MINNEAPOLIS--(BUSINESS WIRE)--Nash Finch Company (NASDAQ: NAFC), one of the leading food distribution companies in the United States, today announced financial results for the sixteen weeks (third quarter) ended October 8, 2011.
Financial Results
Total company sales for the third quarter 2011 were $1.47 billion compared to $1.51 billion in the prior year quarter, a decrease of 2.6%. Excluding the impact of selling or closing eight retail stores, total company third quarter comparable sales decreased 1.6% relative to last year. Sales for the first forty weeks of 2011 were $3.67 billion compared to $3.85 billion in the prior year period, a decrease of 4.5%. Excluding the impact of the sales decrease of $53.2 million attributable to the previously announced transition of a portion of a food distribution buying group to another supplier during 2010 and the effect of selling or closing eight retail stores, total company year-to-date comparable sales decreased 2.5% relative to last year.
Consolidated EBITDA3, adjusted to exclude the impact of significant items totaling $3.3 million and $1.5 million in the third quarter 2011 and 2010, respectively, increased 1.4% to $45.9 million, or 3.1% of sales in 2011 as compared to $45.3 million, or 3.0% of sales in 2010. Including the impact of significant items, Consolidated EBITDA for the third quarter 2011 decreased by 2.7% to $42.6 million, or 2.9% of sales, as compared to $43.8 million, or 2.9% of sales, in the prior year quarter. For the first forty weeks of 2011, Consolidated EBITDA, adjusted to exclude the impact of significant items totaling $5.3 million and $3.3 million in 2011 and 2010, respectively, increased 3.2% to $111.1 million, or 3.0% of sales in 2011, compared to $107.6 million, or 2.8% of sales in 2010. Including the impact of significant items, Consolidated EBITDA for the third quarter year-to-date 2011 increased by 1.5% to $105.8 million, or 2.9% of sales, compared to $104.2 million, or 2.7% of sales, in the prior year period. Consolidated EBITDA is a non-GAAP financial measure that is reconciled to the most directly comparable GAAP financial results in the attached financial statements.
“The year-over-year increases in Consolidated EBITDA results and net earnings, adjusted to exclude significant items, for the third quarter and year-to-date periods were consistent with our expectations,” said Alec Covington, President and CEO of Nash Finch. “We continue to focus on operational improvements and initiatives aimed at growing sales as we and our customers weather this prolonged economic recovery. Despite the challenging times, we have maintained our solid balance sheet and continue to look for growth opportunities.”
Net earnings in the third quarter, adjusted to exclude the impact of significant items totaling $6.3 million or $0.48 per diluted share in 2011 and a benefit of $1.1 million or $0.09 per diluted share in the 2010 quarter, increased 15.0% to $16.4 million or $1.25 per diluted share in 2011, compared to $14.3 million or $1.09 per diluted share in 2010. Including the impact of significant items, our reported net earnings for the third quarter 2011 were $10.1 million or $0.77 per diluted share, as compared to net earnings of $15.3 million, or $1.18 per diluted share, in the prior year quarter. For the first forty weeks of 2011, net earnings, adjusted to exclude the impact of significant items totaling $10.5 million or $0.80 per diluted share in 2011 and a benefit of $0.2 million or $0.01 per diluted share in 2010, increased 12.5% to $38.1 million or $2.92 per diluted share in 2011, compared to $33.8 million or $2.56 per diluted share in 2010. Including the impact of significant items, our reported net earnings for the first forty weeks of 2011 were $27.6 million or $2.12 per diluted share, compared to net earnings of $34.0 million or $2.57 per diluted share, in the prior year period.
