SpartanNash Co [SPTN] Filings

 

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 October 7, 2023.

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

 

 

 

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 November 7, 2023, the registrant had 34,623,737 outstanding shares of common stock, no par value.

 

 

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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" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”), about the plans, strategies, objectives, goals or expectations of SpartanNash Company and subsidiaries (“SpartanNash” or “the Company”). These forward-looking statements may be identifiable by words or phrases indicating that the Company or management "expects," "projects," "anticipates," "plans," "believes," "intends," 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 the 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 December 31, 2022 and other periodic reports filed with the Securities and Exchange Commission (“SEC”), which speak only as of the date made. Forward-looking statements are necessarily based on estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies may affect actual results and could cause actual results to differ materially. These risks and uncertainties include the Company's ability to compete in an extremely competitive industry; the Company's dependence on certain major customers; the Company's ability to implement its growth strategy and transformation initiatives; changes in relationships with the Company’s vendor base and supply chain disruptions; vulnerability to decreases in the supply and increases in the price of raw materials and labor, manufacturing, distribution and other costs; macroeconomic uncertainty, including rising inflation, potential economic recession, and increasing interest rates; difficulty attracting and retaining well-qualified Associates and effectively managing increased labor costs; customers to whom the Company extends credit or for whom the Company guarantees loans or lease obligations may fail to repay the Company; not achieving the Company’s strategy of growth through acquisitions and encountering difficulties successfully integrating acquired businesses that may not realize the anticipated benefits; the Company's ability to manage its private brand program for U.S. military commissaries, including the termination of the program or not achieving the desired results; disruptions to the Company's information security network, including security breaches and cyber-attacks; changes in the geopolitical conditions; instances of security threats, severe weather conditions and natural disasters; climate change and an increased focus by stakeholders on environmental sustainability and corporate responsibility; impacts to the Company’s business and reputation due to an increasing focus on environmental, social and governance matters; disruptions associated with disease outbreaks, such as the COVID-19 pandemic; impairment charges for goodwill or other long-lived assets; the Company's ability to successfully manage leadership transitions; interest rate fluctuations; the Company's ability to service its debt and to comply with debt covenants; the Company’s level of indebtedness; changes in government regulations; 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; labor relations issues; cost increases related to multi-employer pension plans and other postretirement plans; 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 December 31, 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. In addition, historical information should not be considered as an indicator of future performance.

 

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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 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 6.	Exhibits	32
	Signatures	33

 

 

3

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PART I

FINANCIAL INFORMATION

ITEM 1. Financial Statements

SPARTANNASH COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, Unaudited)

	October 7,					December 31,
	2023					2022
Assets
Current assets
Cash and cash equivalents	$		17,554			$		29,086
Accounts and notes receivable, net			427,275					404,016
Inventories, net			579,631					571,065
Prepaid expenses and other current assets			63,594					62,244
Total current assets			1,088,054					1,066,411
Property and equipment, net			616,320					610,220
Goodwill			182,160					182,160
Intangible assets, net			102,661					106,341
Operating lease assets			251,426					257,047
Other assets, net			93,155					84,382
Total assets	$		2,333,776			$		2,306,561
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable	$		505,786			$		487,215
Accrued payroll and benefits			71,531					103,048
Other accrued expenses			53,267					62,465
Current portion of operating lease liabilities			43,372					45,453
Current portion of long-term debt and finance lease liabilities			8,410					6,789
Total current liabilities			682,366					704,970
Long-term liabilities
Deferred income taxes			78,318					66,293
Operating lease liabilities			231,809					239,062
Other long-term liabilities			28,212					33,376
Long-term debt and finance lease liabilities			535,804					496,792
Total long-term liabilities			874,143					835,523
Commitments and contingencies (Note 8)
Shareholders’ equity
Common stock, voting, no par value; 100,000 shares      authorized; 34,629 and 35,079 shares outstanding			457,830					468,061
Preferred stock, no par value, 10,000 shares authorized; no shares outstanding			—					—
Accumulated other comprehensive income			5,155					2,979
Retained earnings			314,282					295,028
Total shareholders’ equity			777,267					766,068
Total liabilities and shareholders’ equity	$		2,333,776			$		2,306,561

See accompanying notes to condensed consolidated financial statements.

