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)  July 28, 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

 

 

N/A

 

(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):

 

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

 

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

 

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

 

¨ 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 July 28, 2016, Smart & Final Stores, Inc. issued a press release announcing its (a) financial results for the quarter ended June 19, 2016 and (b) revised 2016 fiscal year guidance.  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 July 28, 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: July 28, 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 July 28, 2016

 


Exhibit 99.1

 

 

Smart & Final Stores, Inc. Reports Second Quarter 2016 Financial Results

 

COMMERCE, Calif. (July 28, 2016) —Smart & Final Stores, Inc. (the “Company”) (NYSE:SFS), the value-oriented food and everyday staples retailer, today reported financial results for the second fiscal quarter ended June 19, 2016.

 

Second Quarter Highlights:

·    Net sales increase of 14.7% to $1,038.3 million

·    Completed integration of 33 acquired stores to Smart & Final Extra! stores

·    Comparable store sales decrease of 0.3%, including impacts of deflation and cannibalization

·    Net income of $7.8 million, or $0.10 per diluted share

·    Adjusted net income of $15.5 million, or $0.20 per diluted share

·    Adjusted EBITDA of $50.7 million

 

“Smart & Final has generated dynamic growth in new stores and overall sales in the first half of 2016,” said David Hirz, President and Chief Executive Officer.  “We’ve successfully completed the integration of 33 acquired store properties, which have all opened as Smart & Final Extra! stores.  These new stores are performing well, contributing to strong growth in customer transactions, and have led to the expansion of our workforce by over 3,500 new employees.  Additionally, we are broadening our reach to both household and small business customers through an ongoing brand messaging program.  We look forward to the longer-term benefits of increased market density as we communicate Smart & Final’s unique platform to new and existing customers.”

 

Mr. Hirz added, “The anticipated sales cannibalization from new store development, coupled with higher than expected deflationary pressures on product pricing, have resulted in headwinds to comparable store sales during the first half of 2016, which we expect will remain challenging during the balance of the year. Short-term pressures aside, we are confident in our longer-term store development plans and driving customer engagement through our merchandising and marketing initiatives.”

 

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.

 



 

Second Quarter Fiscal 2016 Financial Results

 

Net sales were $1,038.3 million, representing a 14.7% increase as compared to $905.1 million in the same period of 2015.  Net sales growth was driven by the net sales contribution of new stores, partially offset by a 0.3% decrease in comparable store sales. Comparable store sales was comprised of a 0.4% increase in comparable transaction count, including the effect of anticipated cannibalization from new stores, and a 0.7% decrease in comparable average transaction size, including the impact of deflation in key product categories in both store banners.

 

Net sales for Smart & Final banner stores were $811.8 million, an 18.1% increase as compared to $687.4 million in the prior year period.  Comparable store sales for the Smart & Final banner decreased 0.6% in the second quarter.

 

Net sales for Cash & Carry banner stores were $226.5 million, a 4.0% increase as compared to $217.8 million in the same period of 2015.  Comparable store sales for the Cash & Carry banner increased 0.4% in the second quarter.

 

Gross margin from operations was $157.2 million, an 11.0% increase as compared to $141.6 million in the second quarter of 2015. Gross margin rate in the second quarter was 15.1% as compared to 15.6% in the same period of 2015.

 

Operating and administrative expenses were $138.8 million, a 21.6% increase as compared to $114.1 million in the year ago period. This increase was primarily related to expenses associated with 43 new stores developed over the prior 12 months and related support costs.

 

Net income was $7.8 million, including the effect of higher store development costs and non-recurring expenses related to acquired stores, as compared to net income of $11.0 million in the same period of 2015. Net income per diluted share was $0.10 as compared to $0.14 in the second quarter of 2015.

 

Adjusted net income was $15.5 million, a decrease of 8.4% as compared to $16.9 million for the year ago period. Adjusted net income per diluted share was $0.20 as compared to $0.22 in the same period of 2015.

 

Adjusted EBITDA remained unchanged at $50.7 million, as compared to the second quarter of 2015.

 

Fiscal Year-to-date Financial Results
In the twenty-four weeks ended June 19, 2016, net sales were $1,946.7 million, an increase of 12.7% as compared to $1,727.3 million in the same period of 2015.  Net sales growth was driven by a 0.8% increase in comparable store sales and from the net sales contribution of new stores.  The growth in comparable store sales was comprised of a 1.4% increase in comparable transaction count and a 0.6% decrease in comparable average transaction size.

