SPTN - Earnings call transcript Q4 2018

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Operator

Hello and welcome to the SpartanNash Fourth Quarter Full Year 2018 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I now would like to turn the conference over to Katie Turner. Please go ahead, ma’am.

Katie Turner

Thank you. to conference Company’s call. welcome fiscal quarter and earnings XXXX morning the fourth SpartanNash and Good

Mark President On Eastern X are now, release, and and which Dave call everyone Time. Staples, Executive the today to yesterday President Chief from should have was Executive the Officer. issued Chief p.m. Financial and the access company Shamber, By Vice earnings Officer approximately at

please a visit is a will SpartanNash’s at For earnings copy the call and the www.spartannash.com/investors. approximately on being available release, recorded for XX replay of be This website website company’s days.

the begin, like statements significant these results differ uncertainties. economic Actual contain plans competitive distribution we forward-looking conditions. Before projections plans, that implementing everyone inherent materially I will and management may among external and risks amongst in and such from Internal companies; forward-looking These food, factors statements. and others, would and involve discuss differences general retail integrating that and operations; by include, uncertainties pressures comments may may made discussed statements. call results cause expectations, market remind today’s forward-looking the during estimates and to in that strategic

A intention the which SpartanNash forward-looking investors any uncertainties, and any place required to with measure turn disclaims company’s on by with obligation is or comparable factors release, can associated non-GAAP my over risks forward-looking on in information company’s and and Because the metrics investors And and as should not the SpartanNash’s forward-looking and statements. to with these the in This issued statements the pleasure measures yesterday. now comparable reconciliation XX-K Form useful company’s about information to now call Dave. of release performance. and SEC. financial earnings undue reliance Regulation to was Additional it’s filings included other G other statements. be any risk the the GAAP most in of about revise information measures these report found or uncertainties non-GAAP earnings annual the provide company’s to financial financial certain includes presentation period update

Dave Staples

you Good Thank everyone you, joining and us for Katie. today. morning, thank

military distribution, has include identify Our food to of distribution well for your to December, brief call engagement our and improvements our while additional a focused with becoming and plan services been a increasing and on our results on for external advisor of we the an associates revenue us from reducing Team, we culture together business commenced efficient on operating efficiencies transformation the strategic a the company-wide costs. will initiative results. highly and We on questions. our accelerate units by One base and national, opportunities an growth third-party In enthusiasm remain Mark focused our complementary greater emphasis drive retail. of business. substantial detail growth as customer fourth as Project to objective processes driving company developing before our provide distribution and update leveraging we a quarter help The then on platform tremendous to business will call of my our overview financial open our that diverse

offered including improve focused the early our and While and technology are to improve of this we of customers. leverage in those efficiency, in all on we opportunities our chain aspects stages are project, supply business, products the services which

changing the evolution environment in acquisition. of facility growth the to additional our this enable on to through acquisition, strategic closing our our Other an call since project executed progress team quarter of operations changes to rapidly making in have us first amending and actions strategic allow credit provide our Martin’s will to to include capacity our create on update management this We our last call. we continue

Group well our and as new retirement of Officer retirement as innovative, Merchandising Raya, President President the programs stores. to Divisional hired experience Supermarkets. our her management our Strategic announced to Safeway corporate Chief organization, will Lori and and executive lead and a and Merchandising teams two the marketing visionary Vons of customers Marketing our for Officer. executives, front, of Vice Chief held including Retail leader President retail a new Operations, Information merchandising of our within Initiatives and enable the with Vice we Her of own consumer-focused Marketing as Chief senior both On deliver has positions many Officer, independent

growth. diverse generate including role sales Arif new to critical customer in in General will efforts wealth technology to Additionally, establishing Dar, Maple Electric Foods, relationships and SC cost geographically General has and become and and our CIO, businesses infrastructure Leaf Arif has in throughout IT cross-functional efficiencies companies Motors and play Johnson, more to at a experience focused. positions executive a held driving our resources and efficient savings invest operating of

realize Arif to look company’s potential. join team management and Lori both as having about excited our are our full We we

to We leadership in and strategic XXXX. team, supply make will continue systems throughout our chain investments senior

we continue come expanding to by segment. we through overall accounts pleased quarter represented to fourth The partnership to Food new the deliver to XXth our our This to provide our continue are reach. accomplishment and sales offering Turning quarter an strong sales proud Distribution quarter, our ability for geographical to growth, from very consecutive has results and are to of. accounts very of a services existing growth growth attract driven

predominantly sales in factors. due discrete bottom However, the this anticipated did result growth we positive line to several not

associated our initial of higher First, trends the share. per earnings XXXX with LIFO our impacted quarter rising expectations by was rates. the quarter inflation reported fourth characteristic of additional above industry, in within our expense profitability The approximately $X.XX expense was by

know, responded to centers as share no there our to our we a not being fourth distribution due the from the we cost was highest this and from food $X.XX consumer processing official the regard. and our Second, us health lettuce per romaine government At estimate We had of recover shelves, health store to safety losses remove We many recourse you found during retail product hold our as ultimately responsible. operations. recall national from to quickly to SpartanNash, vendors $X.XX general quarter. mandate action product in

decline in Finally, adjusting who and which by following undergoing distribution unable quarter, holidays. to third the our growth center the and our for our the the combined at a the these receive in a our fourth These significant volume came to issues in where the experienced closed to effect management We centers, some quarter and leadership one better responded to and returned team have early customers issues related of circumstances in of faced were we and late changes performance. or hurricanes the in This to with service future. to controls operational processes distribution significant customer of respond shipments associated storm. a The was after return of increased to was implementing time to undertaking us transition normalized these allowed preparations in actions events volumes resulted types levels. more new to these product

