SPTN - Earnings call transcript Q1 2019

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Operator

Hello and welcome to the SpartanNash Company’s First Quarter 2019 Earnings Call and Webcast. [Operator Instructions] Please note this event is being recorded. I now would like to turn the conference over to Ms. Katie Turner. Please go ahead, ma’am.

Katie Turner

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

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

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

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

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

Dave Staples

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

begin Our during an were provide net our results operating our which the Mark sales first on preliminary first objectives. strategic additional on X. made May progress the and then quarter financial we earnings will detail will the call of consistent with on overview and we announced quarter with performance,

for to continue environment, pleased your Finally, evolving we grow a opportunities operating am questions. dynamic call top to I find line. our will to ability our open and the In with

extremely and and We while to best focused areas growth improving to continue addressing to be position the sustain on performance key is team this market our of business line each profitability. translating to within this growth segments us our bottom

fiscal believe we we that implementing we as addition, term the In for have our will the progress toward help identified to year strategy. provide focus objectives organization longer the

strategy. with and customer a objectives year fiscal We military and and financial that these and range, all XX During months, top the our realizing earnings the improving during our include team retail working current the net highly services distribution, national our complementary will leveraging single-digit improvements an of the in but on management adjusted key components a ratios through leverage by $XX sales platform million supply food systems many, EBITDA. XXXX, delivered over long-term run-rate while diverse first least our Team growing which of of not believe of five objectives the team the Project business at strengthening efficient annual of lowering distribution us develop help One next execution units chain base earnings mid operations, our for debt quarter, reducing operating consistent capital, distribution of and

summarize I these detail. performance in Now, versus little objectives a will more our

we achieve consistently growth to net in ability sales. be to our First, continue with pleased

to to increased quarter, For sales billion $X.XX first compared net the first year. consolidated the X.X% quarter last

which Our segments. Martin’s retail the generated by growth the business, first driven from food In newly strong increased was growth the the intercompany improving segment, acquired we all contract comparable quarter Martin’s net distribution continued of In for quarters sales the contributions X.X% current quarter. in the competitive realizing across before segment, seen despite segment, we the while growth In our growth three was have sequentially trend. a the maintained store military sales X.X% sale. of several the broader last elimination environment, to

outlook sales consolidated line net top growth. single-digit our addition, In projects continued mid annual

Next, working entire Team. organization is One our together Project on

to and the leaders and supply chain within product span include efficiencies our initiatives administrative process of all organization savings required for company-wide these cost in operations, drive areas from more plan, enhancements our and these across services due entire ideas the engaged cost earnings startup efficiencies, identified together to of our the and initial to our XX generate ideas and such improvements opportunities implementation are proud developing savings offered be increasing which some to associates the in accelerate the have that initial expectations of from experiences the to transformation has retail versus while business our opportunities costs. growth culture future efficiency improvements than our effect efforts our of implementing associated and over drive the and exceeded to of implementing tremendous customers next reducing the target associates initiatives. to run-rate growth. am material to XXXX to Our results. in with The say The $XX not I and hard initiatives and work million we as expected enthusiasm business plan to processes substantial months annual original million. $XX We been and and

chain Our our team operations. third objective for supply XXXX is to management systems and strengthen

additions are several As the we make we talent include Merchandising Officer for as IT team have key various throughout operations. a team meaningful and supply strategic levels our to mentioned process growth of additions future Other for the Information new additions chain executive at new other teams we Officer, in business. the our management Chief and our previously, Chief a to to added Market new and

During the enhance developing supply partly competitive are and first systems chain the for slowly to warehouse improvements initially and this we due operations continued to and both than our associates. expected environment to more although we invest some transportation quarter,

strategic We reducing debt company’s are the towards also ratio. intently working and objective our capital of lowering while financial working leverage

of last million Martin’s inventory the X% quarter, debt adjusted levels $XX we paid over quarter the our the approximately for down During funding year. the also in and reduced first by first acquisition, from

any the customer made we objective impact, to service this have net to on quarter even generate as in levels pleased are We progress without growth continue in the solid first negative sales.

