UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

___________

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

 

Date of report  (Date of earliest event reported)  May 3, 2017

 

 

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))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 

 

 



 

Item 2.02                                 Results of Operations and Financial Condition.

 

On May 3, 2017, Smart & Final Stores, Inc. issued a press release announcing its financial results for the quarter ended March 26, 2017.  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 May 3, 2017

 



 

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: May 3, 2017

 

 

 

 

 

 

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 May 3, 2017

 


 

EXHIBIT 99.1

 

 

Smart & Final Stores, Inc. Reports First Quarter 2017 Financial Results

 

COMMERCE, Calif. (May 3, 2017) – Smart & Final Stores, Inc. (the “Company”) (NYSE:SFS), the value-oriented food and everyday staples retailer, today reported financial results for the fiscal first quarter ended March 26, 2017.

 

First Quarter Highlights:

 

·                  Net sales increase of 6.4% to $967.0 million

 

·                  Comparable store sales decrease of 2.5%, including impacts of deflation, cannibalization and adverse weather

 

·                  Net loss of $4.6 million, or $0.06 per diluted share

 

·                  Adjusted net loss of $1.5 million, or $0.02 per diluted share

 

·                  Adjusted EBITDA of $24.4 million

 

“The operating environment in the first quarter remained challenging, with lingering effects of deflation and cannibalization weighing on our sales performance and results of operations,” said David Hirz, President and Chief Executive Officer. “Our ability to deliver first quarter net sales growth of 6% year-over-year, despite market conditions and severe weather in our market areas, highlights the effectiveness of our differentiated model, as a one-stop shop for our household and business customers, and our unique product assortment of private label, club sizes and high quality perishables.   In the second half of 2017, we expect deflationary and cannibalization pressures to alleviate, and with severe weather behind us, anticipate positive comparable store sales growth and improved financial comparisons.”

 

Mr. Hirz added, “As we look beyond the current environment, we remain excited about the opportunity to grow and strengthen our two well-positioned store banners. During the first quarter, we opened two new Smart & Final Extra! stores and one new Cash & Carry store, and we are on track to open a total of 19 new stores in 2017.  Our pipeline of 2017 new stores provides us the opportunity to strengthen our presence in existing market areas, as well as introduce our brands to household and business customers in new communities.”

 

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 (loss), adjusted net income (loss) per share, adjusted net income (loss) 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.

 

Fiscal First Quarter 2017 Financial Results

 

Net sales were $967.0 million in the 12-week quarter ended March 26, 2017, representing a 6.4% increase as compared to $908.5 million for the same period of 2016. Net sales growth was driven by the net sales contribution of new stores, partially offset by a 2.5% decrease in comparable store sales. The decrease in comparable store sales was attributable to a 0.4% decrease in comparable transaction count, including the effect of cannibalization from new stores, and a 2.1% decrease in comparable average transaction size, including the impact of deflation in key product categories in both store banners.

 

1



 

Net sales for Smart & Final banner stores were $765.0 million, a 7.8% increase as compared to $709.3 million for the same period of 2016. Comparable store sales for the Smart & Final banner decreased 2.5% in the first quarter.

 

Net sales for Cash & Carry banner stores were $202.0 million, a 1.5% increase as compared to $199.1 million for the same period of 2016. Comparable store sales for the Cash & Carry banner decreased 2.4% in the first quarter.

 

Gross margin from operations was $133.1 million, a 3.7% increase as compared to $128.4 million in the first quarter of 2016. Gross margin rate was 13.8% as compared to 14.1% for the same period of 2016.

 

Operating and administrative expenses were $135.7 million, an 8.5% increase as compared to $125.1 million for the same period of 2016. This increase was primarily related to expenses associated with 26 new stores opened over the prior 12 months and related support costs.

 

Net loss was $4.6 million, including the effect of store development expenses and an income tax benefit of $6.0 million, as compared to net loss of $1.6 million and an income tax benefit of $2.0 million for the same period of 2016. Net loss per diluted share was $0.06 as compared to $0.02 for the same period of 2016.

