SpartanNash Announces Third Quarter Fiscal 2024 Results

Updates Fiscal 2024 Guidance and Provides Preview of Fiscal 2025

Retail Segment Sales Increased 1.9% Supported by Inorganic Growth

GRAND RAPIDS, Mich., Nov. 7, 2024 /PRNewswire/ -- Food solutions company SpartanNash (the "Company") (Nasdaq: SPTN) today reported financial results for its 12-week third quarter ended October 5, 2024.

"Our team made significant progress on our strategic plans this past quarter, while sustaining profitability in a complex environment," said SpartanNash President and CEO Tony Sarsam. "We continue to invest in our business to expand margin, capture additional cost savings, collaborate with our suppliers, and deliver value-add products and outstanding service to our Wholesale customers and Retail shoppers. All of these elements have established a solid foundation to drive organic and inorganic growth, including the upcoming acquisitions of Fresh Encounter and Markham."

Third Quarter Fiscal 2024 Highlights⁽¹⁾

• Net sales decreased 0.6% to $2.25 billion, driven by lower volume in the Wholesale segment, partially offset by an increase in volume in the Retail segment.
  • Wholesale segment net sales decreased 1.6% to $1.58 billion primarily due to reduced case volumes in both the independent retailers and national accounts customer channels.
  • Retail segment net sales increased 1.9% to $674.6 million, while comparable store sales were down 0.7%. Incremental sales from the recently acquired Metcalfe's Market stores more than offset lower consumer demand trends.
• Net earnings were $0.32 per diluted share in both the current and prior year quarters.
  • Increased Wholesale segment gross margin rates, including benefits from the merchandising transformation, and lower corporate administrative costs, as well as reduced LIFO expense were offset by lower case volumes, higher restructuring charges, increased healthcare costs, and increased Retail segment store labor.
• Adjusted EPS⁽²⁾ of $0.48, compared to $0.54. Adjusted EBITDA⁽³⁾ of $60.5 million, compared to $60.9 million. These measures exclude, among other items, restructuring charges and the impact of the LIFO provision.

Other Fiscal 2024 Highlights⁽⁴⁾

• Cash generated from operating activities of $123.3 million compared to $95.7 million. The 28.8% increase in cash from operating activities is due primarily to ongoing working capital management initiatives.
• Net long-term debt⁽⁵⁾ to adjusted EBITDA⁽⁵⁾ ratio of 2.4x compared to 2.2x at the end of the second quarter.
• Capital expenditures and IT capital⁽⁶⁾ of $106.3 million compared to $90.3 million.
• Returned $37.7 million to shareholders through $15.1 million in share repurchases and $22.6 million in dividends.

(1)	All comparisons are for the third quarter of 2024 compared with the third 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 and Net Earnings to Adjusted EBITDA, non-GAAP financial measures, are 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 is updating its guidance to reflect current trends and market conditions. The following table provides the Company's updated guidance for fiscal 2024:

	Fiscal 2023					Previous Fiscal 2024 Outlook										Updated Fiscal 2024 Outlook
(In millions, except adjusted EPS (2))	Actual					Low					High					Low					High
Total net sales	$		9,729			$		9,500			$		9,700			$		9,500			$		9,700
Adjusted EBITDA(3)	$		257			$		255			$		270			$		252			$		257
Adjusted EPS(2)	$		2.18			$		1.85			$		2.10			$		1.85			$		1.95
Capital expenditures and IT capital(6)	$		127			$		135			$		145			$		135			$		140

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

Considering the impact of current market conditions tempered by ongoing investments in growth, in fiscal 2025 the Company expects low-single-digit topline growth and mid-single-digit adjusted EBITDA growth compared to fiscal 2024. The Company plans to provide its full fiscal 2025 outlook when it announces its fourth quarter and fiscal 2024 results in February 2025.

