Albertsons Companies, Inc. Reports Third Quarter Fiscal 2023 Results
- Identical sales increased by 2.9% and digital sales by 21%.
- Net income was $361 million, or $0.62 per share, and adjusted net income was $462 million, or $0.79 per share.
- Adjusted EBITDA was $1,107 million.
- The Merger Agreement with The Kroger Company for a total consideration of $34.10 per share.
- Gross margin rate decreased to 28.0% during the third quarter of fiscal 2023 compared to 28.2% during the third quarter of fiscal 2022.
- Net loss on property dispositions and impairment losses was $23.9 million during the third quarter of fiscal 2023 compared to $7.3 million during the third quarter of fiscal 2022.
- Interest expense, net was $116.3 million during the third quarter of fiscal 2023 compared to $84.3 million during the third quarter of fiscal 2022.
Insights
The reported financial results by Albertsons Companies, Inc. show a modest increase in identical sales and a significant growth in digital sales. The expansion of the loyalty program indicates a strengthening consumer base. However, the reduced gross margin rate, primarily impacted by pharmacy operations and increased shrink, suggests pressure on profitability. The decrease in selling and administrative expenses as a percentage of revenue reflects effective cost management, likely a positive signal to investors about the company's operational efficiency.
Interest expenses have risen due to higher average outstanding borrowings and interest rates, which could concern investors about the company's debt levels and interest rate risk exposure. The effective tax rate has improved due to federal tax credits, which has a favorable impact on net income. Adjusted EBITDA margin contraction may be interpreted as a potential warning sign of reduced operational efficiency or increased cost pressures. The merger with Kroger and the subsequent sale of select assets to C&S Wholesale Grocers, LLC, could lead to significant changes in the market dynamics and competitive landscape, influencing the company's future performance and stock valuation.
Albertsons' increase in identical sales and substantial growth in digital sales reflect a successful adaptation to changing consumer shopping behaviors, with an emphasis on online and omnichannel experiences. This trend is consistent with broader industry shifts towards digital platforms. The loyalty program's growth is indicative of effective customer engagement strategies, which can lead to increased customer retention and spending over time.
However, the margin pressures from the pharmacy sector and the impact of investments in associate wages and benefits suggest that the company is in a balancing act between growth initiatives and cost management. The merger with Kroger represents a significant consolidation in the grocery industry, potentially increasing market share and bargaining power with suppliers, but also attracting regulatory scrutiny. The decision to forego the creation of SpinCo and directly sell assets to C&S may streamline the merger process, reducing uncertainty for stakeholders.
The reported financials highlight the ongoing inflationary pressures facing the retail sector, particularly in the cost of goods sold and operating expenses. Albertsons' ability to pass on these costs to consumers without significantly affecting sales volumes is a positive indicator of demand elasticity in their market segments. The company's productivity initiatives may be seen as a proactive approach to mitigate the impact of wage inflation and other cost increases.
The merger with Kroger, once completed, could result in economies of scale that may enhance competitive pricing capabilities and operational efficiencies. However, the integration process may also bring about transitional costs and challenges. The macroeconomic factors, such as the resumption of student loan payments and reduction in government assistance, could influence consumer spending patterns, potentially affecting future sales and profitability for Albertsons and the retail industry at large.
Third Quarter of Fiscal 2023 Highlights
-
Identical sales increased
2.9% -
Digital sales increased
21% -
Loyalty members increased
17% to 38.5 million -
Net income of
$361 million $0.62 -
Adjusted net income of
$462 million $0.79 -
Adjusted EBITDA of
$1,107 million
"We delivered another solid quarter amidst a challenging economic backdrop," said Vivek Sankaran, CEO. "We want to thank all our teams for their commitment to serving our customers and communities. As we look ahead, our ambition is to create Customers for Life, in part through our focus on operational excellence in our stores, driving growth in our digital and pharmacy operations, and deepening our relationships with our customers."
Mr. Sankaran continued, "While we are benefiting from our productivity initiatives, we expect to continue to see the impacts of investments in associate wages and benefits, cycling significant prior year food inflation, customers receiving less government assistance, the resumption of student loan payments and other types of payment deferrals, inflationary cost increases and the outsized growth of our pharmacy and digital businesses as we continue to lean into increased customer engagement in our Customers for Life strategy."
