UNITED STATES
S
ECURITIES AND EXCHANGE COMMISSION
W
ASHINGTON, DC 20549

 


 

FORM 8-K

 

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

 

 

Date of report  (Date of earliest event reported)  July 22, 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 July 22, 2015, Smart & Final Stores, Inc. issued a press release announcing its financial results for the quarter ended June 14, 2015.  The text of the press release is included as Exhibit 99.1 to this Form 8-K.

 

The information disclosed under this Item 2.02, including Exhibit 99.1 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 and shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933, except as expressly set forth by specific reference in such filing.

 

Item 9.01.       Financial Statements and Exhibits.

 

(d)                   Exhibits:

 

Exhibit Number

Description

 

 

99.1

Press Release, dated July 22, 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: July 22, 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 July 22, 2015

 


Exhibit 99.1

 

 

 

Smart & Final Stores, Inc. Reports Second Quarter 2015 Financial Results

 

COMMERCE, Calif. (July 22, 2015) –Smart & Final Stores, Inc. (the “Company”) (NYSE:SFS) today reported financial results for the fiscal second quarter ended June 14, 2015.

 

Second Quarter Highlights:

·                 Net sales increased 9.3% to $905.1 million

·                 Comparable store sales growth of 3.5%

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

·                 Adjusted net income increased 14.2% to $16.9 million, or $0.22 per diluted share

·                 Adjusted EBITDA increased 6.7% to $50.7 million

·                 263 stores at quarter-end, including 111 Smart & Final Extra! stores

 

Smart & Final Stores had strong total sales growth of over 9% in the second quarter, led by solid growth in comparable store sales and the contribution from new stores,” said Dave Hirz, President and Chief Executive Officer.  “While our average transaction size was impacted by deflation in a few product categories during the second quarter, gross margin rates remained strong and comparable transaction counts grew in both our Smart & Final and Cash & Carry store banners.  We continued our robust store growth with 13 Extra! format stores opened through the second quarter of 2015.”

 

Mr. Hirz continued, “As we expand, we have maintained a consistent focus on value – convenience – and quality – themes that continue to resonate with both our household and business customers.  We are on track to deliver our planned store growth for 2015 and advance our exciting merchandising and branding initiatives in the Smart & Final banner, and continue new store growth in the Cash & Carry banner.”

 

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.

 

Second Quarter Fiscal 2015 Financial Results

Net sales were $905.1 million, a 9.3% increase as compared to $828.1 million in the same period of 2014. Net sales growth was driven by a 3.5% increase in comparable store sales and from the net sales contribution of new stores. The growth in comparable store sales was comprised of approximately a 4.2% increase in comparable transaction count and a 0.6% decrease in comparable average transaction size.

 

Net sales for Smart & Final banner stores were $687.4 million, a 10.3% increase as compared to $623.1 million in the same period of 2014.  Comparable store sales growth for the Smart & Final banner was 3.2% in the second quarter.

 



 

Net sales for Cash & Carry banner stores were $217.8 million, a 6.2% increase as compared to $205.0 million in the same period of 2014.  Comparable store sales growth for the Cash & Carry banner was 4.7% in the second quarter.

 

Gross margin from operations was $141.6 million, a 10.5% increase as compared to $128.2 million in the same period of 2014. Gross margin rate in the second quarter was 15.6% as compared to 15.5% in the same period of 2014.

 

Operating and administrative expenses were $114.1 million, a 12.5% increase as compared to $101.5 million in the same period of 2014. This increase was primarily related to higher sales volumes, increased store support costs, additional marketing expense, and public company costs.

 

Net income was $11.0 million, as compared to $11.1 million in the same period of 2014. Net income per diluted share was $0.14 as compared to $0.19 in the same period of 2014, and reflects an increase of approximately 17.6 million fully diluted shares, including shares issued in the Company’s September 2014 initial public offering.

 

Adjusted net income was $16.9 million, an increase of 14.2% as compared to $14.8 million for the same period of 2014. Adjusted net income per diluted share was $0.22 as compared to $0.25 in the same period of 2014, and reflects an increase of approximately 17.6 million fully diluted shares, including shares issued in the Company’s September 2014 initial public offering.