Conference Call & Supplemental Earnings Presentation

The Company will host a conference call to discuss its quarterly results with additional comments and details on Thursday, Nov. 7, 2024, at 8:30 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, Nov. 21, 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 and Chief Communications Officer
[email protected]

SPARTANNASH COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
	12 Weeks Ended										40 Weeks Ended
	October 5,					October 7,					October 5,					October 7,
(In thousands, except per share amounts)	2024					2023					2024					2023
Net sales	$		2,250,681			$		2,264,248			$		7,287,700			$		7,484,036
Cost of sales			1,896,032					1,916,709					6,139,704					6,337,449
Gross profit			354,649					347,539					1,147,996					1,146,587
Operating expenses
Selling, general and administrative			324,061					322,796					1,045,851					1,059,787
Acquisition and integration, net			272					2,130					3,212					2,259
Restructuring and asset impairment, net			5,397					(458)					17,272					1,371
Total operating expenses			329,730					324,468					1,066,335					1,063,417
Operating earnings			24,919					23,071					81,661					83,170
Other expenses and (income)
Interest expense, net			9,915					9,280					33,943					30,218
Other, net			(216)					(786)					(1,814)					(2,510)
Total other expenses, net			9,699					8,494					32,129					27,708
Earnings before income taxes			15,220					14,577					49,532					55,462
Income tax expense			4,300					3,450					14,152					13,530
Net earnings	$		10,920			$		11,127			$		35,380			$		41,932
Net earnings per basic common share	$		0.33			$		0.33			$		1.05			$		1.22
Net earnings per diluted common share	$		0.32			$		0.32			$		1.03			$		1.20
Weighted average shares outstanding:
Basic			33,580					34,020					33,847					34,262
Diluted			34,102					34,523					34,266					34,967

SPARTANNASH COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
	October 5,					December 30,
(In thousands)	2024					2023
Assets
Current assets
Cash and cash equivalents	$		17,510			$		17,964
Accounts and notes receivable, net			490,131					421,859
Inventories, net			557,955					575,226
Prepaid expenses and other current assets			74,167					62,440
Total current assets			1,139,763					1,077,489
Property and equipment, net			668,927					649,071
Goodwill			190,023					182,160
Intangible assets, net			101,817					101,535
Operating lease assets			259,890					242,146
Other assets, net			107,013					103,174
Total assets	$		2,467,433			$		2,355,575
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable	$		513,577			$		473,419
Accrued payroll and benefits			70,516					78,076
Other accrued expenses			65,432					57,609
Current portion of operating lease liabilities			42,355					41,979
Current portion of long-term debt and finance lease liabilities			9,747					8,813
Total current liabilities			701,627					659,896
Long-term liabilities
Deferred income taxes			85,660					73,904
Operating lease liabilities			245,270					226,118
Other long-term liabilities			26,611					28,808
Long-term debt and finance lease liabilities			626,957					588,667
Total long-term liabilities			984,498					917,497
Commitments and contingencies
Shareholders' equity
Common stock, voting, no par value; 100,000 shares authorized; 33,755 and 34,610 shares outstanding			452,024					460,299
Preferred stock, no par value, 10,000 shares authorized; no shares outstanding			-					-
Accumulated other comprehensive (loss) income			(325)					796
Retained earnings			329,609					317,087
Total shareholders' equity			781,308					778,182
Total liabilities and shareholders' equity	$		2,467,433			$		2,355,575

SPARTANNASH COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
				40 Weeks Ended
(In thousands)				October 5, 2024					October 7, 2023
Cash flow activities
Net cash provided by operating activities				$		123,255			$		95,680
Net cash used in investing activities						(110,652)					(82,003)
Net cash used in financing activities						(13,057)					(25,209)
Net decrease in cash and cash equivalents						(454)					(11,532)
Cash and cash equivalents at beginning of the period						17,964					29,086
Cash and cash equivalents at end of the period				$		17,510			$		17,554

