SpartanNash Announces Third Quarter Fiscal 2020 Financial Results
Reports Third Quarter Retail Comparable Store Sales of 10.6%
Generates EPS of $0.56; Adjusted EPS Increased 133% to $0.70
Adjusted EBITDA increased 37.2% to $57.0 million
Updates Fiscal Year 2020 Outlook
GRAND RAPIDS, Mich.–(BUSINESS WIRE)–
SpartanNash Company (the “Company”) (Nasdaq: SPTN) today reported financial results for its 12-week third quarter ended October 3, 2020.
Third Quarter Fiscal 2020 Highlights
- Net sales growth of 3.1% to $2.06 billion from $2.00 billion in the prior year quarter, representing the eighteenth consecutive quarter of growth.
- Retail comparable store sales of 10.6% were positive for the fifth consecutive quarter.
- EPS of $0.56 per share, compared to a loss of $(0.01) per share in the prior year quarter; adjusted EPS of $0.70 per share, an increase of 133% over $0.30 per share in the prior year quarter.
- Adjusted EBITDA increase of 37.2%, to $57.0 million from $41.6 million in the prior year quarter.
- Subsequent to the end of the third quarter, the Company extended its commercial agreement with Amazon. In connection with this agreement, the Company issued stock warrants to a subsidiary of Amazon, subject to certain vesting conditions.
“In the past nine weeks since taking the CEO position I’ve visited a great number of our distribution centers and retail stores. The passion demonstrated by our associates is nothing short of inspirational,” said Tony Sarsam, President and Chief Executive Officer. “I am energized and excited about the profitable growth opportunities that lie ahead for our business. As I immerse further into our business, I will continue to assess our long-term strategy, focus on motivating our associates and recognizing their accomplishments, identifying opportunities to make investments to improve the efficiency and effectiveness of our supply chain, and evaluating how to best position SpartanNash to deliver shareholder value for years to come.”
Consolidated net sales for the third quarter increased $61.0 million, or 3.1%, to $2.06 billion from $2.00 billion in the prior year quarter. The increase in net sales was generated through higher sales attributable to increased consumer demand related to COVID-19 in the Company’s Retail and Food Distribution segments, as well as continued growth with existing Food Distribution customers, partially offset by the continued impact of domestic base access and commissary shopping restrictions associated with COVID-19 in the Military segment.
Gross profit for the third quarter was $324.8 million, or 15.8% of net sales, compared to $290.4 million, or 14.5% of net sales, in the prior year quarter. The improvement in the gross profit rate was driven by improvements in margin rates at all three segments, as well as an increase in the proportion of Retail and Food Distribution segment sales, which generate higher margin rates than the Military segment.
Reported operating expenses for the third quarter were $295.8 million, or 14.4% of net sales, compared to $274.6 million, or 13.7% of net sales, in the prior year quarter. The increase in expenses as a rate of sales compared to the prior year quarter was due to increased incentive compensation related to improved Company performance, a higher mix of Retail segment sales which have higher operating expense rates, higher supply chain expenses in the Food Distribution segment, and a $5.2 million increase in restructuring and asset impairment charges, partially offset by increased leverage of retail store labor expenses and other fixed costs due to the higher sales volume in the quarter.
The Company reported operating earnings of $29.0 million compared to $15.8 million in the prior year quarter. The increase was attributable to increased sales volume, as well as the changes in rates of margin and operating expenses previously mentioned, partially offset by higher impairment charges. Adjusted operating earnings(1) were $35.8 million compared to $20.3 million in the prior year quarter and are adjusted for the items detailed in Table 3.
Interest expense decreased $3.9 million from the prior year quarter due to multiple rate cuts implemented by the Federal Reserve during 2019 and in early 2020, as well as the Company’s pay down of the debt balance made possible by higher earnings and lower required investments in working capital. Postretirement benefit expense was favorable $10.1 million from cycling charges related to the termination of the Company’s pension plan in the prior year quarter.
The Company reported earnings from continuing operations of $20.0 million, or $0.56 per diluted share, compared to a loss from continuing operations of $0.3 million, or $0.01 per diluted share, in the prior year quarter. The improvement reflects the operating earnings and non-operating expense changes noted above. Adjusted earnings from continuing operations(2) for the third quarter were $25.1 million, or $0.70 per diluted share. Adjusted earnings from continuing operations for the prior year quarter were $10.9 million, or $0.30 per diluted share. A reconciliation of reported earnings from continuing operations to adjusted earnings from continuing operations is included at Table 4.
Adjusted EBITDA(3) increased $15.4 million, or 37.2%, to $57.0 million compared to $41.6 million in the prior year quarter due to factors mentioned above.
Please see the financial tables at the end of this press release for a reconciliation of each non-GAAP financial measure to the most directly comparable measure, prepared and presented in accordance with GAAP.
Segment Financial Results
Food Distribution
Net sales for Food Distribution increased $73.2 million, or 7.8%, to $1.01 billion from $0.94 billion in the prior year quarter. The increase was due to sales growth with existing customers, as well as incremental volume associated with increased consumer demand related to COVID-19, partially offset by the impact of the Company’s decision to exit its Fresh Production operations.
Reported operating earnings for Food Distribution were $9.2 million compared to $11.7 million in the prior year quarter. During the quarter, the Company made the decision to abandon a tradename within this segment to better align with the Company’s overall transportation operations and to provide a more integrated solution to its customers, resulting in a $7.0 million impairment of the associated indefinite-lived tradename asset. The decrease in reported operating earnings for Food Distribution was due to this asset impairment charge, as well as an increase in supply chain and corporate administrative expenses, partially offset by increased earnings due to the higher sales volume. Third quarter adjusted operating earnings(1) were $15.7 million compared to $15.5 million in the prior year quarter. Adjusted operating earnings exclude asset impairment and restructuring charges in both years and losses associated with the Fresh Kitchen operations in the prior year quarter.
Retail
Net sales for Retail increased $35.1 million, or 6.2%, to $596.7 million from $561.6 million in the prior year quarter primarily due to increased consumer demand related to COVID-19, as discussed above. Comparable store sales of 10.6% were partially offset by the impact of lower fuel sales, as well as store closures. During the quarter, the Company experienced more than 175% growth in its eCommerce business.
Reported operating earnings for Retail were $22.3 million compared to $6.7 million in the prior year quarter. The increase in reported operating earnings was due to the increase in sales volume, improvements in margin rates, including inventory shrink, and improved leverage of store labor. These favorable variances were partially offset by higher incentive compensation due to the improved segment performance. Adjusted operating earnings(1) were $22.6 million compared to $7.3 million in the prior year quarter and exclude merger/acquisition and integration expenses in the current year and restructuring charges in the prior year quarter.
