GRAND RAPIDS, Mich.--(BUSINESS WIRE)--SpartanNash Company (the “Company”) (Nasdaq: SPTN) today reported financial results for its 12-week fourth quarter and 52-week fiscal year ended December 28, 2019.
Fourth Quarter Fiscal 2019 Highlights
- Net sales growth of 5.3%, to $2.00 billion from $1.90 billion in the prior year quarter, representing the fifteenth consecutive quarter of growth.
- Retail comparable store sales of 0.5%, were positive for the second consecutive quarter.
- EPS of $0.15 per share; Adjusted EPS of $0.23, including $0.11 in CEO transition and supplemental incentive program costs (“Transition Costs”).
- Significant working capital improvements over the prior year, including over $45 million in inventory reductions, excluding the impact of the Martin’s Super Markets (“Martin’s”) acquisition.
“We are pleased with the progress that was made in the last quarter,” said Dennis Eidson, Interim President and Chief Executive Officer. “By focusing on execution, we were able to deliver positive retail comparable store sales for the second consecutive quarter, reduce working capital and increase our free cash flow, while making improvements in our supply chain operations. As a result, we were able to deliver results consistent with the guidance we provided following the third quarter and are optimistic about our future outlook.”
Consolidated Financial Results
Consolidated net sales for the fourth quarter increased $101.2 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 the acquisition of Martin’s, as well as higher sales within the Food Distribution segment prior to the elimination of the intercompany sales for the acquired business.
Gross profit for the fourth quarter of fiscal 2019 was $286.7 million, or 14.4% of net sales, compared to $245.4 million, or 12.9% of net sales, in the prior year quarter. The growth in gross profit and improvement as a percent of net sales was primarily driven by the acquisition of Martin’s and the resulting higher mix of Retail sales.
Reported operating expenses for the fourth quarter were $275.1 million, or 13.8% of net sales, compared to $257.2 million, or 13.6% 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 the additional Retail segment business associated with Martin’s, which has higher operating expense rates than the distribution business. Additionally, the Company incurred $4.6 million in higher healthcare costs in the current year quarter. These increases were partially offset by a decrease in asset impairment charges. Fourth quarter operating expenses would have been $272.2 million, or 13.6% of net sales, compared to $223.2 million, or 11.8% of net sales, in the prior year quarter, excluding the asset impairment charges and other adjustments detailed in Table 3.
The Company reported operating earnings of $11.6 million compared to a loss of $11.9 million in the prior year quarter. The improvement was primarily attributable to the decrease in asset impairment charges as well as sales growth, partially offset by higher supply chain costs and administrative expenses, including higher healthcare costs and the Transition Costs. Adjusted operating earnings(1) were $15.2 million compared to $22.2 million in the prior year quarter. Adjusted operating earnings decreased due to the higher costs mentioned above, but benefited from the exclusion of losses related to Fresh Kitchen operations, which were not adjusted in the prior year quarter. 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.
The Company reported earnings from continuing operations of $5.5 million, or $0.15 per share, compared to a loss of $14.0 million, or $0.39 per diluted share, in the prior year quarter. The improvement reflects the operating earnings changes noted above, as well as lower interest expense.
Adjusted earnings from continuing operations(3) for the fourth quarter were $8.3 million, or $0.23 per diluted share, and include $3.9 million after tax, or $0.11 per diluted share, in Transition Costs. Adjusted earnings from continuing operations for the prior year quarter were $11.4 million, or $0.32 per diluted share. A reconciliation of reported earnings from continuing operations to adjusted earnings from continuing operations is included at Table 4.
Adjusted EBITDA(2) was $37.4 million compared to $44.3 million in the prior year quarter due to factors mentioned above.
Segment Financial Results
Food Distribution
Net sales for Food Distribution decreased $15.4 million, or 1.6%, to $938.9 million from $954.4 million in the prior year quarter. Excluding the impact of the elimination of intercompany sales to Martin’s, net sales increased 2.5%, primarily due to sales growth with existing customers.
Reported operating earnings for Food Distribution were $10.9 million compared to a loss of $14.3 million in the prior year quarter. The increase in reported operating earnings was primarily attributable to lower asset impairment charges, partially offset by higher corporate administrative expenses, including Transition Costs, and higher supply chain costs. Fourth quarter adjusted operating earnings(1) were $15.7 million compared to $17.9 million in the prior year quarter. Adjusted operating earnings exclude losses associated with Fresh Kitchen operations and disposition activities in the current year, and an impairment charge related to the insolvency of a customer in the prior year quarter.
Retail
Net sales for Retail increased $118.9 million, or 27.7%, to $548.0 million from $429.1 million in the prior year quarter primarily due to the acquisition of Martin’s. Comparable store sales of 0.5% were offset by the impact of store closures.
Reported operating earnings for Retail were $4.2 million compared to operating earnings of $2.9 million in the prior year quarter. The increase in reported operating earnings was due to decreases in restructuring costs, merger/acquisition and integration costs, and the contribution of the acquired Martin’s stores, partially offset by higher healthcare costs and Transition Costs. Adjusted operating earnings(1) were $3.0 million compared to $4.7 million in the prior year quarter and exclude restructuring costs and merger/acquisition and integration activity in both periods.
Military Distribution
Net sales for Military Distribution decreased $2.3 million, or 0.5%, to $511.0 million from $513.3 million in the prior year quarter. The decrease was due to lower comparable sales at Defense Commissary Agency (“DeCA”) operated locations partially offset by the continued expansion of DeCA’s private brand program.
The reported operating loss for Military Distribution was $3.5 million compared to $0.5 million in the prior year quarter. The change was primarily attributable to higher supply chain costs and corporate administrative expenses, partially offset by improvements in margin rates. Adjusted operating loss(1) was $3.5 million compared to $0.4 million in the prior year quarter.
