- Sales increase in all operating
segments
- Seventh consecutive quarter of
positive Save-A-Lot network ID sales
- Operating earnings of $158 million,
$23 million higher than last year's first quarter
- Adjusted EBITDA of $246 million for
Q1 fiscal 2016
SUPERVALU INC. (NYSE: SVU) today reported first quarter fiscal
2016 net sales of $5.41 billion and net earnings from continuing
operations of $63 million ($0.23 per diluted share), which included
$2 million in after-tax structural and tax planning fees. When
adjusted for this item, first quarter fiscal 2016 net earnings from
continuing operations were $65 million ($0.23 per diluted
share).
Net earnings from continuing operations for last year’s first
quarter were $48 million ($0.18 per diluted share), which included
$2 million in after-tax net charges and costs for employee
severance and debt financing activities. When adjusted for these
items, first quarter fiscal 2015 net earnings from continuing
operations were $50 million ($0.18 per diluted share). [See tables
1-3 for a reconciliation of GAAP and non-GAAP (adjusted) results
appearing in this release.]
"We delivered sales increases across all three business segments
and managed our costs very well in this first quarter," said
President and CEO Sam Duncan. "I'm pleased with our bottom line and
ability to manage to these results in spite of softer sales at
Save-A-Lot and in our Retail Food stores. We have plans in place
and operationally we remain well positioned."
First Quarter Results - Continuing Operations
First quarter net sales were $5.41 billion compared to $5.26
billion last year, an increase of $143 million or 2.7 percent.
Save-A-Lot network identical store sales were positive 0.6 percent.
Identical store sales for corporate stores within the Save-A-Lot
network were positive 2.8 percent. Retail Food segment identical
store sales were negative 0.3 percent. Total sales within the
Independent Business segment increased 1.7 percent. Fees earned
under transition services agreements (“TSAs”) in the first quarter
were $64 million compared to $58 million last year.
Gross profit for the first quarter was $810 million, or 15.0
percent of net sales. Last year’s first quarter gross profit was
$755 million, or 14.4 percent of net sales. The increase in gross
profit rate compared to last year was primarily driven by higher
base margins across all three segments.
Selling and administrative expenses in the first quarter were
$652 million and included $3 million of structural and tax planning
fees. When adjusted for this item, selling and administrative costs
were $649 million, or 12.0 percent of net sales. Selling and
administrative expenses in last year’s first quarter were $620
million and included $1 million in employee severance costs.
When adjusted for this item, last year's selling and administrative
expenses were $619 million, or 11.8 percent of net sales. The
increase in adjusted selling and administrative expenses was
primarily attributable to higher employee related costs driven by
new store growth in Save-A-Lot and Retail Food.
Net interest expense for the first quarter was $59 million. Net
interest expense for last year’s first quarter was $64 million and
included $2 million in debt refinancing costs. Excluding these
costs, last year's net interest expense was $62 million.
SUPERVALU’s income tax expense was $38 million, or 36.9 percent
of pre-tax earnings, for the first quarter, compared to $24
million, or 33.1 percent of pre-tax earnings in last year’s first
quarter. The tax rate for each of the first quarters of fiscal 2015
and 2016 reflect discrete tax benefits.
Independent Business
First quarter Independent Business net sales were $2.46 billion,
compared to $2.42 billion last year, an increase of 1.7 percent.
The increase is primarily due to increased sales to new customers
and accounts, partially offset by lost accounts.
Independent Business operating earnings in the first quarter
were $77 million, or 3.1 percent of net sales. Last year’s
Independent Business operating earnings in the first quarter were
$66 million and included $1 million of pre-tax employee
severance costs. When adjusted for this item, Independent Business
operating earnings in the first quarter of fiscal 2015 were $67
million, or 2.8 percent of net sales. The increase in Independent
Business operating earnings was driven by higher sales, higher base
margins and lower logistics costs.
Save-A-Lot
First quarter Save-A-Lot net sales were $1.41 billion, compared
to $1.36 billion last year, an increase of 3.8 percent. The sales
increase reflects the impact of new store openings and network
identical store sales of positive 0.6 percent. Identical store
sales for corporate stores within the Save-A-Lot network were
positive 2.8 percent.
