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SpartanNash Company

15/08/2024 | Press release | Distributed by Public on 15/08/2024 20:12

Quarterly Report for Quarter Ending July 13, 2024 (Form 10-Q)

10-Q

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 July 13, 2024.


☐	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 76thStreet, 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 August 13, 2024, the registrant had 33,745,117outstanding 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 30, 2023 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; the Company's ability to implement its growth strategy through acquisitions and successfully integrate acquired businesses; disruptions to the Company's information security network, including security breaches and cyber-attacks; impacts to the availability and performance of the Company's information technology systems; changes in relationships with the Company's vendor base; changes in product availability and product pricing from vendors; 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; failure to successfully retain or manage transitions with executive leaders and other key personnel; impacts to the Company's business and reputation due to an increasing focus on environmental, social and governance matters; customers to whom the Company extends credit or for whom the Company guarantees loans may fail to repay the Company; changes in the geopolitical conditions; disruptions associated with severe weather conditions and natural disasters, including effects from climate change; disruptions associated with disease outbreaks; 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; impairment charges for goodwill or other long-lived assets; the Company's level of indebtedness; interest rate fluctuations; the Company's ability to service its debt and to comply with debt covenants; changes in government regulations; labor relations issues; 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; cost increases related to multi-employer pension 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 30, 2023 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 the Company or that the Company 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.

TABLE OF CONTENTS


		Page
PART I.	FINANCIAL INFORMATION	4

Item 1.	Financial Statements	4

	Condensed Consolidated Balance Sheets	4

	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	8

	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29

Item 4.	Controls and Procedures	29

PART II.	OTHER INFORMATION	29

Item 1.	Legal Proceedings	29

Item 1A.	Risk Factors	29

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30

Item 5.	Other Information	30

Item 6.	Exhibits	31

	Signatures	32

PART I

FINANCIAL INFORMATION

ITEM 1. Financial Statements

SPARTANNASH COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, Unaudited)


	July 13,		December 30,
	2024		2023
Assets
Current assets
Cash and cash equivalents	$	25,242		$	17,964
Accounts and notes receivable, net		426,869			421,859
Inventories, net		527,595			575,226
Prepaid expenses and other current assets		65,126			62,440
Total current assets		1,044,832			1,077,489

Property and equipment, net		662,501			649,071
Goodwill		190,214			182,160
Intangible assets, net		102,793			101,535
Operating lease assets		266,221			242,146
Other assets, net		99,323			103,174

Total assets	$	2,365,884		$	2,355,575

Liabilities and Shareholders' Equity
Current liabilities
Accounts payable	$	466,830		$	473,419
Accrued payroll and benefits		60,720			78,076
Other accrued expenses		63,557			57,609
Current portion of operating lease liabilities		42,394			41,979
Current portion of long-term debt and finance lease liabilities		9,754			8,813
Total current liabilities		643,255			659,896

Long-term liabilities
Deferred income taxes		81,114			73,904
Operating lease liabilities		252,850			226,118
Other long-term liabilities		25,897			28,808
Long-term debt and finance lease liabilities		586,427			588,667
Total long-term liabilities		946,288			917,497

Commitments and contingencies (Note 8)

Shareholders' equity
Common stock, voting, nopar value; 100,000shares authorized; 33,750and 34,610shares outstanding		449,076			460,299
Preferred stock, nopar value, 10,000shares authorized; noshares outstanding		-			-
Accumulated other comprehensive income		1,005			796
Retained earnings		326,260			317,087
Total shareholders' equity		776,341			778,182

Total liabilities and shareholders' equity	$	2,365,884		$	2,355,575

See accompanying notes to condensed consolidated financial statements.

SPARTANNASH COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OFEARNINGS

(In thousands, except per share amounts)

(Unaudited)


	12 Weeks Ended		28 Weeks Ended
	July 13, 2024		July 15, 2023		July 13, 2024			July 15, 2023
Net sales	$	2,230,756		$		2,312,394			$	5,037,019		$	5,219,788
Cost of sales		1,877,753				1,960,012				4,243,672			4,420,740
Gross profit		353,003				352,382				793,347			799,048

Operating expenses
Selling, general and administrative		318,157				318,795				721,790			736,991
Acquisition and integration, net		2,613				55				2,940			129
Restructuring and asset impairment, net		6,107				(2,254	)			11,875			1,829
Total operating expenses		326,877				316,596				736,605			738,949

Operating earnings		26,126				35,786				56,742			60,099

Other expenses and (income)
Interest expense, net		10,541				9,349				24,028			20,938
Other, net		(550	)			(685	)			(1,598	)		(1,724	)
Total other expenses, net		9,991				8,664				22,430			19,214

Earnings before income taxes		16,135				27,122				34,312			40,885
Income tax expense		4,646				7,654				9,852			10,080
Net earnings	$	11,489		$		19,468			$	24,460		$	30,805

Net earnings per basic common share	$	0.34		$		0.57			$	0.72		$	0.90

Net earnings per diluted common share	$	0.34		$		0.56			$	0.71		$	0.88

Weighted average shares outstanding:
Basic		33,726				34,125				33,962			34,366
Diluted		33,958				34,641				34,329			35,116

See accompanying notes to condensed consolidated financial statements.

SPARTANNASH COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, Unaudited)


	12 Weeks Ended		28 Weeks Ended
	July 13, 2024		July 15, 2023		July 13, 2024			July 15, 2023
Net earnings	$	11,489		$		19,468			$	24,460		$	30,805

Other comprehensive (loss) income, before tax
Change in interest rate swap		(2,882	)			2,281				1,726			1,145
Postretirement liability adjustment		(570	)			(326	)			(1,462	)		(1,237	)
Total other comprehensive (loss) income, before tax		(3,452	)			1,955				264			(92	)

Income tax benefit (expense) related to items of other comprehensive (loss) income		809				(454	)			(55	)		36

Total other comprehensive (loss) income, after tax		(2,643	)			1,501				209			(56	)
Comprehensive income	$	8,846		$		20,969			$	24,669		$	30,749

See accompanying notes to condensed consolidated financial statements.