 

Adjusted EBITDA was $50.7 million, an increase of 6.7% as compared to $47.5 million in the same period of 2014.

 

Fiscal Year-to-date Financial Results

 

Net sales were $1,727.3 million in the 24 weeks (two fiscal quarters) ended June 14, 2015, an increase of 10.5% as compared to $1,563.1 million in the same period of 2014.  Net sales growth was driven by a 4.8% increase in comparable store sales and from the net sales contribution of new stores.  The growth in comparable store sales was comprised of a 4.2% increase in comparable transaction count and a 0.6% increase in comparable average transaction size.

 

Net sales for Smart & Final banner stores were $1,316.2 million, an 11.1% increase as compared to $1,185.0 million in the same period of 2014. Year-to-date comparable store sales growth for the Smart & Final banner was 4.0%.

 

Net sales for Cash & Carry banner stores were $411.1 million, an 8.7% increase as compared to $378.0 million in the same period of 2014.  Year-to-date comparable store sales growth for the Cash & Carry banner was 7.2%.

 

Net income was $15.9 million, an increase of 16.9% as compared to $13.6 million in the same period of 2014. Net income per diluted share was $0.21 as compared to $0.23 for the same period of 2014.

 

2



 

Adjusted net income was $24.6 million, an increase of 26.8% as compared to $19.4 million in the same period of 2014. Adjusted net income per diluted share was $0.32 as compared to $0.33 in the same period of 2014.

 

Adjusted EBITDA was $85.7 million, an increase of 10.3% as compared to $77.7 million in the same period of 2014.

 

Growth and Development

During the second quarter of fiscal 2015, the Company opened five new Smart & Final Extra! stores and completed four conversions of legacy Smart & Final stores to the Smart & Final Extra! format, including one store relocation. The Company also relocated one Cash & Carry store. As of June 14, 2015, the Company operated a total of 111 Smart & Final Extra! and 99 legacy Smart & Final stores, and 53 Cash & Carry stores.

 

 

Operating Stores at Quarter End (June 14, 2015)

 

 

 

 

 

 

 

 

 

Smart & Final Banner Stores

 

 

 

 

 

 

 

Extra! format

 

Legacy format

 

Total

 

Cash & Carry
Banner Stores

 

Total Company

 

End of Fiscal 2014

 

98

 

103

 

201

 

53

 

254

 

New stores

 

9

 

-

 

9

 

-

 

9

 

Relocations

 

1

 

(1)

 

-

 

-

 

-

 

Conversions

 

3

 

(3)

 

-

 

-

 

-

 

End of 1st Quarter 2015

 

111

 

99

 

210

 

53

 

263

 

 

Consistent with prior guidance, during the remainder of fiscal 2015, the Company expects:

·                 In the third quarter - to open six new Smart & Final Extra! stores, complete three conversions of legacy Smart & Final stores to the Extra! format, including one store relocation, and open one new Cash & Carry store.

 

·                 In the fourth quarter - to open five additional new Smart & Final Extra! stores, complete two additional conversions of legacy Smart & Final stores to the Extra! format, including one store relocation, and open one new Cash & Carry store.

 

Leverage and Liquidity

At June 14, 2015, the Company’s debt, net of debt discount, was $589.4 million and cash and cash equivalents was $121.4 million.

 

During the second quarter of fiscal 2015, the Company amended its Term Loan Facility to reduce the interest rate margin over the base rate by 0.50% and to reduce the base rate by 0.25%.  The November 15, 2019 maturity date remained unchanged. The Company expects that the reduced rates will result in lower cash interest costs of $3 to 4 million annually.

 

3



 

In the 24 weeks ended June 14, 2015, the Company generated cash from operations of $71.0 million. The Company invested a net amount of $53.9 million in capital expenditures, primarily related to the development of Extra! format stores, the relocation of one Cash & Carry store, and to improvements of existing assets.

 

Outlook

The Company is maintaining its previously issued outlook for the 2015 Fiscal Year (ending January 3, 2016):

 

 

 

 

 

Fiscal Year Ended January 3, 2016

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

 

Second Quarter 2015 Conference Call

The Company will host a conference call today at 1:30 p.m. PT / 4:30 p.m. ET to discuss its fiscal second quarter 2015 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: 13613511.  The telephonic replay will be available until 11:59 p.m. Eastern Time, on Wednesday, August 5, 2015.