Third Quarter of Fiscal 2023 Results
Net sales and other revenue was
Gross margin rate decreased to
Selling and administrative expenses decreased to
Net loss on property dispositions and impairment losses was
Interest expense, net was
Other income, net was
Income tax expense was
Net income was
Adjusted net income was
Adjusted EBITDA was
Capital Expenditures
During the first 40 weeks of fiscal 2023, capital expenditures were
Merger Agreement
On October 13, 2022, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") with The Kroger Company ("Kroger") and Kettle Merger Sub, Inc. Under the terms of the Merger Agreement, Kroger (through Kettle Merger Sub, Inc.) will acquire all of the outstanding shares of the Company's common stock for total consideration of
In connection with the Merger, on September 8, 2023, the Company and Kroger announced that the parties had entered into a definitive agreement, dated September 8, 2023, with C&S Wholesale Grocers, LLC ("C&S") for the sale of select stores, banners, distribution centers, offices and private label brands to C&S. Also on September 8, 2023, Kroger notified the Company that, in accordance with the Merger Agreement, Kroger intends to sell the SpinCo Business (as defined in the Merger Agreement) to C&S. As a result, the creation of SpinCo and spin-off previously contemplated by the Company and Kroger is no longer a requirement under the Merger Agreement and will no longer be pursued by the Company and Kroger. Details regarding the definitive agreement with C&S can be found in the Form 8-K filed on September 8, 2023 and the joint press release issued by the Company and Kroger on September 8, 2023.
About Albertsons Companies
Albertsons Companies is a leading food and drug retailer in
Forward-Looking Statements and Factors That Impact Our Operating Results and Trends
This press release includes "forward-looking statements" within the meaning of the federal securities laws. The "forward-looking statements" include our current expectations, assumptions, estimates and projections about our business, our industry and the outcome of the Merger. They include statements relating to our future operating or financial performance which the Company believes to be reasonable at this time. You can identify forward-looking statements by the use of words such as "outlook," "may," "should," "could," "estimates," "predicts," "potential," "continue," "anticipates," "believes," "plans," "expects," "future" and "intends" and similar expressions which are intended to identify forward-looking statements.
These statements are not guarantees of future performance and are subject to numerous risks and uncertainties which are beyond our control and difficult to predict and could cause actual results to differ materially from the results expressed or implied by the statements. Risks and uncertainties that could cause actual results to differ materially from such statements include:
- changes in macroeconomic conditions and uncertainty regarding the geopolitical environment;
- rates of food price inflation or deflation, as well as fuel and commodity prices;
- changes in market interest rates;
- changes in consumer behavior and spending due to the impact of macroeconomic factors, including the expiration of student loan payment deferments;
- changes in wage rates, ability to attract and retain qualified associates and negotiate acceptable contracts with labor unions;
- failure to achieve productivity initiatives, unexpected changes in our objectives and plans, inability to implement our strategies, plans, programs and initiatives, or enter into strategic transactions, investments or partnerships in the future on terms acceptable to us, or at all;
- uncertainties related to the Merger, including our ability to close the transactions contemplated by the Merger Agreement, and the impact of the costs related to the Merger;
- erosion of consumer confidence as a result of the Merger and the transactions contemplated by the Merger Agreement;
- litigation related to the transactions contemplated by the Merger Agreement;
- restrictions on our ability to operate as a result of the Merger Agreement;
- challenges in attracting, retaining and motivating our employees until the closing of the Merger;
- availability and cost of goods used in our food products;
- challenges with our supply chain;
- operational and financial effects resulting from cyber incidents, including outages in the cloud environment and the effectiveness of business continuity plans during a ransomware or other cyber incident; and
- continued reduction in administering COVID-19 vaccines and dispensing test kits.
All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements and risk factors. Forward-looking statements contained in this press release reflect our view only as of the date of this press release. We undertake no obligation, other than as required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
In evaluating our financial results and forward-looking statements, you should carefully consider the risks and uncertainties more fully described in the "Risk Factors" section or other sections in our reports filed with the Securities and Exchange Commission ("SEC") including the most recent annual report on Form 10-K and any subsequent periodic reports on Form 10-Q and current reports on Form 8-K.
Additional Information and Where to Find It
The Company has filed with the SEC a definitive information statement on Schedule 14C with respect to the approval of the Merger and has mailed the definitive information statement to the Company's stockholders. You may obtain copies of all documents filed by the Company with the SEC regarding this transaction, free of charge, at the SEC's website, www.sec.gov or from the Company's website at https://www.albertsonscompanies.com/investors/overview/.
