UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

 


 

FORM 8-K

 

CURRENT REPORT
P
ursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

 

Date of report  (Date of earliest event reported)  March 9, 2016

 

 

SMART & FINAL STORES, INC.

(Exact Name of Registrant as Specified in Charter)

 

           Delaware             

 

      001-36626      

 

         80-0862253        

(State or Other Jurisdiction
of Incorporation)

 

(Commission
File Number)

 

(IRS Employer
Identification No.)

 

600 Citadel Drive, Commerce, CA

 

90040

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code (323) 869-7500

 

 

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 



 

Item 2.02        Results of Operations and Financial Condition.

 

On March 9, 2016, Smart & Final Stores, Inc. issued a press release announcing its financial results for the quarter and full year ended January 3, 2016.  The text of the press release is included as Exhibit 99.1 to this Form 8-K.

 

The information disclosed under this Item 2.02, including Exhibit 99.1 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 and shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933, except as expressly set forth by specific reference in such filing.

 

Item 9.01.       Financial Statements and Exhibits.

 

(d)                   Exhibits:

 

Exhibit Number

Description

 

 

99.1

Press Release, dated March 9, 2016

 



 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

SMART & FINAL STORES, INC.

 

 

 

Date: March 9, 2016

 

 

 

 

 

 

By:

/s/ Richard N. Phegley

 

Name:

Richard N. Phegley

 

Title:

Senior Vice President and Chief Financial Officer

 



 

Exhibit Index

 

Exhibit Number

Description

99.1

Press Release, dated March 9, 2016

 


Exhibit 99.1

 

 

Smart & Final Stores, Inc. Reports Fourth Quarter and Full Year 2015 Financial Results

 

COMMERCE, Calif. (March 9, 2016) –Smart & Final Stores, Inc. (the “Company”) (NYSE:SFS), the value-oriented food and everyday staples retailer, today reported financial results for the thirteen week and fifty-three week periods ended January 3, 2016.

 

Full Year Highlights:

·                 Net sales increased 12.4% to $3.97 billion

·                 Comparable store sales growth of 4.5%

·                 Net income of $38.3 million, or $0.50 per diluted share

·                 Adjusted net income increased 21.0% to $56.3 million, or $0.73 per diluted share

·                 Adjusted EBITDA increased 9.5% to $192.9 million

·                 276 stores at year-end, including 127 Smart & Final Extra! stores

 

“2015 was an exceptional year for Smart & Final Stores,” said Mr. David Hirz, President and Chief Executive Officer. “Our focus on execution positioned us to deliver strong top-line sales growth and record bottom-line financial performance.  We completed our 2015 store development plan, which included expanding our Smart & Final Extra! store base by nearly 30% and adding two new Cash & Carry stores. Additionally, we continued the successful roll-out of key merchandising initiatives, which helped contribute to our 26th year of positive comparable store sales over the past 27 years.”

 

Mr. Hirz added, “We’ve set a new standard for growth at Smart & Final Stores and have made the necessary investments to support an accelerated pace of expansion in 2016. We plan to increase our Smart & Final banner store base by 15% this year, driven by the successful acquisition of 33 store leases and related assets in central and southern California previously operated under the Haggen banner.  In addition, we plan to open four to five new Cash & Carry stores in 2016.”

 

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 2015 Financial Results

Net sales were $997.6 million, representing an 18.9% increase as compared to $839.3 million in the same period of 2014. An increase in net sales of $73.3 million was attributable to an additional week in the fourth quarter of 2015 as compared to the same period in 2014. Net sales growth was driven by a 3.5% increase in comparable store sales and from the net sales contribution of new stores. The growth in comparable store sales was comprised of a 3.9% increase in comparable transaction count and a 0.4% decrease in comparable average transaction size, which was negatively impacted by deflation.

 

1



 

Net sales for Smart & Final banner stores were $780.6 million, a 21.1% increase as compared to $644.6 million in the same period of 2014.  Comparable store sales growth for the Smart & Final banner was 4.1% in the fourth quarter.

