SPTN
$19.76
Spartannash
$.08
.41%
Earnings Details
Quarter December 2020
Wednesday, February 24, 2021 4:05:00 PM
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Summary

Spartannash Misses

Spartannash (SPTN) reported Quarter December 2020 earnings of $0.43 per share on revenue of $2.2 billion. The consensus earnings estimate was $0.46 per share on revenue of $2.2 billion. The Earnings Whisper number was $0.56 per share. Revenue grew 12.5% on a year-over-year basis.

The company said it expects 2021 earnings of $1.48 to $1.67 per share on revenue of $8.80 billion to $9.00 billion. The current consensus earnings estimate is $2.17 per share on revenue of $8.85 billion for the year ending December 31, 2021.

SpartanNash Company is a regional grocery distributor and grocery retailer, operating in Michigan and Indiana. Its stores include Econofoods, Family Fare, Family Fresh Market, Sun Foods, and among others.

Results
Reported Earnings
$0.43
Earnings Whisper
$0.56
Consensus Estimate
$0.46
Reported Revenue
$2.25 Bil
Revenue Estimate
$2.22 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

SpartanNash Announces Fourth Quarter and Fiscal 2020 Financial Results

Reports Fourth Quarter Retail Comparable Store Sales of 8.7%

Generates EPS of $0.34; Adjusted EPS of $0.43

Achieves Adjusted EBITDA of $48.9 million versus $37.4 million in Prior Year Quarter

Provides Fiscal Year 2021 Outlook

GRAND RAPIDS, Mich.--(BUSINESS WIRE)--SpartanNash Company (the “Company”) (Nasdaq: SPTN) today reported financial results for its 13-week fourth quarter and 53-week fiscal year ended January 2, 2021. The Company’s fourth quarter and current fiscal year include an additional week of operations compared to the 12- and 52-week prior year quarter and fiscal year, respectively.

Fourth Quarter and Fiscal 2020 Highlights

  • Net sales growth of 12.5% to $2.25 billion for the quarter from $2.00 billion in the prior year quarter, and 9.5% to $9.35 billion for the fiscal year compared to $8.54 billion in the prior fiscal year. The 53rd week accounted for $158.9 million, or 8.0%, of the net sales increase over the prior year quarter.
  • Retail comparable store sales were 8.7% for the fourth quarter and 13.1% for the fiscal year.
  • Quarterly EPS of $0.34 per share, compared to $0.15 per share in the prior year quarter; adjusted EPS of $0.43 per share compared to $0.23 per share in the prior year quarter. Fiscal year EPS of $2.12 per share, compared to $0.16 per share in the prior year; adjusted EPS of $2.53 per share compared to $1.10 per share in the prior year.
  • Adjusted EBITDA(3) increased to $48.9 million from $37.4 million in the prior year quarter. Fiscal year adjusted EBITDA increased to $239.1 million from $177.9 million in the prior year.
  • Net long-term debt(5) decreased by $197.8 million during fiscal 2020 to $466.5 million. Combined with improved profitability, this led to a reduction of the net long-term debt to adjusted EBITDA ratio over from 3.7x to 2.0x.

“Despite the continued challenges presented by COVID-19 in the fourth quarter, I am proud of our team’s performance. Since the beginning of the pandemic almost one year ago, they have remained dedicated to ensuring customer and associate safety, while providing essential services to our local communities,” said Tony Sarsam, President and Chief Executive Officer. “As we move into 2021, we are renewing our focus on key priorities to best position SpartanNash for continued growth and operational efficiency.”

Consolidated net sales for the fourth quarter increased $249.2 million, or 12.5%, to $2.25 billion from $2.00 billion in the prior year quarter, with the 53rd week contributing $158.9 million of net sales. The remaining increase in net sales was generated through continued growth with existing Food Distribution customers, as well as higher sales attributable to increased consumer demand related to COVID-19 in the Company’s Retail and Food Distribution segments, partially offset by the continued impact of domestic base access and commissary shopping restrictions associated with COVID-19 in the Military segment.

Gross profit for the fourth quarter was $338.2 million, or 15.1% of net sales, compared to $286.7 million, or 14.4% of net sales, in the prior year quarter. The improvement in the gross profit rate was driven by improvements in margin rates at all three segments, as discussed further below, as well as an increase in the proportion of Retail and Food Distribution segment sales, which generate higher margin rates than the Military segment. These increases in gross profit rates were partially offset by non-cash warrant expense of $6.5 million associated with the issuance of warrant shares to Amazon early in the fourth quarter, recorded as a reduction of net sales in the Food Distribution segment.

Reported operating expenses for the fourth quarter were $320.8 million, or 14.3% of net sales, compared to $275.1 million, or 13.8% of net sales, in the prior year quarter. The increase in expenses as a rate of sales compared to the prior year quarter was due to increased corporate administrative expenses, including incentive compensation, a higher rate of supply chain expenses in the Food Distribution segment and a greater mix of Retail segment sales which have higher operating expense rates, largely offset by increased leverage of fixed costs in the Retail and Food Distribution segments.

The Company reported operating earnings of $17.4 million compared to $11.6 million in the prior year quarter due to the changes in net sales, gross profit and operating expenses discussed above. Adjusted operating earnings(1) were $22.0 million compared to $15.2 million in the prior year quarter and were adjusted for the items detailed in Table 3.

Interest expense decreased $3.0 million from the prior year quarter due to multiple rate cuts implemented by the Federal Reserve, as well as the Company’s pay down of long-term debt resulting from strong free cash flow(4) during the year.

The Company reported earnings from continuing operations of $12.1 million, or $0.34 per share, compared to $5.5 million, or $0.15 per share in the prior year quarter. The improvement reflects the operating earnings and non-operating expense changes noted above. Adjusted earnings from continuing operations(2) for the fourth quarter were $15.5 million, or $0.43 per diluted share, compared to $8.3 million, or $0.23 per diluted share in the prior year quarter. A reconciliation of reported earnings from continuing operations to adjusted earnings from continuing operations is included at Table 4.

Adjusted EBITDA(3) increased $11.5 million, or 30.7%, to $48.9 million compared to $37.4 million in the prior year quarter due to factors mentioned above.

Please see the financial tables at the end of this press release for a reconciliation of each non-GAAP financial measure to the most directly comparable measure, prepared and presented in accordance with GAAP.

Segment Financial Results

Food Distribution

Net sales for Food Distribution increased $166.7 million, or 17.8%, to $1.11 billion from $0.94 billion in the prior year quarter. The increase was due to sales growth with existing customers, as well as incremental volume associated with increased consumer demand related to COVID-19, partially offset by the impact of the Company’s decision to exit its Fresh Production operations, and the non-cash warrant impact mentioned previously. The 53rd week contributed $76.4 million of net sales.

