Smart & Final Stores, Inc. Reports First Quarter 2019 Financial Results

Published

COMMERCE, Calif., May 1, 2019 /PRNewswire/ -- Smart & Final Stores, Inc. (the "Company") (NYSE:SFS), the value-oriented food and everyday staples retailer, today reported financial results for the fiscal first quarter ended March 24, 2019.

First Quarter Highlights:

  • Net sales increased 2.8% to $1,044.8 million, with a comparable store sales increase of 2.2%
  • Gross margin increased 7.0% to $156.3 million
  • Adjusted EBITDA increased 3.6% to $29.6 million
  • 2019 Guidance withdrawn due to pending Apollo Global Management tender offer

"We had a strong start to the year, with sales growth of 2.8% despite a challenging operating environment characterized by low product price inflation and severe weather in many of our market areas," said David Hirz, president and chief executive officer. "Our comparable store sales growth of 2.2% highlights the value of our differentiated store banners focused on both business and household customers, growth of our private label offerings, our unique warehouse and club-pack assortments, and the success of our ongoing customer service initiatives. We remain dedicated to enhancing our customers' shopping experience both in-store and online through our investment in innovative new technology and merchandising programs."   

Mr. Hirz continued, "On April 16, 2019, we announced an agreement to be acquired by funds managed by affiliates of Apollo Global Management. The proposed transaction, which is supported by our majority shareholder, is a testament to the strength of our franchise and the talent and expertise of our associates. We look forward to closing the transaction and benefitting from Apollo's strategic guidance to help accelerate our business strategy and the growth of our two distinct banners as we begin a new chapter in our almost 150 year-long history."

In order to aid understanding of the Company's business performance, it has presented results in conformity with accounting principles generally accepted in the United States ("GAAP") and has also presented EBITDA, adjusted EBITDA, adjusted net loss, adjusted net loss per share, and adjusted net loss per diluted share, which are non-GAAP measures that are explained and reconciled to the comparable GAAP measures in the tables included in this release. Where applicable, the results below are first presented on a GAAP basis and then on a non-GAAP adjusted basis.

Fiscal First Quarter 2019 Financial Results

Net sales were $1,044.8 million in the 12-week quarter ended March 24, 2019, representing a 2.8% increase as compared to $1,016.2 million for the same period of 2018. Net sales growth was driven by a 2.2% increase in comparable store sales and by the net sales contribution of new stores. Comparable store sales growth was comprised of a 1.7% increase in comparable average transaction size, and a 0.4% increase in comparable transaction count.

Net sales for Smart & Final banner stores were $815.9 million, a 2.6% increase as compared to $795.2 million for the same period of 2018. Comparable store sales growth for the Smart & Final banner was 2.4% in the first quarter.

Net sales for Smart Foodservice Warehouse banner stores were $228.9 million, a 3.6% increase as compared to $221.0 million for the same period of 2018. Comparable store sales growth for the Smart Foodservice Warehouse banner was 1.5% in the first quarter.

Gross margin was $156.3 million, a 7.0% increase as compared to $146.3 million in the first quarter of 2018. Gross margin rate was 15.0% as compared to 14.4% for the same period of 2018.

Operating and administrative expenses were $155.0 million, a 5.2% increase as compared to $147.4 million for the same period of 2018. This increase was related to expenses associated with the effect of higher minimum wages, the eight new stores that opened following the first quarter of 2018 through the end of the first quarter of 2019 and related support costs.

Net loss was $6.7 million, or $0.09 per share, as compared to a net loss of $7.1 million, or $0.10 per share, for the same period of 2018.

Adjusted net loss was $3.3 million, or $0.04 per share, as compared to an adjusted net loss of $2.8 million, or $0.04 per share, for the same period of 2018.  

Adjusted EBITDA was $29.6 million, an increase of 3.6% as compared to $28.6 million for the same period of 2018.

Growth and Development

During the fiscal first quarter of 2019, the Company opened one new Smart Foodservice Warehouse store. As of March 24, 2019, the Company operated a total of 327 stores, including 201 Smart & Final Extra! stores, 59 legacy format Smart & Final stores and 67 Smart Foodservice stores.

  Operating Stores at Quarter End (March 24, 2019)
 Smart & Final Banner Stores  Smart Foodservice Warehouse Banner Stores  Total Company
Extra! format Legacy format Total
End of Fiscal Year 2018 201 59 260 66 326
New stores - - - 1 1
Relocations, net - - - - -
Conversions - - - - -
Store closures - - - - -
End of 1st Quarter 2019 201 59 260 67 327

 

Leverage and Liquidity

As of March 24, 2019, the Company's debt, net of debt issuance costs, was $653.7 million and cash and cash equivalents were $57.9 million.

For the twelve weeks ended March 24, 2019, the Company generated cash from operations of $12.1 million and invested $26.1 million in capital expenditures, primarily related to the improvement of existing assets.

Subsequent Events – Pending Transaction

On April 16, 2019, the Company entered into a definitive merger agreement under which certain investment funds ("Apollo Funds") managed by affiliates of Apollo Global Management, LLC (together with its consolidated subsidiaries, "Apollo") will acquire all of Smart & Final's common stock for $6.50 per share. The transaction, which is expected to close by the third quarter of 2019, is conditioned upon satisfaction of the minimum tender condition which requires that shares representing more than 50 percent of the Company's common shares be tendered, the receipt of approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, Mexican competition law approval, and other customary closing conditions. Upon completion of the transaction, the Company will be a privately held portfolio company of the Apollo Funds, and Smart & Final's common stock will no longer be listed on the New York Stock Exchange.

Outlook

In light of the pending transaction, the Company is no longer providing guidance for its fiscal year ending December 29, 2019.

Fiscal First Quarter 2019 Conference Call

The Company will host a conference call today at 8:00 a.m. Eastern Time / 5:00 a.m. Pacific Time to discuss its fiscal first quarter 2019 financial results. There will not be a question and answer session following management's prepared remarks due to the pending transaction. To participate in the call, please dial (877) 407-0784 (U.S.) or (201) 689-8560 (International) ten minutes prior to the start time. The conference call can also be accessed on the "For Investors" section of the Company's web site at www.smartandfinal.com.   

For those unable to participate during the live broadcast, a telephonic replay of the call will also be available beginning today at approximately 11:00 a.m. Eastern Time, by dialing (844) 512-2921 (U.S.) or (412) 317-6671 (International) and entering the replay pin number: 13689451. The telephonic replay will be available until 11:59 p.m. Eastern Time, May 15, 2019.

About Smart & Final

Smart & Final Stores, Inc. (NYSE: SFS), is a value-oriented food and everyday staples retailer, headquartered in Commerce (near Los Angeles), California. The Company offers quality products in a variety of sizes, saving household, nonprofit and business customers time and money. As of March 24, 2019, the Company operated 327 grocery and foodservice stores under the "Smart & Final," "Smart & Final Extra!" and "Smart Foodservice Warehouse Stores" banners in California, Oregon, Washington, Arizona, Nevada, Idaho, Montana and Utah, with an additional 15 stores in Northwestern Mexico operated through a joint venture. In business for over 147 years, the Company remains committed to giving back to local communities through employee volunteer opportunities and Company donations to local nonprofits.