Military Distribution
Net sales for Military Distribution decreased $47.2 million, or 9.5%, to $452.0 million from $499.2 million in the prior year quarter. Growth in private label and export sales were more than offset by the impact of domestic base access and commissary shopping restrictions associated with COVID-19, which have led to significant declines in Defense Commissary Agency sales as a whole.
The reported operating loss for Military Distribution was $2.5 million compared to $2.6 million in the prior year quarter. The change was driven by improved margin rates, partially offset by higher corporate administrative expenses, the impact of lower sales volumes and, to a lesser extent, increases in the rate of warehousing expenses. Adjusted operating loss(1) was $2.5 million for the quarter in both years.
Balance Sheet and Cash Flow
Cash flows provided by operating activities for the year-to-date period of fiscal 2020 were $223.8 million compared to $140.0 million in the prior year, driven by increased profitability and reductions in working capital. In 2020, the Company has generated $178.0 million in free cash flow(4) year-to-date, compared to $93.1 million in the prior year. The Company reduced net long-term debt(5) by $145.0 million year-to-date in fiscal 2020. The reduction in net long-term debt, combined with increased profitability, resulted in an improvement in the Company’s net long-term debt to adjusted EBITDA ratio over this period of time from 3.7x to 2.3x, calculated on a trailing thirteen periods basis.
Capital expenditures and IT capital(6) totaled $53.5 million in the year-to-date period compared to $46.9 million in the prior year.
Through the third quarter of fiscal 2020, the Company has declared $20.8 million in quarterly cash dividends equal to $0.1925 per common share. The Company also repurchased 860,752 shares for a total of $10.0 million in the first quarter of fiscal 2020, at an average price of $11.62 per share.
Outlook
For the 53-week fiscal year ending January 2, 2021, the Company is updating its annual outlook from what was previously provided on August 12, 2020 to reflect actual financial results, its expectations for the remainder of the fiscal year, and the forecasted impact of stock warrants, which were granted early in the fourth quarter.
For fiscal year 2020, the Company now anticipates adjusted earnings per share from continuing operations(7) of approximately $2.42 to $2.50 compared to its prior projection of $2.40 to $2.60. The Company’s updated guidance reflects the continued benefits of sales trends associated with COVID-19 and the related increase in consumer demand, offset by estimated non-cash stock warrant expense of $6.0 million to $7.0 million, or $0.13 to $0.15 per diluted share. Reported earnings per share from continuing operations are expected to range from $2.09 to $2.17 compared to its prior projection of $2.13 to $2.41.
The Company now expects fiscal 2020 adjusted EBITDA to range from $237.0 million to $242.0 million compared to its prior guidance of $232.0 million to $242.0 million.
The Company’s updated guidance now reflects capital expenditures and IT capital in the range of $80.0 million to $85.0 million for the fiscal year. Depreciation and amortization have been updated to a range of $88.0 million to $90.0 million. Interest expense is now expected to range from $18.0 million to $18.5 million. The Company’s updated guidance now reflects an adjusted effective tax rate of 23.5% to 24.0% and a reported effective tax rate of 13.0% to 13.5%.
Conference Call
A telephone conference call to discuss the Company’s third quarter 2020 financial results is scheduled for Thursday, November 12, 2020 at 8:00 a.m. ET. A live webcast of this conference call will be available on the Company’s website, www.spartannash.com/webcasts. Simply click on “For Investors” and follow the links to the live webcast. The webcast will remain available for replay on the Company’s website for approximately ten days.
About SpartanNash
SpartanNash (Nasdaq: SPTN) is a Fortune 400 company whose core businesses include distributing grocery products to a diverse group of independent and chain retailers, its corporate-owned retail stores and U.S. military commissaries and exchanges; as well as operating a premier fresh produce distribution network. SpartanNash serves customer locations in all 50 states and the District of Columbia, Europe, Cuba, Puerto Rico, Honduras, Bahrain, Djibouti and Egypt. SpartanNash currently operates 156 supermarkets, primarily under the banners of Family Fare, Martin’s Super Markets, D&W Fresh Market, VG’s Grocery and Dan’s Supermarket. Through its MDV military division, SpartanNash is a leading distributor of grocery products to U.S. military commissaries.
Forward-Looking Statements
This press release contains “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These include statements preceded by, followed by or that otherwise include the words “outlook,” “believe,” “anticipates,” “continue,” “expects,” “guidance,” “trend,” “on track,” “encouraged” or “plan” or similar expressions. The statements in the “Outlook” section of this press release are inherently forward looking. Forward-looking statements relating to expectations about future results or events are based upon information available to SpartanNash as of today’s date, and are not guarantees of the future performance of the Company, and actual results may vary materially from the results and expectations discussed. Additional risks and uncertainties include, but are not limited to, disruption associated with the COVID-19 pandemic and the Company’s ability to compete in the highly competitive grocery distribution, retail grocery, and military distribution industries. Additional information concerning these and other risks is contained in SpartanNash’s most recently filed Annual Report on Form 10-K, recent Current Reports on Form 8-K and other SEC filings. All subsequent written and oral forward-looking statements concerning SpartanNash, or other matters and attributable to SpartanNash or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above. SpartanNash does not undertake any obligation to publicly update any of these forward-looking statements to reflect events or circumstances that may arise after the date hereof.
(1) A reconciliation of operating earnings to adjusted operating earnings, a non-GAAP financial measure, is provided in Table 3 below.
(2) A reconciliation of earnings from continuing operations to adjusted earnings from continuing operations, a non-GAAP financial measure, is provided in Table 4 below.
(3) A reconciliation of net earnings to Adjusted EBITDA, a non-GAAP financial measure, is provided in Table 2 below.
(4) A reconciliation of net cash provided by operating activities to free cash flow, a non-GAAP financial measure, is provided in Table 6 below.
(5) A reconciliation of long-term debt and finance lease obligations to net long-term debt, a non-GAAP financial measure, is provided in Table 5 below.
(6) A reconciliation of purchases of property and equipment to capital expenditures and IT capital, a non-GAAP financial measure, is provided in Table 7 below.
(7) A reconciliation of projected earnings per share from continuing operations to adjusted earnings per share from continuing operations, a non-GAAP financial measure, is provided in Table 8 below.
