SPTN - Earnings call transcript Q4 2019

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Operator

Good day and welcome to the SpartanNash Company Fourth Quarter 2019 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Rachel Perkins, ICR. ahead. go Please

Rachel Perkins

welcome fiscal and SpartanNash fourth Company Good XXXX to earnings and year conference quarter morning the call.

Mark Chief On the Chairman Officer; and and Eidson, Officer. are company Vice and Chief Executive Financial call today and from Interim the Shamber, President Executive Dennis President

should to now, yesterday release, issued the which everyone By approximately X:XX earnings was at PM have access Eastern Time.

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

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

release, on be company’s factors information revise forward-looking recent can any Additional associated company's or found SEC. most other Form statements. Report earnings update with in risk uncertainties Annual SpartanNash XX-K these statements with and should intention forward-looking the risks on the obligation SpartanNash's about and of the in undue Because to reliance forward-looking filings not disclaims the and statements. uncertainties, place investors or any any

the with other required useful GAAP earnings most financial release, measures was the yesterday. measures financial and these to in comparable comparable the This which company's by is measures performance. measure non-GAAP presentation provide of company's period non-GAAP about included G as and includes investors financial to issued Regulation information information directly A reconciliation certain

call turn my now is to pleasure Dennis. over the to It

Dennis Eidson

an start today's year overview progress and today. on fourth and will the Rachel. financial you Thanks the of us Mark I'll detail highlights financials our Good for operational thank call, and additional XXXX joining and with quarter On morning, everyone review outlook. some our and provide full

open in consolidated our we'll some cost up with to call guidance. take results quarter. ongoing with healthcare financial conclude fourth able pressures some questions. XXXX line challenges costs Finally, Despite We elevated the including in the and and were

and Our strategy. execution team committed our our remains improving to long-term

our company positioned Distribution We're foundation Military increasingly each retail from to we profitable businesses, building existing day to our the stores our Food as sustain upon growth. and

increased for representing sales X% quarter the For of billion consecutive the net quarter, to $X fourth XXth over growth consolidated the company.

the for to sales billion. year, While net nearly X% increased $X.X

the only for of single-digit not met consecutive our sales another continued with sales quarter, momentum positive at year growth comp but mid store retail sustaining by We we the closing goal for quarter. our second

operating flow to million, million XXXX, in year by our $XXX strengthened cash cash working increased to $XXX reductions fiscal and free capital. For flow increased significant

in early our while acquisition we This flow year. for and reduction to additional achieve overall which position supported year, the sales the the executing of net were growing cash debt an able Martin's

$XX XXXX, area. this further of As started improvement to poised million goal we achieved we is drive in reduction initial our team capital our a and have working

decreased intercompany impact of slightly on sales the elimination net before segments. however, Food our segment, reported the Moving the to to Distribution basis, X.X% Martin's. In sales a increased the on of

to chain we're improvements efficiencies quarter, As to last continuously reduce expenses. to initiatives well as supporting our mentioned increase make as I supply

inform our better forecast component also demand capital significant previously our of in activities fourth working assortment. management. discussed tools resulted to we better quarter. A from purchasing improvements building manage on the inventory and We're As evidenced the to

on includes the all of to trucks and reduce onboard Our improve computers planning, miles to process management route of new transportation the which implementing route team is traveled, service tools new efficiency in levels. installation

We the network. leverage across our are enable fleet will to that better new these programs distribution us by encouraged

the Fresh We late with to expected of and during fourth the concluded In in business first XXXX segment, the was related and quarter the into sell date newly entered an operations the facility closing fiscal Kitchen equipment quarter an agreement store the quarter sales. contributions consecutive XXXX. of comp second the of positive by Retail acquired fiscal sales growth from Martin's driven and of

DeCA's loyalty by continue as needs operated programs and from brand slightly, for customers meet fuel with shopping dunnhumby, their better comp strengthen experiences future assortment, offset positioning growth locations. our program to sales insights partnership net which gain from our as private decreased sales DeCA store our to declining valuable In growth. We we was will segment, our the deliver Military and at

operating SpartanNash We the XXXX, be future. in improving great our pleasure start I've the addition welcome our as to time And had a are committed pleased he'll are to for and family. David President David believe Division. some to knowing we the results Military to Sisk of of

