SpartanNash(US:SPTN)2023-03-01 21:12Financial Performance - Net sales increased by $712.1 million, or 8.0%, to $9.64 billion in 2022 compared to $8.93 billion in 2021, driven by both Wholesale and Retail segments [133]. - Wholesale segment net sales rose by $495.5 million, or 7.8%, to $6.85 billion, primarily due to a 10.4% increase in pricing, despite a 2.6% decrease in case volumes [134]. - Retail segment net sales increased by $216.6 million, or 8.4%, to $2.80 billion, with comparable store sales rising by 7.7% [135]. - Gross profit increased by $93.6 million, or 6.7%, to $1.50 billion, but as a percentage of net sales, it decreased from 15.7% to 15.5% due to higher LIFO expenses [136]. - Selling, general and administrative expenses rose by $118.3 million, or 9.0%, to $1.43 billion, increasing as a percentage of net sales from 14.7% to 14.8% [137]. - Operating earnings decreased by $43.7 million, or 38.9%, to $68.5 million, attributed to changes in net sales, gross profit, and operating expenses [141]. - Net earnings for 2022 were $34,518,000, a decrease of 53% from $73,751,000 in 2021, resulting in diluted earnings per share of $0.95 compared to $2.05 in the previous year [160]. Adjusted Earnings and EBITDA - Adjusted operating earnings for 2022 were $136.7 million, compared to $114.1 million in 2021, reflecting an increase of 19.8% [155]. - The Company’s adjusted EBITDA for 2022 was $136.7 million, excluding the impact of the 53rd week, compared to $133.7 million in 2020 [155]. - In 2022, the wholesale segment's adjusted operating earnings were $107.8 million, significantly up from $52.1 million in 2021, marking a 106.5% increase [156]. - The retail segment's adjusted operating earnings decreased to $28.9 million in 2022 from $62.0 million in 2021, a decline of 53.4% [156]. - Adjusted earnings from continuing operations for 2022 were $84,691,000, or $2.33 per diluted share, up from $74,901,000, or $2.08 per diluted share in 2021, reflecting a 2.5% increase [160]. - Adjusted EBITDA for 2022 was $242,879,000, an increase of 13.6% from $213,706,000 in 2021, excluding the impact of the 53rd week [165]. Tax and Interest Expenses - The effective income tax rate for 2022 was 26.4%, compared to 25.2% in 2021, influenced by state taxes and limitations on deductibility of executive compensation [145]. - The company reported an income tax expense of $12,397,000 for 2022, compared to $24,906,000 in 2021, indicating a reduction in tax liabilities [165]. - Interest expense increased by $8.9 million, or 64.5%, to $22.8 million, primarily due to rising interest rates, with total debt increasing to $503.6 million [144]. Cash Flow and Capital Expenditures - Net cash provided by operating activities decreased by $50.8 million to $110.35 million in 2022 compared to $161.16 million in 2021, primarily due to changes in working capital [187]. - Net cash used in investing activities increased by $53.0 million to $100.95 million in 2022, driven by acquisitions and increased capital expenditures [188]. - Capital expenditures for 2022 were $97.3 million, with expectations for total capital expenditures and IT capital spend to range from $130.0 million to $145.0 million in 2023 [190]. Debt and Financial Ratios - Long-term debt increased by $97.9 million to $503.6 million as of December 31, 2022, due to additional borrowings for working capital, acquisitions, and share repurchases [192]. - The Company had excess availability of $447.8 million after the 10% requirement under the Credit Agreement as of December 31, 2022 [194]. - The current ratio improved to 1.51:1 at December 31, 2022, compared to 1.46:1 at January 1, 2022 [195]. - Total net debt to total capital ratio increased to 0.38:1 at December 31, 2022, from 0.34:1 at January 1, 2022 [195]. - The company’s total debt as of December 31, 2022, was $503.6 million, up from $405.7 million on January 1, 2022, indicating a year-over-year increase of approximately 24% [198]. Operational Initiatives and Adjustments - The company secured $25 million in run-rate cost savings through its supply chain transformation initiative, with a 7% improvement in throughput rate year-over-year [126]. - The company anticipates that its merchandising transformation initiative will begin generating significant benefits in 2023 and beyond [130]. - The Company made a change in 2022 to exclude LIFO expense from adjusted operating earnings, aiming to reduce volatility from inflation fluctuations [148]. - Costs related to shareholder activism amounted to $7.3 million in 2022, impacting adjusted operating earnings [155]. - The company continues to focus on operational adjustments and restructuring, with costs associated with these initiatives totaling $805,000 in 2022 [165]. Impairments and Asset Management - Impairments of long-lived assets were $5.1 million in 2022, compared to $3.8 million in 2021 and $11.5 million in 2020 [180]. - The Company recorded impairments of other indefinite-lived intangible assets amounting to $8.6 million in 2020, with no impairments in 2021 or 2022 [179]. Dividends and Shareholder Returns - The company declared quarterly cash dividends of $0.21, $0.20, and $0.1925 per common share for each quarter of 2022, 2021, and 2020 respectively, with a total cash dividend limit of $35.0 million per year under the Credit Agreement [199]. - The company expects to continue paying dividends, but future declarations will depend on financial conditions and compliance with credit facilities [199].