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Exhibit 99.1

 

For Immediate Release

  

 

Investor Contact: Dave Staples

  

Media Contact: Meredith Gremel

Executive Vice President & COO

  

Vice President Corporate Affairs and Communications

(616) 878-8793

  

(616) 878-2830

 

 

SpartanNash Announces Second Quarter Fiscal Year 2015 Financial Results

 

Adjusted EPS from Continuing Operations Improved to $0.53 per Diluted Share; Reported Second Quarter EPS from Continuing Operations of $0.54 per Diluted Share

Year-to-Date Operating Cash Flow Increased 93% to $123.4 Million

GRAND RAPIDS, MICHIGAN – August 19, 2015 – SpartanNash Company (the “Company”) (Nasdaq: SPTN) today reported financial results for the 12-week second quarter and 28-week period ended July 18, 2015.

Second Quarter Results

 

Consolidated net sales for the 12-week second quarter approximated $1.8 billion in each year as increases in the food distribution segment were offset by the impact of closed stores, a decrease in comparable store sales, significantly lower retail fuel prices compared to the prior year, and lower sales in the military segment.

 

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) were $58.5 million, or 3.3 percent of net sales, compared to $58.3 million, or 3.2 percent of net sales last year. Adjusted EBITDA is a non-Generally Accepted Accounting Principles (GAAP) financial measure. Please see the financial tables at the end of this press release for a reconciliation of Adjusted EBITDA to operating earnings, and a reconciliation of each non-GAAP financial measure to the most directly comparable measure prepared and presented in accordance with GAAP.

 

Reported operating earnings increased to $36.8 million from $32.6 million in the prior year quarter. The increase was primarily due to improved operational efficiencies and lower merger and integration expenses.

 

Adjusted earnings from continuing operations for the second quarter increased to $19.8 million, or $0.53 per diluted share, from $19.1 million, or $0.50 per diluted share in the second quarter last year. For the second quarter of fiscal 2015, adjusted earnings from continuing operations excludes a net after-tax gain of $0.01 per diluted share related to merger integration and acquisition expenses, net gains on the sales of previously closed stores and a benefit related to tax planning initiatives. For the prior year second quarter, adjusted earnings from continuing operations excluded net after-tax charges of $0.04 per diluted share related to merger integration expenses and asset impairment and restructuring costs, partially offset by a tax benefit related to the favorable settlement of an unrecognized tax liability established in a previous year. Adjusted earnings from continuing operations is a non-GAAP operating financial measure. Reported earnings from continuing operations for the second quarter of fiscal 2015 increased to $20.3 million, or $0.54 per diluted share, from $17.4 million, or $0.46 per diluted share, in the prior year quarter, primarily due to the factors previously mentioned.

1


 

“We are pleased with our earnings results in the second quarter,” stated Dennis Eidson, SpartanNash's President and Chief Executive Officer. “In spite of a challenging sales environment, we grew operating profit and exceeded earnings expectations due to our disciplined cost control, merger synergies and improved operational efficiencies. While we experienced sales growth in our food distribution segment, sales in our retail segment were negatively affected by the closure of stores, lower fuel prices, a continued competitive retail food environment and unfavorable weather conditions in our Michigan markets. As we have previously mentioned, we are very focused on improving the performance of our retail segment’s western store base.  We continue to make progress on our initiatives, including the rollout of merchandising, pricing, and promotional strategies across this store base, as well as the re-grand opening of our six remodeled stores in Omaha a few weeks ago. In addition, we are pleased to have acquired six stores from Dan's Supermarket, Inc., which was not previously supplied by SpartanNash, in Bismarck, North Dakota, and have been encouraged by the transition to SpartanNash operations.”

 

Gross profit margin was 14.6 percent in the second quarter of each year.

 

Second quarter operating expenses would have been $224.9 million, or 12.5 percent of net sales, compared to $228.8 million, or 12.6 percent of net sales, in the same quarter last year if this year's net charges related to merger integration and acquisition expenses, net gains on property sales and expenses related to tax planning initiatives, and last year’s merger integration expenses, asset impairment and restructuring charges were excluded from both periods. The lower expenses as a rate to sales were primarily due to a higher mix of food distribution sales and expense control initiatives. Reported operating expenses for the second quarter of fiscal 2015 were $225.2 million, or 12.5 percent of sales, compared to $232.5 million, or 12.8 percent of sales, in the same quarter last year.

