Financial Data and Key Metrics - The company will provide an overview of its Q3 2024 financial results and fiscal 2024 outlook during the call [3] Business Line Data and Key Metrics - No specific data or metrics related to individual business lines were mentioned in the provided content Market Data and Key Metrics - No specific data or metrics related to individual markets were mentioned in the provided content Company Strategy and Industry Competition - The CEO will provide an update on the company's progress since the merger announcement and share early insights into strategic priorities moving forward [3] Management Commentary on Operating Environment and Future Outlook - Management may make forward-looking statements during the call, which could include commentary on the operating environment and future outlook [4] Other Important Information - The call will last approximately one hour and will include a Q&A session after management comments [2][3] Q&A Session Summary - No specific questions or answers were provided in the content for the Q&A session

Core Insights - Albertsons Companies, Inc. reported revenue of $18.77 billion for the quarter ended November 2024, reflecting a year-over-year increase of 1.2% [1] - The company's EPS was $0.71, down from $0.79 in the same quarter last year, but exceeded the consensus estimate of $0.66 by 7.58% [1][2] - The revenue fell slightly short of the Zacks Consensus Estimate of $18.8 billion, resulting in a surprise of -0.11% [1] Financial Performance Metrics - Same-store sales growth was reported at 2%, slightly below the five-analyst average estimate of 2.1% [4] - The total number of stores at the end of the quarter was 2,273, surpassing the four-analyst average estimate of 2,267 [4] - Retail square footage totaled 113.2 million, exceeding the three-analyst average estimate of 112.78 million [4] - Fuel revenue was reported at $885.20 million, which was below the three-analyst average estimate of $976.68 million, marking a year-over-year decline of 15.4% [4] Stock Performance - Albertsons Companies' shares have returned +6.5% over the past month, outperforming the Zacks S&P 500 composite, which declined by -2.8% [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [3]

Financial Performance - Net sales for the 12 weeks ended November 30, 2024, were $18.77 billion, a 1.2% increase compared to $18.56 billion in the same period last year[10] - Net income for the 12 weeks ended November 30, 2024, was $400.6 million, up 10.8% from $361.4 million in the same period last year[10] - Net income for the period ending November 30, 2024, was $400.6 million[15] - Net income for the period ending December 2, 2023, was $361.4 million[18] - Net income for the 12 weeks ended November 30, 2024 was $400.6 million, compared to $361.4 million for the same period in 2023[82] - Net income for Q3 fiscal 2024 was $400.6 million ($0.69 per Class A common share), compared to $361.4 million ($0.62 per share) in Q3 fiscal 2023[124] - For the first 40 weeks of fiscal 2024, net income was $786.8 million ($1.35 per Class A common share), compared to $1,045.5 million ($1.80 per share) in the same period of fiscal 2023[125][126] Assets and Liabilities - Total assets as of November 30, 2024, were $26.67 billion, a 1.7% increase from $26.22 billion as of February 24, 2024[8] - Cash and cash equivalents increased to $202.3 million as of November 30, 2024, up 7.2% from $188.7 million as of February 24, 2024[8] - Inventories, net, increased to $5.14 billion as of November 30, 2024, up 3.9% from $4.95 billion as of February 24, 2024[8] - Long-term debt and finance lease obligations were $7.78 billion as of November 30, 2024, slightly down from $7.78 billion as of February 24, 2024[8] - Total stockholders' equity increased to $3.37 billion as of November 30, 2024, up 22.5% from $2.75 billion as of February 24, 2024[8] - Total current assets as of November 30, 2024, were $6,665.5 million, a 6.0% increase from $6,287.5 million as of February 24, 2024[8] - Inventories, net as of November 30, 2024, were $5,137.2 million, a 3.9% increase from $4,945.2 million as of February 24, 2024[8] - Total stockholders' equity as of November 30, 2024, was $3,365.7 million, a 22.5% increase from $2,747.5 million as of February 24, 2024[8] - Total stockholders' equity increased from $2,747.5 million as of February 24, 2024, to $3,365.7 million as of November 30, 2024[15] - Total