Reports Fourth Quarter Retail Comparable Store
Sales of 8.7%
Generates EPS of $0.34; Adjusted EPS of
$0.43
Achieves Adjusted EBITDA of $48.9 million
versus $37.4 million in Prior Year Quarter
Provides Fiscal Year 2021 Outlook
SpartanNash Company (the “Company”) (Nasdaq: SPTN) today
reported financial results for its 13-week fourth quarter and
53-week fiscal year ended January 2, 2021. The Company’s fourth
quarter and current fiscal year include an additional week of
operations compared to the 12- and 52-week prior year quarter and
fiscal year, respectively.
Fourth Quarter and Fiscal 2020 Highlights
- Net sales growth of 12.5% to $2.25 billion for the quarter from
$2.00 billion in the prior year quarter, and 9.5% to $9.35 billion
for the fiscal year compared to $8.54 billion in the prior fiscal
year. The 53rd week accounted for $158.9 million, or 8.0%, of the
net sales increase over the prior year quarter.
- Retail comparable store sales were 8.7% for the fourth quarter
and 13.1% for the fiscal year.
- Quarterly EPS of $0.34 per share, compared to $0.15 per share
in the prior year quarter; adjusted EPS of $0.43 per share compared
to $0.23 per share in the prior year quarter. Fiscal year EPS of
$2.12 per share, compared to $0.16 per share in the prior year;
adjusted EPS of $2.53 per share compared to $1.10 per share in the
prior year.
- Adjusted EBITDA(3) increased to $48.9 million from $37.4
million in the prior year quarter. Fiscal year adjusted EBITDA
increased to $239.1 million from $177.9 million in the prior
year.
- Net long-term debt(5) decreased by $197.8 million during fiscal
2020 to $466.5 million. Combined with improved profitability, this
led to a reduction of the net long-term debt to adjusted EBITDA
ratio over from 3.7x to 2.0x.
“Despite the continued challenges presented by COVID-19 in the
fourth quarter, I am proud of our team’s performance. Since the
beginning of the pandemic almost one year ago, they have remained
dedicated to ensuring customer and associate safety, while
providing essential services to our local communities,” said Tony
Sarsam, President and Chief Executive Officer. “As we move into
2021, we are renewing our focus on key priorities to best position
SpartanNash for continued growth and operational efficiency.”
Consolidated net sales for the fourth quarter increased $249.2
million, or 12.5%, to $2.25 billion from $2.00 billion in the prior
year quarter, with the 53rd week contributing $158.9 million of net
sales. The remaining increase in net sales was generated through
continued growth with existing Food Distribution customers, as well
as higher sales attributable to increased consumer demand related
to COVID-19 in the Company’s Retail and Food Distribution segments,
partially offset by the continued impact of domestic base access
and commissary shopping restrictions associated with COVID-19 in
the Military segment.
Gross profit for the fourth quarter was $338.2 million, or 15.1%
of net sales, compared to $286.7 million, or 14.4% of net sales, in
the prior year quarter. The improvement in the gross profit rate
was driven by improvements in margin rates at all three segments,
as discussed further below, as well as an increase in the
proportion of Retail and Food Distribution segment sales, which
generate higher margin rates than the Military segment. These
increases in gross profit rates were partially offset by non-cash
warrant expense of $6.5 million associated with the issuance of
warrant shares to Amazon early in the fourth quarter, recorded as a
reduction of net sales in the Food Distribution segment.
Reported operating expenses for the fourth quarter were $320.8
million, or 14.3% of net sales, compared to $275.1 million, or
13.8% of net sales, in the prior year quarter. The increase in
expenses as a rate of sales compared to the prior year quarter was
due to increased corporate administrative expenses, including
incentive compensation, a higher rate of supply chain expenses in
the Food Distribution segment and a greater mix of Retail segment
sales which have higher operating expense rates, largely offset by
increased leverage of fixed costs in the Retail and Food
Distribution segments.
The Company reported operating earnings of $17.4 million
compared to $11.6 million in the prior year quarter due to the
changes in net sales, gross profit and operating expenses discussed
above. Adjusted operating earnings(1) were $22.0 million compared
to $15.2 million in the prior year quarter and were adjusted for
the items detailed in Table 3.
Interest expense decreased $3.0 million from the prior year
quarter due to multiple rate cuts implemented by the Federal
Reserve, as well as the Company’s pay down of long-term debt
resulting from strong free cash flow(4) during the year.
The Company reported earnings from continuing operations of
$12.1 million, or $0.34 per share, compared to $5.5 million, or
$0.15 per share in the prior year quarter. The improvement reflects
the operating earnings and non-operating expense changes noted
above. Adjusted earnings from continuing operations(2) for the
fourth quarter were $15.5 million, or $0.43 per diluted share,
compared to $8.3 million, or $0.23 per diluted share in the prior
year quarter. A reconciliation of reported earnings from continuing
operations to adjusted earnings from continuing operations is
included at Table 4.