 

Net sales for Cash & Carry banner stores were $217.0 million, an 11.5% increase as compared to $194.7 million in the same period of 2014.  Comparable store sales growth for the Cash & Carry banner was 1.7% in the fourth quarter.

 

Gross margin from operations was $147.9 million, an 18.3% increase as compared to $125.0 million in the same period of 2014. Gross margin rate in the fourth quarter was 14.8% as compared to 14.9% in the same period of 2014.

 

Operating and administrative expenses were $125.9 million, a 21.0% increase as compared to $104.0 million in the same period of 2014. This increase was primarily related to increased store development activities and increased public company costs.

 

Net income was $10.0 million, as compared to $9.3 million in the same period of 2014. Net income per diluted share was $0.13 as compared to $0.12 in the same period of 2014, and reflects an increase of approximately 1.3 million fully diluted shares.

 

Adjusted net income was $14.7 million, an increase of 19.5% as compared to $12.3 million for the same period of 2014. Adjusted net income per diluted share was $0.19 as compared to $0.16 in the same period of 2014, and reflects an increase of approximately 1.3 million fully diluted shares.

 

Adjusted EBITDA was $47.4 million, an increase of 14.7% as compared to $41.3 million in the same period of 2014.

 

Full Year Fiscal 2015 Financial Results

 

Net sales were $3,971.0 million for the 53 weeks ended January 3, 2016, representing a 12.4% increase as compared to $3,534.2 million in fiscal 2014.  An increase in net sales of $73.3 million was attributable to an additional week in fiscal 2015 as compared to 2014. Net sales growth was driven by a 4.5% increase in comparable store sales and from the net sales contribution of 22 new store openings in 2015.  The growth in comparable store sales was comprised of a 4.4% increase in comparable transaction count and a 0.1% increase in comparable average transaction size.

 

Net sales for Smart & Final banner stores were $3,036.9 million, a 13.8% increase as compared to $2,668.9 million in fiscal 2014. Fiscal 2015 comparable store sales growth for the Smart & Final banner was 4.4%.

 

Net sales for Cash & Carry banner stores were $934.0 million, a 7.9% increase as compared to $865.3 million in fiscal 2014.  Fiscal 2015 comparable store sales growth for the Cash & Carry banner was 4.5%.

 

2



 

Gross margin from operations was $598.9 million, an increase of $71.6 million, or 13.6%, as compared to $527.3 million in fiscal 2014. As a percentage of sales, gross margin rate for fiscal 2015 was 15.1% as compared to 14.9% in fiscal 2014.

 

Net income was $38.3 million, a 15.5% increase as compared to $33.1 million in fiscal 2014. Net income per diluted share was $0.50 as compared to $0.52 in fiscal 2014, and reflects an increase of approximately 13.3 million fully diluted shares, including shares issued in the Company’s September 2014 initial public offering (the “IPO”).

 

Adjusted net income was $56.3 million, an increase of 21.0% as compared to $46.5 million in fiscal 2014. Adjusted net income per diluted share was $0.73 in both fiscal 2015 and fiscal 2014, reflecting an increase of approximately 13.3 million fully diluted shares, including shares issued in the IPO.

 

Adjusted EBITDA was $192.9 million, an increase of 9.5% as compared to $176.1 million in fiscal 2014.

 

Growth and Development

During fiscal 2015, the Company opened 20 new Smart & Final Extra! stores and completed nine conversions of legacy Smart & Final stores to the Smart & Final Extra! format, including three store relocations. The Company also opened two new Cash & Carry stores. As of January 3, 2016, the Company operated a total of 127 Smart & Final Extra! and 94 legacy Smart & Final stores, and 55 Cash & Carry stores.