 

Net sales for Smart & Final banner stores were $1,521.1 million, a 15.6% increase as compared to $1,316.2 million in the first half of 2015. Year-to-date comparable store sales growth for the Smart & Final banner was 0.9%.

 

2



 

Net sales for Cash & Carry banner stores were $425.7 million, a 3.5% increase as compared to $411.1 million in the same period of 2015.  Year-to-date comparable store sales growth for the Cash & Carry banner was 0.3%.

 

Net income was $6.2 million, including the effect of higher store development costs, as compared to $15.9 million in the first half of 2015. Net income per diluted share was $0.08 as compared to $0.21 for the same period of 2015.

 

Adjusted net income was $22.1 million, a decrease of 10.2% as compared to $24.6 million in the first half of 2015. Adjusted net income per diluted share was $0.28 as compared to $0.32 in the same period of 2015.

 

Adjusted EBITDA was unchanged at $85.7 million, as compared to the same period of 2015.

 

Growth and Development

During the second quarter of fiscal year 2016, the Company opened 16 new Smart & Final Extra! stores and completed two relocations of legacy Smart & Final stores to the Smart & Final Extra! format. As of June 19, 2016, the Company operated a total of 306 stores, including 161 Smart & Final Extra! stores, 90 legacy Smart & Final stores and 55 Cash & Carry stores.

 

Operating Stores at Quarter End (June 19, 2016)

 

 

 

Smart & Final Banner Stores

 

 

 

 

 

 

 

Extra!
format

 

Legacy
format

 

Total

 

Cash & Carry
Banner Stores

 

Total
Company

End of Fiscal 2015

 

127

 

94

 

221

 

55

 

276

 

 

 

 

 

 

 

 

 

 

 

New stores

 

30

 

-

 

30

 

-

 

30

 

 

 

 

 

 

 

 

 

 

 

Relocations, net

 

4

 

(4)

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

Conversions

 

-

 

-

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

End of 2nd Quarter 2016

 

161

 

90

 

251

 

55

 

306

 

Leverage and Liquidity

At June 19, 2016, the Company’s debt, net of debt issuance costs, was $617.0 million and cash and cash equivalents were $67.4 million.

 

In the twenty-four week period ended June 19, 2016, the Company generated cash from operations of $60.4 million and invested $73.5 million in capital expenditures, primarily related to the development of Extra! format stores and to improvements of existing assets.

 

3



 

Outlook

The Company is revising certain elements of the previously issued guidance for the 2016 fiscal year ending January 1, 2017, to reflect our revised expectations of the impact of deflation on sales growth and comparable store sales, and resulting impacts on measures of income (revised elements noted in bold type):

 

Net sales growth

12.5% - 13.5%

Comparable store sales growth 

(0.5)% - 0.5%

Unit growth (net new stores)

 

33 Smart & Final Extra!
4 Cash & Carry

Relocations of existing stores to Extra! format

 

6 Smart & Final stores

 

Conversions of legacy stores to Extra! format

6 Smart & Final stores

Adjusted EBITDA

$185 - $190 million

Adjusted net income

$46 - $48 million

Adjusted diluted EPS

$0.58 - $0.60

Capital expenditures 

$150 - $160 million

Basic weighted average shares

73.3 million

Fully diluted weighted average shares

79.0 million

 

The above guidance includes certain non-GAAP financial measures (namely adjusted net income, adjusted net income per diluted share and Adjusted EBITDA), which exclude certain costs and non-cash costs and provide investors with additional financial measures of the expected operating performance of the Company’s business. The primary factors in reconciling these non-GAAP financial measures to comparable GAAP measures include the following: costs associated with the acquired Haggen store locations of approximately $18 million, non-cash rent related to other stores of approximately $6 million and share-based compensation expense of approximately $10 million. The other amounts needed to reconcile these non-GAAP financial measures to comparable GAAP measures cannot be quantified and are not available without an unreasonable effort.

 

In the third quarter of 2016, the Company expects to open two new Smart & Final Extra! stores and complete two relocations of legacy Smart & Final stores to the Extra! format, and open two new Cash & Carry stores.

 

Second Quarter 2016 Conference Call

The Company will host a conference call today at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time to discuss its second quarter 2016 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: 13639710.  The telephonic replay will be available until 11:59 p.m. Eastern Time, on Thursday, August 11, 2016.