Fiscal Year 2019 Results
Consolidated net sales for the fiscal year ended December 28, 2019 increased $471.5 million, or 5.8%, to $8.54 billion from $8.06 billion in the prior fiscal year. The increase in net sales was generated through the acquisition of Martin’s, as well as higher sales within the Food Distribution segment prior to the elimination of the intercompany sales for the acquired business.
The Company reported earnings from continuing operations for fiscal 2019 of $5.9 million, or $0.16 per diluted share, compared to $33.8 million, or $0.94 per diluted share, in the prior year. The decrease was primarily related to pension termination expenses, an increase in supply chain costs, and higher administrative expenses, including Transition Costs. These factors were partially offset by lower restructuring charges and the contribution of the acquired Martin’s stores. Adjusted earnings from continuing operations(3) for fiscal 2019 were $39.9 million, or $1.10 per diluted share, compared to $67.3 million, or $1.87 per diluted share, in the prior year. Fiscal 2019 adjusted earnings exclude $34.0 million of net after-tax charges primarily related to pension termination expense, asset impairment charges, one-time costs associated with Project One Team and losses from the Fresh Kitchen operations in the second half of the year. Fiscal 2018 adjusted earnings from continuing operations exclude $33.5 million of net after-tax charges primarily related to asset impairment.
Adjusted EBITDA(2) for fiscal 2019 was $177.9 million, or 2.1% of net sales, compared to $209.4 million, or 2.6% of net sales, in fiscal 2018.
Capital expenditures totaled $74.8 million in fiscal 2019, as approximately $12 million more in expenditures were incurred but not paid in the last period of the fiscal year compared to 2018, shifting the purchases from fiscal 2019 to fiscal 2020 for cash flow purposes. The Company incurred depreciation and amortization expense of $88.4 million in fiscal 2019.
Cash Flow
Cash flows provided by operating activities in fiscal 2019 were $180.2 million, compared to $171.7 million in the prior year. The increase was due to improvements in working capital, partially offset by lower earnings from continuing operations. The Company generated $105.4 million in free cash flow(5) in the current year and $100.2 million in the prior year. SpartanNash reduced net long-term debt(6) levels by $15.1 million during fiscal 2019.
The Company declared $27.6 million in 2019 quarterly cash dividends equal to $0.76 per common share.
Strategic Business Objectives
Following are key updates to the Company’s progress towards its strategic business objectives during the fourth quarter of 2019:
- Sustained mid-single digit sales growth in the fourth quarter, realizing 5.3% net sales growth from the same quarter in the prior year and delivering the 15th consecutive quarter of net sales growth.
- Made significant progress on implementation of Project One Team initiatives, continuing to support the expected realization of a run-rate of over $20.0 million in annual cost savings by April 20, 2021.
- Continued to make reductions to working capital, realizing a significant improvement over the fourth quarter of 2018, despite sustaining net sales growth and the acquisition of Martin’s in early 2019. Working capital improvements were driven by reductions in inventory levels of over $45 million, excluding the acquisition.
- Ceased production within the Fresh Kitchen during the fourth quarter of fiscal 2019 and entered into an agreement to sell the facility and related equipment with an expected closing date late in the first quarter of fiscal 2020.
Outlook
For the 53-week fiscal year ending January 2, 2021, the Company anticipates low-single digit percentage sales growth. On a 52-week basis, the Company expects the Food Distribution segment will continue to achieve mid-single digit sales growth driven by existing customers and new business, partially offset by attrition in the independent retail base and the closure of the Fresh Kitchen operations. The Company expects positive Retail segment comparable sales for fiscal 2020 to range from 0.1% to 0.7%. In the Military Distribution segment, the Company expects a continued decline in the DeCA comparable sales trend, partially offset by growth in DeCA private brands, resulting in a mid-single digit percentage sales decline. The Company will also benefit from an additional week of sales compared to the 52-week year ended December 28, 2019, which will be reflected in the Company’s fourth quarter fiscal 2020 results.
The Company is also initiating fiscal 2020 adjusted EBITDA guidance of $180 million to $190 million, compared to fiscal 2019’s adjusted EBITDA(2) of $177.9 million, consistent with the Company’s projected increases in operating earnings.
For fiscal year 2020, the Company anticipates adjusted earnings per share from continuing operations(4) of approximately $1.12 to $1.20, excluding restructuring charges, merger/acquisition and integration expenses and other adjusted items totaling $7.5 million to $9.0 million before taxes, as detailed in Table 7. The favorable contributions from initiatives associated with Project One Team are expected to be partially offset by the increase in costs to achieve normalized incentive compensation levels. The Company anticipates that reported earnings from continuing operations will be in the range of approximately $0.93 to $1.04 per diluted share, compared to earnings from continuing operations of $0.16 per diluted share in fiscal 2019. The anticipated adjusted and reported earnings per share from continuing operations include approximately $0.02 in benefits from the 53rd week in fiscal 2020 as compared to 52-weeks in fiscal 2019.
The Company’s guidance reflects an effective tax rate of 23.5% to 24.5% for fiscal year 2020. The Company expects capital expenditures for fiscal year 2020 to be in the range of $80.0 million to $90.0 million, including the $12 million in 2019 capital expenditure accruals mentioned previously, with depreciation and amortization of $88.0 million to $94.0 million. Interest expense is expected to range from $27.0 million to $28.0 million in fiscal 2020.
With the low volume post-Easter week moving into fiscal 2020’s first quarter, the Company expects Retail comparable sales to be approximately flat. Adjusted diluted earnings per share from continuing operations for the first quarter of fiscal 2020 are expected to be slightly above the first quarter of fiscal 2019.
