UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 


 

FORM 8-K

 

CURRENT REPORT

 

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

 

Date of report (Date of earliest event reported) July 25, 2018

 

SMART & FINAL STORES, INC.

(Exact Name of Registrant as Specified in Charter)

 

 

 

Delaware

 

001-36626

 

80-0862253

(State or Other Jurisdiction
of Incorporation)

 

(Commission
File Number)

 

(IRS Employer
Identification No.)

 

 

 

600 Citadel Drive, Commerce, CA

 

90040

(Address of Principal Executive Offices)

 

(Zip Code)

 

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

 

N/A

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

 

 

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

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

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

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

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

 

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company   o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 



 

Item 2.02                                 Results of Operations and Financial Condition.

 

On July 25, 2018, Smart & Final Stores, Inc. issued a press release announcing its financial results for the quarter ended June 17, 2018.  The text of the press release is included as Exhibit 99.1 to this Form 8-K.

 

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

 

Item 9.01.                             Financial Statements and Exhibits.

 

(d)                                                                             Exhibits:

 

Exhibit Number

Description

 

 

99.1

Press Release, dated July 25, 2018

 



 

Exhibit Index

 

Exhibit Number

 

Description

99.1

 

Press Release, dated July 25, 2018

 



 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

 

SMART & FINAL STORES, INC.

 

 

 

Date: July 25, 2018

 

 

 

 

 

 

 

 

 

By:

/s/ Richard N. Phegley

 

 

Name:

Richard N. Phegley

 

Title:

Senior Vice President and Chief Financial Officer

 


Exhibit 99.1

 

 

Smart & Final Stores, Inc. Reports Second Quarter 2018 Financial Results

 

COMMERCE, Calif. (July 25, 2018) – Smart & Final Stores, Inc. (the “Company”) (NYSE:SFS), the value-oriented food and everyday staples retailer, today reported financial results for the fiscal second quarter ended June 17, 2018.

 

Second Quarter Highlights:

·                  Net sales increased 4.4% to $1,125.5 million with a comparable store sales increase of 1.3%

·                  Business customer sales penetration in the Smart & Final banner increased to 30.1% of sales

·                  Gross margin increased 4.6% to $169.7 million

·                  Adjusted EBITDA increased 2.5% to $49.3 million

·                  Net income of $6.6 million or $0.09 per share

·                  Adjusted net income of $11.4 million or $0.16 per share

 

“In the second quarter, we were pleased to deliver positive comparable store sales in both our Smart & Final and Smart Foodservice Warehouse store banners.  This reflects how our unique assortment of business and club-pack items, our high-quality private label offerings, and rapidly expanding e-commerce channels resonate with shoppers,” said David Hirz, president and chief executive officer.  “While investing in customer service initiatives, we also expanded merchandise margins, grew adjusted EBITDA, and reduced outstanding debt, resulting in an improved financial leverage ratio at quarter-end.”

 

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

 

Fiscal Second Quarter 2018 Financial Results

Net sales were $1,125.5 million in the 12-week quarter ended June 17, 2018, representing a 4.4% increase as compared to $1,078.3 million for the same period of 2017. Net sales growth was driven by a 1.3% increase in comparable store sales and from the net sales contribution of new stores. Comparable store sales growth was comprised of a 2.8% increase in comparable average transaction size, partially offset by a 1.4% decrease in comparable transaction count.

 

Net sales for Smart & Final banner stores were $868.5 million, a 3.9% increase as compared to $836.1 million for the same period of 2017. Comparable store sales growth for the Smart & Final banner was 0.8% in the second quarter.

 

Net sales for Smart Foodservice Warehouse banner stores were $257.0 million, a 6.1% increase as compared to $242.2 million for the same period of 2017. Comparable store sales growth for the Smart Foodservice Warehouse banner was 3.3% in the second quarter.