The following table identifies the significant items affecting our Consolidated EBITDA, net earnings and diluted earnings per share for the third quarter and year-to-date 2011 and prior year results:
| (dollars in millions except per share amounts) | 3rd Quarter | Year-to-date | |||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||
| Significant charges | |||||||||||||
| Restructuring costs related to Food Distribution overhead centralization | $ | (0.9 | ) | - | (1.4 | ) | - | ||||||
| Unusual professional fees | (2.0 | ) | - | (2.0 | ) | - | |||||||
| Costs associated with retail stores sold, closed or remodeled | - | (0.2 | ) | (0.3 | ) | (0.2 | ) | ||||||
| Gain on Retail intangible asset | - | 0.3 | - | 0.3 | |||||||||
| Food Distribution facility closing costs | - | (0.5 | ) | - | (1.7 | ) | |||||||
| Military distribution center conversion and transition costs | (0.4 | ) | (1.1 | ) | (1.6 | ) | (1.7 | ) | |||||
| Significant charges impacting Consolidated EBITDA | $ | (3.3 | ) | (1.5 | ) | (5.3 | ) | (3.3 | ) | ||||
| LIFO (charges) credits | (7.1 | ) | (0.3 | ) | (9.7 | ) | 0.1 | ||||||
| Retail impairments | - | - | (0.3 | ) | - | ||||||||
| Litigation gain | - | 0.3 | - | 0.3 | |||||||||
| Net lease reserve charges (credits) | - | (0.4 | ) | 0.2 | (0.4 | ) | |||||||
| Loss on write-down of long-lived assets | - | - | (2.1 | ) | - | ||||||||
| Total significant charges impacting earnings before tax | $ | (10.4 | ) | (1.9 | ) | (17.2 | ) | (3.3 | ) | ||||
| Income tax on significant net charges | 4.1 | 0.8 | 6.7 | 1.3 | |||||||||
| Reversal of previously recorded tax reserves | - | 2.2 | - | 2.2 | |||||||||
| Total significant charges impacting net earnings | $ | (6.3 | ) | 1.1 | (10.5 | ) | 0.2 | ||||||
| Diluted earnings per share impact from significant items | (0.48 | ) | 0.09 | (0.80 | ) | 0.01 | |||||||
| Diluted earnings per share, as reported | 0.77 | 1.18 | 2.12 | 2.57 | |||||||||
| Diluted earnings per share, as adjusted | $ | 1.25 | 1.09 | 2.92 | 2.56 | ||||||||
Military Distribution Results
| (dollars in millions) | 3rd Quarter |
% |
Year-to-date |
% |
|||||||||
| 2011 | 2010 |
Change |
2011 | 2010 |
Change |
||||||||
| Net Sales | $ | 709.7 | 699.7 | 1.4% | 1,776.3 | 1,755.1 | 1.2% | ||||||
| Segment EBITDA3 | 21.3 | 17.4 | 22.6% | 51.3 | 46.7 | 9.8% | |||||||
| Percentage of Sales | 3.0% | 2.5% | 2.9% | 2.7% | |||||||||
The military segment net sales increased 1.4% in the third quarter 2011 and 1.2% in the year-to-date 2011 period compared to the prior year. However, a larger portion of military sales during the current year have been on a consignment basis, which are not included in our reported net sales. The year-over-year increase in consignment sales was approximately $3.4 million during the quarter and $11.7 million in the year-to-date period. Including the impact of consignment sales, comparable military sales increased 1.9% in the third quarter 2011 and 1.8% in the year-to-date 2011 period compared to the prior year.
The military segment EBITDA increased by $3.9 million or 22.6% in the third quarter 2011 and by $4.6 million or 9.8% in the year-to-date 2011 period compared to the same periods last year. The increase in military EBITDA is primarily due to cost savings achieved from opening the Columbus, Georgia and Bloomington, Indiana distribution centers, cycling the Columbus start-up costs that were incurred the third quarter 2010 and from improvements in inventory management. The military EBITDA as a percentage of sales in the current quarter was 3.0% as compared to 2.5% in the third quarter last year and 2.9% as compared to 2.7% in the year-to-date periods of 2011 and 2010.
“Our Bloomington, Indiana military distribution center has exceeded expectations in the third quarter due to our ability to attract new business and our associates’ focus on operational execution. The expansion of our military footprint is helping us achieve cost savings and improved productivity. We look forward to bringing our Oklahoma City facility on line, which will further improve the efficiency of our military network. The Oklahoma City facility is scheduled to open in the first quarter of 2012,” said Covington.
Food Distribution & Retail Results
| (dollars in millions) | 3rd Quarter |
% |
Year-to-date |
% |
|||||||||
| 2011 | 2010 |
Change |
2011 | 2010 |
Change |
||||||||
| Sales | |||||||||||||
| Food Distribution | $ | 620.1 | 652.7 | (5.0%) | 1,529.9 | 1,689.8 | (9.5%) | ||||||
| Retail | 141.5 | 158.6 | (10.7%) | 364.5 | 400.3 | (8.9%) | |||||||
| Total | $ | 761.6 | 811.3 | (6.1%) | 1,894.4 | 2,090.1 | (9.4%) | ||||||
| Segment EBITDA3 | |||||||||||||
| Food Distribution | $ | 15.9 | 18.9 | (15.8%) | 40.3 | 41.8 | (3.6%) | ||||||
| Retail | 5.4 | 7.5 | (28.4%) | 14.2 | 15.8 | (9.6%) | |||||||
| Total | $ | 21.3 | 26.4 | (19.4%) | 54.5 | 57.6 | (5.2%) | ||||||
| Percentage of Sales | |||||||||||||
| Food Distribution | 2.6% | 2.9% | 2.6% | 2.5% | |||||||||
| Retail | 3.8% | 4.7% | 3.9% | 3.9% | |||||||||
| Total | 2.8% | 3.3% | 2.9% | 2.8% | |||||||||
The combined food distribution and retail segment sales decrease in the third quarter and year-to-date periods of 2011 compared to the 2010 periods was 6.1% and 9.4%, respectively. The decrease in sales was negatively impacted by the previously announced transition of a portion of a customer buying group to another supplier during the second quarter 2010. After adjusting to exclude this sales impact of $0.7 million in the third quarter and $53.2 million year-to-date in addition to the impact of selling four and closing four retail stores, sales declined 4.3% for the third quarter and 5.8% year-to-date. Retail same store sales declined 0.5% as compared to the prior year quarter and 2.2% in the year-to-date comparison.
