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)  March 18, 2015

 

 

SMART & FINAL STORES, INC.

(Exact Name of Registrant as Specified in Charter)

 

 

 

Delaware

 

001-36626

 

80-0862253

 

(State or Other Jurisdiction
of Incorporation)

 

(Commission
File Number)

 

(IRS Employer
Identification No.)

 

 

 

600 Citadel Drive, Commerce, CA

 

90040

 

 

 

 

 

(Address of Principal Executive Offices)

 

(Zip Code)

 

 

Registrant’s telephone number, including area code (323) 869-7500

 

 

 

 

 

 

 

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

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

 

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

 

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

 

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

 

 

 

 



 

Item 2.02                                 Results of Operations and Financial Condition.

 

On March 18, 2015, Smart & Final Stores, Inc. issued a press release announcing its financial results for the quarter and full year ended December 28, 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 March 18, 2015

 



 

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: March 18, 2015

 

 

 

 

 

 

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 March 18, 2015

 


Exhibit 99.1

 

 

Smart & Final Stores, Inc. Reports Fourth Quarter and Full Year 2014 Financial Results

 

COMMERCE, Calif. (March 18, 2015) –Smart & Final Stores, Inc. (the “Company”) (NYSE:SFS) today reported financial results for the fourth quarter and fiscal year ended December 28, 2014.

 

Fourth Quarter Highlights:

·                 Net sales increased 13.0% to $839.3 million

·                 Comparable store sales growth of 7.8%

·                 Net income of $9.3 million, or $0.12 per diluted share

·                 Adjusted net income increased 50.3% to $12.3 million, or $0.16 per diluted share

·                 Adjusted EBITDA increased 7.4% to $41.3 million

 

Full Year Highlights:

·                 Net sales increased 10.1% to $3,534.2 million

·                 Comparable store sales growth of 6.3%

·                 Net income of $33.1 million, or $0.52 per diluted share

·                 Adjusted net income increased 45.9% to $46.5 million, or $0.73 per diluted share

·                 Adjusted EBITDA increased 7.2% to $176.1 million

·                 254 stores at year-end, including 98 Smart & Final Extra! stores

 

“2014 was an exciting year for Smart & Final. We delivered record financial results, continued our accelerated store expansion program and successfully completed our initial public offering,” said Dave Hirz, President and Chief Executive Officer. “Performance across both the Smart & Final and Cash & Carry store banners was strong, driven by our ongoing merchandising and marketing efforts and consistent store level execution. Smart & Final Extra! continues to be the key to our new store growth, and, as planned, we completed twice as many new store openings and conversions to Extra! in 2014 as compared to the prior year.”

 

Mr. Hirz continued, “Looking ahead, in 2015 we plan to continue our accelerated pace of new store openings and believe that our strong performance in comparable store sales, competitive positioning, and real estate development pipeline provide the foundation for strong operating and financial performance.”

 

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.

 

1



 

Fourth Quarter Fiscal 2014 Financial Results

 

Net sales were $839.3 million, a 13.0% increase as compared to $742.8 million in the same period of 2013. Net sales growth was driven by a 7.8% increase in comparable store sales and from the net sales contribution of new stores. In the 12 weeks ended December 28, 2014, the Company opened one new Smart & Final Extra! store and one new Cash & Carry store.  The growth in comparable store sales was comprised of a 4.9% increase in comparable transaction count and a 2.8% increase in comparable average transaction size.

 

Net sales for Smart & Final banner stores were $644.6 million, a 13.5% increase as compared to $568.1 million in the same period of 2013.  Comparable store sales growth for the Smart & Final banner was 7.0% in the fourth quarter.

 

Net sales for Cash & Carry banner stores were $194.7 million, an 11.5% increase as compared to $174.7 million in the same period of 2013.  Comparable store sales growth for the Cash & Carry banner  was 10.5% in the fourth quarter.

 

Gross margin from operations was $125.0 million, a 16.0% increase as compared to $107.8 million in the same period of 2013. Gross margin rate in the fourth quarter was 14.9% as compared to 14.5% in the same period of 2013.

 

Operating and administrative expenses were $104.0 million, a 13.4% increase as compared to $91.7 million in the same period of 2013. This increase was primarily related to higher sales volumes, increased store support costs, and initial public offering and public company costs.

