Raises Fiscal 2021 Outlook
Albertsons Companies, Inc. (NYSE: ACI) (the "Company") today
reported results for the third quarter of fiscal 2021, which ended
December 4, 2021.
Third Quarter of Fiscal 2021
Highlights
- Identical sales increased 5.2%; on a two-year stacked basis
identical sales growth was 17.5%
- Digital sales increased 9%; on a two-year stacked basis digital
sales growth was 234%
- Net income of $425 million, or $0.74 per Class A common
share
- Adjusted net income of $457 million, or $0.79 per Class A
common share
- Adjusted EBITDA of $1,051 million
"We are pleased with our third quarter results as we continue to
execute against our transformation strategy. A favorable economic
backdrop together with the heroic performance of our frontline
retail, distribution, and manufacturing teams contributed to these
better-than-expected results," said Vivek Sankaran, CEO. "Also
driving these results was our continued focus on in-store
excellence, acceleration of our digital and omnichannel
capabilities, and delivery of our productivity initiatives. During
the quarter, we continued to gain market share in both units and
dollars and saw ongoing improvement in both the in-store and online
customer experience."
Third Quarter of Fiscal 2021 Results
Compared to Third Quarter of Fiscal 2020
Net sales and other revenue was $16.7 billion during the 12
weeks ended December 4, 2021 ("third quarter of fiscal 2021")
compared to $15.4 billion during the 12 weeks ended December 5,
2020 ("third quarter of fiscal 2020"). The increase was driven by
the Company's 5.2% increase in identical sales, as well as higher
fuel sales and sales related to stores acquired and opened since
the third quarter of fiscal 2020. Retail price inflation and
incremental sales related to administering COVID-19 vaccines
contributed to the 5.2% identical sales increase.
Gross margin rate decreased to 28.9% during the third quarter of
fiscal 2021 compared to 29.3% during the third quarter of fiscal
2020. Excluding the impact of fuel, gross margin rate increased 10
basis points compared to the third quarter of fiscal 2020. The
increase in gross margin rate was primarily due to productivity
initiatives, improved pharmacy margins related to administering
COVID-19 vaccines and favorable product mix, largely offset by
lower gross margin rates across certain product categories due to
the rate impact of increased product costs driven by the current
inflationary environment, as well as higher supply chain costs.
Selling and administrative expenses decreased to 25.4% of net
sales and other revenue during the third quarter of fiscal 2021
compared to 28.0% during the third quarter of fiscal 2020.
Excluding the impact of fuel and the $285.7 million charge related
to the withdrawal from the United Food and Commercial Workers
International Union ("UFCW") Union-Industry Pension Fund ("National
Fund") during the third quarter of fiscal 2020, selling and
administrative expenses as a percentage of net sales and other
revenue decreased 20 basis points. The decrease in selling and
administrative expenses was primarily attributable to lower
COVID-19 related expenses and the execution of productivity
initiatives, which were offset by higher employee costs,
depreciation and other expenses related to the Company's
investments in its digital and omnichannel capabilities and other
strategic priorities. The increase in employee costs was the result
of additional labor to support the increase in fresh sales,
market-driven wage rate increases and higher equity-based
compensation expense.
Interest expense, net was $111.3 million during the third
quarter of fiscal 2021 compared to $115.9 million during the third
quarter of fiscal 2020.
Other income, net was $38.3 million during the third quarter of
fiscal 2021 compared to $19.2 million during the third quarter of
fiscal 2020.
Income tax expense was $98.4 million, representing a 18.8%
effective tax rate, during the third quarter of fiscal 2021
compared to $29.5 million, representing a 19.3% effective tax rate,
during the third quarter of fiscal 2020. The decrease in the
effective income tax rate was primarily driven by incremental
discrete state income tax benefits related to expired statutes and
audit settlements during the third quarter of fiscal 2021.
Net income was $424.5 million, or $0.74 per Class A common
share, during the third quarter of fiscal 2021 compared to $123.7
million, or $0.20 per Class A common share, during the third
quarter of fiscal 2020.
Adjusted net income was $457.2 million, or $0.79 per Class A
common share, during the third quarter of fiscal 2021 compared to
$386.6 million, or $0.66 per Class A common share, during the third
quarter of fiscal 2020.
Adjusted EBITDA was $1,051.2 million, or 6.3% of sales, during
the third quarter of fiscal 2021 compared to $967.7 million, or
6.3% of sales, during the third quarter of fiscal 2020.
Supplemental Two-Year Results - Third
Quarter of Fiscal 2021 Compared to Third Quarter of Fiscal
2019
The following table provides a comparison of the third quarter
of fiscal 2021 to the 12 weeks ended November 30, 2019 ("third
quarter of fiscal 2019") for certain financial measures, including
a compounded annual growth rate ("CAGR"), to demonstrate the
two-year growth in the Company's business. The Company believes
these supplemental comparisons provide meaningful and useful
information to investors about the trends in its business relative
to pre-COVID-19 pandemic periods.