stockholders' equity increased from $1,610.7 million as of February 25, 2023, to $2,527.3 million as of December 2, 2023[18] - Restricted cash was $4.2 million as of November 30, 2024, compared to $4.5 million as of February 24, 2024[22] - Third-party receivables from pharmacy sales were $545.3 million as of November 30, 2024, compared to $376.1 million as of February 24, 2024[30] - Contract liability related to gift cards was $119.3 million as of November 30, 2024, compared to $111.4 million as of February 24, 2024[31] - Total assets measured at fair value on a recurring basis as of November 30, 2024 were $132.5 million, with $13.6 million in Level 1 and $118.9 million in Level 2[48] - The fair value of total debt as of November 30, 2024 was $7,299.6 million compared to the carrying value of $7,467.4 million[54] - Total long-term debt and finance lease obligations as of November 30, 2024 were $7,838.4 million, with $7,777.1 million in long-term portion[57] Cash Flow and Liquidity - Net cash provided by operating activities for the 40 weeks ended November 30, 2024, was $1.92 billion, an 11.1% increase from $1.73 billion in the same period last year[13] - Payments for property, equipment, and intangibles, including lease buyouts, were $1.45 billion for the 40 weeks ended November 30, 2024, a 5.8% decrease from $1.54 billion in the same period last year[13] - Net cash provided by operating activities for the 40 weeks ended November 30, 2024, was $1,922.1 million, an 11.0% increase from $1,730.8 million in the same period last year[13] - Payments for property, equipment, and intangibles, including lease buyouts, for the 40 weeks ended November 30, 2024, were $1,446.7 million, a 5.7% decrease from $1,535.0 million in the same period last year[13] - Cash and cash equivalents and restricted cash at the end of the period as of November 30, 2024, were $206.5 million, a 9.1% decrease from $227.2 million as of December 2, 2023[13] - Net cash provided by operating activities increased to $1,922.1 million for the first 40 weeks of fiscal 2024, up from $1,730.8 million in the same period of fiscal 2023[135] - Net cash used in investing activities was $1,416.5 million for the first 40 weeks of fiscal 2024, compared to $1,328.8 million in the same period of fiscal 2023[138][139] - Net cash used in financing activities decreased to $492.3 million in the first 40 weeks of fiscal 2024, down from $638.6 million in the same period of fiscal 2023[140][141] - The company estimates liquidity needs over the next 12 months to be approximately $5.0 billion, covering working capital, capital expenditures, pension obligations, and other expenses[145] - As of November 30, 2024, the company had no borrowings under its ABL Facility and total availability of $3,962.8 million (net of letter of credit usage)[146] Dividends and Share Repurchases - Cash dividends declared on common stock were $69.5 million for each quarter in 2024[15] - Cash dividends declared on common stock were $69.1 million for the period ending December 2, 2023[18] - Cash dividends paid on Class A common stock were $208.5 million ($0.36 per share) in the first 40 weeks of fiscal 2024, slightly up from $207.1 million ($0.36 per share) in the same period of fiscal 2023[142] - The company announced a 25% increase in the quarterly cash dividend from $0.12 to $0.15 per common share, effective December 11, 2024[142] - A share repurchase program of up to $2.0 billion was authorized, inclusive of existing authorizations, to be executed through various methods including open market repurchases and tender offers[143][144] Legal and Litigation - The company terminated the Merger Agreement with Kroger on December 10, 2024, following a preliminary injunction by the United States District Court for the District of Oregon[42] - The King County Superior Court for the State of Washington issued a permanent injunction on December 10, 2024, enjoining the consummation of the Merger[43] - The company filed a lawsuit against Kroger seeking damages in addition to the $600 million termination fee due to alleged breach of the Merger Agreement[45] - Kroger disputes the $600 million termination fee, claiming the company failed to comply with the Merger Agreement[46] - The company is involved in legal proceedings, including two qui tam actions alleging violations of the False Claims Act, which could result in treble damages and penalties[65] - The Company