SpartanNash Company (the “Company”) (Nasdaq: SPTN) today reported
financial results for the 15-week third quarter and the 39-week period
ended December 28, 2013 (“Transition Period”).
The Transition Period reflects the previously announced change in the
Company’s fiscal year end from the last Saturday in March to the
Saturday closest to December 31. As a result, the third quarter included
15 weeks and the Transition Period included 39 weeks, compared to 16
weeks and 40 weeks for the respective reporting periods in the prior
year. For purposes of reporting comparable store sales, the Company used
comparable 15-week and 39-week periods for its legacy Spartan Stores
retail operations. In addition, the Transition Period includes
approximately six weeks of financial results from The Nash Finch Company
(“Nash Finch”) as a result of the recent merger of Spartan Stores and
Nash Finch, completed on November 19, 2013.
Third Quarter Results
Consolidated net sales for the 15-week third quarter increased 69.1
percent to $1.3 billion compared to $789.9 million in the 16-week
quarter last year, primarily due to $563.2 million in sales generated as
a result of the merger, comparable store sales increase of 0.7 percent
and the impact of new distribution customers, partially offset by $46.1
million in sales for the extra week in last year’s quarter. Excluding
the impact of the extra week last year and contributions from the
merger, consolidated net sales would have increased approximately 3.8
percent.
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization
(Adjusted EBITDA) for the quarter increased 65.9 percent to $41.6
million, or 3.1 percent of net sales, compared to $25.1 million, or 3.2
percent of net sales in the 16-week quarter last year. Excluding the
impact of the extra week last year and contributions from the merger,
Adjusted EBITDA would have increased approximately 6.2 percent in the
third quarter of fiscal 2014.
Adjusted earnings from continuing operations were $11.1 million, or
$0.40 per diluted share, for the current year third quarter compared to
$4.9 million, or $0.22 per diluted share, last year. For the current
year third quarter, adjusted earnings from continuing operations
excludes net after-tax charges of $24.8 million, or $0.89 per diluted
share, related to merger expenses, asset impairment and restructuring
charges for underperforming and closed stores and land held for future
development, debt extinguishment charges due to merger-related
financing, other one-time and non-cash expenses and a gain on sale of
assets. For the prior year third quarter, adjusted earnings from
continuing operations excludes $0.3 million in net earnings from the
extra week and $1.7 million, or $0.08 per diluted share, of after-tax
charges related to debt extinguishment and acquisition-related
professional fees. A reconciliation of earnings from continuing
operations to adjusted earnings from continuing operations is presented
in the financial tables at the end of the release.
“We are pleased with our sales and adjusted earnings results for the
third quarter,” stated Dennis Eidson, SpartanNash’s President and Chief
Executive Officer. “While the merger with Nash Finch contributed a
significant portion of our growth in the quarter, we produced strong
results in our legacy business, which is a testament to the excellence
of our management team and associates. We are excited to begin the next
phase of SpartanNash’s development and our integration activities are
underway and progressing as planned. Our management team is in place and
we are focused on leveraging our increased scale, geographic reach and
complementary business segments to better compete in the evolving
grocery industry.”
Gross profit margin for the third quarter was 16.9 percent compared to
20.4 percent in the prior year. The change in gross profit margin rate
primarily reflects the change in mix of sales due to the merger and the
impact of low inflation.
Third quarter operating expenses would have been $202.6 million, or 15.2
percent of net sales, compared to $140.3 million, or 18.9 percent of net
sales, in the same quarter last year, if this year’s charges related to
merger expenses, asset impairment and restructuring and other one-time
and non-cash expenses and last year’s extra week and acquisition related
professional fees were excluded. The higher expenses were due to the
inclusion of Nash Finch’s operations and the decrease in the rate to
sales was due primarily to the change in mix of the Company’s segments
as a result of the merger, as well as improved expense leverage on
increased sales, partially offset by higher incentive compensation and
depreciation and amortization expense. Third quarter operating expenses
as reported were $236.5 million, or 17.7 percent of sales, compared to
$149.4 million, or 18.9 percent of sales, in the same quarter last year.
Distribution Segment
Net sales for the distribution segment increased 63.5 percent to $565.8
million in the current year third quarter from $346.1 million for the
third quarter last year. The increase in sales was due to $224.6 million
in sales from Nash Finch, as well as new business gains, partially
offset by the extra week of sales last year. Excluding the impact of the
extra week last year and contributions from Nash Finch, net sales for
the distribution segment would have increased approximately 4.3 percent.
Current year third quarter adjusted operating earnings for the
distribution segment were $16.1 million, excluding $20.5 million of the
net pre-tax charges previously mentioned, compared to adjusted operating
earnings of $9.0 million in the same period last year, excluding the
extra week. The increase in adjusted operating earnings was due to
increased sales volume from Nash Finch’s distribution operations and
improved margins and warehouse efficiencies, partially offset by higher
incentive compensation compared to the same period last year. Excluding
the impact of the extra week last year and contributions from Nash
Finch, adjusted operating earnings for the distribution segment would
have increased approximately 20.0 percent due to improvement in gross
profit margin and expense leverage. The third quarter reported operating
loss was $4.4 million in the current year compared to operating earnings
of $9.5 million in the prior year third quarter.