Third Quarter of Fiscal
2021 Supplemental Two-Year Results
Identical sales two-year stacked (1)
17.5
%
Net income per Class A common share
two-year CAGR
186.7
%
Adjusted net income per Class A common
share two-year CAGR
81.4
%
Net income two-year CAGR
178.3
%
Adjusted net income two-year CAGR
79.3
%
Adjusted EBITDA two-year CAGR
28.7
%
% of net sales and other revenue:
Gross margin (1)
Increased 40 basis points
Selling and administrative expenses
(1)
Decreased 170 basis points
(1) Excluding fuel.
Net sales and other revenue was $16.7 billion during the third
quarter of fiscal 2021 compared to $14.1 billion during the third
quarter of fiscal 2019. The increase in sales compared to the third
quarter of fiscal 2019 was primarily due to the 17.5% increase in
two-year stacked identical sales.
Gross margin rate increased to 28.9% during the third quarter of
fiscal 2021 compared to 28.3% during the third quarter of fiscal
2019. Excluding the impact of fuel, gross margin rate increased by
approximately 40 basis points compared to the third quarter of
fiscal 2019, primarily driven by sales leverage, productivity
initiatives and improved pharmacy margins related to administering
COVID-19 vaccines, partially offset by growth in digital sales and
an increase in product and supply chain costs driven by the current
inflationary environment.
Selling and administrative expenses decreased to 25.4% of net
sales and other revenue during the third quarter of fiscal 2021
compared to 27.0% of net sales and other revenue for the third
quarter of fiscal 2019. Excluding the impact of fuel, selling and
administrative expenses as a percentage of net sales and other
revenue decreased approximately 170 basis points primarily due to
sales leverage and the execution of productivity initiatives,
partially offset by increases in employee costs and other expenses
related to the Company's investments in its digital and omnichannel
capabilities and strategic priorities, as well as incremental
COVID-19 expenses.
Capital Allocation
The Company's capital allocation strategy is balanced,
prioritizing capital investment to drive future growth, continued
deleveraging of the balance sheet, and the return of capital to
stockholders via quarterly dividends and opportunistic share
repurchases, all anchored on strong and consistent free cash
flow.
During the first 40 weeks of fiscal 2021, the Company spent
$1,216.4 million in capital expenditures, which included
investments in digital and technology, the opening of nine new
stores and the completion of 146 store remodels. During the third
quarter of fiscal 2021, the Company also paid its quarterly
dividend of $0.12 per share of Class A common stock on November 12,
2021 to stockholders of record as of October 29, 2021. Today the
Company announced the next quarterly dividend of $0.12 per share of
Class A common stock payable on February 10, 2022 to stockholders
of record as of January 26, 2022.
Convertible Preferred
Stock
Subsequent to the end of the third quarter of fiscal 2021,
certain holders of the Company's convertible preferred stock
converted approximately 262,601 shares of convertible preferred
stock into approximately 15,247,696 shares of the Company's Class A
common stock. These conversions represented approximately 15% of
the convertible preferred stock outstanding as of the end of the
third quarter of fiscal 2021.
Fiscal 2021 Outlook
The Company is providing an updated fiscal 2021 outlook and now
expects:
- Identical sales in fiscal 2021 in the range of (0.8%) to (1.2%)
(previously (2.5%) to (3.5%)), representing two-year stacked growth
of 15.7% to 16.1% (previously 13.4% to 14.4%)
- Adjusted EBITDA in the range of $4.25 billion to $4.30 billion
(previously $3.95 billion to $4.05 billion)
- Adjusted net income per Class A common share in the range of
$2.90 to $2.95 per share (previously $2.50 to $2.60 per share)
- Effective tax rate in the range of 22.5% to 23.5% (previously
23% to 24%)
- Capital expenditures in the range of $1.8 billion to $1.9
billion (previously $1.9 billion to $2.0 billion)
The Company is unable to provide a full reconciliation of the
GAAP and Non-GAAP Measures (as defined below) used in the updated
fiscal 2021 outlook without unreasonable effort because it is not
possible to predict certain of the adjustment items with a
reasonable degree of certainty. This information is dependent upon
future events and may be outside of the Company's control and could
have a significant impact on its GAAP financial results for fiscal
2021. The expected effective tax rate does not reflect potential
rate adjustments for the resolution of tax audits or potential
changes in tax laws, which cannot be predicted with reasonable
certainty.
Conference Call
The Company will hold a conference call today at 8:30 a.m.
Eastern Time, which will be hosted by Vivek Sankaran, CEO, and
Sharon McCollam, President & CFO. The call will be webcast and
can be accessed at
https://investor.albertsonscompanies.com/Event-Calendar. A replay
of the webcast will be available for at least two weeks following
the completion of the call.