 

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 June 14, 2015, the Company operated 263 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 15 stores in northern Mexico operated through a joint venture.

 

4



 

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 Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission.

 

You should keep in mind that any forward-looking statement made by the Company herein, or elsewhere, speaks only as of the date on which made. New risks and uncertainties come up from time to time, and it is impossible for the Company to predict these events or how they may affect it. The Company has no obligation to update any forward-looking statements after the date hereof, except as required by federal securities laws.

 

INVESTOR CONTACTS:

Laura Bainbridge / Andrew Greenebaum

Addo Communications

O: 310.829.5400

investors@smartandfinal.com

 

MEDIA CONTACT:

press@smartandfinal.com

 

5


 


 

Smart & Final Stores, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

(In Thousands, Except Share and Per Share Amounts)

 

 

 

 

Twelve Weeks Ended

 

Twenty-four Weeks Ended

 

 

June 14, 2015

 

June 15, 2014

 

June 14, 2015

 

June 15, 2014

 

 

 

 

 

 

 

 

 

Net sales

 

  $

905,121

 

  $

828,071

 

  $

1,727,291

 

  $

1,563,087

Cost of sales, buying and occupancy

 

763,538

 

699,886

 

1,463,543

 

1,330,313

Gross margin

 

141,583

 

128,185

 

263,748

 

232,774

 

 

 

 

 

 

 

 

 

Operating and administrative expenses

 

114,131

 

101,491

 

221,082

 

193,849

Income from operations

 

27,452

 

26,694

 

42,666

 

38,925

 

 

 

 

 

 

 

 

 

Interest expense, net

 

7,676

 

8,922

 

15,674

 

17,758

Loss on early extinguishment of debt

 

2,192

 

 

2,192

 

Equity in earnings of joint venture

 

392

 

262

 

907

 

714

Income before income taxes

 

17,976

 

18,034

 

25,707

 

21,881

 

 

 

 

 

 

 

 

 

Income tax provision

 

(6,938)

 

(6,919)

 

(9,786)

 

(8,259)

Net income

 

  $

11,038

 

  $

11,115

 

  $

15,921

 

  $

13,622

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

Basic

 

  $

0.15

 

  $

0.19

 

  $

0.22

 

  $

0.24

Diluted

 

  $

0.14

 

  $

0.19

 

  $

0.21

 

  $

0.23

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

73,090,917

 

57,259,361

 

73,087,600

 

57,215,276

Diluted

 

76,893,066

 

59,312,773

 

76,773,674

 

59,303,031

 

6



 

Smart & Final Stores, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In Thousands, Except Share Amounts)

 

 

 

June 14, 2015

 

 

December 28, 2014

 

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

  $

121,353

 

 

  $

106,847

 

Accounts receivable, less allowances of $807 and $787 at June 14, 2015 and December 28, 2014, respectively

 

21,366

 

 

23,666

 

Inventories

 

214,566

 

 

223,404

 

Prepaid expenses and other current assets

 

11,952

 

 

26,532

 

Deferred income taxes

 

22,419

 

 

22,419

 

Total current assets

 

391,656

 

 

402,868

 

 

 

 

 

 

 

 

Property, plant, and equipment:

 

 

 

 

 

 

Land

 

10,940

 

 

11,165

 

Buildings and improvements

 

20,441

 

 

23,938

 

Leasehold improvements

 

201,404

 

 

176,114

 

Fixtures and equipment

 

232,316

 

 

203,473

 

Construction in progress

 

12,133

 

 

7,344

 

 

 

477,234

 

 

422,034

 

Less accumulated depreciation and amortization

 

141,502

 

 

115,350

 

 

 

335,732

 

 

306,684

 

 

 

 

 

 

 

 

Capitalized software, net of accumulated amortization of $10,936 and $9,486 at June 14, 2015 and December 28, 2014, respectively

 

11,258

 

 

10,403

 

Other intangible assets, net

 

323,586

 

 

325,289

 

Goodwill

 

611,242

 

 

611,242

 

