SpartanNash Co. ((SPTN)) has held its Q4 earnings call. Read on for the main highlights of the call.
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SpartanNash Co.’s recent earnings call showcased a complex sentiment landscape. While the company celebrated record achievements in adjusted EBITDA, growth in the retail segment, and a 12th consecutive quarter of military sales growth, these positives were tempered by challenges such as a slight net sales decline, a significant goodwill impairment charge, and an operating loss in the retail segment.
Record Adjusted EBITDA
The earnings call spotlighted SpartanNash’s impressive financial performance, with a record adjusted EBITDA of $258 million. This achievement marks the third consecutive year of record performance, reflecting a 9% increase compared to the prior year’s quarter.
Retail Segment Growth
SpartanNash reported a notable increase in retail net sales, which climbed over 100 basis points to surpass $2.84 billion. This growth was driven by positive comparable sales progression, especially in Michigan, where positive comps were recorded for the last two quarters.
Military Sales Growth
The company celebrated its 12th consecutive quarter of growth in military sales, highlighting the segment’s consistent accretive results and potential for further organic expansion.
Margin Enhancing Initiatives
SpartanNash’s margin enhancing initiatives paid off significantly, delivering approximately $50 million in benefits for 2024. The company met its plan target of $125 million to $150 million a year ahead of schedule, demonstrating strong operational efficiency.
Strong Liquidity and Cash Generation
Liquidity remained robust, with the company generating $206 million in cash from operating activities—a 130% increase compared to fiscal 2023. SpartanNash’s liquidity stood strong at about $300 million.
Net Sales Decline
Despite some positive developments, SpartanNash experienced a slight decline in full-year net sales, down by less than 2% to $9.55 billion. However, there was a slight rebound in Q4, with sales increasing by more than 70 basis points compared to the previous year quarter.
Goodwill Impairment Charge
A significant challenge arose with a $45.7 million goodwill impairment charge, attributed to underperformance in the legacy retail business, impacting the company’s financial results.
Wholesale Segment Challenges
The wholesale segment faced difficulties, with net sales decreasing by 2.1%. This was primarily due to reduced case volumes with national accounts and independent retailers, impacting overall performance.
Interest Expense Increase
Interest expenses saw an uptick, rising by $1.2 million to $10.9 million. This increase was linked to higher borrowings associated with recent acquisitions and capital investments.
Operating Loss in Retail Segment
The retail segment reported an operating loss of $46 million, a stark contrast to the earnings of $1.9 million recorded in the fourth quarter of 2023, highlighting ongoing challenges in this area.
Forward-Looking Guidance
Looking ahead to fiscal 2025, SpartanNash provided optimistic guidance, forecasting net sales between $9.8 billion and $10 billion and an adjusted EBITDA ranging from $263 million to $278 million. The company plans to focus on both organic and inorganic growth, including tuck-in acquisitions and leveraging an additional week in the fiscal year. With an expected food inflation rate of around 1%, SpartanNash aims to expand its retail footprint, particularly in the ethnic and convenience store sectors, to drive long-term shareholder value.
In conclusion, SpartanNash Co.’s earnings call painted a mixed picture. While there were significant achievements in adjusted EBITDA and retail growth, the company also faced notable challenges, including a goodwill impairment and retail segment losses. Looking forward, SpartanNash remains optimistic, with clear strategies to enhance growth and shareholder value.