Non-GAAP Measures and Identical Sales
Non-GAAP Measures. EBITDA, Adjusted EBITDA, Adjusted net income, Adjusted net income per Class A common share and Net debt ratio (collectively, the "Non-GAAP Measures") are performance measures that provide supplemental information the Company believes is useful to analysts and investors to evaluate its ongoing results of operations, when considered alongside other GAAP measures such as net income, operating income, gross margin, and net income per Class A common share. These Non-GAAP Measures exclude the financial impact of items management does not consider in assessing the Company's ongoing core operating performance, and thereby provide useful measures to analysts and investors of its operating performance on a period-to-period basis. Other companies may have different definitions of Non-GAAP Measures and provide for different adjustments, and comparability to the Company's results of operations may be impacted by such differences. The Company also uses Adjusted EBITDA and Net debt ratio for board of director and bank compliance reporting. The Company's presentation of Non-GAAP Measures should not be construed as an inference that its future results will be unaffected by unusual or non-recurring items.
Identical Sales. As used in this earnings release, the term "identical sales" includes stores operating during the same period in both the current fiscal year and the prior fiscal year, comparing sales on a daily basis. Direct to consumer digital sales are included in identical sales, and fuel sales are excluded from identical sales.
Albertsons Companies, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (dollars in millions, except per share data) (unaudited) |
|||||||||||||||
|
12 weeks ended |
|
40 weeks ended |
||||||||||||
|
December 2,
|
|
December 3,
|
|
December 2,
|
|
December 3,
|
||||||||
Net sales and other revenue |
$ |
18,557.3 |
|
|
$ |
18,154.9 |
|
|
$ |
60,898.2 |
|
|
$ |
59,384.6 |
|
Cost of sales |
|
13,360.0 |
|
|
|
13,033.2 |
|
|
|
43,996.7 |
|
|
|
42,713.3 |
|
Gross margin |
|
5,197.3 |
|
|
|
5,121.7 |
|
|
|
16,901.5 |
|
|
|
16,671.3 |
|
|
|
|
|
|
|
|
|
||||||||
Selling and administrative expenses |
|
4,607.3 |
|
|
|
4,532.0 |
|
|
|
15,215.7 |
|
|
|
14,883.9 |
|
Loss (gain) on property dispositions and impairment losses, net |
|
23.9 |
|
|
|
7.3 |
|
|
|
43.1 |
|
|
|
(86.1 |
) |
Operating income |
|
566.1 |
|
|
|
582.4 |
|
|
|
1,642.7 |
|
|
|
1,873.5 |
|
|
|
|
|
|
|
|
|
||||||||
Interest expense, net |
|
116.3 |
|
|
|
84.3 |
|
|
|
383.1 |
|
|
|
313.0 |
|
Other (income) expense, net |
|
(6.7 |
) |
|
|
1.7 |
|
|
|
(14.6 |
) |
|
|
(23.5 |
) |
Income before income taxes |
|
456.5 |
|
|
|
496.4 |
|
|
|
1,274.2 |
|
|
|
1,584.0 |
|
|
|
|
|
|
|
|
|
||||||||
Income tax expense |
|
95.1 |
|
|
|
120.9 |
|
|
|
228.7 |
|
|
|
381.6 |
|
Net income |
$ |
361.4 |
|
|
$ |
375.5 |
|
|
$ |
1,045.5 |
|
|
$ |
1,202.4 |
|
|
|
|
|
|
|
|
|
||||||||
Net income per Class A common share |
|
|
|
|
|
|
|
||||||||
Basic net income per Class A common share |
$ |
0.63 |
|
|
$ |
0.20 |
|
|
$ |
1.82 |
|
|
$ |
1.74 |
|
Diluted net income per Class A common share |
|
0.62 |
|
|
|
0.20 |
|
|
|
1.80 |
|
|
|
1.72 |
|
|
|
|
|
|
|
|
|
||||||||
Weighted average Class A common shares outstanding (in millions) |
|
|
|
|
|
|
|
||||||||
Basic |
|