About Albertsons
Companies
Albertsons Companies is a leading food and drug retailer in the
United States. As of December 4, 2021, the Company operated 2,278
retail food and drug stores with 1,722 pharmacies, 399 associated
fuel centers, 22 dedicated distribution centers and 20
manufacturing facilities. The Company operates stores across 34
states and the District of Columbia under more than 20 well-known
banners including Albertsons, Safeway, Vons, Jewel-Osco, Shaw's,
Acme, Tom Thumb, Randalls, United Supermarkets, Pavilions, Star
Market, Haggen, Carrs, Kings Food Markets and Balducci's Food
Lovers Market. The Company is committed to helping people across
the country live better lives by making a meaningful difference,
neighborhood by neighborhood. In 2020, along with the Albertsons
Companies Foundation, the Company gave $260 million in food and
financial support, including approximately $95 million through our
Nourishing Neighbors Program to ensure those living in our
communities have enough to eat. Albertsons Companies also pledged
$5 million to organizations supporting social justice. These
efforts have helped millions of people in the areas of hunger
relief, education, cancer research and treatment, social justice
and programs for people with disabilities and veterans'
outreach.
Forward-Looking Statements and Factors
That Impact Our Operating Results and Trends
This press release includes "forward-looking statements" within
the meaning of the federal securities laws. The "forward-looking
statements" include our current expectations, assumptions,
estimates and projections about our business and our industry. They
include statements relating to our future operating or financial
performance which the Company believes to be reasonable at this
time. You can identify forward-looking statements by the use of
words such as "outlook," "may," "should," "could," "estimates,"
"predicts," "potential," "continue," "anticipates," "believes,"
"plans," "expects," "future" and "intends" and similar expressions
which are intended to identify forward-looking statements.
These statements are not guarantees of future performance and
are subject to risks, uncertainties and other factors, some of
which are beyond our control and difficult to predict, including,
among others:
- changes in macroeconomic conditions;
- retail consumer behavior and environment and the Company's
industry;
- ability to attract and retain qualified associates;
- failure to achieve productivity initiatives;
- increased rates of food price inflation or future deflation;
and
- factors related to the continued impact of the COVID-19
pandemic, about which there are still many unknowns, including its
duration, recurrence, new variants, status and effectiveness of
vaccinations, duration and scope of related government orders,
financial assistance programs, mandates and regulations and the
extent of the overall impact to our business and the communities we
serve.
All forward-looking statements attributable to us or persons
acting on our behalf are expressly qualified in their entirety by
these cautionary statements and risk factors. Forward-looking
statements contained in this press release reflect our view only as
of the date of this press release. We undertake no obligation,
other than as required by law, to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
While certain aspects of our financial results have been
favorably impacted by increased demand during the COVID-19
pandemic, in addition to favorable consumer conditions including
incremental financial assistance provided by various government
agencies, our business continues to experience challenges to meet
customer demand. We have recently experienced increased labor
shortages due to recent COVID-19 variants resulting in
transportation and retail store disruptions. Together with labor
shortages and higher demand for talent, the current economic
environment is driving higher wages. The current labor shortages
could also impact our ability to negotiate acceptable contracts
with labor unions which could result in strikes by affected workers
and thereby significantly disrupt our operations. Our ability to
meet labor needs, control wage and labor-related costs and minimize
labor disruptions will be key to our success of operating our
business and executing our business strategies. Furthermore, our
business is experiencing an inflationary environment and food price
inflation, which has benefited our sales and gross margin growth
but has negatively impacted our gross margin rates. In addition, a
deflationary market in future periods could reduce sales growth and
earnings. We are unable to predict whether the current inflationary
environment will continue or whether a deflationary trend will
occur. We expect the economic environment to remain uncertain as we
navigate the COVID-19 pandemic, labor challenges and the current
inflationary environment.
Such risks and uncertainties could cause actual results to
differ materially from those expressed or forecasted by us. In
evaluating our financial results and forward-looking statements,
you should carefully consider the risks and uncertainties more
fully described in the "Risk Factors" section or other sections in
our reports filed with the SEC including the most recent annual
report on Form 10-K and any subsequent periodic reports on Form
10-Q and current reports on Form 8-K.
Non-GAAP Measures and Identical
Sales
EBITDA, Adjusted EBITDA, Adjusted net income and Adjusted net
income per Class A common share (collectively, the "Non-GAAP
Measures") are performance measures that provide supplemental
information the Company believes is useful to analysts and
investors to evaluate its ongoing results of operations, when
considered alongside other GAAP measures such as net income,
operating income, gross margin, and net income per Class A common
share. These Non-GAAP Measures exclude the financial impact of
items management does not consider in assessing the Company's
ongoing operating performance, and thereby provide useful measures
of its operating performance on a period-to-period basis. Other
companies may have different definitions of Non-GAAP Measures and
provide for different adjustments, and comparability to the
Company's results of operations may be impacted by such
differences. The Company also uses Adjusted EBITDA and Net Debt
Ratio for board of director and bank compliance reporting. The
Company's presentation of Non-GAAP Measures should not be construed
as an implication that its future results will be unaffected by
unusual or non-recurring items.
