First Quarter Net Sales Increase in All Three
Business Segments
Expects to Achieve Over $20 Million in Annual
Run Rate Cost Savings from Project One Team Initiatives Over the
Next 24 Months
SpartanNash Company (the “Company”) (Nasdaq: SPTN) today
reported financial results for the 16-week first quarter ended
April 20, 2019.
“We are pleased with our team’s efforts to grow net sales across
all three business segments, particularly in light of the
challenging operating environment,” said David Staples, President
and Chief Executive Officer. “While we are not satisfied with our
bottom-line results for the quarter, our team remains committed to
our fiscal 2019 objectives and long-term strategy, which we believe
will support both future growth and profitability long-term.”
Strategic Business Objectives
As outlined in its fourth quarter earnings release, the Company
has defined its top five objectives for 2019. These objectives
remain critical in the context of the Company’s long-term strategic
objective to evolve into a company with a national, highly
efficient distribution platform servicing a diverse customer base
through its three highly complementary business units of Food
Distribution, Military Distribution and Retail.
The following summarizes these objectives and the Company’s
progress during the first quarter of 2019, consistent with its
preliminary earnings release on May 9, 2019:
Achieve Mid-Single Digit Sales Growth. The Company achieved this
objective in the first quarter, realizing 6.6% net sales growth
versus the same quarter in the prior year. This growth was
bolstered by contributions from newly acquired Martin’s Super
Markets (“Martin’s”) in the Retail segment, as well as growth in
both the Food Distribution and Military Distribution segments.
Before the intercompany elimination of Martin’s sales, the Food
Distribution segment realized growth of 5.2%.
Realize at least $15 Million of Annual Run Rate Savings
Over the Next 24 Months from Project One Team. The Company has
exceeded its objective by identifying over $20 million in savings
opportunities, which it expects to achieve in annual run rate over
the next 24 months. The effect of implementing these opportunities
is not currently expected to be material to earnings in 2019.
Strengthen Management Team, Systems and Supply Chain Operations.
During the first quarter, the Company appointed a new Chief
Merchandising and Marketing Officer, Chief Information Officer and
several other key additions throughout the IT and supply chain
operations. Other strategic additions to the management team at
various levels are in process. The Company continues to invest in
enhancements to its systems and supply chain operations, however
some improvements are developing more slowly than initially
expected, partly due to the competitive employment environment in
both warehousing and transportation.
Reduce Debt and Working Capital While Lowering Financial
Leverage Ratios. Adjusted for the funding of the Martin’s
acquisition, the Company paid down over $20 million of debt in the
first quarter of fiscal 2019. The Company also reduced its
inventory levels by over 2% from the first quarter of fiscal 2018,
without negatively impacting customer service levels, despite
continued sales growth. The Company will continue to focus on debt
and working capital improvements in fiscal 2019.
Improve Adjusted Operating Earnings and Adjusted EBITDA Growth.
First quarter of fiscal 2019 profitability did not meet the
Company’s expectations due to the factors discussed in the
consolidated and segment financial results below. The Company is
focused on improving its financial performance through various
initiatives aligned with the organization’s overall long-term
strategy, which include the strategic objectives noted above. The
Company is also in the process of executing strategic investments
in the Retail segment in connection with the implementation of its
new retail brand positioning.
Consolidated Financial Results
Consolidated net sales for the first quarter increased $157.3
million, or 6.6%, to $2.54 billion from $2.39 billion in the prior
year quarter. The increase in net sales was bolstered by the
acquisition of Martin’s, as well as sales growth in the Food
Distribution and Military Distribution segments.
Gross profit for the first quarter of fiscal 2019 was $377.7
million, or 14.9% of net sales, compared to $343.2 million, or
14.4% of net sales, in the prior year quarter. As a percent of net
sales, the change in gross profit was primarily driven by the
acquisition of Martin’s partially offset by the other factors
described below within the Segment Financial Results, as well as
the losses associated with the voluntary product recall for certain
fresh-cut products, which were approximately $0.02 per diluted
share.