The Board of Directors has continued a comprehensive process to identify the Company’s next Chief Executive Officer and has made progress in the search over the last quarter.
Conference Call
A telephone conference call to discuss the Company’s fourth quarter 2019 financial results is scheduled for Thursday, February 20, 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 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, Honduras, Bahrain, Djibouti and Egypt. SpartanNash currently operates 155 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, 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 earnings 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. |
(5) A reconciliation of net cash provided by operating activities to free cash flow, a non-GAAP financial measure, is provided below. |
(6) A reconciliation of long-term debt and finance lease obligations to net long-term debt, a non-GAAP financial measure, is provided below. |
SPARTANNASH COMPANY AND SUBSIDIARIES |
|||||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||||||||||||
(Unaudited) |
|||||||||||||||||||
|
12 Weeks Ended |
|
|
52 Weeks Ended |
|
||||||||||||||
|
December 28, |
|
|
December 29, |
|
|
December 28, |
|
|
December 29, |
|
||||||||
(In thousands, except per share amounts) |
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
||||||||
Net sales |
$ |
|
1,997,953 |
|
|
$ |
|
1,896,796 |
|
|
$ |
|
8,536,065 |
|
|
$ |
|
8,064,552 |
|
Cost of sales |
|
|
1,711,220 |
|
|
|
|
1,651,406 |
|
|
|
|
7,292,235 |
|
|
|
|
6,954,146 |
|
Gross profit |
|
|
286,733 |
|
|
|
|
245,390 |
|
|
|
|
1,243,830 |
|
|
|
|
1,110,406 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
272,241 |
|
|
|
|
223,567 |
|
|
|
|
1,172,401 |
|
|
|
|
997,411 |
|
Merger/acquisition and integration |
|
|
73 |
|
|
|
|
1,406 |
|
|
|
|
1,437 |
|
|
|
|
4,937 |
|
Restructuring, asset impairment and other charges |
|
|
2,835 |
|
|
|
|
32,277 |
|
|
|
|
13,050 |
|
|
|
|
37,546 |
|
Total operating expenses |
|
|
275,149 |
|
|
|
|
257,250 |
|
|
|
|
1,186,888 |
|
|
|
|
1,039,894 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings (loss) |
|
|
11,584 |
|
|
|
|
(11,860 |
) |
|
|
|
56,942 |
|
|
|
|
70,512 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expenses and (income) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
6,596 |
|
|
|
|
7,655 |
|
|
|
|
34,548 |
|
|
|
|
30,483 |
|
Loss on debt extinguishment |
|
|
— |
|
|
|
|
— |
|
|
|
|
329 |
|
|
|
|
— |
|
Postretirement benefit expense |
|
|
126 |
|
|
|
|
179 |
|
|
|
|
19,803 |
|
|
|
|
159 |
|
Other, net |
|
|
(242 |
) |
|
|
|
(193 |
) |
|
|
|
(1,313 |
) |
|
|
|
(828 |
) |
Total other expenses, net |
|
|
6,480 |
|
|
|
|
7,641 |
|
|
|
|
53,367 |
|
|
|
|
29,814 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) before income taxes and discontinued operations |
|
|
5,104 |
|
|
|
|
(19,501 |
) |
|
|
|
3,575 |
|
|
|
|
40,698 |
|
Income tax (benefit) expense |
|
|
(369 |
) |
|
|
|
(5,474 |
) |
|
|
|
(2,342 |
) |
|
|
|
6,907 |
|
Earnings (loss) from continuing operations |
|
|
5,473 |
|
|
|
|
(14,027 |
) |
|
|
|
5,917 |
|
|
|
|
33,791 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings from discontinued operations, net of taxes |
|
|
(49 |
) |
|
|
|
19 |
|
|
|
|
(175 |
) |
|
|
|
(219 |
) |
Net earnings (loss) |
$ |
|
5,424 |
|
|
$ |
|
(14,008 |
) |
|
$ |
|
5,742 |
|
|
$ |
|
33,572 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations |
$ |
|
0.15 |
|
|
$ |
|
(0.39 |
) |
|
$ |
|
0.16 |
|
|
$ |
|
0.94 |
|
Loss from discontinued operations |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
(0.01 |
) |
Net earnings (loss) |
$ |
|
0.15 |
|
|
$ |
|
(0.39 |
) |
|
$ |
|
0.16 |
|
|
$ |
|
0.93 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations |
$ |
|
0.15 |
|
|
$ |
|
(0.39 |
) |
|
$ |
|
0.16 |
|
|
$ |
|
0.94 |
|
Loss from discontinued operations |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
(0.01 |
) |
Net earnings (loss) |
$ |
|
0.15 |
|
|
$ |
|
(0.39 |
) |
|
$ |
|
0.16 |
|
|
$ |
|
0.93 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
36,351 |
|
|
|
|
35,943 |
|
|
|
|
36,271 |
|
|
|
|
36,012 |
|
Diluted |
|
|
36,351 |
|
|
|
|
35,943 |
|
|
|
|
36,271 |
|
|
|
|
36,022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SPARTANNASH COMPANY AND SUBSIDIARIES |
|||||||||
CONSOLIDATED BALANCE SHEETS |
|||||||||
(Unaudited) |
|||||||||
|
December 28, |
|
|
December 29, |
|
||||
(In thousands) |
2019 |
|
|
2018 |
|
||||
Assets |
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
|
24,172 |
|
|
$ |
|
18,585 |
|
Accounts and notes receivable, net |
|
|
345,320 |
|
|
|
|
346,260 |
|
Inventories, net |
|
|
537,212 |
|
|
|
|
553,799 |
|
Prepaid expenses and other current assets |
|
|
58,775 |
|
|
|
|
73,798 |
|
Property and equipment held for sale |
|
|
31,203 |
|
|
|
|
8,654 |
|
Total current assets |
|
|
996,682 |
|
|
|
|
1,001,096 |
