UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 7, 2023.
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission File Number: 000-31127
SPARTANNASH COMPANY
(Exact Name of Registrant as Specified in Its Charter)
Michigan
38-0593940
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
850 76th Street, S.W.
P.O. Box 8700
Grand Rapids, Michigan
49518
(Address of Principal Executive Offices)
(Zip Code)
(616) 878-2000
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Common Stock, no par value
SPTN
NASDAQ Global Select Market
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of November 7, 2023, the registrant had 34,623,737 outstanding shares of common stock, no par value.
FORWARD-LOOKING STATEMENTS
The matters discussed in this Quarterly Report on Form 10-Q, in the Company’s press releases, in the Company's website-accessible conference calls with analysts, and investor presentations include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”), about the plans, strategies, objectives, goals or expectations of SpartanNash Company and subsidiaries (“SpartanNash” or “the Company”). These forward-looking statements may be identifiable by words or phrases indicating that the Company or management "expects," "projects," "anticipates," "plans," "believes," "intends," or "estimates," or that a particular occurrence or event "may," "could," "should," "will" or "will likely" result, occur or be pursued or "continue" in the future, that the "outlook", "trend", "guidance" or "target" is toward a particular result or occurrence, that a development is an "opportunity," "priority," "strategy," "focus," that the Company is "positioned" for a particular result, or similarly stated expectations.
Undue reliance should not be placed on the forward-looking statements contained in this Quarterly Report on Form 10-Q, SpartanNash’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and other periodic reports filed with the Securities and Exchange Commission (“SEC”), which speak only as of the date made. Forward-looking statements are necessarily based on estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies may affect actual results and could cause actual results to differ materially. These risks and uncertainties include the Company's ability to compete in an extremely competitive industry; the Company's dependence on certain major customers; the Company's ability to implement its growth strategy and transformation initiatives; changes in relationships with the Company’s vendor base and supply chain disruptions; vulnerability to decreases in the supply and increases in the price of raw materials and labor, manufacturing, distribution and other costs; macroeconomic uncertainty, including rising inflation, potential economic recession, and increasing interest rates; difficulty attracting and retaining well-qualified Associates and effectively managing increased labor costs; customers to whom the Company extends credit or for whom the Company guarantees loans or lease obligations may fail to repay the Company; not achieving the Company’s strategy of growth through acquisitions and encountering difficulties successfully integrating acquired businesses that may not realize the anticipated benefits; the Company's ability to manage its private brand program for U.S. military commissaries, including the termination of the program or not achieving the desired results; disruptions to the Company's information security network, including security breaches and cyber-attacks; changes in the geopolitical conditions; instances of security threats, severe weather conditions and natural disasters; climate change and an increased focus by stakeholders on environmental sustainability and corporate responsibility; impacts to the Company’s business and reputation due to an increasing focus on environmental, social and governance matters; disruptions associated with disease outbreaks, such as the COVID-19 pandemic; impairment charges for goodwill or other long-lived assets; the Company's ability to successfully manage leadership transitions; interest rate fluctuations; the Company's ability to service its debt and to comply with debt covenants; the Company’s level of indebtedness; changes in government regulations; changes in the military commissary system, including its supply chain, or in the level of governmental funding; product recalls and other product-related safety concerns; labor relations issues; cost increases related to multi-employer pension plans and other postretirement plans; and other risks and uncertainties listed under "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's most recent Annual Report on Form 10-K and in subsequent filings with the Securities and Exchange Commission.
This section and the discussions contained in Item 1A “Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and in Part I, Item 2 “Critical Accounting Policies” of this Quarterly Report on Form 10-Q, are intended to provide meaningful cautionary statements for purposes of the safe harbor provision of the Private Securities Litigation Reform Act of 1995. This should not be construed as a complete list of all the economic, competitive, governmental, technological and other factors that could adversely affect the Company’s expected consolidated financial position, results of operations or liquidity. Additional risks and uncertainties not currently known to SpartanNash or that SpartanNash currently believes are immaterial also may impair its business, operations, liquidity, financial condition and prospects. The Company undertakes no obligation to update or revise its forward-looking statements to reflect developments that occur, or information obtained after the date of this Quarterly Report. In addition, historical information should not be considered as an indicator of future performance.
2
TABLE OF CONTENTS
Page
PART I.
FINANCIAL INFORMATION
4
Item 1.
Financial Statements
Condensed Consolidated Balance Sheets
Condensed Consolidated Statements of Earnings
5
Condensed Consolidated Statements of Comprehensive Income
6
Condensed Consolidated Statements of Shareholders’ Equity
7
Condensed Consolidated Statements of Cash Flows
9
Notes to Condensed Consolidated Financial Statements
10
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
19
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
30
Item 4.
Controls and Procedures
PART II.
OTHER INFORMATION
Legal Proceedings
Item 1A.
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
31
Item 6.
Exhibits
32
Signatures
33
3
PART I
ITEM 1. Financial Statements
SPARTANNASH COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, Unaudited)
October 7,
December 31,
2023
2022
Assets
Current assets
Cash and cash equivalents
$
17,554
29,086
Accounts and notes receivable, net
427,275
404,016
Inventories, net
579,631
571,065
Prepaid expenses and other current assets
63,594
62,244
Total current assets
1,088,054
1,066,411
Property and equipment, net
616,320
610,220
Goodwill
182,160
Intangible assets, net
102,661
106,341
Operating lease assets
251,426
257,047
Other assets, net
93,155
84,382
Total assets
2,333,776
2,306,561
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable
505,786
487,215
Accrued payroll and benefits
71,531
103,048
Other accrued expenses
53,267
62,465
Current portion of operating lease liabilities
43,372
45,453
Current portion of long-term debt and finance lease liabilities
8,410
6,789
Total current liabilities
682,366
704,970
Long-term liabilities
Deferred income taxes
78,318
66,293
Operating lease liabilities
231,809
239,062
Other long-term liabilities
28,212
33,376
Long-term debt and finance lease liabilities
535,804
496,792
Total long-term liabilities
874,143
835,523
Commitments and contingencies (Note 8)
Shareholders’ equity
Common stock, voting, no par value; 100,000 shares authorized; 34,629 and 35,079 shares outstanding
457,830
468,061
Preferred stock, no par value, 10,000 shares authorized; no shares outstanding
—
Accumulated other comprehensive income
5,155
2,979
Retained earnings
314,282
295,028
Total shareholders’ equity
777,267
766,068
Total liabilities and shareholders’ equity
See accompanying notes to condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share amounts)
(Unaudited)
12 Weeks Ended
40 Weeks Ended
October 7, 2023
October 8, 2022
Net sales
2,264,248
2,296,512
7,484,036
7,334,060
Cost of sales
1,916,709
1,945,302
6,337,449
6,178,024
Gross profit
347,539
351,210
1,146,587
1,156,036
Operating expenses
Selling, general and administrative
322,796
333,373
1,059,787
1,094,422
Acquisition and integration, net
2,130
(577
)
2,259
98
Restructuring and asset impairment, net
(458
(886
1,371
1,738
Total operating expenses
324,468
331,910
1,063,417
1,096,258
Operating earnings
23,071
19,300
83,170
59,778
Other expenses and (income)
Interest expense, net
9,280
6,051
30,218
14,764
Other, net
(786
(768
(2,510
(384
Total other expenses, net
8,494
5,283
27,708
14,380
Earnings before income taxes
14,577
14,017
55,462
45,398
Income tax expense
3,450
4,553
13,530
11,530
Net earnings
11,127
9,464
41,932
33,868
Net earnings per basic common share
0.33
0.27
1.22
0.96
Net earnings per diluted common share
0.32
0.26
1.20
0.93
Weighted average shares outstanding:
Basic
34,020
35,160
34,262
35,444
Diluted
34,523
36,145
34,967
36,398
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Other comprehensive income (loss), before tax
Change in interest rate swap
3,625
4,770
Postretirement liability adjustment
(720
(687
(1,957
6,601
Total other comprehensive income (loss), before tax
2,905
2,813
Income tax (expense) benefit related to items of other comprehensive income (loss)
(673
168
(637
(1,619
Total other comprehensive income (loss), after tax
2,232
(519
2,176
4,982
Comprehensive income
13,359
8,945
44,108
38,850
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
Accumulated
Other
Shares
Common
Comprehensive
Retained
Outstanding
Stock
Income (Loss)
Earnings
Total
Balance at December 31, 2022
