10-Q 1 sptn-20220716.htm 10-Q 10-Q
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 16, 2022.

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number: 000-31127

 

img253415392_0.jpg 

SPARTANNASH COMPANY

(Exact Name of Registrant as Specified in Its Charter)

 

Michigan

 

38-0593940

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

850 76th Street, S.W.

P.O. Box 8700

Grand Rapids, Michigan

 

49518

(Address of Principal Executive Offices)

 

(Zip Code)

(616) 878-2000

(Registrant’s Telephone Number, Including Area Code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, no par value

 

SPTN

 

NASDAQ Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

 

 

Accelerated filer

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

Emerging growth company

 

 

 

 

 

 

 

 

 

 

 

 

 

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.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of August 16, 2022, the registrant had 35,747,221 outstanding shares of common stock, no par value.

 

 

 


 

FORWARD-LOOKING STATEMENTS

The matters discussed in this Quarterly Report on Form 10-Q, in the Company’s press releases, in the Company's website-accessible conference calls with analysts, and investor presentations include "forward-looking statements" about the plans, strategies, objectives, goals or expectations of SpartanNash Company and subsidiaries (“SpartanNash” or “the Company”). These forward-looking statements are identifiable by words or phrases indicating that the Company or management "expects," "anticipates," "plans," "believes," or "estimates," or that a particular occurrence or event "may," "could," "should," "will" or "will likely" result, occur or be pursued or "continue" in the future, that the "outlook", "trend", "guidance" or "target" is toward a particular result or occurrence, that a development is an "opportunity," "priority," "strategy," "focus," that the Company is "positioned" for a particular result, or similarly stated expectations.



Undue reliance should not be placed on these forward-looking statements contained in this Quarterly Report on Form 10-Q, SpartanNash’s Annual Report on Form 10-K for the fiscal year ended January 1, 2022 and other periodic reports filed with the Securities and Exchange Commission (“SEC”), which speak only as of the date made. There are many important factors that could cause actual results to differ materially. These risks and uncertainties include the Company's ability to compete in the highly competitive grocery distribution, retail grocery and military distribution industries; changes in economic or geopolitical conditions, including inflationary pressures and the Russia-Ukraine conflict; interest rate fluctuations; labor relations issues and rising labor costs; the ability of customers to fulfill their obligations to the Company; the Company's dependence on certain major customers, suppliers and vendors; disruptions to the Company's information security network; disruptions associated with the COVID-19 pandemic; the Company's ability to implement its growth strategy and transformation initiatives; instances of security threats, severe weather conditions and natural disasters; impairment charges for goodwill and other long-lived assets; the Company's ability to successfully manage leadership transitions; the Company's ability to service its debt and to comply with debt covenants; the Company's ability to manage its private brand program for U.S. military commissaries; changes in the military commissary system, including its supply chain, or in the level of governmental funding; product recalls and other product-related safety concerns; changes in government regulations; and other risks and uncertainties listed under "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's most recent Annual Report on Form 10-K and in subsequent filings with the Securities and Exchange Commission.



This section and the discussions contained in Item 1A “Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended January 1, 2022 and in Part I, Item 2 “Critical Accounting Policies” of this Quarterly Report on Form 10-Q, are intended to provide meaningful cautionary statements for purposes of the safe harbor provision of the Private Securities Litigation Reform Act of 1995. This should not be construed as a complete list of all the economic, competitive, governmental, technological and other factors that could adversely affect the Company’s expected consolidated financial position, results of operations or liquidity. Additional risks and uncertainties not currently known to SpartanNash or that SpartanNash currently believes are immaterial also may impair its business, operations, liquidity, financial condition and prospects. The Company undertakes no obligation to update or revise its forward-looking statements to reflect developments that occur, or information obtained after the date of this Quarterly Report.



 

 

2


 

TABLE OF CONTENTS

 

 

 

Page

PART I.

FINANCIAL INFORMATION

4

 

 

 

Item 1.

Financial Statements

4

 

 

 

 

Condensed Consolidated Balance Sheets

4

 

 

 

 

Condensed Consolidated Statements of Earnings

5

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income

6

 

 

 

 

Condensed Consolidated Statements of Shareholders’ Equity

7

 

 

 

 

Condensed Consolidated Statements of Cash Flows

9

 

 

 

 

Notes to Condensed Consolidated Financial Statements

10

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

30

 

 

 

Item 4.

Controls and Procedures

30

 

 

 

PART II.

OTHER INFORMATION

30

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

30

 

 

 

Item 6.