Reported operating earnings for Food Distribution were $11.0 million compared to $10.9 million in the prior year quarter. The increase in reported operating earnings for Food Distribution was due to increased earnings due to higher sales volume, favorable margin rates, lower asset impairment charges, and cycling prior year losses in the Fresh Production business, largely offset by higher supply chain costs, which were compounded by the effects of the COVID-19 pandemic, non-cash warrant impact and higher corporate administrative expenses. Fourth quarter adjusted operating earnings(1) were $13.1 million compared to $15.7 million in the prior year quarter. Adjusted operating earnings exclude asset impairment and restructuring charges in both years and losses associated with the Fresh Kitchen operations in the fourth quarter of fiscal 2019.

Retail

Net sales for Retail increased $79.4 million, or 14.5%, to $627.4 million from $548.0 million in the prior year quarter primarily due to increased consumer demand, as discussed above. Comparable store sales of 8.7% were partially offset by the impact of lower fuel sales. The Company experienced nearly 180% growth in its eCommerce business, compared to the same quarter in the prior year. The 53rd week contributed $49.1 million of net sales.

Reported operating earnings for Retail were $6.9 million compared to $4.2 million in the prior year quarter. The increase in reported operating earnings was due to the increase in sales volume, improvements in margin rates, including inventory shrink, and improved leverage of store labor. These favorable variances were partially offset by higher incentive compensation due to the improved segment performance. Adjusted operating earnings(1) were $9.4 million compared to $3.0 million in the prior year quarter and exclude merger/acquisition and integration and restructuring charges in the both the current and prior year quarters.

Military

Net sales for Military increased $3.1 million, or 0.6%, to $514.1 million from $511.0 million in the prior year quarter due to incremental net sales of $33.4 million from the 53rd week. In addition to the 53rd week, growth in private label and export sales were more than offset by the impact of domestic base access and commissary shopping restrictions associated with COVID-19, which have led to significant declines in Defense Commissary Agency sales as a whole.

The reported operating loss for Military was $0.5 million compared to $3.5 million in the prior year quarter. The change was driven by improvements in gross margin and supply chain expense rates. The adjusted operating loss(1) in the Military segment was $0.4 million compared to a $3.5 million loss in the prior year.

Fiscal Year 2020 Results

Consolidated net sales for the fiscal year ended January 2, 2021 increased $812.4 million, or 9.5%, to $9.35 billion from $8.54 billion in the prior fiscal year, with the inclusion of the 53rd week contributing $158.9 million to consolidated net sales. The remaining increase in net sales was generated by continued growth with existing Food Distribution customers as well as increased consumer demand associated with the COVID-19 pandemic in the Retail and Food Distribution segments, partially offset by the exit of the Company’s Fresh Production operations and lower comparable sales for the Military segment.

The Company reported earnings from continuing operations for fiscal 2020 of $75.9 million, or $2.12 per diluted share, compared to $5.9 million, or $0.16 per diluted share, in the prior year. The increase was primarily attributable to increased sales volume, improved margin rates, cycling prior year pension termination charges, and tax benefits associated with the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, partially offset by an increase in incentive compensation due to improved overall Company performance, supply chain expense rates, restructuring and asset impairment charges, as well as additional compensation for frontline workers and sanitation measures associated with COVID-19. Adjusted earnings from continuing operations(2) for fiscal 2020 were $90.8 million, or $2.53 per diluted share, compared to $39.9 million, or $1.10 per diluted share, in the prior year. Fiscal 2020 adjusted earnings exclude $14.9 million of net after-tax charges related to restructuring and asset impairments, integration costs, severance, and tax benefits associated with the CARES Act. Fiscal 2019 adjusted earnings from continuing operations exclude $34.0 million of net after-tax charges primarily related to pension termination expense, asset impairment charges, one-time costs associated with Project One Team and losses from the Fresh Kitchen operations subsequent to the decision to exit the business.

Adjusted EBITDA(3) for fiscal 2020 was $239.1 million, or 2.6% of net sales, compared to $177.9 million, or 2.1% of net sales, in fiscal 2019.

Balance Sheet and Cash Flow

Cash flows provided by operating activities for fiscal 2020 were $306.7 million compared to $180.2 million in the prior year, due to increased profitability and reductions in operating assets and liabilities. In 2020, the Company generated $239.4 million in free cash flow(4), compared to $105.4 million in the prior year. As a result of this improved cash generation, the Company was able to reduce its net long-term debt(5) by $197.8 million during fiscal 2020. The reduction in net long-term debt, combined with the Company’s increased profitability, resulted in an improvement in the Company’s net long-term debt to adjusted EBITDA ratio over this period of time from 3.7x to 2.0x.

Capital expenditures and IT capital(6) totaled $78.9 million for fiscal 2020 compared to $74.8 million in the prior year.

For fiscal 2020, the Company declared $27.7 million in quarterly cash dividends equal to $0.1925 per common share. The Company also repurchased 860,752 shares for a total of $10.0 million at an average price of $11.62 per share.

Outlook

“Fiscal 2021 will present a new environment where we expect to see a change in consumer behavior,” continued Tony Sarsam, President and Chief Executive Officer. “While we expect this may create softness in our industry as a whole, we will look to retain our customer base which has grown during the pandemic. We will also shift our focus to prioritize investments into our future. This will include operational spending to invest in our people and processes in connection with our priorities for the coming year. These priorities include sustaining improvements in gross margin and service levels, enhancing the customer experience through our private brand offerings, and improving our associate experience through initiatives related to safety and retention.”

The following table provides the Company’s guidance for 2021:

 

53 Week

 

 

52 Week

 

 

Fiscal 2020

 

 

Fiscal 2021 Guidance

 

 

Actual

 

 

Low

 

 

High

 

Total net sales (millions)

$

 

9,348

 

 

$

 

8,800

 

 

$

 

9,000

 

Adjusted EBITDA(3) (millions)

$

 

239

 

 

$

 

195

 

 

$

 

210

 

Adjusted EPS(7)

$

 

2.53

 

 

$

 

1.65

 

 

$

 

1.80

 

Reported EPS

$

 

2.12

 

 

$

 

1.48

 

 

$

 

1.67

 

Capital expenditures and IT capital(6) (thousands)

$

 

78,932

 

 

$

 

80,000

 

 

$

 

90,000

 

Depreciation and amortization (thousands)

$

 

89,876

 

 

$

 

90,000

 

 

$

 

100,000

 

Interest expense (thousands)

$

 

14,418

 

 

$

 

14,000

 

 

$

 

15,000

 

Income tax rate

 

 

11.1

%

 

 

 

23.0

%

 

 

 

24.5

%

As SpartanNash cycles the impact of the onset of the COVID-19 pandemic in the first quarter of fiscal 2021, the Company currently expects that Retail comparable sales will be negative 7.0% to 9.0% in the first quarter, with fiscal 2021 full year comparable sales of negative 6.0% to 8.0%. Food Distribution sales are expected to decline 1.0% to 3.0% in fiscal 2021, while Military Distribution sales are expected to decline 3.0% to 5.0% in 2021.

