Second Quarter Net Sales Increase 5.3%, 13th Consecutive Quarter of Growth
Announced Leadership Transition, Appointed Dennis Eidson Interim President and CEO
Continued Significant Debt Paydown and Working Capital Improvements
SpartanNash Company (the “Company”) (Nasdaq: SPTN) today reported financial results for the 12-week second quarter and 28-week period ended July 13, 2019.
“Consistent with our comments in the press release issued earlier this week, the Board of Directors and I remain confident in the Company’s overall strategic direction,” said Dennis Eidson, Interim President and Chief Executive Officer. “I am excited to work with our team of talented associates as we focus our efforts on improved execution, while continuing to drive our top-line sales growth.”
Consolidated Financial Results
Consolidated net sales for the second quarter increased $100.0 million, or 5.3%, to $2.00 billion from $1.90 billion in the prior year quarter. The increase in net sales was generated through incremental volume in the Retail segment resulting from the acquisition of Martin’s and growth in the Military Distribution segment, despite a slow start to the quarter due to the Easter shift and unseasonably cool weather for the first two periods of the second quarter.
Gross profit for the second quarter of fiscal 2019 was $289.0 million, or 14.5% of net sales, compared to $265.7 million, or 14.0% of net sales, in the prior year quarter. As a percent of net sales, the improvement in gross profit was primarily driven by the higher mix of Retail sales due to the acquisition of Martin’s and was partially offset by the other factors described below within the Segment Financial Results.
Reported operating expenses for the second quarter were $281.6 million, or 14.1% of net sales, compared to $235.8 million, or 12.4% 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 asset impairment charges primarily associated with the changes the Company recently announced related to its Caito Fresh Production business including the decision to exit the Fresh Kitchen operations, additional Retail segment business associated with Martin’s, as well as an increase in supply chain expenses. Second quarter operating expenses would have been $265.5 million, or 13.3% of net sales, compared to $235.9 million, or 12.4% of net sales, in the prior year quarter, excluding the adjustments related to the non-cash impairment charges and other adjustments detailed in Table 3.
The Company reported operating earnings of $7.4 million compared to $29.8 million in the prior year quarter. The decrease was primarily attributable to the impairment charges noted above, lower margin rates on comparable sales, higher supply chain costs and incremental losses from the Fresh Kitchen operations, partially offset by favorable incentive compensation, incremental earnings from the newly acquired Martin’s business and lower recall charges than in the prior year. Non-GAAP adjusted operating earnings(1) were $23.5 million compared to $29.8 million in the prior year quarter due to the 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.
Adjusted EBITDA(2) was $44.3 million compared to $49.7 million in the prior year quarter due to the factors mentioned above.
The Company reported a second quarter loss from continuing operations of $6.8 million, or $0.19 per diluted share, compared to earnings of $17.8 million, or $0.50 per diluted share, in the prior year quarter. The decrease reflects the factors noted above, as well as settlement expense of $8.7 million associated with the previously announced termination of the Company’s corporate pension plan and increased interest expense due to higher interest rates on the Company’s borrowings.
Adjusted earnings from continuing operations(3) for the second quarter were $12.2 million, or $0.34 per diluted share, compared to $17.9 million, or $0.50 per diluted share, in the prior year quarter.
Segment Financial Results
Food Distribution
Net sales for Food Distribution decreased $6.3 million, or 0.7%, to $935.4 million from $941.7 million in the prior year quarter. Excluding the impact of the elimination of intercompany sales to Martin’s subsequent to the acquisition, sales increased 3.0%, primarily due to sales growth from existing customers. The Company’s rate of sales growth within this segment decelerated from recent quarters, largely due to the unseasonably cool and wet weather during the months of May and June. These trends improved during the month of July as the weather returned to more seasonable levels.
Reported operating earnings for Food Distribution were $0.3 million compared to $18.7 million in the prior year quarter. The decrease in reported operating earnings was due to asset impairment charges primarily associated with changes to the Caito Fresh Production business noted above, losses associated with the Fresh Kitchen operations, and higher supply chain expenses, partially offset by lower recall charges than in the prior year, and favorable adjustments to incentive compensation. Second quarter adjusted operating earnings(1) were $16.8 million compared to $19.8 million in the prior year quarter primarily due to higher supply chain expenses. Adjusted operating earnings exclude $16.0 million of asset impairment charges and the allocation of one-time costs associated with Project One Team in the current year quarter, and merger/acquisition and integration expenses in the prior year quarter.
Military Distribution
Net sales for Military Distribution increased $0.9 million, or 0.2%, to $490.6 million from $489.7 million in the prior year quarter. The increase was primarily due to incremental volume from new business with an existing customer that commenced late in the fourth quarter of 2018 and DeCA’s private brand program, partially offset by lower comparable sales at DeCA operated locations.
Reported operating loss for Military Distribution was $1.6 million compared to operating earnings of $3.1 million in the prior year quarter. The decrease was primarily attributable to lower margin rates, partly due to a shift in the mix of business, and higher supply chain costs, as well as the cycling of gains related to the sale of a closed facility in the prior year quarter, partially offset by favorable adjustments to incentive compensation. The second quarter adjusted operating loss(1) was $1.5 million compared to earnings of $2.3 million in the prior year quarter. The adjusted operating loss in the current year quarter excludes the allocation of one-time costs associated with Project One Team and the gain on the sale of a closed location in the prior year quarter.
Retail
Net sales for Retail increased $105.4 million, or 22.7%, to $570.0 million from $464.6 million in the prior year quarter. Excluding the acquisition of Martin’s, sales decreased 3.3%, due to lower sales resulting from store closures and a decrease in comparable store sales of 2.0%. Comparable store sales were negatively impacted by the shift of the post-Easter week into the second quarter by 0.5%, as well as the unseasonably cool weather for the first two periods of the quarter.
