SpartanNash Announces Second Quarter Fiscal 2024 Results

Reaffirms Fiscal 2024 Guidance

Pilots Customer Value Proposition in Retail Segment

GRAND RAPIDS, Mich., Aug. 15, 2024 /PRNewswire/ -- Food solutions company SpartanNash (the "Company") (Nasdaq: SPTN) today reported financial results for its 12-week second quarter ended July 13, 2024.

"The team's execution of our transformational initiatives has created a foundation for future growth while contributing to our margin gains year-to-date," said SpartanNash President and CEO Tony Sarsam. "We are pleased with the progression of our investments in margin-enhancing programs and expect benefits by the end of the year. Building on this progress, we are piloting a Customer Value Proposition initiative that is informed by extensive shopper data and insights, aimed at enhancing freshness, value and convenience. As part of this store modernization program, we are lowering prices on 6,000 products to bring more value to our shoppers today."

Second Quarter Fiscal 2024 Highlights⁽¹⁾

• Net sales decreased 3.5% to $2.23 billion, driven by lower volumes in both the Wholesale and Retail segments.
  • Wholesale segment net sales decreased 4.8% to $1.55 billion primarily due to reduced volumes in the national accounts customer channel.
  • Retail segment net sales decreased 0.4% to $676.1 million, with comparable store sales down 2.5%. Incremental sales from newly acquired Metcalfe's Market stores were offset by lower consumer demand trends.
• Net earnings of $0.34 per diluted share, compared to $0.57 per diluted share.
  • The decrease was primarily due to lower unit volumes and higher restructuring and asset impairment charges. This reduction was partially offset by benefits from the merchandising transformation, favorable segment sales mix, as well as lower LIFO expense of $3.2 million.
• Adjusted EPS⁽²⁾ of $0.59, compared to $0.65. Adjusted EBITDA⁽³⁾ of $64.5 million, compared to $66.1 million. These measures exclude, among other items, restructuring and asset impairment charges, the impact of the LIFO provision and acquisition and integration expenses.

Other Fiscal 2024 Highlights⁽⁴⁾

• Cash generated from operating activities of $132.1 million compared to $49.7 million. The 166.0% increase in cash from operating activities is due primarily to ongoing working capital management initiatives.
• Net long-term debt⁽⁵⁾ to adjusted EBITDA⁽³⁾ ratio of 2.2x improved sequentially compared to 2.4x at the end of the first quarter.
• Capital expenditures and IT capital⁽⁶⁾ of $73.4 million compared to $63.5 million.
• Returned $30.4 million to shareholders through $15.1 million in share repurchases and $15.4 million in dividends.

(1)	All comparisons are for the second quarter of 2024 compared with the second quarter of 2023, unless otherwise noted.
(2)	A reconciliation of net earnings to adjusted earnings from continuing operations, as well as per diluted share ("adjusted EPS"), a non-GAAP financial measure, is provided in Table 3.
(3)	A reconciliation of net earnings to adjusted EBITDA, a non-GAAP financial measure, is provided in Table 2.
(4)	All comparisons are for the fiscal year-to-date 2024 compared with the fiscal year-to-date 2023, unless otherwise noted.
(5)	A reconciliation of long-term debt and finance lease obligations to net long-term debt, a non-GAAP financial measure, is provided in Table 4.
(6)	A reconciliation of purchases of property and equipment to capital expenditures and IT capital, a non-GAAP financial measure, is provided in Table 5.

Fiscal 2024 Outlook

Based on the Company's performance to date and the current outlook for the remainder of fiscal 2024, the Company reaffirmed its previous guidance provided on May 30, 2024. The following table provides the Company's guidance for fiscal 2024:

	Fiscal 2023					Fiscal 2024 Outlook
(In millions, except adjusted EPS (2))	Actual					Low					High
Total net sales	$		9,729			$		9,500			$		9,700
Adjusted EBITDA(3)	$		257			$		255			$		270
Adjusted EPS(2)	$		2.18			$		1.85			$		2.10
Capital expenditures and IT capital(6)	$		127			$		135			$		145

Guidance incorporates the Company's long-term strategic initiatives, including all transformational programs and tuck-in acquisitions.