As used in this earnings release, the term "identical sales"
includes stores operating during the same period in both the
current fiscal year and the prior fiscal year, comparing sales on a
daily basis. Direct to consumer digital sales are included in
identical sales, and fuel sales are excluded from identical
sales.
Albertsons Companies, Inc. and
Subsidiaries
Condensed Consolidated
Statements of Operations
(dollars in millions, except
per share data)
(unaudited)
12 weeks ended
40 weeks ended
December 4,
2021
December 5,
2020
December 4,
2021
December 5,
2020
Net sales and other revenue
$
16,728.4
$
15,408.9
$
54,503.5
$
53,918.1
Cost of sales
11,898.3
10,900.3
38,765.4
38,063.1
Gross margin
4,830.1
4,508.6
15,738.1
15,855.0
Selling and administrative
expenses
4,243.9
4,309.1
13,978.8
14,109.7
Gain on property dispositions and
impairment losses, net
(13.4)
(59.0)
(13.3)
(47.0)
Operating income
599.6
258.5
1,772.6
1,792.3
Interest expense, net
111.3
115.9
373.9
425.1
Loss on debt extinguishment
3.7
8.6
3.7
57.7
Other income, net
(38.3)
(19.2)
(100.7)
(27.5)
Income before income taxes
522.9
153.2
1,495.7
1,337.0
Income tax expense
98.4
29.5
331.2
342.6
Net income
$
424.5
$
123.7
$
1,164.5
$
994.4
Net income per Class A common
share
Basic net income per Class A common
share
$
0.78
$
0.21
$
1.97
$
1.78
Diluted net income per Class A common
share
0.74
0.20
1.95
1.71
Weighted average Class A common shares
outstanding
Basic
466.0
468.7
465.4
511.0
Diluted
574.2
472.1
471.2
580.3
% of net sales and other
revenue
Gross margin
28.9
%
29.3
%
28.9
%
29.4
%
Selling and administrative
expenses
25.4
%
28.0
%
25.6
%
26.2
%
Store data
Number of stores at end of
quarter
2,278
2,253
Albertsons Companies, Inc. and
Subsidiaries
Condensed Consolidated Balance
Sheets
(in millions)
(unaudited)
December 4,
2021
February 27,
2021
ASSETS
Current assets
Cash and cash equivalents
$
2,661.0
$
1,717.0
Receivables, net
607.4
550.9
Inventories, net
4,671.0
4,301.3
Other current assets
440.3
418.8
Total current assets
8,379.7
6,988.0
Property and equipment, net
9,249.4
9,412.7
Operating lease right-of-use assets
5,922.8
6,015.6
Intangible assets, net
2,239.5
2,108.8
Goodwill
1,201.0
1,183.3
Other assets
943.7
889.6
TOTAL ASSETS
$
27,936.1
$
26,598.0
LIABILITIES
Current liabilities
Accounts payable
$
4,066.1
$
3,487.3
Accrued salaries and wages
1,483.3
1,474.7
Current maturities of long-term debt and
finance lease obligations
82.0
212.4
Current maturities of operating lease
obligations
627.8
605.3
Other current liabilities
1,202.0
1,052.5
Total current liabilities
7,461.2
6,832.2
Long-term debt and finance lease
obligations
7,915.7
8,101.2
Long-term operating lease obligations
5,508.2
5,548.0
Deferred income taxes
684.9
533.7
Other long-term liabilities
2,456.3
2,659.5
Commitments and contingencies
Series A convertible preferred stock
844.3
844.3
Series A-1 convertible preferred stock
754.8
754.8
STOCKHOLDERS' EQUITY
Class A common stock
5.9
5.9
Additional paid-in capital
1,946.1
1,898.9
Treasury stock, at cost
(1,907.0)
(1,907.0)
Accumulated other comprehensive income
78.6
63.5
Retained earnings
2,187.1
1,263.0
Total stockholders' equity
2,310.7
1,324.3
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
$
27,936.1
$
26,598.0
Albertsons Companies, Inc. and
Subsidiaries
Condensed Consolidated
Statements of Cash Flows
(in millions)
(unaudited)
40 weeks ended
December 4,
2021
December 5,
2020
Cash flows from operating
activities:
Net income
$
1,164.5
$
994.4
Adjustments to reconcile net income to net
cash provided by operating activities:
Gain on property dispositions and
impairment losses, net
(13.3)
(47.0)
Depreciation and amortization
1,273.2
1,171.7
Operating lease right-of-use assets
amortization
478.2
443.9
LIFO expense
58.6
37.5
Deferred income tax
99.4
(16.8)
Contributions to pension and
post-retirement benefit plans, net of (income) expense
(73.6)
(80.6)
(Gain) loss on interest rate swaps and
commodity hedges, net
(8.8)
24.0
Deferred financing costs
16.0
16.1
Loss on debt extinguishment
3.7
57.7
Equity-based compensation expense
75.4
43.4
Other
(48.7)
(46.0)
Changes in operating assets and
liabilities:
Receivables, net
(69.6)
(23.1)
Inventories, net
(427.4)
(322.9)
Accounts payable, accrued salaries and
