Smart & Final Stores, Inc. Reports Fourth Quarter and Full Year 2014 Financial Results

COMMERCE, Calif., March 18, 2015 /PRNewswire/ -- Smart & Final Stores, Inc. (the "Company") (NYSE:SFS) today reported financial results for the fourth quarter and fiscal year ended December 28, 2014.

Fourth Quarter Highlights:

  • Net sales increased 13.0% to $839.3 million
  • Comparable store sales growth of 7.8%
  • Net income of $9.3 million, or $0.12 per diluted share
  • Adjusted net income increased 50.3% to $12.3 million, or $0.16 per diluted share
  • Adjusted EBITDA increased 7.4% to $41.3 million

Full Year Highlights:

  • Net sales increased 10.1% to $3,534.2 million
  • Comparable store sales growth of 6.3%
  • Net income of $33.1 million, or $0.52 per diluted share
  • Adjusted net income increased 45.9% to $46.5 million, or $0.73 per diluted share
  • Adjusted EBITDA increased 7.2% to $176.1 million
  • 254 stores at year-end, including 98 Smart & Final Extra! stores

"2014 was an exciting year for Smart & Final.  We delivered record financial results, continued our accelerated store expansion program and successfully completed our initial public offering," said Dave Hirz, President and Chief Executive Officer.  "Performance across both the Smart & Final and Cash & Carry store banners was strong, driven by our ongoing merchandising and marketing efforts and consistent store level execution.  Smart & Final Extra! continues to be the key to our new store growth, and, as planned, we completed twice as many new store openings and conversions to Extra! in 2014 as compared to the prior year."  

Mr. Hirz continued, "Looking ahead, in 2015 we plan to continue our accelerated pace of new store openings and believe that our strong performance in comparable store sales, competitive positioning, and real estate development pipeline provide the foundation for strong operating and financial performance."

In order to aid understanding of the Company's business performance, it has presented results in conformity with accounting principles generally accepted in the United States ("GAAP") and has also presented adjusted net income, adjusted net income per share, adjusted net income per diluted share, EBITDA and adjusted EBITDA, which are non-GAAP measures that are explained and reconciled to the comparable GAAP measures in the tables included in this release.  Where applicable, the numbers below are first presented on a GAAP basis and then on an adjusted basis.

Fourth Quarter Fiscal 2014 Financial Results

Net sales were $839.3 million, a 13.0% increase as compared to $742.8 million in the same period of 2013.  Net sales growth was driven by a 7.8% increase in comparable store sales and from the net sales contribution of new stores.  In the 12 weeks ended December 28, 2014, the Company opened one new Smart & Final Extra! store and one new Cash & Carry store.  The growth in comparable store sales was comprised of a 4.9% increase in comparable transaction count and a 2.8% increase in comparable average transaction size.

Net sales for Smart & Final banner stores were $644.6 million, a 13.5% increase as compared to $568.1 million in the same period of 2013.  Comparable store sales growth for the Smart & Final banner was 7.0% in the fourth quarter.

Net sales for Cash & Carry banner stores were $194.7 million, an 11.5% increase as compared to $174.7 million in the same period of 2013.  Comparable store sales growth for the Cash & Carry banner  was 10.5% in the fourth quarter.

Gross margin from operations was $125.0 million, a 16.0% increase as compared to $107.8 million in the same period of 2013. Gross margin rate in the fourth quarter was 14.9% as compared to 14.5% in the same period of 2013.

Operating and administrative expenses were $104.0 million, a 13.4% increase as compared to $91.7 million in the same period of 2013.  This increase was primarily related to higher sales volumes, increased store support costs, and initial public offering and public company costs.

Net income was $9.3 million, as compared to a net loss of $7.0 million in the same period of 2013.  Net income per diluted share was $0.12 as compared to net loss per diluted share of $0.12 in the same period of 2013.  The net loss in the fourth quarter of 2013 included costs related to extinguishment of debt in conjunction with a refinancing transaction.

Adjusted net income was $12.3 million, an increase of 50.3% as compared to $8.2 million for the same period of 2013.  Adjusted net income per diluted share was $0.16 as compared to $0.14 in the same period of 2013.

Adjusted EBITDA was $41.3 million, an increase of 7.4% as compared to $38.5 million in the same period of 2013.