 

Food Distribution Segment

 

Net sales for the food distribution segment increased 1.9 percent to $782.7 million in the second quarter from $767.9 million for the second quarter last year.

 

Second quarter adjusted operating earnings for the food distribution segment increased to $18.5 million from adjusted operating earnings of $13.5 million in the same period last year.  In the current year second quarter, adjusted operating earnings exclude $0.9 million of net pre-tax gains related to a litigation settlement that resulted in the reduction of previously accrued or paid compensation, net of ongoing merger integration costs, and professional fees associated with tax planning initiatives.  The prior year second quarter excludes $2.9 million of pre-tax merger integration expenses and restructuring charges. The increase in adjusted operating earnings was due to merger synergies, lower operating costs, including healthcare expenses, and increased inventory procurement gains. Adjusted operating earnings is a non-GAAP operating financial measure. Reported operating earnings for the second quarter of fiscal year 2015 increased to $19.4 million from $10.7 million in the prior year second quarter.

 

2


Retail Segment

 

Net sales for the retail segment were $516.1 million in the second quarter of fiscal 2015 compared to $539.8 million for the second quarter last year, primarily due to $17.1 million in lower sales due to the closure of retail stores and fuel centers, a 3.2 percent decrease in comparable store sales, excluding fuel, and $10.6 million due to significantly lower retail fuel prices compared to the prior year, partially offset by sales of $9.2 million from the recently acquired stores. Comparable store sales reflect increased competition, unseasonably cool weather in the Michigan market compared to the prior year, and the continued impact of a low inflationary environment.

 

Second quarter adjusted operating earnings for the retail segment were $14.7 million, compared to adjusted operating earnings of $16.9 million in the prior year second quarter.  In the current year second quarter, adjusted operating earnings exclude $1.2 million of pre-tax merger integration and acquisition costs and net gains on the sales of previously closed sites.  The prior year second quarter excludes $0.8 million of net non-cash pre-tax restructuring charges related to closed stores. The decrease in adjusted operating earnings was due primarily to the increased competitive environment, impact of remodeling activities, low inflation levels and reduced pharmacy margins, partially offset by favorable health care expenses and the impact of store closures. Reported operating earnings in the retail segment were $13.5 million compared to operating earnings of $16.1 million in the prior year quarter.  

 

During the second quarter, the Company acquired six stores from Dan’s Supermarket, Inc. in Bismarck, North Dakota, and ended the quarter with 165 corporate owned stores and 29 fuel centers.

 

Military Segment

 

Net sales for the Company's military segment were $497.0 million in the second quarter compared to $502.4 million in the prior year period due to lower sales at the DeCA-operated commissaries. Reported operating earnings for the military segment were $3.9 million, compared to $5.9 million in the prior year quarter primarily due to the cycling of a purchase accounting related adjustment for depreciation expense.

 

Balance Sheet and Cash Flow

 

Cash flow provided by operating activities for the year-to-date period was $123.4 million, compared to $64.0 million in the comparable period last year. The increase was primarily due to improvements in working capital.

 

The Company repurchased 202,963 shares of its common stock during the second quarter of fiscal 2015 and has repurchased 282,363 shares for the year-to-date period through July 18, 2015. As of July 18, 2015, the Company had $12.3 million available for future share repurchases under its $50.0 million repurchase program which expires May 17, 2016.

3


 

Net long-term debt (including current maturities and capital lease obligations and subtracting cash) for the Company was $524.6 million as of July 18, 2015, compared to $563.8 million at January 3, 2015. The Company's total net long-term debt-to-capital ratio is 0.41-to-1.0 and net long-term debt to Adjusted EBITDA is 2.23-to-1.0 as of July 18, 2015. Net long-term debt is a non-GAAP financial measure. Long-term debt and capital lease obligations, including current maturities, were $537.7 million at July 18, 2015 compared to $570.3 million at January 3, 2015.

