SPTN

SPARTANNASH CO

Consumer Defensive | Small Cap

$0.30

EPS Forecast

$2,279

Revenue Forecast

Announcing earnings for the quarter ending 2024-12-31 soon
EX-99.1 2 sptn-ex991_6.htm EX-99.1 sptn-ex991_6.htm

 

Exhibit 99.1

 

SpartanNash Announces Fourth Quarter and Fiscal 2019 Financial Results



Grows Fourth Quarter Net Sales 5.3% to $2.0 Billion

Reports Positive Retail Comparable Store Sales of 0.5%

Generates Profitability In-Line with Company Guidance

Provides Fiscal Year 2020 Outlook


GRAND RAPIDS, MICHIGAN – February 19, 2020 – SpartanNash Company (the “Company”) (Nasdaq: SPTN) today reported financial results for its 12-week fourth quarter and 52-week fiscal year ended December 28, 2019.

Fourth Quarter Fiscal 2019 Highlights

 

Net sales growth of 5.3%, to $2.00 billion from $1.90 billion in the prior year quarter, representing the fifteenth consecutive quarter of growth.

 

Retail comparable store sales of 0.5%, were positive for the second consecutive quarter.

 

EPS of $0.15 per share; Adjusted EPS of $0.23, including $0.11 in CEO transition and supplemental incentive program costs (“Transition Costs”).

 

Significant working capital improvements over the prior year, including over $45 million in inventory reductions, excluding the impact of the Martin’s Super Markets (“Martin’s”) acquisition.

“We are pleased with the progress that was made in the last quarter,” said Dennis Eidson, Interim President and Chief Executive Officer. “By focusing on execution, we were able to deliver positive retail comparable store sales for the second consecutive quarter, reduce working capital and increase our free cash flow, while making improvements in our supply chain operations. As a result, we were able to deliver results consistent with the guidance we provided following the third quarter and are optimistic about our future outlook.”

Consolidated Financial Results

Consolidated net sales for the fourth quarter increased $101.2 million, or 5.3%, to $2.00 billion from $1.90 billion in the prior year quarter. The increase in net sales was generated through the acquisition of Martin’s, as well as higher sales within the Food Distribution segment prior to the elimination of the intercompany sales for the acquired business.

Gross profit for the fourth quarter of fiscal 2019 was $286.7 million, or 14.4% of net sales, compared to $245.4 million, or 12.9% of net sales, in the prior year quarter. The growth in gross profit and improvement as a percent of net sales was primarily driven by the acquisition of Martin’s and the resulting higher mix of Retail sales.

1


 

Reported operating expenses for the fourth quarter were $275.1 million, or 13.8% of net sales, compared to $257.2 million, or 13.6% of net sales, in the prior year quarter. The increase in expenses as a rate of sales compared to the prior year quarter was due to the additional Retail segment business associated with Martin’s, which has higher operating expense rates than the distribution business. Additionally, the Company incurred $4.6 million in higher healthcare costs in the current year quarter. These increases were partially offset by a decrease in asset impairment charges. Fourth quarter operating expenses would have been $272.2 million, or 13.6% of net sales, compared to $223.2 million, or 11.8% of net sales, in the prior year quarter, excluding the asset impairment charges and other adjustments detailed in Table 3.

The Company reported operating earnings of $11.6 million compared to a loss of $11.9 million in the prior year quarter. The improvement was primarily attributable to the decrease in asset impairment charges as well as sales growth, partially offset by higher supply chain costs and administrative expenses, including higher healthcare costs and the Transition Costs. Adjusted operating earnings(1) were $15.2 million compared to $22.2 million in the prior year quarter. Adjusted operating earnings decreased due to the higher costs mentioned above, but benefited from the exclusion of losses related to Fresh Kitchen operations, which were not adjusted in the prior year quarter. Please see the financial tables at the end of this press release for a reconciliation of each non-GAAP financial measure to the most directly comparable measure, prepared and presented in accordance with GAAP.

The Company reported earnings from continuing operations of $5.5 million, or $0.15 per share, compared to a loss of $14.0 million, or $0.39 per diluted share, in the prior year quarter. The improvement reflects the operating earnings changes noted above, as well as lower interest expense.

Adjusted earnings from continuing operations(3) for the fourth quarter were $8.3 million, or $0.23 per diluted share, and include $3.9 million after tax, or $0.11 per diluted share, in Transition Costs. Adjusted earnings from continuing operations for the prior year quarter were $11.4 million, or $0.32 per diluted share. A reconciliation of reported earnings from continuing operations to adjusted earnings from continuing operations is included at Table 4.

Adjusted EBITDA(2) was $37.4 million compared to $44.3 million in the prior year quarter due to factors mentioned above.

Segment Financial Results

Food Distribution

Net sales for Food Distribution decreased $15.4 million, or 1.6%, to $938.9 million from $954.4 million in the prior year quarter. Excluding the impact of the elimination of intercompany sales to Martin’s, net sales increased 2.5%, primarily due to sales growth with existing customers.

Reported operating earnings for Food Distribution were $10.9 million compared to a loss of $14.3 million in the prior year quarter. The increase in reported operating earnings was primarily attributable to lower asset impairment charges, partially offset by higher corporate administrative expenses, including Transition Costs, and higher supply chain costs. Fourth quarter adjusted operating earnings(1) were $15.7 million compared to $17.9 million in the prior year quarter. Adjusted operating earnings exclude losses associated with Fresh Kitchen operations and disposition activities in the current year, and an impairment charge related to the insolvency of a customer in the prior year quarter.

2


 

Retail

Net sales for Retail increased $118.9 million, or 27.7%, to $548.0 million from $429.1 million in the prior year quarter primarily due to the acquisition of Martin’s. Comparable store sales of 0.5% were offset by the impact of store closures.

Reported operating earnings for Retail were $4.2 million compared to operating earnings of $2.9 million in the prior year quarter. The increase in reported operating earnings was due to decreases in restructuring costs, merger/acquisition and integration costs, and the contribution of the acquired Martin’s stores, partially offset by higher healthcare costs and Transition Costs. Adjusted operating earnings(1) were $3.0 million compared to $4.7 million in the prior year quarter and exclude restructuring costs and merger/acquisition and integration activity in both periods.