SPARTANNASH COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) |
||||||||||||||||||||
|
12 Weeks Ended |
|
|
40 Weeks Ended |
|
|
||||||||||||||
|
October 3, |
|
|
October 5, |
|
|
October 3, |
|
|
October 5, |
|
|
||||||||
(In thousands, except per share amounts) |
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
||||||||
Net sales |
$ |
|
2,060,816 |
|
|
$ |
|
1,999,808 |
|
|
$ |
|
7,101,373 |
|
|
$ |
|
6,538,112 |
|
|
Cost of sales |
|
|
1,735,994 |
|
|
|
|
1,709,447 |
|
|
|
|
6,014,610 |
|
|
|
|
5,581,015 |
|
|
Gross profit |
|
|
324,822 |
|
|
|
|
290,361 |
|
|
|
|
1,086,763 |
|
|
|
|
957,097 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
289,039 |
|
|
|
|
273,286 |
|
|
|
|
981,066 |
|
|
|
|
900,160 |
|
|
Merger/acquisition and integration |
|
|
242 |
|
|
|
|
— |
|
|
|
|
242 |
|
|
|
|
1,364 |
|
|
Restructuring charges and asset impairment |
|
|
6,543 |
|
|
|
|
1,296 |
|
|
|
|
20,455 |
|
|
|
|
10,215 |
|
|
Total operating expenses |
|
|
295,824 |
|
|
|
|
274,582 |
|
|
|
|
1,001,763 |
|
|
|
|
911,739 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings |
|
|
28,998 |
|
|
|
|
15,779 |
|
|
|
|
85,000 |
|
|
|
|
45,358 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expenses and (income) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
3,522 |
|
|
|
|
7,375 |
|
|
|
|
14,810 |
|
|
|
|
27,952 |
|
|
Loss on debt extinguishment |
|
|
— |
|
|
|
|
329 |
|
|
|
|
— |
|
|
|
|
329 |
|
|
Postretirement benefit expense (income) |
|
|
101 |
|
|
|
|
10,221 |
|
|
|
|
(597 |
) |
|
|
|
19,677 |
|
|
Other, net |
|
|
(141 |
) |
|
|
|
(180 |
) |
|
|
|
(547 |
) |
|
|
|
(1,071 |
) |
|
Total other expenses, net |
|
|
3,482 |
|
|
|
|
17,745 |
|
|
|
|
13,666 |
|
|
|
|
46,887 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) before income taxes and discontinued operations |
|
|
25,516 |
|
|
|
|
(1,966 |
) |
|
|
|
71,334 |
|
|
|
|
(1,529 |
) |
|
Income tax expense (benefit) |
|
|
5,564 |
|
|
|
|
(1,656 |
) |
|
|
|
7,513 |
|
|
|
|
(1,973 |
) |
|
Earnings (loss) from continuing operations |
|
|
19,952 |
|
|
|
|
(310 |
) |
|
|
|
63,821 |
|
|
|
|
444 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, net of taxes |
|
|
— |
|
|
|
|
(27 |
) |
|
|
|
— |
|
|
|
|
(126 |
) |
|
Net earnings (loss) |
$ |
|
19,952 |
|
|
$ |
|
(337 |
) |
|
$ |
|
63,821 |
|
|
$ |
|
318 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations |
$ |
|
0.56 |
|
|
$ |
|
(0.01 |
) |
|
$ |
|
1.78 |
|
|
$ |
|
0.01 |
|
|
Loss from discontinued operations |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
Net earnings (loss) |
$ |
|
0.56 |
|
|
$ |
|
(0.01 |
) |
|
$ |
|
1.78 |
|
|
$ |
|
0.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations |
$ |
|
0.56 |
|
|
$ |
|
(0.01 |
) |
|
$ |
|
1.78 |
|
|
$ |
|
0.01 |
|
|
Loss from discontinued operations |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
Net earnings (loss) |
$ |
|
0.56 |
|
|
$ |
|
(0.01 |
) |
|
$ |
|
1.78 |
|
|
$ |
|
0.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
35,730 |
|
|
|
|
36,340 |
|
|
|
|
35,900 |
|
|
|
|
36,248 |
|
|
Diluted |
|
|
35,732 |
|
|
|
|
36,340 |
|
|
|
|
35,900 |
|
|
|
|
36,248 |
|
|
SPARTANNASH COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) |
|||||||||
|
October 3, |
|
|
December 28, |
|
||||
(In thousands) |
2020 |
|
|
2019 |
|
||||
Assets |
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
|
26,903 |
|
|
$ |
|
24,172 |
|
Accounts and notes receivable, net |
|
|
387,114 |
|
|
|
|
345,320 |
|
Inventories, net |
|
|
586,351 |
|
|
|
|
537,212 |
|
Prepaid expenses and other current assets |
|
|
73,192 |
|
|
|
|
58,775 |
|
Property and equipment held for sale |
|
|
21,942 |
|
|
|
|
31,203 |
|
Total current assets |
|
|
1,095,502 |
|
|
|
|
996,682 |
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
562,326 |
|
|
|
|
615,816 |
|
Goodwill |
|
|
181,035 |
|
|
|
|
181,035 |
|
Intangible assets, net |
|
|
119,039 |
|
|
|
|
130,434 |
|
Operating lease assets |
|
|
269,025 |
|
|
|
|
268,982 |
|
Other assets, net |
|
|
94,632 |
|
|
|
|
82,660 |
|
|
|
|
|
|
|
|
|
|
|
Total assets |
$ |
|
2,321,559 |
|
|
$ |
|
2,275,609 |
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
Accounts payable |
$ |
|
501,099 |
|
|
$ |
|
405,370 |
|
Accrued payroll and benefits |
|
|
91,001 |
|
|
|
|
59,680 |
|
Other accrued expenses |
|
|
53,439 |
|
|
|
|
51,295 |
|
Current portion of operating lease liabilities |
|
|
43,705 |
|
|
|
|
42,440 |
|
Current portion of long-term debt and finance lease liabilities |
|
|
5,338 |
|
|
|
|
6,349 |
|
Total current liabilities |
|
|
694,582 |
|
|
|
|
565,134 |
|
|
|
|
|
|
|
|
|
|
|
Long-term liabilities |
|
|
|
|
|
|
|
|
|
Deferred income taxes |
|
|
52,952 |
|
|
|
|
43,111 |
|
Operating lease liabilities |
|
|
261,621 |
|
|
|
|
267,350 |
|
Other long-term liabilities |
|
|
48,033 |
|
|
|
|
30,272 |
|
Long-term debt and finance lease liabilities |
|
|
540,920 |
|
|
|
|
682,204 |
|
Total long-term liabilities |
|
|
903,526 |
|
|
|
|
1,022,937 |
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity |
|
|
|
|
|
|
|
|
|
Common stock, voting, no par value; 100,000 shares authorized; 35,871 and 36,351 shares outstanding |
|
|
484,612 |
|
|
|
|
490,233 |
|
Preferred stock, no par value, 10,000 shares authorized; no shares outstanding |
|
|
— |
|
|
|
|
— |
|
Accumulated other comprehensive loss |
|
|
(1,479 |
) |
|
|
|
(1,600 |
) |
Retained earnings |
|
|
240,318 |
|
|
|
|
198,905 |
|
Total shareholders’ equity |
|
|
723,451 |
|
|
|
|
687,538 |