35,079
11,337
Other comprehensive loss
(1,557
Dividends - $0.215 per share
(7,679
Share repurchases
(435
(10,910
Stock-based compensation
5,147
Stock warrant
607
Issuances of common stock for associate stock purchase plan
17
358
Issuances of restricted stock
425
Cancellations of stock-based awards
(151
(3,917
Balance at April 22, 2023
34,935
459,346
1,422
298,686
759,454
19,468
Other comprehensive income
1,501
(7,524
(330
(7,617
2,465
353
Issuances of common stock for associate stock purchase plan and other stock-based awards
18
328
(15
(31
Balance at July 15, 2023
34,618
454,844
2,923
310,630
768,397
(7,475
2,348
319
348
11
(19
(29
Balance at October 7, 2023
34,629
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY, CONTINUED
(Loss) Income
Balance at January 1, 2022
35,948
493,783
(1,455
290,541
782,869
19,289
23
Dividends - $0.21 per share
(7,665
4,295
673
108
369
(180
(4,288
Balance at April 23, 2022
36,140
494,571
(1,432
302,165
795,304
5,115
5,478
(7,561
(215
(6,573
1,397
481
Issuance of common stock for associate stock purchase plan
104
14
(30
(23
Balance at July 16, 2022
35,913
489,957
4,046
299,719
793,722
(7,436
(543
(16,716
1,280
505
121
(20
(11
Balance at October 8, 2022
35,359
475,136
3,527
301,747
780,410
8
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash flows from operating activities
Adjustments to reconcile net earnings to net cash provided by operating activities:
Non-cash restructuring, asset impairment, and other charges
1,273
1,664
Depreciation and amortization
75,245
72,274
Non-cash rent
(2,760
(3,428
LIFO expense
22,445
42,916
Postretirement benefits income
(1,990
(367
11,388
5,299
Stock-based compensation expense
9,960
6,972
1,279
1,659
Loss (gain) on disposals of assets
304
(68
Other operating activities
1,308
Changes in operating assets and liabilities:
Accounts receivable
(23,071
(68,142
Inventories
(32,688
(140,698
Prepaid expenses and other assets
(3,558
(2,043
37,517
54,682
(34,960
16,348
Current income taxes
(3,564
(350
Other accrued expenses and other liabilities
(4,380
(14,633
Net cash provided by operating activities
95,680
7,454
Cash flows from investing activities
Purchases of property and equipment
(86,212
(66,282
Net proceeds from the sale of assets
4,055
28,981
Acquisitions, net of cash acquired
(780
(9,408
Payments from customers on loans
1,097
1,103
Other investing activities
(163
Net cash used in investing activities
(82,003
(45,956
Cash flows from financing activities
Proceeds from senior secured credit facility
1,044,242
1,057,633
Payments on senior secured credit facility
(1,017,484
(955,456
Repayment of other long-term debt and finance lease liabilities
(6,279
(5,116
(18,527
(23,289
Net payments related to stock-based award activities
(3,977
(4,322
Dividends paid
(22,381
(22,458
Other financing activities
(803
(192
Net cash (used in) provided by financing activities
(25,209
46,800
Net (decrease) increase in cash and cash equivalents
(11,532
8,298
Cash and cash equivalents at beginning of period
10,666
Cash and cash equivalents at end of period
18,964
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Summary of Significant Accounting Policies and Basis of Presentation
The accompanying unaudited condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of SpartanNash Company and its subsidiaries (“SpartanNash” or “the Company”). Intercompany accounts and transactions have been eliminated. For further information, refer to the consolidated financial statements and footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
In the opinion of management, the accompanying condensed consolidated financial statements, taken as a whole, contain all adjustments, including normal recurring items, necessary to present fairly the financial position of SpartanNash as of October 7, 2023, and the results of its operations and cash flows for the interim periods presented. The preparation of the condensed consolidated financial statements and related notes to the financial statements requires management to make estimates. Estimates are based on historical experience, where applicable, and expectations of future outcomes which management believes are reasonable under the circumstances. Interim results are not necessarily indicative of results for a full year.
The unaudited information in the condensed consolidated financial statements for the third quarter and year-to-date periods of 2023 and 2022 include the results of operations of the Company for the 12- and 40-week periods ended October 7, 2023 and October 8, 2022, respectively.
Note 2 – Adoption of New Accounting Standards and Recently Issued Accounting Standards
As of October 7, 2023 and for the period then ended, there were no recently adopted accounting standards that had a material impact on the Company’s condensed consolidated financial statements. There were no recently issued accounting standards not yet adopted which would have a material effect on the Company’s condensed consolidated financial statements.
Note 3 – Revenue
Disaggregation of Revenue
The following table provides information about disaggregated revenue by type of products and customers for each of the Company’s reportable segments:
12 Weeks Ended October 7, 2023
40 Weeks Ended October 7, 2023
(In thousands)
Wholesale
Retail
Type of products:
Center store (a)
623,273
256,550
879,823
2,054,415
832,202
2,886,617
Fresh (b)
488,929
243,198
732,127
1,651,191
811,825
2,463,016
Non-food (c)
465,473
120,149
585,622
1,535,880
386,993
1,922,873
Fuel
42,114
131,167
24,325
237
24,562
79,562
801
80,363
1,602,000
662,248
5,321,048
2,162,988
Type of customers:
Individuals
662,011
2,162,188
Independent retailers (d)
548,656
1,814,874
National accounts
504,971
1,741,407
Military (e)
538,790
1,729,221
9,583
9,820
35,546
800
36,346
12 Weeks Ended October 8, 2022
40 Weeks Ended October 8, 2022
642,552
259,044
901,596
2,010,150
806,116
2,816,266
508,440
253,712
762,152
1,647,860
811,879
2,459,739
450,974
106,074
557,048
1,466,281
342,015
1,808,296
47,567
159,514
27,903
246
28,149
89,442
803
90,245
1,629,869
666,643
5,213,733
2,120,327
666,415
2,119,553
554,191
1,787,685
552,980
1,785,704
508,102
1,596,612
14,596
228
14,824
43,732
774
44,506
(a) Center store includes dry grocery, frozen and beverages.
(b) Fresh includes produce, meat, dairy, deli, bakery, prepared proteins, seafood and floral.
(c) Non-food includes general merchandise, health and beauty care, tobacco products and pharmacy.
(d) Independent retailers include sales to manufacturers, brokers and distributors.
(e) Military represents the distribution of grocery products to U.S. military commissaries and exchanges, which primarily includes sales to manufacturers and brokers.
Contract Assets and Liabilities
Under its contracts with customers, the Company stands ready to deliver product upon receipt of a purchase order. Accordingly, the Company has no performance obligations under its contracts until its customers submit a purchase order. The Company does not receive pre-payment from its customers or enter into commitments to provide goods or services that have terms greater than one year. As the performance obligation is part of a contract that has an original expected duration of less than one year, the Company has applied the practical expedient under Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers, to omit disclosures regarding remaining performance obligations.
Revenue recognized from performance obligations related to prior periods (for example, due to changes in estimated rebates and incentives impacting the transaction price) was not material in any period presented.
For volume-based arrangements, the Company estimates the amount of the advanced funds earned by the retailers based on the expected volume of purchases by the retailer and amortizes the advances as a reduction of the transaction price and revenue earned. These advances are not considered contract assets under ASC 606 as they are not generated through the transfer of goods or services to the retailers. These advances are included in Other assets, net within the condensed consolidated balance sheets.
When the Company transfers goods or services to a customer, payment is due subject to normal terms and is not conditional on anything other than the passage of time. Typical payment terms range from "due upon receipt" to due within 30 days, depending on the customer. At contract inception, the Company expects that the period of time between the transfer of goods to the customer and when the customer pays for those goods will be less than one year, which is consistent with the Company’s standard payment terms. Accordingly, the Company has elected the practical expedient to not adjust for the effects of a significant financing component. As a result, these amounts are recorded as receivables and not contract assets. The Company had no contract assets for any period presented.
The Company does not typically incur incremental costs of obtaining a contract that are contingent upon successful contract execution and would therefore be capitalized.
Allowance for Credit Losses
Changes to the balance of the allowance for credit losses were as follows:
Current Accounts
Long-term
and Notes Receivable
Notes Receivable
6,098
948
7,046
Changes in credit loss estimates
(1,314
439
(875
Write-offs charged against the allowance
(448
4,336
1,387
5,723
4,414
731
5,145
903
(756
4,561
5,292
Note 4 – Goodwill and Other Intangible Assets
The Company has two reporting units, Wholesale and Retail. The carrying amount of goodwill recorded within the Wholesale reporting unit was $181.0 million and the value within the Retail reporting unit was $1.1 million as of both October 7, 2023 and December 31, 2022.
The Company has indefinite-lived intangible assets that are not amortized, consisting primarily of indefinite-lived trade names and liquor licenses. The carrying amount of indefinite-lived intangible assets was $67.8 million as of both October 7, 2023 and December 31, 2022.