Reported operating earnings for Retail were $8.7 million compared to operating earnings of $8.0 million in the prior year quarter. The increase in reported operating earnings was primarily attributable to the contribution of the acquired Martin’s stores, the favorable impact of closing underperforming stores and favorable adjustments to incentive compensation, partially offset by higher fees paid to pharmacy benefit managers. Adjusted operating earnings(1) were $8.2 million compared to $7.7 million in the prior year quarter and exclude restructuring gains and merger/acquisition and integration expenses in the current year and restructuring gains in the prior year quarter.
Cash Flow
Cash flows provided by operating activities for the first half of 2019 were $103.8 million, consistent with the prior year period at $104.3 million. The Company generated $72.1 million of free cash in the 28 weeks ended July 13, 2019, compared to $69.7 million of free cash in same period of fiscal 2018.
In the first half of fiscal 2019, the Company returned $13.8 million to shareholders in the form of cash dividends equal to $0.38 per common share.
Strategic Business Objectives
The Company remains focused on the execution of its top five objectives for 2019. These objectives are critical in the context of the Company’s long-term strategic objective to build and operate a national, highly efficient distribution platform servicing a diverse customer base through three highly complementary business units of Food Distribution, Military Distribution and Retail.
The following summarizes these objectives and the Company’s progress during the second quarter of 2019:
Achieve Mid-Single Digit Sales Growth. The Company sustained this objective in the second quarter, realizing 5.3% sales growth from the same quarter in the prior year and delivering its 13th consecutive quarter of sales growth.
Realize More Than $15.0 Million of Savings Over the Next 24 Months from Project One Team. The Company has completed the implementation of a number of initiatives and is in process with others. The Company remains on track to achieve a run rate of over $20.0 million in annual cost savings within the next 24 months.
Strengthen Management Team, Systems and Supply Chain Operations. During the second quarter, the Company appointed Walt Lentz as the President of Food Distribution. Mr. Lentz has an extensive background in logistics, supply chain and food manufacturing, including roles as Acting Chief Executive Officer and Chief Supply Chain Officer of Peapod LLC, the grocery eCommerce business division of Ahold Delhaize. He oversees the Food Distribution segment and has assumed responsibility for the Company’s supply chain.
Reduce Debt and Working Capital While Lowering Financial Leverage Ratios. Since the second quarter of 2018, the Company has paid down over $90.0 million in debt, resulting in an $8 million reduction in the debt balance despite the acquisition of Martin’s at the beginning of fiscal 2019. The Company also reduced its working capital by over $15.0 million from the second quarter of fiscal 2018, while continuing to grow sales. The Company will continue to focus on working capital improvements and debt reduction and expects to achieve total working capital improvements of $30.0 million for the full fiscal year.
Improve Adjusted Operating Earnings and Adjusted EBITDA Trend. The Company has recently executed a significant number of changes in leadership, including a transition in the President and CEO position. The leaders of SpartanNash have a renewed focus on driving operational execution and organizational development, while enhancing the distribution business. As part of these efforts to improve operating earnings and EBITDA trends, the Company recently announced its decision to exit the Indianapolis-based Fresh Kitchen operations and shift the Company’s focus and expertise to the produce distribution and Fresh Cut operations, which have been the hallmark of the Caito business. The Company expects to complete this transition by the end of fiscal 2019. These changes, along with the other strategies of the Company discussed above, are believed to be critical to return the Company to long-term profitable growth.
Outlook
The Company continues to expect financial results for the fiscal year ending December 28, 2019 consistent with its outlook previously provided on August 12, 2019, as outlined below and detailed in Table 6:
|
|
52 Weeks Ending December 28, 2019 |
|
Net Sales Growth |
Mid-single digits |
|
Adjusted EBITDA (2) |
$183 – $195 million |
|
Adjusted EPS from Continuing Operations (4) |
$1.20 – $1.35 |
|
Reported EPS from Continuing Operations |
$0.21 – $0.47 |
The Company’s fiscal year guidance reflects an effective tax rate of 22.0% to 23.0%, due to a shift in profitability into lower tax jurisdictions. The Company expects capital expenditures for fiscal year 2019 to be in the range of $86.0 million to $92.0 million, with depreciation and amortization of $89.0 million to $91.0 million. Interest expense is now expected to range from $34.0 million to $35.0 million in fiscal 2019.
The Company’s updated guidance for fiscal 2019 does not include costs associated with the CEO transition and costs from a non-recurring, supplemental, transition incentive program for eligible associates.
Conference Call
A telephone conference call to discuss the Company’s second quarter 2019 financial results is scheduled for Thursday, August 15, 2019 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 premier fresh produce distribution and fresh food processing. SpartanNash serves customer locations in all 50 states and the District of Columbia, Europe, Cuba, Puerto Rico, Bahrain, Djibouti and Egypt. SpartanNash currently operates 160 supermarkets, primarily under the banners of Family Fare, Martin’s Super Markets, D&W Fresh Market, VG’s Grocery, Dan’s Supermarket and Family Fresh Market. 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, 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 below.
(2) A reconciliation of net earnings to Adjusted EBITDA, a non-GAAP financial measure, is provided below.
(3) A reconciliation of loss from continuing operations to adjusted earnings from continuing operations, a non-GAAP financial measure, is provided below.
