Net Sales Increase 5.9% Driven by Continued
Growth in Food Distribution and Improved Trends in Military
SpartanNash Company (the “Company”) (Nasdaq: SPTN) today
reported financial results for the 12-week third quarter and
40-week period ended October 7, 2017.
Third Quarter Results
Consolidated net sales for the third quarter increased $106.6
million, or 5.9%, to $1.91 billion from $1.80 billion in the prior
year quarter. The increase in net sales was driven by contributions
from the Caito Foods Service (“Caito”) acquisition, organic growth
of 5.2% in food distribution and significantly improved sales
trends in the military commissary business, partially offset by
lower sales at retail.
“Our third quarter sales trends continued to accelerate versus
last year and we executed well against key elements of our
long-term strategic plan, as demonstrated by the sequential
improvement in military distribution sales generated by key new
business gains, ongoing growth in our organic food distribution
sales and the roll out of our Fast Lane online ordering, pick-up
service. Additionally, our disciplined approach to driving sales
while containing costs led to a nearly five percent improvement in
Adjusted EBITDA over the prior year,” said David Staples, President
and Chief Executive Officer. “Across each of our segments, our team
is taking decisive action to deliver increased value, convenience
and the type of customer experience that will continue to set us
apart from the competition in these challenging market conditions.
We remain confident that our strategy will continue to drive
long-term profitable sales growth.”
Gross margin for the third quarter of fiscal 2017 was $261.7
million, or 13.7% of net sales, an increase of approximately $6.4
million over the third quarter of fiscal 2016 gross margin of
$255.3 million, or 14.2% of net sales. The decline in the Company’s
gross margin percentage was primarily due to the increased mix of
food distribution sales as a percentage of total sales combined
with margin investments in the retail segment.
Reported operating expenses for the third quarter were $455.5
million, or 23.9% of net sales, compared to $225.4 million, or
12.5% of net sales, in the prior year quarter. The increase in
expenses as a rate to sales was primarily attributable to a
non-cash goodwill impairment charge and higher non-cash asset
impairment and restructuring costs compared to the prior year
quarter, as well as increased health care costs, partially offset
by lower incentive compensation costs. In the third quarter of
fiscal 2017, the Company recorded a non-cash goodwill impairment
charge of $189.0 million related to its retail segment as a result
of lower than previously estimated retail operating results and an
overall lower market valuation of the retail reporting unit. The
Company also recorded $35.7 million of non-cash asset impairment
and restructuring charges in the third quarter as it remains
focused on improving the efficiency of its retail store base and
continues its store rationalization program. Third quarter
operating expenses would have been $228.3 million, or 12.0% of net
sales, compared to $220.2 million, or 12.2% of net sales, in the
prior year quarter, if the aforementioned adjustments were
excluded.
The Company reported an operating loss of $193.8 million
compared to earnings of $29.9 million in the prior year quarter,
driven by the non-cash goodwill and asset impairment charges
mentioned above. Non-GAAP adjusted operating earnings(1) improved
to $35.3 million from $35.1 million in the prior year quarter due
to sales growth in food distribution and lower incentive
compensation expense, partially offset by increased health care
expenses. 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.
Adjusted EBITDA(2) increased 4.7% to $55.9 million from $53.4
million in the prior year quarter due to the factors mentioned
above.
The Company reported a loss from continuing operations for the
third quarter of $123.5 million, or $3.31 per diluted share,
compared to earnings from continuing operations of $16.7 million,
or $0.45 per diluted share in the prior year quarter. Third quarter
results include a $0.04 and $0.02 per diluted share benefit
associated with certain tax credits in fiscal 2017 and 2016,
respectively. Adjusted earnings from continuing operations(3) for
the third quarter were $20.1 million, or $0.54 per diluted share,
compared to $20.1 million, or $0.53 per diluted share, in the prior
year quarter. Current year adjusted earnings from continuing
operations exclude net after-tax charges of $3.85 per diluted share
primarily related to the non-cash goodwill and asset impairment
charges mentioned previously, start-up costs associated with its
new Fresh Kitchen operation and acquisition and integration
activities. Prior year third quarter adjusted earnings from
continuing operations exclude net after-tax charges of $0.08 per
diluted share primarily related to asset impairment charges and
restructuring activities associated with the Company’s retail store
rationalization plan, as well as ongoing merger integration
activities.