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders’ equity |
$ |
|
2,321,559 |
|
|
$ |
|
2,275,609 |
|
SPARTANNASH COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
|||||||||
|
40 Weeks Ended |
|
|||||||
(In thousands) |
October 3, 2020 |
|
|
October 5, 2019 |
|
||||
Cash flow activities |
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
$ |
|
223,832 |
|
|
$ |
|
140,034 |
|
Net cash used in investing activities |
|
|
(35,536 |
) |
|
|
|
(117,645 |
) |
Net cash used in financing activities |
|
|
(185,565 |
) |
|
|
|
(17,385 |
) |
Net cash used in discontinued operations |
|
|
— |
|
|
|
|
(153 |
) |
Net increase in cash and cash equivalents |
|
|
2,731 |
|
|
|
|
4,851 |
|
Cash and cash equivalents at beginning of the period |
|
|
24,172 |
|
|
|
|
18,585 |
|
Cash and cash equivalents at end of the period |
$ |
|
26,903 |
|
|
$ |
|
23,436 |
|
SPARTANNASH COMPANY AND SUBSIDIARIES SUPPLEMENTAL FINANCIAL DATA Table 1: Net Sales and Operating Earnings (Loss) by Segment (Unaudited) |
|||||||||||||||||||||||||||||||
|
12 Weeks Ended |
|
|
40 Weeks Ended |
|
||||||||||||||||||||||||||
(In thousands) |
October 3, 2020 |
|
|
October 5, 2019 |
|
|
October 3, 2020 |
|
|
October 5, 2019 |
|
||||||||||||||||||||
Food Distribution Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
|
1,012,204 |
|
|
49.1 |
% |
|
$ |
|
939,047 |
|
|
47.0 |
% |
|
$ |
|
3,471,561 |
|
|
48.9 |
% |
|
$ |
|
3,043,668 |
|
|
46.6 |
% |
Operating earnings |
|
|
9,191 |
|
|
|
|
|
|
|
11,699 |
|
|
|
|
|
|
|
34,990 |
|
|
|
|
|
|
|
36,564 |
|
|
|
|
Retail Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
|
596,659 |
|
|
29.0 |
% |
|
|
|
561,605 |
|
|
28.1 |
% |
|
|
|
2,010,483 |
|
|
28.3 |
% |
|
|
|
1,833,347 |
|
|
28.0 |
% |
Operating earnings |
|
|
22,318 |
|
|
|
|
|
|
|
6,726 |
|
|
|
|
|
|
|
59,416 |
|
|
|
|
|
|
|
14,600 |
|
|
|
|
Military Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
|
451,953 |
|
|
21.9 |
% |
|
|
|
499,156 |
|
|
24.9 |
% |
|
|
|
1,619,329 |
|
|
22.8 |
% |
|
|
|
1,661,097 |
|
|
25.4 |
% |
Operating loss |
|
|
(2,511 |
) |
|
|
|
|
|
|
(2,646 |
) |
|
|
|
|
|
|
(9,406 |
) |
|
|
|
|
|
|
(5,806 |
) |
|
|
|
Total: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
|
2,060,816 |
|
|
100.0 |
% |
|
$ |
|
1,999,808 |
|
|
100.0 |
% |
|
$ |
|
7,101,373 |
|
|
100.0 |
% |
|
$ |
|
6,538,112 |
|
|
100.0 |
% |
Operating earnings |
|
|
28,998 |
|
|
|
|
|
|
|
15,779 |
|
|
|
|
|
|
|
85,000 |
|
|
|
|
|
|
|
45,358 |
|
|
|
|
Non-GAAP Financial Measures
In addition to reporting financial results in accordance with GAAP, the Company also provides information regarding Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“adjusted EBITDA”), adjusted operating earnings, adjusted earnings from continuing operations, total net long-term debt, free cash flow and projected adjusted earnings per diluted share from continuing operations. These are non-GAAP financial measures, as defined below, and are used by management to allocate resources, assess performance against its peers and evaluate overall performance. The Company believes these measures provide useful information for both management and its investors. The Company believes these non-GAAP measures are useful to investors because they provide additional understanding of the trends and special circumstances that affect its business. These measures provide useful supplemental information that helps investors to establish a basis for expected performance and the ability to evaluate actual results against that expectation. The measures, when considered in connection with GAAP results, can be used to assess the overall performance of the Company as well as assess the Company’s performance against its peers. These measures are also used as a basis for certain compensation programs sponsored by the Company. In addition, securities analysts, fund managers and other shareholders and stakeholders that communicate with the Company request its financial results in these adjusted formats.
Current year adjusted operating earnings, adjusted earnings from continuing operations, and adjusted EBITDA exclude “Fresh Cut operating losses” subsequent to the decision to exit these operations during the first quarter, severance associated with cost reduction initiatives, and fees paid to a third-party advisory firm associated with Project One Team, the Company’s initiative to drive growth while increasing efficiency and reducing costs. Pension termination income related to a refund from the annuity provider associated with the final reconciliation of participant data is excluded from adjusted earnings from continuing operations. These items are considered “non-operational” or “non-core” in nature. Prior year adjusted operating earnings, adjusted earnings from continuing operations, and adjusted EBITDA exclude “Fresh Kitchen operating losses” subsequent to the decision to exit these operations at the beginning of the third quarter, costs associated with organizational realignment, which include significant changes to the Company’s management team, and fees paid to a third-party advisory firm associated with Project One Team, the Company’s initiative to drive growth while increasing efficiency and reducing costs. Pension termination costs, primarily related to non-operating settlement expense associated with the distribution of pension assets, are excluded from adjusted earnings from continuing operations, and to a lesser extent adjusted operating earnings.