The food distribution and retail segment EBITDA decreased by $5.1 million or 19.4% in the third quarter 2011 and by $3.0 million or 5.2% in the year-to-date 2011 period compared to the same periods last year. The decrease in third quarter EBITDA was primarily due to the previously mentioned significant items that included $2.0 million of unusual professional fees and $0.9 million of restructuring costs related to the centralization of overhead functions. The food distribution and retail segment EBITDA, adjusted to exclude the impact of significant items as a percentage of sales was 3.2% in the third quarter 2011 as compared to 3.3% in the prior year quarter. Food distribution and retail segment EBITDA, adjusted to exclude the impact of significant items as a percentage of sales was 3.1% in the year-to-date 2011 period as compared to 2.8% in the same period last year.
“We were pleased to see the improvement in comparable sales for food distribution and retail in the third quarter and we expect comparable sales to continue to improve over the near term. We continue to partner with our customers on ways to improve their competitive position and to drive sales as we maintain our focus on improving productivity,” said Covington.
Financial Target Progress
Improvements on our key financial targets have been achieved to date since the targets were announced as part of the Company’s strategic plan in November 2006. In particular, Consolidated EBITDA margin improved from 2.2% to 2.9% of sales and the debt leverage ratio has improved from 3.11x to 2.23x from Fiscal 2006 to the third quarter 2011. The ratio of free cash flow to net assets excluding the impact of strategic projects has increased from 8.7% in Fiscal 2006 to 13.1% in the third quarter 2011.
The following table charts the Company’s progress towards its long-term financial targets that are anticipated to be attained through successful execution of the strategic plan.
| Financial Targets | Long-term | 3rd Qtr YTD | Fiscal | Fiscal | Fiscal | Fiscal | Fiscal | |||||||
| Target | 2011 | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||
| Organic Revenue Growth4 | 2.0% | (4.5%) | (5.4%) | (0.6%) | 3.1% | (2.6%) | (3.1%) | |||||||
| Consolidated EBITDA Margin5 | 4.0% | 2.9% | 2.8% | 2.7% | 3.1% | 2.9% | 2.2% | |||||||
|
Trailing Four Quarter Free Cash Flow / Net |
5.0% | 0.9% | 10.6% | 12.0% | 9.2% | 8.7% | ||||||||
|
Trailing Four Quarter Free Cash Flow to Net |
10.0% | 13.1% | 8.4% | 13.1% | 14.0% | 9.7% | 8.7% | |||||||
| Total Leverage Ratio8 | 2.5 - 3.0 x | 2.23x | 2.29x | 2.02x | 1.75x | 2.20x | 3.11x | |||||||
Liquidity
Total debt at the end of the third quarter of 2011 decreased by $9.6 million to $309.8 million since the end of the second quarter 2011. The Company continues to focus on effectively managing its balance sheet and is currently in compliance with all of its debt covenants. The debt leverage ratio as of the end of the third quarter 2011 was 2.23x. Availability on the Company’s revolving credit facility at the end of the quarter was $180.1 million. In the fourth quarter of 2011, the Company anticipates refinancing the Asset Based Lending agreement which will provide long term financial stability.
1 Adjusted Consolidated EBITDA is defined as Consolidated EBITDA, as defined in footnote 3, adjusted for any significant charges.