Save-A-Lot operating earnings in the first quarter were $51
million, or 3.6 percent of net sales. Last year’s Save-A-Lot
operating earnings in the first quarter were $46 million, or 3.4
percent of net sales. The increase in Save-A-Lot operating earnings
as a percent of sales was primarily driven by higher base margins
and lower logistics costs, offset in part by higher occupancy and
employee related costs driven by new store growth.
Retail Food
First quarter Retail Food net sales were $1.47 billion, compared
to $1.43 billion last year, an increase of 3.0 percent. The sales
increase reflects the impact of new store openings partially offset
by negative identical store sales of 0.3 percent.
Retail Food operating earnings in the first quarter were $33
million, or 2.2 percent of net sales. Last year’s Retail Food
operating earnings were $30 million, or 2.1 percent of net sales.
The increase in Retail Food operating earnings was driven by higher
base margins, offset in part by higher shrink and employee related
costs driven by new store growth.
Corporate
First quarter fees earned under the TSAs were $64 million,
compared to $58 million last year. The increase was primarily
driven by fees earned under the Haggen TSA.
Net Corporate operating loss in the first quarter was $3 million
and included $3 million of structural and tax planning fees. When
adjusted for this item, net Corporate operating earnings were $0
million. Last year’s first quarter net Corporate operating loss was
$7 million. The improvement in net Corporate operating results was
primarily driven by higher fees earned under the TSAs.
Cash Flows - Continuing Operations
First quarter fiscal 2016 net cash flows provided by operating
activities of continuing operations were $111 million compared to
$57 million in the prior year, reflecting lower levels of
investment in working capital. First quarter net cash flows used in
investing activities of continuing operations were $70 million
compared to $32 million in the prior year, reflecting purchases of
intangible assets and increased payments for capital expenditures.
First quarter net cash flows used in financing activities of
continuing operations were $19 million compared to $18 million in
the prior year.
Conference Call
A conference call to review the first quarter results is
scheduled for 9:00 a.m. central time today. The call will be
webcast live at www.supervaluinvestors.com (click on microphone
icon). A replay of the call will be archived at www.supervaluinvestors.com. To access the website
replay go to the "Investors" link and click on "Presentations and
Webcasts."
About SUPERVALU INC.
SUPERVALU INC. is one of the largest grocery wholesalers and
retailers in the U.S. with annual sales of approximately $18
billion. SUPERVALU serves customers across the United States
through a network of 3,597 stores composed of 1,857 primary stores
serviced by the Company’s food distribution business; 1,335
Save-A-Lot stores, of which 902 are operated by licensee owners;
and 197 traditional retail grocery stores (store counts as of
June 20, 2015). Headquartered in Minnesota, SUPERVALU has
approximately 40,000 employees. For more information about
SUPERVALU visit www.supervalu.com.
CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION
FOR THE PURPOSE OF “SAFE HARBOR” PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995.
Except for the historical and factual information contained
herein, the matters set forth in this news release, particularly
those pertaining to SUPERVALU’s expectations, guidance, or future
operating results, and other statements identified by words such as
"estimates," "expects," "projects," "plans," "intends," and similar
expressions are forward-looking statements within the meaning of
the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements are subject to
risks and uncertainties that may cause actual results to differ
materially, including competition, ability to execute initiatives,
substantial indebtedness, labor relations issues, escalating costs
of providing employee benefits, relationships with Albertson’s LLC,
New Albertson’s Inc., and Haggen, intrusions to and disruption of
information technology systems, impact of economic conditions,
governmental regulation, food and drug safety issues, legal
proceedings, severe weather, natural disasters and adverse climate
changes, disruption to supply chain and distribution network,
changes in military business, adequacy of insurance, volatility in
fuel and energy costs, asset impairment charges, fluctuations in
our common stock price and other risk factors relating to our
business or industry as detailed from time to time in SUPERVALU's
reports filed with the SEC. You should not place undue reliance on
these forward-looking statements, which speak only as of the date
of this news release. Unless legally required, SUPERVALU undertakes
no obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events
or otherwise.