Reported operating expenses for the first quarter were $355.5
million, or 14.0% of net sales, compared to $317.5 million, or
13.3% of net sales, in the prior year quarter. The increase in
expenses as a rate of sales compared to the prior year quarter was
primarily due to the acquisition of Martin’s and one-time costs
associated with Project One Team, partially offset by restructuring
gains related to the sale of real property for a previously closed
site. Operating expenses were unfavorable to the prior year quarter
as a rate of sales on an adjusted basis, due to the higher mix of
sales within the Retail segment as well as higher supply chain
costs in both the Military Distribution and Food Distribution
segments and operational inefficiencies within the Company’s food
processing operations. First quarter operating expenses would have
been $354.6 million, or 13.9% of net sales, compared to $308.8
million, or 12.9% of net sales, in the prior year quarter,
excluding the adjustments related to restructuring gains, one-time
costs associated with Project One Team, merger and integration
costs and organizational realignment costs.
The Company reported operating earnings of $22.2 million
compared to $25.7 million in the prior year quarter. The decrease
was primarily attributable to lower Food Distribution and Retail
margin rates, higher supply chain costs and one-time expenses
associated with the Project One Team initiative, partially offset
by favorable restructuring gains and the incremental earnings from
the Martin’s business. Non-GAAP adjusted operating earnings(1) were
$23.2 million compared to $35.8 million in the prior year quarter,
due to previously mentioned gross margin rate pressures and higher
supply chain costs. 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 $54.7 million compared to $67.2 million
in the prior year quarter due to the factors mentioned above.
The Company reported first quarter earnings from continuing
operations of $7.5 million, or $0.21 per diluted share, compared to
$12.4 million, or $0.34 per diluted share, in the prior year
quarter. The decrease reflects the factors noted above, as well as
increased interest expense due to higher interest rates on the
Company’s borrowings.
Adjusted earnings from continuing operations(3) for the first
quarter were $8.5 million, or $0.24 per diluted share, compared to
$20.0 million, or $0.55 per diluted share, in the prior year
quarter.
Segment Financial Results
Food Distribution
Net sales for Food Distribution increased $14.0 million, or
1.2%, to $1,169.2 million from $1,155.2 million in the prior year
quarter. Excluding the impact of the elimination of intercompany
sales to Martin’s subsequent to the acquisition, net sales
increased 5.2%, primarily due to sales growth from existing
customers.
Reported operating earnings for Food Distribution were $24.6
million compared to $24.5 million in the prior year quarter. The
increase in reported operating earnings was primarily attributable
to higher sales volumes and the gain on the sale of real property
for a previously closed site, offset by lower margin rates and
higher supply chain costs, including warehouse operational issues
at one of the Company’s distribution centers. First quarter
adjusted operating earnings(4) were $21.3 million compared to $29.5
million in the prior year quarter. Adjusted operating earnings for
the current year quarter exclude $3.3 million of net pre-tax gains
related to the sale of real property, the allocation of one-time
costs associated with Project One Team and severance; the prior
year quarter excluded $5.0 million in merger/acquisition and
integration costs, Fresh Kitchen start-up activities and an asset
impairment charge related to certain discontinued warehouse
equipment.
Military Distribution
Net sales for Military Distribution increased $7.7 million, or
1.2%, to $671.3 million from $663.6 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 $1.5 million in the prior
year quarter. The decrease was primarily attributable to warehouse
operational issues at one of the Company’s distribution centers and
increases in transportation costs, partially offset by favorable
price changes. First quarter adjusted operating loss(4) was $0.8
million compared to earnings of $1.6 million in the prior year
quarter. Adjusted operating earnings in the current year exclude
the allocation of one-time costs associated with Project One
Team.
Retail
Net sales for Retail increased $135.6 million, or 23.9%, to
$701.8 million from $566.2 million in the prior year quarter.
Excluding the acquisition of Martin’s, sales decreased 3.0%, due to
lower sales resulting from store closures of $12.4 million and a
decrease in fuel prices per gallon. Retail comparable store sales
were -0.3% in the first quarter.
Reported operating loss for Retail was $0.8 million compared to
$0.3 million in the prior year quarter. The decrease in reported
operating earnings was primarily attributable to lower supermarket
margin rates, the allocation of one-time costs associated with
Project One Team, higher healthcare costs, merger/acquisition and
integration expenses related to the Martin’s acquisition and higher
fees paid to pharmacy benefit managers. Mostly offsetting these
items were the contribution of the acquired Martin’s stores, lower
occupancy costs due to the adoption of the new lease accounting
standard and the favorable impact of closing underperforming
stores. Adjusted operating earnings(4) were $2.7 million compared
to $4.7 million in the prior year quarter and exclude $3.5 million
of pre-tax charges primarily related to the allocation of one-time
costs associated with Project One Team, merger/acquisition and
integration expenses, and store closing expenses in the current
year versus $5.0 million of store closing and asset impairment
expenses in the prior year quarter.
