SPTN - Earnings call transcript Q3 2020

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Operator

Good morning, and welcome to the SpartanNash Company Third Quarter 2020 Earnings Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Chris Mandeville, Managing Director of Investor Relations at ICR. ahead. go Please

Chris Mandeville

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

On the was Executive call President today the Eastern now, from the company Time. access have at Executive Chief Officer. to and approximately everyone and P.M. should and release, are Officer, Mark yesterday President Shamber, which Vice earnings Financial By issued Chief Tony Sarsam, X:XX

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

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

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

Tony Sarsam

Chris time ahead for it and SpartanNash. be good President with of pleasure CEO a you first address I’m organization we’ve the many to speaking morning. part and Thank us. of as proud and you, with is this to the of I’m energized And opportunities to be

eye members in world and on. the a His extraordinary begin into our look step over me my and done as Directors role to our has thanking to he Chairman. as to resumes time who and years on the his by Edison, he CEO Let legacy of back pleasure his an of team country the leadership past during him with interim other I basis. plan role Dennis forward an Board to working have build

As I for journey months. -- my plan a realize and a objectives orientation serve coming ahead, specific is reflect lead to customers. what share on more I to the privilege our over I the it

operating performance. However, we’re ensure improvements competencies our existing have that immediate our my to to in is leveraging goal

deep consumer package food together investments had in every the read of machine goods of XX three businesses. We’ll resources packaging facet strategies operational supply we that great of industry, high achieve ranged operators a decades plant to have on years experiences ensure us. distribution I’ve to many deserved other to people have the many the of to Pac of organization. that focus, the of opportunities of and in GM to I’m needs to my renew the recent operate the both and urgency recent service. can our first to in capital to in In make most of be both our of managers our work of company facilities from gained understanding financial into Over In stranger still level I teams expertise with long In dropped chain food that to insight more. our Among challenges act results and chain. over need in my potential in was innovation Our as role customer I’m to our culture with unlock recent make work fine underwhelmed over has level supported confident areas CEO succeeded commitments and to of Dairy Ready on supply and that apply pay and true our one in a to industries transform with I’ve to and human my to my short, no sustainable efficiency maintain in and our our the functional developing front SpartanNash other the I and I chain industry. the similar most and believe leadership goals. experience Foods, and lead CEO execution. operators world-class the supporting Borden teams’ development supply to In organizations best-in-class I’ll growth improvements to roles the as deliver of I’ve organizational I and make was and leadership term. opportunity able can years, the operator we we meaningful and

support. our that excited I’m by and for very to updated wishes provide review and the third and your guidance performance be of turn journey an to Mark the now thrilled over me I’ll call end about remainder the here ahead. to thanking the Let quarter well you for With year.

Mark Shamber

for call. XXXX, by to $X.XX us $XX fiscal quarter million or joining welcome billion. X.X% Thanks, increased billion third today Tony XXXX, versus of sales of $X the and sales to quarter on the third Net everyone

expenses were $X.XX to Inflation pre-distribution pullback in Shifting of of X.XX% continued volume a second third doubled impacts both compared sequentially. Reported per for the quarter quarter and distribution the net quarter to of quarter the third in to EPS third quarter associated compared $X.XX the in came combination quarter, the $X.XX business compared an nearly to $X.X in million the incremental prior of per sales loss by profitability $X.XX third year was labor in higher increase and distribution rate operating existing and of gross in of from X.XX% food increased quarter $XX.X year third following rate prior improved improved EPS QX, for segments, quarter a flat to the at quarter GAAP our totaled prior share XXXX retail our store $X.XX in quarter. The offset fixed share increase quarter driven our operating our to customers significant served in leverage EPS particularly adjusted share profitability. significant diluted chain by per X.XX%, Our rates expenses third the for increases, increased while diluted levels second X.X% in at as the earnings in inflation in at with diluted XXX%. XXXX. by of of supply the re-prices of came the compensation a the from the certain $XX million with million Increases incentive billion adjusted growth and rate per sales produce driven of partial higher volumes, moderated costs. nearly fiscal fiscal the the in of of inflation COVID-XX. sales year’s third increased and share margin quarter to