Retail Segment
Net sales for the retail segment increased 17.4 percent to $520.9
million in the current year third quarter from $443.8 million for the
third quarter last year. The increase in sales was due to $90.0 million
in sales generated as a result of the merger, as well as the previously
disclosed acquisition of a grocery store and fuel center in the prior
year’s third quarter and a 0.7 percent increase in comparable store
sales, excluding fuel, partially offset by $2.7 million in fewer sales
due to the closure of certain stores and $27.3 million in sales for the
extra week in last year’s third quarter. Excluding the impact of the
extra week last year and contributions from the merger, net sales for
the retail segment would have increased approximately 3.5 percent.
Current year third quarter adjusted operating earnings for the retail
segment were $3.4 million, excluding $13.4 million of the net pre-tax
charges previously mentioned, compared to adjusted operating earnings of
$2.2 million in the same period last year, excluding non-cash, pre-tax
professional fees of $0.4 million and the extra week of $0.3 million.
The improvement in adjusted operating earnings was due to the merged
retail operations.
During the current year third quarter, the Company completed five minor
remodels and store re-banners, acquired two stores in North Dakota and
closed seven underperforming supermarkets. SpartanNash ended the quarter
with 172 corporate owned stores and 34 fuel centers.
Military Segment
Net sales for the Company’s military segment were $248.6 million and
operating earnings were $3.2 million for the six weeks included in the
third quarter of fiscal 2014.
Balance Sheet and Cash Flow
Cash flow provided by operating activities for the current year-to-date
period was $64.8 million compared to $27.3 million for the comparable
period last year, largely due to the impact of the merger, which added
$22.0 million in cash flow to the current year-to-date period.
Net long-term debt (including current maturities and capital lease
obligations and subtracting cash) for the Company was $595.7 million as
of December 28, 2013 compared to $162.0 million at the end of the third
quarter last year, due primarily to the incurrence of $436.1 million in
debt as a result of the Nash Finch merger. The Company’s total net
long-term debt-to-capital ratio is 0.46-to-1.0 as of December 28, 2013.
In conjunction with the merger, the Company entered into a $1.0 billion
amended and restated senior secured credit facility, the proceeds of
which were used to repay its and Nash Finch’s existing credit facilities
and to provide working capital and funds for general corporate purposes.
The Company believes that cash flow from operating activities and the
approximately $400.0 million of excess availability under its revolving
credit facility will support its operational and strategic initiatives
for fiscal 2014.
Year to Date Results
For the 39-week period ended December 28, 2013, consolidated net sales
increased 28.9 percent to $2.6 billion, including $563.2 million in
sales generated as a result of the recent merger with Nash Finch,
compared to $2.0 billion in the 40-week period ended January 5, 2013.
Comparable store sales, excluding fuel, decreased 0.6 percent in the
Transition Period on a 39-week basis. Excluding the impact of the extra
week last year and contributions from Nash Finch, consolidated net sales
would have increased approximately 3.3 percent.
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization
(Adjusted EBITDA) for the Transition Period increased 26.9 percent to
$97.3 million, or 3.8 percent of net sales, compared to $76.7 million,
or 3.7 percent of net sales, in the 40-week quarter last year. Excluding
the impact of the extra week last year and contributions from Nash
Finch, Adjusted EBITDA would have increased approximately 7.4 percent in
the Transition Period.
Transition Period adjusted earnings from continuing operations were
$29.8 million, or $1.23 per diluted share, excluding net after-tax
charges of $28.6 million related to previously mentioned items, compared
to $20.5 million, or $0.94 per diluted share in the prior year-to-date
period, excluding $0.3 million in net earnings from the extra week and
net after-tax charges of $0.9 million related to debt extinguishment,
asset impairment, professional fees, gain on sale of assets and a tax
benefit.
For the Transition Period, depreciation and amortization totaled $37.1
million, interest expense totaled $9.2 million and capital expenditures
totaled $37.2 million.
Outlook
Mr. Eidson continued, “We are making excellent progress in our work to
integrate our retail, food distribution and military distribution
businesses and are energized by what the combined SpartanNash can
achieve. We continue to expect synergies of approximately $20 million,
$35 million and $52 million in fiscal years 2014, 2015 and 2016,
respectively and integration and transaction closing related costs of
approximately $12 million, $5 million and $2 million in fiscal years
2014, 2015 and 2016, respectively. We also expect additional
depreciation, amortization and stock compensation expense resulting from
the step-up in basis of the Nash Finch assets and amendments to our
stock compensation plan to approximate $10 million annually.”
“Our outlook for fiscal 2014 is cautiously optimistic as the economy
continues to show modest improvement; however, we expect that the lack
of inflation, curtailment of Supplemental Nutrition Assistance Program
(“SNAP”) benefits, the cycling of very favorable LIFO, insurance and
employee benefit expenses in the prior year first quarter and a more
challenging competitive retail environment will create a negative
headwind on our results. We expect to put forth a robust capital plan
that will allow us to create positive momentum for the merged
organization and address these headwinds. During fiscal 2014, we plan to
complete a total of five minor remodels and ten major remodels, 16 store
re-banners, two fuel centers, as well as begin construction on two new
stores in markets with attractive growth profiles. In addition, we will
complete a major expansion of a military distribution center, which
should increase our geographic reach and further improve our operational
efficiencies. We will also continue to evaluate our store base and may
close up to ten stores over the course of fiscal 2014.”