 

Net income was $9.3 million, as compared to a net loss of $7.0 million in the same period of 2013. Net income per diluted share was $0.12 as compared to net loss per diluted share of $0.12 in the same period of 2013.  The net loss in the fourth quarter of 2013 included costs related to extinguishment of debt in conjunction with a refinancing transaction.

 

Adjusted net income was $12.3 million, an increase of 50.3% as compared to $8.2 million for the same period of 2013. Adjusted net income per diluted share was $0.16 as compared to $0.14 in the same period of 2013.

 

Adjusted EBITDA was $41.3 million, an increase of 7.4% as compared to $38.5 million in the same period of 2013.

 

Full Year Fiscal 2014 Financial Results

 

Net sales were $3,534.2 million, a 10.1% increase as compared to $3,210.3 million in fiscal 2013. Net sales growth was driven by a 6.3% increase in comparable store sales growth and the net sales contribution from 13 new Extra! stores and one new Cash & Carry store in fiscal 2014.  The growth in comparable store sales was comprised of a 4.1% increase in comparable transaction count and a 2.1% increase in comparable average transaction size.

 

2



 

Net sales for Smart & Final banner stores were $2,668.9 million, or a 10.0% increase as compared to $2,425.4 million in fiscal 2013. Fiscal 2014 comparable store sales growth for the Smart & Final banner was 5.0%.

 

Net sales for Cash & Carry banner stores were $865.3 million, or a 10.2% increase as compared to $784.9 million in fiscal 2013.  Fiscal 2014 comparable store sales growth for the Cash & Carry banner was 10.0%.

 

Net income was $33.1 million, as compared to $8.2 million in fiscal 2013. Net income per diluted share was $0.52 as compared to $0.14 for fiscal 2013.

 

Adjusted net income was $46.5 million, an increase of 45.9% as compared to $31.9 million in fiscal 2013. Adjusted net income per diluted share was $0.73, compared to $0.54 in fiscal 2013.

 

Adjusted EBITDA was $176.1 million, or a 7.2% increase as compared to $164.3 million in fiscal 2013.

 

Growth and Development

During fiscal 2014, the Company opened 13 new Smart & Final Extra! stores, completed 16 conversions of legacy Smart & Final stores to the Smart & Final Extra! format, including two relocations, and opened one new Cash & Carry store. As of December 28, 2014, the Company operated a total of 98 Smart & Final Extra! and 103 legacy Smart & Final stores, and 53 Cash & Carry stores.

 

Operating Store at Period End (December 28, 2014)

 

 

 

 

 

Smart & Final Banner Stores

 

Cash &

 

 

 

 

 

Legacy
format

 

Extra!
format

 

Total

 

Carry
Banner
Stores

 

Total
Company

 

End of Fiscal 2013

 

119

 

69

 

188

 

52

 

240

 

New stores

 

-

 

12

 

12

 

-

 

12

 

Relocations

 

(1)

 

1

 

-

 

-

 

-

 

Conversions

 

(8)

 

8

 

-

 

-

 

-

 

End of 3rd Quarter 2014

 

110

 

90

 

200

 

52

 

252

 

 

 

 

 

 

 

 

 

 

 

 

 

New stores

 

-

 

1

 

1

 

1

 

2

 

Relocations

 

(1)

 

1

 

-

 

-

 

-

 

Conversions

 

(6)

 

6

 

-

 

-

 

-

 

End of Fiscal 2014

 

103

 

98

 

201

 

53

 

254

 

 

 

In the first quarter of fiscal 2015, the Company expects to open four new Smart & Final Extra! stores.

 

In fiscal 2015, the Company expects to open a total of 20 new Smart & Final Extra! stores, complete nine conversions of legacy stores to the Extra! format, including three store relocations, and open three Cash & Carry stores, including one store relocation. The Company expects the pace of new store openings to be relatively consistent throughout 2015.

 

3



 

Leverage and Liquidity

 

During the full year fiscal 2014, the Company repaid approximately $120.9 million in borrowings under its Term Loan Facility.  At December 28, 2014, the Company’s debt, net of debt discount, was $588.1 million and cash and cash equivalents was $106.8 million.

 

The Company generated cash from operations of $125.3 million in the 52 weeks ended December 28, 2014. The Company invested $117.4 million in capital expenditures under the Company’s plan to accelerate openings of Extra! format and Cash & Carry stores, as well as convert its legacy stores to the Extra! format and ensure its existing store portfolio maintains its competitiveness.