XXXX. will working debt Our focus continue reminder to and the improvements for team of on fiscal capital

for fiscal improve and operating top adjusted the adjusted last earnings year EBITDA growth, which Our to achieve. is we not objective did

the mentioned. within voluntary performance to Our I and focused increased cost improving which operation, in of Fresh was We operation. recall on and fresh-cut initiatives just supply efficiencies chain fruit at through environment these primarily due a strategy, many Kitchen of our organization’s our with overall retail effect our the remained challenging below expectation the aligned results

segment. to I to to are Turning deliver distribution as pleased we our results quarter, food mentioned, for sales continue segment growth in the very

accounts is partnership an consecutive to quarter to geographical existing very strong our coming expanded attract first our new to offering are accounts quarter provide we and ability growth, reach. of This represented from proud a through services sales The continue XXth growth and to accomplishment of.

of increase them to ways We continue help the improvement customer customers in Martin’s. X.X% and partner for programs our operation sponsor look and independent sales Included growth BRT perimeter our retailers segment related sales as increase before fresh-cut for new to with the distribution to store within intensely center and intercompany food marketplace. this business sales was in distribution reflects sales to elimination succeed at our fresh to Caito partially Fresh grow offset competitive the voluntary of as our existing recall food the operation. well in the by the in product and increased Kitchen to impact This

through operations with the year’s onsite advisory impact the as Kitchen continued in five profitability is operations. fresh-cut recall. objectives the closely top expect our to team for top with the this of an in from Consistent pressure XXXX, external Fresh We operation quarter we our improve line second working fiscal cycle our

continue operation, pressures volatility growth including processing have we few industry-wide experience of certain the cost, significant increases supply in facilities. experience compounded food the in discussed last These significant we cost by price available quarters, to in shortage of produce and pressure As categories. been have and transportation in chain our our labor certain

we incremental military of our programs continue program drivers increasing for driven our centers last overall in are to a textile. expand believe distribution A supplier action and first as growth we from examples in as have of can better pleased choose most will and private an volume of address in exclusive year fleet of regrow are solutions the brand well create particularly where introducing couple We given DeCA’s experienced sales growth these net the have performance. have result availability network. the trade to In the efficient chain DeCA to the delivery quarter more smaller the improved ensure retention we environment pressures. The quarter as We model trucks load the products actions significant to the declining over the growth we along we include these efficient and segment, we XXX steps, supply with private by brand labor will recruiting We and growth where fourth implement a quarter from. improve to in future with of will program. second was to customer finished A to be by the sizes further continue commissary boarded our of these categories to to sales processes in efficiencies operating for comparisons. achieved set

to manufacturers quarter to choice segment, in operation. and continue compounded contribution growing a the remain our focused timing as sales new to through business by majority with environment, supplier We which was retail in We pipeline their the obtained the provide well shifts remain fiscal Easter two on to incremental navigate the of in continue for holiday. late military tough government in quarter as the significant programs sales In as of payments XXXX. food first of we the benefit the of first on for we our the SNAP the our relationship these increased operating expect build

sales we new same store the time, look are of our pleased stores the the improvement in our positioning in the brand at with initiative. comparable trend and included with However, feel and

our implementation focus of store better Gourmet completed bratwurst, her products stores. expanded seasonal him a value Fare Family and community sharpening differentiation Sunday in-store fun in-store to meal elements vegetables, experience marketing This Our donuts several positioning year and significant a well health in was brand and and local butcher focus and be positioning and solutions, providing West the and favorites. on fruit with focused into and operation. stores in-store, last beauty Michigan our indulgent socially a include will cut-to-order offer as special on our new additional tested crafted key wellness, was just meat price, smart departments affordable cases pricing shopping operations more of featuring other crafted beyond working Key and and sausages for as a strategy.

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

fits these through quarter, lastly, team benefits consistent accomplished XXXX. quarter, with will associated respect perfectly with Family we second expect for and with positioning realizing to brand additional we the growth summary, Martin’s our ability and fiscal is pleased new a the attract begin has promotional during with for This expectations. with XXXX pleased we which what in quality and incur our are are contribution business. While Fare. And to from and was In launches sales the with costs our we operation later marketing, to labor

for us team highly faced and but increased business well fiscal to now And our growth to objectives XXXX across translate sustainable with five turn believe long-term we despite Mark. segments, sales Our remains focused will in profitability our the into position challenges strategies we on that, this the call I growth profitability. deploying for strategic over

