Group 1 - The grocery chain Albertsons Companies, Inc. (NYSE: ACI) has performed surprisingly well amidst market turmoil [1] - In January, it was noted that the stock of Albertsons had risen significantly [1] Group 2 - Crude Value Insights provides an investing service focused on oil and natural gas, emphasizing cash flow and companies with growth potential [1] - The service includes a 50+ stock model account and in-depth cash flow analyses of exploration and production firms [2]

Core Insights - Albertsons Companies, Inc. reported $18.8 billion in revenue for the quarter ended February 2025, marking a year-over-year increase of 2.5% [1] - The company's EPS for the same period was $0.46, down from $0.54 a year ago, but exceeded the consensus estimate of $0.40 by 15% [1] - The reported revenue surpassed the Zacks Consensus Estimate of $18.63 billion, resulting in a surprise of 0.93% [1] Financial Performance Metrics - Same-store sales increased by 2.3%, outperforming the average estimate of 1.8% based on five analysts [4] - The number of stores at the end of the quarter was 2,270, slightly below the average estimate of 2,273 from four analysts [4] - Total retail square footage was reported at 113 million, closely aligning with the average estimate of 113.07 million from three analysts [4] - Fuel revenues reached $823.20 million, exceeding the average estimate of $776.15 million, with a year-over-year change of 0.1% [4] Stock Performance - Albertsons Companies' shares returned 7.1% over the past month, contrasting with the Zacks S&P 500 composite's decline of 8.9% [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Company Operations - As of February 22, 2025, Albertsons operates 2,270 stores across 34 states and the District of Columbia, holding a 1 or 2 market share position in 66% of the 122 metropolitan statistical areas where it operates[22]. - The company employs approximately 285,000 associates, with 62% being part-time and over 195,000 covered by collective bargaining agreements[38]. - Albertsons operates 19 food production plants, including seven milk plants and three bakery plants, optimizing make-versus-buy decisions for quality and profitability[27]. - The company operates 1,728 in-store pharmacies, exposing it to risks related to pharmaceuticals and healthcare products[78]. - The company operates 405 fuel centers, and increased fuel prices could negatively impact gross margins and demand[88]. Sales and Financial Performance - Net income for fiscal 2024 was $959 million, or $1.64 per Class A common share[166]. - Adjusted net income reached $1,382 million, or $2.34 per Class A common share[166]. - Adjusted EBITDA for fiscal 2024 was $4,005 million[166]. - Identical sales increased by 2.0% during fiscal 2024[160]. - Digital sales rose by 24% compared to fiscal 2023[160]. - Net sales and other revenue increased by $1,153.2 million, or 1.5%, to $80,390.9 million in fiscal 2024 from $79,237.7 million in fiscal 2023, driven by a 2.0% increase in identical sales and a 24% increase in digital sales[173]. - Net income was $958.6 million, or $1.64 per diluted share, in fiscal 2024, down from $1,296.0 million, or $2.23 per diluted share, in fiscal 2023[183]. - Adjusted net income for fiscal 2024 was $1,382.4 million, down 18.3% from $1,693.7 million in fiscal 2023[186]. - Adjusted EBITDA for fiscal 2024 was $4,004.7 million, a decline of 7.2% compared to $4,317.7 million in fiscal 2023[185]. Customer Engagement and Loyalty - Albertsons has 45.6 million members enrolled in its loyalty program, which significantly drives higher sales and customer retention[31]. - Loyalty members increased by 15% to 45.6 million in fiscal 2024[160]. Environmental and Sustainability Initiatives - The company recycled nearly 800 million pounds of cardboard and over 25 million pounds of plastic bags and film during fiscal 2024[36]. - The company completed over 600 energy efficiency projects in fiscal 2024 as part of its commitment to environmental stewardship[36]. - Legislative and regulatory changes related to climate change may increase operational costs and impact financial condition[85]. Digital Transformation and Technology - The company has significantly expanded its digital capabilities and loyalty programs, but must continue to adapt to changing consumer preferences[76]. - The company launched a partnership with Grubhub in fiscal 2024 to enhance its delivery services, which are available in over 2,200 stores[22]. - The company has deployed cloud-based enterprise solutions to process customer and transaction data, enabling targeted marketing strategies[31]. - The company expanded its digital business to offer online shopping options, but there is no assurance of continued success in these initiatives[71]. Financial Obligations and Debt - The company has