 

 

Outlook

 

The following provides information on the Company’s guidance for the full year ending January 3, 2016:

 

 

 

 

2015

Net sales growth

 

 

11% - 12%

Comparable store sales growth 

 

 

3.5% - 4.5%

Unit growth (net new stores)

 

 

20 Smart & Final Extra!

2 Cash & Carry

Relocations of existing stores

 

 

3 Smart & Final

1 Cash & Carry

Conversions of legacy stores to the Extra! format

 

 

6 stores

Adjusted EBITDA

 

 

$185 - $190 million

Adjusted net income

 

 

$51 - $53 million 

Adjusted diluted EPS

 

 

$0.67- $0.70

Capital expenditures 

 

 

$135 - $145 million

Basic weighted average shares

 

 

73.1 million

Fully diluted weighted average shares

 

 

76.6 million

 

Fourth Quarter and Full Year 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 fourth quarter and full year fiscal 2014 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 (877) 870-5176 (U.S.) or (858) 384-5517 (International) and entering the replay pin number: 13602597.  The telephonic replay will be available until 11:59 p.m. Eastern Time, on Wednesday, April 1, 2015.

 

4



 

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 December 28, 2014, the Company operated 254 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 14 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 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.

 

INVESTOR CONTACTS:

Laura Bainbridge / Andrew Greenebaum

Addo Communications

O: 310.829.5400

investors@smartandfinal.com

 

MEDIA CONTACT:

press@smartandfinal.com

 

5



 

Smart & Final Stores, Inc. and Subsidiaries

Consolidated Statements of Operations

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

 

 

 

 

Twelve Weeks Ended

 

Fifty-two Weeks Ended

 

 

December 28, 2014

 

December 29, 2013

 

December 28, 2014

 

December 29, 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

839,336 

 

$

742,800 

 

$

3,534,244 

 

$

3,210,293 

Cost of sales, buying and occupancy

 

714,325 

 

634,999 

 

3,006,955 

 

2,736,357 

Gross margin

 

125,011 

 

107,801 

 

527,289 

 

473,936 

 

 

 

 

 

 

 

 

 

Operating and administrative expenses

 

104,001 

 

91,677 

 

438,528 

 

387,133 

Income from operations

 

21,010 

 

16,124 

 

88,761 

 

86,803 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

8,119 

 

10,550 

 

37,602 

 

50,365 

Loss on early extinguishment of debt

 

-    

 

(17,348)

 

(2,224)

 

(24,487)

Equity in earnings of joint venture

 

 

241 

 

1,037 

 

1,649 

Income (loss) before income taxes

 

12,896 

 

(11,533)

 

49,972 

 

13,600 

 

 

 

 

 

 

 

 

 

Income tax (provision) benefit

 

(3,623)

 

4,544 

 

(16,854)

 

(5,429)

Net income (loss)

 

$

9,273 

 

$

(6,989)

 

$

33,118 

 

$

8,171 

 

 

 

 

 

 

 

 

 

Net income (loss) per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.13 

 

$

(0.12)

 

$

0.54 

 

$

0.14 

Diluted

 

$

0.12 

 

$

(0.12)

 

$

0.52 

 

$

0.14 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

73,074,360 

 

57,171,190 

 

61,455,584 

 

57,030,099 

Diluted

 

76,193,944 

 

57,171,190 

 

63,841,118 

 

59,387,487 

 

6



 

Smart & Final Stores, Inc. and Subsidiaries

Consolidated Balance Sheets

(Dollars in Thousands, Except Share Amounts)

 

 

 

 

December 28, 2014

 

December 29, 2013

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

106,847 

 

$

53,699 

Accounts receivable, less allowances of $787 and $766 at December 28, 2014 and December 29, 2013, respectively

 

23,666 

 

19,453 

Inventories

 

223,404 

 

209,502 

Prepaid expenses and other current assets

 

26,532 

 

17,938 

Deferred income taxes

 

22,419 

 

20,747 

Total current assets

 

402,868 

 

321,339 

 

 

 

 

 

Property, plant, and equipment:

 

 

 

 

Land

 

11,165 

 

10,394 

Buildings and improvements

 

23,938 

 

20,441 

Leasehold improvements

 

176,114 

 

119,306 

Fixtures and equipment

 

203,473 

 

148,271 

Construction in progress

 