Balance Sheet and Cash Flow
Cash flows provided by operating activities for the first
quarter were $13.5 million compared to $60.4 million in the prior
year, representing a decrease of $46.9 million. The decrease in
cash flows provided by operating activities was primarily related
to the change in working capital requirements, mostly due to timing
with respect to the Easter holiday, partially offset by
improvements in accounts payable compared to the prior year.
During the first quarter, the Company returned $6.9 million to
shareholders in the form of cash dividends equal to $0.19 per
common share.
Outlook
Based on the Company’s performance to date and the current
outlook for the remainder of fiscal 2019, SpartanNash is
reaffirming its previous sales guidance provided on February 20,
2019, and maintaining its fiscal 2019 guidance regarding its
effective tax rate, capital expenditures, depreciation and
amortization, and interest expense.
Additionally, the Company is maintaining the updated fiscal 2019
adjusted EBITDA and adjusted earnings per share guidance provided
on May 9, 2019. Fiscal 2019 adjusted EBITDA is expected to be $190
million to $205 million, while the Company anticipates adjusted
earnings per share(5) from continuing operations of approximately
$1.20 to $1.50, excluding the adjusted items totaling $16.5 million
to $18.5 million after taxes, as detailed in Table 6. The Company
anticipates that reported earnings from continuing operations will
be in the range of approximately $0.70 to $1.04 per diluted share,
compared to earnings from continuing operations of $0.94 per
diluted share in fiscal 2018.
Conference Call
A telephone conference call to discuss the Company’s first
quarter 2019 financial results is scheduled for today, Monday, May
20, 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 Supermarkets, 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
earnings from continuing operations to adjusted earnings from
continuing operations, a non-GAAP financial measure, is provided
below.(4) A reconciliation of operating (loss) earnings to adjusted
operating earnings (loss) by segment, a non-GAAP financial measure,
is provided below.(5) 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)
16 Weeks Ended April 20,
April 21,
(In thousands,
except per share amounts)
2019 2018 Net sales $ 2,542,375 $
2,385,073
Cost of sales 2,164,646
2,041,859
Gross profit 377,729 343,214
Operating expenses Selling, general and administrative
360,400 309,058 Merger/acquisition and integration 782 2,206
Restructuring (gains) charges and asset impairment
(5,662 ) 6,202
Total operating expenses
355,520 317,466
Operating
earnings 22,209 25,748
Other expenses and
(income) Interest expense 11,881 8,778 Other, net
183 (225 )
Total other expenses, net
12,064 8,553
Earnings before income
taxes and discontinued operations 10,145 17,195 Income tax
expense 2,624 4,760
Earnings from
continuing operations 7,521 12,435
Loss from
discontinued operations, net of taxes (52 )
(92 )
Net earnings $ 7,469 $
12,343
Basic earnings per share: Earnings from
continuing operations $ 0.21 $ 0.34 Loss from discontinued
operations — — Net earnings $
0.21 $ 0.34
Diluted earnings per share:
Earnings from continuing operations $ 0.21 $ 0.34 Loss from
discontinued operations — — Net
earnings $ 0.21 $ 0.34
Weighted average
shares outstanding: Basic 36,121 36,186 Diluted 36,121 36,197
SPARTANNASH COMPANY AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
April 20, December
29, (In thousands) 2019 2018
Assets
Current assets Cash and cash equivalents $
21,360 $ 18,585 Accounts and notes receivable, net 376,708 346,260
Inventories, net 595,741 553,799 Prepaid expenses and other current
assets 59,014 73,798 Property and equipment held for sale
— 8,654
Total current assets 1,052,823
1,001,096
Property and equipment, net 623,132 579,060
Goodwill 178,648 178,648
Intangible assets, net
144,451 128,926
Operating lease assets 273,537 —
Other
assets, net 86,905 84,182
Total assets $ 2,359,496 $ 1,971,912
Liabilities and
Shareholders’ Equity