a earnings, the fully still the we and expense Food particularly extent, the approximately run stabilize normal impacted to our Distribution quarter Military However, operating segments $X.XX the late we to fourth by event expect operations completely by much quarter. lesser within the rebuild This and, first in than per rates share. team management higher until

share. first to $X.XX to $X.XX the be in impact the quarter expect per We approximately

our of net our with continued growth. sales we segment sales results, as Distribution, to new in we to increased Turning string quarters with year-over-year attract continued expanding ones. while Food business X.X% Segment customers existing

in in well intensely as this store marketplace. as look to Included the perimeter grow to sponsor to for ways partner center to and continue our We Fresh new this them operations. growth retailers fresh with succeed Caito distribution existing independent help and programs competitive X.X% sales Kitchen is which and business, within in customer sales growth increased at customers to a increase our reflects

transportation continue been a discussed processing certain we industry-wide experience supply last operations, increases our significant chain have by food As shortage available in we’ve pressures price generate. quarter, been These categories. compounded including the to volatility in and we cost pressure growth of in to able costs, produce labor and

supply and chain to efficiency on We will address processes to these our continue pressures. focus improving overall

On we experienced to to focused significant mix cost the adjust which the rationalize reflect our on improve product are food date. efforts increases yields, processing front, and will pricing

positive We efforts of effects first of XXXX. seeing the these quarter late expect in the begin to

growth over of XXX We with DeCA’s fiscal private to DeCA private in program of are in brand with XXXX. see continued release network collaborate within fiscal XXXX brand continue the We in finished to pleased products additional items the will segment. our Military and DeCA

and a their our food to on-boarded sales negative these offset experienced new program expected an We for late in comparable we significant remain of with in our build focused programs, the we military environment. commissary In relationships contribution of fourth the as choice quarter. remain existing the with to pipeline on the significantly growing The overall are manufacturers protein operations. the fresh two sales addition, customer supplier

brand positioning within significant new was quarter during in implemented implementation Retail in several Our initiative the fiscal the segment XXXX. planned more half a fourth with stores of first the

with current increasingly in far thus the to these consumer the happy position are us response believe We will and efforts retail win environment.

will Markets. brand positioning the run over will closed with Family great in call Lastly, a turn a the And acquisition of very fit we to operation Martin’s base. in the our have with process of Fare be are and are store of banner is Martin’s I principles Mark. we to implementing reflects our on well Super excited that the many that that, now

Mark Shamber

fiscal quarter fourth an and of $XX came Food everyone approximately for for the $X.XX $X.XX XX fiscal both of company the of sales from per quarter flat, net and of Adjusted the GAAP due $X.XX that and I Shifting per fourth of of QX us billion, note of coming an fourth in impact on basis share fourth the quarter diluted and customer the related romaine noted operating in $X.XX driven charge. billion. with $XX.X million quarter in in earnings on decreased prior diluted the of GAAP operational associated solvency diluted operational sales when who’s Fresh in And the loss call quarter combination Distribution in net primarily versus million, fourth industry-wide operating share tax from Net year totaled of a the one or increase strategies. On an the to the quarter. XXXX XXXX. a decrease operating to quarter. in XXXX’s the increase of $XXX.X of quarter quarter $X.XX private DeCA-operated quarter XXXX’s to the distribution EPS income quarter of $XX.X quarter related per compared largely earnings morning million by fiscal or an issues related adjusted sales inflation warehouse in existing recognized accelerated new million, of the of to fourth million existing to the in the diluted $XX.X Military EPS of military’s for to and XX sales in basis, listening the operating expense to effects Fourth year in to fourth include the Dave Thanks, share $X.X compared earlier. earlier of operating loss conference totaled fiscal sales compares to program. million fiscal offset was Kitchen XXXX’s in EPS to points volume good X%, to the volume X.X%, business the Food the to planning $XX.X in primarily per compared LIFO compared million, fourth incremental Military million over of fiscal $XX.X prior of issues lettuce per Food expense million, and at by pretax call. year’s basis, our by by of recall increased our would $X.X partially recall. quarter, and a $X.XX the earnings quarter to income share XXXX, quarter lower at primarily adjusted in LIFO like expenses impact non-cash or expense, due quarter higher XXXX the adjusted $X.X and joining the XXXX the the fourth our centers, million programs. at operational operating with associated in of points issues DeCA’s to sales estimated at million. Inflation adjusted income due taken The in $XXX X% reported nearly issues, fourth operating expenses the segments, business LIFO fourth increased of webcast. to quarter under year fourth romaine prior charges in the costs diluted to share, current lettuce via quarter, the On Adjusted for non-cash with In with is earnings adjusted charge points. adjustments million reported and basis $X.XX X locations Distribution Distribution $XX.X losses the was comparable new had during customer warehouse fiscal fourth primarily primarily $XXX.X associated startup loss the quarter. inflation experiencing $X.X adjusted industry-wide exclude growth from $X.X million basis a which of noted higher an quarter brand in million of revenues customer incremental million fourth of XXXX in exclude

finished The to million $XXX.X for came a to $XX related fourth XXX X.X%, which stores partly of acquisition higher the healthcare, million incentive to the in costs; these and expense increased offsetting sales stores the Martin’s. in compared year. the decrease and and sales impairment Approximately fourth the well as fourth was million Retail sales compared $XXX income stores GAAP Year’s holiday lower of the quarter of of Martin’s managers, year. administrative LIFO stores. lower DIR centers, and related following balance strategies; of comparable last the expenses count to store Partially higher We in quarter XXXX attributable quarter prior the acquisition net were to fuel asset impact of other compared fees paid with our the decline in driven closing favorable the primarily operating was income weather Finally, million XXX due for with at the planning closure was as of and to to this pharmacy of acquisition. the tax charges related unfavorable underperforming as sales to prior by items and quarter. $X year’s to shift retail quarter fourth expenses reported the $X.X to New benefit million increase