Forward-Looking Statements

This communication contains forward-looking statements in addition to historical and other information. Words such as "anticipate," "believe," "could," "estimate," "expect," "forecast," "intend," "looking forward," "may," "plan," "potential," "project," "should," "target," "will" and "would," or any variations of these words, or other words with similar meanings to or that otherwise, are used to identify forward-looking statements although not all forward-looking statements contain these words. All statements that address activities, events, performance or developments that the Company intends, expects or believes may occur in the future are forward-looking statements. Forward-looking statements may relate to such matters as the tender offer, its completion and the completion of the related transactions (including the merger), and payment of dividends, as well as the Company's industry, business strategy, goals, projections and expectations concerning the Company's market positions, future operations, future performance, results or condition, margins, profitability, capital expenditures, liquidity and capital resources, interest rates and other financial and operating information and the outcome of contingencies such as legal and administrative proceedings. The Company also derives many of its forward-looking statements from its operating budgets and forecasts, which are based upon many detailed assumptions. The following are some of the factors and uncertainties that could cause actual future results, performance, condition and events to differ, including materially, from those expressed in any forward-looking statements: (1) uncertainties as to the timing of the tender offer and the proposed transactions relating to the tender offer; (2) the risk that the proposed transactions, including the tender offer and related merger, may not be completed in a timely manner or at all; (3) uncertainties as to the percentage of the Company's stockholders that will support the proposed transactions and tender their shares in the tender offer; (4) the possibility that competing offers or acquisition proposals for the Company will be made; (5) the possibility that any or all of the various conditions to the consummation of the proposed transactions may not be satisfied or waived, including the failure to receive any required regulatory approvals from any applicable governmental entities including under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) and by the Mexican Federal Economic Competition Commission or the Mexican Federal Institute of Telecommunications (as applicable) (or any conditions, limitations or restrictions placed on such approvals); (6) the occurrence of any event, change or other circumstance that could give rise to the termination of the agreement and plan of merger (such as the occurrence of a material adverse effect), including in circumstances that would require the Company to pay a termination fee or other expenses; (7) risks regarding the failure to obtain the necessary financing to complete the proposed transactions; (8) risks related to the equity and debt financing and related guarantee arrangements entered into in connection with the proposed transactions; (9) the effect of the announcement or pendency of the proposed transactions on the ability to retain and hire key personnel, to maintain relationships with customers, retailers, suppliers and others with whom business is done, and operating results and business generally; (10) risks related to diverting management's attention from ongoing business operations; (11) the risk that stockholder litigation in connection with the proposed transactions may result in significant costs of defense, indemnification and liability; (12) effects of changes in the general business, political and economic climates; and (13) other factors as set forth from time to time in the Company's filings with the U.S. Securities and Exchange Commission (the "SEC"), including its Form 10-K for the fiscal year ended December 30, 2018, subsequent Form 10-Q filings, and other SEC filings. These forward-looking statements reflect the Company's expectations as of the date of this communication. Factors or events that could affect the proposed transactions or cause actual events, results or performance to differ, including materially, may emerge from time to time and are beyond the control of the Company and it is not possible for the Company to predict all of them. Accordingly, no assurances can be given as to, among other things, whether the proposed transactions will be completed or if any of the other events anticipated by the forward-looking statements will occur or what impact they will have. The reader is cautioned not to place undue reliance on these forward-looking statements. Any forward-looking statements made in this communication speak only as of the date hereof. The Company does not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by applicable securities laws.

Additional Information and Where to Find It

The tender offer for the outstanding shares of the Company referenced in this press release has not yet commenced. This communication is for informational purposes only and is neither a recommendation, an offer to purchase nor a solicitation of an offer to sell shares, nor is it a substitute for the tender offer materials that the Apollo Funds and their acquisition subsidiary will file with the SEC upon commencement of the tender offer. At the time the tender offer is commenced, the Apollo Funds and their acquisition subsidiary will file tender offer materials on Schedule TO, and the Company thereafter will file a Solicitation/Recommendation Statement on Schedule 14D-9 with the SEC with respect to the tender offer. THE TENDER OFFER MATERIALS (INCLUDING AN OFFER TO PURCHASE, A RELATED LETTER OF TRANSMITTAL AND CERTAIN OTHER TENDER OFFER DOCUMENTS) AND THE SOLICITATION/RECOMMENDATION STATEMENT WILL CONTAIN IMPORTANT INFORMATION. HOLDERS OF SHARES OF THE COMPANY ARE URGED TO READ THESE DOCUMENTS CAREFULLY IN THEIR ENTIRETY, AS EACH MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME, AS WELL AS ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION THAT HOLDERS OF THE COMPANY SECURITIES SHOULD CONSIDER BEFORE MAKING ANY DECISION REGARDING TENDERING THEIR SECURITIES.

The Offer to Purchase, the related Letter of Transmittal and certain other tender offer documents, as well as the Solicitation/Recommendation Statement, will be made available to all holders of shares of the Company at no expense to them. The tender offer materials, the Solicitation/Recommendation Statement and other related documents (when available) will be made available for free at the SEC's web site at www.sec.gov. Investors and securityholders may obtain a free copy of the Solicitation/Recommendation Statement and other related documents (when available) that the Company files with the SEC, free of charge, from the Company at investors@smartandfinal.com or by directing a request to Investor Relations, at 310.829.5400 or investors@smartandfinal.com.

  Operating Stores at Quarter End (March 24, 2019) Smart & Final Stores, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
 Smart & Final Banner Stores  Smart Foodservice Warehouse Banner Stores  Total Company (Unaudited)
Extra! format Legacy format Total (In Thousands, Except Share and Per Share Amounts)
End of Fiscal Year 2018 201 59 260 66 326
New stores - - - 1 1 Twelve Weeks Ended
Relocations, net - - - - - March 24, 2019 March 25, 2018
Conversions - - - - -
Store closures - - - - - Net sales  $     1,044,802 $     1,016,237
End of 1st Quarter 2019 201 59 260 67 327 Cost of sales, buying and occupancy  888,466 869,975
Gross margin  156,336 146,262
Operating and administrative expenses  155,038 147,430
Income (loss) from operations  1,298 (1,168)
Interest expense, net  10,578 9,251
Equity in earnings of joint venture  433 577
Loss before income taxes  (8,847) (9,842)
Income tax benefit  2,170 2,748
Net loss  $           (6,677) $           (7,094)
Net loss per share:
      Basic  $             (0.09) $             (0.10)
      Diluted  $             (0.09) $             (0.10)
Weighted average shares outstanding:
       Basic 73,867,084 72,231,171
       Diluted 73,867,084 72,231,171

 