Adjusted EBITDA(3) increased $11.5 million, or 30.7%, to $48.9
million compared to $37.4 million in the prior year quarter due to
factors mentioned above.
Please see the financial tables at the end of this press release
for a reconciliation of each non-GAAP financial measure to the most
directly comparable measure, prepared and presented in accordance
with GAAP.
Segment Financial Results
Food Distribution
Net sales for Food Distribution increased $166.7 million, or
17.8%, to $1.11 billion from $0.94 billion in the prior year
quarter. The increase was due to sales growth with existing
customers, as well as incremental volume associated with increased
consumer demand related to COVID-19, partially offset by the impact
of the Company’s decision to exit its Fresh Production operations,
and the non-cash warrant impact mentioned previously. The 53rd week
contributed $76.4 million of net sales.
Reported operating earnings for Food Distribution were $11.0
million compared to $10.9 million in the prior year quarter. The
increase in reported operating earnings for Food Distribution was
due to increased earnings due to higher sales volume, favorable
margin rates, lower asset impairment charges, and cycling prior
year losses in the Fresh Production business, largely offset by
higher supply chain costs, which were compounded by the effects of
the COVID-19 pandemic, non-cash warrant impact and higher corporate
administrative expenses. Fourth quarter adjusted operating
earnings(1) were $13.1 million compared to $15.7 million in the
prior year quarter. Adjusted operating earnings exclude asset
impairment and restructuring charges in both years and losses
associated with the Fresh Kitchen operations in the fourth quarter
of fiscal 2019.
Retail
Net sales for Retail increased $79.4 million, or 14.5%, to
$627.4 million from $548.0 million in the prior year quarter
primarily due to increased consumer demand, as discussed above.
Comparable store sales of 8.7% were partially offset by the impact
of lower fuel sales. The Company experienced nearly 180% growth in
its eCommerce business, compared to the same quarter in the prior
year. The 53rd week contributed $49.1 million of net sales.
Reported operating earnings for Retail were $6.9 million
compared to $4.2 million in the prior year quarter. The increase in
reported operating earnings was due to the increase in sales
volume, improvements in margin rates, including inventory shrink,
and improved leverage of store labor. These favorable variances
were partially offset by higher incentive compensation due to the
improved segment performance. Adjusted operating earnings(1) were
$9.4 million compared to $3.0 million in the prior year quarter and
exclude merger/acquisition and integration and restructuring
charges in the both the current and prior year quarters.
Military
Net sales for Military increased $3.1 million, or 0.6%, to
$514.1 million from $511.0 million in the prior year quarter due to
incremental net sales of $33.4 million from the 53rd week. In
addition to the 53rd week, growth in private label and export sales
were more than offset by the impact of domestic base access and
commissary shopping restrictions associated with COVID-19, which
have led to significant declines in Defense Commissary Agency sales
as a whole.
The reported operating loss for Military was $0.5 million
compared to $3.5 million in the prior year quarter. The change was
driven by improvements in gross margin and supply chain expense
rates. The adjusted operating loss(1) in the Military segment was
$0.4 million compared to a $3.5 million loss in the prior year.
Fiscal Year 2020 Results
Consolidated net sales for the fiscal year ended January 2, 2021
increased $812.4 million, or 9.5%, to $9.35 billion from $8.54
billion in the prior fiscal year, with the inclusion of the 53rd
week contributing $158.9 million to consolidated net sales. The
remaining increase in net sales was generated by continued growth
with existing Food Distribution customers as well as increased
consumer demand associated with the COVID-19 pandemic in the Retail
and Food Distribution segments, partially offset by the exit of the
Company’s Fresh Production operations and lower comparable sales
for the Military segment.
The Company reported earnings from continuing operations for
fiscal 2020 of $75.9 million, or $2.12 per diluted share, compared
to $5.9 million, or $0.16 per diluted share, in the prior year. The
increase was primarily attributable to increased sales volume,
improved margin rates, cycling prior year pension termination
charges, and tax benefits associated with the Coronavirus Aid,
Relief, and Economic Security (“CARES”) Act, partially offset by an
increase in incentive compensation due to improved overall Company
performance, supply chain expense rates, restructuring and asset
impairment charges, as well as additional compensation for
frontline workers and sanitation measures associated with COVID-19.
Adjusted earnings from continuing operations(2) for fiscal 2020
were $90.8 million, or $2.53 per diluted share, compared to $39.9
million, or $1.10 per diluted share, in the prior year. Fiscal 2020
adjusted earnings exclude $14.9 million of net after-tax charges
related to restructuring and asset impairments, integration costs,
severance, and tax benefits associated with the CARES Act. Fiscal
2019 adjusted earnings from continuing operations 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 subsequent to the decision to exit the business.
Adjusted EBITDA(3) for fiscal 2020 was $239.1 million, or 2.6%
of net sales, compared to $177.9 million, or 2.1% of net sales, in
fiscal 2019.
