ThZeal - The Zeal

PART I

FINANCIAL INFORMATION

ITEM 1. Financial Statements

SPARTANNASH COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, Unaudited)


	October 5,			December 30,
	2024			2023
Assets
Current assets
Cash and cash equivalents	$	17,510		$	17,964
Accounts and notes receivable, net		490,131			421,859
Inventories, net		557,955			575,226
Prepaid expenses and other current assets		74,167			62,440
Total current assets		1,139,763			1,077,489

Property and equipment, net		668,927			649,071
Goodwill		190,023			182,160
Intangible assets, net		101,817			101,535
Operating lease assets		259,890			242,146
Other assets, net		107,013			103,174

Total assets	$	2,467,433		$	2,355,575

Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable	$	513,577		$	473,419
Accrued payroll and benefits		70,516			78,076
Other accrued expenses		65,432			57,609
Current portion of operating lease liabilities		42,355			41,979
Current portion of long-term debt and finance lease liabilities		9,747			8,813
Total current liabilities		701,627			659,896

Long-term liabilities
Deferred income taxes		85,660			73,904
Operating lease liabilities		245,270			226,118
Other long-term liabilities		26,611			28,808
Long-term debt and finance lease liabilities		626,957			588,667
Total long-term liabilities		984,498			917,497

Commitments and contingencies (Note 8)

Shareholders’ equity
Common stock, voting, no par value; 100,000 shares authorized; 33,755 and 34,610 shares outstanding		452,024			460,299
Preferred stock, no par value, 10,000 shares authorized; no shares outstanding		—			—
Accumulated other comprehensive (loss) income		(325	)		796
Retained earnings		329,609			317,087
Total shareholders’ equity		781,308			778,182

Total liabilities and shareholders’ equity	$	2,467,433		$	2,355,575

See accompanying notes to condensed consolidated financial statements.

SPARTANNASH COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share amounts)

(Unaudited)


	12 Weeks Ended						40 Weeks Ended
	October 5, 2024			October 7, 2023			October 5, 2024			October 7, 2023
Net sales	$	2,250,681		$	2,264,248		$	7,287,700		$	7,484,036
Cost of sales		1,896,032			1,916,709			6,139,704			6,337,449
Gross profit		354,649			347,539			1,147,996			1,146,587

Operating expenses
Selling, general and administrative		324,061			322,796			1,045,851			1,059,787
Acquisition and integration, net		272			2,130			3,212			2,259
Restructuring and asset impairment, net		5,397			(458	)		17,272			1,371
Total operating expenses		329,730			324,468			1,066,335			1,063,417

Operating earnings		24,919			23,071			81,661			83,170

Other expenses and (income)
Interest expense, net		9,915			9,280			33,943			30,218
Other, net		(216	)		(786	)		(1,814	)		(2,510	)
Total other expenses, net		9,699			8,494			32,129			27,708

Earnings before income taxes		15,220			14,577			49,532			55,462
Income tax expense		4,300			3,450			14,152			13,530
Net earnings	$	10,920		$	11,127		$	35,380		$	41,932

Net earnings per basic common share	$	0.33		$	0.33		$	1.05		$	1.22

Net earnings per diluted common share	$	0.32		$	0.32		$	1.03		$	1.20

Weighted average shares outstanding:
Basic		33,580			34,020			33,847			34,262
Diluted		34,102			34,523			34,266			34,967

See accompanying notes to condensed consolidated financial statements.