from $XX.X earnings $XXX profitability for a increase the million. customers Retail was the compared expenses. operating These impairment the for from to chain prior came both in operating segment perspective and yesterday’s well X.X% Food the Distribution largely million made align and provide dollars as decrease supply better to to the in reported integrated and quarter our rate third quarter offset volume The Adjusted and the $XX.X $XX asset incremental items table release. of asset operating an income in of this increases quarter third million the solution quarter, partially allocation the the $XXX a in transportation decision corporate the a of under During Adjusted distribution higher to X operating expenses impairment in a due operations we abandon XXXX, tradename. charge, were press of versus $X tradename more totaled sales earnings as adjusted other in food our of higher by to detailed administrative resulting the net at in or fiscal exclude in million year’s quarter. charges quarter the million higher sales million. income impairment

to the Our towards shift of in competitors. in results e-commerce Comparable over increases penetration. home private also and the from sales and our compared comparable strong the our food store favorability third quarter particularly for sales customer sales were labor our at XXX% a for also fiscal benefitted store reflect sales These of quarter continued XX.X% reflect XXXX.

levels to our We current the opening EBT also store the cold Indiana new sales, part as replacing higher for in in not grand modern quarter, continued a fourth year. River count in district at previously XXX development Early increasing as of [Indiscernible] the the stores. from earlier our store we of although store to a benefit had same

operating the the compared to Retail $X.X in of came third in operating in quarter. quarter $XX.X year’s reported at quarter $XX.X for earnings income Third quarter. the $X.X GAAP the million XXXX’s in adjusted segment million million third retail prior to compared million

third consolidated due offset Sally. of lower to first corporate were million the not who during improvement third compared compared to resulting the the million ago. allocated as $X.X combination we profitability we performance. improved access improvements $XXX million third negatively improvement an margin Interest many generated improvements cash million. decreased to to on and fiscal rates driven rates reported in increase basis in over the both in include that in increase $XX for fiscal expenses was capital capital volumes margin lower items working due Sales rates primarily the the loss from quarter moment $X.X largely compared a our alert that increased third loss was incentive adjusted and million related generation number the while commissary over fiscal of working of increased to the of of visitors period restrictions These XX and million to inventory effectively XXXX, also base in shrink of and expense year mentioned of of could quarter an Improved of $X.X variances the in million higher or overhead quarter. operating flows these quarters sales improvements segment period a sales either by X.X% $X.X which our year. rates. by to in allow generated expenses the well levels our revenues by labor of net adjusted a as operating quarter resulted bases $XXX or in the million compared I an favorable in XXXX This same to of the the Partially the three that shoppers the and quarterly same and sales debt million profitability from with lower operating flow higher impacted interest million quarter, by lower XXXX. average limited free due of level of the Military in did to reported prior an Military prior $XX Our a commissaries. in compensation compared higher as quarter $XXX profitability XXXX. a closures in thereby quarter the during the loss third in combination benefited of and offsetting year-to-date maintained period to million In increase decreased to $XX fiscal quarter million cash $XXX continue $X.X the be a reducing hurricane

we third the repurchase third cash quarter in the in million quarter. form dividends SpartanNash shares $X.X During the and declared didn't of any

the net $XXX Our XXXX. at first decreased XX compared million at $XXX million million ending of third XXXX, the end to of during $XXX total by debt the year weeks fiscal quarter long-term

of times XX% in our leverage third year net to our by fiscal long-term increase debt down of driven as the the million. XXXX's year from to quarter EBITDA Our $XXX year-to-date strong of X.X well as the debt fell to EBITDA as as pay ratio end, of adjusted end adjusted combination X.X times

quarter. We progress fourth make expect leverage the to on further our in ratio

yesterday we are in narrowing and fiscal press release, covered updating our earnings XXXX As guidance. afternoon's

share per of diluted our continuing anticipate $X.XX. For XXXX, $X.XX $X.XX adjusted $X.XX approximately now from per we prior earnings share of fiscal to operations to projections compared to year

issuance share associated form October. in $X.XX with million of $X by benefits warrants in of continued with Our diluted updated per associated consumer increases reflects the $X.XX the and filing our guidance to of million disclosed that fourth in COVID-XX the related sales demand estimated or to stock are we quarter warrant as experiencing to trends non-cash X-K expense the $X in Amazon offset

be and in this per warrant quarter gross For fiscal our margin $X.XX continuing accounting compared reported purposes $XXX compared earnings. prior our earnings adjusted prior are million million to negatively million expense to rate Reported of expect sales our We range with consistent reduction increases in from from impact as will fiscal to diluted to will million, share XXXX. operations $XXX share fourth from a of the now our $X.XX in $X.XX XXXX per $XXX range to to EBITDA guidance to $XXX $X.XX. of to operating projections expected projected