SPARTANNASH COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(In thousands, Unaudited)


							Accumulated
							Other
	Shares			Common		Comprehensive		Retained
	Outstanding			Stock		Income		Earnings		Total
Balance at December 30, 2023		34,610			$	460,299		$	796		$	317,087		$	778,182
Net earnings		-				-			-			12,971			12,971
Other comprehensive income		-				-			2,852			-			2,852
Dividends - $0.2175per share		-				-			-			(7,705	)		(7,705	)
Share repurchases		(134	)			(2,616	)		-			-			(2,616	)
Stock-based compensation		-				3,720			-			-			3,720
Stock warrant		-				326			-			-			326
Issuances of common stock for associate stock purchase plan		32				626			-			-			626
Cancellations of stock-based awards		(159	)			(3,151	)		-			-			(3,151	)
Balance at April 20, 2024		34,349			$	459,204		$	3,648		$	322,353		$	785,205
Net earnings		-				-			-			11,489			11,489
Other comprehensive loss		-				-			(2,643	)		-			(2,643	)
Dividends - $0.2175per share		-				-			-			(7,582	)		(7,582	)
Share repurchases		(627	)			(12,435	)		-			-			(12,435	)
Stock-based compensation		-				1,856			-			-			1,856
Stock warrant		-				190			-			-			190
Restricted stock units issued as common stock		15				-			-			-			-
Issuances of common stock for associate stock purchase plan and other stock-based awards		19				291			-			-			291
Cancellations of stock-based awards		(6	)			(30	)		-			-			(30	)
Balance at July 13, 2024		33,750			$	449,076		$	1,005		$	326,260		$	776,341


							Accumulated
							Other
	Shares			Common		Comprehensive		Retained
	Outstanding			Stock		Income		Earnings		Total
Balance at December 31, 2022		35,079			$	468,061		$	2,979		$	295,028		$	766,068
Net earnings		-				-			-			11,337			11,337
Other comprehensive loss		-				-			(1,557	)		-			(1,557	)
Dividends - $0.215per share		-				-			-			(7,679	)		(7,679	)
Share repurchases		(435	)			(10,910	)		-			-			(10,910	)
Stock-based compensation		-				5,147			-			-			5,147
Stock warrant		-				607			-			-			607
Issuances of common stock for associate stock purchase plan		17				358			-			-			358
Issuances of restricted stock		425				-			-			-			-
Cancellations of stock-based awards		(151	)			(3,917	)		-			-			(3,917	)
Balance at April 22, 2023		34,935			$	459,346		$	1,422		$	298,686		$	759,454
Net earnings		-				-			-			19,468			19,468
Other comprehensive income		-				-			1,501			-			1,501
Dividends - $0.215per share		-				-			-			(7,524	)		(7,524	)
Share repurchases		(330	)			(7,617	)		-			-			(7,617	)
Stock-based compensation		-				2,465			-			-			2,465
Stock warrant		-				353			-			-			353
Issuances of common stock for associate stock purchase plan and other stock-based awards		18				328			-			-			328
Issuances of restricted stock		10				-			-			-			-
Cancellations of stock-based awards		(15	)			(31	)		-			-			(31	)
Balance at July 15, 2023		34,618			$	454,844		$	2,923		$	310,630		$	768,397

See accompanying notes to condensed consolidated financial statements.

SPARTANNASH COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, Unaudited)


	28 Weeks Ended
	July 13, 2024		July 15, 2023
Cash flows from operating activities
Net earnings	$	24,460		$	30,805
Adjustments to reconcile net earnings to net cash provided by operating activities:
Non-cash restructuring, asset impairment, and other charges		12,129			1,735
Depreciation and amortization		53,988			52,203
Non-cash rent		(1,676	)		(2,044	)
LIFO expense		3,529			15,839
Postretirement benefits income		(1,085	)		(1,149	)
Deferred income taxes		4,254			12,214
Stock-based compensation expense		5,576			7,612
Stock warrant		516			960
Loss on disposals of assets		44			46
Other operating activities		991			879
Changes in operating assets and liabilities:
Accounts receivable		(3,619	)		(20,163	)
Inventories		48,517			(25,313	)
Prepaid expenses and other assets		2,213			2,068
Accounts payable		9,962			32,252
Accrued payroll and benefits		(25,604	)		(46,469	)
Current income taxes		(3,604	)		(7,645	)
Other accrued expenses and other liabilities		1,507			(4,174	)
Net cash provided by operating activities		132,098			49,656
Cash flows from investing activities
Purchases of property and equipment		(67,074	)		(60,824	)
Net proceeds from the sale of assets		1,901			3,996
Acquisitions, net of cash acquired		(14,898	)		(780	)
Payments from customers on loans		983			740
Other investing activities		(407	)		(189	)
Net cash used in investing activities		(79,495	)		(57,057	)
Cash flows from financing activities
Proceeds from senior secured credit facility		715,399			781,075
Payments on senior secured credit facility		(721,069	)		(743,132	)
Repayment of other long-term debt and finance lease liabilities		(5,879	)		(4,366	)
Share repurchases		(15,051	)		(18,527	)
Net payments related to stock-based award activities		(3,181	)		(3,948	)
Dividends paid		(15,360	)		(15,117	)
Other financing activities		(184	)		(760	)
Net cash used in financing activities		(45,325	)		(4,775	)

Net increase (decrease) in cash and cash equivalents		7,278			(12,176	)
Cash and cash equivalents at beginning of period		17,964			29,086
Cash and cash equivalents at end of period	$	25,242		$	16,910

See accompanying notes to condensed consolidated financial statements.

SPARTANNASH COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 30, 2023.

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 July 13, 2024, 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 second quarter and year-to-date periods of 2024 and 2023 include the results of operations of the Company for the 12- and 28-week periods ended July 13, 2024 and July 15, 2023, respectively.

Note 2 - Adoption of New Accounting Standards and Recently Issued Accounting Standards

As of July 13, 2024and 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 July 13, 2024		28 Weeks Ended July 13, 2024
(In thousands)	Wholesale		Retail		Total		Wholesale		Retail	Total
Type of products:
Center store (a)	$	576,284		$		256,841		$	833,125	$	1,337,529	$	560,055	$	1,897,584
Fresh (b)		482,558				259,255			741,813		1,097,927		556,171		1,654,098
Non-food (c)		474,486				121,583			596,069		1,082,792		270,454		1,353,246
Fuel		-				38,172			38,172		-		81,093		81,093
Other		21,300				277			21,577		50,401		597		50,998
Total	$	1,554,628		$		676,128		$	2,230,756	$	3,568,649	$	1,468,370	$	5,037,019
Type of customers:
Individuals	$	-		$		675,851		$	675,851	$	-	$	1,467,773	$	1,467,773
Independent retailers (d)		532,398				-			532,398		1,197,583		-		1,197,583
National accounts		492,215				-			492,215		1,128,845		-		1,128,845
Military (e)		521,532				-			521,532		1,221,439		-		1,221,439
Other		8,483				277			8,760		20,782		597		21,379
Total	$	1,554,628		$		676,128		$	2,230,756	$	3,568,649	$	1,468,370	$	5,037,019

	12 Weeks Ended July 15, 2023		28 Weeks Ended July 15, 2023
(In thousands)	Wholesale		Retail		Total		Wholesale		Retail	Total
Type of products:
Center store (a)	$	603,441		$		260,838		$	864,279	$	1,431,142	$	575,652	$	2,006,794
Fresh (b)		508,004				257,915			765,919		1,162,262		568,627		1,730,889
Non-food (c)		499,440				119,245			618,685		1,070,407		266,844		1,337,251
Fuel		-				40,787			40,787		-		89,053		89,053
Other		22,479				245			22,724		55,237		564		55,801
Total	$	1,633,364		$		679,030		$	2,312,394	$	3,719,048	$	1,500,740	$	5,219,788
Type of customers:
Individuals	$	-		$		678,785		$	678,785	$	-	$	1,500,177	$	1,500,177
Independent retailers (d)		563,412				-			563,412		1,266,218		-		1,266,218
National accounts		554,451				-			554,451		1,236,436		-		1,236,436
Military (e)		504,736				-			504,736		1,190,431		-		1,190,431
Other		10,765				245			11,010		25,963		563		26,526
Total	$	1,633,364		$		679,030		$	2,312,394	$	3,719,048	$	1,500,740	$	5,219,788