(4) 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 below.
|
SPARTANNASH COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) |
||||||||||||||||||||
|
|
12 Weeks Ended |
|
|
28 Weeks Ended |
|
|
||||||||||||||
|
|
July 13, |
|
|
July 14, |
|
|
July 13, |
|
|
July 14, |
|
|
||||||||
|
(In thousands, except per share amounts) |
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
|
||||||||
|
Net sales |
$ |
|
1,995,929 |
|
|
$ |
|
1,895,953 |
|
|
$ |
|
4,538,304 |
|
|
$ |
|
4,281,026 |
|
|
|
Cost of sales |
|
|
1,706,922 |
|
|
|
|
1,630,293 |
|
|
|
|
3,871,568 |
|
|
|
|
3,672,152 |
|
|
|
Gross profit |
|
|
289,007 |
|
|
|
|
265,660 |
|
|
|
|
666,736 |
|
|
|
|
608,874 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
266,474 |
|
|
|
|
236,202 |
|
|
|
|
626,874 |
|
|
|
|
545,261 |
|
|
|
Merger/acquisition and integration |
|
|
582 |
|
|
|
|
804 |
|
|
|
|
1,364 |
|
|
|
|
3,010 |
|
|
|
Restructuring charges (gains) and asset impairment |
|
|
14,581 |
|
|
|
|
(1,164 |
) |
|
|
|
8,919 |
|
|
|
|
5,037 |
|
|
|
Total operating expenses |
|
|
281,637 |
|
|
|
|
235,842 |
|
|
|
|
637,157 |
|
|
|
|
553,308 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings |
|
|
7,370 |
|
|
|
|
29,818 |
|
|
|
|
29,579 |
|
|
|
|
55,566 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expenses and (income) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
8,696 |
|
|
|
|
6,969 |
|
|
|
|
20,577 |
|
|
|
|
15,747 |
|
|
|
Postretirement benefit expense (income) |
|
|
8,821 |
|
|
|
|
(10 |
) |
|
|
|
9,456 |
|
|
|
|
(14 |
) |
|
|
Other, net |
|
|
(439 |
) |
|
|
|
(226 |
) |
|
|
|
(891 |
) |
|
|
|
(447 |
) |
|
|
Total other expenses, net |
|
|
17,078 |
|
|
|
|
6,733 |
|
|
|
|
29,142 |
|
|
|
|
15,286 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings before income taxes and discontinued operations |
|
|
(9,708 |
) |
|
|
|
23,085 |
|
|
|
|
437 |
|
|
|
|
40,280 |
|
|
|
Income tax (benefit) expense |
|
|
(2,941 |
) |
|
|
|
5,247 |
|
|
|
|
(317 |
) |
|
|
|
10,007 |
|
|
|
(Loss) earnings from continuing operations |
|
|
(6,767 |
) |
|
|
|
17,838 |
|
|
|
|
754 |
|
|
|
|
30,273 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, net of taxes |
|
|
(47 |
) |
|
|
|
(66 |
) |
|
|
|
(99 |
) |
|
|
|
(158 |
) |
|
|
Net (loss) earnings |
$ |
|
(6,814 |
) |
|
$ |
|
17,772 |
|
|
$ |
|
655 |
|
|
$ |
|
30,115 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings from continuing operations |
$ |
|
(0.19 |
) |
|
$ |
|
0.50 |
|
|
$ |
|
0.02 |
|
|
$ |
|
0.84 |
|
|
|
Loss from discontinued operations |
|
|
– |
|
|
|
|
(0.01 |
) |
* |
|
|
– |
|
|
|
|
(0.01 |
) |
* |
|
Net (loss) earnings |
$ |
|
(0.19 |
) |
|
$ |
|
0.49 |
|
|
$ |
|
0.02 |
|
|
$ |
|
0.83 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted (loss) earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings from continuing operations |
$ |
|
(0.19 |
) |
|
$ |
|
0.50 |
|
|
$ |
|
0.02 |
|
|
$ |
|
0.84 |
|
|
|
Loss from discontinued operations |
|
|
– |
|
|
|
|
(0.01 |
) |
* |
|
|
– |
|
|
|
|
(0.01 |
) |
* |
|
Net (loss) earnings |
$ |
|
(0.19 |
) |
|
$ |
|
0.49 |
|
|
$ |
|
0.02 |
|
|
$ |
|
0.83 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
36,323 |
|
|
|
|
35,928 |
|
|
|
|
36,208 |
|
|
|
|
36,075 |
|
|
|
Diluted |
|
|
36,323 |
|
|
|
|
35,940 |
|
|
|
|
36,208 |
|
|
|
|
36,087 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* includes rounding |
||||||||||||||||||||
|
SPARTANNASH COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) |
|||||||||
|
|
July 13, |
|
|
December 29, |
|
||||
|
(In thousands) |
2019 |
|
|
2018 |
|
||||
|
Assets |
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
|
19,949 |
|
|
$ |
|
18,585 |
|
|
Accounts and notes receivable, net |
|
|
362,605 |
|
|
|
|
346,260 |
|
|
Inventories, net |
|
|
572,723 |
|
|
|
|
553,799 |
|
|
Prepaid expenses and other current assets |
|
|
43,219 |
|
|
|
|
73,798 |
|
|
Property and equipment held for sale |
|
|
– |
|
|
|
|
8,654 |
|
|
Total current assets |
|
|
998,496 |
|
|
|
|
1,001,096 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
619,613 |
|
|
|
|
579,060 |
|
|
Goodwill |
|
|
181,035 |
|
|
|
|
178,648 |
|
|
Intangible assets, net |
|
|
129,131 |
|
|
|
|
128,926 |
|
|
Operating lease assets |
|
|
274,336 |
|
|
|
|
– |
|
|
Other assets, net |
|
|
89,353 |
|
|
|
|
84,182 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
$ |
|
2,291,964 |
|
|
$ |
|
1,971,912 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
Accounts payable |
$ |
|
406,896 |
|
|
$ |
|
357,802 |
|
|
Accrued payroll and benefits |