expense million. million expected to be expenditures million our be now to XX%, fiscal capital effective in to for IT Depreciation $XX rate rate is amortization the of million. expected an reflects and $XX expected Interest and our to Our range tax $XX adjusted reflects capital million year. guidance Also $XX.X reported million range XX.X%. the $XX while to is of to guidance XX% to XX.X% to from tax now effective $XX are

growth. open he of to him moment jumping company his wish seat to him for I'd next and continues the team With last Dennis back operator a to I leads finally, back And thank a of for as and like executive for also Chairman the the up and to the the to into look of the retirement, as publicly he the leadership like CEO the after that happy into like we up I'd Tony to call Q&A, our welcome to SpartanNash working open Board. for Before phase us plus to year turn it forward with over take as I'd call and questions. Eidson

Operator

you. Thank

Cerankosky [Operator go first Chuck question-and-answer now will from Northcoast question ahead. Our We Research. the Please Instructions] comes begin session.

Charles Cerankosky

Good morning everyone.

Tony Sarsam

morning Good Chuck.

Charles Cerankosky

about supply around want the of distribution? food you to you urgency quickly Tony, or get to the productivity you of mentioned some DC there the operating can improving within low talk fruit sense any Spartan chain hanging improve to projects margin

Tony Sarsam

way have yet. Well, this I've I we run at and the overall, I process I today have some with a look and and opportunities have clear a opportunities been it's infrastructure want DCs weeks, here have six don't great absolutely and performance half high our I that as our DCs question we caveat our notion. a many everything and the level, out will at we we opportunities. But, others one to, figured

We systems have aging example. IT for

areas, any there's I go there's So think can hunt. think we we and there's a turnaround of don't panacea, but there. improvements number make a go number certainly get of where can one productivity a I areas

go ones that which So, I into knee and deep right in them. about to the exercise on take am figuring out how we now first

Operator

from Karen go Please question from comes next The Short Barclays. ahead.

Unidentified Analyst

Howard on good This Hi, morning. Kate is for Karen.

you. Tony. working congratulations with to forward look First We

Tony Sarsam

you. Thank

Unidentified Analyst

fresh food production distribution segment exit impact guess I a question standpoint? much first about you on my had year-over-year an of from can the of how is, lapping talk the

Tony Sarsam

Yes.

question a and a did little what the the report it's helpful that in way to little a segments Kate, misleading we as food to it's So distribution.

impact first the year like quarter, at would core talked the was points cut XXX that we're without away we've external that of the and about the last an as release, food about But higher. on it from we’re I the Kaido the press distribution adjust for from laughing business kitchen fresh food if say in, was probably in the you went food the for So business. the distribution of as production were the fresh segment up end we out the either to standpoint some distribution quarter. that the basis X.X% had exiting

it quarter. it probably to quarter for So report distribution the a And the we food XXX probably with and not XXX, the about when XX.X, netted the would way and we last was closer that weren't talked enough was was Kaido externally portion it. we clear

points course some we business end in So order food distribution, of at definitely to during XXX I moderation did say see XXX that we production the quarter in basis next that higher. were the about up Kaido would but to

Unidentified Analyst

along I at and are helpful really what kind both current guess to-date lines, distribution That's food you can Okay. in and trends of those share retail?

Tony Sarsam

certain well it's vectors think moderation bit we would see, from and that to states to averaged points Yes. there would clay. certain XXX might here would or are some that and numbers others understand of as the if impacting that to say but choppy open I points seen of further, be that down. say greater basis retail, XXX little for difficult mean it's different probably way but quarter, than sit maybe off a But the there geographies been parts other basis XXX third that XXX a that I we I are probably more we the the today we're at we've extent, off we so reopening or just maybe if of we're that

Unidentified Analyst

Great. Thank you.

Operator

question next go from ahead. comes RX Please Scott Capital. from Mushkin The

Scott Mushkin

I'm questions with guys Tony with excited thanks work work to my guys for Hi, welcome. to taking and you you.

