Nash Finch Company (Nasdaq: NAFC), a Minneapolis-based food retailer and distributor, yesterday reported net earnings of $3.3 million, or 28 cents per share, in the 12-week first quarter ended March 24, 2001. The results represent a 43% increase over net earnings of $2.3 million reported in the prior year period. Total revenues for the quarter were $908.0 million versus revenues of $877.4 million in the first quarter of 2000, a 3.5% increase.
EBITDA (earnings from operations before interest, taxes, depreciation, amortization, LIFO and non-recurring items) totaled $24.9 million in the first quarter of 2001, or 2.7% percent of sales, which is a 24% increase over EBITDA in the first quarter of 2000 of $20.1 million, or 2.3% of sales.
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“The results of refocusing our business over the past three years are reflected in our improved revenues, and even more dramatically in our significantly improved earnings,” said Ron Marshall, president and chief executive officer. “All three of our business segments — retail, food distribution and military — posted revenue and earnings growth as our operating efficiencies continue to improve margins. The quality metrics in our food distribution business are the best in the industry and allow us to continue to capture new accounts from our major competitors. The new volume we gained during the last 12 months is driving down our cost of goods sold, and we’re passing that savings on to our independent operators, which further drives new account capture.”
Business Segments
Revenues in the company’s retail segment for first quarter 2001 were $229.2 million, a 2.4% increase over revenues of $223.8 million in the first quarter of 2000. Same-store-sales were up 1.1% during the first quarter, excluding the Southeast stores we recently announced as being sold to current food distribution customers. Retail segment profit in first quarter 2001 improved by 52% to $7.0 million, or 3.1% of sales, compared to $4.6 million, or 2.1% of sales in first quarter 2000.
During the quarter, the company announced the openings of two new state-of-the-art Econofoods stores in Hudson, Wisconsin and Red Wing, Minnesota, providing the company key positions in both markets. In addition, the company converted two recently acquired stores in Sioux Falls, South Dakota and New Prague, Minnesota to the Econofoods banner and store format, and substantially remodeled and upgraded stores in Rapid City, South Dakota and Monmouth, Illinois.
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By GlobalData“In the last three years, approximately 90% of our retail stores were either newly built, remodeled or expanded. Those stores are delivering on our promise of a convenient shopping experience, unmatched freshness in perishable goods, and outstanding customer service,” said Marshall. “At the same time, our buying leverage on the distribution side has driven down our cost of goods in our retail operations and improved our margins.”
Nash Finch’s food distribution segment reported revenues in the first quarter of 2001 of $457.7 million, compared to $437.8 million in first quarter 2000, a 4.6% increase. The company previously reported $360 million in new wholesale business during 2000, business which has now been fully converted into the company’s distribution centers. The new volume contributed to improved margins in the business, with segment profit increasing by 24% to $11.9 million, or 2.6% of sales, in first quarter 2001 compared to $9.6 million, or 2.2% of sales, in first quarter 2000.
The military segment of the company increased revenue in first quarter 2001 to $221.1 million, up 2.7% from revenues of $215.2 million in the first quarter of 2000. As with the other business segments, military segment profit and profit margins similarly improved during the quarter. Segment profit was $4.9 million, or 2.2% of sales, compared to $4.5 million, or 2.1% of sales, in first quarter 2000.
New President of Retail Operations
During the quarter, Nash Finch announced that Michael Petersen joined the company as executive vice president and president of retail operations, with responsibility for the company’s 119 retail stores. Petersen was president and chief operating officer of Baker’s Supermarkets in Omaha, Nebraska and has over 35 years of experience in the retail grocery industry. Petersen was elected a corporate officer of the Nash Finch Company at the April 17 board meeting.
Addition to Board of Directors
On March 13, 2001, Nash Finch announced that Laura Stein, senior vice president and general counsel of H.J. Heinz Company, had been elected to the company’s board of directors.
Outlook
Nash Finch previously announced expected earnings per share for fiscal 2001 to be in the range of $1.55 to $1.65 per share, reflecting a 15 percent to 22 percent increase over earnings per share for fiscal year 2000 of $1.35.
“We’re clear on our strategy and we will stay focused the remainder of the year. We believe 2001 is the year in which we can really leverage the efficiencies and innovations we’ve built over the last few years. Clearly we’re encouraged by the momentum the first quarter has provided us,” said Marshall.
Nash Finch Company is one of the leading food retail and 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 and Europe are key customers of Nash Finch’s food distribution business. Further information is available on the company’s website at www.nashfinch.com .