wages and other accrued liabilities
627.6
627.1
Operating lease liabilities
(388.2)
(357.7)
Self-insurance assets and liabilities
34.7
20.6
Other operating assets and liabilities
(18.9)
453.7
Net cash provided by operating
activities
2,782.8
2,996.0
Cash flows from investing
activities:
Business acquisitions, net of cash
acquired
(25.4)
—
Payments for property, equipment and
intangibles, including payments for lease buyouts
(1,216.4)
(1,083.0)
Proceeds from sale of long-lived
assets
37.8
143.9
Other investing activities
26.9
(5.2)
Net cash used in investing
activities
(1,177.1)
(944.3)
Cash flows from financing
activities:
Proceeds from issuance of long-term
debt
—
3,500.0
Payments on long-term borrowings
(330.6)
(3,638.7)
Payments of obligations under finance
leases
(50.6)
(52.0)
Payment of redemption premium on debt
extinguishment
(2.9)
(48.6)
Payments for debt financing costs
—
(15.9)
Dividends paid on common stock
(149.0)
(47.3)
Dividends paid on convertible preferred
stock
(88.6)
(36.4)
Proceeds from convertible preferred
stock
—
1,680.0
Third party issuance costs on convertible
preferred stock
—
(80.9)
Treasury stock purchase, at cost
—
(1,864.7)
Employee tax withholding on vesting of
restricted stock units
(28.7)
(13.7)
Other financing activities
(11.3)
(25.7)
Net cash used in financing
activities
(661.7)
(643.9)
Net increase in cash and cash
equivalents and restricted cash
944.0
1,407.8
Cash and cash equivalents and
restricted cash at beginning of period
1,767.6
478.9
Cash and cash equivalents and
restricted cash at end of period
$
2,711.6
$
1,886.7
The following tables reconcile Net income to Adjusted net
income, and Net income per Class A common share to Adjusted net
income per Class A common share for the 12 weeks ended December 4,
2021, December 5, 2020 and November 30, 2019:
12 weeks ended
December 4,
2021
December 5,
2020
November 30, 2019
Supplemental
Numerator:
Net income
$
424.5
$
123.7
$
54.8
Adjustments:
(Gain) loss on interest rate and commodity
hedges, net (d)
(1.3)
(1.9)
0.1
Facility closures and transformation
(1)(b)
10.2
18.6
11.0
Acquisition and integration costs
(2)(b)
1.2
2.0
17.4
Equity-based compensation expense (b)
26.4
15.1
7.2
Gain on property dispositions and
impairment losses, net
(13.4)
(59.0)
(18.7)
LIFO expense (a)
29.5
14.3
2.6
Discretionary COVID-19 pandemic related
costs (3)(b)
—
44.7
—
Government-mandated incremental COVID-19
pandemic related pay (4)(b)
5.6
—
—
Transaction and reorganization costs
related to convertible preferred stock issuance and initial public
offering (b)
—
(1.0)
3.4
Amortization of debt discount and deferred
financing costs (c)
4.8
4.9
25.1
Loss on debt extinguishment
3.7
8.6
—
Amortization of intangible assets
resulting from acquisitions (b)
9.5
12.9
65.3
UFCW National Fund withdrawal (b)
—
285.7
—
Miscellaneous adjustments (5)(f)
(34.9)
8.6
4.6
Tax impact of adjustments to Adjusted net
income
(8.6)
(90.6)
(30.6)
Adjusted net income
$
457.2
$
386.6
$
142.2
Denominator:
Weighted average Class A common shares
outstanding - diluted
574.2
472.1
580.9
Adjustments:
Convertible preferred stock (6)
—
101.6
—
Restricted stock units and awards (7)
6.5
8.9
6.6
Adjusted weighted average Class A common
shares outstanding - diluted
580.7
582.6
587.5
Adjusted net income per Class A common
share - diluted
$
0.79
$
0.66
$
0.24
Supplemental Two-Year CAGR:
Net income two-year CAGR
178.3
%
Adjusted net income two-year CAGR
79.3
%
Albertsons Companies, Inc. and
Subsidiaries
Reconciliation of Non-GAAP
Measures
(in millions, except per share
data)
12 weeks ended
December 4,
2021
December 5,
2020
November 30, 2019
Supplemental
Net income per Class A common share -
diluted
$
0.74
$
0.20
$
0.09
Convertible preferred stock (6)
—
0.01
—
Non-GAAP adjustments (8)
0.06
0.46
0.15
Restricted stock units and awards (7)
(0.01)
(0.01)
—
Adjusted net income per Class A common
share - diluted
$
0.79
$
0.66
$
0.24
Supplemental Two-Year CAGR:
Net income per Class A common share
two-year CAGR
186.7
%
Adjusted net income per Class A common
share two-year CAGR
81.4
%
(1) Includes costs related to closures of operating facilities
and third-party consulting fees related to our strategic priorities
and associated business transformation. (2) Related to conversion