Conference Call & Supplemental Earnings Presentation

The Company will host a conference call to discuss its quarterly results with additional comments and details on Thursday, Aug. 15, 2024, at 10:30 a.m. ET. There will also be a simultaneous, live webcast made available at SpartanNash's website at spartannash.com/webcasts under the "Investor Relations" section and will remain archived on the Company's website through Thursday, Aug. 29, 2024.

A supplemental quarterly earnings presentation will also be available on the Company's website at spartannash.com/investor-presentations.

About SpartanNash

SpartanNash (Nasdaq: SPTN) is a food solutions company that delivers the ingredients for a better life. Committed to fostering a People First culture, the SpartanNash family of Associates is 17,000 strong. SpartanNash operates two complementary business segments - food wholesale and grocery retail. Its global supply chain network serves wholesale customers that include independent and chain grocers, national retail brands, e-commerce platforms, and U.S. military commissaries and exchanges. The Company distributes products for every aisle in the grocery store, from fresh produce to household goods to its OwnBrands, which include the Our Family^® portfolio of products. On the retail side, SpartanNash operates 147 brick-and-mortar grocery stores, primarily under the banners of Family Fare, Martin's Super Markets and D&W Fresh Market, in addition to dozens of pharmacies and fuel centers. Leveraging insights and solutions across its segments, SpartanNash offers a full suite of support services for independent grocers. For more information, visit spartannash.com.

Forward-Looking Statements

The matters discussed in this press release and in the Company's website-accessible conference calls with analysts and investor presentations include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"), about the plans, strategies, objectives, goals or expectations of the Company. These forward-looking statements may be identifiable by words or phrases indicating that the Company or management "expects," "projects," "anticipates," "plans," "believes," "intends," or "estimates," or that a particular occurrence or event "may," "could," "should," "will" or "will likely" result, occur or be pursued or "continue" in the future, that the "outlook," "trend," "guidance" or "target" is toward a particular result or occurrence, that a development is an "opportunity," "priority," "strategy," "focus," that the Company is "positioned" for a particular result, or similarly stated expectations. Undue reliance should not be placed on these forward-looking statements, which speak only as of the date made. Forward-looking statements are necessarily based on estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies may affect actual results and could cause actual results to differ materially. These risks and uncertainties include the Company's ability to compete in an extremely competitive industry; the Company's dependence on certain major customers; the Company's ability to implement its growth strategy and transformation initiatives; the Company's ability to implement its growth strategy through acquisitions and successfully integrate acquired businesses; disruptions to the Company's information security network, including security breaches and cyber-attacks; impacts to the availability and performance of the Company's information technology systems; changes in relationships with the Company's vendor base; changes in product availability and product pricing from vendors; macroeconomic uncertainty, including rising inflation, potential economic recession, and increasing interest rates; difficulty attracting and retaining well-qualified Associates and effectively managing increased labor costs; failure to successfully retain or manage transitions with executive leaders and other key personnel; impacts to the Company's business and reputation due to an increasing focus on environmental, social and governance matters; customers to whom the Company extends credit or for whom the Company guarantees loans may fail to repay the Company; changes in the geopolitical conditions; disruptions associated with severe weather conditions and natural disasters, including effects from climate change; disruptions associated with disease outbreaks; the Company's ability to manage its private brand program for U.S. military commissaries, including the termination of the program or not achieving the desired results; impairment charges for goodwill or other long-lived assets; the Company's level of indebtedness; interest rate fluctuations; the Company's ability to service its debt and to comply with debt covenants; changes in government regulations; labor relations issues; changes in the military commissary system, including its supply chain, or in the level of governmental funding; product recalls and other product-related safety concerns; cost increases related to multi-employer pension plans; and other risks and uncertainties listed under "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's most recent Annual Report on Form 10-K and in subsequent filings with the Securities and Exchange Commission. Additional risks and uncertainties not currently known to the Company or that the Company currently believes are immaterial also may impair its business, operations, liquidity, financial condition and prospects. The Company undertakes no obligation to update or revise its forward-looking statements to reflect developments that occur or information obtained after the date of this press release.