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
615,816 |
|
|
|
|
579,060 |
|
Goodwill |
|
|
181,035 |
|
|
|
|
178,648 |
|
Intangible assets, net |
|
|
130,434 |
|
|
|
|
128,926 |
|
Operating lease assets |
|
|
268,982 |
|
|
|
|
— |
|
Other assets, net |
|
|
82,660 |
|
|
|
|
84,182 |
|
|
|
|
|
|
|
|
|
|
|
Total assets |
$ |
|
2,275,609 |
|
|
$ |
|
1,971,912 |
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
Accounts payable |
$ |
|
405,370 |
|
|
$ |
|
357,802 |
|
Accrued payroll and benefits |
|
|
59,680 |
|
|
|
|
57,180 |
|
Other accrued expenses |
|
|
51,295 |
|
|
|
|
43,206 |
|
Current portion of operating lease liabilities |
|
|
42,440 |
|
|
|
|
— |
|
Current portion of long-term debt and finance lease liabilities |
|
|
6,349 |
|
|
|
|
18,263 |
|
Total current liabilities |
|
|
565,134 |
|
|
|
|
476,451 |
|
|
|
|
|
|
|
|
|
|
|
Long-term liabilities |
|
|
|
|
|
|
|
|
|
Deferred income taxes |
|
|
43,111 |
|
|
|
|
49,254 |
|
Operating lease liabilities |
|
|
267,350 |
|
|
|
|
— |
|
Other long-term liabilities |
|
|
30,272 |
|
|
|
|
50,463 |
|
Long-term debt and finance lease liabilities |
|
|
682,204 |
|
|
|
|
679,797 |
|
Total long-term liabilities |
|
|
1,022,937 |
|
|
|
|
779,514 |
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity |
|
|
|
|
|
|
|
|
|
Common stock, voting, no par value; 100,000 shares authorized; 36,351 and 35,952 shares outstanding |
|
|
490,233 |
|
|
|
|
484,064 |
|
Preferred stock, no par value, 10,000 shares authorized; no shares outstanding |
|
|
— |
|
|
|
|
— |
|
Accumulated other comprehensive loss |
|
|
(1,600 |
) |
|
|
|
(15,759 |
) |
Retained earnings |
|
|
198,905 |
|
|
|
|
247,642 |
|
Total shareholders’ equity |
|
|
687,538 |
|
|
|
|
715,947 |
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders’ equity |
$ |
|
2,275,609 |
|
|
$ |
|
1,971,912 |
|
|
|
|
|
|
|
|
|
|
|
SPARTANNASH COMPANY AND SUBSIDIARIES |
||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||||||
(Unaudited) |
||||||||||||
|
|
|
|
52 Weeks Ended |
|
|||||||
(In thousands) |
|
|
|
December 28, 2019 |
|
|
December 29, 2018 |
|
||||
Cash flow activities |
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
|
$ |
|
180,192 |
|
|
$ |
|
171,658 |
|
Net cash used in investing activities |
|
|
|
|
|
(143,172 |
) |
|
|
|
(64,156 |
) |
Net cash used in financing activities |
|
|
|
|
|
(31,219 |
) |
|
|
|
(104,300 |
) |
Net cash used in discontinued operations |
|
|
|
|
|
(214 |
) |
|
|
|
(284 |
) |
Net increase in cash and cash equivalents |
|
|
|
|
|
5,587 |
|
|
|
|
2,918 |
|
Cash and cash equivalents at beginning of the period |
|
|
|
|
|
18,585 |
|
|
|
|
15,667 |
|
Cash and cash equivalents at end of the period |
|
|
|
$ |
|
24,172 |
|
|
$ |
|
18,585 |
|
SPARTANNASH COMPANY AND SUBSIDIARIES |
|||||||||||||||||||||||||||||||
SUPPLEMENTAL FINANCIAL DATA |
|||||||||||||||||||||||||||||||
Table 1: Sales and Operating Earnings by Segment |
|||||||||||||||||||||||||||||||
(Unaudited) |
|||||||||||||||||||||||||||||||
|
12 Weeks Ended |
|
|
52 Weeks Ended |
|
||||||||||||||||||||||||||
(In thousands) |
December 28, 2019 |
|
|
December 29, 2018 |
|
|
December 28, 2019 |
|
|
December 29, 2018 |
|
||||||||||||||||||||
Food Distribution Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
|
938,941 |
|
|
47.0 |
% |
|
$ |
|
954,354 |
|
|
50.3 |
% |
|
$ |
|
3,982,609 |
|
|
46.7 |
% |
|
$ |
|
3,991,450 |
|
|
49.5 |
% |
Operating earnings (loss) |
|
|
10,852 |
|
|
|
|
|
|
|
(14,308 |
) |
|
|
|
|
|
|
47,416 |
|
|
|
|
|
|
|
48,752 |
|
|
|
|
Military Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
|
511,010 |
|
|
25.6 |
% |
|
|
|
513,347 |
|
|
27.1 |
% |
|
|
|
2,172,107 |
|
|
25.4 |
% |
|
|
|
2,166,843 |
|
|
26.9 |
% |
Operating (loss) earnings |
|
|
(3,510 |
) |
|
|
|
|
|
|
(473 |
) |
|
|
|
|
|
|
(9,316 |
) |
|
|
|
|
|
|
5,647 |
|
|
|
|
Retail Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
|
548,002 |
|
|
27.4 |
% |
|
|
|
429,095 |
|
|
22.6 |
% |
|
|
|
2,381,349 |
|
|
27.9 |
% |
|
|
|
1,906,259 |
|
|
23.6 |
% |
Operating earnings |
|
|
4,242 |
|
|
|
|
|
|
|
2,921 |
|
|
|
|
|
|
|
18,842 |
|
|
|
|
|
|
|
16,113 |
|
|
|
|
Total: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
|
1,997,953 |
|
|
100.0 |
% |
|
$ |
|
1,896,796 |
|
|
100.0 |
% |
|
$ |
|
8,536,065 |
|
|
100.0 |
% |
|
$ |
|
8,064,552 |
|
|
100.0 |
% |
Operating earnings (loss) |
|
|
11,584 |
|
|
|
|
|
|
|
(11,860 |
) |
|
|
|
|
|
|
56,942 |
|
|
|
|
|
|
|
70,512 |
|
|
|
|
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 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. Prior year adjusted operating earnings, adjusted earnings from continuing operations, and adjusted EBITDA exclude start-up costs associated with the first year of Fresh Kitchen operations, which concluded during the first quarter of 2018. These items are considered “non-operational” or “non-core” in nature.