Military Distribution

Net sales for Military Distribution decreased $2.3 million, or 0.5%, to $511.0 million from $513.3 million in the prior year quarter. The decrease was due to lower comparable sales at Defense Commissary Agency (“DeCA”) operated locations partially offset by the continued expansion of DeCA’s private brand program.

The reported operating loss for Military Distribution was $3.5 million compared to $0.5 million in the prior year quarter. The change was primarily attributable to higher supply chain costs and corporate administrative expenses, partially offset by improvements in margin rates. Adjusted operating loss(1) was $3.5 million compared to $0.4 million in the prior year quarter.

Fiscal Year 2019 Results

Consolidated net sales for the fiscal year ended December 28, 2019 increased $471.5 million, or 5.8%, to $8.54 billion from $8.06 billion in the prior fiscal year. The increase in net sales was generated through the acquisition of Martin’s, as well as higher sales within the Food Distribution segment prior to the elimination of the intercompany sales for the acquired business.

The Company reported earnings from continuing operations for fiscal 2019 of $5.9 million, or $0.16 per diluted share, compared to $33.8 million, or $0.94 per diluted share, in the prior year. The decrease was primarily related to pension termination expenses, an increase in supply chain costs, and higher administrative expenses, including Transition Costs. These factors were partially offset by lower restructuring charges and the contribution of the acquired Martin’s stores. Adjusted earnings from continuing operations(3) for fiscal 2019 were $39.9 million, or $1.10 per diluted share, compared to $67.3 million, or $1.87 per diluted share, in the prior year. Fiscal 2019 adjusted earnings exclude $34.0 million of net after-tax charges primarily related to pension termination expense, asset impairment charges, one-time costs associated with Project One Team and losses from the Fresh Kitchen operations in the second half of the year. Fiscal 2018 adjusted earnings from continuing operations exclude $33.5 million of net after-tax charges primarily related to asset impairment.

Adjusted EBITDA(2for fiscal 2019 was $177.9 million, or 2.1% of net sales, compared to $209.4 million, or 2.6% of net sales, in fiscal 2018.

Capital expenditures totaled $74.8 million in fiscal 2019, as approximately $12 million more in expenditures were incurred but not paid in the last period of the fiscal year compared to 2018, shifting the purchases from fiscal 2019 to fiscal 2020 for cash flow purposes. The Company incurred depreciation and amortization expense of $88.4 million in fiscal 2019.

 

3


 

Cash Flow

 

Cash flows provided by operating activities in fiscal 2019 were $180.2 million, compared to $171.7 million in the prior year. The increase was due to improvements in working capital, partially offset by lower earnings from continuing operations.  The Company generated $105.4 million in free cash flow(5) in the current year and $100.2 million in the prior year. SpartanNash reduced net long-term debt(6) levels by $15.1 million during fiscal 2019.

The Company declared $27.6 million in 2019 quarterly cash dividends equal to $0.76 per common share.

Strategic Business Objectives

Following are key updates to the Company’s progress towards its strategic business objectives during the fourth quarter of 2019:

 

Sustained mid-single digit sales growth in the fourth quarter, realizing 5.3% net sales growth from the same quarter in the prior year and delivering the 15th consecutive quarter of net sales growth.

 

 

Made significant progress on implementation of Project One Team initiatives, continuing to support the expected realization of a run-rate of over $20.0 million in annual cost savings by April 20, 2021.

 

 

Continued to make reductions to working capital, realizing a significant improvement over the fourth quarter of 2018, despite sustaining net sales growth and the acquisition of Martin’s in early 2019. Working capital improvements were driven by reductions in inventory levels of over $45 million, excluding the acquisition.

 

 

Ceased production within the Fresh Kitchen during the fourth quarter of fiscal 2019 and entered into an agreement to sell the facility and related equipment with an expected closing date late in the first quarter of fiscal 2020.  

 

Outlook

For the 53-week fiscal year ending January 2, 2021, the Company anticipates low-single digit percentage sales growth. On a 52-week basis, the Company expects the Food Distribution segment will continue to achieve mid-single digit sales growth driven by existing customers and new business, partially offset by attrition in the independent retail base and the closure of the Fresh Kitchen operations. The Company expects positive Retail segment comparable sales for fiscal 2020 to range from 0.1% to 0.7%. In the Military Distribution segment, the Company expects a continued decline in the DeCA comparable sales trend, partially offset by growth in DeCA private brands, resulting in a mid-single digit percentage sales decline. The Company will also benefit from an additional week of sales compared to the 52-week year ended December 28, 2019, which will be reflected in the Company’s fourth quarter fiscal 2020 results.

The Company is also initiating fiscal 2020 adjusted EBITDA guidance of $180 million to $190 million, compared to fiscal 2019’s adjusted EBITDA(2) of $177.9 million, consistent with the Company’s projected increases in operating earnings.

4


 

For fiscal year 2020, the Company anticipates adjusted earnings per share from continuing operations(4) of approximately $1.12 to $1.20, excluding restructuring charges, merger/acquisition and integration expenses and other adjusted items totaling $7.5 million to $9.0 million before taxes, as detailed in Table 7. The favorable contributions from initiatives associated with Project One Team are expected to be partially offset by the increase in costs to achieve normalized incentive compensation levels. The Company anticipates that reported earnings from continuing operations will be in the range of approximately $0.93 to $1.04 per diluted share, compared to earnings from continuing operations of $0.16 per diluted share in fiscal 2019. The anticipated adjusted and reported earnings per share from continuing operations include approximately $0.02 in benefits from the 53rd week in fiscal 2020 as compared to 52-weeks in fiscal 2019.

The Company’s guidance reflects an effective tax rate of 23.5% to 24.5% for fiscal year 2020. The Company expects capital expenditures for fiscal year 2020 to be in the range of $80.0 million to $90.0 million, including the $12 million in 2019 capital expenditure accruals mentioned previously, with depreciation and amortization of $88.0 million to $94.0 million. Interest expense is expected to range from $27.0 million to $28.0 million in fiscal 2020.

