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)  November 12, 2014

 

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):

 

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

 

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

 

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

 

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

 

 

 



 

Item 2.02                                           Results of Operations and Financial Condition.

 

On November 12, 2014, Smart & Final Stores, Inc. issued a press release announcing its financial results for the quarter ended October 5, 2014.  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 November 12, 2014

 

2



 

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: November 12, 2014

 

 

 

 

 

 

 

 

By:

/s/ Richard N. Phegley

 

Name:

Richard N. Phegley

 

Title:

Senior Vice President and Chief Financial Officer

 

3



 

Exhibit Index

 

Exhibit Number

 

Description

 

 

 

99.1

 

Press Release, dated November 12, 2014

 

4


Exhibit 99.1

 

GRAPHIC

 

Smart & Final Stores, Inc. Reports Third Quarter 2014 Results

 

Third Quarter Highlights:

 

·                  Net sales increased 10.8% to $1.13 billion

·                  Comparable store sales growth of 6.6%

·                  Net income increased 1.9% to $10.2 million

·                  Adjusted net income increased 24.9% to $14.9 million, or $0.24 per diluted share

·                  Operated 252 stores at quarter-end, including 90 Smart & Final Extra! stores

 

COMMERCE, Calif. (November 12, 2014) —Smart & Final Stores, Inc. (the “Company”) (NYSE:SFS) today reported results for its 16-week third quarter ended October 5, 2014.

 

“It’s an exciting time at Smart & Final Stores,” said Dave Hirz, President and Chief Executive Officer. “Our store banners are uniquely positioned at the intersection of value, convenience and quality.  We are leading the way with the growth of our Smart & Final Extra! stores which offer a one-stop shopping experience that resonates with today’s household and business customers.  We continue to grow sales in both of our store banners — Smart & Final and Cash & Carry — and this has translated into strong financial results.”

 

Mr. Hirz continued, “Importantly, we continue to see growth in customer transactions as our distinct merchandise and strong value pricing remains a compelling proposition for both household and business customers. Our strong financial performance of 10.8% sales growth and 6.6% comparable store sales growth provides a strong foundation for continued growth, and we plan to continue a robust program of new store openings during the balance of this year and during 2015.”

 

In order to aid understanding of the Company’s business performance, it has presented results in conformity with accounting principles generally accepted in the United States (“GAAP”) and has also presented adjusted net income, adjusted net income per share, adjusted net income per diluted share, EBITDA and adjusted EBITDA, which are non-GAAP measures that are explained and reconciled to the comparable GAAP measures in the tables included in this release. Where applicable, the numbers below are first presented on a GAAP basis and then on an adjusted basis.

 

Fiscal Third Quarter 2014 Financial Results

 

Net sales were $1,131.8 million, a 10.8% increase as compared to $1,021.4 million in the same period of 2013. Net sales growth was driven by a 6.6% increase in comparable store sales and from the sales contribution of new stores.  In the 16 weeks ended October 5, 2014 the company opened six new stores, and has opened 13 new stores in the 52 weeks ended October 5, 2014.  All of the new stores have been in the Smart & Final Extra! store format.  The growth in comparable store sales was comprised of a 3.9% increase in comparable transaction count and a 2.5% increase in comparable average transaction size.

 

1



 

Net sales for Smart & Final banner stores were $839.3 million, a 10.5% increase as compared to $759.7 million in the same period of 2013.  Comparable store sales growth for the Smart & Final banner was 4.7% in the third quarter.

 

Net sales for Cash & Carry banner stores were $292.5 million, an 11.8% increase as compared to $261.7 million in the same period of 2013.  Comparable store sales growth for the Cash & Carry banner was 11.8% in the third quarter.

 

Gross margin from operations was $169.5 million, a 10.9% increase as compared to $152.8 million in the same period of 2013. Gross margin rate in the third quarter was 15.0%, consistent with the same period in 2013.

 

Operating and administrative expenses increased to $140.7 million as compared to $121.4 million in the same period of 2013. This increase was primarily related to higher sales volumes, increased store support costs, and costs charged to expense associated with the Company’s initial public offering in September 2014.