Full Year Fiscal 2014 Financial Results

Net sales were $3,534.2 million, a 10.1% increase as compared to $3,210.3 million in fiscal 2013.  Net sales growth was driven by a 6.3% increase in comparable store sales growth and the net sales contribution from 13 new Extra! stores and one new Cash & Carry store in fiscal 2014.  The growth in comparable store sales was comprised of a 4.1% increase in comparable transaction count and a 2.1% increase in comparable average transaction size. 

Net sales for Smart & Final banner stores were $2,668.9 million, or a 10.0% increase as compared to $2,425.4 million in fiscal 2013.  Fiscal 2014 comparable store sales growth for the Smart & Final banner was 5.0%.

Net sales for Cash & Carry banner stores were $865.3 million, or a 10.2% increase as compared to $784.9 million in fiscal 2013.  Fiscal 2014 comparable store sales growth for the Cash & Carry banner was 10.0%.

Net income was $33.1 million, as compared to $8.2 million in fiscal 2013.  Net income per diluted share was $0.52 as compared to $0.14 for fiscal 2013.

Adjusted net income was $46.5 million, an increase of 45.9% as compared to $31.9 million in fiscal 2013.  Adjusted net income per diluted share was $0.73, compared to $0.54 in fiscal 2013.

Adjusted EBITDA was $176.1 million, or a 7.2% increase as compared to $164.3 million in fiscal 2013.

Growth and Development

During fiscal 2014, the Company opened 13 new Smart & Final Extra! stores, completed 16 conversions of legacy Smart & Final stores to the Smart & Final Extra! format, including two relocations, and opened one new Cash & Carry store.  As of December 28, 2014, the Company operated a total of 98 Smart & Final Extra! and 103 legacy Smart & Final stores, and 53 Cash & Carry stores.

Operating Store at Period End (December 28, 2014)













 Smart & Final Banner Stores


 Cash & Carry
Banner Stores


 Total
Company



 Legacy format


  Extra! format


 Total




End of Fiscal 2013

119


69


188


52


240


New stores

-


12


12


-


12


Relocations

(1)


1


-


-


-


Conversions

(8)


8


-


-


-


End of 3rd Quarter 2014

110


90


200


52


252













New stores

-


1


1


1


2


Relocations

(1)


1


-


-


-


Conversions

(6)


6


-


-


-


End of Fiscal 2014

103


98


201


53


254


 

In the first quarter of fiscal 2015, the Company expects to open four new Smart & Final Extra! stores.

In fiscal 2015, the Company expects to open a total of 20 new Smart & Final Extra! stores, complete nine conversions of legacy stores to the Extra! format, including three store relocations, and open three Cash & Carry stores, including one store relocation.  The Company expects the pace of new store openings to be relatively consistent throughout 2015.  

Leverage and Liquidity

During the full year fiscal 2014, the Company repaid approximately $120.9 million in borrowings under its Term Loan Facility.  At December 28, 2014, the Company's debt, net of debt discount, was $588.1 million and cash and cash equivalents was $106.8 million.

The Company generated cash from operations of $125.3 million in the 52 weeks ended December 28, 2014.  The Company invested $117.4 million in capital expenditures under the Company's plan to accelerate openings of Extra! format and Cash & Carry stores, as well as convert its legacy stores to the Extra! format and ensure its existing store portfolio maintains its competitiveness.

Outlook  

The following provides information on the Company's guidance for the full year ending January 3, 2016:



2015

Net sales growth

11% - 12%

Comparable store sales growth 

3.5% - 4.5%

Unit growth (net new stores)

20 Smart & Final Extra!

2 Cash & Carry

Relocations of existing stores

3 Smart & Final

1 Cash & Carry

Conversions of legacy stores to the Extra! format

6 stores

Adjusted EBITDA

$185 - $190 million

Adjusted net income

$51 - $53 million  

Adjusted diluted EPS

$0.67- $0.70

Capital expenditures 

$135 - $145 million

Basic weighted average shares

73.1 million

Fully diluted weighted average shares

76.6 million

 

Fourth Quarter and Full Year 2014 Conference Call

The Company will host a conference call today at 1:30 p.m. PT / 4:30 p.m. ET to discuss its fourth quarter and full year fiscal 2014 financial results.  To participate in the call, please dial (877) 407-0784 (U.S.) or (201) 689-8560 (International) ten minutes prior to the start time.  The conference call can also be accessed on the "Investors" section of the Company's Web site at http://www.smartandfinal-investor.com/.