SPARTANNASH COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, Unaudited)


	12 Weeks Ended						40 Weeks Ended
	October 5, 2024			October 7, 2023			October 5, 2024			October 7, 2023
Net earnings	$	10,920		$	11,127		$	35,380		$	41,932

Other comprehensive (loss) income, before tax
Change in interest rate swap		(1,739	)		3,625			(13	)		4,770
Postretirement liability adjustment		—			(720	)		(1,462	)		(1,957	)
Total other comprehensive (loss) income, before tax		(1,739	)		2,905			(1,475	)		2,813

Income tax benefit (expense) related to items of other comprehensive (loss) income		409			(673	)		354			(637	)

Total other comprehensive (loss) income, after tax		(1,330	)		2,232			(1,121	)		2,176
Comprehensive income	$	9,590		$	13,359		$	34,259		$	44,108

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 (Loss)			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 - $0.2175 per 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 - $0.2175 per 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
Net earnings		—			—			—			10,920			10,920
Other comprehensive loss		—			—			(1,330	)		—			(1,330	)
Dividends - $0.2175 per share		—			—			—			(7,571	)		(7,571	)
Stock-based compensation		—			2,476			—			—			2,476
Stock warrant		—			184			—			—			184
Issuances of common stock for associate stock purchase plan		17			303			—			—			303
Cancellations of stock-based awards		(12	)		(15	)		—			—			(15	)
Balance at October 5, 2024		33,755		$	452,024		$	(325	)	$	329,609		$	781,308

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 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 - $0.215 per 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 - $0.215 per 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
Net earnings		—			—			—			11,127			11,127
Other comprehensive income		—			—			2,232			—			2,232
Dividends - $0.215 per share		—			—			—			(7,475	)		(7,475	)
Stock-based compensation		—			2,348			—			—			2,348
Stock warrant		—			319			—			—			319
Issuances of common stock for associate stock purchase plan		19			348			—			—			348
Issuances of restricted stock		11			—			—			—			—
Cancellations of stock-based awards		(19	)		(29	)		—			—			(29	)
Balance at October 7, 2023		34,629		$	457,830		$	5,155		$	314,282		$	777,267

See accompanying notes to condensed consolidated financial statements.

SPARTANNASH COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, Unaudited)


	40 Weeks Ended
	October 5, 2024			October 7, 2023
Cash flows from operating activities
Net earnings	$	35,380		$	41,932
Adjustments to reconcile net earnings to net cash provided by operating activities:
Non-cash restructuring, asset impairment, and other charges		16,129			1,273
Depreciation and amortization		78,147			75,245
Non-cash rent		(2,437	)		(2,760	)
LIFO expense		5,046			22,445
Postretirement benefits income		(969	)		(1,990	)
Deferred income taxes		9,634			11,388
Stock-based compensation expense		8,052			9,960
Stock warrant		700			1,279
(Gain) loss on disposals of assets		(48	)		304
Other operating activities		1,388			1,308
Changes in operating assets and liabilities:
Accounts receivable		(66,080	)		(23,071	)
Inventories		16,634			(32,688	)
Prepaid expenses and other assets		(12,055	)		(3,558	)
Accounts payable		55,136			37,517
Accrued payroll and benefits		(15,529	)		(34,960	)
Current income taxes		(7,893	)		(3,564	)
Other accrued expenses and other liabilities		2,020			(4,380	)
Net cash provided by operating activities		123,255			95,680
Cash flows from investing activities
Purchases of property and equipment		(97,867	)		(86,212	)
Net proceeds from the sale of assets		2,058			4,055
Acquisitions, net of cash acquired		(14,370	)		(780	)
Loans to customers		(1,305	)		—
Payments from customers on loans		1,372			1,097
Other investing activities		(540	)		(163	)
Net cash used in investing activities		(110,652	)		(82,003	)
Cash flows from financing activities
Proceeds from senior secured credit facility		1,011,564			1,044,242
Payments on senior secured credit facility		(974,969	)		(1,017,484	)
Repayment of other long-term debt and finance lease liabilities		(8,014	)		(6,279	)
Share repurchases		(15,051	)		(18,527	)
Net payments related to stock-based award activities		(3,196	)		(3,977	)
Dividends paid		(22,635	)		(22,381	)
Other financing activities		(756	)		(803	)
Net cash used in financing activities		(13,057	)		(25,209	)

Net decrease in cash and cash equivalents		(454	)		(11,532	)
Cash and cash equivalents at beginning of period		17,964			29,086
Cash and cash equivalents at end of period	$	17,510		$	17,554

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 October 5, 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 third quarter and year-to-date periods of 2024 and 2023 include the results of operations of the Company for the 12- and 40-week periods ended October 5, 2024 and October 7, 2023, respectively.