Mark Shamber

XXXX good of diluted joining us and quarter X.X% conference the diluted quarter EPS $X.XX to $X.XX XXXX’s of in Adjusted fiscal to of share first first and to fiscal adjusted everyone Dave first sales first increased million came of at compared the $XXX billion. share on call Net of in EPS for quarter. $X.XX XXXX per per the over billion, webcast. $X.XX fiscal for an increase Thanks, XXXX’s sales or quarter morning

by QX recall per in our slower voluntary business changes increased segments, we food with rebates As pharmacy largely the brands, of quarter and processing costs operation. driving rate $X.XX the the in $XX was by per improvement was impacted adjusted realization $X.X than the EPS of performance or XXXX. in private sales share of and the increased basis, dividends the to the in in On expected and difficult of our a changes a operations. expected, previously X.X% the and reflects anticipated associated direct environment our $X.XX XXXX. first food $X.X impacted our GAAP to of at impact of and Shifting chain recall. million had in the fiscal the due in operational earnings supply quarter food million share processing quarter distribution of negatively from Both and to fresh-cut of billion QX than one the fresh-cut warehouses, net remuneration by an partly fruit fiscal GAAP first the our of the fees in company’s of performance company operations or indirect compared were retail approximately to further diluted $X.XX earnings lapping

to operating quarter elimination operating accelerated XX declined from XX growth points due the on $XX.X increased primarily points million Martin’s sales in from real $XX.X the first sale higher the of totaled customers. the XXXX. the QX quarter closed property the distribution in quarter, basis sales year’s an existing intercompany XX of to earnings food compared basis site to driven gain Adjusted of previously XXXX Inflation subsequent quarter offset the a Excluding in and largely first million sales in prior higher from by by of first operating of of versus of increase the million to fiscal fiscal supply acquisition, income distribution a adjusted food volume points $XX.X costs. the sales Reported chain to lower during in totaled million. income $XX.X margin rates and first X.X% basis compared and quarter quarter

First and exclude increases earnings issue locations. offset warehouse million by press in are Table XXXX, program existing in commissary expenses, which quarter detailed by to first fiscal also first pre-tax as quarter first year morning’s $X.X or was quarter sales is of distribution due an year margin noted for $X.X On improved of loss $X.X the exclude loss costs, in the in X detailed million. million $X.X Military and operating income quarter business XXXX partially million $X.X first of prior in private primarily first Project of operating of food X.X% the of distribution operating cost. earnings previously under partially Military million to general compared of quarter the X Fiscal compared net current rate. Distribution the net basis, quarter, adjusted release. release. compared in at adjusted Military’s Table press to of an the lower gains $XXX Team the adjusted in revenues sales transportation in to operational customer which million first operating $X One of from segment $XXX in due in operating to Incremental reported million million the comparable by increased earnings XXXX’s XXXX’s fiscal increase, largely in sales brand quarter the offset $X.X drove this new volume with an million DeCA’s

compared $XXX sales million net came year. the in first million last our the quarter $XXX quarter to Retail in for at Finally,

$XX.X gallon closures the X% sales lower acquisition, fuel associated Martin’s in decrease the to store due a and a totaling sales on with price basis. impact of per million decreased Excluding

negative fiscal a XXXX. snowstorms in year the number Our sales Comparable store current of the X.X% X.X% X.X% to XXXX in sales comparable compared fiscal a the improved greater store decline of to quarter and compared XXXX from of of fiscal to fourth first XXXX’s quarter quarter. for first in a of benefited fiscal quarter of first the decline

attributable acquisition, of stores, Martin’s margin the primarily margin the was compared million operating costs, the quarter stores. year’s merger, partially and rate, and compared pharmacy the supermarket gain quarter The Retail million decrease XXXX’s contribution a the first to to closing occupancy $X.X lower amounted reported XXXX operating in higher $X.X in first earnings lower loss under-performing first expenses related the in for million fees to offset to integration paid First acquisition, by GAAP a $X.X loss managers, $X.X prior of of and to impact of Retail to favorable acquired adjusted million quarter. quarter. Martin’s of benefit

expected, As first million lower pharmacy of the is fees pressure margin in from was increase in DIR the as we pharmacy, the experienced XXXX. than $X.X quarter

to the fund to the $XX.X impact we prior In Easter on the quarter three of to related first increased as to accounts was we XXXX of XXXX, a year to the fiscal with million fees the quarter DIR not primarily significant through we interest the XXXX, and of in as Martin’s and holiday higher first quarter same flows million to headwind of the operating acquisition. balance. of consolidated year period. expense $XX.X prior but in compared of $X.X cash interest the end due in last to pharmacy decline expect million to the we borrowings As fiscal corresponding week-shift million progressed year-over-year headwind The in the generated Interest $XX.X period the compared first the year. timing represent associated receivable rates a experienced the

returned quarter, form the cash of million During XXXX’s first in $X.X we dividends.

