
activities (247,801 ) (35,528 ) Net cash provided by (used in)
financing activities 207,796 (20,276 ) Net cash provided by (used
in) discontinued operations 23 (281 )
Net (decrease) increase in cash and cash equivalents (1,625
) 1,097
Cash and cash equivalents at beginning of fiscal
year 24,351 22,719
Cash and cash
equivalents at end of fiscal year $ 22,726 $
23,816
SPARTANNASH COMPANY AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA Table 1: Sales and Operating
Earnings by Segment
(In thousands)
(Unaudited)
12 Weeks Ended 28 Weeks
Ended July 15, 2017 July 16, 2016 July
15, 2017 July 16, 2016
Food Distribution
Segment:
Net sales $ 941,636 49.7 % $ 820,328 44.9 % $
2,104,586 49.0 % $ 1,811,465 44.1 % Operating earnings $ 23,204 $
19,227 $ 48,518 $ 45,083
Military
Segment:
Net sales 471,077 24.9 % 505,418 27.6 % 1,114,390 25.9 % 1,179,941
28.7 % Operating earnings 2,509 2,497 3,399 5,930
Retail
Segment:
Net sales 481,996 25.4 % 501,816 27.5 % 1,078,237 25.1 % 1,114,926
27.2 % Operating earnings 13,229 10,896 16,669 3,267
Total:
Net sales $ 1,894,709 100.0 % $ 1,827,562 100.0 % $ 4,297,213 100.0
% $ 4,106,332 100.0 % Operating earnings $ 38,942 $ 32,620 $ 68,586
$ 54,280
Table 2: Reconciliation of Net Earnings
to Adjusted Earnings Before Interest, Taxes, Depreciation and
Amortization (Adjusted EBITDA) (A Non-GAAP Financial
Measure)
(In thousands)
(Unaudited)
12 Weeks Ended 28 Weeks Ended
July 15, July 16, July 15,
July 16,
(In
thousands)
2017 2016 2017 2016 Net earnings $
21,029 $ 17,484 $ 36,054 $ 27,335 Loss
from discontinued operations, net of tax 31 76 71 185 Income taxes
12,267 10,743 19,636 16,770 Other expenses, net 5,615
4,317 12,825 9,990
Operating earnings 38,942 32,620 68,586 54,280 Adjustments: LIFO
expense 692 1,059 2,282 2,471 Depreciation and amortization 19,018
17,635 44,099 41,004 Merger/acquisition and integration 622 913
4,638 1,810 Restructuring (gains) charges and asset impairment (14
) 5,748 1,008 21,052 Fresh Kitchen start-up costs 1,854 — 4,602 —
Stock-based compensation 1,139 1,043 7,491 6,067 Other non-cash
(gains) charges (300 ) (295 )
(523 ) 76 Adjusted EBITDA $ 61,953 $
58,723 $ 132,183 $ 126,760
Reconciliation of operating earnings to adjusted EBITDA by
segment: Food Distribution: Operating earnings $ 23,204
$ 19,227 $ 48,518 $ 45,083 Adjustments: LIFO expense 380 551 1,263
1,288 Depreciation and amortization 6,827 4,827 15,429 11,297
Merger/acquisition and integration 468 93 4,315 561 Restructuring
charges and asset impairment 301 2,308 901 4,541 Fresh Kitchen
start-up costs 1,854 — 4,602 — Stock-based compensation 551 369
3,511 2,681 Other non-cash (gains) charges (1 )
25 46 201 Adjusted EBITDA
$ 33,584 $ 27,400 $ 78,585 $ 65,652
Military: Operating earnings $ 2,509 $ 2,497 $ 3,399 $ 5,930
Adjustments: LIFO expense 84 234 392 545 Depreciation and
amortization 2,607 2,682 6,046 6,157 Merger/acquisition and
integration — — — 1 Restructuring gains — (291 ) — (259 )
Stock-based compensation 165 226 1,127 1,007 Other non-cash (gains)
charges (14 ) (5 ) (16 )
203 Adjusted EBITDA $ 5,351 $ 5,343 $
10,948 $ 13,584
Retail: Operating earnings $
13,229 $ 10,896 $ 16,669 $ 3,267 Adjustments: LIFO expense 228 274
627 638 Depreciation and amortization 9,584 10,126 22,624 23,550
Merger/acquisition and integration 154 820 323 1,248 Restructuring
charges and asset impairment (315 ) 3,731 107 16,770 Stock-based
compensation 423 448 2,853 2,379 Other non-cash gains
(285 ) (315 ) (553 ) (328
) Adjusted EBITDA $ 23,018 $ 25,980 $ 42,650 $
47,524
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.