7,344 

 

5,541 

 

 

422,034 

 

303,953 

Less accumulated depreciation and amortization

 

115,350 

 

59,961 

 

 

306,684 

 

243,992 

 

 

 

 

 

Capitalized software, net of accumulated amortization of $9,486 and $5,168 at December 28, 2014 and December 29, 2013, respectively

 

10,403 

 

12,664 

Other intangible assets, net

 

325,289 

 

328,865 

Goodwill

 

611,242 

 

611,242 

Deferred financing costs, net

 

5,894 

 

8,272 

Equity investment in joint venture

 

11,924 

 

10,948 

Other assets

 

54,988 

 

62,219 

Total assets

 

$

1,729,292 

 

$

1,599,541 

 

 

 

 

 

Liabilities and Stockholders’ equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

184,897 

 

$

153,644 

Accrued salaries and wages

 

28,582 

 

22,337 

Accrued expenses

 

72,667 

 

69,174 

Current portion of long-term debt

 

-     

 

7,200 

Total current liabilities

 

286,146 

 

252,355 

 

 

 

 

 

Long-term debt, less current portion and debt discount

 

588,117 

 

698,991 

Deferred income taxes

 

125,673 

 

151,232 

Postretirement and postemployment benefits

 

127,004 

 

84,155 

Other long-term liabilities

 

85,144 

 

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 and 57,171,190 at December 28, 2014 and December 29, 2013, respectively

 

73 

 

57 

Additional paid-in capital

 

489,551 

 

311,935 

Retained earnings (deficit)

 

32,001 

 

(1,117)

Accumulated other comprehensive (loss) income

 

(4,417)

 

30,984 

Total stockholders’ equity

 

517,208 

 

341,859 

Total liabilities and stockholders’ equity

 

$

1,729,292 

 

$

1,599,541 

 

7



 

Smart & Final Stores, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Dollars in Thousands)

 

 

 

Fifty-two Weeks Ended

 

 

 

December 28, 2014

 

December 29, 2013

 

Operating activities

 

 

 

 

 

Net income

 

  $

33,118

 

  $

8,171

 

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

 

 

 

 

 

Depreciation

 

35,565

 

33,414

 

Amortization

 

28,629

 

27,345

 

Amortization of deferred financing costs and debt discount

 

3,275

 

4,465

 

Share-based compensation

 

11,329

 

 

Excess tax benefits related to share-based payments

 

(728)

 

 

Deferred income taxes

 

(3,826)

 

(1,258)

 

Equity in earnings of joint venture

 

(1,037)

 

(1,649)

 

(Gain) loss on disposal of property, plant, and equipment

 

(30)

 

75

 

Asset impairment

 

988

 

1,105

 

Loss on early extinguishment of debt

 

2,224

 

24,487

 

Dividend from joint venture

 

 

577

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable, net

 

(2,931)

 

(1,755)

 

Inventories, net

 

(13,902)

 

(14,099)

 

Prepaid expenses and other assets

 

(8,074)

 

6,218

 

Accounts payable

 

31,253

 

20,067

 

Accrued salaries and wages

 

6,245

 

(3,112)

 

Other accrued liabilities

 

3,239

 

3,466

 

Net cash provided by operating activities

 

125,337

 

107,517

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

Purchases of property, plant, and equipment

 

(114,933)

 

(52,884)

 

Proceeds from disposal of property, plant, and equipment

 

95

 

85

 

Investment in capitalized software

 

(2,466)

 

(2,209)

 

Purchase of intangible asset

 

(100)

 

 

Other

 

34

 

(311)

 

Net cash used in investing activities

 

(117,370)

 

(55,319)

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

Borrowings on bank line of credit

 

 

5,000

 

Issuance of bank debt, net of issuance costs

 

 

188,985

 

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

 

(315)

 

(1,073)

 

Payments on bank line of credit

 

 

(7,000)

 

Payments on bank debt

 

(120,880)

 

(199,213)

 

Payments of IPO issuance costs

 

(5,046)

 

 

Excess tax benefits related to share-based payments

 

728

 

 

Contingent consideration related to acquisition of SFHC

 

(248)

 

(22,885)

 

Net cash provided by (used in) financing activities

 

45,181

 

(34,486)

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

53,148

 

17,712

 

Cash and cash equivalents at beginning of period

 

53,699

 

35,987

 

