Exhibit 99.1
For Immediate Release | | |
Investor Contact: Dave Staples | | Media Contact: Meredith Gremel |
Executive Vice President & COO | | Vice President Corporate Affairs and Communications |
(616) 878-8793 | | (616) 878-2830 |
SpartanNash Announces Third Quarter Fiscal Year 2015 Financial Results
Adjusted Third Quarter EPS from Continuing Operations Improved to $0.49 per Diluted Share; Reported EPS from Continuing Operations of $0.40 per Diluted Share
GRAND RAPIDS, MICHIGAN – November 11, 2015 – SpartanNash Company (the “Company”) (Nasdaq: SPTN) today reported financial results for the 12-week third quarter and 40-week period ended October 10, 2015.
Third Quarter Results
Consolidated net sales for the 12-week third quarter decreased 1.9 percent to $1.78 billion compared to $1.81 billion last year primarily due to lower sales in the Military and Retail segments.
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) were $55.2 million compared to $55.9 million for the prior year quarter, representing 3.1 percent of net sales in each year. Adjusted EBITDA is a non-Generally Accepted Accounting Principles (GAAP) financial measure. Please see the financial tables at the end of this press release for a reconciliation of Adjusted EBITDA to operating earnings, and a reconciliation of each non-GAAP financial measure to the most directly comparable measure prepared and presented in accordance with GAAP.
Reported operating earnings were $29.2 million compared to $33.6 million for the prior year quarter. The decrease was primarily due to higher restructuring and asset impairment charges of $2.0 million compared to the prior year quarter, as well as higher merger integration and acquisition expenses of $3.0 million associated with the repositioning of the distribution network and remodeled retail stores in the western division along with retail system conversions.
Adjusted earnings from continuing operations for the third quarter increased to $18.6 million, or $0.49 per diluted share, from $17.2 million, or $0.46 per diluted share in the third quarter last year. For the current year third quarter, adjusted earnings from continuing operations exclude net after-tax charges of $0.09 per diluted share primarily related to merger integration and acquisition expenses and net restructuring and asset impairment charges. For the prior year third quarter, adjusted earnings from continuing operations excluded net after-tax charges of $0.01 per diluted share related to merger integration expenses and net asset impairment and restructuring gains. Adjusted earnings from continuing operations is a non-GAAP operating financial measure. Reported earnings from continuing operations for the third quarter were $15.2 million, or $0.40 per diluted share, compared to $17.2 million, or $0.45 per diluted share, in the prior year quarter, primarily due to the factors previously mentioned.
“We are pleased with our ability to generate improved third quarter adjusted earnings” stated Dennis Eidson, SpartanNash's President and Chief Executive Officer. “While the sales environment remains more challenging than anticipated, our team continues to strengthen SpartanNash’s value proposition as well as the quality and service that we offer customers across our Retail, Food Distribution and Military segments. During the quarter, we continued to invest in our western store base with the completion of six store remodels and grand re-openings in Omaha and through the initial rollout of our yes Rewards loyalty program into these remodeled stores. We are encouraged by the initial results at these six stores. In addition, we anticipate further benefits from merger integration and improved operational efficiencies through the optimization of our supply chain.”
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Gross profit margin for the third quarter was 14.6 percent compared to 14.4 percent in the prior year quarter. The change in gross profit margin rate primarily reflects an increase in fuel margin rates, partially offset by the impact of lower inflation-related gains in the Military segment.
Third quarter operating expenses would have been $224.3 million compared to $227.7 million, representing 12.6 percent of net sales in each year, if net merger integration and acquisition expenses, asset impairment and restructuring charges, and one-time costs related to cost reduction initiatives were excluded from both periods. Reported operating expenses for the third quarter were $229.8 million, or 12.9 percent of sales, compared to $227.8 million, or 12.6 percent of sales, in the same quarter last year.
Food Distribution Segment
Net sales for the Food Distribution segment were $762.3 million in the third quarter compared to $764.3 million in the same quarter last year.