INVESTOR CONTACT:
Kayleigh Campbell
Head of Investor Relations
[email protected]

MEDIA CONTACT:
Adrienne Chance
SVP, Communications
[email protected]

SPARTANNASH COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
	12 Weeks Ended										28 Weeks Ended
	July 13,					July 15,					July 13,					July 15,
(In thousands, except per share amounts)	2024					2023					2024					2023
Net sales	$		2,230,756			$		2,312,394			$		5,037,019			$		5,219,788
Cost of sales			1,877,753					1,960,012					4,243,672					4,420,740
Gross profit			353,003					352,382					793,347					799,048
Operating expenses
Selling, general and administrative			318,157					318,795					721,790					736,991
Acquisition and integration, net			2,613					55					2,940					129
Restructuring and asset impairment, net			6,107					(2,254)					11,875					1,829
Total operating expenses			326,877					316,596					736,605					738,949
Operating earnings			26,126					35,786					56,742					60,099
Other expenses and (income)
Interest expense, net			10,541					9,349					24,028					20,938
Other, net			(550)					(685)					(1,598)					(1,724)
Total other expenses, net			9,991					8,664					22,430					19,214
Earnings before income taxes			16,135					27,122					34,312					40,885
Income tax expense			4,646					7,654					9,852					10,080
Net earnings	$		11,489			$		19,468			$		24,460			$		30,805
Net earnings per basic common share	$		0.34			$		0.57			$		0.72			$		0.90
Net earnings per diluted common share	$		0.34			$		0.56			$		0.71			$		0.88
Weighted average shares outstanding:
Basic			33,726					34,125					33,962					34,366
Diluted			33,958					34,641					34,329					35,116

SPARTANNASH COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
	July 13,					December 30,
(In thousands)	2024					2023
Assets
Current assets
Cash and cash equivalents	$		25,242			$		17,964
Accounts and notes receivable, net			426,869					421,859
Inventories, net			527,595					575,226
Prepaid expenses and other current assets			65,126					62,440
Total current assets			1,044,832					1,077,489
Property and equipment, net			662,501					649,071
Goodwill			190,214					182,160
Intangible assets, net			102,793					101,535
Operating lease assets			266,221					242,146
Other assets, net			99,323					103,174
Total assets	$		2,365,884			$		2,355,575
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable	$		466,830			$		473,419
Accrued payroll and benefits			60,720					78,076
Other accrued expenses			63,557					57,609
Current portion of operating lease liabilities			42,394					41,979
Current portion of long-term debt and finance lease liabilities			9,754					8,813
Total current liabilities			643,255					659,896
Long-term liabilities
Deferred income taxes			81,114					73,904
Operating lease liabilities			252,850					226,118
Other long-term liabilities			25,897					28,808
Long-term debt and finance lease liabilities			586,427					588,667
Total long-term liabilities			946,288					917,497
Commitments and contingencies
Shareholders' equity
Common stock, voting, no par value; 100,000 shares authorized; 33,750 and 34,610 shares outstanding			449,076					460,299
Preferred stock, no par value, 10,000 shares authorized; no shares outstanding			-					-
Accumulated other comprehensive income			1,005					796
Retained earnings			326,260					317,087
Total shareholders' equity			776,341					778,182
Total liabilities and shareholders' equity	$		2,365,884			$		2,355,575

SPARTANNASH COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
				28 Weeks Ended
(In thousands)				July 13, 2024					July 15, 2023
Cash flow activities
Net cash provided by operating activities				$		132,098			$		49,656
Net cash used in investing activities						(79,495)					(57,057)
Net cash used in financing activities						(45,325)					(4,775)
Net increase (decrease) in cash and cash equivalents						7,278					(12,176)
Cash and cash equivalents at beginning of the period						17,964					29,086
Cash and cash equivalents at end of the period				$		25,242			$		16,910

SPARTANNASH COMPANY AND SUBSIDIARIES SUPPLEMENTAL FINANCIAL DATA
Table 1: Sales and Operating Earnings (Loss) by Segment (Unaudited)
	12 Weeks Ended																28 Weeks Ended
(In thousands)	July 13, 2024								July 15, 2023								July 13, 2024								July 15, 2023
Wholesale Segment:
Net sales	$		1,554,628			69.7	%		$		1,633,364			70.6	%		$		3,568,649			70.8	%		$		3,719,048			71.2	%
Operating earnings			22,067								21,542								58,069								47,867
Retail Segment:
Net sales			676,128			30.3	%				679,030			29.4	%				1,468,370			29.2	%				1,500,740			28.8	%
Operating earnings (loss)			4,059								14,244								(1,327)								12,232
Total:
Net sales	$		2,230,756			100.0	%		$		2,312,394			100.0	%		$		5,037,019			100.0	%		$		5,219,788			100.0	%
Operating earnings			26,126								35,786								56,742								60,099