Cash and cash equivalents at end of period

 

  $

106,847

 

  $

53,699

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

Interest

 

  $

41,290

 

  $

45,547

 

Income taxes

 

  $

25,372

 

  $

12,718

 

 

 

 

 

 

 

Non-cash investing and financing activities

 

 

 

 

 

Software development costs incurred but not paid

 

  $

419

 

  $

49

 

Construction in progress costs incurred but not paid

 

  $

8,101

 

  $

3,366

 

Issuance costs incurred but not paid

 

  $

222

 

  $

 

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

 

  $

2,359

 

  $

2,607

 

 

8



 

Smart & Final Stores, Inc. and Subsidiaries

Segment Reporting

(Dollars in Thousands)

 

 

 

Smart & Final

 

Cash & Carry

 

Corporate /
Other

 

Consolidated

 

 Twelve Weeks Ended December 28, 2014

 

 

 

 

 

 

 

 

 

 Net sales

 

  $

644,609

 

  $

194,727

 

  $

-

 

  $

839,336

 

 Cost of sales, distribution and store occupancy

 

544,830

 

167,623

 

1,872

 

714,325

 

 Operating and administrative expenses

 

76,213

 

13,639

 

14,149

 

104,001

 

 Income (loss) from operations

 

  $

23,566

 

  $

13,465

 

  $

(16,021)

 

  $

21,010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Capital expenditures

 

  $

22,933

 

  $

4,045

 

  $

737

 

  $

27,715

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Twelve Weeks Ended December 29, 2013

 

 

 

 

 

 

 

 

 

 Net sales

 

  $

568,132

 

  $

174,668

 

  $

-

 

  $

742,800

 

 Cost of sales, distribution and store occupancy

 

481,956

 

151,361

 

1,682

 

634,999

 

 Operating and administrative expenses

 

66,735

 

12,222

 

12,720

 

91,677

 

 Income (loss) from operations

 

  $

19,441

 

  $

11,085

 

  $

(14,402)

 

  $

16,124

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Capital expenditures

 

  $

10,087

 

  $

705

 

  $

1,635

 

  $

12,427

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Fiscal Year Ended December 28, 2014

 

 

 

 

 

 

 

 

 

 Net sales

 

  $

2,668,933

 

  $

865,311

 

  $

-

 

  $

3,534,244

 

 Cost of sales, distribution and store occupancy

 

2,252,698

 

746,102

 

8,155

 

3,006,955

 

 Operating and administrative expenses

 

319,864

 

57,963

 

60,701

 

438,528

 

 Income (loss) from operations

 

  $

96,371

 

  $

61,246

 

  $

(68,856)

 

  $

88,761

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Capital expenditures

 

  $

106,528

 

  $

5,229

 

  $

5,642

 

  $

117,399

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Fiscal Year Ended December 29, 2013

 

 

 

 

 

 

 

 

 

 Net sales

 

  $

2,425,346

 

  $

784,947

 

  $

-

 

  $

3,210,293

 

 Cost of sales, distribution and store occupancy

 

2,050,197

 

678,760

 

7,400

 

2,736,357

 

 Operating and administrative expenses

 

284,025

 

53,240

 

49,868

 

387,133

 

 Income (loss) from operations

 

  $

91,124

 

  $

52,947

 

  $

(57,268)

 

  $

86,803

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Capital expenditures

 

  $

48,053

 

  $

2,198

 

  $

4,842

 

  $

55,093

 

 

 

 

 

 

 

 

 

 

 

 

9



 

The following tables show reconciliations of adjusted net income, EBITDA and adjusted EBITDA to net income, and adjusted net income per share and adjusted net income per diluted share to net income per share, for the twelve-week and fifty two-week periods ended December 28, 2014 and December 29, 2013.