SPARTANNASH COMPANY AND SUBSIDIARIES SUPPLEMENTAL FINANCIAL DATA
Table 1: Sales and Operating Earnings by Segment (Unaudited)
	12 Weeks Ended																40 Weeks Ended
(In thousands)	October 5, 2024								October 7, 2023								October 5, 2024								October 7, 2023
Wholesale Segment:
Net sales	$		1,576,082			70.0	%		$		1,602,000			70.8	%		$		5,144,731			70.6	%		$		5,321,048			71.1	%
Operating earnings			21,054								18,153								79,123								66,020
Retail Segment:
Net sales			674,599			30.0	%				662,248			29.2	%				2,142,969			29.4	%				2,162,988			28.9	%
Operating earnings			3,865								4,918								2,538								17,150
Total:
Net sales	$		2,250,681			100.0	%		$		2,264,248			100.0	%		$		7,287,700			100.0	%		$		7,484,036			100.0	%
Operating earnings			24,919								23,071								81,661								83,170

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, operating and non-operating costs associated with the postretirement plan amendment and settlement and a non-operating benefit associated with a pension refund from an annuity provider. 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. The pension refund from an annuity provider is related to a terminated pension plan and is a non-operating benefit which is adjusted out of adjusted earnings from continuing operations. 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										40 Weeks Ended
(In thousands)	October 5, 2024					October 7, 2023					October 5, 2024					October 7, 2023
Net earnings	$		10,920			$		11,127			$		35,380			$		41,932
Income tax expense			4,300					3,450					14,152					13,530
Other expenses, net			9,699					8,494					32,129					27,708
Operating earnings			24,919					23,071					81,661					83,170
Adjustments:
LIFO expense			1,517					6,606					5,046					22,445
Depreciation and amortization			24,159					23,042					78,147					75,245
Acquisition and integration, net			272					2,130					3,212					2,259
Restructuring and asset impairment, net			5,397					(458)					17,272					1,371
Cloud computing amortization			1,748					1,259					5,606					3,685
Organizational realignment, net			240					2,681					1,915					4,710
Severance associated with cost reduction initiatives			279					39					420					311
Stock-based compensation			2,519					2,461					8,139					10,073
Stock warrant			184					319					700					1,279
Non-cash rent			(655)					(531)					(2,281)					(2,094)
(Gain) loss on disposal of assets			(92)					258					(48)					304
Legal settlement			-					-					-					900
Postretirement plan amendment and settlement			-					-					99					94
Adjusted EBITDA	$		60,487			$		60,877			$		199,888			$		203,752
Wholesale:
Operating earnings	$		21,054			$		18,153			$		79,123			$		66,020
Adjustments:
LIFO expense			1,153					4,411					3,861					16,734
Depreciation and amortization			12,747					12,151					41,126					39,165
Acquisition and integration, net			71					65					2,048					189
Restructuring and asset impairment, net			6,824					(293)					6,792					688
Cloud computing amortization			1,098					834					3,622					2,499
Organizational realignment, net			148					1,673					1,194					2,939
Severance associated with cost reduction initiatives			131					39					230					296
Stock-based compensation			1,711					1,621					5,572					6,615
Stock warrant			184					319					700					1,279
Non-cash rent			(246)					-					(789)					(138)
(Gain) loss on disposal of assets			(108)					24					(127)					(11)
Legal settlement			-					-					-					900
Postretirement plan amendment and settlement			-					-					62					59
Adjusted EBITDA	$		44,767			$		38,997			$		143,414			$		137,234
Retail:
Operating earnings	$		3,865			$		4,918			$		2,538			$		17,150
Adjustments:
LIFO expense			364					2,195					1,185					5,711
Depreciation and amortization			11,412					10,891					37,021					36,080
Acquisition and integration, net			201					2,065					1,164					2,070
Restructuring and asset impairment, net			(1,427)					(165)					10,480					683
Cloud computing amortization			650					425					1,984					1,186
Organizational realignment, net			92					1,008					721					1,771
Severance associated with cost reduction initiatives			148					-					190					15
Stock-based compensation			808					840					2,567					3,458
Non-cash rent			(409)					(531)					(1,492)					(1,956)
Loss on disposal of assets			16					234					79					315
Postretirement plan amendment and settlement			-					-					37					35
Adjusted EBITDA	$		15,720			$		21,880			$		56,474			$		66,518