David David's will experience, to the Chief segment resale military channel who continue further appreciate and DeCA our as Legal has the the her following of of for leader continue Officer. completion partners. also be Military our nearly Kathy with important business we Legal Chief in serving transition. role for three foundation as while Officer. the build She's years knowledge a passion will for the and We of contributions been provided and relationship to strong Mahoney, the as grow Kathy upon

course guidance for last to to consistent deliver to of Chief with process Officer and of are in next future results the our has Additionally, progress directors I'd outlook. comprehensive our that In board note optimistic about a and the pleased over has quarter. we're made quarter second consecutive like continued Executive identify summary, the the search the

for I'll the Now turn over review. Mark to call the financial

Mark Shamber

on quarter XXXX’s billion, sales Dennis fourth sales Net fourth increased fiscal $XXX morning the Thanks, the of of everyone million $X.X or over X.X% us conference an XXXX and good to quarter call joining and for to of webcast. $X increase billion.

higher of as Food segment acquisition well acquired due the to the Distribution Our intercompany the to sales elimination for increase sales prior sales business. the within of was Martin’s, as the

per $X.XX as discussion. XXXX adjusted EPS of in earnings for in taxes, of fiscal diluted $X.X XXXX per with EPS at share and fourth which costs after includes costs are to $X.XX the program fourth transition diluted per the associates, in for associated came Adjusted quarter. or incentive collectively compared quarter eligible the share, Adjusted fourth of million in CEO $X.XX quarter elsewhere share referred transition XXXX’s fiscal to supplemental my the for

quarter The in lower year-over-year from as the of prior in compared of loss interest to growth sales charges asset to and compared improvement fiscal On basis, company fourth a the the well lower reported $X.XX of of impairment GAAP XXXX. Martin’s quarter acquisition, year’s reflects as $X.XX diluted a share share expense quarter. fourth per diluted earnings the benefit per

X.X% in Shifting Distribution the XXXX. of fourth $XXX to our million in sales quarter business decreased to Food segments, net

Excluding acquisition, from to Martin’s customers. our of the to existing X.X%, sales elimination intercompany increased net growth sales sales post primarily due

XXX Primarily quarter $XX.X including the operating quarter totaled Food administrative Inflation QX $XX.X impairment a partially asset by million XX Costs. fourth due charges, but Distribution the offset decrease points fourth XXXX. slowed basis million the Transition XXXX. during earnings to quarter of of expenses, of over in in loss lower to fiscal of a higher the fourth Distribution quarter, basis the an compared for corporate Reported XX points of in Food to basis increase points from

to higher the a totaled chain operating year’s the the exclusion Adjusted related costs, adjusted supply moment Fresh quarter. expenses income operating higher were due and losses $XX.X of quarter quarter operations, the income versus ago million to adjusted mentioned fourth in million, Kitchen offset in prior year the which the administrative prior not partially by $XX.X corporate of

with the primarily of were the Martin’s. increase $XXX positive Comparable Our points store a and million of to our XX consecutive retail XX.X% net acquisition second due comp positive increased sales X.X%, to sales. basis sequential for quarter, quarter sales

earnings for due costs. XXXX as acquired of fourth the as in to healthcare the was of fourth million costs, unusually contribution quarter. lower to primarily stores Retail items year’s restructuring These prior reported the offset operating The in high partially quarter well $X.X higher $X.X acquisition Martin’s and million increase the were are quarter. the which by fourth of compared

earnings compared million in basis, to fourth earnings $X.X quarter and acquisition adjusted were operating XXXX periods. the exclude of million XXXX’s for an operating quarter fourth restructuring and activity $X both of retail On in

million comparable expansion offset by fourth reflect the Finally, program. of in to the prior quarter DeCA sales private locations, brand due of million. $XXX compared of to operated of sales The decrease continued Military $XXX.X partially sales at the X.X% decrease net year DeCA’s was lower

On an fourth fourth costs, was to by XXXX’s of fourth XXXX in in Military basis, in million $X.X operating higher offset Military’s reported million of million a of for $X.X an $X.X compared chain to the margin quarter quarter. quarter $X.X improvements quarter in fourth rates. compared loss million partially the primarily due XXXX, operating supply loss adjusted the to