  Operating Stores at Quarter End (March 24, 2019) Smart & Final Stores, Inc. and Subsidiaries Smart & Final Stores, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations Condensed Consolidated Balance Sheets
 Smart & Final Banner Stores  Smart Foodservice Warehouse Banner Stores  Total Company (Unaudited) (In Thousands, Except Share and Per Share Amounts)
Extra! format Legacy format Total (In Thousands, Except Share and Per Share Amounts)
End of Fiscal Year 2018 201 59 260 66 326  March 24, 2019   December 30, 2018 
New stores - - - 1 1 Twelve Weeks Ended  (unaudited) 
Relocations, net - - - - - March 24, 2019 March 25, 2018 Assets 
Conversions - - - - - Current assets: 
Store closures - - - - - Net sales  $     1,044,802 $     1,016,237 Cash and cash equivalents  $             57,872 $                   67,217
End of 1st Quarter 2019 201 59 260 67 327 Cost of sales, buying and occupancy  888,466 869,975 Accounts receivable, less allowances of $100 and $100 at 
Gross margin  156,336 146,262   March 24, 2019 and December 30, 2018, respectively  37,786 36,771
Inventories  286,902 301,938
Operating and administrative expenses  155,038 147,430 Prepaid expenses and other current assets  25,721 32,346
Income (loss) from operations  1,298 (1,168) Total current assets  408,281 438,272
Interest expense, net  10,578 9,251 Property, plant, and equipment: 
Equity in earnings of joint venture  433 577 Land  11,463 9,734
Loss before income taxes  (8,847) (9,842) Buildings and improvements  56,705 60,637
Leasehold improvements  379,685 367,820
Income tax benefit  2,170 2,748 Fixtures and equipment  469,350 450,267
Net loss  $           (6,677) $           (7,094) Construction in progress  16,797 21,784
934,000 910,242
Net loss per share: Less accumulated depreciation and amortization  465,439 428,095
      Basic  $             (0.09) $             (0.10) 468,561 482,147
      Diluted  $             (0.09) $             (0.10) Assets under capital leases - 16,862
Operating lease assets 886,091 -
Weighted average shares outstanding: Capitalized software, net of accumulated amortization of 
       Basic 73,867,084 72,231,171 $21,902 and $20,294 at March 24, 2019 and 
       Diluted 73,867,084 72,231,171 December 30, 2018, respectively  35,089 33,725
Other intangible assets, net  310,722 355,554
Goodwill  291,918 291,918
Equity investment in joint venture  17,705 17,468
Other assets  80,312 75,972
Total assets  $        2,498,679 $              1,711,918
Liabilities and stockholders' equity
Current liabilities: 
Accounts payable  $           209,453 $                 239,668
Accrued salaries and wages  37,409 36,757
Accrued expenses  91,289 99,317
Current portion of operating and financing lease liabilities 77,486 -
Current portion of debt, less debt issuance costs 34,196 29,095
Total current liabilities  449,833 404,837
Obligations under capital leases - 17,177
Obligations under financing leases 22,229 -
Long-term operating lease liabilities 867,606 -
Long-term debt, less debt issuance costs 619,544 619,204
Deferred income taxes  46,942 50,365
Postretirement and postemployment benefits  116,067 115,402
Other long-term liabilities  82,867 196,778
Commitments and contingencies 
Stockholders' equity: 
Preferred stock, $0.001 par value; 
Authorized shares – 10,000,000 
Issued and outstanding shares – none
Common stock, $0.001 par value; 
Authorized shares – 340,000,000
Issued and outstanding shares - 76,522,262 and 76,524,061 at March 24, 2019 and December 30, 2018, respectively
77 77
Additional paid-in capital  523,868 521,183
Retained deficit (207,503) (190,315)
Accumulated other comprehensive loss (22,851) (22,790)
Total stockholders' equity  293,591 308,155
Total liabilities and stockholders' equity  $        2,498,679 $              1,711,918

 

  Operating Stores at Quarter End (March 24, 2019) Smart & Final Stores, Inc. and Subsidiaries Smart & Final Stores, Inc. and Subsidiaries Smart & Final Stores, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Cash Flows
 Smart & Final Banner Stores  Smart Foodservice Warehouse Banner Stores  Total Company (Unaudited) (In Thousands, Except Share and Per Share Amounts) (Unaudited)
Extra! format Legacy format Total (In Thousands, Except Share and Per Share Amounts) (In Thousands)
End of Fiscal Year 2018 201 59 260 66 326  March 24, 2019   December 30, 2018 
New stores - - - 1 1 Twelve Weeks Ended  (unaudited)  Twelve Weeks Ended
Relocations, net - - - - - March 24, 2019 March 25, 2018 Assets  March 24, 2019 March 25, 2018
Conversions - - - - - Current assets: 
Store closures - - - - - Net sales  $     1,044,802 $     1,016,237 Cash and cash equivalents  $             57,872 $                   67,217 Operating activities 
End of 1st Quarter 2019 201 59 260 67 327 Cost of sales, buying and occupancy  888,466 869,975 Accounts receivable, less allowances of $100 and $100 at  Net loss $                               (6,677) $                         (7,094)
