UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 


 

FORM 8-K

 

CURRENT REPORT

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

 

Date of report (Date of earliest event reported) November 14, 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 November 14, 2018, Smart & Final Stores, Inc. issued a press release announcing its financial results for the quarter ended October 7, 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 November 14, 2018

 

2


 

Exhibit Index

 

Exhibit Number

 

Description

 

 

 

99.1

 

Press Release, dated November 14, 2018

 

3


 

SIGNATURES

 

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

 

 

SMART & FINAL STORES, INC.

 

 

Date: November 14, 2018

 

 

 

 

By:

/s/ Richard N. Phegley

 

Name:

Richard N. Phegley

 

Title:

Senior Vice President and Chief Financial Officer

 

4


Exhibit 99.1

 

 

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

 

COMMERCE, Calif. (November 14, 2018) — Smart & Final Stores, Inc. (the “Company”) (NYSE:SFS), the value-oriented food and everyday staples retailer, today reported financial results for the fiscal third quarter ended October 7, 2018.

 

Third Quarter Highlights:

 

·                  Net sales increased 2.8% to $1,497.7 million with a comparable store sales increase of 0.6%

·                  Gross margin increased 8.7% to $232.4 million

·                  Adjusted EBITDA of $62.3 million

·                  Net income of $10.2 million or $0.14 per share, including benefit of lower tax rate

·                  Adjusted net income of $16.9 million or $0.23 per share, including benefit of lower tax rate

·                  Debt reduction of $23 million in the quarter and $46 million year-to-date

 

“Our third quarter performance was solid with 2.8% year-over-year growth in overall sales.  We also delivered our sixth consecutive quarter of positive comparable store sales, with growth in both average transaction size and merchandise margins despite greater pressure from deflation in product prices,” said David Hirz, president and chief executive officer of the Company.

 

“We also continue to allocate our strong free cash flow from operations to reduce outstanding debt with a year-to-date reduction of $46 million.  Our focus on our key customer segments, including small business customers, is growing sales despite deflation, as we build on our core strengths in value pricing and unique merchandising.  We continue to support our value proposition through targeted investments in digital commerce and infrastructure, which are helping to drive strong online sales gains in both our Smart & Final and Smart Foodservice Warehouse banners.”

 

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 Third Quarter 2018 Financial Results

 

Net sales were $1,497.7 million in the 16-week quarter ended October 7, 2018, representing a 2.8% increase as compared to $1,457.4 million for the same period of 2017. Net sales growth was driven by a 0.6% increase in comparable store sales and from the net sales contribution of new stores. Comparable store sales growth was comprised of a 1.9% increase in comparable average transaction size, partially offset by a 1.3% decrease in comparable transaction count. The Company estimates that the year-to-year deflation rate in product pricing was -0.7% in the third quarter.

 

1


 

Net sales for Smart & Final banner stores were $1,144.1 million, a 2.6% increase as compared to $1,115.2 million for the same period of 2017. Comparable store sales growth for the Smart & Final banner was 0.2% in the third quarter.

 

Net sales for Smart Foodservice Warehouse banner stores were $353.6 million, a 3.3% increase as compared to $342.1 million for the same period of 2017. Comparable store sales growth for the Smart Foodservice Warehouse banner was 2.0% in the third quarter.

 

Gross margin was $232.4 million, an 8.7% increase as compared to $213.9 million in the third quarter of 2017. Gross margin rate was 15.5% as compared to 14.7% for the same period of 2017. Gross margin rate in the quarter was supported by the Company’s strategic sourcing, merchandising and pricing initiatives.

 

Operating and administrative expenses were $209.9 million, a 7.5% increase as compared to $195.3 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 third quarter was $13.3 million, an 18.0% increase as compared to $11.2 million in the prior year quarter, primarily driven by higher interest rates as well as interest expense related to accounting for build-to-suit store developments.