For the 16 week first quarter of fiscal 2014, the Company anticipates
that its consolidated net sales will increase to between $2.30 billion
and $2.34 billion as it continues to benefit from the merger with Nash
Finch, partially offset by the impact of store closures. The Company
anticipates comparable store sales in its legacy retail segment will be
positive for the third consecutive quarter.
The Company expects first quarter of fiscal 2014 Adjusted EBITDA will be
in the range of $62.5 million to $66.5 million and adjusted earnings per
diluted share from continuing operations will be in the range of $0.33
to $0.38, based on approximately 37.7 million shares outstanding. This
guidance includes approximately $3.8 million in after-tax merger synergy
benefits and $2.8 million in after-tax incremental depreciation,
amortization and stock compensation expense related to the step-up in
basis of the Nash Finch assets and amendments to the Company’s stock
compensation plan and excludes approximately $3.4 million in after-tax
integration expenses and $1.3 million in after-tax restructuring charges
associated with store closures and the closure of the Cincinnati, Ohio
distribution center.
For the 53 week fiscal year ending January 3, 2015, the Company
anticipates that consolidated net sales will increase to between $7.90
billion and $8.04 billion, Adjusted EBITDA will be in the range of
$230.0 million to $239.0 million and earnings per share from continuing
operations will be approximately $1.65 to $1.75, excluding integration
costs of approximately $7.4 million after tax and any other one-time
expenses. These results will be accretive to the trailing 13-period
earnings for Spartan Stores on a standalone basis. The Company expects
that reported retail comparable store sales will be positive for the
year. However, total sales will be negatively impacted by approximately
$50.0 million resulting from the store closures occurring in the third
quarter of the Transition Period. Capital expenditures for fiscal year
2014 are expected to be in the range of $77.0 million to $82.0 million,
with depreciation and amortization in the range of $89 million to $93
million and total interest expense in the range of $26.0 million to
$28.0 million.
Conference Call
A telephone conference call to discuss the Company’s third quarter and
Transition Fiscal 2013 financial results is scheduled for 9:00 a.m.
Eastern Time, Thursday, March 6, 2014. A live webcast of this conference
call will be available on the Company’s website, www.spartannash.com.
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 (SPTN) is a Fortune 500 company and the largest food
distributor serving military commissaries and exchanges in the United
States, in terms of revenue. The Company's core businesses include
distributing food to military commissaries and exchanges and independent
and corporate-owned retail stores located in 44 states and the District
of Columbia, Europe, Cuba, Puerto Rico, the Azores, Bahrain and Egypt.
SpartanNash currently operates 172 supermarkets, primarily under the
banners of Family Fare Supermarkets, D&W Fresh Markets, No Frills, Bag
'n Save, Sun Mart and Econofoods.
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 regarding
the expected benefits of the merger and statements preceded by, followed
by or that otherwise include the words “outlook,” “optimistic,”
“anticipate,” “believe,” “continue,” "expects," "looks forward to,"
“outlook,” “progress” or “plan” or similar expressions or that an event
or trend “may,” or "will" occur. 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 combined company, and actual results may
vary materially from the results and expectations discussed. Additional
risks and uncertainties related to the merger include, but are not
limited to, the successful integration of Spartan Stores' and Nash
Finch's business and the combined company's ability to compete in the
highly competitive grocery distribution and retail grocery industry.
Additional information concerning these and other risks is contained in
Spartan Stores' and Nash Finch's most recently filed Annual Reports on
Form 10-K, subsequent Quarterly Reports on Form 10-Q, recent Current
Reports on Form 8-K and other SEC filings. All subsequent written and
oral forward-looking statements concerning SpartanNash, the merger, 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.
