Rite Aid Reports Fiscal 2018 Second Quarter Results
- Second Quarter Net Income of $170.7 Million or $0.16 Per Diluted Share, Compared to the Prior Year
Second Quarter Net Income of $14.8 Million or $0.01 Per Diluted Share
- Second Quarter Adjusted Net Loss Per Diluted Share of $0.01, Compared to the Prior Year Second
Quarter Adjusted Net Income Per Diluted Share of $0.03
- Adjusted EBITDA of $213.3 Million for the Second Quarter, Compared to the Prior Year Second
Quarter Adjusted EBITDA of $312.7 Million
Rite Aid Corporation (NYSE: RAD) today reported operating results for its second fiscal quarter ended September 2, 2017.
For the second quarter, the company reported revenues of $7.7 billion, net income of $170.7 million, or $0.16 per diluted share,
Adjusted net loss of $15.6 million, or $0.01 per diluted share and Adjusted EBITDA of $213.3 million, or 2.8 percent of
revenues.
“While our performance for the quarter reflects a challenging reimbursement rate environment and the effects of an extended
merger and asset sale process, securing regulatory clearance for the amended asset sale agreement with Walgreens Boots Alliance
gives us a clear path forward to realize the benefits of the transaction and implement our plans to deliver improved results. In
addition, we’ve announced this morning that Kermit Crawford – a proven leader with extensive retail pharmacy experience – is
joining Rite Aid as president and chief operating officer to further strengthen our leadership team,” said Rite Aid Chairman and
CEO John Standley.
“As we work to complete the asset sale, which will reduce our leverage and provide greater financial flexibility to invest in
our business, we’ll also focus on generating momentum for our business by meeting the health and wellness needs of our customers
and patients while delivering an outstanding experience in our stores.”
Second Quarter Summary
Revenues for the quarter were $7.7 billion compared to revenues of $8.0 billion in the prior year’s second quarter, a decrease
of $350.9 million or 4.4 percent. Retail Pharmacy Segment revenues were $6.3 billion and decreased 3.4 percent compared to the
prior year period primarily as a result of a decrease in same store sales and reimbursement rates. Revenues in the company’s
Pharmacy Services Segment were $1.5 billion and decreased 8.7 percent compared to the prior year period, due to an election to
participate in fewer Medicare Part D regions.
Same store sales for the quarter decreased 3.4 percent over the prior year, consisting of a 4.6 percent decrease in pharmacy
sales and a 0.9 percent decrease in front-end sales. Pharmacy sales included an approximate 189 basis point negative impact from
new generic introductions. The number of prescriptions filled in same stores, adjusted to 30-day equivalents, decreased 1.8 percent
over the prior year period due in part, to exclusion from certain pharmacy networks that Rite Aid participated in the prior year.
Prescription sales accounted for 67.8 percent of total drugstore sales, and third party prescription revenue was 98.3 percent of
pharmacy sales.
Net income was $170.7 million or $0.16 per diluted share compared to last year’s second quarter net income of $14.8 million or
$0.01 per diluted share. The improvement in operating results was due primarily to receipt of the $325.0 million merger termination
fee from Walgreens Boots Alliance, Inc. (Nasdaq: WBA) for the termination of the merger agreement, effective June 28, 2017,
partially offset by a decline in Adjusted EBITDA and higher income tax expense.
Adjusted net loss was $15.6 million or $0.01 per diluted share compared to last year’s second quarter adjusted net income of
$36.4 million or $0.03 per diluted share. The decline in Adjusted net income was due to a decline in Adjusted EBITDA, partially
offset by a reduction in adjusted income tax expense and depreciation and amortization expense.
Adjusted EBITDA (which is reconciled to net income in the attached tables) was $213.3 million or 2.8 percent of revenues for the
second quarter compared to $312.7 million or 3.9 percent of revenues for the same period last year. The decline in Adjusted EBITDA
was due to a decrease of $98.6 million in the Retail Pharmacy Segment. The decrease in the Retail Pharmacy Segment EBITDA was
primarily driven by a decline in pharmacy gross profit, which was due to a decline in reimbursement rates, which the company was
unable to fully offset with generic purchasing efficiencies and lower script counts. The decline in pharmacy gross profit was
partially offset by good cost control. Adjusted EBITDA in the Pharmacy Services Segment was flat compared to the prior year.
In the second quarter, the company opened 1 store, relocated 1 store, remodeled 54 stores and expanded 1 store, bringing the
total number of wellness stores chainwide to 2,532. The company closed 17 stores, resulting in a total store count of 4,507 at the
end of the second quarter.
Rite Aid is one of the nation’s leading drugstore chains with 4,507 stores in 31 states and the District of Columbia.
Information about Rite Aid, including corporate background and press releases, is available through Rite Aid’s website at www.riteaid.com.