approximately $7.5 billion of debt outstanding as of February 22, 2025, with an additional borrowing capacity of $4.0 billion under its asset-based loan facility[117]. - Total contractual obligations amount to $20,513.7 million, with long-term debt at $7,452.4 million and operating leases at $8,878.5 million[211]. - The estimated allocable share of underfunding for multiemployer plans is approximately $3.6 billion, reduced from $4.9 billion due to special financial assistance received[217]. - The company may incur substantial additional indebtedness in the future, increasing the risks associated with its current debt levels[119]. Market and Competitive Landscape - The company faces intense competition in the food and drug retail industry, which may adversely affect profitability and operating results[70]. - The company has experienced increased inflation periods over the past several years, impacting sales growth and earnings[62]. - The company’s ability to attract customers relies on various factors including price, service, and convenience, which are challenged by competitors[72]. Regulatory and Legal Risks - The company’s financial performance may be adversely affected by governmental and regulatory changes, including reductions in subsidies like SNAP[63]. - Legal and regulatory changes could materially impact the company's operations and financial performance, requiring compliance with complex regulations[105]. - The company is subject to various legal proceedings that could have a material adverse effect on its financial condition and results of operations[108]. Labor and Employment Challenges - The company has faced a competitive labor market, impacting its ability to manage costs and invest in technology[64]. - Approximately 195,000 employees are covered by collective bargaining agreements, with 120,000 agreements set to expire in fiscal 2025[95]. - Increased labor costs due to rising minimum wage regulations may adversely affect future financial results[100]. - The company faces significant risks related to labor availability, which could adversely affect customer service and financial performance if unable to attract and retain qualified associates[102]. Risk Management and Cybersecurity - Cybersecurity risks pose a threat to the company's IT systems, which are critical for business operations and financial reporting[110]. - The cybersecurity team conducts regular risk assessments and maintains a risk repository to manage cybersecurity threats[131]. - The company has not identified any cybersecurity threats that have materially affected its operations as of the report date[140].

Group 1: Market Performance - Johnson & Johnson (JNJ) and Albertsons Companies (ACI) stocks have provided a hedge against market volatility, with both stocks up 6% year to date [1] - The S&P 500 and Nasdaq are near correction territory, highlighting the defensive nature of JNJ and ACI [1] Group 2: Johnson & Johnson Q1 Results - JNJ's Q1 sales rose 2% to $21.89 billion, exceeding estimates of $21.61 billion, driven by DARZALEX, which saw a 20% growth [2] - Q1 earnings increased 2% to $2.77 per share, surpassing EPS expectations of $2.57 by 7.78% [3] - JNJ has maintained an average earnings surprise of 5.71% over the last four quarters [3] Group 3: Albertsons Q4 Results - Albertsons' Q4 sales increased 2% to $18.79 billion, surpassing estimates of $18.62 billion, with E-commerce sales spiking 24% [4] - Q4 EPS of $0.46 beat expectations of $0.40, although it fell from $0.54 in the comparative quarter [5] - Albertsons has achieved or exceeded the Zacks EPS Consensus in each of the last four quarters with an average earnings surprise of 7.21% [7] Group 4: Guidance & Outlook - JNJ raised its full-year sales guidance to $91 billion-$91.8 billion, above the Zacks Consensus of $89.99 billion, with projected sales growth of 4% in FY26 [8] - JNJ lowered its FY25 EPS guidance to a range of $10.50-$10.70, aligning with estimates of $10.51, indicating 5% growth [9] - Albertsons provided FY26 EPS guidance of $2.03-$2.16, below expectations of $2.33, but FY27 EPS is projected to rebound to $2.44 [11] - Albertsons' sales are expected to increase 3% in FY26 and another 1% in FY27 to $83.25 billion [11] Group 5: Overall Assessment - Both JNJ and ACI currently hold a Zacks Rank 3 (Hold), indicating defensive safety due to the essential nature of their businesses, though there may be better buying opportunities given their guidance [12]