Food Distribution Segment
Net sales for the food distribution segment increased $132.9
million, or 16.5%, to $937.4 million from $804.5 million in the
prior year quarter, primarily due to contributions from the Caito
acquisition and organic sales growth from existing customers.
Reported operating earnings for the food distribution segment
increased to $20.4 million from $19.0 million in the prior year
quarter. The increase in reported operating earnings was due to
sales growth and lower incentive compensation costs, partially
offset by start-up and integration costs related to the Caito
acquisition and higher health care, depreciation and amortization
expense. Third quarter adjusted operating earnings increased to
$23.8 million from $19.8 million in the prior year quarter. Third
quarter adjusted operating earnings in the current and prior year
exclude $3.4 million and $0.8 million, respectively, of pre-tax
charges primarily related to Fresh Kitchen start-up costs in the
current year and integration costs in both periods. Segment
adjusted operating earnings(4) is a non-GAAP operating financial
measure.
Military Segment
Net sales for the military segment were essentially flat at
$505.6 million compared to $506.6 million in the prior year third
quarter. Sequentially, net sales for the military segment increased
by 7.3% from the second quarter of fiscal 2017 with new commissary
business in the Southwest region of the United States combined with
incremental volume from the private brand program offsetting lower
comparable sales at Defense Commissary Agency (“DeCA”) operated
locations.
Reported operating earnings for the military segment were $1.1
million compared to $2.9 million in the prior year quarter. The
decrease was primarily attributable to integration expenses
associated with newly secured commissary business, higher
transportation costs associated with onboarding new distribution
business and ramping up the private brand program, asset impairment
charges and higher health care costs compared to the prior year
quarter, partially offset by lower incentive compensation costs.
Third quarter adjusted operating earnings increased to $3.1 million
from $2.9 million in the prior year period when adjusting for $1.5
million of pre-tax integration expenses and $0.5 million of asset
impairment charges in the current year quarter.
Retail Segment
Net sales for the retail segment were $463.6 million in the
third quarter compared to $489.0 million for the prior year
quarter. The decrease in net sales was primarily attributable to
$16.7 million in lower sales resulting from the closure and sale of
retail stores and a 2.5% decrease in comparable store sales,
excluding fuel, partially offset by higher fuel prices compared to
the prior year.
The reported operating loss in the retail segment was $215.3
million, compared to reported operating income of $8.0 million in
the prior year quarter. The decrease in reported operating earnings
was primarily attributable to the non-cash impairment charges
previously mentioned. Adjusted operating earnings were $8.5 million
compared to $12.4 million in the prior year quarter, reflecting the
continued challenging retail environment and higher health care
costs, partially offset by lower incentive compensation and
depreciation and amortization compared to the prior year quarter.
Adjusted operating earnings exclude $223.8 million of pre-tax
charges primarily associated with the above mentioned items in this
year’s third quarter and $4.4 million of pre-tax asset impairment
and restructuring charges and merger integration expenses in the
prior year quarter.
During the third quarter, as part of its store rationalization
plan, the Company closed three retail stores and sold one
additional retail store to a new food distribution customer, ending
the quarter with 147 corporate owned retail stores compared to 159
stores in the prior year quarter. Early in the fourth quarter, the
Company closed one retail store in connection with its store
rationalization plan and sold another to an existing food
distribution customer.
Balance Sheet and Cash Flow
Cash flow provided by operating activities for the year-to-date
period was $71.6 million, compared to $81.1 million provided by
operating activities in the comparable period last year. The change
in cash flow was mainly due to the timing of working capital
requirements, particularly higher accounts receivable balances
associated with sales to new and existing distribution customers,
largely offset by lower customer advances to support sales growth
compared to the prior year period. For the third quarter, the
Company generated $33.3 million of cash flow from operations
compared to $24.0 million in the third quarter of fiscal 2016 due
to the timing of working capital requirements and lower customer
advances.
During the third quarter, the Company paid a cash dividend of
$0.165 per share for a total of $6.1 million and repurchased
561,850 shares of its common stock for a total expenditure of
approximately $14.6 million. As of October 7, 2017, the Company had
repurchased 862,142 shares for a total expenditure of approximately
$22.5 million during the fiscal year and has $27.5 million
available for future repurchases under its $50.0 million share
repurchase program.