Conference Call Broadcast
Rite Aid will hold an analyst call at 8:30 a.m. Eastern Time today with remarks by Rite Aid's management team. The call will be
simulcast via the internet and can be accessed at www.riteaid.com in the conference call section of investor information. Slides related to materials discussed on
the call will also be available. A playback of the call will be available on both sites starting at 12 p.m. Eastern Time today. A
playback of the call will also be available by telephone beginning at 12 p.m. Eastern Time today until 11:59 p.m. Eastern Time on
Sept. 30, 2017. The playback number is 1-855-859-2056 from within the U.S. and Canada or 1-404-537-3406 from outside the U.S. and
Canada with the eight-digit reservation number 72531385.
Cautionary Statement Regarding Forward Looking Statements
Statements in this release that are not historical, are forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements
regarding the expected timing of the closing of the sale of stores and assets to WBA; the ability of the parties to complete
the sale and related transactions considering the various closing conditions; the outcome of legal and regulatory matters in
connection with the sale of store and assets of Rite Aid to WBA; the expected benefits of the transactions such as improved
operations, growth potential, market profile and financial strength; the competitive ability and position of Rite Aid following
completion of the proposed transactions; the ability of Rite Aid to implement new business strategies following the completion of
the proposed transactions and any assumptions underlying any of the foregoing. Words such as “anticipate,” “believe,” “continue,”
“could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “should,” and “will” and variations of such words and
similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees
of future performance and involve risks, assumptions and uncertainties, including, but not limited to, our high level of
indebtedness and our ability to make interest and principal payments on our debt and satisfy the other covenants contained in our
debt agreements; general economic, industry, market, competitive, regulatory and political conditions; our ability to improve the
operating performance of our stores in accordance with our long term strategy; the impact of private and public third-party payers
continued reduction in prescription drug reimbursements and efforts to encourage mail order; our ability to manage expenses and our
investments in working capital; outcomes of legal and regulatory matters; changes in legislation or regulations, including
healthcare reform; our ability to achieve the benefits of our efforts to reduce the costs of our generic and other drugs; risks
related to the proposed transactions, including the possibility that the transactions may not close, including because a
governmental entity may prohibit, delay or refuse to grant approval for the consummation of the transactions, or may require
conditions, limitations or restrictions in connection with such approvals, the risk that there may be a material adverse change of
Rite Aid, or the business of Rite Aid may suffer as a result of uncertainty surrounding the proposed transactions; risks related to
the ability to realize the anticipated benefits of the proposed transactions; risks associated with the financing of the proposed
transaction; disruption from the proposed transaction making it more difficult to maintain business and operational relationships;
the effect of the pending sale on Rite Aid's business relationships (including, without limitation, customers and suppliers
operating results and business generally; risks related to diverting management's or employees' attention from ongoing business
operations; the risk that Rite Aid's stock price may decline significantly if the proposed transaction is not completed;
significant transaction costs; unknown liabilities; the risk of litigation and/or regulatory actions related to the proposed
transactions; potential changes to our strategy in the event the proposed transactions do not close, which may include delaying or
reducing capital or other expenditures, selling assets or other operations, attempting to restructure or refinance our debt, or
seeking additional capital, and other business effects. These and other risks, assumptions and uncertainties are more fully
described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K, and in other documents that we file or furnish
with the Securities and Exchange Commission, which you are encouraged to read. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or
anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-
looking statements, which speak only as of the date they are made. Rite Aid expressly disclaims any current intention to update
publicly any forward-looking statement after the distribution of this release, whether as a result of new information, future
events, changes in assumptions or otherwise.
Reconciliation of Non-GAAP Financial Measures
The company separately reports financial results on the basis of Adjusted Net Income (Loss), Adjusted Net Income (Loss) per
Diluted Share, and Adjusted EBITDA, which are non-GAAP financial measures. See the attached tables for a reconciliation of Adjusted
Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share and Adjusted EBITDA to net income (loss), and net income (loss) per
diluted share, which are the most directly comparable GAAP financial measures. Adjusted Net Income (Loss) and Adjusted Net Income
(Loss) per Diluted Share exclude amortization of EnvisionRx intangible assets, merger and acquisition-related costs, loss on debt
retirements, LIFO adjustments, and the Walgreens Boots Alliance, Inc. termination fee. Adjusted EBITDA is defined as net income
(loss) excluding the impact of income taxes, interest expense, depreciation and amortization, LIFO adjustments, charges or credits
for facility closing and impairment, inventory write-downs related to store closings, debt retirements, the Walgreens Boots
Alliance, Inc. termination fee, and other items (including stock-based compensation expense, merger and acquisition-related costs,
severance and costs related to distribution center closures, gain or loss on sale of assets and revenue deferrals related to our
customer loyalty program).