 

1



 

Gross margin was $169.7 million, a 4.6% increase as compared to $162.3 million in the second quarter of 2017. Gross margin rate was 15.1% as compared to 15.0% for the same period of 2017. Gross margin rate in the quarter was supported by our strategic sourcing, merchandising and pricing initiatives.

 

Operating and administrative expenses were $150.6 million, a 5.2% increase as compared to $143.1 million for the same period of 2017. This increase was related to expenses associated with the effect of higher minimum wage rates, as well as new stores opened during the prior twelve months and their related support costs.

 

Interest expense in the second quarter was $9.7 million, a 15.9% increase as compared to $8.3 million in the prior year quarter, primarily driven by higher interest rates as well as accrued interest expense related to accounting for build-to-suit store developments.

 

The Company’s effective tax rate in the 2018 second quarter was 33%, including the effect of the 2017 Tax Cuts and Jobs Act and certain tax adjustments.  The Company currently projects a 2018 full year effective tax rate of approximately 27%.

 

Net income was $6.6 million, or $0.09 per share, as compared to net income of $7.1 million, or $0.09 per share, for the same period of 2017. Adjusted net income was $11.4 million, or $0.16 per share, as compared to adjusted net income of $11.0 million, or $0.14 per share, for the same period of 2017.

 

Adjusted EBITDA was $49.3 million, an increase of 2.5% as compared to $48.0 million for the same period of 2017.

 

Fiscal Year-to-date Financial Results

In the twenty-four weeks ended June 17, 2018, net sales were $2,141.7 million, an increase of 4.7% as compared to $2,045.3 million in the same period of 2017. Net sales growth was driven by the net sales contribution of new stores and a 1.3% increase in comparable store sales. The increase in comparable store sales was attributable to a 1.6% decrease in comparable transaction count and a 2.9% increase in comparable average transaction size.

 

Net sales for Smart & Final banner stores were $1,663.6 million, an increase of 3.9% as compared to $1,601.1 million in the first half of 2017. Year-to-date comparable store sales for the Smart & Final banner increased 0.4%.

 

Net sales for Smart Foodservice Warehouse banner stores were $478.1 million, a 7.6% increase as compared to $444.2 million in the same period of 2017. Year-to-date comparable store sales for the Smart Foodservice Warehouse banner increased 4.5%.

 

Net loss was $0.5 million, as compared to net income of $2.5 million in the first half of 2017, which included a tax benefit of $2.2 million. Net loss per diluted share was $0.01 as compared to net income per diluted share of $0.03 for the same period of 2017.

 

2



 

Adjusted net income was $8.6 million, as compared to $9.5 million in the first half of 2017. Adjusted net income per diluted share was $0.12, flat compared to the same period of 2017.

 

Adjusted EBITDA was $77.9 million, as compared to $72.5 million in the same period of 2017.

 

Growth and Development

During the fiscal second quarter of 2018, the Company relocated one legacy Smart & Final store and closed two legacy Smart & Final stores. The Company opened one new Smart Foodservice Warehouse store in the quarter. As of June 17, 2018, the Company operated a total of 322 stores, including 195 Smart & Final Extra! stores, 63 legacy format Smart & Final stores and 64 Smart Foodservice Warehouse stores.

 

Operating Stores at Quarter End (June 17, 2018)

 

 

 

 

 

 

 

 

 

 Smart & Final Banner Stores

 

Smart

 

 

 

 

Extra!
format

 

Legacy
format

 

Total

 

Foodservice
Warehouse
Banner
Stores

 

Total
Company

End of Fiscal Year 2017

 

194

 

66

 

260

 

63

 

323

New stores

 

-

 

-

 

-

 

1

 

1

Relocations, net

 

1

 

(1)

 

-

 

-

 

-

Conversions

 

-

 

-

 

-

 

-

 

-

Store Closures

 

-

 

(2)

 

(2)

 

-

 

(2)

End of 2nd Quarter 2018

 

195

 

63

 

258

 

64

 

322

 

 

Leverage and Liquidity

As of June 17, 2018, the Company’s debt, net of debt issuance costs, was $677.2 million and cash and cash equivalents were $64.2 million.