 

Outlook

 

Mr. Eidson continued, "As we begin the second half of 2015, we are pleased with our solid execution and the progress we have made operationally and strategically. Although the retail environment in our markets remains challenging, we continue to work on improving our offerings in the Western Division and recently completed six remodels and re-banners to Family Fare in the Nebraska market. In conjunction with the re-banners, we launched our new Things Are Good HereTM advertising campaign, which is focused on our differentiated shopping experience and our commitment to convenience, quality and overall value. We are in the process of rolling out our yes Rewards loyalty program to our western markets and are highly encouraged by the initial acceptance rates and preliminary success of this venture. In addition, we remain optimistic about our prospects in our food distribution segment and continue to expect further benefits from the merger integration and improved operational efficiencies, including the optimization of our supply chain. Additionally, we will continue to proactively pursue financially and strategically attractive acquisition opportunities.”

 

For the third quarter and remainder of fiscal 2015, the Company anticipates that net earnings from continuing operations per diluted share will slightly exceed last year's adjusted comparable third and fourth quarter results of $0.46 and $0.44 per diluted share, respectively, excluding merger integration costs and any other one-time expenses.

 

Based on the first half results and outlook for the remainder of the year, the Company is maintaining its previously issued fiscal 2015 guidance of adjusted earnings per share from continuing operations of approximately $1.89 to $1.98, excluding merger integration costs and other one-time expenses and gains. For purposes of comparison, the Company's similarly adjusted earnings per share were $1.80 in fiscal 2014 when adjusted to a 52-week basis. This guidance is based on expectations of the continuation of low inflation levels and the challenging sales environment.

 

The Company expects capital expenditures for fiscal year 2015 to be in the range of $70.0 million to $75.0 million, with depreciation and amortization of approximately $83.0 million to $85.0 million and total interest expense of approximately $21.0 to $23.0 million.

 


4


Conference Call

 

A telephone conference call to discuss the Company’s second quarter of fiscal 2015 financial results is scheduled for 9:00 a.m. Eastern Time, Thursday, August 20, 2015. 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 (SPTN) is a Fortune 400 company and the largest food distributor serving U.S. military commissaries and exchanges in the world, in terms of revenue. The Company’s core businesses include distributing food to military commissaries and exchanges and independent and corporate-owned retail stores located in 46 states and the District of Columbia, Europe, Cuba, Puerto Rico, Bahrain and Egypt. SpartanNash currently operates 165 supermarkets, primarily under the banners of Family Fare Supermarkets, Family Fresh Markets, D&W Fresh Markets, and Econofoods.

 

Forward-Looking Statements

 

This press release contains "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These include statements regarding the expected benefits of the merger and statements preceded by, followed by or that otherwise include the words “outlook,” “optimistic,” “committed,” “anticipates,” “appears,” “believe,” “continue,” “expects,” “look forward,” “guidance,” “target,” “trend,” “opportunities,” “design,” “focus,” “look forward,” “confident,” “position,” “taking steps,” “intend,” “seek,” or “plan,” or similar expressions or that an event or trend “may,” “will,” or is “likely to” occur, or is “beginning.” Forward-looking statements relating to expectations about future results or events are based upon information available to SpartanNash as of today's date, and are not guarantees of the future performance of the combined company, and actual results may vary materially from the results and expectations discussed. Additional risks and uncertainties related to the merger include, but are not limited to, the successful integration of Spartan Stores' and Nash Finch's business and the combined company's ability to compete in the highly competitive grocery distribution and retail grocery industry. Additional information concerning these and other risks is contained in SpartanNash’s most recently filed Annual Report on Form 10-K,  Quarterly Report on Form 10-Q, recent Current Reports on Form 8-K and other SEC filings. All subsequent written and oral forward-looking statements concerning SpartanNash, the merger, or other matters and attributable to SpartanNash or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above. SpartanNash does not undertake any obligation to publicly update any of these forward-looking statements to reflect events or circumstances that may arise after the date hereof.

 

- More -

 

5


SPARTANNASH COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

(Unaudited)

 

 

12 Weeks Ended

 

 

28 Weeks Ended

 

 

 

July 18,

 

 

July 12,

 

 

July 18,

 

 

July 12,

 

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

 

Net sales

$

1,795,864

 

 

$

1,810,175

 

 

$

4,108,547

 

 

$

4,143,902

 

 

Cost of sales

 

1,533,822

 

 

 

1,545,061

 

 

 

3,510,259

 

 

 

3,531,450

 

 

Gross profit

 

262,042

 

 

 

265,114

 

 

 

598,288

 

 

 

612,452

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

225,433

 

 

 

228,806

 

 

 

527,804

 

 

