SpartanNash Announces Third Quarter Fiscal 2023 Results

Transformational Initiatives Continue to Deliver Shareholder Value

Narrows Fiscal 2023 Guidance

GRAND RAPIDS, Mich., Nov. 8, 2023 /PRNewswire/ — Food solutions company SpartanNash (the “Company”) (Nasdaq: SPTN) today reported financial results for its 12-week third quarter ended October 7, 2023.

Third Quarter Fiscal 2023 Highlights

  • Net sales of $2.26 billion, a decrease of 1.4%, compared to $2.30 billion in the prior year quarter.
  • Retail comparable sales increased 1.2%, compared to the prior year quarter.
  • Net earnings of $11.1 million, compared to $9.5 million in the prior year quarter.
  • Adjusted EBITDA(1) of $60.9 million, compared to $57.3 million in the prior year quarter.
  • Cash generated from operating activities was $95.7 million during the year-to-date period of fiscal 2023 compared to $7.5 million in the year-to-date period of the prior year.
  • Returned $40.9 million to shareholders during the year-to-date period of fiscal 2023 through $18.5 million in share repurchases and $22.4 million in dividends.

(1)

A reconciliation of net earnings to adjusted EBITDA, a non-GAAP financial measure, is provided in Table 2 below.

“We continue to make tremendous progress on our plan, growing share and executing on our transformational initiatives despite the ongoing headwinds facing our industry,” said SpartanNash President and CEO Tony Sarsam. “Our team is capturing savings, actively collaborating with the supplier community, and delivering reliable services to our Wholesale customers and Retail shoppers. With the success of Our Winning Recipe, we are energized by the opportunities ahead to further capture share, drive results and grow sustainable value for shareholders.”

Third Quarter Consolidated Financial Results

Net sales decreased $32.3 million, or 1.4%, to $2.26 billion from $2.30 billion in the prior year quarter. The year-over-year decrease reflected sales declines in both the Wholesale and Retail segments, which were unfavorably impacted by a reduction in volume, partially offset by higher pricing from inflationary trends.

Gross profit was $347.5 million, or 15.35% of net sales, compared to $351.2 million, or 15.29% of net sales, in the prior year quarter. The gross profit dollar decline was driven by lower unit volumes within both segments. Last in first out (“LIFO”) expense decreased $8.3 million, or 36 basis points, compared to the prior year quarter. Additional variances in the gross profit rate are discussed within the segment financial results below.

Reported operating expenses for the third quarter were $324.5 million, or 14.3% of net sales, compared to $331.9 million, or 14.5% of net sales, in the prior year quarter. During the quarter, efficiencies realized from the Company’s supply chain transformation helped to offset industry-wide headwinds. The reduction in expenses was also due to lower incentive compensation compared to the prior year quarter. These decreases were partially offset by an increase in acquisition and integration charges and organizational realignment costs related to the previously announced go-to-market plan.

The Company reported operating earnings of $23.1 million, an increase of $3.8 million, compared to $19.3 million in the prior year quarter. The increase was driven by the changes in net sales, gross profit, and operating expenses discussed above.

Interest expense of $9.3 million increased $3.2 million from the prior year quarter. Higher interest rates on the Company’s credit facility were driven by federal monetary policy tightening and accounted for $2.5 million of the increase in interest expense. Other income for the third quarter included a $0.8 million gain related to the amortization of a prior service credit of a previously terminated post-retirement plan.

The Company reported net earnings of $11.1 million, or $0.32 per diluted share, compared to $9.5 million, or $0.26 per diluted share in the prior year quarter. Adjusted earnings from continuing operations(2) for the third quarter were $18.8 million, or $0.54 per diluted share, compared to $20.0 million, or $0.55 per diluted share in the prior year quarter.

Adjusted EBITDA(1) increased $3.6 million to $60.9 million, compared to $57.3 million in the prior year quarter, due to the sales, gross profit and expense variances described above.