 

Net income was $10.2 million, a 1.9% increase as compared to $10.0 million in the same period of 2013. Net income per diluted share was $0.17 as compared to $0.17 in the same period of 2013.

 

Adjusted net income was $14.9 million as compared to $11.9 million for the same period of 2013. Adjusted net income per diluted share was $0.24 as compared to $0.20 in the same period of 2013.

 

Adjusted EBITDA was $57.1 million, or a 4.3% increase as compared to $54.7 million in the same period of 2013.

 

Fiscal Year-to-date Financial Results

 

Net sales were $2,694.9 million in the 40 weeks (three fiscal quarters) ended October 5, 2014, a 9.2% increase as compared to $2,467.5 million in the same period of 2013. Net sales growth was driven by a 5.8% increase in comparable store sales growth and the net sales contribution from new stores.  The growth in comparable store sales was comprised of a 3.8% increase in comparable transaction count and a 1.9% increase in comparable average transaction size.

 

Net sales for Smart & Final banner stores were $2,024.3 million, or a 9.0% increase as compared to $1,857.2 million in the same period of 2013. Year-to-date comparable store sales growth for the Smart & Final banner was 4.4%.

 

Net sales for Cash & Carry banner stores were $670.6 million, or a 9.9% increase as compared to $610.3 million in the same period of 2013.  Year-to-date comparable store sales growth for the Cash & Carry banner was 9.9%.

 

Net income was $23.8 million, a 57.3% increase as compared to $15.2 million in the same period of 2013. Net income per diluted share was $0.40 as compared to $0.26 for the same period of 2013.

 

Adjusted net income was $34.3 million as compared to $23.7 million in the same period of 2013. Adjusted net income per diluted share was $0.57, compared to $0.40 in the same period of 2013.

 

2



 

Adjusted EBITDA was $134.8 million, or a 7.2% increase as compared to $125.8 million in the same period of 2013.

 

Growth and Development

 

During the third quarter of fiscal 2014, the Company opened six new Smart & Final Extra! stores and completed four conversions of legacy Smart & Final to the Smart & Final Extra! store format. As of October 5, 2014, the Company operated a total of 90 Smart & Final Extra! and 110 legacy Smart & Final stores, and 52 Cash & Carry stores.

 

Operating Stores at Period End

 

 

 

Smart & Final Banner Stores

 

Cash & Carry

 

Total

 

 

 

Legacy format

 

Extra! format

 

Total

 

Banner Stores

 

Company

 

End of Fiscal Year 2013

 

119

 

69

 

188

 

52

 

240

 

New stores

 

 

6

 

6

 

 

6

 

Relocations

 

(1

)

1

 

 

 

 

Conversions

 

(4

)

4

 

 

 

 

End of 2nd Quarter 2014

 

114

 

80

 

194

 

52

 

246

 

 

 

 

 

 

 

 

 

 

 

 

 

New stores

 

 

6

 

6

 

 

6

 

Relocations

 

 

 

 

 

 

Conversions

 

(4

)

4

 

 

 

 

End of 3rd Quarter 2014

 

110

 

90

 

200

 

52

 

252

 

 

In the fourth quarter of fiscal 2014, the Company expects to open one additional new Smart & Final Extra! store, complete seven additional conversions of legacy stores to the Extra! format, including one store relocation, and open one new Cash & Carry store.

 

Leverage and Liquidity

 

The Company generated cash from operations of $100.4 million in the 40 weeks ended October 5, 2014 and invested $89.7 million in capital expenditures for property, plant, and equipment and capitalized software.

 

During the third quarter of 2014, in conjunction with its initial public offering, the Company repaid approximately $115.5 million in borrowings under its Term Loan Facility.  At the end of the quarter the Company’s debt, net of debt discount, was $587.8 million and cash was $110.1 million.

 

Initial Public Offering

 

On September 29, 2014, the Company completed its initial public offering of 13,450,000 shares of common stock, at a price to the public of $12.00 per share, before underwriting discounts and commissions. The Company additionally sold 2,017,500 shares as a result of the underwriters’ exercise of their over-allotment option to purchase additional shares. The initial public offering, including

 

3



 

exercise of the over-allotment option, generated aggregate net proceeds to the Company of approximately $167.7 million, net of underwriting discounts and commissions and direct offering expenses.