2 Adjusted EPS is defined as net earnings adjusted for any significant charges divided by diluted shares outstanding.
3 References to EBITDA, Consolidated EBITDA, and segment EBITDA are calculated as earnings before interest, income tax, depreciation and amortization, adjusted to exclude extraordinary gains or losses, gains or losses from sales of assets other than inventory in the ordinary course of business, and non-cash charges (such as LIFO, asset impairments, closed store lease costs and share-based compensation), less cash payments made during the current period on non-cash charges recorded in prior periods. Consolidated EBITDA should not be considered an alternative measure of our net income, operating performance, cash flows or liquidity. Consolidated EBITDA is provided as additional information as a key metric used to determine payout pursuant to our Short-Term and Long-Term Incentive Plans. The Company also believes investors find the information useful because it reflects the resources available for strategic investments including, for example, capital needs of the business, strategic acquisitions and debt service.
4 Organic Revenue Growth is the percentage change in revenues for a fiscal period(s) compared to the similar prior year fiscal period(s), excluding incremental revenue obtained through acquisitions.
5 Consolidated EBITDA Margin is calculated by dividing Consolidated EBITDA by sales.
6 Trailing Four Quarter Free Cash Flow to Net Assets ratio is defined as cash provided from operations less capital expenditures for property, plant & equipment during the trailing four quarters divided by the average net assets for the current period and prior year comparable period (total assets less current liabilities plus current portion of long-term debt and capital leases).
7 Trailing Four Quarter Free Cash Flow to Net Assets excluding impact of strategic projects ratio is defined as cash provided from operations less capital expenditures for property, plant & equipment (excluding capital expenditures for strategic projects) during the trailing four quarters divided by the average net assets (excluding average net assets generated from strategic projects) for the current period and prior year comparable period (total assets less current liabilities plus current portion of long-term debt and capital leases).
8 Total Leverage Ratio is defined as total debt (current portion of long-term debt and capital leases, long-term debt and capitalized lease obligations) divided by the trailing four quarters Consolidated EBITDA.
****************************************************************************************************
A conference call to review the third quarter 2011 results is scheduled for 9 a.m. CT (10 a.m. ET) on November 10, 2011. Interested participants can listen to the conference call over the Internet by logging onto the “Investor Relations” portion of Nash Finch's website at http://www.nashfinch.com. A replay of the webcast will be available and the transcript of the call will be archived on the “Investor Relations” portion of Nash Finch's website under the heading “Audio Archives.” A copy of this press release and the other financial and statistical information about the periods to be discussed in the conference call will be available at the time of the call on the “Investor Relations” portion of the Nash Finch website under the caption “Press Releases.”
Nash Finch Company is a Fortune 500 company and one of the leading food distribution companies in the United States. Nash Finch’s core business, food distribution, serves independent retailers and military commissaries in 36 states, the District of Columbia, Europe, Cuba, Puerto Rico, the Azores and Egypt. The Company also owns and operates a base of retail stores, primarily supermarkets under the Econofoods®, Family Thrift Center®, AVANZA®, Family Fresh Markets®, Savers Choice® and Sun Mart® trade names. Further information is available on the Company's website at www.nashfinch.com.
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements relate to trends and events that may affect our future financial position and operating results. Any statement contained in this release that is not statements of historical fact may be deemed forward-looking statements. For example, words such as “may,” “will,” “should,” “likely,” “expect,” “anticipate,” “estimate,” “believe,” “intend, ” “potential” or “plan,” or comparable terminology, are intended to identify forward-looking statements. Such statements are based upon current expectations, estimates and assumptions, and entail various risks and uncertainties that could cause actual results to differ materially from those expressed in such forward-looking statements. Important factors known to us that could cause or contribute to material differences include, but are not limited to, the following:
- the effect of competition on our food distribution, military and retail businesses;
- general sensitivity to economic conditions, including the uncertainty related to the current state of the economy in the U.S. and worldwide economic slowdown; disruptions to the credit and financial markets in the U.S. and worldwide; changes in market interest rates; continued volatility in energy prices and food commodities;
- macroeconomic and geopolitical events affecting commerce generally;
- changes in consumer buying and spending patterns;
- our ability to identify and execute plans to expand our food distribution, military and retail operations;
- possible changes in the military commissary system, including those stemming from the redeployment of forces, congressional action and funding levels;
- our ability to identify and execute plans to improve the competitive position of our retail operations;
- the success or failure of strategic plans, new business ventures or initiatives;
- our ability to successfully integrate and manage current or future businesses we acquire, including the ability to manage credit risks and retain the customers of those operations;
- changes in credit risk from financial accommodations extended to new or existing customers;
- significant changes in the nature of vendor promotional programs and the allocation of funds among the programs;
- limitations on financial and operating flexibility due to debt levels and debt instrument covenants;
- legal, governmental, legislative or administrative proceedings, disputes, or actions that result in adverse outcomes;
- our ability to identify and remediate any material weakness in our internal controls that could affect our ability to detect and prevent fraud, expose us to litigation, or prepare financial statements and reports in a timely manner;
- changes in accounting standards;
- technology failures that may have a material adverse effect on our business;
- severe weather and natural disasters that may impact our supply chain;
- unionization of a significant portion of our workforce;
- costs related to a multi-employer pension plan which has liabilities in excess of plan assets;
- changes in health care, pension and wage costs and labor relations issues;
- product liability claims, including claims concerning food and prepared food products;
- threats or potential threats to security;
- unanticipated problems with product procurement; and
- maintaining our reputation and corporate image.