|
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|
RITE AID CORPORATION AND SUBSIDIARIES |
|
|
|
|
|
CONSOLIDATED BALANCE SHEETS |
(Dollars in thousands) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 2, 2017 |
|
March 4, 2017 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
238,978 |
|
|
$ |
245,410 |
|
Accounts receivable, net |
|
|
1,843,320 |
|
|
|
1,771,126 |
|
Inventories, net of LIFO reserve of $1,022,282 and $999,776 |
|
|
2,877,427 |
|
|
|
2,837,211 |
|
Prepaid expenses and other current assets |
|
|
221,644 |
|
|
|
211,541 |
|
Total current assets |
|
|
5,181,369 |
|
|
|
5,065,288 |
|
Property, plant and equipment, net |
|
|
2,188,217 |
|
|
|
2,251,692 |
|
Goodwill |
|
|
1,715,479 |
|
|
|
1,715,479 |
|
Other intangibles, net |
|
|
747,288 |
|
|
|
835,795 |
|
Deferred tax assets |
|
|
1,453,291 |
|
|
|
1,505,564 |
|
Other assets |
|
|
212,664 |
|
|
|
219,934 |
|
Total assets |
|
$ |
11,498,308 |
|
|
$ |
11,593,752 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
Current liabilities: |
|
|
|
|
Current maturities of long-term debt and lease financing obligations |
|
$ |
22,491 |
|
|
$ |
21,335 |
|
Accounts payable |
|
|
1,687,880 |
|
|
|
1,613,909 |
|
Accrued salaries, wages and other current liabilities |
|
|
1,270,840 |
|
|
|
1,370,004 |
|
Total current liabilities |
|
|
2,981,211 |
|
|
|
3,005,248 |
|
Long-term debt, less current maturities |
|
|
7,082,549 |
|
|
|
7,263,288 |
|
Lease financing obligations, less current maturities |
|
|
37,890 |
|
|
|
44,070 |
|
Other noncurrent liabilities |
|
|
663,048 |
|
|
|
667,076 |
|
Total liabilities |
|
|
10,764,698 |
|
|
|
10,979,682 |
|
|
|
|
|
|
Commitments and contingencies |
|
|
- |
|
|
|
- |
|
Stockholders' equity: |
|
|
|
|
Common stock |
|
|
1,062,411 |
|
|
|
1,053,690 |
|
Additional paid-in capital |
|
|
4,841,700 |
|
|
|
4,839,854 |
|
Accumulated deficit |
|
|
(5,129,213 |
) |
|
|
(5,237,157 |
) |
Accumulated other comprehensive loss |
|
|
(41,288 |
) |
|
|
(42,317 |
) |
Total stockholders' equity |
|
|
733,610 |
|
|
|
614,070 |
|
Total liabilities and stockholders' equity |
|
$ |
11,498,308 |
|
|
$ |
11,593,752 |
|
|
|
|
|
RITE AID CORPORATION AND SUBSIDIARIES |
|
|
|
|
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|
CONSOLIDATED STATEMENTS OF OPERATIONS |
(Dollars in thousands, except per share amounts) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen weeks ended
September 2, 2017
|
|
Thirteen weeks ended
August 27, 2016
|
Revenues |
|
$ |
7,678,903 |
|
|
$ |
8,029,806 |
|
Costs and expenses: |
|
|
|
|
|
Cost of revenues |
|
|
5,891,900 |
|
|
|
6,113,063 |
|
Selling, general and administrative expenses |
|
|
1,734,306 |
|
|
|
1,778,247 |
|
Lease termination and impairment charges |
|
|
3,128 |
|
|
|
7,233 |
|
Interest expense |
|
|
111,261 |
|
|
|
105,388 |
|
Walgreens Boots Alliance merger termination fee |
|
|
(325,000 |
) |
|
|
- |
|
(Gain) loss on sale of assets, net |
|
|
(14,495 |
) |
|
|
174 |
|
|
|
|
|
|
|
|
|
|
7,401,100 |
|
|
|
8,004,105 |
|
|
|
|
|
|
|
Income before income taxes |
|
|
277,803 |
|
|
|
25,701 |
|
Income tax expense |
|
|
107,087 |
|
|
|
10,928 |
|
Net income |
|
$ |
170,716 |
|
|
$ |
14,773 |
|
|
|
|
|
|
|
Basic and diluted earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
Numerator for earnings per share: |
|
|
|
|
|
Income attributable to common stockholders - basic and diluted |
|
$ |
170,716 |
|
|
$ |
14,773 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator: |
|
|
|
|
|
Basic weighted average shares |
|
|
1,048,548 |
|
|
|
1,044,198 |
|
Outstanding options and restricted shares, net |