Table 2: Reconciliation of Net Earnings to Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) (A Non-GAAP Financial Measure) (Unaudited) |
|||||||||||||||||||
|
12 Weeks Ended |
|
|
40 Weeks Ended |
|
||||||||||||||
(In thousands) |
October 3, 2020 |
|
|
October 5, 2019 |
|
|
October 3, 2020 |
|
|
October 5, 2019 |
|
||||||||
Net earnings (loss) |
$ |
|
19,952 |
|
|
$ |
|
(337 |
) |
|
$ |
|
63,821 |
|
|
$ |
|
318 |
|
Loss from discontinued operations, net of tax |
|
|
— |
|
|
|
|
27 |
|
|
|
|
— |
|
|
|
|
126 |
|
Income tax expense (benefit) |
|
|
5,564 |
|
|
|
|
(1,656 |
) |
|
|
|
7,513 |
|
|
|
|
(1,973 |
) |
Other expenses, net |
|
|
3,482 |
|
|
|
|
17,745 |
|
|
|
|
13,666 |
|
|
|
|
46,887 |
|
Operating earnings |
|
|
28,998 |
|
|
|
|
15,779 |
|
|
|
|
85,000 |
|
|
|
|
45,358 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIFO expense |
|
|
387 |
|
|
|
|
1,268 |
|
|
|
|
3,158 |
|
|
|
|
3,761 |
|
Depreciation and amortization |
|
|
20,858 |
|
|
|
|
20,351 |
|
|
|
|
68,611 |
|
|
|
|
67,513 |
|
Merger/acquisition and integration |
|
|
242 |
|
|
|
|
— |
|
|
|
|
242 |
|
|
|
|
1,364 |
|
Restructuring, asset impairment and other charges |
|
|
6,543 |
|
|
|
|
1,296 |
|
|
|
|
20,455 |
|
|
|
|
10,215 |
|
Fresh Cut operating losses |
|
|
— |
|
|
|
|
— |
|
|
|
|
2,262 |
|
|
|
|
— |
|
Fresh Kitchen operating losses |
|
|
— |
|
|
|
|
2,204 |
|
|
|
|
— |
|
|
|
|
2,204 |
|
Stock-based compensation |
|
|
1,033 |
|
|
|
|
638 |
|
|
|
|
5,181 |
|
|
|
|
6,735 |
|
Non-cash rent |
|
|
(1,188 |
) |
|
|
|
(1,082 |
) |
|
|
|
(3,981 |
) |
|
|
|
(4,542 |
) |
Costs associated with Project One Team |
|
|
— |
|
|
|
|
— |
|
|
|
|
493 |
|
|
|
|
5,428 |
|
Organizational realignment costs |
|
|
— |
|
|
|
|
935 |
|
|
|
|
— |
|
|
|
|
1,812 |
|
Severance associated with cost reduction initiatives |
|
|
40 |
|
|
|
|
— |
|
|
|
|
5,121 |
|
|
|
|
— |
|
Loss on disposal of assets |
|
|
35 |
|
|
|
|
— |
|
|
|
|
3,462 |
|
|
|
|
— |
|
Other non-cash charges |
|
|
94 |
|
|
|
|
187 |
|
|
|
|
193 |
|
|
|
|
710 |
|
Adjusted EBITDA |
$ |
|
57,042 |
|
|
$ |
|
41,576 |
|
|
$ |
|
190,197 |
|
|
$ |
|
140,558 |
|
Table 2: Reconciliation of Net Earnings to Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization, continued (Adjusted EBITDA) (A Non-GAAP Financial Measure) (Unaudited) |
|||||||||||||||||||
|
12 Weeks Ended |
|
|
40 Weeks Ended |
|
||||||||||||||
(In thousands) |
October 3, 2020 |
|
|
October 5, 2019 |
|
|
October 3, 2020 |
|
|
October 5, 2019 |
|
||||||||
Food Distribution: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings |
$ |
|
9,191 |
|
|
$ |
|
11,699 |
|
|
$ |
|
34,990 |
|
|
$ |
|
36,564 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIFO expense |
|
|
295 |
|
|
|
|
639 |
|
|
|
|
1,684 |
|
|
|
|
1,869 |
|
Depreciation and amortization |
|
|
7,413 |
|
|
|
|
7,390 |
|
|
|
|
24,561 |
|
|
|
|
25,368 |
|
Merger/acquisition and integration |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
(130 |
) |
Restructuring, asset impairment and other charges |
|
|
6,538 |
|
|
|
|
1,043 |
|
|
|
|
19,222 |
|
|
|
|
10,724 |
|
Fresh Cut operating losses |
|
|
— |
|
|
|
|
— |
|
|
|
|
2,262 |
|
|
|
|
— |
|
Fresh Kitchen operating losses |
|
|
— |
|
|
|
|
2,204 |
|
|
|
|
— |
|
|
|
|
2,204 |
|
Stock-based compensation |
|
|
522 |
|
|
|
|
302 |
|
|
|
|
2,524 |
|
|
|
|
3,319 |
|
Non-cash rent |
|
|
31 |
|
|
|
|
147 |
|
|
|
|
125 |
|
|
|
|
353 |
|
Costs associated with Project One Team |
|
|
— |
|
|
|
|
— |
|
|
|
|
265 |
|
|
|
|
2,877 |
|
Organizational realignment costs |
|
|
— |
|
|
|
|
495 |
|
|
|
|
— |
|
|
|
|
960 |
|
Severance associated with cost reduction initiatives |
|
|
— |
|
|
|
|
— |
|
|
|
|
3,143 |
|
|
|
|
— |
|
(Gain) loss on disposal of assets |
|
|
(6 |
) |
|
|
|
— |
|
|
|
|
1,613 |
|
|
|
|
— |
|
Other non-cash charges |
|
|
52 |
|
|
|
|
14 |
|
|
|
|
103 |
|
|
|
|
391 |
|
Adjusted EBITDA |
$ |
|
24,036 |
|
|
$ |
|
23,933 |
|
|
$ |
|
90,492 |
|
|
$ |
|
84,499 |
|
Retail: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings |
$ |
|
22,318 |
|
|
$ |
|
6,726 |
|
|
$ |
|
59,416 |
|
|
$ |
|
14,600 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIFO (gain) expense |
|
|
(15 |
) |
|
|
|
257 |
|
|
|
|
586 |
|
|
|
|
858 |
|
Depreciation and amortization |
|
|
10,489 |
|
|
|
|
10,197 |
|
|
|
|
34,570 |
|
|
|
|
33,048 |
|
Merger/acquisition and integration |
|
|
242 |
|
|
|
|
— |
|
|
|
|
242 |
|
|
|
|
1,494 |
|
Restructuring charges (gains) and asset impairment |
|
|
5 |
|
|
|
|
253 |
|
|
|
|
1,233 |
|
|
|
|
(509 |
) |
Stock-based compensation |
|
|
364 |
|
|
|
|
222 |
|
|
|
|
1,756 |
|
|
|
|
2,325 |
|
Non-cash rent |
|
|
(1,134 |
) |
|
|
|
(1,149 |
) |
|
|
|
(3,818 |
) |
|
|
|
(4,612 |
) |
Costs associated with Project One Team |
|
|
— |
|
|
|
|
— |
|
|
|
|
164 |
|
|
|
|
1,845 |
|
Organizational realignment costs |
|
|
— |
|
|
|
|
318 |
|
|
|
|
— |
|
|
|
|
616 |
|
Severance associated with cost reduction initiatives |
|
|
9 |
|
|
|
|
— |
|
|
|
|
1,441 |
|
|
|
|
— |
|
Loss on disposal of assets |
|
|
34 |
|
|
|
|
— |
|
|
|
|
1,905 |
|
|
|
|
— |
|
Other non-cash charges |
|
|
30 |
|
|
|
|
243 |
|
|
|
|
64 |
|
|
|
|
410 |
|
Adjusted EBITDA |
$ |
|
32,342 |
|
|
$ |
|
17,067 |
|
|
$ |
|
97,559 |
|
|
$ |
|
50,075 |
|
Military: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
$ |
|
(2,511 |
) |
|
$ |
|
(2,646 |
) |
|
$ |
|
(9,406 |
) |
|
$ |
|
(5,806 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIFO expense |
|
|
107 |
|
|
|
|
372 |
|
|
|
|
888 |
|
|
|
|
1,034 |
|
Depreciation and amortization |
|
|
2,956 |
|
|
|