4

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SPARTANNASH COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share amounts)

(Unaudited)

	12 Weeks Ended										40 Weeks Ended
	October 7, 2023					October 8, 2022					October 7, 2023					October 8, 2022
Net sales	$		2,264,248			$		2,296,512			$		7,484,036			$		7,334,060
Cost of sales			1,916,709					1,945,302					6,337,449					6,178,024
Gross profit			347,539					351,210					1,146,587					1,156,036
Operating expenses
Selling, general and administrative			322,796					333,373					1,059,787					1,094,422
Acquisition and integration, net			2,130					(577	)				2,259					98
Restructuring and asset impairment, net			(458	)				(886	)				1,371					1,738
Total operating expenses			324,468					331,910					1,063,417					1,096,258
Operating earnings			23,071					19,300					83,170					59,778
Other expenses and (income)
Interest expense, net			9,280					6,051					30,218					14,764
Other, net			(786	)				(768	)				(2,510	)				(384	)
Total other expenses, net			8,494					5,283					27,708					14,380
Earnings before income taxes			14,577					14,017					55,462					45,398
Income tax expense			3,450					4,553					13,530					11,530
Net earnings	$		11,127			$		9,464			$		41,932			$		33,868
Net earnings per basic common share	$		0.33			$		0.27			$		1.22			$		0.96
Net earnings per diluted common share	$		0.32			$		0.26			$		1.20			$		0.93
Weighted average shares outstanding:
Basic			34,020					35,160					34,262					35,444
Diluted			34,523					36,145					34,967					36,398

 

See accompanying notes to condensed consolidated financial statements.

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SPARTANNASH COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, Unaudited)

	12 Weeks Ended										40 Weeks Ended
	October 7, 2023					October 8, 2022					October 7, 2023					October 8, 2022
Net earnings	$		11,127			$		9,464			$		41,932			$		33,868
Other comprehensive income (loss), before tax
Change in interest rate swap			3,625					—					4,770					—
Postretirement liability adjustment			(720	)				(687	)				(1,957	)				6,601
Total other comprehensive income (loss), before tax			2,905					(687	)				2,813					6,601
Income tax (expense) benefit related to items of other comprehensive income (loss)			(673	)				168					(637	)				(1,619	)
Total other comprehensive income (loss), after tax			2,232					(519	)				2,176					4,982
Comprehensive income	$		13,359			$		8,945			$		44,108			$		38,850

See accompanying notes to condensed consolidated financial statements.

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SPARTANNASH COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands, Unaudited)

										Accumulated
										Other
	Shares				Common					Comprehensive					Retained
	Outstanding				Stock					Income (Loss)					Earnings					Total
Balance at December 31, 2022		35,079			$		468,061			$		2,979			$		295,028			$		766,068
Net earnings		—					—					—					11,337					11,337
Other comprehensive loss		—					—					(1,557	)				—					(1,557	)
Dividends - $0.215 per share		—					—					—					(7,679	)				(7,679	)
Share repurchases		(435	)				(10,910	)				—					—					(10,910	)
Stock-based compensation		—					5,147					—					—					5,147
Stock warrant		—					607					—					—					607
Issuances of common stock for associate stock purchase plan		17					358					—					—					358
Issuances of restricted stock		425					—					—					—					—
Cancellations of stock-based awards		(151	)				(3,917	)				—					—					(3,917	)
Balance at April 22, 2023		34,935			$		459,346			$		1,422			$		298,686			$		759,454
Net earnings		—					—					—					19,468					19,468
Other comprehensive income		—					—					1,501					—					1,501
Dividends - $0.215 per share		—					—					—					(7,524	)				(7,524	)
Share repurchases		(330	)				(7,617	)				—					—					(7,617	)
Stock-based compensation		—					2,465					—					—					2,465
Stock warrant		—					353					—					—					353
Issuances of common stock for associate stock purchase plan and other stock-based awards		18					328					—					—					328
Issuances of restricted stock		10					—					—					—					—
Cancellations of stock-based awards		(15	)				(31	)				—					—					(31	)
Balance at July 15, 2023		34,618			$		454,844			$		2,923			$		310,630			$		768,397
Net earnings		—					—					—					11,127					11,127
Other comprehensive income		—					—					2,232					—					2,232
Dividends - $0.215 per share		—					—					—					(7,475	)				(7,475	)
Stock-based compensation		—					2,348					—					—					2,348
Stock warrant		—					319					—					—					319
Issuances of common stock for associate stock purchase plan		19					348					—					—					348
Issuances of restricted stock		11					—					—					—					—
Cancellations of stock-based awards		(