 

 

 

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)

 

 

 

Twelve Weeks Ended

 

Year Ended

 

 

December 28,
2014

 

December 29,
2013

 

December 28,
2014

 

December 29,
2013

Net income

 

  $

9,273

 

  $

(6,989)

 

  $

33,118

 

  $

8,171

Income tax provision

 

3,623

 

(4,544)

 

16,854

 

5,429

Net income before income taxes

 

12,896

 

(11,533)

 

49,972

 

13,600

 

 

 

 

 

 

 

 

 

Adjustments to Net Income

 

 

 

 

 

 

 

 

Transaction costs (a) 

 

(100)

 

7

 

1,539

 

220

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

 

569

 

1,136

 

2,030

 

3,592

(Gain) loss from asset dispositions (c) 

 

345

 

904

 

851

 

974

Share-based compensation expense (d) 

 

2,874

 

-    

 

11,329

 

-

Non-cash rent (e) 

 

646

 

1,039

 

4,797

 

3,985

Pre-opening costs (f) 

 

872

 

741

 

3,971

 

1,432

Loss on extinguishment of debt (g) 

 

-    

 

17,348

 

2,224

 

24,487

Other items (h) 

 

(119)

 

4,145

 

(2,399)

 

4,847

Adjusted income tax provision

 

(5,658)

 

(5,589)

 

(27,800)

 

(21,251)

Adjusted net income

 

  $

12,325

 

  $

8,198

 

  $

46,514

 

  $

31,886

 

 

 

 

 

 

 

 

 

Adjusted Net Income Per Share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share - basic

 

  $

0.13

 

  $

(0.12)

 

  $

0.54

 

  $

0.14

Per share impact of net income adjustments

 

 

0.04

 

 

0.26

 

 

0.22

 

 

0.42

Adjusted net income per share - basic

 

  $

0.17

 

  $

0.14

 

  $

0.76

 

  $

0.56

Net income per share - diluted

 

  $

0.12

 

  $

(0.12)

 

  $

0.52

 

  $

0.14

Per share impact of net income adjustments

 

 

0.04

 

 

0.26

 

 

0.21

 

 

0.40

Adjusted net income per share - diluted

 

  $

0.16

 

  $

0.14

 

  $

0.73

 

  $

0.54

 

 

 

 

 

 

 

 

 

Weighted average shares - basic

 

73,074,360

 

57,171,190

 

61,455,584

 

57,030,099

Weighted average shares - fully diluted

 

76,193,944

 

57,171,190

 

63,841,118

 

59,387,487

 

10



 

Smart & Final Stores, Inc. and Subsidiaries

Reconciliation of EBITDA to Adjusted EBITDA

(Unaudited)

 

(Dollars in Thousands)

 

 

 

Twelve Weeks Ended

 

Year Ended

 

 

December 28,
2014

 

December 29,
2013

 

December 28,
2014

 

December 29,
2013

Net income

 

$

9,273 

 

$

(6,989)

 

$

33,118 

 

$

8,171 

Depreciation and amortization

 

15,201 

 

14,119 

 

64,194 

 

60,759 

Interest expense, net

 

8,119 

 

10,550 

 

37,602 

 

50,365 

Income tax provision

 

3,623 

 

(4,544)

 

16,854 

 

5,429 

EBITDA

 

36,216 

 

13,136 

 

151,768 

 

124,724 

 

 

 

 

 

 

 

 

 

Adjustments to EBITDA

 

 

 

 

 

 

 

 

Transaction costs (a) 

 

(100)

 

 

1,539 

 

220 

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

 

569 

 

1,136 

 

2,030 

 

3,592 

(Gain) loss from asset dispositions (c) 

 

345 

 

904 

 

851 

 

974 

Share-based compensation expense (d) 

 

2,874 

 

-    

 

11,329 

 

-    

Non-cash rent (e) 

 

646 

 

1,039 

 

4,797 

 

3,985 

Pre-opening costs (f) 

 

872 

 

741 

 

3,971 

 

1,432 

Loss on extinguishment of debt (g) 

 

-     

 

17,348 

 

2,224 

 

24,487 

Other items (h) 

 

(119)

 

4,145 

 

(2,399)

 

4,847 

Adjusted EBITDA

 

$

41,303 

 

$

38,456 

 

$

176,110 

 

$

164,261 

 

 

(a)  Represents costs (i) primarily associated with the Company’s initial public offering that were charged to expense for the fiscal year ended December 28, 2014 and (ii) associated with the Ares Acquisition for the fiscal year ended December 29, 2013.

(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 fiscal year ended December 28, 2014, (ii) death benefit income from a Company-owned life insurance policy for the fiscal year ended December 28, 2014,  (iii) consulting expenses related to strategic growth initiatives for the fiscal year ended December 28, 2014, and (iv) costs primarily related to a legal settlement for the twelve-week period and fiscal year ended December 29, 2013, net.

 

 

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 above.  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 above.

 

11



 

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.

 

12


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