the end due the to of quarter by Our end of at debt acquisition compared $XX.X $XXX.X $XXX.X the to total at XXXX, Martin’s. million to long-term million fiscal million net increased

for Martin’s. of debt acquisition $XX down quarter, we adjusting During paid after in the million the

debt Our adjusted first acquisition end Martin’s, Martin’s the net from XXXX, of the whereas increased driven X.XXX EBITDA reflected our by from borrowings in of quarter in calculation. quarter ratio to long-term the to the at fiscal of one X.XXX EBITDA is largely currently only

our are release our financial results press in we guidance. covered updating fiscal preliminary May As Xth, earnings on XXXX

our which to including net which require these offset described XX, release, press cost us originally the in February XXXX. historically and sales higher initially We our challenges perspective, markets tight have will increases was From provided expected a guidance, by environment, transportation. reiterated chain of initial X be supply net navigate sales May a profitability will on labor

operations greater also team in our and operations segment, year, gradual Kitchen along opportunities EPS our realize anticipated at we of than engage with XXXX. which business. solution Fresh to to initially with recall remainder fresh-cut impact our food the represents comparisons to prior the Relative our consultants a quarter rate fiscal from us in generate unfavorable important accelerate growth. improve the We expect will to this in distribution kitchen for to The profitable expect operations, of the work outside profitability to for each

per per primarily of Table related totaling per earnings continuing $XX.X excluding our From We share per operations frozen from share. million diluted expect approximately GAAP a charges the XXXX detailed the in adjusted in $X.XX plan $X.XX to range earnings of from reported diluted diluted to be earnings million operations will pension expect we of to today’s as release. after-taxes $X.XX to to $X.XX share the continuing X be $XX.X share, termination perspective,

this the from and rate like to $XX I over range million expenditures of And $XX and turn approximately XX%. Dave. maintaining ranges are point, back to would of range Finally, million, guidance interest at million to million effective XX% $XX expense $XX.X $XX capital call reported depreciation $XX to million, adjusted tax our of million our and our our we to to amortization range

Dave Staples

Thank you, Mark.

and I these customer help long-term. and the food by our of the necessary strategic strategy. the satisfied believe bottom to are base objectives our the with in win of performance the will enable objectives retail with leveraging made We on believe complementary distribution develop military with team in distribution, with diverse we long-term our increasingly again not for over they quarter our us will of highly services first efficient line While our move progress We national am pleased quarter, distribution, organization many key the units, to our forward XXXX. us business execution a are strategic consistent platform

of the with and call for open your I So turn operator would questions. back it like over the that, to to up any

Operator

thank Yes, you.

[Operator with comes first now question And Mushkin Wolfe Research. will We session. Instructions] from the question-and-answer begin the Scott

Scott Mushkin

guys. Hey,

Dave Staples

Good morning, Scott.

Scott Mushkin

Sorry. Hi, I you on Hey, good speakerphone. morning. had

about about just wanted what I little size of think and kind out the the your of more environment? in was up was operational I So That’s to quarter more control so your think was them control could question. guess was and if first you what and what bit, and in a challenges what my

Dave Staples

two Well, Scott, the I think intersect obviously.