Outlook
Mr. Staples continued, “Looking ahead, I am excited about the
future of SpartanNash. We are focused on maximizing the many
opportunities we have identified, particularly in our food
distribution and military segments, through continued sales growth
to existing customers and the addition of new customers across more
diversified sales channels. We will continue to improve our retail
consumers’ experience through an improved assortment of better for
you products, convenient meal solutions and increased value
offerings in private brands and produce. We expect these
initiatives, as well as our Fast Lane and pilot of home delivery
services, will lead to increased customer satisfaction and loyalty
as they are deployed over the next year. Overall, we are encouraged
by our progress to evolve our business and to take full advantage
of the power of our expanded product offering, innovative solutions
and unique supply chain capabilities in the changing competitive
landscape.”
Given the current retail environment, the Company is updating
its guidance for fiscal 2017 and now expects a reported loss from
continuing operations of approximately $2.04 to $2.10 per diluted
share and adjusted earnings per share from continuing operations(5)
of approximately $2.06 to $2.12, excluding the non-cash goodwill
and asset impairment, merger/acquisition and integration costs and
other adjusted expenses and gains. In the fourth quarter, the
Company expects slight food inflation at retail and distribution
and, absent any significant changes to commodity pricing trends, no
longer expects any deflation-related LIFO benefit. The updated
guidance implies that fourth quarter earnings will be significantly
below the prior year as anticipated fourth quarter sales increases
of nearly five percent at food distribution and the continuation of
improved sales trends at military will be more than offset by the
cycling of the entire prior year LIFO benefit of $0.07 per diluted
share, ongoing challenges in the retail environment and as
headwinds associated with hurricane impacts and onboarding of new
business negatively affect fill rates and cause inbound freight
disruptions in the fourth quarter.
The Company expects capital expenditures for fiscal year 2017 to
now be in the range of $71.0 million to $73.0 million due to the
timing of certain capital projects moving into fiscal 2018,
depreciation and amortization to be approximately $82.0 million to
$84.0 million, and total interest expense to be in the range of
$25.0 million to $26.0 million.
Conference Call
A telephone conference call to discuss the Company’s third
quarter of fiscal 2017 financial results is scheduled for Thursday,
November 9, 2017 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 350 company whose core
businesses include distributing grocery products to independent
grocery retailers, select national accounts, its corporate owned
retail stores and U.S. military commissaries and exchanges.
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 145 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 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,” “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 (loss) earnings to adjusted
operating earnings, a non-GAAP financial measure, is provided
below.
(2) A reconciliation of net (loss) earnings to Adjusted EBITDA,
a non-GAAP financial measure, is provided below.
(3) A reconciliation of (loss) earnings from continuing
operations to adjusted earnings from continuing operations, a
non-GAAP financial measure, is provided below.
(4) A reconciliation of operating (loss) earnings to adjusted
operating earnings by segment, a non-GAAP financial measure, is
provided below.
(5) A reconciliation of projected (loss) 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 CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per
share data) (Unaudited)
12 Weeks Ended
40 Weeks Ended October 7, October
8, October 7, October 8, 2017
2016 2017 2016 Net sales $ 1,906,644 $