Conference Call

A telephone conference call to discuss the Company’s fourth quarter and fiscal 2020 financial results is scheduled for Thursday, February 25, 2021 at 8:00 a.m. ET. A live webcast of this conference call will be available on the Company’s website, www.spartannash.com/webcasts. Simply click on “For Investors” and follow the links to the live webcast. The webcast will remain available for replay on the Company’s website for approximately ten days.

About SpartanNash

SpartanNash (Nasdaq: SPTN) is a Fortune 400 company whose core businesses include distributing grocery products to a diverse group of independent and chain retailers, its corporate-owned retail stores and U.S. military commissaries and exchanges; as well as operating a premier fresh produce distribution network. SpartanNash serves customer locations in all 50 states and the District of Columbia, Europe, Cuba, Puerto Rico, Honduras, Iraq, Kuwait, Bahrain, Qatar and Djibouti. SpartanNash currently operates 154 supermarkets, primarily under the banners of Family Fare, Martin's Super Markets, D&W Fresh Market, VG's Grocery and Dan's Supermarket. Through its MDV military division, SpartanNash is a leading distributor of grocery products to U.S. military commissaries.

Forward-Looking Statements

This press release contains “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These include statements preceded by, followed by or that otherwise include the words “outlook,” “believe,” “anticipates,” “continue,” “expects,” “guidance,” “trend,” “on track,” “encouraged” or “plan” or similar expressions. The statements in the “Outlook” section of this press release are inherently forward looking. Forward-looking statements relating to expectations about future results or events are based upon information available to SpartanNash as of today's date, and are not guarantees of the future performance of the Company, and actual results may vary materially from the results and expectations discussed. Additional risks and uncertainties include, but are not limited to, disruption associated with the COVID-19 pandemic and the Company's ability to compete in the highly competitive grocery distribution, retail grocery, and military distribution industries. Additional information concerning these and other risks is contained in SpartanNash’s most recently filed Annual Report on Form 10-K, recent Current Reports on Form 8-K and other SEC filings. All subsequent written and oral forward-looking statements concerning SpartanNash, or other matters and attributable to SpartanNash or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above. SpartanNash does not undertake any obligation to publicly update any of these forward-looking statements to reflect events or circumstances that may arise after the date hereof.

(1) A reconciliation of operating earnings to adjusted operating earnings, a non-GAAP financial measure, is provided in Table 3 below.
(2) A reconciliation of earnings from continuing operations to adjusted earnings from continuing operations, a non-GAAP financial measure, is provided in Table 4 below.
(3) A reconciliation of net earnings to Adjusted EBITDA, a non-GAAP financial measure, is provided in Table 2 below.
(4) A reconciliation of net cash provided by operating activities to free cash flow, a non-GAAP financial measure, is provided in Table 6 below.
(5) A reconciliation of long-term debt and finance lease obligations to net long-term debt, a non-GAAP financial measure, is provided in Table 5 below.
(6) A reconciliation of purchases of property and equipment to capital expenditures and IT capital, a non-GAAP financial measure, is provided in Table 7 below.
(7)
A reconciliation of projected earnings per share from continuing operations to adjusted earnings per share from continuing operations, a non-GAAP financial measure, is provided in Table 8 below.

SPARTANNASH COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

 

 

13 and 12 Weeks Ended

 

 

53 and 52 Weeks Ended

 

 

 

January 2,

 

 

December 28,

 

 

January 2,

 

 

December 28,

 

 

(In thousands, except per share amounts)

2021

 

 

2019

 

 

2021

 

 

2019

 

 

Net sales

$

 

2,247,112

 

 

$

 

1,997,953

 

 

$

 

9,348,485

 

 

$

 

8,536,065

 

 

Cost of sales

 

 

1,908,910

 

 

 

 

1,711,220

 

 

 

 

7,923,520

 

 

 

 

7,292,235

 

 

Gross profit

 

 

338,202

 

 

 

 

286,733

 

 

 

 

1,424,965

 

 

 

 

1,243,830

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

316,674

 

 

 

 

272,241

 

 

 

 

1,297,740

 

 

 

 

1,172,401

 

 

Merger/acquisition and integration

 

 

179

 

 

 

 

73

 

 

 

 

421

 

 

 

 

1,437

 

 

Restructuring charges and asset impairment

 

 

3,943

 

 

 

 

2,835

 

 

 

 

24,398

 

 

 

 

13,050

 

 

Total operating expenses

 

 

320,796

 

 

 

 

275,149

 

 

 

 

1,322,559

 

 

 

 

1,186,888

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating earnings

 

 

17,406

 

 

 

 

11,584

 

 

 

 

102,406

 

 

 

 

56,942

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expenses and (income)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

3,608

 

 

 

 

6,596

 

 

 

 

18,418

 

 

 

 

34,548

 

 

Loss on debt extinguishment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

329

 

 

Postretirement benefit (income) expense

 

 

(88

)

 

 

 

126

 

 

 

 

(685

)

 

 

 

19,803

 

 

Other, net

 

 

(144

)

 

 

 

(242

)

 

 

 

(691

)

 

 

 

(1,313

)

 

Total other expenses, net

 

 

3,376

 

 

 

 

6,480

 

 

 

 

17,042

 

 

 

 

53,367

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings before income taxes and discontinued operations

 

 

14,030

 

 

 

 

5,104

 

 

 

 

85,364

 

 

 

 

3,575

 

 

Income tax expense (benefit)

 

 

1,937

 

 

 

 

(369

)

 

 

 

9,450

 

 

 

 

(2,342

)

 

Earnings from continuing operations

 

 

12,093

 

 

 

 

5,473

 

 

 

 

75,914

 

 

 

 

5,917

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from discontinued operations, net of taxes

 

 

 

 

 

 

(49

)

 

 

 

 

 

 

 

(175

)

 

Net earnings

$

 

12,093

 

 

$

 