With the low volume post-Easter week moving into fiscal 2020’s first quarter, the Company expects Retail comparable sales to be approximately flat. Adjusted diluted earnings per share from continuing operations for the first quarter of fiscal 2020 are expected to be slightly above the first quarter of fiscal 2019.  

The Board of Directors has continued a comprehensive process to identify the Company’s next Chief Executive Officer and has made progress in the search over the last quarter.  

Conference Call

A telephone conference call to discuss the Company’s fourth quarter 2019 financial results is scheduled for Thursday, February 20, 2020 at 8:00 a.m. ET. A live webcast of this conference call will be available on the Company’s website, www.spartannash.com/webcasts. Simply click on “For Investors” and follow the links to the live webcast. The webcast will remain available for replay on the Company’s website for approximately ten days.

About SpartanNash

SpartanNash (Nasdaq: SPTN) is a Fortune 400 company whose core businesses include distributing grocery products to a diverse group of independent and chain retailers, its corporate-owned retail stores and U.S. military commissaries and exchanges; as well as premier fresh produce distribution and fresh food processing. SpartanNash serves customer locations in all 50 states and the District of Columbia, Europe, Cuba, Puerto Rico, Honduras, Bahrain, Djibouti and Egypt. SpartanNash currently operates 155 supermarkets, primarily under the banners of Family Fare, Martin’s Super Markets, D&W Fresh Market, VG’s Grocery, and Dan’s Supermarket. Through its MDV military division, SpartanNash is a leading distributor of grocery products to U.S. military commissaries.

5


 

Forward-Looking Statements

This press release contains “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These include statements preceded by, followed by or that otherwise include the words “outlook,” “believe,” “anticipates,” “continue,” “expects,” “guidance,” “trend,” “on track,” “encouraged” or “plan” or similar expressions. The statements in the “Outlook” section of this press release are inherently forward looking. Forward-looking statements relating to expectations about future results or events are based upon information available to SpartanNash as of today's date, and are not guarantees of the future performance of the Company, and actual results may vary materially from the results and expectations discussed. Additional risks and uncertainties include, but are not limited to, the Company's ability to compete in the highly competitive grocery distribution, retail grocery, and military distribution industries. Additional information concerning these and other risks is contained in SpartanNash’s most recently filed Annual Report on Form 10-K, recent Current Reports on Form 8-K and other SEC filings. All subsequent written and oral forward-looking statements concerning SpartanNash, or other matters and attributable to SpartanNash or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above. SpartanNash does not undertake any obligation to publicly update any of these forward-looking statements to reflect events or circumstances that may arise after the date hereof.

(1) A reconciliation of operating earnings to adjusted operating earnings, a non-GAAP financial measure, is provided below.

(2) A reconciliation of net earnings to Adjusted EBITDA, a non-GAAP financial measure, is provided below.

(3) A reconciliation of earnings from continuing operations to adjusted earnings from continuing operations, a non-GAAP financial measure, is provided below.

(4) A reconciliation of projected earnings per share from continuing operations to adjusted earnings per share from continuing operations, a non-GAAP financial measure, is provided below.

(5) A reconciliation of net cash provided by operating activities to free cash flow, a non-GAAP financial measure, is provided below.

(6) A reconciliation of long-term debt and finance lease obligations to net long-term debt, a non-GAAP financial measure, is provided below.

 

Investor Contacts:

Mark Shamber

Chief Financial Officer and Executive Vice President

(616) 878-8023

 

Katie Turner

Partner, ICR

(646) 277-1228

 

 

 

 

Media Contact:  

Meredith Gremel

Vice President Corporate Affairs and Communications

(616) 878-2830

– More –

6


 

 

 

 

 

SPARTANNASH COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

12 Weeks Ended

 

 

52 Weeks Ended

 

 

 

December 28,

 

 

December 29,

 

 

December 28,

 

 

December 29,

 

 

(In thousands, except per share amounts)

2019

 

 

2018

 

 

2019

 

 

2018

 

 

Net sales

$

 

1,997,953

 

 

$

 

1,896,796

 

 

$

 

8,536,065

 

 

$

 

8,064,552

 

 

Cost of sales

 

 

1,711,220

 

 

 

 

1,651,406

 

 

 

 

7,292,235

 

 

 

 

6,954,146

 

 

Gross profit

 

 

286,733

 

 

 

 

245,390

 

 

 

 

1,243,830

 

 

 

 

1,110,406

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

272,241

 

 

 

 

223,567

 

 

 

 

1,172,401

 

 

 

 

997,411

 

 

Merger/acquisition and integration

 

 

73

 

 

 

 

1,406

 

 

 

 

1,437

 

 

 

 

4,937

 

 

Restructuring, asset impairment and other charges

 

 

2,835

 

 

 

 

32,277

 

 

 

 

13,050

 

 

 

 

37,546

 

 

Total operating expenses

 

 

275,149

 

 

 

 

257,250

 

 

 

 

1,186,888

 

 

 

 

1,039,894

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating earnings (loss)

 

 

11,584

 

 

 

 

(11,860

)

 

 

 

56,942

 

 

 

 

70,512

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expenses and (income)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

6,596

 

 

 

 

7,655

 

 

 

 

34,548

 

 

 

 

30,483

 

 

Loss on debt extinguishment

 

 

 

 

 

 

 

 

 

 

329

 

 

 

 

 

 

Postretirement benefit expense

 

 

126

 

 

 

 

179

 

 

 

 

19,803

 

 

 

 

159

 

 

Other, net

 

 

(242

)

 

 

 

(193

)

 

 

 

(1,313

)

 

 

 

(828

)

 

Total other expenses, net

 

 

6,480

 

 

 

 

7,641

 

 

 

 

53,367

 

 

 

 

29,814

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) before income taxes and discontinued operations

 

 

5,104

 

 

 

 

(19,501

)

 

 

 

3,575

 

 

 

 

40,698

 

 

Income tax (benefit) expense

 

 