Net elimination X.X% sales the $X.XX sales growth the for as the within Food increase in generated to of fiscal XXXX $X.XX as segment of billion through Distribution to increased XXXX. acquisition well for The sales largely was billion business. Martin’s, prior from the the intercompany acquired

within XXXX or share $X.XX $X.X Transition for costs for per adjusted is higher in EPS include due adjusted Adjusted decrease The expenses chain per $X.XX per XXXX diluted to taxes to at Administrative fiscal $X.XX in and administrative share compared in XXXX. after diluted higher of EPS fiscal earnings fiscal share supply Costs. diluted came EPS million in expenses. adjusted

also On termination diluted a $X.XX The for in decline and per earnings compared fiscal diluted impact of expenses fiscal name. reflects share the company pension XXXX a per the impairment trade GAAP the share of basis, $X.XX business of reported XXXX. to

increase compared XXXX, during of million. XXXX, net capital, million improvements of $XX.X year. earnings acquisitions of $XX.X working increase due In generated fiscal in cash And by by funding cash an $XXX.X in declared million the we prior and in XXXX The to lower from despite levels flows offset million from operating dividends continuing we generated the Martin’s. $XXX.X fiscal We million operations. was $XXX.X to debt XXXX, of free cash fiscal in million partially in XXXX, consolidated $XXX.X reduced

we yesterday’s XX base customers release, partially achieve a percentage to existing for on due XXXX, business, XX of anticipate which week Overall, and are issuing XXrd with sales attrition in the driven fourth press fourth the quarter. to by In the quarter a we the independent during growth we of lower including over XXXX, growth XXXX. XXrd the operations growth offset and new low-single-digit guidance by year, Distribution, sales basis, week the addition Kitchen in of closure percentage falling week. of sales covered the will Food be week the fiscal expect As Fresh mid-single-digit retail in

decline in X.X% comp the in DeCA’s positive ranging on basis. offset a Within expect XX X.X% expect from will by year. resulting DeCA of we brands mid-single-digit sales in continued sales the continuation our fiscal percentage we retail, business, growth partially In the to decline week be comparable a Military which a trend, for private

increase expect from the charges, share earnings excluding the expenses from to compared company’s year $X.XX per XXXX merger/acquisition to We adjusted over in with and continuing profitability and prior $X.XX per $X.XX diluted adjusted to operations items. integration to range share restructuring other fiscal XXXX,

to to XXXX expect to EBITDA in range million consistent EBITDA compared $XXX million adjusted adjusted earnings. in XXXX’s We the operating company’s projected be $XXX.X million, with the increase fiscal of of $XXX

XXXX. GAAP a per $X.XX earnings range operations operations continuing of from we earnings continuing of will reported from the perspective, fiscal to in share, diluted in comparison that be From $X.XX $X.XX to in expect

the from and cost continued to expected approximately fiscal reported to the adjusted operations with of week in favorable Team compensation diluted incentive the initiative The XXrd include levels. are associated share XXXX. guidance increase company’s contributions partially One Our be Project for per the earnings $X.XX by in continuing normalized achieve offset benefit

million. not expense Also, mentioned capital In $XX interest will range press that range approximately fiscal the range The million in capital XXXX, will within $XX to million million in million our we million be expenditures we guidance. to and release expenditure of to depreciation be expenditures $XX in million. fiscal included expect to were of $XX approximately and $XX paid in $XX our the amortization expect $XX capital the incremental XXXX are of from

Finally, rates to expect reported effective XX.X% we range to and XX.X%. from our adjusted tax

over to And now, I’d back like the to call Dennis. turn

Dennis Eidson

continue closing, and the remain Mark. with in are confident progress of Thanks, our outlook. of our the we’ll We we on strength we and our focus the platform half in the pleased In year execution. second to made future

to over some can back call the turn questions. for I’ll that, with we And open up and Lisa, it

Operator

Thank you.

question We will the Barclays. session. [Operator begin Karen The ahead. now Short from question-and-answer Please Instructions] go today first of comes

Karen Short

little a inflation couple XXXX. of the thanks year, to about of bit the and want Hi, to also just in versus question. quarter things, inflation relative A expectations for taking I the traffic comps for talk next terms in basket

Dennis Eidson

Okay.

quarter retail the improvement in narrowed I is comp for say is previous and little more those of a of degradation in of the the the made So – up both couple from And the SPT would transactions. quarters.