 

Operating Stores at Fiscal Year End

 

 

 

 

Smart & Final Banner Stores

 

 

 

 

 

 

 

Extra!
format

 

Legacy
format

 

Total

 

 

Cash & Carry
Banner Stores

 

Total
Company

End of Fiscal 2014

 

98

 

103

 

201

 

53

 

254

 

 

 

 

 

 

 

 

 

 

 

New stores

 

20

 

-

 

20

 

2

 

22

 

 

 

 

 

 

 

 

 

 

 

Relocations, net

 

3

 

(3)

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

Conversions

 

6

 

(6)

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

End of Fiscal 2015

 

127

 

94

 

221

 

55

 

276

 

 

Leverage and Liquidity

At January 3, 2016, the Company’s debt, net of debt discount, was $595.1 million and cash and cash equivalents was $59.3 million.

 

In the 53-week period ended January 3, 2016, the Company generated cash from operations of $145.4 million. The Company invested $128.9 million in capital expenditures, primarily related to the development of Extra! format stores, and Cash & Carry stores and to improvements of existing assets. In the fourth quarter, the Company invested an additional $66.4 million in the acquisition of 33 store leases and related assets previously operated under the Haggen banner.

 

3



 

Outlook

 

Mr. Hirz added, “We look forward to building on our positive momentum in 2016. We have a strong team in place and the resources to execute our multi-year growth plan. As a result, we’re anticipating that 2016 will mark our 27th year of positive comparable store sales in the last 28 years.”

 

The Company is providing the following guidance for the 52 week, full year ending January 1, 2017:

 

 

 

Fiscal Year Ending January 1, 2017

Net sales growth

 

15% - 16%

Comparable store sales growth 

 

2.5% - 3.0%

Unit growth (net new stores)

 

33 Smart & Final Extra!
4 - 5 Cash & Carry

Relocations of existing stores to Extra! format

 

 

6 Smart & Final

 

Conversions of legacy stores to Extra! format

 

6 stores

Adjusted EBITDA

 

$205 - $210 million

Adjusted net income

 

$58 - $60 million

Adjusted diluted EPS

 

$0.75 - $0.77

Capital expenditures 

 

$150 - $160 million

Basic weighted average shares

 

73.3 million

Fully diluted weighted average shares

 

77.6 million

 

In the first quarter of 2016, the Company expects to open 13 to 14 new Smart & Final Extra! stores and complete two relocations of legacy Smart & Final stores to the Extra! format.  The Company additionally is providing first quarter 2016 guidance for comparable store sales growth of 2.00% to 2.25% and Adjusted EBITDA in the range of $34 to $36 million.

 

 

Fourth Quarter 2015 Conference Call

The Company will host a conference call today at 2:00 p.m. PT / 5:00 p.m. ET to discuss its fourth quarter and full year 2015 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 8:00 p.m. Eastern Time, by dialing (877) 870-5176 (U.S.) or (858) 384-5517 (International) and entering the replay pin number: 13630488.  The telephonic replay will be available until 11:59 p.m. Eastern Time, on Wednesday, March 23, 2016.

 

4



 

About Smart & Final

Smart & Final Stores, Inc. (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 145 years ago. As of January 3, 2016, the Company operated 276 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 15 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 special note concerning “Forward-Looking Statements,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business” sections and elsewhere in the Company’s Annual Report on Form 10-K to be 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.

 

INVESTOR CONTACTS:

Laura Bainbridge / Andrew Greenebaum

Addo Communications

O: 310.829.5400

investors@smartandfinal.com

 

MEDIA CONTACT:

press@smartandfinal.com

 

5



 

Smart & Final Stores, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In Thousands, Except Share and Per Share Amounts)

 

 

 

 

Thirteen Weeks
Ended

 

Twelve Weeks
Ended

 

Fifty-three Weeks
Ended

 

Fifty-two Weeks
Ended

 

 

 

January 3, 2016

 

December 28, 2014

 

January 3, 2016

 

December 28, 2014

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

997,626

 

$

839,336

 

$

3,970,980

 

$

3,534,244

 

Cost of sales, buying and occupancy

 