The Company reviews goodwill and other indefinite-lived intangible assets for impairment annually, during the fourth quarter of each year, and more frequently if circumstances indicate impairment is probable. Such circumstances have not arisen in the current fiscal year. Testing goodwill and other indefinite-lived intangible assets for impairment requires management to make significant estimates about the Company’s future performance, cash flows, and other assumptions that can be affected by potential changes in economic, industry or market conditions, business operations, competition, or the Company’s stock price and market capitalization.
Note 5 – Restructuring and Asset Impairment
The following table provides the activity of reserves for closed properties for the 40-week period ended October 7, 2023. Included in the liability are lease-related ancillary costs from the date of closure to the end of the remaining lease term, as well as related severance. Reserves for closed properties recorded in the condensed consolidated balance sheets are included in “Other accrued expenses” in Current liabilities and “Other long-term liabilities” in Long-term liabilities based on the timing of when the obligations are expected to be paid. Reserves for severance are recorded in “Accrued payroll and benefits”.
Reserves for Closed Properties
Lease
Ancillary
Costs
Severance
3,977
Provision for severance
21
Changes in estimates
(228
Accretion expense
83
Payments
(836
(21
(857
2,996
12
Restructuring and asset impairment, net in the condensed consolidated statements of earnings consisted of the following:
October 8,
Asset impairment charges (a)
752
3,745
4,232
Provision for closing charges
857
Loss (gain) on sales of assets related to closed facilities (b)
120
(2,553
(2,470
(3,168
1
Other (income) costs associated with site closures (c)
(4
58
596
(17
Lease termination adjustments (d)
(102
Changes in estimates (e)
(575
(521
(73
(a) Asset impairment charges in the current year relate to two store closures within the Retail segment and impairment losses related to a distribution location that sustained significant storm damage within the Wholesale segment. In the prior year, asset impairment charges were incurred in the Retail segment and related to restructuring of the Retail segment's e-commerce delivery model and a store closure.
(b) Loss (gain) on sales of assets in the current year primarily relate to the sale of a store within the Retail segment. Gains on sales of assets in the prior year relates to the sales of real property of previously closed locations within the Wholesale and Retail segments.
(c) Other costs net activity in the current year primarily relate to Retail store closings. In the prior year, activity primarily relates to restructuring activity within the Wholesale segment and Retail store closings.
(d) Lease termination adjustments in the prior year relate to the gain recognized to terminate a lease agreement.
(e) Changes in estimates primarily relate to revised estimates for turnover and other lease ancillary costs associated with previously closed locations. The current quarter also included a $0.3 million gain for additional insurance proceeds received related to a distribution location that sustained significant storm damage within the Wholesale segment.
Long-lived assets which are not recoverable are measured at fair value on a nonrecurring basis using Level 3 inputs under the fair value hierarchy, as further described in Note 6. In the current year, assets with a book value of $7.4 million were measured at a fair value of $3.7 million, resulting in impairment charges of $3.7 million. In the prior year, long-lived assets with a book value of $4.3 million were measured at a fair value of $0.1 million, resulting in impairment charges of $4.2 million. The fair value of long-lived assets is determined by estimating the amount and timing of net future cash flows, including the expected proceeds from the sale of assets and expected insurance recoveries, discounted using a risk-adjusted rate of interest. The Company estimates future cash flows based on historical results of operations, external factors expected to impact future performance, experience and knowledge of the geographic area in which the assets are located, and when necessary, uses the support of real estate brokers.
Note 6 – Fair Value Measurements
ASC 820, Fair Value Measurement, prioritizes the inputs to valuation techniques used to measure fair value into the following hierarchy:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability, reflecting the reporting entity’s own assumptions about the assumptions that market participants would use in pricing.
Financial instruments include cash and cash equivalents, accounts and notes receivable, accounts payable and long-term debt. The carrying amounts of cash and cash equivalents, accounts and notes receivable, and accounts payable approximate fair value because of the short-term maturities of these financial instruments. For discussion of the fair value measurements related to goodwill, and long- or indefinite-lived asset impairment charges, refer to Notes 4 and 5. At October 7, 2023 and December 31, 2022, the book value and estimated fair value of the Company’s debt instruments, excluding debt financing costs, were as follows:
Book value of debt instruments, excluding debt financing costs:
Current maturities of long-term debt and finance lease liabilities
540,147
501,419
Total book value of debt instruments
548,557
508,208
Fair value of debt instruments, excluding debt financing costs
545,025
507,668
Deficit of fair value over book value
(3,532
(540
13
The estimated fair value of debt is based on market quotes for instruments with similar terms and remaining maturities (Level 2 inputs and valuation techniques).
The Company's interest rate swap agreement is considered a Level 2 instrument. The Company values the interest rate swap using standard models and observable market inputs including SOFR interest rates and discount rates, which are considered Level 2 inputs. The location and the fair value of the interest rate swap agreement in the condensed consolidated balance sheet is disclosed in Note 7.
Note 7 – Derivatives
Hedging of Interest Rate Risk
During the first quarter of 2023, the Company entered into an interest rate swap contract to mitigate its exposure to changes in variable interest rates. The Company's interest rate swap is designated as a cash flow hedge as of both the effective date, March 17, 2023, and as of October 7, 2023. The interest rate swap is reflected at its fair value in the condensed consolidated balance sheets. Refer to Note 6 for further information on the fair value of the interest rate swap.
Details of the pay-fixed, receive-floating interest rate swap contract as of October 7, 2023 are as follows:
Effective Date
Maturity Date
Notional Value(in millions)
Pay Fixed Rate
Receive Floating Rate
Floating Rate Reset Terms
March 17, 2023
November 17, 2027
$150
3.646%
One-Month CME Term SOFR
Monthly
The Company performed an initial quantitative assessment of hedge effectiveness using the change-in-variable-cash-flows method. Under this method, the Company assessed the effectiveness of the hedging relationship by comparing the present value of the cumulative change in the expected future cash flows on the variable leg of the interest rate swap with the present value of the cumulative change in the expected future interest cash flows on the variable-rate debt. The Company determined the interest rate swap to be highly effective. To assess for continued hedge effectiveness, the Company performs a retrospective and prospective qualitative assessment each quarter. The Company also monitors the credit risk of the counterparty on an ongoing basis. The change in the fair value of the interest rate swap is initially reported in "Other comprehensive income" in the condensed consolidated statements of comprehensive income and subsequently reclassified to earnings in "Interest expense, net" in the condensed consolidated statements of earnings when the hedged transactions affect earnings.
The location and the fair value of the interest rate swap in the condensed consolidated balance sheets as of October 7, 2023 is as follows:
Derivative Fair Value
Condensed Consolidated Balance Sheet Location
Cash Flow Hedge:
Interest rate swap
2,489
2,344
3,652
The location and amount of gains recognized in the condensed consolidated statements of earnings for the interest rate swap, presented on a pre-tax basis, are as follows:
Total amounts of expense line items presented in the condensed consolidated statements ofearnings in which the effects of cash flow hedges are recorded
Gain on cash flow hedging relationships:
Gain reclassified from comprehensive income into earnings
573
1,242
Note 8 – Commitments and Contingencies
The Company is engaged from time-to-time in routine legal proceedings incidental to its business. The Company does not believe that these routine legal proceedings, taken as a whole, will have a material impact on its business or financial condition. While the ultimate effect of such actions cannot be predicted with certainty, management believes that their outcome will not result in an adverse effect on the Company’s consolidated financial position, operating results or liquidity.
The Company has contributed and is required to continue making contributions to the Central States Southeast and Southwest Pension Fund (the “Central States Plan” or the “Plan”), a multi-employer pension plan, based on obligations arising from certain of its collective bargaining agreements. If the Company were to cease making such contributions and triggered a withdrawal from the Plan, it is possible that the Company would be obligated to pay a withdrawal liability to the Plan if the Plan is underfunded at the time of such withdrawal.
On March 10, 2021, the United States Congress passed the American Rescue Plan Act of 2021 (the “Act”), which provides financial relief to certain failing multiemployer pension plans. On January 12, 2023, the Central States Plan received approximately $35.8 billion in Special Financial Assistance (“SFA”), inclusive of interest, which is designed to alleviate the risk of insolvency of the Plan.
Based on the most recent information available to the Company, management believes the value of assets held in trust to pay benefits covers the present value of actuarial accrued liabilities in the Central States Plan. Except with respect to the approved SFA, management is not aware of any significant change in funding levels in the Plan since December 31, 2022. Due to uncertainty regarding future factors that could trigger a withdrawal liability, as well as the absence of specific information regarding matters such as the Plan’s current financial situations, the Company is unable to determine with certainty the current amount of the Plan’s funding and/or SpartanNash’s current potential withdrawal liability exposure in the event of a future withdrawal from the Plan. Any adjustment for withdrawal liability would be recorded when it is probable that a liability exists and can be reasonably determined.