 

Q4 2014 Outlook

 

The following provides information on the Company’s guidance for the fourth quarter of 2014:

 

 

 

4th Quarter 2014

Net sales growth

 

9.5% - 10.5%

Comparable store sales growth

 

4.5% - 5.5%

Unit growth (net new stores)

 

1 Smart & Final Extra!

1 Cash & Carry

Relocations of existing stores

 

1 store

Conversions of legacy stores to the Extra! format

 

6 stores

Adjusted EBITDA

 

$37.0 - $39.0 million

Adjusted net income

 

$8.5 - $9.5 million

Capital expenditures

 

$28.0 - $30.0 million

 

Third Quarter 2014 Conference Call

 

The Company will host a conference call today at 1:30 p.m. PT / 4:30 p.m. ET to discuss its third quarter 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 7:30 p.m. Eastern Time, by dialing 1-877-870-5176 (U.S.) or 1-858-384-5517 (international) and entering the replay pin number: 13593690.  The telephonic replay will be available until 11:59 p.m. Eastern Time, on Wednesday, November 26, 2014.

 

About Smart & Final

 

Smart & Final Stores, Inc. (NYSE: SFS), is a value-oriented food and everyday staples retailer that serves household and business customers. The Company is headquartered in Commerce (located in Los Angeles), CA, where it was founded over 140 years ago.  As of October 5, 2014, the Company operated 252 grocery and foodservice stores under the “Smart & Final”, “Smart & Final Extra!” and  “Cash & Carry Smart Foodservice” banners in California, Oregon, Washington, Arizona, Nevada, and Idaho, with an additional 13 stores in northern Mexico operated through a joint venture.

 

Forward-Looking Statements

 

Certain statements contained in this release that are not historical information contain forward-looking statements. The forward-looking statements involve risks and uncertainties and actual results may differ

 

4



 

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 “Risk Factors,” “Special Note Concerning Forward-Looking Statements,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business” sections and elsewhere in the prospectus that is contained in the Company’s registration statement on Form S-1 (File No. 333-196931) 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.

 

5



 

Smart & Final Stores, Inc. and Subsidiaries

 

Condensed Consolidated Statements of Operations and Comprehensive Income

 

(Unaudited)

 

(Dollars in Thousands, Except Share and Per Share Amounts)

 

 

 

Sixteen Weeks Ended

 

Forty Weeks Ended

 

 

 

October 5,

 

October 6,

 

October 5,

 

October 6,

 

 

 

2014

 

2013

 

2014

 

2013

 

Net sales

 

$

1,131,821

 

$

1,021,392

 

$

2,694,908

 

$

2,467,493

 

Cost of sales, buying and occupancy

 

962,317

 

868,580

 

2,292,630

 

2,101,358

 

Gross margin

 

169,504

 

152,812

 

402,278

 

366,135

 

 

 

 

 

 

 

 

 

 

 

Operating and administrative expenses

 

140,678

 

121,417

 

334,527

 

295,456

 

Income from operations

 

28,826

 

31,395

 

67,751

 

70,679

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(11,725

)

(14,386

)

(29,483

)

(39,815

)

Loss on early extinguishment of debt

 

(2,224

)

 

(2,224

)

(7,139

)

Equity in earnings of joint venture

 

318

 

887

 

1,032

 

1,408

 

Income before income taxes

 

15,195

 

17,896

 

37,076

 

25,133

 

 

 

 

 

 

 

 

 

 

 

Income tax provision

 

(4,972

)

(7,863

)

(13,231

)

(9,973

)

Net income

 

$

10,223

 

$

10,033

 

$

23,845

 

$

15,160

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.17

 

$

0.18

 

$

0.41

 

$

0.27

 

Diluted

 

$

0.17

 

$

0.17

 

$

0.40

 

$

0.26

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

59,101,972

 

57,171,190

 

57,969,954

 

56,989,129

 

Diluted

 

61,232,212

 

59,522,595

 

60,196,116

 

59,308,332

 

 

6



 

Smart & Final Stores, Inc. and Subsidiaries

 