The Company believes that adjusted EBITDA provides a meaningful
representation of its operating performance for the Company as a
whole and for its operating segments. The Company considers
adjusted EBITDA as an additional way to measure operating
performance on an ongoing basis. Adjusted EBITDA is meant to
reflect the ongoing operating performance of all of its
distribution and retail operations; consequently, it excludes the
impact of items that could be considered “non-operating” or
“non-core” in nature, and also excludes the contributions of
activities classified as discontinued operations. Because adjusted
EBITDA and adjusted EBITDA by segment are performance measures that
management uses to allocate resources, assess performance against
its peers and evaluate overall performance, the Company believes it
provides useful information for both management and its investors.
In addition, securities analysts, fund managers and other
shareholders and stakeholders that communicate with the Company
request its operating financial results in adjusted EBITDA
format.
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)
(In thousands)
(Unaudited)
12 Weeks Ended 28 Weeks Ended July
15, July 16, July 15,
July 16,
(In
thousands)
2017 2016 2017 2016 Operating earnings
$ 38,942 $ 32,620 $ 68,586 $ 54,280
Adjustments: Merger/acquisition and integration 622 913 4,638 1,810
Restructuring (gains) charges and asset impairment (14 ) 5,748
1,008 21,052 Fresh Kitchen start-up costs 1,854 — 4,602 — Stock
compensation associated with executive retirement — — 1,172
Severance associated with cost reduction initiatives
21 11 24 690 Adjusted
operating earnings $ 41,425 $ 39,292 $ 80,030
$ 77,832
Reconciliation of operating earnings to adjusted
operating earnings by segment: Food Distribution:
Operating earnings $ 23,204 $ 19,227 $ 48,518 $ 45,083 Adjustments:
Merger/acquisition and integration 468 93 4,315 561 Restructuring
charges and asset impairment 301 2,308 901 4,541 Fresh Kitchen
start-up costs 1,854 — 4,602 — Stock compensation associated with
executive retirement — — 591 Severance associated with cost
reduction initiatives 21 —
22 206 Adjusted operating earnings $
25,848 $ 21,628 $ 58,949 $ 50,391
Military: Operating earnings $ 2,509 $ 2,497 $ 3,399 $ 5,930
Adjustments: Merger/acquisition and integration — — — 1
Restructuring gains — (291 ) — (259 ) Stock compensation associated
with executive retirement — — 147 — Severance associated with cost
reduction initiatives — 1
1 223 Adjusted operating earnings $ 2,509 $
2,207 $ 3,547 $ 5,895
Retail: Operating
earnings $ 13,229 $ 10,896 $ 16,669 $ 3,267 Adjustments:
Merger/acquisition and integration 154 820 323 1,248 Restructuring
(gains) charges and asset impairment (315 ) 3,731 107 16,770 Stock
compensation associated with executive retirement — — 434 —
Severance associated with cost reduction initiatives
— 10 1 261 Adjusted
operating earnings $ 13,068 $ 15,457 $ 17,534
$ 21,546
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.
The Company believes that adjusted operating earnings provide a
meaningful representation of its operating performance for the
Company as a whole and for its operating segments. The Company
considers adjusted operating earnings as an additional way to
measure operating performance on an ongoing basis. Adjusted
operating earnings is meant to reflect the ongoing operating
performance of all of its distribution and retail operations;
consequently, it excludes the impact of items that could be
considered “non-operating” or “non-core” in nature, and also
excludes the contributions of activities classified as discontinued
operations. Because adjusted operating earnings and adjusted
operating earnings by segment are performance measures that
management uses to allocate resources, assess performance against
its peers and evaluate overall performance, the Company believes it
provides useful information for both management and its
investors. In addition, securities analysts, fund managers and
other shareholders and stakeholders that communicate with the
Company request its operating financial results in adjusted
operating earnings format.