849,753

 

714,325

 

3,372,120

 

3,006,955

 

Gross margin

 

147,873

 

125,011

 

598,860

 

527,289

 

 

 

 

 

 

 

 

 

 

 

Operating and administrative expenses

 

125,873

 

104,001

 

503,995

 

438,528

 

Income from operations

 

22,000

 

21,010

 

94,865

 

88,761

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

7,680

 

8,119

 

32,687

 

37,602

 

Loss on early extinguishment of debt

 

-    

 

 

2,192

 

2,224

 

Equity in earnings of joint venture

 

333

 

5

 

1,378

 

1,037

 

Income before income taxes

 

14,653

 

12,896

 

61,364

 

49,972

 

 

 

 

 

 

 

 

 

 

 

Income tax provision

 

(4,692)

 

(3,623)

 

(23,102)

 

(16,854)

 

Net income

 

$

9,961

 

$

9,273

 

$

38,262

 

$

33,118

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.14

 

$

0.13

 

$

0.52

 

$

0.54

 

Diluted

 

$

0.13

 

$

0.12

 

$

0.50

 

$

0.52

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

73,191,829

 

73,074,360

 

73,121,964

 

61,455,584

 

Diluted

 

77,497,406

 

76,193,944

 

77,141,621

 

63,841,118

 

 

6



 

Smart & Final Stores, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In Thousands, Except Share and Per Share Amounts)

 

 

 

January 3, 2016

 

December 28, 2014

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

59,327

 

$

106,847

 

Accounts receivable, less allowances of $454 and $787 at January 3, 2016 and December 28, 2014, respectively

 

27,304

 

23,666

 

Inventories

 

234,289

 

223,404

 

Prepaid expenses and other current assets

 

29,072

 

26,532

 

Deferred income taxes

 

22,471

 

22,419

 

Total current assets

 

372,463

 

402,868

 

 

 

 

 

 

 

Property, plant, and equipment:

 

 

 

 

 

Land

 

10,940

 

11,165

 

Buildings and improvements

 

20,441

 

23,938

 

Leasehold improvements

 

237,820

 

176,114

 

Fixtures and equipment

 

266,080

 

203,473

 

Construction in progress

 

19,501

 

7,344

 

 

 

554,782

 

422,034

 

 

 

 

 

 

 

Less accumulated depreciation and amortization

 

174,906

 

115,350

 

 

 

379,876

 

306,684

 

 

 

 

 

 

 

Capitalized software, net of accumulated amortization of $12,356 and $9,486 at January 3, 2016 and December 28, 2014, respectively

 

11,365

 

10,403

 

Other intangible assets, net

 

376,122

 

325,289

 

Goodwill

 

611,242

 

611,242

 

Deferred financing costs, net

 

4,208

 

5,894

 

Equity investment in joint venture

 

12,763

 

11,924

 

Other assets

 

53,250

 

54,988

 

Total assets

 

$

1,821,289

 

$

1,729,292

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

194,149

 

$

184,897

 

Accrued salaries and wages

 

33,859

 

28,582

 

Accrued expenses

 

77,374

 

72,667

 

Current portion of long-term debt

 

5,000

 

-

 

Total current liabilities

 

310,382

 

286,146

 

 

 

 

 

 

 

Long-term debt, less current portion and debt discount

 

590,068

 

588,117

 

Deferred income taxes

 

128,752

 

125,673

 

Postretirement and postemployment benefits

 

117,417

 

127,004

 

Other long-term liabilities

 

108,099

 

85,144

 

 

 

 

 

 

 

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 - 73,789,608 and 73,755,388 at January 3, 2016 and December 28, 2014, respectively

 

74

 

74

 

Additional paid-in capital

 

502,304

 

489,550

 

Retained earnings

 

70,181

 

32,001

 

Accumulated other comprehensive loss

 

(5,988)

 

(4,417)

 

Total stockholders’ equity

 

566,571

 

517,208

 