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

As of October 5, 2024 and for the period then ended, there were no recently adopted accounting standards that had a material impact on the Company’s condensed consolidated financial statements. There were no recently issued accounting standards not yet adopted which would have a material effect on the Company’s condensed consolidated financial statements.

Note 3 – Revenue

Disaggregation of Revenue

The following table provides information about disaggregated revenue by type of products and customers for each of the Company’s reportable segments:


	12 Weeks Ended October 5, 2024						40 Weeks Ended October 5, 2024
(In thousands)	Wholesale		Retail		Total		Wholesale		Retail		Total
Type of products:
Center store (a)	$	594,135	$	255,386	$	849,521	$	1,931,664	$	815,441	$	2,747,105
Fresh (b)		479,988		250,385		730,373		1,577,915		806,556		2,384,471
Non-food (c)		482,449		131,474		613,923		1,565,241		401,928		1,967,169
Fuel		—		37,083		37,083		—		118,176		118,176
Other		19,510		271		19,781		69,911		868		70,779
Total	$	1,576,082	$	674,599	$	2,250,681	$	5,144,731	$	2,142,969	$	7,287,700
Type of customers:
Individuals	$	—	$	674,328	$	674,328	$	—	$	2,142,101	$	2,142,101
Independent retailers (d)		522,825		—		522,825		1,720,408		—		1,720,408
National accounts		495,558		—		495,558		1,624,403		—		1,624,403
Military (e)		548,833		—		548,833		1,770,272		—		1,770,272
Other		8,866		271		9,137		29,648		868		30,516
Total	$	1,576,082	$	674,599	$	2,250,681	$	5,144,731	$	2,142,969	$	7,287,700

	12 Weeks Ended October 7, 2023						40 Weeks Ended October 7, 2023
(In thousands)	Wholesale		Retail		Total		Wholesale		Retail		Total
Type of products:
Center store (a)	$	623,273	$	256,550	$	879,823	$	2,054,415	$	832,202	$	2,886,617
Fresh (b)		488,929		243,198		732,127		1,651,191		811,825		2,463,016
Non-food (c)		465,473		120,149		585,622		1,535,880		386,993		1,922,873
Fuel		—		42,114		42,114		—		131,167		131,167
Other		24,325		237		24,562		79,562		801		80,363
Total	$	1,602,000	$	662,248	$	2,264,248	$	5,321,048	$	2,162,988	$	7,484,036
Type of customers:
Individuals	$	—	$	662,011	$	662,011	$	—	$	2,162,188	$	2,162,188
Independent retailers (d)		548,656		—		548,656		1,814,874		—		1,814,874
National accounts		504,971		—		504,971		1,741,407		—		1,741,407
Military (e)		538,790		—		538,790		1,729,221		—		1,729,221
Other		9,583		237		9,820		35,546		800		36,346
Total	$	1,602,000	$	662,248	$	2,264,248	$	5,321,048	$	2,162,988	$	7,484,036

(a) Center store includes dry grocery, frozen and beverages.
(b) Fresh includes produce, meat, dairy, deli, bakery, prepared proteins, seafood and floral.
(c) Non-food includes general merchandise, health and beauty care, tobacco products and pharmacy.
(d) Independent retailers include sales to manufacturers, brokers and distributors.
(e) Military represents the distribution of grocery products to U.S. military commissaries and exchanges, which primarily includes sales to manufacturers and brokers.