576.2 |
|
|
|
534.6 |
|
|
|
575.2 |
|
|
|
525.4 |
|
Diluted |
|
581.1 |
|
|
|
538.6 |
|
|
|
580.5 |
|
|
|
529.8 |
|
|
|
|
|
|
|
|
|
||||||||
% of net sales and other revenue |
|
|
|
|
|
|
|
||||||||
Gross margin |
|
28.0 |
% |
|
|
28.2 |
% |
|
|
27.8 |
% |
|
|
28.1 |
% |
Selling and administrative expenses |
|
24.8 |
% |
|
|
25.0 |
% |
|
|
25.0 |
% |
|
|
25.1 |
% |
|
|
|
|
|
|
|
|
||||||||
Store data |
|
|
|
|
|
|
|
||||||||
Number of stores at end of quarter |
|
2,271 |
|
|
|
2,270 |
|
|
|
|
|
||||
Albertsons Companies, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (in millions) (unaudited) |
|||||||
|
December 2,
|
|
February 25,
|
||||
ASSETS |
|
|
|
||||
Current assets |
|
|
|
||||
Cash and cash equivalents |
$ |
222.7 |
|
|
$ |
455.8 |
|
Receivables, net |
|
828.4 |
|
|
|
687.6 |
|
Inventories, net |
|
5,175.8 |
|
|
|
4,782.0 |
|
Other current assets |
|
435.0 |
|
|
|
345.0 |
|
Total current assets |
|
6,661.9 |
|
|
|
6,270.4 |
|
|
|
|
|
||||
Property and equipment, net |
|
9,417.1 |
|
|
|
9,358.7 |
|
Operating lease right-of-use assets |
|
5,926.3 |
|
|
|
5,879.1 |
|
Intangible assets, net |
|
2,450.8 |
|
|
|
2,465.4 |
|
Goodwill |
|
1,201.0 |
|
|
|
1,201.0 |
|
Other assets |
|
839.4 |
|
|
|
993.6 |
|
TOTAL ASSETS |
$ |
26,496.5 |
|
|
$ |
26,168.2 |
|
|
|
|
|
||||
LIABILITIES |
|
|
|
||||
Current liabilities |
|
|
|
||||
Accounts payable |
$ |
4,119.2 |
|
|
$ |
4,173.1 |
|
Accrued salaries and wages |
|
1,276.5 |
|
|
|
1,317.4 |
|
Current maturities of long-term debt and finance lease obligations |
|
737.8 |
|
|
|
1,075.7 |
|
Current maturities of operating lease obligations |
|
674.1 |
|
|
|
664.8 |
|
Other current liabilities |
|
1,049.9 |
|
|
|
1,197.8 |
|
Total current liabilities |
|
7,857.5 |
|
|
|
8,428.8 |
|
|
|
|
|
||||
Long-term debt and finance lease obligations |
|
7,797.0 |
|
|
|
7,834.4 |
|
Long-term operating lease obligations |
|
5,514.1 |
|
|
|
5,386.2 |
|
Deferred income taxes |
|
794.6 |
|
|
|
854.0 |
|
Other long-term liabilities |
|
2,006.0 |
|
|
|
2,008.4 |
|
|
|
|
|
||||
Commitments and contingencies |
|
|
|
||||
Series A convertible preferred stock |
|
— |
|
|
|
45.7 |
|
|
|
|
|
||||
STOCKHOLDERS' EQUITY |
|
|
|
||||
Class A common stock |
|
5.9 |
|
|
|
5.9 |
|
Additional paid-in capital |
|
2,109.2 |
|
|
|
2,072.7 |
|
Treasury stock, at cost |
|
(304.2 |
) |
|
|
(352.2 |
) |
Accumulated other comprehensive income |
|
68.7 |
|
|
|
69.3 |
|
Retained earnings (accumulated deficit) |
|
647.7 |
|
|
|
(185.0 |
) |
Total stockholders' equity |
|
2,527.3 |
|
|
|
1,610.7 |
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ |
26,496.5 |
|
|
$ |
26,168.2 |
|
Albertsons Companies, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (in millions) (unaudited) |
|||||||
|
40 weeks ended |
||||||
|
December 2,
|
|
December 3,
|
||||
Cash flows from operating activities: |
|
|
|
||||
Net income |
$ |
1,045.5 |
|
|
$ |
1,202.4 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
||||
Loss (gain) on property dispositions and impairment losses, net |
|
43.1 |
|
|
|
(86.1 |
) |
Depreciation and amortization |
|
1,359.9 |
|
|
|
1,380.9 |
|
Operating lease right-of-use assets amortization |
|
510.7 |
|
|
|
500.7 |
|
LIFO expense |
|
87.8 |
|
|
|
181.4 |
|
Deferred income tax |
|
(116.5 |
) |
|
|
101.3 |
|
Contributions to pension and post-retirement benefit plans, net of (income) expense |