1,800,085 $ 6,203,857 $ 5,906,416
Cost of sales
1,644,952 1,544,790 5,313,763
5,054,180
Gross profit 261,692 255,295 890,094
852,236
Operating expenses Selling, general and
administrative 228,489 220,339 782,659 740,138 Merger/acquisition
and integration 2,392 2,427 7,031 4,237 Goodwill impairment 189,027
— 189,027 — Restructuring charges and asset impairment
35,626 2,662 36,633
23,714
Total operating expenses 455,534
225,428 1,015,350 768,089
Operating (loss) earnings (193,842 ) 29,867 (125,256
) 84,147
Other (income) and expenses Interest expense
6,130 4,419 19,128 14,678 Other, net (75 ) (146 )
(248 ) (416 )
Total other expenses, net
6,055 4,273 18,880 14,262
(Loss) earnings before income taxes and
discontinued operations (199,897 ) 25,594 (144,136 ) 69,885
Income taxes (76,445 ) 8,864 (56,809 )
25,635
(Loss) earnings from continuing
operations (123,452 ) 16,730 (87,327 ) 44,250
Loss
from discontinued operations, net of taxes (54 )
(82 ) (125 ) (268 )
Net (loss) earnings $
(123,506 ) $ 16,648 $ (87,452 ) $ 43,982
Basic (loss) earnings per share: (Loss) earnings from
continuing operations $ (3.31 ) $ 0.45 $ (2.32 ) $ 1.18 Loss from
discontinued operations (0.01 ) * (0.01 ) *
(0.01 ) * (0.01 ) Net (loss) earnings $ (3.32 ) $ 0.44
$ (2.33 ) $ 1.17
Diluted (loss) earnings
per share: (Loss) earnings from continuing operations $ (3.31 )
$ 0.45 $ (2.32 ) $ 1.18 Loss from discontinued operations
(0.01 ) * (0.01 ) * (0.01 ) * (0.01 ) Net
(loss) earnings $ (3.32 ) $ 0.44 $ (2.33 ) $ 1.17
Weighted average shares outstanding: Basic 37,254
37,470 37,596 37,479 Diluted 37,254 37,546 37,596 37,539
* Includes rounding
SPARTANNASH COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
(Unaudited)
October 7, October
8, 2017 2016
Assets
Current assets Cash and cash equivalents $ 13,154 $ 26,398
Accounts and notes receivable, net 370,482 321,989 Inventories, net
598,493 561,772 Prepaid expenses and other current assets
33,426 29,589
Total current assets
1,015,555 939,748
Property and equipment, net 588,416
570,709
Goodwill 178,392 322,686
Intangible assets,
net 135,656 60,571
Other assets, net 115,755
100,165
Total assets $ 2,033,774
$ 1,993,879
Liabilities and
Shareholders’ Equity
Current liabilities Accounts payable $ 440,590 $ 398,945
Accrued payroll and benefits 60,632 66,980 Other accrued expenses
39,361 40,149 Current maturities of long-term debt and capital
lease obligations 19,407 18,998
Total current liabilities 559,990 525,072
Long-term liabilities Deferred income taxes 60,397 116,277
Postretirement benefits 16,564 16,282 Other long-term liabilities
39,330 45,300 Long-term debt and capital lease obligations
651,537 475,365
Total long-term
liabilities 767,828 653,224
Commitments and
contingencies Shareholders’ equity
Common stock, voting, no par value;
100,000 shares authorized; 36,974 and 37,488 shares outstanding
508,570 519,390
Preferred stock, no par value, 10,000
shares authorized; no shares outstanding
— — Accumulated other comprehensive loss (11,373 ) (11,444 )
Retained earnings 208,759 307,637
Total shareholders’ equity 705,956
815,583
Total liabilities and shareholders’
equity $ 2,033,774 $ 1,993,879
SPARTANNASH COMPANY AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
(Unaudited)
40 Weeks Ended October 7,
October 8, 2017
2016 Cash flow activities Net cash provided by
operating activities $ 71,563 $ 81,134 Net cash used in investing
activities (277,156 ) (52,536 ) Net cash provided by (used in)
financing activities 194,444 (24,505 ) Net cash used in
discontinued operations (48 ) (414 )
Net
(decrease) increase in cash and cash equivalents (11,197 )
3,679
Cash and cash equivalents at beginning of fiscal year
24,351 22,719
Cash and cash
equivalents at end of fiscal year $ 13,154 $ 26,398
SPARTANNASH COMPANY AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA Table 1: Sales and Operating
(Loss) Earnings by Segment (In thousands) (Unaudited)
12 Weeks Ended 40 Weeks Ended
October 7, 2017 October 8, 2016 October 7,