 

Adjusted net loss was $1.5 million as compared to adjusted net income of $6.6 million for the same period of 2016. Adjusted net loss per diluted share was $0.02 as compared to adjusted net income per diluted share of $0.08 for the same period of 2016.

 

Adjusted EBITDA was $24.4 million as compared to $35.0 million for the same period of 2016.

 

Growth and Development

 

During the fiscal first quarter of 2017, the Company opened two new Smart & Final Extra! stores and one new Cash & Carry store. As of March 26, 2017, the Company operated a total of 308 stores, including 174 Smart & Final Extra! stores, 74 legacy Smart & Final stores and 60 Cash & Carry stores.

 

Operating Stores at Fiscal Quarter End (March 26, 2017)

 

 

 

Smart & Final Banner Stores

 

 

 

 

 

 

 

Extra!
format

 

Legacy
format

 

Total

 

 

Cash & Carry
Banner Stores

 

Total
Company

End of Fiscal 2016

 

172

 

74

 

246

 

59

 

305

 

 

 

 

 

 

 

 

 

 

 

New stores

 

2

 

-

 

2

 

1

 

3

 

 

 

 

 

 

 

 

 

 

 

Relocations, net

 

-

 

-

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

Conversions

 

-

 

-

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

Store closures

 

-

 

-

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

End of 1st Quarter 2017

 

174

 

74

 

248

 

60

 

308

 

2



 

Leverage and Liquidity

 

As of March 26, 2017, the Company’s debt, net of debt issuance costs, was $685.4 million and cash and cash equivalents were $50.4 million.

 

As of March 26, 2017, the Company generated cash from operations of $21.3 million and invested $29.1 million in capital expenditures, primarily related to the development of Extra! format stores and to improvements of existing assets.

 

Outlook

 

The Company is maintaining the previously issued guidance for the full year ending December 31, 2017:

 

 

Net sales growth

5.5% - 6.5%

Comparable store sales growth

1.0% - 2.0%

Unit growth (new stores)

15 Smart & Final Extra!

4 Cash & Carry

Relocations of existing stores to Extra! format

3 Smart & Final stores

Expansions or conversions of legacy stores to Extra! format

4 to 5 Smart & Final stores

Adjusted EBITDA

$185 - $195 million

Adjusted net income

$39 - $43 million

Adjusted diluted EPS

$0.50 - $0.55

Capital expenditures 

$120 - $130 million

Fully diluted weighted average shares

77 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: pre-opening costs associated with new stores of approximately $6 million, non-cash rent related to stores of approximately $4 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 second quarter of fiscal year 2017, the Company expects to open four new Smart & Final Extra! stores and one new Cash & Carry store.

 

Fiscal First Quarter 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 fiscal first quarter 2017 financial results. To participate in the call, please dial (877) 423-9813 (U.S.) or (201) 689-8573 (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/.

 

3



 

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 (844) 512-2921 (U.S.) or (412) 317-6671 (International) and entering the replay pin number: 13659241. The telephonic replay will be available until 11:59 p.m. Eastern Time, on Wednesday, May 17, 2017.

 

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 March 26, 2017, the Company operated 308 grocery and foodservice stores under the “Smart & Final,” “Smart & Final Extra!” and “Cash & Carry Smart Foodservice” banners in California, Oregon, Washington, Arizona, Nevada, Idaho and Utah, with an additional 15 stores in Northwestern Mexico operated through a joint venture. In business for over 145 years, the Company remains committed to giving back to local communities through employee volunteer opportunities and Company donations to local nonprofits.