So SPT, we’ve the strength in SPT. less more in a little gotten the

makeup, XXX So XXX inflation, at the that’s talked of and about And Karen, Q. for kind it, retail points at we distribution. the

in for retail X.X% We’re years ago year, looking X% years X.X% be historically and when went last range to based been negative to several was inflation on nearly we that positive in then two last year, the last it for X.X% which years, where two next ago, year. we’ve

the for doldrums and the So always of at zero out we’re bit little inflation’s of good inflation been least, space. of

Karen Short

could gas it it does Because, has in quarter kind on just seem margins held of you to give gas then have mean, And might in benefiting related on color you? particular, as any margins, I Okay. there. this

Dennis Eidson

Yeah.

the but profitable margins we’re gas on more of per year, We favorable favorable fuel actually $X.XX per the gallon. were a gallon. XX% nearly on the was compared margins. on were the $X.XX actually Our prior because business, gallons, for to on better short little It quarter

Karen Short

obviously, Okay. business, or on further maybe of then a you thoughts Any getting rollout And ongoing color that just and on click-and-collect, little in that. rollout, lot like, on, a of a generally? traction terms are

Dennis Eidson

of the we store We base more think maybe limited one have have Out a don’t talk we currently of that of lots ceiling we makeup in place rural click-and-collect whole a That’s team around business. little of and virtue click-and-collect the numerics our lot on a But stores, heck in than places, our kind of them. many more I in of this about that’s by of working incredibly Yes. hard part retailers. are And other that a maybe that. business. we XX track our XXX fun – about

there numbers, are you If them. like lot of

things One rank to their them about and we we ask one five, customers is through the of do with program satisfaction the ask being best. the overall five we

and track nicely. your us added fly We give we’re five by, give the our of recently XX% sign your that have if It’s if customers We’ve app, business. year permission, that stores our added in location. you onto on We’ve some a you calling to us the on helped. want growing to mobile what also for we’ll geo-coding

can get order that we quicker. So ready

retailers our we on actually focused So maturity. and a reducing time. across Europe, we’re North to wait did fulfillment five number XX actually Europe were and the America and a were but And pleased actually the We click-and-collect ranked in incisive the really one number see study in probably got overall smallest. of of and and U.S. and XX we model

on it there lots and So forward. going things to good in make move of hoping we space, better that we’re as even

Karen Short

as to then about question XXrd the me queue. get think anything to modeled last just and then takes mean, various. shift out the there’s I’ll obviously about that’s next we and year. there’s the I But puts Easter obviously And appreciate Okay. the relates from Easter, it else and also I back Any call and week. in think to

Mark Shamber

they That growing how within to, No, I business itself, in we little sort have of and looking varying who’s just that’s component – regard, is Karen, the for unique units out who’s the by at mean think laid a the but the I I individual bit declining mid-single-digit, probably nothing sort mid-single-digit. that business is other the there. think speaks sales profitability units of

Karen Short

thanks. in get back I’ll Okay, queue. the

Operator

Northcoast today question Chuck Cerankosky comes next of Research. from The

Chuck Cerankosky

everyone. Good morning,

Mark Shamber

Chuck. morning, Good

Chuck Cerankosky

customers is more you’ve are contributes serving, an four those update and and that a the three footing Can of such us on food military. both have both that distribution, give to in it distribution segments? centers where on think at you program margins to or I got DCs how of

Dennis Eidson

military, more Chuck. only couple actually we than Well, are DCs pure that used a for being of have kind of

limited see more kind problems, that we’re maybe the solve critical network we strategy benefit some getting is So that of with out The in the kind – able logistic think, little of in first to And difficult of the company from. be foodstuffs network it’s primarily. will two commingled, building shipping that of a less scope. I a we’ve

important of are those network. the parts So

Chuck Cerankosky

types or logistics you types to? referring customers What what me, of – excuse are of solutions

Dennis Eidson

trends it’s don’t that I And base of quarters business. we growth, know fair year. the say, space on you that sales customer the distribution a again our we’re XX the table But Well, the DC, look give as and that lot put serving each for the of want at out mid-single-digit specifically. we’ve think, to I into specifics about and calling fact of we’re of on growth next now consecutive to

it’s close that work. say, finding think I to not getting optimize, we’re to, to fair optimize ways if