|
|
18,668 |
|
|
|
17,251 |
|
|
|
|
|
|
|
Diluted weighted average shares |
|
|
1,067,216 |
|
|
|
1,061,449 |
|
|
|
|
|
|
|
Basic and diluted income per share |
|
$ |
0.16 |
|
|
$ |
0.01 |
|
|
|
|
|
RITE AID CORPORATION AND SUBSIDIARIES |
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF OPERATIONS |
(Dollars in thousands, except per share amounts) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twenty-six weeks ended
September 2, 2017
|
|
Twenty-six weeks ended
August 27, 2016
|
Revenues |
|
$ |
15,460,356 |
|
|
$ |
16,213,987 |
|
Costs and expenses: |
|
|
|
|
|
Cost of revenues |
|
|
11,914,319 |
|
|
|
12,402,944 |
|
Selling, general and administrative expenses |
|
|
3,495,596 |
|
|
|
3,571,494 |
|
Lease termination and impairment charges |
|
|
7,214 |
|
|
|
13,014 |
|
Interest expense |
|
|
221,198 |
|
|
|
210,501 |
|
Walgreens Boots Alliance merger termination fee |
|
|
(325,000 |
) |
|
|
- |
|
(Gain) loss on sale of assets, net |
|
|
(20,216 |
) |
|
|
1,230 |
|
|
|
|
|
|
|
|
|
|
15,293,111 |
|
|
|
16,199,183 |
|
|
|
|
|
|
|
Income before income taxes |
|
|
167,245 |
|
|
|
14,804 |
|
Income tax expense |
|
|
71,878 |
|
|
|
4,619 |
|
Net income |
|
$ |
95,367 |
|
|
$ |
10,185 |
|
|
|
|
|
|
|
Basic and diluted earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
Numerator for earnings per share: |
|
|
|
|
|
Income attributable to common stockholders - basic and diluted |
|
$ |
95,367 |
|
|
$ |
10,185 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator: |
|
|
|
|
|
Basic weighted average shares |
|
|
1,047,687 |
|
|
|
1,043,317 |
|
Outstanding options and restricted shares, net |
|
|
22,597 |
|
|
|
17,210 |
|
|
|
|
|
|
|
Diluted weighted average shares |
|
|
1,070,284 |
|
|
|
1,060,527 |
|
|
|
|
|
|
|
Basic and diluted income per share |
|
$ |
0.09 |
|
|
$ |
0.01 |
|
|
|
RITE AID CORPORATION AND SUBSIDIARIES |
|
|
|
|
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |
(In thousands) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen weeks ended |
|
Thirteen weeks ended |
|
|
September 2, 2017 |
|
August 27, 2016 |
Net income |
|
$ |
170,716 |
|
$ |
14,773 |
Other comprehensive income: |
|
|
|
|
Defined benefit pension plans: |
|
|
|
|
Amortization of prior service cost, net transition obligation and net
actuarial losses included in net periodic pension cost, net of $342 and $451 tax expense |
|
|
515 |
|
|
681 |
Total other comprehensive income |
|
|
515 |
|
|
681 |
Comprehensive income |
|
$ |
171,231 |
|
$ |
15,454 |
|
|
RITE AID CORPORATION AND SUBSIDIARIES |
|
|
|
|
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |
(In thousands) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twenty-six weeks ended |
|
Twenty-six weeks ended |
|
|
September 2, 2017 |
|
August 27, 2016 |
Net income |
|
$ |
95,367 |
|
$ |
10,185 |
Other comprehensive income: |
|
|
|
|
Defined benefit pension plans: |
|
|
|
|
Amortization of prior service cost, net transition obligation and net
actuarial losses included in net periodic pension cost, net of $684 and $902 tax expense |
|
|
1,029 |
|
|
1,362 |
Total other comprehensive income |
|
|
1,029 |
|
|
1,362 |
Comprehensive income |
|
$ |
96,396 |
|
$ |
11,547 |
|
|
RITE AID CORPORATION AND SUBSIDIARIES |
|
|
|
|
|
SUPPLEMENTAL SEGMENT OPERATING INFORMATION |
(Dollars in thousands) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen weeks ended
September 2, 2017
|
|
Thirteen weeks ended
August 27, 2016
|
|
|
|
|
|
Retail Pharmacy Segment |
|
|
|
|
Revenues (a) |
|
$ |
6,267,929 |
|
|
$ |
6,485,482 |
|
Cost of revenues (a) |
|