 

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

 

4


 


 

Smart & Final Stores, Inc. and Subsidiaries

Consolidated Statements of Operations

(In Thousands, Except Share and Per Share Amounts)

 

 

 

 

Twelve Weeks

Ended

 

Twelve Weeks

Ended

 

 

 

March 26, 2017

 

March 27, 2016

 

 

 

 

 

 

 

Net sales

 

$

967,017

 

$

908,453

 

Cost of sales, buying and occupancy

 

833,906

 

780,102

 

Gross margin

 

133,111

 

128,351

 

 

 

 

 

 

 

Operating and administrative expenses

 

135,674

 

125,082

 

Income (loss) from operations

 

(2,563)

 

3,269

 

 

 

 

 

 

 

Interest expense, net

 

8,174

 

7,311

 

Equity in earnings of joint venture

 

167

 

444

 

Loss before income taxes

 

(10,570)

 

(3,598)

 

 

 

 

 

 

 

Income tax benefit

 

5,978

 

1,960

 

Net loss

 

$

(4,592)

 

$

(1,638)

 

 

 

 

 

 

 

Net loss per share:

 

 

 

 

 

Basic

 

$

(0.06)

 

$

(0.02)

 

Diluted

 

$

(0.06)

 

$

(0.02)

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

Basic

 

72,287,891

 

73,189,149

 

Diluted

 

72,287,891

 

73,189,149

 

 

 

5



 

Smart & Final Stores, Inc. and Subsidiaries

Consolidated Balance Sheets

(In Thousands, Except Share and Per Share Amounts)

 

 

 

 

March 26, 2017

 

January 1, 2017

 

 

 

 

 

 

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

50,385

 

$

54,235

 

Accounts receivable, less allowances of $433 and $434 at March 26, 2017 and January 1, 2017, respectively

 

27,367

 

31,809

 

Inventories

 

266,698

 

278,718

 

Prepaid expenses and other current assets

 

59,492

 

48,769

 

Deferred income taxes

 

-     

 

22,105

 

Total current assets

 

403,942

 

435,636

 

 

 

 

 

 

 

Property, plant, and equipment:

 

 

 

 

 

Land

 

9,082

 

9,106

 

Buildings and improvements

 

17,351

 

17,351

 

Leasehold improvements

 

310,151

 

301,522

 

Fixtures and equipment

 

363,819

 

353,764

 

Construction in progress

 

16,636

 

12,110

 

 

 

717,039

 

693,853

 

Less accumulated depreciation and amortization

 

269,108

 

249,251

 

 

 

447,931

 

444,602

 

 

 

 

 

 

 

Capitalized software, net of accumulated amortization of $14,284 and $13,293 at March 26, 2017 and January 1, 2017, respectively

 

14,246

 

10,392

 

Other intangible assets, net

 

367,907

 

369,519

 

Goodwill

 

611,242

 

611,242

 

Equity investment in joint venture

 

14,512

 

14,366

 

Other assets

 

68,239

 

66,662

 

Total assets

 

$

1,928,019

 

$

1,952,419

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

216,774

 

$

225,227

 

Accrued salaries and wages

 

31,446

 

31,933

 

Accrued expenses

 

86,195

 

82,925

 

Current portion of debt, less debt issuance costs

 

68,454

 

62,352

 

Total current liabilities

 

402,869

 

402,437

 

 

 

 

 

 

 

Long-term debt, less debt issuance costs

 

616,902

 

616,588

 

Deferred income taxes

 

108,329

 

129,902

 

Postretirement and postemployment benefits

 

120,157

 

121,409

 

Other long-term liabilities

 

133,791

 

129,834

 

 

 

 

 

 

 

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 - 73,155,074 and 72,930,653 at March 26, 2017 and January 1, 2017, respectively

 

73

 

73

 

Additional paid-in capital

 

502,044

 

500,666

 

Retained earnings

 

57,180

 

65,093

 

Accumulated other comprehensive loss

 

(13,326)

 

(13,583)

 

Total stockholders’ equity

 

545,971

 

552,249

 

Total liabilities and stockholders’ equity

 

$

1,928,019

 

$

1,952,419

 

 

6



 