 

544,271

 

 

Merger integration and acquisition

 

151

 

 

 

2,581

 

 

 

2,835

 

 

 

6,749

 

 

Restructuring (gains) charges and asset impairment

 

(336

)

 

 

1,078

 

 

 

7,002

 

 

 

1,205

 

 

Total operating expenses

 

225,248

 

 

 

232,465

 

 

 

537,641

 

 

 

552,225

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating earnings

 

36,794

 

 

 

32,649

 

 

 

60,647

 

 

 

60,227

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-operating expense (income)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

4,894

 

 

 

5,475

 

 

 

11,644

 

 

 

12,949

 

 

Other, net

 

(26

)

 

 

 

 

 

(54

)

 

 

5

 

 

Total non-operating expense, net

 

4,868

 

 

 

5,475

 

 

 

11,590

 

 

 

12,954

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings before income taxes and discontinued operations

 

31,926

 

 

 

27,174

 

 

 

49,057

 

 

 

47,273

 

 

   Income taxes

 

11,619

 

 

 

9,779

 

 

 

18,303

 

 

 

17,359

 

 

Earnings from continuing operations

 

20,307

 

 

 

17,395

 

 

 

30,754

 

 

 

29,914

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from discontinued operations, net of taxes

 

(46

)

 

 

(76

)

 

 

(166

)

 

 

(285

)

 

Net earnings

$

20,261

 

 

$

17,319

 

 

$

30,588

 

 

$

29,629

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Earnings from continuing operations

$

0.54

 

 

$

0.46

 

 

$

0.82

 

 

$

0.79

 

 

   Loss from discontinued operations

 

 

 

 

 

 

 

(0.01

)

*

 

 

*

   Net earnings

$

0.54

 

 

$

0.46

 

 

$

0.81

 

 

$

0.79

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Earnings from continuing operations

$

0.54

 

 

$

0.46

 

 

$

0.81

 

 

$

0.79

 

 

   Loss from discontinued operations

 

 

 

 

 

 

 

 

 

 

 

*

   Net earnings

$

0.54

 

 

$

0.46

 

 

$

0.81

 

 

$

0.79

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Basic

 

37,584

 

 

 

37,744

 

 

 

37,644

 

 

 

37,662

 

 

   Diluted

 

37,710

 

 

 

37,810

 

 

 

37,770

 

 

 

37,738

 

 

*Includes rounding

 

 

 

6


SPARTANNASH COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

 

July 18, 2015

 

 

July 12, 2014

 

Assets

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

$

13,085

 

 

$

6,420

 

Accounts and notes receivable, net

 

298,034

 

 

 

334,440

 

Inventories, net

 

552,327

 

 

 

564,628

 

Prepaid expenses and other current assets

 

21,678

 

 

 

35,675

 

Property and equipment held for sale

 

5,996

 

 

 

 

Total current assets

 

891,120

 

 

 

941,163

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

587,871

 

 

 

606,969

 

Goodwill

 

331,523

 

 

 

312,252

 

Other assets, net

 

122,478

 

 

 

128,850

 

 

 

 

 

 

 

 

 

Total assets

$

1,932,992

 

 

$

1,989,234

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Accounts payable

$

350,719

 

 

$

375,592

 

Accrued payroll and benefits

 

60,541

 

 

 

68,893

 

Other accrued expenses

 

45,705

 

 

 

45,815

 

Deferred income taxes

 

28,819

 

 

 

26,816

 

Current maturities of long-term debt and capital lease obligations

 

21,669

 

 

 

7,189

 

Total current liabilities

 

507,453

 

 

 

524,305

 

 

 

 

 

 

 

 

 

Long-term liabilities

 

 

 

 

 

 

 

Deferred income taxes

 

87,316

 

 

 

97,538

 

Postretirement benefits

 

17,022

 

 

 

19,884

 

Other long-term liabilities

 

39,379

 

 

 

38,204

 

Long-term debt and capital lease obligations

 

516,012

 

 

 

576,474

 

Total long-term liabilities

 

659,729

 

 

 

732,100

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

 

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

     authorized; 37,517 and 37,725 shares outstanding

 

518,615

 

 

 

523,148

 

Preferred stock, no par value, 10,000 shares

     authorized; no shares outstanding

 

 

 

 

 

Accumulated other comprehensive loss

 