Non-GAAP Financial Measures

In addition to reporting financial results in accordance with GAAP, the Company also provides information regarding adjusted earnings from continuing operations, as well as per diluted share ("adjusted EPS"), net long-term debt, capital expenditures and IT capital, and adjusted earnings before interest, taxes, depreciation and amortization ("adjusted EBITDA"). These are non-GAAP financial measures, as defined below, and are used by management to allocate resources, assess performance against its peers and evaluate overall performance. The Company believes these measures provide useful information for both management and its investors. The Company believes these non-GAAP measures are useful to investors because they provide additional understanding of the trends and special circumstances that affect its business. These measures provide useful supplemental information that helps investors to establish a basis for expected performance and the ability to evaluate actual results against that expectation. The measures, when considered in connection with GAAP results, can be used to assess the overall performance of the Company as well as assess the Company's performance against its peers. These measures are also used as a basis for certain compensation programs sponsored by the Company. In addition, securities analysts, fund managers and other shareholders and stakeholders that communicate with the Company request its financial results in these adjusted formats.

Current year adjusted earnings from continuing operations, and adjusted EBITDA exclude, among other items, LIFO expense, organizational realignment, severance associated with cost reduction initiatives and operating and non-operating costs associated with the postretirement plan amendment and settlement. Current year organizational realignment includes consulting and severance costs associated with the Company's change in its go-to-market strategy as part of its long-term plan, which relates to the reorganization of certain functions. Costs related to the postretirement plan amendment and settlement include operating and non-operating expenses associated with amortization of the prior service credit related to the amendment of the retiree medical plan, which are adjusted out of adjusted earnings from continuing operations. Postretirement plan amendment and settlement costs also include operating expenses related to payroll taxes which are adjusted out of all non-GAAP financial measures. Prior year adjusted earnings from continuing operations, and adjusted EBITDA exclude, among other items, LIFO expense, organizational realignment, severance associated with cost reduction initiatives and a non-routine settlement related to a legal matter resulting from a previously closed operation that was resolved during the prior year and operating and non-operating costs associated with the postretirement plan amendment and settlement.

Each of these items are considered "non-operational" or "non-core" in nature.

The Company is unable to provide a full reconciliation of the GAAP to non-GAAP measures used in the Fiscal 2024 Outlook section of this press release without unreasonable effort because it is not possible to predict certain adjustment items with a reasonable degree of certainty since they are not yet known or quantifiable, and do not relate to the Company's normal operating activities. These adjustments may include, among other items, restructuring and asset impairment activity, acquisition and integration costs, severance, costs related to the postretirement plan amendment and settlement, and organizational realignment costs, and the impact of adjustments to the LIFO inventory reserve. This information is dependent upon future events, which may be outside of the Company's control and could have a significant impact on its GAAP financial results for fiscal 2024.

