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) July 25, 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

 

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):

 

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 July 25, 2017, Smart & Final Stores, Inc. issued a press release announcing its financial results for the quarter ended June 18, 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 July 25, 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: July 25, 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 July 25, 2017

 


Exhibit 99.1

 

 

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

 

COMMERCE, Calif. (July 25, 2017) – Smart & Final Stores, Inc. (the “Company”) (NYSE:SFS), the value-oriented food and everyday staples retailer, today reported financial results for the fiscal second quarter ended June 18, 2017.

 

Second Quarter Highlights:

·                  Net sales increase of 3.9% to $1,078.3 million

·                  Comparable store sales increase of 1.3%

·                  Net income of $7.1 million, or $0.09 per diluted share

·                  Adjusted net income of $11.0 million, or $0.14 per diluted share

·                  Adjusted EBITDA of $48.0 million

 

“The second quarter marked a return to positive comparable store sales growth, reflecting the expected lessening of pressures from deflation and growth-related sales cannibalization, as well as from customer growth attributable to our strong competitive position,” said David Hirz, President and Chief Executive Officer.  “We expect sales growth will continue to be supported by the maturation of new stores opened over the past two years, as well as marketing and promotional initiatives aimed at increasing store traffic and building basket size.”

 

Mr. Hirz added, “Smart & Final is well known for meeting the needs of both business and household customers with quality warehouse-club sized and private label products, plus a unique assortment of items for small businesses.  We have a differentiated position in our value-priced and convenient stores with strong digital capabilities. With a broad range of online and delivery options to serve our customers, Smart & Final is well positioned for continued success in an evolving marketplace.”

 

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 EBITDA, adjusted EBITDA, adjusted net income, adjusted net income per share, and adjusted net income per diluted share,  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 a non-GAAP adjusted basis.

 

Fiscal Second Quarter 2017 Financial Results

Net sales were $1,078.3 million in the 12-week quarter ended June 18, 2017, representing a 3.9% increase as compared to $1,038.3 million for the same period of 2016. Net sales growth was driven by a 1.3% increase in comparable store sales and from the net sales contribution of new stores. The increase in comparable store sales was attributable to a 1.9% increase in comparable transaction count, partially offset by a 0.6% decrease in comparable average transaction size, including the effect of cannibalization from new stores.

 

Net sales for Smart & Final banner stores were $836.1 million, a 3.0% increase as compared to $811.8 million for the same period of 2016. Comparable store sales growth for the Smart & Final banner was 1.2% in the second quarter.

 

1



 

Net sales for Cash & Carry banner stores were $242.2 million, a 6.9% increase as compared to $226.5 million for the same period of 2016. Comparable store sales growth for the Cash & Carry banner was 1.8% in the second quarter.

 

Gross margin was $162.3 million, a 3.2% increase as compared to $157.2 million in the second quarter of 2016. Gross margin rate was 15.0% as compared to 15.1% for the same period of 2016.

 

Operating and administrative expenses were $143.1 million, a 3.1% increase as compared to $138.8 million for the same period of 2016. This increase was primarily related to expenses associated with the 31 new stores that opened beginning in the second quarter of 2016 through the end of the second quarter of 2017 and related support costs.

 

Net income was $7.1 million, including the effect of store development expenses, as compared to $7.8 million for the same period of 2016. Net income per diluted share was $0.09 as compared to $0.10 for the same period of 2016.

 

Adjusted net income was $11.0 million, as compared to $15.5 million for the same period of 2016. Adjusted net income per diluted share was $0.14 as compared to $0.20 for the same period of 2016.

 

Adjusted EBITDA was $48.0 million as compared to $50.7 million for the same period of 2016.

 

Fiscal Year-to-date Financial Results

In the twenty-four weeks ended June 18, 2017, net sales were $2,045.3 million, an increase of 5.1% as compared to $1,946.7 million in the same period of 2016.  Net sales growth was driven by the net sales contribution of new stores, partially offset by a 0.5% decline in comparable store sales.  The decline in comparable store sales was attributable to a 0.8% increase in comparable transaction count and a 1.3% decrease in comparable average transaction size.