would one in issues this have think be is the processes certainly, our those sure the bring as everything of degrees think it be, to to and on I the make continue some what some consistently it’s I of control make will in then grow to and complicate efficiencies labor Fresh desire. Kitchen types put we us business and can that we up in and the we new that but kitchen availability of and place

different In our where can I distribution to to problems do. growth runs, of there centers are in address up, way. with a is business and them mentioned of we make access that that drivers load our we more things it trucks our be I extent experiencing efficient. believe items. it’s to mix we reflowed types So, differentiated as distribution believe the some smaller can can certainly shorter think sizes and discussion have some open I supply of large chain, to alleviating that certainly incremental opportunities we

can control of then the availability certainly labor there chain. number things think and supply a cost I of of So, and is the we

them. strategies can in can’t those control directly, to we we While certainly put overcome

tough the end, be chosen environment, always make and price. In on to in can pretty change. these all of aggressive and it’s a things the on so make certain of we players I it And think the is retail have impacts sure, environment,

us the a into they little moderate over of craftsmanship I some bring it’s to positioning more But in opportunities kind focused than competitors, we many business, can that your our take made a term. puts that food butcher dominance in our offer longer in where bit alternatives a the department think these place to think vegetables I others so or have pride craftsmanship gourmet of fruit meat that’s the abandoned. cut or order it’s in whether newer have in and whether back whether

So, lot are control. we’ve I think we things right of mix a to all our like a put did in now, place efforts of and that change the under things

Scott Mushkin

Hey, David. data the come It’s Upper our been a competitive. The answer. all Meyer, has mean, but just is Midwest pretty follow-up, show, appreciate the real I – of heavy. also would really

then side some look mean, that at retail on affects with you. And of I that you environment, little are clients’ operations. dealing your How yield. from it, a the with your I’ll got your As But distribution the perspective? too. overall, both it on and affects Thank some environment obviously they guess, you I it of distribution. side be I struggling bit think to retail

Dave Staples

but Yes, the great Walmart’s very operator. a limited level, all Meyer, obviously pricing assortment, obviously limitations, good up incredible do. things and I of food assortment, Meyer both have also price, with operators both their are right, very those better obviously to But – they we’re very in both mean, the experienced not only better and

Meyer, ours, that that all years. pronounced say, so, the to past XX the lived XX last the And environment of for for years. time basically competitors all been over, we They’ve more in XX both

distribution to put learn and retail really we have compete they tactics we’ve try to in in our all business along at the our program and what we do environment. so ideas is customers great that to this our And together them provide deployed things with

side programs new we emphasize do that not areas programs a that. business, store all with it’s the So, successful of a do past. that of forth this differentiated do How the and great is And in some the bring help from in do differentiate we have we lot where against been them how is distribution that Meyer. do and well we for. center And solution, known butchers we’re the our that, have offer the to our all that just we them the put new that, of prudent to fresh handy to and can that have and operations life customers you we of we’ve ability with deploying retail positioning things competitors, some of these work

do So, Scott, we would that’s guess it. how I

an But I feels our others before. competitive work this. everybody through Walmart out I and pressure and we’ve like are through incursions at that. solutions very with think pretty in figuring resourceful, environment independents work to think competitive good been they And

Scott Mushkin

very Thanks much. Good luck.

Operator

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

Charles Cerankosky

Good morning, everyone.

Dave Staples

Good Chuck. morning,

Charles Cerankosky

gain Could you please sort the estate the the go with quarter through where repositioning of in resold, you’ve whole stores which Gordy’s and was real and and you’re at part repossessed of that process?

Dave Staples

area. incremental customers stores And possession over of stores the Falls our other few So, will one three in Chuck, as believe. speak we with over have here of two Gordy’s at I we weeks, next Chippewa taken of this point, the take

reposition. all will so, stores the then And

XX between we around I stores we us in something have were – and somewhere total, are think, I XX, XX, that probably now believe. and customers like our the we two

a And real out in estate much we that month. didn’t be really transitioned to of about over or had here will so, year-and-a-half pretty The probably sale a transaction the do gain have ago. two from next decommissioned that ago the with years was anything warehouse that

Charles Cerankosky

thank Okay, you.

And they cost all be cash Team – during what year. the year? next they’ll in guess total that One costs are I we’re seeing we those offset Project the this the. completely And are will see On that year, that as adjustments

Dave Staples

seeing for cash. Harvest be fee the year they that the next fee, you’re so now pay seeing the right are – would assistance not you’re from Group. Earnings those really like recur So, what the would It’s we

– So, they won’t recurring year. next I would be

Charles Cerankosky

offset year benefits And this little they to in of form those will be the fees? relatively

Dave Staples

timing. because It’s Correct. basically of

Mark Shamber

there mentioned, some $XXX,XXX this know Chuck, $X.X Dave where be year. might but benefits, get or technology some associated that upfront but the in offset might you million a of generate as with investment costs the a is them goes And and will return, $XXX,XXX investment of current that whether front a on it

like have that we instances as So, well. some

Charles Cerankosky

thank Okay, you.