For those unable to participate during the live broadcast, a telephonic replay of the call will also be available beginning today at approximately 7:30 p.m. Eastern Time, by dialing (877) 870-5176 (U.S.) or (858) 384-5517 (International) and entering the replay pin number: 13602597.  The telephonic replay will be available until 11:59 p.m. Eastern Time, on Wednesday, April 1, 2015.

About Smart & Final

Smart & Final Stores, Inc. (NYSE: SFS), is a value-oriented food and everyday staples retailer that serves household and business customers. The Company is headquartered in Commerce (located in Los Angeles), CA, where it was founded over 140 years ago.  As of December 28, 2014, the Company operated 254 grocery and foodservice stores under the "Smart & Final", "Smart & Final Extra!" and "Cash & Carry Smart Foodservice" banners in California, Oregon, Washington, Arizona, Nevada, and Idaho, with an additional 14 stores in northern Mexico operated through a joint venture.

Forward-Looking Statements

Certain statements contained in this release that are not historical information contain forward-looking statements. The forward-looking statements involve risks and uncertainties and actual results may differ materially from those projected or implied. Further, certain forward-looking statements are based on assumptions of future events which may not prove to be accurate. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "may," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or, in each case, their negative, or other variations or comparable terminology. The Company derives many of its forward-looking statements from its operating budgets and forecasts, which are based upon many detailed assumptions. While the Company believes that its assumptions are reasonable, it is difficult to predict the impact of known factors and, of course, it is impossible to anticipate all factors that could affect actual results. These factors are discussed in the "Risk Factors," "Special Note Concerning Forward-Looking Statements," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Business" sections and elsewhere in the prospectus that is contained in the Company's registration statement on Form S-1 (File No. 333-196931) filed with the Securities and Exchange Commission.

You should keep in mind that any forward-looking statement made by the Company herein, or elsewhere, speaks only as of the date on which made. New risks and uncertainties come up from time to time, and it is impossible for the Company to predict these events or how they may affect it. The Company has no obligation to update any forward-looking statements after the date hereof, except as required by federal securities laws.

 

Smart & Final Stores, Inc. and Subsidiaries


Consolidated Statements of Operations 

(Dollars in Thousands, Except Share and Per Share Amounts)


















 Twelve Weeks Ended 


 Fifty-two Weeks Ended 


December 28, 2014


December 29, 2013


December 28, 2014


December 29, 2013

















Net sales 

$                839,336


$                742,800


$             3,534,244


$             3,210,293

Cost of sales, buying and occupancy 

714,325


634,999


3,006,955


2,736,357

Gross margin 

125,011


107,801


527,289


473,936









Operating and administrative expenses 

104,001


91,677


438,528


387,133

Income from operations 

21,010


16,124


88,761


86,803









Interest expense, net 

8,119


10,550


37,602


50,365

Loss on early extinguishment of debt

-


(17,348)


(2,224)


(24,487)

Equity in earnings of joint venture 

5


241


1,037


1,649

Income (loss) before income taxes 

12,896


(11,533)


49,972


13,600









Income tax (provision) benefit

(3,623)


4,544


(16,854)


(5,429)

Net income (loss)

$                    9,273


$                   (6,989)


$                  33,118


$                    8,171









Net income (loss) per share:








       Basic

$                      0.13


$                     (0.12)


$                      0.54


$                      0.14

       Diluted

$                      0.12


$                     (0.12)


$                      0.52


$                      0.14









Weighted average shares outstanding:








       Basic

73,074,360


57,171,190


61,455,584


57,030,099

       Diluted

76,193,944


57,171,190


63,841,118


59,387,487

 

Smart & Final Stores, Inc. and Subsidiaries


Consolidated Balance Sheets

(Dollars in Thousands, Except Share Amounts)










 December 28, 2014 


 December 29, 2013 

Assets 




Current assets: 




Cash and cash equivalents 

$                 106,847


$                   53,699

Accounts receivable, less allowances of $787 and $766 at 




December 28, 2014 and December 29, 2013, respectively 

23,666


19,453

Inventories 

223,404


209,502

Prepaid expenses and other current assets 

26,532


17,938

Deferred income taxes 

22,419


20,747

Total current assets 

402,868


321,339





Property, plant, and equipment: 