Forward-looking statements combined 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
- Condensed Consolidated Statements of Operations (unaudited)
- (In thousands, except per share amounts)
Twelve Weeks Ended
March 24, March 25,
2001 2000
Total sales and revenues $908,005 877,395
Cost and expenses:
Cost of sales 803,384 781,834
Selling, general and administrative 80,218 74,167
Depreciation and amortization 10,647 9,881
Interest expense 8,202 7,603
Total cost and expenses 902,451 873,485
Earnings from continuing operations
before income taxes 5,554 3,910
Income taxes 2,299 1,658
Earnings from continuing operations 3,255 2,252
Basic earnings per share: $ 0.28 0.20
Diluted earnings per share: 0.28 0.20
Weighted average number of common
shares outstanding and common equivalent
shares outstanding:
Basic 11,508 11,406
Diluted 11,729 11,411
EBITDA (a) $ 24,885 20,093
EBITDA as a percent of revenue 2.74% 2.29%
NOTES
(a) 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
Condensed Consolidated Balance Sheets
(In thousands)
March 24, December 30, March 25,
2001 2000 2000
(unaudited) (unaudited)
Assets
Current assets:
Cash $ 1,421 1,534 13,259
Accounts and notes receivable, net 122,859 132,992 126,406
Inventories 265,299 270,481 262,547
Other current assets 33,544 28,532 33,714
Total current assets 423,123 433,539 435,926
Investments and noncurrent
receivables 37,029 32,454 18,517
Property, plant and equipment, net 264,091 256,516 239,968
Goodwill, net 114,182 113,584 114,777
Other assets 45,232 44,735 43,780
Total assets $883,657 880,828 852,968
Liabilities and Stockholders’ Equity
Current liabilities:
Current maturities of long-term debt
and capitalized lease
obligations $ 5,174 4,646 3,162
Accounts payable 226,102 240,724 222,861
Accrued and other liabilities 88,283 79,416 80,794
Total current liabilities 319,559 324,786 306,817
Long-term debt 311,670 308,618 321,921
Capitalized lease obligations 48,639 45,046 33,309
Deferred credits and other
liabilities 16,676 17,838 17,006
Stockholders’ equity 187,113 184,540 173,915
Total liabilities and
stockholders’ equity $883,657 880,828 852,968
NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
Twelve Weeks Ended
March 24, March 25,
2001 2000
Operating activities:
Net earnings (loss) $3,255 2,252
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 10,648 9,881
Provision for bad debts 982 2,744
Deferred income taxes 718 1,162
Other (679) 240
Changes in working capital 17,261 14,141
Net cash provided by
operating activities 32,185 30,420
Investing activities:
Net increase in property,
plant and equipment (12,480) (6,266)
Business acquired, net of cash acquired (1,070) (19,483)
(Loans to) payments from customers (5,263) 173
Repurchase of receivables (4,325) (6,700)
Other (3,917) (778)
Net cash used for
investing activities (27,055) (33,054)
Financing activities:
Proceeds from long-term debt 3,798 7,833
Dividends paid (1,044) (1,028)
Decrease in outstanding checks (8,547) (7,218)
Other 550 (83)
Net cash used for
financing activities (5,243) (496)
Net decrease in cash $ (113) (3,130)
Supplemental disclosure of cash flow information:
Non cash investing and financing activities
Purchase of real estate under
capital leases $3,866 —
Twelve Weeks Ended
March 24, March 25,
2001 2000
EBITDA Reconciliation ($ Millions)
Pre-tax earnings (a) $ 5.6 3.9
Add/(deduct)
LIFO 0.2 (0.5)
Depreciation and amortization 10.6 9.9
Interest expense 8.2 7.6
Closed store lease costs 0.3 0.6
(Gains) losses on sales of real estate 0.0 (1.4)
Total EBITDA $ 24.9 20.1
Other Data ($ Millions)
Cash from operations – 1st qtr. $ 32.2 30.4
Debt to EBITDA – trailing 4 qtrs. EBITDA 3.3 4.0
Interest coverage – trailing 4 qtrs. 3.2 2.9
Debt to total capitalization 66% 67%
Total debt $365.5 358.4
Capital spending – 1st qtr. $ 13.0 8.2
Capitalization $552.6 532.3
Stockholders’ Equity $187.1 173.9
(a) Pre-tax earnings reflect continuing operations only