 

The third quarter results reflect an effective tax rate benefit of approximately 2% which includes a $2.9 million discrete tax benefit related to accelerated depreciation deductions included in the Company’s 2017 income tax return and the effect of the 2017 Tax Cuts and Jobs Act.

 

Net income was $10.2 million, or $0.14 per share, as compared to net income of $5.1 million, or $0.07 per share, for the same period of 2017. Adjusted net income was $16.9 million, or $0.23 per share, as compared to adjusted net income of $12.9 million, or $0.17 per share, for the same period of 2017.

 

Adjusted EBITDA was $62.3 million, a slight decrease of 1.0% as compared to $62.9 million for the same period of 2017.

 

Fiscal Year-to-date Financial Results

 

In the forty weeks ended October 7, 2018, net sales were $3,639.4 million, an increase of 3.9% as compared to $3,502.7 million in the same period of 2017. Net sales growth was driven in part by the net sales contribution of new stores and a 1.0% increase in comparable store sales. The increase in comparable store sales was attributable to a 2.5% increase in comparable average transaction size, partially offset by a 1.5% decrease in comparable transaction count.

 

Net sales for Smart & Final banner stores were $2,807.7 million, an increase of 3.4% as compared to $2,716.3 million in the same period of 2017. Year-to-date comparable store sales for the Smart & Final banner increased 0.3%.

 

Net sales for Smart Foodservice Warehouse banner stores were $831.7 million, a 5.8% increase as compared to $786.3 million in the same period of 2017. Year-to-date comparable store sales for the Smart Foodservice Warehouse banner increased 3.4%.

 

2


 

Net income was $9.7 million, as compared to net income of $7.6 million in the same period of 2017, which included a tax provision of $0.3 million and $0.4 million, respectively. Net income per diluted share was $0.13 as compared to $0.10 for the same period of 2017.

 

Adjusted net income was $25.5 million, as compared to $22.5 million in the same period of 2017. Adjusted net income per diluted share was $0.34, compared to $0.30 in the same period of 2017.

 

Adjusted EBITDA was $140.2 million, as compared to $135.4 million in the same period of 2017.

 

Growth and Development

 

During the fiscal third quarter of 2018, the Company opened three new Smart & Final Extra! stores, relocated one legacy Smart & Final store to an Extra! format store and closed one legacy Smart & Final store. As of October 7, 2018, the Company operated a total of 324 stores, including 199 Smart & Final Extra! stores, 61 legacy format Smart & Final stores and 64 Smart Foodservice Warehouse stores.

 

Operating Stores at Quarter End (October 7, 2018)

 

 

 

Smart & Final Banner Stores

 

Smart
Foodservice
Warehouse

 

 

 

 

 

Extra!
format

 

Legacy
format

 

Total

 

Banner
Stores

 

Total
Company

 

End of Fiscal Year 2017

 

194

 

66

 

260

 

63

 

323

 

New stores

 

3

 

 

3

 

1

 

4

 

Relocations, net

 

2

 

(2

)

 

 

 

Conversions

 

 

 

 

 

 

Store Closures

 

 

(3

)

(3

)

 

(3

)

End of 3rd Quarter 2018

 

199

 

61

 

260

 

64

 

324

 

 

Year-to-date, the Company has closed three legacy Smart & Final banner stores where leases were expiring and the store economic performance was marginal.  The Company expects to close one additional legacy store in the fourth quarter of fiscal 2018.

 

Leverage and Liquidity

 

As of October 7, 2018, the Company’s debt, net of debt issuance costs, was $653.0 million and cash and cash equivalents were $62.2 million.

 

During the forty weeks ended October 7, 2018, the Company generated cash from operations of $109.5 million and invested $107.9 million in capital expenditures, primarily related to the improvement of existing assets and new stores.

 

Year-to-date, the Company has reduced outstanding borrowings under its revolving credit facility by $46 million.