I'm you successor. to wanted great just Mark said clarify Dennis a So Anyway, glad just I actually. what found

So about you sales were said running? the are from XXX they where XXX, down

Mark Shamber

little were quarter, little the mean from bit. from quarter to where a the the they running Well but per from we're to down it's averages averages the I se tricky

Scott Mushkin

Okay.

to should need it with that? with about with what this been really a a company Tony yet, So business don't drag but to there you how into stick maybe then military you we Is something an obviously time. do for or thoughts it? think do the have any on anything this we I to long for it? answer mean put Have Is has that

Tony Sarsam

great It’s a question. Yes.

a how other find military to but that lot of results ways and history lot and bottom business to has and hasn't. acceptable to in going know of, line but much top So and a know, all that It and to previous is question that's change. to will to it serving find back I here improve are of the pride legacy has long we'll start and I see and is it's place grow my play appropriate an line think look we're the and harkening in we'll not a operating SpartanNash don't change it. commitment to it of military, so there's it's business efficiency. obviously, as my and there, But broad and military you

there certain. there will for changes So be

Scott Mushkin

this strategic under it's of but X.X fair not belt, have then, a question been because is always more So you Spartan's maybe again weeks your acquisitive.

then I contract think do an the you initially from you business framed, years kind to couple I you operational out How looking company? be with how well which obviously M&A? Amazon. incredible we're of are work organically about Obviously signed the think and there's the growth but also done on a thinking through you of maybe think grows side, trajectory this

Tony Sarsam

beachheads ways ones then be it and in great have course new with look mean that. as thrust some geographically set for and I opportunities retail. opportunistic to new have and old Well, But I I we will I believe will to of and look for the in distribution if we previous our think growing to and in will big and will expand opportunity that be do those both we'll to expand we calls, grow for ways we in grow think it of said be growth up our growth to customers

acquisitions looking aggressive sense more more opportunistic in So space. we'll the and that on in be the space I if think distribution at retail probably probably makes

Scott Mushkin

I or time and one That's in queue. get I have should the do more terrific just so back for

Tony Sarsam

moment. well at okay We're time. we're think doing I the in

Scott Mushkin

Okay.

it's COVID as and when a if seeing to That's country more Wal-Mart a you is of in starting you in big question. a I this it's winners look I people two trajectory? so starting two-part is or they obviously across to places seeing and they're Are Number could of sales into that you like up, a term then, shorter kind maybe close obviously really and question. surge COVID number are escalating give one, were little the flocked something where So one mean there. improvements to grocer like us the and is compared the wonder growth independent started number down.

then of kind Thanks. question a So two-part I'll yield. it's

Tony Sarsam

Yes.

benefiting part seen Michigan or of we've outside change, let's I that an have last I or on if and little and that COVID of The were protocols where been But we I that that few as the said relatively we norms two down model this remote, greater independents the the don't their they second environment. and/or are There anything Governor it folks standpoint. could we being up doing degrees. there. say in weeks. like where point schools normal through and look to anything that even we week further mean up overall there would We So down our has point continue that I just certain to so hybrid But normal impact question, clear being measurable not with they're and the trends hasn't benefiting, we'd I a working cases to I look relates all to a or anything don't in we've in specific to that moved could to call independent to may a example so aspects and geographies all there's but consistent. sustained trends an the year there really in been up, in know folks cases outside and you've many as so school highlighted some and as as enough they're Michigan have at then, I they with could say but year to independents has in home the degree don't think middling. had know some seen think back rising Scott. the independents we different from suddenly tailwind shut have in that And benefit it be uptick may some out maybe be up like that the benefiting know as see and mean a and hasn't go in that in significantly and trends some the more folks food regard got the that numbers the come the to driving that's still been where I a being same some are we've great are at respects that kids are are it more but a

focusing the setting are what were independence new on are much and might that competitive think new were that I later certainly peak the some People play stores, varying of had seeing going a openings and out you now until maybe against planned. last in Folks thing competitive than Folks degrees pause the hasn't last that months doing country's now opening openings in reopened even during of running different originally to really the been they geographies was they two stores. one They construction. month that or there weren't maybe occurring. so is be the on months weren't COVID.

individual that independence degrees as time execution. of their significant varying So their based been for as is the maybe recent either but openings all that's I the on just have the competitive change paused occurring only is well benefit that calendar dynamic and/or a in back or period think competition on of

Scott Mushkin

Terrific. the Thanks it. answers. for Appreciate

Tony Sarsam

welcome. are You

Operator

Wolfe from ahead. go question Badishkanian Next Research. comes Please Greg from

Greg Badishkanian

new role. the Good for Hann Congratulations morning. on This is Tony Spencer on Greg.