Current liabilities Accounts payable $ 391,315 $
357,802 Accrued payroll and benefits 55,922 57,180 Other accrued
expenses 48,437 43,206 Current portion of operating lease
liabilities 41,425 — Current portion of long-term debt and finance
lease liabilities 18,006 18,263
Total current liabilities 555,105 476,451
Long-term liabilities Deferred income taxes 45,087 49,254
Operating lease liabilities 279,599 — Other long-term liabilities
32,785 50,463 Long-term debt and finance lease liabilities
753,118 679,797
Total long-term
liabilities 1,110,589 779,514
Commitments and
contingencies Shareholders’ equity Common stock,
voting, no par value; 100,000 shares
authorized; 36,319 and 35,952 shares
outstanding
488,155 484,064 Preferred stock, no par value, 10,000 shares
authorized; no shares outstanding
— — Accumulated other comprehensive loss (15,699 ) (15,759 )
Retained earnings 221,346 247,642
Total shareholders’ equity 693,802
715,947
Total liabilities and shareholders’
equity $ 2,359,496 $ 1,971,912
SPARTANNASH COMPANY AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(Unaudited)
16 Weeks Ended
(In
thousands)
April 20, 2019 April 21, 2018 Cash
flow activities Net cash provided by operating
activities $ 13,519 $ 60,381 Net cash used in investing activities
(87,225 ) (20,933 ) Net cash provided by (used in) financing
activities 76,567 (37,863 ) Net cash used in discontinued
operations (86 ) (85 )
Net increase
in cash and cash equivalents 2,775 1,500
Cash and cash
equivalents at beginning of the period 18,585
15,667
Cash and cash equivalents at end of the
period $ 21,360 $ 17,167
SPARTANNASH COMPANY AND SUBSIDIARIES SUPPLEMENTAL
FINANCIAL DATA Table 1: Sales and Operating Earnings
by Segment (Unaudited) 16 Weeks
Ended (In thousands) April 20, 2019
April 21, 2018
Food Distribution
Segment:
Net sales $ 1,169,238 46.0 % $
1,155,211 48.5 % Operating earnings 24,592 24,521
Military
Segment:
Net sales 671,370 26.4 % 663,620 27.8 % Operating (loss) earnings
(1,557 ) 1,513
Retail
Segment:
Net sales 701,767 27.6 % 566,242 23.7 % Operating loss (826 ) (286
)
Total:
Net sales $ 2,542,375 100.0 % $ 2,385,073 100.0 % Operating
earnings 22,209 25,748
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 the 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. 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)
16 Weeks Ended
(In
thousands)
April 20, 2019 April 21, 2018 Net
earnings $ 7,469 $ 12,343 Loss from discontinued
operations, net of tax 52 92 Income tax expense 2,624 4,760 Other
expenses, net 12,064 8,553 Operating
earnings 22,209 25,748 Adjustments: LIFO expense 1,425 1,540
Depreciation and amortization 26,632 25,018 Merger/acquisition and
integration 782 2,206 Restructuring (gains) charges and asset
impairment (5,662 ) 6,202 Fresh Kitchen start-up costs — 1,366
Stock-based compensation 5,383 5,290 Non-cash rent (1,918 ) (77 )
Costs associated with Project One Team 4,618 — Organizational
realignment costs 858 — Other non-cash charges (gains)
342 (122 )
Adjusted EBITDA
$ 54,669 $ 67,171
16 Weeks Ended
(In
thousands)
April 20, 2019 April 21, 2018 Food
Distribution: Operating earnings $ 24,592 $ 24,521 Adjustments:
LIFO expense 703 766 Depreciation and amortization 10,233 9,321
Merger/acquisition and integration (130 ) 2,195 Restructuring
(gains) charges and asset impairment (6,343 ) 1,260 Fresh Kitchen
start-up costs — 1,366 Stock-based compensation 2,676 2,526
Non-cash rent 57 (22 ) Costs associated with Project One Team 2,448
— Organizational realignment costs 455 — Other non-cash charges
319 237 Adjusted EBITDA $ 35,010
$ 42,170
Military: Operating (loss) earnings $ (1,557
) $ 1,513 Adjustments: LIFO expense 378 424 Depreciation and
amortization 3,597 3,678 Merger/acquisition and integration — 4
Stock-based compensation 854 805 Non-cash rent (122 ) (1 ) Costs
associated with Project One Team 600 — Organizational realignment
costs 111 — Other non-cash gains (20 )
(70 ) Adjusted EBITDA $ 3,841 $ 6,353
Retail:
Operating loss $ (826 ) $ (286 ) Adjustments: LIFO expense 344 350