SUPERVALU INC. and Subsidiaries CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In
millions, except percent and per share data)
First Quarter Ended June 20, June
14, 2015 2014 (16 weeks) (16 weeks)
Net sales $ 5,407 100.0 % $ 5,264
100.0 %
Cost of sales 4,597 85.0 4,509
85.6
Gross profit 810 15.0 755 14.4
Selling
and administrative expenses(1) 652 12.1
620 11.8
Operating earnings 158 2.9 135 2.6
Interest expense, net(1) 59 1.1 64 1.2
Equity in
earnings of unconsolidated affiliates (2 ) — (1 ) —
Earnings from continuing operations before income
taxes(1) 101 1.9 72 1.4
Income tax provision 38
0.7 24 0.5
Net earnings from
continuing operations(1) 63 1.2 48 0.9
Income (loss)
from discontinued operations, net of tax 1 — (3 )
(0.1 )
Net earnings including noncontrolling interests 64
1.2 45 0.9
Less net earnings attributable to noncontrolling
interests (3 ) 0.1 (2 ) —
Net earnings
attributable to SUPERVALU INC. $ 61 1.1 % $ 43
0.8 %
Basic net earnings (loss) per share attributable to
SUPERVALU INC.: Continuing operations $ 0.23 $ 0.18
Discontinued operations $ — $ (0.01 ) Basic net earnings per share
$ 0.23 $ 0.17
Diluted net earnings (loss) per share attributable
to SUPERVALU INC.: Continuing operations
(1) $ 0.23 $
0.18 Discontinued operations $ — $ (0.01 ) Diluted net earnings per
share $ 0.23 $ 0.17
Weighted average number of shares
outstanding: Basic 262 260 Diluted 268 262
(1)
Results from continuing operations for the first
quarter ended June 20, 2015 include structural and tax planning
fees of $3 before tax ($2 after tax, or $0.00 per diluted share)
within Selling and administrative expenses. Results from
continuing operations for the first quarter ended June 14, 2014
include net charges and costs of $3 before tax ($2 after tax, or
$0.00 per diluted share), comprised of a non-cash unamortized
financing cost charge of $2 before tax ($1 after tax, or $0.00 per
diluted share) within Interest expense, net, and severance costs of
$1 before tax ($1 after tax, or $0.00 or diluted share) included
within Selling and administrative expenses.
SUPERVALU INC. and Subsidiaries CONDENSED CONSOLIDATED
SEGMENT FINANCIAL INFORMATION (Unaudited) (In
millions, except percent data) First Quarter
Ended June 20, June 14, 2015
2014 (16 weeks) (16 weeks) Net sales
Independent Business $ 2,462 $ 2,420 % of total 45.6 % 46.0 %
Save-A-Lot 1,408 1,356 % of total 26.0 % 25.7 % Retail Food 1,473
1,430 % of total 27.2 % 27.2 % Corporate 64 58 % of total 1.2 % 1.1
% Total net sales $ 5,407 $ 5,264 100.0 % 100.0 %
Operating
earnings Independent Business(1) $ 77 $ 66 % of Independent
Business sales 3.1 % 2.8 % Save-A-Lot 51 46 % of Save-A-Lot sales
3.6 % 3.4 % Retail Food 33 30 % of Retail Food sales 2.2 % 2.1 %
Corporate(2) (3 ) (7 ) Total operating earnings 158 135 % of total
net sales 2.9 % 2.6 %
Interest expense, net(3) 59 64
Equity in earnings of unconsolidated affiliates (2 ) (1 )
Earnings from continuing operations before income taxes 101
72
Income tax provision 38 24
Net earnings
from continuing operations 63 48
Income (loss) from
discontinued operations, net of tax 1 (3 )
Net
earnings including noncontrolling interests 64 45
Less net
earnings attributable to noncontrolling interests (3 ) (2 )
Net earnings attributable to SUPERVALU INC. $ 61 $ 43
LIFO charge Independent Business $ 1 $ 1
Retail Food 2 1 Total LIFO charge $ 3 $ 2
Depreciation and amortization Independent Business $
14 $ 15 Save-A-Lot 21 20 Retail Food 47 54 Corporate 1 —
Total depreciation and amortization $ 83 $ 89
(1) Independent Business operating earnings
for the first quarter ended June 14, 2014 includes severance costs
of $1. (2) Corporate operating loss for the first quarter
ended June 20, 2015 included structural and tax planning fees of
$3. (3) Interest expense, net for the first quarter ended
June 14, 2014 includes unamortized financing costs charges of $2.