|
|
53,072 |
|
|
|
|
57,180 |
|
|
Other accrued expenses |
|
|
48,306 |
|
|
|
|
43,206 |
|
|
Current portion of operating lease liabilities |
|
|
41,767 |
|
|
|
|
– |
|
|
Current portion of long-term debt and finance lease liabilities |
|
|
17,709 |
|
|
|
|
18,263 |
|
|
Total current liabilities |
|
|
567,750 |
|
|
|
|
476,451 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term liabilities |
|
|
|
|
|
|
|
|
|
|
Deferred income taxes |
|
|
43,200 |
|
|
|
|
49,254 |
|
|
Operating lease liabilities |
|
|
276,888 |
|
|
|
|
– |
|
|
Other long-term liabilities |
|
|
31,954 |
|
|
|
|
50,463 |
|
|
Long-term debt and finance lease liabilities |
|
|
684,527 |
|
|
|
|
679,797 |
|
|
Total long-term liabilities |
|
|
1,036,569 |
|
|
|
|
779,514 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity |
|
|
|
|
|
|
|
|
|
|
Common stock, voting, no par value; 100,000 shares authorized; 36,334 and 35,952 shares outstanding |
|
|
488,947 |
|
|
|
|
484,064 |
|
|
Preferred stock, no par value, 10,000 shares authorized; no shares outstanding |
|
|
– |
|
|
|
|
– |
|
|
Accumulated other comprehensive loss |
|
|
(8,932 |
) |
|
|
|
(15,759 |
) |
|
Retained earnings |
|
|
207,630 |
|
|
|
|
247,642 |
|
|
Total shareholders’ equity |
|
|
687,645 |
|
|
|
|
715,947 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders’ equity |
$ |
|
2,291,964 |
|
|
$ |
|
1,971,912 |
|
|
|
|
|
|
|
|
|
|
|
|
|
SPARTANNASH COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
||||||||||||
|
|
|
|
|
28 Weeks Ended |
|
|||||||
|
(In thousands) |
|
|
|
July 13, 2019 |
|
|
July 14, 2018 |
|
||||
|
Cash flow activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
|
$ |
|
103,836 |
|
|
$ |
|
104,300 |
|
|
Net cash used in investing activities |
|
|
|
|
|
(102,609 |
) |
|
|
|
(28,141 |
) |
|
Net cash provided by (used in) financing activities |
|
|
|
|
|
267 |
|
|
|
|
(75,771 |
) |
|
Net cash used in discontinued operations |
|
|
|
|
|
(130 |
) |
|
|
|
(142 |
) |
|
Net increase in cash and cash equivalents |
|
|
|
|
|
1,364 |
|
|
|
|
246 |
|
|
Cash and cash equivalents at beginning of the period |
|
|
|
|
|
18,585 |
|
|
|
|
15,667 |
|
|
Cash and cash equivalents at end of the period |
|
|
|
$ |
|
19,949 |
|
|
$ |
|
15,913 |
|
|
SPARTANNASH COMPANY AND SUBSIDIARIES SUPPLEMENTAL FINANCIAL DATA |
|||||||||||||||||||||||||||||||
|
Table 1: Sales and Operating Earnings by Segment (Unaudited) |
|||||||||||||||||||||||||||||||
|
|
12 Weeks Ended |
|
|
28 Weeks Ended |
|
||||||||||||||||||||||||||
|
(In thousands) |
July 13, 2019 |
|
|
July 14, 2018 |
|
|
July 13, 2019 |
|
|
July 14, 2018 |
|
||||||||||||||||||||
|
Food Distribution Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
|
935,383 |
|
|
46.9 |
% |
|
$ |
|
941,702 |
|
|
49.7 |
% |
|
$ |
|
2,104,621 |
|
|
46.4 |
% |
|
$ |
|
2,096,913 |
|
|
49.0 |
% |
|
Operating earnings |
|
|
272 |
|
|
|
|
|
|
|
18,724 |
|
|
|
|
|
|
|
24,864 |
|
|
|
|
|
|
|
43,245 |
|
|
|
|
|
Military Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
|
490,571 |
|
|
24.5 |
% |
|
|
|
489,654 |
|
|
25.8 |
% |
|
|
|
1,161,941 |
|
|
25.6 |
% |
|
|
|
1,153,274 |
|
|
26.9 |
% |
|
Operating (loss) earnings |
|
|
(1,603 |
) |
|
|
|
|
|
|
3,099 |
|
|
|
|
|
|
|
(3,160 |
) |
|
|
|
|
|
|
4,612 |
|
|
|
|
|
Retail Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
|
569,975 |
|
|
28.6 |
% |
|
|
|
464,597 |
|
|
24.5 |
% |
|
|
|
1,271,742 |
|
|
28.0 |
% |
|
|
|
1,030,839 |
|
|
24.1 |
% |
|
Operating earnings |
|
|
8,701 |
|
|
|
|
|
|
|
7,995 |
|
|
|
|
|
|
|
7,875 |
|
|
|
|
|
|
|
7,709 |
|
|
|
|
|
Total: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
|
1,995,929 |
|
|
100.0 |
% |
|
$ |
|
1,895,953 |
|
|
100.0 |
% |
|
$ |
|
4,538,304 |
|
|
100.0 |
% |
|
$ |
|
4,281,026 |
|
|
100.0 |
% |
|
Operating earnings |
|
|
7,370 |
|
|
|
|
|
|
|
29,818 |
|
|
|
|
|
|
|
29,579 |
|
|
|
|
|
|
|
55,566 |
|
|
|
|
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, 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 costs associated with organizational realignment, which include significant changes to the Company’s management team. Also excluded are the 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. 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 start-up costs associated with the Fresh Kitchen operation, which concluded during the first quarter of 2018. The Fresh Kitchen represented a new line of business for the Company, and provides the Company with the ability to process, cook, and package fresh protein-based foods and complete meal solutions.