Condensed Consolidated Balance Sheets

(Unaudited)

(Dollars in Thousands, Except Share Amounts)

 

 

 

October 5, 2014

 

December 29, 2013

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

110,068

 

$

53,699

 

Accounts receivable, less allowances of $903 and $766 at October 5, 2014 and December 29, 2013, respectively

 

23,606

 

19,453

 

Inventories

 

211,042

 

209,502

 

Prepaid expenses and other current assets

 

16,143

 

17,938

 

Deferred income taxes

 

23,845

 

20,747

 

Total current assets

 

384,704

 

321,339

 

 

 

 

 

 

 

Property, plant, and equipment:

 

 

 

 

 

Land

 

11,165

 

10,394

 

Buildings and improvements

 

23,801

 

20,441

 

Leasehold improvements

 

160,324

 

119,306

 

Fixtures and equipment

 

192,318

 

148,271

 

Construction in progress

 

12,522

 

5,541

 

 

 

400,130

 

303,953

 

Less accumulated depreciation and amortization

 

102,215

 

59,961

 

 

 

297,915

 

243,992

 

 

 

 

 

 

 

Capitalized software, net of accumulated amortization of $8,594 and $5,168 at October 5, 2014 and December 29, 2013, respectively

 

10,534

 

12,664

 

Other intangible assets, net

 

326,141

 

328,865

 

Goodwill

 

611,242

 

611,242

 

Deferred financing costs, net

 

6,251

 

8,272

 

Equity investment in joint venture

 

12,001

 

10,948

 

Other assets

 

55,092

 

62,219

 

Total assets

 

$

1,703,880

 

$

1,599,541

 

 

 

 

 

 

 

Liabilities and Stockholders’ equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

165,950

 

$

153,644

 

Accrued salaries and wages

 

25,115

 

22,337

 

Accrued expenses

 

77,333

 

69,174

 

Current portion of long-term debt

 

 

7,200

 

Total current liabilities

 

268,398

 

252,355

 

 

 

 

 

 

 

Long-term debt, less current portion and debt discount

 

587,824

 

698,991

 

Deferred income taxes

 

151,814

 

151,232

 

Postretirement and postemployment benefits

 

74,632

 

84,155

 

Other long-term liabilities

 

82,644

 

70,949

 

 

 

 

 

 

 

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 - 73,074,360 at October 5, 2014; 57,171,190 at December 29, 2013

 

73

 

57

 

Additional paid-in capital

 

486,679

 

311,935

 

Retained earnings (deficit)

 

22,728

 

(1,117

)

Accumulated other comprehensive income

 

29,088

 

30,984

 

Total stockholders’ equity

 

538,568

 

341,859

 

Total liabilities and stockholders’ equity

 

$

1,703,880

 

$

1,599,541

 

 

7



 

Smart & Final Stores, Inc. and Subsidiaries

 

Condensed Consolidated Statements of Cash Flows

 

(Unaudited)

 

(Dollars in Thousands)

 

 

 

Forty Weeks Ended

 

 

 

October 5,

 

October 6,

 

 

 

2014

 

2013

 

Operating activities

 

 

 

 

 

Net income

 

$

23,845

 

$

15,160

 

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

 

 

 

 

 

Depreciation

 

27,107

 

25,657

 

Amortization

 

21,886

 

20,983

 

Amortization of deferred financing costs and debt discount

 

2,509

 

3,364

 

Share-based compensation

 

8,455

 

 

Excess tax benefits related to share-based payments

 

(730

)

 

Deferred income taxes

 

(3,382

)

 

Equity in earnings of joint venture

 

(1,032

)

(1,408

)

Loss on disposal of property, plant, and equipment

 

28

 

50

 

Asset impairment

 

501

 

201

 

Loss on early extinguishment of debt

 

2,224

 

7,139

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable, net

 

(2,871

)

(2,991

)

Inventories, net

 

(1,540

)

(4,552

)

Prepaid expenses and other assets

 

3,589

 

17,060

 

Accounts payable

 

12,306

 

12,382

 

Accrued salaries and wages

 

2,778

 

(3,497

)

Other accrued liabilities

 