Land 

11,165


10,394

Buildings and improvements 

23,938


20,441

Leasehold improvements 

176,114


119,306

Fixtures and equipment 

203,473


148,271

Construction in progress 

7,344


5,541


422,034


303,953

Less accumulated depreciation and amortization 

115,350


59,961


306,684


243,992





Capitalized software, net of accumulated amortization of 




$9,486 and $5,168 at December 28, 2014 and 




December 29, 2013, respectively 

10,403


12,664

Other intangible assets, net 

325,289


328,865

Goodwill 

611,242


611,242

Deferred financing costs, net 

5,894


8,272

Equity investment in joint venture 

11,924


10,948

Other assets 

54,988


62,219

Total assets 

$              1,729,292


$              1,599,541









Liabilities and Stockholders' equity




Current liabilities: 




Accounts payable 

$                 184,897


$                 153,644

Accrued salaries and wages 

28,582


22,337

Accrued expenses 

72,667


69,174

Current portion of long-term debt

-


7,200

Total current liabilities 

286,146


252,355





Long-term debt, less current portion and debt discount 

588,117


698,991

Deferred income taxes 

125,673


151,232

Postretirement and postemployment benefits 

127,004


84,155

Other long-term liabilities 

85,144


70,949





Commitments and contingencies 








Stockholders' equity: 




Preferred stock, $0.001 par value; 




Authorized shares – 10,000,000 




Issued and outstanding shares – none


Common stock, $0.001 par value; 




Authorized shares – 340,000,000




Issued and outstanding shares - 73,074,360 and 57,171,190 at 




 December 28, 2014 and December 29, 2013, respectively

73


57

Additional paid-in capital 

489,551


311,935

Retained earnings (deficit)

32,001


(1,117)

 Accumulated other comprehensive (loss) income

(4,417)


30,984

Total stockholders' equity

517,208


341,859

Total liabilities and stockholders' equity 

$              1,729,292


$              1,599,541

 

Smart & Final Stores, Inc. and Subsidiaries


Consolidated Statements of Cash Flows

(Dollars in Thousands)










 Fifty-two Weeks Ended 


 December 28, 2014 


 December 29, 2013 

Operating activities 




Net income 

$                       33,118


$                         8,171

Adjustments to reconcile net income to net cash provided 




by operating activities: 




Depreciation 

35,565


33,414

Amortization 

28,629


27,345

Amortization of deferred financing costs and debt discount 

3,275


4,465

Share-based compensation

11,329


Excess tax benefits related to share-based payments

(728)


Deferred income taxes

(3,826)


(1,258)

Equity in earnings of joint venture 

(1,037)


(1,649)

(Gain) loss on disposal of property, plant, and equipment 

(30)


75

Asset impairment 

988


1,105

Loss on early extinguishment of debt

2,224


24,487

Dividend from joint venture


577

Changes in operating assets and liabilities: 




Accounts receivable, net 

(2,931)


(1,755)

Inventories, net 

(13,902)


(14,099)

Prepaid expenses and other assets 

(8,074)


6,218

Accounts payable 

31,253


20,067

Accrued salaries and wages 

6,245


(3,112)

Other accrued liabilities 

3,239


3,466

Net cash provided by operating activities 

125,337


107,517





Investing activities 




Purchases of property, plant, and equipment 

(114,933)


(52,884)

Proceeds from disposal of property, plant, and equipment 

95


85

Investment in capitalized software 

(2,466)


(2,209)

Purchase of intangible asset

(100)


Other 

34


(311)

Net cash used in investing activities 

(117,370)


(55,319)





Financing activities




Borrowings on bank line of credit


5,000

Issuance of bank debt, net of issuance costs


188,985

Issuance of common stock in IPO

173,080


Issuance of common stock, other

79


1,700

Proceeds from exercise of stock options

450


Payment of minimum withholding taxes on net share settlement of stock option exercise

(2,667)


Fees paid in conjunction with debt financing

(315)


(1,073)

Payments on bank line of credit


(7,000)

Payments on bank debt

(120,880)


(199,213)

Payments of IPO issuance costs

(5,046)


Excess tax benefits related to share-based payments

728


Contingent consideration related to acquisition of SFHC

(248)


(22,885)

Net cash provided by (used in) financing activities

45,181


(34,486)





Net increase in cash and cash equivalents

53,148


17,712

Cash and cash equivalents at beginning of period

53,699


35,987

Cash and cash equivalents at end of period

$                     106,847


$                       53,699





Cash paid during the period for:




Interest 

$                       41,290


$                       45,547

Income taxes

$                       25,372


$                       12,718





Non-cash investing and financing activities




Software development costs incurred but not paid

$                            419


$                              49

Construction in progress costs incurred but not paid

$                         8,101


$                         3,366

Issuance costs incurred but not paid

$                            222


$                                –

Other consideration payable for acquisition of Smart & Final Holdings Corp.