(11,359

)

 

 

(8,500

)

Retained earnings

 

258,554

 

 

 

218,181

 

Total shareholders’ equity

 

765,810

 

 

 

732,829

 

 

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

$

1,932,992

 

 

$

1,989,234

 

 

 

 

7


SPARTANNASH COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

28 Weeks Ended

 

 

July 18, 2015

 

 

July 12, 2014

 

Cash flows from operating activities

 

 

 

 

 

 

 

Net cash provided by operating activities

$

123,355

 

 

$

63,973

 

Net cash used in investing activities

 

(54,606

)

 

 

(36,447

)

Net cash used in financing activities

 

(52,725

)

 

 

(30,136

)

Net cash used in discontinued operations

 

(9,382

)

 

 

(186

)

Net increase (decrease) in cash and cash equivalents

 

6,642

 

 

 

(2,796

)

Cash and cash equivalents at beginning of period

 

6,443

 

 

 

9,216

 

Cash and cash equivalents at end of period

$

13,085

 

 

$

6,420

 

 

 

 

SPARTANNASH COMPANY AND SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA

Table 1: Sales and Operating Earnings by Segment

(In thousands)

(Unaudited)

 

 

12 Weeks Ended

 

 

28 Weeks Ended

 

 

July 18, 2015

 

 

 

 

 

 

July 12, 2014

 

 

 

 

 

 

July 18, 2015

 

 

 

 

 

 

July 12, 2014

 

 

 

 

 

Military Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

497,047

 

 

 

27.7

%

 

$

502,402

 

 

 

27.8

%

 

$

1,196,441

 

 

 

29.1

%

 

$

1,186,569

 

 

 

28.6

%

Operating earnings

$

3,895

 

 

 

 

 

 

$

5,884

 

 

 

 

 

 

$

10,053

 

 

 

 

 

 

$

10,305

 

 

 

 

 

Food Distribution Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

782,743

 

 

 

43.6

%

 

$

767,926

 

 

 

42.4

%

 

$

1,769,178

 

 

 

43.1

%

 

$

1,738,928

 

 

 

42.0

%

Operating earnings

$

19,406

 

 

 

 

 

 

$

10,670

 

 

 

 

 

 

$

39,655

 

 

 

 

 

 

$

24,879

 

 

 

 

 

Retail Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

516,074

 

 

 

28.7

%

 

$

539,847

 

 

 

29.8

%

 

$

1,142,928

 

 

 

27.8

%

 

$

1,218,405

 

 

 

29.4

%

Operating earnings

$

13,493

 

 

 

 

 

 

$

16,095

 

 

 

 

 

 

$

10,939

 

 

 

 

 

 

$

25,043

 

 

 

 

 

Total:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

1,795,864

 

 

 

100.0

%

 

$

1,810,175

 

 

 

100.0

%

 

$

4,108,547

 

 

 

100.0

%

 

$

4,143,902

 

 

 

100.0

%

Operating earnings

$

36,794

 

 

 

 

 

 

$

32,649

 

 

 

 

 

 

$

60,647

 

 

 

 

 

 

$

60,227

 

 

 

 

 

 

 

8


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

(Adjusted EBITDA)

(A Non-GAAP Financial Measure)

(In thousands)

(Unaudited)

 

(Unaudited)

12 Weeks Ended

 

 

28 Weeks Ended

 

(In thousands)

July 18, 2015

 

 

July 12, 2014

 

 

July 18, 2015

 

 

July 12, 2014

 

Operating earnings

$

36,794

 

 

$

32,649

 

 

$

60,647

 

 

$

60,227

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIFO expense

 

1,294

 

 

 

1,555

 

 

 

3,017

 

 

 

3,527

 

Depreciation and amortization

 

19,453

 

 

 

19,417

 

 

 

45,238

 

 

 

46,970

 

Restructuring (gains) charges and asset impairment

 

(336

)

 

 

1,078

 

 

 

7,002

 

 

 

1,205

 

Merger integration and acquisition

 

151

 

 

 

2,581

 

 

 

2,835

 

 

 

6,749

 

Fees and expenses related to tax planning strategies

 

569

 

 

 

 

 

 

569

 

 

 

 

Stock based compensation

 

909

 

 

 

1,135

 

 

 

5,662

 

 

 

5,064

 

Other non-cash gains

 

(285

)