Third quarter adjusted operating earnings for the Food Distribution segment increased to $17.0 million from $15.2 million in the same period last year. In the current year third quarter, adjusted operating earnings exclude $0.5 million of net pre-tax charges consisting primarily of merger integration and acquisition costs and one-time charges related to cost reduction initiatives. The prior year third quarter excludes $1.4 million of pre-tax merger integration expenses. The increase in adjusted operating earnings was due to merger synergies and lower operating costs, including the impact of lower health care costs. Adjusted operating earnings is a non-GAAP operating financial measure. Reported operating earnings for the current year third quarter increased to $16.5 million from $13.8 million in the prior year third quarter.
Retail Segment
Net sales for the Retail segment were $507.2 million in the third quarter compared to $521.7 million in the same quarter last year. The decrease was primarily due to a 3.0 percent decrease in comparable store sales, excluding fuel, $13.2 million in lower sales resulting from the closure of retail stores and fuel centers, and significantly lower retail fuel prices compared to the prior year, partially offset by sales from recently acquired stores. Comparable store sales reflect the low inflationary environment and increased competition in the western markets.
Third quarter adjusted operating earnings for the Retail segment increased to $13.2 million from $12.9 million in the prior year third quarter. In the current year third quarter, adjusted operating earnings exclude $4.0 million of pre-tax merger integration and acquisition costs, and net asset impairment charges. The prior year third quarter excludes $1.2 million of net non-cash pre-tax asset impairment and restructuring gains. The increase in adjusted operating earnings was due to contributions from stores acquired, lower health care costs, improved fuel margins and the impact of store closures in the prior periods, partially offset by the impact of negative comparable store sales, grand re-opening costs, and higher shrink levels in the western stores. Reported operating earnings in the Retail segment were $9.2 million compared to $14.1 million in the prior year quarter.
During the third quarter, the Company completed six major remodels in the Omaha, Nebraska market. The Company ended the quarter with 165 corporate owned stores and 29 fuel centers.
Military Segment
Net sales for the Company's Military segment were $506.0 million compared to $523.6 million in the prior year quarter, primarily due to lower sales at the DeCA-operated commissaries.
Third quarter adjusted operating earnings for the Military segment were $4.5 million compared to $5.7 million in the prior year third quarter. The decrease in adjusted operating earnings was due to lower sales volume and lower inflation-related gains, partially offset by reduced health care costs. In the current year third quarter, adjusted operating earnings exclude $1.1 million of pre-tax restructuring and asset impairment charges related to a facility closure and one-time costs associated with cost reduction initiatives. Reported operating earnings for the Military segment were $3.4 million compared to $5.7 million in the prior year quarter.
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Balance Sheet and Cash Flow
Cash flow provided by operating activities for the year-to-date period was $129.9 million, compared to $117.4 million in the comparable period last year. The increase was primarily due to improvements in working capital.
Net long-term debt (including current maturities and capital lease obligations and subtracting cash) for the Company was $539.4 million as of October 10, 2015, compared to $563.8 million at January 3, 2015. The Company's total net long-term debt-to-capital ratio is 0.41-to-1.0 and net long-term debt to Adjusted EBITDA is 2.30-to-1.0 as of October 10, 2015. Net long-term debt is a non-GAAP financial measure. Long-term debt and capital lease obligations, including current maturities, were $547.9 million at October 10, 2015 compared to $570.3 million at January 3, 2015.
Outlook
Mr. Eidson continued, “We are committed to focusing our efforts on the initiatives that will help drive sales and margins in a challenging operating environment. In our Retail segment, we will continue to implement our operational improvement strategy in our western store base, including the rollout of our marketing and loyalty programs in connection with store re-bannering activities. On the distribution side of the business, we expect to continue to benefit from the optimization of our supply chain in our food distribution and military channels. We believe our value added approach to distribution is gaining traction in our markets and is also gaining us access to new areas of opportunity. As a result, we believe we are well positioned to generate incremental business in both the Food Distribution and Military segments next year.”