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
	October 5, 2024											October 7, 2023
						per diluted											per diluted
(In thousands, except per share amounts)	Earnings					share						Earnings					share
Net earnings	$		10,920			$		0.32				$		11,127			$		0.32
Adjustments:
LIFO expense			1,517											6,606
Acquisition and integration, net			272											2,130
Restructuring and asset impairment, net			5,397											(458)
Organizational realignment, net			240											2,681
Severance associated with cost reduction initiatives			279											39
Postretirement plan amendment and settlement			-											(762)
Pension refund from annuity provider			(239)											-
Total adjustments			7,466											10,236
Income tax effect on adjustments (a)			(1,895)											(2,600)
Total adjustments, net of taxes			5,571					0.16						7,636					0.22
Adjusted earnings from continuing operations	$		16,491			$		0.48				$		18,763			$		0.54
	40 Weeks Ended
	October 5, 2024											October 7, 2023
						per diluted											per diluted
(In thousands, except per share amounts)	Earnings					share						Earnings					share
Net earnings	$		35,380			$		1.03				$		41,932			$		1.20
Adjustments:
LIFO expense			5,046											22,445
Acquisition and integration, net			3,212											2,259
Restructuring and asset impairment, net			17,272											1,371
Organizational realignment, net			1,915											4,710
Severance associated with cost reduction initiatives			420											311
Postretirement plan amendment and settlement			(1,458)											(2,411)
Pension refund from annuity provider			(239)											-
Legal settlement			-											900
Total adjustments			26,168											29,585
Income tax effect on adjustments (a)			(6,698)											(7,525)
Total adjustments, net of taxes			19,470					0.57						22,060					0.63
Adjusted earnings from continuing operations	$		54,850			$		1.60				$		63,992			$		1.83

(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 and Net Earnings to Adjusted EBITDA (A Non-GAAP Financial Measure) (Unaudited)
(In thousands)	October 5, 2024					July 13, 2024
Current portion of long-term debt and finance lease liabilities	$		9,747			$		9,754
Long-term debt and finance lease liabilities			626,957					586,427
Total debt			636,704					596,181
Cash and cash equivalents			(17,510)					(25,242)
Net long-term debt	$		619,194			$		570,939

	Rolling 52- Weeks Ended
(In thousands, except for ratio)	October 5, 2024					July 13, 2024
Net earnings	$		45,685			$		45,892
Income tax expense			18,510					17,660
Other expenses, net			41,008					39,803
Operating earnings			105,203					103,355
Adjustments:
LIFO (benefit) expense			(1,295)					3,794
Depreciation and amortization			101,541					100,424
Acquisition and integration, net			4,369					6,227
Restructuring and asset impairment, net			25,091					19,236
Cloud computing amortization			6,955					6,466
Organizational realignment, net			2,444					4,885
Severance associated with cost reduction initiatives			427					187
Stock-based compensation			10,602					10,544
Stock warrant			980					1,115
Non-cash rent			(2,786)					(2,662)
(Gain) loss on disposal of assets			(93)					257
Postretirement plan amendment and settlement			99					99
Adjusted EBITDA	$		253,537			$		253,927
Net long-term debt to adjusted EBITDA ratio			2.4					2.2

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)
				40 Weeks Ended
(In thousands)				October 5, 2024					October 7, 2023
Purchases of property and equipment				$		97,867			$		86,212
Plus:
Cloud computing spend						8,401					4,065
Capital expenditures and IT capital				$		106,268			$		90,277

				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