SUPERVALU INC. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS (In
millions, except per share data)
June 20, February 28, 2015 2015
(Unaudited) ASSETS Current assets Cash and
cash equivalents $ 137 $ 114 Receivables, net 484 482 Inventories,
net 1,011 984 Other current assets 94 120
Total
current assets 1,726 1,700
Property, plant and
equipment, net 1,433 1,470
Goodwill 865 865
Intangible assets, net 68 48
Deferred tax assets 266
265
Other assets 133 137
Total assets $
4,491 $ 4,485
LIABILITIES AND STOCKHOLDERS’
DEFICIT Current liabilities Accounts payable $ 1,130 $
1,121 Accrued vacation, compensation and benefits 182 204 Current
maturities of long-term debt and capital lease obligations 305 35
Other current liabilities 186 173
Total current liabilities
1,803 1,533
Long-term debt 2,200 2,480
Long-term capital lease obligations 207 213
Pension and
other postretirement benefit obligations 555 602
Long-term
tax liabilities 112 119
Other long-term liabilities 175
174
Commitments and contingencies Stockholders’
deficit Common stock, $0.01 par value: 400 shares authorized;
265 and 262 shares issued, respectively 3 3 Capital in excess of
par value 2,793 2,810 Treasury stock, at cost, 2 and 2 shares,
respectively (15 ) (33 ) Accumulated other comprehensive loss (410
) (423 ) Accumulated deficit (2,942 ) (3,003 )
Total SUPERVALU
INC. stockholders’ deficit (571 ) (646 ) Noncontrolling
interests 10 10
Total stockholders’ deficit
(561 ) (636 )
Total liabilities and stockholders’ deficit $
4,491 $ 4,485
SUPERVALU INC. and
Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (Unaudited) (In millions)
First Quarter Ended June 20, June
14, 2015 2014 (16 weeks) (16 weeks)
Cash flows from operating activities Net earnings including
noncontrolling interests $ 64 $ 45 Income (loss) from discontinued
operations, net of tax 1 (3 ) Net earnings from continuing
operations 63 48 Adjustments to reconcile Net earnings from
continuing operations to Net cash provided by operating activities
– continuing operations: Asset impairment and other charges — 2 Net
gain on sale of assets and exits of surplus leases — (7 )
Depreciation and amortization 83 89 LIFO charge 3 2 Deferred income
taxes (14 ) 6 Stock-based compensation 7 7 Net pension and other
postretirement benefits cost 11 9 Contributions to pension and
other postretirement benefit plans (37 ) (45 ) Other adjustments 9
6 Changes in operating assets and liabilities, net of effects from
business acquisitions (14 ) (60 )
Net cash provided by operating
activities – continuing operations 111 57
Net cash provided
by operating activities – discontinued operations 1 —
Net cash provided by operating activities 112
57
Cash flows from investing activities Proceeds from
sale of assets 1 4 Purchases of property, plant and equipment (49 )
(37 ) Payments for business acquisitions (1 ) (5 ) Other (21 ) 6
Net cash used in investing activities (70 ) (32 )
Cash flows from financing activities Proceeds from sale of
common stock 2 2 Payments of debt and capital lease obligations (17
) (13 ) Distributions to noncontrolling interests (3 ) (4 )
Payments of debt financing costs (1 ) (3 )
Net cash used in financing
activities
(19 ) (18 ) Net increase in cash and cash equivalents 23 7
Cash
and cash equivalents at beginning of period 114 83
Cash and cash equivalents at the end of period $ 137
$ 90
SUPPLEMENTAL CASH FLOW INFORMATION The
Company’s non-cash activities were as follows: Purchases of
property, plant and equipment included in Accounts payable $ 17 $
16 Capital lease asset additions $ — $ — Interest and income taxes
paid: Interest paid, net of amounts capitalized $ 62 $ 58 Income
taxes paid (refunded), net $ 4 $ (3 )
SUPERVALU INC. and
SubsidiariesSUPPLEMENTAL FINANCIAL
INFORMATION(Unaudited)
SUPERVALU INC.'s consolidated financial statements are
prepared and presented in accordance with generally accepted
accounting principles ("GAAP"). The measures and items identified
below are provided as a supplement to our consolidated financial
statements and should not be considered an alternative to any GAAP
measure of performance or liquidity. The presentation of these
financial measures and items is not intended to be a substitute for
or be superior to any financial information prepared and presented
in accordance with GAAP. Investors are cautioned that there are
material limitations associated with the use of non-GAAP financial
measures as an analytical tool. Certain adjustments to our GAAP
financial measures reflected below exclude certain items that are
occasionally recurring in nature and may be reflected in our
financial results for the foreseeable future. These measurements
and items may be different from non-GAAP financial measures used by
other companies. All measurements are provided as a reconciliation
from a GAAP measurement. Management believes the measurements and
items identified below are important measures of business
performance that provide investors with useful supplemental
information. SUPERVALU utilizes certain non-GAAP measures
to analyze underlying core business trends to understand operating
performance. In addition, management utilizes certain non-GAAP
measures as a compensation performance measure. The items below
should be reviewed in conjunction with SUPERVALU
INC.'s financial results reported in accordance with GAAP, as
reported in SUPERVALU's Quarterly Reports on Form 10-Q
and the Annual Report on Form 10-K for the fiscal year
ended February 28, 2015.