|
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 |
|
|
28 Weeks Ended |
|
||||||||||||||
|
(In thousands) |
July 13, 2019 |
|
|
July 14, 2018 |
|
|
July 13, 2019 |
|
|
July 14, 2018 |
|
||||||||
|
Net (loss) earnings |
$ |
|
(6,814 |
) |
|
$ |
|
17,772 |
|
|
$ |
|
655 |
|
|
$ |
|
30,115 |
|
|
Loss from discontinued operations, net of tax |
|
|
47 |
|
|
|
|
66 |
|
|
|
|
99 |
|
|
|
|
158 |
|
|
Income tax (benefit) expense |
|
|
(2,941 |
) |
|
|
|
5,247 |
|
|
|
|
(317 |
) |
|
|
|
10,007 |
|
|
Other expenses, net |
|
|
17,078 |
|
|
|
|
6,733 |
|
|
|
|
29,142 |
|
|
|
|
15,286 |
|
|
Operating earnings |
|
|
7,370 |
|
|
|
|
29,818 |
|
|
|
|
29,579 |
|
|
|
|
55,566 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIFO expense |
|
|
1,068 |
|
|
|
|
155 |
|
|
|
|
2,493 |
|
|
|
|
1,695 |
|
|
Depreciation and amortization |
|
|
20,529 |
|
|
|
|
19,007 |
|
|
|
|
47,161 |
|
|
|
|
44,025 |
|
|
Merger/acquisition and integration |
|
|
582 |
|
|
|
|
804 |
|
|
|
|
1,364 |
|
|
|
|
3,010 |
|
|
Restructuring charges (gains) and asset impairment |
|
|
14,581 |
|
|
|
|
(1,164 |
) |
|
|
|
8,919 |
|
|
|
|
5,037 |
|
|
Fresh Kitchen start-up costs |
|
|
– |
|
|
|
|
– |
|
|
|
|
– |
|
|
|
|
1,366 |
|
|
Stock-based compensation |
|
|
715 |
|
|
|
|
976 |
|
|
|
|
6,098 |
|
|
|
|
6,267 |
|
|
Non-cash rent |
|
|
(1,516 |
) |
|
|
|
(41 |
) |
|
|
|
(3,434 |
) |
|
|
|
(117 |
) |
|
Costs associated with Project One Team |
|
|
810 |
|
|
|
|
– |
|
|
|
|
5,428 |
|
|
|
|
– |
|
|
Organizational realignment costs |
|
|
19 |
|
|
|
|
– |
|
|
|
|
877 |
|
|
|
|
– |
|
|
Other non-cash charges |
|
|
154 |
|
|
|
|
135 |
|
|
|
|
496 |
|
|
|
|
12 |
|
|
Adjusted EBITDA |
$ |
|
44,312 |
$ |
|
49,690 |
|
|
$ |
|
98,981 |
|
|
$ |
|
116,861 |
|
||
|
|
12 Weeks Ended |
|
|
28 Weeks Ended |
|
||||||||||||||
|
(In thousands) |
July 13, 2019 |
|
|
July 14, 2018 |
|
|
July 13, 2019 |
|
|
July 14, 2018 |
|
||||||||
|
Food Distribution: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings |
$ |
|
272 |
|
|
$ |
|
18,724 |
|
|
$ |
|
24,864 |
|
|
$ |
|
43,245 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIFO expense (benefit) |
|
|
527 |
|
|
|
|
(82 |
) |
|
|
|
1,230 |
|
|
|
|
683 |
|
|
Depreciation and amortization |
|
|
7,744 |
|
|
|
|
7,318 |
|
|
|
|
17,977 |
|
|
|
|
16,639 |
|
|
Merger/acquisition and integration |
|
|
– |
|
|
|
|
745 |
|
|
|
|
(130 |
) |
|
|
|
2,940 |
|
|
Restructuring charges and asset impairment |
|
|
16,024 |
|
|
|
|
100 |
|
|
|
|
9,681 |
|
|
|
|
1,360 |
|
|
Fresh Kitchen start-up costs |
|
|
– |
|
|
|
|
– |
|
|
|
|
– |
|
|
|
|
1,366 |
|
|
Stock-based compensation |
|
|
341 |
|
|
|
|
441 |
|
|
|
|
3,017 |
|
|
|
|
2,968 |
|
|
Non-cash rent |
|
|
149 |
|
|
|
|
1 |
|
|
|
|
206 |
|
|
|
|
(21 |
) |
|
Costs associated with Project One Team |
|
|
429 |
|
|
|
|
– |
|
|
|
|
2,877 |
|
|
|
|
– |
|
|
Organizational realignment costs |
|
|
10 |
|
|
|
|
– |
|
|
|
|
465 |
|
|
|
|
– |
|
|
Other non-cash charges |
|
|
59 |
|
|
|
|
204 |
|
|
|
|
378 |
|
|
|
|
441 |
|
|
Adjusted EBITDA |
$ |
|
25,555 |
|
|
$ |
|
27,451 |
|
|
$ |
|
60,565 |
|
|
$ |
|
69,621 |
|
|
Military: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) earnings |
$ |
|
(1,603 |
) |
|
$ |
|
3,099 |
|
|
$ |
|
(3,160 |
) |
|
$ |
|
4,612 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIFO expense (benefit) |
|
|
284 |
|
|
|
|
(26 |
) |
|
|
|
662 |
|
|
|
|
399 |
|
|
Depreciation and amortization |
|
|
2,736 |
|
|
|
|
2,763 |
|
|
|
|
6,333 |
|
|
|
|
6,441 |
|
|
Merger/acquisition and integration |
|
|
– |
|
|
|
|
– |
|
|
|
|
– |
|
|
|
|
4 |
|
|
Restructuring gains |
|
|
– |
|
|
|
|
(830 |
) |
|
|
|
– |
|
|
|
|
(830 |
) |
|