5,424

 

 

$

 

75,914

 

 

$

 

5,742

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from continuing operations

$

 

0.34

 

 

$

 

0.15

 

 

$

 

2.12

 

 

$

 

0.16

 

 

Loss from discontinued operations

 

 

 

 

 

 

(0.00

)

 

 

 

 

 

 

 

(0.00

)

 

Net earnings

$

 

0.34

 

 

$

 

0.15

 

 

$

 

2.12

 

 

$

 

0.16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from continuing operations

$

 

0.34

 

 

$

 

0.15

 

 

$

 

2.12

 

 

$

 

0.16

 

 

Loss from discontinued operations

 

 

 

 

 

 

(0.00

)

 

 

 

 

 

 

 

(0.00

)

 

Net earnings

$

 

0.34

 

 

$

 

0.15

 

 

$

 

2.12

 

 

$

 

0.16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

35,742

 

 

 

 

36,351

 

 

 

 

35,861

 

 

 

 

36,271

 

 

Diluted

 

 

35,807

 

 

 

 

36,351

 

 

 

 

35,862

 

 

 

 

36,271

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SPARTANNASH COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

January 2,

 

 

December 28,

 

(In thousands)

2021

 

 

2019

 

Assets

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

 

19,903

 

 

$

 

24,172

 

Accounts and notes receivable, net

 

 

357,564

 

 

 

 

345,320

 

Inventories, net

 

 

541,785

 

 

 

 

537,212

 

Prepaid expenses and other current assets

 

 

72,229

 

 

 

 

58,775

 

Property and equipment held for sale

 

 

23,259

 

 

 

 

31,203

 

Total current assets

 

 

1,014,740

 

 

 

 

996,682

 

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

577,059

 

 

 

 

615,816

 

Goodwill

 

 

181,035

 

 

 

 

181,035

 

Intangible assets, net

 

 

116,142

 

 

 

 

130,434

 

Operating lease assets

 

 

289,173

 

 

 

 

268,982

 

Other assets, net

 

 

99,242

 

 

 

 

82,660

 

 

 

 

 

 

 

 

 

 

 

Total assets

$

 

2,277,391

 

 

$

 

2,275,609

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

Accounts payable

$

 

464,784

 

 

$

 

405,370

 

Accrued payroll and benefits

 

 

113,789

 

 

 

 

59,680

 

Other accrued expenses

 

 

60,060

 

 

 

 

51,295

 

Current portion of operating lease liabilities

 

 

45,786

 

 

 

 

42,440

 

Current portion of long-term debt and finance lease liabilities

 

 

5,135

 

 

 

 

6,349

 

Total current liabilities

 

 

689,554

 

 

 

 

565,134

 

 

 

 

 

 

 

 

 

 

 

Long-term liabilities

 

 

 

 

 

 

 

 

 

Deferred income taxes

 

 

45,728

 

 

 

 

43,111

 

Operating lease liabilities

 

 

278,859

 

 

 

 

267,350

 

Other long-term liabilities

 

 

46,892

 

 

 

 

30,272

 

Long-term debt and finance lease liabilities

 

 

481,309

 

 

 

 

682,204

 

Total long-term liabilities

 

 

852,788

 

 

 

 

1,022,937

 

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

 

 

 

Common stock, voting, no par value; 100,000 shares
authorized; 35,851 and 36,351 shares outstanding

 

 

491,819

 

 

 

 

490,233

 

Preferred stock, no par value, 10,000 shares
authorized; no shares outstanding

 

 

 

 

 

 

 

Accumulated other comprehensive loss

 

 

(2,276

)

 

 

 

(1,600

)

Retained earnings

 

 

245,506

 

 

 

 

198,905

 

Total shareholders’ equity

 

 

735,049

 

 

 

 

687,538

 

 

 

 

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

$

 

2,277,391

 

 

$

 

2,275,609

 

 

 

 

 

 

 

 

 

 

 

SPARTANNASH COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

 

 

53 and 52 Weeks Ended

 

(In thousands)

 

 

 

January 2, 2021

 

 

December 28, 2019

 

Cash flow activities

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

 

 

$

 

306,716

 

 

$

 

180,192

 

Net cash used in investing activities

 

 

 

 

 

(57,221

)

 

 

 

(143,172

)

Net cash used in financing activities

 

 

 

 

 

(253,764

)

 

 

 

(31,219

)

Net cash used in discontinued operations

 

 

 

 

 

 

 

 

 

(214

)

Net (decrease) increase in cash and cash equivalents

 

 

 

 

 

(4,269

)

 

 

 

5,587

 

Cash and cash equivalents at beginning of the period

 

 

 

 

 

24,172

 

 

 

 

18,585

 

Cash and cash equivalents at end of the period

 

 

 

$

 

19,903

 

 

$

 

24,172

 

SPARTANNASH COMPANY AND SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA

Table 1: Sales and Operating Earnings (Loss) by Segment

(Unaudited)

 

 

13 and 12 Weeks Ended

 

 

53 and 52 Weeks Ended

 

(In thousands)

January 2, 2021

 

 

December 28, 2019

 

 

January 2, 2021

 

 

December 28, 2019

 

Food Distribution Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

 

1,105,617

 

 

49.2

%

 

$

 

938,941

 

 

47.0

%

 

$

 

4,577,178

 

 

49.0

%

 

$

 

3,982,609

 

 

46.7

%

Operating earnings

 

 

10,972

 

 

 

 

 

 

 

10,852

 

 

 

 

 

 

 

45,962

 

 

 

 

 

 

 

47,416

 

 

 

 

Retail Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

 

627,434

 

 

27.9

%

 

 

 

548,002

 

 

27.4

%

 

 

 

2,637,917

 

 

28.2

%

 

 

 

2,381,349

 

 

27.9

%

Operating earnings

 

 

6,943

 

 

 

 

 

 

 

4,242

 

 

 

 

 

 

 

66,359

 

 

 

 

 

 

 

18,842

 

 

 

 

Military Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

 

514,061

 

 

22.9

%

 

 

 

511,010

 

 

25.6

%

 

 

 

2,133,390

 

 

22.8

%

 

 

 

2,172,107

 

 

25.4

%

Operating loss

 

 

(509

)

 

 

 

 

 

 

(3,510

)

 

 

 

 

 

 

(9,915

)

 

 

 

 

 

 

(9,316

)

 

 

 

Total:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

 

2,247,112

 

 

100.0

%

 

$

 

1,997,953

 

 

100.0

%

 

$

 

9,348,485

 

 

100.0

%

 

$

 

8,536,065

 

 