Note 9 – Associate Retirement Plans
During the 12- and 40- week periods ended October 7, 2023, the Company recognized net periodic postretirement benefit income of $0.7 million and $2.2 million, respectively, related to the SpartanNash Retiree Medical Plan (“Retiree Medical Plan” or "Plan"). During the 12- and 40- week periods ended October 8, 2022 the Company recognized net periodic postretirement benefit income of $0.7 million and expense of $0.2 million, respectively, related to the Retiree Medical Plan.
Effective June 30, 2022, the Company has amended the Retiree Medical Plan. In connection with the amendment, the Company will make lump sum cash payments to all active and retired participants in lieu of future monthly benefits and reimbursements previously offered under the Plan. As a result of the amendment effective June 30, 2022, the Plan obligation was remeasured, resulting in a reduction to the obligation of $6.6 million and a corresponding prior service credit in AOCI, which will be amortized to net periodic postretirement benefit income over the remaining period until the final payment on July 1, 2024. During the 12- and 40- week periods ended October 7, 2023, the Company recognized $0.8 million and $2.5 million in net periodic postretirement benefit income related to the amortization of the prior service credit from AOCI. During the 12- and 40- week periods ended October 8, 2022, the Company recognized $0.8 million and $0.9 million in net periodic postretirement benefit income related to the amortization of the prior service credit from AOCI.
On July 1, 2023 and July 1, 2022, the Company made lump sum payments to retired participants totaling $1.3 million and $2.0 million, respectively. The payments constituted partial settlements of the Plan, which resulted in the recognition within net periodic postretirement expense of $0.3 million and $0.7 million on July 1, 2023 and July 1, 2022, respectively, related to the net actuarial loss within AOCI. The remaining payment, which relates to active participants, is expected to be made on or about July 1, 2024.
The Company’s retirement programs also include defined contribution plans providing contributory benefits, as well as executive compensation plans for a select group of management personnel and/or highly compensated associates.
In the first quarter of the prior year, the Company realized a gain of $0.2 million related to a refund from the annuity provider associated with an ineligible participant previously included in the terminated SpartanNash Company Pension Plan. These amounts are included in “Other, net” in the condensed consolidated statements of earnings.
Multi-Employer Plans
In addition to the plans listed above, the Company participates in the Central States Southeast and Southwest Pension Fund, the Michigan Conference of Teamsters and Ohio Conference of Teamsters Health and Welfare plans (collectively referred to as “multi-employer plans”), and other company-sponsored defined contribution plans for most associates covered by collective bargaining agreements.
With respect to the Company’s participation in the Central States Plan, expense is recognized as contributions are payable. The Company’s contributions during the 12- week periods ended October 7, 2023 and October 8, 2022 were $2.3 million and $2.2 million, respectively. The Company's contributions during the 40-week periods ended October 7, 2023 and October 8, 2022 were $9.8 million and $9.1 million, respectively. See Note 8 for further information regarding contingencies related to the Company’s participation in the Central States Plan.
Note 10 – Income Taxes
The effective income tax rate was 23.7% and 32.5% for the 12 weeks ended October 7, 2023 and October 8, 2022, respectively. The effective income tax rate was 24.4% and 25.4% for the 40 weeks ended October 7, 2023 and October 8, 2022, respectively.
15
The difference from the federal statutory rate in the current year and prior year quarters were primarily due to state taxes and non-deductible expenses, partially offset by benefits associated with federal tax credits. The difference from the federal statutory rate in the current year was primarily due to state taxes and non-deductible expenses, partially offset by benefits associated with federal tax credits, discrete tax benefits due to a change in contingencies and discrete tax benefits related to stock compensation. The difference in the federal statutory rate in the prior year was primarily due to state taxes, limitations on the deductibility of executive compensation and non-deductible expenses, partially offset by benefits associated with federal tax credits and discrete tax benefits related to stock compensation.
Note 11 – Stock-Based Compensation
Stock-Based Employee Awards
The Company sponsors shareholder-approved stock incentive plans that provide for the granting of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance share units, dividend equivalent rights, and other stock-based and stock-related awards to directors, officers and other key associates.
Stock-based compensation expense recognized and included in “Selling, general and administrative expenses” in the condensed consolidated statements of earnings, and related tax impacts were as follows:
Restricted stock expense
1,771
8,468
Performance share unit expense
577
1,492
Income tax benefit
(593
(582
(3,502
(3,630
Stock-based compensation expense, net of tax
1,755
698
6,458
3,342
The following table summarizes activity in the stock incentive plans for the 40 weeks ended October 7, 2023:
Weighted
Restricted
Average
Performance
Grant-Date
Share Unit
Awards
Fair Value
Outstanding at December 31, 2022
863,063
22.05
Granted
445,762
26.97
299,840
27.01
Vested
(432,150
21.16
Cancelled/Forfeited
(38,062
26.22
(2,803
27.24
Outstanding at October 7, 2023
838,613
24.94
297,037
As of October 7, 2023, total unrecognized compensation cost related to nonvested restricted stock awards granted under the Company’s stock incentive plans is $11.1 million and is expected to be recognized over a weighted average period of 1.9 years. As of October 7, 2023, total unrecognized compensation cost related to nonvested performance share unit awards granted under the Company’s stock incentive plans is $6.5 million and is expected to be recognized over a weighted average period of 2.2 years.
Stock Warrant
On October 7, 2020, in connection with its entry into a commercial agreement with Amazon.com, Inc. (“Amazon”), the Company issued Amazon.com NV Investment Holdings LLC, a subsidiary of Amazon, a warrant to acquire up to an aggregate of 5,437,272 shares of the Company’s common stock (the “Warrant”), subject to certain vesting conditions. Warrant shares totaling 1,087,455 shares vested upon the signing of the commercial agreement and had a grant date fair value of $5.51 per share. Warrant shares totaling up to 4,349,817 shares may vest in connection with conditions defined by the terms of the Warrant, as Amazon makes payments to the Company in connection with the commercial supply agreement, in increments of $200 million, and had a grant date fair value of $5.33 per share. Upon vesting, shares may be acquired at an exercise price of $17.7257. The Warrant contains customary anti-dilution, down-round and change-in-control provisions. The right to purchase shares in connection with the Warrant expires on October 7, 2027.
Share-based payment expense recognized as a reduction of “Net sales” in the condensed consolidated statements of earnings, and related tax benefits were as follows:
Warrant expense
(43
(46
(138
(187
Warrant expense, net of tax
276
459
1,141
1,472
16
The following table summarizes stock warrant activity for the 40 weeks ended October 7, 2023:
Warrant
Outstanding and nonvested at December 31, 2022
3,479,849
(217,492
Outstanding and nonvested at October 7, 2023
3,262,357
As of October 7, 2023, total unrecognized cost related to nonvested warrant shares was $17.2 million, which may be expensed as vesting conditions are satisfied over the remaining term of the agreement, or 4.0 years. Warrants representing 2,174,915 shares are vested and exercisable. As of October 7, 2023, nonvested warrant shares had an intrinsic value of $17.1 million, and vested warrant shares had an intrinsic value of $11.4 million.