Contract Assets and Liabilities

Under its contracts with customers, the Company stands ready to deliver product upon receipt of a purchase order. Accordingly, the Company has no performance obligations under its contracts until its customers submit a purchase order. The Company does not receive pre-payment from its customers or enter into commitments to provide goods or services that have terms greater than one year. As the performance obligation is part of a contract that has an original expected duration of less than one year, the Company has applied the practical expedient under Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers, to omit disclosures regarding remaining performance obligations.

Revenue recognized from performance obligations related to prior periods (for example, due to changes in estimated rebates and incentives impacting the transaction price) was not material in any period presented.

For volume-based arrangements, the Company estimates the amount of the advanced funds earned by the retailers based on the expected volume of purchases by the retailer and amortizes the advances as a reduction of the transaction price and revenue earned. These advances are not considered contract assets under ASC 606 as they are not generated through the transfer of goods or services to the retailers. These advances are included in Other assets, net within the condensed consolidated balance sheets.

When the Company transfers goods or services to a customer, payment is due subject to normal terms and is not conditional on anything other than the passage of time. Typical payment terms range from "due upon receipt" to due within 30 days, depending on the customer. At contract inception, the Company expects that the period of time between the transfer of goods to the customer and when the customer pays for those goods will be less than one year, which is consistent with the Company’s standard payment terms. Accordingly, the Company has elected the practical expedient to not adjust for the effects of a significant financing component. As a result, these amounts are recorded as receivables and not contract assets. The Company had no contract assets for any period presented.

The Company does not typically incur incremental costs of obtaining a contract that are contingent upon successful contract execution and would therefore be capitalized.

Allowance for Credit Losses

Changes to the balance of the allowance for credit losses were as follows:


	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		(356	)		(394	)		(750	)
Write-offs charged against the allowance		(171	)		(350	)		(521	)
Balance at October 5, 2024	$	4,084		$	468		$	4,552


	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		(1,314	)		439		(875	)
Write-offs charged against the allowance		(448	)		—		(448	)
Balance at October 7, 2023	$	4,336		$	1,387	$	5,723

Note 4 – Goodwill and Other Intangible Assets

The Company has two reporting 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		—		7,863		7,863
Balance at October 5, 2024	$	181,035	$	8,988	$	190,023

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 October 5, 2024	$	71,517

Within the Retail reporting unit, the Company acquired goodwill of $7.9 million and an indefinite-lived trade name of $9.8 million 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 40-week period ended October 5, 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 closing charges		5,356			—			5,356
Provision for severance		—			405			405
Lease termination adjustments		(1,489	)		—			(1,489	)
Changes in estimates		(29	)		—			(29	)
Accretion expense		59			—			59
Payments		(390	)		(30	)		(420	)
Balance at October 5, 2024	$	6,484		$	375		$	6,859

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


	12 Weeks Ended						40 Weeks Ended
(In thousands)	October 5, 2024			October 7, 2023			October 5, 2024			October 7, 2023
Asset impairment charges (a)	$	75		$	—		$	13,059		$	3,745
Provision for closing charges		5,356			—			5,356			—
Loss (gain) on sales of assets related to closed facilities (b)		11			120			(34	)		(2,470	)
Provision for severance		378			1			405			21
Other costs (income) associated with site closures (c)		1,024			(4	)		753			596
Lease termination adjustments (d)		(1,418	)		—			(2,238	)		—
Changes in estimates		(29	)		(575	)		(29	)		(521	)
Total	$	5,397		$	(458	)	$	17,272		$	1,371

(a) Asset impairment charges in the current year were primarily 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) Other costs net activity in the current year primarily relates to restructuring activity within the Wholesale segment, including the closure of a distribution center. In the prior year, activity primarily relates to Retail store closings.

(d) Lease termination adjustments in the current year relate to the gains recognized to terminate lease agreements, which included the write-off of lease liabilities totaling $0.6 million and the write-off of lease ancillary costs included in the reserve for closed properties totaling $1.5 million.