2017 October 8, 2016
Food Distribution
Segment:
Net sales $ 937,397 49.2 % $ 804,500
44.7 % $ 3,041,983 49.0 % $ 2,615,964 44.3 % Operating earnings
20,350 18,957 68,868 64,040
Military
Segment:
Net sales 505,631 26.5 % 506,626 28.1 % 1,620,021 26.1 % 1,686,567
28.5 % Operating earnings 1,118 2,862 4,517 8,792
Retail
Segment:
Net sales 463,616 24.3 % 488,959 27.2 % 1,541,853 24.9 % 1,603,885
27.2 % Operating (loss) earnings (215,310 ) 8,048 (198,641 ) 11,315
Total:
Net sales $ 1,906,644 100.0 % $ 1,800,085 100.0 % $ 6,203,857 100.0
% $ 5,906,416 100.0 % Operating (loss) earnings (193,842 ) 29,867
(125,256 ) 84,147
Table 2: Reconciliation of Net
(Loss) Earnings to Adjusted Earnings Before Interest, Taxes,
Depreciation and Amortization (Adjusted EBITDA) (A
Non-GAAP Financial Measure) (In thousands) (Unaudited)
12 Weeks Ended 40 Weeks Ended
October 7, October 8, October 7,
October 8, (In thousands) 2017
2016 2017 2016 Net (loss) earnings $ (123,506
) $ 16,648 $ (87,452 ) $ 43,982 Loss from discontinued operations,
net of tax 54 82 125 268 Income taxes (76,445 ) 8,864 (56,809 )
25,635 Other expenses, net 6,055 4,273
18,880 14,262 Operating (loss) earnings
(193,842 ) 29,867 (125,256 ) 84,147 Adjustments: LIFO expense
(benefit) 192 (341 ) 2,474 2,130 Depreciation and amortization
19,455 17,927 63,553 58,931 Merger/acquisition and integration
2,392 2,427 7,031 4,237 Restructuring charges and asset impairment
224,653 2,662 225,660 23,714 Fresh Kitchen start-up costs 2,086 —
6,688 — Stock-based compensation 1,102 943 8,593 7,010 Other
non-cash (gains) charges (138 ) (71 ) (661 )
3 Adjusted EBITDA $ 55,900 $ 53,414 $
188,082 $ 180,172
Reconciliation of operating
earnings (loss) to adjusted EBITDA by segment: Food
Distribution: Operating earnings $ 20,350 $ 18,957 $ 68,868 $
64,040 Adjustments: LIFO expense (benefit) 98 (348 ) 1,361 941
Depreciation and amortization 6,862 4,842 22,291 16,139
Merger/acquisition and integration 939 639 5,254 1,201
Restructuring charges and asset impairment 379 207 1,280 4,749
Fresh Kitchen start-up costs 2,086 — 6,688 — Stock-based
compensation 488 409 3,999 3,090 Other non-cash (gains) charges
(57 ) (61 ) (11 ) 137 Adjusted
EBITDA $ 31,145 $ 24,645 $ 109,730 $ 90,297
Military: Operating earnings $ 1,118 $ 2,862 $ 4,517
$ 8,792 Adjustments: LIFO (benefit) expense (63 ) 134 329 678
Depreciation and amortization 2,786 2,693 8,832 8,850
Merger/acquisition and integration 1,453 — 1,453 1 Restructuring
charges (gains) 500 18 500 (241 ) Stock-based compensation 186 171
1,313 1,178 Other non-cash charges (gains) 1
58 (15 ) 262 Adjusted EBITDA $ 5,981
$ 5,936 $ 16,929 $ 19,520
Retail: Operating (loss) earnings $ (215,310 ) $ 8,048 $
(198,641 ) $ 11,315 Adjustments: LIFO expense (benefit) 157 (127 )
784 511 Depreciation and amortization 9,807 10,392 32,430 33,942
Merger/acquisition and integration — 1,788 324 3,035 Restructuring
charges and asset impairment 223,774 2,437 223,880 19,206
Stock-based compensation 428 363 3,281 2,742 Other non-cash gains
(82 ) (68 ) (635 ) (396 ) Adjusted
EBITDA $ 18,774 $ 22,833 $ 61,423 $ 70,355
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 (Loss) Earnings to
Adjusted Operating Earnings (A Non-GAAP Financial
Measure) (In thousands) (Unaudited)
12 Weeks
Ended 40 Weeks Ended October 7,
October 8, October 7, October 8,
(In
thousands)
2017 2016 2017 2016 Operating (loss)
earnings $ (193,842 ) $ 29,867 $ (125,256 ) $ 84,147 Adjustments:
Merger/acquisition and integration 2,392 2,427 7,031 4,237
Restructuring charges and asset impairment 224,653 2,662 225,660
23,714 Fresh Kitchen start-up costs 2,086 — 6,688 — Stock
compensation associated with executive retirement — — 1,172
Severance associated with cost reduction initiatives 4
149 27 839 Adjusted
operating earnings $ 35,293 $ 35,105 $ 115,322 $
112,937
Reconciliation of operating earnings (loss) to
adjusted operating earnings by segment: Food
Distribution: Operating earnings $ 20,350 $ 18,957 $ 68,868 $