is facing litigation alleging overcharging of federal government healthcare programs by not providing usual and customary prices, with potential damages exceeding $100 million before trebling and excluding penalties[69] - The Company has recorded an estimated liability for the litigation matters related to overcharging federal government healthcare programs[69] - The Company is defending against a lawsuit challenging prescription-drug prices reported to a pharmacy benefit manager, with the case scheduled for trial on or after March 9, 2026[72] - The Company has recorded an estimated liability for the Pharmacy Benefit Manager (PBM) litigation[72] - The Company is named in approximately 83 opioid-related lawsuits, with trial dates scheduled in 2025 for cases in Dallas County (Texas), the State of Washington, and the City of Philadelphia (Pennsylvania)[73] - The Company settled 15 cases in New Mexico and Nevada, recording a liability of $21.5 million, which was paid by insurers in the fourth quarter of fiscal 2022[74] - The Company has received subpoenas and Civil Investigative Demands from the U.S. Department of Justice and state Attorneys General regarding purported violations of the federal Controlled Substances Act and the FCA[75] Operational Metrics - Digital sales increased 23% during the third quarter of fiscal 2024 compared to the same period in 2023[95] - Loyalty members increased 15% to 44.3 million in the third quarter of fiscal 2024 compared to the same period in 2023[95] - Identical sales, excluding fuel, increased 2.0% during the third quarter of fiscal 2024[95] - Adjusted EBITDA for the third quarter of fiscal 2024 was $1,065 million[100] - Adjusted net income for the third quarter of fiscal 2024 was $420 million, or $0.71 per Class A common share[100] - Capital expenditures were approximately $1,447 million during the first 40 weeks of fiscal 2024[98] - Net sales and other revenue increased 1.2% to $18,774.5 million for the third quarter of fiscal 2024, driven by a 2.0% increase in identical sales, primarily from strong pharmacy sales growth[104] - Identical sales, excluding fuel, were 2.0% for the 12 weeks ended November 30, 2024, compared to 2.9% for the same period in 2023[106] - Gross margin rate decreased to 27.9% during the third quarter of fiscal 2024, down from 28.0% in the same period of 2023, primarily due to lower-margin pharmacy sales and increased digital sales costs[109] - Selling and administrative expenses increased to 25.1% of net sales and other revenue in the third quarter of fiscal 2024, up from 24.8% in the same period of 2023, driven by merger-related costs and higher occupancy expenses[113] - Total retail square footage increased to 113.2 million at the end of the third quarter of fiscal 2024, up from 112.9 million in the same period of 2023[101] - Pharmacy sales accounted for 13.8% of net sales in the third quarter of fiscal 2024, up from 12.3% in the same period of 2023[106] - Digital sales continued to grow during the third quarter of fiscal 2024, contributing to the increase in identical sales[104] - The company operated 2,273 stores at the end of the third quarter of fiscal 2024, with 56.3% of stores being larger than 50,000 square feet[101] - Loss on property dispositions and impairment losses decreased to $10.2 million in the third quarter of fiscal 2024, down from $23.9 million in the same period of 2023[115] - Net loss on property dispositions and impairment losses for the first 40 weeks of fiscal 2024 was $59.4 million, driven by $62.7 million in asset impairments, including $39.8 million related to equipment from micro-fulfillment center closures, $19.5 million in retail store impairment losses, and $3.5 million related to technology assets, partially offset by $3.3 million in net gains from real estate sales[116] - Interest expense, net decreased to $109.0 million in Q3 fiscal 2024 from $116.3 million in Q3 fiscal 2023, primarily due to lower average outstanding borrowings, with a weighted average interest rate of 5.6% for both periods[117][119] - Other income, net for Q3 fiscal 2024 was $5.6 million, driven by unrealized gains from non-operating investments and non-service cost components of net pension and post-retirement expense, compared to $6.7 million in Q3 fiscal 2023[120] - Income tax expense for Q3 fiscal 2024 was $14.5 million with an effective tax rate of 3.5%, significantly lower than the $95.1 million and 