During the second quarter, 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 $23.7 million was measured at a fair value of $17.6 million, resulting in an impairment charge of $6.1 million. 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 $7.5 million were measured at a fair value of $0.5 million, resulting in impairment charges of $7.0 million. In the prior year, long-lived assets with a book value of $7.4 million were measured at a fair value of $3.7 million, resulting in impairment charges of $3.7 million. The fair value of long-lived assets is determined by estimating the amount and timing of net future cash flows, including the expected proceeds from the sale of assets and expected insurance recoveries, discounted using a risk-adjusted rate of interest. The Company estimates future cash flows based on historical results of operations, external factors expected to impact future performance, experience and knowledge of the geographic area in which the assets are located, and when necessary, uses the support of real estate brokers.

Note 6 – Fair Value Measurements

ASC 820, Fair Value Measurement, prioritizes the inputs to valuation techniques used to measure fair value into the following hierarchy:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: Unobservable inputs for the asset or liability, reflecting the reporting entity’s own assumptions about the assumptions that market participants would use in pricing.

Financial instruments include cash and cash equivalents, accounts and notes receivable, accounts payable and long-term debt. The carrying amounts of cash and cash equivalents, accounts and notes receivable, and accounts payable approximate fair value because of the short-term maturities of these financial instruments. For discussion of the fair value measurements related to goodwill, and long- or indefinite-lived asset impairment charges, refer to Notes 4 and 5. At October 5, 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)	October 5, 2024		December 30, 2023
Book value of debt instruments, excluding debt financing costs:
Current maturities of long-term debt and finance lease liabilities	$	9,747	$	8,813
Long-term debt and finance lease liabilities		630,353		593,061
Total book value of debt instruments		640,100		601,874
Fair value of debt instruments, excluding debt financing costs		641,503		603,117
Excess of fair value over book value	$	1,403	$	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 October 5, 2024 and December 30, 2023, respectively, are as follows:


		Derivative Fair Value
(In thousands)	Condensed Consolidated Balance Sheets Location	October 5, 2024			December 30, 2023
Cash Flow Hedge:
Interest rate swap	Prepaid expenses and other current assets	$	628		$	1,721
Interest rate swap	Other long-term liabilities		1,024			1,914
Interest rate swap	Accumulated other comprehensive (loss) income		(325	)		(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				40 Weeks Ended
(In thousands)	October 5, 2024		October 7, 2023		October 5, 2024		October 7, 2024
Total amounts of expense line items presented in the condensed consolidated statements of earnings in which the effects of cash flow hedges are recorded	$	9,915	$	9,280	$	33,943	$	30,218
Gain on cash flow hedging relationships:
Gain reclassified from comprehensive income into earnings		569		573		1,946		1,242

Note 8 – Commitments and Contingencies

The Company is engaged from time-to-time in routine legal proceedings incidental to its business. The Company does not believe that these routine legal proceedings, taken as a whole, will have a material impact on its business or financial condition. While the ultimate effect of such actions cannot be predicted with certainty, management believes that their outcome will not result in an adverse effect on the Company’s consolidated financial position, operating results or liquidity.

The Company has contributed and is required to continue making contributions to the Central States Southeast and Southwest Pension Fund (the “Central States Plan” or the “Plan”), a multi-employer pension plan, based on obligations arising from certain of its collective bargaining agreements. If the Company were to cease making such contributions and triggered a withdrawal from the Plan, it is possible that the Company would be obligated to pay a withdrawal liability to the Plan if the Plan is underfunded at the time of such withdrawal.