 

Net sales for Smart & Final banner stores were $1,601.1 million, an increase of 5.3% as compared to $1,521.1 million in the first half of 2016. Year-to-date comparable store sales for the Smart & Final banner decreased 0.6%.

 

Net sales for Cash & Carry banner stores were $444.2 million, a 4.4% increase as compared to $425.7 million in the same period of 2016.  Year-to-date comparable store sales for the Cash & Carry banner decreased 0.2%.

 

Net income was $2.5 million, as compared to $6.2 million in the first half of 2016. Net income per diluted share was $0.03 as compared to $0.08 for the same period of 2016.

 

Adjusted net income was $9.5 million, as compared to $22.1 million in the first half of 2016. Adjusted net income per diluted share was $0.12 as compared to $0.28 in the same period of 2016.

 

Adjusted EBITDA was $72.4 million, as compared to $85.7 million in the same period of 2016.

 

Growth and Development

During the fiscal second quarter of 2017, the Company opened four new Smart & Final Extra! stores, completed one conversion of a legacy Smart & Final store to the Extra! format, and one relocation. The Company opened one new Cash & Carry store. As of June 18, 2017, the Company operated a total of 313 stores, including 180 Smart & Final Extra! stores, 72 legacy Smart & Final stores and 61 Cash & Carry stores.

 

2



 

Operating Stores at Fiscal Quarter End (June 18, 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

 

6

 

-

 

6

 

2

 

8

Relocations, net

 

1

 

(1)

 

-

 

-

 

-

Conversions

 

1

 

(1)

 

-

 

-

 

-

Store closures

 

-

 

-

 

-

 

-

 

-

End of 2nd Quarter 2017

 

180

 

72

 

252

 

61

 

313

 

Leverage and Liquidity

As of June 18, 2017, the Company’s debt, net of debt issuance costs, was $665.7 million and cash and cash equivalents were $63.2 million.

 

As of June 18, 2017, the Company generated cash from operations of $95.1 million and invested $69.5 million in capital expenditures, primarily related to the development of Extra! format stores and to improvements of existing assets.

 

Outlook

The Company is maintaining its previously issued guidance framework for the full year ending December 31, 2017, while narrowing the guidance range for certain elements (as noted in bold type):

 

Net sales growth

5.5% - 6.0%

Comparable store sales growth

1.0% - 1.5%

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 - $190 million

Adjusted net income

$39 - $41 million

Adjusted diluted EPS

$0.50 - $0.52

Capital expenditures 

$120 - $130 million

Fully diluted weighted average shares

77 million

 

The above guidance includes certain non-GAAP financial measures (namely adjusted EBITDA, adjusted net income and adjusted net income per diluted share), 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.

 

3



 

In the third quarter of fiscal year 2017, the Company expects to open 3 new Smart & Final Extra! stores and 2 new Cash & Carry stores.

 

Fiscal Second 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 second quarter 2017 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 (844) 512-2921 (U.S.) or (412) 317-6671 (International) and entering the replay pin number: 13665867. The telephonic replay will be available until 11:59 p.m. Eastern Time, August 8, 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. The Company operates 314 grocery and foodservice stores under the “Smart & Final,” “Smart & Final Extra!” and “Cash & Carry Smart Foodservice” banners in California, Oregon, Washington, Arizona, Nevada, Idaho, Montana 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.

 

4



 

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

(Unaudited)

(In Thousands, Except Share and Per Share Amounts)

 

 

 

 

Twelve Weeks Ended

 

Twenty-four Weeks Ended

 

 

June 18, 2017

 

June 19, 2016

 

June 18, 2017

 

June 19, 2016

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,078,287

 

$

1,038,281

 

$

2,045,304

 

$

1,946,734

Cost of sales, buying and occupancy

 

916,017

 

881,067

 

1,749,923

 

1,661,169

Gross margin

 

162,270

 

157,214

 

295,381

 

285,565

 

 

 

 

 

 

 

 

 

Operating and administrative expenses

 

143,062

 

138,819

 

278,736

 

263,901

Income from operations

 

19,208

 

18,395

 