A more detailed discussion of many of these factors, as well as other factors that could affect the Company’s results, is contained in the Company’s periodic reports filed with the SEC. You should carefully consider each of these factors and all of the other information in this release. We believe that all forward-looking statements are based upon reasonable assumptions when made. However, we caution that it is impossible to predict actual results or outcomes and that accordingly you should not place undue reliance on these statements. Forward-looking statements speak only as of the date when made and we undertake no obligation to revise or update these statements in light of subsequent events or developments. Actual results and outcomes may differ materially from anticipated results or outcomes discussed in forward-looking statements. You are advised, however, to consult any future disclosures we make on related subjects in future reports to the Securities and Exchange Commission (SEC).
| NASH FINCH COMPANY AND SUBSIDIARIES | |||||||||||
| Consolidated Statements of Income | |||||||||||
| (In thousands, except per share amounts) | |||||||||||
| Sixteen | Sixteen | Forty | Forty | ||||||||
| Weeks Ended | Weeks Ended | Weeks Ended | Weeks Ended | ||||||||
| October 8 | October 9 | October 8 | October 9 | ||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||
| Sales | $ | 1,471,357 | 1,510,881 | 3,670,741 | 3,845,191 | ||||||
| Cost of sales | 1,357,669 | 1,388,926 | 3,377,487 | 3,537,079 | |||||||
| Gross profit | 113,688 | 121,955 | 293,254 | 308,112 | |||||||
| Gross profit margin | 7.7% | 8.1% | 8.0% | 8.0% | |||||||
| Other costs and expenses: | |||||||||||
| Selling, general and administrative | 79,199 | 81,119 | 202,017 | 208,601 | |||||||
| Depreciation and amortization | 10,738 | 10,883 | 27,688 | 27,638 | |||||||
| Interest expense | 7,014 | 7,123 | 17,828 | 17,747 | |||||||
| Total other costs and expenses | 96,951 | 99,125 | 247,533 | 253,986 | |||||||
| Earnings before income taxes | 16,737 | 22,830 | 45,721 | 54,126 | |||||||
| Income tax expense | 6,644 | 7,484 | 18,096 | 20,125 | |||||||
| Net earnings | $ | 10,093 | 15,346 | 27,625 | 34,001 | ||||||
| Net earnings per share: | |||||||||||
| Basic | $ | 0.78 | 1.21 | 2.16 | 2.64 | ||||||
| Diluted | $ | 0.77 | 1.18 | 2.12 | 2.57 | ||||||
| Declared dividends per common share | $ | 0.18 | 0.18 | 0.54 | 0.54 | ||||||
| Weighted average number of common shares | |||||||||||
| outstanding and common equivalent shares outstanding: | |||||||||||
| Basic | 12,873 | 12,656 | 12,780 | 12,870 | |||||||
| Diluted | 13,105 | 13,038 | 13,056 | 13,223 | |||||||
| NASH FINCH COMPANY AND SUBSIDIARIES | |||||||
| Consolidated Balance Sheets | |||||||
| (In thousands, except per share amounts) | |||||||
|
Assets |
October 8, 2011 | January 1, 2011 | |||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 681 | 830 | ||||
| Accounts and notes receivable, net | 274,227 | 233,436 | |||||
| Inventories | 344,886 | 333,146 | |||||
| Prepaid expenses and other | 15,904 | 15,817 | |||||
| Deferred tax assets | 7,619 | 8,281 | |||||
| Total current assets | 643,317 | 591,510 | |||||
| Notes receivable, net | 21,355 | 20,350 | |||||
| Property, plant and equipment: | 665,209 | 649,256 | |||||
| Less accumulated depreciation and amortization | (407,725) | (409,190) | |||||
| Net property, plant and equipment | 257,484 | 240,066 | |||||
| Goodwill | 166,856 | 167,166 | |||||
| Customer contracts and relationships, net | 16,030 | 18,133 | |||||