Note 12 – Earnings Per Share
Outstanding nonvested restricted stock awards under the 2015 Stock Incentive Plan contain nonforfeitable rights to dividends or dividend equivalents, which participate in undistributed earnings with common stock. These awards are classified as participating securities and are included in the calculation of basic earnings per share. Awards under the 2020 Stock Incentive Plan do not contain nonforfeitable rights to dividends or dividend equivalents and are therefore not classified as participating securities. The dilutive impact of both the restricted stock awards and warrants are presented below, as applicable. Weighted average restricted stock awards that were not included in the EPS calculations because they were anti-dilutive were 288,041 and 18,340 for the 12- and 40- week periods ended October 7, 2023, respectively. The performance share units are not currently dilutive. The following table sets forth the computation of basic and diluted net earnings per share:
Numerator:
Adjustment for earnings attributable to participating securities
(81
(100
(333
(406
Net earnings used in calculating earnings per share
11,046
9,364
41,599
33,462
Denominator:
Weighted average shares outstanding, including participating securities
Adjustment for participating securities
(247
(370
(272
(425
Shares used in calculating basic earnings per share
33,773
34,790
33,990
35,019
Effect of dilutive stock warrant
432
792
614
784
Effect of dilutive restricted stock awards
72
193
91
170
Shares used in calculating diluted earnings per share
34,277
35,775
34,695
35,973
Basic earnings per share
Diluted earnings per share
Note 13 – Supplemental Cash Flow Information
Supplemental cash flow information is as follows:
Non-cash investing activities:
Capital expenditures included in accounts payable
6,341
Operating lease asset additions
34,815
16,227
Finance lease asset additions
13,492
16,204
Non-cash financing activities:
Recognition of operating lease liabilities
Recognition of finance lease liabilities
Other supplemental cash flow information:
Cash paid for interest
30,930
13,008
Note 14 – Segment Information
The following tables set forth information about the Company by reportable segment:
Net sales to external customers
Inter-segment sales
274,540
434
274,974
Acquisition and integration
65
2,065
(293
(165
12,151
10,891
23,042
18,153
4,918
Capital expenditures
16,287
9,101
25,388
280,892
274
281,166
(2,088
1,202
11,090
10,743
21,833
14,015
5,285
9,642
10,209
19,851
902,720
1,086
903,806
189
2,070
688
683
39,165
36,080
66,020
17,150
54,512
31,700
86,212
904,144
675
904,819
Acquisitions and integration, net
(2,216
3,954
36,602
35,672
54,834
4,944
34,867
31,415
66,282
October 8, 2023
December 31, 2022
Total Assets
1,573,915
1,525,760
759,861
780,801
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Management’s Discussion and Analysis of financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q, the information contained under the caption “Forward-Looking Statements,” which appears at the beginning of this report, and the information in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Overview
SpartanNash, headquartered in Grand Rapids, Michigan, is a food solutions company that delivers the ingredients for a better life. Its core businesses include distributing grocery products to a diverse group of independent and chain retailers, its corporate-owned retail stores, and U.S. military commissaries and exchanges; as well as operating a premier fresh produce distribution network and the Our Family® private label brand. SpartanNash serves customer locations in all 50 states and the District of Columbia, Europe, Cuba, Puerto Rico, Honduras, Iraq, Kuwait, Bahrain, Qatar, Djibouti, Korea and Japan.
The Company’s Wholesale segment provides a wide variety of nationally branded and private brand grocery products and perishable food products to independent retailers, national accounts, food service distributors, e-commerce providers, and the Company’s corporate owned retail store. The Company’s Wholesale segment also distributes grocery products to 160 military commissaries and over 400 exchanges worldwide. The Company is the exclusive supplier of private brand products to U.S. military commissaries, a partnership with DeCA which began in fiscal 2017.
As of the end of the third quarter, the Company’s Retail segment operated 144 corporate owned retail stores in the Midwest region primarily under the banners of Family Fare, Martin’s Super Markets and D&W Fresh Market. The Company also offered pharmacy services in 91 of its corporate owned retail stores (81 of the pharmacies are owned by the Company), operated three pharmacy locations not associated with corporate-owned retail locations and operated 36 fuel centers. The Company’s neighborhood market strategy distinguishes its corporate owned retail stores from supercenters and limited assortment stores.
All fiscal quarters are 12 weeks, except for the Company’s first quarter, which is 16 weeks and will generally include the Easter holiday. The fourth quarter includes the Thanksgiving and Christmas holidays, and depending on the fiscal year end, may include the New Year’s holiday.
The majority of the Company’s revenues are not seasonal in nature. However, in some geographies, corporate retail stores and independent retail customers are dependent on tourism, and therefore can be affected by seasons. The Company's revenues may also be impacted by weather patterns.
2023 Third Quarter Highlights
Key financial and operational highlights for the third quarter include the following:
The Company believes that certain known or anticipated trends may cause future results to vary from historical results. The Company believes certain initiatives tied to its long-term plan including the supply chain transformation, merchandising transformation, and refreshed go-to-market strategy will favorably impact future results. The Company anticipates that additional investments in capital expenditures, and increased borrowings from the Company's senior secured credit facility, will be necessary to support these and other programs. Offsetting the Company's expectations of favorable future results are macroeconomic headwinds including economic uncertainty associated with inflation, labor costs, and interest rates. The Company continues to be exposed to inflationary impacts to other general areas including utilities, insurance and fuel costs.
Results of Operations
The following table sets forth items from the condensed consolidated statements of earnings as a percentage of net sales and the year-to-year percentage change in the dollar amounts:
Percentage of Net Sales
Percentage Change
100.0
(1.4
2.0
15.3
15.8
(1.0
(0.8
14.3
14.5
14.2
14.9
(3.2
0.1
(0.0
0.0
**
Restructuring charges and asset impairment, net
(48.3
(21.1
1.0
0.8
1.1
19.5
39.1
Other expenses
0.4
0.2
60.8
92.7
0.6
0.7
4.0
22.2
(24.2
17.3
0.5
17.6
23.8
Note: Certain totals do not sum due to rounding.
** Not meaningful
Net Sales – The following table presents net sales by segment and variances in net sales:
Variance
(27,869
107,315
(4,395
42,661
Total net sales
(32,264
149,976
Net sales for the quarter ended October 7, 2023 (the “third quarter”) decreased $32.3 million, or 1.4%, to $2.26 billion from $2.30 billion in the quarter ended October 8, 2022 (the “prior year quarter”). Net sales for the year-to-date period ended October 7, 2023 (the "year-to-date period") increased $150.0 million, or 2.0%, to $7.48 billion from $7.33 billion in the year-to-date period ended October 8, 2022 (the "prior year-to-date-period"). The decrease during the current quarter reflected sales declines in both the Wholesale and Retail segments, which were unfavorably impacted by a reduction in volume and partially offset by higher pricing from inflationary trends. The year-to-date increase reflected sales growth in both the Wholesale and Retail segments, which were favorably impacted by higher pricing from inflationary trends and partially offset by lower volumes.
Wholesale net sales decreased $27.9 million, or 1.7% to $1.60 billion in the third quarter from $1.63 billion in the prior year quarter. Wholesale net sales for the year-to-date period increased $107.3 million, or 2.1%, to $5.32 billion from $5.21 billion in the prior year-to-date period. The decrease in the current quarter was due primarily to marketplace demand changes from a certain national account customer. The increase in the year-to-date period was primarily due to the inflationary impact on pricing, partially offset by a decrease led by marketplace demand changes from a certain national account customer. Overall case volumes for the segment were down in the current quarter and current year-to-date period compared to the prior year by 5.4% and 4.2%, respectively.
Retail net sales decreased $4.4 million, or 0.7%, to $662.2 million in the third quarter from $666.6 million in the prior year quarter. Net sales for the year-to-date period increased $42.7 million, or 2.0%, to $2.16 billion from $2.12 billion in the prior year-to-date period. Comparable store sales grew 1.2% and 3.6% for the current quarter and current year-to-date periods, respectively. The comparable store sales growth was due primarily to the inflationary impact on pricing, which included an offsetting 6.0% and 5.8% decline in unit volumes in the current quarter and current year-to-date periods, respectively. Additionally, lower fuel sales reduced reported net sales by 0.8% and 1.3% in the current quarter and current year-to-date periods, respectively. The Company defines a retail store as comparable when it is in operation for 14 accounting periods (a period equals four weeks), regardless of remodels, expansions, or relocated stores. Acquired stores are included in the comparable sales calculation 13 periods after the acquisition date. Sales are compared to the same store’s operations from the prior year period for purposes of calculation of comparable store sales. Fuel is excluded from the comparable sales calculation due to volatility in price. Comparable store sales is a widely used metric among retailers, which is useful to management and investors to assess performance. The Company’s definition of comparable store sales may differ from similarly titled measures at other companies.
20
Gross Profit – Gross profit represents net sales less cost of sales, which for all non-production operations includes purchase costs, in-bound freight, physical inventory adjustments, markdowns and promotional allowances and excludes warehousing costs, depreciation and other administrative expenses. The Company’s gross profit definition may not be identical to similarly titled measures reported by other companies. Vendor allowances that relate to the buying and merchandising activities consist primarily of promotional allowances, which are generally allowances on purchased quantities and, to a lesser extent, slotting allowances, which are billed to vendors for the Company’s merchandising costs, such as setting up warehouse infrastructure. Vendor allowances are recognized as a reduction in cost of sales when the product is sold. Lump sum payments received for multi-year contracts are amortized over the life of the contracts based on contractual terms. The Wholesale segment includes shipping and handling costs in the Selling, general and administrative section of operating expenses in the consolidated statements of earnings.