16,645

 

21,664

 

 

 

 

 

 

 

 

 

Interest expense, net

 

8,335

 

7,441

 

16,509

 

14,752

Equity in earnings of joint venture

 

47

 

284

 

214

 

728

Income before income taxes

 

10,920

 

11,238

 

350

 

7,640

 

 

 

 

 

 

 

 

 

Income tax (provision) benefit

 

(3,792)

 

(3,432)

 

2,186

 

(1,472)

Net income

 

$

7,128

 

$

7,806

 

$

2,536

 

$

6,168

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.10

 

$

0.11

 

$

0.04

 

$

0.08

Diluted

 

$

0.09

 

$

0.10

 

$

0.03

 

$

0.08

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

72,573,681

 

73,197,064

 

72,430,786

 

73,193,107

Diluted

 

76,251,510

 

78,907,184

 

76,478,054

 

78,976,605

 

6



 

Smart & Final Stores, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In Thousands, Except Share and Per Share Amounts)

 

 

 

 

June 18, 2017

 

January 1, 2017

 

 

(Unaudited)

 

 

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

63,225

 

$

54,235

Accounts receivable, less allowances of $433 and $434 at June 18, 2017 and January 1, 2017, respectively

 

32,988

 

31,809

Inventories

 

266,569

 

278,718

Prepaid expenses and other current assets

 

30,086

 

48,769

Deferred income taxes

 

-     

 

22,105

Total current assets

 

392,868

 

435,636

 

 

 

 

 

Property, plant, and equipment:

 

 

 

 

Land

 

9,123

 

9,106

Buildings and improvements

 

20,468

 

17,351

Leasehold improvements

 

321,777

 

301,522

Fixtures and equipment

 

382,168

 

353,764

Construction in progress

 

18,849

 

12,110

 

 

752,385

 

693,853

Less accumulated depreciation and amortization

 

289,389

 

249,251

 

 

462,996

 

444,602

 

 

 

 

 

Capitalized software, net of accumulated amortization of $15,293 and $13,293 at June 18, 2017 and January 1, 2017, respectively

 

15,545

 

10,392

Other intangible assets, net

 

366,296

 

369,519

Goodwill

 

611,242

 

611,242

Equity investment in joint venture

 

14,644

 

14,366

Other assets

 

68,796

 

66,662

Total assets

 

$

1,932,387

 

$

1,952,419

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

230,786

 

$

225,227

Accrued salaries and wages

 

33,273

 

31,933

Accrued expenses

 

86,025

 

82,925

Current portion of debt, less debt issuance costs

 

48,531

 

62,352

Total current liabilities

 

398,615

 

402,437

 

 

 

 

 

Long-term debt, less debt issuance costs

 

617,178

 

616,588

Deferred income taxes

 

108,595

 

129,902

Postretirement and postemployment benefits

 

118,530

 

121,409

Other long-term liabilities

 

133,693

 

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 - 73,972,443 and 72,930,653 at June 18, 2017 and January 1, 2017, respectively

 

74

 

73

Additional paid-in capital

 

504,407

 

500,666

Retained earnings

 

64,308

 

65,093

Accumulated other comprehensive loss

 

(13,013)

 

(13,583)

Total stockholders’ equity

 

555,776

 

552,249

Total liabilities and stockholders’ equity

 

$

1,932,387

 

$

1,952,419

 

7



 

Smart & Final Stores, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In Thousands)

 

 

 

 

Twenty-four Weeks Ended

 

 

June 18, 2017

 

June 19, 2016

Operating activities

 

 

 

 

Net income

 

$

2,536

 

$

6,168

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

 

 

 

 

Depreciation

 

25,989

 

21,752

Amortization

 

18,008

 

15,035

Amortization of debt discount and debt issuance costs

 

891

 

1,280

Share-based compensation

 

4,304

 

3,418

Deferred income taxes

 

524

 

(811)

Equity in earnings of joint venture

 

(214)

 

(728)

Loss on disposal of property, plant, and equipment

 

14

 

65

Asset impairment

 

550

 

181

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable, net

 

(2,958)

 

(1,074)