|
(17.0 |
) |
|
|
(34.9 |
) |
Gain on interest rate swaps and energy hedges, net |
|
(6.1 |
) |
|
|
(12.9 |
) |
Deferred financing costs |
|
12.0 |
|
|
|
13.0 |
|
Equity-based compensation expense |
|
80.5 |
|
|
|
96.6 |
|
Other operating activities |
|
(8.6 |
) |
|
|
1.9 |
|
Changes in operating assets and liabilities: |
|
|
|
||||
Receivables, net |
|
(139.4 |
) |
|
|
(143.8 |
) |
Inventories, net |
|
(481.6 |
) |
|
|
(735.4 |
) |
Accounts payable, accrued salaries and wages and other accrued liabilities |
|
54.1 |
|
|
|
33.6 |
|
Operating lease liabilities |
|
(424.3 |
) |
|
|
(412.0 |
) |
Self-insurance assets and liabilities |
|
31.3 |
|
|
|
49.6 |
|
Other operating assets and liabilities |
|
(300.6 |
) |
|
|
(64.3 |
) |
Net cash provided by operating activities |
|
1,730.8 |
|
|
|
2,072.0 |
|
|
|
|
|
||||
Cash flows from investing activities: |
|
|
|
||||
Payments for property, equipment and intangibles, including lease buyouts |
|
(1,535.0 |
) |
|
|
(1,566.9 |
) |
Proceeds from sale of assets |
|
201.3 |
|
|
|
99.4 |
|
Other investing activities |
|
4.9 |
|
|
|
(11.2 |
) |
Net cash used in investing activities |
|
(1,328.8 |
) |
|
|
(1,478.7 |
) |
|
|
|
|
||||
Cash flows from financing activities: |
|
|
|
||||
Proceeds from issuance of long-term debt, including ABL facility |
|
150.0 |
|
|
|
1,400.0 |
|
Payments on long-term borrowings, including ABL facility |
|
(500.7 |
) |
|
|
(200.5 |
) |
Payments of obligations under finance leases |
|
(45.4 |
) |
|
|
(46.4 |
) |
Dividends paid on common stock |
|
(207.1 |
) |
|
|
(190.9 |
) |
Dividends paid on convertible preferred stock |
|
(0.8 |
) |
|
|
(50.2 |
) |
Employee tax withholding on vesting of restricted stock units |
|
(37.1 |
) |
|
|
(42.9 |
) |
Other financing activities |
|
2.5 |
|
|
|
5.3 |
|
Net cash (used in) provided by financing activities |
|
(638.6 |
) |
|
|
874.4 |
|
|
|
|
|
||||
Net (decrease) increase in cash and cash equivalents and restricted cash |
|
(236.6 |
) |
|
|
1,467.7 |
|
Cash and cash equivalents and restricted cash at beginning of period |
|
463.8 |
|
|
|
2,952.6 |
|
Cash and cash equivalents and restricted cash at end of period |
$ |
227.2 |
|
|
$ |
4,420.3 |
|
Albertsons Companies, Inc. and Subsidiaries Reconciliation of Non-GAAP Measures (in millions, except per share data) |
|||||||||||||||
| The following tables reconcile Net income to Adjusted net income, and Net income per Class A common share to Adjusted net income per Class A common share: | |||||||||||||||
|
12 weeks ended |
|
40 weeks ended |
||||||||||||
|
December 2,
|
|
December 3,
|
|
December 2,
|
|
December 3,
|
||||||||
Numerator: |
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Net income |
$ |
361.4 |
|
|
$ |
375.5 |
|
|
$ |
1,045.5 |
|
|
$ |
1,202.4 |
|
Adjustments: |
|
|
|
|
|
|
|
||||||||
(Gain) loss on interest rate swaps and energy hedges, net (d) |
|
(0.7 |
) |
|
|
2.0 |
|
|
|
(6.1 |
) |
|
|
(12.9 |
) |
Business transformation (1)(b) |
|
12.3 |
|
|
|
17.2 |
|
|
|
37.9 |
|
|
|
64.5 |
|
Equity-based compensation expense (b) |
|
23.3 |
|
|
|
33.4 |
|
|
|
80.5 |
|
|
|
96.6 |
|
Loss (gain) on property dispositions and impairment losses, net |
|
23.9 |
|
|
|
7.3 |
|
|
|
43.1 |
|
|
|
(86.1 |
) |
LIFO expense (a) |
|
27.6 |
|
|
|
64.5 |
|
|
|
87.8 |
|
|
|
181.4 |
|