Exhibits

31

 

 

 

 

Signatures

32

 

 

3


 

PART I

FINANCIAL INFORMATION

ITEM 1. Financial Statements

SPARTANNASH COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, Unaudited)

 

July 16,

 

 

January 1,

 

 

2022

 

 

2022

 

Assets

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

$

 

21,217

 

 

$

 

10,666

 

Accounts and notes receivable, net

 

 

411,453

 

 

 

 

361,686

 

Inventories, net

 

 

591,609

 

 

 

 

522,324

 

Prepaid expenses and other current assets

 

 

72,258

 

 

 

 

62,517

 

Property and equipment held for sale

 

 

25,073

 

 

 

 

 

Total current assets

 

 

1,121,610

 

 

 

 

957,193

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

557,754

 

 

 

 

577,359

 

Goodwill

 

 

182,160

 

 

 

 

181,035

 

Intangible assets, net

 

 

108,349

 

 

 

 

110,960

 

Operating lease assets

 

 

264,583

 

 

 

 

283,040

 

Other assets, net

 

 

87,863

 

 

 

 

97,195

 

 

 

 

 

 

 

 

 

Total assets

$

 

2,322,319

 

 

$

 

2,206,782

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Accounts payable

$

 

503,711

 

 

$

 

447,451

 

Accrued payroll and benefits

 

 

88,075

 

 

 

 

86,315

 

Other accrued expenses

 

 

59,902

 

 

 

 

67,893

 

Current portion of operating lease liabilities

 

 

46,297

 

 

 

 

47,845

 

Current portion of long-term debt and finance lease liabilities

 

 

6,303

 

 

 

 

6,334

 

Total current liabilities

 

 

704,288

 

 

 

 

655,838

 

 

 

 

 

 

 

 

 

Long-term liabilities

 

 

 

 

 

 

 

Deferred income taxes

 

 

74,497

 

 

 

 

63,692

 

Operating lease liabilities

 

 

247,230

 

 

 

 

266,701

 

Other long-term liabilities

 

 

28,706

 

 

 

 

38,292

 

Long-term debt and finance lease liabilities

 

 

473,876

 

 

 

 

399,390

 

Total long-term liabilities

 

 

824,309

 

 

 

 

768,075

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 7)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

 

Common stock, voting, no par value; 100,000 shares
     authorized;
35,913 and 35,948 shares outstanding

 

 

489,957

 

 

 

 

493,783

 

Preferred stock, no par value, 10,000 shares authorized; no shares outstanding

 

 

 

 

 

 

 

Accumulated other comprehensive income (loss)

 

 

4,046

 

 

 

 

(1,455

)

Retained earnings

 

 

299,719

 

 

 

 

290,541

 

Total shareholders’ equity

 

 

793,722

 

 

 

 

782,869

 

 

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

$

 

2,322,319

 

 

$

 

2,206,782

 

See accompanying notes to condensed consolidated financial statements.

4


 

SPARTANNASH COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share amounts)

(Unaudited)

 

12 Weeks Ended

 

 

28 Weeks Ended

 

 

July 16, 2022

 

 

July 17, 2021

 

 

July 16, 2022

 

 

July 17, 2021

 

Net sales

$

 

2,273,890

 

 

$

 

2,106,560

 

 

$

 

5,037,548

 

 

$

 

4,764,359

 

Cost of sales

 

 

1,919,647

 

 

 

 

1,772,933

 

 

 

 

4,232,722

 

 

 

 

4,012,702

 

Gross profit

 

 

354,243

 

 

 

 

333,627

 

 

 

 

804,826

 

 

 

 

751,657

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

338,867

 

 

 

 

304,248

 

 

 

 

761,049

 

 

 

 

692,185

 

Acquisition and integration

 

 

436

 

 

 

 

121

 

 

 

 

675

 

 

 

 

180

 

Restructuring and asset impairment, net

 

 

2,611

 

 

 

 

3,337

 

 

 

 

2,624

 

 

 

 

3,176

 

Total operating expenses

 

 

341,914

 

 

 

 

307,706

 

 

 

 

764,348

 

 

 

 

695,541

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating earnings

 

 

12,329

 

 

 

 

25,921

 

 

 

 

40,478

 

 

 

 

56,116

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expenses and (income)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

4,528

 

 

 

 

3,267

 

 

 

 

8,713

 

 

 

 

7,856

 

Other, net

 

 

600

 

 

 

 

(10

)

 

 

 

384

 

 

 

 

(276

)

Total other expenses, net

 

 

5,128

 

 

 

 

3,257

 

 

 

 

9,097

 

 

 

 

7,580

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings before income taxes

 

 

7,201

 

 

 

 

22,664

 

 

 

 

31,381

 

 

 

 

48,536

 

Income tax expense

 

 

2,086

 

 

 

 

5,850

 

 

 

 

6,977

 

 

 

 

12,206

 

Net earnings

$

 

5,115

 

 

$

 

16,814

 

 

$

 

24,404

 

 

$

 

36,330

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net earnings per share:

$

 

0.14

 

 

$

 

0.47

 

 

$

 

0.69

 

 

$

 

1.02

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted net earnings per share:

$

 

0.14

 

 

$

 

0.47

 

 

$

 

0.67

 

 

$

 

1.01

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to condensed consolidated financial statements.