For the fourth quarter of fiscal 2015, the Company slightly revised its previously issued guidance for adjusted net earnings from continuing operations to approximate $0.44 per diluted share, excluding merger integration costs and any other one-time expenses. This guidance is based on expectations of the continuation of low inflation levels and the challenging sales environment and is within the Company’s previously issued annual range.
The Company expects capital expenditures for fiscal year 2015 to be in the range of $75.0 million to $80.0 million, with depreciation and amortization of approximately $83.0 million to $84.0 million and total interest expense of approximately $21.0 to $22.0 million, excluding one-time charges.
On November 2, 2015, the Company called for redemption all of the outstanding $50.0 million aggregate principal amount of the 6.625% Senior Notes due December 2016 (the “Notes”). The Company will redeem the Notes for cash using borrowings under its revolving credit facility, with the redemption to occur on December 15, 2015. One-time charges of $1.1 million are expected to be incurred in the current year fourth quarter consisting of the redemption premium and the write-off of unamortized issuance costs. As a result of the redemption, the Company expects to reduce ongoing annual interest expense by approximately $2.0 million, partially offset by future interest rate increases.
Conference Call
A telephone conference call to discuss the Company’s third quarter of fiscal 2015 financial results is scheduled for 9:00 a.m. Eastern Time, Thursday, November 12, 2015. 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 (SPTN) is a Fortune 400 company and the largest grocery distributor serving U.S. military commissaries and exchanges in the world, in terms of revenue. The Company's core businesses include distributing grocery products to military commissaries and exchanges and independent and corporate-owned retail stores located in 46 states and the District of Columbia, Europe, Cuba, Puerto Rico, Bahrain and Egypt. SpartanNash currently operates 164 supermarkets, primarily under the banners of Family Fare Supermarkets, Family Fresh Markets, D&W Fresh Markets, and SunMart.
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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 regarding the expected benefits of the merger and statements preceded by, followed by or that otherwise include the words "outlook," "optimistic," "committed," "anticipates," "appears," "believe," "continue," "expects," "look forward," "guidance," "target," "opportunities," "design," "focus," "confident," "position," "taking steps," "intend," "seek," or "plan" or similar expressions or that an event or trend "may," "will," or is "likely to" occur, or is "beginning." 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 combined company, and actual results may vary materially from the results and expectations discussed. Additional risks and uncertainties related to the merger include, but are not limited to, the successful integration of Spartan Stores' and Nash Finch's business and the combined company's ability to compete in the highly competitive grocery distribution and retail grocery industry. 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, the merger, 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.
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SPARTANNASH COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
(Unaudited)
| 12 Weeks Ended | | | 40 Weeks Ended | | |
| October 10, | | | October 4, | | | October 10, | | | October 4, | | |
| 2015 | | | 2014 | | | 2015 | | | 2014 | | |
Net sales | $ | 1,775,401 | | | $ | 1,809,571 | | | $ | 5,883,948 | | | $ | 5,953,473 | | |
