Albertsons Companies(ACI) - 2025 Q3 - Quarterly Report

Financial Performance - Net sales for the 12 weeks ended November 30, 2024, were $18.77 billion, a 1.2$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$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$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$188.7 million as of February 24, 2024[8] - Inventories, net, increased to $5.14 billion as of November 30, 2024, up 3.9$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$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$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$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$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$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$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$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$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$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$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$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$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$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$250.0 million and borrowed $50.0 million under the ABL Facility during the 40 weeks ended November 30, 2024[58]