100.0

%

Operating earnings

 

 

17,406

 

 

 

 

 

 

 

11,584

 

 

 

 

 

 

 

102,406

 

 

 

 

 

 

 

56,942

 

 

 

 

Non-GAAP Financial Measures

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

Current year adjusted operating earnings, adjusted earnings from continuing operations, and adjusted EBITDA exclude “Fresh Cut operating losses” subsequent to the decision to exit these operations during the first quarter, severance associated with cost reduction initiatives, organizational alignment costs, and fees paid to a third-party advisory firm associated with Project One Team, the Company’s initiative to drive growth while increasing efficiency and reducing costs. Adjusted earnings from continuing operations exclude pension termination income related to refunds from the annuity provider associated with the final reconciliation of participant data, as well as net tax benefits associated with the CARES Act. Prior year adjusted operating earnings, adjusted earnings from continuing operations and adjusted EBITDA exclude “Fresh Kitchen operating losses” subsequent to the decision to exit these operations at the beginning of the third quarter, costs associated with organizational realignment, which include significant changes to the Company’s management team, and fees paid to a third-party advisory firm associated with Project One Team, the Company’s initiative to drive growth while increasing efficiency and reducing costs. Pension termination costs, primarily related to non-operating settlement expense associated with the distribution of pension assets, are excluded from adjusted earnings from continuing operations, and to a lesser extent adjusted operating earnings. These measures were adjusted for the impact of the 53rd week in 2020 to provide better comparability to prior years.

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

(Adjusted EBITDA)

(A Non-GAAP Financial Measure)

(Unaudited)

 

 

13 and 12 Weeks Ended

 

 

53 and 52 Weeks Ended

 

(In thousands)

January 2, 2021

 

 

December 28, 2019

 

 

January 2, 2021

 

 

December 28, 2019

 

Net earnings

$

 

12,093

 

 

$

 

5,424

 

 

$

 

75,914

 

 

$

 

5,742

 

Earnings from discontinued operations, net of tax

 

 

 

 

 

 

49

 

 

 

 

 

 

 

 

175

 

Income tax expense (benefit)

 

 

1,937

 

 

 

 

(369

)

 

 

 

9,450

 

 

 

 

(2,342

)

Other expenses, net

 

 

3,376

 

 

 

 

6,480

 

 

 

 

17,042

 

 

 

 

53,367

 

Operating earnings

 

 

17,406

 

 

 

 

11,584

 

 

 

 

102,406

 

 

 

 

56,942

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIFO (gain) expense

 

 

(982

)

 

 

 

2,131

 

 

 

 

2,176

 

 

 

 

5,892

 

Depreciation and amortization

 

 

20,893

 

 

 

 

20,353

 

 

 

 

89,504

 

 

 

 

87,866

 

Merger/acquisition and integration

 

 

179

 

 

 

 

73

 

 

 

 

421

 

 

 

 

1,437

 

Restructuring, asset impairment and other charges

 

 

3,943

 

 

 

 

2,835

 

 

 

 

24,398

 

 

 

 

13,050

 

Fresh Kitchen operating losses

 

 

 

 

 

 

690

 

 

 

 

 

 

 

 

2,894

 

Fresh Cut operating losses

 

 

 

 

 

 

 

 

 

 

2,262

 

 

 

 

 

Stock-based compensation

 

 

1,084

 

 

 

 

578

 

 

 

 

6,265

 

 

 

 

7,313

 

Stock warrants

 

 

6,549

 

 

 

 

 

 

 

 

6,549

 

 

 

 

 

Non-cash rent

 

 

(752

)

 

 

 

(1,080

)

 

 

 

(4,733

)

 

 

 

(5,622

)

Costs associated with Project One Team

 

 

 

 

 

 

 

 

 

 

493

 

 

 

 

5,428

 

Organizational realignment costs

 

 

455

 

 

 

 

 

 

 

 

455

 

 

 

 

1,812

 

Severance associated with cost reduction initiatives

 

 

33

 

 

 

 

 

 

 

 

5,154

 

 

 

 

 

(Gain) loss on disposal of assets

 

 

(132

)

 

 

 

 

 

 

 

3,330

 

 

 

 

 

Other non-cash charges

 

 

186

 

 

 

 

223

 

 

 

 

379

 

 

 

 

933

 

Adjusted EBITDA

 

 

48,862

 

 

 

 

37,387

 

 

 

 

239,059

 

 

 

 

177,945

 

53rd week

 

 

(4,246

)

 

 

 

 

 

 

 

(4,246

)

 

 

 

 

Adjusted EBITDA, excluding 53rd week

$

 

44,616

 

 

$

 

37,387

 

 

$

 

234,813

 

 

$

 

177,945

 

Food Distribution:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating earnings

$

 

10,972

 

 

$

 

10,852

 

 

$

 

45,962

 

 

$

 

47,416

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIFO (gain) expense

 

 

(829

)

 

 

 

1,163

 

 

 

 

855

 

 

 

 

3,032

 

Depreciation and amortization

 

 

7,356

 

 

 

 

7,493

 

 

 

 

31,917

 

 

 

 

32,861

 

Merger/acquisition and integration

 

 

 

 

 

 

8

 

 

 

 

 

 

 

 

(122

)

Restructuring, asset impairment and other charges

 

 

1,863

 

 

 

 

4,120

 

 

 

 

21,085

 

 

 

 

14,844

 

Fresh Kitchen operating losses

 

 

 

 

 

 

690

 

 

 

 

 

 

 

 

2,894

 

Fresh Cut operating losses

 

 

 

 

 

 

 

 

 

 

2,262

 

 

 

 

 

Stock-based compensation

 

 

552

 

 

 

 

284

 

 

 

 

3,076

 

 

 

 

3,603

 

Stock warrants

 

 

6,549

 

 

 

 

 

 

 

 

6,549

 

 

 

 

 

Non-cash rent

 

 

433

 

 

 

 

129

 

 

 

 

558

 

 

 

 

482

 

Costs associated with Project One Team

 

 

 

 

 

 

 

 

 

 

265

 

 

 

 

2,877

 

Organizational realignment costs

 

 

245

 

 

 

 

 

 

 

 

245

 

 

 

 

960

 

(Gain) loss on disposal of assets

 

 

(131

)

 

 

 

 

 

 

 

1,482

 

 

 

 

 

Severance associated with cost reduction initiatives

 

 

13

 

 

 

 

 

 

 

 

3,156

 

 

 

 

 

Other non-cash charges

 

 

101

 

 

 

 

3

 

 

 

 

204

 

 

 

 

394

 

