Minneapolis-based Nash Finch, a national food retailer and distributor, has reported a 27% increase in comparable earnings of US$8.1m (66 cents per diluted share) in the Q2 ended 15 June 2002, compared to US$6.4m (53 cents per diluted share) excluding goodwill amortization, year on year.
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Earnings for the Q2 2001 were US$5.3m (44 cents per diluted share) including goodwill amortisation.
Total revenues for the Q2 2002 registered US$937.1m, versus year-ago revenues of US$949.6m. EBITDA grew to US$29.5m in the Q2 2002 compared to US$28.5m in the prior-year, representing 3.2% and 3% of sales, respectively.
“Our earnings performance illustrates our ability to deliver results in an intensely competitive marketplace made even more difficult by a sluggish economy,” said Ron Marshall, president and CEO: “We were able to continue year-over-year growth in comparable earnings as a result of a comprehensive process improvement initiative begun in the Q4 of last year.”
For the first 24 weeks of 2002, total revenues were US$1.86bn compared to US$1.85bn in the prior year period. Net earnings rose 31% to US$13.9m (US$1.15 per diluted share) versus US$10.6m (90 cents per diluted share) excluding goodwill amortisation in the prior-year.
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By GlobalDataAs reported, earnings for the 24-week period of 2001 were US$8.5m (72 cents per diluted share) including goodwill amortisation. EBITDA for the 24-week period in 2002 increased 5% to US$56.1m, or 3% of sales, from US$53.4m, or 2.9% of sales, in the first 24 weeks of 2001.
The net earnings increase was driven by a combination of gross margin improvements, overhead cost reductions and lower interest rates. A 0.31% gross margin improvement is attributed to increased productivity and efficient utilisation of distribution facilities, improved retail store sales mix in higher margin departments and to a lesser degree the higher proportion of retail segment revenues in the 2002 quarter compared to 2001. SG&A margins increased slightly due to a higher proportion of retail segment revenues offset by overhead cost reductions attained through implementing many process improvements.
“Despite the continuing competitive environment,” Robert Dimond, executive VP and CFO added, “we remain confident about our future and are increasing our earnings guidance for FY 2002 to range between US$2.50 and US$2.55 per diluted share. For the Q3 2002, we expect diluted earnings per share to be in the range of 68 to 70 cents. This compares to Q3 2001 diluted earnings per share of 62 cents, excluding goodwill amortisation.”
Food distribution results
Q2 revenues for the food distribution segment totalled US$456.7m versus US$478.4m in the year-ago period, largely due to intense competition in the industry, the impact of a hesitant economy, the negative effect of the industry, the impact of a hesitant economy, the negative effect of unseasonably cold weather in the Midwest and the planned rationalisation of certain unprofitable accounts. Food distribution profits for the Q2 grew to US$14.6m versus US$13.6m last year. Segment EBITDA totalled US$17m, or 3.7% of sales, versus US$16.3m, or 3.4% of sales, in the prior-year period.
Military segment revenues in the second quarter were US$235.3m compared to US$234.1m a year ago. Profits were US$7.5m versus US$7.7m in the same period last year. EBITDA for this segment was US$7.8m, or 3.3% of sales, in the Q2 2002 versus US$8m, or 3.4% of sales, in the year-ago period.
Retail results
In the Q2, revenues from corporate retail stores increased to US$245.1m from US$237.1m in 2001. Profits grew to US$9.2m, up from US$8.7m in the prior-year period. Retail segment EBITDA increased to US$13m, or 5.3% of sales, versus US$12.3m, or 5.2% of sales, in the prior-year period. Same-store sales were down 3.6% in the due, in part, to the level of competitive activity felt system-wide, combined with the impact of a transition in senior management in our retail group. The store count at the end of the quarter was 112, up from 97 stores at the end of the Q2 2001 and from 110 stores at year-end.
Outlook
“We remain confident that Nash Finch has the team and the tactics necessary to continue our outstanding record of success,” concluded Marshall.