 

 

(135

)

 

 

(532

)

 

 

(550

)

Adjusted EBITDA

$

58,549

 

 

$

58,280

 

 

$

124,438

 

 

$

123,192

 

Reconciliation of operating earnings to adjusted EBITDA by segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Military:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating earnings

$

3,895

 

 

$

5,884

 

 

$

10,053

 

 

$

10,305

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIFO expense

 

291

 

 

 

362

 

 

 

679

 

 

 

833

 

Depreciation and amortization

 

2,810

 

 

 

1,552

 

 

 

6,543

 

 

 

5,829

 

Merger integration and acquisition

 

 

 

 

24

 

 

 

 

 

 

24

 

Fees and expenses related to tax planning strategies

 

75

 

 

 

 

 

 

75

 

 

 

 

Stock based compensation

 

150

 

 

 

106

 

 

 

854

 

 

 

416

 

Other non-cash charges (gains)

 

6

 

 

 

(64

)

 

 

103

 

 

 

(59

)

Adjusted EBITDA

$

7,227

 

 

$

7,864

 

 

$

18,307

 

 

$

17,348

 

Food Distribution:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating earnings

$

19,406

 

 

$

10,670

 

 

$

39,655

 

 

$

24,879

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIFO expense

 

669

 

 

 

795

 

 

 

1,559

 

 

 

1,757

 

Depreciation and amortization

 

6,169

 

 

 

7,155

 

 

 

14,705

 

 

 

16,174

 

Restructuring charges (gains) and asset impairment

 

3

 

 

 

307

 

 

 

(278

)

 

 

1,029

 

Merger integration and acquisition

 

(1,151

)

 

 

2,554

 

 

 

1,036

 

 

 

6,722

 

Fees and expenses related to tax planning strategies

 

282

 

 

 

 

 

 

282

 

 

 

 

Stock based compensation

 

399

 

 

 

488

 

 

 

2,629

 

 

 

2,399

 

Other non-cash charges

 

6

 

 

 

158

 

 

 

41

 

 

 

80

 

Adjusted EBITDA

$

25,783

 

 

$

22,127

 

 

$

59,629

 

 

$

53,040

 

Retail:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating earnings

$

13,493

 

 

$

16,095

 

 

$

10,939

 

 

$

25,043

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIFO expense

 

334

 

 

 

398

 

 

 

779

 

 

 

937

 

Depreciation and amortization

 

10,474

 

 

 

10,710

 

 

 

23,990

 

 

 

24,967

 

Restructuring (gains) charges and asset impairment

 

(339

)

 

 

771

 

 

 

7,280

 

 

 

176

 

Merger integration and acquisition

 

1,302

 

 

 

3

 

 

 

1,799

 

 

 

3

 

Fees and expenses related to tax planning strategies

 

212

 

 

 

 

 

 

212

 

 

 

 

Stock based compensation

 

360

 

 

 

541

 

 

 

2,179

 

 

 

2,249

 

Other non-cash gains

 

(297

)

 

 

(229

)

 

 

(676

)

 

 

(571

)

Adjusted EBITDA

$

25,539

 

 

$

28,289

 

 

$

46,502

 

 

$

52,804

 

Notes: Consolidated adjusted EBITDA is a non-GAAP operating financial measure that we define as operating earnings plus depreciation and amortization, and other non-cash items including deferred (stock) compensation, the LIFO provision, as well as adjustments for unusual items that do not reflect the ongoing operating activities of SpartanNash and costs associated with the closing of operational locations.

9


We believe that adjusted EBITDA provides a meaningful representation of our operating performance for SpartanNash as a whole and for our operating segments. We consider adjusted EBITDA as an additional way to measure operating performance on an ongoing basis. Adjusted EBITDA is meant to reflect the ongoing operating performance of our military, food distribution and retail operations; consequently, it excludes the impact of items that could be considered “non-operating” or “non-core” in nature, and also excludes the contributions of activities classified as discontinued operations. Because adjusted EBITDA and adjusted EBITDA by segment are performance measures that management uses to allocate resources, assess performance against its peers, and evaluate overall performance, we believe it provides useful information for our investors. In addition, securities analysts, fund managers and other shareholders and stakeholders that communicate with us request our operating financial results in adjusted EBITDA format.