(369

)

 

 

 

(5,474

)

 

 

 

(2,342

)

 

 

 

6,907

 

 

Earnings (loss) from continuing operations

 

 

5,473

 

 

 

 

(14,027

)

 

 

 

5,917

 

 

 

 

33,791

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) earnings from discontinued operations, net of taxes

 

 

(49

)

 

 

 

19

 

 

 

 

(175

)

 

 

 

(219

)

 

Net earnings (loss)

$

 

5,424

 

 

$

 

(14,008

)

 

$

 

5,742

 

 

$

 

33,572

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) from continuing operations

$

 

0.15

 

 

$

 

(0.39

)

 

$

 

0.16

 

 

$

 

0.94

 

 

Loss from discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(0.01

)

 

Net earnings (loss)

$

 

0.15

 

 

$

 

(0.39

)

 

$

 

0.16

 

 

$

 

0.93

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) from continuing operations

$

 

0.15

 

 

$

 

(0.39

)

 

$

 

0.16

 

 

$

 

0.94

 

 

Loss from discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(0.01

)

 

Net earnings (loss)

$

 

0.15

 

 

$

 

(0.39

)

 

$

 

0.16

 

 

$

 

0.93

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

36,351

 

 

 

 

35,943

 

 

 

 

36,271

 

 

 

 

36,012

 

 

Diluted

 

 

36,351

 

 

 

 

35,943

 

 

 

 

36,271

 

 

 

 

36,022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7


 

SPARTANNASH COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

December 28,

 

 

December 29,

 

(In thousands)

2019

 

 

2018

 

Assets

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

 

24,172

 

 

$

 

18,585

 

Accounts and notes receivable, net

 

 

345,320

 

 

 

 

346,260

 

Inventories, net

 

 

537,212

 

 

 

 

553,799

 

Prepaid expenses and other current assets

 

 

58,775

 

 

 

 

73,798

 

Property and equipment held for sale

 

 

31,203

 

 

 

 

8,654

 

Total current assets

 

 

996,682

 

 

 

 

1,001,096

 

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

615,816

 

 

 

 

579,060

 

Goodwill

 

 

181,035

 

 

 

 

178,648

 

Intangible assets, net

 

 

130,434

 

 

 

 

128,926

 

Operating lease assets

 

 

268,982

 

 

 

 

 

Other assets, net

 

 

82,660

 

 

 

 

84,182

 

 

 

 

 

 

 

 

 

 

 

Total assets

$

 

2,275,609

 

 

$

 

1,971,912

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

Accounts payable

$

 

405,370

 

 

$

 

357,802

 

Accrued payroll and benefits

 

 

59,680

 

 

 

 

57,180

 

Other accrued expenses

 

 

51,295

 

 

 

 

43,206

 

Current portion of operating lease liabilities

 

 

42,440

 

 

 

 

 

Current portion of long-term debt and finance lease liabilities

 

 

6,349

 

 

 

 

18,263

 

Total current liabilities

 

 

565,134

 

 

 

 

476,451

 

 

 

 

 

 

 

 

 

 

 

Long-term liabilities

 

 

 

 

 

 

 

 

 

Deferred income taxes

 

 

43,111

 

 

 

 

49,254

 

Operating lease liabilities

 

 

267,350

 

 

 

 

 

Other long-term liabilities

 

 

30,272

 

 

 

 

50,463

 

Long-term debt and finance lease liabilities

 

 

682,204

 

 

 

 

679,797

 

Total long-term liabilities

 

 

1,022,937

 

 

 

 

779,514

 

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

 

 

 

Common stock, voting, no par value; 100,000 shares

     authorized; 36,351 and 35,952 shares outstanding

 

 

490,233

 

 

 

 

484,064

 

Preferred stock, no par value, 10,000 shares

     authorized; no shares outstanding

 

 

 

 

 

 

 

Accumulated other comprehensive loss

 

 

(1,600

)

 

 

 

(15,759

)

Retained earnings

 

 

198,905

 

 

 

 

247,642

 

Total shareholders’ equity

 

 

687,538

 

 

 

 

715,947

 

 

 

 

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

$

 

2,275,609

 

 

$

 

1,971,912

 

 

 

 

 

 

 

 

 

 

 

 

 

8


 

SPARTANNASH COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) 

 

 

 

 

 

52 Weeks Ended

 

(In thousands)

 

 

 

December 28, 2019

 

 

December 29, 2018

 

Cash flow activities

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

 

 

$

 

180,192

 

 

$

 

171,658

 

Net cash used in investing activities

 

 

 

 

 

(143,172

)

 

 

 

(64,156

)

Net cash used in financing activities

 

 

 

 

 

(31,219

)

 

 

 

(104,300

)

Net cash used in discontinued operations

 

 

 

 

 

(214

)

 

 

 

(284

)

Net increase in cash and cash equivalents

 

 

 

 

 

5,587

 

 

 

 

2,918

 

Cash and cash equivalents at beginning of the period

 

 

 

 

 

18,585

 

 

 

 

15,667

 

Cash and cash equivalents at end of the period

 

 

 

$

 

24,172

 

 

$

 

18,585

 

 

 

SPARTANNASH COMPANY AND SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA

Table 1: Sales and Operating Earnings by Segment

(Unaudited)

 

 

12 Weeks Ended

 

 

52 Weeks Ended

 

(In thousands)

December 28, 2019

 

 

December 29, 2018

 

 

December 28, 2019

 

 

December 29, 2018

 

Food Distribution Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

 

938,941

 

 

47.0

%

 

$

 

954,354

 

 

50.3

%

 

$

 

3,982,609

 

 

46.7

%

 

$

 

3,991,450

 

 

49.5

%

Operating earnings (loss)

 

 

10,852

 

 

 

 

 

 

 

(14,308

)

 

 

 

 

 

 

47,416

 

 

 

 

 

 

 

48,752

 

 

 

 

Military Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

 

511,010

 

 

25.6

%

 

 

 

513,347

 

 

27.1

%

 

 

 

2,172,107

 

 

25.4

%

 

 

 

2,166,843

 