Total liabilities and stockholders’ equity

 

$

1,821,289

 

$

1,729,292

 

 

7



 

Smart & Final Stores, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In Thousands)

 

 

 

Fifty-three Weeks Ended

 

Fifty-two Weeks Ended

 

 

 

January 3, 2016

 

December 28, 2014

 

Operating activities

 

 

 

 

 

Net income

 

$

38,262

 

 

$

33,118

 

Adjustments to reconcile net income to net cash provided

 

 

 

 

 

 

by operating activities:

 

 

 

 

 

 

Depreciation

 

38,585

 

 

35,565

 

Amortization

 

30,181

 

 

28,629

 

Amortization of deferred financing costs and debt discount

 

2,780

 

 

3,275

 

Share-based compensation

 

10,003

 

 

11,329

 

Excess tax benefits related to share-based payments

 

(358

)

 

(728

)

Deferred income taxes

 

3,325

 

 

(3,826

)

Equity in earnings of joint venture

 

(1,378

)

 

(1,037

)

Gain on disposal of property, plant, and equipment

 

(40

)

 

(30

)

Asset impairment

 

1,413

 

 

988

 

Loss on early extinguishment of debt

 

2,192

 

 

2,224

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable, net

 

(3,637

)

 

(2,931

)

Inventories

 

(10,885

)

 

(13,902

)

Prepaid expenses and other assets

 

(1,202

)

 

(8,074

)

Accounts payable

 

9,252

 

 

31,253

 

Accrued salaries and wages

 

5,277

 

 

6,245

 

Other accrued liabilities

 

21,621

 

 

3,239

 

Net cash provided by operating activities

 

145,391

 

 

125,337

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

Purchases of property, plant, and equipment

 

(132,738

)

 

(114,933

)

Proceeds from sale of property, plant, and equipment

 

8,104

 

 

95

 

Assets acquired in Haggen Transaction

 

(66,440

)

 

 

Investment in capitalized software

 

(4,265

)

 

(2,466

)

Purchase of intangible asset

 

 

 

(100

)

Other

 

(1,277

)

 

34

 

Net cash used in investing activities

 

(196,616

)

 

(117,370

)

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

Issuance of common stock in IPO

 

 

 

173,080

 

Issuance of common stock, other

 

 

 

79

 

Proceeds from exercise of stock options

 

719

 

 

450

 

Payment of minimum withholding taxes on net share settlement of

 

 

 

 

 

 

stock option exercise and vested restricted stock

 

(694

)

 

(2,667

)

Fees paid in conjunction with debt financing

 

(1,335

)

 

(315

)

Borrowings on bank line of credit

 

15,000

 

 

 

Payments on bank line of credit

 

(10,000

)

 

 

Payments on bank debt

 

 

 

(120,880

)

Payments of public offering issuance costs

 

(214

)

 

(5,046

)

Excess tax benefits related to share-based payments

 

358

 

 

728

 

Stock repurchases

 

(129

)

 

 

Contingent consideration related to acquisition of Smart & Final Holdings Corp.

 

 

 

(248

)

Net cash provided by financing activities

 

3,705

 

 

45,181

 

 

 

 

 

 

 

 

Net (decrease) increase in cash and cash equivalents

 

(47,520

)

 

53,148

 

Cash and cash equivalents at beginning of period

 

106,847

 

 

53,699

 

Cash and cash equivalents at end of period

 

$

59,327

 

 

$

106,847

 

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

Interest

 

$

29,462

 

 

$

41,290

 

Income taxes

 

$

23,729

 

 

$

25,372

 

 

 

 

 

 

 

 

Non-cash investing and financing activities

 

 

 

 

 

 

Software development costs incurred but not paid

 

$

310

 

 

$

419

 

Construction in progress costs incurred but not paid

 

$

8,534

 

 

$

8,101

 

 

8



 

Smart & Final Stores, Inc. and Subsidiaries

Segment Reporting

(Dollars in Thousands)

 