(2)

A reconciliation of net earnings to adjusted earnings from continuing operations, as well as per diluted share (“adjusted EPS”), a non-GAAP financial measure, is provided in Table 4 below.

Third Quarter Segment Financial Results

Wholesale

The Company’s supply chain network serves Wholesale customers that include independent and chain grocers, national retail brands, e-commerce platforms, and U.S. military commissaries and exchanges around the globe. The Company distributes products for every aisle in the grocery store, from fresh produce to household goods to its OwnBrands, which include the Our Family® portfolio of products.

Net sales for Wholesale decreased $27.9 million, or 1.7%, to $1.60 billion from $1.63 billion in the prior year quarter. The decline in net sales was due primarily to marketplace demand changes from a certain national account customer.

Reported operating earnings for Wholesale were $18.2 million, compared to $14.0 million in the prior year quarter. The increase in reported operating earnings was due to an increase in the gross profit rate, lower incentive compensation, and efficiencies realized from the Company’s supply chain transformation initiative. The gross profit rate increase was primarily driven by lower LIFO expense, as well as benefits realized from the merchandising transformation initiative. These benefits mostly offset the anticipated impact of lower inflation-related price change benefits compared to elevated levels in the prior year quarter. The increase in reported operating earnings was partially offset by cycling asset impairment and restructuring gains in the prior year quarter. Adjusted EBITDA(1) increased $0.7 million to $39.0 million from $38.3 million in the prior year quarter.

Retail

The Company operates a scaled regional Retail segment with 144 brick-and-mortar grocery stores, in addition to pharmacies and fuel centers.

Net sales for Retail decreased $4.4 million, or 0.7%, to $662.2 million from $666.6 million in the prior year quarter. Retail comparable store sales grew 1.2% for the quarter, due primarily to the inflationary impact on pricing. Additionally, lower fuel sales in the quarter reduced reported net sales by 0.8%.

Reported operating earnings for Retail were $4.9 million, compared to $5.3 million in the prior year quarter. The decrease in reported operating earnings was due to higher acquisition and integration expenses, a decline in unit volume, and lower pharmacy margin rates. This was partially offset by lower incentive compensation and reduced asset impairment and restructuring charges. Adjusted EBITDA(1) increased $2.9 million to $21.9 million from $19.0 million in the prior year quarter.

Balance Sheet and Cash Flow

Long-term debt and finance lease liabilities, including current maturities, increased $40.6 million for the year-to-date period. The Company’s net long-term debt(3) to adjusted EBITDA(1) ratio improved sequentially by 10 basis points to 2.1x, compared to the second quarter 2023. The Company’s liquidity remains strong, giving it flexibility to support its strategic plan.

Cash flows provided by operating activities for the year-to-date period were $95.7 million, compared to $7.5 million in the prior year. The increase in cash flows compared to the prior year was due primarily to improvements in working capital.

Purchases of property and equipment were $86.2 million in the year-to-date period, compared to $66.3 million in the prior year, while capital expenditures and IT capital(4) totaled $90.3 million in the year-to-date period, compared to $69.5 million in the prior year.

Through the third quarter, the Company paid $22.4 million in cash dividends, equal to $0.645 per common share. The Company also repurchased 765,194 shares of common stock during the year-to-date period for a total of $18.5 million, at an average price of $24.21 per share. In total, the Company returned $40.9 million to shareholders through the third quarter. As of October 7, 2023, $25.5 million remains available under the Company’s share repurchase program, which expires on February 22, 2027.

(3)

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.

(4)

A reconciliation of purchases of property and equipment to capital expenditures and IT capital, a non-GAAP financial measure, is provided in Table 6 below.

