Category: SPTN

SPTN – SpartanNash's (SPTN) Earnings Beat in Q2, Sales Decline Y/Y

SpartanNash Company (SPTN Free Report) posted mixed results for the second quarter of 2021 wherein the bottom line beat the Zacks Consensus Estimate while the top line missed the same. Both metrics plunged year over year.

This presently Zacks Rank #3 (Hold) company posted adjusted earnings from continuing operations of 54 cents a share, outshining the Zacks Consensus Estimate by a penny. However, the bottom line decreased nearly 26% from 73 cents a share earned in the same quarter a year ago.

Consolidated net sales of $2,106.6 million declined 3.6% year over year due to the absence of the prior-year period’s favorable sales, aided by elevated consumer demand with respect to the pandemic across all segments. The top line also lagged the Zacks Consensus Estimate of $2,129 million. The company saw a sales decline across all three segments, somewhat offset by strong growth in some existing Food Distribution customers.

SpartanNash Company Price, Consensus and EPS Surprise

Gross profit dipped 1.4% year over year to $333.6 million. However, gross margin expanded 30 basis points (bps) to 15.8% on growth across the Food Distribution and Military units, and higher proportion of margin accretive Retail and Food Distribution segment sales. This was somewhat offset by elevated LIFO expenses.

Adjusted operating earnings came in at $29.3 million, which decreased 22.3% from $37.7 million reported in the year-ago quarter. Adjusted EBITDA fell 8.1% to $54.4 million with a margin contraction of 10 bps to 2.6%.

Segmental Analysis

Net sales at Food Distribution dipped 3.1% to $1,056.5 million due to lack of higher sales prevalent in the prior year on the back of elevated consumer demand. The same was mitigated with persistent growth in some existing Food Distribution customers. The segment’s sales jumped 13% from the second-quarter 2019 actuals. The unit accounted for 50.2% of the company’s consolidated sales in the second quarter of 2021.

Retail’s net sales slipped 1.8% to $620 million in the reported quarter, mainly due to the absence of last year’s favorable sales, attributable to higher coronavirus-led demand. However, the metric was partly offset by better fuel sales in the quarter. Retail comparable store sales also slid 2.7% year over year even though the metric rose 12.1% on a two-year comparable basis. The retail segment represented 29.4% of total sales in the period.

Finally, net sales at Military, which constituted 20.4% of the overall quarterly sales, were down 7.1% to $430.1 million. This was mainly due to persistently lower volumes at domestic commissaries caused by limited base access. The segment’s sales tumbled 12.3% from the second-quarter 2019 reading.

Other Financials

SpartanNash ended the quarter with cash and cash equivalents of $24.1 million, net long-term debt of $427.2 million and total shareholders’ equity of $756.2 million. The company paid long-term debt of $75.8 million in the reported quarter.

Cash generated from operating activities was $105.4 million during the second quarter. The company had free cash flow of $33.7 million in the 28-week ended Jul 17, 2021. Capital expenditures and IT capital totaled $43.8 million in the first half of 2021. For 2021, management still projects capital expenditures and IT capital in the band of $80-$90 million.

In the first half of the current year, management declared cash dividends worth $14.4 million, equal to 20 cents a share. It also bought back 265,000 shares for $5.3 million in the same period.

Guidance

Management expects sustained momentum in the Retail business. However, it continues facing challenges in the distribution operations, mainly considering the ongoing pandemic-related conditions. The company revised 2021 outlook, which includes the improved trends in Retail and headwinds associated with sales trends in its Military business. SpartanNash also completed drafting the blueprint of its supply-chain transformation initiative.

The company continues projecting total net sales in the band of $8,800-$9,000 million, indicating a decline from $9,348 million generated in 2020. Retail comparable sales are likely to be a negative 2-5% for the current year compared with a negative 5-7% predicted earlier. Food Distribution sales are anticipated to decrease 1-3% while Military Distribution sales are estimated to fall 9-13% in 2021.

Adjusted EBITDA for 2021 is likely to fall in the range of $200-$210 million from $239 million delivered last year. The metric was earlier estimated in the $195-$210 million band.

The company estimates reported earnings per share between $1.56 and $1.69, implying a decline from the prior-year’s tally of $2.12. Adjusted earnings per share are envisioned to be $1.70-$1.80 for the current year, indicating a decrease from $2.53 registered in 2020. Adjusted earnings per share were previously anticipated in the bracket of $1.65-$1.80.

Price Performance

This grocery retailer’s stock has decreased 15.6% in the past six months compared with the industry’s 5.1% decline.

Better-Ranked Stocks to Consider

Medifast (MED Free Report) has an earnings surprise of 16% in the last four quarters, on average, and a Zacks Rank #1 (Strong Buy), currently. You can seethe complete list of today’s Zacks #1 Rank stocks here.

Chewy (CHWY Free Report) , also presently a Zacks #1 Ranked stock, has an expected long-term earnings growth rate of 20%.

Sysco (SYY Free Report) has an expected long-term earnings growth rate of 9% and a Zacks Rank #2 (Buy) at present.