Government-mandated incremental COVID-19 pandemic related pay (2)(b) |
|
— |
|
|
|
1.0 |
|
|
|
— |
|
|
|
10.8 |
|
Merger-related costs (3)(b) |
|
35.9 |
|
|
|
14.4 |
|
|
|
124.2 |
|
|
|
23.8 |
|
Certain legal and regulatory accruals and settlements, net (b) |
|
(6.7 |
) |
|
|
— |
|
|
|
(6.7 |
) |
|
|
43.7 |
|
Amortization of debt discount and deferred financing costs (c) |
|
3.6 |
|
|
|
3.9 |
|
|
|
11.9 |
|
|
|
12.9 |
|
Amortization of intangible assets resulting from acquisitions (b) |
|
11.0 |
|
|
|
11.7 |
|
|
|
37.5 |
|
|
|
39.1 |
|
Combined Plan (4)(b) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(19.0 |
) |
Miscellaneous adjustments (5)(f) |
|
3.4 |
|
|
|
16.4 |
|
|
|
24.0 |
|
|
|
46.1 |
|
Tax impact of adjustments to Adjusted net income |
|
(32.7 |
) |
|
|
(42.2 |
) |
|
|
(103.9 |
) |
|
|
(97.9 |
) |
Adjusted net income |
$ |
462.3 |
|
|
$ |
505.1 |
|
|
$ |
1,375.7 |
|
|
$ |
1,505.4 |
|
|
|
|
|
|
|
|
|
||||||||
Denominator: |
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Weighted average Class A common shares outstanding - diluted |
|
581.1 |
|
|
|
538.6 |
|
|
|
580.5 |
|
|
|
529.8 |
|
Adjustments: |
|
|
|
|
|
|
|
||||||||
Convertible preferred stock (6) |
|
— |
|
|
|
37.6 |
|
|
|
0.4 |
|
|
|
45.2 |
|
Restricted stock units and awards (7) |
|
6.9 |
|
|
|
6.6 |
|
|
|
6.4 |
|
|
|
6.1 |
|
Adjusted weighted average Class A common shares outstanding - diluted |
|
588.0 |
|
|
|
582.8 |
|
|
|
587.3 |
|
|
|
581.1 |
|
|
|
|
|
|
|
|
|
||||||||
Adjusted net income per Class A common share - diluted |
$ |
0.79 |
|
|
$ |
0.87 |
|
|
$ |
2.34 |
|
|
$ |
2.59 |
|
Albertsons Companies, Inc. and Subsidiaries Reconciliation of Non-GAAP Measures (in millions, except per share data) |
|||||||||||||||
|
12 weeks ended |
|
40 weeks ended |
||||||||||||
|
December 2,
|
|
December 3,
|
|
December 2,
|
|
December 3,
|
||||||||
Net income per Class A common share - diluted |
$ |
0.62 |
|
|
$ |
0.20 |
|
|
$ |
1.80 |
|
|
$ |
1.72 |
|
Convertible preferred stock (6) |
|
— |
|
|
|
0.45 |
|
|
|
— |
|
|
|
0.37 |
|
Non-GAAP adjustments (8) |
|
0.18 |
|
|
|
0.23 |
|
|
|
0.57 |
|
|
|
0.53 |
|
Restricted stock units and awards (7) |
|
(0.01 |
) |
|
|
(0.01 |
) |
|
|
(0.03 |
) |
|
|
(0.03 |
) |
Adjusted net income per Class A common share - diluted |
$ |
0.79 |
|
|
$ |
0.87 |
|
|
$ |
2.34 |
|
|
$ |
2.59 |
|
The following table is a reconciliation of Adjusted net income to Adjusted EBITDA: |
|||||||||||||||
|
12 weeks ended |
|
40 weeks ended |
||||||||||||
|
December 2,
|
|
December 3,
|
|
December 2,
|
|
December 3,
|
||||||||
Adjusted net income (9) |
$ |
462.3 |
|
|
$ |
505.1 |
|
|
$ |
1,375.7 |
|
|
$ |
1,505.4 |
|
Tax impact of adjustments to Adjusted net income |
|
32.7 |
|
|
|
42.2 |
|
|
|
103.9 |
|
|
|
97.9 |
|
Income tax expense |
|
95.1 |
|
|
|
120.9 |
|
|
|
228.7 |
|
|
|
381.6 |
|
Amortization of debt discount and deferred financing costs (c) |
|
(3.6 |
) |
|
|
(3.9 |
) |
|
|
(11.9 |
) |
|
|
(12.9 |
) |
Interest expense, net |
|
116.3 |
|
|
|
84.3 |
|
|
|
383.1 |
|
|
|
313.0 |
|
Amortization of intangible assets resulting from acquisitions (b) |
|
(11.0 |
) |
|
|
(11.7 |
) |
|
|
(37.5 |
) |
|
|
(39.1 |
) |
Depreciation and amortization (e) |
|
414.7 |
|
|
|
421.1 |
|
|
|
1,359.9 |
|
|
|
1,380.9 |
|
Adjusted EBITDA |
$ |
1,106.5 |
|
|
$ |
1,158.0 |
|
|
$ |
3,401.9 |
|
|
$ |
3,626.8 |