Fiscal 2023 Outlook

Based upon the Company’s performance to date and the current outlook for the remainder of fiscal 2023, the Company is refining its guidance to reflect current trends and market conditions. The following table provides the Company’s updated guidance for fiscal 2023:


Fiscal 2022



Previous Fiscal 2023 Outlook



Updated Fiscal 2023 Outlook


Actual



Low



High



Low



High

Total net sales (millions)

$


9,643



$


9,650



$


9,950



$


9,650



$


9,850

Adjusted EBITDA(1) (millions)

$


243



$


248



$


263



$


253



$


258

Adjusted EPS(2)

$


2.33



$


2.20



$


2.35



$


2.20



$


2.28

Capital expenditures and IT capital(4) (thousands)

$


102,097



$


130,000



$


140,000



$


130,000



$


140,000

Conference Call & Supplemental Earnings Presentation

The Company will host a conference call to discuss its quarterly results with additional comments and details on Wednesday, November 8, 2023, at 8:30 a.m. ET. There will also be a simultaneous, live webcast made available at SpartanNash’s website at www.spartannash.com/webcasts under the “Investor Relations” section and will remain archived on the Company’s website through Wednesday, November 22, 2023.

A supplemental quarterly earnings presentation will also be available on the Company’s website at www.spartannash.com/investor-presentations.

About SpartanNash

SpartanNash (Nasdaq: SPTN) is a food solutions company that delivers the ingredients for a better life. Committed to fostering a People First culture, the SpartanNash family of Associates is 17,500 strong and growing. SpartanNash operates two complementary business segments – food wholesale and grocery retail. Its global supply chain network serves wholesale customers that include independent and chain grocers, national retail brands, e-commerce platforms, and U.S. military commissaries and exchanges. The Company distributes products for every aisle in the grocery store, from fresh produce to household goods to its OwnBrands, which include the Our Family® portfolio of products. On the retail side, SpartanNash operates 144 brick-and-mortar grocery stores, primarily under the banners of Family Fare, Martin’s Super Markets and D&W Fresh Market, in addition to dozens of pharmacies and fuel centers. Leveraging insights and solutions across its segments, SpartanNash offers a full suite of support services for independent grocers. For more information, visit spartannash.com

Forward-Looking Statements

The matters discussed in this press release and in the Company’s website-accessible conference calls with analysts and investor presentations include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”), about the plans, strategies, objectives, goals or expectations of the Company. These forward-looking statements may be identifiable by words or phrases indicating that the Company or management “expects,” “projects,” “anticipates,” “plans,” “believes,” “intends,” or “estimates,” or that a particular occurrence or event “may,” “could,” “should,” “will” or “will likely” result, occur or be pursued or “continue” in the future, that the “outlook,” “trend,” “guidance” or “target” is toward a particular result or occurrence, that a development is an “opportunity,” “priority,” “strategy,” “focus,” that the Company is “positioned” for a particular result, or similarly stated expectations. Undue reliance should not be placed on these forward-looking statements, which speak only as of the date made. Forward-looking statements are necessarily based on estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies may affect actual results and could cause actual results to differ materially. These risks and uncertainties include the Company’s ability to compete in an extremely competitive industry; the Company’s dependence on certain major customers; the Company’s ability to implement its growth strategy and transformation initiatives; changes in relationships with the Company’s vendor base and supply chain disruptions; vulnerability to decreases in the supply and increases in the price of raw materials and labor, manufacturing, distribution and other costs; macroeconomic uncertainty, including rising inflation, potential economic recession, and increasing interest rates; difficulty attracting and retaining well-qualified Associates and effectively managing increased labor costs; customers to whom the Company extends credit or for whom the Company guarantees loans or lease obligations may fail to repay the Company; not achieving the Company’s strategy of growth through acquisitions and encountering difficulties successfully integrating acquired businesses that may not realize the anticipated benefits; the Company’s ability to manage its private brand program for U.S. military commissaries, including the termination of the program or not achieving the desired results; disruptions to the Company’s information security network, including security breaches and cyber-attacks; changes in the geopolitical conditions; instances of security threats, severe weather conditions and natural disasters; climate change and an increased focus by stakeholders on environmental sustainability and corporate responsibility; impacts to the Company’s business and reputation due to an increasing focus on environmental, social and governance matters; disruptions associated with disease outbreaks, such as the COVID-19 pandemic; impairment charges for goodwill or other long-lived assets; the Company’s ability to successfully manage leadership transitions; interest rate fluctuations; the Company’s ability to service its debt and to comply with debt covenants; the Company’s level of indebtedness; changes in government regulations; changes in the military commissary system, including its supply chain, or in the level of governmental funding; product recalls and other product-related safety concerns; labor relations issues; cost increases related to multi-employer pension plans and other postretirement plans; and other risks and uncertainties listed under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s most recent Annual Report on Form 10-K and in subsequent filings with the Securities and Exchange Commission. Additional risks and uncertainties not currently known to the Company or that the Company currently believes are immaterial also may impair its business, operations, liquidity, financial condition and prospects. The Company undertakes no obligation to update or revise its forward-looking statements to reflect developments that occur or information obtained after the date of this press release.