Balance Sheet and Cash Flow
Cash flows provided by operating activities for fiscal 2020 were
$306.7 million compared to $180.2 million in the prior year, due to
increased profitability and reductions in operating assets and
liabilities. In 2020, the Company generated $239.4 million in free
cash flow(4), compared to $105.4 million in the prior year. As a
result of this improved cash generation, the Company was able to
reduce its net long-term debt(5) by $197.8 million during fiscal
2020. The reduction in net long-term debt, combined with the
Company’s increased profitability, resulted in an improvement in
the Company’s net long-term debt to adjusted EBITDA ratio over this
period of time from 3.7x to 2.0x.
Capital expenditures and IT capital(6) totaled $78.9 million for
fiscal 2020 compared to $74.8 million in the prior year.
For fiscal 2020, the Company declared $27.7 million in quarterly
cash dividends equal to $0.1925 per common share. The Company also
repurchased 860,752 shares for a total of $10.0 million at an
average price of $11.62 per share.
Outlook
“Fiscal 2021 will present a new environment where we expect to
see a change in consumer behavior,” continued Tony Sarsam,
President and Chief Executive Officer. “While we expect this may
create softness in our industry as a whole, we will look to retain
our customer base which has grown during the pandemic. We will also
shift our focus to prioritize investments into our future. This
will include operational spending to invest in our people and
processes in connection with our priorities for the coming year.
These priorities include sustaining improvements in gross margin
and service levels, enhancing the customer experience through our
private brand offerings, and improving our associate experience
through initiatives related to safety and retention.”
The following table provides the Company’s guidance for
2021:
53 Week
52 Week
Fiscal 2020
Fiscal 2021 Guidance
Actual
Low
High
Total net sales (millions)
$
9,348
$
8,800
$
9,000
Adjusted EBITDA(3) (millions)
$
239
$
195
$
210
Adjusted EPS(7)
$
2.53
$
1.65
$
1.80
Reported EPS
$
2.12
$
1.48
$
1.67
Capital expenditures and IT capital(6)
(thousands)
$
78,932
$
80,000
$
90,000
Depreciation and amortization
(thousands)
$
89,876
$
90,000
$
100,000
Interest expense (thousands)
$
14,418
$
14,000
$
15,000
Income tax rate
11.1
%
23.0
%
24.5
%
As SpartanNash cycles the impact of the onset of the COVID-19
pandemic in the first quarter of fiscal 2021, the Company currently
expects that Retail comparable sales will be negative 7.0% to 9.0%
in the first quarter, with fiscal 2021 full year comparable sales
of negative 6.0% to 8.0%. Food Distribution sales are expected to
decline 1.0% to 3.0% in fiscal 2021, while Military Distribution
sales are expected to decline 3.0% to 5.0% in 2021.
Conference Call
A telephone conference call to discuss the Company’s fourth
quarter and fiscal 2020 financial results is scheduled for
Thursday, February 25, 2021 at 8:00 a.m. ET. A live webcast of this
conference call will be available on the Company’s website,
www.spartannash.com/webcasts. Simply click on “For Investors” and
follow the links to the live webcast. The webcast will remain
available for replay on the Company’s website for approximately ten
days.
About SpartanNash
SpartanNash (Nasdaq: SPTN) is a Fortune 400 company whose core
businesses include distributing grocery products to a diverse group
of independent and chain retailers, its corporate-owned retail
stores and U.S. military commissaries and exchanges; as well as
operating a premier fresh produce distribution network. SpartanNash
serves customer locations in all 50 states and the District of
Columbia, Europe, Cuba, Puerto Rico, Honduras, Iraq, Kuwait,
Bahrain, Qatar and Djibouti. SpartanNash currently operates 154
supermarkets, primarily under the banners of Family Fare, Martin's
Super Markets, D&W Fresh Market, VG's Grocery and Dan's
Supermarket. Through its MDV military division, SpartanNash is a
leading distributor of grocery products to U.S. military
commissaries.
Forward-Looking Statements
This press release contains “forward-looking” statements within
the meaning of Section 27A of the Securities Act of 1933, and
Section 21E of the Securities Exchange Act of 1934. These include
statements preceded by, followed by or that otherwise include the
words “outlook,” “believe,” “anticipates,” “continue,” “expects,”
“guidance,” “trend,” “on track,” “encouraged” or “plan” or similar
expressions. The statements in the “Outlook” section of this press
release are inherently forward looking. Forward-looking statements
relating to expectations about future results or events are based
upon information available to SpartanNash as of today's date, and
are not guarantees of the future performance of the Company, and
actual results may vary materially from the results and
expectations discussed. Additional risks and uncertainties include,
but are not limited to, disruption associated with the COVID-19
pandemic and the Company's ability to compete in the highly
competitive grocery distribution, retail grocery, and military
distribution industries. Additional information concerning these
and other risks is contained in SpartanNash’s most recently filed
Annual Report on Form 10-K, recent Current Reports on Form 8-K and
other SEC filings. All subsequent written and oral forward-looking
statements concerning SpartanNash, or other matters and
attributable to SpartanNash or any person acting on its behalf are
expressly qualified in their entirety by the cautionary statements
above. SpartanNash does not undertake any obligation to publicly
update any of these forward-looking statements to reflect events or
circumstances that may arise after the date hereof.