activities and related costs associated with integrating acquired
businesses. Also includes expenses related to management fees in
prior periods paid in connection with acquisition and financing
activities. (3) Includes $44.7 million in bonus payments related to
front-line associates during the third quarter of fiscal 2020. (4)
Represents incremental pay that is legislatively required in
certain municipalities in which we operate. (5) Primarily includes
lease adjustments related to non-cash rent expense and costs
incurred on leased surplus properties, net realized and unrealized
gains and losses related to non-operating investments, certain
legal and regulatory accruals and settlements, and adjustments for
unconsolidated equity investments. (6) Represents the conversion of
convertible preferred stock to the fully outstanding as-converted
Class A common shares as of the end of each respective period, for
periods in which the convertible preferred stock is antidilutive
under GAAP. (7) Represents incremental unvested restricted stock
units ("RSUs") and unvested restricted stock awards ("RSAs") to
adjust the diluted weighted average Class A common shares
outstanding during each respective period to the fully outstanding
RSUs and RSAs as of the end of each respective period. (8) Reflects
the per share impact of Non-GAAP adjustments for each period. See
the reconciliation of Net income to Adjusted net income above for
further details.
The following table is a reconciliation of Adjusted net income
to Adjusted EBITDA:
12 weeks ended
December 4,
2021
December 5,
2020
November 30, 2019
Supplemental
Adjusted net income (1)
$
457.2
$
386.6
$
142.2
Tax impact of adjustments to Adjusted net
income
8.6
90.6
30.6
Income tax expense
98.4
29.5
12.9
Amortization of debt discount and deferred
financing costs (c)
(4.8)
(4.9)
(25.1)
Interest expense, net
111.3
115.9
154.8
Amortization of intangible assets
resulting from acquisitions (b)
(9.5)
(12.9)
(65.3)
Depreciation and amortization (e)
390.0
362.9
384.3
Adjusted EBITDA
$
1,051.2
$
967.7
$
634.4
Supplemental Two-Year CAGR:
Adjusted EBITDA two-year CAGR
28.7
%
(1) See the reconciliation of Net income to Adjusted net income
above for further details.
Non-GAAP adjustment classifications within the Consolidated
Statement of Operations: (a) Cost of sales (b) Selling and
administrative expenses (c) Interest expense, net (d) (Gain) loss
on interest rate and commodity hedges, net:
12 weeks ended
December 4,
2021
December 5,
2020
November 30, 2019
Supplemental
Cost of sales
$
(0.6)
$
(2.2)
$
0.1
Other income, net
(0.7)
0.3
—
Total (Gain) loss on interest rate and
commodity hedges, net
$
(1.3)
$
(1.9)
$
0.1
(e) Depreciation and amortization:
12 weeks ended
December 4,
2021
December 5,
2020
November 30, 2019
Supplemental
Cost of sales
$
38.8
$
37.8
$
38.3
Selling and administrative expenses
351.2
325.1
346.0
Total Depreciation and amortization
$
390.0
$
362.9
$
384.3
(f) Miscellaneous adjustments:
12 weeks ended
December 4,
2021
December 5,
2020
November 30, 2019
Supplemental
Selling and administrative expenses
$
(15.2)
$
10.0
$
11.9
Other income, net
(19.7)
(1.4)
(7.3)
Total Miscellaneous adjustments
$
(34.9)
$
8.6
$
4.6
The following tables reconcile Net income to Adjusted net
income, and Net income per Class A common share to Adjusted net
income per Class A common share for the 40 weeks ended December 4,
2021, December 5, 2020 and November 30, 2019:
40 weeks ended
December 4,
2021
December 5,
2020
November 30, 2019
Supplemental
Numerator:
Net income
$
1,164.5
$
994.4
$
398.6
Adjustments:
(Gain) loss on interest rate and commodity
hedges, net (d)
(8.8)
24.0
0.4
Facility closures and transformation
(1)(b)
45.8
34.5
11.0
Acquisition and integration costs
(2)(b)
8.1
10.5
51.0
Equity-based compensation expense (b)
75.4
43.4
24.8
Gain on property dispositions and
impairment losses, net (3)
(13.3)
(47.0)
(482.7)
LIFO expense (a)
58.6
37.5
18.9
Discretionary COVID-19 pandemic related
costs (4)(b)
—
134.6
—
Government-mandated incremental COVID-19
pandemic related pay (5)(b)
53.0
—
—
Civil disruption related costs (6)(b)
—
13.0
—
Transaction and reorganization costs
related to convertible preferred stock issuance and initial public
offering (b)
—
23.4
3.4
Amortization of debt discount and deferred