Gross profit decreased $3.7 million, or 1.0%, to $347.5 million in the third quarter from $351.2 million in the prior year quarter. As a percent of net sales, gross profit for the current quarter was 15.35% compared to 15.29% in the prior year quarter. The gross profit decline was driven by lower volumes. The gross profit rate increase in the current quarter was driven by lower last-in-first-out ("LIFO") expense and benefits realized from the merchandising transformation initiative. These benefits were mostly offset by the anticipated lower inflation-related price change benefits in the Wholesale segment compared to elevated levels in the prior year quarter and lower pharmacy margins in the Retail segment. LIFO expense decreased $8.3 million, or 36 basis points, compared to the prior year quarter. Gross profit for the year-to-date period decreased $9.4 million, or 0.8% from $1.16 billion in the prior year-to-date period to $1.15 billion in the current year. As a percent of net sales, gross profit for the year-to-date period was 15.32% compared to 15.76% in the prior year-to-date period. The gross profit decline was driven by lower volumes. In addition, the gross profit rate decrease in the year-to-date period was driven by lower inflation-related price change benefits in the Wholesale segment compared to elevated levels in the prior year, partially offset by benefits realized from the merchandising transformation initiative and a decline in LIFO expense. LIFO expense decreased $20.5 million, or 29 basis points, compared to the prior year-to-date period.
Selling, General and Administrative Expenses – Selling, general and administrative (“SG&A”) expenses consist primarily of operating costs related to retail and supply chain operations, including salaries and wages, employee benefits, facility costs, shipping and handling, equipment rental, depreciation, and out-bound freight, in addition to corporate administrative expenses.
SG&A expenses for the third quarter decreased $10.6 million, or 3.2%, to $322.8 million from $333.4 million in the prior year quarter, representing 14.3% of net sales in the third quarter compared to 14.5% in the prior year quarter. SG&A expense for the year-to-date period decreased $34.6 million, or 3.2% to $1.06 billion, from $1.09 billion in the prior year-to-date period, representing 14.2% in the current year-to-date period compared to 14.9% as a percentage of net sales in the prior year-to-date period. The decreases in selling, general and administrative expenses as a rate of sales was due primarily to lower incentive compensation expense compared to the prior year and a reduction in the supply chain expense rates as a result of efficiencies realized from the Company's supply chain transformation initiative. These decreases were partially offset by organizational realignment costs related to the previously announced go-to-market plan.
Acquisition and Integration, net – Third quarter and prior year quarter results included net charges of $2.1 million and net gains of $0.6 million, respectively. Acquisition and integration expenses for the year-to-date periods ended October 7, 2023 and October 8, 2022 included charges of $2.3 million and $0.1 million, respectively. Current year activity primarily consists of expenses associated with the Company's acquisition efforts within the Retail segment. The prior year quarter activity primarily consisted of a gain from the reversal of a litigation accrual within the Retail segment. Prior year-to-date expense is primarily related to an acquisition within the Retail segment, partially offset by the reversal of the litigation accrual in the prior year quarter.
Restructuring and Asset Impairment, net – Third quarter and prior year quarter results included net gains of $0.5 million and $0.9 million, respectively. The year-to-date period and prior year-to-date period included charges of $1.4 million and $1.7 million, respectively. The current quarter gain primarily relates to a $0.3 million gain for additional insurance proceeds related to a distribution location that sustained significant storm damage within the Wholesale segment, in addition to revised estimates for turnover and other lease ancillary costs associated with previously closed locations. The year-to-date net charges primarily relate to two store closures within the Retail segment and impairment losses related to a distribution location that sustained significant storm damage within the Wholesale segment, partially offset by the sale of a store within the Retail segment. The prior year quarter income was primarily due to gains on the sales of real property of previously closed locations within both segments, partially offset by Retail store closing charges and asset impairment charges related to the restructuring of the Retail segment's e-commerce delivery model. The prior year-to-date expense primarily consists of asset impairment charges related to the restructuring of the Retail segment's e-commerce delivery model and Retail store closing charges, partially offset by a gain on sales of assets related to the sale of real property of previously closed locations in both segments.
Operating Earnings – The following table presents operating earnings by segment and variances in operating earnings.
4,138
11,186
12,206
Total operating earnings
3,771
23,392
Operating earnings increased $3.8 million, or 19.5% to $23.1 million in the third quarter from $19.3 million in the prior year quarter. Operating earnings for the year-to-date period increased $23.4 million, or 39.1%, to $83.2 million from $59.8 million in the prior year-to-date period. The increases in operating earnings was due to the changes in net sales, gross profit and operating expenses discussed above.
Wholesale operating earnings increased $4.1 million, or 29.5%, to $18.2 million in the third quarter from $14.0 million in the prior year quarter. Operating earnings for the year-to-date period increased $11.2 million, or 20.4%, to $66.0 million from $54.8 million in the prior year-to-date period. The increases in operating earnings were due to benefits realized from the merchandising transformation initiative, lower incentive compensation as well as efficiencies realized from the Company's supply chain transformation initiative. The increases in operating earnings were partially offset by the anticipated lower inflation-related price change benefits compared to elevated levels in the prior year.
Retail operating earnings decreased $0.4 million, or 6.9%, to $4.9 million in the third quarter from $5.3 million in the prior year quarter. Operating earnings for the year-to-date period increased $12.2 million, to $17.2 million from $4.9 million in the prior year-to-date period. The decrease in operating earnings in the current quarter was due to higher acquisition and integration expenses, a decline in unit volume, and lower pharmacy margin rates. This was partially offset by lower incentive compensation and reduced asset impairment and restructuring charges. The increase in operating earnings in the year-to-date period was due to higher gross margin driven by inflation, lower incentive compensation and reduced asset impairment and restructuring charges, partially offset by a decline in unit volume.
Interest Expense – Interest expense increased $3.2 million, or 53.4%, to $9.3 million in the third quarter from $6.1 million in the prior year quarter. Interest expense for the year-to-date period increased $15.5 million, or 104.7%, to $30.2 million from $14.8 million in the prior year-to-date period. Higher interest rates on the Company's credit facility were driven by federal monetary policy tightening and accounted for $2.5 million and $12.6 million of the increase in interest expense in the quarterly and year-to-date periods, respectively.
Income Taxes – The effective income tax rates were 23.7% and 32.5% for the third quarter and prior year quarter, respectively. For the year-to-date period and prior year-to-date period, the effective tax rates were 24.4% and 25.4%, respectively. The difference from the federal statutory rate in the current year and prior year quarters were primarily due to state taxes and non-deductible expenses, partially offset by benefits associated with federal tax credits. The difference from the federal statutory rate in the current year was primarily due to state taxes and non-deductible expenses, partially offset by benefits associated with federal tax credits, discrete tax benefits due to a change in contingencies and discrete tax benefits related to stock compensation. The difference in the federal statutory rate in the prior year was primarily due to state taxes, limitations on the deductibility of executive compensation and non-deductible expenses, partially offset by benefits associated with federal tax credits and discrete tax benefits related to stock compensation.
Non-GAAP Financial Measures
In addition to reporting financial results in accordance with GAAP, the Company also provides information regarding adjusted operating earnings, adjusted earnings from continuing operations, as well as per diluted share (“adjusted EPS”), net long-term debt, total capital, and adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”). These are non-GAAP financial measures, as defined below, and are used by management to allocate resources, assess performance against its peers and evaluate overall performance. The Company believes these measures provide useful information for both management and its investors. The Company believes these non-GAAP measures are useful to investors because they provide additional understanding of the trends and special circumstances that affect its business. These measures provide useful supplemental information that helps investors to establish a basis for expected performance and the ability to evaluate actual results against that expectation. The measures, when considered in connection with GAAP results, can be used to assess the overall performance of the Company as well as assess the Company’s performance against its peers. These measures are also used as a basis for certain compensation programs sponsored by the Company. In addition, securities analysts, fund managers and other shareholders and stakeholders that communicate with the Company request its financial results in these adjusted formats.
22
Current year adjusted operating earnings, adjusted earnings from continuing operations, and adjusted EBITDA exclude, among other items, LIFO expense, organizational realignment, severance associated with cost reduction initiatives, a non-routine settlement related to a legal matter resulting from a previously closed operation that was resolved during the year and operating and non-operating costs associated with the postretirement plan amendment and settlement. Current year organizational realignment includes consulting and severance costs associated with the Company's change in its go-to-market strategy as part of its long-term plan, which relates to the reorganization of certain functions. Costs related to the postretirement plan amendment and settlement include non-operating expenses associated with amortization of the prior service credit related to the amendment of the retiree medical plan, which are excluded from adjusted earnings from continuing operations. Postretirement plan amendment and settlement costs also include operating expenses related to payroll taxes which are adjusted out of all non-GAAP financial measures. Prior year adjusted operating earnings, adjusted earnings from continuing operations, and adjusted EBITDA exclude, among other things, LIFO expense, costs related to shareholder activism, organizational realignment, operating and non-operating costs associated with the postretirement plan amendment and settlement, and severance associated with cost reduction initiatives. Costs related to shareholder activism include consulting, and other expenses incurred in relation to shareholder activism activities. Organizational realignment includes benefits for associates terminated as part of leadership transition plans, which do not meet the definition of reduction-in-force.