Gross margin  156,336 146,262   March 24, 2019 and December 30, 2018, respectively  37,786 36,771 Adjustments to reconcile net loss to net cash provided by 
Inventories  286,902 301,938 operating activities: 
Operating and administrative expenses  155,038 147,430 Prepaid expenses and other current assets  25,721 32,346 Depreciation  12,714 13,880
Income (loss) from operations  1,298 (1,168) Total current assets  408,281 438,272 Amortization  10,698 9,412
Amortization of debt discount and debt issuance costs  472 459
Interest expense, net  10,578 9,251 Property, plant, and equipment:  Share-based compensation 2,703 3,285
Equity in earnings of joint venture  433 577 Land  11,463 9,734 Deferred income taxes (628) (257)
Loss before income taxes  (8,847) (9,842) Buildings and improvements  56,705 60,637 Equity in earnings of joint venture  (433) (577)
Leasehold improvements  379,685 367,820 Loss (gain) on disposal of property, plant, and equipment  85 (32)
Income tax benefit  2,170 2,748 Fixtures and equipment  469,350 450,267 Asset impairment  322 1,425
Net loss  $           (6,677) $           (7,094) Construction in progress  16,797 21,784 Changes in operating assets and liabilities: 
934,000 910,242 Accounts receivable, net  (1,015) 3,452
Net loss per share: Less accumulated depreciation and amortization  465,439 428,095 Inventories 15,036 1,972
      Basic  $             (0.09) $             (0.10) 468,561 482,147 Prepaid expenses and other assets  6,494 7,520
      Diluted  $             (0.09) $             (0.10) Assets under capital leases - 16,862 Operating lease assets 17,528 -
Operating lease assets 886,091 - Accounts payable  (30,215) (24,319)
Weighted average shares outstanding: Capitalized software, net of accumulated amortization of  Accrued salaries and wages  652 (5,140)
       Basic 73,867,084 72,231,171 $21,902 and $20,294 at March 24, 2019 and  Operating lease liabilities (19,653) -
       Diluted 73,867,084 72,231,171 December 30, 2018, respectively  35,089 33,725 Other accrued liabilities  3,968 14,209
Other intangible assets, net  310,722 355,554 Net cash provided by operating activities  12,051 18,195
Goodwill  291,918 291,918
Equity investment in joint venture  17,705 17,468 Investing activities 
Other assets  80,312 75,972 Purchases of property, plant, and equipment  (22,208) (25,478)
Total assets  $        2,498,679 $              1,711,918 Proceeds from disposal of property, plant, and equipment  137 33
Investment in capitalized software  (3,899) (3,523)
Other  (167) (19)
Liabilities and stockholders' equity Net cash used in investing activities  (26,137) (28,987)
Current liabilities: 
Accounts payable  $           209,453 $                 239,668 Financing activities
Accrued salaries and wages  37,409 36,757 Proceeds from exercise of stock options 27 336
Accrued expenses  91,289 99,317 Payment of minimum withholding taxes on net share settlement of share-based compensation awards (45) (65)
Current portion of operating and financing lease liabilities 77,486 - Fees paid in conjunction with debt financing (31) (31)
Current portion of debt, less debt issuance costs 34,196 29,095 Borrowings on bank line of credit 36,000 27,000
Total current liabilities  449,833 404,837 Payments on bank line of credit (31,000) (39,000)
Obligations under capital leases - 17,177 Principal payments on finance leases (210) -
Obligations under financing leases 22,229 - Cash from landlord related to financing lease obligations - 6,671
Long-term operating lease liabilities 867,606 - Net cash provided by (used in) financing activities 4,741 (5,089)
Long-term debt, less debt issuance costs 619,544 619,204
Deferred income taxes  46,942 50,365 Net decrease in cash and cash equivalents (9,345) (15,881)
Postretirement and postemployment benefits  116,067 115,402 Cash and cash equivalents at beginning of period 67,217 71,671
Other long-term liabilities  82,867 196,778 Cash and cash equivalents at end of period $                               57,872 $                         55,790
Commitments and contingencies  Cash paid during the period for:
Interest  $                                 6,720 $                           1,116
Stockholders' equity:  Income taxes - -
Preferred stock, $0.001 par value; 
Authorized shares – 10,000,000  Non-cash investing and financing activities
Issued and outstanding shares – none Software development costs incurred but not paid $                                 1,509 $                           2,115
Common stock, $0.001 par value;  Construction in progress costs incurred but not paid 12,752 14,888
Authorized shares – 340,000,000 Property acquired through financing lease obligations - 232
Issued and outstanding shares - 76,522,262 and 76,524,061 at March 24, 2019 and December 30, 2018, respectively
77 77
Additional paid-in capital  523,868 521,183
Retained deficit (207,503) (190,315)
Accumulated other comprehensive loss (22,851) (22,790)
Total stockholders' equity  293,591 308,155
Total liabilities and stockholders' equity  $        2,498,679 $              1,711,918