|
2,764 |
|
|
|
|
9,480 |
|
|
|
|
9,097 |
|
Stock-based compensation |
|
|
147 |
|
|
|
|
114 |
|
|
|
|
901 |
|
|
|
|
1,091 |
|
Non-cash rent |
|
|
(85 |
) |
|
|
|
(80 |
) |
|
|
|
(288 |
) |
|
|
|
(283 |
) |
Costs associated with Project One Team |
|
|
— |
|
|
|
|
— |
|
|
|
|
64 |
|
|
|
|
706 |
|
Organizational realignment costs |
|
|
— |
|
|
|
|
122 |
|
|
|
|
— |
|
|
|
|
236 |
|
Severance associated with cost reduction initiatives |
|
|
31 |
|
|
|
|
— |
|
|
|
|
537 |
|
|
|
|
— |
|
Loss (gain) on disposal of assets |
|
|
7 |
|
|
|
|
— |
|
|
|
|
(56 |
) |
|
|
|
— |
|
Other non-cash charges (gains) |
|
|
12 |
|
|
|
|
(70 |
) |
|
|
|
26 |
|
|
|
|
(91 |
) |
Adjusted EBITDA |
$ |
|
664 |
|
|
$ |
|
576 |
|
|
$ |
|
2,146 |
|
|
$ |
|
5,984 |
|
Notes: Adjusted EBITDA is a non-GAAP operating financial measure that the Company defines as net earnings plus interest, discontinued operations, depreciation and amortization, and other non-cash items including deferred (stock) compensation, the LIFO provision, as well as adjustments for items that do not reflect the ongoing operating activities of the Company and costs associated with the closing of operational locations.
Adjusted EBITDA and adjusted EBITDA by segment are not measures of performance under accounting principles generally accepted in the United States of America and should not be considered as a substitute for net earnings, cash flows from operating activities and other income or cash flow statement data. The Company’s definitions of adjusted EBITDA and adjusted EBITDA by segment may not be identical to similarly titled measures reported by other companies.
Table 3: Reconciliation of Operating Earnings to Adjusted Operating Earnings (A Non-GAAP Financial Measure) (Unaudited) |
|||||||||||||||||||
|
12 Weeks Ended |
|
|
40 Weeks Ended |
|
||||||||||||||
(In thousands) |
October 3, 2020 |
|
|
October 5, 2019 |
|
|
October 3, 2020 |
|
|
October 5, 2019 |
|
||||||||
Operating earnings |
$ |
|
28,998 |
|
|
$ |
|
15,779 |
|
|
$ |
|
85,000 |
|
|
$ |
|
45,358 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger/acquisition and integration |
|
|
242 |
|
|
|
|
— |
|
|
|
|
242 |
|
|
|
|
1,364 |
|
Restructuring, asset impairment and other |
|
|
6,543 |
|
|
|
|
1,296 |
|
|
|
|
20,455 |
|
|
|
|
10,215 |
|
Fresh Cut operating losses |
|
|
— |
|
|
|
|
— |
|
|
|
|
2,262 |
|
|
|
|
— |
|
Fresh Kitchen operating losses |
|
|
— |
|
|
|
|
2,204 |
|
|
|
|
— |
|
|
|
|
2,204 |
|
Costs associated with Project One Team |
|
|
— |
|
|
|
|
— |
|
|
|
|
493 |
|
|
|
|
5,428 |
|
Organizational realignment costs |
|
|
— |
|
|
|
|
935 |
|
|
|
|
— |
|
|
|
|
1,812 |
|
Expenses associated with tax planning |
|
|
(15 |
) |
|
|
|
— |
|
|
|
|
82 |
|
|
|
|
— |
|
Pension termination |
|
|
— |
|
|
|
|
28 |
|
|
|
|
— |
|
|
|
|
48 |
|
Severance associated with cost reduction initiatives |
|
|
40 |
|
|
|
|
43 |
|
|
|
|
5,121 |
|
|
|
|
484 |
|
Adjusted operating earnings |
$ |
|
35,808 |
|
|
$ |
|
20,285 |
|
|
$ |
|
113,655 |
|
|
$ |
|
66,913 |
|
Reconciliation of operating earnings (loss) to adjusted operating earnings (loss) by segment: |
|
||||||||||||||||||
Food Distribution: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings |
$ |
|
9,191 |
|
|
$ |
|
11,699 |
|
|
$ |
|
34,990 |
|
|
$ |
|
36,564 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger/acquisition and integration |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
(130 |
) |
Restructuring, asset impairment and other |
|
|
6,538 |
|
|
|
|
1,043 |
|
|
|
|
19,222 |
|
|
|
|
10,724 |
|
Fresh Cut operating losses |
|
|
— |
|
|
|
|
— |
|
|
|
|
2,262 |
|
|
|
|
— |
|
Fresh Kitchen operating losses |
|
|
— |
|
|
|
|
2,204 |
|
|
|
|
— |
|
|
|
|
2,204 |
|
Costs associated with Project One Team |
|
|
— |
|
|
|
|
— |
|
|
|
|
265 |
|
|
|
|
2,877 |
|
Organizational realignment costs |
|
|
— |
|
|
|
|
495 |
|
|
|
|
— |
|
|
|
|
960 |
|
Expenses associated with tax planning |
|
|
(8 |
) |
|
|
|
— |
|
|
|
|
44 |
|
|
|
|
— |
|
Pension termination |
|
|
— |
|
|
|
|
15 |
|
|
|
|
— |
|
|
|
|
26 |
|
Severance associated with cost reduction initiatives |
|
|
— |
|
|
|
|
31 |
|
|
|
|
3,143 |
|
|
|
|
392 |
|
Adjusted operating earnings |
$ |
|
15,721 |
|
|
$ |
|
15,487 |
|
|
$ |
|
59,926 |
|
|
$ |
|
53,617 |
|
Retail: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings |
$ |
|
22,318 |
|
|
$ |
|
6,726 |
|
|
$ |
|
59,416 |
|
|
$ |
|
14,600 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger/acquisition and integration |
|
|
242 |
|
|
|
|
— |
|
|
|
|
242 |
|
|
|
|
1,494 |
|
Restructuring charges (gains) and asset impairment |
|
|
5 |
|
|
|
|
253 |
|
|
|
|
1,233 |
|
|
|
|
(509 |
) |
Costs associated with Project One Team |
|
|
— |
|
|
|
|
— |
|
|
|
|
164 |
|
|
|
|
1,845 |
|
Organizational realignment costs |
|
|
— |
|
|
|
|
318 |
|
|
|
|
— |
|
|
|
|
616 |
|
Expenses associated with tax planning |
|
|
(5 |
) |
|
|
|
— |
|
|
|
|
27 |
|
|
|
|
— |
|
Pension termination |
|
|
— |
|
|
|
|
10 |
|
|
|
|
— |
|
|
|
|
17 |
|
Severance associated with cost reduction initiatives |
|
|
9 |
|
|
|
|
12 |
|
|
|
|
1,441 |
|
|
|
|
83 |
|
Adjusted operating earnings |
$ |
|
22,569 |
|
|
$ |
|
7,319 |
|
|
$ |
|
62,523 |
|
|
$ |
|
18,146 |
|
Military: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
$ |
|
(2,511 |
) |
|
$ |
|
(2,646 |
) |
|
$ |
|
(9,406 |
) |
|
$ |
|
(5,806 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs associated with Project One Team |
|
|
— |
|
|
|
|
— |
|
|
|
|
64 |
|
|
|
|
706 |
|
Organizational realignment costs |
|
|
— |