Operator

next Thank question the you. And Bania Capital with Kelly BMO comes from Markets.

David Lantz

taking for is this Thank for David you Kelly questions. Hi, our Bania. Lantz on

Dave Staples

David. Hi,

David Lantz

morning. Good

So, I learned some was team in for experts of that with improve Fresh to maybe brought wondering, outside could so Kitchen give outside far you you’ve on you’ve more execution us what team the there? color,

Dave Staples

heard we’ve Well, I of mean, things expect. as you’d a number

really is how able do accommodate position I focus to so this just not have, Kitchen be growth. the processes of streamline think we much continued we but on only the to

And of helping waste expect, to in do Kitchen of you’re in the building scratch, our than on-board is those to day-to-day scrap as what running really type new we where us only to also where improvement so, of processes think you’d And focus Fresh a component from day-to-day a result of like, you’d but opportunity addition, operations, lot not higher is or and And your ability the business. component always in. in that your with that that. any put really is bit there’s quite is much reduce that’s

David Lantz

in Retail I for side, the of if the inflation Thank for for you And I of could segments us given Food outlook was you’d then, retail. quarter retail you Great. the you. Food XX in Distribution. year? the give think rest on are wondering seeing both what the your points Distribution the And and basis

Mark Shamber

Yes.

we a a step basis actually XX sequential we think points, fourth XX at though. we So, points I I a standpoint, basis almost like And for the about was XX we’re From a XX basis quarter. basis points XX points. decline for basis year-over-year the on are at points, were took basis, think it retail on down of backwards, side,

increases seen we’ve I has about I the front. as distribution through past, think to passed there been in through some price side. able on in And come So, some retail we’ve the talked get mean, on challenges it the being

we going X% to And still as passed to get go it think retail And or so, of necessarily we I that a is X%-plus. as going on varies be the may see X.X% bit I’m through. on that we distribution I how that expect think, the to get to more side, where we feel maybe much through X%, little I wouldn’t year, to side the

as then where they’re backwards saw particular retailers and Easter inflationary. this out eggs were Easter year take regards of this into which is coming we And it more quarter, eggs, leading we with to a continued another where were of dairy number were a step big typically deflationary For sure I’m hurt other typical.

So, to that tough it’s out. I that’s on think play front going how to the tell retail

David Lantz

you. anything of share Okay, one on acquisition? can Thank Do you last synergies me. now And Martin’s more kind great. the have you with then potential that for the

Dave Staples

process a in off a backed gave differently, a systems we’re our perspective the a most for with we where in line that bit in guidance. little would the and others our we’ve couple think in think, Well, our net-net some initial we’re from mean, say rather from areas of would we it felt where but and approach we’re synergies. I I year, We’ve those expectations initial for guidance Martin’s in mean, I the that full expectations, we acquisition when line part, I exceeded I the tracking with

I’m So not down sure to break I’m further than it any that. going

David Lantz

you Thank very Great. much.

Dave Staples

welcome. You’re

Operator

from Barclays. Basanta And with the question you. next Thank Renato comes

Renato Basanta

my morning. Thanks good questions. for taking Hi,

to with in your about past quickly Distribution, environment, X% Scott’s Food customers to in you’ve sales for sort on the declined specifically follow-up to X% question competitive customers. earlier, talked deal attrition Just in and same-store has really of question my for the

seeing seems It overall there. curious growth what maybe you’re higher cost. an sales of sort out I had like coming, just So,

a if be and color here? I worse you helpful or from it’s state steady provided So, getting of on competitive sort just seeing specifically think would it some you’re if standpoint, what actually

Mark Shamber

I’ll then sort mean, I start I’ll let chime in. Dave maybe off of Yes. and

of a business levels and factor. and been more that how you And I becoming have sort we look, mean that costly. out I think I don’t think business cost report about it’s there typically your if the talked that and not strictly environment a was really in always lose margin service the know tight drives operate but you I on factor, that win cost as research a always

I but we regards in I as you mean, haven’t an it’s think change environment that environment that where only anything So last day’s delivery. dramatically to your are regard, as the seen always competitive good with

Renato Basanta

it be Fare with from deal you think to the but of provide that service how then this how upscale In maybe you program, color the then perspective? hoping risk perception you and have Family more about perception but expect brand then positioning, from on on year a on seeing price, can going you the the words, Okay, alright. many other how just helpful. And that in you it that lift That’s talk new is upscale more retail, stores are just to – also do risk? then higher

Dave Staples

Sure.