 

  Operating Stores at Quarter End (March 24, 2019) Smart & Final Stores, Inc. and Subsidiaries Smart & Final Stores, Inc. and Subsidiaries Smart & Final Stores, Inc. and Subsidiaries  Smart & Final Stores, Inc. and Subsidiaries 
Condensed Consolidated Statements of Operations Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Cash Flows  Segment Reporting 
 Smart & Final Banner Stores  Smart Foodservice Warehouse Banner Stores  Total Company (Unaudited) (In Thousands, Except Share and Per Share Amounts) (Unaudited)  (In Thousands) 
Extra! format Legacy format Total (In Thousands, Except Share and Per Share Amounts) (In Thousands)
End of Fiscal Year 2018 201 59 260 66 326  March 24, 2019   December 30, 2018   Smart & Final   Smart Foodservice   Corporate / Other   Consolidated 
New stores - - - 1 1 Twelve Weeks Ended  (unaudited)  Twelve Weeks Ended Twelve Weeks Ended March 24, 2019 
Relocations, net - - - - - March 24, 2019 March 25, 2018 Assets  March 24, 2019 March 25, 2018  Net sales  $        815,909 $     228,893 $                - $     1,044,802
Conversions - - - - - Current assets:   Cost of sales, distribution and store occupancy  691,406 194,937 2,123 888,466
Store closures - - - - - Net sales  $     1,044,802 $     1,016,237 Cash and cash equivalents  $             57,872 $                   67,217 Operating activities   Operating and administrative expenses  116,313 19,261 19,464 155,038
End of 1st Quarter 2019 201 59 260 67 327 Cost of sales, buying and occupancy  888,466 869,975 Accounts receivable, less allowances of $100 and $100 at  Net loss $                               (6,677) $                         (7,094)  Income (loss) from operations  $            8,190 $       14,695 $     (21,587) $            1,298
Gross margin  156,336 146,262   March 24, 2019 and December 30, 2018, respectively  37,786 36,771 Adjustments to reconcile net loss to net cash provided by 
Inventories  286,902 301,938 operating activities: 
Operating and administrative expenses  155,038 147,430 Prepaid expenses and other current assets  25,721 32,346 Depreciation  12,714 13,880  Capital expenditures  $          15,315 $         5,150 $        5,642 $          26,107
Income (loss) from operations  1,298 (1,168) Total current assets  408,281 438,272 Amortization  10,698 9,412
Amortization of debt discount and debt issuance costs  472 459
Interest expense, net  10,578 9,251 Property, plant, and equipment:  Share-based compensation 2,703 3,285
Equity in earnings of joint venture  433 577 Land  11,463 9,734 Deferred income taxes (628) (257)
Loss before income taxes  (8,847) (9,842) Buildings and improvements  56,705 60,637 Equity in earnings of joint venture  (433) (577) Twelve Weeks Ended March 25, 2018 
Leasehold improvements  379,685 367,820 Loss (gain) on disposal of property, plant, and equipment  85 (32)  Net sales  $        795,192 $     221,045 $                - $     1,016,237
Income tax benefit  2,170 2,748 Fixtures and equipment  469,350 450,267 Asset impairment  322 1,425  Cost of sales, distribution and store occupancy  678,615 189,471 1,889 869,975
Net loss  $           (6,677) $           (7,094) Construction in progress  16,797 21,784 Changes in operating assets and liabilities:   Operating and administrative expenses  109,569 17,796 20,065 147,430
934,000 910,242 Accounts receivable, net  (1,015) 3,452  Income (loss) from operations  $            7,008 $       13,778 $     (21,954) $          (1,168)
Net loss per share: Less accumulated depreciation and amortization  465,439 428,095 Inventories 15,036 1,972
      Basic  $             (0.09) $             (0.10) 468,561 482,147 Prepaid expenses and other assets  6,494 7,520
      Diluted  $             (0.09) $             (0.10) Assets under capital leases - 16,862 Operating lease assets 17,528 -  Capital expenditures  $          23,859 $         1,270 $        3,872 $          29,001
Operating lease assets 886,091 - Accounts payable  (30,215) (24,319)
Weighted average shares outstanding: Capitalized software, net of accumulated amortization of  Accrued salaries and wages  652 (5,140)
       Basic 73,867,084 72,231,171 $21,902 and $20,294 at March 24, 2019 and  Operating lease liabilities (19,653) -
       Diluted 73,867,084 72,231,171 December 30, 2018, respectively  35,089 33,725 Other accrued liabilities  3,968 14,209
Other intangible assets, net  310,722 355,554 Net cash provided by operating activities  12,051 18,195
Goodwill  291,918 291,918
Equity investment in joint venture  17,705 17,468 Investing activities 
Other assets  80,312 75,972 Purchases of property, plant, and equipment  (22,208) (25,478)
Total assets  $        2,498,679 $              1,711,918 Proceeds from disposal of property, plant, and equipment  137 33
Investment in capitalized software  (3,899) (3,523)
Other  (167) (19)
Liabilities and stockholders' equity Net cash used in investing activities  (26,137) (28,987)
Current liabilities: 
Accounts payable  $           209,453 $                 239,668 Financing activities
Accrued salaries and wages  37,409 36,757 Proceeds from exercise of stock options 27 336
Accrued expenses  91,289 99,317 Payment of minimum withholding taxes on net share settlement of share-based compensation awards (45) (65)
Current portion of operating and financing lease liabilities 77,486 - Fees paid in conjunction with debt financing (31) (31)
Current portion of debt, less debt issuance costs 34,196 29,095 Borrowings on bank line of credit 36,000 27,000
Total current liabilities  449,833 404,837 Payments on bank line of credit (31,000) (39,000)
Obligations under capital leases - 17,177 Principal payments on finance leases (210) -
Obligations under financing leases 22,229 - Cash from landlord related to financing lease obligations - 6,671
Long-term operating lease liabilities 867,606 - Net cash provided by (used in) financing activities 4,741 (5,089)
Long-term debt, less debt issuance costs 619,544 619,204
Deferred income taxes  46,942 50,365 Net decrease in cash and cash equivalents (9,345) (15,881)
Postretirement and postemployment benefits  116,067 115,402 Cash and cash equivalents at beginning of period 67,217 71,671
Other long-term liabilities  82,867 196,778 Cash and cash equivalents at end of period $                               57,872 $                         55,790
Commitments and contingencies  Cash paid during the period for:
Interest  $                                 6,720 $                           1,116
Stockholders' equity:  Income taxes - -
Preferred stock, $0.001 par value; 
Authorized shares – 10,000,000  Non-cash investing and financing activities
Issued and outstanding shares – none Software development costs incurred but not paid $                                 1,509 $                           2,115
Common stock, $0.001 par value;  Construction in progress costs incurred but not paid 12,752 14,888
Authorized shares – 340,000,000 Property acquired through financing lease obligations - 232
Issued and outstanding shares - 76,522,262 and 76,524,061 at March 24, 2019 and December 30, 2018, respectively
77 77
Additional paid-in capital  523,868 521,183
Retained deficit (207,503) (190,315)
Accumulated other comprehensive loss (22,851) (22,790)
Total stockholders' equity  293,591 308,155
Total liabilities and stockholders' equity  $        2,498,679 $              1,711,918