Stock-based compensation |
|
|
124 |
|
|
|
|
220 |
|
|
|
|
978 |
|
|
|
|
1,025 |
|
|
Non-cash rent |
|
|
(92 |
) |
|
|
|
(1 |
) |
|
|
|
(214 |
) |
|
|
|
(1 |
) |
|
Costs associated with Project One Team |
|
|
106 |
|
|
|
|
– |
|
|
|
|
706 |
|
|
|
|
– |
|
|
Organizational realignment costs |
|
|
3 |
|
|
|
|
– |
|
|
|
|
114 |
|
|
|
|
– |
|
|
Other non-cash charges (gains) |
|
|
9 |
|
|
|
|
(76 |
) |
|
|
|
(11 |
) |
|
|
|
(148 |
) |
|
Adjusted EBITDA |
$ |
|
1,567 |
|
|
$ |
|
5,149 |
|
|
$ |
|
5,408 |
|
|
$ |
|
11,502 |
|
|
Retail: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings |
$ |
|
8,701 |
|
|
$ |
|
7,995 |
|
|
$ |
|
7,875 |
|
|
$ |
|
7,709 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIFO expense |
|
|
257 |
|
|
|
|
263 |
|
|
|
|
601 |
|
|
|
|
613 |
|
|
Depreciation and amortization |
|
|
10,049 |
|
|
|
|
8,926 |
|
|
|
|
22,851 |
|
|
|
|
20,945 |
|
|
Merger/acquisition and integration |
|
|
582 |
|
|
|
|
59 |
|
|
|
|
1,494 |
|
|
|
|
66 |
|
|
Restructuring (gains) charges and asset impairment |
|
|
(1,443 |
) |
|
|
|
(434 |
) |
|
|
|
(762 |
) |
|
|
|
4,507 |
|
|
Stock-based compensation |
|
|
250 |
|
|
|
|
315 |
|
|
|
|
2,103 |
|
|
|
|
2,274 |
|
|
Non-cash rent |
|
|
(1,573 |
) |
|
|
|
(41 |
) |
|
|
|
(3,426 |
) |
|
|
|
(95 |
) |
|
Costs associated with Project One Team |
|
|
275 |
|
|
|
|
– |
|
|
|
|
1,845 |
|
|
|
|
– |
|
|
Organizational realignment costs |
|
|
6 |
|
|
|
|
– |
|
|
|
|
298 |
|
|
|
|
– |
|
|
Other non-cash charges (gains) |
|
|
86 |
|
|
|
|
7 |
|
|
|
|
129 |
|
|
|
|
(281 |
) |
|
Adjusted EBITDA |
$ |
|
17,190 |
|
|
$ |
|
17,090 |
|
|
$ |
|
33,008 |
|
|
$ |
|
35,738 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
28 Weeks Ended |
|
||||||||||||||
|
(In thousands) |
July 13, 2019 |
|
|
July 14, 2018 |
|
|
July 13, 2019 |
|
|
July 14, 2018 |
|
||||||||
|
Operating earnings |
$ |
|
7,370 |
|
|
$ |
|
29,818 |
|
|
$ |
|
29,579 |
|
|
$ |
|
55,566 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger/acquisition and integration |
|
|
582 |
|
|
|
|
804 |
|
|
|
|
1,364 |
|
|
|
|
3,010 |
|
|
Restructuring charges (gains) and asset impairment |
|
|
14,581 |
|
|
|
|
(1,164 |
) |
|
|
|
8,919 |
|
|
|
|
5,037 |
|
|
Fresh Kitchen start-up costs |
|
|
– |
|
|
|
|
– |
|
|
|
|
– |
|
|
|
|
1,366 |
|
|
Costs associated with Project One Team |
|
|
810 |
|
|
|
|
– |
|
|
|
|
5,428 |
|
|
|
|
– |
|
|
Organizational realignment costs |
|
|
19 |
|
|
|
|
– |
|
|
|
|
877 |
|
|
|
|
– |
|
|
Pension termination |
|
|
20 |
|
|
|
|
– |
|
|
|
|
20 |
|
|
|
|
– |
|
|
Severance associated with cost reduction initiatives |
|
|
80 |
|
|
|
|
344 |
|
|
|
|
442 |
|
|
|
|
618 |
|
|
Adjusted operating earnings |
$ |
|
23,462 |
|
|
$ |
|
29,802 |
|
|
$ |
|
46,629 |
|
|
$ |
|
65,597 |
|
|
Reconciliation of operating earnings (loss) to adjusted operating earnings (loss) by segment: |
|
||||||||||||||||||
|
Food Distribution: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings |
$ |
|
272 |
|
|
$ |
|
18,724 |
|
|
$ |
|
24,864 |
|
|
$ |
|
43,245 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger/acquisition and integration |
|
|
– |
|
|
|
|
745 |
|
|
|
|
(130 |
) |
|
|
|
2,940 |
|
|
Restructuring charges and asset impairment |
|
|
16,024 |
|
|
|
|
100 |
|
|
|
|
9,681 |
|
|
|
|
1,360 |
|
|
Fresh Kitchen start-up costs |
|
|
– |
|
|
|
|
– |
|
|
|
|
– |
|
|
|
|
1,366 |
|
|
Costs associated with Project One Team |
|
|
429 |
|
|
|
|
– |
|
|
|
|
2,877 |
|
|
|
|
– |
|
|
Organizational realignment costs |
|
|
10 |
|
|
|
|
– |
|
|
|
|
465 |
|
|
|
|
– |
|
|
Pension termination |
|
|
11 |
|
|
|
|
– |
|
|
|
|
11 |
|
|
|
|
– |
|
|
Severance associated with cost reduction initiatives |