(1) A reconciliation of operating earnings to adjusted operating
earnings, a non-GAAP financial measure, is provided in Table 3
below. (2) A reconciliation of earnings from continuing operations
to adjusted earnings from continuing operations, a non-GAAP
financial measure, is provided in Table 4 below. (3) A
reconciliation of net earnings to Adjusted EBITDA, a non-GAAP
financial measure, is provided in Table 2 below. (4) A
reconciliation of net cash provided by operating activities to free
cash flow, a non-GAAP financial measure, is provided in Table 6
below. (5) A reconciliation of long-term debt and finance lease
obligations to net long-term debt, a non-GAAP financial measure, is
provided in Table 5 below. (6) A reconciliation of purchases of
property and equipment to capital expenditures and IT capital, a
non-GAAP financial measure, is provided in Table 7 below. (7) A
reconciliation of projected earnings per share from continuing
operations to adjusted earnings per share from continuing
operations, a non-GAAP financial measure, is provided in Table 8
below.
SPARTANNASH COMPANY AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
EARNINGS
(Unaudited)
13 and 12 Weeks Ended
53 and 52 Weeks Ended
January 2,
December 28,
January 2,
December 28,
(In thousands,
except per share amounts)
2021
2019
2021
2019
Net sales
$
2,247,112
$
1,997,953
$
9,348,485
$
8,536,065
Cost of sales
1,908,910
1,711,220
7,923,520
7,292,235
Gross profit
338,202
286,733
1,424,965
1,243,830
Operating expenses
Selling, general and administrative
316,674
272,241
1,297,740
1,172,401
Merger/acquisition and integration
179
73
421
1,437
Restructuring charges and asset
impairment
3,943
2,835
24,398
13,050
Total operating expenses
320,796
275,149
1,322,559
1,186,888
Operating earnings
17,406
11,584
102,406
56,942
Other expenses and (income)
Interest expense
3,608
6,596
18,418
34,548
Loss on debt extinguishment
—
—
—
329
Postretirement benefit (income)
expense
(88
)
126
(685
)
19,803
Other, net
(144
)
(242
)
(691
)
(1,313
)
Total other expenses, net
3,376
6,480
17,042
53,367
Earnings before income taxes and
discontinued operations
14,030
5,104
85,364
3,575
Income tax expense (benefit)
1,937
(369
)
9,450
(2,342
)
Earnings from continuing
operations
12,093
5,473
75,914
5,917
Loss from discontinued operations, net
of taxes
—
(49
)
—
(175
)
Net earnings
$
12,093
$
5,424
$
75,914
$
5,742
Basic earnings per share:
Earnings from continuing operations
$
0.34
$
0.15
$
2.12
$
0.16
Loss from discontinued operations
—
(0.00
)
—
(0.00
)
Net earnings
$
0.34
$
0.15
$
2.12
$
0.16
Diluted earnings per share:
Earnings from continuing operations
$
0.34
$
0.15
$
2.12
$
0.16
Loss from discontinued operations
—
(0.00
)
—
(0.00
)
Net earnings
$
0.34
$
0.15
$
2.12
$
0.16
Weighted average shares
outstanding:
Basic
35,742
36,351
35,861
36,271
Diluted
35,807
36,351
35,862
36,271
SPARTANNASH COMPANY AND
SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(Unaudited)
January 2,
December 28,
(In
thousands)
2021
2019
Assets
Current assets
Cash and cash equivalents
$
19,903
$
24,172
Accounts and notes receivable, net
357,564
345,320
Inventories, net
541,785
537,212
Prepaid expenses and other current
assets
72,229
58,775
Property and equipment held for sale
23,259
31,203
Total current assets
1,014,740
996,682
Property and equipment, net
577,059
615,816
Goodwill
181,035
181,035
Intangible assets, net
116,142
130,434
Operating lease assets
289,173
268,982
Other assets, net
99,242
82,660
Total assets
$
2,277,391
$
2,275,609
Liabilities and
Shareholders’ Equity
Current liabilities
Accounts payable
$
464,784
$
405,370
Accrued payroll and benefits
113,789
59,680
Other accrued expenses
60,060
51,295
Current portion of operating lease
liabilities
45,786
42,440
Current portion of long-term debt and
finance lease liabilities
5,135
6,349
Total current liabilities
689,554
565,134
Long-term liabilities
Deferred income taxes
45,728
43,111
Operating lease liabilities
278,859
267,350
Other long-term liabilities
46,892
30,272
Long-term debt and finance lease
liabilities
481,309
682,204
Total long-term liabilities
852,788
1,022,937
Commitments and contingencies
Shareholders’ equity
Common stock, voting, no par value;
100,000 shares authorized; 35,851 and 36,351 shares outstanding
491,819
490,233
Preferred stock, no par value, 10,000
shares authorized; no shares outstanding
—
—
Accumulated other comprehensive loss
(2,276
)
(1,600
)
Retained earnings
245,506
198,905
Total shareholders’ equity
735,049
687,538
Total liabilities and shareholders’
equity
$
2,277,391
$
2,275,609