 Non-GAAP Financial Measures

To supplement the Company's financial information presented in accordance with GAAP, the Company uses certain non-GAAP financial measures (namely EBITDA and adjusted EBITDA, adjusted net income (loss), adjusted net income (loss) per share, and adjusted net income (loss) per diluted share) to evaluate our operating and financial performance and to compare such performance to that of prior periods. We also use these non-GAAP financial measures in making operational and financial decisions and in establishing operational goals. We believe that providing these non-GAAP financial measures to investors, as a supplement to GAAP financial measures, helps investors to (i) evaluate our operating and financial performance and future prospects, (ii) compare financial results across accounting periods, (iii) better understand the long-term performance of our core business and (iv) evaluate trends in our business, all consistent with how management evaluates such performance and movements. The Company defines EBITDA as net income (loss) before depreciation and amortization, interest expense and provision (benefit) for income tax, and adjusted EBITDA as EBITDA adjusted for the items set forth in the table below.  The Company defines adjusted net income (loss) as net income (loss) adjusted for the items set forth in the table below. The Company defines adjusted net income (loss) per share as adjusted net income (loss) divided by the weighted average basic shares outstanding. The Company defines adjusted net income (loss) per diluted share as adjusted net income (loss) divided by the weighted average diluted shares outstanding.

Use of these non-GAAP measures may differ from similar measures reported by other companies. Each of these non-GAAP measures has its limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of the Company's results as reported under GAAP.

The following tables present reconciliations of net loss to EBITDA, adjusted EBITDA and adjusted net loss, and net loss per share to adjusted net loss per share and adjusted net loss per diluted share, for the twelve-week periods ended March 24, 2019 and March 25, 2018.

  Operating Stores at Quarter End (March 24, 2019) Smart & Final Stores, Inc. and Subsidiaries Smart & Final Stores, Inc. and Subsidiaries Smart & Final Stores, Inc. and Subsidiaries  Smart & Final Stores, Inc. and Subsidiaries   Smart & Final  Stores, Inc. and Subsidiaries 
Condensed Consolidated Statements of Operations Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Cash Flows  Segment Reporting   Reconciliation of Net Loss to Non-GAAP Adjusted EBITDA 
 Smart & Final Banner Stores  Smart Foodservice Warehouse Banner Stores  Total Company (Unaudited) (In Thousands, Except Share and Per Share Amounts) (Unaudited)  (In Thousands)   (Unaudited) 
Extra! format Legacy format Total (In Thousands, Except Share and Per Share Amounts) (In Thousands)  (In Thousands) 
End of Fiscal Year 2018 201 59 260 66 326  March 24, 2019   December 30, 2018   Smart & Final   Smart Foodservice   Corporate / Other   Consolidated 
New stores - - - 1 1 Twelve Weeks Ended  (unaudited)  Twelve Weeks Ended Twelve Weeks Ended March 24, 2019  Twelve Weeks Ended March 24, 2019 Twelve Weeks Ended March 25, 2018
Relocations, net - - - - - March 24, 2019 March 25, 2018 Assets  March 24, 2019 March 25, 2018  Net sales  $        815,909 $     228,893 $                - $     1,044,802  Net loss  $             (6,677) $             (7,094)
Conversions - - - - - Current assets:   Cost of sales, distribution and store occupancy  691,406 194,937 2,123 888,466  Depreciation and amortization   23,413 23,292
Store closures - - - - - Net sales  $     1,044,802 $     1,016,237 Cash and cash equivalents  $             57,872 $                   67,217 Operating activities   Operating and administrative expenses  116,313 19,261 19,464 155,038  Interest expense, net  10,579 9,251
End of 1st Quarter 2019 201 59 260 67 327 Cost of sales, buying and occupancy  888,466 869,975 Accounts receivable, less allowances of $100 and $100 at  Net loss $                               (6,677) $                         (7,094)  Income (loss) from operations  $            8,190 $       14,695 $     (21,587) $            1,298  Income tax benefit  (2,170) (2,748)
Gross margin  156,336 146,262   March 24, 2019 and December 30, 2018, respectively  37,786 36,771 Adjustments to reconcile net loss to net cash provided by   EBITDA  25,145 22,701
Inventories  286,902 301,938 operating activities: 
Operating and administrative expenses  155,038 147,430 Prepaid expenses and other current assets  25,721 32,346 Depreciation  12,714 13,880  Capital expenditures  $          15,315 $         5,150 $        5,642 $          26,107  Adjustments to EBITDA 
Income (loss) from operations  1,298 (1,168) Total current assets  408,281 438,272 Amortization  10,698 9,412  Net loss from closed stores and exit costs (a)  524 91
Amortization of debt discount and debt issuance costs  472 459  Loss from asset dispositions and impairment charges (b)  379 1,418
Interest expense, net  10,578 9,251 Property, plant, and equipment:  Share-based compensation 2,703 3,285  Share-based compensation expense (c)  2,703 3,285
Equity in earnings of joint venture  433 577 Land  11,463 9,734 Deferred income taxes (628) (257)  Non-cash rent (d)  609 1,203
Loss before income taxes  (8,847) (9,842) Buildings and improvements  56,705 60,637 Equity in earnings of joint venture  (433) (577) Twelve Weeks Ended March 25, 2018   Pre-opening costs (e)  156 (69)
Leasehold improvements  379,685 367,820 Loss (gain) on disposal of property, plant, and equipment  85 (32)  Net sales  $        795,192 $     221,045 $                - $     1,016,237  Other items (f)  131 -
Income tax benefit  2,170 2,748 Fixtures and equipment  469,350 450,267 Asset impairment  322 1,425  Cost of sales, distribution and store occupancy  678,615 189,471 1,889 869,975  Adjusted EBITDA  $            29,647 $            28,629
Net loss  $           (6,677) $           (7,094) Construction in progress  16,797 21,784 Changes in operating assets and liabilities:   Operating and administrative expenses  109,569 17,796 20,065 147,430
934,000 910,242 Accounts receivable, net  (1,015) 3,452  Income (loss) from operations  $            7,008 $       13,778 $     (21,954) $          (1,168)
Net loss per share: Less accumulated depreciation and amortization  465,439 428,095 Inventories 15,036 1,972
      Basic  $             (0.09) $             (0.10) 468,561 482,147 Prepaid expenses and other assets  6,494 7,520
      Diluted  $             (0.09) $             (0.10) Assets under capital leases - 16,862 Operating lease assets 17,528 -  Capital expenditures  $          23,859 $         1,270 $        3,872 $          29,001
Operating lease assets 886,091 - Accounts payable  (30,215) (24,319)
Weighted average shares outstanding: Capitalized software, net of accumulated amortization of  Accrued salaries and wages  652 (5,140)
       Basic 73,867,084 72,231,171 $21,902 and $20,294 at March 24, 2019 and  Operating lease liabilities (19,653) -
       Diluted 73,867,084 72,231,171 December 30, 2018, respectively  35,089 33,725 Other accrued liabilities  3,968 14,209
Other intangible assets, net  310,722 355,554 Net cash provided by operating activities  12,051 18,195
Goodwill  291,918 291,918
Equity investment in joint venture  17,705 17,468 Investing activities 
Other assets  80,312 75,972 Purchases of property, plant, and equipment  (22,208) (25,478)
Total assets  $        2,498,679 $              1,711,918 Proceeds from disposal of property, plant, and equipment  137 33
Investment in capitalized software  (3,899) (3,523)
Other  (167) (19)
Liabilities and stockholders' equity Net cash used in investing activities  (26,137) (28,987)
Current liabilities: 
Accounts payable  $           209,453 $                 239,668 Financing activities
Accrued salaries and wages  37,409 36,757 Proceeds from exercise of stock options 27 336
Accrued expenses  91,289 99,317 Payment of minimum withholding taxes on net share settlement of share-based compensation awards (45) (65)
Current portion of operating and financing lease liabilities 77,486 - Fees paid in conjunction with debt financing (31) (31)
Current portion of debt, less debt issuance costs 34,196 29,095 Borrowings on bank line of credit 36,000 27,000
Total current liabilities  449,833 404,837 Payments on bank line of credit (31,000) (39,000)
Obligations under capital leases - 17,177 Principal payments on finance leases (210) -
Obligations under financing leases 22,229 - Cash from landlord related to financing lease obligations - 6,671
Long-term operating lease liabilities 867,606 - Net cash provided by (used in) financing activities 4,741 (5,089)
Long-term debt, less debt issuance costs 619,544 619,204
Deferred income taxes  46,942 50,365 Net decrease in cash and cash equivalents (9,345) (15,881)
Postretirement and postemployment benefits  116,067 115,402 Cash and cash equivalents at beginning of period 67,217 71,671
Other long-term liabilities  82,867 196,778 Cash and cash equivalents at end of period $                               57,872 $                         55,790
Commitments and contingencies  Cash paid during the period for:
Interest  $                                 6,720 $                           1,116
Stockholders' equity:  Income taxes - -
Preferred stock, $0.001 par value; 
Authorized shares – 10,000,000  Non-cash investing and financing activities
Issued and outstanding shares – none Software development costs incurred but not paid $                                 1,509 $                           2,115
Common stock, $0.001 par value;  Construction in progress costs incurred but not paid 12,752 14,888
Authorized shares – 340,000,000 Property acquired through financing lease obligations - 232
Issued and outstanding shares - 76,522,262 and 76,524,061 at March 24, 2019 and December 30, 2018, respectively
77 77
Additional paid-in capital  523,868 521,183
Retained deficit (207,503) (190,315)
Accumulated other comprehensive loss (22,851) (22,790)
Total stockholders' equity  293,591 308,155
Total liabilities and stockholders' equity  $        2,498,679 $              1,711,918