Adjusted EBITDA

 

 

27,124

 

 

 

 

24,742

 

 

 

 

117,616

 

 

 

 

109,241

 

53rd week

 

 

(1,363

)

 

 

 

 

 

 

 

(1,363

)

 

 

 

 

Adjusted EBITDA, excluding 53rd week

$

 

25,761

 

 

$

 

24,742

 

 

$

 

116,253

 

 

$

 

109,241

 

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

(Adjusted EBITDA)

(A Non-GAAP Financial Measure)

(Unaudited)

 

(In thousands)

January 2, 2021

 

 

December 28, 2019

 

 

January 2, 2021

 

 

December 28, 2019

 

Retail:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating earnings

$

 

6,943

 

 

$

 

4,242

 

 

$

 

66,359

 

 

$

 

18,842

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIFO (gain) expense

 

 

(285

)

 

 

 

213

 

 

 

 

301

 

 

 

 

1,071

 

Depreciation and amortization

 

 

10,629

 

 

 

 

10,123

 

 

 

 

45,199

 

 

 

 

43,171

 

Merger/acquisition and integration

 

 

179

 

 

 

 

65

 

 

 

 

421

 

 

 

 

1,559

 

Restructuring charges (gains) and asset impairment

 

 

2,080

 

 

 

 

(1,285

)

 

 

 

3,313

 

 

 

 

(1,794

)

Stock-based compensation

 

 

378

 

 

 

 

205

 

 

 

 

2,134

 

 

 

 

2,530

 

Non-cash rent

 

 

(1,097

)

 

 

 

(1,118

)

 

 

 

(4,915

)

 

 

 

(5,730

)

Costs associated with Project One Team

 

 

 

 

 

 

 

 

 

 

164

 

 

 

 

1,845

 

Organizational realignment costs

 

 

151

 

 

 

 

 

 

 

 

151

 

 

 

 

616

 

Severance associated with cost reduction initiatives

 

 

4

 

 

 

 

 

 

 

 

1,445

 

 

 

 

 

Loss on disposal of assets

 

 

41

 

 

 

 

 

 

 

 

1,946

 

 

 

 

 

Other non-cash charges

 

 

60

 

 

 

 

218

 

 

 

 

124

 

 

 

 

628

 

Adjusted EBITDA

 

 

19,083

 

 

 

 

12,663

 

 

 

 

116,642

 

 

 

 

62,738

 

53rd week

 

 

(2,780

)

 

 

 

 

 

 

 

(2,780

)

 

 

 

 

Adjusted EBITDA, excluding 53rd week

$

 

16,303

 

 

$

 

12,663

 

 

$

 

113,862

 

 

$

 

62,738

 

Military:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss

$

 

(509

)

 

$

 

(3,510

)

 

$

 

(9,915

)

 

$

 

(9,316

)

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIFO expense

 

 

132

 

 

 

 

755

 

 

 

 

1,020

 

 

 

 

1,789

 

Depreciation and amortization

 

 

2,908

 

 

 

 

2,737

 

 

 

 

12,388

 

 

 

 

11,834

 

Stock-based compensation

 

 

154

 

 

 

 

89

 

 

 

 

1,055

 

 

 

 

1,180

 

Non-cash rent

 

 

(88

)

 

 

 

(91

)

 

 

 

(376

)

 

 

 

(374

)

Costs associated with Project One Team

 

 

 

 

 

 

 

 

 

 

64

 

 

 

 

706

 

Organizational realignment costs

 

 

59

 

 

 

 

 

 

 

 

59

 

 

 

 

236

 

Severance associated with cost reduction initiatives

 

 

16

 

 

 

 

 

 

 

 

553

 

 

 

 

 

Gain on disposal of assets

 

 

(42

)

 

 

 

 

 

 

 

(98

)

 

 

 

 

Other non-cash charges (gains)

 

 

25

 

 

 

 

2

 

 

 

 

51

 

 

 

 

(89

)

Adjusted EBITDA

 

 

2,655

 

 

 

 

(18

)

 

 

 

4,801

 

 

 

 

5,966

 

53rd week

 

 

(103

)

 

 

 

 

 

 

 

(103

)

 

 

 

 

Adjusted EBITDA, excluding 53rd week

$

 

2,552

 

 

$

 

(18

)

 

$

 

4,698

 

 

$

 

5,966

 

Notes: Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“adjusted EBITDA”) is a non-GAAP operating financial measure that the Company defines as net earnings plus interest, discontinued operations, depreciation and amortization, and other non-cash items including share-based payments (equity awards measured in accordance with ASC 718, Stock Compensation, which include both stock-based compensation to employees and stock warrants issued to non-employees) and the LIFO provision, as well as adjustments for items that do not reflect the ongoing operating activities of the Company and costs associated with the closing of operational locations.

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

Table 3: Reconciliation of Operating Earnings to Adjusted Operating Earnings

(A Non-GAAP Financial Measure)

(Unaudited)

 

 

13 and 12 Weeks Ended

 

 

53 and 52 Weeks Ended

 

(In thousands)

January 2, 2021

 

 

December 28, 2019

 

 

January 2, 2021

 

 

December 28, 2019

 

Operating earnings

$

 

17,406

 

 

$

 

11,584

 

 

$

 

102,406

 

 

$

 

56,942

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger/acquisition and integration

 

 

179

 

 

 

 

73

 

 

 

 

421

 

 

 

 

1,437

 

Restructuring, asset impairment and other

 

 

3,943

 

 

 

 

2,835

 

 

 

 

24,398

 

 

 

 

13,050

 

Fresh Kitchen operating losses

 

 

 

 

 

 

690

 

 

 

 

 

 

 

 

2,894

 

Expenses associated with tax planning strategies

 

 

 

 

 

 

 

 

 

 

82

 

 

 

 

 

Costs associated with Project One Team

 

 

 

 

 

 

 

 

 

 

493

 

 

 

 

5,428

 

Organizational realignment costs

 

 

455

 

 

 

 

 

 

 

 

455

 

 

 

 

1,812

 

Pension termination

 

 

 

 

 

 

13

 

 

 

 

 

 

 

 

59

 

Severance associated with cost reduction initiatives

 

 

33

 

 

 

 

24

 

 

 

 

5,154

 

 

 

 

509

 

Fresh Cut operating losses

 

 

 

 

 

 

 

 

 

 

2,262

 

 

 

 

 

Adjusted operating earnings

 

 

22,016

 

 

 

 

15,219

 

 

 

 

135,671

 

 

 

 

82,131

 

53rd week

 

 

(4,155

)

 

 

 

 

 

 