Mark Shamber

side, get regard. mean, customer on I and to you’re mean, and anytime miles. And have that increased closer going I Yes. hopefully the so profitability the mean, reduced Chuck, costs just can logistics that you reduce in I to stem

I to to going be mean, a mean, able always from the closer be that’s if to certain win I us. So, we’re leverage locations customer, to

As well get of that cutoff what customer, as leads submitted. order they’re better gets later the times later for so and selling can to dispatch reflection their they before through times a it because

Chuck Cerankosky

Thank it. you. Got

Operator

Kelly Capital. of The next comes from question Bania BMO

Kelly Bania

good Thanks Hi, our morning. for taking questions.

Dennis Eidson

morning. Good

Mark Shamber

morning. Good

Kelly Bania

was help just of XXXX in the us of a clearly, back headwind. and look expenses, some could buckets of at chain big you if Wondering, and year kind step the supply

should that just to impacted And question. seem then the healthcare to back do XXXX. about think and in costs expectation that and out maybe EBITDA came jump And XXXX. XXXX. And what we quarter what help transition in how your relative Just how kind of if can understand in us same then much think any, and in you

Mark Shamber

Yes.

and reverse take I of miss if in them order then it. the So I’ll the portion maybe

So you fourth to say the because made you run I tell that both that program to way side and with that update had trends going year the felt we us. the I guidance going you of and we mean, fourth changes the the the that the the prior the the as healthcare, obviously insurance in negatives. the were on along of would yes. into quarter, tell some favorable I the some as We we’re would to health I for that’s go would quarter updates had. into we positives leading entering and were the you

that played not large we reasonable we did a claims decline, way a the quarter. to only out, in disproportionate fourth of that during luck, year-over-year amount basis quarter on don’t And bad And not want just a say, had but you increase had I healthcare.

You and year, of that always claims amount, self had years, we had I have the fourth the come being claims. this versus had three we quarter last the of of tell anytime would highest any different in part quarter, But this was in challenge you the a we the that’s both insured. disproportionate number

And that $X.X led so exception. to million the

mean, that, can’t it. you from our because can’t I you can’t think predict standpoint, – you I So, control

that is got the increase we’ve and a update of XXXX. new elements how is plays some think in of being we’ll I And in you’ll course that that the insurance baseline health goes built year out during regard. for see

the think transition mean, relatively are saying in we I say we the middle for I right would As result for program associates range, company range. and will And came costs, I $X.XX to of those back incentive It in had part out is the put tight costs. that had it place not. relates $X.XX. had where the that a a of expected at different those we they in to year, that I say lead we significantly came $X.XX we in that to costs would smacked half of and that Kelly, achieved the in the the its came we

was the back And achieve to program program as – those put we program. baked in simply we put And incentive place that half. not in into are the put this place, we was because talked XXXX, when track that incentive for number on when a highlighted its was company the about fiscal normal for we

in showing growth but probably bucket bucket we Having mean, an incentives. getting for talked said about to top to line incentive have XXXX, normalize the we that, I fill incentive are, an million fill we do of fiscal excess for that’s we’re that to $XX XXXX. and have

EBITDA. improvements other And and of and business, we’re comp anywhere some But in incentive from we’re increase that in back so we’re in some the improvements growth as to going we X% to refill supply to EPS in getting chain used fiscal the are level. make look of at elements X% we’re XXXX to dropping historical that that being the X% the increase to of making, the X%

your don’t So chain of it, I wraps the piece answers know you everything if it of the I mean, that all don’t asking know questions. were supply because but if in I response. in kind covered I

Kelly Bania

think in about little a yes. year. EBITDA Yes, that can dollars to supply bit No, you just how much improve chain on trying and detail think terms you of more in next just

Mark Shamber

going the back of to of efficiency inventory, specifically, put you reducing would a the will know also half Yes. seen turns, the we of improve year got warehouses, in don’t a our standpoint. of a the initiatives I improvement I’m And but helps had – and drivers which the major and that Walt both they And to of the be year-over-year. because we’ve his success underway. identified and – away it one call from the we’ve number improves them replenishment operating helps have tell team our I that out

the and So quantify, in line AIP expansion. I’m overall I but the chain mean, bottom supply between larger some year-over-year, would the overall the the of you are improvement drivers to not that going from tell to improvements refilling necessarily I try