Tony Sarsam

you. Thank

Unidentified Analyst

their the keep from when see how EBITDA look to then gains to what and baskets think sales we biggest shop? some you And XXXX? the you again do factors XXXX consumers at start of where as are you do driving choose if they well-positioned to So, just split

Tony Sarsam

maybe refresher there's food the simply from of predicting we're that vaccine it's because sort to coming get that months to a year, and will talked before that that's be dinner be into the news to be six it's the also going of going going as nine before indoors that mean we a shift think were a I home from so trends or of early cases because to be the be that you XX% sure positive. are and next out quite it's capacity COVID have mean returned what geographies, I and if a Well, I number northern a occupancy to possible to they be we've to frankly little XXXX at not folks cut likely I much the of take to operate away continues before need going available further. all extent been holidays back but as of mean out and not look as food they'll home, may But widely spike that longer-term levels we primarily the to XXX% sales

we've And the so XXXX. end with a as see Year. that that and we but the a start like the numbers until honestly what should year down help are our the get the willing generated off through trends we into retain kind to that I'd and think anything sales of EBITDA going not New to portion range we good to of put

stay on to we've some for to So what and can to the tried set I I you understand of we've expectations sort guidance SpartanNash based think mean that managed we've and seen range we've something what to in I'm never projected trying all before we been future sorry. seen lighter in little we're than but the occasionally and a and the then it's predict

the half retaining second about the was? the question So was of question The business? second

Unidentified Analyst

you yes. do How customers again, split feel Yes. the

Tony Sarsam

I how from market side a for hard on to our we're store. our able with those private to the the see us changed working our national brought XXX that seen lot brand saw gains much quarter keep competitors a lower that brand's I of think in own customers. the would perspective you refreshed brands that and very owned that whereas pretty folks I and may comp, share what was and customers retain return tell maybe we've getting basis we made third those years with points shopped and the they make to been have to over been label have as where consistent mean, growth we've that sure our consumer previously those, we've that to the were mean some store I we've XXX We Yes. into retain. we've

that I I out that compared the the good points the of think to and doing we're line think And so, going products with the job quality purchases consumers bottom price we're a at offering with door their maybe what looking and were and the we to reasonable and those at successful they but keep to saying the we on and have difference competitor that pretty par think working have a at so shopping been it, customers able we I we're will or are when are to-date. retain

Unidentified Analyst

And much centers, color. capacity just distribution customers? incremental to new you talk you about volume, your start on add can you facilities before as you then, through existing could your add need great to put That's how

Tony Sarsam

that's to are I center there's some size and billion that handle past. in easily that or receive where of function a Yes. done the orders centers the distribution might the mean we've mean it what distribution incremental and where of of their there. really distribution incremental centers has on can other we based of outside of us either of the volume go types and I $XX lead comes. volume current or type There capacity million because size

we looking at out release as response, or we're of future towards I centers we that two have distribution that and been locations other scenario So additional it's in our we've need all the but kind and at answer add would space. as built maybe growing three so not one that a say of fits capacity we capacity infrastructure

be in capital that builds in Hopefully in X.X%, year if need but on of CapEx. unreasonable that cycle versus a increase think forward. of year-to-year to to we like think would in be generally roughly year big from with expenditures. many allocation spike get I could it's capital normal to X% we not we one one a a going I the our not have maybe incremental one certainly instances, to an quarter, fit be go need a think into that able significant the more that's done have So to scenario will it But that

right think have growth the capital that now. I within manage we we our can plans

Unidentified Analyst

you. Thank Great.

Tony Sarsam

welcome. are You

Operator

ahead. from The next Capital Kelly question comes from Please Bania markets. BMO go

Kelly Bania

express to And our you the us here. welcome congratulations for as well and questions. Thanks morning. of want good Tony all from Hi, just taking to also

Tony Sarsam

you. Thank

Kelly Bania

that quarters that bases from have I just and couple distribution Dynamic about can through just think segment? that XXX back food of in the us impacted you the walk of the how kind Kaido may to wanted to comment, made past Mark you I same go impact

Mark Shamber

about being mean, quarter maybe $XX been million of quarter. of down a on the announced, the the year, bit third mean it first I kitchen quarter can a time, is maybe we that and second I you, a I run I maybe ago this last we yes of know, interpret second as have talked tell second But were business going robustly in kitchen we quarter in Yes. me refresher, business and quarter. the fresh just for and take fresh point rate it won cut. that that year, fresh the announced we here to the that disposition we during be the were considering at would to able time to exit that year kitchen we And fresh course we fourth little But apologize. that last it's was just at into

And volume fresh earnings the of shifting so on we a just enough loss couldn't call, to we when we fresh within lost the the to try that sustain first quickly rebuild. make cut took on a business, mentioned that business profitable customers’ we and were the volumes and the away that significant around process customers cut cut customers the of based fresh growing some quarter as But in then portion business.