| Investment in direct financing leases | 2,739 | 2,948 | |||||
| Other assets | 9,218 | 10,502 | |||||
| Total assets | $ | 1,116,999 | 1,050,675 | ||||
|
Liabilities and Stockholders' Equity |
|||||||
| Current liabilities: | |||||||
| Current maturities of long-term debt and capital lease obligations | $ | 3,082 | 3,159 | ||||
| Accounts payable | 279,919 | 230,082 | |||||
| Accrued expenses | 57,104 | 60,001 | |||||
| Total current liabilities | 340,105 | 293,242 | |||||
| Long-term debt | 290,351 | 292,266 | |||||
| Capital lease obligations | 16,355 | 18,920 | |||||
| Deferred tax liability, net | 39,681 | 36,344 | |||||
| Other liabilities | 28,384 | 32,899 | |||||
| Commitments and contingencies | - | - | |||||
| Stockholders' equity: | |||||||
| Preferred stock - no par value. | |||||||
| Authorized 500 shares; none issued | - | - | |||||
| Common stock of $1.66 2/3 par value | |||||||
| Authorized 50,000 shares; 13,677 shares issued | 22,796 | 22,796 | |||||
| Additional paid-in capital | 117,790 | 114,799 | |||||
| Common stock held in trust | (1,243) | (1,213) | |||||
| Deferred compensation obligations | 1,243 | 1,213 | |||||
| Accumulated other comprehensive loss | (10,725) | (10,984) | |||||
| Retained earnings | 324,502 | 303,584 | |||||
| Treasury stock at cost; 1,541 and 1,569 shares | (52,240) | (53,191) | |||||
| Total stockholders' equity | 402,123 | 377,004 | |||||
| Total liabilities and stockholders' equity | $ | 1,116,999 | 1,050,675 | ||||
| NASH FINCH COMPANY AND SUBSIDIARIES | ||||||||||
| Consolidated Statements of Cash Flows | ||||||||||
| (In thousands) | ||||||||||
| 40 Weeks Ended | ||||||||||
| October 8 | October 9 | |||||||||
| 2011 | 2010 | |||||||||
| Operating activities: | ||||||||||
| Net earnings | $ | 27,625 | 34,001 | |||||||
| Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||||
| Depreciation and amortization | 27,688 | 27,638 | ||||||||
| Amortization of deferred financing costs | 1,409 | 1,411 | ||||||||
| Non-cash convertible debt interest | 4,385 | 4,058 | ||||||||
| Amortization of rebateable loans | 2,568 | 3,074 | ||||||||
| Provision for bad debts | 683 | 216 | ||||||||
| Provision for (reversal of) lease reserves | 631 | 291 | ||||||||
| Deferred income tax expense | 3,999 | 7,510 | ||||||||
| Loss (gain) on sale of property, plant and equipment | 1,316 | (423 | ) | |||||||
| LIFO charge (credit) | 9,717 | (76 | ) | |||||||
| Asset impairments | 363 | 926 | ||||||||
| Share-based compensation | 4,292 | 6,179 | ||||||||
| Deferred compensation | 646 | 838 | ||||||||
| Other | (644 | ) | (730 | ) | ||||||
| Changes in operating assets and liabilities | ||||||||||
| Accounts and notes receivable | (37,768 | ) | (22,593 | ) | ||||||
| Inventories | (20,973 | ) | (55,886 | ) | ||||||
| Prepaid expenses | (1,835 | ) | 1,887 | |||||||
| Accounts payable | 35,660 | 14,407 | ||||||||
| Accrued expenses | (2,637 | ) | (912 | ) | ||||||
| Income taxes payable | 1,747 | (5,305 | ) | |||||||
| Other assets and liabilities | (3,968 | ) | (200 | ) | ||||||
| Net cash provided by operating activities | 54,904 | 16,311 | ||||||||
| Investing activities: | ||||||||||
| Disposal of property, plant and equipment | 3,863 | 575 | ||||||||
| Additions to property, plant and equipment | (47,340 | ) | (39,853 | ) | ||||||
| Business acquired, net of cash | (1,587 | ) | - | |||||||
| Loans to customers | (7,285 | ) | (1,095 | ) | ||||||
| Payments from customers on loans | 1,178 | 1,703 | ||||||||
| Other | (520 | ) | (400 | ) | ||||||