Kelly Bania

And relative much in comps to that in understand into are came and that as the can us this How year. and you back year. for gets that guessing to the that banners how legacy business at Martin’s, the your also performing to folded just those helpful. relative help That’s added expectation. retail we How look year the of EBITDA just Okay. terms sales

that XXXX. the from So there impact is any just across comp outlook retail to in

Mark Shamber

Lot of in questions there.

retail is, the in I be would comp. not there weeks. And to be is like folks really will say I of the as in a answer the Martin’s that would two day, there’ll to part the we Martin’s. day first be start for But in our will XX two portion Martin’s year comp strong only even for XX the that’s in year, or one numbers. a it had the then think day in they of XX XX of the XX will be to remainder all the though, be one for of weeks of the XX, first and So or week for those last the quarter our comp, the

elsewhere. As fell to where sales would less mean, their surprised than so I I part, a we with some were. our we took the about an a loss when percent you you sales that business maybe tell volume of were do because when on, a acquisition worry pleasantly expectations or probably, probably and they it the go guided relates from we little conservatively customers

standpoint, But say a amount volume I we there. maintain were retain or line to the that of the would vast able sales top from

a the the a there, projected that to know that them. close had track And we necessarily I going short budget. not year much So and they pleased the they our of they we say But would like to of were from there I say then would we what in had probably fell little we I break on were – line, basis versus more missed but made portion they – full that business, out an EBITDA try relatively And modeled mean, I on I'm bit I are to lost but that. rest I acquisition. questions were that when

Kelly Bania

it. free No, I that one in cash. terms me just guess, And was for more of

improvements at another would've also I maybe to big this than misheard that. said because much have expense is thought? can all may improvement have how capital But just us down cash lower working XXXX, I free may little and million far debt you if planning help this what in think outlook $XX was year, in for your you're so there a you So your flow I pay year. interest

Mark Shamber

Yes.

of than expense things, I improvements guess, more I interest side had made we working we say, mean, the on would capital, I more So generated quickly in we projected. –

So think are guidance when the place did I in was little not cut that come from that modeled. last the in standpoint setting Fed interest a rate had bit the lighter. I think we our originally put And one then we had

So I wasn't when of the cut setting the more quarter, fourth think expectations got rate one benefit we guidance. our we in were in that the

addition got where And we probably debt some the that's down. so in benefit to pay

think I XXXX, that from think out as our standpoint we $XX don't know we've I I target – there. a million look at put we

accounts reduces factor payable some purchasing it time, in it, given got got it that sort less, that you've because inventory it we've an on corresponding would know not from degree. that I minimize – any targets that the thus then point offset to you standpoint, when in in you're the side probably be minimizes of range. some But

capital know so high feel $XX comfortable in as I'd I'd say go in So, probably I fiscal excess but working improvement XX to of million for don't that that saying it's XXXX.

the the I pay down, too expect down as my sale back the Kitchen get I EBITDA our as debt to expected some low people there. that year the mean, with debt or we'd in relates get during want we budgeted between assumptions that because would other would pay where well I pay make leverage we actual of say Xs Xs. of would trying the EBITDA then debt leverage I the between down our specific don't cash And to the I Xs. think it I generate the low low mean down EBITDA of into want But assets. the under utilized Fresh don't to finished and as as expansion to free and as the well kind that

Kelly Bania

Okay. Thank you.

Operator

The from Trussell Bank. of Paul next Deutsche question comes

Damon Polistina

Polistina questions. the morning. is for This for on Paul. taking Good Thanks Damon

Dennis Eidson

Good morning.

Mark Shamber

Hi Damon.