|
4,584,188 |
|
|
|
4,666,133 |
|
Gross profit |
|
|
1,683,741 |
|
|
|
1,819,349 |
|
LIFO charge |
|
|
5,632 |
|
|
|
13,760 |
|
FIFO gross profit |
|
|
1,689,373 |
|
|
|
1,833,109 |
|
|
|
|
|
|
Gross profit as a percentage of revenues |
|
|
26.86 |
% |
|
|
28.05 |
% |
LIFO charge as a percentage of revenues |
|
|
0.09 |
% |
|
|
0.21 |
% |
FIFO gross profit as a percentage of revenues |
|
|
26.95 |
% |
|
|
28.26 |
% |
|
|
|
|
|
Selling, general and administrative expenses |
|
|
1,658,873 |
|
|
|
1,708,633 |
|
Selling, general and administrative expenses as a percentage of revenues |
|
|
26.47 |
% |
|
|
26.35 |
% |
|
|
|
|
|
Cash interest expense |
|
|
105,207 |
|
|
|
100,105 |
|
Non-cash interest expense |
|
|
5,434 |
|
|
|
5,273 |
|
Total interest expense |
|
|
110,641 |
|
|
|
105,378 |
|
|
|
|
|
|
Adjusted EBITDA |
|
|
163,995 |
|
|
|
262,643 |
|
Adjusted EBITDA as a percentage of revenues |
|
|
2.62 |
% |
|
|
4.05 |
% |
|
|
|
|
|
|
|
|
|
|
Pharmacy Services Segment |
|
|
|
|
Revenues (a) |
|
$ |
1,492,831 |
|
|
$ |
1,634,876 |
|
Cost of revenues (a) |
|
|
1,389,569 |
|
|
|
1,537,482 |
|
Gross profit |
|
|
103,262 |
|
|
|
97,394 |
|
|
|
|
|
|
Gross profit as a percentage of revenues |
|
|
6.92 |
% |
|
|
5.96 |
% |
|
|
|
|
|
Adjusted EBITDA |
|
|
49,275 |
|
|
|
50,010 |
|
Adjusted EBITDA as a percentage of revenues |
|
|
3.30 |
% |
|
|
3.06 |
% |
|
|
|
(a) - |
|
Revenues and cost of revenues include $81,857 and $90,552 of inter-segment activity
for the thirteen weeks ended September 2, 2017 and August 27, 2016, respectively, that is eliminated in consolidation. |
|
|
RITE AID CORPORATION AND SUBSIDIARIES |
|
|
|
|
|
SUPPLEMENTAL SEGMENT OPERATING INFORMATION |
(Dollars in thousands) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
Twenty-six weeks ended
September 2, 2017
|
|
Twenty-six weeks ended
August 27, 2016
|
|
|
|
|
|
Retail Pharmacy Segment |
|
|
|
|
Revenues (a) |
|
$ |
12,618,137 |
|
|
$ |
13,161,030 |
|
Cost of revenues (a) |
|
|
9,280,334 |
|
|
|
9,536,314 |
|
Gross profit |
|
|
3,337,803 |
|
|
|
3,624,716 |
|
LIFO charge |
|
|
22,506 |
|
|
|
27,511 |
|
FIFO gross profit |
|
|
3,360,309 |
|
|
|
3,652,227 |
|
|
|
|
|
|
Gross profit as a percentage of revenues |
|
|
26.45 |
% |
|
|
27.54 |
% |
LIFO charge as a percentage of revenues |
|
|
0.18 |
% |
|
|
0.21 |
% |
FIFO gross profit as a percentage of revenues |
|
|
26.63 |
% |
|
|
27.75 |
% |
|
|
|
|
|
Selling, general and administrative expenses |
|
|
3,341,264 |
|
|
|
3,432,536 |
|
Selling, general and administrative expenses as a percentage of revenues |
|
|
26.48 |
% |
|
|
26.08 |
% |
|
|
|
|
|
Cash interest expense |
|
|
209,630 |
|
|
|
199,787 |
|
Non-cash interest expense |
|
|
10,910 |
|
|
|
10,702 |
|
Total interest expense |
|
|
220,540 |
|
|
|
210,489 |
|
|
|
|
|
|
Adjusted EBITDA |
|
|
307,960 |
|
|
|
507,470 |
|
Adjusted EBITDA as a percentage of revenues |
|
|
2.44 |
% |
|
|
3.86 |
% |
|
|
|
|
|
|
|
|
|
|
Pharmacy Services Segment |
|
|
|
|
Revenues (a) |
|
$ |
3,006,072 |
|
|
$ |
3,237,235 |
|
Cost of revenues (a) |
|
|
2,797,838 |
|
|
|
3,050,908 |
|
Gross profit |
|
|
208,234 |
|
|
|
186,327 |
|
|
|
|
|
|
Gross profit as a percentage of revenues |
|
|
6.93 |
% |
|
|
5.76 |
% |
|
|
|
|
|
Adjusted EBITDA |
|
|
97,874 |
|
|
|
91,185 |
|
Adjusted EBITDA as a percentage of revenues |
|
|
3.26 |
% |
|
|
2.82 |
% |
|
|
|
(a) -
|
|
Revenues and cost of revenues include $163,853 and $184,278 of inter-segment activity for the
twenty-six weeks ended September 2, 2017 and August 27, 2016, respectively, that is eliminated in consolidation.
