SpartanNash(SPTN) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Consolidated net sales decreased by 0.6% to $2.25 billion compared to$2.26 billion in Q3 2023 [15] - Adjusted EBITDA was $60.5 million, with an adjusted EBITDA margin of 2.7$200,000 to $10.9 million, while EPS remained flat at$0.32 per diluted share [17] Business Line Data and Key Metrics Changes - Wholesale segment net sales decreased by 1.6% to $1.58 billion, primarily due to reduced case volumes [18] - Retail segment sales grew by 1.9$675 million, driven by contributions from recently acquired Metcalfe's [20] - Comparable store sales in the Retail segment were down 0.7%, but same-store sales improved sequentially [11] Market Data and Key Metrics Changes - The grocery markets where the company operates grew only 40 basis points compared to Q3 2023, while total U.S. grocery was up about 1.1% [8] - The military channel within the Wholesale segment has seen sales growth for 11 consecutive quarters [10] Company Strategy and Development Direction - The company is focused on a "people first" culture and has improved its total retention rate by nearly 20% since launching its strategic plan [5] - Recent acquisitions, including Fresh Encounter and Markham Enterprises, are expected to enhance the company's retail footprint and fuel distribution capabilities [6][7] - The company plans to continue evaluating M&A opportunities to maximize shareholder value [7] Management's Comments on Operating Environment and Future Outlook - Management expects macroeconomic headwinds to persist into 2025, impacting previously communicated targets [9] - The company is taking a practical approach to mitigate these pressures while driving results and growing shareholder value [9] - For fiscal 2025, the company anticipates low single-digit top-line growth and mid-single-digit adjusted EBITDA growth [25] Other Important Information - The company has generated $123.3 million in cash from operating activities year-to-date, an increase of over 28$9.5 billion and $9.7 billion [22] Q&A Session Summary Question: Strategic importance of the Markham acquisition in fuel distribution - Management highlighted the stability and good margins of fuel distribution, indicating plans for further expansion in this area [32][34] Question: Performance of private label products - The company reported stable performance in private label penetration, maintaining strong levels and seeing progress in premium offerings [35] Question: Timing and rationale behind recent acquisitions - Management indicated that the timing was right for both acquisitions, emphasizing long-standing relationships with the previous owners [38][39] Question: Update on Amazon Fresh business - Management noted improvements in stability but does not expect significant growth from this segment in the near future [41] Question: Consumer behavior and sales volume updates - Management observed sequential improvement in retail sales and is focusing on pricing strategies to enhance consumer value [43][45] Question: Digital capabilities and customer demand - The company is expanding its digital offerings and has seen increased interest from customers in electronic shelf labels and enhanced media [46][49] Question: Addressing industry trends and future M&A - Management is focusing on local and specialty products to meet consumer demand and is considering these factors in future acquisitions [53][54] Question: Anticipated promotional activity from CPGs - Management expects increased promotional activity and is working closely with suppliers to find effective pricing strategies [56][58]