 

During the twenty-four weeks ending June 17, 2018, the Company generated cash from operations of $65.3 million and invested $65.4 million in capital expenditures, primarily related to the improvement of existing assets.

 

3



 

Outlook

The Company is updating its previously issued guidance for the full year ending December 30, 2018, to reflect current store development expectations:

 

 

Previous Full Year

2018 Guidance

Updated Full Year

2018 Guidance

Net sales growth

4.0% - 5.0%

Unchanged

Comparable store sales growth

1.0% - 2.0%

Unchanged

Unit growth (new stores)

3-5 Smart & Final Extra! stores

3-5 Smart Foodservice Warehouse stores

5 Smart & Final Extra! stores

4 Smart Foodservice Warehouse stores

Relocations or expansions of legacy stores to Extra! format

3-5 Smart & Final stores

3-4 Smart & Final stores

Adjusted EBITDA

$180 - $190 million

Unchanged

Adjusted net income

$31 - $35 million

Unchanged

Adjusted diluted EPS

$0.42 - $0.47

Unchanged

Capital expenditures (net)

$80 - $90 million

Unchanged

Fully diluted weighted average shares

74 to 75 million

Unchanged

 

 

The above guidance includes certain non-GAAP financial measures (namely adjusted EBITDA, adjusted net income and adjusted net income per diluted share), which exclude certain costs and non-cash costs and provide investors with additional financial measures of the expected operating performance of the Company’s business. The primary factors in reconciling these non-GAAP financial measures to comparable GAAP measures include the following: pre-opening costs associated with new stores of approximately $3.1 million, non-cash rent related to stores of approximately $4.2 million, share-based compensation expense of approximately $14.5 million, and $4.2 million of store closure expenses. The other amounts needed to reconcile these non-GAAP financial measures to comparable GAAP measures cannot be quantified and are not available without an unreasonable effort.

 

Fiscal Second Quarter 2018 Conference Call

The Company will host a conference call today at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time to discuss its fiscal second quarter 2018 financial results. To participate in the call, please dial (877) 407-0784 (U.S.) or (201) 689-8560 (International) ten minutes prior to the start time. The conference call can also be accessed on the “For Investors” section of the Company’s web site at www.smartandfinal.com.

 

For those unable to participate during the live broadcast, a telephonic replay of the call will also be available beginning today at approximately 8:00 p.m. Eastern Time, by dialing (844) 512-2921 (U.S.) or (412) 317-6671 (International) and entering the replay pin number: 13681354. The telephonic replay will be available until 11:59 p.m. Eastern Time, August 8, 2018.

 

About Smart & Final

Smart & Final Stores, Inc. (NYSE: SFS), is a value-oriented food and everyday staples retailer, headquartered in Commerce (near Los Angeles), California. The Company offers quality products in a variety of sizes, saving household, nonprofit and business customers time and money. As of June 17, 2018, the Company operated 322 grocery and foodservice stores under the “Smart & Final,” “Smart & Final Extra!” and “Smart Foodservice Warehouse Stores” banners in California, Oregon, Washington, Arizona, Nevada, Idaho, Montana and Utah, with an additional 15 stores in Northwestern Mexico operated through a joint venture. In business for over 146 years, the Company remains committed to giving back to local communities through employee volunteer opportunities and Company donations to local nonprofits.

 

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 special note concerning “Forward-Looking Statements,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business” sections and elsewhere in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission.