financing costs (c)
15.9
16.1
68.9
Loss on debt extinguishment
3.7
57.7
65.8
Amortization of intangible assets
resulting from acquisitions (b)
37.1
43.5
227.0
UFCW National Fund withdrawal (b)
—
285.7
—
Miscellaneous adjustments (7)(f)
(40.6)
56.0
37.7
Tax impact of adjustments to Adjusted net
income
(55.2)
(183.1)
(6.9)
Adjusted net income
$
1,344.2
$
1,544.2
$
417.9
Denominator:
Weighted average Class A common shares
outstanding - diluted
471.2
580.3
579.8
Adjustments:
Convertible preferred stock (8)
101.6
—
—
Restricted stock units and awards (9)
7.3
8.3
7.6
Adjusted weighted average Class A common
shares outstanding - diluted
580.1
588.6
587.4
Adjusted net income per Class A common
share - diluted
$
2.32
$
2.62
$
0.71
Supplemental Two-Year CAGR:
Net income two-year CAGR
70.9
%
Adjusted net income two-year CAGR
79.3
%
40 weeks ended
December 4,
2021
December 5,
2020
November 30, 2019
Supplemental
Net income per Class A common share -
diluted
$
1.95
$
1.71
$
0.69
Convertible preferred stock (8)
0.09
—
—
Non-GAAP adjustments (10)
0.31
0.95
0.03
Restricted stock units and awards (9)
(0.03)
(0.04)
(0.01)
Adjusted net income per Class A common
share - diluted
$
2.32
$
2.62
$
0.71
Supplemental Two-Year CAGR:
Net income per Class A common share
two-year CAGR
68.1
%
Adjusted net income per Class A common
share two-year CAGR
80.8
%
(1) Includes costs related to closures of operating facilities
and third-party consulting fees related to our strategic priorities
and associated business transformation. (2) Related to conversion
activities and related costs associated with integrating acquired
businesses. Also includes expenses related to management fees in
prior periods paid in connection with acquisition and financing
activities. (3) Primarily due to gains related to sale leaseback
transactions in the second quarter of fiscal 2019. (4) Includes
$44.7 million in bonus payments related to front-line associates
during the third quarter of fiscal 2020. Also includes $53 million
of charitable contributions to our communities for hunger relief
and $36.9 million in final reward payments to front-line associates
at the end of the first quarter of fiscal 2020. (5) Represents
incremental pay that is legislatively required in certain
municipalities in which we operate. (6) Primarily includes costs
related to store damage, inventory losses and community support as
a result of the civil disruption during late May 2020 and early
June 2020 in certain markets. (7) Primarily includes lease
adjustments related to non-cash rent expense and costs incurred on
leased surplus properties, net realized and unrealized gains and
losses related to non-operating investments, certain legal and
regulatory accruals and settlements, pension settlement gain and
adjustments for unconsolidated equity investments. (8) Represents
the conversion of convertible preferred stock to the fully
outstanding as-converted Class A common shares as of the end of
each respective period, for periods in which the convertible
preferred stock is antidilutive under GAAP. (9) Represents
incremental unvested RSUs and unvested RSAs to adjust the diluted
weighted average Class A common shares outstanding during each
respective period to the fully outstanding RSUs and RSAs as of the
end of each respective period. (10) Reflects the per share impact
of Non-GAAP adjustments for each period. See the reconciliation of
Net income to Adjusted net income above for further details.
The following table is a reconciliation of Adjusted net income
to Adjusted EBITDA:
40 weeks ended
December 4,
2021
December 5,
2020
November 30, 2019
Supplemental
Adjusted net income (1)
1,344.2
$
1,544.2
$
417.9
Tax impact of adjustments to Adjusted net
income
55.2
183.1
6.9
Income tax expense
331.2
342.6
110.5
Amortization of debt discount and deferred
financing costs (c)
(15.9)
(16.1)
(68.9)
Interest expense, net
373.9
425.1
557.5
Amortization of intangible assets
resulting from acquisitions (b)
(37.1)
(43.5)
(227.0)
Depreciation and amortization (e)
1,273.2
1,171.7
1,281.9
Adjusted EBITDA
$
3,324.7
$
3,607.1
$
2,078.8
Supplemental Two-Year CAGR:
Adjusted EBITDA two-year CAGR
26.5
%
(1) See the reconciliation of Net income to Adjusted net income
above for further details.