 

(4,155

)

 

 

 

 

Adjusted operating earnings, excluding 53rd week

$

 

17,861

 

 

$

 

15,219

 

 

$

 

131,516

 

 

$

 

82,131

 

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

 

 

13 and 12 Weeks Ended

 

 

53 and 52 Weeks Ended

 

 

January 2, 2021

 

 

December 28, 2019

 

 

January 2, 2021

 

 

December 28, 2019

 

Food Distribution:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating earnings

$

 

10,972

 

 

$

 

10,852

 

 

$

 

45,962

 

 

$

 

47,416

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger/acquisition and integration

 

 

 

 

 

 

8

 

 

 

 

 

 

 

 

(122

)

Restructuring, asset impairment and other charges

 

 

1,863

 

 

 

 

4,120

 

 

 

 

21,085

 

 

 

 

14,844

 

Fresh Kitchen operating losses

 

 

 

 

 

 

690

 

 

 

 

 

 

 

 

2,894

 

Expenses associated with tax planning strategies

 

 

 

 

 

 

 

 

 

 

44

 

 

 

 

 

Costs associated with Project One Team

 

 

 

 

 

 

 

 

 

 

265

 

 

 

 

2,877

 

Organizational realignment costs

 

 

245

 

 

 

 

 

 

 

 

245

 

 

 

 

960

 

Pension termination

 

 

 

 

 

 

6

 

 

 

 

 

 

 

 

32

 

Severance associated with cost reduction initiatives

 

 

13

 

 

 

 

21

 

 

 

 

3,156

 

 

 

 

413

 

Fresh Cut operating losses

 

 

 

 

 

 

 

 

 

 

2,262

 

 

 

 

 

Adjusted operating earnings

 

 

13,093

 

 

 

 

15,697

 

 

 

 

73,019

 

 

 

 

69,314

 

53rd week

 

 

(1,300

)

 

 

 

 

 

 

 

(1,300

)

 

 

 

 

Adjusted operating earnings, excluding 53rd week

$

 

11,793

 

 

$

 

15,697

 

 

$

 

71,719

 

 

$

 

69,314

 

Retail:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating earnings

 

 

6,943

 

 

 

 

4,242

 

 

 

 

66,359

 

 

 

 

18,842

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger/acquisition and integration

 

 

179

 

 

 

 

65

 

 

 

 

421

 

 

 

 

1,559

 

Restructuring, asset impairment and other charges (gains)

 

 

2,080

 

 

 

 

(1,285

)

 

 

 

3,313

 

 

 

 

(1,794

)

Costs associated with Project One Team

 

 

 

 

 

 

 

 

 

 

164

 

 

 

 

1,845

 

Organizational realignment costs

 

 

151

 

 

 

 

 

 

 

 

151

 

 

 

 

616

 

Expenses associated with tax planning strategies

 

 

 

 

 

 

 

 

 

 

27

 

 

 

 

 

Pension termination

 

 

 

 

 

 

4

 

 

 

 

 

 

 

 

21

 

Severance associated with cost reduction initiatives

 

 

4

 

 

 

 

3

 

 

 

 

1,445

 

 

 

 

86

 

Adjusted operating earnings

 

 

9,357

 

 

 

 

3,029

 

 

 

 

71,880

 

 

 

 

21,175

 

53rd week

 

 

(2,760

)

 

 

 

 

 

 

 

(2,760

)

 

 

 

 

Adjusted operating earnings, excluding 53rd week

$

 

6,597

 

 

$

 

3,029

 

 

$

 

69,120

 

 

$

 

21,175

 

Military:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss

$

 

(509

)

 

$

 

(3,510

)

 

$

 

(9,915

)

 

$

 

(9,316

)

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs associated with Project One Team

 

 

 

 

 

 

 

 

 

 

64

 

 

 

 

706

 

Organizational realignment costs

 

 

59

 

 

 

 

 

 

 

 

59

 

 

 

 

236

 

Expenses associated with tax planning strategies

 

 

 

 

 

 

 

 

 

 

11

 

 

 

 

 

Pension termination

 

 

 

 

 

 

3

 

 

 

 

 

 

 

 

6

 

Severance associated with cost reduction initiatives

 

 

16

 

 

 

 

 

 

 

 

553

 

 

 

 

10

 

Adjusted operating loss

 

 

(434

)

 

 

 

(3,507

)

 

 

 

(9,228

)

 

 

 

(8,358

)

53rd week

 

 

(95

)

 

 

 

 

 

 

 

(95

)

 

 

 

 

Adjusted operating loss, excluding 53rd week

$

 

(529

)

 

$

 

(3,507

)

 

$

 

(9,323

)

 

$

 

(8,358

)

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

Adjusted operating earnings is not a measure of performance under GAAP and should not be considered as a substitute for operating earnings, and other income statement data. The Company’s definition of adjusted operating earnings may not be identical to similarly titled measures reported by other companies.

Table 4: Reconciliation of Earnings from Continuing Operations to

Adjusted Earnings from Continuing Operations

(A Non-GAAP Financial Measure)

(Unaudited)

 

 

13 and 12 Weeks Ended

 

 

 

January 2, 2021

 

 

December 28, 2019

 

 

 

 

 

 

per diluted

 

 

 

 

 

per diluted

 

 

(In thousands, except per share amounts)

Earnings

 

 

share

 

 

Earnings

 

 

share

 

 

Earnings from continuing operations

$

 

12,093

 

 

$

 

0.34

 

 

$

 

5,473

 

 

$

 

0.15

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger/acquisition and integration

 

 

179

 

 

 

 

 

 

 

 

 

73

 

 

 

 

 

 

 

Restructuring, asset impairment and other charges

 

 

3,943

 

 

 

 

 

 

 

 

 

2,835

 

 

 

 

 

 

 

Fresh Kitchen operating losses

 

 

 

 

 

 

 

 

 

 

 

690

 

 

 

 

 

 

 

Organizational realignment costs

 

 

455

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Severance associated with cost reduction initiatives

 

 

33

 

 

 

 

 

 

 

 

 

25

 

 

 

 

 

 

 

Pension termination

 

 

(189

)

 

 

 

 

 

 

 

 

47

 

 

 

 

 

 

 

Total adjustments

 

 

4,421

 

 

 

 

 

 

 

 

 

3,670

 

 

 

 

 

 

 

Income tax effect on adjustments (a)

 

 

(1,024

)

 

 

 

 

 

 

 

 

(856

)

 

 

 

 

 

 

Impact of CARES Act (b)

 

 

6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total adjustments, net of taxes

 

 