SPARTANNASH COMPANY AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
53 and 52 Weeks Ended
(In
thousands)
January 2, 2021
December 28, 2019
Cash flow activities
Net cash provided by operating
activities
$
306,716
$
180,192
Net cash used in investing activities
(57,221
)
(143,172
)
Net cash used in financing activities
(253,764
)
(31,219
)
Net cash used in discontinued
operations
—
(214
)
Net (decrease) increase in cash and
cash equivalents
(4,269
)
5,587
Cash and cash equivalents at beginning
of the period
24,172
18,585
Cash and cash equivalents at end of the
period
$
19,903
$
24,172
SPARTANNASH COMPANY AND
SUBSIDIARIES
SUPPLEMENTAL FINANCIAL
DATA
Table 1: Sales and Operating
Earnings (Loss) by Segment
(Unaudited)
13 and 12 Weeks Ended
53 and 52 Weeks Ended
(In
thousands)
January 2, 2021
December 28, 2019
January 2, 2021
December 28, 2019
Food Distribution
Segment:
Net sales
$
1,105,617
49.2
%
$
938,941
47.0
%
$
4,577,178
49.0
%
$
3,982,609
46.7
%
Operating earnings
10,972
10,852
45,962
47,416
Retail
Segment:
Net sales
627,434
27.9
%
548,002
27.4
%
2,637,917
28.2
%
2,381,349
27.9
%
Operating earnings
6,943
4,242
66,359
18,842
Military
Segment:
Net sales
514,061
22.9
%
511,010
25.6
%
2,133,390
22.8
%
2,172,107
25.4
%
Operating loss
(509
)
(3,510
)
(9,915
)
(9,316
)
Total:
Net sales
$
2,247,112
100.0
%
$
1,997,953
100.0
%
$
9,348,485
100.0
%
$
8,536,065
100.0
%
Operating earnings
17,406
11,584
102,406
56,942
Non-GAAP Financial Measures
In addition to reporting financial results in accordance with
accounting principles generally accepted in the United States of
America (“GAAP”), the Company also provides information regarding
adjusted operating earnings, adjusted earnings from continuing
operations, and adjusted earnings before interest, taxes,
depreciation and amortization (“adjusted EBITDA”), net long-term
debt, free cash flow, capital expenditures and IT capital, and
projected earnings per share from continuing operations. These are
non-GAAP financial measures, as defined below, and are used by
management to allocate resources, assess performance against its
peers and evaluate overall performance. The Company believes these
measures provide useful information for both management and its
investors. The Company believes these non-GAAP measures are useful
to investors because they provide additional understanding of the
trends and special circumstances that affect its business. These
measures provide useful supplemental information that helps
investors to establish a basis for expected performance and the
ability to evaluate actual results against that expectation. The
measures, when considered in connection with GAAP results, can be
used to assess the overall performance of the Company as well as
assess the Company’s performance against its peers. These measures
are also used as a basis for certain compensation programs
sponsored by the Company. In addition, securities analysts, fund
managers and other shareholders and stakeholders that communicate
with the Company request its financial results in these adjusted
formats.
Current year adjusted operating earnings, adjusted earnings from
continuing operations, and adjusted EBITDA exclude “Fresh Cut
operating losses” subsequent to the decision to exit these
operations during the first quarter, severance associated with cost
reduction initiatives, organizational alignment costs, 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. Adjusted earnings from continuing
operations exclude pension termination income related to refunds
from the annuity provider associated with the final reconciliation
of participant data, as well as net tax benefits associated with
the CARES Act. Prior year adjusted operating earnings, adjusted
earnings from continuing operations and adjusted EBITDA exclude
“Fresh Kitchen operating losses” subsequent to the decision to exit
these operations at the beginning of the third quarter, costs
associated with organizational realignment, which include
significant changes to the Company’s management team, and fees paid
to a third-party advisory firm associated with Project One Team,
the Company’s initiative to drive growth while increasing
efficiency and reducing costs. Pension termination costs, primarily
related to non-operating settlement expense associated with the
distribution of pension assets, are excluded from adjusted earnings
from continuing operations, and to a lesser extent adjusted
operating earnings. These measures were adjusted for the impact of
the 53rd week in 2020 to provide better comparability to prior
years.