 

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

 

INVESTOR CONTACTS:

Laura Bainbridge / Andrew Greenebaum

Addo Investor Relations

O: 310.829.5400

investors@smartandfinal.com

 

MEDIA CONTACT:  press@smartandfinal.com

 

5



 

Smart & Final Stores, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

(In Thousands, Except Share and Per Share Amounts)

 

 

 

 

 

Twelve Weeks Ended

 

 

Twenty-four Weeks Ended

 

 

 

 

June 17, 2018

 

June 18, 2017

 

June 17, 2018

 

June 18, 2017

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,125,484

 

$

1,078,287

 

$

2,141,721

 

$

2,045,304

 

Cost of sales, buying and occupancy

 

955,767

 

916,017

 

1,825,742

 

1,749,923

 

Gross margin

 

169,717

 

162,270

 

315,979

 

295,381

 

 

 

 

 

 

 

 

 

 

 

Operating and administrative expenses

 

150,572

 

143,062

 

298,002

 

278,736

 

Income from operations

 

19,145

 

19,208

 

17,977

 

16,645

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

9,664

 

8,335

 

18,915

 

16,509

 

Equity in earnings of joint venture

 

373

 

47

 

950

 

214

 

Income before income taxes

 

9,854

 

10,920

 

12

 

350

 

 

 

 

 

 

 

 

 

 

 

Income tax (provision) benefit

 

(3,253)

 

(3,792)

 

(505)

 

2,186

 

Net income (loss)

 

$

6,601

 

$

7,128

 

$

(493)

 

$

2,536

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.09

 

$

0.10

 

$

(0.01)

 

$

0.04

 

Diluted

 

$

0.09

 

$

0.09

 

$

(0.01)

 

$

0.03

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

72,658,662

 

72,573,681

 

72,444,916

 

72,430,786

 

Diluted

 

73,374,180

 

76,251,510

 

72,444,916

 

76,478,054

 

 

6



 

Smart & Final Stores, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In Thousands, Except Share and Per Share Amounts)

 

 

 

June 17, 2018

 

December 31, 2017

 

 

 

(Unaudited)

 

 

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

64,214

 

$

71,671

 

Accounts receivable, less allowances of $175 and $177 at June 17, 2018 and December 31, 2017, respectively

 

31,970

 

33,019

 

Inventories

 

284,998

 

289,712

 

Prepaid expenses and other current assets

 

32,477

 

54,241

 

Total current assets

 

413,659

 

448,643

 

 

 

 

 

 

 

Property, plant, and equipment:

 

 

 

 

 

Land

 

11,116

 

10,076

 

Buildings and improvements

 

54,554

 

53,965

 

Leasehold improvements

 

357,738

 

346,181

 

Fixtures and equipment

 

436,546

 

421,912

 

Construction in progress

 

32,043

 

8,242

 

 

 

891,997

 

840,376

 

Less accumulated depreciation and amortization

 

380,206

 

338,149

 

 

 

511,791

 

502,227

 

 

 

 

 

 

 

Assets under capital leases

 

4,586

 

-

 

Capitalized software, net of accumulated amortization of $18,690 and $17,325 at June 17, 2018 and December 31, 2017, respectively

 

28,065

 

21,984

 

Other intangible assets, net

 

359,316

 

362,536

 

Goodwill

 

385,918

 

385,918

 

Equity investment in joint venture

 

16,378

 

15,380

 

Other assets

 

79,529

 

73,249

 

Total assets

 

$

1,799,242

 

$

1,809,937

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

221,819

 

$

245,009

 

Accrued salaries and wages

 

32,456

 

36,216

 

Accrued expenses

 

113,269

 

100,639

 

Current portion of debt, less debt issuance costs

 

58,677

 

81,512

 

Total current liabilities

 

426,221

 

463,376

 

 

 

 

 

 

 

Obligations under capital leases

 

4,586

 

-

 

Long-term debt, less debt issuance costs

 

618,482

 

617,867

 

Deferred income taxes

 

39,853

 

38,095

 

Postretirement and postemployment benefits

 

124,589

 

127,649

 

Other long-term liabilities

 

175,452

 

159,904

 

 

 

 

 

 

 

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 - 75,934,423 and 74,120,113 at June 17, 2018 and December 31, 2017, respectively

 

76

 

74

 

Additional paid-in capital

 

513,631

 

506,098

 