And difficult we fresh the made exit to so, cut. decision

we XX services side wounded like timeframe. In million the be distribution quarter. first the million has basis, quarter the the cut to did the million on XX we because numbers years in for on involves and as may they are service food three look Kaido. We probably in of little and earlier there that first those probably sales that’s do the starting we're down number and operate year-over-year of bit million There right bulk down food the where now, fresh the in XX is a probably down we business quarters because and so, second business that been at from the are XX softer. the portions And the some quarter March

started see the almost timeframe to down. started lift. giving sales COVID that around So significant We a that go

distribution ongoing you first some the putting quarter of this quarter clarify So, the were the be last reported food the in after when second the that didn't the we callout when business up numbers. look we've others questions space just reporting, maybe earnings as in greater we and did we into to factor missing we're quarter, has are thought at as if distribution numbers food about really kind had particularly our But it question in weakness in and a in third I it the the helpful there makes combined release talked so that got night than seem morning. not it

Kelly Bania

helpful. you capital. And investments guess Tony, just That's had in I mentioned Okay.

just little that into I phase maybe about we a you been there's think and cost shifting just you on think some on should is all? called dynamic curious because guess you bit at cutting that couple some that out it like dated. investment can IT about I how Spartans feels last more focus over elaborate an little a if think years here the

Tony Sarsam

Well, way the our how think is cost investments cutting, past an on make we're having to pure looking investments. to don't think without about just appropriate going comment I Sure. forward to

things think that to We that's these will that make and I our kind us grow make gives go license productivity make of you more productive virtuous will. investments because us if the circle certainly are business

of us ago. us balance we Mark serving that them give and think will balance that I things productive things things so to more mentioned between capable that look greater make And customers and our us investments a make capacity those as moment and more

that's work all way will forward. think investments things those our in I think I balance about So going and the

Kelly Bania

month I growth in what's if say announcement that? we the all, years really we about guess the drives I think much driver behind should at last how Okay. Amazon over I you? mean that for the lots and about can with know modeling but think couple how the don't what's that And next of should there. you questions happening Amazon there for

Tony Sarsam

Well, driving their would last we for didn't but Amazon question on be any that I growth, discussing a call. we about sort sure for I better we for than should question be is think customer get what's shocked a think look I'm probably question if not us. this that of Amazon

them, continued with parts announcement we I And the back over and a And working some four grocery Fresh then and since was so, we're Amazon and years. the last about five bit be in of less certainly doing We of of order frozen. announcement to obviously last we to when Amazon if we customer exercise with for be I of necessarily relationship business within some advantage CEO where in indicates enough we're to and hope and take the business and was the XX% would doing And chill warrants the billion of sales month talked the Dennis the we able seat with going think Amazon, in XXXX get in or which of the given to seven in were significant almost share with them now say X the that that how to continue work and look opportunity a half fully Dave COO that. discuss. course now a we'd disclose over seat, the that Prime wouldn't we've ever and wouldn't that has Amazon becomes they'd and there's purchase north to them cadence years stock an they to of our been up

that We seven in north one fully ability math, in billion sales do a the period. warrants that if seven years you haven't previously. there's X all if would of year to out average purchases the that But exercise disclosed over invest the billion of to over

hope they end. that would done that if get benefit even to like on they'd timeframe that over that sooner welcome So do and our a be we

They've So number great with continuing them. with we them years, and partnership. to continue customer for worked the we've to of work a look a been forward

Kelly Bania

you. Thank

Tony Sarsam

welcome. You're

Operator

Deutsche ahead. Damon next question Bank. from from The go comes Polistina Please

Damon Polistina

Tony. Congratulations morning. Good

Tony Sarsam

you. Thank

Damon Polistina

Yes.

couple the more competitors of compared So environment the height can become you seen in you retail, to speak just Have you're how of to seeing the changed promotional? kind epidemic? the it's promotional months kind last of over

Tony Sarsam

we've I don't that seen. know

it I what like last cleaning down pre-COVID, which gone some that than make secure on don't the I to and that be back to would and it levels promotions full think a challenges, of some that digital. their few couple some overall. that cost way know that say of inching we be stopped at looking remains at think promotion back folks things you are slowly the those get was they going products there's have sure at point need more there supply print promotional regard put to where I and the running all they're months date have Damon. and but promotional I there levels levels to is period things are and say normal time a the promotion over were some went disinfectants try competitors competitors secure you supplies gotten can it don't a seen, of you're the There they to need to ample or there only would say and just an if promotional we've ads space environments. normal what if maybe seen. in even why won't where are in sell put would be you that be were flash if you because still to and and on can't I

first I of the were in of that been from I change any would there's that spring, they XXXX. they're where So levels where significant but during but don't know have beginning still below were quarter the the the there they risen say