3,403

 

 

 

 

0.09

 

 

 

 

2,814

 

 

 

 

0.08

 

 

Adjusted earnings from continuing operations

 

 

15,496

 

 

 

 

0.43

 

 

 

 

8,287

 

 

 

 

0.23

 

 

53rd week

 

 

(2,999

)

 

 

 

(0.08

)

 

 

 

 

 

 

 

 

 

Adjusted earnings from continuing operations, excluding 53rd week

$

 

12,497

 

 

$

 

0.35

 

 

$

 

8,287

 

 

$

 

0.23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

53 and 52 Weeks Ended

 

 

 

January 2, 2021

 

 

December 28, 2019

 

 

 

 

 

 

per diluted

 

 

 

 

 

per diluted

 

 

(In thousands, except per share amounts)

Earnings

 

 

share

 

 

Earnings

 

 

share

 

 

Earnings from continuing operations

$

 

75,914

 

 

$

 

2.12

 

 

$

 

5,917

 

 

$

 

0.16

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger/acquisition and integration

 

 

421

 

 

 

 

 

 

 

 

 

1,437

 

 

 

 

 

 

 

Restructuring, asset impairment and other charges

 

 

24,398

 

 

 

 

 

 

 

 

 

13,050

 

 

 

 

 

 

 

Fresh Kitchen operating losses

 

 

 

 

 

 

 

 

 

 

 

2,894

 

 

 

 

 

 

 

Expenses associated with tax planning

 

 

82

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs associated with Project One Team

 

 

493

 

 

 

 

 

 

 

 

 

5,428

 

 

 

 

 

 

 

Organizational realignment costs

 

 

455

 

 

 

 

 

 

 

 

 

1,812

 

 

 

 

 

 

 

Loss on debt extinguishment

 

 

 

 

 

 

 

 

 

 

 

329

 

 

 

 

 

 

 

Severance associated with cost reduction initiatives

 

 

5,154

 

 

 

 

 

 

 

 

 

509

 

 

 

 

 

 

 

Fresh Cut operating losses

 

 

2,262

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension termination

 

 

(1,193

)

 

 

 

 

 

 

 

 

19,557

 

 

 

 

 

 

 

Total adjustments

 

 

32,072

 

 

 

 

 

 

 

 

 

45,016

 

 

 

 

 

 

 

Income tax effect on adjustments (a)

 

 

(7,851

)

 

 

 

 

 

 

 

 

(11,022

)

 

 

 

 

 

 

Impact of CARES Act (b)

 

 

(9,292

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total adjustments, net of taxes

 

 

14,929

 

 

 

 

0.41

 

 

 

 

33,994

 

 

 

 

0.94

 

 

Adjusted earnings from continuing operations

 

 

90,843

 

 

 

 

2.53

 

 

 

 

39,911

 

 

 

 

1.10

 

 

53rd week

 

 

(2,999

)

 

 

 

(0.08

)

 

 

 

 

 

 

 

 

 

Adjusted earnings from continuing operations, excluding 53rd week

$

 

87,844

 

 

$

 

2.45

 

 

$

 

39,911

 

 

$

 

1.10

 

 

 (a) The income tax effect on adjustments is computed by applying the applicable tax rate to the adjustments.
 (b) Represents tax impacts attributable to the Coronavirus Aid, Relief and Economic Security (“CARES”) Act, and related tax planning, primarily related to additional deductions and the utilization of net operating loss carrybacks.

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

Adjusted earnings from continuing operations is not a measure of performance under GAAP and should not be considered as a substitute for earnings from continuing operations and other income statement data. The Company’s definition of adjusted earnings from continuing operations may not be identical to similarly titled measures reported by other companies.

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

(A Non-GAAP Financial Measure)

(Unaudited)

 

 

January 2,

 

 

December 29,

 

(In thousands)

2021

 

 

2019

 

Current portion of long-term debt and finance lease liabilities

$

 

5,135

 

 

$

 

6,349

 

Long-term debt and finance lease liabilities

 

 

481,309

 

 

 

 

682,204

 

Total debt

 

 

486,444

 

 

 

 

688,553

 

Cash and cash equivalents

 

 

(19,903

)

 

 

 

(24,172

)

Net long-term debt

$

 

466,541

 

 

$

 

664,381

 

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

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

(A Non-GAAP Financial Measure)

(Unaudited)

 

 

 

 

 

53 and 52 Weeks Ended

 

(In thousands)

 

 

 

January 2, 2021

 

 

December 28, 2019

 

Net cash provided by operating activities

 

 

 

$

 

306,716

 

 

$

 

180,192

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

 

 

 

67,298

 

 

 

 

74,815

 

Free cash flow

 

 

 

$

 

239,418

 

 

$

 

105,377

 

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

Table 7: Reconciliation of Purchases of Property and Equipment to Capital Expenditures and IT Capital

(A Non-GAAP Financial Measure)

(Unaudited)

 

 

 

 

 

53 and 52 Weeks Ended

 

(In thousands)

 

 

 

January 2, 2021

 

 

December 28, 2019

 

Purchases of property and equipment

 

 

 

$

 

67,298

 

 

$

 

74,815

 

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

Cloud computing spend

 

 

 

 

 

11,634

 

 

 

 

 

Capital expenditures and IT capital

 

 

 

$

 

78,932

 

 

$

 

74,815

 

Table 8: Reconciliation of Projected Earnings per Diluted Share from Continuing Operations to

Projected Adjusted Earnings per Diluted Share from Continuing Operations

(A Non-GAAP Financial Measure)

(Unaudited)

 

 

52 Weeks Ending

January 1, 2022

 

 

Low

 

 

High

 

Earnings from continuing operations

$

 

1.48

 

 

$

 

1.67

 

Adjustments, net of taxes:

 

 

 

 

 

 

 

 

 

Merger/acquisition and integration expenses

 

 

0.01

 

 

 

 

0.01

 

Restructuring and asset impairment

 

 

0.13

 

 

 

 

0.10

 

Severance associated with cost reduction initiatives

 

 

0.01

 

 

 

 

0.01

 

Organizational realignment

 

 

0.02

 

 

 

 

0.01

 

Adjusted earnings from continuing operations

$

 

1.65

 

 

$

 

1.80

 

 

Investors:
Mark Shamber
Chief Financial Officer and Executive Vice President
(616) 878-8023

Chris Mandeville
ICR
(203) 682-8304

Anna Kate Heller
ICR
(678) 358-8995

Media:
Meredith Gremel
Vice President Corporate Affairs and Communications
(616) 878-2830

Source: SpartanNash Company