Table 2: Reconciliation of Net
Earnings to Adjusted Earnings Before Interest, Taxes, Depreciation
and Amortization
(Adjusted EBITDA)
(A Non-GAAP Financial
Measure)
(Unaudited)
13 and 12 Weeks Ended
53 and 52 Weeks Ended
(In
thousands)
January 2, 2021
December 28, 2019
January 2, 2021
December 28, 2019
Net earnings
$
12,093
$
5,424
$
75,914
$
5,742
Earnings from discontinued operations, net
of tax
—
49
—
175
Income tax expense (benefit)
1,937
(369
)
9,450
(2,342
)
Other expenses, net
3,376
6,480
17,042
53,367
Operating earnings
17,406
11,584
102,406
56,942
Adjustments:
LIFO (gain) expense
(982
)
2,131
2,176
5,892
Depreciation and amortization
20,893
20,353
89,504
87,866
Merger/acquisition and integration
179
73
421
1,437
Restructuring, asset impairment and other
charges
3,943
2,835
24,398
13,050
Fresh Kitchen operating losses
—
690
—
2,894
Fresh Cut operating losses
—
—
2,262
—
Stock-based compensation
1,084
578
6,265
7,313
Stock warrants
6,549
—
6,549
—
Non-cash rent
(752
)
(1,080
)
(4,733
)
(5,622
)
Costs associated with Project One Team
—
—
493
5,428
Organizational realignment costs
455
—
455
1,812
Severance associated with cost reduction
initiatives
33
—
5,154
—
(Gain) loss on disposal of assets
(132
)
—
3,330
—
Other non-cash charges
186
223
379
933
Adjusted EBITDA
48,862
37,387
239,059
177,945
53rd week
(4,246
)
—
(4,246
)
—
Adjusted EBITDA, excluding 53rd week
$
44,616
$
37,387
$
234,813
$
177,945
Food Distribution:
Operating earnings
$
10,972
$
10,852
$
45,962
$
47,416
Adjustments:
LIFO (gain) expense
(829
)
1,163
855
3,032
Depreciation and amortization
7,356
7,493
31,917
32,861
Merger/acquisition and integration
—
8
—
(122
)
Restructuring, asset impairment and other
charges
1,863
4,120
21,085
14,844
Fresh Kitchen operating losses
—
690
—
2,894
Fresh Cut operating losses
—
—
2,262
—
Stock-based compensation
552
284
3,076
3,603
Stock warrants
6,549
—
6,549
—
Non-cash rent
433
129
558
482
Costs associated with Project One Team
—
—
265
2,877
Organizational realignment costs
245
—
245
960
(Gain) loss on disposal of assets
(131
)
—
1,482
—
Severance associated with cost reduction
initiatives
13
—
3,156
—
Other non-cash charges
101
3
204
394
Adjusted EBITDA
27,124
24,742
117,616
109,241
53rd week
(1,363
)
—
(1,363
)
—
Adjusted EBITDA, excluding 53rd week
$
25,761
$
24,742
$
116,253
$
109,241
Table 2: Reconciliation of Net
Earnings to Adjusted Earnings Before Interest, Taxes, Depreciation
and Amortization, continued
(Adjusted EBITDA)
(A Non-GAAP Financial
Measure)
(Unaudited)
(In
thousands)
January 2, 2021
December 28, 2019
January 2, 2021
December 28, 2019
Retail:
Operating earnings
$
6,943
$
4,242
$
66,359
$
18,842
Adjustments:
LIFO (gain) expense
(285
)
213
301
1,071
Depreciation and amortization
10,629
10,123
45,199
43,171
Merger/acquisition and integration
179
65
421
1,559
Restructuring charges (gains) and asset
impairment
2,080
(1,285
)
3,313
(1,794
)
Stock-based compensation
378
205
2,134
2,530
Non-cash rent
(1,097
)
(1,118
)
(4,915
)
(5,730
)
Costs associated with Project One Team
—
—
164
1,845
Organizational realignment costs
151
—
151
616
Severance associated with cost reduction
initiatives
4
—
1,445
—
Loss on disposal of assets
41
—
1,946
—
Other non-cash charges
60
218
124
628
Adjusted EBITDA
19,083
12,663
116,642
62,738
53rd week
(2,780
)
—
(2,780
)
—
Adjusted EBITDA, excluding 53rd week
$
16,303
$
12,663
$
113,862
$
62,738
Military:
Operating loss
$
(509
)
$
(3,510
)
$
(9,915
)
$
(9,316
)
Adjustments:
LIFO expense
132
755
1,020
1,789
Depreciation and amortization
2,908
2,737
12,388
11,834
Stock-based compensation
154
89
1,055
1,180
Non-cash rent
(88
)
(91
)
(376
)
(374
)
Costs associated with Project One Team
—
—
64
706
Organizational realignment costs
59
—
59
236
Severance associated with cost reduction
initiatives
16
—
553
—
Gain on disposal of assets
(42
)
—
(98
)
—
Other non-cash charges (gains)
25
2
51
(89
)
Adjusted EBITDA
2,655
(18
)
4,801
5,966
53rd week
(103
)
—
(103
)
—
Adjusted EBITDA, excluding 53rd week
$
2,552
$
(18
)
$
4,698
$
5,966
Notes: Adjusted Earnings Before Interest, Taxes, Depreciation
and Amortization (“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 share-based payments (equity
awards measured in accordance with ASC 718, Stock Compensation,
which include both stock-based compensation to employees and stock
warrants issued to non-employees) and 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 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)
13 and 12 Weeks Ended
53 and 52 Weeks Ended
(In
thousands)
January 2, 2021
December 28, 2019
January 2, 2021
December 28, 2019
Operating earnings
$
17,406
$
11,584
$
102,406
$
56,942
Adjustments:
Merger/acquisition and integration
179
73
421
1,437
Restructuring, asset impairment and
other
3,943
2,835
24,398
13,050
Fresh Kitchen operating losses
—
690
—
2,894
Expenses associated with tax planning
strategies
—
—
82
—