 

Outlook

 

The Company is revising certain elements of its previously issued guidance framework for the full year ending December 30, 2018, as noted in the table below:

 

3


 

 

 

Previous Full Year
2018 Guidance

 

Updated Full Year
2018 Guidance

Net sales growth

 

4.0% - 5.0%

 

3.5% - 3.75%

Comparable store sales growth

 

1.0% - 2.0%

 

1.00% - 1.25%

Unit growth (new stores)

 

5 Smart & Final Extra! stores
4 Smart Foodservice Warehouse stores

 

4 Smart & Final Extra! stores
3 Smart Foodservice Warehouse stores

Relocations or expansions of legacy stores to Extra! Format

 

3-4 Smart & Final stores

 

3 Smart & Final stores

Adjusted EBITDA

 

$180 - $190 million

 

$180 - $185 million

Adjusted net income

 

$31 - $35 million

 

$34 - $36 million

Adjusted diluted EPS

 

$0.42 - $0.47

 

$0.46 - $0.48

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 $2.6 million, non-cash rent related to stores of approximately $4.8 million, share-based compensation expense of approximately $13.3 million, and $3.9 million of store closure expenses. The other amounts needed to reconcile these non-GAAP financial measures to comparable GAAP measures cannot be quantified and are not available without an unreasonable effort.

 

Fiscal Third 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 third 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: 13683403. The telephonic replay will be available until 11:59 p.m. Eastern Time, November 14, 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 October 7, 2018, the Company operated 324 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)

 

 

 

Sixteen Weeks Ended

 

Forty Weeks Ended

 

 

 

October 7, 2018

 

October 8, 2017

 

October 7, 2018

 

October 8, 2017

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,497,669

 

$

1,457,353

 

$

3,639,390

 

$

3,502,657

 

Cost of sales, buying and occupancy

 

1,265,220

 

1,243,490

 

3,090,962

 

2,993,413

 

Gross margin

 

232,449

 

213,863

 

548,428

 

509,244

 

 

 

 

 

 

 

 

 

 

 

Operating and administrative expenses

 

209,890

 

195,285

 

507,892

 

474,021

 

Income from operations

 

22,559

 

18,578

 

40,536

 

35,223

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

13,250

 

11,229

 

32,165

 

27,738

 

Equity in earnings of joint venture

 

651

 

362

 

1,601

 

576

 

Income before income taxes

 

9,960

 

7,711

 

9,972

 

8,061

 

 

 

 

 

 

 

 

 

 

 

Income tax benefit (provision)

 

200

 

(2,605

)

(305

)

(419

)

Net income

 

$

10,160

 

$

5,106

 

$

9,667

 

$

7,642

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.14

 

$

0.07

 

$

0.13

 

$

0.11

 

Diluted

 

$

0.14

 

$

0.07

 

$

0.13

 

$

0.10

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

73,117,389

 

72,446,404

 

72,713,906

 

72,437,033

 

Diluted

 

74,446,660

 

74,253,374

 

74,071,704

 

75,588,182

 

 

6


 

Smart & Final Stores, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In Thousands, Except Share and Per Share Amounts)

 

 

 

October 7, 2018

 

December 31, 2017

 

 

 

(Unaudited)

 

 

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

62,174

 

$

71,671

 

Accounts receivable, less allowances of $177 and $177 at October 7, 2018 and December 31, 2017, respectively

 

37,937

 

33,019

 

Inventories

 

291,963

 

289,712

 

Prepaid expenses and other current assets

 

41,135

 

54,241

 

Total current assets

 

433,209

 

448,643

 

 

 

 

 

 

 

Property, plant, and equipment:

 

 

 

 

 

Land

 

8,816

 

10,076

 

Buildings and improvements

 

47,943

 

53,965

 

Leasehold improvements

 

367,869

 

346,181

 

Fixtures and equipment

 

447,511

 

421,912

 

Construction in progress

 

44,023

 

8,242

 

 

 

916,162

 

840,376

 

Less accumulated depreciation and amortization

 

407,276

 

338,149

 

 

 