Each of these items are considered “non-operational” or “non-core” in nature.
Adjusted Operating Earnings
Adjusted operating earnings is a non-GAAP operating financial measure that the Company defines as operating earnings plus or minus adjustments for items that do not reflect the ongoing operating activities of the Company and costs associated with the closing of operational locations.
The Company believes that adjusted operating earnings provide a meaningful representation of its operating performance for the Company as a whole and for its operating segments. The Company considers adjusted operating earnings as an additional way to measure operating performance on an ongoing basis. Adjusted operating earnings is meant to reflect the ongoing operating performance of all of its distribution and retail operations; consequently, it excludes the impact of items that could be considered “non-operating” or “non-core” in nature and also excludes the contributions of activities classified as discontinued operations. Because adjusted operating earnings and adjusted operating earnings by segment are performance measures that management uses to allocate resources, assess performance against its peers and evaluate overall performance, the Company believes it provides useful information for both management and its investors. In addition, securities analysts, fund managers and other shareholders and stakeholders that communicate with the Company request its operating financial results in an adjusted operating earnings format.
Adjusted operating earnings is not a measure of performance under GAAP and should not be considered as a substitute for operating earnings, and other income statement data. The Company’s definition of adjusted operating earnings may not be identical to similarly titled measures reported by other companies.
Following is a reconciliation of operating earnings to adjusted operating earnings for the 12 and 40 weeks ended October 7, 2023 and October 8, 2022.
Adjustments:
6,606
14,884
Organizational realignment, net
2,681
588
4,710
1,859
Severance associated with cost reduction initiatives
39
54
311
795
Legal settlement
900
Postretirement plan amendment and settlement
94
133
Costs related to shareholder activism
7,335
Adjusted operating earnings
34,069
33,363
115,260
114,652
Wholesale:
4,411
12,959
16,734
35,138
1,673
367
2,939
1,160
43
296
662
59
4,577
24,048
25,296
87,825
94,238
Retail:
2,195
1,925
5,711
7,778
1,008
221
699
35
50
2,758
10,021
8,067
27,435
20,414
Adjusted Earnings from Continuing Operations
Adjusted earnings from continuing operations, as well as per diluted share ("adjusted EPS"), is a non-GAAP operating financial measure that the Company defines as net earnings plus or minus adjustments for items that do not reflect the ongoing operating activities of the Company and costs associated with the closing of operational locations.
The Company believes that adjusted earnings from continuing operations provide a meaningful representation of its operating performance for the Company. The Company considers adjusted earnings from continuing operations as an additional way to measure operating performance on an ongoing basis. Adjusted earnings from continuing operations is meant to reflect the ongoing operating performance of all of its distribution and retail operations; consequently, it excludes the impact of items that could be considered “non-operating” or “non-core” in nature, and excludes the contributions of activities classified as discontinued operations. Because adjusted earnings from continuing operations is a performance measure that management uses to allocate resources, assess performance against its peers and evaluate overall performance, the Company believes it provides useful information for both management and its investors. In addition, securities analysts, fund managers and other shareholders and stakeholders that communicate with the Company request its operating financial results in adjusted earnings from continuing operations format.
Adjusted earnings from continuing operations is not a measure of performance under GAAP and should not be considered as a substitute for net earnings, cash flows from operating activities and other income or cash flow statement data. The Company’s definition of adjusted earnings from continuing operations may not be identical to similarly titled measures reported by other companies.
24
Following is a reconciliation of net earnings to adjusted earnings from continuing operations for the 12 weeks ended October 7, 2023 and October 8, 2022.
per diluted
share
(762
(763
Total adjustments
10,236
13,300
Income tax effect on adjustments (a)
(2,600
(2,725
Total adjustments, net of taxes
7,636
0.22
10,575
0.29
Adjusted earnings from continuing operations
18,763
0.54
20,039
0.55
Pension refund from annuity provider
(200
(2,411
(18
29,585
54,523
(7,525
(13,870
22,060
0.63
40,653
1.12
63,992
1.83
74,521
2.05
25
Adjusted EBITDA
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“adjusted EBITDA”) is a non-GAAP operating financial measure that the Company defines as net earnings plus interest, discontinued operations, depreciation and amortization, and other non-cash items, including share-based payments (equity awards measured in accordance with ASC 718, Stock Compensation, which include both stock-based compensation to employees and stock warrants issued to non-employees) and the LIFO provision, as well as adjustments for items that do not reflect the ongoing operating activities of the Company.
The Company believes that adjusted EBITDA provides a meaningful representation of its operating performance for the Company and for its operating segments. The Company considers adjusted EBITDA as an additional way to measure operating performance on an ongoing basis. Adjusted EBITDA is meant to reflect the ongoing operating performance of all of its distribution and retail operations; consequently, it excludes the impact of items that could be considered “non-operating” or “non-core” in nature, and also excludes the contributions of activities classified as discontinued operations. Because adjusted EBITDA and adjusted EBITDA by segment are performance measures that management uses to allocate resources, assess performance against its peers and evaluate overall performance, the Company believes it provides useful information for both management and its investors. In addition, securities analysts, fund managers and other shareholders and stakeholders that communicate with the Company request its operating financial results in adjusted EBITDA format.
Adjusted EBITDA and adjusted EBITDA by segment are not measures of performance under GAAP and should not be considered as a substitute for net earnings, cash flows from operating activities and other income or cash flow statement data. The Company’s definitions of adjusted EBITDA and adjusted EBITDA by segment may not be identical to similarly titled measures reported by other companies.
26
Following is a reconciliation of net earnings to adjusted EBITDA for the 12 and 40 weeks ended October 7, 2023 and October 8, 2022.
Other expenses, net
Cloud computing amortization
1,259
925
3,685
2,694
2,461
1,370
10,073
7,208
(531
(764
(2,094
(2,691
Loss (gain) on disposal of assets
258
63
60,877
57,295
203,752
195,728
834
645
2,499
1,873
1,621
894
6,615
4,743
(92
(288
(26
(184
38,997
38,312
137,234
138,643
280
1,186
821
840
476
3,458
(672
(1,956
(2,403
Loss on disposal of assets
234
89
315
116
21,880
18,983
66,518
57,085
27
Liquidity and Capital Resources
Cash Flow Information
The following table summarizes the Company’s consolidated statements of cash flows:
Cash flow activities
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period
Net cash provided by operating activities. Net cash provided by operating activities increased $88.2 million in the current year-to-date period compared to the prior year-to-date period, due primarily to improvements in working capital.
Net cash used in investing activities. Net cash used in investing activities increased $36.0 million in the current year compared to the prior year primarily due to net proceeds received from the sale of assets in the prior year and an increase in capital expenditures in the current year in line with the Company's long-term plan, partially offset by an acquisition within the Retail segment in the prior year.
Capital expenditures were $86.2 million in the current year and cloud computing application development spend, which is included in operating activities, was $4.1 million, compared to capital expenditures of $66.3 million and cloud computing application development spend of $3.2 million in the prior year. The Wholesale and Retail segments utilized 63.2% and 36.8% of capital expenditures, respectively, in the current year.
Net cash (used in) provided by financing activities. Net cash (used in) provided by financing activities increased $72.0 million in the current year compared to the prior year, primarily due to an increased rate of borrowing in the prior year on the senior credit facility.
Debt Management
Total debt, including finance lease liabilities, was $544.2 million and $503.6 million as of October 7, 2023 and December 31, 2022, respectively. The increase in total debt was due to additional net borrowings on the senior credit facility to fund working capital changes, purchases of property, plant and equipment and share repurchases.
Liquidity
The Company’s principal sources of liquidity are cash flows generated from operations and its senior secured credit facility, which includes Tranche A revolving loans, with a borrowing capacity of $1.09 billion, and Tranche A-1 revolving loans, with a borrowing capacity of $40 million. As of October 7, 2023, the senior secured credit facility had outstanding borrowings of $472.6 million. During the first quarter, the Company increased the borrowing capacity of Tranche A revolving loans by $115.0 million to $1.09 billion from $975.0 million through the addition of two new lenders. This expansion of borrowing capacity aligns with the Company's recent growth and provides flexibility to support the Company's strategic long-term plans, including both organic and inorganic investments.