| Net cash used in investing activities | (51,691 | ) | (39,070 | ) | ||||||
| Financing activities: | ||||||||||
| Proceeds (payments) of revolving debt | (6,000 | ) | 38,000 | |||||||
| Dividends paid | (6,549 | ) | (6,739 | ) | ||||||
| Repurchase of common stock | - | (20,267 | ) | |||||||
| Payments of long-term debt | (284 | ) | (264 | ) | ||||||
| Payments of capital lease obligations | (2,256 | ) | (3,009 | ) | ||||||
| Increase (decrease) in outstanding checks | 12,235 | 14,993 | ||||||||
| Other | (508 | ) | - | |||||||
| Net cash used in by financing activities | (3,362 | ) | 22,714 | |||||||
| Net decrease in cash | (149 | ) | (45 | ) | ||||||
| Cash at beginning of period | 830 | 830 | ||||||||
| Cash at end of period | $ | 681 | 785 | |||||||
| NASH FINCH COMPANY AND SUBSIDIARIES | |||||
| Supplemental Data (Unaudited) | |||||
| October 8 | October 9 | ||||
|
Other Data (In thousands) |
2011 | 2010 | |||
| Total debt | $ | 309,788 | 321,941 | ||
| Stockholders' equity | $ | 402,123 | 363,683 | ||
| Capitalization | $ | 711,911 | 685,624 | ||
| Debt to total capitalization | 43.5% | 47.0% | |||
| Non-GAAP Data | |||||
| Consolidated EBITDA (a) | $ | 139,042 | 135,503 | ||
| Leverage ratio - trailing 4 qtrs. (debt to consolidated EBITDA) (b) | 2.23x | 2.38x | |||
| Comparable GAAP Data | |||||
| Debt to earnings before income taxes (b) | 4.86 | 25.59 | |||
|
(a) |
Consolidated EBITDA, as defined in our credit agreement, is earnings before interest, income tax, depreciation and amortization, | |
| adjusted to exclude extraordinary gains or losses, gains or losses from sales of assets other than inventory in the ordinary course | ||
| of business, and non-cash charges (such as LIFO, asset impairments, closed store lease costs and share-based compensation), less | ||
| cash payments made during the current period on non-cash charges recorded in prior periods. Consolidated EBITDA should not | ||
| be considered an alternative measure of our net income, operating performance, cash flows or liquidity. The amount of Consolidated | ||
| EBITDA is provided as a metric used to determine payout of performance units pursuant to our Long-Term Incentive Plan. | ||
|
(b) |
Leverage ratio is defined as the Company's total debt at October 8, 2011 and October 9, 2010, divided by Consolidated EBITDA | |
| for the respective four trailing quarters. The most comparable GAAP ratio is debt at the same date divided by earnings from | ||
| continuing operations before income taxes for the respective four trailing quarters. | ||
|
Derivation of Consolidated EBITDA; Segment Consolidated EBITDA and Segment Profit (in thousands) |
||||||||||||||||||
| FY 2011 | ||||||||||||||||||
| 2010 | 2011 | 2011 | 2011 | Rolling | ||||||||||||||
| Qtr 4 | Qtr 1 | Qtr 2 | Qtr 3 | 4 Qtrs | ||||||||||||||
| Earnings before income taxes | $ | 18,000 | 12,370 | 16,614 | 16,737 | 63,721 | ||||||||||||
| Add/(deduct) | ||||||||||||||||||
| LIFO charge | 129 | 501 | 2,131 | 7,085 | 9,846 | |||||||||||||
| Depreciation and amortization | 8,481 | 8,583 | 8,367 | 10,738 | 36,169 | |||||||||||||
| Interest expense | 5,656 | 5,459 | 5,355 | 7,014 | 23,484 | |||||||||||||
| Settlement of pre-acquisition contingency | - | - | - | - | - | |||||||||||||
| Closed store lease costs | 29 | 448 | 159 | 24 | 660 | |||||||||||||
| Asset impairment | 11 | - | 349 | 13 | 373 | |||||||||||||
| Net loss (gain) on sale of real estate and other assets | - | 1,796 | (391 | ) | (106 | ) | 1,299 | |||||||||||