508,886

 

502,227

 

 

 

 

 

 

 

Assets under capital leases

 

13,535

 

 

Capitalized software, net of accumulated amortization of $19,570 and $17,325 at October 7, 2018 and December 31, 2017, respectively

 

29,957

 

21,984

 

Other intangible assets, net

 

357,306

 

362,536

 

Goodwill

 

385,918

 

385,918

 

Equity investment in joint venture

 

16,746

 

15,380

 

Other assets

 

83,002

 

73,249

 

Total assets

 

$

1,828,559

 

$

1,809,937

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

235,551

 

$

245,009

 

Accrued salaries and wages

 

34,227

 

36,216

 

Accrued expenses

 

111,026

 

100,639

 

Current portion of debt, less debt issuance costs

 

34,029

 

81,512

 

Total current liabilities

 

414,833

 

463,376

 

 

 

 

 

 

 

Obligations under capital leases

 

13,663

 

 

Long-term debt, less debt issuance costs

 

618,924

 

617,867

 

Deferred income taxes

 

39,487

 

38,095

 

Postretirement and postemployment benefits

 

118,796

 

127,649

 

Other long-term liabilities

 

199,387

 

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 - 75,987,863 and 74,120,113 at October 7, 2018 and December 31, 2017, respectively

 

76

 

74

 

Additional paid-in capital

 

517,395

 

506,098

 

Retained deficit

 

(68,493

)

(78,160

)

Accumulated other comprehensive loss

 

(25,509

)

(24,966

)

Total stockholders’ equity

 

423,469

 

403,046

 

Total liabilities and stockholders’ equity

 

$

1,828,559

 

$

1,809,937

 

 

7


 

Smart & Final Stores, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In Thousands)

 

 

 

 

Forty Weeks Ended

 

 

 

October 7, 2018

 

October 8, 2017

 

 

 

 

 

 

 

Operating activities

 

 

 

 

 

Net income

 

$

9,667

 

$

7,642

 

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

 

 

 

 

 

Depreciation

 

44,953

 

44,526

 

Amortization

 

31,293

 

30,522

 

Amortization of debt discount and debt issuance costs

 

1,601

 

1,485

 

Share-based compensation

 

10,057

 

8,504

 

Deferred income taxes

 

1,439

 

(506

)

Equity in earnings of joint venture

 

(1,601

)

(576

)

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

 

559

 

(50

)

Asset impairment

 

3,182

 

1,430

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable, net

 

(4,918

)

(3,858

)

Inventories

 

(2,251

)

7,391

 

Prepaid expenses and other assets

 

12,672

 

16,404

 

Accounts payable

 

(9,458

)

(758

)

Accrued salaries and wages

 

(1,989

)

3,240

 

Other accrued liabilities

 

14,251

 

12,644

 

Net cash provided by operating activities

 

109,457

 

128,040

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

Purchases of property, plant, and equipment

 

(95,891

)

(107,078

)

Proceeds from disposal of property, plant, and equipment

 

33

 

1,850

 

Investment in capitalized software

 

(11,846

)

(10,505

)

Other

 

(231

)

(579

)

Net cash used in investing activities

 

(107,935

)

(116,312

)

 

 

 

 

 

 

Financing activities

 

 

 

 

 

Proceeds from exercise of stock options

 

1,885

 

3,780

 

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

 

(645

)

(1,826

)

Fees paid in conjunction with debt financing

 

(180

)

(154

)

Borrowings on bank line of credit

 

47,000

 

63,000

 

Payments on bank line of credit

 

(93,000

)

(57,000

)

Payment on promissory note

 

(1,775

)

 

Cash received from landlord related to financing lease obligations

 

35,696

 

 

Stock repurchases

 

 

(12,873

)

Net cash used in financing activities

 

(11,019

)

(5,073

)

 

 

 

 

 

 

Net (decrease) increase in cash and cash equivalents

 

(9,497

)

6,655

 