RECONCILIATIONS OF EARNINGS FROM CONTINUING
OPERATIONS TO EARNINGS FROM CONTINUING OPERATIONS AFTER
ADJUSTMENTS
Table 1 First
Quarter Ended June 20, 2015
Diluted
Earnings
Earnings After
Earnings Per
(In millions, except per share data)
Before Tax
Tax
Share
Continuing operations $ 101 $ 63 $ 0.23 Adjustments: Structural and
tax planning fees 3 2 — Continuing operations after
adjustments $ 104 $ 65 $ 0.23
Table 2 First Quarter Ended June 14,
2014
Diluted
Earnings
Earnings After
Earnings Per
(In millions, except per share data)
Before Tax
Tax
Share
Continuing operations $ 72 $ 48 $ 0.18 Adjustments: Severance costs
1 1 — Unamortized financing cost charges 2 1 —
Continuing operations after adjustments $ 75 $ 50 $
0.18
RECONCILIATION OF OPERATING EARNINGS FROM
CONDENSED CONSOLIDATED SEGMENT FINANCIAL INFORMATION AS REPORTED TO
SUPPLEMENTALLY PROVIDED ADJUSTED EBITDA AND PRO FORMA ADJUSTED
EBITDA
TABLE 3 First Quarter Ended June
20, June 14, 2015 2014
(In millions) (16 weeks) (16 weeks)
Independent Business operating earnings, as reported $ 77 $ 66
Adjustments: Severance costs — 1 Independent Business
operating earnings, as adjusted 77 67 Independent Business
depreciation and amortization 14 15 LIFO charge 1 1
Independent Business adjusted EBITDA(1) $ 92 $ 83
Save-A-Lot operating earnings, as reported $ 51 $ 46
Save-A-Lot depreciation and amortization 21 20
Save-A-Lot adjusted EBITDA(1) $ 72 $ 66 Retail
Food operating earnings, as reported $ 33 $ 30 Retail Food
depreciation and amortization 47 54 LIFO charge 2 1 Equity in
earnings of unconsolidated affiliates 2 1 Net earnings attributable
to noncontrolling interests (3 ) (2 ) Retail Food adjusted
EBITDA(1) $ 81 $ 84 Corporate operating loss,
as reported $ (3 ) $ (7 ) Adjustments: Structural and tax planning
fees 3 — Corporate operating earnings, as adjusted —
(7 ) Corporate depreciation and amortization 1 —
Corporate adjusted EBITDA(1) 1 (7 ) Total adjusted EBITDA(1)
$ 246 $ 226
(1)
The Company's measure of adjusted EBITDA
includes SUPERVALU INC.'s segment operating earnings (loss), as
reported, plus depreciation and amortization, LIFO charge (credit),
equity earnings of unconsolidated affiliates and any unusual items,
and less net earnings attributable to noncontrolling interests.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150728005587/en/
SUPERVALU INC.Investor
ContactSteve Bloomquist, 952-828-4144steve.j.bloomquist@supervalu.comorMedia ContactJeff Swanson,
952-903-1645jeffrey.s.swanson@supervalu.com
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