Nash Finch Company (Nasdaq: NAFC), a Minneapolis-based food retailer and distributor, today reported increased comparable earnings of $5.2 million, or 45 cents per share, excluding an extraordinary charge, in the fourth-quarter ended Dec. 30, 2000, compared to $4.2 million, or 37 cents per share, excluding non-recurring items, in the prior-year period. Total revenues for the 2000 fourth-quarter improved to $984.7 million, versus year-ago revenues of $963.3 million. EBITDA (earnings from operations before interest, taxes, depreciation, amortization and non-recurring items) rose 20 percent to $29.3 million in the 2000 fourth-quarter, or 3.0 percent of sales, versus $24.5 million, or 2.5 percent of sales, in the prior-year.
Non-recurring items included the reversal of restructuring charges in the 1999 fourth-quarter, and the extraordinary charge from early extinguishment of debt in the 2000 fourth-quarter, resulting in net earnings of $4.8 million, or 42 cents per share, versus $8.3 million, or 73 cents per share, in the prior-year period.
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Total 2000 revenues were $4.016 billion versus $4.123 billion in 1999. Comparable earnings for the full year increased to $15.8 million, or $1.38 per share, excluding an extraordinary charge from early extinguishment of debt, compared to $9.4 million, or 83 cents per share in 1999, excluding non-recurring items. Full-year 2000 EBITDA rose 19 percent to $106.7 million, or 2.7 percent of sales, compared to EBITDA of $89.5 million, or 2.2 percent of sales, in 1999.
Including the reversal of restructuring charges, non-recurring gains on the 1999 sales of the company’s produce growing and marketing subsidiary, Nash-De Camp, and majority stakes in two dairy operations, as well as the debt issuance cost write-off in 2000, net earnings were $15.5 million, or $1.35 per share, versus $19.8 million, or $1.75 per share, in the prior-year period.
“Our operating results have improved dramatically year-over-year with comparable EPS and EBITDA increasing 66 percent and 19 percent, respectively,” said Ron Marshall, president and chief executive officer. “NFC today is a performance driven company with a focus on consistent operational excellence and outstanding customer service. I believe our momentum will continue into 2001 and I am looking forward to our continued growth.”
Food Distribution Segment Results
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By GlobalDataFourth-quarter revenues for the food distribution segment totaled $504.5 million versus $500.8 million in the year-ago period. Food distribution profits for the fourth-quarter jumped to $14.3 million versus $6.2 million last year, primarily as a result of operational and buying efficiencies as well as cycling past the closures of five distribution centers in 1999. For the 2000 fiscal year, food distribution revenues were $1.993 billion compared to $2.281 billion in the prior-year period. Profits increased to $47.8 million versus $42.5 million in fiscal 1999.
“In 2000, NFC began to realize the benefits of the strategic decisions made to improve the company since mid-1998,” said Marshall. “One of our objectives in 2000 was to expand our food distribution business through new account capture. I am pleased to report that our industry-leading performance as a food distributor resulted in over $360 million in annualized new business. These new customers were generally captured from large, national competitors and included single-store independent retailers, such as Maus Foods in Minnesota, to multiple-store operators, such as Kuhn’s and Brodak’s in Pennsylvania, to our single largest new customer, Food Farm, Inc., a consortium of independent retailers operating 63 Piggly Wiggly stores in North Carolina. Independent customers have been choosing NFC because of our resounding commitment to quality, our ethic of customer service and our performance on key metrics important to their success.”
Military segment revenues in the fourth-quarter rose to $238.7 million from $231.7 million a year ago. Profits increased to $5.1 million versus $5.0 million in the same period last year. For the year, revenues totaled $972.5 million compared to $963.3 million in fiscal 1999. The segment posted 2000 profits of $21.6 million versus $20.7 million in the prior-year period.
Retail Segment Results
In the fourth-quarter, revenues from retail stores rose 5 percent to $237.4 million versus $225.3 million in 1999, while profits increased 60 percent to $10.1 million, up from $6.3 million in the prior-year period. For fiscal 2000, retail revenues increased 20 percent to $1.030 billion compared to $856.6 million in 1999. Profits improved 85 percent to $33.3 million, up from $18.0 million in the prior-year period. While same-store sales decreased 2 percent during the fourth-quarter, year-over-year, NFC achieved flat same-store sales despite many competitive openings.