(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 noperformance 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 30days, 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 nocontract 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:


	Allowance for Credit Losses
	Current Accounts		Long-term
(In thousands)	and Notes Receivable		Notes Receivable		Total
Balance at December 30, 2023	$	4,611		$		1,212		$	5,823
Changes in credit loss estimates		52				(307	)		(255	)
Write-offs charged against the allowance		(72	)			(350	)		(422	)
Balance at July 13, 2024	$	4,591		$		555		$	5,146


	Allowance for Credit Losses
	Current Accounts		Long-term
(In thousands)	and Notes Receivable		Notes Receivable		Total
Balance at December 31, 2022	$	6,098		$		948	$	7,046
Changes in credit loss estimates		(1,214	)			439		(775	)
Write-offs charged against the allowance		(408	)			-		(408	)
Balance at July 15, 2023	$	4,476		$		1,387	$	5,863

Note 4 - Goodwill and Other Intangible Assets

The Company has tworeporting units, Wholesale and Retail. Changes in the carrying amount of goodwill were as follows:


(In thousands)	Wholesale		Retail		Total
Balance at December 30, 2023	$	181,035		$		1,125	$	182,160
Acquisitions		-				8,054		8,054
Balance at July 13, 2024	$	181,035		$		9,179	$	190,214

The Company has indefinite-lived intangible assets that are not amortized, consisting primarily of indefinite-lived trade names. Changes in the carrying amount of indefinite-lived intangible assets were as follows:


	Indefinite-lived
(In thousands)	Intangible Assets
Balance at December 30, 2023	$	67,826
Acquisitions		9,750
Impairment (Note 5)		(6,059	)
Balance at July 13, 2024	$	71,517

Within the Retail reporting unit, the Company acquired goodwill of $8.1million and an indefinite-lived trade name of $9.8million related to an immaterial acquisition during the second quarter of 2024.

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. Except for the impairment described in Note 5, 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 28-week period ended July 13, 2024. 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
(In thousands)	Lease Ancillary Costs		Severance		Total
Balance at December 30, 2023	$	2,977		$		-		$		2,977
Provision for severance		-				27				27
Lease termination adjustments		(451	)						(451	)
Accretion expense		42				-				42
Payments		(253	)			(27	)			(280	)
Balance at July 13, 2024	$	2,315		$		-		$		2,315

Restructuring and asset impairment, net in the condensed consolidated statements of earnings consisted of the following:


	12 Weeks Ended		28 Weeks Ended
(In thousands)	July 13, 2024		July 15, 2023		July 13, 2024			July 15, 2023
Asset impairment charges (a)	$	6,863		$		-			$	12,984		$	3,745
Gain on sales of assets related to closed facilities (b)		(96	)			(2,529	)			(45	)		(2,590	)
Provision for severance		27				20				27			20
Other (income) costs associated with site closures		(17	)			286				(271	)		600
Lease termination adjustments (c)		(670	)			-				(820	)		-
Changes in estimates		-				(31	)			-			54
Total	$	6,107		$		(2,254	)		$	11,875		$	1,829

(a) Asset impairment charges in the current year were incurred in the Retail segment related to long-lived assets and an indefinite-lived trade name as a result of changes in the competitive environment.In the prior year, asset impairment charges related 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.

(b) Gains on sales of assets in the prior year relate to the sale of a store within the Retail segment.

(c)Lease termination adjustments in the current quarter relate to the gain recognized to terminate a lease agreement, which included a $0.2million write-off of the lease liability and a $0.5million write-off of lease ancillary costs included in the reserve for closed properties.

Due to changes in the competitive environment, the Company evaluated an indefinite-lived trade name within the Retail segment for potential impairment. The indefinite-lived trade name with a book value of $23.7million was measured at a fair value of $17.6million, resulting in an impairment charge of $6.1million. Indefinite-lived intangible assets are measured at fair value using Level 3 inputs under the fair value hierarchy, as further described in Note 6. Fair value of indefinite-lived assets is determined by estimating the amount and timing of net future cash flows, 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 and, in the case of indefinite-lived trade name assets, estimated royalty rates.

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 $7.4million were measured at a fair value of $0.5million, resulting in impairment charges of $6.9million. In the prior year, long-lived assets with a book value of $7.4million were measured at a fair value of $3.7million, resulting in impairment charges of $3.7million. 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 July 13, 2024 and December 30, 2023, the book value and estimated fair value of the Company's debt instruments, excluding debt financing costs, were as follows:


(In thousands)	July 13, 2024		December 30, 2023
Book value of debt instruments, excluding debt financing costs:
Current maturities of long-term debt and finance lease liabilities	$	9,754		$	8,813
Long-term debt and finance lease liabilities		590,162			593,061
Total book value of debt instruments		599,916			601,874
Fair value of debt instruments, excluding debt financing costs		600,658			603,117
Excess of fair value over book value	$	742		$	1,243

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 was designated as a cash flow hedge as of the effective date, March 17, 2023, and continues to be designated as a cash flow hedge. 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 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 retrospective and prospective qualitative assessments 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 (loss) 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 July 13, 2024 and December 30, 2023, respectively, are as follows:


		Derivative Fair Value
(In thousands)	Condensed Consolidated Balance Sheets Location	July 13, 2024		December 30, 2023
Cash Flow Hedge:
Interest rate swap	Prepaid expenses and other current assets	$	1,718		$	1,721
Interest rate swap	Other long-term liabilities		291			1,914
Interest rate swap	Accumulated other comprehensive income		1,005			(316	)

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:


	Interest expense, net
	12 Weeks Ended		28 Weeks Ended
(In thousands)	July 13, 2024		July 15, 2023		July 13, 2024		July 15, 2023
Total amounts of expense line items presented in the condensed consolidated statements of earnings in which the effects of cash flow hedges are recorded	$	10,541		$		9,349		$	24,028	$	20,938
Gain on cash flow hedging relationships:
Gain reclassified from comprehensive income into earnings		588				494			1,377		669

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 January 12, 2023, the Central States Plan received approximately $35.8billion in Special Financial Assistance ("SFA"), inclusive of interest, which is designed to alleviate the risk of insolvency of the Plan. On March 29, 2024, in accordance with the Pension Protection Act ("PPA"), the Plan's actuary certified that the Plan was considered to be in "critical" zone status for the plan year beginning January 1, 2024. Due to the receipt of the SFA, the Central States Plan has stated that it expects it "will be funded well into the future". Despite the expectations of the Plan, the Company views the Plan's solvency as an ongoing risk factor.