|
(1) |
Includes costs associated with third-party consulting fees related to our operational priorities and associated business transformation. |
|
(2) |
Represents incremental COVID-19 related pay legislatively required in certain municipalities in which we operate. |
|
(3) |
Primarily relates to third-party legal and advisor fees and retention program expense related to the proposed Merger and costs in connection with our previously-announced Board-led review of potential strategic alternatives. |
|
(4) |
Includes the |
|
(5) |
Primarily includes net realized and unrealized gains and losses related to non-operating investments, lease adjustments related to non-cash rent expense and costs incurred on leased surplus properties, adjustments for unconsolidated equity investments and other costs not considered in our core performance. |
|
(6) |
Represents the conversion of convertible preferred stock to the fully outstanding as-converted Class A common shares as of the end of each respective period, for periods in which the convertible preferred stock is antidilutive under GAAP. |
|
(7) |
Represents incremental unvested restricted stock units ("RSUs") and unvested restricted stock awards ("RSAs") to adjust the diluted weighted average Class A common shares outstanding during each respective period to the fully outstanding RSUs and RSAs as of the end of each respective period. |
|
(8) |
Reflects the per share impact of Non-GAAP adjustments for each period. See the reconciliation of Net income to Adjusted net income above for further details. |
|
(9) |
See the reconciliation of Net income to Adjusted net income above for further details. |
|
|
||
Non-GAAP adjustment classifications within the Condensed Consolidated Statements of Operations: |
||
(a) |
Cost of sales |
|
(b) |
Selling and administrative expenses |
|
(c) |
Interest expense, net |
|
(d) |
(Gain) loss on interest rate swaps and energy hedges, net: | |
|
12 weeks ended |
|
40 weeks ended |
||||||||||||
|
December 2,
|
|
December 3,
|
|
December 2,
|
|
December 3,
|
||||||||
Cost of sales |
$ |
(0.5 |
) |
|
$ |
2.8 |
|
|
$ |
(4.3 |
) |
|
$ |
(2.7 |
) |
Selling and administrative expenses |
|
(0.2 |
) |
|
|
0.5 |
|
|
|
(1.8 |
) |
|
|
(1.6 |
) |
Other (income) expense, net |
|
— |
|
|
|
(1.3 |
) |
|
|
— |
|
|
|
(8.6 |
) |
Total (Gain) loss on interest rate swaps and energy hedges, net |
$ |
(0.7 |
) |
|
$ |
2.0 |
|
|
$ |
(6.1 |
) |
|
$ |
(12.9 |
) |
(e) |
Depreciation and amortization: |
|
12 weeks ended |
|
40 weeks ended |
||||||||||||
|
December 2,
|
|
December 3,
|
|
December 2,
|
|
December 3,
|
||||||||
Cost of sales |
$ |
40.9 |
|
$ |
39.5 |
|
$ |
125.9 |
|
$ |
129.2 |
||||
Selling and administrative expenses |
|
373.8 |
|
|
381.6 |
|
|
1,234.0 |
|
|
1,251.7 |
||||
Total Depreciation and amortization |
$ |
414.7 |
|
$ |
421.1 |
|
$ |
1,359.9 |
|
$ |
1,380.9 |
||||
(f) |
Miscellaneous adjustments: |
|
12 weeks ended |
|
40 weeks ended |
||||||||||||
|
December 2,
|
|
December 3,
|
|
December 2,
|
|
December 3,
|
||||||||
Selling and administrative expenses |
$ |
7.3 |
|
|
$ |
6.5 |
|
$ |
29.2 |
|
|
$ |
20.9 |
||
Other (income) expense, net |
|
(3.9 |
) |
|
|
9.9 |
|
|
(5.2 |
) |
|
|
25.2 |
||
Total Miscellaneous adjustments |
$ |
3.4 |
|
|
$ |
16.4 |
|
$ |
24.0 |
|
|
$ |
46.1 |
||