 

26.9

%

Operating (loss) earnings

 

 

(3,510

)

 

 

 

 

 

 

(473

)

 

 

 

 

 

 

(9,316

)

 

 

 

 

 

 

5,647

 

 

 

 

Retail Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

 

548,002

 

 

27.4

%

 

 

 

429,095

 

 

22.6

%

 

 

 

2,381,349

 

 

27.9

%

 

 

 

1,906,259

 

 

23.6

%

Operating earnings

 

 

4,242

 

 

 

 

 

 

 

2,921

 

 

 

 

 

 

 

18,842

 

 

 

 

 

 

 

16,113

 

 

 

 

Total:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

 

1,997,953

 

 

100.0

%

 

$

 

1,896,796

 

 

100.0

%

 

$

 

8,536,065

 

 

100.0

%

 

$

 

8,064,552

 

 

100.0

%

Operating earnings (loss)

 

 

11,584

 

 

 

 

 

 

 

(11,860

)

 

 

 

 

 

 

56,942

 

 

 

 

 

 

 

70,512

 

 

 

 

Non-GAAP Financial Measures

In addition to reporting financial results in accordance with GAAP, the Company also provides information regarding Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“adjusted EBITDA”), adjusted operating earnings, adjusted earnings from continuing operations, total net long-term debt, free cash flow and projected adjusted earnings per diluted share from continuing operations. These are non-GAAP financial measures, as defined below, and are used by management to allocate resources, assess performance against its peers and evaluate overall performance. The Company believes these measures provide useful information for both management and its investors. The Company believes these non-GAAP measures are useful to investors because they provide additional understanding of the trends and special circumstances that affect its business. These measures provide useful supplemental information that helps investors to establish a basis for expected performance and the ability to evaluate actual results against that expectation. The measures, when considered in connection with GAAP results, can be used to assess the overall performance of the Company as well as assess the Company’s performance against its peers. These measures are also used as a basis for certain compensation programs sponsored by the Company. In addition, securities analysts, fund managers and other shareholders and stakeholders that communicate with the Company request its financial results in these adjusted formats.

9


 

Current year adjusted operating earnings, adjusted earnings from continuing operations, and adjusted EBITDA exclude “Fresh Kitchen operating losses” subsequent to the decision to exit these operations at the beginning of the third quarter, costs associated with organizational realignment, which include significant changes to the Company’s management team, and fees paid to a third-party advisory firm associated with Project One Team, the Company’s initiative to drive growth while increasing efficiency and reducing costs. Pension termination costs, primarily related to non-operating settlement expense associated with the distribution of pension assets, are excluded from adjusted earnings from continuing operations, and to a lesser extent adjusted operating earnings. Prior year  adjusted operating earnings, adjusted earnings from continuing operations, and adjusted EBITDA exclude start-up costs associated with the first year of Fresh Kitchen operations, which concluded during the first quarter of 2018. These items are considered “non-operational” or “non-core” in nature.

 

Table 2: Reconciliation of Net Earnings (Loss) to Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization

(Adjusted EBITDA)

(A Non-GAAP Financial Measure)

(Unaudited)  

 

12 Weeks Ended

 

 

52 Weeks Ended

 

(In thousands)

December 28, 2019

 

 

December 29, 2018

 

 

December 28, 2019

 

 

December 29, 2018

 

Net earnings (loss)

$

 

5,424

 

 

$

 

(14,008

)

 

$

 

5,742

 

 

$

 

33,572

 

Loss (earnings) from discontinued operations, net of tax

 

 

49

 

 

 

 

(19

)

 

 

 

175

 

 

 

 

219

 

Income tax (benefit) expense

 

 

(369

)

 

 

 

(5,474

)

 

 

 

(2,342

)

 

 

 

6,907

 

Other expenses, net

 

 

6,480

 

 

 

 

7,641

 

 

 

 

53,367

 

 

 

 

29,814

 

Operating earnings (loss)

 

 

11,584

 

 

 

 

(11,860

)

 

 

 

56,942

 

 

 

 

70,512

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIFO expense

 

 

2,131

 

 

 

 

2,252

 

 

 

 

5,892

 

 

 

 

4,601

 

Depreciation and amortization

 

 

20,353

 

 

 

 

19,362

 

 

 

 

87,866

 

 

 

 

82,634

 

Merger/acquisition and integration

 

 

73

 

 

 

 

1,406

 

 

 

 

1,437

 

 

 

 

4,937

 

Restructuring, asset impairment and other charges

 

 

2,835

 

 

 

 

32,277

 

 

 

 

13,050

 

 

 

 

37,546

 

Fresh Kitchen start-up costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,366

 

Fresh Kitchen operating losses

 

 

690

 

 

 

 

 

 

 

 

2,894

 

 

 

 

 

Expenses associated with tax planning strategies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

225

 

Stock-based compensation

 

 

578

 

 

 

 

606

 

 

 

 

7,313

 

 

 

 

7,646

 

Non-cash rent

 

 

(1,080

)

 

 

 

(144

)

 

 

 

(5,622

)

 

 

 

(962

)

Costs associated with Project One Team

 

 

 

 

 

 

 

 

 

 

5,428

 

 

 

 

 

Organizational realignment costs

 

 

 

 

 

 

 

 

 

 

1,812

 

 

 

 

 

Other non-cash charges

 

 

223

 

 

 

 

357

 

 

 

 

933

 

 

 

 

916

 

Adjusted EBITDA

$

 

37,387

 

 

$

 

44,256

 

 

$

 

177,945

 

 

$

 

209,421

 

 

10


 

Table 2: Reconciliation of Net Earnings (Loss) to Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization, continued

(Adjusted EBITDA)

(A Non-GAAP Financial Measure)

(Unaudited)

 

12 Weeks Ended

 

 

52 Weeks Ended

 

(In thousands)

December 28, 2019

 

 

December 29, 2018

 

 

December 28, 2019

 

 

December 29, 2018

 

Food Distribution:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating earnings (loss)

$

 

10,852

 

 

$

 

(14,308

)

 

$

 

47,416

 

 

$

 