Retained deficit

 

(78,653

)

(78,160

)

Accumulated other comprehensive loss

 

(24,995

)

(24,966

)

Total stockholders’ equity

 

410,059

 

403,046

 

Total liabilities and stockholders’ equity

 

$

1,799,242

 

$

1,809,937

 

 

7



 

Smart & Final Stores, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In Thousands)

 

 

 

 

Twenty-four Weeks Ended

 

 

 

June 17, 2018

 

June 18, 2017

 

 

 

 

 

 

 

Operating activities

 

 

 

 

 

Net (loss) income

 

$

(493)

 

$

2,536

 

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

 

 

 

 

 

Depreciation

 

27,607

 

25,989

 

Amortization

 

18,810

 

18,008

 

Amortization of debt discount and debt issuance costs

 

918

 

891

 

Share-based compensation

 

6,442

 

4,304

 

Deferred income taxes

 

1,805

 

524

 

Equity in earnings of joint venture

 

(950)

 

(214)

 

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

 

(31)

 

14

 

Asset impairment

 

1,622

 

550

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable, net

 

1,049

 

(2,958)

 

Inventories

 

4,714

 

12,149

 

Prepaid expenses and other assets

 

20,220

 

18,318

 

Accounts payable

 

(23,190)

 

5,559

 

Accrued salaries and wages

 

(3,760)

 

1,340

 

Other accrued liabilities

 

10,554

 

8,128

 

Net cash provided by operating activities

 

65,317

 

95,138

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

Purchases of property, plant, and equipment

 

(58,313)

 

(62,646)

 

Proceeds from disposal of property, plant, and equipment

 

33

 

1,807

 

Investment in capitalized software

 

(7,112)

 

(6,836)

 

Other

 

(33)

 

(458)

 

Net cash used in investing activities

 

(65,425)

 

(68,133)

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

Proceeds from exercise of stock options

 

1,430

 

3,626

 

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

 

(339)

 

(1,524)

 

Fees paid in conjunction with debt financing

 

(137)

 

(123)

 

Borrowings on bank line of credit

 

42,000

 

38,000

 

Payments on bank line of credit

 

(65,000)

 

(52,000)

 

Cash received from landlords related to financing lease obligations

 

14,697

 

-

 

Stock repurchases

 

-

 

(5,994)

 

Net cash used in financing activities

 

(7,349)

 

(18,015)

 

 

 

 

 

 

 

Net (decrease) increase in cash and cash equivalents

 

(7,457)

 

8,990

 

Cash and cash equivalents at beginning of period

 

71,671

 

54,235

 

Cash and cash equivalents at end of period

 

$

64,214

 

$

63,225

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

Interest

 

$

16,421

 

$

11,012

 

 

 

 

 

 

 

Non-cash investing and financing activities

 

 

 

 

 

Software development costs incurred but not paid

 

$

4,005

 

$

340

 

Construction in progress costs incurred but not paid

 

20,463

 

9,634

 

Property acquired through capital and financing lease obligations

 

5,340

 

-

 

 

8



 

Smart & Final Stores, Inc. and Subsidiaries

Segment Reporting

(In Thousands)

 

 

 

Smart & Final

 

Smart
Foodservice

 

Corporate /
Other

 

Consolidated

Twelve Weeks Ended June 17, 2018

 

 

 

 

 

 

 

 

Net sales

 

$

868,457

 

$

257,027

 

$

-

 

$

1,125,484

Cost of sales, distribution and store occupancy

 

734,123

 

219,546

 

2,098

 

955,767

Operating and administrative expenses

 

115,868

 

18,873

 

15,831

 

150,572

Income (loss) from operations

 

$

18,466

 

$

18,608

 

$

(17,929)

 

$

19,145

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

$

25,177

 

$

6,961

 

$

4,286

 

$

36,424

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Weeks Ended June 18, 2017

 

 

 

 

 

 

 

 

Net sales

 

$

836,134

 

$

242,153

 