|
|
37 |
|
|
|
|
258 |
|
|
|
|
361 |
|
|
|
|
451 |
|
|
Adjusted operating earnings |
$ |
|
16,783 |
|
|
$ |
|
19,827 |
|
|
$ |
|
38,129 |
|
|
$ |
|
49,362 |
|
|
Military: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) earnings |
$ |
|
(1,603 |
) |
|
$ |
|
3,099 |
|
|
$ |
|
(3,160 |
) |
|
$ |
|
4,612 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger/acquisition and integration |
|
|
– |
|
|
|
|
– |
|
|
|
|
– |
|
|
|
|
4 |
|
|
Restructuring gains |
|
|
– |
|
|
|
|
(830 |
) |
|
|
|
– |
|
|
|
|
(830 |
) |
|
Costs associated with Project One Team |
|
|
106 |
|
|
|
|
– |
|
|
|
|
706 |
|
|
|
|
– |
|
|
Organizational realignment costs |
|
|
3 |
|
|
|
|
– |
|
|
|
|
114 |
|
|
|
|
– |
|
|
Pension termination |
|
|
2 |
|
|
|
|
– |
|
|
|
|
2 |
|
|
|
|
– |
|
|
Severance associated with cost reduction initiatives |
|
|
– |
|
|
|
|
18 |
|
|
|
|
9 |
|
|
|
|
70 |
|
|
Adjusted operating (loss) earnings |
$ |
|
(1,492 |
) |
|
$ |
|
2,287 |
|
|
$ |
|
(2,329 |
) |
|
$ |
|
3,856 |
|
|
Retail: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings |
$ |
|
8,701 |
|
|
$ |
|
7,995 |
|
|
$ |
|
7,875 |
|
|
$ |
|
7,709 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger/acquisition and integration |
|
|
582 |
|
|
|
|
59 |
|
|
|
|
1,494 |
|
|
|
|
66 |
|
|
Restructuring (gains) charges and asset impairment |
|
|
(1,443 |
) |
|
|
|
(434 |
) |
|
|
|
(762 |
) |
|
|
|
4,507 |
|
|
Costs associated with Project One Team |
|
|
275 |
|
|
|
|
– |
|
|
|
|
1,845 |
|
|
|
|
– |
|
|
Organizational realignment costs |
|
|
6 |
|
|
|
|
– |
|
|
|
|
298 |
|
|
|
|
– |
|
|
Pension termination |
|
|
7 |
|
|
|
|
– |
|
|
|
|
7 |
|
|
|
|
– |
|
|
Severance associated with cost reduction initiatives |
|
|
43 |
|
|
|
|
68 |
|
|
|
|
72 |
|
|
|
|
97 |
|
|
Adjusted operating earnings |
$ |
|
8,171 |
|
|
$ |
|
7,688 |
|
|
$ |
|
10,829 |
|
|
$ |
|
12,379 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 from Continuing Operations to Adjusted Earnings from Continuing Operations (A Non-GAAP Financial Measure) (Unaudited) |
||||||||||||||||||||
|
|
12 Weeks Ended |
|
|
|||||||||||||||||
|
|
July 13, 2019 |
|
|
July 14, 2018 |
|
|
||||||||||||||
|
|
|
|
|
per diluted |
|
|
|
|
|
per diluted |
|
|
||||||||
|
(In thousands, except per share amounts) |
Earnings |
|
|
share |
|
|
Earnings |
|
|
share |
|
|
||||||||
|
(Loss) earnings from continuing operations |
$ |
|
(6,767 |
) |
|
$ |
|
(0.19 |
) |
|
$ |
|
17,838 |
|
|
$ |
|
0.50 |
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger/acquisition and integration |
|
|
582 |
|
|
|
|
|
|
|
|
|
804 |
|
|
|
|
|
|
|
|
Restructuring charges (gains) and asset impairment |
|
|
14,581 |
|
|
|
|
|
|
|
|
|
(1,164 |
) |
|
|
|
|
|
|
|
Costs associated with Project One Team |
|
|
810 |
|
|
|
|
|
|
|
|
|
– |
|
|
|
|
|
|
|
|
Organizational realignment costs |
|
|
19 |
|
|
|
|
|
|
|
|
|
– |
|
|
|
|
|
|
|
|
Severance associated with cost reduction initiatives |
|
|
80 |
|
|
|
|
|
|
|
|
|
344 |
|
|
|
|
|
|
|
|
Pension termination |
|
|
8,998 |
|
|
|
|
|
|
|
|
|
– |
|
|
|
|
|
|
|
|
Total adjustments |
|
|
25,070 |
|
|
|
|
|
|
|
|
|
(16 |
) |
|
|
|
|
|
|
|
Income tax effect on adjustments (1) |
|
|
(6,112 |
) |
|
|
|
|
|
|
|
|
48 |
|
|
|
|
|
|
|
|
Total adjustments, net of taxes |
|
|
18,958 |
|
|
|
|
0.53 |
|
|
|
|
32 |
|
|
|
|
– |
|
|
|
Adjusted earnings from continuing operations |
$ |
|
12,191 |
|
|
$ |
|
0.34 |
|
|
$ |
|
17,870 |
|
|
$ |
|
0.50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28 Weeks Ended |
|
|
|||||||||||||||||
|
|
July 13, 2019 |
|
|
July 14, 2018 |
|
|
||||||||||||||
|
|
|
|
|
per diluted |
|
|
|
|
|
per diluted |
|
|
||||||||
|
