Nash Finch Company
) reported third-quarter 2012 earnings (excluding one-time items)
of $1.38 per share, surpassing the Zacks Consensus Estimate of 71
NASH FINCH CO (NAFC): Free Stock Analysis
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Reported earnings were up 10.4% year over year from $1.25 per
share on the back of top-line growth.
Nash Finch's total sales in third quarter 2012 were $1.50
billion, up 1.7% from the prior-year quarter level. The takeover
of 12 Bag 'N Save stores in May 2012 and the acquisition of 18 No
Frills stores during the quarter boosted total company sales by
$47.2 million. Sales were above the Zacks Consensus Estimate of
Nash Finch's total comparable sales dipped 1.4% year over year in
the reported quarter on account of lower sales due to regular
sale/closing of retail stores.
Adjusted earnings before interest, taxes, depreciation, and
amortization (EBITDA) in the third quarter of 2012 declined 4.6%
to $43.8 million. Selling, general and administrative expenses
amounted to $84.7 million up 6.9% from the prior-year quarter.
Sales declined marginally by 0.2% to $708.1 million in the third
quarter of 2012 from the prior-year quarter.
The segment's EBITDA decreased 35.7% from the prior-year quarter
to $13.7 million in the third quarter of 2012, owing to low
inflation rate and increased establishment and transaction cost
of distribution centers. EBITDA margin was 1.9% in the reported
quarter, down 110 basis points from the previous-year quarter.
Food Distribution sales declined 12% to $546.1 million in the
quarter. The decrease was primarily due to the impact of the
acquisition of Bag 'N' Save and No Frills supermarkets, which,
however, benefited the Retail segment.
Segment EBITDA decreased 7% to $14.8 million in the quarter.
EBITDA margin contracted 10 basis points year over year to 2.7%
in the reported quarter due to inflation.
Retail sales increased 71.2% year over year to $242.2 million,
driven by the benefits of the acquisition of Bag 'N' Save and No
Segment EBITDA more than doubled to $11.3 million in the quarter.
EBITDA margin grew 90 basis points year over year to 4.7% in the
While the acquisition of Bag 'N Save added to retail sales, as it
was a Food Distribution customer, it was also responsible for the
year-over-year decrease in Food Distribution segment sales.
Total Food Distribution and Retail EBITDA increased to $26.1
million, up 22.5% from the prior-year quarter. EBITDA margin also
expanded 50 basis points to 3.3% in the quarter. Overall increase
in total EBITDA can be attributed to a strong impetus from the
retail acquisitions and a decline in incentives.
Cash and cash equivalents for Nash Finch were $1.2 million as of
October 6, 2012, compared with $857,000 as of June 16, 2012.
Long-term debt went up to $371.1 million in the quarter from
$337.4 million in the prior-year quarter.
The company intends to integrate 30 newly acquired stores in the
corporate store base, which is expected to be complete by first
quarter 2013. On the other hand, the company intends to shut down
the Cedar Rapids, Iowa distribution centre in order to optimize
We are positive about the company's top- and bottom-line growth
and continuous acquisitions and have faith in the company's
long-term prospects. We believe that the company's initiative to
increase distribution of its private label products and price
them more competitively will boost sales in the future. Moreover,
its strategic growth plan, Operation Fresh Start is helping the
company to achieve its long-term targets. However, a low
inflation rate continues to hurt the company.
A peer of
), Nash Finch Company currently has a Zacks #3 Rank (short-term
Hold rating). For the long term, we have a Neutral recommendation
on the stock.