20.8% rate in Q3 fiscal 2023, due to $81.0 million in discrete state income tax benefits from audit settlements[122] - Adjusted EBITDA for Q3 fiscal 2024 was $1,065.1 million (5.7% of net sales and other revenue), down from $1,106.5 million (6.0% of net sales) in Q3 fiscal 2023[127] - Adjusted EBITDA for the first 40 weeks of fiscal 2024 was $3,149.6 million (5.1% of net sales and other revenue), compared to $3,401.9 million (5.6% of net sales) in the same period of fiscal 2023[127] Taxes and Expenses - Income tax expense for the 12 weeks ended November 30, 2024 was $14.5 million, representing a 3.5% effective tax rate[26] - Income tax expense for the 40 weeks ended November 30, 2024 was $124.7 million, representing a 13.7% effective tax rate[28] - LIFO expense for the 12 weeks ended November 30, 2024 was $3.5 million, compared to $27.6 million for the same period in 2023[23] - LIFO expense for the 40 weeks ended November 30, 2024 was $22.9 million, compared to $87.8 million for the same period in 2023[23] - The company recorded $6.0 million in retail store impairment losses during the 12 weeks ended November 30, 2024[56] - The company contributed $42.5 million to its defined pension plans during the 12 weeks ended November 30, 2024[60] - The company anticipates contributing an additional $11.9 million to its defined benefit pension plans for the remainder of fiscal 2024[60] - Net pension and post-retirement expense for the 12 weeks ended November 30, 2024 was $1.1 million[60] - Total miscellaneous adjustments for the 12 weeks ended November 30, 2024, were $4.8 million, up from $3.4 million in the same period of fiscal 2023[133] - Total depreciation and amortization for the 12 weeks ended November 30, 2024, was $423.0 million, compared to $414.7 million in the same period of fiscal 2023[133] Other Financial Metrics - Basic net income per Class A common share for the 12 weeks ended November 30, 2024, was $0.69, up 9.5% from $0.63 in the same period last year[10] - Diluted net income per Class A common share for the 40 weeks ended November 30, 2024, was $1.35, a 25.0% decrease from $1.80 in the same period last year[10] - The company's accumulated other comprehensive income (AOCI) balance increased to $90.9 million as of November 30, 2024, from $88.0 million at the beginning of the period[79] - The company's net income per Class A common share is calculated using the two-class method, with no Convertible Preferred Stock outstanding as of June 17, 2023[80] - The company realized a gain of $10.5 million from the repurchase of its 45% ownership interest in El Rancho during the first quarter of fiscal 2023[24] - The company repaid $250.0 million and borrowed $50.0 million under the ABL Facility during the 40 weeks ended November 30, 2024[58]

Sales Performance - Net sales and other revenue increased 1.2% to $18,774.5 million in Q3 fiscal 2024, driven by a 2.0% increase in identical sales and a 23% growth in digital sales[5] - Digital sales grew 23% in Q3 fiscal 2024, with loyalty members increasing 15% to 44.3 million[7] - Net sales and other revenue for the 12 weeks ended November 30, 2024, were $18,774.5 million, a 1.2% increase compared to $18,557.3 million in the same period in 2023[31] - Identical sales include stores operating during the same period in both the current and prior fiscal year, comparing sales on a daily basis, with direct-to-consumer digital sales included and fuel sales excluded[28] Profitability and Margins - Gross margin rate decreased to 27.9% in Q3 fiscal 2024, primarily due to strong growth in pharmacy sales and increased digital sales costs[6] - Gross margin for the 12 weeks ended November 30, 2024, was $5,246.4 million, representing 27.9% of net sales, slightly down from 28.0% in the same period in 2023[31] - Adjusted EBITDA was $1,065.1 million, or 5.7% of net sales, in Q3 fiscal 2024, compared to $1,106.5 million, or 6.0% of net sales, in Q3 fiscal 2023[13] - Adjusted EBITDA for the 12 weeks ended November 30, 2024, was $1,065.1 million, compared to $1,106.5 million for the same period in 2023[37] - Rolling four quarters Adjusted EBITDA as of November 30, 2024, was $4,065.4 million, compared to $4,452.1 million as of December 2, 2023[47] Net Income and Earnings - Net income for the 12 weeks ended November 30, 2024, was $400.6 million, an 11% increase compared to $361.4 million in the same period in 2023[31] - Net income for the 12 weeks