(Source: Business Wire)
Winn-Dixie Stores, Inc. (NASDAQ:WINN), today reported net income of $16.6 million, or $0.30 per diluted share, for the third quarter of fiscal 2009 compared to net income of $15.0 million, or $0.28 per diluted share, for the third quarter of fiscal 2008.
Adjusted EBITDA in the third quarter was $57.5 million, including a LIFO charge of $1.2 million for the quarter. Adjusted EBITDA in the third quarter of fiscal 2008 was $51.2 million, which included an estimated benefit of $3.5 million due to the earlier timing of the Easter holiday in 2008 and a LIFO charge of $6.2 million.
Winn-Dixie Chairman, CEO, and President, Peter Lynch, said, "I am very pleased with our financial performance this quarter, which reflects our success maintaining an appropriate balance between sales and gross margin. Based on our strong results, we are raising our annual Adjusted EBITDA guidance for the fiscal year to a range of $145 to $152 million. Our updated guidance reflects a significant increase in growth over fiscal 2008 Adjusted EBITDA of $101.9 million, despite the challenges posed by the economy."
Mr. Lynch added, "We are on track with our long-term initiatives, including our store remodeling program and merchandising and marketing strategies. I remain confident that we have the right strategies in place to generate sustainable long-term sales growth and profitability by offering customers better quality, service and value for their shopping dollars."
Fiscal 2009 Third Quarter Results
Net sales in the third quarter of fiscal 2009 were $1.7 billion, an increase of $3.1 million compared to the prior year period. Identical store sales from continuing operations increased 0.2% compared to the same period in the prior fiscal year. Third quarter identical store sales were impacted negatively by approximately 100 basis points due to the timing of the Easter holiday. The third quarter of the prior fiscal year included Easter holiday sales, whereas Easter sales occurred in the fourth quarter of fiscal 2009. In addition, identical store sales in the third quarter of fiscal 2009 were impacted negatively by approximately 70 basis points due to a higher percentage of generic versus branded pharmaceutical products sold.
Gross profit in the third quarter of fiscal 2009 was $498.7 million, or 28.9% of net sales, compared to $483.1 million, or 28.0% of net sales, in the third quarter of fiscal 2008. The increase in gross profit primarily reflects the benefit of product mix changes, lower transportation costs and a lower LIFO charge.
Other operating and administrative expenses for the third quarter of fiscal 2009 were $468.4 million, an increase of $9.7 million compared to the same period in the prior fiscal year. The increase in other operating and administrative expenses in the third quarter of fiscal 2009 was due primarily to higher retail payroll and higher utility rates.
As of April 1, 2009, Winn-Dixie had approximately $661.6 million of liquidity, comprised of $484.3 million of borrowing availability under its credit agreement and $177.3 million of cash and cash equivalents.
In addressing liquidity, Mr. Lynch added, "Based on our strong cash position and our preliminary review of our capital plan for next year, we anticipate that in fiscal 2010 we will again have no borrowings under our Credit Facility."
Store Remodeling Program
Winn-Dixie continued to make progress with the store remodeling program it commenced in the second half of fiscal 2007. The Company is on track to remodel roughly half of its stores by the end of fiscal 2010 and substantially all of its stores by the end of fiscal 2013.
As of the end of the third quarter of fiscal 2009, the Company had completed 127 store remodels, 74 of which were still within their first year of operation. Of the 74 first-year store remodels, 47 are considered by the Company to be offensive remodels. Year-to-date, those 47 stores had a 10% weighted average sales increase compared to the same period in the prior fiscal year, excluding the grand re-opening phase and adjusted for the Easter holiday shift. The sales increase resulted from increases in transaction count and basket size of 4.5% and 5.3%, respectively.
Corporate Brands Program
The Company's corporate brands program is another key component of its long-term strategic plan. For the third quarter of fiscal 2009, the Company's penetration rate improved to 21.8%, an increase of 110 basis points compared to the same period in the prior fiscal year, on the categories we measure. To date, the Company has completed packaging and label redesigns for over 2,000 private label products. The Company's plan is to have redesigned substantially all of its line of private label products, which consists of approximately 3,000 items, by the end of calendar year 2009.