continue DIR QX slightly compared in As being increase factor in year. margin in noted the earnings impact call, by the a is consistent see expectations prior pharmacy, which on in from primary with million calls, pressure This fees we was higher. previous pharmacy to the to although the our unfavorable provided $X.X

rates $XX.X XXXX in cash will cash $XXX.X however, compared XXXX and In in amounted expense $XXX.X significant Interest of we a of million fiscal more to quarter earnings improvements of higher the quarter $X.X fiscal $X.X to of accounts quarter. first due to cash fourth XXXX. at retail the receivable in of will fees Once year. XXXX, a The operating million compared in cycle pharmacy the in adjusted see $XX.X generated million with XXXX. XXXX; of million once $XX.X in XXXX, of to to expect year-over-year operating fiscal fourth XXXX known excuse We for as fiscal quarter in inventory of still We million working expense $XX.X million following use the fiscal last impact. the be the to quarter interest million have expect from run-rate increases, impact XXXX, particularly cycle free continue million requirements, period million lower to first a similar the and be the that the largest by they quarter to DIR flows of fees XXXX the in cycled the to fiscal me. same compared XXXX’s and XXXX’s prior higher increased DIR a impact during we year. fourth compared increases into $X.X we generated we $X.X million in remainder we Fourth which fiscal cash – quarter compared were consolidated flows generated fourth capital operating to fiscal normal

of million XXXX, we including in $XX.X the cash fiscal form shareholders, During dividends. $XX.X to million returned

debt XXX,XXX Additionally, while repurchased an $XX over price all by X%. for the during balance million, first of approximately at our common share our $XX.XX long-term shares stock we reducing quarter, per of average

long-term to end $XXX.X Our debt at total by net million of $XXX.X XXXX. at year the $XX.X to the compared million million end fiscal decreased

EBITDA Our third of XXXX. was quarter debt ratio from a adjusted slight the long-term to X.X:X, net increase

segment, the expect we in issuing expect In the in approximately increase on expect million. business, of yesterday’s to trends, to offset sales due impact continued the we of the brand X%. Distribution, independent private This driven the we growth, Within to store to approximately covered elimination within rollout are acquisition Martin’s million Food million to DeCA XXXX including in of contribute military, In comparable will a offset the sales impact As by and to business million guidance. by sales segment Martin’s sales. to we sales our and to press brand basis. to the Martin’s new intercompany total rationalization. positioning, continued are excludes partially will fiscal retail customers that negative release, although existing the largely attrition company’s achieve low- full sales $XXX by $XXX expectation expected base $XXX growth offset year related expected partially X% the the earnings new continue retail the to of of acquisition business, of retail the of $XXX of mid-single-digit business modestly net decline is year-over-year

$X.XX X pension XXXX charge share, earnings share expenses; adjusted diluted integration our and operations items and acquisition share table tax $X.XX unfavorable a to expect decline favorable totaling excluding frozen plan; earnings to higher diluted merger, year, per of restructuring taxes other $XX and EBITDA operating $XX per adjusted prior We continuing as expect EPS per and interest from charges; earnings the be approximately further million We to rates. yesterday’s due to terminate be but to adjusted will in million release. to detailed to after

due action capacity along continued our add Our expectation of the current increase is variable in expect and our primarily with mitigate over impacting to also to which interest increases debt. we due year, expense the strategic rate to higher borrowings, to rate

$X.XX be in million. comparison in Our our a million reported significant yesterday’s XXXX our guidance From of the expect in range as a recognized This expect the in XXXX. expect first comparisons of continuing May. in progresses. estimated first not per dramatically operations GAAP the XXXX to are earnings to quarter portion the be costs and quarter in accordingly share guidance update number will results our operations earnings costs release, earnings improve items by this we we will these approximately million earnings be to $XX we $XX but from negatively fiscal impact In as associated to to perspective, earnings yet our range in impacted million, of share excludes which on in per of capital intend an to and continuing depreciation from One a of fiscal and first XXXX, $X.XX with fiscal diluted from expenditures known. our We $XX the be $X.XX of onetime Team, the provide the Project to to on $XX XXXX amortization will to quarter, update release initiative range enumerated

interest the in expense will million. be range $XX of million to We $XX.X expect

to call the shift from profitability adjusted in XX% over in to to certain I’ll Finally, due tax back turn we Dave. rate XX% our to reported now jurisdictions. a range expect effective And our and

Dave Staples

Thank In you, operating challenging. the we to fiscal Mark. remain expect XXXX, environment

will we company our actions move to forward. take However, to continue decisive

chain growth. and operations positioning continue make future our to supply will We progress current our manage to

a on unit. efficiency will in infrastructure our business to We and and provide technology team to customers each our experience build to management continue better strategic to and our improve will focus additions senior resources

profitability. execution We industry our One by continue will made the Project we to seek identified growth in of the business and Team as disruption opportunities on commence while as new opportunities to work improving capitalize available

success Super retail our complete its history. into during this We chain experienced look the retail of integration the will Markets to Martin’s continue operation successfully has and

strategic year to as objectives. challenges We for these your the then over and towards the the turn that, up take the we are like eager realizing in to questions. back any I’d operator coming of call work company’s open With on to it long-term

Operator

Christopher this thank [Operator And Jefferies. Yes, morning’s question Instructions] you. comes with first Mandeville from

Christopher Mandeville

Hey, good morning, guys.