On January 12, 2023, the Central States Plan received approximately $35.8 billion in Special Financial Assistance ("SFA"), inclusive of interest, which is designed to alleviate the risk of insolvency of the Plan. 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 40 week period ended October 5, 2024, the Company recognized net periodic postretirement benefit income of $1.4 million, related to the SpartanNash Retiree Medical Plan ("Retiree Medical Plan" or "Plan"). During the 12- and 40- week periods ended October 7, 2023 the Company recognized net periodic postretirement benefit income of $0.7 million and $2.2 million, respectively, related to the 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 $6.6 million 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 40 week period ended October 5, 2024, the Company recognized $1.7 million in net periodic postretirement benefit income related to the amortization of the prior service credit from AOCI. During the 12- and 40- week periods ended October 7, 2023, the Company recognized $0.8 million and $2.5 million, 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 $1.3 million 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 $1.3 million, which constituted a partial settlement of the Plan. The payments resulted in the recognition within net periodic postretirement expense of $0.1 million and $0.3 million 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 October 5, 2024 and October 7, 2023 were each $2.3 million. The Company's contributions during the 40-week periods ended October 5, 2024 and October 7, 2023 were $10.2 million and $9.8 million, respectively. See Note 8 for further information regarding contingencies related to the Company’s participation in the Central States Plan.

Note 10 – Income Taxes

The effective income tax rate was 28.3% and 23.7% for the 12 weeks ended October 5, 2024 and October 7, 2023, respectively. The effective income tax rate was 28.6% and 24.4% for the 40 weeks ended October 5, 2024 and October 7, 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 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						40 Weeks Ended
(In thousands)	October 5, 2024			October 7, 2023			October 5, 2024			October 7, 2023
Restricted stock expense	$	1,082		$	1,771		$	4,343		$	8,468
Restricted stock unit expense		845			—			4,509			—
Performance share unit expense (benefit)		549			577			(800	)		1,492
Income tax benefit		(686	)		(593	)		(2,129	)		(3,502	)
Stock-based compensation expense, net of tax	$	1,790		$	1,755		$	5,923		$	6,458

The following table summarizes activity in the stock incentive plans for the 40 weeks ended October 5, 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		—			—		594,321			20.30		418,008			20.55
Vested		(466,544	)		23.14		(15,490	)		20.41		—			—
Cancelled/Forfeited		(23,104	)		27.11		(27,960	)		20.41		(28,274	)		23.30
Outstanding at October 5, 2024		329,809		$	27.29		550,871		$	20.30		680,044		$	23.19

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 October 5, 2024:


			Weighted
	Unrecognized		Average
	Compensation		Recognition
	Cost		Period
	(In thousands)		(in years)
Restricted stock awards	$	4,169		1.2
Restricted stock units		7,017		2.2
Performance share units		7,006		2.2
Total	$	18,192

Stock Warrant

On October 7, 2020, in connection with its entry into a commercial agreement with Amazon.com, Inc. (“Amazon”), the Company issued Amazon.com NV Investment Holdings LLC, a subsidiary of Amazon, a warrant to acquire up to an aggregate of 5,437,272 shares of the Company’s common stock (the “Warrant”), subject to certain vesting conditions. Warrant shares totaling 1,087,455 shares vested upon the signing of the commercial agreement and had a grant date fair value of $5.51 per share. Warrant shares totaling up to 4,349,817 shares may vest in connection with conditions defined by the terms of the Warrant, as Amazon makes payments to the Company in connection with the commercial supply agreement, in increments of $200 million, and had a grant date fair value of $5.33 per share. Upon vesting, shares may be acquired at an exercise price of $17.7257. The Warrant contains customary anti-dilution, down-round and change-in-control provisions. The right to purchase shares in connection with the Warrant expires on October 7, 2027.