|
|
|
RITE AID CORPORATION AND SUBSIDIARIES |
SUPPLEMENTAL INFORMATION |
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA |
(In thousands) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen weeks ended
September 2, 2017
|
|
Thirteen weeks ended
August 27, 2016
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of net income to adjusted EBITDA: |
|
|
|
|
Net income |
|
$ |
170,716 |
|
|
$ |
14,773 |
|
Adjustments: |
|
|
|
|
Interest expense |
|
|
111,261 |
|
|
|
105,388 |
|
Income tax expense |
|
|
107,087 |
|
|
|
10,928 |
|
Depreciation and amortization |
|
|
132,012 |
|
|
|
142,051 |
|
LIFO charge |
|
|
5,632 |
|
|
|
13,760 |
|
Lease termination and impairment charges |
|
|
3,128 |
|
|
|
7,233 |
|
Walgreens Boots Alliance merger termination fee |
|
|
(325,000 |
) |
|
|
- |
|
Other |
|
|
8,434 |
|
|
|
18,520 |
|
Adjusted EBITDA |
|
$ |
213,270 |
|
|
$ |
312,653 |
|
Percent of revenues |
|
|
2.78 |
% |
|
|
3.89 |
% |
|
|
RITE AID CORPORATION AND SUBSIDIARIES |
SUPPLEMENTAL INFORMATION |
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA |
(In thousands) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twenty-six weeks ended
September 2, 2017
|
|
Twenty-six weeks ended
August 27, 2016
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of net income to adjusted EBITDA: |
|
|
|
|
Net income |
|
$ |
95,367 |
|
|
$ |
10,185 |
|
Adjustments: |
|
|
|
|
Interest expense |
|
|
221,198 |
|
|
|
210,501 |
|
Income tax expense |
|
|
71,878 |
|
|
|
4,619 |
|
Depreciation and amortization |
|
|
274,104 |
|
|
|
280,839 |
|
LIFO charge |
|
|
22,506 |
|
|
|
27,511 |
|
Lease termination and impairment charges |
|
|
7,214 |
|
|
|
13,014 |
|
Walgreens Boots Alliance merger termination fee |
|
|
(325,000 |
) |
|
|
- |
|
Other |
|
|
38,567 |
|
|
|
51,986 |
|
Adjusted EBITDA |
|
$ |
405,834 |
|
|
$ |
598,655 |
|
Percent of revenues |
|
|
2.62 |
% |
|
|
3.69 |
% |
|
|
|
|
RITE AID CORPORATION AND SUBSIDIARIES |
SUPPLEMENTAL INFORMATION |
ADJUSTED NET (LOSS) INCOME |
(Dollars in thousands, except per share amounts) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen weeks ended
September 2, 2017
|
|
Thirteen weeks ended
August 27, 2016
|
|
|
|
|
|
|
Net income |
|
$ |
170,716 |
|
|
$ |
14,773 |
|
Add back - Income tax expense |
|
|
107,087 |
|
|
|
10,928 |
|
Income before income taxes |
|
|
277,803 |
|
|
|
25,701 |
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
Amortization of EnvisionRx intangible assets |
|
|
19,560 |
|
|
|
20,853 |
|
LIFO charge |
|
|
5,632 |
|
|
|
13,760 |
|
Merger and Acquisition-related costs |
|
|
13,883 |
|
|
|
1,402 |
|
Walgreens Boots Alliance merger termination fee |
|
|
(325,000 |
) |
|
|
- |
|
|
|
|
|
|
|
Adjusted (loss) income before income taxes |
|
|
(8,122 |
) |
|
|
61,716 |
|
|
|
|
|
|
|
Adjusted income tax expense (a) |
|
|
7,480 |
|
|
|
25,335 |
|
Adjusted net (loss) income |
|
$ |
(15,602 |
) |
|
$ |
36,381 |
|
|
|
|
|
|
|
Adjusted net (loss) income per diluted share: |
|
|
|
|
|
|
|
|
|
|
|
Numerator for adjusted net (loss) income per diluted share: |
|
|
|
|
|
Adjusted net (loss) income |
|
$ |
(15,602 |
) |
|
$ |
36,381 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator: |
|
|
|
|
|
Basic weighted average shares |
|
|
1,048,548 |
|
|
|
1,044,198 |
|
Outstanding options and restricted shares, net |
|
|
- |
|
|
|
17,251 |
|
|
|
|
|
|
|
Diluted weighted average shares |
|
|
1,048,548 |
|
|
|
1,061,449 |
|
|
|
|
|
|
|
Net income per diluted share |
|
$ |
0.16 |
|
|
$ |
0.01 |
|
|
|
|
|
|
|
Adjusted net (loss) income per diluted share |
|
$ |
(0.01 |
) |
|
$ |
0.03 |
|
|
|
|
(a)
|
|
The fiscal year 2018 and 2017 annual effective tax rates, adjusted to exclude amortization of
EnvisionRx intangible assets, LIFO charges, Merger and Acquisition-related costs and the Walgreens Boots Alliance merger
termination fee from book income, are used for the thirteen weeks ended September 2, 2017 and August 27, 2016,
respectively.
|
|
|
|
|
RITE AID CORPORATION AND SUBSIDIARIES |
SUPPLEMENTAL INFORMATION |
ADJUSTED NET (LOSS) INCOME |
(Dollars in thousands, except per share amounts) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twenty-six weeks ended
September 2, 2017
|
|
Twenty-six weeks ended
August 27, 2016
|
|
|
|
|
|
|
Net income |
|
$ |
95,367 |
|
|
$ |
10,185 |
|
Add back - Income tax expense |
|
|
71,878 |
|
|
|
4,619 |
|
Income before income taxes |
|
|
167,245 |
|
|
|
14,804 |
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
Amortization of EnvisionRx intangible assets |
|
|
40,276 |
|
|
|
41,168 |
|
LIFO charge |
|
|
22,506 |
|
|
|
27,511 |
|
Merger and Acquisition-related costs |
|
|
21,121 |
|
|
|
4,158 |
|
Walgreens Boots Alliance merger termination fee |
|
|
(325,000 |
) |
|
|
- |
|
|
|
|
|
|
|
Adjusted (loss) income before income taxes |
|
|
(73,852 |
) |
|
|
87,641 |
|
|
|
|
|
|
|
Adjusted income tax (benefit) expense (a) |
|
|
(11,346 |
) |
|
|
34,468 |
|
Adjusted net (loss) income |
|
$ |
(62,506 |
) |
|
$ |
53,173 |
|
|
|
|
|
|
|
Adjusted net (loss) income per diluted share: |
|
|
|
|
|
|
|
|
|
|
|
Numerator for adjusted net (loss) income per diluted share: |
|
|
|
|
|
Adjusted net (loss) income |
|
$ |
(62,506 |
) |
|
$ |
53,173 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator: |
|
|
|
|
|
Basic weighted average shares |
|
|
1,047,687 |
|
|
|
1,043,317 |
|
Outstanding options and restricted shares, net |
|
|
- |
|
|
|
17,210 |
|
|
|
|
|
|
|
Diluted weighted average shares |
|
|
1,047,687 |
|
|
|
1,060,527 |
|
|
|
|
|
|
|
Net income per diluted share |
|
$ |
0.09 |
|
|
$ |
0.01 |
|
|
|
|
|
|
|
Adjusted net (loss) income per diluted share |
|
$ |
(0.06 |
) |
|
$ |
0.05 |
|
|
|
|
(a)
|
|
The fiscal year 2018 and 2017 annual effective tax rates, adjusted to exclude amortization of
EnvisionRx intangible assets, LIFO charges, Merger and Acquisition-related costs and the Walgreens Boots Alliance merger
termination fee from book income, are used for the twenty-six weeks ended September 2, 2017 and August 27, 2016,
respectively.