SPARTAN STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
15 Weeks Ended
|
|
16 Weeks Ended
|
|
39 Weeks Ended
|
|
40 Weeks Ended
|
|
|
December 28, 2013
|
|
January 5, 2013
|
|
December 28, 2013
|
|
January 5, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
1,335,354
|
|
$
|
789,880
|
|
$
|
2,597,230
|
|
$
|
2,015,351
|
|
Cost of sales
|
|
1,110,046
|
|
|
628,925
|
|
|
2,110,350
|
|
|
1,602,450
|
|
Gross profit
|
|
225,308
|
|
|
160,955
|
|
|
486,880
|
|
|
412,901
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
188,321
|
|
|
137,384
|
|
|
396,368
|
|
|
340,838
|
|
Depreciation and amortization
|
|
18,018
|
|
|
12,024
|
|
|
37,082
|
|
|
29,499
|
|
Merger related expenses
|
|
15,519
|
|
|
-
|
|
|
20,993
|
|
|
-
|
|
Restructuring and asset impairment charges
|
|
14,657
|
|
|
-
|
|
|
15,644
|
|
|
356
|
|
Total operating expenses
|
|
236,515
|
|
|
149,408
|
|
|
470,087
|
|
|
370,693
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) earnings
|
|
(11,207
|
)
|
|
11,547
|
|
|
16,793
|
|
|
42,208
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating expense (income)
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
4,757
|
|
|
3,084
|
|
|
9,219
|
|
|
7,517
|
|
Non-cash convertible debt interest
|
|
-
|
|
|
1,109
|
|
|
-
|
|
|
2,903
|
|
Debt extinguishment
|
|
5,527
|
|
|
2,285
|
|
|
5,527
|
|
|
2,285
|
|
Other, net
|
|
(11
|
)
|
|
(23
|
)
|
|
(23
|
)
|
|
(752
|
)
|
Total non-operating expense, net
|
|
10,273
|
|
|
6,455
|
|
|
14,723
|
|
|
11,953
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings before income taxes and discontinued operations
|
|
(21,480
|
)
|
|
5,092
|
|
|
2,070
|
|
|
30,255
|
|
Income taxes
|
|
(7,810
|
)
|
|
1,620
|
|
|
841
|
|
|
10,352
|
|
(Loss) earnings from continuing operations
|
|
(13,670
|
)
|
|
3,472
|
|
|
1,229
|
|
|
19,903
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, net of taxes
|
|
(322
|
)
|
|
(72
|
)
|
|
(488
|
)
|
|
(195
|
)
|
Net (loss) earnings
|
$
|
(13,992
|
)
|
$
|
3,400
|
|
$
|
741
|
|
$
|
19,708
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings from continuing operations
|
$
|
(0.49
|
)
|
$
|
0.16
|
|
$
|
0.05
|
|
$
|
0.91
|
|
Loss from discontinued operations
|
|
(0.01
|
)
|
|
-
|
|
|
(0.02
|
)
|
|
(0.01
|
)
|
Net (loss) earnings
|
$
|
(0.50
|
)
|
$
|
0.16
|
|
$
|
0.03
|
|
$
|
0.90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted (loss) earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings from continuing operations
|
$
|
(0.49
|
)
|
$
|
0.16
|
|
$
|
0.05
|
|
$
|
0.91
|
|
Loss from discontinued operations
|
|
(0.01
|
)
|
|
-
|
|
|
(0.02
|
)
|
|
(0.01
|
)
|
Net (loss) earnings
|
$
|
(0.50
|
)
|
$
|
0.16
|
|
$
|
0.03
|
|
$
|
0.90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
27,800
|
|
|
21,750
|
|
|
24,137
|
|
|
21,780
|
|
Diluted
|
|
27,800
|
|
|
21,816
|
|
|
24,229
|
|
|
21,855
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Includes rounding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SPARTAN STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
|
|
|
|
|
|
Assets
|
December 28, 2013
|
|
January 5, 2013
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
9,216
|
|
$
|
8,960
|
|
Accounts receivable, net
|
|
286,903
|
|
|
50,267
|
|
Inventories, net
|
|
590,248
|
|
|
133,879
|
|
Prepaid expenses
|
|
39,028
|
|
|
18,917
|
|
Deferred taxes on income
|
|
-
|
|
|
269
|
|
Property held for sale
|
|
440
|
|
|
710
|
|
Total current assets
|
|
925,835
|
|
|
213,002
|
|
|
|
|
|
|
|
|
Goodwill
|
|
306,148
|
|
|
246,925
|
|
|
|
|
|
|
|
|
Other, net
|
|
115,214
|
|
|
62,266
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
651,477
|
|
|
272,368
|
|
|
|
|
|
|
|
|
Total assets
|
$
|
1,998,674
|
|
$
|
794,561
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
Accounts payable
|
$
|
364,856
|
|
$
|
116,207
|
|
Accrued payroll and benefits
|
|
85,102
|
|
|
33,782
|
|
Other accrued expenses
|
|
62,399
|
|
|
22,993
|
|
Deferred taxes on income
|
|
23,827
|
|
|
-
|
|
Current maturities of long-term debt and capital lease obligations
|
|
7,345
|
|
|
4,104
|
|
Total current liabilities
|
|
543,529
|
|
|