Inventories

 

12,149

 

(11,602)

Prepaid expenses and other assets

 

18,318

 

2,017

Accounts payable

 

5,559

 

18,215

Accrued salaries and wages

 

1,340

 

(2,153)

Other accrued liabilities

 

8,128

 

8,682

Net cash provided by operating activities

 

95,138

 

60,445

 

 

 

 

 

Investing activities

 

 

 

 

Purchases of property, plant, and equipment

 

(62,646)

 

(70,346)

Proceeds from disposal of property, plant, and equipment

 

1,807

 

409

Assets acquired in Haggen Transaction

 

 

(2,227)

Investment in capitalized software

 

(6,836)

 

(1,385)

Other

 

(458)

 

(279)

Net cash used in investing activities

 

(68,133)

 

(73,828)

 

 

 

 

 

Financing activities

 

 

 

 

Proceeds from exercise of stock options

 

3,626

 

1,783

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

 

(1,524)

 

(106)

Fees paid in conjunction with debt financing

 

(123)

 

(133)

Borrowings on bank line of credit

 

38,000

 

40,000

Payments on bank line of credit

 

(52,000)

 

(15,000)

Stock repurchases

 

(5,994)

 

(5,104)

Net cash (used in) provided by financing activities

 

(18,015)

 

21,440

 

 

 

 

 

Net increase in cash and cash equivalents

 

8,990

 

8,057

Cash and cash equivalents at beginning of period

 

54,235

 

59,327

Cash and cash equivalents at end of period

 

$

63,225

 

$

67,384

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

Interest

 

$

11,012

 

$

7,467

Income taxes

 

$

1

 

$

5,476

 

 

 

 

 

Non-cash investing and financing activities

 

 

 

 

Software development costs incurred but not paid

 

$

340

 

$

490

Construction in progress costs incurred but not paid

 

$

9,634

 

$

13,542

 

8



 

Smart & Final Stores, Inc. and Subsidiaries

Segment Information

(In Thousands)

 

 

 

Smart & Final

 

Cash & Carry

 

Corporate / Other

 

Consolidated

Twelve Weeks Ended June 18, 2017

 

 

 

 

 

 

 

 

Net sales

 

$

836,134

 

$

242,153

 

$

-

 

$

1,078,287

Cost of sales, distribution and store occupancy

 

706,610

 

207,372

 

2,035

 

916,017

Operating and administrative expenses

 

107,796

 

17,441

 

17,825

 

143,062

Income (loss) from operations

 

$

21,728

 

$

17,340

 

$

(19,860)

 

$

19,208

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

$

33,830

 

$

3,501

 

$

3,057

 

$

40,388

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twenty-four Weeks Ended June 18, 2017

 

 

 

 

 

 

 

 

Net sales

 

$

1,601,103

 

$

444,201

 

$

-

 

$

2,045,304

Cost of sales, distribution and store occupancy

 

1,363,402

 

382,505

 

4,016

 

1,749,923

Operating and administrative expenses

 

211,702

 

33,607

 

33,427

 

278,736

Income (loss) from operations

 

$

25,999

 

$

28,089

 

$

(37,443)

 

$

16,645

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

$

54,804

 

$

6,374

 

$

8,304

 

$

69,482

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

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 EBITDA and adjusted EBITDA, adjusted net income, adjusted net income per share, and adjusted net income per diluted share) 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 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.  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.

 

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 net income to EBITDA, adjusted EBITDA and adjusted net income, and net income per share to adjusted net income per share and adjusted net income per diluted share, for the twelve-week and twenty-four week periods ended June 18, 2017 and June 19, 2016.