Cost of sales | | 1,516,352 | | | | 1,548,162 | | | | 5,026,611 | | | | 5,079,612 | | |
Gross profit | | 259,049 | | | | 261,409 | | | | 857,337 | | | | 873,861 | | |
| | | | | | | | | | | | | | | | |
Operating expenses | | | | | | | | | | | | | | | | |
Selling, general and administrative | | 224,648 | | | | 227,690 | | | | 752,452 | | | | 771,961 | | |
Merger integration and acquisition | | 4,417 | | | | 1,379 | | | | 7,252 | | | | 8,128 | | |
Restructuring charges (gains) and asset impairment | | 760 | | | | (1,272 | ) | | | 7,762 | | | | (67 | ) | |
Total operating expenses | | 229,825 | | | | 227,797 | | | | 767,466 | | | | 780,022 | | |
| | | | | | | | | | | | | | | | |
Operating earnings | | 29,224 | | | | 33,612 | | | | 89,871 | | | | 93,839 | | |
| | | | | | | | | | | | | | | | |
Other (income) and expenses | | | | | | | | | | | | | | | | |
Interest expense | | 4,983 | | | | 5,467 | | | | 16,627 | | | | 18,416 | | |
Other, net | | (148 | ) | | | (1 | ) | | | (202 | ) | | | 4 | | |
Total other expenses, net | | 4,835 | | | | 5,466 | | | | 16,425 | | | | 18,420 | | |
| | | | | | | | | | | | | | | | |
Earnings before income taxes and discontinued operations | | 24,389 | | | | 28,146 | | | | 73,446 | | | | 75,419 | | |
Income taxes | | 9,141 | | | | 10,977 | | | | 27,444 | | | | 28,336 | | |
Earnings from continuing operations | | 15,248 | | | | 17,169 | | | | 46,002 | | | | 47,083 | | |
| | | | | | | | | | | | | | | | |
Earnings (loss) from discontinued operations, net of taxes | | 145 | | | | (73 | ) | | | (21 | ) | | | (358 | ) | |
Net earnings | $ | 15,393 | | | $ | 17,096 | | | $ | 45,981 | | | $ | 46,725 | | |
| | | | | | | | | | | | | | | | |
Basic earnings per share: | | | | | | | | | | | | | | | | |
Earnings from continuing operations | $ | 0.41 | | | $ | 0.46 | | | $ | 1.22 | | | $ | 1.25 | | |
Earnings (loss) from discontinued operations | | — | | | | (0.01 | ) | * | | — | | | | (0.01 | ) | |
Net earnings | $ | 0.41 | | | $ | 0.45 | | | $ | 1.22 | | | $ | 1.24 | | |
| | | | | | | | | | | | | | | | |
Diluted earnings per share: | | | | | | | | | | | | | | | | |
Earnings from continuing operations | $ | 0.40 | | | $ | 0.45 | | | $ | 1.22 | | | $ | 1.25 | | |
Earnings (loss) from discontinued operations | | 0.01 | | * | | — | | | | — | | | | (0.01 | ) | |
Net earnings | $ | 0.41 | | | $ | 0.45 | | | $ | 1.22 | | | $ | 1.24 | | |
| | | | | | | | | | | | | | | | |
Weighted average shares outstanding: | | | | | | | | | | | | | | | | |
Basic | | 37,553 | | | | 37,717 | | | | 37,617 | | | | 37,678 | | |
Diluted | | 37,653 | | | | 37,778 | | | | 37,735 | | | | 37,749 | | |
*Includes rounding
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SPARTANNASH COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
| October 10, 2015 | | | October 4, 2014 | |
Assets | | | | | | | |
Current assets | | | | | | | |
Cash and cash equivalents | $ | 8,510 | | | $ | 8,048 | |
Accounts and notes receivable, net | | 320,019 | | | | 305,433 | |
Inventories, net | | 573,320 | | | | 612,901 | |
Prepaid expenses and other current assets | | 24,494 | | | | 34,093 | |
Property and equipment held for sale | | 4,002 | | | | 11,013 | |
Total current assets | | 930,345 | | | | 971,488 | |
| | | | | | | |
Property and equipment, net | | 586,361 | | | | 596,294 | |
Goodwill | | 331,612 | | | | 297,352 | |
Other assets, net | | 118,035 | | | | 126,135 | |
| | | | | | | |
Total assets | $ | 1,966,353 | | | $ | 1,991,269 | |
| | | | | | | |
Liabilities and Shareholders’ Equity | | | | | | | |
Current liabilities | | | | | | | |
Accounts payable | $ | 365,818 | | | $ | 411,279 | |
Accrued payroll and benefits | | 63,693 | | | | 64,307 | |
Other accrued expenses | | 36,824 | | | | 43,851 | |
Deferred income taxes | | 29,453 | | | | 22,987 | |