Costs associated with Project One Team
—
—
493
5,428
Organizational realignment costs
455
—
455
1,812
Pension termination
—
13
—
59
Severance associated with cost reduction
initiatives
33
24
5,154
509
Fresh Cut operating losses
—
—
2,262
—
Adjusted operating earnings
22,016
15,219
135,671
82,131
53rd week
(4,155
)
—
(4,155
)
—
Adjusted operating earnings, excluding
53rd week
$
17,861
$
15,219
$
131,516
$
82,131
Reconciliation of operating earnings
(loss) to adjusted operating earnings (loss) by segment:
13 and 12 Weeks Ended
53 and 52 Weeks Ended
January 2, 2021
December 28, 2019
January 2, 2021
December 28, 2019
Food Distribution:
Operating earnings
$
10,972
$
10,852
$
45,962
$
47,416
Adjustments:
Merger/acquisition and integration
—
8
—
(122
)
Restructuring, asset impairment and other
charges
1,863
4,120
21,085
14,844
Fresh Kitchen operating losses
—
690
—
2,894
Expenses associated with tax planning
strategies
—
—
44
—
Costs associated with Project One Team
—
—
265
2,877
Organizational realignment costs
245
—
245
960
Pension termination
—
6
—
32
Severance associated with cost reduction
initiatives
13
21
3,156
413
Fresh Cut operating losses
—
—
2,262
—
Adjusted operating earnings
13,093
15,697
73,019
69,314
53rd week
(1,300
)
—
(1,300
)
—
Adjusted operating earnings, excluding
53rd week
$
11,793
$
15,697
$
71,719
$
69,314
Retail:
Operating earnings
6,943
4,242
66,359
18,842
Adjustments:
Merger/acquisition and integration
179
65
421
1,559
Restructuring, asset impairment and other
charges (gains)
2,080
(1,285
)
3,313
(1,794
)
Costs associated with Project One Team
—
—
164
1,845
Organizational realignment costs
151
—
151
616
Expenses associated with tax planning
strategies
—
—
27
—
Pension termination
—
4
—
21
Severance associated with cost reduction
initiatives
4
3
1,445
86
Adjusted operating earnings
9,357
3,029
71,880
21,175
53rd week
(2,760
)
—
(2,760
)
—
Adjusted operating earnings, excluding
53rd week
$
6,597
$
3,029
$
69,120
$
21,175
Military:
Operating loss
$
(509
)
$
(3,510
)
$
(9,915
)
$
(9,316
)
Adjustments:
Costs associated with Project One Team
—
—
64
706
Organizational realignment costs
59
—
59
236
Expenses associated with tax planning
strategies
—
—
11
—
Pension termination
—
3
—
6
Severance associated with cost reduction
initiatives
16
—
553
10
Adjusted operating loss
(434
)
(3,507
)
(9,228
)
(8,358
)
53rd week
(95
)
—
(95
)
—
Adjusted operating loss, excluding 53rd
week
$
(529
)
$
(3,507
)
$
(9,323
)
$
(8,358
)
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 GAAP and should not be considered as a substitute for
operating earnings, and other income 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)
13 and 12 Weeks Ended
January 2, 2021
December 28, 2019
per diluted
per diluted
(In thousands,
except per share amounts)
Earnings
share
Earnings
share
Earnings from continuing operations
$
12,093
$
0.34
$
5,473
$
0.15
Adjustments:
Merger/acquisition and integration
179
73
Restructuring, asset impairment and other
charges
3,943
2,835
Fresh Kitchen operating losses
—
690
Organizational realignment costs
455
—
Severance associated with cost reduction
initiatives
33
25
Pension termination
(189
)
47
Total adjustments
4,421
3,670
Income tax effect on adjustments (a)
(1,024
)
(856
)
Impact of CARES Act (b)
6
—
Total adjustments, net of taxes
3,403
0.09
2,814
0.08
Adjusted earnings from continuing
operations
15,496
0.43
8,287
0.23
53rd week
(2,999
)
(0.08
)
—
—
Adjusted earnings from continuing
operations, excluding 53rd week
$
12,497
$
0.35
$
8,287
$
0.23
53 and 52 Weeks Ended
January 2, 2021
December 28, 2019
per diluted
per diluted
(In thousands,
except per share amounts)
Earnings
share
Earnings
share
Earnings from continuing operations
$
75,914
$
2.12
$
5,917
$
0.16
Adjustments:
Merger/acquisition and integration
421
1,437
Restructuring, asset impairment and other
charges
24,398
13,050
Fresh Kitchen operating losses
—
2,894
Expenses associated with tax planning
82
—
Costs associated with Project One Team
493
5,428
Organizational realignment costs
455
1,812
Loss on debt extinguishment
—
329
Severance associated with cost reduction
initiatives
5,154
509
Fresh Cut operating losses
2,262
—
Pension termination
(1,193
)
19,557
Total adjustments
32,072
45,016
Income tax effect on adjustments (a)
(7,851
)
(11,022
)
Impact of CARES Act (b)
(9,292
)
—
Total adjustments, net of taxes
14,929
0.41
33,994
0.94
Adjusted earnings from continuing
operations
90,843
2.53
39,911
1.10
53rd week
(2,999
)
(0.08
)
—
—
Adjusted earnings from continuing
operations, excluding 53rd week
$
87,844
$
2.45
$
39,911
$
1.10
(a) The income tax effect on adjustments is computed
by applying the applicable tax rate to the adjustments. (b)
Represents tax impacts attributable to the Coronavirus Aid,
Relief and Economic Security (“CARES”) Act, and related tax
planning, primarily related to additional deductions and the
utilization of net operating loss carrybacks.