Dave Staples

real some having are serious we Chris, Hey, distortion.

Operator

And from un-hearable, Mandeville, Mr. Yes. I’d almost Capital. so Kelly question recommend back next Bania comes the line your is again. from BMO dialing in

Kelly Bania

morning. Hi, taking for good questions. Thanks my

us top what attrition Food is you walk or or that on and low through the on just Distribution, are line just for there, line us same-store the just can outlook expecting First us to so conservative walk there? your top sales help in single-digit core mid of customers terms plan you what how maybe through is

Dave Staples

little we about years, environment, Sure. I talk think as to normal our Well, X% probably, attrition. attrition. in annual Kelly, this base a bit look customer There’s X% at that in a we

in really our that of Other customers. wide is a to variety mean, of of down real customers some I slightly flat experience Some we sales have and performance to comp are growth. wide sales variety a levels. going of customers

So think our will consistent and think health is sales. customer base the I so a that component our good, be of of overall pretty I

be that. so We expect and we’ve good at been able attract to new customers, to

alternative. I offer differentiated a think we

to environment present expect growth help in to we we we work as And well. our through to well new think solve through as existing and we them as our some to customers product use help issues in continue I customers of and to provide I to see more to to network as with unique facing them to of retail how market. think may issues more their getting bear ways more be programs can think them of try this to we we work the knowledge be bringing the partnering ways competitive hard they provide through

will different provide it’s of or a variety I that are efforts think So looking we growth really segments at. different that

Kelly Bania

your at planning what’s inflation you what Mark you retail for think of of outlook inflation in as in and I XX help about distribution, points can well? year us And I was happening think basis are at inflation you terms mentioned the and understand that

Mark Shamber

Yes.

the probably I anywhere XXX and there higher the side, to on mean, hasn’t of I I say differing past that couple years have have that it at I would have ranged So that know than that, XX that I we reports necessarily but think that come I think we been looking from mean distribution for have are materialized. seen basis out points.

the So I think range we look what year, that something the blended able have in distribution the at those probably things, but quarter, doesn’t retail necessarily it of as fourth for pass side as we along translate the the at in to of have talked in side, the always along are into it retail. about, although full lines you we on experienced we same

matching think And probably the a probably basis in distribution on fourth lower the the a Retail, widely bit are XX side, for bit food than say than inflationary an side, what are but was they standpoint. categories so more seeing retail quarter, what from points XX little on we basis than distribution the points, I lower retail about do categories, we vary I the end. at would the the saw on food distribution we

Kelly Bania

is update exacerbated the by maybe helpful. was sounds issue turnover just facilities issue. at how just that’s And turnover Okay, the like one of some generally, it on operational maybe an trending

through So on organization are that is you understand across and that maybe managing just how help year? planning us how the the

Dave Staples

I lot of work we say Yes. have into actually turnover. put would a

to you choice. want experienced, As markets you our tight the has be of get industry employer into labor as

of to kind take work of right of – we kind in the so dress the that think, shifts, right seen same ability all retail. and to kind your of and And lifestyles. turnover in our I fit to schedules our decline actually distribution operations, types year numerous long improving the actions continued retail is not The are over the we their we of course just issues value in go and have the have results center, of In monetary, codes, in last actions, of continue way our right. a associates. with work all you which how lunches, taken things to There we a lot expect

a overly operations It’s decline in pretty focus nothing as it’s concerning, up distribution but for the been have maybe a We year but goes our stable. relatively seen manufacturing it’s and think turnover our bit, I consistently us on. little clearly

Kelly Bania

lot one hand for a guidance me either will in of it these expected the QX, it but sounds the I sounds Okay. improve off, cycle you – then are but or like Last and to pressures explained post-QX. pressures it like

just issues you I about through and cushion of that for built in how we the curious unexpected was – So year? feel how is kind conservative there move is as enough much just

Mark Shamber

I or where foremost. influence go many recall, when can’t safety factors using in you’re a what pulling without isolated over And of take it considering the versus areas mean, always recall in first could right, you’re you’re the running romaine right when that Kelly, doing or where a knowing things I is areas country you’re and I have taking the you you where I when the part consumer direct instances could wrong will second think and pulling on it’s first – giving and control DC you’re are different some related versus if of you’re product or a go where the Yes. what what part are or I range, there from. even identified, question. mean, based what all always and that buying – that instances and can to the is when all you’re that you at

that. the guidance I high of of and the low ends reflect So sort the mean,

on this that looking the – we were necessarily we Caito year, call, in as baked for last differently bit standpoint, we of fiscal the Caito ‘XX, been doesn’t within think didn’t on we looking see little we guided – talked mean I It materialize, standpoint. we’re those looking we’ve a think a that, external and levels may in in from that the have, a things. an improvement, improvements that for business for little side for bit year-over-year but internally we’ve differently I some not of

where And our achieve. go range that’s think, are guidance, think some us, that mean, will I we’re comfortable and in it’s with we there feel range. go out setting be highlight we that are and are quarter the very that, specific be did in the the through first once get we’re in or give a I there and can against the we are that I but some things with we that that will But favor, So overall some things that why of normalized coming to seeing run-rate levels. what either the we in those, will need are to back we items will trend-wise,

Kelly Bania

thank Okay, you.

Mark Shamber

welcome. are You

Operator

another go we attempt And ahead, you. Mr. from Please with Christopher Mandeville. Jefferies. Thank have Mandeville

is line Your live.

Okay. And attempt from He Barclays. has the from next actually comes Basanta Renato disconnected.