64,040 Adjustments: Merger/acquisition and integration 939 639
5,254 1,201 Restructuring charges and asset impairment 379 207
1,280 4,749 Fresh Kitchen start-up costs 2,086 — 6,688 — Stock
compensation associated with executive retirement — — 591 —
Severance associated with cost reduction initiatives 4
12 25 218 Adjusted
operating earnings $ 23,758 $ 19,815 $ 82,706 $
70,208
Military: Operating earnings $ 1,118 $ 2,862 $
4,517 $ 8,792 Adjustments: Merger/acquisition and integration 1,453
— 1,453 1 Restructuring charges (gains) 500 18 500 (241 ) Stock
compensation associated with executive retirement — — 147 —
Severance associated with cost reduction initiatives —
20 1 242 Adjusted
operating earnings $ 3,071 $ 2,900 $ 6,618 $ 8,794
Retail: Operating (loss) earnings $ (215,310 ) $
8,048 $ (198,641 ) $ 11,315 Adjustments: Merger/acquisition and
integration — 1,788 324 3,035 Restructuring charges and asset
impairment 223,774 2,437 223,880 19,206 Stock compensation
associated with executive retirement — — 434 — Severance associated
with cost reduction initiatives — 117 1
379 Adjusted operating earnings $ 8,464
$ 12,390 $ 25,998 $ 33,935
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 (Loss)
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
October 7, 2017 October 8, 2016 per
diluted per diluted
(In thousands,
except per share amounts)
Earnings share Earnings share (Loss)
earnings from continuing operations $ (123,452 ) $ (3.31 ) $ 16,730
$ 0.45 Adjustments: Merger/acquisition and integration 2,392 2,427
Restructuring charges and asset impairment 224,653 2,662 Fresh
Kitchen start-up costs 2,086 — Severance associated with cost
reduction initiatives 4 149 Total
adjustments 229,135 5,238 Income tax effect on adjustments (a)
(85,546 ) (1,918 ) Total adjustments, net of taxes
143,589 3.85 3,320
0.08 * Adjusted earnings from continuing operations $ 20,137
$ 0.54 $ 20,050 $ 0.53
40
Weeks Ended October 7, 2017 October 8, 2016
per diluted per diluted
(In thousands,
except per share amounts)
Earnings share Earnings share (Loss)
earnings from continuing operations $ (87,327 ) $ (2.32 ) $ 44,250
$ 1.18 Adjustments: Merger integration and acquisition expenses
7,031 4,237 Restructuring charges and asset impairment 225,660
23,714 Fresh Kitchen start-up costs 6,688 — Severance associated
with cost reduction initiatives 27 839 Stock compensation
associated with executive retirement 1,172 —
Total adjustments 240,578 28,790 Income tax effect on
adjustments (a) (89,840 ) (10,871 ) Total
adjustments, net of taxes 150,738 4.01
17,919 0.48 Adjusted earnings from continuing
operations $ 63,411 $ 1.69 $ 62,169 $ 1.66 *
Includes rounding
(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)
October 7, December 31,
2017 2016 Current maturities of long-term debt
and capital lease obligations $ 19,407 $ 17,424 Long-term debt and
capital lease obligations 651,537 413,675
Total debt 670,944 431,099 Cash and cash equivalents
(13,154 ) (24,351 ) Total net long-term debt $ 657,790
$ 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
Loss 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 Loss from continuing operations $
(2.10
) $
(2.04
) Adjustments, net of taxes: Merger/acquisition and integration
expenses 0.14 0.14 Goodwill impairment 3.15 3.15 Restructuring
charges and asset impairment 0.71 0.71 Fresh Kitchen start-up costs
0.14 0.14 Stock compensation associated with executive retirement
0.02 0.02 Adjusted earnings from
continuing operations $
2.06
$
2.12
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171108006557/en/
Investor Contacts:SpartanNash CompanyMark ShamberChief
Financial Officer and Executive Vice President(616)
878-8023orICRKatie TurnerManaging Director(646) 277-1228orMedia
Contact:SpartanNash CompanyMeredith GremelVice President
Corporate Affairs and Communications(616) 878-2830
SpartanNash (NASDAQ:SPTN)
Historical Stock Chart
From Mar 2024 to Apr 2024
SpartanNash (NASDAQ:SPTN)
Historical Stock Chart
From Apr 2023 to Apr 2024