SPARTANNASH COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)



12 Weeks Ended



40 Weeks Ended



October 7,



October 8,



October 7,



October 8,


(In thousands, except per share amounts)

2023



2022



2023



2022


Net sales

$


2,264,248



$


2,296,512



$


7,484,036



$


7,334,060


Cost of sales



1,916,709





1,945,302





6,337,449





6,178,024


Gross profit



347,539





351,210





1,146,587





1,156,036






















Operating expenses




















  Selling, general and administrative



322,796





333,373





1,059,787





1,094,422


  Acquisition and integration, net



2,130





(577)





2,259





98


  Restructuring and asset impairment, net



(458)





(886)





1,371





1,738


Total operating expenses



324,468





331,910





1,063,417





1,096,258






















Operating earnings



23,071





19,300





83,170





59,778






















Other expenses and (income)




















  Interest expense, net



9,280





6,051





30,218





14,764


  Other, net



(786)





(768)





(2,510)





(384)


Total other expenses, net



8,494





5,283





27,708





14,380






















Earnings before income taxes



14,577





14,017





55,462





45,398


  Income tax expense



3,450





4,553





13,530





11,530


Net earnings

$


11,127



$


9,464



$


41,932



$


33,868






















Net earnings per basic common share

$


0.33



$


0.27



$


1.22



$


0.96






















Net earnings per diluted common share

$


0.32



$


0.26



$


1.20



$


0.93






















Weighted average shares outstanding:




















  Basic



34,020





35,160





34,262





35,444


  Diluted



34,523





36,145





34,967





36,398


SPARTANNASH COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)



October 7,



December 31,

(In thousands)

2023



2022

Assets









 Current assets









Cash and cash equivalents

$


17,554



$


29,086

Accounts and notes receivable, net



427,275





404,016

Inventories, net



579,631





571,065

Prepaid expenses and other current assets



63,594





62,244

Total current assets



1,088,054





1,066,411










 Property and equipment, net



616,320





610,220

 Goodwill



182,160





182,160

 Intangible assets, net



102,661





106,341

 Operating lease assets



251,426





257,047

 Other assets, net



93,155





84,382










Total assets

$


2,333,776



$


2,306,561










Liabilities and Shareholders Equity









 Current liabilities









Accounts payable

$


505,786



$


487,215

Accrued payroll and benefits



71,531





103,048

Other accrued expenses



53,267





62,465

Current portion of operating lease liabilities



43,372





45,453

Current portion of long-term debt and finance lease liabilities



8,410





6,789

Total current liabilities



682,366





704,970










 Long-term liabilities









Deferred income taxes



78,318





66,293

Operating lease liabilities



231,809





239,062

Other long-term liabilities



28,212





33,376

Long-term debt and finance lease liabilities



535,804





496,792

Total long-term liabilities



874,143





835,523










 Commitments and contingencies


















 Shareholders equity









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

     authorized; 34,629 and 35,079 shares outstanding



457,830





468,061

Preferred stock, no par value, 10,000 shares

     authorized; no shares outstanding







Accumulated other comprehensive income



5,155





2,979

Retained earnings



314,282





295,028

Total shareholders equity



777,267





766,068










Total liabilities and shareholders equity

$


2,333,776



$


2,306,561

SPARTANNASH COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 (Unaudited)