177,086
|
|
|
|
|
|
|
|
|
Long-term liabilities
|
|
|
|
|
|
|
Deferred taxes on income
|
|
92,319
|
|
|
86,689
|
|
Postretirement benefits
|
|
22,009
|
|
|
13,548
|
|
Other long-term liabilities
|
|
36,381
|
|
|
21,052
|
|
Long-term debt and capital lease obligations
|
|
597,563
|
|
|
166,843
|
|
Total long-term liabilities
|
|
748,272
|
|
|
288,132
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity
|
|
|
|
|
|
|
Common stock, voting, no par value; 100,000 shares authorized;
37,371 and 21,750 shares outstanding
|
|
518,056
|
|
|
146,320
|
|
Preferred stock, no par value, 10,000 shares authorized; no
shares outstanding
|
|
-
|
|
|
-
|
|
Accumulated other comprehensive loss
|
|
(8,794
|
)
|
|
(13,793
|
)
|
Retained earnings
|
|
197,611
|
|
|
196,816
|
|
Total shareholders’ equity
|
|
706,873
|
|
|
329,343
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders’ equity
|
$
|
1,998,674
|
|
$
|
794,561
|
|
|
|
|
|
|
|
|
SPARTAN STORES, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
|
39 Weeks Ended
|
|
|
40 Weeks Ended
|
|
|
December 28, 2013
|
|
|
January 5, 2013
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
$
|
64,761
|
|
|
$
|
27,296
|
|
Net cash used in investing activities
|
|
(57,170
|
)
|
|
|
(44,873
|
)
|
Net cash (used in) provided by financing activities
|
|
(4,051
|
)
|
|
|
412
|
|
Net cash used in discontinued operations
|
|
(421
|
)
|
|
|
(351
|
)
|
Net increase (decrease) in cash and cash equivalents
|
|
3,119
|
|
|
|
(17,516
|
)
|
Cash and cash equivalents at beginning of period
|
|
6,097
|
|
|
|
26,476
|
|
Cash and cash equivalents at end of period
|
$
|
9,216
|
|
|
$
|
8,960
|
|
|
|
|
|
|
|
|
|
SPARTAN STORES, INC. AND SUBSIDIARIES SUPPLEMENTAL FINANCIAL
DATA
Table 1: Sales and Operating Earnings by Segment
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
15 Weeks December 28, 2013
|
|
16 Weeks
January 5, 2013
|
|
39 Weeks
December 28, 2013
|
|
40 Weeks
January 5, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail Segment:
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
520,911
|
|
$
|
443,752
|
|
$
|
1,252,828
|
|
$
|
1,151,633
|
Operating (loss) earnings
|
$
|
(9,982
|
)
|
$
|
2,054
|
|
$
|
4,325
|
|
$
|
14,044
|
|
|
|
|
|
|
|
|
|
|
|
|
Food Distribution Segment:
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
565,800
|
|
$
|
346,128
|
|
$
|
1,095,759
|
|
$
|
863,718
|
Operating (loss) earnings
|
$
|
(4,427
|
)
|
$
|
9,493
|
|
$
|
9,266
|
|
$
|
28,164
|
|
|
|
|
|
|
|
|
|
|
|
|
Military Segment:
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
248,643
|
|
$
|
-
|
|
$
|
248,643
|
|
$
|
-
|
Operating earnings
|
$
|
3,202
|
|
$
|
-
|
|
$
|
3,202
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 2: Reconciliation of Net (Loss) Earnings to
Adjusted Earnings Before Interest, Taxes, Depreciation and
Amortization (Adjusted EBITDA)
(A Non-GAAP Financial Measure)
(Unaudited)
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15 Weeks Ended
|
16 Weeks Ended
|
|
|
|
|
39 Weeks Ended
|
40 Weeks Ended
|
|
|
|
|
December 28, 2013
|
|
|
January 5, 2013
|
|
|
|
|
December 28, 2013
|
|
|
January 5, 2013
|
|
Net (loss) earnings
|
|
$
|
(13,992
|
)
|
$
|
3,400
|
|
|
|
$
|
741
|
|
$
|
19,708
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations
|
|
|
322
|
|
|
72
|
|
|
|
|
488
|
|
|
195
|
|
Income taxes
|
|
|
(7,810
|
)
|
|
1,620
|
|
|
|
|
841
|
|
|
10,352
|
|
Interest expense
|
|
|
4,757
|
|
|
4,193
|
|
|
|
|
9,219
|
|
|
10,420
|
|
Debt extinguishment
|
|
|
5,527
|
|
|
2,285
|
|
|
|
|
5,527
|
|
|
2,285
|
|
Non-operating income
|
|
|
(11
|
)
|
|
(23
|
)
|
|
|
|
(23
|
)
|
|
(752
|
)
|
Operating (loss) earnings
|
|
|
(11,207
|
)
|
|
11,547
|
|
|
|
|
16,793
|
|
|
42,208
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
18,018
|
|
|
12,024
|
|
|
|
|
37,082
|
|
|
29,499
|
|
LIFO (income) expense
|
|
|
(25
|
)
|
|
(396
|
)
|
|
|
|
928
|
|
|
984
|
|
Restructuring and asset impairment charges
|
|
|
14,657
|
|
|
-
|
|
|
|
|
15,644
|
|
|
356
|
|
Merger related expenses
|
|
|
15,519
|
|
|
-
|
|
|
|
|
20,993
|
|
|
-
|
|
Pension settlement accounting
|
|
|
621
|
|
|
-
|
|
|
|
|