$

-

 

$

1,078,287

Cost of sales, distribution and store occupancy

 

706,610

 

207,372

 

2,035

 

916,017

Operating and administrative expenses

 

107,796

 

17,441

 

17,825

 

143,062

Income (loss) from operations

 

$

21,728

 

$

17,340

 

$

(19,860)

 

$

19,208

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

$

33,830

 

$

3,501

 

$

3,057

 

$

40,388

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Smart & Final

 

Smart
Foodservice

 

Corporate /
Other

 

Consolidated

Twenty-four Weeks Ended June 17, 2018

 

 

 

 

 

 

 

 

Net sales

 

$

1,663,649

 

$

478,072

 

$

-

 

$

2,141,721

Cost of sales, distribution and store occupancy

 

1,412,738

 

409,017

 

3,987

 

1,825,742

Operating and administrative expenses

 

225,437

 

36,669

 

35,896

 

298,002

Income (loss) from operations

 

$

25,474

 

$

32,386

 

$

(39,883)

 

$

17,977

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

$

49,036

 

$

8,231

 

$

8,158

 

$

65,425

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twenty-four Weeks Ended June 18, 2017

 

 

 

 

 

 

 

 

Net sales

 

$

1,601,103

 

$

444,201

 

$

-

 

$

2,045,304

Cost of sales, distribution and store occupancy

 

1,363,402

 

382,505

 

4,016

 

1,749,923

Operating and administrative expenses

 

211,702

 

33,607

 

33,427

 

278,736

Income (loss) from operations

 

$

25,999

 

$

28,089

 

$

(37,443)

 

$

16,645

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

$

54,804

 

$

6,374

 

$

8,304

 

$

69,482

 

9



 

Non-GAAP Financial Measures

To supplement the Company’s financial information presented in accordance with GAAP, the Company uses certain non-GAAP financial measures (namely EBITDA and adjusted EBITDA, adjusted net income, adjusted net income per share, and adjusted net income per diluted share) to evaluate our operating and financial performance and to compare such performance to that of prior periods. We also use these non-GAAP financial measures in making operational and financial decisions and in establishing operational goals. We believe that providing these non-GAAP financial measures to investors, as a supplement to GAAP financial measures, helps investors to (i) evaluate our operating and financial performance and future prospects, (ii) compare financial results across accounting periods, (iii) better understand the long-term performance of our core business and (iv) evaluate trends in our business, all consistent with how management evaluates such performance and movements. The Company defines EBITDA as net income (loss) before depreciation and amortization, interest expense and provision (benefit) for income tax, and adjusted EBITDA as EBITDA adjusted for the items set forth in the table below.  The Company defines adjusted net income as net income (loss) adjusted for the items set forth in the table below. The Company defines adjusted net income per share as adjusted net income divided by the weighted average basic shares outstanding. The Company defines adjusted net income per diluted share as adjusted net income divided by the weighted average diluted shares outstanding.

 

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

 

The following tables present reconciliations of net income (loss) to EBITDA, adjusted EBITDA and adjusted income, and net income (loss) per share to adjusted net income per share and adjusted net income per diluted share, for the twelve-week and twenty-four week periods ended June 17, 2018 and June 18, 2017.

 

 

 

Smart & Final Stores, Inc. and Subsidiaries

Reconciliation of Net Income (Loss) to Non-GAAP Adjusted EBITDA

(Unaudited)

(In Thousands)

 

 

 

Twelve Weeks
Ended June 17,
2018

 

Twelve Weeks
Ended June 18,
2017

 

Twenty-four
Weeks Ended
June 17, 2018

 

Twenty-four
Weeks Ended
June 18, 2017

Net income (loss)

 

$

6,601

 

$

7,128

 

$

(493)

 

$

2,536

Depreciation and amortization

 

23,125

 

22,314

 

46,417

 

43,997

Interest expense, net

 

9,664

 

8,335

 

18,915

 

16,509

Income tax provision (benefit)