|
|
|
|
122 |
|
|
|
|
— |
|
|
|
|
236 |
|
Expenses associated with tax planning |
|
|
(2 |
) |
|
|
|
— |
|
|
|
|
11 |
|
|
|
|
— |
|
Pension termination |
|
|
— |
|
|
|
|
3 |
|
|
|
|
— |
|
|
|
|
5 |
|
Severance associated with cost reduction initiatives |
|
|
31 |
|
|
|
|
— |
|
|
|
|
537 |
|
|
|
|
9 |
|
Adjusted operating loss |
$ |
|
(2,482 |
) |
|
$ |
|
(2,521 |
) |
|
$ |
|
(8,794 |
) |
|
$ |
|
(4,850 |
) |
Notes: Adjusted operating earnings is a non-GAAP operating financial measure that the Company defines as operating earnings plus or minus adjustments for items that do not reflect the ongoing operating activities of the Company and costs associated with the closing of operational locations.
Adjusted operating earnings is not a measure of performance under accounting principles generally accepted in the United States of America and should not be considered as a substitute for operating earnings, cash flows from operating activities and other income or cash flow statement data. The Company’s definition of adjusted operating earnings may not be identical to similarly titled measures reported by other companies.
Table 4: Reconciliation of Earnings (loss) from Continuing Operations to Adjusted Earnings from Continuing Operations (A Non-GAAP Financial Measure) (Unaudited) |
||||||||||||||||||||
|
12 Weeks Ended |
|
|
|||||||||||||||||
|
October 3, 2020 |
|
|
October 5, 2019 |
|
|
||||||||||||||
|
|
|
|
per diluted |
|
|
|
|
|
per diluted |
|
|
||||||||
(In thousands, except per share amounts) |
Earnings |
|
|
share |
|
|
Earnings |
|
|
share |
|
|
||||||||
Earnings (loss) from continuing operations |
$ |
|
19,952 |
|
|
$ |
|
0.56 |
|
|
$ |
|
(310 |
) |
|
$ |
|
(0.01 |
) |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger/acquisition and integration |
|
|
242 |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
Restructuring, asset impairment and other |
|
|
6,543 |
|
|
|
|
|
|
|
|
|
1,296 |
|
|
|
|
|
|
|
Fresh Kitchen operating losses |
|
|
— |
|
|
|
|
|
|
|
|
|
2,204 |
|
|
|
|
|
|
|
Organizational realignment costs |
|
|
— |
|
|
|
|
|
|
|
|
|
935 |
|
|
|
|
|
|
|
Loss on debt extinguishment |
|
|
— |
|
|
|
|
|
|
|
|
|
329 |
|
|
|
|
|
|
|
Severance associated with cost reduction initiatives |
|
|
40 |
|
|
|
|
|
|
|
|
|
43 |
|
|
|
|
|
|
|
Expenses associated with tax planning |
|
|
(15 |
) |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
Pension termination |
|
|
— |
|
|
|
|
|
|
|
|
|
10,159 |
|
|
|
|
|
|
|
Total adjustments |
|
|
6,810 |
|
|
|
|
|
|
|
|
|
14,966 |
|
|
|
|
|
|
|
Income tax effect on adjustments (a) |
|
|
(1,830 |
) |
|
|
|
|
|
|
|
|
(3,751 |
) |
|
|
|
|
|
|
Impact of CARES Act (b) |
|
|
212 |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
Total adjustments, net of taxes |
|
|
5,192 |
|
|
|
|
0.14 |
* |
|
|
11,215 |
|
|
|
|
0.31 |
|
|
|
Adjusted earnings from continuing operations |
$ |
|
25,144 |
|
|
$ |
|
0.70 |
|
|
$ |
|
10,905 |
|
|
$ |
|
0.30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40 Weeks Ended |
|
|
|||||||||||||||||
|
October 3, 2020 |
|
|
October 5, 2019 |
|
|
||||||||||||||
|
|
|
|
per diluted |
|
|
|
|
|
per diluted |
|
|
||||||||
(In thousands, except per share amounts) |
Earnings |
|
|
share |
|
|
Earnings |
|
|
share |
|
|
||||||||
Earnings from continuing operations |
$ |
|
63,821 |
|
|
$ |
|
1.78 |
|
|
$ |
|
444 |
|
|
$ |
|
0.01 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger/acquisition and integration |
|
|
242 |
|
|
|
|
|
|
|
|
|
1,364 |
|
|
|
|
|
|
|
Restructuring, asset impairment and other |
|
|
20,455 |
|
|
|
|
|
|
|
|
|
10,215 |
|
|
|
|
|
|
|
Fresh Cut operating losses |
|
|
2,262 |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
Fresh Kitchen operating losses |
|
|
— |
|
|
|
|
|
|
|
|
|
2,204 |
|
|
|
|
|
|
|
Costs associated with Project One Team |
|
|
493 |
|
|
|
|
|
|
|
|
|
5,428 |
|
|
|
|
|
|
|
Organizational realignment costs |
|
|
— |
|
|
|
|
|
|
|
|
|
1,812 |
|
|
|
|
|
|
|
Loss on debt extinguishment |
|
|
— |
|
|
|
|
|
|
|
|
|
329 |
|
|
|
|
|
|
|
Severance associated with cost reduction initiatives |
|
|
5,121 |
|
|
|
|
|
|
|
|
|
484 |
|
|
|
|
|
|
|
Expenses associated with tax planning |
|
|
82 |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
Pension termination |
|
|
(1,004 |
) |
|
|
|
|
|
|
|
|
19,510 |
|
|
|
|
|
|
|
Total adjustments |
|
|
27,651 |
|
|
|
|
|
|
|
|
|
41,346 |
|
|
|
|
|
|
|
Income tax effect on adjustments (a) |
|
|
(6,827 |
) |
|
|
|
|
|
|
|
|
(10,166 |
) |
|
|
|
|
|
|
Impact of CARES Act (b) |
|
|
(9,298 |
) |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
Total adjustments, net of taxes |
|
|
11,526 |
|
|
|
|
0.32 |
|
|
|
|
31,180 |
|
|
|
|
0.86 |
|
|
Adjusted earnings from continuing operations |
$ |
|
75,347 |
|
|
$ |
|
2.10 |
|
|
$ |
|
31,624 |
|
|
$ |
|
0.87 |
|
|
* Includes rounding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
The income tax effect on adjustments is computed by applying the applicable tax rate to the adjustments. |
|
(b) |
Represents tax impacts attributable to the Coronavirus Aid, Relief and Economic Security (“CARES”) Act, primarily related to additional deductions and the utilization of net operating loss carrybacks. |
Notes: Adjusted earnings from continuing operations is a non-GAAP operating financial measure that the Company defines as earnings from continuing operations plus or minus adjustments for items that do not reflect the ongoing operating activities of the Company and costs associated with the closing of operational locations.