 

  Operating Stores at Quarter End (March 24, 2019) Smart & Final Stores, Inc. and Subsidiaries Smart & Final Stores, Inc. and Subsidiaries Smart & Final Stores, Inc. and Subsidiaries  Smart & Final Stores, Inc. and Subsidiaries   Smart & Final  Stores, Inc. and Subsidiaries   Smart & Final  Stores, Inc. and Subsidiaries 
Condensed Consolidated Statements of Operations Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Cash Flows  Segment Reporting   Reconciliation of Net Loss to Non-GAAP Adjusted EBITDA   Reconciliation of Net Loss to Non-GAAP Adjusted Net Loss 
 Smart & Final Banner Stores  Smart Foodservice Warehouse Banner Stores  Total Company (Unaudited) (In Thousands, Except Share and Per Share Amounts) (Unaudited)  (In Thousands)   (Unaudited)   (Unaudited) 
Extra! format Legacy format Total (In Thousands, Except Share and Per Share Amounts) (In Thousands)  (In Thousands)   (In Thousands, Except Share and Per Share Amounts) 
End of Fiscal Year 2018 201 59 260 66 326  March 24, 2019   December 30, 2018   Smart & Final   Smart Foodservice   Corporate / Other   Consolidated 
New stores - - - 1 1 Twelve Weeks Ended  (unaudited)  Twelve Weeks Ended Twelve Weeks Ended March 24, 2019  Twelve Weeks Ended March 24, 2019 Twelve Weeks Ended March 25, 2018 Twelve Weeks Ended March 24, 2019 Twelve Weeks Ended March 25, 2018
Relocations, net - - - - - March 24, 2019 March 25, 2018 Assets  March 24, 2019 March 25, 2018  Net sales  $        815,909 $     228,893 $                - $     1,044,802  Net loss  $             (6,677) $             (7,094)  Net loss  $             (6,677) $             (7,094)
Conversions - - - - - Current assets:   Cost of sales, distribution and store occupancy  691,406 194,937 2,123 888,466  Depreciation and amortization   23,413 23,292  Income tax benefit  (2,170) (2,748)
Store closures - - - - - Net sales  $     1,044,802 $     1,016,237 Cash and cash equivalents  $             57,872 $                   67,217 Operating activities   Operating and administrative expenses  116,313 19,261 19,464 155,038  Interest expense, net  10,579 9,251  Loss before income taxes  (8,847) (9,842)
End of 1st Quarter 2019 201 59 260 67 327 Cost of sales, buying and occupancy  888,466 869,975 Accounts receivable, less allowances of $100 and $100 at  Net loss $                               (6,677) $                         (7,094)  Income (loss) from operations  $            8,190 $       14,695 $     (21,587) $            1,298  Income tax benefit  (2,170) (2,748)
Gross margin  156,336 146,262   March 24, 2019 and December 30, 2018, respectively  37,786 36,771 Adjustments to reconcile net loss to net cash provided by   EBITDA  25,145 22,701  Adjustments to net loss 
Inventories  286,902 301,938 operating activities:   Net loss from closed stores and exit costs (a)  524 91
Operating and administrative expenses  155,038 147,430 Prepaid expenses and other current assets  25,721 32,346 Depreciation  12,714 13,880  Capital expenditures  $          15,315 $         5,150 $        5,642 $          26,107  Adjustments to EBITDA   Loss from asset dispositions and impairment charges (b)  379 1,418
Income (loss) from operations  1,298 (1,168) Total current assets  408,281 438,272 Amortization  10,698 9,412  Net loss from closed stores and exit costs (a)  524 91  Share-based compensation expense (c)  2,703 3,285
Amortization of debt discount and debt issuance costs  472 459  Loss from asset dispositions and impairment charges (b)  379 1,418  Non-cash rent (d)  609 1,203
Interest expense, net  10,578 9,251 Property, plant, and equipment:  Share-based compensation 2,703 3,285  Share-based compensation expense (c)  2,703 3,285  Pre-opening costs (e)  156 (69)
Equity in earnings of joint venture  433 577 Land  11,463 9,734 Deferred income taxes (628) (257)  Non-cash rent (d)  609 1,203  Other items (f)  131 -
Loss before income taxes  (8,847) (9,842) Buildings and improvements  56,705 60,637 Equity in earnings of joint venture  (433) (577) Twelve Weeks Ended March 25, 2018   Pre-opening costs (e)  156 (69)  Adjusted income tax benefit  1,022 1,092
Leasehold improvements  379,685 367,820 Loss (gain) on disposal of property, plant, and equipment  85 (32)  Net sales  $        795,192 $     221,045 $                - $     1,016,237  Other items (f)  131 -  Adjusted net loss  $             (3,323) $             (2,822)
Income tax benefit  2,170 2,748 Fixtures and equipment  469,350 450,267 Asset impairment  322 1,425  Cost of sales, distribution and store occupancy  678,615 189,471 1,889 869,975  Adjusted EBITDA  $            29,647 $            28,629
Net loss  $           (6,677) $           (7,094) Construction in progress  16,797 21,784 Changes in operating assets and liabilities:   Operating and administrative expenses  109,569 17,796 20,065 147,430 Adjusted Net Loss Per Share
934,000 910,242 Accounts receivable, net  (1,015) 3,452  Income (loss) from operations  $            7,008 $       13,778 $     (21,954) $          (1,168)
Net loss per share: Less accumulated depreciation and amortization  465,439 428,095 Inventories 15,036 1,972 Net loss per share - basic $               (0.09) $               (0.10)
      Basic  $             (0.09) $             (0.10) 468,561 482,147 Prepaid expenses and other assets  6,494 7,520 Per share impact of net loss adjustments 0.05 0.06
      Diluted  $             (0.09) $             (0.10) Assets under capital leases - 16,862 Operating lease assets 17,528 -  Capital expenditures  $          23,859 $         1,270 $        3,872 $          29,001 Adjusted net loss per share - basic $               (0.04) $               (0.04)
Operating lease assets 886,091 - Accounts payable  (30,215) (24,319) Net loss per share - diluted $               (0.09) $               (0.10)
Weighted average shares outstanding: Capitalized software, net of accumulated amortization of  Accrued salaries and wages  652 (5,140) Per share impact of net loss adjustments 0.05 0.06
       Basic 73,867,084 72,231,171 $21,902 and $20,294 at March 24, 2019 and  Operating lease liabilities (19,653) - Adjusted net loss per share - diluted $               (0.04) $               (0.04)
       Diluted 73,867,084 72,231,171 December 30, 2018, respectively  35,089 33,725 Other accrued liabilities  3,968 14,209
Other intangible assets, net  310,722 355,554 Net cash provided by operating activities  12,051 18,195 Weighted average shares - basic 73,867,084 72,231,171
Goodwill  291,918 291,918 Weighted average shares - diluted 73,867,084 72,231,171
Equity investment in joint venture  17,705 17,468 Investing activities 
Other assets  80,312 75,972 Purchases of property, plant, and equipment  (22,208) (25,478)
Total assets  $        2,498,679 $              1,711,918 Proceeds from disposal of property, plant, and equipment  137 33
Investment in capitalized software  (3,899) (3,523)
Other  (167) (19)
Liabilities and stockholders' equity Net cash used in investing activities  (26,137) (28,987)
Current liabilities: 
Accounts payable  $           209,453 $                 239,668 Financing activities
Accrued salaries and wages  37,409 36,757 Proceeds from exercise of stock options 27 336
Accrued expenses  91,289 99,317 Payment of minimum withholding taxes on net share settlement of share-based compensation awards (45) (65)
Current portion of operating and financing lease liabilities 77,486 - Fees paid in conjunction with debt financing (31) (31)
Current portion of debt, less debt issuance costs 34,196 29,095 Borrowings on bank line of credit 36,000 27,000
Total current liabilities  449,833 404,837 Payments on bank line of credit (31,000) (39,000)
Obligations under capital leases - 17,177 Principal payments on finance leases (210) -
Obligations under financing leases 22,229 - Cash from landlord related to financing lease obligations - 6,671
Long-term operating lease liabilities 867,606 - Net cash provided by (used in) financing activities 4,741 (5,089)
Long-term debt, less debt issuance costs 619,544 619,204
Deferred income taxes  46,942 50,365 Net decrease in cash and cash equivalents (9,345) (15,881)
Postretirement and postemployment benefits  116,067 115,402 Cash and cash equivalents at beginning of period 67,217 71,671
Other long-term liabilities  82,867 196,778 Cash and cash equivalents at end of period $                               57,872 $                         55,790
Commitments and contingencies  Cash paid during the period for:
Interest  $                                 6,720 $                           1,116
Stockholders' equity:  Income taxes - -
Preferred stock, $0.001 par value; 
Authorized shares – 10,000,000  Non-cash investing and financing activities
Issued and outstanding shares – none Software development costs incurred but not paid $                                 1,509 $                           2,115
Common stock, $0.001 par value;  Construction in progress costs incurred but not paid 12,752 14,888
Authorized shares – 340,000,000 Property acquired through financing lease obligations - 232
Issued and outstanding shares - 76,522,262 and 76,524,061 at March 24, 2019 and December 30, 2018, respectively
77 77
Additional paid-in capital  523,868 521,183
Retained deficit (207,503) (190,315)
Accumulated other comprehensive loss (22,851) (22,790)
Total stockholders' equity  293,591 308,155
Total liabilities and stockholders' equity  $        2,498,679 $              1,711,918