$                         2,359


$                         2,607

 

Smart & Final Stores, Inc. and Subsidiaries


 Segment Reporting 

 (Dollars in Thousands) 










 Smart & Final 


 Cash & Carry 


 Corporate / Other 


 Consolidated 

Twelve Weeks Ended December 28, 2014








 Net sales 

$      644,609


$      194,727


$               -


$      839,336

 Cost of sales, distribution and store occupancy 

544,830


167,623


1,872


714,325

 Operating and administrative expenses 

76,213


13,639


14,149


104,001

 Income (loss) from operations 

$        23,566


$        13,465


$    (16,021)


$        21,010

















 Capital expenditures 

$        22,933


$          4,045


$          737


$        27,715

























Twelve Weeks Ended December 29, 2013








 Net sales 

$      568,132


$      174,668


$               -


$      742,800

 Cost of sales, distribution and store occupancy 

481,956


151,361


1,682


634,999

 Operating and administrative expenses 

66,735


12,222


12,720


91,677

  Income (loss) from operations

$        19,441


$        11,085


$   (14,402)


$        16,124

















 Capital expenditures 

$        10,087


$            705


$       1,635


$        12,427

























Fiscal Year Ended December 28, 2014








 Net sales 

$    2,668,933


$      865,311


$               -


$    3,534,244

 Cost of sales, distribution and store occupancy 

2,252,698


746,102


8,155


3,006,955

 Operating and administrative expenses 

319,864


57,963


60,701


438,528

 Income (loss) from operations 

$        96,371


$        61,246


$    (68,856)


$        88,761

















 Capital expenditures 

$      106,528


$          5,229


$       5,642


$      117,399

























Fiscal Year Ended December 29, 2013








 Net sales 

$    2,425,346


$      784,947


$               -


$    3,210,293

 Cost of sales, distribution and store occupancy 

2,050,197


678,760


7,400


2,736,357

 Operating and administrative expenses 

284,025


53,240


49,868


387,133

  Income (loss) from operations

$ 91,124


$ 52,947


$   (57,268)


$ 86,803

















 Capital expenditures 

$        48,053


$          2,198


$       4,842


$        55,093

 

The following tables show reconciliations of adjusted net income, EBITDA and adjusted EBITDA to net income, and adjusted net income per share and adjusted net income per diluted share to net income per share, for the twelve-week and fifty two-week periods ended December 28, 2014 and December 29, 2013.

 Smart & Final Stores, Inc. and Subsidiaries 


 Reconciliation of Net Income to Non-GAAP Adjusted Net Income 

 (Unaudited) 

 (Dollars in Thousands, Except Share and Per Share Amounts) 










 Twelve Weeks Ended 


 Year Ended 


 December 28, 2014 


 December 29, 2013 


 December 28, 2014 


 December 29, 2013 

 Net income 

$            9,273


$          (6,989)


$          33,118


$            8,171

 Income tax provision 

3,623


(4,544)


16,854


5,429

 Net income before income taxes 

12,896


(11,533)


49,972


13,600









 Adjustments to Net Income 








 Transaction costs (a) 

(100)


7


1,539


220

 Net (income) loss from closed stores and exit costs (b) 

569


1,136


2,030


3,592

 (Gain) loss from asset dispositions (c) 

345


904


851


974

 Share-based compensation expense (d) 

2,874


-


11,329


-

 Non-cash rent (e) 

646


1,039


4,797


3,985

 Pre-opening costs (f) 

872


741


3,971


1,432

 Loss on extinguishment of debt (g) 

-


17,348


2,224


24,487

 Other items (h) 

(119)


4,145


(2,399)


4,847

 Adjusted income tax provision 

(5,658)


(5,589)