Smart & Final Stores, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In Thousands)

 

 

 

 

Twelve Weeks Ended

 

Twelve Weeks Ended

 

 

 

March 26, 2017

 

March 27, 2016

 

Operating activities

 

 

 

 

 

Net loss

 

$

(4,592)

 

$

(1,638)

 

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

 

 

 

 

 

Depreciation

 

12,783

 

10,189

 

Amortization

 

8,900

 

7,345

 

Amortization of debt discount and debt issuance costs

 

445

 

639

 

Share-based compensation

 

1,814

 

1,507

 

Deferred income taxes

 

284

 

(446)

 

Equity in earnings of joint venture

 

(167)

 

(444)

 

Loss on disposal of property, plant, and equipment

 

21

 

78

 

Asset impairment

 

325

 

128

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable, net

 

2,663

 

2,401

 

Inventories

 

12,020

 

(961)

 

Prepaid expenses and other assets

 

(11,524)

 

(6,218)

 

Accounts payable

 

(8,453)

 

(8,717)

 

Accrued salaries and wages

 

(487)

 

(3,649)

 

Other accrued liabilities

 

7,279

 

12,037

 

Net cash provided by operating activities

 

21,311

 

12,251

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

Purchases of property, plant, and equipment

 

(24,570)

 

(28,217)

 

Proceeds from disposal of property, plant, and equipment

 

1,785

 

386

 

Assets acquired in Haggen Transaction

 

 

(1,801)

 

Investment in capitalized software

 

(4,524)

 

(696)

 

Other

 

(55)

 

(209)

 

Net cash used in investing activities

 

(27,364)

 

(30,537)

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

Proceeds from exercise of stock options

 

2,335

 

146

 

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

 

(106)

 

(91)

 

Fees paid in conjunction with debt financing

 

(31)

 

(31)

 

Borrowings on bank line of credit

 

28,000

 

25,000

 

Payments on bank line of credit

 

(22,000)

 

-

 

Stock repurchases

 

(5,995)

 

(2,992)

 

Net cash provided by financing activities

 

2,203

 

22,032

 

 

 

 

 

 

 

Net (decrease) increase in cash and cash equivalents

 

(3,850)

 

3,746

 

Cash and cash equivalents at beginning of period

 

54,235

 

59,327

 

Cash and cash equivalents at end of period

 

$

50,385

 

$

63,073

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

Interest

 

$

2,340

 

$

236

 

Income taxes

 

$

 

$

4

 

 

 

 

 

 

 

Non-cash investing and financing activities

 

 

 

 

 

Software development costs incurred but not paid

 

$

344

 

$

79

 

Construction in progress costs incurred but not paid

 

$

11,537

 

$

23,660

 

 

7



 

Smart & Final Stores, Inc. and Subsidiaries

Segment Reporting

(In Thousands)

 

 

 

 

Smart & Final

 

Cash & Carry

 

Corporate / Other

 

Consolidated

 

Twelve Weeks Ended March 26, 2017

 

 

 

 

 

 

 

 

 

Net sales

 

$

764,969

 

$

202,048

 

$

-

 

$

967,017

 

Cost of sales, distribution and store occupancy

 

656,792

 

175,133

 

1,981

 

833,906

 

Operating and administrative expenses

 

103,906

 

16,166

 

15,602

 

135,674

 

Income (loss) from operations

 

$

4,271

 

$

10,749

 

$

(17,583)

 

$

(2,563)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

$

20,974

 

$

2,873

 

$

5,247

 

$

29,094

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Weeks Ended March 27, 2016

 

 

 

 

 

 

 

 

 

Net sales

 

$

709,314

 

$

199,139

 

$

-

 

$

908,453

 

Cost of sales, distribution and store occupancy

 

606,682

 

171,117

 

2,303

 

780,102

 

Operating and administrative expenses

 

95,200

 

14,825

 

15,057

 

125,082

 

Income (loss) from operations

 

$

7,432

 

$

13,197

 

$

(17,360)

 

$

3,269

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

$

26,599

 

$

1,062

 

$

1,252

 

$

28,913

 

 

8



 

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 (loss), EBITDA and adjusted EBITDA to net loss, and adjusted net income (loss) per share and adjusted net income (loss) per diluted share to net loss per share, for the twelve week fiscal quarters ended March 26, 2017 and March 27, 2016.