 

About Smart & Final

Smart & Final Stores, Inc. (NYSE: SFS), is a value-oriented food and everyday staples retailer, headquartered in Commerce (near Los Angeles), California. The Company offers quality products in a variety of sizes, saving household, nonprofit and business customers time and money. As of June 19, 2016, the Company operated 306 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 Northwestern Mexico operated through a joint venture. In business for 145 years, the Company remains committed to giving back to local communities through employee volunteer opportunities and Company donations to local nonprofits.

 

4



 

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 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 Investor Relations

O: 310.829.5400

investors@smartandfinal.com

 

MEDIA CONTACT:

press@smartandfinal.com

 

5



 

Smart & Final Stores, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)

(In Thousands, Except Share and Per Share Amounts)

 

 

 

 

Twelve Weeks Ended

 

Twenty-Four Weeks Ended

 

 

 

June 19, 2016

 

June 14, 2015

 

June 19, 2016

 

June 14, 2015

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,038,281

 

$

905,121

 

$

1,946,734

 

$

1,727,291

 

Cost of sales, buying and occupancy

 

881,067

 

763,538

 

1,661,169

 

1,463,543

 

Gross margin

 

157,214

 

141,583

 

285,565

 

263,748

 

 

 

 

 

 

 

 

 

 

 

Operating and administrative expenses

 

138,819

 

114,131

 

263,901

 

221,082

 

Income from operations

 

18,395

 

27,452

 

21,664

 

42,666

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

7,441

 

7,676

 

14,752

 

15,674

 

Loss on early extinguishment of debt

 

 

2,192

 

 

2,192

 

Equity in earnings of joint venture

 

284

 

392

 

728

 

907

 

Income before income taxes

 

11,238

 

17,976

 

7,640

 

25,707

 

 

 

 

 

 

 

 

 

 

 

Income tax provision

 

(3,432)

 

(6,938)

 

(1,472)

 

(9,786)

 

Net income

 

$

7,806

 

$

11,038

 

$

6,168

 

$

15,921

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.11

 

$

0.15

 

$

0.08

 

$

0.22

 

Diluted earnings per share

 

$

0.10

 

$

0.14

 

$

0.08

 

$

0.21

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

73,197,064

 

73,090,917

 

73,193,107

 

73,087,600

 

Diluted

 

78,907,184

 

76,893,066

 

78,976,605

 

76,773,674

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

Net income

 

$

7,806

 

$

11,038

 

$

6,168

 

$

15,921

 

Derivative instruments:

 

 

 

 

 

 

 

 

 

(Loss) gain, net of income tax (benefit) expense of $(163) and $160, respectively, for twelve weeks ended; $(710) and $(754), respectively, for the twenty-four weeks ended

 

(244)

 

240

 

(1,065)

 

(1,132)

 

Reclassification adjustments, net of income tax expense of $2 and $27, respectively, for twelve weeks ended; $5 and $18, respectively, for twenty-four weeks ended

 

4

 

40

 

7

 

27

 

Foreign currency translation and employee benefit obligation adjustment

 

(115)

 

(180)

 

(102)

 

(795)

 

Other comprehensive (loss) income

 

(355)

 

100

 

(1,160)

 

(1,900)

 

Comprehensive income

 

$

7,451

 

$

11,138

 

$

5,008

 

$

14,021

 

 

6



 

Smart & Final Stores, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In Thousands, Except Share and Per Share Amounts)

 

 

 

 

June 19, 2016

 

January 3, 2016

 

 

 

(Unaudited)

 

 

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

67,384

 

$

59,327

 

Accounts receivable, less allowances of $444 and $454 at June 19, 2016 and January 3, 2016, respectively

 

28,378

 

27,304

 

Inventories

 

245,891

 

234,289

 

Prepaid expenses and other current assets

 

25,572

 

29,072

 

Deferred income taxes

 

22,815

 

22,471

 

Total current assets

 

390,040

 

372,463

 

 

 

 

 

 

 

Property, plant, and equipment:

 

 

 

 

 

Land

 

10,730

 

10,940

 

Buildings and improvements

 

20,021

 

20,441

 

Leasehold improvements

 

262,851

 

237,820

 

Fixtures and equipment

 

315,417

 

266,080

 

Construction in progress

 

17,813

 

19,501

 

 

 

626,832

 

554,782

 

Less accumulated depreciation and amortization

 

206,801

 

174,906

 

 

 

420,031

 

379,876

 

 

 

 

 

 

 