621
|
|
|
-
|
|
Acquisition related expenses
|
|
|
-
|
|
|
396
|
|
|
|
|
-
|
|
|
396
|
|
40th week
|
|
|
-
|
|
|
(767
|
)
|
|
|
|
-
|
|
|
(767
|
)
|
Non-cash stock compensation and other charges
|
|
|
3,990
|
|
|
1,487
|
|
|
|
|
5,242
|
|
|
3,249
|
|
Adjusted EBITDA
|
|
$
|
41,573
|
|
$
|
24,291
|
|
|
|
$
|
97,303
|
|
$
|
75,925
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of operating (loss) earnings to adjusted EBITDA by
segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) earnings
|
|
$
|
(9,982
|
)
|
$
|
2,054
|
|
|
|
$
|
4,325
|
|
$
|
14,044
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
11,301
|
|
|
9,358
|
|
|
|
|
26,164
|
|
|
22,902
|
|
LIFO (income) expense
|
|
|
(11
|
)
|
|
216
|
|
|
|
|
639
|
|
|
1,064
|
|
Restructuring and asset impairment charges
|
|
|
14,058
|
|
|
-
|
|
|
|
|
15,045
|
|
|
356
|
|
Pension settlement accounting
|
|
|
148
|
|
|
-
|
|
|
|
|
148
|
|
|
-
|
|
Acquisition related expenses
|
|
|
-
|
|
|
396
|
|
|
|
|
-
|
|
|
396
|
|
40th week
|
|
|
-
|
|
|
(328
|
)
|
|
|
|
-
|
|
|
(328
|
)
|
Non-cash stock compensation and other charges
|
|
|
(291
|
)
|
|
557
|
|
|
|
|
335
|
|
|
2,014
|
|
Adjusted EBITDA
|
|
$
|
15,223
|
|
$
|
12,253
|
|
|
|
$
|
46,656
|
|
$
|
40,448
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food Distribution:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) earnings
|
|
$
|
(4,427
|
)
|
$
|
9,493
|
|
|
|
$
|
9,266
|
|
$
|
28,164
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
5,346
|
|
|
2,666
|
|
|
|
|
9,547
|
|
|
6,597
|
|
LIFO (income) expense
|
|
|
(14
|
)
|
|
(612
|
)
|
|
|
|
289
|
|
|
(80
|
)
|
Restructuring and asset impairment charges
|
|
|
599
|
|
|
-
|
|
|
|
|
599
|
|
|
-
|
|
Merger related expenses
|
|
|
15,519
|
|
|
-
|
|
|
|
|
20,993
|
|
|
-
|
|
Pension settlement accounting
|
|
|
473
|
|
|
-
|
|
|
|
|
473
|
|
|
-
|
|
40th week
|
|
|
-
|
|
|
(439
|
)
|
|
|
|
-
|
|
|
(439
|
)
|
Non-cash stock compensation and other charges
|
|
|
4,287
|
|
|
930
|
|
|
|
|
4,913
|
|
|
1,235
|
|
Adjusted EBITDA
|
|
$
|
21,783
|
|
$
|
12,038
|
|
|
|
$
|
46,080
|
|
$
|
35,477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Military:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings
|
|
$
|
3,202
|
|
$
|
-
|
|
|
|
$
|
3,202
|
|
$
|
-
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
1,371
|
|
|
-
|
|
|
|
|
1,371
|
|
|
-
|
|
Non-cash stock compensation and other charges
|
|
|
(6
|
)
|
|
-
|
|
|
|
|
(6
|
)
|
|
-
|
|
Adjusted EBITDA
|
|
$
|
4,567
|
|
$
|
-
|
|
|
|
$
|
4,567
|
|
$
|
-
|
|
Notes: Consolidated Adjusted EBITDA is a non-GAAP operating financial
measure that the Company defines as net earnings from continuing
operations plus depreciation and amortization, and other non-cash items
including imputed interest, 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, interest expense and the provision
for income taxes to the extent deducted in the computation of Net
Earnings.
We believe that Adjusted EBITDA provides a meaningful representation of
our operating performance for SpartanNash as a whole and for our
operating segments. We consider Adjusted EBITDA as an additional way to
measure operating performance on an ongoing basis. Adjusted EBITDA is
meant to reflect the ongoing operating performance of all of our retail
stores and distribution operations; consequently, it excludes the impact
of items that could be considered “non-operating” or “non-core” in
nature, and also excludes the contributions of activities classified as
discontinued operations. Because Adjusted EBITDA is a performance
measure that management uses to allocate resources, assess performance
against its peers, and evaluate overall performance, we believe it
provides useful information for our investors. In addition, securities
analysts, fund managers and other shareholders and stakeholders that
communicate with us request our operating financial results in Adjusted
EBITDA format.
Adjusted EBITDA 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.
Our definition of Adjusted EBITDA may not be identical to similarly
titled measures reported by other companies.