48,752

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIFO expense

 

 

1,163

 

 

 

 

1,341

 

 

 

 

3,032

 

 

 

 

2,270

 

Depreciation and amortization

 

 

7,493

 

 

 

 

7,675

 

 

 

 

32,861

 

 

 

 

31,854

 

Merger/acquisition and integration

 

 

8

 

 

 

 

162

 

 

 

 

(122

)

 

 

 

3,581

 

Restructuring, asset impairment and other charges

 

 

4,120

 

 

 

 

31,764

 

 

 

 

14,844

 

 

 

 

33,056

 

Fresh Kitchen start-up costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,366

 

Fresh Kitchen operating losses

 

 

690

 

 

 

 

 

 

 

 

2,894

 

 

 

 

 

Expenses associated with tax planning strategies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

116

 

Stock-based compensation

 

 

284

 

 

 

 

308

 

 

 

 

3,603

 

 

 

 

3,626

 

Non-cash rent

 

 

129

 

 

 

 

41

 

 

 

 

482

 

 

 

 

157

 

Costs associated with Project One Team

 

 

 

 

 

 

 

 

 

 

2,877

 

 

 

 

 

Organizational realignment costs

 

 

 

 

 

 

 

 

 

 

960

 

 

 

 

 

Other non-cash charges (gains)

 

 

3

 

 

 

 

218

 

 

 

 

394

 

 

 

 

567

 

Adjusted EBITDA

$

 

24,742

 

 

$

 

27,201

 

 

$

 

109,241

 

 

$

 

125,345

 

Military:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating (loss) earnings

$

 

(3,510

)

 

$

 

(473

)

 

$

 

(9,316

)

 

$

 

5,647

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIFO expense

 

 

755

 

 

 

 

686

 

 

 

 

1,789

 

 

 

 

1,230

 

Depreciation and amortization

 

 

2,737

 

 

 

 

2,711

 

 

 

 

11,834

 

 

 

 

11,968

 

Merger/acquisition and integration

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

 

Restructuring gains

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(801

)

Expenses associated with tax planning strategies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

28

 

Stock-based compensation

 

 

89

 

 

 

 

63

 

 

 

 

1,180

 

 

 

 

1,244

 

Non-cash rent

 

 

(91

)

 

 

 

(74

)

 

 

 

(374

)

 

 

 

(323

)

Costs associated with Project One Team

 

 

 

 

 

 

 

 

 

 

706

 

 

 

 

 

Organizational realignment costs

 

 

 

 

 

 

 

 

 

 

236

 

 

 

 

 

Other non-cash charges (gains)

 

 

2

 

 

 

 

21

 

 

 

 

(89

)

 

 

 

50

 

Adjusted EBITDA

$

 

(18

)

 

$

 

2,934

 

 

$

 

5,966

 

 

$

 

19,047

 

Retail:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating earnings

$

 

4,242

 

 

$

 

2,921

 

 

$

 

18,842

 

 

$

 

16,113

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIFO expense

 

 

213

 

 

 

 

225

 

 

 

 

1,071

 

 

 

 

1,101

 

Depreciation and amortization

 

 

10,123

 

 

 

 

8,976

 

 

 

 

43,171

 

 

 

 

38,812

 

Merger/acquisition and integration

 

 

65

 

 

 

 

1,244

 

 

 

 

1,559

 

 

 

 

1,352

 

Restructuring (gains) charges and asset impairment

 

 

(1,285

)

 

 

 

513

 

 

 

 

(1,794

)

 

 

 

5,291

 

Expenses associated with tax planning strategies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

81

 

Stock-based compensation

 

 

205

 

 

 

 

235

 

 

 

 

2,530

 

 

 

 

2,776

 

Non-cash rent

 

 

(1,118

)

 

 

 

(111

)

 

 

 

(5,730

)

 

 

 

(796

)

Costs associated with Project One Team

 

 

 

 

 

 

 

 

 

 

1,845

 

 

 

 

 

Organizational realignment costs

 

 

 

 

 

 

 

 

 

 

616

 

 

 

 

 

Other non-cash charges

 

 

218

 

 

 

 

118

 

 

 

 

628

 

 

 

 

299

 

Adjusted EBITDA

$

 

12,663

 

 

$

 

14,121

 

 

$

 

62,738

 

 

$

 

65,029

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes: Adjusted EBITDA is a non-GAAP operating financial measure that the Company defines as net earnings plus interest, discontinued operations, depreciation and amortization, and other non-cash items including deferred (stock) compensation, the LIFO provision, as well as adjustments for items that do not reflect the ongoing operating activities of the Company and costs associated with the closing of operational locations.

11


 

Adjusted EBITDA and adjusted EBITDA by segment are not measures of performance under accounting principles generally accepted in the United States of America and should not be considered as a substitute for net earnings, cash flows from operating activities and other income or cash flow statement data. The Company’s definitions of adjusted EBITDA and adjusted EBITDA by segment may not be identical to similarly titled measures reported by other companies.

12


 

Table 3: Reconciliation of Operating Earnings (Loss) to Adjusted Operating Earnings (Loss)

(A Non-GAAP Financial Measure)

(Unaudited)

 

12 Weeks Ended

 

 

52 Weeks Ended

 

(In thousands)

December 28, 2019

 

 

December 29, 2018

 

 

December 28, 2019

 

 

December 29, 2018

 

Operating earnings (loss)

$

 

11,584

 

 

$

 

(11,860

)

 

$

 

56,942

 

 

$

 

70,512

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger/acquisition and integration

 

 

73

 

 

 

 

1,406

 

 

 

 

1,437

 

 

 

 

4,937

 

Restructuring, asset impairment and other charges

 

 

2,835

 

 

 

 

32,277

 

 

 

 

13,050

 

 

 

 

37,546

 

Fresh Kitchen start-up costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,366

 

Fresh Kitchen operating losses

 

 

690

 

 

 

 

 

 

 

 

2,894

 

 

 

 

 

Expenses associated with tax planning strategies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

225

 

Costs associated with Project One Team

 

 

 

 

 

 

 