Capitalized software, net of accumulated amortization of $13,872 and $12,356 at June 19, 2016 and January 3, 2016, respectively

 

11,413

 

11,365

 

Other intangible assets, net

 

373,335

 

376,122

 

Goodwill

 

611,242

 

611,242

 

Equity investment in joint venture

 

13,576

 

12,763

 

Other assets

 

55,333

 

53,250

 

Total assets

 

$

1,874,970

 

$

1,817,081

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

212,364

 

$

194,149

 

Accrued salaries and wages

 

31,706

 

33,859

 

Accrued expenses

 

85,004

 

77,374

 

Current portion of debt, less debt issuance costs

 

29,166

 

3,904

 

Total current liabilities

 

358,240

 

309,286

 

 

 

 

 

 

 

Long-term debt, less debt issuance costs

 

587,840

 

586,956

 

Deferred income taxes

 

127,580

 

128,752

 

Postretirement and postemployment benefits

 

115,351

 

117,417

 

Other long-term liabilities

 

114,382

 

108,099

 

 

 

 

 

 

 

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 - 74,215,032 and 73,789,608 at June 19, 2016 and January 3, 2016, respectively

 

74

 

74

 

Additional paid-in capital

 

505,296

 

502,304

 

Retained earnings

 

73,355

 

70,181

 

Accumulated other comprehensive loss

 

(7,148)

 

(5,988)

 

Total stockholders’ equity

 

571,577

 

566,571

 

Total liabilities and stockholders’ equity

 

$

1,874,970

 

$

1,817,081

 

 

7



 

Smart & Final Stores, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In Thousands)

 

 

 

 

Twenty-four Weeks Ended

 

 

 

June 19, 2016

 

June 14, 2015

 

Operating activities

 

 

 

 

 

Net income

 

$

6,168

 

$

15,921

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Depreciation

 

21,752

 

16,625

 

Amortization

 

15,035

 

13,159

 

Amortization of debt discount and debt issuance costs

 

1,280

 

1,293

 

Share-based compensation

 

3,418

 

4,903

 

Excess tax benefits related to share-based payments

 

-

 

(60)

 

Deferred income taxes

 

(811)

 

(1,878)

 

Equity in earnings of joint venture

 

(728)

 

(907)

 

Loss (gain) on disposal of property, plant, and equipment

 

65

 

(26)

 

Asset impairment

 

181

 

513

 

Loss on early extinguishment of debt

 

 

2,192

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable, net

 

(1,074)

 

2,300

 

Inventories

 

(11,602)

 

8,838

 

Prepaid expenses and other assets

 

2,017

 

14,558

 

Accounts payable

 

18,215

 

(4,608)

 

Accrued salaries and wages

 

(2,153)

 

(3,625)

 

Other accrued liabilities

 

8,682

 

1,813

 

Net cash provided by operating activities

 

60,445

 

71,011

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

Purchases of property, plant, and equipment

 

(70,346)

 

(59,350)

 

Proceeds from disposal of property, plant, and equipment

 

409

 

8,091

 

Assets acquired in Haggen Transaction

 

(2,227)

 

 

Investment in capitalized software

 

(1,385)

 

(2,674)

 

Other

 

(279)

 

(1,304)

 

Net cash used in investing activities

 

(73,828)

 

(55,237)

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

Proceeds from exercise of stock options

 

1,783

 

107

 

Payment of minimum withholding taxes on net share settlement of share-based compensation awards

 

(106)

 

(17)

 

Fees paid in conjunction with debt financing

 

(133)

 

(1,204)

 

Borrowings on bank line of credit

 

40,000

 

 

Payments on bank line of credit

 

(15,000)

 

 

Payments of public offering costs

 

 

(214)

 

Excess tax benefits related to share-based payments

 

 

60

 

Stock repurchases

 

(5,104)

 

 

Net cash provided by (used in) financing activities

 

21,440

 

(1,268)

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

8,057

 

14,506

 

Cash and cash equivalents at beginning of period

 

59,327

 

106,847

 

Cash and cash equivalents at end of period

 

$

67,384

 

$

121,353

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

Interest

 

$

7,467

 

$

11,443

 

Income taxes

 

$

5,476

 

$

7,022

 

 

 

 

 

 

 

Non-cash investing and financing activities

 

 

 

 

 

Software development costs incurred but not paid

 

$

490

 

$

49

 

Construction in progress costs incurred but not paid

 

$

13,542

 

$

12,053

 

 

8



 