Albertsons Companies, Inc. and Subsidiaries Reconciliation of Non-GAAP Measures (in millions) |
||||||
| The following table is a reconciliation of Net Debt Ratio on a rolling four quarter basis: | ||||||
|
December 2,
|
|
December 3,
|
|||
Total debt (including finance leases) |
$ |
8,534.8 |
|
$ |
9,117.3 |
|
|
|
|
|
|||
Cash and cash equivalents |
|
222.7 |
|
|
4,412.3 |
|
Special dividend payable |
|
— |
|
|
(3,921.3 |
) |
Cash and cash equivalents, net of Special dividend payable |
|
222.7 |
|
|
491.0 |
|
|
|
|
|
|||
Total debt net of cash and cash equivalents |
|
8,312.1 |
|
|
8,626.3 |
|
|
|
|
|
|||
Rolling four quarters Adjusted EBITDA |
$ |
4,452.1 |
|
$ |
4,700.5 |
|
|
|
|
|
|||
Total Net Debt Ratio |
|
1.87 |
|
|
1.84 |
|
The following table is a reconciliation of Net income to Adjusted EBITDA on a rolling four quarter basis: |
|||||||
|
Rolling four quarters ended |
||||||
|
December 2,
|
|
December 3,
|
||||
Net income |
$ |
1,356.6 |
|
|
$ |
1,657.5 |
|
Depreciation and amortization |
|
1,786.1 |
|
|
|
1,789.0 |
|
Interest expense, net |
|
474.7 |
|
|
|
421.0 |
|
Income tax expense |
|
269.1 |
|
|
|
530.3 |
|
EBITDA |
|
3,886.5 |
|
|
|
4,397.8 |
|
|
|
|
|
||||
Gain on interest rate swaps and energy hedges, net |
|
(1.6 |
) |
|
|
(26.9 |
) |
Business transformation (1) |
|
51.7 |
|
|
|
75.3 |
|
Equity-based compensation expense |
|
122.2 |
|
|
|
122.4 |
|
Gain on property dispositions and impairment losses, net |
|
(18.3 |
) |
|
|
(87.8 |
) |
LIFO expense |
|
174.4 |
|
|
|
238.0 |
|
Government-mandated incremental COVID-19 pandemic related pay (2) |
|
— |
|
|
|
15.7 |
|
Merger-related costs (3) |
|
156.9 |
|
|
|
23.8 |
|
Certain legal and regulatory accruals and settlements, net |
|
50.3 |
|
|
|
40.6 |
|
Combined Plan (4) |
|
— |
|
|
|
(125.3 |
) |
Miscellaneous adjustments (5) |
|
30.0 |
|
|
|
26.9 |
|
Adjusted EBITDA |
$ |
4,452.1 |
|
|
$ |
4,700.5 |
|
(1) |
Includes costs associated with third-party consulting fees related to our operational priorities and associated business transformation. |
|
(2) |
Represents incremental COVID-19 related pay legislatively required in certain municipalities in which we operate. |
|
(3) |
Primarily relates to third-party legal and advisor fees and retention program expense related to the proposed Merger and costs in connection with our previously-announced Board-led review of potential strategic alternatives. |
|
(4) |
Includes gains related to the withdrawal from the Combined Plan. |
|
(5) |
Primarily includes net realized and unrealized gains and losses related to non-operating investments, lease adjustments related to non-cash rent expense and costs incurred on leased surplus properties, pension settlement gain, adjustments for unconsolidated equity investments, certain contract terminations and other costs not considered in our core performance. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240109096192/en/
For Investor Relations, contact investor-relations@albertsons.com
For Media Relations, contact media@albertsons.com
Source: Albertsons Companies, Inc.
FAQ
What were Albertsons Companies, Inc.'s Q3 fiscal 2023 results?
What is the Merger Agreement mentioned in the PR?
What were the capital expenditures during the first 40 weeks of fiscal 2023?
What was the impact on the gross margin rate during the third quarter of fiscal 2023?