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. Management is not aware of any significant change in funding levels in the Plan since December 30, 2023. Due to uncertainty regarding future factors that could trigger a withdrawal liability, 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 28- week periods ended July 13, 2024, the Company recognized net periodic postretirement benefit income of $0.5million and $1.4million, respectively, related to the SpartanNash Retiree Medical Plan ("Retiree Medical Plan" or "Plan"). During the 12- and 28- week periods ended July 15, 2023the Company recognized net periodic postretirement benefit income of $0.6million and $1.5million, respectively, related to the Retiree Medical Plan.

The Company amended the Retiree Medical Plan on June 30, 2022. In connection with the amendment, the Company was to 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 $6.6million and a corresponding prior service credit in AOCI, which was amortized to net periodic postretirement benefit income over the remaining period until the final payment was made on June 28, 2024. During the 12 week periods ended July 13, 2024 and July 15, 2023, the Company recognized $0.7million and $0.8million, respectively, in net periodic postretirement benefit income related to the amortization of the prior service credit from AOCI. During the28 week periods ended July 13, 2024 and July 15, 2023, the Company recognized $1.7million and $1.8million, respectively, in net periodic postretirement benefit income related to the amortization of the prior service credit from AOCI.

On June 28, 2024, the Company made a lump sum payment of $1.3million to all remaining active or retired participants, which constituted a final settlement of the Plan. On July 1, 2023, the Company made a lump sum payment to retired participants totaling $1.3million, which constituted a partial settlement of the Plan. The payments resulted in the recognition within net periodic postretirement expense of $0.1million and $0.3million on June 28, 2024 and July 1, 2023, respectively, related to the net actuarial loss within AOCI.

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 highly compensated associates.

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 July 13, 2024 and July 15, 2023were $3.3million. The Company's contributions during the 28-week periods ended July 13, 2024 and July 15, 2023were $7.9million and $7.6million, 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 28.8%and 28.2%for the 12 weeks ended July 13, 2024 and July 15, 2023, respectively. The effective income tax rate was 28.7%and 24.7%for the 28 weeks ended July 13, 2024 and July 15, 2023, respectively.

Differences from the federal statutory rate for all periods presented were due to state taxes and non-deductible expenses, partially offset by benefits associated with federal tax credits. The prior year also included discrete tax benefits from a both change in contingencies, as well as 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:


	12 Weeks Ended		28 Weeks Ended
(In thousands)	July 13, 2024		July 15, 2023		July 13, 2024			July 15, 2023
Restricted stock expense	$	1,179		$		1,896			$	3,261		$	6,697
Restricted stock unit expense		874				-				3,664			-
Performance share unit (benefit) expense		(197	)			569				(1,349	)		915
Income tax benefit		(517	)			(742	)			(1,442	)		(2,909	)
Stock-based compensation expense, net of tax	$	1,339		$		1,723			$	4,134		$	4,703

The following table summarizes activity in the stock incentive plans for the 28 weeks ended July 13, 2024:


				Weighted					Weighted					Weighted
	Restricted		Average			Restricted		Average		Performance		Average
	Stock		Grant-Date			Stock		Grant-Date		Share		Grant-Date
	Awards		Fair Value			Units		Fair Value		Units		Fair Value
Outstanding at December 30, 2023		819,457			$		24.92			-		$	-		290,310		$	27.00
Granted		-					-			580,063			20.29		413,207			20.53
Vested		(460,364	)				23.16			(15,490	)		20.41		-			-
Cancelled/Forfeited		(12,981	)				26.77			(11,631	)		20.41		(10,294	)		23.39
Outstanding at July 13, 2024		346,112			$		27.19			552,942		$	20.28		693,223		$	23.20

The following table summarizes the unrecognized compensation cost and weighted average recognition period for awards granted under the Company's stock incentive plans as of July 13, 2024:


				Weighted
	Unrecognized		Average
	Compensation		Recognition
	Cost		Period
	(In thousands)		(in years)
Restricted stock awards	$	5,476			1.3
Restricted stock units		7,895			2.4
Performance share units		7,664			2.4
Total	$	21,035

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 5,437,272shares of the Company's common stock (the "Warrant"), subject to certain vesting conditions. Warrant sharestotaling 1,087,455shares vested upon the signing of the commercial agreement and had a grant date fair value of $5.51per share. Warrant shares totaling up to 4,349,817shares 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 $200million, and had a grant date fair value of $5.33per 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:


	12 Weeks Ended		28 Weeks Ended
(In thousands)	July 13, 2024		July 15, 2023		July 13, 2024			July 15, 2023
Warrant expense	$	190		$		353			$	516		$	960
Income tax benefit		(13	)			(31	)			(55	)		(95	)
Warrant expense, net of tax	$	177		$		322			$	461		$	865

The following table summarizes stock warrant activity for the 28 weeks ended July 13, 2024:


	Warrant
Outstanding and nonvested at December 30, 2023		3,262,357
Vested		(108,746	)
Outstanding and nonvested at July 13, 2024		3,153,611

As of July 13, 2024, total unrecognized cost related to nonvested warrant shares was $16.4million, which may be expensed as vesting conditions are satisfied over the remaining term of the agreement, or 3.2years. Warrants representing 2,283,661shares are vested and exercisable. As of July 13, 2024, nonvested warrant shares had an intrinsic value of $3.0million, and vested warrant shares had an intrinsic value of $2.2million.

Note 12 - Earnings Per Share

Outstanding nonvested restricted stock awards granted to retirement-eligible Associates contain nonforfeitable rights to 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. The dilutive impact of the restricted stock awards, restricted stock units, 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 248,685and 200,091for the 12- and 28- week periods ended July 13, 2024, respectively. The performance share units are not currently dilutive. The following table sets forth the computation of basic and diluted net earnings per share:


	12 Weeks Ended		28 Weeks Ended
(In thousands, except per share amounts)	July 13, 2024		July 15, 2023		July 13, 2024			July 15, 2023
Numerator:
Net earnings	$	11,489		$		19,468			$	24,460		$	30,805
Adjustment for earnings attributable to participating securities		(62	)			(140	)			(145	)		(254	)
Net earnings used in calculating earnings per share	$	11,427		$		19,328			$	24,315		$	30,551
Denominator:
Weighted average shares outstanding, including participating securities		33,726				34,125				33,962			34,366
Adjustment for participating securities		(181	)			(246	)			(201	)		(283	)
Shares used in calculating basic earnings per share		33,545				33,879				33,761			34,083
Effect of dilutive stock warrant		196				468				296			650
Effect of dilutive stock-based employee compensation		36				48				71			100
Shares used in calculating diluted earnings per share		33,777				34,395				34,128			34,833
Basic earnings per share	$	0.34		$		0.57			$	0.72		$	0.90
Diluted earnings per share	$	0.34		$		0.56			$	0.71		$	0.88