Table 2: Reconciliation of Net Earnings (Loss) to Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization |
|||||||||||||||||||
(Adjusted EBITDA) |
|||||||||||||||||||
(A Non-GAAP Financial Measure) |
|||||||||||||||||||
(Unaudited) |
|||||||||||||||||||
|
12 Weeks Ended |
|
|
52 Weeks Ended |
|
||||||||||||||
(In thousands) |
December 28,
|
|
|
December 29,
|
|
|
December 28,
|
|
|
December 29,
|
|
||||||||
Net earnings (loss) |
$ |
|
5,424 |
|
|
$ |
|
(14,008 |
) |
|
$ |
|
5,742 |
|
|
$ |
|
33,572 |
|
Loss (earnings) from discontinued operations, net of tax |
|
|
49 |
|
|
|
|
(19 |
) |
|
|
|
175 |
|
|
|
|
219 |
|
Income tax (benefit) expense |
|
|
(369 |
) |
|
|
|
(5,474 |
) |
|
|
|
(2,342 |
) |
|
|
|
6,907 |
|
Other expenses, net |
|
|
6,480 |
|
|
|
|
7,641 |
|
|
|
|
53,367 |
|
|
|
|
29,814 |
|
Operating earnings (loss) |
|
|
11,584 |
|
|
|
|
(11,860 |
) |
|
|
|
56,942 |
|
|
|
|
70,512 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIFO expense |
|
|
2,131 |
|
|
|
|
2,252 |
|
|
|
|
5,892 |
|
|
|
|
4,601 |
|
Depreciation and amortization |
|
|
20,353 |
|
|
|
|
19,362 |
|
|
|
|
87,866 |
|
|
|
|
82,634 |
|
Merger/acquisition and integration |
|
|
73 |
|
|
|
|
1,406 |
|
|
|
|
1,437 |
|
|
|
|
4,937 |
|
Restructuring, asset impairment and other charges |
|
|
2,835 |
|
|
|
|
32,277 |
|
|
|
|
13,050 |
|
|
|
|
37,546 |
|
Fresh Kitchen start-up costs |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
1,366 |
|
Fresh Kitchen operating losses |
|
|
690 |
|
|
|
|
— |
|
|
|
|
2,894 |
|
|
|
|
— |
|
Expenses associated with tax planning strategies |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
225 |
|
Stock-based compensation |
|
|
578 |
|
|
|
|
606 |
|
|
|
|
7,313 |
|
|
|
|
7,646 |
|
Non-cash rent |
|
|
(1,080 |
) |
|
|
|
(144 |
) |
|
|
|
(5,622 |
) |
|
|
|
(962 |
) |
Costs associated with Project One Team |
|
|
— |
|
|
|
|
— |
|
|
|
|
5,428 |
|
|
|
|
— |
|
Organizational realignment costs |
|
|
— |
|
|
|
|
— |
|
|
|
|
1,812 |
|
|
|
|
— |
|
Other non-cash charges |
|
|
223 |
|
|
|
|
357 |
|
|
|
|
933 |
|
|
|
|
916 |
|
Adjusted EBITDA |
$ |
|
37,387 |
|
|
$ |
|
44,256 |
|
|
$ |
|
177,945 |
|
|
$ |
|
209,421 |
|
Table 2: Reconciliation of Net Earnings (Loss) to Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization, continued |
|||||||||||||||||||
(Adjusted EBITDA) |
|||||||||||||||||||
(A Non-GAAP Financial Measure) |
|||||||||||||||||||
(Unaudited) |
|||||||||||||||||||
|
12 Weeks Ended |
|
|
52 Weeks Ended |
|
||||||||||||||
(In thousands) |
December 28,
|
|
|
December 29,
|
|
|
December 28,
|
|
|
December 29,
|
|
||||||||
Food Distribution: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings (loss) |
$ |
|
10,852 |
|
|
$ |
|
(14,308 |
) |
|
$ |
|
47,416 |
|
|
$ |
|
48,752 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIFO expense |
|
|
1,163 |
|
|
|
|
1,341 |
|
|
|
|
3,032 |
|
|
|
|
2,270 |
|
Depreciation and amortization |
|
|
7,493 |
|
|
|
|
7,675 |
|
|
|
|
32,861 |
|
|
|
|
31,854 |
|
Merger/acquisition and integration |
|
|
8 |
|
|
|
|
162 |
|
|
|
|
(122 |
) |
|
|
|
3,581 |
|
Restructuring, asset impairment and other charges |
|
|
4,120 |
|
|
|
|
31,764 |
|
|
|
|
14,844 |
|
|
|
|
33,056 |
|
Fresh Kitchen start-up costs |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
1,366 |
|
Fresh Kitchen operating losses |
|
|
690 |
|
|
|
|
— |
|
|
|
|
2,894 |
|
|
|
|
— |
|
Expenses associated with tax planning strategies |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
116 |
|
Stock-based compensation |
|
|
284 |
|
|
|
|
308 |
|
|
|
|
3,603 |
|
|
|
|
3,626 |
|
Non-cash rent |
|
|
129 |
|
|
|
|
41 |
|
|
|
|
482 |
|
|
|
|
157 |
|
Costs associated with Project One Team |
|
|
— |
|
|
|
|
— |
|
|
|
|
2,877 |
|
|
|
|
— |
|
Organizational realignment costs |
|
|
— |
|
|
|
|
— |
|
|
|
|
960 |
|
|
|
|
— |
|
Other non-cash charges (gains) |
|
|
3 |
|
|
|
|
218 |
|
|
|
|
394 |
|
|
|
|
567 |
|
Adjusted EBITDA |
$ |
|
24,742 |
|
|
$ |
|
27,201 |
|
|
$ |
|
109,241 |
|
|
$ |
|
125,345 |
|
Military: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) earnings |
$ |
|
(3,510 |