40 Weeks Ended

(In thousands)




October 7, 2023



October 8, 2022

Cash flow activities












  Net cash provided by operating activities




$


95,680



$


7,454

  Net cash used in investing activities






(82,003)





(45,956)

  Net cash (used in) provided by financing activities






(25,209)





46,800

Net (decrease) increase in cash and cash equivalents






(11,532)





8,298

Cash and cash equivalents at beginning of the period






29,086





10,666

Cash and cash equivalents at end of the period




$


17,554



$


18,964

SPARTANNASH COMPANY AND SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA




Table 1: Sales and Operating Earnings by Segment

 (Unaudited)





12 Weeks Ended



40 Weeks Ended


(In thousands)

October 7, 2023



October 8, 2022



October 7, 2023



October 8, 2022


Wholesale Segment:
































  Net sales

$


1,602,000



70.8

%


$


1,629,869



71.0

%


$


5,321,048



71.1

%


$


5,213,733



71.1

%

  Operating earnings



18,153








14,015








66,020








54,834





Retail Segment:
































  Net sales



662,248



29.2

%




666,643



29.0

%




2,162,988



28.9

%




2,120,327



28.9

%

  Operating earnings



4,918








5,285








17,150








4,944





Total:
































  Net sales

$


2,264,248



100.0

%


$


2,296,512



100.0

%


$


7,484,036



100.0

%


$


7,334,060



100.0

%

  Operating earnings



23,071








19,300








83,170








59,778





Non-GAAP Financial Measures

In addition to reporting financial results in accordance with GAAP, the Company also provides information regarding adjusted operating earnings, adjusted earnings from continuing operations, as well as per diluted share (“adjusted EPS”), net long-term debt, capital expenditures and IT capital, and adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”). 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, among other items, LIFO expense, organizational realignment, severance associated with cost reduction initiatives, a non-routine settlement related to a legal matter resulting from a previously closed operation that was resolved during the year and operating and non-operating costs associated with the postretirement plan amendment and settlement. Current year organizational realignment includes consulting and severance costs associated with the Company’s change in its go-to-market strategy as part of its long-term plan, which relates to the reorganization of certain functions. Costs related to the postretirement plan amendment and settlement include non-operating expenses associated with amortization of the prior service credit related to the amendment of the retiree medical plan, which are excluded from adjusted earnings from continuing operations. Postretirement plan amendment and settlement costs also include operating expenses related to payroll taxes which are adjusted out of all non-GAAP financial measures. Prior year adjusted operating earnings, adjusted earnings from continuing operations, and adjusted EBITDA exclude, among other things, LIFO expense, costs related to shareholder activism, organizational realignment, operating and non-operating costs associated with the postretirement plan amendment and settlement, and severance associated with cost reduction initiatives. Costs related to shareholder activism include consulting, and other expenses incurred in relation to shareholder activism activities. Organizational realignment includes benefits for associates terminated as part of leadership transition plans, which do not meet the definition of reduction-in-force.

Each of these items are considered “non-operational” or “non-core” in nature.

The Company is unable to provide a full reconciliation of the GAAP to non-GAAP measures used in the Fiscal 2023 Outlook section of this press release without unreasonable effort because it is not possible to predict certain adjustment items with a reasonable degree of certainty since they are not yet known or quantifiable, and do not relate to the Company’s normal operating activities. These adjustments may include, among other items, restructuring and asset impairment activity, acquisition and integration costs, severance, costs related to the postretirement plan amendment and settlement, and organizational realignment costs, and the impact of adjustments to the LIFO inventory reserve. This information is dependent upon future events, which may be outside of the Company’s control and could have a significant impact on its GAAP financial results for fiscal 2023 or fiscal 2025, respectively.