So, it. me you walk let through

day a been since one it. launched have whoppy it’s we So,

we happy improvements up So very the a and a in is sales this and day our very leading and customer very you not that are are obviously, were so good received been we it’s and But in by had doing our day we one. with favorably change launch, way making first to expensive.

Family a to experiential, is targeted trying but We it way doing that for more this we a that customer. are Fare in make experience that are much really

an here expensive, but way to not donut to to indulgence. just little it is than more an feel I feel indulgence. a that term the else have a Having someone a other make Having your made normal sometimes it things do be like indulgence from, Starbucks can’t you expensive, to know indulgence, the marinated objective more gourmet think store-made little point, but a fun. tasteful right, use we produce an food That’s you is but expensive, let And in way and be more to Buying your to yourself, to implies have the it. sausage it’s doesn’t a choose do So, in fun it expensive. it in – and came allows you make shop cut coffee places butcher who find indulgence food. more indulgence, where is when not know instead is your and it have donut. and where vegetables you could that your a is doesn’t you to we meat

differentiated way speak speak It’s much are to going it’s doing going I And going experience, this going shopping to speak to to to better isn’t experience. shopping think and to fun, and we the a more so a all. to it’s speak expensive at

in with mainstay, a We which where now doing of are sushi is experimenting some is these facilities incredibly smokehouses well.

will with We and bar of Asian hot hot burritos be an in hot are working them. a regular few bars,

people we bringing are the so, for. that a of looking are And lot trends

We are bringing this grab a more us to and quality trust than have go, this prepared quickly. food, that they bringing food. trust to the customer fast meal They ability

food more be wholesome. will Our

bringing wellness. affordable are We in

beef, going to beef, for hormone-free, going grasp are to your are able be to to get antibiotic-free your get you able be you So, gluten-free.

anyone affordable an produce You are and be In done in have our of organic to market. natural than are able in produce going you have to way. our it’s in an But yet to else way, more thousands department, operations organic options. affordable going

are real in a high-priced operator going like to We be not of that people space. some the

are to wellness. you us so going focus And affordable see on

to You see are are beyond some value we the about. going which things have talked focused of on price us that

us very You are going to see be local.

have businesses can customers those X,XXX We become many of our our our customers allowed some of with products, and on significant there local to pretty focused basis. really will companies a set. successful where on part plus is local experiences grow have based very of normal help And become local displays and local success the items

– it be commitment XX,XXX that our whether the volunteered mean, community. we and be for in funding bring together last be of social of bring sell, be much and communities we community. get put I to year associates back our We ways our $X raised local to million over associates We our involvement other events. between we it going our in whether hours the carbon to it products to footprint, socially that we are part are forward smart going whether being to type of the really fabric our consumers

of we’re more so, emphasize to going And that.

you’re point, you’re more to stores think, feel but at fun, does this our to we’ve it at going all. experiential really welcome come engaging. actually in very very that a and more some I expensive feels It find visit So, way, not done

Renato Basanta

that’s it Okay, I’ll pass along. helpful.

Dave Staples

Okay.

Operator

Instructions] Chris [Operator from comes question Thank you. Mandeville and the from next Jefferies.

Blake Anderson

for is this wanted morning, on I to Blake Fresh Good Caito’s Chris. start Kitchen. on

think the the looking of management to you a exactly you’re help then the Are and to and team timing day-to-day also can just you’re kind then, as a ones the changes talk more now they making talk processes, what making or you’re if them. about then specifically, here recent the they have and are you hire progress right the on changes, you are? the issues continued the improvement with And some to maybe little mentioned experiencing? leadership for you’ve then just same but And You new of new update profitability? hired third-party you any fix more growth-oriented not only quarters expected Can business. getting or about do on there