 

3,253

 

3,792

 

505

 

(2,186)

EBITDA

 

42,643

 

41,569

 

65,344

 

60,856

 

 

 

 

 

 

 

 

 

Adjustments to EBITDA

 

 

 

 

 

 

 

 

Net loss from closed stores and exit costs (a)

 

1,434

 

891

 

1,525

 

1,281

Loss from asset dispositions (b)

 

196

 

300

 

1,614

 

628

Share-based compensation expense (c)

 

3,158

 

2,489

 

6,443

 

4,304

Non-cash rent (d)

 

1,552

 

1,571

 

2,755

 

3,126

Pre-opening costs (e)

 

483

 

1,196

 

414

 

2,173

Other items (f)

 

(200)

 

25

 

(200)

 

81

Adjusted EBITDA

 

$

49,266

 

$

48,041

 

$

77,895

 

$

72,449

 

10



 

Smart & Final Stores, Inc. and Subsidiaries

Reconciliation of Net Income (Loss) to Non-GAAP Adjusted Net Income

(Unaudited)

(In Thousands, Except Share and Per Share Amounts)

 

 

 

Twelve Weeks
Ended June 17,
2018

 

Twelve Weeks
Ended June 18,
2017

 

Twenty-four
Weeks Ended
June 17, 2018

 

Twenty-four
Weeks Ended
June 18, 2017

Net income (loss)

 

$

6,601

 

$

7,128

 

$

(493)

 

$

2,536

Income tax provision (benefit)

 

3,253

 

3,792

 

505

 

(2,186)

Income before income taxes

 

9,854

 

10,920

 

12

 

350

 

 

 

 

 

 

 

 

 

Adjustments to net income (loss)

 

 

 

 

 

 

 

 

Net loss from closed stores and exit costs (a)

 

1,434

 

891

 

1,525

 

1,281

Loss from asset dispositions (b)

 

196

 

300

 

1,614

 

628

Share-based compensation expense (c)

 

3,158

 

2,489

 

6,443

 

4,304

Non-cash rent (d)

 

1,552

 

1,571

 

2,755

 

3,126

Pre-opening costs (e)

 

483

 

1,196

 

414

 

2,173

Other items (f)

 

(200)

 

25

 

(200)

 

81

Adjusted income tax provision

 

(5,084)

 

(6,365)

 

(3,975)

 

(2,422)

Adjusted net income

 

$

11,393

 

$

11,027

 

$

8,588

 

$

9,521

 

 

 

 

 

 

 

 

 

Adjusted Net Income Per Share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share - basic

 

$

0.09

 

$

0.10

 

$

(0.01)

 

$

0.04

Per share impact of net income adjustments

 

0.07

 

0.05

 

0.13

 

0.09

Adjusted net income per share - basic

 

$

0.16

 

$

0.15

 

$

0.12

 

$

0.13

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share - diluted

 

$

0.09

 

$

0.09

 

$

(0.01)

 

$

0.03

Per share impact of net income adjustments

 

0.07

 

0.05

 

0.13

 

0.09

Adjusted net income per share - diluted

 

$

0.16

 

$

0.14

 

$

0.12

 

$

0.12

 

 

 

 

 

 

 

 

 

Weighted average shares - basic

 

72,658,662

 

72,573,681

 

72,444,916

 

72,430,786

Weighted average shares - diluted

 

73,374,180

 

76,251,510

 

73,821,732

 

76,478,054

 

 

 

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

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

(c)  Represents expenses associated with the Company’s equity-based incentive award program.

(d)  Represents non-cash component of recognized rent expense.

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

(f)  Represents severance costs in the twelve and twenty-four week periods ended June 17, 2018 and June 18, 2017.

 

11


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2 EX-99.1 a18-14069_4ex99d1.htm EX-99.1 489991
3 GRAPHIC g140694mm01i001.jpg GRAPHIC 2006
  Complete submission text file 0001104659-18-046955.txt   521371