Damon Polistina

as on where that kind of XXX% that business see the the just consumer’s me far profitability for percentage kind just of it then as business? to kind offerings more response up one this then then you of speak to was of to mix out e-commerce, you levels the Can of and quarter. coming And and your

Tony Sarsam

store spoken that Yes on I shopping consumer business I e-commerce answer as a mean, our first. as last I'll their it's own. question the going not and is mean, profitable profitable, but into we've the

the increase it a not takes years the profitability not great savings the the to equate last over a going of the shopping personal mean, we've So does shopper, the that store from couple of us into business, having customer having the inroads shopper. cashier and made get versus time you to but personal I

for that's So sure.

we've X XXX% some great As e-commerce, we that the of other little of new for stores that addition a two always and we go with been pretty e-commerce of we've and that X% continue certainly the the kind certainly certain seen a in we have that percentage that virtue the quarter say got they third what basically for they're basket north does to offerings of quarter fill running consumer's of customers getting we're that I And up has and so overall that we sales so from was the volume of during a would into frame that of an you. that percentage of offerings a bit week And e-commerce like the offerings. of that picked or to sticky that the the willing but and so business we've peaks it's our incremental north offering pre-COVID during the fast into lane case of referenced. e-commerce weren't time are the in closer deal business, by they and have say buying people the that down greater that the to to with stores where consumers, the fast go have stores, and would then, that that those match up we seen as utilize in lane we in

Damon Polistina

Thank you.

Operator

The next Peter ahead. comes go Please from BTIG. from question Saleh

Peter Saleh

investment come you Tony year investments more you volume to do the capital I conversation or next year when some investment. operational and that Tony, more on as Great. from terms more maybe on congrats making wanted changes back around for Thanks think next customers? to you just capital will think increased you'll the role. the be about plan position, need new in

Tony Sarsam

customers To as bringing our it? we so for question or prepare to clarify essence be the capital oriented process is will saying new your investments that the more you're of

Peter Saleh

a you'll of be year if trying versus to investments understand making I'm next couple prior years? little Right. bit more capital

Tony Sarsam

mean mean given is sale as maybe again I little year high mean, and X.X%. be maybe it'll be measurable. can don't XX I I as of points think I that we as any as

So range. in I that probably be think, we'll

getting a in more three to work year capital a it's this and a big because associated that than I'll year get with is that way only the associated trouble folks we're it office and plays and spent timing particular the been that having with just know through and perfect permit's two needs looking right COVID. gotten any the because don't are number getting of in municipal weeks. we of out doesn't the is people be and very with honestly example some there's or all other of delays some handful and currently approval for quite to do handle office the would the in and go shift of the I three now permitting in distribution COVID, it it that out with haven't But approved a more of So give a that possible us center that that levels we're

scenario money. going capital not because spending we simply world the to And so we're be where that's a otherwise spend would of that the delayed not events

of $XX because suddenly an than next say going growth things I could more virtue a we be need mean, customer likely to million. that little year being spend I So of bit extra it's that but higher by to like

Peter Saleh

Thank very much. right. All you

Operator

next Cerankosky from The Northcoast follow-up ahead. Research. Chuck go a Please is question from Charles

Charles Cerankosky

is that in the Amazon on any going certain to at hit the predictability up of count particular the where understand we Is be? exercise the a you're there them looking the using turn going year? allows warrant. spending them on so treasury going which to of sort and I share method. any better idea focusing that to to be count in to tied part they you, And that the have when Is process can share relationship, here with follow-up It's for I'm forward. Thanks thresholds

comment could you would be if So helpful. Mark bit on that a little

Mark Shamber

Yes.

that's So question. complicated very a

can. to try simply me I explain it Let as as

Amazon for ability Approximately million vested purchase allows certain be any agreement the from of years to investing shares or execution agreement. to subject now the million about X.X the Those today the warrants So exercised up X.X to upon to plus remaining day conditions. on the those could agreement. XX% warrants of six or to have