Table 2: Reconciliation of Net Earnings to Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) (A Non-GAAP Financial Measure) (Unaudited)
	12 Weeks Ended										28 Weeks Ended
(In thousands)	July 13, 2024					July 15, 2023					July 13, 2024					July 15, 2023
Net earnings	$		11,489			$		19,468			$		24,460			$		30,805
Income tax expense			4,646					7,654					9,852					10,080
Other expenses, net			9,991					8,664					22,430					19,214
Operating earnings			26,126					35,786					56,742					60,099
Adjustments:
LIFO expense			1,509					4,667					3,529					15,839
Depreciation and amortization			23,342					22,458					53,988					52,203
Acquisition and integration, net			2,613					55					2,940					129
Restructuring and asset impairment, net			6,107					(2,254)					11,875					1,829
Cloud computing amortization			1,840					1,076					3,858					2,426
Organizational realignment, net			1,369					2,029					1,675					2,029
Severance associated with cost reduction initiatives			72					(12)					141					272
Stock-based compensation			1,900					2,465					5,620					7,612
Stock warrant			190					353					516					960
Non-cash rent			(725)					(635)					(1,626)					(1,563)
Loss on disposal of assets			64					24					44					46
Legal settlement			-					-					-					900
Postretirement plan amendment and settlement			99					94					99					94
Adjusted EBITDA	$		64,506			$		66,106			$		139,401			$		142,875
Wholesale:
Operating earnings	$		22,067			$		21,542			$		58,069			$		47,867
Adjustments:
LIFO expense			1,153					3,590					2,708					12,323
Depreciation and amortization			12,301					11,644					28,379					27,014
Acquisition and integration, net			1,977					55					1,977					124
Restructuring and asset impairment, net			118					1					(32)					981
Cloud computing amortization			1,155					725					2,524					1,665
Organizational realignment, net			855					1,266					1,046					1,266
Severance associated with cost reduction initiatives			30					(7)					99					257
Stock-based compensation			1,357					1,611					3,861					4,994
Stock warrant			190					353					516					960
Non-cash rent			(243)					(63)					(543)					(138)
Gain on disposal of assets			(1)					(45)					(19)					(35)
Legal settlement			-					-					-					900
Postretirement plan amendment and settlement			62					59					62					59
Adjusted EBITDA	$		41,021			$		40,731			$		98,647			$		98,237
Retail:
Operating earnings (loss)	$		4,059			$		14,244			$		(1,327)			$		12,232
Adjustments:
LIFO expense			356					1,077					821					3,516
Depreciation and amortization			11,041					10,814					25,609					25,189
Acquisition and integration, net			636					-					963					5
Restructuring and asset impairment, net			5,989					(2,255)					11,907					848
Cloud computing amortization			685					351					1,334					761
Organizational realignment, net			514					763					629					763
Severance associated with cost reduction initiatives			42					(5)					42					15
Stock-based compensation			543					854					1,759					2,618
Non-cash rent			(482)					(572)					(1,083)					(1,425)
Loss on disposal of assets			65					69					63					81
Postretirement plan amendment and settlement			37					35					37					35
Adjusted EBITDA	$		23,485			$		25,375			$		40,754			$		44,638

Table 2: Reconciliation of Net Earnings to Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization, continued (Adjusted EBITDA) (A Non-GAAP Financial Measure) (Unaudited)
	52 Weeks Ended
(In thousands)	2023
Net earnings	$		52,237
Income tax expense			17,888
Other expenses, net			36,587
Operating earnings			106,712
Adjustments:
LIFO expense			16,104
Depreciation and amortization			98,639
Acquisition and integration, net			3,416
Restructuring and asset impairment, net			9,190
Cloud computing amortization			5,034
Organizational realignment, net			5,239
Severance associated with cost reduction initiatives			318
Stock-based compensation			12,536
Stock warrant			1,559
Non-cash rent			(2,599)
Loss on disposal of assets			259
Legal settlement			900
Postretirement plan amendment and settlement			94
Adjusted EBITDA	$		257,401

Notes: Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("adjusted EBITDA") is a non-GAAP operating financial measure that the Company defines as net earnings plus interest, discontinued operations, depreciation and amortization, and other non-cash items including share-based payments (equity awards measured in accordance with ASC 718, Stock Compensation, which include both stock-based compensation to employees and stock warrants issued to non-employees) and the LIFO provision, as well as adjustments for items that do not reflect the ongoing operating activities of the Company.

Adjusted EBITDA and adjusted EBITDA by segment are not measures of performance under GAAP and should not be considered as a substitute for net earnings, cash flows from operating activities and other income or cash flow statement data. The Company's definitions of adjusted EBITDA and adjusted EBITDA by segment may not be identical to similarly titled measures reported by other companies.

Table 3: Reconciliation of Net Earnings to Adjusted Earnings from Continuing Operations, as well as per diluted share ("adjusted EPS") (A Non-GAAP Financial Measure) (Unaudited)
	12 Weeks Ended
	July 13, 2024											July 15, 2023
						per diluted											per diluted
(In thousands, except per share amounts)	Earnings					share						Earnings					share
Net earnings	$		11,489			$		0.34				$		19,468			$		0.56
Adjustments:
LIFO expense			1,509											4,667
Acquisition and integration, net			2,613											55
Restructuring and asset impairment, net			6,107											(2,254)
Organizational realignment, net			1,369											2,029
Severance associated with cost reduction initiatives			72											(12)
Postretirement plan amendment and settlement			(513)											(631)
Total adjustments			11,157											3,854
Income tax effect on adjustments (a)			(2,767)											(955)
Total adjustments, net of taxes			8,390					0.25						2,899					0.09		*
Adjusted earnings from continuing operations	$		19,879			$		0.59				$		22,367			$		0.65
* Includes rounding
	28 Weeks Ended
	July 13, 2024											July 15, 2023
						per diluted											per diluted
(In thousands, except per share amounts)	Earnings					share						Earnings					share
Net earnings	$		24,460			$		0.71				$		30,805			$		0.88
Adjustments:
LIFO expense			3,529											15,839
Acquisition and integration, net			2,940											129
Restructuring and asset impairment, net			11,875											1,829
Organizational realignment, net			1,675											2,029
Severance associated with cost reduction initiatives			141											272
Postretirement plan amendment and settlement			(1,458)											(1,649)
Legal settlement			-											900
Total adjustments			18,702											19,349
Income tax effect on adjustments (a)			(4,803)											(4,925)
Total adjustments, net of taxes			13,899					0.41		*				14,424					0.41
Adjusted earnings from continuing operations	$		38,359			$		1.12				$		45,229			$		1.29
* Includes rounding