Table 3: Reconciliation of Operating (Loss) Earnings to
Adjusted Operating Earnings
(A Non-GAAP Financial Measure)
(Unaudited)
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15 Weeks Ended
|
16 Weeks Ended
|
|
|
|
|
39 Weeks Ended
|
40 Weeks Ended
|
|
|
|
|
December 28, 2013
|
|
|
January 5, 2013
|
|
|
|
|
December 28, 2013
|
|
|
January 5, 2013
|
|
Operating (loss) earnings
|
|
$
|
(11,207
|
)
|
$
|
11,547
|
|
|
|
$
|
16,793
|
|
$
|
42,208
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset impairment and restructuring charges
|
|
|
14,657
|
|
|
-
|
|
|
|
|
15,644
|
|
|
356
|
|
Merger related expenses
|
|
|
15,519
|
|
|
-
|
|
|
|
|
20,993
|
|
|
-
|
|
Pension settlement accounting
|
|
|
621
|
|
|
-
|
|
|
|
|
621
|
|
|
-
|
|
Acquisition related expenses
|
|
|
-
|
|
|
396
|
|
|
|
|
-
|
|
|
396
|
|
Stock compensation modifications
|
|
|
4,174
|
|
|
-
|
|
|
|
|
4,174
|
|
|
-
|
|
Professional fees related to tax planning
|
|
|
-
|
|
|
-
|
|
|
|
|
-
|
|
|
108
|
|
Gain on sale of pharmacy prescription lists
|
|
|
(1,038
|
)
|
|
-
|
|
|
|
|
(1,038
|
)
|
|
-
|
|
40th week
|
|
|
-
|
|
|
(756
|
)
|
|
|
|
-
|
|
|
(756
|
)
|
Adjusted operating earnings
|
|
$
|
22,726
|
|
$
|
11,187
|
|
|
|
$
|
57,187
|
|
$
|
42,312
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of operating (loss) earnings to adjusted operating
(loss) earnings by segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) earnings
|
|
$
|
(9,982
|
)
|
$
|
2,054
|
|
|
|
$
|
4,325
|
|
$
|
14,044
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset impairment and restructuring charges
|
|
|
14,058
|
|
|
-
|
|
|
|
|
15,045
|
|
|
356
|
|
Pension settlement accounting
|
|
|
148
|
|
|
|
|
|
|
|
148
|
|
|
|
|
Acquisition related expenses
|
|
|
-
|
|
|
396
|
|
|
|
|
-
|
|
|
396
|
|
Stock compensation modifications
|
|
|
213
|
|
|
|
|
|
|
|
213
|
|
|
-
|
|
Gain on sale of pharmacy prescription lists
|
|
|
(1,038
|
)
|
|
|
|
|
|
|
(1,038
|
)
|
|
-
|
|
40th week
|
|
|
-
|
|
|
(293
|
)
|
|
|
|
-
|
|
|
(293
|
)
|
Adjusted operating earnings
|
|
$
|
3,399
|
|
$
|
2,157
|
|
|
|
$
|
18,693
|
|
$
|
14,503
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food Distribution:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) earnings
|
|
$
|
(4,427
|
)
|
$
|
9,493
|
|
|
|
$
|
9,266
|
|
$
|
28,164
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset impairment and restructuring charges
|
|
|
599
|
|
|
-
|
|
|
|
|
599
|
|
|
-
|
|
Merger related expenses
|
|
|
15,519
|
|
|
-
|
|
|
|
|
20,993
|
|
|
-
|
|
Pension settlement accounting
|
|
|
473
|
|
|
-
|
|
|
|
|
473
|
|
|
-
|
|
Stock compensation modifications
|
|
|
3,961
|
|
|
-
|
|
|
|
|
3,961
|
|
|
-
|
|
Professional fees related to tax planning
|
|
|
-
|
|
|
-
|
|
|
|
|
-
|
|
|
108
|
|
40th week
|
|
|
-
|
|
|
(463)
|
|
|
|
|
-
|
|
|
(463
|
)
|
Adjusted operating earnings
|
|
$
|
16,125
|
|
$
|
9,030
|
|
|
|
$
|
35,292
|
|
$
|
27,809
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Military:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings
|
|
$
|
3,202
|
|
$
|
-
|
|
|
|
$
|
3,202
|
|
$
|
-
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating earnings
|
|
$
|
3,202
|
|
$
|
-
|
|
|
|
$
|
3,202
|
|
$
|
-
|
|
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.
The Company believes that adjusted operating earnings provide a
meaningful representation of its operating performance for the Company.
The Company considers adjusted operating earnings as an additional way
to measure operating performance on an ongoing basis. Adjusted operating
earnings is meant to reflect the ongoing operating performance of all of
its retail stores and distribution operations; consequently, it excludes
the impact of items that could be considered “non-operating” or
“non-core” in nature, and also excludes the contributions of activities
classified as discontinued operations. Because adjusted operating
earnings is a performance measure that management uses to allocate
resources, assess performance against its peers and evaluate overall
performance, the Company believes it provides useful information for
investors. In addition, securities analysts, fund managers and other
shareholders and stakeholders that communicate with the Company request
its operating financial results in adjusted operating earnings format.