Share-based payment expense recognized as a reduction of “Net sales” in the condensed consolidated statements of earnings, and related tax benefits were as follows:


	12 Weeks Ended						40 Weeks Ended
(In thousands)	October 5, 2024			October 7, 2023			October 5, 2024			October 7, 2023
Warrant expense	$	184		$	319		$	700		$	1,279
Income tax benefit		(17	)		(43	)		(72	)		(138	)
Warrant expense, net of tax	$	167		$	276		$	628		$	1,141

The following table summarizes stock warrant activity for the 40 weeks ended October 5, 2024:


	Warrant
Outstanding and nonvested at December 30, 2023		3,262,357
Vested		(217,492	)
Outstanding and nonvested at October 5, 2024		3,044,865

As of October 5, 2024, total unrecognized cost related to nonvested warrant shares was $16.3 million, which may be expensed as vesting conditions are satisfied over the remaining term of the agreement, or 3 years. Warrants representing 2,392,407 shares are vested and exercisable. As of October 5, 2024, nonvested warrant shares had an intrinsic value of $10.9 million, and vested warrant shares had an intrinsic value of $8.5 million.

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 7,170 and 288,041 for the 12- weeks ended October 5, 2024 and October 7, 2023, respectively, and were 189,062 and 18,340 for the 40- weeks ended October 5, 2024 and October 7, 2023, respectively. The performance share units are not currently dilutive. The following table sets forth the computation of basic and diluted net earnings per share:


	12 Weeks Ended						40 Weeks Ended
(In thousands, except per share amounts)	October 5, 2024			October 7, 2023			October 5, 2024			October 7, 2023
Numerator:
Net earnings	$	10,920		$	11,127		$	35,380		$	41,932
Adjustment for earnings attributable to participating securities		(57	)		(81	)		(202	)		(333	)
Net earnings used in calculating earnings per share	$	10,863		$	11,046		$	35,178		$	41,599
Denominator:
Weighted average shares outstanding, including participating securities		33,580			34,020			33,847			34,262
Adjustment for participating securities		(174	)		(247	)		(193	)		(272	)
Shares used in calculating basic earnings per share		33,406			33,773			33,654			33,990
Effect of dilutive stock warrant		380			432			332			614
Effect of dilutive stock-based employee compensation		143			72			87			91
Shares used in calculating diluted earnings per share		33,929			34,277			34,073			34,695
Basic earnings per share	$	0.33		$	0.33		$	1.05		$	1.22
Diluted earnings per share	$	0.32		$	0.32		$	1.03		$	1.20

Note 13 – Supplemental Cash Flow Information

Supplemental cash flow information is as follows:


	40 Weeks Ended
(In thousands)	October 5, 2024		October 7, 2023
Non-cash investing activities:
Capital expenditures included in accounts payable and other long-term liabilities	$	12,763	$	6,458
Operating lease asset additions		54,377		34,815
Finance lease asset additions		9,374		13,492
Non-cash financing activities:
Recognition of operating lease liabilities		54,377		34,815
Recognition of finance lease liabilities		9,374		13,492
Other supplemental cash flow information:
Cash paid for interest		35,406		30,930

Note 14 – Segment Information

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


(In thousands)	Wholesale			Retail			Total
12 Weeks Ended October 5, 2024
Net sales to external customers	$	1,576,082		$	674,599		$	2,250,681
Inter-segment sales		279,426			402			279,828
Acquisition and integration, net		71			201			272
Restructuring and asset impairment, net		6,824			(1,427	)		5,397
Depreciation and amortization		12,747			11,412			24,159
Operating earnings		21,054			3,865			24,919
Capital expenditures		13,006			17,787			30,793

12 Weeks Ended October 7, 2023
Net sales to external customers	$	1,602,000		$	662,248		$	2,264,248
Inter-segment sales		274,540			434			274,974
Acquisition and integration, net		65			2,065			2,130
Restructuring and asset impairment, net		(293	)		(165	)		(458	)
Depreciation and amortization		12,151			10,891			23,042
Operating earnings		18,153			4,918			23,071
Capital expenditures		16,287			9,101			25,388

40 Weeks Ended October 5, 2024
Net sales to external customers	$	5,144,731		$	2,142,969		$	7,287,700
Inter-segment sales		896,023			1,493			897,516
Acquisition and integration, net		2,048			1,164			3,212
Restructuring and asset impairment, net		6,792			10,480			17,272
Depreciation and amortization		41,126			37,021			78,147
Operating earnings		79,123			2,538			81,661
Capital expenditures		49,680			48,187			97,867