 

 

Smart & Final

 

Cash & Carry

 

Corporate / Other

 

Consolidated

 

Thirteen Weeks Ended January 3, 2016

 

 

 

 

 

 

 

 

 

Net sales

 

$

780,592

 

$

217,034

 

$

-

 

 

$

997,626

 

Cost of sales, buying and store occupancy

 

662,194

 

185,469

 

2,090

 

 

849,753

 

Operating and administrative expenses

 

95,089

 

15,885

 

14,899

 

 

125,873

 

Income (loss) from operations

 

$

23,309

 

$

15,680

 

$

(16,989

)

 

$

22,000

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

$

29,393

 

$

1,556

 

$

1,775

 

 

$

32,724

 

 

 

 

 

 

 

 

 

 

 

 

Assets acquired in Haggen Trasaction

 

$

66,440

 

$

-

 

$

-

 

 

$

66,440

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Weeks Ended December 28, 2014

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

644,609

 

$

194,727

 

$

-

 

 

$

839,336

 

Cost of sales, buying 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

 

 

 

 

 

 

 

 

 

 

 

 

Fifty-three Weeks Ended January 3, 2016

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

3,036,949

 

$

934,031

 

$

-

 

 

$

3,970,980

 

Cost of sales, buying and store occupancy

 

2,561,035

 

802,115

 

8,970

 

 

3,372,120

 

Operating and administrative expenses

 

372,011

 

64,368

 

67,616

 

 

503,995

 

Income (loss) from operations

 

$

103,903

 

$

67,548

 

$

(76,586

)

 

$

94,865

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

$

122,808

 

$

7,616

 

$

6,579

 

 

$

137,003

 

 

 

 

 

 

 

 

 

 

 

 

Assets acquired in Haggen Trasaction

 

$

66,440

 

$

-

 

$

-

 

 

$

66,440

 

 

 

 

 

 

 

 

 

 

 

 

Fifty-two Weeks Ended December 28, 2014

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

2,668,933

 

$

865,311

 

$

-

 

 

$

3,534,244

 

Cost of sales, buying 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

 

 

 

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

 

9



 

below.  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 below.

 

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.

 

The following tables present 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 thirteen-week and fifty-three-week periods ended January 3, 2016 and the twelve-week and fifty-two week periods ended December 28, 2014.

 

 

Smart & Final Stores, Inc. and Subsidiaries

Reconciliation of EBITDA to Adjusted EBITDA

(Unaudited)

(In Thousands)

 

 

 

Thirteen Weeks

 

 

 

Fifty-three Weeks

 

Fifty-two Weeks

 

 

 

Ended

 

Twelve Weeks Ended

 

Ended

 

Ended

 

 

 

January 3, 2016

 

December 28, 2014

 

January 3, 2016

 

December 28, 2014

 

Net income

 

$

9,961

 

$

9,273

 

$

38,262

 

$

33,118

 

Depreciation and amortization

 

17,096

 

15,201

 

68,766

 

64,194

 

Interest expense, net

 

7,680

 

8,119

 

32,687

 

37,602

 

Income tax provision

 

4,692

 

3,623

 

23,102

 

16,854

 

EBITDA

 

39,429

 

36,216

 

162,817

 

151,768

 

 

 

 

 

 

 

 

 

 

 

Adjustments to EBITDA

 

 

 

 

 

 

 

 

 

Transaction costs (a)

 

-

 

(100)

 

936

 

1,539

 

Net loss from closed stores and exit costs (b)

 

332

 

569

 

2,344

 

2,030

 

Loss from asset dispositions (c)

 

838

 

345

 

1,396

 

851

 

Share-based compensation expense (d)

 

1,922

 

2,874

 

10,003

 

11,329

 

Non-cash rent (e)

 

1,430

 

646

 

4,508

 

4,797

 

Pre-opening costs (f)

 

3,369

 

872

 

8,543

 

3,971

 

Loss on extinguishment of debt (g)

 