ended November 30, 2024, was $400.6 million, compared to $361.4 million for the same period in 2023[37] - Adjusted net income per Class A common share for the 12 weeks ended November 30, 2024, was $0.71, compared to $0.79 for the same period in 2023[39] Capital Expenditures and Investments - Capital expenditures totaled $1,446.7 million in the first 40 weeks of fiscal 2024, including 84 remodels and 9 new store openings[14] - Payments for property, equipment, and intangibles, including lease buyouts, for the 40 weeks ended November 30, 2024, were $1,446.7 million, a 5.8% decrease compared to $1,535.0 million in the same period in 2023[35] Dividends and Share Repurchases - The company increased its quarterly common stock dividend by 25% to $0.15 per share[7] - The company authorized a share repurchase program of up to $2.0 billion[16] Legal and Merger Activities - The company terminated the Merger Agreement with Kroger and filed a lawsuit seeking damages, including a $600 million termination fee[17][18] - Merger-related costs for the 12 weeks ended November 30, 2024, were $61.1 million, compared to $35.9 million for the same period in 2023[37] Financial Position and Debt - Total assets as of November 30, 2024, were $26,665.3 million, a 1.7% increase compared to $26,221.1 million as of February 24, 2024[33] - Inventories, net as of November 30, 2024, were $5,137.2 million, a 3.9% increase compared to $4,945.2 million as of February 24, 2024[33] - Long-term debt and finance lease obligations as of November 30, 2024, were $7,777.1 million, slightly down from $7,783.4 million as of February 24, 2024[33] - Total debt net of cash and cash equivalents as of November 30, 2024, was $7,636.1 million, compared to $8,312.1 million as of December 2, 2023[47] Operational Costs and Expenses - Business transformation costs for the 12 weeks ended November 30, 2024, were $15.0 million, compared to $12.3 million for the same period in 2023[37] - Equity-based compensation expense for the 12 weeks ended November 30, 2024, was $21.7 million, compared to $23.3 million for the same period in 2023[37] - LIFO expense for the 12 weeks ended November 30, 2024, was $3.5 million, compared to $27.6 million for the same period in 2023[37] - Depreciation and amortization for the 12 weeks ended November 30, 2024, was $423.0 million, compared to $414.7 million for the same period in 2023[37] Cash Flow - Net cash provided by operating activities for the 40 weeks ended November 30, 2024, was $1,922.1 million, an 11% increase compared to $1,730.8 million in the same period in 2023[35] Fiscal 2024 Outlook - Fiscal 2024 outlook includes identical sales growth of 1.8% to 2.0% and adjusted EBITDA in the range of $3.95 billion to $3.99 billion[21] - The company expects an effective tax rate of 15% to 16% for fiscal 2024, reflecting $81.0 million of discrete state income tax benefits recognized in Q3 fiscal 2024[20] Store Operations - Number of stores at the end of the quarter was 2,273, a slight increase from 2,271 in the previous quarter[31]

Core Insights - Albertsons (ACI) is set to report its fiscal 2024 third-quarter results, marking its first report since the failed merger with Kroger (KR) due to legal challenges [2][5]. Financial Performance - Analysts expect Albertsons to report $18.81 billion in revenue for the quarter, an increase from $18.56 billion last year [4]. - Net income is anticipated to be $318.1 million, or $0.54 per share, down from $361.4 million, or $0.62 per share in the previous year [4]. Analyst Ratings - Among the seven analysts covering Albertsons, three have "buy" ratings and four have "hold" ratings, with an average price target of $23, indicating a potential recovery of the stock, which lost approximately 15% last year [3]. Merger Developments - The merger with Kroger, valued at nearly $25 billion, was blocked by a federal judge based on concerns from the Federal Trade Commission (FTC) regarding competition in the grocery industry [5]. - Following the termination of the merger agreement, both companies have initiated legal disputes against each other, with Albertsons accusing Kroger of failing to address regulatory concerns [6]. Future Plans - Both Albertsons and Kroger have resumed stock buyback programs after pausing them during the merger approval process, with Albertsons' CEO indicating that more details on future plans will be shared during the upcoming earnings call [7].