Deferred financing costs, net

 

4,942

 

 

5,894

 

Equity investment in joint venture

 

12,205

 

 

11,924

 

Other assets

 

53,595

 

 

54,988

 

Total assets

 

  $

1,744,216

 

 

  $

1,729,292

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

  $

180,289

 

 

  $

184,897

 

Accrued salaries and wages

 

24,957

 

 

28,582

 

Accrued expenses

 

74,624

 

 

72,667

 

Total current liabilities

 

279,870

 

 

286,146

 

 

 

 

 

 

 

 

Long-term debt, less current portion and debt discount

 

589,445

 

 

588,117

 

Deferred income taxes

 

123,056

 

 

125,673

 

Postretirement and postemployment benefits

 

125,145

 

 

127,004

 

Other long-term liabilities

 

90,417

 

 

85,144

 

 

 

 

 

 

 

 

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 - 73,763,573 and 73,755,388 at June 14, 2015 and December 28, 2014, respectively

 

74

 

 

74

 

Additional paid-in capital

 

494,604

 

 

489,550

 

Retained earnings

 

47,922

 

 

32,001

 

Accumulated other comprehensive loss

 

(6,317

)

 

(4,417

)

Total stockholders’ equity

 

536,283

 

 

517,208

 

Total liabilities and stockholders’ equity

 

  $

1,744,216

 

 

  $

1,729,292

 

 

7



 

Smart & Final Stores, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In Thousands)

 

 

 

 

Twenty-four Weeks Ended

 

 

 

June 14, 2015

 

June 15, 2014

 

Operating activities

 

 

 

 

 

Net income

 

 $

15,921

 

 

 $

13,622

 

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

 

 

 

 

 

 

Depreciation

 

16,625

 

 

15,659

 

Amortization

 

13,159

 

 

12,794

 

Amortization of deferred financing costs and debt discount

 

1,293

 

 

1,534

 

Share-based compensation

 

4,903

 

 

1,740

 

Excess tax benefits related to share-based payments

 

(60

)

 

(730

)

Deferred income taxes

 

(1,878

)

 

(696

)

Equity in earnings of joint venture

 

(907

)

 

(714

)

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

 

(26

)

 

32

 

Asset impairment

 

513

 

 

229

 

Loss on early extinguishment of debt

 

2,192

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable, net

 

2,300

 

 

(2,448

)

Inventories, net

 

8,838

 

 

6,182

 

Prepaid expenses and other assets

 

14,558

 

 

5,312

 

Accounts payable

 

(4,608

)

 

11,089

 

Accrued salaries and wages

 

(3,625

)

 

(644

)

Other accrued liabilities

 

1,813

 

 

2,789

 

Net cash provided by operating activities

 

71,011

 

 

65,750

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

Purchases of property, plant, and equipment

 

(59,350

)

 

(47,478

)

Proceeds from disposal of property, plant, and equipment

 

8,091

 

 

20

 

Investment in capitalized software

 

(2,674

)

 

(968

)

Other

 

(1,304

)

 

(36

)

Net cash used in investing activities

 

(55,237

)

 

(48,462

)

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

Issuance of common stock

 

 

 

79

 

Proceeds from exercise of stock options

 

107

 

 

450

 

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

 

(17

)

 

(2,667

)

Fees paid in conjunction with debt financing

 

(1,204

)

 

(170

)

Payments on bank debt

 

 

 

(3,600

)

Payments of IPO issuance costs

 

(214

)

 

 

Excess tax benefits related to share-based payments

 

60

 

 

730

 

Contingent consideration related to acquisition of Smart & Final Holdings Corp.