5


 

SPARTANNASH COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, Unaudited)

 

12 Weeks Ended

 

 

28 Weeks Ended

 

 

July 16, 2022

 

 

July 17, 2021

 

 

July 16, 2022

 

 

July 17, 2021

 

Net earnings

$

 

5,115

 

 

$

 

16,814

 

 

$

 

24,404

 

 

$

 

36,330

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income, before tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Postretirement liability adjustment

 

 

7,258

 

 

 

 

57

 

 

 

 

7,288

 

 

 

 

133

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense related to items of other comprehensive income

 

 

(1,780

)

 

 

 

(13

)

 

 

 

(1,787

)

 

 

 

(32

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total other comprehensive income, after tax

 

 

5,478

 

 

 

 

44

 

 

 

 

5,501

 

 

 

 

101

 

Comprehensive income

$

 

10,593

 

 

$

 

16,858

 

 

$

 

29,905

 

 

$

 

36,431

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to condensed consolidated financial statements.

6


 

SPARTANNASH COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands, Unaudited)

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

Shares

 

 

Common

 

 

Comprehensive

 

 

Retained

 

 

 

 

 

Outstanding

 

 

Stock

 

 

(Loss) Income

 

 

Earnings

 

 

Total

 

Balance at January 1, 2022

 

35,948

 

 

$

493,783

 

 

$

(1,455

)

 

$

290,541

 

 

$

782,869

 

Net earnings

 

 

 

 

 

 

 

 

 

 

19,289

 

 

 

19,289

 

Other comprehensive income

 

 

 

 

 

 

 

23

 

 

 

 

 

 

23

 

Dividends - $0.21 per share

 

 

 

 

 

 

 

 

 

 

(7,665

)

 

 

(7,665

)

Stock-based employee compensation

 

 

 

 

4,295

 

 

 

 

 

 

 

 

 

4,295

 

Stock warrant

 

 

 

 

673

 

 

 

 

 

 

 

 

 

673

 

Issuances of common stock for associate stock purchase plan

 

3

 

 

 

108

 

 

 

 

 

 

 

 

 

108

 

Issuances of restricted stock

 

369

 

 

 

 

 

 

 

 

 

 

 

 

 

Cancellations of stock-based awards

 

(180

)

 

 

(4,288

)

 

 

 

 

 

 

 

 

(4,288

)

Balance at April 23, 2022

 

36,140

 

 

$

494,571

 

 

$

(1,432

)

 

$

302,165

 

 

$

795,304

 

Net earnings

 

 

 

 

 

 

 

 

 

 

5,115

 

 

 

5,115

 

Other comprehensive income

 

 

 

 

 

 

 

5,478

 

 

 

 

 

 

5,478

 

Dividends - $0.21 per share

 

 

 

 

 

 

 

 

 

 

(7,561

)

 

 

(7,561

)

Share repurchases

 

(215

)

 

 

(6,573

)

 

 

 

 

 

 

 

 

(6,573

)

Stock-based employee compensation

 

 

 

 

1,397

 

 

 

 

 

 

 

 

 

1,397

 

Stock warrant

 

 

 

 

481

 

 

 

 

 

 

 

 

 

481

 

Issuances of common stock for associate stock purchase plan

 

4

 

 

 

104

 

 

 

 

 

 

 

 

 

104

 

Issuances of restricted stock

 

14

 

 

 

 

 

 

 

 

 

 

 

 

 

Cancellations of stock-based awards

 

(30

)

 

 

(23

)

 

 

 

 

 

 

 

 

(23

)

Balance at July 16, 2022

 

35,913

 

 

$

489,957

 

 

$

4,046

 

 

$

299,719

 

 

$

793,722

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to condensed consolidated financial statements.

 

7


 

SPARTANNASH COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY, CONTINUED

(In thousands, Unaudited)

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

Shares

 

 

Common

 

 

Comprehensive

 

 

Retained

 

 

 

 

 

Outstanding

 

 

Stock

 

 

Loss

 

 

Earnings

 

 

Total

 

Balance at January 2, 2021

 

35,851

 

 

$

491,819

 

 

$

(2,276

)

 

$

245,506