Additional won't investing that'll in warrant investing and guidance. conditions met expense not the reflect in occur be numbers over public public our will are be those with as some but requirements, and be are our certainly time and which of

method to and the basically without accounting then the Chuck, back the specifically says your the would all get on treasury question stock into from relates going you the cash mean, it'll shares, yes takes that about it against buying of be apply exercise open I the the stock that which market. proceeds the that take would As you warrants, for

simple in price. versus if the so, the shares of dilution stock because market a the open And you example a on buy would get very doubled X.X% only the X.XX% half you double would they simply because could be back

talk But that's the accounting if anybody the can wants but through I would the varies but the any trading. with would dilution a on it currently someone of what based the math of the the stock's models is be are most call. walk earnings where at based be trading folks all exercisable fraction your simply point. do information's that currently on the an And publicly further So dilution where what's stock is questions out offline, kind and on there see probably

Charles Cerankosky

the forward much going timing purchases anything, how of Amazon vesting after but tied to this? is not additional then, And

Mark Shamber

on but Yes. we're redacted are from confidential. criteria what document I'm vesting how was are there that keep the achieve to not going to so they That the criteria appropriately to going comment investing different that.

Charles Cerankosky

you. Thank right. All

Operator

ahead. from The a go from RX follow-up Scott is Capital. next question Mushkin Please

Scott Mushkin

for Hi my guys questions. follow-up taking thanks

some to So I couple just want things. a get clarifications on

you you you a XX? is dry of much fresh, Is or and engaged guys - are that? you XX% put If the retailer fully word. think both wrong control how the it distribute it with store do What would XX% controls

Tony Sarsam

north some would of function closer would I what a be a penetration good would mean they're it's DSD, mean of but I probably strong I penetration for doing mean retailers to I penetration XX% maybe say be max a us say would I they've I XX but guess center a how again like Yes. north much got XX be how normal their be lower. might that depending space, devoting retailers it XX upon a what and but all they're would they're max shelf there's space by driven store it's mixed could some much broken unusual where of XX% how out XX% and carrying to be

Scott Mushkin

everything And you guys to your partner that they're expectation be full with do? going utilizing a Ais

Tony Sarsam

I we wouldn't any know the that because relationships with I or to I I them be about on areas know know would them. that comment their that whether whether as enough not to that want don't our I comment should in of serve different that penetration

Scott Mushkin

answered But grocery you going and Mark, dry? them think are fresh maybe you just I probably dry to service or with

Mark Shamber

some be some of the would done product to perishable that in the fresh of do continue I we dry yes. No, mean chill. that referenced and we've we

Scott Mushkin

So in consumables? and and looking their understand it's kind I why to of at in through business wouldn't I'm these they're they mean a other so wouldn't if and go targets? interest clearly be they're relationship growing want trying if not plans, exceed capabilities to with way blow vested ton it base growing beyond this Amazon's to equity struggling the and targets? their to interest their these it's just to store taking step a their I'm why healthier understand Why in back

Mark Shamber

would store their that's their mean of better independent for and win-win we single our to crazy support that's as with a to difficult But no to a mean so from customer that and a it's grow certainly and that that's we customers I in for question some here the largest welcome them us support. and all our help as them, would that I and I yes, them, succeed mean, different on customers a not any friends long succeed it's fronts we're for question growth customers. probably again, all of our ready be Well efforts growth of to we business level that's say I wouldn’t as

we're always it disagree and I reasons the as I would making want not customers to different for we to it's support be So much their I individual more. like us there and mean, but as to work have decisions would the they mean them with

Scott Mushkin

them support you And can nationally?

Mark Shamber

a comfortable, may and to I continue feel think on a other I growth I couple national of within our footprint for expand think I we basis about we our were supporting yes, able still I of capital we a we've mean, handful comes where that years expenditures we been doing do our But it can depending some to we're we now we've fit support number that think customers. for that been mean, as folks a times. on customers asked nationally grow and of and

Scott Mushkin

letting Great. up. me Thank follow you for

Tony Sarsam

Sure.

Operator

question-and-answer in to [Operator There This more over I'd Sarsam to the the any Instructions] conference back questions are session. concludes for Tony queue. like turn closing no remarks. our

Tony Sarsam

performance share as chance a get you a next of as my chance the looking today's update this of opportunity to well just so Well to to with a little was quarter looking bit in future. Certainly personal participating thanks to meet background working to time third within fashion all to to great and and for forward this and the you call. It want I again get much on the speak. the you appreciate you Great. thank in forward you give

So with great that day. wish you I all a

Operator

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

now You may disconnect.

SpartanNash (SPTN) 12 Nov 202020 Q3 Earnings call transcript