-

 

-

 

2,192

 

2,224

 

Other items (h)

 

38

 

(119)

 

135

 

(2,399)

 

Adjusted EBITDA

 

$

47,358

 

$

41,303

 

$

192,874

 

$

176,110

 

 

10



 

Smart & Final Stores, Inc. and Subsidiaries

Reconciliation of Net Income to Non-GAAP Adjusted Net Income

(Unaudited)

(In Thousands, Except Share and Per Share Amounts)

 

 

 

Thirteen Weeks

 

 

 

Fifty-three Weeks

 

Fifty-two Weeks

 

 

 

Ended

 

Twelve Weeks Ended

 

Ended

 

Ended

 

 

 

January 3, 2016

 

December 28, 2014

 

January 3, 2016

 

December 28, 2014

 

Net income

 

$

9,961

 

$

9,273

 

$

38,262

 

$

33,118

 

Income tax provision

 

4,692

 

3,623

 

23,102

 

16,854

 

Net income before income taxes

 

14,653

 

12,896

 

61,364

 

49,972

 

 

 

 

 

 

 

 

 

 

 

Adjustments to Net Income

 

 

 

 

 

 

 

 

 

Transaction costs (a)

 

-

 

(100)

 

936

 

1,539

 

Net loss from closed stores and exit costs (b)

 

332

 

569

 

2,344

 

2,030

 

Loss from asset dispositions (c)

 

838

 

345

 

1,396

 

851

 

Share-based compensation expense (d)

 

1,922

 

2,874

 

10,003

 

11,329

 

Non-cash rent (e)

 

1,430

 

646

 

4,508

 

4,797

 

Pre-opening costs (f)

 

3,369

 

872

 

8,543

 

3,971

 

Loss on extinguishment of debt (g)

 

-

 

-

 

2,192

 

2,224

 

Other items (h)

 

38

 

(119)

 

135

 

(2,399)

 

Adjusted income tax provision

 

(7,857)

 

(5,658)

 

(35,140)

 

(27,800)

 

Adjusted net income

 

$

14,725

 

$

12,325

 

$

56,281

 

$

46,514

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income Per Share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share - basic

 

$

0.14

 

$

0.13

 

$

0.52

 

$

0.54

 

Per share impact of net income adjustments

 

0.06

 

0.04

 

$

0.25

 

$

0.22

 

Adjusted net income per share - basic

 

$

0.20

 

$

0.17

 

$

0.77

 

$

0.76

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share - diluted

 

$

0.13

 

$

0.12

 

$

0.50

 

$

0.52

 

Per share impact of net income adjustments

 

0.06

 

0.04

 

$

0.23

 

$

0.21

 

Adjusted net income per share - diluted

 

$

0.19

 

$

0.16

 

$

0.73

 

$

0.73

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares - basic

 

73,191,829

 

73,074,360

 

73,121,964

 

61,455,584

 

Weighted average shares - fully diluted

 

77,497,406

 

76,193,944

 

77,141,621

 

63,841,118

 

 

 

(a)  Represents costs primarily associated with the Company’s secondary public offering that were charged to expense in the fiscal year ended January 3, 2016 and the Company’s initial public offering that were charged to expense in the twelve-week and fiscal year ended December 28, 2014.

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

(c)  Represents non-cash 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 loss on the early extinguishment of debt in (i) the fiscal year ended January 3, 2016 in connection with an amendment to the Company’s Term Loan Facility and the write-off of unamortized debt discount and deferred financing costs and (ii) the fiscal year ended December 28, 2014 in connection with an early payment on the Company’s Term Loan Facility.

(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, and (iii) consulting expenses related to strategic growth initiatives for the fiscal year ended December 28, 2014.

 

11


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2 EX-99.1 a16-6051_1ex99d1.htm EX-99.1 577900
3 GRAPHIC g60511mm01i001.jpg GRAPHIC 1927
  Complete submission text file 0001104659-16-103919.txt   606089