Note 13 - Supplemental Cash Flow Information

Supplemental cash flow information is as follows:


	28 Weeks Ended
(In thousands)	July 13, 2024		July 15, 2023
Non-cash investing activities:
Capital expenditures included in accounts payable and other long-term liabilities	$	14,678		$	6,192
Operating lease asset additions		51,696			27,214
Finance lease asset additions		9,321			10,000
Non-cash financing activities:
Recognition of operating lease liabilities		51,696			27,214
Recognition of finance lease liabilities		9,321			10,000
Other supplemental cash flow information:
Cash paid for interest		25,132			21,172

Note 14 - Segment Information

The following tables set forth information about the Company by reportable segment:


(In thousands)	Wholesale		Retail		Total
12 Weeks Ended July 13, 2024
Net sales to external customers	$	1,554,628		$		676,128		$	2,230,756
Inter-segment sales		282,232				500			282,732
Acquisition and integration, net		1,977				636			2,613
Restructuring and asset impairment, net		118				5,989			6,107
Depreciation and amortization		12,301				11,041			23,342
Operating earnings		22,067				4,059			26,126
Capital expenditures		14,052				12,859			26,911

12 Weeks Ended July 15, 2023
Net sales to external customers	$	1,633,364		$		679,030		$	2,312,394
Inter-segment sales		278,886				328			279,214
Acquisition and integration, net		55				-			55
Restructuring and asset impairment, net		1				(2,255	)		(2,254	)
Depreciation and amortization		11,644				10,814			22,458
Operating earnings		21,542				14,244			35,786
Capital expenditures		13,828				8,132			21,960

28 Weeks Ended July 13, 2024
Net sales to external customers	$	3,568,649		$		1,468,370		$	5,037,019
Inter-segment sales		616,597				1,091			617,688
Acquisition and integration, net		1,977				963			2,940
Restructuring and asset impairment, net		(32	)			11,907			11,875
Depreciation and amortization		28,379				25,609			53,988
Operating earnings (loss)		58,069				(1,327	)		56,742
Capital expenditures		36,674				30,400			67,074

28 Weeks Ended July 15, 2023
Net sales to external customers	$	3,719,048		$		1,500,740		$	5,219,788
Inter-segment sales		628,180				652			628,832
Acquisition and integration, net		124				5			129
Restructuring and asset impairment, net		981				848			1,829
Depreciation and amortization		27,014				25,189			52,203
Operating earnings		47,867				12,232			60,099
Capital expenditures		38,225				22,599			60,824


(In thousands)	July 13, 2024		December 30, 2023
Total assets
Wholesale	$	1,536,806		$	1,576,182
Retail		829,078			779,393
Total	$	2,365,884		$	2,355,575

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 30, 2023.

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 its own 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 stores. The Company's Wholesale segment also distributes grocery products to 160 military commissaries and over 400 exchanges worldwide. The Company is the primary supplier of private brand products to U.S. military commissaries, a partnership with the Defense Commissary Agency ("DeCA") which began in fiscal 2017.

As of the end of the second quarter, the Company's Retail segment operated 147 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 two 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.

2024 Second Quarter Highlights

Key financial and operational highlights for the second quarter compared to the prior year quarter, unless otherwise noted, include the following:

•

Net sales decreased 3.5% to $2.23 billion, driven by lower volumes in both the Wholesale and Retail segments.

Wholesale segment net sales decreased 4.8% to $1.55 billion due to reduced case volumes in the national accounts customer channel.

Retail segment net sales decreased 0.4% to $676.1 million, with comparable store sales down 2.5%. Incremental sales from newly acquired stores were offset by lower consumer demand trends.

•

Net earnings of $0.34 per diluted share, compared to $0.57 per diluted share.

The decrease was primarily due to lower unit volumes and higher restructuring and asset impairment charges. This reduction was partially offset by benefits from the merchandising transformation, favorable segment sales mix, as well as lower LIFO expense of $3.2 million.

•

Adjusted EPS of $0.59, compared to $0.65. Adjusted EBITDA of $64.5 million, compared to $66.1 million. These measures exclude, among other items, restructuring and asset impairment charges, the impact of the LIFO provision and acquisition and integration expenses.

•

Cash generated from operating activities of $132.1 million during the first half of fiscal 2024 compared to $49.7 million in the first half of the prior year. The 166.0% increase in cash from operating activities is due primarily to ongoing working capital management initiatives.

•

Net long-term debt to adjusted EBITDA ratio of 2.2x improved sequentially compared to 2.4x at the end of the first quarter.

•

Capital expenditures and IT capital of $73.4 million during the first half of fiscal 2024 increased compared to $63.5 million during the first half of the prior year.

•

Returned $30.4 million to shareholders during the first half of fiscal 2024 through $15.1 million in share repurchases and $15.4 million in dividends.

The Company believes that certain known or anticipated trends may cause future results to vary from historical results. The Company believes certain initiatives including both the supply chain and merchandising transformations, as well as the go-to-market strategy may favorably impact future results. The Company anticipates that additional investments in capital expenditures will be necessary to support these and other programs. Offsetting the Company's expectations of favorable future results are macroeconomic headwinds including changes in consumer demand driven by inflation and elevated interest rates. The Company may also be exposed to other price changes such as utilities, insurance and occupancy 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
	12 Weeks Ended		28 Weeks Ended		12 Weeks Ended	28 Weeks Ended
	July 13, 2024		July 15, 2023		July 13, 2024	July 15, 2023	July 13, 2024		July 13, 2024
Net sales		100.0		100.0		100.0		100.0			(3.5	)		(3.5	)
Gross profit		15.8		15.2		15.8		15.3			0.2			(0.7	)
Selling, general and administrative		14.3		13.8		14.3		14.1			(0.2	)		(2.1	)
Acquisition and integration, net		0.1		0.0		0.1		0.0		**			**
Restructuring charges and asset impairment, net		0.3		(0.1	)	0.2		0.0			(370.9	)		549.3
Operating earnings		1.2		1.5		1.1		1.2			(27.0	)		(5.6	)
Other expenses		0.4		0.4		0.4		0.4			15.3			16.7
Earnings before income taxes		0.7		1.2		0.7		0.8			(40.5	)		(16.1	)
Income tax expense		0.2		0.3		0.2		0.2			(39.3	)		(2.3	)
Net earnings		0.5		0.8		0.5		0.6			(41.0	)		(20.6	)

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:


	12 Weeks Ended		28 Weeks Ended
(In thousands)	July 13, 2024		July 15, 2023		Variance		July 13, 2024		July 15, 2023		Variance
Wholesale	$	1,554,628		$		1,633,364		$	(78,736	)	$	3,568,649	$	3,719,048	$	(150,399	)
Retail		676,128				679,030			(2,902	)		1,468,370		1,500,740		(32,370	)
Total net sales	$	2,230,756		$		2,312,394		$	(81,638	)	$	5,037,019	$	5,219,788	$	(182,769	)

Net sales for the quarter ended July 13, 2024 (the "second quarter") decreased $81.6 million, or 3.5%, to $2.23 billion from $2.31 billion in the quarter ended July 15, 2023 (the "prior year quarter"). Net sales for the year-to-date period ended July 13, 2024 (the "year-to-date period") decreased $182.8 million, or 3.5%, to $5.04 billion from $5.22 billion in the year-to-date period ended July 15, 2023 (the "prior year-to-date-period"). The decreases reflected sales declines in both the Wholesale and Retail segments, which were unfavorably impacted by lower volumes.