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)
(In thousands, except per share data)
(Unaudited)
12 Weeks Ended July 15, 2017
July 16, 2016 per diluted per
diluted
(In thousands,
except per share amounts)
Earnings share Earnings share Earnings
from continuing operations $ 21,060 $ 0.56 $
17,560 $ 0.47 Adjustments: Merger/acquisition and
integration 622 913 Restructuring (gains) charges and asset
impairment (14 ) 5,748 Fresh Kitchen start-up costs 1,854 —
Severance associated with cost reduction initiatives
21 11 Total adjustments 2,483 6,672 Income tax effect
on adjustments (a) (932 ) (2,525 )
Total adjustments, net of taxes 1,551
0.04 4,147 0.11 Adjusted earnings from
continuing operations $ 22,611 $ 0.60 $ 21,707
$ 0.58
28 Weeks Ended July
15, 2017 July 16, 2016 per diluted per
diluted
(In thousands,
except per share amounts)
Earnings share Earnings share Earnings
from continuing operations $ 36,125 $ 0.96 $ 27,520 $ 0.73
Adjustments: Merger integration and acquisition expenses 4,638
1,810 Restructuring charges and asset impairment 1,008 21,052 Fresh
Kitchen start-up costs 4,602 — Severance associated with cost
reduction initiatives 24 690 Stock compensation associated with
executive retirement 1,172 — Total
adjustments 11,444 23,552 Income tax effect on adjustments (a)
(4,295 ) (8,953 ) Total adjustments,
net of taxes 7,149 0.19
14,599 0.39 Adjusted earnings from continuing
operations $ 43,274 $ 1.15 $ 42,119 $
1.12
(a) The income tax effect on adjustments is computed by applying
the effective tax rate, before discrete tax items, to the total
adjustments for the period.
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.
The Company believes that adjusted earnings from continuing
operations provide a meaningful representation of its operating
performance for the Company. The Company considers adjusted
earnings from continuing operations as an additional way to measure
operating performance on an ongoing basis. Adjusted earnings from
continuing operations is meant to reflect the ongoing operating
performance of all of its distribution and retail operations;
consequently, it excludes the impact of items that could be
considered “non-operating” or “non-core” in nature, and also
excludes the contributions of activities classified as discontinued
operations. Because adjusted earnings from continuing operations is
a performance measure that management uses to allocate resources,
assess performance against its peers and evaluate overall
performance, the Company believes it provides useful information
for both management and its investors. In addition, securities
analysts, fund managers and other shareholders and stakeholders
that communicate with the Company request its operating financial
results in adjusted earnings from continuing operations format.
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)
(In thousands)
(Unaudited)
July 15, December 31, 2017
2016 Current maturities of long-term debt and capital lease
obligations $ 19,001 $ 17,424 Long-term debt and
capital lease obligations 641,257
413,675 Total debt 660,258 431,099 Cash and cash equivalents
(22,726 ) (24,351 ) Total net long-term debt $
637,532 $ 406,748
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 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 30, 2017 Low
High Earnings from continuing operations $
1.83 $ 1.90 Adjustments, net of taxes: Merger/acquisition
and integration expenses 0.12 0.13 Restructuring charges and asset
impairment 0.09 0.09 Fresh Kitchen start-up costs 0.12 0.14 Stock
compensation associated with executive retirement
0.02 0.02 Adjusted earnings from continuing
operations $ 2.18 $ 2.28
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170816006029/en/
SpartanNash CompanyInvestor Contact: Tom Van HallInterim Chief
Financial Officer(616) 878-8023orMedia Contact: Meredith GremelVice
President Corporate Affairs and Communications(616) 878-2830
SpartanNash (NASDAQ:SPTN)
Historical Stock Chart
From Apr 2024 to May 2024
SpartanNash (NASDAQ:SPTN)
Historical Stock Chart
From May 2023 to May 2024