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

(Adjusted EBITDA)

(A Non-GAAP Financial Measure)

(Unaudited)



12 Weeks Ended



40 Weeks Ended


(In thousands)

October 7, 2023



October 8, 2022



October 7, 2023



October 8, 2022


Net earnings

$


11,127



$


9,464



$


41,932



$


33,868


   Income tax expense



3,450





4,553





13,530





11,530


   Other expenses, net



8,494





5,283





27,708





14,380


Operating earnings



23,071





19,300





83,170





59,778


Adjustments:




















   LIFO expense



6,606





14,884





22,445





42,916


   Depreciation and amortization



23,042





21,833





75,245





72,274


   Acquisition and integration, net



2,130





(577)





2,259





98


   Restructuring and asset impairment, net



(458)





(886)





1,371





1,738


   Cloud computing amortization



1,259





925





3,685





2,694


   Organizational realignment, net



2,681





588





4,710





1,859


   Severance associated with cost reduction initiatives



39





54





311





795


   Stock-based compensation



2,461





1,370





10,073





7,208


   Stock warrant



319





505





1,279





1,659


   Non-cash rent



(531)





(764)





(2,094)





(2,691)


   Loss (gain) on disposal of assets



258





63





304





(68)


   Legal settlement











900






   Postretirement plan amendment and settlement











94





133


   Costs related to shareholder activism















7,335


Adjusted EBITDA

$


60,877



$


57,295



$


203,752



$


195,728


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

(Adjusted EBITDA)

(A Non-GAAP Financial Measure)

(Unaudited)



12 Weeks Ended



40 Weeks Ended


(In thousands)

October 7, 2023



October 8, 2022



October 7, 2023



October 8, 2022


Wholesale:




















Operating earnings

$


18,153



$


14,015



$


66,020



$


54,834


Adjustments:




















  LIFO expense



4,411





12,959





16,734





35,138


  Depreciation and amortization



12,151





11,090





39,165





36,602


  Acquisition and integration, net



65









189






  Restructuring and asset impairment, net



(293)





(2,088)





688





(2,216)


  Cloud computing amortization



834





645





2,499





1,873


  Organizational realignment, net



1,673





367





2,939





1,160


  Severance associated with cost reduction initiatives



39





43





296





662


  Stock-based compensation



1,621





894





6,615





4,743


  Stock warrant



319





505





1,279





1,659


  Non-cash rent







(92)





(138)





(288)


  Loss (gain) on disposal of assets



24





(26)





(11)





(184)


  Legal settlement











900






  Postretirement plan amendment and settlement











59





83


  Costs related to shareholder activism















4,577


Adjusted EBITDA

$


38,997



$


38,312



$


137,234



$


138,643


Retail:




















Operating earnings

$


4,918



$


5,285



$


17,150



$


4,944


Adjustments:




















  LIFO expense



2,195





1,925





5,711





7,778


  Depreciation and amortization



10,891





10,743





36,080





35,672


  Acquisition and integration, net



2,065





(577)





2,070





98


  Restructuring and asset impairment, net



(165)





1,202





683





3,954


  Cloud computing amortization



425





280





1,186





821


  Organizational realignment, net



1,008





221





1,771





699


  Severance associated with cost reduction initiatives







11





15





133


  Stock-based compensation



840





476





3,458





2,465


  Non-cash rent



(531)





(672)





(1,956)





(2,403)


  Loss on disposal of assets



234





89





315





116


  Postretirement plan amendment and settlement











35





50


  Costs related to shareholder activism















2,758


Adjusted EBITDA

$


21,880



$


18,983



$


66,518



$


57,085


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

(Adjusted EBITDA)

(A Non-GAAP Financial Measure)

(Unaudited)



52 Weeks
Ended


(In thousands)

December 31,
2022


Net earnings

$


34,518


  Income tax expense



12,397


  Other expenses, net



21,629


Operating earnings



68,544


Adjustments:





  LIFO expense



56,823


  Depreciation and amortization



94,180


  Acquisition and integration, net



343


  Restructuring and asset impairment, net



805


  Cloud computing amortization



3,650


  Organizational realignment, net



1,859


  Severance associated with cost reduction initiatives



831


  Stock-based compensation



8,589


  Stock warrant



2,158


  Non-cash rent



(3,444)


  Loss on disposal of assets



1,073


  Postretirement plan amendment and settlement



133


  Costs related to shareholder activism



7,335


Adjusted EBITDA

$


242,879



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.