Core Insights - Albertsons Companies, Inc. reported a year-over-year increase in net sales for the fourth quarter of fiscal 2024, surpassing the Zacks Consensus Estimate, while adjusted earnings per share declined but still beat expectations [1][3][14] - The company is focusing on its "Customers for Life" strategy, which aims to drive future growth and value creation through investments in core business areas, including digital platforms and media [2][13] Financial Performance - Adjusted earnings per share for the fourth quarter were 46 cents, exceeding the consensus estimate of 40 cents, but down 14.8% from 54 cents in the prior year [3] - Net sales reached $18,799.5 million, a 2.5% increase year-over-year, driven by a 2.3% rise in identical sales and an 18% increase in pharmacy sales [3] - Digital sales grew by 24%, attributed to strong first-party sales [3] Membership and Customer Engagement - Loyalty membership increased by 15% to 45.6 million in the fourth quarter compared to the same period in fiscal 2023 [4] Margins and Expenses - Gross profit was $5.1 billion, a slight increase of 0.1% year-over-year, but gross margin contracted by 60 basis points to 27.4% [5] - Selling and administrative expenses rose by 2.5% to $4.8 billion, maintaining a rate of 25.7% of net sales [7] - Adjusted EBITDA declined 6.6% year-over-year to $855.1 million, with an adjusted EBITDA margin of 4.5%, down 50 basis points [8] Financial Snapshot - As of February 22, 2025, cash and cash equivalents stood at $293.6 million, with long-term debt totaling $7.8 billion and total stockholders' equity at $3.4 billion [9] Capital Expenditures and Dividends - Capital expenditures for fiscal 2024 were $1.9 billion, reflecting store remodels and investments in digital platforms, with expectations for fiscal 2025 expenditures between $1.7 billion and $1.9 billion [10] - The company raised its quarterly dividend by 25% to 15 cents per share, with the next payment scheduled for May 9, 2025 [11] Future Outlook - For fiscal 2025, Albertsons anticipates identical sales growth of 1.5-2.5% and adjusted EBITDA between $3.8 billion and $3.9 billion [13] - Adjusted earnings per share are projected to be in the range of $2.03-$2.16, reflecting a decrease from $2.34 in fiscal 2024 [14]

Core Insights - Albertsons Companies, Inc. (NYSE: ACI) reported fiscal Q4 earnings on April 15, indicating a fair sales performance but a decline in profitability [1] Financial Performance - The grocery retailer has shown continued sales performance, but profitability has faltered due to already thin margins [1]

Core Insights - Albertsons is experiencing inflationary pressures that are driving consumers to seek value in their purchases [1][2] - The company reported a 24% increase in digital sales for the quarter and full fiscal year, with identical sales up 2.3% for the quarter and 2% for the year [1] - Membership in the company's loyalty program increased by 15% to 45.6 million [1] Sales Performance - The pharmacy segment was a significant sales driver, with quarterly revenues up 18% year over year [2] - The company is focusing on its pharmacy and health platform to enhance customer engagement and loyalty, expecting growth in prescriptions and immunizations [3] Management Insights - The incoming CEO, Susan Morris, emphasized the importance of cross-shopping between grocery and pharmacy, which contributes to higher customer lifetime value [3] - Morris noted that customers typically engage with the company in-store before utilizing multiple platforms, leading to increased lifetime value [4] Supply Chain Considerations - Albertsons sources 90% of its products domestically, which positions it differently from competitors regarding tariffs [5] - However, the company acknowledges that some ingredients are sourced from areas affected by tariffs, necessitating ongoing monitoring [5]

Core Viewpoint - Albertsons reported solid fourth-quarter results, but the forward outlook for profits was below analyst expectations, leading to an 8% drop in stock price [1][4]. Financial Performance - In the fourth quarter, Albertsons' revenue grew 2.5% to $18.8 billion, supported by a 2.3% increase in same-store sales, which met expectations [3]. - Adjusted earnings per share (EPS) fell 15% to $0.46, surpassing analyst expectations of $0.41 [3]. - The full-year 2025 EPS guidance of $2.03 to $2.16 per share was disappointing, as it was below the expected $2.28, marking the third consecutive year of adjusted earnings declines [4]. Business Strategy and Market Position - The pharmacy segment contributed significantly to revenue growth, while investments in delivery and digital programs increased by 24% last quarter [5]. - However, the pharmacy revenue is lower-margin, and the delivery growth required further investments, which pressured gross margins [5]. - Albertsons is in a challenging competitive position following the rejection of its proposed takeover by Kroger last year [7]. Management Changes - CEO Vivek Sankaran is set to retire on May 1, with COO Susan Morris taking over, which may have influenced the conservative guidance provided by management [2][6].