 

 

 

(248

)

Net cash used in financing activities

 

(1,268

)

 

(5,426

)

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

14,506

 

 

11,862

 

Cash and cash equivalents at beginning of period

 

106,847

 

 

53,699

 

Cash and cash equivalents at end of period

 

 $

121,353

 

 

 $

65,561

 

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

Interest

 

 $

11,443

 

 

 $

15,789

 

Income taxes

 

 $

6,252

 

 

 $

5,222

 

 

 

 

 

 

 

 

Non-cash investing and financing activities

 

 

 

 

 

 

Software development costs incurred but not paid

 

 $

49

 

 

 $

206

 

Construction in progress costs incurred but not paid

 

 $

12,053

 

 

 $

12,047

 

 

8



 

Smart & Final Stores, Inc. and Subsidiaries

 

Segment Reporting

(In Thousands)

 

 

 

Smart & Final

 

Cash & Carry

 

Corporate /
Other

 

Consolidated

 Twelve Weeks Ended June 14, 2015

 

 

 

 

 

 

 

 

 Net sales

 

 $

687,353

 

 $

217,768

 

 $

-

 

 $

905,121

 Cost of sales, distribution and store occupancy

 

574,217

 

187,208

 

2,113

 

763,538

 Operating and administrative expenses

 

82,399

 

14,632

 

17,100

 

114,131

 Income (loss) from operations

 

 $

30,737

 

 $

15,928

 

 $

(19,213)

 

 $

27,452

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Capital expenditures

 

 $

33,183

 

 $

2,641

 

 $

1,817

 

 $

37,641

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Twelve Weeks Ended June 15, 2014

 

 

 

 

 

 

 

 

 Net sales

 

 $

623,107

 

 $

204,964

 

 $

-

 

 $

828,071

 Cost of sales, distribution and store occupancy

 

520,907

 

177,058

 

1,921

 

699,886

 Operating and administrative expenses

 

73,373

 

13,528

 

14,590

 

101,491

 Income (loss) from operations

 

 $

28,827

 

 $

14,378

 

 $

(16,511)

 

 $

26,694

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Capital expenditures

 

 $

32,865

 

 $

253

 

 $

1,084

 

 $

34,202

 

 

 

 

 

 

 

 

 

 Twenty-four Weeks Ended June 14, 2015

 

 

 

 

 

 

 

 

 Net sales

 

 $

1,316,189

 

 $

411,102

 

 $

-

 

 $

1,727,291

 Cost of sales, distribution and store occupancy

 

1,104,837

 

354,515

 

4,191

 

1,463,543

 Operating and administrative expenses

 

160,646

 

28,519

 

31,917

 

221,082

 Income (loss) from operations

 

 $

50,706

 

 $

28,068

 

 $

(36,108)

 

 $

42,666

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Capital expenditures

 

 $

54,050

 

 $

4,319

 

 $

3,655

 

 $

62,024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Twenty-four Weeks Ended June 15, 2014

 

 

 

 

 

 

 

 

 Net sales

 

 $

1,185,048

 

 $

378,039

 

 $

-

 

 $

1,563,087

 Cost of sales, distribution and store occupancy

 

999,266

 

327,331

 

3,716

 

1,330,313

 Operating and administrative expenses

 

140,960

 

25,829

 

27,060

 

193,849

 Income (loss) from operations

 

 $

44,822

 

 $

24,879

 

 $

(30,776)

 

 $

38,925

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Capital expenditures

 

 $

45,060

 

 $

381

 

 $

3,005

 

 $

48,446

 

9



 

Non-GAAP Financial Measures

 

To supplement the Company’s financial information presented in accordance with GAAP, the Company uses certain non-GAAP financial measures, namely 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 tables 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 tables below.

 

Use of these non-GAAP measures may differ from similar measures reported by other companies. Each of these non-GAAP measures has its limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of the Company’s results as reported under GAAP.

 

The following tables present reconciliations of adjusted net income, 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 periods ended June 14, 2015 and June 15, 2014.

 

Smart & Final Stores, Inc. and Subsidiaries

Reconciliation of EBITDA to Adjusted EBITDA

(Unaudited)

(In Thousands)

 

 

 

Twelve Weeks Ended

 

Twenty-four Weeks Ended

 

 

 

June 14, 2015

 

June 15, 2014

 

June 14, 2015

 

June 15, 2014

 

Net income

 

$

11,038

 

$

11,115

 

$

15,921

 

$

13,622

 

Depreciation and amortization

 

15,282

 

14,434

 

29,783

 

28,453

 

Interest expense, net

 

7,676

 

8,922

 

15,674

 

17,758

 

Income tax provision

 

6,938

 

6,919

 

9,786

 

8,259

 

EBITDA

 

40,934

 

41,390

 

71,164

 