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

Table 3: Reconciliation of Operating Earnings to Adjusted Operating Earnings

(A Non-GAAP Financial Measure)

(Unaudited)



12 Weeks Ended



40 Weeks Ended


(In thousands)

October 7, 2023



October 8, 2022



October 7, 2023



October 8, 2022


Operating earnings

$


23,071



$


19,300



$


83,170



$


59,778


Adjustments:




















  LIFO expense



6,606





14,884





22,445





42,916


  Acquisition and integration, net



2,130





(577)





2,259





98


  Restructuring and asset impairment, net



(458)





(886)





1,371





1,738


  Organizational realignment, net



2,681





588





4,710





1,859


  Severance associated with cost reduction initiatives



39





54





311





795


  Legal settlement











900






  Postretirement plan amendment and settlement











94





133


  Costs related to shareholder activism















7,335


Adjusted operating earnings

$


34,069



$


33,363



$


115,260



$


114,652


Wholesale:




















Operating earnings

$


18,153



$


14,015



$


66,020



$


54,834


Adjustments:




















  LIFO expense



4,411





12,959





16,734





35,138


  Acquisition and integration, net



65









189






  Restructuring and asset impairment, net



(293)





(2,088)





688





(2,216)


  Organizational realignment, net



1,673





367





2,939





1,160


  Severance associated with cost reduction initiatives



39





43





296





662


  Legal settlement











900






  Postretirement plan amendment and settlement











59





83


  Costs related to shareholder activism















4,577


Adjusted operating earnings

$


24,048



$


25,296



$


87,825



$


94,238


Retail:




















Operating earnings

$


4,918



$


5,285



$


17,150



$


4,944


Adjustments:




















  LIFO expense



2,195





1,925





5,711





7,778


  Acquisition and integration, net



2,065





(577)





2,070





98


  Restructuring and asset impairment, net



(165)





1,202





683





3,954


  Organizational realignment, net



1,008





221





1,771





699


  Severance associated with cost reduction initiatives







11





15





133


  Postretirement plan amendment and settlement











35





50


  Costs related to shareholder activism















2,758


Adjusted operating earnings

$


10,021



$


8,067



$


27,435



$


20,414



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 Net Earnings to

Adjusted Earnings from Continuing Operations, as well as per diluted share (“adjusted EPS”)

(A Non-GAAP Financial Measure)

(Unaudited)



12 Weeks Ended



October 7, 2023




October 8, 2022






per diluted







per diluted


(In thousands, except per share amounts)

Earnings



share




Earnings



share


Net earnings

$


11,127



$


0.32




$


9,464



$


0.26


Adjustments:





















  LIFO expense



6,606











14,884







  Acquisition and integration, net



2,130











(577)







  Restructuring and asset impairment, net



(458)











(886)







  Organizational realignment, net



2,681











588







  Severance associated with cost reduction initiatives



39











54







  Postretirement plan amendment and settlement



(762)











(763)







 Total adjustments



10,236











13,300







   Income tax effect on adjustments (a)



(2,600)











(2,725)







Total adjustments, net of taxes



7,636





0.22






10,575





0.29


Adjusted earnings from continuing operations

$


18,763



$


0.54




$


20,039



$


0.55
























40 Weeks Ended



October 7, 2023




October 8, 2022






per diluted







per diluted


(In thousands, except per share amounts)

Earnings



share




Earnings



share


Net earnings

$


41,932



$


1.20




$


33,868



$


0.93


Adjustments:





















  LIFO expense



22,445











42,916







  Acquisition and integration, net



2,259











98







  Restructuring and asset impairment, net



1,371











1,738







  Organizational realignment, net



4,710











1,859







  Severance associated with cost reduction initiatives



311











795







  Pension refund from annuity provider













(200)







  Postretirement plan amendment and settlement



(2,411)











(18)







  Legal settlement



900

















  Costs related to shareholder activism













7,335







 Total adjustments



29,585











54,523







  Income tax effect on adjustments (a)



(7,525)











(13,870)







 Total adjustments, net of taxes



22,060





0.63






40,653





1.12


Adjusted earnings from continuing operations

$


63,992



$


1.83




$


74,521



$


2.05




(a)

The income tax effect on adjustments is computed by applying the effective tax rate, before discrete tax items, to the total adjustments for the period.