Economic Data and Market Outlook - The upcoming week will feature significant economic data, including the nonfarm payroll report and the purchasing managers' index (PMI), which are expected to impact market sentiment [1][4] - The PMI report on Monday will provide insights into the economy, while the job openings report (JOLTS) on Tuesday may offer clues for the labor report on Friday [1][2] Company Earnings and Sector Insights - Albertsons is set to report earnings on Wednesday, with a focus on food inflation and potential declines in snack and junk food sales due to the rise of GLP-1 weight loss drugs [2] - Jefferies Financial Group's earnings will also be monitored, as the company may benefit from regulatory changes under the new Federal Trade Commission leadership [2] - Constellation Brands is facing challenges due to new advisories about alcohol as a carcinogen and concerns over import tariffs on its Mexican products, although there remains optimism about its growth [4] - Delta Airlines is expected to report positive profits, but the outlook for the drugstore business remains uncertain [4] Market Events and Observations - The market will be closed on Thursday for former President Jimmy Carter's funeral, with limited consequential news expected that day [3] - The Labor Department's nonfarm payroll report on Friday is critical, as lower wage growth and disappointing hiring could lead to a decrease in the 10-year Treasury yield [4]

Core Viewpoint - Analysts project that Albertsons Companies, Inc. (ACI) will report quarterly earnings of $0.66 per share, reflecting a year-over-year decline of 16.5%, with revenues expected to reach $18.8 billion, an increase of 1.3% from the same quarter last year [1]. Earnings Projections - The consensus EPS estimate for the quarter has been revised upward by 2.5% over the past 30 days, indicating a collective reassessment by analysts [2]. - It is crucial to consider revisions to earnings projections prior to a company's earnings release, as these revisions are a key indicator of potential investor behavior regarding the stock [3]. Key Metrics Forecast - Analysts project 'Revenues- Fuel' to reach $976.68 million, indicating a year-over-year decline of 6.7% [5]. - The consensus estimate for the 'Number of stores at end of quarter' is 2,267, slightly down from 2,271 a year ago [5]. - 'Total Square Footage - Retail Square Feet' is forecasted to be 112.78 million, compared to 112.9 million from the previous year [5]. Market Performance - Shares of Albertsons Companies have increased by 2.7% over the past month, contrasting with a decline of 2.8% in the Zacks S&P 500 composite [6]. - With a Zacks Rank 2 (Buy), ACI is anticipated to outperform the overall market in the near future [6].

Group 1: Small Caps vs Large Caps - Small-cap stocks are expected to outperform large-cap stocks in 2025 due to the impact of tariffs and a long-term technical breakout [1][2][3] Group 2: Market Corrections - A 10% pullback in the stock market is anticipated in the first half of the year, as profit-taking is common even in strong bull markets [5][6] Group 3: Mergers and Acquisitions (M&A) - The M&A environment is expected to change dramatically with the new administration, which may adopt a more lenient approach towards mergers, particularly for mid and small-cap companies [7][8][9] Group 4: Bull Market Trends - The S&P 500 Index is projected to gain more than 10%, continuing the momentum of the bull market, which typically lasts around four years [10] Group 5: IPO Market - A significant increase in the IPO market is anticipated, especially in the quantum computing and AI sectors, following a recovery in 2024 [13][14]

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