Smart & Final Stores, Inc. and Subsidiaries

Segment Reporting

(In Thousands)

 

 

 

 

Smart & Final

 

Cash & Carry

 

Corporate /
Other

 

Consolidated

 

Twelve Weeks Ended June 19, 2016

 

 

 

 

 

 

 

 

 

Net sales

 

$

811,754

 

$

226,527

 

$

-

 

$

1,038,281

 

Cost of sales, distribution and store occupancy

 

685,129

 

193,579

 

2,359

 

881,067

 

Operating and administrative expenses

 

108,041

 

15,225

 

15,553

 

138,819

 

Income (loss) from operations

 

$

18,584

 

$

17,723

 

$

(17,912)

 

$

18,395

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

$

40,524

 

$

824

 

$

1,470

 

$

42,818

 

Assets acquired in Haggen Transaction

 

$

426

 

$

-

 

$

-

 

$

426

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Weeks Ended June 14, 2015

 

 

 

 

 

 

 

 

 

Net sales

 

$

687,353

 

$

217,768

 

$

-

 

$

905,121

 

Cost of sales, distribution and store occupancy

 

574,217

 

187,208

 

2,113

 

763,538

 

Operating and administrative expenses

 

82,399

 

14,632

 

17,100

 

114,131

 

Income (loss) from operations

 

$

30,737

 

$

15,928

 

$

(19,213)

 

$

27,452

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

$

33,183

 

$

2,641

 

$

1,817

 

$

37,641

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twenty-four Weeks Ended June 19, 2016

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,521,068

 

$

425,666

 

$

-

 

$

1,946,734

 

Cost of sales, distribution and store occupancy

 

1,291,811

 

364,696

 

4,662

 

1,661,169

 

Operating and administrative expenses

 

203,241

 

30,050

 

30,610

 

263,901

 

Income (loss) from operations

 

$

26,016

 

$

30,920

 

$

(35,272)

 

$

21,664

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

$

67,123

 

$

1,886

 

$

2,722

 

$

71,731

 

Assets acquired in Haggen Transaction

 

$

2,227

 

$

-

 

$

-

 

$

2,227

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twenty-four Weeks Ended June 14, 2015

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,316,189

 

$

411,102

 

$

-

 

$

1,727,291

 

Cost of sales, distribution and store occupancy

 

1,104,837

 

354,515

 

4,191

 

1,463,543

 

Operating and administrative expenses

 

160,646

 

28,519

 

31,917

 

221,082

 

Income (loss) from operations

 

$

50,706

 

$

28,068

 

$

(36,108)

 

$

42,666

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

$

54,050

 

$

4,319

 

$

3,655

 

$

62,024

 

 

9



 

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 evaluate our operating and financial performance and to compare such performance to that of prior periods. We also use these non-GAAP financial measures in making operational and financial decisions and in establishing operational goals. We believe that providing these non-GAAP financial measures to investors, as a supplement to GAAP financial measures, helps investors to (i) evaluate our operating and financial performance and future prospects, (ii) compare financial results across accounting periods, (iii) better understand the long-term performance of our core business and (iv) evaluate trends in our business, all consistent with how management evaluates such performance and movements. The Company defines adjusted net income as net income adjusted for the items set forth in the table 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 twelve-week and twenty-four week periods ended June 19, 2016 and June 14, 2015.

 

10



 

Smart & Final  Stores, Inc. and Subsidiaries

Reconciliation of EBITDA to Adjusted EBITDA

(Unaudited)

(In Thousands)

 

 

 

Twelve Weeks
Ended

 

Twelve Weeks
Ended

 

Twenty-four
Weeks Ended

 

Twenty-four
Weeks Ended

 

 

 

June 19, 2016

 

June 14, 2015

 

June 19, 2016

 

June 14, 2015

 

Net income

 

$

7,806

 

$

11,038

 

$

6,168

 

$

15,921

 

Depreciation and amortization

 

19,253

 

15,282

 

36,787

 

29,783

 

Interest expense, net

 

7,441

 

7,676

 

14,752

 

15,674

 

Income tax provision

 

3,432

 

6,938

 

1,472

 

9,786

 

EBITDA

 

37,932

 

40,934

 

59,179

 

71,164

 

 

 

 

 

 

 

 

 

 

 

Adjustments to EBITDA

 

 

 

 

 

 

 

 

 

Transaction costs (a)

 

-     

 

875

 

-     

 

936

 

Net loss from closed stores and exit costs (b)

 