Depreciation and amortization 12,802 12,019 Merger/acquisition and
integration 912 7 Restructuring charges and asset impairment 681
4,942 Stock-based compensation 1,853 1,959 Non-cash rent (1,853 )
(54 ) Costs associated with Project One Team 1,570 — Organizational
realignment costs 292 — Other non-cash charges (gains)
43 (289 ) Adjusted EBITDA $ 15,818 $
18,648
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)
16 Weeks Ended
(In
thousands)
April 20, 2019 April 21, 2018 Operating
earnings $ 22,209 $ 25,748 Adjustments:
Merger/acquisition and integration 782 2,206 Restructuring (gains)
charges and asset impairment (5,662 ) 6,202 Fresh Kitchen start-up
costs — 1,366 Costs associated with Project One Team 4,618 —
Organizational realignment costs 858 — Severance associated with
cost reduction initiatives 362 274
Adjusted operating earnings $ 23,167 $ 35,796
Reconciliation of operating earnings (loss) to adjusted
operating earnings by segment: Food Distribution:
Operating earnings $ 24,592 $ 24,521 Adjustments:
Merger/acquisition and integration (130 ) 2,195 Restructuring
(gains) charges and asset impairment (6,343 ) 1,260 Fresh Kitchen
start-up costs — 1,366 Costs associated with Project One Team 2,448
— Organizational realignment costs 455 — Severance associated with
cost reduction initiatives 324 193
Adjusted operating earnings $ 21,346 $ 29,535
Military: Operating (loss) earnings $ (1,557 ) $ 1,513
Adjustments: Merger/acquisition and integration — 4 Costs
associated with Project One Team 600 — Organizational realignment
costs 111 — Severance associated with cost reduction initiatives
9 52 Adjusted operating (loss) earnings
$ (837 ) $ 1,569
Retail: Operating loss $ (826
) $ (286 ) Adjustments: Merger/acquisition and integration 912 7
Restructuring charges and asset impairment 681 4,942 Costs
associated with Project One Team 1,570 — Organizational realignment
costs 292 — Severance associated with cost reduction initiatives
29 29 Adjusted operating earnings $
2,658 $ 4,692
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)
16 Weeks Ended April 20, 2019
April 21, 2018 per
diluted per diluted
(In thousands,
except per share amounts)
Earnings share Earnings share Earnings
from continuing operations $ 7,521 $ 0.21 $
12,435 $ 0.34 Adjustments: Merger/acquisition and
integration 782 2,206 Restructuring (gains) charges and asset
impairment (5,662 ) 6,202 Fresh Kitchen start-up costs — 1,366
Costs associated with Project One Team 4,618 — Organizational
realignment costs 858 — Severance associated with cost reduction
initiatives 362 274 Pension termination 353 — Total
adjustments 1,311 10,048 Income tax effect on adjustments (1)
(304 ) (2,437 ) Total adjustments, net of taxes
1,007 0.03 7,611
0.21 Adjusted earnings from continuing operations $
8,528 $ 0.24 $ 20,046 $ 0.55
(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)
April 20, December
29,
(In
thousands)
2019 2018 Current portion of long-term debt and
finance lease liabilities $ 18,006 $ 18,263 Long-term
debt and finance lease liabilities 753,118
679,797 Total debt 771,124 698,060 Cash and cash equivalents
(21,360 ) (18,585 ) Total net long-term
debt $ 749,764 $ 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 29, 2018
Low High Earnings from continuing
operations $ 0.70 $ 1.04 Adjustments, net of taxes:
Merger/acquisition and integration expenses 0.03 0.02 Gain on sale
of assets (0.15 ) (0.15 ) Termination of frozen pension plan 0.43
0.43 Costs associated with Project One Team 0.10 0.10 Restructuring
and asset impairment 0.02 0.01 Severance associated with cost
reduction initiatives 0.03 0.02 Organizational realignment costs
0.04 0.03 Adjusted earnings from
continuing operations $ 1.20 $ 1.50
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190520005150/en/
Investor Contacts:Mark ShamberChief Financial Officer and
Executive Vice President(616) 878-8023
Katie TurnerPartner, ICR(646) 277-1228
Media Contact:Meredith GremelVice President Corporate Affairs
and Communications(616) 878-2830
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