Wholesale net sales decreased $78.7 million, or 4.8% to $1.55 billion in the second quarter from $1.63 billion in the prior year quarter. Wholesale net sales for the year-to-date period decreased $150.4 million, or 4.0%, to $3.57 billion from $3.72 billion in the prior year-to-date period. The decreases were due primarily to lower volumes within the national account customer channel. Overall case volumes for the segment were down in the current quarter and current year-to-date period compared to the prior year by 5.7% and 6.6%, respectively.

Retail net sales decreased $2.9 million, or 0.4%, to $676.1 million in the second quarter from $679.0 million in the prior year quarter. Net sales for the year-to-date period decreased $32.4 million, or 2.2%, to $1.47 billion from $1.50 billion in the prior year-to-date period. Comparable store sales decreased 2.5% in both the current quarter and current year-to-date periods. The comparable store sales declines were due primarily to lower consumer demand trends, which included a 4.7% and 4.8% decline in unit volumes in the current quarter and current year-to-date periods, respectively. The decrease in comparable store sales in the current year-to-date period was also driven by a reduction in food assistance program benefits. Retail's comparable store sales decreases were partially offset by incremental sales from newly acquired stores. Additionally, lower fuel sales reduced Retail's reported net sales by 0.4% and 0.5% 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. 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.

Gross Profit- Gross profit represents net sales less cost of sales, which 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. These 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 increased $0.6 million to $353.0 million in the second quarter from $352.4 million in the prior year quarter. As a percent of net sales, gross profit for the current quarter was 15.8% compared to 15.2% in the prior year quarter. Gross profit for the year-to-date period decreased $5.7 million from $799.0 million in the prior year-to-date period to $793.3 million in the current year. As a percent of net sales, gross profit for the year-to-date period was 15.8% compared to 15.3% in the prior year-to-date period. The gross profit variances in both the current quarter and current year were unfavorably impacted by lower volumes. The gross profit rate increase in the current quarter was driven by favorable segment sales mix and lower last-in-first-out ("LIFO") expense of $3.2 million, or 13 basis points. The gross profit rate increase in the current year was driven by lower LIFO expense of $12.3 million, or 23 basis points. Additionally, the increases in both the current quarter and current year were driven by benefits realized from the merchandising transformation initiative, partially offset by changes in customer mix within the Wholesale segment.

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 second quarter decreased $0.6 million to $318.2 million from $318.8 million in the prior year quarter, representing 14.3% of net sales in the second quarter compared to 13.8% in the prior year quarter. SG&A expense for the year-to-date period decreased $15.2 million to $721.8 million, from $737.0 in the prior year-to-date period, representing 14.3% in the current year-to-date period compared to 14.1% as a percentage of net sales in the prior year-to-date period. The increases in selling, general and administrative expenses as a rate of sales compared to the prior year were due primarily to increased Retail store labor, corporate administrative costs, driven by investments in the transformational initiatives, and depreciation and amortization expense. These increases were partially offset by lower incentive compensation compared to the prior year and benefits realized from both the merchandising transformation and go-to-market strategy changes.

Acquisition and Integration, net- Second quarter and prior year quarter results included net charges of $2.6 million and $0.1 million, respectively. The year-to-date period and prior year-to-date period included charges of $2.9 million and $0.1 million, respectively. Current year activity consists of expenses associated with the Company's acquisition efforts within both segments while the prior year activity relates primarily to the Wholesale segment.

Restructuring and Asset Impairment, net -Second quarter and prior year quarter results included net charges of $6.1 million and a net gain of $2.3 million, respectively. The year-to-date period and prior year-to-date period included charges of $11.9 million and $1.8 million, respectively. The charges in the current quarter were primarily incurred within the Retail segment related to an impairment of an indefinite-lived trade name. The year-to-date charges also include impairment losses within the Retail segment on long-lived assets due to changes in the competitive environment. The prior year quarter gain primarily relates to the sale of a store location within the Retail segment, partially offset by other costs related to Retail store closings. The prior year 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.

Operating Earnings - The following table presents operating earnings (loss) by segment and variances in operating earnings (loss).


	12 Weeks Ended		28 Weeks Ended
(In thousands)	July 13, 2024		July 15, 2023		Variance		July 13, 2024		July 15, 2023		Variance
Wholesale	$	22,067		$		21,542		$	525		$	58,069		$	47,867	$	10,202
Retail		4,059				14,244			(10,185	)		(1,327	)		12,232		(13,559	)
Total operating earnings	$	26,126		$		35,786		$	(9,660	)	$	56,742		$	60,099	$	(3,357	)

Operating earnings decreased $9.7 million, or 27.0% to $26.1 million in the second quarter from $35.8 million in the prior year quarter. Operating earnings for the year-to-date period decreased $3.4 million, or 5.6%, to $56.7 million from $60.1 million in the prior year-to-date period. The decreases in operating earnings was due to the changes in net sales, gross profit and operating expenses discussed above.

Wholesale operating earnings increased $0.5 million, or 2.4%, to $22.1 million in the second quarter from $21.5 million in the prior year quarter. Operating earnings for the year-to-date period increased $10.2 million, or 21.3%, to $58.1 million from $47.9 million in the prior year-to-date period. The increases in operating earnings were due to higher gross profit rates, benefits realized from the merchandising transformation initiative, and lower incentive compensation. The increases in operating earnings were partially offset by lower unit volumes.

Retail operating earnings decreased $10.2 million, or 71.5%, to $4.1 million in the second quarter from $14.2 million in operating earnings in the prior year quarter. Operating earnings for the year-to-date period decreased $13.6 million, or 110.8%, to a $1.3 million loss from $12.2 million in the prior year-to-date period. The decreases in operating earnings were due to lower unit volumes, increased restructuring and asset impairment charges and higher store labor as a percent of net sales, partially offset by lower incentive compensation.

Interest Expense- Interest expense increased $1.2 million, or 12.8%, to $10.5 million in the second quarter from $9.3 million in the prior year quarter. Interest expense for the year-to-date period increased $3.1 million, or 14.8%, to $24.0 million from $20.9 million in the prior year-to-date period. Higher average debt balances on the Company's credit facility accounted for $0.9 million and $2.3 million of the increase in interest expense in the current quarter and current year, respectively.

Income Taxes- The effective income tax rates were 28.8% and 28.2% for the second quarter and prior year quarter, respectively. For the year-to-date period and prior year-to-date period, the effective tax rates were 28.7% and 24.7%, respectively. Differences from the federal statutory rate for the periods presented were due to state taxes and non-deductible expenses, partially offset by benefits associated with federal tax credits. The prior year also included discrete tax benefits from both a change in contingencies and 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.