) |
|
$ |
|
(473 |
) |
|
$ |
|
(9,316 |
) |
|
$ |
|
5,647 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIFO expense |
|
|
755 |
|
|
|
|
686 |
|
|
|
|
1,789 |
|
|
|
|
1,230 |
|
Depreciation and amortization |
|
|
2,737 |
|
|
|
|
2,711 |
|
|
|
|
11,834 |
|
|
|
|
11,968 |
|
Merger/acquisition and integration |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
4 |
|
Restructuring gains |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
(801 |
) |
Expenses associated with tax planning strategies |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
28 |
|
Stock-based compensation |
|
|
89 |
|
|
|
|
63 |
|
|
|
|
1,180 |
|
|
|
|
1,244 |
|
Non-cash rent |
|
|
(91 |
) |
|
|
|
(74 |
) |
|
|
|
(374 |
) |
|
|
|
(323 |
) |
Costs associated with Project One Team |
|
|
— |
|
|
|
|
— |
|
|
|
|
706 |
|
|
|
|
— |
|
Organizational realignment costs |
|
|
— |
|
|
|
|
— |
|
|
|
|
236 |
|
|
|
|
— |
|
Other non-cash charges (gains) |
|
|
2 |
|
|
|
|
21 |
|
|
|
|
(89 |
) |
|
|
|
50 |
|
Adjusted EBITDA |
$ |
|
(18 |
) |
|
$ |
|
2,934 |
|
|
$ |
|
5,966 |
|
|
$ |
|
19,047 |
|
Retail: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings |
$ |
|
4,242 |
|
|
$ |
|
2,921 |
|
|
$ |
|
18,842 |
|
|
$ |
|
16,113 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIFO expense |
|
|
213 |
|
|
|
|
225 |
|
|
|
|
1,071 |
|
|
|
|
1,101 |
|
Depreciation and amortization |
|
|
10,123 |
|
|
|
|
8,976 |
|
|
|
|
43,171 |
|
|
|
|
38,812 |
|
Merger/acquisition and integration |
|
|
65 |
|
|
|
|
1,244 |
|
|
|
|
1,559 |
|
|
|
|
1,352 |
|
Restructuring (gains) charges and asset impairment |
|
|
(1,285 |
) |
|
|
|
513 |
|
|
|
|
(1,794 |
) |
|
|
|
5,291 |
|
Expenses associated with tax planning strategies |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
81 |
|
Stock-based compensation |
|
|
205 |
|
|
|
|
235 |
|
|
|
|
2,530 |
|
|
|
|
2,776 |
|
Non-cash rent |
|
|
(1,118 |
) |
|
|
|
(111 |
) |
|
|
|
(5,730 |
) |
|
|
|
(796 |
) |
Costs associated with Project One Team |
|
|
— |
|
|
|
|
— |
|
|
|
|
1,845 |
|
|
|
|
— |
|
Organizational realignment costs |
|
|
— |
|
|
|
|
— |
|
|
|
|
616 |
|
|
|
|
— |
|
Other non-cash charges |
|
|
218 |
|
|
|
|
118 |
|
|
|
|
628 |
|
|
|
|
299 |
|
Adjusted EBITDA |
$ |
|
12,663 |
|
|
$ |
|
14,121 |
|
|
$ |
|
62,738 |
|
|
$ |
|
65,029 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 (Loss) to Adjusted Operating Earnings (Loss) |
|||||||||||||||||||
(A Non-GAAP Financial Measure) |
|||||||||||||||||||
(Unaudited) |
|||||||||||||||||||
|
12 Weeks Ended |
|
|
52 Weeks Ended |
|
||||||||||||||
(In thousands) |
December 28,
|
|
|
December 29,
|
|
|
December 28,
|
|
|
December 29,
|
|
||||||||
Operating earnings (loss) |
$ |
|
11,584 |
|
|
$ |
|
(11,860 |
) |
|
$ |
|
56,942 |
|
|
$ |
|
70,512 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger/acquisition and integration |
|
|
73 |
|
|
|
|
1,406 |
|
|
|
|
1,437 |
|
|
|
|
4,937 |
|
Restructuring, asset impairment and other charges |
|
|
2,835 |
|
|
|
|
32,277 |
|
|
|
|
13,050 |
|
|
|
|
37,546 |
|
Fresh Kitchen start-up costs |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
1,366 |
|
Fresh Kitchen operating losses |
|
|
690 |
|
|
|
|
— |
|
|
|
|
2,894 |
|
|
|
|
— |
|
Expenses associated with tax planning strategies |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
225 |
|
Costs associated with Project One Team |
|
|
— |
|
|
|
|
— |
|
|
|
|
5,428 |
|
|
|
|
— |
|
Organizational realignment costs |
|
|
— |
|
|
|
|
— |
|
|
|
|
1,812 |
|
|
|
|
— |
|
Pension termination |
|
|
11 |
|
|
|
|
— |
|
|
|
|
59 |
|
|
|
|
— |
|
Severance associated with cost reduction initiatives |
|
|
25 |
|
|
|
|
355 |
|
|
|
|
509 |
|
|
|
|
1,023 |
|
Adjusted operating earnings |
$ |
|
15,218 |
|
|
$ |
|
22,178 |
|
|
$ |
|
82,131 |
|
|
$ |
|
115,609 |
|
Reconciliation of operating earnings (loss) to adjusted operating earnings (loss) by segment: |
|
||||||||||||||||||
Food Distribution: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings (loss) |
$ |
|
10,852 |
|
|
$ |
|
(14,308 |
) |
|
$ |
|
47,416 |
|
|
$ |
|