(In thousands, except per share amounts) |
Earnings |
|
|
share |
|
|
Earnings |
|
|
share |
|
|
||||||||
|
Earnings from continuing operations |
$ |
|
754 |
|
|
$ |
|
0.02 |
|
|
$ |
|
30,273 |
|
|
$ |
|
0.84 |
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger/acquisition and integration |
|
|
1,364 |
|
|
|
|
|
|
|
|
|
3,010 |
|
|
|
|
|
|
|
|
Restructuring charges (gains) and asset impairment |
|
|
8,919 |
|
|
|
|
|
|
|
|
|
5,037 |
|
|
|
|
|
|
|
|
Fresh Kitchen start-up costs |
|
|
– |
|
|
|
|
|
|
|
|
|
1,366 |
|
|
|
|
|
|
|
|
Costs associated with Project One Team |
|
|
5,428 |
|
|
|
|
|
|
|
|
|
– |
|
|
|
|
|
|
|
|
Organizational realignment costs |
|
|
877 |
|
|
|
|
|
|
|
|
|
– |
|
|
|
|
|
|
|
|
Severance associated with cost reduction initiatives |
|
|
442 |
|
|
|
|
|
|
|
|
|
618 |
|
|
|
|
|
|
|
|
Pension termination |
|
|
9,351 |
|
|
|
|
|
|
|
|
|
– |
|
|
|
|
|
|
|
|
Total adjustments |
|
|
26,381 |
|
|
|
|
|
|
|
|
|
10,031 |
|
|
|
|
|
|
|
|
Income tax effect on adjustments (1) |
|
|
(6,416 |
) |
|
|
|
|
|
|
|
|
(2,388 |
) |
|
|
|
|
|
|
|
Total adjustments, net of taxes |
|
|
19,965 |
|
|
|
|
0.55 |
|
|
|
|
7,643 |
|
|
|
|
0.21 |
|
|
|
Adjusted earnings from continuing operations |
$ |
|
20,719 |
|
|
$ |
|
0.57 |
|
|
$ |
|
37,916 |
|
|
$ |
|
1.05 |
|
|
|
(1) The income tax effect on adjustments is computed by applying the applicable tax rate to the adjustments. |
||||||||||||||||||||
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 Capital Lease Obligations to Total Net Long-Term Debt and Capital Lease Obligations (A Non-GAAP Financial Measure) (Unaudited) |
|||||||||
|
|
July 13, |
|
|
December 29, |
|
||||
|
(In thousands) |
2019 |
|
|
2018 |
|
||||
|
Current portion of long-term debt and finance lease liabilities |
$ |
|
17,709 |
|
|
$ |
|
18,263 |
|
|
Long-term debt and finance lease liabilities |
|
|
684,527 |
|
|
|
|
679,797 |
|
|
Total debt |
|
|
702,236 |
|
|
|
|
698,060 |
|
|
Cash and cash equivalents |
|
|
(19,949 |
) |
|
|
|
(18,585 |
) |
|
Total net long-term debt |
$ |
|
682,287 |
|
|
$ |
|
679,475 |
|
Notes: Total net debt is a non-GAAP financial measure that is defined as long-term debt and capital lease obligations plus current maturities of long-term debt and capital 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. Total net debt is not a substitute for GAAP financial measures and may differ from similarly titled measures of other companies.
|
Table 6: 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) |
|||||||||
|
|
52 Weeks Ending December 28, 2019 |
|
|||||||
|
|
Low |
|
|
High |
|
||||
|
Earnings from continuing operations |
$ |
|
0.21 |
|
|
$ |
|
0.47 |
|
|
Adjustments, net of taxes: |
|
|
|
|
|
|
|
|
|
|
Merger/acquisition and integration expenses |
|
|
0.04 |
|
|
|
|
0.03 |
|
|
Gain on sale of assets |
|
|
(0.15 |
) |
|
|
|
(0.15 |
) |
|
Termination of frozen pension plan |
|
|
0.41 |
|
|
|
|
0.38 |
|
|
Costs associated with Project One Team |
|
|
0.12 |
|
|
|
|
0.11 |
|
|
Losses from Fresh Kitchen |
|
|
0.12 |
|
|
|
|
0.10 |
|
|
Restructuring and asset impairment |
|
|
0.38 |
|
|
|
|
0.36 |
|
|
Severance associated with cost reduction initiatives |
|
|
0.03 |
|
|
|
|
0.02 |
|
|
Organizational realignment costs |
|
|
0.04 |
|
|
|
|
0.03 |
|
|
Adjusted earnings from continuing operations |
$ |
|
1.20 |
|
|
$ |
|
1.35 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20190814005718/en/
Investor Contacts:
Mark Shamber, Chief Financial Officer and Executive Vice President, (616) 878-8023
Katie Turner, Partner, ICR, (646) 277-1228
Media Contact:
Meredith Gremel, Vice President Corporate Affairs and Communications, (616) 878-2830