(a)	The income tax effect on adjustments is computed by applying the effective tax rate, before discrete tax items, to the total adjustments for the period.

	52 Weeks Ended
	December 30, 2023
						per diluted
(In thousands, except per share data)	Earnings					share
Net earnings	$		52,237			$		1.50
Adjustments:
LIFO expense			16,104
Acquisition and integration, net			3,416
Restructuring and asset impairment, net			9,190
Organizational realignment, net			5,239
Severance associated with cost reduction initiatives			318
Legal settlement			900
Postretirement plan amendment and settlement			(3,174)
Total adjustments			31,993
Income tax effect on adjustments (a)			(8,218)
Total adjustments, net of taxes			23,775					0.68
Adjusted earnings from continuing operations	$		76,012			$		2.18

(a)	The income tax effect on adjustments is computed by applying the effective tax rate, before discrete tax items, to the total adjustments for the period.

Notes: Adjusted earnings from continuing operations, as well as per diluted share ("adjusted EPS"), is a non-GAAP operating financial measure that the Company defines as net earnings plus or minus adjustments for items that do not reflect the ongoing operating activities of the Company and costs associated with the closing of operational locations.

Adjusted earnings from continuing operations is not a measure of performance under GAAP and should not be considered as a substitute for net earnings, cash flows from operating activities and other income or cash flow statement data. The Company's definition of adjusted earnings from continuing operations may not be identical to similarly titled measures reported by other companies.

Table 4: Reconciliation of Long-Term Debt and Finance Lease Obligations to Net Long-Term Debt (A Non-GAAP Financial Measure) (Unaudited)
(In thousands)	July 13, 2024					December 30, 2023
Current portion of long-term debt and finance lease liabilities	$		9,754			$		8,813
Long-term debt and finance lease liabilities			586,427					588,667
Total debt			596,181					597,480
Cash and cash equivalents			(25,242)					(17,964)
Net long-term debt	$		570,939			$		579,516

Notes: Net long-term debt is a non-GAAP financial measure that is defined as long-term debt and finance lease obligations plus current maturities of long-term debt and finance lease obligations less cash and cash equivalents. The Company believes both management and its investors find the information useful because it reflects the amount of long-term debt obligations that are not covered by available cash and temporary investments. Net long-term debt is not a substitute for GAAP financial measures and may differ from similarly titled measures of other companies.

Table 5: Reconciliation of Purchases of Property and Equipment to Capital Expenditures and IT Capital (A Non-GAAP Financial Measure) (Unaudited)
				28 Weeks Ended
(In thousands)				July 13, 2024					July 15, 2023
Purchases of property and equipment				$		67,074			$		60,824
Plus:
Cloud computing spend						6,347					2,719
Capital expenditures and IT capital				$		73,421			$		63,543
				52 Weeks Ended
(In thousands)				December 30, 2023
Purchases of property and equipment				$		120,330
Plus:
Cloud computing spend						7,040
Capital expenditures and IT capital				$		127,370

Notes: Capital expenditures and IT capital is a non-GAAP financial measure calculated by adding spending related to the development of cloud computing applications to capital expenditures, the most directly comparable GAAP measure. Cloud computing spend only includes costs incurred during the application development phase and does not include ongoing costs of hosting or maintenance associated with these applications, which are expensed as incurred. The Company believes it is a useful indicator of the Company's investment in its facilities and systems as it transitions to more cloud-based IT systems. Capital expenditures and IT capital is not a substitute for GAAP financial measures and may differ from similarly titled measures of other companies.

SOURCE SpartanNash