 

Smart & Final  Stores, Inc. and Subsidiaries

Reconciliation of EBITDA to Adjusted EBITDA

(Unaudited)

(In Thousands)

 

 

 

Twelve Weeks
Ended March 26,
2017

 

Twelve Weeks
Ended March 27,
2016

 

Net loss

 

$

(4,592)

 

$

(1,638)

 

Depreciation and amortization

 

21,683

 

17,534

 

Interest expense, net

 

8,174

 

7,311

 

Income tax benefit

 

(5,978)

 

(1,960)

 

EBITDA

 

19,287

 

21,247

 

 

 

 

 

 

 

Adjustments to EBITDA

 

 

 

 

 

Net loss from closed stores and exit costs (a)

 

390

 

1,136

 

Loss from asset dispositions (b)

 

328

 

128

 

Share-based compensation expense (c)

 

1,814

 

1,507

 

Non-cash rent (d)

 

360

 

248

 

Pre-opening costs (e)

 

971

 

191

 

Costs associated with acquired Haggen store locations (f)

 

1,201

 

10,576

 

Other (g)

 

56

 

6

 

Adjusted EBITDA

 

$

24,407

 

$

35,039

 

 

9



 

Smart & Final  Stores, Inc. and Subsidiaries

Reconciliation of Net Loss to Non-GAAP Adjusted Net Income (Loss)

(Unaudited)

(In Thousands, Except Share and Per Share Amounts)

 

 

 

Twelve Weeks

Ended March 26,

2017

 

Twelve Weeks

Ended March 27,

2016

 

Net loss

 

$

(4,592)

 

$

(1,638)

 

Income tax benefit

 

(5,978)

 

(1,960)

 

Loss before income taxes

 

(10,570)

 

(3,598)

 

 

 

 

 

 

 

Adjustments to net loss

 

 

 

 

 

Net loss from closed stores and exit costs (a)

 

390

 

1,136

 

Loss from asset dispositions (b)

 

328

 

128

 

Share-based compensation expense (c)

 

1,814

 

1,507

 

Non-cash rent (d)

 

360

 

248

 

Pre-opening costs (e)

 

971

 

191

 

Costs associated with acquired Haggen store locations (f)

 

1,201

 

10,576

 

Other (g)

 

56

 

6

 

Adjusted income tax benefit (provision)

 

3,935

 

(3,561)

 

Adjusted net income (loss)

 

$

(1,515)

 

$

6,633

 

 

 

 

 

 

 

Adjusted Net Income (Loss) Per Share

 

 

 

 

 

 

 

 

 

 

 

Net loss per share - basic

 

$

(0.06)

 

$

(0.02)

 

Per share impact of net income (loss) adjustments

 

0.04

 

0.11

 

Adjusted net income (loss) per share - basic

 

$

(0.02)

 

$

0.09

 

Net loss per share - diluted

 

$

(0.06)

 

$

(0.02)

 

Per share impact of net income (loss) adjustments

 

0.04

 

0.10

 

Adjusted net income (loss) per share - diluted

 

$

(0.02)

 

$

0.08

 

 

 

 

 

 

 

Weighted average shares - basic

 

72,287,891

 

73,189,149

 

Weighted average shares - fully diluted

 

72,287,891

 

79,046,024

 

 

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

(b) Represents non-cash loss associated with asset dispositions and impairment charges.

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

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

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

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

(g) Represents costs primarily associated with severance costs in the twelve week fiscal quarters ended March 26, 2017 and March 27, 2016.

 

10


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