2,602

 

1,284

 

3,738

 

1,374

 

Loss from asset dispositions (c)

 

57

 

95

 

185

 

503

 

Share-based compensation expense (d)

 

1,911

 

2,519

 

3,418

 

4,903

 

Non-cash rent (e)

 

1,422

 

484

 

2,506

 

1,277

 

Pre-opening costs (f)

 

247

 

2,277

 

437

 

3,410

 

Acquired Haggen store locations pre-opening costs and non-cash rent (g)

 

6,537

 

-     

 

16,278

 

-     

 

Loss on extinguishment of debt (h)

 

-     

 

2,192

 

-     

 

2,192

 

Other items (i)

 

-     

 

25

 

6

 

(45)

 

Adjusted EBITDA

 

$

50,708

 

$

50,685

 

$

85,747

 

$

85,714

 

 

11



 

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)

 

 

 

Twelve Weeks
Ended

 

Twelve Weeks
Ended

 

Twenty-four
Weeks Ended

 

Twenty-four
Weeks Ended

 

 

 

June 19, 2016

 

June 14, 2015

 

June 19, 2016

 

June 14, 2015

 

Net income

 

$

7,806

 

$

11,038

 

$

6,168

 

$

15,921

 

Income tax provision

 

3,432

 

6,938

 

1,472

 

9,786

 

Income before income taxes

 

11,238

 

17,976

 

7,640

 

25,707

 

 

 

 

 

 

 

 

 

 

 

Adjustments to Net Income

 

 

 

 

 

 

 

 

 

Transaction costs (a)

 

-     

 

875

 

-     

 

936

 

Net loss from closed stores and exit costs (b)

 

2,602

 

1,284

 

3,738

 

1,374

 

Loss from asset dispositions (c)

 

57

 

95

 

185

 

503

 

Share-based compensation expense (d)

 

1,911

 

2,519

 

3,418

 

4,903

 

Non-cash rent (e)

 

1,422

 

484

 

2,506

 

1,277

 

Pre-opening costs (f)

 

247

 

2,277

 

437

 

3,410

 

Costs associated with acquired Haggen store locations (g)

 

6,537

 

-     

 

16,278

 

-     

 

Loss on extinguishment of debt (h)

 

-     

 

2,192

 

-     

 

2,192

 

Other items (i)

 

-     

 

25

 

6

 

(45)

 

Adjusted income tax provision

 

(8,546)

 

(10,833)

 

(12,107)

 

(15,638)

 

Adjusted net income

 

$

15,468

 

$

16,894

 

$

22,101

 

$

24,619

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income Per Share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share - basic

 

$

0.11

 

$

0.15

 

$

0.08

 

$

0.22

 

Per share impact of net income adjustments

 

 

0.10

 

 

0.08

 

 

0.22

 

 

0.12

 

Adjusted net income per share - basic

 

$

0.21

 

$

0.23

 

$

0.30

 

$

0.34

 

Net income per share - diluted

 

$

0.10

 

$

0.14

 

$

0.08

 

$

0.21

 

Per share impact of net income adjustments

 

 

0.10

 

 

0.08

 

 

0.20

 

 

0.11

 

Adjusted net income per share - diluted

 

$

0.20

 

$

0.22

 

$

0.28

 

$

0.32

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares - basic

 

73,197,064

 

73,090,917

 

73,193,107

 

73,087,600

 

Weighted average shares - fully diluted

 

78,907,184

 

76,893,066

 

78,976,605

 

76,773,674

 

 

 

(a)  Represents costs primarily associated with the Company’s secondary public offering that were charged to expense in the twelve and twenty-four weeks ended June 14, 2015.

(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 new store opening costs and non-cash rent related to acquired former Haggen store locations.

(h)  Represents loss on the early extinguishment of debt in the twelve and twenty-four weeks ended June 14, 2015 in connection with an amendment to the Company’s Term Loan Facility.

(i)  Represents (i) severance costs  in the twenty-four weeks ended June 19, 2016 and the twelve and twenty-four weeks ended June 14, 2015 and (ii) death benefit income from a Company-owned life insurance policy in the twenty-four weeks ended June 14, 2015.

 

12


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1 8-K a16-15575_18k.htm 8-K 26780
2 EX-99.1 a16-15575_1ex99d1.htm EX-99.1 544005
3 GRAPHIC g155751mm01i001.jpg GRAPHIC 1927
  Complete submission text file 0001104659-16-135022.txt   574868