Non-GAAP adjustment classifications within the Consolidated
Statement of Operations: (a) Cost of sales (b) Selling and
administrative expenses (c) Interest expense, net (d) (Gain) loss
on interest rate and commodity hedges, net:
40 weeks ended
December 4,
2021
December 5,
2020
November 30, 2019
Supplemental
Cost of sales
$
(8.4)
$
4.3
$
0.4
Other income, net
(0.4)
19.7
—
Total (Gain) loss on interest rate and
commodity hedges, net
$
(8.8)
$
24.0
$
0.4
(e) Depreciation and amortization:
40 weeks ended
December 4,
2021
December 5,
2020
November 30, 2019
Supplemental
Cost of sales
$
125.6
$
131.9
$
128.3
Selling and administrative expenses
1,147.6
1,039.8
1,153.6
Total Depreciation and amortization
$
1,273.2
$
1,171.7
$
1,281.9
(f) Miscellaneous adjustments:
40 weeks ended
December 4,
2021
December 5,
2020
November 30, 2019
Supplemental
Selling and administrative expenses
$
(5.0)
$
44.7
$
28.6
Other income, net
(35.6)
11.3
9.1
Total Miscellaneous adjustments
$
(40.6)
$
56.0
$
37.7
The following table is a reconciliation of Net Debt Ratio on a
rolling four quarter basis:
December 4,
2021
December 5,
2020
Total debt (including finance leases and
excluding operating leases)
$
7,997.7
$
8,540.4
Cash and cash equivalents
2,661.0
1,836.1
Total debt net of cash and cash
equivalents
5,336.7
6,704.3
Rolling four quarters Adjusted EBITDA
$
4,241.6
$
4,362.7
Total Net Debt Ratio
1.26
1.54
The following table is a reconciliation of Net income to
Adjusted EBITDA on a rolling four quarter basis:
Rolling four quarters
ended
December 4,
2021
December 5,
2020
Net income
$
1,020.3
$
1,062.2
Depreciation and amortization
1,638.4
1,581.1
Interest expense, net
487.0
565.6
Income tax expense
267.1
364.9
EBITDA
3,412.8
3,573.8
(Gain) loss on interest rate and commodity
hedges, net
(15.9)
74.2
Facility closures and transformation
(1)
69.3
41.8
Acquisition and integration costs (2)
10.2
20.0
Equity-based compensation expense
91.0
51.4
Loss on debt extinguishment
31.3
103.3
Gain on property dispositions and
impairment losses, net
(5.1)
(49.1)
LIFO expense
79.8
37.0
Discretionary COVID-19 pandemic related
costs (3)
—
134.6
Government-mandated incremental COVID-19
pandemic related pay (4)
53.0
—
Civil disruption related costs (5)
—
13.0
Transaction and reorganization costs
related to convertible preferred stock issuance and initial public
offering
0.4
23.7
Combined Plan and UFCW National Fund
withdrawal (6)
607.2
285.7
Miscellaneous adjustments (7)
(92.4)
53.3
Adjusted EBITDA
$
4,241.6
$
4,362.7
(1) Includes costs related to closures of operating facilities
and third-party consulting fees related to our strategic priorities
and associated business transformation. (2) Related to conversion
activities and related costs associated with integrating acquired
businesses. Also includes expenses related to acquisitions and
expenses related to management fees paid in connection with
acquisition and financing activities. (3) Includes $44.7 million in
bonus payments related to front-line associates during the third
quarter of fiscal 2020. Also includes $53 million of charitable
contributions to our communities for hunger relief and $36.9
million in final reward payments to front-line associates at the
end of the first quarter of fiscal 2020. (4) Represents incremental
pay that is legislatively required in certain municipalities in
which we operate. (5) Primarily includes costs related to store
damage, inventory losses and community support as a result of civil
disruption during late May 2020 and early June 2020 in certain
markets. (6) Includes the $607.2 million charge in the fourth
quarter of fiscal 2020 related to the withdrawal from the Food
Employers Labor Relations Association and United Food and
Commercial Workers Pension Fund ("FELRA") and the Mid-Atlantic UFCW
and Participating Pension Fund ("MAP" and together with FELRA, the
"Combined Plan") and the $285.7 million charge in the third quarter
of fiscal 2020 related to the withdrawal from the UFCW National
Fund. (7) Primarily includes lease adjustments related to non-cash
rent expense and costs incurred on leased surplus properties, net
realized and unrealized gains and losses related to non-operating
investments, certain legal and regulatory accruals and settlements,
pension settlement gain and adjustments for unconsolidated equity
investments.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220111005233/en/
Media Contact: Melissa Plaisance
melissa.plaisance@albertsons.com | 925-226-5115
Albertsons Companies (NYSE:ACI)
Historical Stock Chart
From Apr 2024 to May 2024
Albertsons Companies (NYSE:ACI)
Historical Stock Chart
From May 2023 to May 2024