 

Smart & Final  Stores, Inc. and Subsidiaries

Reconciliation of Net Income to Non-GAAP EBITDA and Adjusted EBITDA

(Unaudited)

(In Thousands)

 

 

 

Twelve Weeks
Ended June 18,
2017

 

Twelve Weeks
Ended June 19,
2016

 

Twenty-four
Weeks Ended
June 18, 2017

 

Twenty-four
Weeks Ended
June 19, 2016

Net income

 

$

7,128

 

$

7,806

 

$

2,536

 

$

6,168

Depreciation and amortization

 

22,314

 

19,253

 

43,997

 

36,787

Interest expense, net

 

8,335

 

7,441

 

16,509

 

14,752

Income tax provision (benefit)

 

3,792

 

3,432

 

(2,186)

 

1,472

EBITDA

 

41,569

 

37,932

 

60,856

 

59,179

 

 

 

 

 

 

 

 

 

Adjustments to EBITDA

 

 

 

 

 

 

 

 

Net loss from closed stores and exit costs (a)

 

891

 

2,602

 

1,281

 

3,738

Loss from asset dispositions (b)

 

300

 

57

 

628

 

185

Share-based compensation expense (c)

 

2,489

 

1,911

 

4,304

 

3,418

Non-cash rent (d)

 

376

 

586

 

736

 

834

Pre-opening costs (e)

 

1,190

 

247

 

2,161

 

437

Costs associated with acquired Haggen store locations (f)

 

1,201

 

7,373

 

2,402

 

17,950

Other items (g)

 

25

 

-    

 

81

 

6

Adjusted EBITDA

 

$

48,041

 

$

50,708

 

$

72,449

 

$

85,747

 

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)

 

 

 

Twelve Weeks
Ended June 18,
2017

 

Twelve Weeks
Ended June 19,
2016

 

Twenty-four
Weeks Ended
June 18, 2017

 

Twenty-four
Weeks Ended
June 19, 2016

Net income

 

$

7,128

 

$

7,806

 

$

2,536

 

$

6,168

Income tax provision (benefit)

 

3,792

 

3,432

 

(2,186)

 

1,472

Income before income taxes

 

10,920

 

11,238

 

350

 

7,640

 

 

 

 

 

 

 

 

 

Adjustments to net income

 

 

 

 

 

 

 

 

Net loss from closed stores and exit costs (a)

 

891

 

2,602

 

1,281

 

3,738

Loss from asset dispositions (b)

 

300

 

57

 

628

 

185

Share-based compensation expense (c)

 

2,489

 

1,911

 

4,304

 

3,418

Non-cash rent (d)

 

376

 

586

 

736

 

834

Pre-opening costs (e)

 

1,190

 

247

 

2,161

 

437

Costs associated with acquired Haggen store locations (f)

 

1,201

 

7,373

 

2,402

 

17,950

Other items (g)

 

25

 

-

 

81

 

6

Adjusted income tax provision

 

(6,365)

 

(8,546)

 

(2,422)

 

(12,107)

Adjusted net income

 

$

11,027

 

$

15,468

 

$

9,521

 

$

22,101

 

 

 

 

 

 

 

 

 

Adjusted Net Income Per Share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share - basic

 

$

0.10

 

$

0.11

 

$

0.04

 

$

0.08

Per share impact of net income adjustments

 

0.05

 

0.10

 

0.09

 

0.22

Adjusted net income per share - basic

 

$

0.15

 

$

0.21

 

$

0.13

 

$

0.30

 

 

 

 

 

 

 

 

 

Net income per share - diluted

 

$

0.09

 

$

0.10

 

$

0.03

 

$

0.08

Per share impact of net income adjustments

 

0.05

 

0.10

 

0.09

 

0.20

Adjusted net income per share - diluted

 

$

0.14

 

$

0.20

 

$

0.12

 

$

0.28

 

 

 

 

 

 

 

 

 

Weighted average shares - basic

 

72,573,681

 

73,197,064

 

72,430,786

 

73,193,107

Weighted average shares - fully diluted

 

76,251,510

 

78,907,184

 

76,478,054

 

78,976,605

 

 

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

(g)  Represents severance costs in the twelve-week period ended June 18, 2017 and the twenty-four week periods ended June 18, 2017 and June 19, 2016.

 

11


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1 8-K a17-18278_18k.htm 8-K 29731
2 EX-99.1 a17-18278_1ex99d1.htm EX-99.1 448449
3 GRAPHIC g182781mm01i001.jpg GRAPHIC 1927
  Complete submission text file 0001104659-17-046812.txt   482262