Cash and cash equivalents at beginning of period

 

71,671

 

54,235

 

Cash and cash equivalents at end of period

 

$

62,174

 

$

60,890

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

Interest

 

$

29,171

 

$

26,191

 

 

 

 

 

 

 

Non-cash investing and financing activities

 

 

 

 

 

Software development costs incurred but not paid

 

$

3,508

 

$

331

 

Construction in progress costs incurred but not paid

 

18,511

 

26,093

 

Property acquired through capital and financing lease obligations

 

14,369

 

 

 

8


 

Smart & Final Stores, Inc. and Subsidiaries

Segment Reporting

(In Thousands)

 

 

 

 

Smart & Final

 

Smart
Foodservice

 

Corporate / Other

 

Consolidated

 

Sixteen Weeks Ended October 7, 2018

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,144,090

 

$

353,579

 

$

 

$

1,497,669

 

Cost of sales, distribution and store occupancy

 

961,575

 

300,999

 

2,646

 

1,265,220

 

Operating and administrative expenses

 

159,742

 

25,660

 

24,488

 

209,890

 

Income (loss) from operations

 

$

22,773

 

$

26,920

 

$

(27,134

)

$

22,559

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

$

27,747

 

$

6,759

 

$

7,806

 

$

42,312

 

 

 

 

 

 

 

 

 

 

 

Sixteen Weeks Ended October 8, 2017

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,115,234

 

$

342,119

 

$

 

$

1,457,353

 

Cost of sales, distribution and store occupancy

 

948,476

 

292,502

 

2,512

 

1,243,490

 

Operating and administrative expenses

 

145,410

 

23,972

 

25,903

 

195,285

 

Income (loss) from operations

 

$

21,348

 

$

25,645

 

$

(28,415

)

$

18,578

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

$

38,699

 

$

5,201

 

$

4,201

 

$

48,101

 

 

 

 

Smart & Final

 

Smart
Foodservice

 

Corporate / Other

 

Consolidated

 

Forty Weeks Ended October 7, 2018

 

 

 

 

 

 

 

 

 

Net sales

 

$

2,807,739

 

$

831,651

 

$

 

$

3,639,390

 

Cost of sales, distribution and store occupancy

 

2,374,313

 

710,016

 

6,633

 

3,090,962

 

Operating and administrative expenses

 

385,179

 

62,329

 

60,384

 

507,892

 

Income (loss) from operations

 

$

48,247

 

$

59,306

 

$

(67,017

)

$

40,536

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

$

76,783

 

$

14,990

 

$

15,964

 

$

107,737

 

 

 

 

 

 

 

 

 

 

 

Forty Weeks Ended October 8, 2017

 

 

 

 

 

 

 

 

 

Net sales

 

$

2,716,337

 

$

786,320

 

$

 

$

3,502,657

 

Cost of sales, distribution and store occupancy

 

2,311,878

 

675,007

 

6,528

 

2,993,413

 

Operating and administrative expenses

 

357,112

 

57,579

 

59,330

 

474,021

 

Income (loss) from operations

 

$

47,347

 

$

53,734

 

$

(65,858

)

$

35,223

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

$

93,503

 

$

11,575

 

$

12,505

 

$

117,583

 

 

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 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 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 to EBITDA, adjusted EBITDA and adjusted net income, and net income per share to adjusted net income per share and adjusted net income per diluted share, for the sixteen-week and forty-week periods ended October 7, 2018 and October 8, 2017.