Current maturities of long-term debt and capital lease obligations | | 21,993 | | | | 7,349 | |
Total current liabilities | | 517,781 | | | | 549,773 | |
| | | | | | | |
Long-term liabilities | | | | | | | |
Deferred income taxes | | 89,148 | | | | 91,602 | |
Postretirement benefits | | 17,070 | | | | 18,855 | |
Other long-term liabilities | | 37,870 | | | | 37,261 | |
Long-term debt and capital lease obligations | | 525,889 | | | | 549,530 | |
Total long-term liabilities | | 669,977 | | | | 697,248 | |
| | | | | | | |
Shareholders’ equity | | | | | | | |
Common stock, voting, no par value; 100,000 shares authorized; 37,596 and 37,625 shares outstanding | | 520,953 | | | | 521,875 | |
Preferred stock, no par value, 10,000 shares authorized; no shares outstanding | | — | | | | — | |
Accumulated other comprehensive loss | | (11,233 | ) | | | (8,375 | ) |
Retained earnings | | 268,875 | | | | 230,748 | |
Total shareholders’ equity | | 778,595 | | | | 744,248 | |
| | | | | | | |
Total liabilities and shareholders’ equity | $ | 1,966,353 | | | $ | 1,991,269 | |
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SPARTANNASH COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
(Unaudited) | 40 Weeks Ended | |
(In thousands) | October 10, 2015 | | | October 4, 2014 | |
Cash flows from operating activities | | | | | | | |
Net cash provided by operating activities | $ | 129,869 | | | $ | 117,385 | |
Net cash used in investing activities | | (71,497 | ) | | | (54,362 | ) |
Net cash used in financing activities | | (47,486 | ) | | | (63,912 | ) |
Net cash used in discontinued operations | | (8,819 | ) | | | (279 | ) |
Net increase (decrease) in cash and cash equivalents | | 2,067 | | | | (1,168 | ) |
Cash and cash equivalents at beginning of period | | 6,443 | | | | 9,216 | |
Cash and cash equivalents at end of period | $ | 8,510 | | | $ | 8,048 | |
SPARTANNASH COMPANY AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA
Table 1: Sales and Operating Earnings by Segment
(In thousands)
(Unaudited)
| 12 Weeks Ended | | | 40 Weeks Ended | |
| October 10, 2015 | | | | | | | October 4, 2014 | | | | | | | October 10, 2015 | | | | | | | October 4, 2014 | | | | | |
Military Segment: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net sales | $ | 505,971 | | | | 28.5 | % | | $ | 523,553 | | | | 28.9 | % | | $ | 1,702,412 | | | | 29.0 | % | | $ | 1,710,122 | | | | 28.7 | % |
Operating earnings | $ | 3,438 | | | | | | | $ | 5,651 | | | | | | | $ | 13,491 | | | | | | | $ | 15,956 | | | | | |
Food Distribution Segment: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net sales | $ | 762,250 | | | | 42.9 | % | | $ | 764,288 | | | | 42.3 | % | | $ | 2,531,428 | | | | 43.0 | % | | $ | 2,503,216 | | | | 42.1 | % |
Operating earnings | $ | 16,540 | | | | | | | $ | 13,834 | | | | | | | $ | 56,195 | | | | | | | $ | 38,713 | | | | | |
Retail Segment: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net sales | $ | 507,180 | | | | 28.6 | % | | $ | 521,730 | | | | 28.8 | % | | $ | 1,650,108 | | | | 28.0 | % | | $ | 1,740,135 | | | | 29.2 | % |
Operating earnings | $ | 9,246 | | | | | | | $ | 14,127 | | | | | | | $ | 20,185 | | | | | | | $ | 39,170 | | | | | |
Total: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net sales | $ | 1,775,401 | | | | 100.0 | % | | $ | 1,809,571 | | | | 100.0 | % | | $ | 5,883,948 | | | | 100.0 | % | | $ | 5,953,473 | | | | 100.0 | % |
Operating earnings | $ | 29,224 | | | | | | | $ | 33,612 | | | | | | | $ | 89,871 | | | | | | | $ | 93,839 | | | | | |
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Table 2: Reconciliation of Operating Earnings to Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization
(Adjusted EBITDA)
(A Non-GAAP Financial Measure)
(In thousands)
(Unaudited)