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

 

Table 3: Reconciliation of Operating Earnings to Adjusted Operating Earnings

(A Non-GAAP Financial Measure)

(In thousands)

(Unaudited)

 

(Unaudited)

12 Weeks Ended

 

 

28 Weeks Ended

 

(In thousands)

July 18, 2015

 

 

July 12, 2014

 

 

July 18, 2015

 

 

July 12, 2014

 

Operating earnings

$

36,794

 

 

$

32,649

 

 

$

60,647

 

 

$

60,227

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger integration and acquisition

 

151

 

 

 

2,581

 

 

 

2,835

 

 

 

6,749

 

Restructuring (gains) charges and asset impairment

 

(336

)

 

 

1,078

 

 

 

7,002

 

 

 

1,205

 

Fees and expenses related to tax planning strategies

 

569

 

 

 

 

 

 

569

 

 

 

 

Adjusted operating earnings

$

37,178

 

 

$

36,308

 

 

$

71,053

 

 

$

68,181

 

Reconciliation of operating earnings to adjusted

operating earnings by segment:

 

Military:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating earnings

$

3,895

 

 

$

5,884

 

 

$

10,053

 

 

$

10,305

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger integration and acquisition

 

 

 

 

24

 

 

 

 

 

 

24

 

Fees and expenses related to tax planning strategies

 

75

 

 

 

 

 

 

75

 

 

 

 

Adjusted operating earnings

$

3,970

 

 

$

5,908

 

 

$

10,128

 

 

$

10,329

 

Food Distribution:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating earnings

$

19,406

 

 

$

10,670

 

 

$

39,655

 

 

$

24,879

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger integration and acquisition

 

(1,151

)

 

 

2,554

 

 

 

1,036

 

 

 

6,722

 

Restructuring charges (gains) and asset impairment

 

3

 

 

 

307

 

 

 

(278

)

 

 

1,029

 

Fees and expenses related to tax planning strategies

 

282

 

 

 

 

 

 

282

 

 

 

 

Adjusted operating earnings

$

18,540

 

 

$

13,531

 

 

$

40,695

 

 

$

32,630

 

Retail:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating earnings

$

13,493

 

 

$

16,095

 

 

$

10,939

 

 

$

25,043

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger integration and acquisition

 

1,302

 

 

 

3

 

 

 

1,799

 

 

 

3

 

Restructuring (gains) charges and asset impairment

 

(339

)

 

 

771

 

 

 

7,280

 

 

 

176

 

Fees and expenses related to tax planning strategies

 

212

 

 

 

 

 

 

212

 

 

 

 

Adjusted operating earnings

$

14,668

 

 

$

16,869

 

 

$

20,230

 

 

$

25,222

 

10


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

The Company believes that adjusted operating earnings provide a meaningful representation of its operating performance for the Company. The Company considers adjusted operating earnings as an additional way to measure operating performance on an ongoing basis. Adjusted operating earnings is meant to reflect the ongoing operating performance of its military, food distribution and retail operations; consequently, it excludes the impact of items that could be considered “non-operating” or “non-core” in nature, and also excludes the contributions of activities classified as discontinued operations. Because adjusted operating earnings is a performance measure that management uses to allocate resources, assess performance against its peers and evaluate overall performance, the Company believes it provides useful information for investors. In addition, securities analysts, fund managers and other shareholders and stakeholders that communicate with the Company request its operating financial results in adjusted operating earnings format.

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

 

Table 4: Reconciliation of Earnings from Continuing Operations to

Adjusted Earnings from Continuing Operations

(A Non-GAAP Financial Measure)

(In thousands, except per share data)

(Unaudited)

 

 

12 Weeks Ended

 

 

 

July 18, 2015

 

 

July 12, 2014

 

 

 

 

 

 

 

Earnings from

 

 

 

 

 

 

Earnings from

 

 

 

Earnings

 

 

continuing

 

 

Earnings

 

 

continuing

 

 

 

from

 

 

operations

 

 

from

 

 

operations

 

 

(Unaudited)

continuing

 

 

per diluted

 

 

continuing

 

 

per diluted

 

 

(In thousands, except per share data)

operations

 

 

share

 

 

operations

 

 

share

 

 

Earnings from continuing operations

$

20,307

 

 

$

0.54

 

 

$

17,395

 

 

$

0.46

 

 