Table 4: Reconciliation of Net Earnings to

Adjusted Earnings from Continuing Operations, as well as per diluted share, continued (“adjusted EPS”)

(A Non-GAAP Financial Measure)

(Unaudited)



52 Weeks Ended



December 31, 2022






per diluted


(In thousands, except per share amounts)

Earnings



share


Net earnings

$


34,518



$


0.95


Adjustments:










  LIFO expense



56,823







  Acquisition and integration, net



343







  Restructuring and asset impairment, net



805







  Organizational realignment, net



1,859







  Severance associated with cost reduction initiatives



831







  Pension refund from annuity provider



(200)







  Postretirement plan amendment and settlement



(776)







  Costs related to shareholder activism



7,335







  Write off of deferred financing costs



236







 Total adjustments



67,256







  Income tax effect on adjustments (a)



(17,083)







 Total adjustments, net of taxes



50,173





1.38


Adjusted earnings from continuing operations

$


84,691



$


2.33




(a)

The income tax effect on adjustments is computed by applying the effective tax rate, before discrete tax items, to the total adjustments for the period.



Notes: Adjusted earnings from continuing operations, as well as per diluted share (“adjusted EPS”), is a non-GAAP operating financial measure that the Company defines as net 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 earnings from continuing operations is not a measure of performance under GAAP and should not be considered as a substitute for net earnings, cash flows from operating activities and other income or cash flow statement data. The Company’s definition of adjusted earnings from continuing operations may not be identical to similarly titled measures reported by other companies.

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

(A Non-GAAP Financial Measure)

(Unaudited)


(In thousands)

October 7, 2023



December 31, 2022

Current portion of long-term debt and finance lease liabilities

$


8,410



$


6,789

Long-term debt and finance lease liabilities



535,804





496,792

  Total debt



544,214





503,581

Cash and cash equivalents



(17,554)





(29,086)

  Net long-term debt

$


526,660



$


474,495


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 Purchases of Property and Equipment to Capital Expenditures and IT Capital

(A Non-GAAP Financial Measure)

(Unaudited)






40 Weeks Ended

(In thousands)




October 7, 2023



October 8, 2022

Purchases of property and equipment




$


86,212



$


66,282

Plus:












  Cloud computing spend






4,065





3,236

Capital expenditures and IT capital




$


90,277



$


69,518











52 Weeks Ended






(In thousands)




December 31, 2022






Purchases of property and equipment




$


97,280






Plus:












  Cloud computing spend






4,817






Capital expenditures and IT capital




$


102,097







Notes: Capital expenditures and IT capital is a non-GAAP financial measure calculated by adding spending related to the development of cloud computing applications to capital expenditures, the most directly comparable GAAP measure. Cloud computing spend only includes costs incurred during the application development phase and does not include ongoing costs of hosting or maintenance associated with these applications, which are expensed as incurred. The Company believes it is a useful indicator of the Company’s investment in its facilities and systems as it transitions to more cloud-based IT systems. Capital expenditures and IT capital is not a substitute for GAAP financial measures and may differ from similarly titled measures of other companies.

INVESTOR CONTACT:
Kayleigh Campbell
Head of Investor Relations
[email protected] 

MEDIA CONTACT: 
Adrienne Chance  
SVP, Communications 
[email protected]  

SOURCE SpartanNash

Originally published at https://www.prnewswire.com/news-releases/spartannash-announces-third-quarter-fiscal-2023-results-301980738.html
Images courtesy of https://pixabay.com

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