(27,800)


(21,251)

 Adjusted net income 

$          12,325


$            8,198


$          46,514


$          31,886









Adjusted Net Income Per Share
















Net income per share - basic

$            0.13


$           (0.12)


$            0.54


$            0.14

Per share impact of net income adjustments

$            0.04


$            0.26


$            0.22


$            0.42

Adjusted net income per share - basic

$            0.17


$            0.14


$            0.76


$            0.56

Net income per share - diluted

$            0.12


$          (0.12)


$            0.52


$            0.14

Per share impact of net income adjustments

$            0.04


$            0.26


$            0.21


$            0.40

Adjusted net income per share - diluted

$            0.16


$            0.14


$            0.73


$            0.54









Weighted average shares - basic

73,074,360


57,171,190


61,455,584


57,030,099

Weighted average shares - fully diluted

76,193,944


57,171,190


63,841,118


59,387,487

 

Smart & Final Stores, Inc. and Subsidiaries


 Reconciliation of EBITDA to Adjusted EBITDA 

 (Unaudited) 

 (Dollars in Thousands) 










 Twelve Weeks Ended 


 Year Ended 


 December 28, 2014 


 December 29, 2013 


 December 28, 2014 


 December 29, 2013 

 Net income 

$            9,273


$          (6,989)


$          33,118


$            8,171

 Depreciation and amortization  

15,201


14,119


64,194


60,759

 Interest expense, net 

8,119


10,550


37,602


50,365

 Income tax provision 

3,623


(4,544)


16,854


5,429

 EBITDA 

36,216


13,136


151,768


124,724









 Adjustments to EBITDA 








 Transaction costs (a) 

(100)


7


1,539


220

 Net (income) loss from closed stores and exit costs (b) 

569


1,136


2,030


3,592

 (Gain) loss from asset dispositions (c) 

345


904


851


974

 Share-based compensation expense (d) 

2,874


-


11,329


-

 Non-cash rent (e) 

646


1,039


4,797


3,985

 Pre-opening costs (f) 

872


741


3,971


1,432

 Loss on extinguishment of debt (g) 

-


17,348


2,224


24,487

 Other items (h) 

(119)


4,145


(2,399)


4,847

 Adjusted EBITDA 

$          41,303


$          38,456


$        176,110


$        164,261

 

(a)  Represents costs (i) primarily associated with the Company's initial public offering that were charged to expense for the fiscal year ended December 28, 2014 and (ii) associated with the Ares Acquisition for the fiscal year ended December 29, 2013.

(b)  Represents costs associated with store closure and exit costs.

(c)  Represents non-cash gain or loss associated with asset dispositions and impairment charges.

(d)  Represents expenses associated with the Company's equity-based incentive award program.

(e)  Represents non-cash component of recognized rent expense.

(f)  Represents new store and relocation opening costs consisting primarily of rent utilities, distribution, store labor and advertising.

(g)  Represents the write-off of unamortized debt discount and deferred financing costs.

(h)  Represents (i) reversal of a reserve related to executive compensation for the fiscal year ended December 28, 2014, (ii) death benefit income from a Company-owned life insurance policy for the fiscal year ended December 28, 2014, (iii) consulting expenses related to strategic growth initiatives for the fiscal year ended December 28, 2014, and (iv) costs primarily related to a legal settlement for the twelve-week period and fiscal year ended December 29, 2013, net.

 

Non-GAAP Financial Measures

To supplement the Company's financial information presented in accordance with GAAP, the Company uses certain non-GAAP financial measures, namely adjusted net income, adjusted net income per share, adjusted net income per diluted share, EBITDA and Adjusted EBITDA to clarify and enhance understanding of its past performance. The Company defines adjusted net income as net income adjusted for the items set forth in the table above.  The Company defines adjusted net income per share as adjusted net income divided by the weighted average basic shares outstanding.  The Company defines adjusted net income per diluted share as adjusted net income divided by the weighted average diluted shares outstanding.  The Company defines EBITDA as net income before depreciation and amortization, interest expense and provision for income tax, and adjusted EBITDA as EBITDA adjusted for the items set forth in the table above.

Use of these non-GAAP measures may differ from similar measures reported by other companies. Each of these non-GAAP measures has its limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of the Company's results as reported under GAAP.

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SOURCE Smart & Final Stores, Inc.