48,752 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger/acquisition and integration |
|
|
8 |
|
|
|
|
162 |
|
|
|
|
(122 |
) |
|
|
|
3,581 |
|
Restructuring, asset impairment and other charges |
|
|
4,120 |
|
|
|
|
31,764 |
|
|
|
|
14,844 |
|
|
|
|
33,056 |
|
Fresh Kitchen start-up costs |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
1,366 |
|
Fresh Kitchen operating losses |
|
|
690 |
|
|
|
|
— |
|
|
|
|
2,894 |
|
|
|
|
— |
|
Expenses associated with tax planning strategies |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
116 |
|
Costs associated with Project One Team |
|
|
— |
|
|
|
|
— |
|
|
|
|
2,877 |
|
|
|
|
— |
|
Organizational realignment costs |
|
|
— |
|
|
|
|
— |
|
|
|
|
960 |
|
|
|
|
— |
|
Pension termination |
|
|
6 |
|
|
|
|
— |
|
|
|
|
32 |
|
|
|
|
— |
|
Severance associated with cost reduction initiatives |
|
|
21 |
|
|
|
|
245 |
|
|
|
|
413 |
|
|
|
|
763 |
|
Adjusted operating earnings |
$ |
|
15,697 |
|
|
$ |
|
17,863 |
|
|
$ |
|
69,314 |
|
|
$ |
|
87,634 |
|
Military: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) earnings |
$ |
|
(3,510 |
) |
|
$ |
|
(473 |
) |
|
$ |
|
(9,316 |
) |
|
$ |
|
5,647 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger/acquisition and integration |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
4 |
|
Restructuring gains |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
(801 |
) |
Expenses associated with tax planning strategies |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
28 |
|
Costs associated with Project One Team |
|
|
— |
|
|
|
|
— |
|
|
|
|
706 |
|
|
|
|
— |
|
Organizational realignment costs |
|
|
— |
|
|
|
|
— |
|
|
|
|
236 |
|
|
|
|
— |
|
Pension termination |
|
|
1 |
|
|
|
|
— |
|
|
|
|
6 |
|
|
|
|
— |
|
Severance associated with cost reduction initiatives |
|
|
1 |
|
|
|
|
38 |
|
|
|
|
10 |
|
|
|
|
107 |
|
Adjusted operating (loss) earnings |
$ |
|
(3,508 |
) |
|
$ |
|
(435 |
) |
|
$ |
|
(8,358 |
) |
|
$ |
|
4,985 |
|
Retail: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings |
$ |
|
4,242 |
|
|
$ |
|
2,921 |
|
|
$ |
|
18,842 |
|
|
$ |
|
16,113 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger/acquisition and integration |
|
|
65 |
|
|
|
|
1,244 |
|
|
|
|
1,559 |
|
|
|
|
1,352 |
|
Restructuring (gains) charges and asset impairment |
|
|
(1,285 |
) |
|
|
|
513 |
|
|
|
|
(1,794 |
) |
|
|
|
5,291 |
|
Expenses associated with tax planning strategies |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
81 |
|
Costs associated with Project One Team |
|
|
— |
|
|
|
|
— |
|
|
|
|
1,845 |
|
|
|
|
— |
|
Organizational realignment costs |
|
|
— |
|
|
|
|
— |
|
|
|
|
616 |
|
|
|
|
— |
|
Pension termination |
|
|
4 |
|
|
|
|
— |
|
|
|
|
21 |
|
|
|
|
— |
|
Severance associated with cost reduction initiatives |
|
|
3 |
|
|
|
|
72 |
|
|
|
|
86 |
|
|
|
|
153 |
|
Adjusted operating earnings |
$ |
|
3,029 |
|
|
$ |
|
4,750 |
|
|
$ |
|
21,175 |
|
|
$ |
|
22,990 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|||||||||||||||||
|
December 28, 2019 |
|
|
December 29, 2018 |
|
||||||||||||||
|
|
|
|
per diluted |
|
|
|
|
|
per diluted |
|
||||||||
(In thousands, except per share amounts) |
Earnings |
|
|
share |
|
|
Earnings |
|
|
share |
|
||||||||
Earnings (loss) from continuing operations |
$ |
|
5,473 |
|
|
$ |
|
0.15 |
|
|
$ |
|
(14,027 |
) |
|
$ |
|
(0.39 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger/acquisition and integration |
|
|
73 |
|
|
|
|
|
|
|
|
|
1,406 |
|
|
|
|
|
|
Restructuring, asset impairment and other charges |
|
|
2,835 |
|
|
|
|
|
|
|
|
|
32,277 |
|
|
|
|
|
|
Fresh Kitchen operating losses |
|
|
690 |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
Severance associated with cost reduction initiatives |
|
|
25 |
|
|
|
|
|
|
|
|
|
355 |
|
|
|
|
|
|
Pension termination |
|
|
47 |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
Total adjustments |
|
|
3,670 |
|
|
|
|
|
|
|
|
|
34,038 |
|
|
|
|
|
|
Income tax effect on adjustments (a) |
|
|
(856 |
) |
|
|
|
|
|
|
|
|
(8,575 |
) |
|
|
|
|
|
Total adjustments, net of taxes |
|
|
2,814 |
|
|
|
|
0.08 |
|
|
|
|
25,463 |
|
|
|
|
0.71 |