Financial Data and Key Metrics Changes - The company reported ID sales growth of 2.3% in Q4 2024, with adjusted EBITDA of $855 million and adjusted earnings per share of $0.46 [13][41] - Q4 gross margin was 27.4%, a decrease of 45 basis points compared to the previous year, primarily due to strong growth in lower-margin pharmacy sales and increased digital sales costs [38][41] - Adjusted EBITDA for the year was $3.8 billion to $3.9 billion, with adjusted EPS projected between $2.03 and $2.16 [47][50] Business Line Data and Key Metrics Changes - E-commerce sales grew by 24% in Q4, with penetration now over 8% of grocery revenue [15][16] - Pharmacy revenue increased by 18% year-over-year, driven by script and immunization growth [20][37] - Loyalty membership grew by over 15% year-over-year, reaching more than 45 million members [18] Market Data and Key Metrics Changes - The company operates in over 120 MSAs, with varying price positions across different markets [146] - Inflationary pressures have heightened customer demand for value, leading to strategic price investments [24][25] Company Strategy and Development Direction - The company is focused on driving customer growth through digital platforms, enhancing the customer value proposition, and modernizing capabilities through technology [14][28] - Investments in the Albertsons Media Collective are expected to grow faster than the retail media market, providing reinvestment fuel for core business [23] - The company aims to achieve a gross margin of at least 30% through increased innovation and product launches [26] Management's Comments on Operating Environment and Future Outlook - Management noted that consumer behavior has not dramatically shifted, although there is a clear trend towards value-seeking [58][82] - The company expects ID sales growth in the range of 1.5% to 2.5% for fiscal 2025, assuming inflation of 1.5% to 2% [46][47] - Management expressed confidence in the Customers for Life strategy and its ability to drive growth despite short-term margin headwinds [45][53] Other Important Information - The company contributed over $435 million in food and financial support to communities in 2024 [34] - Capital expenditures for Q4 were $485 million, primarily for store modernization and digital technology [42] Q&A Session Summary Question: Update on price gaps and competitive environment - Management indicated that there has not been a dramatic shift in consumer behavior, with a focus on value and promotions [58][60] Question: Buybacks within guidance - The company plans to repurchase approximately $1.9 billion over the next three years, equating to about $0.06 of accretion in EPS each year [62] Question: Proportion of imported goods and tariff impact - Over 90% of products are procured domestically, with some impacts from tariff-affected ingredients [66] Question: Key investment areas for 2025 - Investments will focus on digital growth, the Media Collective, and enhancing the customer value proposition [78][79] Question: Q1 performance expectations - Q1 is expected to reflect investments made, with benefits anticipated in the latter half of the year [81] Question: Pharmacy growth outlook and GLP-1 impact - GLP-1s contribute to growth, but core script volume is also increasing year-over-year [115][116] Question: Wage rate pressure in 2025 - Wage growth is expected to be higher than the previous 2% to 3% range, impacting SG&A [121]