40-Week Results
Net sales for the 40 weeks ended April 1, 2009, were $5.7 billion, an increase of $61.2 million compared to the same period in the prior fiscal year. Identical store sales from continuing operations increased 1.0% compared to the same period in the prior fiscal year. Gross profit as a percentage of net sales was 28.3%, an increase of 100 basis points compared to the same period in the prior fiscal year.
Net income for the 40 weeks of fiscal 2009 was $30.4 million, or $0.56 per diluted share, compared to net income of $18.3 million, or $0.34 per diluted share, in the prior fiscal year. Adjusted EBITDA was $120.0 million compared to $92.2 million in the prior fiscal year.
Fiscal 2009 Guidance-Update
The Company now expects Adjusted EBITDA in fiscal 2009 to be between $145 million to $152 million, an increase from its previous estimate of $110 million to $125 million. The Company's updated guidance reflects its strong performance year-to-date and its expectation for continued success maintaining an appropriate balance between sales and gross margin. In addition, the Company's updated guidance includes a $12 million reduction in the estimated full-year LIFO charge to $19 million from the previous estimate of $31 million.
Conference Call and Webcast Information
The Company will host a live conference call and simultaneous audio webcast on Tuesday, May 12, 2009, from 8:30 AM to 9:00 AM Eastern Time. To access the simultaneous webcast of the conference call (a replay of which will be available later in the day), please go to the Company's Investor Relations site at http://www.winn-dixie.com under "Investors". Parties interested in participating in this call should dial-in ten minutes prior to the start time at 888-713-4211 or 617-213-4864 with access code 63770147. A recording of the call will be available on the Investor Relations section of the Winn-Dixie website from May 12, through May 19, 2009; it can also be accessed by calling 888-286-8010 or 617-801-6888. The replay access code is 31153589.
About Winn-Dixie
Winn-Dixie Stores, Inc., is one of the nation's largest food retailers. Founded in 1925, the Company is headquartered in Jacksonville, FL. The Company currently operates 520 retail grocery locations, including more than 400 in-store pharmacies, in Florida, Alabama, Louisiana, Georgia, and Mississippi. For more information, please visit www.winn-dixie.com.
The Securities and Exchange Commission ("SEC") has adopted rules related to disclosure of certain financial measures not calculated in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). Such rules require all public companies to provide certain disclosures in press release and SEC filings related to non-GAAP financial measures. We use the non-GAAP measure "Adjusted EBITDA" to evaluate the Company's operating performance and it is among the primary measures used by management for planning and forecasting of future periods. Adjusted EBITDA is defined as income from continuing operations before interest, income taxes, and depreciation and amortization expense, or EBITDA, and further adjusted for certain non-cash charges, reorganization items, self-insurance reserves, and items related to the Company's emergence from bankruptcy. The Company believes the presentation of this measure is relevant and useful for investors because it allows investors to view results in a manner similar to the method used by the Company's management and makes it easier to compare the Company's results with other companies that have different financing and capital structures or tax rates. In addition, this measure is also among the primary measures used externally by the Company's investors, analysts and peers in its industry for purposes of valuation and comparing the results of the Company to other peers in its industry. Adjusted EBITDA is reconciled to Net Income on the attached schedule of this release.
Forward-Looking Statements
Certain statements made in this press release may constitute "forward-looking statements" within the meaning of the federal securities laws. These forward-looking statements are based on our current plans and expectations and involve certain risks and uncertainties. Actual results may differ materially from the expected results described in the forward-looking statements. These forward-looking statements include and may be indicated by words or phrases such as "anticipate," "estimate," "plan," "expect," "project," "continuing," "ongoing," "should," "will," "believe," or "intend" and similar words and phrases. There are many factors that could cause the Company's actual results to differ materially from the expected results contemplated or implied by the Company's forward-looking statements.