|
Adjusted earnings from continuing operations |
$ |
|
8,287 |
|
|
$ |
|
0.23 |
|
|
$ |
|
11,436 |
|
|
$ |
|
0.32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52 Weeks Ended |
|
|||||||||||||||||
|
December 28, 2019 |
|
|
December 29, 2018 |
|
||||||||||||||
|
|
|
|
per diluted |
|
|
|
|
|
per diluted |
|
||||||||
(In thousands, except per share amounts) |
Earnings |
|
|
share |
|
|
Earnings |
|
|
share |
|
||||||||
Earnings from continuing operations |
$ |
|
5,917 |
|
|
$ |
|
0.16 |
|
|
$ |
|
33,791 |
|
|
$ |
|
0.94 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger/acquisition and integration |
|
|
1,437 |
|
|
|
|
|
|
|
|
|
4,937 |
|
|
|
|
|
|
Restructuring, asset impairment and other charges |
|
|
13,050 |
|
|
|
|
|
|
|
|
|
37,546 |
|
|
|
|
|
|
Fresh Kitchen start-up costs |
|
|
— |
|
|
|
|
|
|
|
|
|
1,366 |
|
|
|
|
|
|
Fresh Kitchen operating losses |
|
|
2,894 |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
Expenses associated with tax planning strategies |
|
|
— |
|
|
|
|
|
|
|
|
|
225 |
|
|
|
|
|
|
Costs associated with Project One Team |
|
|
5,428 |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
Organizational realignment costs |
|
|
1,812 |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
Loss on debt extinguishment |
|
|
329 |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
Severance associated with cost reduction initiatives |
|
|
509 |
|
|
|
|
|
|
|
|
|
1,023 |
|
|
|
|
|
|
Pension termination |
|
|
19,557 |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
Total adjustments |
|
|
45,016 |
|
|
|
|
|
|
|
|
|
45,097 |
|
|
|
|
|
|
Income tax effect on adjustments (a) |
|
|
(11,022 |
) |
|
|
|
|
|
|
|
|
(11,139 |
) |
|
|
|
|
|
Impact of Tax Cuts and Jobs Act (b) |
|
|
— |
|
|
|
|
|
|
|
|
|
(494 |
) |
|
|
|
|
|
Total adjustments, net of taxes |
|
|
33,994 |
|
|
|
|
0.94 |
|
|
|
|
33,464 |
|
|
|
|
0.93 |
|
Adjusted earnings from continuing operations |
$ |
|
39,911 |
|
|
$ |
|
1.10 |
|
|
$ |
|
67,255 |
|
|
$ |
|
1.87 |
|
(a) |
The income tax effect on adjustments is computed by applying the applicable tax rate to the adjustments. |
|
(b) |
Includes a $1.1 million tax benefit attributable to tax planning strategies related to the Tax Cuts and Jobs Act in 2018. |
|
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 Total Net Long-Term Debt |
|||||||||
(A Non-GAAP Financial Measure) |
|||||||||
(Unaudited) |
|||||||||
|
December 28, |
|
|
December 29, |
|
||||
(In thousands) |
2019 |
|
|
2018 |
|
||||
Current portion of long-term debt and finance lease liabilities |
$ |
|
6,349 |
|
|
$ |
|
18,263 |
|
Long-term debt and finance lease liabilities |
|
|
682,204 |
|
|
|
|
679,797 |
|
Total debt |
|
|
688,553 |
|
|
|
|
698,060 |
|
Cash and cash equivalents |
|
|
(24,172 |
) |
|
|
|
(18,585 |
) |
Total net long-term debt |
$ |
|
664,381 |
|
|
$ |
|
679,475 |
|
Notes: Total 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. Total 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) |
||||||||||||
|
|
|
|
52 Weeks Ended |
|
|||||||
(In thousands) |
|
|
|
December 28,
|
|
|
December 29,
|
|
||||
Net cash provided by operating activities |
|
|
|
$ |
|
180,192 |
|
|
$ |
|
171,658 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
|
|
|
|
74,815 |
|
|
|
|
71,495 |
|
Free cash flow |
|
|
|
$ |
|
105,377 |
|
|
$ |
|
100,163 |
|
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 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
|
|
|||||||
|
Low |
|
|
High |
|
||||
Earnings from continuing operations |
$ |
|
0.93 |
|
|
$ |
|
1.04 |
|
Adjustments, net of taxes: |
|
|
|
|
|
|
|
|
|
Merger/acquisition and integration expenses |
|
|
0.03 |
|
|
|
|
0.02 |
|
Costs associated with Project One Team |
|
|
0.01 |
|
|
|
|
0.01 |
|
Exit of Fresh Kitchen |
|
|
0.01 |
|
|
|
|
0.01 |
|
Pension termination |
|
|
(0.01 |
) |
|
|
|
(0.02 |
) |
Restructuring and asset impairment |
|
|
0.06 |
|
|
|
|
0.05 |
|
Severance associated with cost reduction initiatives |
|
|
0.09 |
|
|
|
|
0.09 |
|
Adjusted earnings from continuing operations |
$ |
|
1.12 |
|
|
$ |
|
1.20 |
|