Sales Performance - Identical sales increased by 2.3% in the fourth quarter of fiscal 2024, driven primarily by strong growth in pharmacy sales[4] - Digital sales surged by 24% during the fourth quarter of fiscal 2024, contributing to overall revenue growth[5] - Net sales for Fiscal 2024 reached $80,390.9 million, a 1.5% increase from $79,237.7 million in Fiscal 2023[29] - The company expects identical sales growth in the range of 1.5% to 2.5% for fiscal 2025[18] Financial Performance - Net income for the fourth quarter of fiscal 2024 was $172 million, or $0.29 per share, compared to $250.5 million, or $0.43 per share in the same quarter of fiscal 2023[10] - Net income for Fiscal 2024 was $958.6 million, a decrease of 26.1% compared to $1,296.0 million in Fiscal 2023[29] - Basic net income per Class A common share for Fiscal 2024 was $1.65, down from $2.25 in Fiscal 2023, reflecting a decline of 26.7%[29] - Net income for Fiscal 2024 was $171.8 million, a decrease of 31.2% from $250.5 million in Fiscal 2023[35] - Adjusted net income for Fiscal 2024 was $1,382.4 million, down 18.3% from $1,693.7 million in Fiscal 2023[35] - Adjusted EBITDA for the fourth quarter of fiscal 2024 was $855 million, down from $915.8 million in the fourth quarter of fiscal 2023[10] - Adjusted EBITDA for Fiscal 2024 was $4,004.7 million, a decline of 7.2% compared to $4,317.7 million in Fiscal 2023[35] - Adjusted EBITDA for fiscal 2025 is projected to be between $3.8 billion and $3.9 billion, including approximately $65 million related to the company's 53rd week[18] Capital Expenditures and Investments - Capital expenditures for fiscal 2024 totaled $1.93 billion, including the completion of 127 remodels and the opening of 11 new stores[11] - The company repurchased 4.1 million shares of common stock for a total of $82.5 million during the fourth quarter of fiscal 2024[13] - The board increased the quarterly cash dividend by 25% from $0.12 to $0.15 per common share[11] Assets and Liabilities - Total current assets increased to $6,559.0 million in February 2025, compared to $6,287.5 million in February 2024[31] - Total liabilities decreased slightly to $23,369.8 million in February 2025 from $23,474.3 million in February 2024[31] - Cash and cash equivalents at the end of the period were $297.9 million, up from $193.2 million at the beginning of the period[33] - Total stockholders' equity increased to $3,385.9 million in February 2025, compared to $2,747.5 million in February 2024[31] - Total debt (including finance leases) decreased to $7,820.1 million in Fiscal 2024 from $8,068.6 million in Fiscal 2023[42] - The total net debt ratio increased to 1.88 in Fiscal 2024 from 1.83 in Fiscal 2023[42] Operating Performance - Operating income for Fiscal 2024 was $1,546.1 million, down from $2,068.9 million in Fiscal 2023, representing a decline of 25.2%[29] - Gross margin for the fourth quarter was $5,149.0 million, maintaining a gross margin percentage of 27.4%, down from 28.0% in the same quarter last year[29] Other Financial Metrics - Interest expense, net for Fiscal 2024 was $459.8 million, a decrease from $492.1 million in Fiscal 2023[35] - The company incurred merger-related costs of $254.8 million in Fiscal 2024, compared to $180.6 million in Fiscal 2023[35] - Business transformation adjustments amounted to $105.2 million in Fiscal 2024, significantly higher than $45.1 million in Fiscal 2023[35] - Weighted average diluted Class A common shares outstanding increased to 584.4 million in Fiscal 2024 from 583.0 million in Fiscal 2023[37] - Adjusted net income per Class A common share for Fiscal 2024 was $2.34, down from $2.88 in Fiscal 2023[37]