SpartanNash(SPTN) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Full year net sales decreased by less than 2% to $9.55 billion, but Q4 sales increased by more than 70 basis points compared to the prior year quarter [12][28] - Adjusted EBITDA for the year reached a record$258 million, with Q4 adjusted EBITDA increasing by more than 9% compared to the prior year quarter [16][31] - The company generated $206 million in cash from operating activities, representing a 130$2.84 billion, with incremental sales from acquired stores offsetting softer demand in existing stores [13] - Wholesale net sales were over $6.7 billion, with a 2.1$14.8 million compared to $13 million in the prior year's quarter, while wholesale adjusted EBITDA was$43.8 million, an increase of 7.7% [36][35] Market Data and Key Metrics Changes - The grocery industry is expected to grow at around 1.5% in 2025, with inflation returning to pre-pandemic conditions at around low single digits [10][9] - The military sales channel has grown for 12 consecutive quarters, indicating a strong performance in this unique segment [15] Company Strategy and Development Direction - The company is focusing on capturing market share through its wholesale and retail segments, leveraging their complementary nature [10][11] - Key growth initiatives include expanding remodel capital deployment, enhancing convenience store operations, and growing the ethnic store footprint [19][65] - The company is actively pursuing M&A opportunities to improve the retail segment and maximize shareholder value [22][81] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategic plan, highlighting a return to growth and the successful execution of their Master Action Plan [48] - The company anticipates a challenging market environment in 2025 but expects to achieve net sales of $9.8 billion to$10 billion, with adjusted EBITDA projected between $263 million and$278 million [40][42] Other Important Information - The company took a goodwill impairment charge in the quarter, which was attributed to underperformance in the legacy retail business [18][29] - The leverage ratio of net long-term debt to adjusted EBITDA increased to 2.8x due to recent acquisitions [38] Q&A Session Summary Question: Can you provide details on sales, volumes, and inflation perspectives? - Management noted that foot traffic was roughly flat, with positive trends in Michigan and overall stability in customer demand [52][54] Question: How does the 2025 guidance look when excluding acquisitions? - The guidance implies flattish organic growth, with expectations of modest inflation around 1% [57][60] Question: What are the growth opportunities in the ethnic store footprint? - The company plans to double its ethnic store footprint and sees significant long-term growth potential in this segment [63][65] Question: What is the sentiment in the M&A market? - Management indicated a mix of operators looking to exit and those wanting to continue running their businesses, with ongoing engagement in M&A discussions [79][81]