Notes: Adjusted earnings from continuing operations is a
non-GAAP operating financial measure that the Company defines as
earnings from continuing operations plus or minus adjustments for
items that do not reflect the ongoing operating activities of the
Company and costs associated with the closing of operational
locations.
Adjusted earnings from continuing operations is not a measure of
performance under GAAP and should not be considered as a substitute
for earnings from continuing operations and other income statement
data. The Company’s definition of adjusted earnings from continuing
operations may not be identical to similarly titled measures
reported by other companies.
Table 5: Reconciliation of
Long-Term Debt and Finance Lease Obligations to Net Long-Term
Debt
(A Non-GAAP Financial
Measure)
(Unaudited)
January 2,
December 29,
(In
thousands)
2021
2019
Current portion of long-term debt and
finance lease liabilities
$
5,135
$
6,349
Long-term debt and finance lease
liabilities
481,309
682,204
Total debt
486,444
688,553
Cash and cash equivalents
(19,903
)
(24,172
)
Net long-term debt
$
466,541
$
664,381
Notes: Net long-term debt is a non-GAAP financial measure that
is defined as long-term debt and finance lease obligations plus
current maturities of long-term debt and finance lease obligations
less cash and cash equivalents. The Company believes both
management and its investors find the information useful because it
reflects the amount of long-term debt obligations that are not
covered by available cash and temporary investments. Net long-term
debt is not a substitute for GAAP financial measures and may differ
from similarly titled measures of other companies.
Table 6: Reconciliation of Net
Cash Provided by Operating Activities to Free Cash Flow
(A Non-GAAP Financial
Measure)
(Unaudited)
53 and 52 Weeks Ended
(In
thousands)
January 2, 2021
December 28, 2019
Net cash provided by operating
activities
$
306,716
$
180,192
Less:
Purchases of property and equipment
67,298
74,815
Free cash flow
$
239,418
$
105,377
Notes: Free cash flow is a non-GAAP financial measure calculated
by subtracting capital expenditures from cash flows provided by
operating activities, the most directly comparable GAAP measure.
The Company believes it is a useful indicator of liquidity that
provides information to both management and investors about the
amount of cash generated from operations that, after capital
expenditures, can be used for strategic business objectives,
including the repayment of long-term debt. Free cash flow is not a
substitute for GAAP financial measures and may differ from
similarly titled measures of other companies.
Table 7: Reconciliation of
Purchases of Property and Equipment to Capital Expenditures and IT
Capital
(A Non-GAAP Financial
Measure)
(Unaudited)
53 and 52 Weeks Ended
(In
thousands)
January 2, 2021
December 28, 2019
Purchases of property and equipment
$
67,298
$
74,815
Plus:
Cloud computing spend
11,634
—
Capital expenditures and IT capital
$
78,932
$
74,815
Table 8: Reconciliation of
Projected Earnings per Diluted Share from Continuing Operations
to
Projected Adjusted Earnings
per Diluted Share from Continuing Operations
(A Non-GAAP Financial
Measure)
(Unaudited)
52 Weeks Ending
January 1, 2022
Low
High
Earnings from continuing operations
$
1.48
$
1.67
Adjustments, net of taxes:
Merger/acquisition and integration
expenses
0.01
0.01
Restructuring and asset impairment
0.13
0.10
Severance associated with cost reduction
initiatives
0.01
0.01
Organizational realignment
0.02
0.01
Adjusted earnings from continuing
operations
$
1.65
$
1.80
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210224005996/en/
Investors: Mark Shamber Chief Financial Officer and Executive
Vice President (616) 878-8023 Chris Mandeville ICR (203) 682-8304
Anna Kate Heller ICR (678) 358-8995 Media: Meredith Gremel Vice
President Corporate Affairs and Communications (616) 878-2830
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