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)
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
15 Weeks Ended
|
|
|
16 Weeks Ended
|
|
|
|
|
December 28, 2013
|
|
|
|
|
January 5, 2013
|
|
|
|
|
Earnings from continuing operations
|
|
|
Earnings per diluted share
|
|
|
|
|
Earnings from continuing operations
|
|
|
Earnings per diluted share
|
|
(Loss) earnings from continuing operations
|
|
$
|
(13,670
|
)
|
$
|
(0.49
|
)
|
|
|
$
|
3,472
|
|
$
|
0.16
|
|
Adjustments, net of taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset impairment and restructuring charges
|
|
|
9,090
|
|
|
0.33
|
|
|
|
|
-
|
|
|
-
|
|
Merger related expenses
|
|
|
11,785
|
|
|
0.42
|
|
|
|
|
-
|
|
|
-
|
|
Pension settlement accounting
|
|
|
385
|
|
|
0.01
|
|
|
|
|
-
|
|
|
-
|
|
Acquisition related expenses
|
|
|
-
|
|
|
-
|
|
|
|
|
250
|
|
|
0.01
|
|
Stock compensation modifications
|
|
|
2,589
|
|
|
0.09
|
|
|
|
|
-
|
|
|
-
|
|
Gain on sale of pharmacy prescription lists
|
|
|
(644
|
)
|
|
(0.02
|
)
|
|
|
|
-
|
|
|
-
|
|
Debt extinguishment
|
|
|
3,428
|
|
|
0.12
|
|
|
|
|
1,443
|
|
|
0.07
|
|
Tax benefit related to change in state deferred
tax rate
|
|
|
(2,418
|
)
|
|
(0.08
|
)*
|
|
|
|
-
|
|
|
-
|
|
Unrecognized tax liability
|
|
|
595
|
|
|
0.02
|
|
|
|
|
-
|
|
|
-
|
|
40th week
|
|
|
-
|
|
|
-
|
|
|
|
|
(309
|
)
|
|
(0.02
|
)*
|
Adjusted earnings from continuing operations
|
|
$
|
11,140
|
|
$
|
0.40
|
|
|
|
$
|
4,856
|
|
$
|
0.22
|
|
*includes rounding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39 Weeks Ended
|
|
|
40 Weeks Ended
|
|
|
|
|
December 28, 2013
|
|
|
|
|
January 5, 2013
|
|
|
|
|
Earnings from continuing operations
|
|
|
Earnings per diluted share
|
|
|
|
|
Earnings from continuing operations
|
|
|
Earnings per diluted share
|
|
Earnings from continuing operations
|
|
$
|
1,229
|
|
$
|
0.05
|
|
|
|
$
|
19,903
|
|
$
|
0.91
|
|
Adjustments, net of taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset impairment and restructuring charges
|
|
|
9,702
|
|
|
0.40
|
|
|
|
|
225
|
|
|
0.01
|
|
Merger related expenses
|
|
|
15,179
|
|
|
0.63
|
|
|
|
|
-
|
|
|
-
|
|
Pension settlement accounting
|
|
|
385
|
|
|
0.02
|
|
|
|
|
-
|
|
|
-
|
|
Acquisition related expenses
|
|
|
-
|
|
|
-
|
|
|
|
|
250
|
|
|
0.01
|
|
Stock compensation modifications
|
|
|
2,589
|
|
|
0.11
|
|
|
|
|
-
|
|
|
-
|
|
Gain on sale of assets
|
|
|
(644
|
)
|
|
(0.03
|
)
|
|
|
|
(422
|
)
|
|
(0.02
|
)
|
Debt extinguishment
|
|
|
3,428
|
|
|
0.14
|
|
|
|
|
1,443
|
|
|
0.07
|
|
Tax benefit related to change in state deferred
tax rate
|
|
|
(2,418
|
)
|
|
(0.10
|
)
|
|
|
|
-
|
|
|
-
|
|
Favorable settlement of unrecognized tax liability
|
|
|
(244
|
)
|
|
(0.01
|
)
|
|
|
|
-
|
|
|
-
|
|
Impact of state tax law changes
|
|
|
-
|
|
|
-
|
|
|
|
|
(623
|
)
|
|
(0.03
|
)
|
Unrecognized tax liability
|
|
|
595
|
|
|
0.02
|
|
|
|
|
-
|
|
|
-
|
|
40th week
|
|
|
-
|
|
|
-
|
|
|
|
|
(309
|
)
|
|
(0.01
|
)
|
Adjusted earnings from continuing operations
|
|
$
|
29,801
|
|
$
|
1.23
|
|
|
|
$
|
20,467
|
|
$
|
0.94
|
|
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.
The Company believes that adjusted earnings from continuing operations
provide a meaningful representation of its operating performance for the
Company. The Company considers adjusted earnings from continuing
operations as an additional way to measure operating performance on an
ongoing basis. Adjusted earnings from continuing operations is meant to
reflect the ongoing operating performance of all of its retail stores
and distribution operations; consequently, it excludes the impact of
items that could be considered “non-operating” or “non-core” in nature,
and also excludes the contributions of activities classified as
discontinued operations. Because adjusted earnings from continuing
operations is a performance measure that management uses to allocate
resources, assess performance against its peers and evaluate overall
performance, the Company believes it provides useful information for
investors. In addition, securities analysts, fund managers and other
shareholders and stakeholders that communicate with the Company request
its operating financial results in Adjusted earnings from continuing
operations format.
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)
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
December 28, 2013
|
|
January 5, 2013
|
|
|
|
|
|
|
|
|
Current maturities of long-term debt and capital lease obligations
|
$
|
7,345
|
|
$
|
4,104
|
|
Long-term debt and capital lease obligations
|
|
597,563
|
|
|
166,843
|
|
Total debt
|
|
604,908
|
|
|
170,947
|
|
Cash and cash equivalents
|
|
(9,216
|
)
|
|
(8,960
|
)
|
Total net long-term debt
|
$
|
595,692
|
|
$
|
161,987
|
|
Notes: Total net long-term 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 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.
Copyright Business Wire 2014