Adjustments, net of taxes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger integration and acquisition

 

96

 

 

 

0.00

 

 

 

1,593

 

 

 

0.04

 

 

Restructuring (gains) charges and asset impairment

 

(192

)

 

 

0.00

 

*

 

665

 

 

 

0.02

 

 

Tax planning strategies, net of fees and expenses

 

(382

)

 

 

(0.01

)

 

 

 

 

 

 

 

Favorable settlement of unrecognized tax liability

 

 

 

 

 

 

 

(595

)

 

 

(0.02

)

 

Adjusted earnings from continuing operations

$

19,829

 

 

$

0.53

 

 

$

19,058

 

 

$

0.50

 

 

* Includes rounding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

28 Weeks Ended

 

 

 

July 18, 2015

 

 

July 12, 2014

 

 

 

 

 

 

 

Earnings from

 

 

 

 

 

 

Earnings from

 

 

 

Earnings

 

 

continuing

 

 

Earnings

 

 

continuing

 

 

 

from

 

 

operations

 

 

from

 

 

operations

 

 

(Unaudited)

continuing

 

 

per diluted

 

 

continuing

 

 

per diluted

 

 

(In thousands, except per share data)

operations

 

 

share

 

 

operations

 

 

share

 

 

Earnings from continuing operations

$

30,754

 

 

$

0.81

 

 

$

29,914

 

 

$

0.79

 

 

Adjustments, net of taxes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger integration and acquisition

 

1,735

 

 

 

0.05

 

 

 

4,186

 

 

 

0.11

 

 

Restructuring and asset impairment charges

 

4,285

 

 

 

0.11

 

 

 

747

 

 

 

0.02

 

 

Tax planning strategies, net of fees and expenses

 

(382

)

 

 

(0.01

)

 

 

 

 

 

 

 

Favorable settlement of unrecognized tax liability

 

 

 

 

 

 

 

(595

)

 

 

(0.01

)

*

Adjusted earnings from continuing operations

$

36,392

 

 

$

0.96

 

 

$

34,252

 

 

$

0.91

 

 

* Includes rounding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11


Notes: Adjusted earnings from continuing operations is a non-GAAP operating financial measure that we define 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.

We believe that adjusted earnings from continuing operations provide a meaningful representation of our operating performance for the Company. We consider adjusted earnings from continuing operations as an additional way to measure operating performance on an ongoing basis. Adjusted earnings from continuing operations is meant to reflect the ongoing operating performance of our military, food distribution and retail operations; consequently, it excludes the impact of items that could be considered “non-operating” or “non-core” in nature, and also excludes the contributions of activities classified as discontinued operations. We believe that adjusted earnings from continuing operations provides useful information for our investors because it is a performance measure that management uses to allocate resources, assess performance against its peers and evaluate overall performance. In addition, securities analysts, fund managers and other shareholders and stakeholders that communicate with us request our operating financial results in adjusted earnings from continuing operations format.

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

 

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

Lease Obligations

(A Non-GAAP Financial Measure)

(In thousands)

(Unaudited)

 

 

July 18, 2015

 

 

January 3, 2015

 

Current maturities of long-term debt and capital lease obligations

$

21,669

 

 

$

19,758

 

Long-term debt and capital lease obligations

 

516,012

 

 

 

550,510

 

Total debt

 

537,681

 

 

 

570,268

 

Cash and cash equivalents

 

(13,085

)

 

 

(6,443

)

Total net long-term debt

$

524,596

 

 

$

563,825

 

Notes: Total net debt is a non-GAAP financial measure that is defined as long term debt and capital lease obligations plus current maturities of long-term debt and capital lease obligations less cash and cash equivalents. The Company believes investors find the information useful because it reflects the amount of long term debt obligations that are not covered by available cash and temporary investments.

Table 6: 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 2, 2016

 

 

Low

 

 

High

 

Earnings from continuing operations

$

1.71

 

 

$

1.80

 

Adjustments, net of taxes:

 

 

 

 

 

 

 

   Restructuring and asset impairment

 

0.12

 

 

 

0.12

 

   Merger integration and acquisition

 

0.07

 

 

 

0.07

 

   Tax planning strategies, net of fees and expenses

 

(0.01

)

 

 

(0.01

)

Adjusted earnings from continuing operations

$

1.89

 

 

$

1.98

 

 

12