Renato Basanta

Hey, guys. good taking Thanks my for questions. morning

on clearly an what to potential something a given seeing potentially on are into of am positive for I now be you is could you just forward a you bit that commented competitors one the Just is being wondering, of factor. inflation, follow-up a seeing know something that that are your positive there, buying QX? acceleration and

Dave Staples

business forward is Well, opportunity always in I mean, buy. to a in as an when inflation there it’s distributor, anytime our

So, component distribution that’s of core a how works.

of those opportunities they We will come. if take advantage

or that call year probably inflation rampant what isn’t expecting X%, somewhere we inflation. would Mark As rapid alluded to, next in X.X%, inflation we are that

we going end be opportunities, certainly where when reflect we think there will think to with types events And so than been more year. we and the past those we for have up in the there on we come are of

Renato Basanta

of us perspective, just mentioned inflation, broadly, companies, you distribution the the and would then Okay, some issues if your some the bit through of side being a in increases side? the on just ability price the think retail CPG little that’s helpful I on a given from you by could some pushed but color pass-through inflation be a produce, give to both it helpful. more pass-through And

Dave Staples

Yes.

the so the on and So of through. a we distribution cost-plus side work in pass business, model we inflation

the that bit responds, prices as a pass-through. over spike but I to adjust If is into always, prices the and typically, market a type move beneficial, is, we reduction may lag and will or the vice and but it a can category back, at little you at through, it of get of rapid inflationary Retail, that’s over if the pass the sometimes eventually, inflation a come a it versa, long so And to some distribution choppier, probably at as take But bit. on sometimes to you usually little choppier, find a pass-through. the through. going downward retail you, inflationary, in the and those commodities, side, with And pace, distribution. the little market, be increase as lags on produce time, or be a honest it’s up, little what meat term, there’s passes longer believe side, little upward differing

Renato Basanta

on just the Okay. And chain, and and your supply then overall just you enhancements. efficiency referenced reach have capability

provide just when of you doing see to timing and on those more am the if what expect you I details you some could of are wondering hit So P&L? the just there benefits

Dave Staples

Sure.

doing are We evidenced as distribution the the have a by we growth of lot segment experienced. things in

our to their business partnerships into much other food are use on from facility buy our and We Coast where price customers. segments for to able Coast to we fleet partnering West already expansion our using their of at distribute the are of intact West to a fair facilitate people and the distribution business more our on with

models in not hub of physical country using us distribution spoke enable where and we are to to network parts reach the have our may We assets.

differing utilization that over network to continue opportunistic as continue we to to capacity that to Every partners of load business we a as are out. customer also our to meet and assets parameter ways different more with move problem time’s able costs. formed solve go leveraging well the to year, experimenting really as we we driver for find we’ll of plan a which being able customer, have years. a to another as category we different think I smaller and traditional our Because category move as a some the save of that. enabled have different-sized on a So can or business, to trucks. enables for we take efficient build driver, able to find we’re are to than to to on fuel truck truck evolve our this new actually and mileage assets per expand we’re find to or a well acquisitions the a to the have higher And that a delivery, we gallon has as – And down seem opportunity next few driver, a able into network evolve we of of over kind of it’s smaller type we grow us of is been into our other

to move as kinds our have we efficiency we of continue results year. put that will our drive to those together this that through all believe improve things it’s we So

Renato Basanta

one I then Okay, to there, months can from? coming be on anything be been any maybe just that’s details one in, synergies would those closed Any if you color it’s sneak about Thanks. or the And X.X just would update quantify? helpful. where synergies on since Martin’s. That And then last helpful.

Mark Shamber

going or out timing updates I the reviews communicating of for of it’s X.X we details, mean, for to this have be early positives had that position much are likely we see what of not that we in internally provide we say felt too better level the But early some that call. would lot it’s as a say out. process, I I to next of have things and week, play try would due something first one it Yes. coming still done were still a had another how share to weeks on we to bit three to as some as the is mean, a front. are if and the we would and

Dave Staples

expectations, a It’s markets, in on for our great think we expected. just stayed very Martin’s trends little weeks. well. great operations I are guess, I and I their team. moved X-week They a maybe have moving with chime X happy we’ve line period. with It’s their handle as mean, sales little the these let as through a right we me this have as even better in a just

the do at concerned, as the the little to last things so deliberate operations, of are because going we’re ongoing future the move here to is we’re we we that the impact the are out operation. operation, gleaning we because as And is that we believe of operations. don’t right more other of and ones to obvious the some be pace adjust we success As this these bit gate high-quality critical team the is disrupt which feel far a synergies thing want as to we are a deliberate And operation. going happy about with very team a this

forward, number. have he rushing to very but will going they as to keeps So we where belong to a synergy details we’re believe and prudent move these said, operations more go as as pace be Mark the will, at we strong just opposed

Renato Basanta

thanks. Alright, luck. Best of

Dave Staples

Thanks.

Operator

Wolfe you. the question comes with Mushkin next from Research. Scott Thank And

Scott Mushkin

questions. guys. Hey, Thanks taking my for

your competitors little or Walmart just have talk to feel either the X% I know lot what customers talked pricing different go will was retail different competitive but anything materially the you your if I Aldi I operating next a will you of So a clearly a on the in environment, of to year? guess as these we out wanted that make guys about do, I inflation, your wondering And through guess and you distribution about seeing to Kroger bit degree side some the environment? own does markets and that a dictate environment X.X% are I of

Dave Staples

Scott, always, market has price-orientated. As the been

we’ve well years. X.X that of been think most dealing with with I over for our markets

in pricing aggressive think our that we other ground zero some the we’ve probably impact if anything, pricing seen when majority and took of competitors we’ve seen more from the easing probably entered in [indiscernible] all stances process. this an aggressive for Walmart in our move a off they markets out, of early direction in, recall, you’ll people aggressive All experiment pricing markets, and on market, have little were back the of I If real the extremely all these so maybe the that taken. that positions took. competitors the some And majority

So, we I anything don’t irrational go expect, our in forward. as markets I guess,

ways to people think will inflation. I find this pass-through

Scott Mushkin

And Okay. more I just terrific. actually That’s here. two have

Mark, second I also to I think, you your you it expanded do some you around out go So, now the amended think credit I revolves if were said guys or X.Xx. your question, at M&A mentioned right What you possible. and

comfort there? and And you make it’s want your comfortable that. up? on I side, guess assumption making Are but So, think level the taking you sure I’m I’m the to distribution I’d about that acquisitions, on where��s when right

Dave Staples

Yes.

experience, seem appropriate where know, the capacity to over present level of closing these, as believe like our Scott, our has when a to higher, at gone years, present look that, to as environment multiples. we through we we times, pressures do. So, were is opportunities sharp, themselves. little I themselves the going In Because the competitive cost we thing industry acquisition, amended next whenever because may type Martin’s couple we facility up some the guess, opportunities find our just to are a you be of in it of, and reasonable you process the out do seemed use

was this we prepared the felt basically and time that. that be for to So, that want right do to

for And basis so, we that’s what really did. the think I

well. unsustainable look leverage, debt. to as think company take don’t We far an know us of to level pretty I As you this

that for And arise be so, advantage opportunities. our down, will And we opportunity promptly. should allows to rate certainly really to take strategy, our work current levels but of leverage bring an execute bring to we’ll will those work and then prepared down also it, that back us we

like to back So, our in over the the always we’ll, been, it vision move down. right we long-term, above then Xx high. the Xx be at has but that, But that opportunity, bring for we’ll to

Scott Mushkin

time bring And and the is what having hear I you’re? distribution is just of and then from in. omni-channel. goes to, that for really somewhat but obviously if Instacart Alright wondering with dealing my difficult, this we’re they’re medium-sized Collect hearing, We small- your some more a people, customers what there is helpful, the process and final your hard I guess, to perfect. business that Click was omni-channel. And regarding to is operators thought and question

Dave Staples

as we out a We’ve product and corporate Yes. our And Collect we’ve you us. of for in as the well landscape, seen as stores. really finding Click customers. for effort our base as customer in we’ve a And invested our been actually as a stores, as know, and corporate put and lot really for we’ve our solutions it’s that, opportunity in assess great looked great

Click distribution is in customer are done types of provide to gone umbrella outstanding loyalty of we we’ve we’ve out such our degree, Collect, such some different our services services services and personalization, purveyors cards, So, as using what base vetted technology. can as customers actually and who we’ve think where

we are of operators And so, to these have economical operators base taken a customers. types providers offering to think and to really way a services that practical XX-store top-notch and we’ve service one-store of very to their suite of XX, customer our allow

our as So, made customers. we feel the progress both going we area pretty what good in thought of about how good we with we’ve and addition we’ve in about to Arif, we’re as well kind about for of operations. that the really take level, this feel to And good for done our the next us feel

Scott Mushkin

for Perfect Thanks taking guys. my questions.

Operator

from Research. comes question Thank And you. with next the Northcoast Cerankosky Chuck

Chuck Cerankosky

with Dave the Good acquisition Gordy’s. with retail and resolution Martin’s recently looking say, and you’re when opportunities we��ve Mark, of, morning the of seen portion everyone. bigger growing take a at company, presumably

with segments Is more opportunistic? more two do of you more distribution focus you have? sales or a stores. some end is You that a maintain want retail the to particular And balance up retail getting between and

Dave Staples

Yes. question. good a Chuck, that’s

volume. actually you as was acquisition two been was acquisition roughly to $XXX the have somewhat equal $XXX million, look acquisitions, roughly they and The million to. over Mark the million, last Martin’s If alluded Caito in $XXX

So, I don’t tilted. it’s been if know

Our retail. last acquisition certainly was

food really serves planks, distribution, this retail. distribution these out build three national Our strategy network is military to and that

areas. out well markets we very more canted serve, And be tangential as in And that retail, diversify other our would network. will company we continue there’s distribution network our towards so, think, But strategy markets as as into operations this or the tangential will long-term, diversifying that’s concerned, that out this type as operation believe main acquisition of build far to extent the a current of our we opportunistic. we But sort strong and the to higher-growth building the over be focus be are within the the to will the segments I there. we current or operations make in

Chuck Cerankosky

you. Thank

Operator

from And you. Paul comes Bank. next with the Thank question Trussell Deutsche

Damon Polistina

shift Good for holiday quarter? comp. This that Can impact we little a weather and on bit? Can talk is was morning. said retail Paul. fourth a about you there in You Polistina the Damon quantify

Dave Staples

Year’s now be versus amount delayed feel had New one was and of purchasing quarter the in certainly of you’ve weekend did the we some obviously the Michigan where into But difficult on shift in you’ve on quantify to of would the this and certainly seen, specifically in then that a don’t out or we call folks impacts where nothing doing year-over-year impact see that it with year ‘XX. their gotten the little of just year comps. can fiscal almost But weather in Eve versus a holiday of first estimates It’s sort December, impact the And the identify snow different here year mean, into sort we think the snow got markets out. to happens big track that moved last estimates. XXXX. we the basis, shift, felt we beginning quarter-to-quarter, to it to you And the in enough into year-to-year, so fair certainly and where experienced markets bit it we one impacted because get a try it not. year try I of last see in because you weather. I where you of we on can into see week, move or it to certainly had we that bad And Year’s New year of as what weather the

what on the of quantify we the and the something But try call on quarter. the not impact it to impact results. out were comps So to fourth was going as some for certainly it an to was

Damon Polistina

that Do for you also, comps your what looking uptick stores positioning as have seeing you And brand then the year? kind then expected new to go are what’s with And expect improvement your through? in Thanks. cadence we the Okay. throughout an of XXXX, that? from

Dave Staples

as the competitive the for not reasons uptick some in or the until say that timing mean, brand I to exact the year. a Yes. an we’ve the comps I launch. as positioning expect I happen go we question markets expect second that the again certainly I intentionally in part bit But ‘XX. stores some And on to little mean, additional then certainly of would was. will that improve. we gotten fiscal been mean, We’ve identify later vague would throughout I

Damon Polistina

just performed brand the stores that was have stores the how who to in positioning, it haven’t? new compared have utilized on the Oh, those

Mark Shamber

on quite as performance. that always to tweak their say do been ones with we it move and we first would to pleased better. I make and And I there’s opportunities we’ve mean, the out we next returns. individually. to further But minor get number of improvements limited the don’t I on call a know, it’s given make ones, stores, specific adjustments that ever that stores the we

say So, I been we’ve to that But ones to in wouldn’t information. attempt share that the that pleased would we’ve launched date. I

Dave Staples

retail an she’s Swanson year. let to expand to fall, our that bit even Lori guess, our veteran more of maybe changes made, key in number an little acquisition as are And and a the change role we We’ve experienced in retail a with directors that now the on just, the Martin’s. Yes. us late of the things here then comfortable in company as feel Tom the the like our have on operations. of I general added actions team the our team Monday well me like the stepped up manager I over the we significant And operation. of made course leading and retail. of of at think, with departments With strides kind to that so bringing made

going we’ve to environment. believe this they help is the operations this of in strength I put make to really what win to in continue us be to need team retail So, place our

we’re here, putting pretty So, team excited really, how we to this together forth. see we’re putting and because feel the do really good forward we’re we about look what with in we repositioning

Damon Polistina

in little seen I me, your the know been there? one kind behind couple from on expectation the the military, just describe you brand your expectations with private bit you’ve That’s quarters. progress Can a the And last Thank of you. the you’ve helpful. last

Dave Staples

original we’re mean, don’t our to we our be I I expectations. continue expectations. Well, behind behind know

there, in expectations our adjusted moved along. it’s and we’ve think I

tremendous in billion-dollar would think opportunity it’s be they the there I and I say, average, mean, look XX-ish at a sales percent a an the of industry organization you volume if you an military. is you at assume penetration, doing When brand private do, opportunity.

in these And a of so relatively of sales high the have at is on fairly clearly, when DECA there’s they DECA make the lot seeing DECA influences operate appropriate, they choices. consider to short and back those, that inception, how to had has launch a feels time. period we hopes kind of But and of a different rapid transform team

need that. to go the And so, it appropriate their to at thought they pace they They they for determined different at we to business, whichever we’re them and would happy we understood feel than it pace than expect move pace to and respect is they originally the prefer. is be different be, right and

to to expect continue We see growth.

and providing belief that. our our a be you traffic help that of, and over We we’re next which and to its in the system, we year private and expect part nice into brand program all accomplish see expect know, growth key objectives program, their the a heroes, military time, to for proud DECA culture operations to as part real of is really this increasing of foot benefit

Damon Polistina

Thank you.

Operator

comes Group. Thank Ajay Research you. next the Pivotal And from question with Jain

Ajay Jain

Yes, morning. hi good

it that few Kitchen some can lettuce costs. was below cycle profitability in there the can heading as run obviously, how QX? But months the Kitchen you rate, QX? optimism Like, expressed you performance anticipate for to confirm current towards what’s startup you recent the far of the a think breakeven to was recall. I was comment? in Fresh And ago, begin then if no Dave, some guys way And you better-than-breakeven Fresh

Mark Shamber

that that level going at a a Yes, was that Ajay. of obviously, of loss sort profitability look, putting share. and losing expectation that, sets because the so or been expect. year-over-year would mean, forward. would or Distribution, not is I is of mean, I you we’ve out, kitchen seen mean, I basis, it it sub-segment the which like that’s a Food it once start ever would we while we I a money, of Caito, hasn’t on progress rate say sub-segment the

Ajay Jain

terms things took Okay. But a step you back from QX? incrementally, QX to can if confirm in of profitability

Mark Shamber

call. the whole can I in space. I Honestly, a to general perspective Ajay, seasonal quarter of that think on fourth that that follow-up of don’t mean, softer from I didn’t right sides top. know things. off within of the know just quarter the some back it of to off-line I because I answer we’ve it a you the get got question. directionally is

Dave Staples

I it our mean, follow-up quarter, little the year We relatively which expect to was Ajay, fourth expectation. a improve. fourth the quarter with consistent was prior not to bit, did

Mark Shamber

Right.

Dave Staples

didn’t. it And

and a inefficiency. regrettably in we’ve and of took to hard the the a sales found lot that consistent when number the like operation on that phase, the that, All issues. new we’ve aside, When a what? And in were so, think up some over we team a team, brought we’re know it we mean, I we’re the forth to quarter, team, get volume into a this finally team. commodity there’s workforce volatility a on trying quarter. cause but When you of of in a business for as increase get I consistent I place XX% kitchen you management we there, get had, think in working the of management into you lot and consistent

on stabilizing weeks corner of a in take good in on kitchen a real we’ve focused cost job seen, its it’s reducing done pricing adjusted increase, think, fresh-cut has And pretty in year I into manufacturing feeling the care and team great we’ve the We’re and turnover job us. really great the fresh-cut, team. force. the last the for of to strong developed and this a And are X so some as fresh-cut, very done, management the turn we as keeping

we Now fresh-cut. for X every good in In the they’ve the I done. the kitchen weeks feeling does certainly us, kitchen nice commodities begins about accounts is and our team the the in some pretty not in, one, not do, management us. what think kind Obviously, as and before. we’ve we something of run they’re has in And make assuming assess the run know, stability I kitchen in is as kitchens, startup in, we products the a team a we what so I but new because, this to as trend, brought in make. think as are profitable. enhancements new it we’ve fresh-cut believe some I bring but certainly think And operations side, This seen to we’ve we think, learn holds in move kitchen SKU learning have which have operations, quarter, is aren’t the profitable, as business or rationalization productivity a you learn for the we management we

probably a the a year transformational very keep still we is, we’re of being out will opportunities as this We progresses. these over really there. Caito see on operations a half doing. improvement course kitchen about interesting business in year. There to far But as of how a year the view really type the some on There’s will off strong

will find We that another one or way that will happen.

so, go trend going are, or we are make improve actions operations along year, expectations will to our And other as at to the that better. we the look

Ajay Jain

ask seemed lot the helpful. on are I it company five quarter a laid of factors impacting very specific. the those headwinds that follow-up was guidance, guidance, That might are you like you. when first Thank If question out a

irrationality pricing to confirm much be not how So, to necessarily earlier market. competitive factoring much you’re there the of like a on outlook how backdrop question in of environment, I seeing seeing and for terms you’re that in wanted change might not the But it QX. the just Dave, response the the in sounded in cautious

Dave Staples

years try a I just issues I change, which We interest to mean, really, competitive. while say, really in We’ve and The they’ve which the X.X talked markets. the to aggressive I work talked the a, think ago, pricing rebate environment. it’s we’ve I that. that as through; Ajay main main Columbus, a our about; there’s the is confine earlier, think timing through Caito, for question. no I have we charges we but environment’s would there retail about; impacts to QX. that and I Like working some we continues challenge had rate said retail been the issue think, impact. competitive we That pricing took still, four lessened, they’re topics be for being our

what will of do experience the do we consumer? How center kind store? price? as do that are into in to demonstrate How and the opposed we continue overall environment side positioning we to changes some we I our account it this consumer dramatic Our guess the and to of stores. the address said, How challenging. as be about. allow really be do the I so side store How see they the remains us, our differently? don’t retail better these to of positioning to see hard in an it think I and quality How that’s I do rethink guy our you improve this and want I value the on the the fresh than don’t is, of through And store think of of we be that that of we want they levels takes total I’ve social pricing, do just basis, is any challenging, I and point for other to consciousness guess to the our mix we’re business to that work So, issues continue partner to shop than social with? other my

Ajay Jain

you Thank Great. very much.

Operator

BMO Kelly from the a is And you. Thank question with Bania follow-up Capital. next

Kelly Bania

thanks. Hi

housekeeping quick couple questions. a Just of

to how about you compensation? expecting as what your are you you And there, outlook expecting called out in the ‘XX Just stock-based Project for on XXXX? in LIFO, of think savings One are much and land you that

Dave Staples

Okay.

a hard as the because that there. not again, inflation, increase we say, where current it start I change few if would up But I year, it’s LIFO bit a and flow probably mean, trends how trends how to if a I there’s to to that If a questions SKUs mean, broad-based I there’s many an flat basis hold. a we But is from that’s predict perspective. hold, bounced Kelly, see bit. to around it but So, on accordingly. say see through if would more that from little last expect year-over-year inflation the so we little current to standpoint, would would significant in that

that. number. X% up On think I But maybe, in. if this. like, I’ve page I the in want to it’s a range sharing I of my don’t I’m million, dollars, $X.X think huge In that recollection, maybe up take probably it’s give or X%. been it’s sure I do a not or I’m thousand brought million-ish. stock-based not couple the if hundred that I have half comp, always so say sure a

The what again? the third part was sorry. third I’m one

Kelly Bania

Just on Project One savings.

so to was out how months’ that called play just year. expect think timeline there, this XX you I curious you I out in

Dave Staples

I I through think identifying our from still in mean, and Yes. areas which the we’ve I going standpoint, we’re mean, initiatives. got

as be think and into that until translates dollars by defined for we costs that implemented what well I what a rate How the talking a at think get be more, and a point, a year, in some where year. of quickly quarter clarity run to those able the of list at because, a bit still maybe on knowing bit that. much the XXXX more we’ll little of quarter how does are bit some it’s a into the they’re of and as and half that’s we’ll call back less, have little little we’ll for that is start more the really first items, little a maybe it deferred of premature, the the to it’s savings I what that end

substantially first them in probably taking share be but here, so, I’d the be can I’d a and guess, And numbers revising I just quarter.

significantly that going to we’re be far not something put enough not along I’d months now. out we I’m because So, give and change on there, able good just X to from to guidance rather deferred that

Kelly Bania

Thank you. it. Got

Operator

return comments. Thank closing no to I call you. are to any And questions, for as management like more the there would

Dave Staples

quarter. the you today, look with Thank you call and participating speaking for forward again everybody next on to we

Operator

Thank Thank you. attending now The has presentation. today’s conference you for concluded.

your disconnect You may now lines.

SpartanNash (SPTN) 24 Feb 192018 Q4 Earnings call transcript