Dave Staples

that of to and So, try things probably experienced you, to You’re a let’s products at we the going done gave a questions have as we’ve grow, as it’s those of significant it, think, five there. kitchen one repeat kitchen the look operation, you’ve of number right? the as is, through in well. I couple to given move Well, we grown

different. same, more the it’s it’s not of just and more So,

on from of build up. And lot organization unique to a an that trying forth ground so, the as pressures put it’s has

the we’re is focus the so, and on think and turns And one we how organization things and type efficiencies well we products the we’ve learned one what should. that do of I the do of working the are bringing things of products they on the

we of on will in we’ve So, more that products and that we’ll of rationalize some the profitably. taken focus products and grow the some

the say, growth that all for and you and all things hunt on up sometimes great the learn, you’re types as and of I’d being big learning, a It So, an right. can’t to people operation, isn’t that’s be case. always and products you’re starting all

efforts I think very to reduce we’ve seen waste. clear

measurement put more and put eliminate clearly points we’ve as really they the be production the that even supervisory that employee I product team turnover where that’s we’ve together, our learning hard focus need we we the consistency getting the whether and and process that to use trained think, it really big from environment team consistent effort much in operation or are on teams level getting productive. in on that perspective Probably waste really a of to the focused need resources. labor the an be of can and to efficient tough because reporting makes you focused supervisory team waste, a and next is as a the more place helping

the So, those and place that the put in those. nice process we fresh-cut focused are on. areas the Those areas improvements in saw in we’re most are really operation

As far as down the is operator. leader team, strong I a think there our

that when bring will up progress and structurally We area. good in our him, operation that move president of we’re distribution, we under making in

month or the over hopeful so, So, we’ll in I’m addition that next have area. an

need with And make management structure a help maybe we that and So, with what five team, but it questions the this reporting answered some of of not overall, tweaks will we Mark sure make by. few work. that, be changes, to kind we’ll I alluded this believe think I’m I’ve all

I I think one, them. If me I missed number of know. a probably good let got

Blake Anderson

challenges real the cash estate progress to was time That your monetization? had you value? And last alternative But when it. considered generate [Technical was debt I that continue talk costs, the And about front, good. as you good have reducing to there. such then help and the methods appreciate estate given real secondly, on you making then Difficulty] pretty some to leverage of on your

Dave Staples

in answer mean, to credit pledge I facility the have the there. use we actually that revolving So, estate we as part of against our real question, program collateral our our

so agreement the time. transaction our we of in it that at question, amended the last Martin’s was of second debt part when point revaluated, And part

So, that. was it of done as part

opportunity, would cost then of for to short-term that the other try there So, sale long-term revolver more it out and a from leaseback some with much take be but perhaps sort were do a we to transactions. expensive

Blake Anderson

me more on the some making comp lot a And side. are some stores profitability on about Alright. Thanks initiatives on to there, the seems making you you retail, one much. challenged last the you then also And was so progress been the mentioned closing have talked front, you profitability see retail? to am of some maybe ability the making weighing to How the progress about are Because you margins. maybe in items. wondering you just two core investments improved are those about I talk were if back out you margin feel the if these do it on

just about margins? the talk maybe retail So

Mark Shamber

are written mean, and pressure peers. you I feeling Well, current so think about retail that environment, of I think have your in now I and most have margins right the

it’s environment right difficult pricing I now. think a

doing said, And think what in again stages. I then when the early are our positioning. I we look you like with we at are very

XX We have yesterday. of in this stores a just positioning total really it with launched and it

been fruit values them other products really value the of him we things is really like areas consumer that we an price in HBC how for So, where how But this donuts better and offer but out. one or that, and meat hair it great in really things able fresh-cut produce like and essential or help some to beyond the consumer impact. on and positioning areas have how the care hasn’t we balance a veg in offer the her working better buy our and margin mix with products a products or products, are big great choose shop gourmet can the we we also butcher custom sell store to more oils, with other

the that consumer are improve balance And give for how do looking structure positioning our we while margin so us of our part this store to helping they is overall base.

our better a that works we And of something profitability and to experience us. to able are yet that so we for part really roll haven’t to looking see that’s out, been consumer the a continue that we well picture forward positioning as blends for it

Blake Anderson

much. Thanks Great. so

Operator

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

Dave Staples

I again, we our results. second again speaking today’s when for questions your you thank everyone participation just on quarter fiscal like and forward would look and with to to XXXX call we report Well,

Operator

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

You your disconnect may lines. now

SpartanNash (SPTN) 20 May 192019 Q1 Earnings call transcript