“In 2000, we focused on becoming a dominant retail chain in the Upper Midwest,” stated Marshall. “We advanced that goal throughout the year with multiple acquisitions as well as new and replacement stores in many key markets.”
During 2000, the net number of NFC corporate retail stores grew from 114 to 118. The following highlights some of the key retail events.
* The acquisition of the 12-store Hinky Dinky chain in Nebraska took
place in the first quarter of 2000. These stores, as well as the
18-store Erickson’s chain purchased in 1999, were all converted to
primary NFC banners, strengthening brand recognition and boosting
marketing efficiencies.
* Six new conventional stores were built or acquired in the Upper Midwest.
New Econofoods “Fresh Place” stores were built in Rochester, Minn.;
Cedar Rapids, Iowa; and Marshalltown, Iowa. Acquired NFC stores
included Norwood, New Prague and Watertown, Minn., which were all
converted to the Econofoods banner.
* After year-end, two new Econofoods stores opened in Hudson, Wis., and
Red Wing, Minn. In addition, a store was acquired in Sioux Falls, S.D.,
that is operating under the Econofoods banner.
* NFC expanded its test of the Wholesale Food Outlet (WFO) format which
targets the under-served Hispanic market. Two new WFO units opened in
Muscatine, Iowa, and Omaha, Neb., complementing the initial unit in
Greeley, Colo.
Marketing and Merchandising Accomplishments
“Developing new growth opportunities was another important objective in 2000,” continued Marshall. “NFC made significant progress in this area by launching many innovative marketing and merchandising programs, helping drive retail store sales and profitability for our independent customers, as well as our corporate stores.”
Significant accomplishments included:
* development and launch of an exclusive Signature Program of high-quality
products, including Bernini Pizza, Cinnfully Good Cinnamon Rolls and
Dewy Fresh Produce, available only at NFC owned and supplied stores;
* expansion of the Signature Program with selected vendor partners
resulting in the Signature Partner Program, linking products such as
NFC’s Bernini Pizza and Coca-Cola, to effectively leverage NFC and the
vendor partners’ strengths to build additional brand awareness and link
the center store with perimeter departments;
* introduction of a wide range of highly-effective merchandising programs,
such as Price Break and Money Line, offering a lower cost of goods and
creating competitive differentiators for NFC-supplied retailers; and
* formation of an innovative strategic partnership with Catalina Marketing
Corporation allowing NFC to become the first food distributor to make
Catalina’s services available to its independent customers.
Outlook
“Going forward, we will continue to grow our food distribution business through consistent execution, top-notch efficiency and new account capture. We will remain dominant in the military segment of our business. In our retail business, we are intently focused on becoming a dominant retail chain in the Upper Midwest with an emphasis on outstanding perishable execution, exceptional customer service and a convenient shopping experience. Finally, our innovative marketing and merchandising initiatives continue to offer new growth avenues for NFC. Through all of these efforts, we are clearly focused on increasing profitability and raising shareholder value,” concluded Marshall.
NFC expects earnings per share for fiscal 2001 to be in the range of $1.55 to $1.65 per share, reflecting an increase of 15 percent to 22 percent over the prior-year.
Nash Finch Company is one of the leading food distribution companies in the United States with over $4 billion in annual revenues. The company owns and operates a base of 119 retail stores, principally supermarkets under the Econofoods, Sun Mart and Family Thrift Center trade names. Independent retailers and military commissaries in approximately 30 states are key Nash Finch customers. Further information is available on the company’s Web site at http://www.nashfinch.com.
Forward-looking statements contained in this news release are made under the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. Such factors may include but are not limited to: general business conditions, the impact of competition, and other risks detailed from time to time in the Company’s periodic reports available from the Security and Exchange Commission.
NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share amounts)
Twelve Weeks Ended Fifty-Two Weeks Ended
December 30, January 1, December 30, January 1,
2000 2000 2000 2000
Total sales and
revenues $984,738 963,310 4,015,541 4,123,213
Cost and expenses:
Cost of sales 868,428 861,017 3,546,516 3,698,752
Selling, general and
administrative 87,233 76,970 361,024 331,221
Special charges (a) — (7,045) — (7,045)
Depreciation and
amortization 11,675 10,071 46,485 42,619
Interest expense 8,349 7,895 34,017 31,213
Total costs and
expenses 975,685 948,908 3,988,042 4,096,760
Earnings from continuing
operations before income
taxes and extraordinary
charge 9,053 14,402 27,499 26,453
Income taxes 3,838 6,106 11,659 11,216
Earnings from continuing
operations before
extraordinary charge 5,215 8,296 15,840 15,237
Discontinued operations:
Earnings from disposal
of discontinued
operations, including
profit of $1,017 during
the phase out period,
net of income tax
of $3,587 — — — 4,566
Earnings before
extraordinary charge 5,215 8,296 15,840 19,803
Extraordinary charge from
early extinguishment of
debt, net of income tax
benefit of $271 (b) 369 — 369 —
Net earnings $4,846 8,296 15,471 19,803
Basic and diluted earnings
per share:
Earnings from
continuing
operations $0.45 0.73 1.38 1.35
Earnings from
discontinued
operations — — — 0.40
Earnings before
extraordinary charge 0.45 0.73 1.38 1.75
Extraordinary charge
from early extinguishment
of debt, net of income
taxes (0.03) — (0.03) —
Net earnings per share $0.42 0.73 1.35 1.75
Diluted earnings (loss)
per share:
Earnings from continuing
operations $0.45 0.73 1.38 1.34
Earnings from
discontinued operations — — — 0.40
Earnings before
extraordinary charge 0.45 0.73 1.38 1.74
Extraordinary charge
from early
extinguishment of debt,
net of income taxes (0.03) — (0.03) —
Net earnings per share $0.42 0.73 1.35 1.74
Weighted average number of
common shares outstanding
and common equivalent shares
outstanding:
Basic 11,480 11,335 11,443 11,333
Diluted 11,672 11,411 11,495 11,409
EBITDA (c) $29,306 24,471 106,667 89,506
EBITDA as a percent
of revenue 2.98% 2.54% 2.66% 2.17%
NOTES
(a) During the 4th quarter of 1999 the Company reversed special charges
relative to the decision not to close certain warehouses.
(b) In the 4th quarter of 2000 the Company refinanced its revolving debt
and wrote off debt financing costs totaling $.6 million.
(c) EBITDA (operating cash flow) represents earnings from operations
before interest, income tax, depreciation, amortization, LIFO, gains
from the sale of real estate, special charges and other non-recurring
items.
NASH FINCH COMPANY AND SUBSIDIARIES
Calculation of Comparable Earnings
Fourth Quarter Ended Fiscal Year Ended
(12 weeks) (12 weeks) (52 weeks) (52 weeks)
December 30, January 1, December 30, January 1,
2000 2000 2000 2000
Net earnings $4,846 8,296 15,471 19,803
Add Back:
Extraordinary charge
– extinguishment of
debt, net of tax 369 369
Discontinued operations,
net of income tax
(benefit) — (4,566)
Total adjustments 369 — 369 (4,566)
Earnings from continuing
operations before
extraordinary charge 5,215 8,296 15,840 15,237
Add Back:
Special charges — (7,045) — (7,045)
Income tax benefit
of charges — 2,987 — 2,987
Total adjustments — (4,058) — (4,058)
Earnings from continuing
operations before special
charges 5,215 4,238 15,840 11,179
Gain on sale of dairy
operations (after-tax) — (1,807)
Earnings from continuing
operations before special
charges and gain on sale
of dairy operations $5,215 4,238 15,840 9,372
Basic earnings per share
as reported $ 0.42 0.73 1.35 1.75
Basic comparable earnings
per share – continuing
operations pre-charge