Adjusted earnings from continuing operations is not a measure of performance under accounting principles generally accepted in the United States of America and should not be considered as a substitute for net earnings, cash flows from operating activities and other income or cash flow statement data. The Company’s definition of adjusted earnings from continuing operations may not be identical to similarly titled measures reported by other companies.
Table 5: Reconciliation of Long-Term Debt and Finance Lease Obligations to Net Long-Term Debt (A Non-GAAP Financial Measure) (Unaudited) |
|||||||||
|
October 3, |
|
|
December 28, |
|
||||
(In thousands) |
2020 |
|
|
2019 |
|
||||
Current portion of long-term debt and finance lease liabilities |
$ |
|
5,338 |
|
|
$ |
|
6,349 |
|
Long-term debt and finance lease liabilities |
|
|
540,920 |
|
|
|
|
682,204 |
|
Total debt |
|
|
546,258 |
|
|
|
|
688,553 |
|
Cash and cash equivalents |
|
|
(26,903 |
) |
|
|
|
(24,172 |
) |
Net long-term debt |
$ |
|
519,355 |
|
|
$ |
|
664,381 |
|
Notes: Net long-term debt is a non-GAAP financial measure that is defined as long-term debt and finance lease obligations plus current maturities of long-term debt and finance lease obligations less cash and cash equivalents. The Company believes both management and its investors find the information useful because it reflects the amount of long-term debt obligations that are not covered by available cash and temporary investments. Net long-term debt is not a substitute for GAAP financial measures and may differ from similarly titled measures of other companies.
Table 6: Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow (A Non-GAAP Financial Measure) (Unaudited) |
|||||||||
|
40 Weeks Ended |
|
|||||||
(In thousands) |
October 3, 2020 |
|
|
October 5, 2019 |
|
||||
Net cash provided by operating activities |
$ |
|
223,832 |
|
|
$ |
|
140,034 |
|
Less: |
|
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
|
45,880 |
|
|
|
|
46,905 |
|
Free cash flow |
$ |
|
177,952 |
|
|
$ |
|
93,129 |
|
Notes: Free cash flow is a non-GAAP financial measure calculated by subtracting capital expenditures from cash flows provided by operating activities, the most directly comparable GAAP measure. The Company believes it is a useful indicator of liquidity that provides information to both management and investors about the amount of cash generated from operations that, after capital expenditures, can be used for strategic business objectives, including the repayment of long-term debt. Free cash flow is not a substitute for GAAP financial measures and may differ from similarly titled measures of other companies.
Table 7: Reconciliation of Purchases of Property and Equipment to Capital Expenditures and IT Capital (A Non-GAAP Financial Measure) (Unaudited) |
|||||||||
|
40 Weeks Ended |
|
|||||||
(In thousands) |
October 3, 2020 |
|
|
October 5, 2019 |
|
||||
Purchases of property and equipment |
$ |
|
45,880 |
|
|
$ |
|
46,905 |
|
Plus: |
|
|
|
|
|
|
|
|
|
Cloud computing spend |
|
|
7,658 |
|
|
|
|
— |
|
Capital expenditures and IT capital |
$ |
|
53,538 |
|
|
$ |
|
46,905 |
|
Notes: Capital expenditures and IT capital is a non-GAAP financial measure calculated by adding spending related to the development of cloud computing applications spend to capital expenditures, the most directly comparable GAAP measure. Cloud computing spend only includes costs incurred during the application development phase and does not include ongoing costs of hosting or maintenance associated with these applications, which are expensed as incurred. The Company believes it is a useful indicator of the Company’s investment in its facilities and systems as it transitions to more cloud-based IT systems. Capital expenditures and IT capital is not a substitute for GAAP financial measures and may differ from similarly titled measures of other companies.
Table 8: Reconciliation of Projected Earnings per Diluted Share from Continuing Operations to Projected Adjusted Earnings per Diluted Share from Continuing Operations (A Non-GAAP Financial Measure) (Unaudited) |
|||||||||
|
53 Weeks Ending January 2, 2021 |
|
|||||||
|
Low |
|
|
High |
|
||||
Earnings from continuing operations |
$ |
|
2.09 |
|
|
$ |
|
2.17 |
|
Adjustments, net of taxes: |
|
|
|
|
|
|
|
|
|
Merger/acquisition and integration expenses |
|
|
0.01 |
|
|
|
|
0.01 |
|
Costs associated with Project One Team |
|
|
0.01 |
|
|
|
|
0.01 |
|
Pension termination |
|
|
(0.02 |
) |
|
|
|
(0.02 |
) |
Restructuring and asset impairment |
|
|
0.43 |
|
|
|
|
0.43 |
|
Severance associated with cost reduction initiatives |
|
|
0.11 |
|
|
|
|
0.11 |
|
Fresh Cut operating losses |
|
|
0.05 |
|
|
|
|
0.05 |
|
Impact of CARES Act |
|
|
(0.26 |
) |
|
|
|
(0.26 |
) |
Adjusted earnings from continuing operations |
$ |
|
2.42 |
|
|
$ |
|
2.50 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20201111005748/en/
Investors:
Mark Shamber
Chief Financial Officer and Executive Vice President
(616) 878-8023
Chris Mandeville
ICR
(203) 682-8304
Jeff Sonnek
ICR
(646) 277-1263
Media:
Meredith Gremel
Vice President Corporate Affairs and Communications
(616) 878-2830
KEYWORDS: United States North America Michigan
INDUSTRY KEYWORDS: Retail Supermarket Food/Beverage
MEDIA: