Smart & Final Stores, Inc. Reports Fourth Quarter and Full Year 2017 Financial Results

COMMERCE, Calif., March 14, 2018 /PRNewswire/ -- Smart & Final Stores, Inc. (the "Company") (NYSE:SFS), the value-oriented food and everyday staples retailer, today reported financial results for the fiscal fourth quarter and full year ended December 31, 2017.

Fourth Quarter Highlights:

  • Net sales increase of 6.7% to $1,068 million driven by comparable store sales increase of 3.2%.
  • Online options for both business and household customers, including delivery or in-store pickup options, available in over 85% of Smart & Final banner stores.
  • Net loss of $146.6 million in fourth quarter reflects non-cash goodwill impairment charge of $180 million.
  • Adjusted net income of $11.3 million or $0.15 per diluted share and adjusted EBITDA of $49.1 million.
  • Named one of Fortune's "Most Admired Companies" for second consecutive year.

"We have a differentiated position in the evolving retail marketplace and our unique store operating model enables us to maintain our position as a low-cost leader serving multiple sales channels," said David Hirz, president and chief executive officer. "We are pleased with our strengthening comparable store sales trends, which represent the third consecutive quarter of comp growth. This reflects the success of our merchandising initiatives aimed at both household and business customers with an emphasis on our natural and organic, private label and club-size items. These initiatives, combined with our efforts in strategic sourcing and pricing, contributed to a gross margin rate expansion in the fourth quarter, despite ongoing promotional activity within the grocery landscape."    

Mr. Hirz continued, "Over the course of 2017, we accelerated the expansion of our online sales channel and delivery offerings, with over 85% of our Smart & Final banner stores offering delivery or in-store pickup at year-end.  While we remain focused on our strong brick-and-mortar stores with two successful store banners, we are increasingly focused on digital channels for brand marketing and customer transaction options.  In 2018, we plan to make additional investments in our infrastructure to position all of our sales channels for continued success."

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 results below are first presented on a GAAP basis and then on a non-GAAP adjusted basis.

Fiscal Fourth Quarter 2017 Financial Results
Net sales were $1,067.9 million in the 12-week quarter ended December 31, 2017, representing a 6.7% increase as compared to $1,000.6 million for the same period of 2016. Net sales growth was driven by a 3.2% increase in comparable store sales and the net sales contribution of new stores. Comparable store sales growth was comprised of a 3.7% increase in comparable average transaction size, partially offset by a 0.4% decrease in comparable transaction count, including the effect of cannibalization from new stores.

Net sales for Smart & Final banner stores were $841.4 million, a 5.7% increase as compared to $796.3 million for the same period of 2016. Comparable store sales growth for the Smart & Final banner was 2.5% in the fourth quarter.

Net sales for Cash & Carry Smart Foodservice banner stores were $226.6 million, a 10.8% increase as compared to $204.4 million for 2016. Comparable store sales growth for the Cash & Carry banner was 6.2% in the fourth quarter.

Gross margin was $164.4 million, a 16.7% increase as compared to $140.9 million in the fourth quarter of 2016. Gross margin rate was 15.4% as compared to 14.1% for the same period of 2016.

Operating and administrative expenses were $147.1 million, an 8.8% increase as compared to $135.2 million for the same period of 2016. The increase was related to expenses associated with the effect of higher minimum wages, the 14 new stores that opened following the fourth quarter of 2016 through the end of the fourth quarter of 2017 and related support costs.

Net loss was $146.6 million, or $2.03 per diluted share, as compared to a net loss of $0.3 million for the same period of 2016. These results included a non-cash net benefit of $27.0 million, as a result of the Tax Cuts and Jobs Act and other one-time items, primarily due to a lower valuation of net deferred tax liabilities. During the quarter, the Company also recorded a goodwill impairment charge of $180.0 million, related to the Company's Smart & Final banner.

Adjusted net income was $11.3 million, or $0.15 per diluted share, as compared to $5.0 million, or $0.07 per share, for the same period of 2016.   Adjusted net income excludes the $27.0 million, or $0.37 per diluted share, benefit associated with the Tax Cuts and Jobs Act and other one-time items, and the $180.0 million, or $2.44 per diluted share, goodwill impairment charge.

Adjusted EBITDA was $49.1 million as compared to $37.3 million for the same period of 2016.

Fiscal 2017 Financial Results
In the fifty-two weeks ended December 31, 2017, net sales were $4,570.6 million, an increase of 5.3% as compared to $4,341.8 million for the same period of 2016.  Net sales growth was driven by the net sales contribution of new stores, and a 1.0% increase in comparable store sales.  Comparable store sales growth was comprised of a 0.3% increase in comparable transaction count, and a 0.8% increase in comparable average transaction size. 

Net sales for Smart & Final banner stores were $3,557.7 million, an increase of 4.6% as compared to $3,400.8 million for 2016. Full year 2017 comparable store sales for the Smart & Final banner increased 0.7%.

Net sales for Cash & Carry Smart Foodservice banner stores were $1,012.9 million, a 7.6% increase as compared to $941.0 million for 2016.  Full year 2017 comparable store sales for the Cash & Carry banner increased 2.4%.

Net loss was $138.9 million, or $1.92 per diluted share, as compared to  net income of $12.9 million, or $0.17 per diluted share, for fiscal 2016. These results included a non-cash net benefit of $27.0 million, as a result of the Tax Cuts and Jobs Act and other one-time items, primarily due to a lower valuation of net deferred tax liabilities. During the fourth quarter, the Company also recorded a goodwill impairment charge of $180.0 million, related to the Company's Smart & Final banner.

Adjusted net income was $33.6 million, or $0.45 per diluted share, as compared to $42.2 million, or $0.54 per share, for 2016.   Adjusted net income excludes the $27.0 million, or $0.36 per diluted share, benefit associated with income tax reform and other one-time items, as well as the $180.0 million, or $2.39 per diluted share, goodwill impairment charge, recorded in the fourth quarter 2017.

Adjusted EBITDA was $184.4 million as compared to $180.3 million for 2016.

Goodwill Impairment
In the fourth quarter of 2017, the Company concluded an annual review of its goodwill as required under accounting standard ASC 350.  The review included current equity market valuation metrics and the Company's near term plans for growth.  The result of the review was an impairment of Smart & Final banner goodwill in the amount of $180.0 million.  The Company does not believe that this impairment charge reflects a fundamental change in the long-term attractiveness of future store investments.

Growth and Development
During the fiscal fourth quarter of 2017, the Company opened seven new Smart & Final Extra! stores, and completed three expansions of legacy Smart & Final stores to the Extra! store format, and one store relocation. As of December 31, 2017, the Company operated a total of 323 stores, including 194 Smart & Final Extra! stores, 66 legacy format Smart & Final stores and 63 Cash & Carry Smart Foodservice stores.

Operating Stores at Fiscal Year End (December 31, 2017)













Smart & Final Banner Stores


Cash & Carry
Banner Stores


Total
Company


Extra!
format


Legacy
format


Total



End of Fiscal 2016

172


74


246


59


305

New stores

14


-


14


4


18

Relocations, net

3


(3)


-


-


-

Expansions

5


(5)


-


-


-

Store closures

-


-


-


-


-

End of Fiscal 2017

194


66


260


63


323

 

Leverage and Liquidity
As of December 31, 2017, the Company's debt, net of debt issuance costs, was $699.4 million and cash and cash equivalents were $71.7 million.

For the fifty-two weeks ended December 31, 2017, the Company generated cash from operations of $169.5 million and invested $162.6 million in capital expenditures, primarily related to the development of Extra! format stores and to improvements of existing assets.

Outlook
The Company is providing the following guidance for the full year ending December 30, 2018:

Net sales growth

4.0% - 5.0%

Comparable store sales growth

1.0% - 2.0%

Unit growth (new stores)

3-5 Smart & Final Extra!
3-5 Cash & Carry Smart Foodservice

Relocations of existing stores to Extra! format

2-3 Smart & Final stores

Expansions or conversions of legacy stores to Extra! format

1-2 Smart & Final stores

Adjusted EBITDA

$180 - $190 million

Adjusted net income

$31 - $35 million

Adjusted diluted EPS

$0.42 - $0.47

Capital expenditures (net)

$80 - $90 million

Fully diluted weighted average shares

74 to 75 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 $3.8 million, non-cash rent related to stores of approximately $2.9 million, share-based compensation expense of approximately $15.5 million, and $3.9 million of store closure expenses. 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.

The Company additionally is providing first quarter 2018 guidance for comparable store sales growth of 1.0% to 1.5% and adjusted EBITDA in the range of $23 to $25 million.

Fiscal Fourth Quarter and Full Year 2017 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 fourth quarter and fiscal 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 "For Investors" section of the Company's web site at www.smartandfinal.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: 13677083. The telephonic replay will be available until 11:59 p.m. Eastern Time, March 28, 2018.

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 December 31, 2017, the Company operated 323 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 146 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.


Smart & Final Stores, Inc. and Subsidiaries

Consolidated Statements of Operations 

(In Thousands, Except Share and Per Share Amounts)



 Twelve Weeks Ended 


 Fifty-two Weeks Ended 


December 31, 2017


January 1, 2017


December 31, 2017


January 1, 2017

















Net sales 

$             1,067,908


$       1,000,632


$             4,570,565


$       4,341,795

Cost of sales, buying and occupancy 

903,484


859,722


3,896,897


3,712,291

Gross margin 

164,424


140,910


673,668


629,504









Operating and administrative expenses 

147,057


135,183


621,078


582,486

Goodwill impairment

180,000


-


180,000


-

(Loss) income from operations 

(162,633)


5,727


(127,410)


47,018









Interest expense, net 

8,732


7,925


36,470


32,654

Loss on early extinguishment of debt

-


-


-


4,978

Equity in earnings of joint venture 

347


295


923


1,525

(Loss) income before income tax benefit

(171,018)


(1,903)


(162,957)


10,911









Income tax benefit

24,462


1,650


24,043


2,037

Net (loss) income

$               (146,556)


$                (253)


$               (138,914)


$            12,948

















Net (loss) income per share:








       Basic

$                     (2.03)


$                0.00


$                     (1.92)


$                0.18

       Diluted

$                     (2.03)


$                0.00


$                     (1.92)


$                0.17









Weighted average shares outstanding:








       Basic

72,068,998


71,962,127


72,352,102


72,727,071

       Diluted

72,068,998


71,962,127


72,352,102


78,026,159

 

Smart & Final Stores, Inc. and Subsidiaries

Consolidated Balance Sheets

(In Thousands, Except Share and Per Share Amounts)






 December 31, 2017 


 January 1, 2017 





Assets 




Current assets: 




Cash and cash equivalents 

$                   71,671


$            54,235

Accounts receivable, less allowances of $177 and $434 at
  
December 31, 2017 and January 1, 2017, respectively 

33,019


31,809

Inventories 

289,712


278,718

Prepaid expenses and other current assets 

54,241


48,769

Deferred income taxes 

-


22,105

Total current assets 

448,643


435,636





Property, plant, and equipment: 




Land 

10,076


9,106

Buildings and improvements 

53,965


17,351

Leasehold improvements 

346,181


301,522

Fixtures and equipment 

421,912


353,764

Construction in progress 

8,242


12,110


840,376


693,853

Less accumulated depreciation and amortization 

338,149


249,251


502,227


444,602





Capitalized software, net of accumulated amortization of
   $17,325 and $13,293 at December 31, 2017 and
   January 1, 2017, respectively

21,984


10,392

Other intangible assets, net 

362,536


369,519

Goodwill 

385,918


565,918

Equity investment in joint venture 

15,380


14,366

Other assets 

73,249


66,662

Total assets 

$              1,809,937


$       1,907,095









Liabilities and stockholders' equity




Current liabilities: 




Accounts payable 

$                 245,009


$          225,227

Accrued salaries and wages 

36,216


31,933

Accrued expenses 

100,639


82,925

Current portion of debt, less debt issuance costs

81,512


62,352

Total current liabilities 

463,376


402,437





Long-term debt, less debt issuance costs

617,867


616,588

Deferred income taxes 

38,095


84,578

Postretirement and postemployment benefits 

127,649


121,409

Other long-term liabilities 

159,904


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 - 74,120,113 and 72,930,653
  at December 31, 2017 and January 1, 2017, respectively

74


73

Additional paid-in capital 

506,098


500,666

Retained (deficit) earnings 

(78,160)


65,093

Accumulated other comprehensive loss

(24,966)


(13,583)

Total stockholders' equity 

403,046


552,249

Total liabilities and stockholders' equity 

$              1,809,937


$       1,907,095

 

Smart & Final Stores, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In Thousands)




Fiscal Year


Fiscal Year


Fiscal Year


2017


2016


2015







Operating activities 






Net (loss) income 

$                          (138,914)


$                          12,948


$                           38,262

Adjustments to reconcile net (loss) income to net cash provided by 

  operating activities: 






Depreciation 

58,589


51,385


38,585

Amortization 

39,783


35,630


30,181

Amortization of debt discount and debt issuance costs 

1,908


2,511


2,780

Share-based compensation

11,560


9,803


10,003

Excess tax benefits related to share-based payments



(358)

Deferred income taxes

(20,283)


(1,469)


3,325

Equity in earnings of joint venture 

(923)


(1,525)


(1,378)

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

(51)


282


(40)

Asset impairment 

1,796


1,323


1,413

Goodwill impairment

180,000



Loss on early extinguishment of debt


4,978


2,192

Dividend from joint venture

455


769


Changes in operating assets and liabilities: 






Accounts receivable, net 

(2,988)


(2,726)


(3,637)

Inventories

(10,994)


(44,429)


(10,885)

Prepaid expenses and other assets 

405


(23,962)


(1,202)

Accounts payable 

19,782


31,078


9,252

Accrued salaries and wages 

4,283


(1,926)


5,277

Other accrued liabilities 

25,087


22,423


21,621

Net cash provided by operating activities 

169,495


97,093


145,391







Investing activities 






Purchases of property, plant, and equipment 

(149,347)


(148,043)


(132,738)

Proceeds from disposal of property, plant, and equipment 

1,858


2,265


8,104

Assets acquired in Haggen Transaction


(2,257)


(66,440)

Investment in capitalized software 

(14,316)


(3,193)


(4,265)

Other 

(782)


(2,024)


(1,277)

Net cash used in investing activities 

(162,587)


(153,252)


(196,616)







Financing activities






Proceeds from exercise of stock options

4,228


4,667


719

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

(1,850)


(669)


(694)

Fees paid in conjunction with debt financing

(245)


(8,500)


(1,335)

Borrowings on bank line of credit

88,000


97,000


15,000

Payments on bank line of credit

(71,000)


(38,000)


(10,000)

Cash from landlord related to financing lease obligations

4,268



Issuance of bank debt, net of issuance costs


30,093


Payments of public offering issuance costs



(214)

Excess tax benefits related to share-based payments



358

Stock repurchases

(12,873)


(33,524)


(129)

Net cash provided by financing activities

10,528


51,067


3,705







Net increase (decrease) in cash and cash equivalents

17,436


(5,092)


(47,520)

Cash and cash equivalents at beginning of period

54,235


59,327


106,847

Cash and cash equivalents at end of period

$                               71,671


$                          54,235


$                           59,327







Cash paid during the period for:






Interest 

$                               33,957


$                          29,750


$                           29,462

Income taxes

2


10,448


23,729







Non-cash investing and financing activities






Software development costs incurred but not paid

$                                 1,397


$                                 24


$                                310

Construction in progress costs incurred but not paid

18,834


12,070


8,534

Property acquired through financing lease obligations

7,135



 

 Smart & Final Stores, Inc. and Subsidiaries 

 Segment Information 

 (In Thousands) 




 Smart & Final 


 Cash & Carry


 Corporate / Other 


 Consolidated 

 Twelve Weeks Ended December 31, 2017 









 Net sales 


$         841,354


$                     226,554


$                             -


$     1,067,908

 Cost of sales, distribution and store occupancy 


708,326


193,537


1,621


903,484

 Operating and administrative expenses 


111,834


17,212


18,011


147,057

 Goodwill impairment 


180,000


-


-


180,000

 Income (loss) from operations 


$        (158,806)


$                       15,805


$                 (19,632)


$      (162,633)



















 Capital expenditures 


$           40,814


$                         1,269


$                     3,996


$          46,079





































 Twelve Weeks Ended January 1, 2017 









 Net sales 


$         796,250


$                     204,382


$                             -


$     1,000,632

 Cost of sales, distribution and store occupancy 


680,210


177,324


2,188


859,722

 Operating and administrative expenses 


100,067


15,556


19,560


135,183

 Income (loss) from operations 


$           15,973


$                       11,502


$                 (21,748)


$            5,727



















 Capital expenditures 


$           30,209


$                         4,231


$                        849


$          35,289




























 Fifty-two Weeks Ended December 31, 2017 









 Net sales 


$      3,557,691


$                  1,012,874


$                             -


$     4,570,565

 Cost of sales, distribution and store occupancy 


3,020,204


868,544


8,149


3,896,897

 Operating and administrative expenses 


468,946


74,791


77,341


621,078

 Goodwill impairment 


180,000


-


-


180,000

 Income (loss) from operations 


$        (111,459)


$                       69,539


$                 (85,490)


$      (127,410)



















 Capital expenditures 


$         134,317


$                       12,844


$                   16,502


$        163,663





































 Fifty-two Weeks Ended January 1, 2017 









 Net sales 


$      3,400,755


$                     941,040


$                             -


$     4,341,795

 Cost of sales, distribution and store occupancy 


2,894,222


808,258


9,811


3,712,291

 Operating and administrative expenses 


444,318


66,688


71,480


582,486

 Income (loss) from operations 


$           62,215


$                       66,094


$                 (81,291)


$          47,018



















 Capital expenditures 


$         135,677


$                       10,074


$                     5,485


$        151,236










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 (loss) before depreciation and amortization, interest expense and provision (benefit) 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 (loss) adjusted for the items set forth in the table below. The Company defines adjusted net income (loss) 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 (loss) per share to adjusted net income per share and adjusted net income per diluted share, for the twelve-week and fifty-two week periods ended December 31, 2017.