(Unaudited) | 12 Weeks Ended | | | 40 Weeks Ended | |
(In thousands) | October 10, 2015 | | | October 4, 2014 | | | October 10, 2015 | | | October 4, 2014 | |
Operating earnings | $ | 29,224 | | | $ | 33,612 | | | $ | 89,871 | | | $ | 93,839 | |
Adjustments: | | | | | | | | | | | | | | | |
LIFO expense | | 178 | | | | 1,550 | | | | 3,195 | | | | 5,077 | |
Depreciation and amortization | | 19,722 | | | | 19,951 | | | | 64,960 | | | | 66,921 | |
Restructuring charges (gains) and asset impairment | | 760 | | | | (1,272 | ) | | | 7,762 | | | | (67 | ) |
Merger integration and acquisition | | 4,417 | | | | 1,379 | | | | 7,252 | | | | 8,128 | |
Fees and expenses related to tax planning strategies | | — | | | | — | | | | 569 | | | | — | |
Stock based compensation | | 808 | | | | 953 | | | | 6,470 | | | | 6,017 | |
Other non-cash charges (gains) | | 123 | | | | (262 | ) | | | (409 | ) | | | (812 | ) |
Adjusted EBITDA | $ | 55,232 | | | $ | 55,911 | | | $ | 179,670 | | | $ | 179,103 | |
Reconciliation of operating earnings to adjusted EBITDA by segment: | |
Military: | | | | | | | | | | | | | | | |
Operating earnings | $ | 3,438 | | | $ | 5,651 | | | $ | 13,491 | | | $ | 15,956 | |
Adjustments: | | | | | | | | | | | | | | | |
LIFO (income) expense | | (59 | ) | | | 359 | | | | 620 | | | | 1,192 | |
Depreciation and amortization | | 2,838 | | | | 2,751 | | | | 9,381 | | | | 8,580 | |
Restructuring charges and asset impairment | | 984 | | | | — | | | | 984 | | | | — | |
Merger integration and acquisition | | — | | | | 3 | | | | — | | | | 27 | |
Fees and expenses related to tax planning strategies | | — | | | | — | | | | 75 | | | | — | |
Stock based compensation | | 144 | | | | 86 | | | | 998 | | | | 502 | |
Other non-cash charges (gains) | | 101 | | | | 4 | | | | 204 | | | | (55 | ) |
Adjusted EBITDA | $ | 7,446 | | | $ | 8,854 | | | $ | 25,753 | | | $ | 26,202 | |
Food Distribution: | | | | | | | | | | | | | | | |
Operating earnings | $ | 16,540 | | | $ | 13,834 | | | $ | 56,195 | | | $ | 38,713 | |
Adjustments: | | | | | | | | | | | | | | | |
LIFO expense | | 16 | | | | 794 | | | | 1,575 | | | | 2,551 | |
Depreciation and amortization | | 6,131 | | | | 6,931 | | | | 20,836 | | | | 23,105 | |
Restructuring charges (gains) and asset impairment | | 41 | | | | — | | | | (237 | ) | | | 1,029 | |
Merger integration and acquisition | | 323 | | | | 1,375 | | | | 1,359 | | | | 8,097 | |
Fees and expenses related to tax planning strategies | | — | | | | — | | | | 282 | | | | — | |
Stock based compensation | | 363 | | | | 440 | | | | 2,992 | | | | 2,839 | |
Other non-cash charges (gains) | | 123 | | | | (96 | ) | | | 164 | | | | (16 | ) |
Adjusted EBITDA | $ | 23,537 | | | $ | 23,278 | | | $ | 83,166 | | | $ | 76,318 | |
Retail: | | | | | | | | | | | | | | | |
Operating earnings | $ | 9,246 | | | $ | 14,127 | | | $ | 20,185 | | | $ | 39,170 | |
Adjustments: | | | | | | | | | | | | | | | |
LIFO expense | | 221 | | | | 397 | | | | 1,000 | | | | 1,334 | |
Depreciation and amortization | | 10,753 | | | | 10,269 | | | | 34,743 | | | | 35,236 | |
Restructuring (gains) charges and asset impairment | | (265 | ) | | | (1,272 | ) | | | 7,015 | | | | (1,096 | ) |
Merger integration and acquisition | | 4,094 | | | | 1 | | | | 5,893 | | | | 4 | |
Fees and expenses related to tax planning strategies | | — | | | | — | | | | 212 | | | | — | |
Stock based compensation | | 301 | | | | 427 | | | | 2,480 | | | | 2,676 | |
Other non-cash gains | | (101 | ) | | | (170 | ) | | | (777 | ) | | | (741 | ) |
Adjusted EBITDA | $ | 24,249 | | | $ | 23,779 | | | $ | 70,751 | | | $ | 76,583 | |
Notes: Adjusted EBITDA is a non-GAAP operating financial measure that the Company defines as operating earnings plus 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.