and gain on sale of
dairy operations $ 0.45 0.37 1.38 0.83
Weighted average number
of common shares
Basic 11,480 11,335 11,443 11,333
NASH FINCH COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
December 30, January 1,
2000 2000
Assets
Current assets:
Cash $1,534 16,389
Accounts and notes receivable, net 132,992 154,066
Inventories 270,481 264,232
Other current assets 28,532 30,876
Total current assets 433,539 465,563
Investments and noncurrent receivables 32,454 21,220
Property, plant and equipment, net 256,516 235,626
Goodwill, net 113,584 101,751
Intangible assets, net 20,553 13,652
Other assets 24,182 24,631
Total assets $880,828 862,443
Liabilities and Stockholders’ Equity
Current liabilities:
Short-term debt payable to banks $ — —
Current maturities of long-term debt and
capitalized lease obligations 4,646 3,117
Accounts payable 240,724 246,723
Accrued and other liabilities 79,416 77,487
Total current liabilities 324,786 327,327
Long-term debt 308,618 314,091
Capitalized lease obligations 45,046 33,718
Deferred credits and other liabilities 17,838 14,633
Stockholders’ equity 184,540 172,674
Total liabilities and stockholders’ equity $880,828 862,443
NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
2000 1999
Operating activities:
Net earnings (loss) $15,471 19,803
Adjustments to reconcile net income to net cash
provided by operating activities:
Special charges — (15,198)
Depreciation and amortization 46,485 42,619
Provision for bad debts 7,361 4,388
Deferred income taxes 2,884 17,460
Extraordinary charges – extinguishment of debt 640 —
Other (958) (4,839)
Changes in working capital 14,739 (11,083)
Net cash provided by operating activities 86,622 53,150
Investing activities:
Net increase in property, plant and equipment (37,476) (22,676)
Business acquired, net of cash acquired (19,985) (67,082)
(Loans to) payments from customers (14,905) 1,881
(Repurchase) sale of receivables (7,970) 5,070
Proceeds from sale of dairy operation,
net of gain — 12,769
Proceeds from sale of Nash-De Camp — 17,083
Other (5,340) (1,070)
Net cash used for investing activities (85,676) (54,025)
Financing activities:
(Payments) proceeds from long-term debt (4,192) 5,225
Dividends paid (4,122) (4,083)
(Payments) proceeds of short-term debt — (5,891)
(Decrease) increase in outstanding checks (2,932) 21,645
Extinguishment of debt (15) —
Other (4,540) (480)
Net cash (used for) provided by financing
activities (15,801) 16,416
Net increase (decrease) in cash $(14,855) 15,541
Supplemental disclosure of cash flow information:
Non cash investing and financing activities
Purchase of real estate under capital leases $16,049 679
NASH FINCH COMPANY AND SUBSIDIARIES
Twelve Weeks Ended Fifty-Two Weeks Ended
December 30, January 1, December 30, January 1,
2000 2000 2000 2000
EBITDA Reconciliation
($ Millions)
Pre-tax earnings (a) $9.1 14.4 27.5 26.5
Add/(deduct)
LIFO (0.0) (1.4) (1.1) (0.9)
Depreciation and
amortization 11.7 10.0 46.6 42.6
Interest expense 8.3 7.9 34.0 31.2
Closed store lease
costs 1.5 1.8 2.7 1.7
Gain on sale of dairies 0.0 0.0 0.0 (3.1)
Special charges 0.0 (7.0) 0.0 (7.0)
(Gains) losses on sales
of real estate (1.3) (1.2) (3.0) (1.5)
Total EBITDA $29.3 24.5 106.7 89.5
Other Data ($ Millions)
Cash from operations
– 4th qtr. $16.3 15.5 86.6 53.2
Debt to EBITDA –
trailing 4 qtrs.
EBITDA 3.4 3.9 3.4 3.9
Interest coverage
– trailing 4 qtrs. 3.1 2.9 3.1 2.9
Debt to total
capitalization 66% 67% 66% 67%
Total debt $358.3 350.9 358.3 350.9
Capital spending
– 4th qtr. $13.6 10.8 54.1 52.3
Capitalization $542.8 523.6 542.8 523.6
Stockholders’ equity $184.5 172.7 184.5 172.7
(a) Pre-tax earnings reflect continuing operations only