  Operating Stores at Quarter End (March 24, 2019) Smart & Final Stores, Inc. and Subsidiaries Smart & Final Stores, Inc. and Subsidiaries Smart & Final Stores, Inc. and Subsidiaries  Smart & Final Stores, Inc. and Subsidiaries   Smart & Final  Stores, Inc. and Subsidiaries   Smart & Final  Stores, Inc. and Subsidiaries 
Condensed Consolidated Statements of Operations Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Cash Flows  Segment Reporting   Reconciliation of Net Loss to Non-GAAP Adjusted EBITDA   Reconciliation of Net Loss to Non-GAAP Adjusted Net Loss  (a)  Represents costs associated with store closure and exit costs.
 Smart & Final Banner Stores  Smart Foodservice Warehouse Banner Stores  Total Company (Unaudited) (In Thousands, Except Share and Per Share Amounts) (Unaudited)  (In Thousands)   (Unaudited)   (Unaudited)  (b)  Represents non-cash loss associated with asset dispositions and impairment charges.
Extra! format Legacy format Total (In Thousands, Except Share and Per Share Amounts) (In Thousands)  (In Thousands)   (In Thousands, Except Share and Per Share Amounts)  (c)  Represents expenses associated with the Company's equity-based incentive award program.
End of Fiscal Year 2018 201 59 260 66 326  March 24, 2019   December 30, 2018   Smart & Final   Smart Foodservice   Corporate / Other   Consolidated  (d)  Represents non-cash component of recognized rent expense. 
New stores - - - 1 1 Twelve Weeks Ended  (unaudited)  Twelve Weeks Ended Twelve Weeks Ended March 24, 2019  Twelve Weeks Ended March 24, 2019 Twelve Weeks Ended March 25, 2018 Twelve Weeks Ended March 24, 2019 Twelve Weeks Ended March 25, 2018 (e)  Represents new store and relocation opening costs consisting primarily of rent, utilities, distribution, store labor and advertising.
Relocations, net - - - - - March 24, 2019 March 25, 2018 Assets  March 24, 2019 March 25, 2018  Net sales  $        815,909 $     228,893 $                - $     1,044,802  Net loss  $             (6,677) $             (7,094)  Net loss  $             (6,677) $             (7,094) (f)  Represents legal costs in the twelve weeks ended March 24, 2019.
Conversions - - - - - Current assets:   Cost of sales, distribution and store occupancy  691,406 194,937 2,123 888,466  Depreciation and amortization   23,413 23,292  Income tax benefit  (2,170) (2,748)
Store closures - - - - - Net sales  $     1,044,802 $     1,016,237 Cash and cash equivalents  $             57,872 $                   67,217 Operating activities   Operating and administrative expenses  116,313 19,261 19,464 155,038  Interest expense, net  10,579 9,251  Loss before income taxes  (8,847) (9,842)
End of 1st Quarter 2019 201 59 260 67 327 Cost of sales, buying and occupancy  888,466 869,975 Accounts receivable, less allowances of $100 and $100 at  Net loss $                               (6,677) $                         (7,094)  Income (loss) from operations  $            8,190 $       14,695 $     (21,587) $            1,298  Income tax benefit  (2,170) (2,748)
Gross margin  156,336 146,262   March 24, 2019 and December 30, 2018, respectively  37,786 36,771 Adjustments to reconcile net loss to net cash provided by   EBITDA  25,145 22,701  Adjustments to net loss 
Inventories  286,902 301,938 operating activities:   Net loss from closed stores and exit costs (a)  524 91
Operating and administrative expenses  155,038 147,430 Prepaid expenses and other current assets  25,721 32,346 Depreciation  12,714 13,880  Capital expenditures  $          15,315 $         5,150 $        5,642 $          26,107  Adjustments to EBITDA   Loss from asset dispositions and impairment charges (b)  379 1,418
Income (loss) from operations  1,298 (1,168) Total current assets  408,281 438,272 Amortization  10,698 9,412  Net loss from closed stores and exit costs (a)  524 91  Share-based compensation expense (c)  2,703 3,285
Amortization of debt discount and debt issuance costs  472 459  Loss from asset dispositions and impairment charges (b)  379 1,418  Non-cash rent (d)  609 1,203
Interest expense, net  10,578 9,251 Property, plant, and equipment:  Share-based compensation 2,703 3,285  Share-based compensation expense (c)  2,703 3,285  Pre-opening costs (e)  156 (69)
Equity in earnings of joint venture  433 577 Land  11,463 9,734 Deferred income taxes (628) (257)  Non-cash rent (d)  609 1,203  Other items (f)  131 -
Loss before income taxes  (8,847) (9,842) Buildings and improvements  56,705 60,637 Equity in earnings of joint venture  (433) (577) Twelve Weeks Ended March 25, 2018   Pre-opening costs (e)  156 (69)  Adjusted income tax benefit  1,022 1,092
Leasehold improvements  379,685 367,820 Loss (gain) on disposal of property, plant, and equipment  85 (32)  Net sales  $        795,192 $     221,045 $                - $     1,016,237  Other items (f)  131 -  Adjusted net loss  $             (3,323) $             (2,822)
Income tax benefit  2,170 2,748 Fixtures and equipment  469,350 450,267 Asset impairment  322 1,425  Cost of sales, distribution and store occupancy  678,615 189,471 1,889 869,975  Adjusted EBITDA  $            29,647 $            28,629
Net loss  $           (6,677) $           (7,094) Construction in progress  16,797 21,784 Changes in operating assets and liabilities:   Operating and administrative expenses  109,569 17,796 20,065 147,430 Adjusted Net Loss Per Share
934,000 910,242 Accounts receivable, net  (1,015) 3,452  Income (loss) from operations  $            7,008 $       13,778 $     (21,954) $          (1,168)
Net loss per share: Less accumulated depreciation and amortization  465,439 428,095 Inventories 15,036 1,972 Net loss per share - basic $               (0.09) $               (0.10)
      Basic  $             (0.09) $             (0.10) 468,561 482,147 Prepaid expenses and other assets  6,494 7,520 Per share impact of net loss adjustments 0.05 0.06
      Diluted  $             (0.09) $             (0.10) Assets under capital leases - 16,862 Operating lease assets 17,528 -  Capital expenditures  $          23,859 $         1,270 $        3,872 $          29,001 Adjusted net loss per share - basic $               (0.04) $               (0.04)
Operating lease assets 886,091 - Accounts payable  (30,215) (24,319) Net loss per share - diluted $               (0.09) $               (0.10)
Weighted average shares outstanding: Capitalized software, net of accumulated amortization of  Accrued salaries and wages  652 (5,140) Per share impact of net loss adjustments 0.05 0.06
       Basic 73,867,084 72,231,171 $21,902 and $20,294 at March 24, 2019 and  Operating lease liabilities (19,653) - Adjusted net loss per share - diluted $               (0.04) $               (0.04)
       Diluted 73,867,084 72,231,171 December 30, 2018, respectively  35,089 33,725 Other accrued liabilities  3,968 14,209
Other intangible assets, net  310,722 355,554 Net cash provided by operating activities  12,051 18,195 Weighted average shares - basic 73,867,084 72,231,171
Goodwill  291,918 291,918 Weighted average shares - diluted 73,867,084 72,231,171
Equity investment in joint venture  17,705 17,468 Investing activities 
Other assets  80,312 75,972 Purchases of property, plant, and equipment  (22,208) (25,478)
Total assets  $        2,498,679 $              1,711,918 Proceeds from disposal of property, plant, and equipment  137 33
Investment in capitalized software  (3,899) (3,523)
Other  (167) (19)
Liabilities and stockholders' equity Net cash used in investing activities  (26,137) (28,987)
Current liabilities: 
Accounts payable  $           209,453 $                 239,668 Financing activities
Accrued salaries and wages  37,409 36,757 Proceeds from exercise of stock options 27 336
Accrued expenses  91,289 99,317 Payment of minimum withholding taxes on net share settlement of share-based compensation awards (45) (65)
Current portion of operating and financing lease liabilities 77,486 - Fees paid in conjunction with debt financing (31) (31)
Current portion of debt, less debt issuance costs 34,196 29,095 Borrowings on bank line of credit 36,000 27,000
Total current liabilities  449,833 404,837 Payments on bank line of credit (31,000) (39,000)
Obligations under capital leases - 17,177 Principal payments on finance leases (210) -
Obligations under financing leases 22,229 - Cash from landlord related to financing lease obligations - 6,671
Long-term operating lease liabilities 867,606 - Net cash provided by (used in) financing activities 4,741 (5,089)
Long-term debt, less debt issuance costs 619,544 619,204
Deferred income taxes  46,942 50,365 Net decrease in cash and cash equivalents (9,345) (15,881)
Postretirement and postemployment benefits  116,067 115,402 Cash and cash equivalents at beginning of period 67,217 71,671
Other long-term liabilities  82,867 196,778 Cash and cash equivalents at end of period $                               57,872 $                         55,790
Commitments and contingencies  Cash paid during the period for:
Interest  $                                 6,720 $                           1,116
Stockholders' equity:  Income taxes - -
Preferred stock, $0.001 par value; 
Authorized shares – 10,000,000  Non-cash investing and financing activities
Issued and outstanding shares – none Software development costs incurred but not paid $                                 1,509 $                           2,115
Common stock, $0.001 par value;  Construction in progress costs incurred but not paid 12,752 14,888
Authorized shares – 340,000,000 Property acquired through financing lease obligations - 232
Issued and outstanding shares - 76,522,262 and 76,524,061 at March 24, 2019 and December 30, 2018, respectively
77 77
Additional paid-in capital  523,868 521,183
Retained deficit (207,503) (190,315)
Accumulated other comprehensive loss (22,851) (22,790)
Total stockholders' equity  293,591 308,155
Total liabilities and stockholders' equity  $        2,498,679 $              1,711,918

 

 

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SOURCE Smart & Final Stores, Inc.

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