|
|
|
|
|
|
|
RITE AID CORPORATION AND SUBSIDIARIES |
|
|
|
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(Dollars in thousands) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen weeks ended
September 2, 2017
|
|
Thirteen weeks ended
August 27, 2016 (a)
|
|
|
|
|
|
|
|
|
|
|
OPERATING ACTIVITIES: |
|
|
|
|
Net income |
|
$ |
170,716 |
|
|
$ |
14,773 |
|
Adjustments to reconcile to net cash provided by (used in) operating activities: |
|
|
|
|
Depreciation and amortization |
|
|
132,012 |
|
|
|
142,051 |
|
Lease termination and impairment charges |
|
|
3,128 |
|
|
|
7,233 |
|
LIFO charge |
|
|
5,632 |
|
|
|
13,760 |
|
(Gain) loss on sale of assets, net |
|
|
(14,495 |
) |
|
|
174 |
|
Stock-based compensation expense |
|
|
6,324 |
|
|
|
12,552 |
|
Changes in deferred taxes |
|
|
103,010 |
|
|
|
7,747 |
|
Excess tax benefit on stock options and restricted stock |
|
|
- |
|
|
|
(2,365 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
Accounts receivable |
|
|
(60,025 |
) |
|
|
(152,725 |
) |
Inventories |
|
|
(93,886 |
) |
|
|
(216,911 |
) |
Accounts payable |
|
|
58,180 |
|
|
|
34,693 |
|
Other assets and liabilities, net |
|
|
(105,499 |
) |
|
|
(1,943 |
) |
Net cash provided by (used in) operating activities |
|
|
205,097 |
|
|
|
(140,961 |
) |
INVESTING ACTIVITIES: |
|
|
|
|
Payments for property, plant and equipment |
|
|
(59,723 |
) |
|
|
(119,641 |
) |
Intangible assets acquired |
|
|
(4,839 |
) |
|
|
(12,488 |
) |
Proceeds from dispositions of assets and investments |
|
|
8,768 |
|
|
|
3,745 |
|
Proceeds from insured loss |
|
|
1,490 |
|
|
|
- |
|
Net cash used in investing activities |
|
|
(54,304 |
) |
|
|
(128,384 |
) |
FINANCING ACTIVITIES: |
|
|
|
|
Net (payments to) proceeds from revolver |
|
|
(100,000 |
) |
|
|
270,000 |
|
Principal payments on long-term debt |
|
|
(3,829 |
) |
|
|
(5,509 |
) |
Change in zero balance cash accounts |
|
|
(18,579 |
) |
|
|
(1,728 |
) |
Net proceeds from the issuance of common stock |
|
|
68 |
|
|
|
1,587 |
|
Excess tax benefit on stock options and restricted stock |
|
|
- |
|
|
|
2,365 |
|
Payments for taxes related to net share settlement of equity awards |
|
|
(3,924 |
) |
|
|
(6,117 |
) |
Net cash (used in) provided by financing activities |
|
|
(126,264 |
) |
|
|
260,598 |
|
Increase (decrease) in cash and cash equivalents |
|
|
24,529 |
|
|
|
(8,747 |
) |
Cash and cash equivalents, beginning of period |
|
|
214,449 |
|
|
|
144,840 |
|
Cash and cash equivalents, end of period |
|
$ |
238,978 |
|
|
$ |
136,093 |
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL CASH FLOW INFORMATION |
|
|
|
|
|
|
|
|
|
Payments for property, plant and equipment |
|
$ |
59,723 |
|
|
$ |
119,641 |
|
Intangible assets acquired |
|
|
4,839 |
|
|
|
12,488 |
|
Total cash capital expenditures |
|
|
64,562 |
|
|
|
132,129 |
|
Equipment received for noncash consideration |
|
|
- |
|
|
|
114 |
|
Equipment financed under capital leases |
|
|
4,758 |
|
|
|
1,307 |
|
Gross capital expenditures |
|
$ |
69,320 |
|
|
$ |
133,550 |
|
|
(a) During the thirteen weeks ended June 3, 2017, the Company adopted ASU 2016-09, Improvements
to Employee Share-Based Payment Accounting, which resulted in a retrospective reclassification of $6.1 million for
payments for taxes related to net share settlement of equity awards from operating activities to financing activities which
decreased net cash used in operating activities and decreased cash provided by financing activities for the thirteen weeks
ended August 27, 2016.