Damon Polistina

to expect upcoming in going comp retail What be the be for it drivers initiatives? whether territory. specifically on this SpartanNash in back macro gives to year. confidence you or – It's in Just be this, positive

Dennis Eidson

that. Yes, take at shot I’ll a

actually of And lot us lot I quarters want First We all, spend we delivering. doing, that to two a year consecutive the don't think gives of of of or with are positive about ended the comps. things a time we're region our conviction the talking – by far largest Michigan and for – we for about region, our market. full year even only though positive Michigan really by four we but three is had in positive choose the And were company.

good We're I some, dunnhumby. seeing that. some wins doing already really with in stuff think, We're

helping efficient think They're some helping with with drivers been promotions us traffic. of I very effective perception information. they're and price understanding, better us also

an say is I'd that, piece that's click-and-collect performing. that's terms element. of important So the also how in meaningful

Senior Swanson, a Raya. a She's have Merchant, We not She's Lori year a yet. difference here quite with made that that's Tom along big been newer running business.

not into reason week. the QX the QX call feel we into the shift, us and that we because week can that's post-Easter business, year sustain out Easter we'll Sunday slow did have the So, Martin’s a We very no in for an and now help. comps like and for Easter to there's comp. go That'll the fall

the we point about in of flat. be that's a see positive. going But headwind so around approximately We're flat. So to we balance to XX QX the called XX it year, as

Damon Polistina

opportunities talk on of going there kind dynamics you then single-digits kind what for year, that place mid upcoming just this And any to in down – to next Thanks. the year. the with any the of initiatives Could the about improve and there? segment Military

Dennis Eidson

a military with David P&G hard passionate I retail the really that on called David system. about of really group P&G. for Yes, new space. There's He's we're David's President MDV works the Sisk, trade got the with a and chaired who's long the military and our that. mentioned, tenure business that in has ran ALA working And past.

think of same-store past, some for I So headwind as to X% a under X%, new leadership at say, the the going years, Kathy's ideas. to he's would last that gap. perspective team look you and sales of MDV to clearly negative that's us plug found the I running ways big bring kind has fresh couple DeCA, volume over

at this I eligible this a military say could shop solution customers goes advent of XXXX. the to potential moment in ready driver. a have don't we be would for on And the commissaries new side, that But

to not – several folks on that going that's Xst. now starting are eligible published from public seen DeCA there. are have shop numbers numbers million how There We January

in I maybe legitimately or of was think located advantage. were the XXX,XXX people take those so forecast geography to

DeCA. We know in in shoppers increase there at January was an new

good next so So last $XXX we've at headwind and of And supply the to significant believe improve of will improvement million channel, also line in in relates being about a of the million. all bit performance negative be kind own sign. military we talked and though a we particularly to business, our our on as bottom year top that could it year DCs, $XX line even the we a chain, that's made military

So I guess, that's right. saying something,

So that's we the going that could falling improve a we're of think lot still line. But revenue to be off. bottom

Damon Polistina

Thank you.

Operator

Mandeville The next Jefferies. question of comes from today Chris

Chris Mandeville

year-on-year full year, that to? to thinking thinking the some profitability for should we kind heard going about maybe level think or the of looking certain improvements the internally investment in comps an margin I be you is to showing about it's EBITDA of there be an improvement, a that just year. opportunity I coming sustain chain to heard stability I Hey, you're by retail that even positive driven expectation or forward good supply this If referenced correctly, morning. Mark, predominantly begin

Mark Shamber

Well, yes.

between I is Let business we Military affecting saying, and the think me mean, – that, chain higher we're supply with the Food XX% XXXX costs. supply I obviously on of the some Distribution. first chain part, but of had some I the when business of help line XXXX that itself Food get in Distribution and growth chain we'll to will top that the want supply discount in drive incremental it from don't there. mean, I profit

So line then contribute. I will top but certainly driver, would supply say, are improvements growth a large chain the

that's of areas would been was things, I to. where to return and moving of the investments mean, positive we the think certain alluding felt on that contributors Dennis as I made Retail us comps some we've one towards get that side in the we

in But it's return to return, investment we be get may as think base. go blanket better here within that perception-wise markets, mean, to partnership the able to there the as we where need a I with drive and identify in I to their feel comps. get going I'm store retail margins selectively we So that's in we categories, we the leveraging a substantial forward. not where retail price sure that and selective where leveraging data within maybe much investments to across to But dunnhumby order greatest so sit or to we're that our be be not to need try make

Chris Mandeville

this of much differently EBIT, being on some Okay. QX the XX controllable bit increase Maybe ask healthcare basis I how was down little versus can investments that adjusted that made? roughly you’ve of points the in

Dennis Eidson

say would I mean, I they allocate if business the then obviously the receive has so the the and if all. it largest on our they healthcare I largest broke Retail not mean, Almost more portion And portion all all, of when mean, of or I we out, charge. associates largest down, almost represent than I associates. the

whole So majority you however that of if I say other that can want portion, would the takes. some it the in of the associated play overwhelming tell – incremental with it, was not I all the because puts if you But the and you would not vast with of QX. of always healthcare it the it, that portion