 

 

 

5,428

 

 

 

 

 

Organizational realignment costs

 

 

 

 

 

 

 

 

 

 

1,812

 

 

 

 

 

Pension termination

 

 

11

 

 

 

 

 

 

 

 

59

 

 

 

 

 

Severance associated with cost reduction initiatives

 

 

25

 

 

 

 

355

 

 

 

 

509

 

 

 

 

1,023

 

Adjusted operating earnings

$

 

15,218

 

 

$

 

22,178

 

 

$

 

82,131

 

 

$

 

115,609

 

Reconciliation of operating earnings (loss) to adjusted operating earnings (loss) by segment:

 

Food Distribution:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating earnings (loss)

$

 

10,852

 

 

$

 

(14,308

)

 

$

 

47,416

 

 

$

 

48,752

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger/acquisition and integration

 

 

8

 

 

 

 

162

 

 

 

 

(122

)

 

 

 

3,581

 

Restructuring, asset impairment and other charges

 

 

4,120

 

 

 

 

31,764

 

 

 

 

14,844

 

 

 

 

33,056

 

Fresh Kitchen start-up costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,366

 

Fresh Kitchen operating losses

 

 

690

 

 

 

 

 

 

 

 

2,894

 

 

 

 

 

Expenses associated with tax planning strategies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

116

 

Costs associated with Project One Team

 

 

 

 

 

 

 

 

 

 

2,877

 

 

 

 

 

Organizational realignment costs

 

 

 

 

 

 

 

 

 

 

960

 

 

 

 

 

Pension termination

 

 

6

 

 

 

 

 

 

 

 

32

 

 

 

 

 

Severance associated with cost reduction initiatives

 

 

21

 

 

 

 

245

 

 

 

 

413

 

 

 

 

763

 

Adjusted operating earnings

$

 

15,697

 

 

$

 

17,863

 

 

$

 

69,314

 

 

$

 

87,634

 

Military:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating (loss) earnings

$

 

(3,510

)

 

$

 

(473

)

 

$

 

(9,316

)

 

$

 

5,647

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger/acquisition and integration

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

 

Restructuring gains

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(801

)

Expenses associated with tax planning strategies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

28

 

Costs associated with Project One Team

 

 

 

 

 

 

 

 

 

 

706

 

 

 

 

 

Organizational realignment costs

 

 

 

 

 

 

 

 

 

 

236

 

 

 

 

 

Pension termination

 

 

1

 

 

 

 

 

 

 

 

6

 

 

 

 

 

Severance associated with cost reduction initiatives

 

 

1

 

 

 

 

38

 

 

 

 

10

 

 

 

 

107

 

Adjusted operating (loss) earnings

$

 

(3,508

)

 

$

 

(435

)

 

$

 

(8,358

)

 

$

 

4,985

 

Retail:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating earnings

$

 

4,242

 

 

$

 

2,921

 

 

$

 

18,842

 

 

$

 

16,113

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger/acquisition and integration

 

 

65

 

 

 

 

1,244

 

 

 

 

1,559

 

 

 

 

1,352

 

Restructuring (gains) charges and asset impairment

 

 

(1,285

)

 

 

 

513

 

 

 

 

(1,794

)

 

 

 

5,291

 

Expenses associated with tax planning strategies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

81

 

Costs associated with Project One Team

 

 

 

 

 

 

 

 

 

 

1,845

 

 

 

 

 

Organizational realignment costs

 

 

 

 

 

 

 

 

 

 

616

 

 

 

 

 

Pension termination

 

 

4

 

 

 

 

 

 

 

 

21

 

 

 

 

 

Severance associated with cost reduction initiatives

 

 

3

 

 

 

 

72

 

 

 

 

86

 

 

 

 

153

 

Adjusted operating earnings

$

 

3,029

 

 

$

 

4,750

 

 

$

 

21,175

 

 

$

 

22,990

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13


 

Notes: Adjusted operating earnings is a non-GAAP operating financial measure that the Company defines as operating earnings plus or minus adjustments for items that do not reflect the ongoing operating activities of the Company and costs associated with the closing of operational locations.

Adjusted operating earnings is not a measure of performance under accounting principles generally accepted in the United States of America and should not be considered as a substitute for operating earnings, cash flows from operating activities and other income or cash flow statement data. The Company’s definition of adjusted operating earnings may not be identical to similarly titled measures reported by other companies.

Table 4: Reconciliation of Earnings (Loss) from Continuing Operations to

Adjusted Earnings from Continuing Operations

(A Non-GAAP Financial Measure)

(Unaudited)

 

 

12 Weeks Ended

 

 

 

December 28, 2019

 

 

December 29, 2018

 

 

 

 

 

 

per diluted

 

 

 

 

 

per diluted

 

 

(In thousands, except per share amounts)

Earnings

 

 

share

 

 

Earnings

 

 

share

 

 

Earnings (loss) from continuing operations

$

 

5,473

 

 

$

 

0.15

 

 

$

 

(14,027

)

 

$

 

(0.39

)

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger/acquisition and integration

 

 

73

 

 

 

 

 

 

 

 

 

1,406

 

 

 

 

 

 

 

Restructuring, asset impairment and other charges

 

 

2,835

 

 

 

 

 

 

 

 

 

32,277

 

 

 

 

 

 

 

Fresh Kitchen operating losses

 

 

690

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Severance associated with cost reduction initiatives

 

 

25

 

 

 

 

 

 

 

 

 

355

 

 

 

 

 

 

 

Pension termination

 

 

47

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total adjustments

 

 

3,670

 

 

 

 

 

 

 

 

 

34,038

 

 

 

 

 

 

 

Income tax effect on adjustments (a)

 

 

(856

)

 

 

 

 

 

 

 

 

(8,575

)

 

 

 

 

 

 

Total adjustments, net of taxes

 

 

2,814

 

 

 

 

0.08

 

 

 

 

25,463

 

 

 

 

0.71

 

 

Adjusted earnings from continuing operations

$

 

8,287

 

 

$

 

0.23

 

 

$

 

11,436

 

 