Additional available borrowings under the Company’s credit facility are based on stipulated advance rates on eligible assets, as defined in the Credit Agreement. The Credit Agreement requires that the Company maintain excess availability of 10% of the borrowing base, as such term is defined in the Credit Agreement. The Company had excess availability after the 10% covenant of $518.2 million at October 7, 2023. Payment of dividends and repurchases of outstanding shares are permitted, provided that certain levels of excess availability are maintained. The credit facility provides for the issuance of letters of credit, of which $17.7 million were outstanding as of October 7, 2023. The credit facility matures November 17, 2027 and is secured by substantially all of the Company’s assets.
The Company believes that cash generated from operating activities and available borrowings under the credit facility will be sufficient to meet anticipated requirements for working capital, capital expenditures, dividend payments, and debt service obligations for the foreseeable future. However, there can be no assurance that the business will continue to generate cash flow at or above current levels or that the Company will maintain its ability to borrow under the Credit Agreement.
The Company’s current ratio (current assets to current liabilities) was 1.59-to-1 at October 7, 2023 compared to 1.51-to-1 at December 31, 2022, and its investment in working capital was $405.7 million at October 7, 2023 compared to $361.4 million at December 31, 2022. The net long-term debt to total capital ratio was 0.40-to-1 at October 7, 2023 compared to 0.38-to-1 at December 31, 2022.
28
Net long-term debt is a non-GAAP financial measure that is defined as long-term debt and finance lease liabilities, plus current portion of long-term debt and finance lease liabilities, less cash and cash equivalents. The ratio of net long-term debt to total capital is a non-GAAP financial measure that is calculated by dividing net long-term debt, as defined previously, by total capital (net long-term debt plus total shareholders’ equity). The Company believes both management and its investors find the information useful because it reflects the amount of long-term debt obligations that are not covered by available cash and temporary investments. Total net long-term debt is not a substitute for GAAP financial measures and may differ from similarly titled measures of other companies.
Following is a reconciliation of “Long-term debt and finance lease liabilities” to Net long-term debt as of October 7, 2023 and December 31, 2022.
Total debt
544,214
503,581
(17,554
(29,086
Net long-term debt
526,660
474,495
Following is a reconciliation of "Net long-term debt" and "Total shareholders' equity" to Total capital as of October 7, 2023 and December 31, 2022.
Total shareholders' equity
Total capital
1,303,927
1,240,563
For information on material cash requirements, see the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. At October 7, 2023, there have been no significant changes to the Company’s material cash requirements outside the ordinary course of business.
Cash Dividends
During the quarter ended October 7, 2023, the Company declared $7.5 million in dividends. A 2.4% increase in the quarterly dividend rate from $0.21 per share to $0.215 per share was approved by the Board of Directors and announced on March 1, 2023. Although the Company expects to continue to pay a quarterly cash dividend, adoption of a dividend policy does not commit the Board of Directors to declare future dividends. Each future dividend will be considered and declared by the Board of Directors at its discretion. Whether the Board of Directors continues to declare dividends depends on a number of factors, including the Company’s future financial condition, anticipated profitability and cash flows and compliance with the terms of its credit facilities.
Under the senior revolving credit facility, the Company is generally permitted to pay dividends in any fiscal year up to an amount such that all cash dividends, together with any cash distributions and share repurchases, do not exceed $35.0 million. Additionally, the Company is generally permitted to pay cash dividends and repurchase shares in excess of $35.0 million in any fiscal year so long as its Excess Availability, as defined in the senior revolving credit facility, is in excess of 15% of the Total Borrowing Base, as defined in the senior revolving credit facility, before and after giving effect to the repurchases and dividends.
Off-Balance Sheet Arrangements
The Company has also made certain commercial commitments that extend beyond October 7, 2023. These commitments consist primarily of purchase commitments, standby letters of credit of $17.7 million as of October 7, 2023, and interest on long-term debt and finance lease liabilities.
Critical Accounting Policies
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and the related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that may not be readily apparent from other sources. Based on the Company’s ongoing review, the Company makes adjustments it considers appropriate under the facts and circumstances. This discussion and analysis of the Company’s financial condition and results of operations is based upon the Company’s consolidated financial statements. The Company believes these accounting policies and others set forth in Item 7 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 should be reviewed as they are integral to understanding the Company’s financial condition and results of operations. The Company has discussed the development, selection and disclosure of these accounting policies with the Audit Committee of the Board of Directors. The accompanying financial statements are prepared using the same critical accounting policies discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
29
Recently Issued Accounting Standards
Refer to Note 2 in the notes to the condensed consolidated financial statements for further information.
ITEM 3. Quantitative and Qualitative Disclosure about Market Risk
There have been no material changes in market risk of SpartanNash from the information provided in Part II, Item 7A, “Quantitative and Qualitative Disclosure About Market Risk,” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, with the exception of the interest rate swap entered into during the first quarter of 2023 described below.
As of October 7, 2023, the Company maintained an interest rate swap agreement with a maturity date of November 17, 2027 with an aggregate notional amount totaling $150 million. An interest rate swap is an agreement that effectively converts a portion of the variable interest payable on $150 million of the Company's outstanding debt to a fixed rate. The fixed interest rate for the interest rate swap is 3.646%. The variable rate leg of the interest rate swap is the one-month Secured Overnight Financing Rate (SOFR). As of October 7, 2023, the fair value of the interest rate swap was recorded in "Prepaid expenses and other current assets" and "Other assets, net" for $2.5 million and $2.3 million, respectively, and "Accumulated other comprehensive income" for $3.7 million, net of tax.
ITEM 4. Controls and Procedures
An evaluation of the effectiveness of the design and operation of SpartanNash Company’s disclosure controls and procedures (as currently defined in Rule 13a-15(e) under the Exchange Act) was performed as of October 7, 2023 (the “Evaluation Date”). This evaluation was performed under the supervision and with the participation of SpartanNash Company’s management, including its Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”) and Corporate Controller. As of the Evaluation Date, SpartanNash Company’s management, including the CEO, CFO and Corporate Controller, concluded that SpartanNash’s disclosure controls and procedures were effective as of the Evaluation Date to ensure that material information required to be disclosed in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities and Exchange Act of 1934 is accumulated and communicated to management, including its principal executive and principal financial officer, as appropriate, to allow for timely decisions regarding required disclosure. During the third quarter of 2023 there were no changes that materially affected, or were reasonably likely to materially affect, SpartanNash’s internal control over financial reporting.
PART II
ITEM 1. Legal Proceedings
The information required by this Part II, Item 1 is incorporated by reference to the information set forth under the caption “Commitments and Contingencies” in Note 8 in the notes to condensed consolidated financial statements included in this report.
ITEM 1A. Risk Factors
There have been no material changes to the risk factors previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K (2022 10-K) for the year ended December 31, 2022 filed with Securities and Exchange Commission. You should carefully consider the risks included in our 2022 10-K, together with all the other information in this Quarterly Report on Form 10-Q, including the forward-looking statements which appear at the beginning of this report.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
On February 24, 2022, the Board of Directors authorized the repurchase of common shares in connection with a $50 million share repurchase program, which expires on February 22, 2027. There were not any repurchases of common stock made under this program during the third quarter of 2023. At October 7, 2023, $25.5 million remains available under the program. Repurchases of common stock may include: (1) shares of SpartanNash common stock delivered in satisfaction of the exercise price and/or tax withholding obligations by holders of employee stock options who exercised options, and (2) shares submitted for cancellation to satisfy tax withholding obligations that occur upon the vesting of the restricted shares. The value of the shares delivered or withheld is determined by the applicable stock compensation plan. The Company plans to return value to shareholders through share repurchases under this program as well as continuing regular dividends.
Fiscal Period
Total Number of Shares Purchased
Average Price Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Programs
Maximum Dollar Value of Shares Yet to be Purchased Under the Plans or Programs(in thousands)
July 16 - August 12, 2023
Employee Transactions
23.47
N/A
Repurchase Program
25,467
August 13 - September 9, 2023
418
22.14
September 10 - October 7, 2023
21.04
Total for quarter ended October 7, 2023
601
22.16
ITEM 6. Exhibits
The following documents are filed as exhibits to this Quarterly Report on Form 10-Q:
ExhibitNumber
Document
3.1
Restated Articles of Incorporation of SpartanNash Company, as amended. Previously filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended July 15, 2017. Incorporated herein by reference.
3.2
Bylaws of SpartanNash Company, as amended. Previously filed as an exhibit to the Company's Current Report of Form 8-K filed on August 25, 2023.
31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended October 7, 2023, has been formatted in Inline XBRL.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
(Registrant)
Date: November 9, 2023
By
/s/ Jason Monaco
Jason Monaco
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
/s/ R. Todd Riksen
R. Todd Riksen
Vice President and Corporate Controller
(Principal Accounting Officer)