Chris Mandeville

independent just the independent general asked on the then there earlier, thinking I a secret a the distribution a And helpful. there's about quite sales year late. health challenge conventional is versus Karen Can grocery to That's XX of the front obviously throughout what Okay. on about of way a bit of you your little that distribution thinking the about talk of bit business, just of the no it's hidden guess, week been maybe had some cadence and retailers growth basis? larger similar of specialty

Dennis Eidson

cadence that much. quarter segment I of Distribution should we're So guiding and there's and modestly volume disparity that mid independent you shrinking a going the the thing. it's The think locations would think, X%, single-digit. the the for the and from size looking in the in thousand we I macro a only say just this space We And and into X%. health. on of Food sense But start year to of characterizing that's some have independent just being a time, confidence suggest number not serve a wide some change retailers, in that I line, and Despite monolithic a pretty at space top ratable. it's don't X.X%, weeks couple you as think last I to has perspective been probably we're seven

So about in feeling that the we're good volume segment.

cetera. retail I stepping kind think the the trends about of a bit et and of about business, just little asked back question the profitability, kind of you

recall. I that think given guidance can we've we've given more here specific year in year than on I the any probably

So if were, amount think you say of this and kind I kind a we're I out what coming year back it for we on of us significant momentum. of was tough of where a reflect would year with

half discussed, all as going comps just earnings going is year slice the has the I outlook X% to not big negative We're from balance Retail. was I'm And here sure proud understands that pie. same Distribution that that low be think little and think this worked incredibly at on I time, the and mid EPS single-digit up on top EBITDA the growth the turn into think just and of back continued the as environment of to hard And single-digit they've sheet, for I what mean, I my we've improved good. growing. positive to mean, the segment in the to and the our still one I everybody we're I segment looks I bottom here de-leveraging At very X% want of line forecasting team perspective, Mark discussing, line, is turn you taken when on you It's comprehensive. here roll growth improve in Military and accomplished. the the but make a

Chris Mandeville

I then freight if one it's that that opportunity the for rates for last for Okay. know full to some quick were persist. potential just Is one but me. in savings And nonetheless, trend really early Mark, an down intermodal are year? actually year-on-year, the year, I believe

Mark Shamber

our that isn't mean, of certainly of that to if I that where certainly capitalize volume Yes, able that. capitalize our rates and stay think DCs situated I We're intermodal be have but an network inbound how bringing on way things we're well to try mean, and that. some heavy, at our represents I it you'd to look to opportunity on in

Chris Mandeville

of on best year. the and again luck Thanks Great.

Mark Shamber

Thanks.

Operator

is Research. next of from Northcoast The a Instructions] [Operator follow-up Cerankosky question Chuck

Chuck Cerankosky

Thanks.

far weather, quarter? stores the the impacted looking about in Michigan thus winter question it's your mild how a first what fourth especially in Just quarter, like Northern and the it

Dennis Eidson

Yes. a of we typical quarter fourth Chuck, kind the actually had more experience. in winter

as like year-over-year, clearly new was are material week had volume. now the of impact think into volume. felt it I the impact it on we it any on So kind don't fiscal has had seven year, But the we of an

It is We've a snow, February very of having nothing been have but we've warm. last temperatures bouts had really The virtually be a – had a snowy couple year. sure. impact sustainable. January, of got to We negative

little I'm concerned. a And so

we're think guiding flat. talked about I we

to ago. is flat it's hiccup in a if different quarter, that I the year approximately first get but materially be it, in than probably a think weather we'll going there's this

Chuck Cerankosky

Thank you. All right.

Operator

conference I remarks. Eidson the over session. back question-and-answer closing Dennis would our to for concludes like any turn This to

Dennis Eidson

Thanks I a look day. quarter for And we Everybody to the on with Lisa. you. to first everybody everybody when results. forward thank our have we speaking want call XXXX participating again Thank today and great report

Operator

is you for conference presentation. now attending The concluded. Thank today's

may You now disconnect.

SpartanNash (SPTN) 20 Feb 202019 Q4 Earnings call transcript