|
|
|
|
|
|
|
RITE AID CORPORATION AND SUBSIDIARIES |
|
|
|
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(Dollars in thousands) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twenty-six weeks ended
September 2, 2017
|
|
Twenty-six weeks ended
August 27, 2016 (a)
|
|
|
|
|
|
|
|
|
|
|
OPERATING ACTIVITIES: |
|
|
|
|
Net income |
|
$ |
95,367 |
|
|
$ |
10,185 |
|
Adjustments to reconcile to net cash provided by operating activities: |
|
|
|
|
Depreciation and amortization |
|
|
274,104 |
|
|
|
280,839 |
|
Lease termination and impairment charges |
|
|
7,214 |
|
|
|
13,014 |
|
LIFO charge |
|
|
22,506 |
|
|
|
27,511 |
|
(Gain) loss on sale of assets, net |
|
|
(20,216 |
) |
|
|
1,230 |
|
Stock-based compensation expense |
|
|
15,362 |
|
|
|
23,696 |
|
Changes in deferred taxes |
|
|
64,850 |
|
|
|
1,998 |
|
Excess tax benefit on stock options and restricted stock |
|
|
- |
|
|
|
(3,248 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
Accounts receivable |
|
|
(73,782 |
) |
|
|
(227,255 |
) |
Inventories |
|
|
(62,714 |
) |
|
|
(157,471 |
) |
Accounts payable |
|
|
62,552 |
|
|
|
150,339 |
|
Other assets and liabilities, net |
|
|
(87,412 |
) |
|
|
(101,799 |
) |
Net cash provided by operating activities |
|
|
297,831 |
|
|
|
19,039 |
|
INVESTING ACTIVITIES: |
|
|
|
|
Payments for property, plant and equipment |
|
|
(120,461 |
) |
|
|
(225,718 |
) |
Intangible assets acquired |
|
|
(13,073 |
) |
|
|
(28,869 |
) |
Proceeds from dispositions of assets and investments |
|
|
17,407 |
|
|
|
6,833 |
|
Proceeds from insured loss |
|
|
3,627 |
|
|
|
- |
|
Net cash used in investing activities |
|
|
(112,500 |
) |
|
|
(247,754 |
) |
FINANCING ACTIVITIES: |
|
|
|
|
Net (payments to) proceeds from revolver |
|
|
(190,000 |
) |
|
|
250,000 |
|
Principal payments on long-term debt |
|
|
(8,096 |
) |
|
|
(11,230 |
) |
Change in zero balance cash accounts |
|
|
10,189 |
|
|
|
534 |
|
Net proceeds from the issuance of common stock |
|
|
215 |
|
|
|
3,958 |
|
Excess tax benefit on stock options and restricted stock |
|
|
- |
|
|
|
3,248 |
|
Payments for taxes related to net share settlement of equity awards |
|
|
(4,071 |
) |
|
|
(6,173 |
) |
Net cash (used in) provided by financing activities |
|
|
(191,763 |
) |
|
|
240,337 |
|
(Decrease) increase in cash and cash equivalents |
|
|
(6,432 |
) |
|
|
11,622 |
|
Cash and cash equivalents, beginning of period |
|
|
245,410 |
|
|
|
124,471 |
|
Cash and cash equivalents, end of period |
|
$ |
238,978 |
|
|
$ |
136,093 |
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL CASH FLOW INFORMATION |
|
|
|
|
|
|
|
|
|
Payments for property, plant and equipment |
|
$ |
120,461 |
|
|
$ |
225,718 |
|
Intangible assets acquired |
|
|
13,073 |
|
|
|
28,869 |
|
Total cash capital expenditures |
|
|
133,534 |
|
|
|
254,587 |
|
Equipment received for noncash consideration |
|
|
1,295 |
|
|
|
746 |
|
Equipment financed under capital leases |
|
|
8,615 |
|
|
|
2,860 |
|
Gross capital expenditures |
|
$ |
143,444 |
|
|
$ |
258,193 |
|
(a) During the thirteen weeks ended June 3, 2017, the Company adopted ASU 2016-09, Improvements
to Employee Share-Based Payment Accounting, which resulted in a retrospective reclassification of $6.2 million for
payments for taxes related to net share settlement of equity awards from operating activities to financing activities which
increased net cash provided by operating activities and decreased cash provided by financing activities for the twenty-six
weeks ended August 27, 2016.
|
Rite Aid Corporation
INVESTORS:
Matt Schroeder, 717-214-8867
investor@riteaid.com
or
MEDIA:
Susan Henderson, 717-730-7766
View source version on businesswire.com: http://www.businesswire.com/news/home/20170928005598/en/