| Stock compensation | 1,692 | 1,159 | 1,372 | 1,761 | 5,984 | |||||||||||||
| Subsequent cash payments on non-cash charges | (768 | ) | (504 | ) | (572 | ) | (650 | ) | (2,494 | ) | ||||||||
| Total Consolidated EBITDA | $ | 33,230 | 29,812 | 33,384 | 42,616 | 139,042 | ||||||||||||
| 2010 | 2011 | 2011 | 2011 | Rolling | ||||||||||||||
| Segment Consolidated EBITDA | Qtr 4 | Qtr 1 | Qtr 2 | Qtr 3 | 4 Qtrs | |||||||||||||
| Military | $ | 14,081 | 15,107 | 14,835 | 21,348 | 65,371 | ||||||||||||
| Food Distribution | 14,570 | 10,581 | 13,791 | 15,907 | 54,849 | |||||||||||||
| Retail | 4,579 | 4,124 | 4,758 | 5,361 | 18,822 | |||||||||||||
| $ | 33,230 | 29,812 | 33,384 | 42,616 | 139,042 | |||||||||||||
| 2010 | 2011 | 2011 | 2011 | Rolling | ||||||||||||||
| Segment profit | Qtr 4 | Qtr 1 | Qtr 2 | Qtr 3 | 4 Qtrs | |||||||||||||
| Military | $ | 11,450 | 12,147 | 11,285 | 14,666 | 49,548 | ||||||||||||
| Food Distribution | 9,444 | 5,845 | 7,709 | 6,177 | 29,175 | |||||||||||||
| Retail | 1,892 | (984 | ) | 2,128 | 1,790 | 4,826 | ||||||||||||
| Unallocated: | ||||||||||||||||||
| Interest | (4,786 | ) | (4,638 | ) | (4,508 | ) | (5,896 | ) | (19,828 | ) | ||||||||
| $ | 18,000 | 12,370 | 16,614 | 16,737 | 63,721 | |||||||||||||
| FY 2010 | ||||||||||||||||||
| 2009 | 2010 | 2010 | 2010 | Rolling | ||||||||||||||
| Qtr 4 | Qtr 1 | Qtr 2 | Qtr 3 | 4 Qtrs | ||||||||||||||
| Earnings (loss) before income taxes | $ | (41,545 | ) | 13,330 | 17,966 | 22,830 | 12,581 | |||||||||||
| Add/(deduct) | ||||||||||||||||||
| LIFO credit | (2,301 | ) | (40 | ) | (321 | ) | 285 | (2,377 | ) | |||||||||
| Depreciation and amortization | 9,304 | 8,585 | 8,170 | 10,883 | 36,942 | |||||||||||||
| Interest expense | 5,607 | 5,258 | 5,366 | 7,123 | 23,354 | |||||||||||||
| Special charge | 6,020 | - | - | - | 6,020 | |||||||||||||
| Goodwill impairment | 50,927 | - | - | - | 50,927 | |||||||||||||
| Settlement of pre-acquisition contingency | - | - | - | (310 | ) | (310 | ) | |||||||||||
| Closed store lease costs | 1,644 | - | (434 | ) | 725 | 1,935 | ||||||||||||
| Asset impairment | 722 | 517 | 301 | 108 | 1,648 | |||||||||||||
| Stock compensation | 1,663 | 1,605 | 1,857 | 2,717 | 7,842 | |||||||||||||
| Subsequent cash payments on non-cash charges | (772 | ) | (740 | ) | (969 | ) | (578 | ) | (3,059 | ) | ||||||||
| Total Consolidated EBITDA | $ | 31,269 | 28,515 | 31,936 | 43,783 | 135,503 | ||||||||||||
| 2009 | 2010 | 2010 | 2010 | Rolling | ||||||||||||||
| Segment Consolidated EBITDA | Qtr 4 | Qtr 1 | Qtr 2 | Qtr 3 | 4 Qtrs | |||||||||||||
| Military | $ | 13,399 | 14,761 | 14,542 | 17,412 | 60,114 | ||||||||||||
| Food Distribution | 14,284 | 10,257 | 12,623 | 18,889 | 56,053 | |||||||||||||
| Retail | 3,586 | 3,497 | 4,771 | 7,482 | 19,336 | |||||||||||||
| $ | 31,269 | 28,515 | 31,936 | 43,783 | 135,503 | |||||||||||||
| 2009 | 2010 | 2010 | 2010 | Rolling | ||||||||||||||
| Segment profit | Qtr 4 | Qtr 1 | Qtr 2 | Qtr 3 | 4 Qtrs | |||||||||||||
| Military | $ | 11,566 | 12,918 | 12,663 | 14,270 | 51,417 | ||||||||||||
| Food Distribution | 10,303 | 4,904 | 7,636 | 11,666 | 34,509 | |||||||||||||
| Retail | (1,677 | ) | 20 | 2,190 | 2,558 | 3,091 | ||||||||||||
| Unallocated: | ||||||||||||||||||
| Interest | (4,790 | ) | (4,512 | ) | (4,523 | ) | (5,664 | ) | (19,489 | ) | ||||||||
| Special charge | (6,020 | ) | - | - | - | (6,020 | ) | |||||||||||
| Goodwill impairment | (50,927 | ) | - | - | - | (50,927 | ) | |||||||||||
| $ | (41,545 | ) | 13,330 | 17,966 | 22,830 | 12,581 | ||||||||||||