SPTN – SpartanNash Announces Finance Team Transitions

GRAND RAPIDS, Mich.–(BUSINESS WIRE)–SpartanNash (Nasdaq: SPTN) announced today that the Company has appointed Jason Monaco as Executive Vice President and Chief Financial Officer (CFO), effective March 22, 2021. Mr. Monaco will assume the CFO position from Mark Shamber who will remain with the Company through the end of April to assist with a transition. As CFO, Mr. Monaco will direct finance, mergers and acquisitions, treasury, internal audit, real estate, and risk management. He will report to SpartanNash’s President and Chief Executive Officer, Tony Sarsam.

“We look forward to having Jason join our team,” notes Mr. Sarsam. “Jason has a proven track record of partnering with cross functional teams and digging deeply into the business to build systems, processes, and teams to develop and drive operational efficiencies. His extensive food distribution expertise at Borden Dairy, coupled with his deep financial background leading multiple global teams with Kimberly Clark, align with SpartanNash’s future growth plans.”

Mr. Sarsam added, “On behalf of the board of directors and all of us at SpartanNash, I want to thank Mark for supporting this transition and for all his contributions over the last three years. We wish him well in his future endeavors.”

SpartanNash also announced the promotion of Todd Riksen to Vice President, Corporate Controller, effective March 14, 2021. Mr. Riksen is assuming the position as part of the Company’s succession plan. Tammy Hurley, Vice President, Finance and Chief Accounting Officer, is retiring on April 23, 2021 after 20 years with the Company. In his new role, Mr. Riksen will oversee the Company’s retail, distribution and corporate accounting and financial reporting, SEC reporting, tax compliance and tax planning, financial shared services, and will support the quarterly earnings reports, shareholder calls and required filings.

“As part of our people-first culture, we are grateful for Tammy’s leadership, talent development as well as the succession planning that will enable us to seamlessly make this transition,” said Mr. Sarsam. “Todd is a key contributor and we are excited to have him overseeing our accounting group. He is well respected by our executive leadership team, co-workers, and customers; and we look forward to his future contributions.”

Jason Monaco Biography

Mr. Monaco most recently served as Chief Financial Officer for Dallas, Texas-based Cornerstone Chemical Company. Mr. Monaco also has served as CFO of Dallas-based Borden Dairy and held increasing executive leadership positions with Kimberly-Clark. During his tenure at Borden Dairy, Mr. Monaco was responsible for planning, implementing, managing and controlling all financial and technology related activities of the company. His strategic initiatives drove volume growth and execution of a critical supply chain productivity program resulting in significant cost savings. At Cornerstone Chemical, Mr. Monaco guided acquisition integration planning, facilitating 50% sales growth through capacity, fulfillment, customer transition, inventory management, systems integration, and organizational design.

Todd Riksen Biography

Mr. Riksen is a certified public accountant and joined the company in April 2018 as Director, Financial Reporting and Corporate Accounting. Prior to joining SpartanNash, Mr. Riksen worked in the assurance practice at Ernst & Young serving publicly traded companies while based in the US and in the Netherlands. During his time at Ernst & Young, Mr. Riksen held roles of increasing responsibility, culminating with his role as Assurance Senior Manager.

About SpartanNash

SpartanNash (Nasdaq: SPTN) is a Fortune 400 company whose core businesses include distributing grocery products to a diverse group of independent and chain retailers, its corporate-owned retail stores and U.S. military commissaries and exchanges; as well as operating a premier fresh produce distribution network. SpartanNash serves customer locations in all 50 states and the District of Columbia, Europe, Cuba, Puerto Rico, Honduras, Iraq, Kuwait, Bahrain, Qatar and Djibouti. SpartanNash currently operates 154 supermarkets, primarily under the banners of Family Fare, Martin’s Super Markets, D&W Fresh Market, VG’s Grocery and Dan’s Supermarket. Through its MDV military division, SpartanNash is a leading distributor of grocery products to U.S. military commissaries.

SPTN – Are Investors Undervaluing Spartan Stores (SPTN) Right Now?

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the “Value” category. When paired with a high Zacks Rank, “A” grades in the Value category are among the strongest value stocks on the market today.

One company value investors might notice is Spartan Stores (SPTN Free Report) . SPTN is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock is trading with a P/E ratio of 8.37, which compares to its industry’s average of 16.43. Over the last 12 months, SPTN’s Forward P/E has been as high as 14.89 and as low as 7.35, with a median of 9.80.

Investors will also notice that SPTN has a PEG ratio of 1.71. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company’s expected earnings growth rate. SPTN’s industry currently sports an average PEG of 1.81. Within the past year, SPTN’s PEG has been as high as 1.94 and as low as 1.12, with a median of 1.39.

Another notable valuation metric for SPTN is its P/B ratio of 0.90. The P/B ratio pits a stock’s market value against its book value, which is defined as total assets minus total liabilities. SPTN’s current P/B looks attractive when compared to its industry’s average P/B of 2.25. Over the past year, SPTN’s P/B has been as high as 1.17 and as low as 0.49, with a median of 0.91.

Finally, investors will want to recognize that SPTN has a P/CF ratio of 4.04. This figure highlights a company’s operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. SPTN’s current P/CF looks attractive when compared to its industry’s average P/CF of 8.44. SPTN’s P/CF has been as high as 7.59 and as low as 3.53, with a median of 4.85, all within the past year.

These are only a few of the key metrics included in Spartan Stores’s strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, SPTN looks like an impressive value stock at the moment.