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 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 adjusted out of 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 items, LIFO expense, organizational realignment, severance associated with cost reduction initiatives, and a non-routine settlement related to a legal matter resulting from a previously closed operation that was resolved during the prior year and operating and non-operating costs associated with the postretirement plan amendment and settlement.

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 (loss) to adjusted operating earnings for the 12 and 28 weeks ended July 13, 2024 and July 15, 2023.


	12 Weeks Ended		28 Weeks Ended
(In thousands)	July 13, 2024		July 15, 2023		July 13, 2024			July 15, 2023
Operating earnings	$	26,126		$		35,786			$	56,742		$	60,099
Adjustments:
LIFO expense		1,509				4,667				3,529			15,839
Acquisition and integration, net		2,613				55				2,940			129
Restructuring and asset impairment, net		6,107				(2,254	)			11,875			1,829
Organizational realignment, net		1,369				2,029				1,675			2,029
Severance associated with cost reduction initiatives		72				(12	)			141			272
Legal settlement		-				-				-			900
Postretirement plan amendment and settlement		99				94				99			94
Adjusted operating earnings	$	37,895		$		40,365			$	77,001		$	81,191
Wholesale:
Operating earnings	$	22,067		$		21,542			$	58,069		$	47,867
Adjustments:
LIFO expense		1,153				3,590				2,708			12,323
Acquisition and integration, net		1,977				55				1,977			124
Restructuring and asset impairment, net		118				1				(32	)		981
Organizational realignment, net		855				1,266				1,046			1,266
Severance associated with cost reduction initiatives		30				(7	)			99			257
Legal settlement		-				-				-			900
Postretirement plan amendment and settlement		62				59				62			59
Adjusted operating earnings	$	26,262		$		26,506			$	63,929		$	63,777
Retail:
Operating earnings (loss)	$	4,059		$		14,244			$	(1,327	)	$	12,232
Adjustments:
LIFO expense		356				1,077				821			3,516
Acquisition and integration, net		636				-				963			5
Restructuring and asset impairment, net		5,989				(2,255	)			11,907			848
Organizational realignment, net		514				763				629			763
Severance associated with cost reduction initiatives		42				(5	)			42			15
Postretirement plan amendment and settlement		37				35				37			35
Adjusted operating earnings	$	11,633		$		13,859			$	13,072		$	17,414

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.

Following is a reconciliation of net earnings to adjusted earnings from continuing operations for the 12 and 28 weeks ended July 13, 2024 and July 15, 2023.


	12 Weeks Ended
	July 13, 2024			July 15, 2023
			per diluted					per diluted
(In thousands, except per share amounts)	Earnings		share			Earnings		share
Net earnings	$	11,489			$	0.34			$		19,468	$	0.56
Adjustments:
LIFO expense		1,509								4,667
Acquisition and integration, net		2,613								55
Restructuring and asset impairment, net		6,107								(2,254	)
Organizational realignment, net		1,369								2,029
Severance associated with cost reduction initiatives		72								(12	)
Postretirement plan amendment and settlement		(513	)							(631	)
Total adjustments		11,157								3,854
Income tax effect on adjustments (a)		(2,767	)							(955	)
Total adjustments, net of taxes		8,390				0.25					2,899		0.09	*
Adjusted earnings from continuing operations	$	19,879			$	0.59			$		22,367	$	0.65
* Includes rounding

	28 Weeks Ended
	July 13, 2024			July 15, 2023
			per diluted					per diluted
(In thousands, except per share amounts)	Earnings		share			Earnings		share
Net earnings	$	24,460			$	0.71			$		30,805	$	0.88
Adjustments:
LIFO expense		3,529								15,839
Acquisition and integration, net		2,940								129
Restructuring and asset impairment, net		11,875								1,829
Organizational realignment, net		1,675								2,029
Severance associated with cost reduction initiatives		141								272
Postretirement plan amendment and settlement		(1,458	)							(1,649	)
Legal settlement		-								900
Total adjustments		18,702								19,349
Income tax effect on adjustments (a)		(4,803	)							(4,925	)
Total adjustments, net of taxes		13,899				0.41	*				14,424		0.41
Adjusted earnings from continuing operations	$	38,359			$	1.12			$		45,229	$	1.29
* Includes rounding

(a) The income tax effect on adjustments is computed by applying the effective tax rate, before discrete tax items, to the total

adjustments for the period.

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.

Following is a reconciliation of net earnings to adjusted EBITDA for the 12 and 28 weeks ended July 13, 2024 and July 15, 2023.


	12 Weeks Ended		28 Weeks Ended
(In thousands)	July 13, 2024		July 15, 2023		July 13, 2024			July 15, 2023
Net earnings	$	11,489		$		19,468			$	24,460		$	30,805
Income tax expense		4,646				7,654				9,852			10,080
Other expenses, net		9,991				8,664				22,430			19,214
Operating earnings		26,126				35,786				56,742			60,099
Adjustments:
LIFO expense		1,509				4,667				3,529			15,839
Depreciation and amortization		23,342				22,458				53,988			52,203
Acquisition and integration, net		2,613				55				2,940			129
Restructuring and asset impairment, net		6,107				(2,254	)			11,875			1,829
Cloud computing amortization		1,840				1,076				3,858			2,426
Organizational realignment, net		1,369				2,029				1,675			2,029
Severance associated with cost reduction initiatives		72				(12	)			141			272
Stock-based compensation		1,900				2,465				5,620			7,612
Stock warrant		190				353				516			960
Non-cash rent		(725	)			(635	)			(1,626	)		(1,563	)
Loss on disposal of assets		64				24				44			46
Legal settlement		-				-				-			900
Postretirement plan amendment and settlement		99				94				99			94
Adjusted EBITDA	$	64,506		$		66,106			$	139,401		$	142,875
Wholesale:
Operating earnings	$	22,067		$		21,542			$	58,069		$	47,867
Adjustments:
LIFO expense		1,153				3,590				2,708			12,323
Depreciation and amortization		12,301				11,644				28,379			27,014
Acquisition and integration, net		1,977				55				1,977			124
Restructuring and asset impairment, net		118				1				(32	)		981
Cloud computing amortization		1,155				725				2,524			1,665
Organizational realignment, net		855				1,266				1,046			1,266
Severance associated with cost reduction initiatives		30				(7	)			99			257
Stock-based compensation		1,357				1,611				3,861			4,994
Stock warrant		190				353				516			960
Non-cash rent		(243	)			(63	)			(543	)		(138	)
Gain on disposal of assets		(1	)			(45	)			(19	)		(35	)
Legal settlement		-				-				-			900
Postretirement plan amendment and settlement		62				59				62			59
Adjusted EBITDA	$	41,021		$		40,731			$	98,647		$	98,237
Retail:
Operating earnings (loss)	$	4,059		$		14,244			$	(1,327	)	$	12,232
Adjustments:
LIFO expense		356				1,077				821			3,516
Depreciation and amortization		11,041				10,814				25,609			25,189
Acquisition and integration, net		636				-				963			5
Restructuring and asset impairment, net		5,989				(2,255	)			11,907			848
Cloud computing amortization		685				351				1,334			761
Organizational realignment, net		514				763				629			763
Severance associated with cost reduction initiatives		42				(5	)			42			15
Stock-based compensation		543				854				1,759			2,618
Non-cash rent		(482	)			(572	)			(1,083	)		(1,425	)
Loss on disposal of assets		65				69				63			81
Postretirement plan amendment and settlement		37				35				37			35
Adjusted EBITDA	$	23,485		$		25,375			$	40,754		$	44,638