68,092

 

 

 

 

 

 

 

 

 

 

 

Adjustments to EBITDA

 

 

 

 

 

 

 

 

 

Transaction costs (a)

 

875

 

470

 

936

 

470

 

Net loss from closed stores and exit costs (b)

 

1,284

 

663

 

1,374

 

970

 

Loss from asset dispositions (c)

 

95

 

162

 

503

 

235

 

Share-based compensation expense (d)

 

2,519

 

1,741

 

4,903

 

1,741

 

Non-cash rent (e)

 

484

 

1,394

 

1,277

 

2,578

 

Pre-opening costs (f)

 

2,277

 

1,535

 

3,410

 

1,976

 

Loss on extinguishment of debt (g)

 

2,192

 

-

 

2,192

 

-

 

Other items (h)

 

25

 

145

 

(45)

 

1,672

 

Adjusted EBITDA

 

$

50,685

 

$

47,500

 

$

85,714

 

$

77,734

 

 

10



 

Smart & Final Stores, Inc. and Subsidiaries

Reconciliation of Net Income to Non-GAAP Adjusted Net Income

(Unaudited)

(In Thousands, Except Share and Per Share Amounts)

 

 

 

Twelve Weeks Ended

 

Twenty-four Weeks Ended

 

 

 

June 14, 2015

 

June 15, 2014

 

June 14, 2015

 

June 15, 2014

 

Net income

 

  $

11,038

 

  $

11,115

 

  $

15,921

 

  $

13,622

 

Income tax provision

 

6,938

 

6,919

 

9,786

 

8,259

 

Net income before income taxes

 

17,976

 

18,034

 

25,707

 

21,881

 

 

 

 

 

 

 

 

 

 

 

Adjustments to Net Income

 

 

 

 

 

 

 

 

 

Transaction costs (a)

 

875

 

470

 

936

 

470

 

Net loss from closed stores and exit costs (b)

 

1,284

 

663

 

1,374

 

970

 

Loss from asset dispositions (c)

 

95

 

162

 

503

 

235

 

Share-based compensation expense (d)

 

2,519

 

1,741

 

4,903

 

1,741

 

Non-cash rent (e)

 

484

 

1,394

 

1,277

 

2,578

 

Pre-opening costs (f)

 

2,277

 

1,535

 

3,410

 

1,976

 

Loss on extinguishment of debt (g)

 

2,192

 

-    

 

2,192

 

-    

 

Other items (h)

 

25

 

145

 

(45)

 

1,672

 

Adjusted income tax provision

 

(10,833)

 

(9,356)

 

(15,638)

 

(12,105

)

Adjusted net income

 

  $

16,894

 

  $

14,788

 

  $

24,619

 

  $

19,418

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income Per Share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share - basic

 

  $

0.15

 

  $

0.19

 

  $

0.22

 

  $

0.24

 

Per share impact of net income adjustments

 

0.08

 

0.07

 

  $

0.12

 

  $

0.10

 

Adjusted net income per share - basic

 

  $

0.23

 

  $

0.26

 

  $

0.34

 

  $

0.34

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share - diluted

 

  $

0.14

 

  $

0.19

 

  $

0.21

 

  $

0.23

 

Per share impact of net income adjustments

 

0.08

 

0.06

 

  $

0.11

 

  $

0.10

 

Adjusted net income per share - diluted

 

  $

0.22

 

  $

0.25

 

  $

0.32

 

  $

0.33

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares - basic

 

73,090,917

 

57,259,361

 

73,087,600

 

57,215,276

 

Weighted average shares - fully diluted

 

76,893,066

 

59,312,773

 

76,773,674

 

59,303,031

 

 

 

 

(a)  Represents costs primarily associated with the Company’s secondary public offering that were charged to expense in the twelve and twenty-four weeks ended June 14, 2015 and the Company’s initial public offering that were charged to expense in the twelve and twenty-four weeks ended June 15, 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 loss on the early extinguishment of debt in the twelve weeks ended June 14, 2015 in connection with an amendment to the Company’s Term Loan Facility.

(h)  Represents consulting expenses related to strategic growth initiatives for the twelve and twenty-four weeks ended June 15, 2014.

 

11


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