4,752

 

(16,084

)

Net cash provided by operating activities

 

100,425

 

73,464

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

Purchases of property, plant, and equipment

 

(87,619

)

(40,991

)

Proceeds from disposal of property, plant, and equipment

 

33

 

38

 

Investment in capitalized software

 

(2,065

)

(1,675

)

Purchase of intangible asset

 

(100

)

 

Other

 

(38

)

(260

)

Net cash used in investing activities

 

(89,789

)

(42,888

)

 

 

 

 

 

 

Financing activities

 

 

 

 

 

Borrowings on bank line of credit

 

 

5,000

 

Issuance of bank debt, net of issuance costs

 

 

50,055

 

Issuance of common stock in IPO

 

173,080

 

 

Issuance of common stock, other

 

79

 

1,700

 

Proceeds from exercise of stock options

 

450

 

 

Payment of minimum withholding taxes on net share settlement of stock option exercise

 

(2,667

)

 

Fees paid in conjunction with debt financing

 

(200

)

(191

)

Payments on bank line of credit

 

 

(7,000

)

Payments on bank debt

 

(120,880

)

(59,213

)

Payments of IPO issuance costs

 

(4,611

)

 

Excess tax benefits related to share-based payments

 

730

 

 

Contingent consideration related to acquisition of SFHC

 

(248

)

 

Net cash provided by (used in) financing activities

 

45,733

 

(9,649

)

Net increase in cash and cash equivalents

 

56,369

 

20,927

 

Cash and cash equivalents at beginning of period

 

53,699

 

35,987

 

Cash and cash equivalents at end of period

 

$

110,068

 

$

56,914

 

Cash paid during the period for:

 

 

 

 

 

Interest

 

$

33,174

 

$

42,068

 

Income taxes

 

$

11,375

 

$

7,682

 

 

 

 

 

 

 

Non-cash investing and financing activities

 

 

 

 

 

Software development costs incurred but not paid

 

$

57

 

$

 

Construction in progress costs incurred but not paid

 

$

12,593

 

$

3,427

 

IPO issuance costs incurred but not paid

 

$

757

 

$

 

Other consideration payable for acquisition of Smart & Final Holdings Corp.

 

$

2,359

 

$

18,630

 

 

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 clarify and enhance understanding of its past performance. The Company defines adjusted net income as net income adjusted for the items set forth in the table 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 table shows reconciliations of adjusted net income, EBITDA and adjusted EBITDA to net income, and adjusted net income per share and adjusted net income per diluted share to net income per share, for the sixteen-week and forty-week periods ended October 5, 2014 and October 6, 2013.

 

9



 

Smart & Final Stores, Inc. and Subsidiaries

 

Reconciliation of Net Income to Non-GAAP Adjusted Net Income

 

(Unaudited)

 

(Dollars in Thousands, Except Share and Per Share Amounts)

 

 

 

Sixteen Weeks Ended

 

Forty Weeks Ended

 

 

 

October 5,
2014

 

October 6,
2013

 

October 5,
2014

 

October 6,
2013

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

10,223

 

$

10,033

 

$

23,845

 

$

15,160

 

Income tax provision

 

4,972

 

7,863

 

13,231

 

9,973

 

Net income before income taxes

 

15,195

 

17,896

 

37,076

 

25,133

 

 

 

 

 

 

 

 

 

 

 

Adjustments to Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transaction costs (a)

 

1,169

 

139

 

1,639

 

213

 

Net (income) loss from closed stores and exit costs (b)

 

491

 

1,011

 

1,461

 

2,456

 

(Gain) loss from asset dispositions (c)

 

271

 

26

 

506

 

70

 

Share-based compensation expense (d)

 

6,714

 

 

8,455

 

 

Non-cash rent (e)

 

1,573

 

1,154

 

4,151

 

2,946

 

Pre-opening costs (f)

 

1,123

 

432

 

3,099

 

691

 

Loss on extinguishment of debt (g)

 

2,224

 

 

2,224

 

7,139

 

Other items (h)

 

(3,952

)

399

 

(2,280

)

702

 

Adjusted income tax provision

 

(9,908

)

(9,128

)