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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 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 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 EBITDA 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)
(Unaudited) | 12 Weeks Ended | | | 40 Weeks Ended | |
(In thousands) | October 10, 2015 | | | October 4, 2014 | | | October 10, 2015 | | | October 4, 2014 | |
Operating earnings | $ | 29,224 | | | $ | 33,612 | | | $ | 89,871 | | | $ | 93,839 | |
Adjustments: | | | | | | | | | | | | | | | |
Merger integration and acquisition | | 4,417 | | | | 1,379 | | | | 7,252 | | | | 8,128 | |
Restructuring charges (gains) and asset impairment | | 760 | | | | (1,272 | ) | | | 7,762 | | | | (67 | ) |
One-time charges related to cost reduction initiatives | | 371 | | | | — | | | | 371 | | | | — | |
Fees and expenses related to tax planning strategies | | — | | | | — | | | | 569 | | | | — | |
Adjusted operating earnings | $ | 34,772 | | | $ | 33,719 | | | $ | 105,825 | | | $ | 101,900 | |
Reconciliation of operating earnings to adjusted operating earnings by segment: | |
Military: | | | | | | | | | | | | | | | |
Operating earnings | $ | 3,438 | | | $ | 5,651 | | | $ | 13,491 | | | $ | 15,956 | |
Adjustments: | | | | | | | | | | | | | | | |
Merger integration and acquisition | | — | | | | 3 | | | | — | | | | 27 | |
Restructuring charges and asset impairment | | 984 | | | | — | | | | 984 | | | | — | |
One-time charges related to cost reduction initiatives | | 95 | | | | — | | | | 95 | | | | — | |
Fees and expenses related to tax planning strategies | | — | | | | — | | | | 75 | | | | — | |
Adjusted operating earnings | $ | 4,517 | | | $ | 5,654 | | | $ | 14,645 | | | $ | 15,983 | |
Food Distribution: | | | | | | | | | | | | | | | |
Operating earnings | $ | 16,540 | | | $ | 13,834 | | | $ | 56,195 | | | $ | 38,713 | |
Adjustments: | | | | | | | | | | | | | | | |
Merger integration and acquisition | | 323 | | | | 1,375 | | | | 1,359 | | | | 8,097 | |
Restructuring charges (gains) and asset impairment | | 41 | | | | — | | | | (237 | ) | | | 1,029 | |
One-time charges related to cost reduction initiatives | | 116 | | | | — | | | | 116 | | | | — | |
Fees and expenses related to tax planning strategies | | — | | | | — | | | | 282 | | | | — | |
Adjusted operating earnings | $ | 17,020 | | | $ | 15,209 | | | $ | 57,715 | | | $ | 47,839 | |
Retail: | | | | | | | | | | | | | | | |
Operating earnings | $ | 9,246 | | | $ | 14,127 | | | $ | 20,185 | | | $ | 39,170 | |
Adjustments: | | | | | | | | | | | | | | | |
Merger integration and acquisition | | 4,094 | | | | 1 | | | | 5,893 | | | | 4 | |
Restructuring (gains) charges and asset impairment | | (265 | ) | | | (1,272 | ) | | | 7,015 | | | | (1,096 | ) |
One-time charges related to cost reduction initiatives | | 160 | | | | — | | | | 160 | | | | — | |
Fees and expenses related to tax planning strategies | | — | | | | — | | | | 212 | | | | — | |
Adjusted operating earnings | $ | 13,235 | | | $ | 12,856 | | | $ | 33,465 | | | $ | 38,078 | |
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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 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 | | |
| October 10, 2015 | | | October 4, 2014 | | |
| | | | | Earnings from | | | | | | | Earnings from | | |
| Earnings | | | continuing | | | Earnings | | | continuing | | |