Liquidity and Capital Resources

Cash Flow Information

The following table summarizes the Company's consolidated statements of cash flows:


	28 Weeks Ended
(In thousands)	July 13, 2024		July 15, 2023
Cash flow activities
Net cash provided by operating activities	$	132,098		$	49,656
Net cash used in investing activities		(79,495	)		(57,057	)
Net cash used in financing activities		(45,325	)		(4,775	)
Net increase (decrease) in cash and cash equivalents		7,278			(12,176	)
Cash and cash equivalents at beginning of the period		17,964			29,086
Cash and cash equivalents at end of the period	$	25,242		$	16,910

Net cash provided by operating activities. Net cash provided by operating activities increased $82.4 million in the current year-to-date period compared to the prior year-to-date period, due primarily to ongoing working capital management initiatives.

Net cash used in investing activities. Net cash used in investing activities increased $22.4 million in the current year compared to the prior year due to an acquisition within the Retail segment in the current year, as well as higher capital expenditures.

Capital expenditures were $67.1 million in the current year and cloud computing application development spend, which is included in operating activities, was $6.3 million, compared to capital expenditures of $60.8 million and cloud computing application development spend of $2.7 million in the prior year. The increase in capital expenditures in the current year compared to the prior year was in line investments connected with the Company's long-term plan. The Wholesale and Retail segments utilized 54.7% and 45.3% of capital expenditures, respectively, in the current year.

Net cash used in financing activities. Net cash used in financing activities increased $40.6 million in the current year compared to the prior year, primarily due to net payments on the senior credit facility in the current year compared to net proceeds in the prior year.

Debt Management

Total debt, including finance lease liabilities, was $596.2 million and $597.5 million as of July 13, 2024 and December 30, 2023, respectively.

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 $1.17 billion, and Tranche A-1 revolving loans, with a borrowing capacity of $40 million. The Company has the ability to increase the amount borrowed under the Credit Agreement by an additional $195 million, subject to certain conditions. As of July 13, 2024, the senior secured credit facility had outstanding borrowings of $516.8 million.

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 $449.6 million at July 13, 2024. 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 $18.1 million were outstanding as of July 13, 2024. 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 anticipates that additional borrowings may be required to fund investments related to both organic and inorganic initiatives included in the long-term strategic plan.

The Company's current ratio (current assets to current liabilities) was 1.62-to-1 at July 13, 2024 compared to 1.63-to-1 at December 30, 2023, and its investment in working capital was $401.6 million at July 13, 2024 compared to $417.6 million at December 30, 2023. The net long-term debt to total capital ratio was 0.42-to-1 at July 13, 2024 compared to 0.43-to-1 at December 30, 2023.

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 July 13, 2024 and December 30, 2023.


(In thousands)	July 13, 2024		December 30, 2023
Current portion of long-term debt and finance lease liabilities	$	9,754		$	8,813
Long-term debt and finance lease liabilities		586,427			588,667
Total debt		596,181			597,480
Cash and cash equivalents		(25,242	)		(17,964	)
Net long-term debt	$	570,939		$	579,516

Following is a reconciliation of "Net long-term debt" and "Total shareholders' equity" to Total capital as of July 13, 2024 and December 30, 2023.


(In thousands)	July 13, 2024		December 30, 2023
Net long-term debt	$	570,939		$	579,516
Total shareholders' equity		776,341			778,182
Total capital	$	1,347,280		$	1,357,698

For information on material cash requirements, see the Company's Annual Report on Form 10-K for the fiscal year ended December 30, 2023. At July 13, 2024, 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 July 13, 2024, the Company declared $7.6 million in dividends. A 1.2% increase in the quarterly dividend rate from $0.215 per share to $0.2175 per share was approved by the Board of Directors and announced on March 7, 2024. 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 July 13, 2024. These commitments consist primarily of purchase commitments, standby letters of credit of $18.1 million as of July 13, 2024, 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 30, 2023 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 30, 2023.

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 30, 2023.

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 July 13, 2024 (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 second quarter of 2024 there were no changes that materially affected, or were reasonably likely to materially affect, SpartanNash's internal control over financial reporting.

PART II

OTHER INFORMATION

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 (2023 10-K) for the year ended December 30, 2023 filed with Securities and Exchange Commission. You should carefully consider the risks included in our 2023 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 $12.4 million of common stock share repurchases made under this program during the second quarter of 2024. At July 13, 2024, $10.4 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)
April 21 - May 18, 2024
Employee Transactions		121		$	20.62	N/A		N/A
Repurchase Program		393,827		$	19.61		393,827	$	15,060
May 19 - June 15, 2024
Employee Transactions		1,341		$	19.95	N/A		N/A
Repurchase Program		232,843		$	20.01		232,843	$	10,401
June 16 - July 13, 2024
Employee Transactions		156		$	18.05	N/A		N/A
Repurchase Program		-		$	-		-	$	10,401
Total for quarter ended July 13, 2024
Employee Transactions		1,618		$	19.82	N/A		N/A
Repurchase Program		626,670		$	19.76		626,670	$	10,401

Item 5. Other Information

Rule 10b5-1 Plan Elections

The directors and officers of the Company (as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended) ("Exchange Act") may from time to time enter into plans or other arrangements for the purchase or sale of our shares that are intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act. During the quarter ended July 13, 2024, no Rule 10b5-1 trading arrangements or "non-Rule 10b5-1 trading arrangements" (as defined by S-K Item 408(c)) were enteredinto or terminatedby our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act).

ITEM 6. Exhibits

The following documents are filed as exhibits to this Quarterly Report on Form 10-Q:


Exhibit Number		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		Restated 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 With Embedded Linkbase Documents

104		The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended July 13, 2024, 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 thereunto duly authorized.


	SPARTANNASH COMPANY (Registrant)
Date: August 15, 2024	By	/s/ Jason Monaco
		Jason Monaco Executive Vice President and Chief Financial Officer (Principal Financial Officer)

Date: August 15, 2024	By	/s/ R. Todd Riksen
		R. Todd Riksen Vice President and Corporate Controller (Principal Accounting Officer)

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SpartanNash Company

Quarterly Report for Quarter Ending July 13, 2024 (Form 10-Q)

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