(22,015

)

(15,662

)

Adjusted net income

 

14,900

 

11,929

 

34,316

 

23,688

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income Per Share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share - basic

 

$

0.17

 

$

0.18

 

$

0.41

 

$

0.27

 

Per share impact of adjustments to net income

 

$

0.08

 

$

0.03

 

$

0.18

 

$

0.15

 

Adjusted net income per share - basic

 

$

0.25

 

$

0.21

 

$

0.59

 

$

0.42

 

 

 

 

 

 

 

 

 

 

 

Net income per share - diluted

 

$

0.17

 

$

0.17

 

$

0.40

 

$

0.26

 

Per share impact of adjustments to net income

 

$

0.07

 

$

0.03

 

$

0.17

 

$

0.14

 

Adjusted net income per share - diluted

 

$

0.24

 

$

0.20

 

$

0.57

 

$

0.40

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares - basic

 

59,101,972

 

57,171,190

 

57,969,954

 

56,989,129

 

Weighted average shares - fully diluted

 

61,232,212

 

59,522,595

 

60,196,116

 

59,308,332

 

 

10



 

Smart & Final Stores, Inc. and Subsidiaries

 

Reconciliation of EBITDA to Adjusted EBITDA

 

(Unaudited)

 

(Dollars in Thousands)

 

 

 

Sixteen Weeks Ended

 

Forty Weeks Ended

 

 

 

October 5,

 

October 6,

 

October 5,

 

October 6,

 

 

 

2014

 

2013

 

2014

 

2013

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

10,223

 

$

10,033

 

$

23,845

 

$

15,160

 

Depreciation and amortization

 

20,540

 

19,265

 

48,993

 

46,640

 

Interest expense, net

 

11,725

 

14,386

 

29,483

 

39,815

 

Income tax provision

 

4,972

 

7,863

 

13,231

 

9,973

 

EBITDA

 

47,460

 

51,547

 

115,552

 

111,588

 

 

 

 

 

 

 

 

 

 

 

Adjustments to EBITDA

 

 

 

 

 

 

 

 

 

Transaction costs (a)

 

1,169

 

139

 

1,639

 

213

 

Net (income) loss from closed stores and exit costs (b)

 

491

 

1,011

 

1,461

 

2,456

 

(Gain) loss from asset dispositions (c)

 

271

 

26

 

506

 

70

 

Share-based compensation expense (d)

 

6,714

 

 

8,455

 

 

Non-cash rent (e)

 

1,573

 

1,154

 

4,151

 

2,946

 

Pre-opening costs (f)

 

1,123

 

432

 

3,099

 

691

 

Loss on extinguishment of debt (g)

 

2,224

 

 

2,224

 

7,139

 

Other items (h)

 

(3,952

)

399

 

(2,280

)

702

 

Adjusted EBITDA

 

$

57,073

 

$

54,708

 

$

134,807

 

$

125,805

 

 


(a)  Represents costs primarily associated with the Company’s initial public offering that were charged to expense for the sixteen-week and forty-week periods ended October 5, 2014

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

(c)  Represents non-cash gain or 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 the write-off of unamortized debt discount and deferred financing costs.

(h)  Represents (i) reversal of a reserve related to executive compensation for the sixteen-week and forty-week periods ended October 5, 2014, (ii) death benefit income from a Company-owned life insurance policy for the sixteen-week and forty-week periods ended October 5, 2014, (iii) consulting expenses related to strategic growth initiatives for the forty-week period ended October 5, 2014, and (iv) costs primarily related to a legal settlement for the sixteen-week and forty-week periods ended October 6, 2013, net.

 

##

 

INVESTOR CONTACTS:

 

Andrew Greenebaum / Laura Bainbridge

Addo Communications

O: 310.829.5400

investors@smartandfinal.com

 

MEDIA CONTACT:

 

press@smartandfinal.com

 

11


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1 8-K a14-24291_18k.htm 8-K 27723
2 EX-99.1 a14-24291_1ex99d1.htm EX-99.1 466533
3 GRAPHIC g242911mm01i001.jpg GRAPHIC 1663
  Complete submission text file 0001104659-14-079766.txt   497977