| from | | | operations | | | from | | | operations | | |
(Unaudited) | continuing | | | per diluted | | | continuing | | | per diluted | | |
(In thousands, except per share data) | operations | | | share | | | operations | | | share | | |
Earnings from continuing operations | $ | 15,248 | | | $ | 0.40 | | | $ | 17,169 | | | $ | 0.45 | | |
Adjustments, net of taxes: | | | | | | | | | | | | | | | | |
Merger integration and acquisition | | 2,778 | | | | 0.07 | | | | 807 | | | | 0.03 | | * |
Restructuring charges (gains) and asset impairment | | 469 | | | | 0.01 | | | | (782 | ) | | | (0.02 | ) | |
One-time charges related to cost reduction initiatives | | 229 | | | | 0.01 | | | | — | | | | — | | |
Favorable settlement of unrecognized tax liability | | (94 | ) | | | — | | | | — | | | | — | | |
Adjusted earnings from continuing operations | $ | 18,630 | | | $ | 0.49 | | | $ | 17,194 | | | $ | 0.46 | | |
* Includes rounding | | | | | | | | | | | | | | | | |
| 40 Weeks Ended | | |
| October 10, 2015 | | | October 4, 2014 | | |
| | | | | Earnings from | | | | | | | Earnings from | | |
| Earnings | | | continuing | | | Earnings | | | continuing | | |
| from | | | operations | | | from | | | operations | | |
(Unaudited) | continuing | | | per diluted | | | continuing | | | per diluted | | |
(In thousands, except per share data) | operations | | | share | | | operations | | | share | | |
Earnings from continuing operations | $ | 46,002 | | | $ | 1.22 | | | $ | 47,083 | | | $ | 1.25 | | |
Adjustments, net of taxes: | | | | | | | | | | | | | | | | |
Merger integration and acquisition | | 4,474 | | | | 0.12 | | | | 4,999 | | | | 0.13 | | |
Restructuring charges (gains) and asset impairment | | 4,793 | | | �� | 0.12 | | * | | (41 | ) | | | — | | |
One-time charges related to cost reduction initiatives | | 229 | | | | 0.01 | | | | — | | | | — | | |
Tax planning strategies, net of fees and expenses | | (382 | ) | | | (0.01 | ) | | | — | | | | — | | |
Favorable settlement of unrecognized tax liability | | (94 | ) | | | — | | | | (595 | ) | | | (0.02 | ) | |
Adjusted earnings from continuing operations | $ | 55,022 | | | $ | 1.46 | | | $ | 51,446 | | | $ | 1.36 | | |
* Includes rounding | | | | | | | | | | | | | | | | |
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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 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)
(Unaudited) | | | | | | | |
(In thousands) | October 10, 2015 | | | January 3, 2015 | |
Current maturities of long-term debt and capital lease obligations | $ | 21,993 | | | $ | 19,758 | |
Long-term debt and capital lease obligations | | 525,889 | | | | 550,510 | |
Total debt | | 547,882 | | | | 570,268 | |
Cash and cash equivalents | | (8,510 | ) | | | (6,443 | ) |
Total net long-term debt | $ | 539,372 | | | $ | 563,825 | |
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 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.
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)
| 12 Weeks Ending January 2, 2016 | | |
Earnings from continuing operations | $ | 0.41 | | |
Adjustments, net of taxes: | | | | |
Restructuring and asset impairment | | 0.01 | | |
Merger integration and acquisition | | — | | |
One-time charges related to redemption of 2016 Senior Notes | | 0.02 | | |
Adjusted earnings from continuing operations | $ | 0.44 | | |
| | | | |
| | | | |
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