 

Smart & Final  Stores, Inc. and Subsidiaries

Reconciliation of Net Income to Non-GAAP Adjusted EBITDA

(Unaudited)

(In Thousands)

 

 

 

Sixteen Weeks
Ended October 7,
2018

 

Sixteen Weeks
Ended October 8,
2017

 

Forty Weeks
Ended October 7,
2018

 

Forty Weeks
Ended October 8,
2017

 

Net income

 

$

10,160

 

$

5,106

 

$

9,668

 

$

7,642

 

Depreciation and amortization

 

29,829

 

31,052

 

76,246

 

75,049

 

Interest expense, net

 

13,250

 

11,229

 

32,165

 

27,738

 

Income tax (benefit) provision

 

(200

)

2,605

 

305

 

419

 

EBITDA

 

53,039

 

49,992

 

118,384

 

110,848

 

 

 

 

 

 

 

 

 

 

 

Adjustments to EBITDA

 

 

 

 

 

 

 

 

 

Net loss from closed stores and exit costs (a)

 

1,026

 

1,275

 

2,551

 

2,556

 

Loss from asset dispositions (b)

 

2,083

 

830

 

3,697

 

1,458

 

Share-based compensation expense (c)

 

3,615

 

4,199

 

10,058

 

8,503

 

Non-cash rent (d)

 

1,438

 

1,917

 

4,193

 

5,043

 

Pre-opening costs (e)

 

1,158

 

1,346

 

1,572

 

3,519

 

Other items (f)

 

(100

)

3,354

 

(300

)

3,435

 

Adjusted EBITDA

 

$

62,259

 

$

62,913

 

$

140,155

 

$

135,362

 

 

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)

 

 

 

Sixteen Weeks
Ended October 7,
2018

 

Sixteen Weeks
Ended October 8,
2017

 

Forty Weeks
Ended October 7,
2018

 

Forty Weeks
Ended October 8,
2017

 

Net income

 

$

10,160

 

$

5,106

 

$

9,668

 

$

7,642

 

Income tax (benefit) provision

 

(200

)

2,605

 

305

 

419

 

Income before income taxes

 

9,960

 

7,711

 

9,973

 

8,061

 

 

 

 

 

 

 

 

 

 

 

Adjustments to net income

 

 

 

 

 

 

 

 

 

Net loss from closed stores and exit costs (a)

 

1,026

 

1,275

 

2,551

 

2,556

 

Loss from asset dispositions (b)

 

2,083

 

830

 

3,697

 

1,458

 

Share-based compensation expense (c)

 

3,615

 

4,199

 

10,058

 

8,503

 

Non-cash rent (d)

 

1,438

 

1,917

 

4,193

 

5,043

 

Pre-opening costs (e)

 

1,158

 

1,346

 

1,572

 

3,519

 

Other items (f)

 

(100

)

3,354

 

(300

)

3,435

 

Adjusted income tax provision

 

(2,327

)

(7,702

)

(6,272

)

(10,090

)

Adjusted net income

 

$

16,853

 

$

12,930

 

$

25,472

 

$

22,485

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income Per Share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share - basic

 

$

0.14

 

$

0.07

 

$

0.13

 

$

0.11

 

Per share impact of net income adjustments

 

0.09

 

0.11

 

0.22

 

0.20

 

Adjusted net income per share - basic

 

$

0.23

 

$

0.18

 

$

0.35

 

$

0.31

 

Net income per share - diluted

 

$

0.14

 

$

0.07

 

$

0.13

 

$

0.10

 

Per share impact of net income adjustments

 

0.09

 

0.10

 

0.21

 

0.20

 

Adjusted net income per share - diluted

 

$

0.23

 

$

0.17

 

$

0.34

 

$

0.30

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares - basic

 

73,117,389

 

72,446,404

 

72,713,906

 

72,437,033

 

Weighted average shares - diluted

 

74,446,660

 

74,253,374

 

74,071,704

 

75,588,182

 

 


(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 sixteen and forty weeks ended October 7, 2018 and the sixteen and forty weeks ended October 8, 2017.

 

11


Document Format Files

Seq Description Document Type Size
1 8-K a18-40121_18k.htm 8-K 28481
2 EX-99.1 a18-40121_1ex99d1.htm EX-99.1 512893
3 GRAPHIC g401211mm01i001.jpg GRAPHIC 1927
  Complete submission text file 0001104659-18-068459.txt   545457