 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 December
31, 2017


Twelve Weeks
Ended January 1,
2017


Fifty-two Weeks
Ended December
31, 2017


Fifty-two Weeks
Ended January 1,
2017

 Net (loss) income 

$          (146,556)


$                (253)


$          (138,914)


$             12,948

 Income tax (benefit) 

(24,462)


(1,650)


(24,043)


(2,037)

 (Loss) income before income taxes 

(171,018)


(1,903)


(162,957)


10,911









 Adjustments to net (loss) income 








 Net loss from closed stores and exit costs (a) 

1,262


2,650


3,818


8,671

 Goodwill impairment (b) 

180,000


-


180,000


-

 Loss from asset dispositions and impairment charges (c) 

369


594


1,827


1,598

 Share-based compensation expense (d) 

3,057


2,555


11,560


9,803

 Non-cash rent (e) 

1,492


1,688


6,535


7,946

 Pre-opening costs (f) 

1,914


926


5,433


17,695

 Loss on extinguishment of debt (g) 

-


-


-


4,978

 Other items (h) 

(45)


377


3,390


(1,018)

 Adjusted income tax (benefit) 

(5,731)


(1,890)


(15,951)


(18,363)

 Adjusted net income 

$              11,300


$               4,997


$              33,655


$             42,221









Adjusted Net (Loss) Income Per Share
















Net (loss) income per share - basic

$              (2.03)


$                0.00


$              (1.92)


$               0.18

Per share impact of net income adjustments

2.19


0.07


2.39


0.40

Adjusted net income per share - basic

$                0.16


$                0.07


$                0.47


$               0.58

Net (loss) income per share - diluted

$              (1.99)


$                0.00


$              (1.85)


$               0.17

Per share impact of net income adjustments

2.14


0.07


2.30


0.37

Adjusted net income per share - diluted

$                0.15


$                0.07


$                0.45


$               0.54









Weighted average shares - basic

72,068,998


71,962,127


72,352,102


72,727,071

Weighted average shares - diluted

73,828,639


76,552,257


75,182,134


78,026,159

 

 Smart & Final  Stores, Inc. and Subsidiaries 

 Reconciliation of EBITDA to Adjusted EBITDA 

 (Unaudited) 

 (In Thousands) 



Twelve Weeks
Ended December
31, 2017


Twelve Weeks
Ended January 1,
2017


Fifty-two Weeks
Ended December
31, 2017


Fifty-two Weeks
Ended January 1,
2017

 Net (loss) income 

$          (146,556)


$                (253)


$          (138,914)


$             12,948

 Depreciation and amortization  

23,324


22,500


98,373


87,015

 Interest expense, net 

8,732


7,925


36,470


32,654

 Income tax (benefit)  

(24,462)


(1,650)


(24,043)


(2,037)

 EBITDA 

(138,962)


28,522


(28,114)


130,580









 Adjustments to EBITDA 








 Net loss from closed stores and exit costs (a) 

1,262


2,650


3,818


8,671

 Goodwill impairment (b) 

180,000


-


180,000


-

 Loss from asset dispositions and impairment charges (c) 

369


594


1,827


1,598

 Share-based compensation expense (d) 

3,057


2,555


11,560


9,803

 Non-cash rent (e) 

1,492


1,688


6,535


7,946

 Pre-opening costs (f) 

1,914


926


5,433


17,695

 Loss on extinguishment of debt (g) 

-


-


-


4,978

 Other items (h) 

(45)


377


3,390


(1,018)

 Adjusted EBITDA 

$              49,087


$             37,312


$            184,449


$            180,253



(a)

Represents costs associated with store closure and exit costs.

(b)

Represents non-cash charge associated with goodwill impairment.

(c)

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

(d)

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

(e)

Represents non-cash component of recognized rent expense. 

(f)

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

(g)

Represents loss on the early extinguishment of debt in the fiscal year ended January 1, 2017 in connection with amendments to the Company's First Lien Term Loan Credit Facility.

(h)

Represents (i) severance costs in the twelve and fifty-two weeks ended December 31, 2017 and the twelve and fifty-two weeks ended January 1, 2017 and (ii) death benefit income from a Company-owned life insurance policy in the fifty-two weeks ended January 1, 2017.

 

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SOURCE Smart & Final Stores, Inc.