$

 

0.32

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

52 Weeks Ended

 

 

 

December 28, 2019

 

 

December 29, 2018

 

 

 

 

 

 

per diluted

 

 

 

 

 

per diluted

 

 

(In thousands, except per share amounts)

Earnings

 

 

share

 

 

Earnings

 

 

share

 

 

Earnings from continuing operations

$

 

5,917

 

 

$

 

0.16

 

 

$

 

33,791

 

 

$

 

0.94

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger/acquisition and integration

 

 

1,437

 

 

 

 

 

 

 

 

 

4,937

 

 

 

 

 

 

 

Restructuring, asset impairment and other charges

 

 

13,050

 

 

 

 

 

 

 

 

 

37,546

 

 

 

 

 

 

 

Fresh Kitchen start-up costs

 

 

 

 

 

 

 

 

 

 

 

1,366

 

 

 

 

 

 

 

Fresh Kitchen operating losses

 

 

2,894

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses associated with tax planning strategies

 

 

 

 

 

 

 

 

 

 

 

225

 

 

 

 

 

 

 

Costs associated with Project One Team

 

 

5,428

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Organizational realignment costs

 

 

1,812

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss on debt extinguishment

 

 

329

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Severance associated with cost reduction initiatives

 

 

509

 

 

 

 

 

 

 

 

 

1,023

 

 

 

 

 

 

 

Pension termination

 

 

19,557

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total adjustments

 

 

45,016

 

 

 

 

 

 

 

 

 

45,097

 

 

 

 

 

 

 

Income tax effect on adjustments (a)

 

 

(11,022

)

 

 

 

 

 

 

 

 

(11,139

)

 

 

 

 

 

 

Impact of Tax Cuts and Jobs Act (b)

 

 

 

 

 

 

 

 

 

 

 

(494

)

 

 

 

 

 

 

Total adjustments, net of taxes

 

 

33,994

 

 

 

 

0.94

 

 

 

 

33,464

 

 

 

 

0.93

 

 

Adjusted earnings from continuing operations

$

 

39,911

 

 

$

 

1.10

 

 

$

 

67,255

 

 

$

 

1.87

 

 

14


 

 

 

(a)

The income tax effect on adjustments is computed by applying the applicable tax rate to the adjustments.

 

(b)

Includes a $1.1 million tax benefit attributable to tax planning strategies related to the Tax Cuts and Jobs Act in 2018.

Notes: Adjusted earnings from continuing operations is a non-GAAP operating financial measure that the Company defines as earnings from continuing operations plus or minus adjustments for items that do not reflect the ongoing operating activities of the Company and costs associated with the closing of operational locations.

Adjusted earnings from continuing operations is not a measure of performance under accounting principles generally accepted in the United States of America and should not be considered as a substitute for net earnings, cash flows from operating activities and other income or cash flow statement data. The Company’s definition of adjusted earnings from continuing operations may not be identical to similarly titled measures reported by other companies.

Table 5: Reconciliation of Long-Term Debt and Finance Lease Obligations to Total Net Long-Term Debt

(A Non-GAAP Financial Measure)

(Unaudited)

 

 

December 28,

 

 

December 29,

 

(In thousands)

2019

 

 

2018

 

Current portion of long-term debt and finance lease liabilities

$

 

6,349

 

 

$

 

18,263

 

Long-term debt and finance lease liabilities

 

 

682,204

 

 

 

 

679,797

 

Total debt

 

 

688,553

 

 

 

 

698,060

 

Cash and cash equivalents

 

 

(24,172

)

 

 

 

(18,585

)

Total net long-term debt

$

 

664,381

 

 

$

 

679,475

 

Notes: Total net long-term debt is a non-GAAP financial measure that is defined as long-term debt and finance lease obligations plus current maturities of long-term debt and finance lease obligations less cash and cash equivalents. The Company believes both management and its investors find the information useful because it reflects the amount of long-term debt obligations that are not covered by available cash and temporary investments. Total net long-term debt is not a substitute for GAAP financial measures and may differ from similarly titled measures of other companies.

Table 6: Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow

(A Non-GAAP Financial Measure)

(Unaudited)

 

 

 

 

 

52 Weeks Ended

 

(In thousands)

 

 

 

December 28, 2019

 

 

December 29, 2018

 

Net cash provided by operating activities

 

 

 

$

 

180,192

 

 

$

 

171,658

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

 

 

 

74,815

 

 

 

 

71,495

 

Free cash flow

 

 

 

$

 

105,377

 

 

$

 

100,163

 

15


 

 

Notes: Free cash flow is a non-GAAP financial measure calculated by subtracting capital expenditures from cash flows provided by operating activities, the most directly comparable GAAP measure. The Company believes it is a useful indicator of liquidity that provides information to both management and investors about the amount of cash generated from operations that, after capital expenditures, can be used for strategic business objectives, including the repayment of long-term debt. Free cash flow is not a substitute for GAAP financial measures and may differ from similarly titled measures of other companies.

 

Table 7: Reconciliation of Projected Earnings per Diluted Share from Continuing Operations to

Projected Adjusted Earnings per Diluted Share from Continuing Operations

(A Non-GAAP Financial Measure)

(Unaudited)

 

 

53 Weeks Ending

January 2, 2021

 

 

Low

 

 

High

 

Earnings from continuing operations

$

 

0.93

 

 

$

 

1.04

 

Adjustments, net of taxes:

 

 

 

 

 

 

 

 

 

   Merger/acquisition and integration expenses

 

 

0.03

 

 

 

 

0.02

 

   Costs associated with Project One Team

 

 

0.01

 

 

 

 

0.01

 

   Exit of Fresh Kitchen

 

 

0.01

 

 

 

 

0.01

 

   Pension termination

 

 

(0.01

)

 

 

 

(0.02

)

   Restructuring and asset impairment

 

 

0.06

 

 

 

 

0.05

 

   Severance associated with cost reduction initiatives

 

 

0.09

 

 

 

 

0.09

 

Adjusted earnings from continuing operations

$

 

1.12

 

 

$

 

1.20

 

 

16