The Company faces a number of risks and uncertainties with respect to its continuing business operations and its attempt to increase its sales and gross profit margin, including, but not limited to: the Company's ability to improve the quality of its stores and products; the Company's success in achieving increased customer count and sales in remodeled and other stores; the results of the Company's efforts to revitalize the corporate brand; competitive factors, which could include new store openings, price reduction programs and marketing strategies from other food and/or drug retail chains, supercenters and non-traditional competitors; the ability of the Company to effectively manage gross margin rates; the ability of the Company to attract, train and retain key leadership; the Company's ability to implement, maintain or upgrade information technology systems, including programs to support retail pricing policies; the outcome of the Company's programs to control or reduce operating and administrative expenses and to control inventory shrink; increases in utility rates, gasoline costs and food prices, which could impact consumer spending and buying habits and the cost of doing business; the availability and terms of capital resources and financing and its adequacy for the Company's planned investment in store remodeling and other activities; the concentration of the Company's locations in the southeastern United States, which increases its vulnerability to severe storm damage; general business and economic conditions in the southeastern United States, including consumer spending levels, population, employment and job re-growth in some of our markets, and the additional risks relating to limitations on insurance coverage following the catastrophic storms in recent years; the Company's ability to successfully estimate self-insurance liabilities; changes in laws and other regulations affecting the Company's business; events that give rise to actual or potential food contamination, drug contamination or food-borne illness; the Company's ability to use net operating loss carryforwards under the federal tax laws; and the outcome of litigation or legal proceedings.
Please refer to discussions of these and other factors in the Company's Annual Report on Form 10-K for the fiscal year ended June 25, 2008, and other Company filings with the Securities and Exchange Commission. These statements are based on current expectations and speak only as of the date of such statements. The Company undertakes no obligation to publicly revise or update these forward-looking statements, whether as a result of new information, future events or otherwise.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Dollar amounts in thousands except per share data 12 weeks ended April 1, 2009 April 2, 2008 Amount % Amount % Net sales $ 1,725,946 100.0 $ 1,722,829 100.0 Cost of sales, including warehouse and delivery expenses 1,227,216 71.1 1,239,749 72.0 Gross profit on sales 498,730 28.9 483,080 28.0 Other operating and administrative expenses 468,439 27.1 458,708 26.6 Impairment charges 204 - - - Operating income 30,087 1.8 24,372 1.4 Interest expense (income), net 781 0.1 (1,057 ) (0.1 ) Income before income taxes 29,306 1.7 25,429 1.5 Income tax expense 12,744 0.7 10,405 0.6 Net income $ 16,562 1.0 $ 15,024 0.9 Basic and diluted earnings per share $ 0.30 0.28 Weighted average common shares outstanding-basic 54,389 53,970 Weighted average common shares outstanding-diluted 54,557 54,251 Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA): Net income $ 16,562 15,024 Adjustments to reconcile net income to EBITDA: Income tax expense 12,744 10,405 Depreciation and amortization 21,830 21,581 Favorable and unfavorable lease amortization, net 697 894 Interest expense (income), net 781 (1,057 ) EBITDA 52,614 46,847 Adjustments to reconcile EBITDA to Adjusted EBITDA Share-based compensation 4,048 3,343 Post-emergence bankruptcy-related professional fees 620 966 Impairment charges 204 - Adjusted EBITDA $ 57,486 51,156 -------------------------------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Dollar amounts in thousands except per share data 40 weeks ended April 1, 2009 April 2, 2008 Amount % Amount % Net sales $ 5,651,927 100.0 $ 5,590,695 100.0 Cost of sales, including warehouse and delivery expenses 4,053,944 71.7 4,062,234 72.7 Gross profit on sales 1,597,983 28.3 1,528,461 27.3 Other operating and administrative expenses 1,556,777 27.5 1,498,912 26.8 Gain on insurance settlement (22,430 ) (0.4 ) - - Impairment charges 1,870 0.1 210 - Operating income 61,766 1.1 29,339 0.5 Interest expense (income), net 3,374 0.1 (3,572 ) (0.1 ) Income before income taxes 58,392 1.0 32,911 0.6 Income tax expense 27,998 0.5 14,606 0.3 Net income $ 30,394 0.5 $ 18,305 0.3 Basic and diluted earnings per share $ 0.56 0.34 Diluted earnings per share $ 0.56 0.34 Weighted average common shares outstanding-basic 54,307 53,922 Weighted average common shares outstanding-diluted 54,522 54,290 Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA): Net income $ 30,394 18,305 Adjustments to reconcile net income to EBITDA: Income tax expense 27,998 14,606 Depreciation and amortization 75,222 65,544 Favorable and unfavorable lease amortization, net 1,968 2,647 Interest expense (income), net 3,374 (3,572 ) EBITDA 138,956 97,530 Adjustments to reconcile EBITDA to Adjusted EBITDA Share-based compensation 11,551 10,199 Post-emergence bankruptcy-related professional fees 1,788 2,597 Gain on insurance settlement (22,430 ) - Self-insurance reserve adjustment (9,185 ) (18,316 ) Impairment charges 1,870 210 VISA / MasterCard settlement (2,563 ) - Adjusted EBITDA $ 119,987 92,220 -------------------------------------------------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) Dollar amounts in thousands except par value ASSETS April 1, 2009 June 25, 2008 Current assets: Cash and cash equivalents $ 177,347 201,275 Trade and other receivables, less allowance for doubtful receivables of $3,034 ($1,906 at June 25, 2008) 70,225 79,912 Insurance claims receivable - 2,197 Income tax receivable 6,861 4,874 Merchandise inventories, less LIFO reserve of $42,587 ($24,738 at June 25, 2008) 659,519 649,022 Prepaid expenses and other current assets 33,851 42,099 Total current assets 947,803 979,379 Property, plant and equipment, net 552,456 446,866 Intangible assets, net 243,351 294,775 Deferred tax assets, non-current 36,404 39,454 Other assets, net 5,557 15,047 Total assets $ 1,785,571 1,775,521 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current obligations under capital leases $ 11,266 7,920 Accounts payable 324,870 340,211 Reserve for self-insurance liabilities 79,315 73,365 Accrued wages and salaries 73,714 77,575 Accrued rent 29,828 39,464 Deferred tax liabilities 47,502 50,557 Accrued expenses 73,948 76,244 Total current liabilities 640,443 665,336 Reserve for self-insurance liabilities 115,302 121,000 Long-term borrowings under credit facility 133 58 Unfavorable leases 116,393 126,049 Obligations under capital leases 26,460 17,698 Other liabilities 19,591 19,753 Total liabilities 918,322 949,894 Shareholders' equity: Common stock, $0.001 par value. Authorized 400,000,000 shares; 54,577,320 shares issued; 54,478,793 outstanding at April 1, 2009 and 54,179,890 shares issued; 54,081,363 outstanding at June 25, 2008. 54 54 Additional paid-in-capital 787,617 776,059 Retained earnings 71,671 41,277 Accumulated other comprehensive income 7,907 8,237 Total shareholders' equity 867,249 825,627 Total liabilities and shareholders' equity $ 1,785,571 1,775,521 -------------------------------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Amounts in thousands 40 weeks ended April 1, 2009 Apr. 2, 2008 Cash flows from operating activities: Net income $ 30,394 18,305 Adjustments to reconcile net income to net cash provided by operating activities: Loss on sales of assets, net 190 239 Gain on insurance settlement (22,430 ) - Impairment charges 1,870 210 Depreciation and amortization 75,222 65,544 Share-based compensation 11,551 10,199 Deferred income taxes 27,998 14,803 Change in operating assets and liabilities: Favorable and unfavorable leases, net 1,968 2,647 Trade, insurance and other receivables 21,036 17,560 Merchandise inventories (10,497 ) (21,120 ) Prepaid expenses and other current assets 8,248 2,002 Accounts payable (7,860 ) 49,923 Income taxes payable/receivable 1,425 6,555 Reserve for self-insurance liabilities 252 (5,963 ) Accrued expenses and other (18,828 ) (24,622 ) Net cash provided by operating activities 120,539 136,282 Cash flows from investing activities: Purchases of property, plant and equipment (153,500 ) (153,772 ) Decrease (increase) in investments and other assets, net 4,909 (7,672 ) Sales of assets 639 178 Purchases of marketable securities - (72,090 ) Sales of marketable securities - 75,466 Proceeds from insurance 17,601 - Net cash used in investing activities (130,351 ) (157,890 ) Cash flows from financing activities: Gross borrowings on credit facilities 11,529 10,091 Gross payments on credit facilities (11,454 ) (10,066 ) (Decrease) increase in book overdrafts (7,481 ) 3,281 Principal payments on capital leases (6,717 ) (5,799 ) Proceeds from sales under Employee Stock Purchase Plan 7 - Net cash used in financing activities (14,116 ) (2,493 ) Decrease in cash and cash equivalents (23,928 ) (24,101 ) Cash and cash equivalents at beginning of period 201,275 201,946 Cash and cash equivalents at end of period $ 177,347 177,845 -------------------------------------------------------------------------------
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