40 Weeks Ended October 7, 2023
Net sales to external customers	$	5,321,048		$	2,162,988		$	7,484,036
Inter-segment sales		902,720			1,086			903,806
Acquisition and integration, net		189			2,070			2,259
Restructuring and asset impairment, net		688			683			1,371
Depreciation and amortization		39,165			36,080			75,245
Operating earnings		66,020			17,150			83,170
Capital expenditures		54,512			31,700			86,212


(In thousands)	October 5, 2024		December 30, 2023
Total assets
Wholesale	$	1,630,441	$	1,576,182
Retail		836,992		779,393
Total	$	2,467,433	$	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 third 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 Third Quarter Highlights

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

•

Net sales decreased 0.6% to $2.25 billion. Wholesale segment net sales decreased 1.6% to $1.58 billion, while Retail segment net sales increased 1.9% to $674.6 million

•

Net earnings were $0.32 per diluted share in both periods

•

Adjusted EPS of $0.48, compared to $0.54. Adjusted EBITDA of $60.5 million, compared to $60.9 million.

•

Net long-term debt to adjusted EBITDA ratio of 2.4x compared to 2.3x at the end of fiscal 2023.

•

Cash generated from operating activities of $123.3 million during the year-to-date period of fiscal 2024 compared to $95.7 million in the year-to-date period of the prior year.

•

Capital expenditures and IT capital of $106.3 million during the year-to-date period of fiscal 2024 compared to $90.3 million in the year-to-date period of the prior year.

•

Returned $37.7 million to shareholders during the year-to-date period of fiscal 2024 through $15.1 million in share repurchases and $22.6 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, higher labor rates 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					40 Weeks Ended				12 Weeks Ended			40 Weeks Ended
	October 5, 2024		October 7, 2023			October 5, 2024		October 7, 2023		October 5, 2024			October 5, 2024
Net sales		100.0		100.0			100.0		100.0		(0.6	)		(2.6	)
Gross profit		15.8		15.3			15.8		15.3		2.0			0.1
Selling, general and administrative		14.4		14.3			14.4		14.2		0.4			(1.3	)
Acquisition and integration, net		0.0		0.1			0.0		0.0		(87.2	)		42.2
Restructuring charges and asset impairment, net		0.2		(0.0	)		0.2		0.0	**			**
Operating earnings		1.1		1.0			1.1		1.1		8.0			(1.8	)
Other expenses		0.4		0.4			0.4		0.4		14.2			16.0
Earnings before income taxes		0.7		0.6			0.7		0.7		4.4			(10.7	)
Income tax expense		0.2		0.2			0.2		0.2		24.6			4.6
Net earnings		0.5		0.5			0.5		0.6		(1.9	)		(15.6	)

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							40 Weeks Ended
(In thousands)	October 5, 2024		October 7, 2023		Variance			October 5, 2024		October 7, 2023		Variance
Wholesale	$	1,576,082	$	1,602,000	$	(25,918	)	$	5,144,731	$	5,321,048	$	(176,317	)
Retail		674,599		662,248		12,351			2,142,969		2,162,988		(20,019	)
Total net sales	$	2,250,681	$	2,264,248	$	(13,567	)	$	7,287,700	$	7,484,036	$	(196,336	)

Net sales for the quarter ended October 5, 2024 (the “third quarter”) decreased $13.6 million, or 0.6%, to $2.25 billion from $2.26 billion in the quarter ended October 7, 2023 (the “prior year quarter”). Net sales for the year-to-date period ended October 5, 2024 (the "year-to-date period") decreased $196.3 million, or 2.6%, to $7.29 billion from $7.48 billion in the year-to-date period ended October 7, 2023 (the "prior year-to-date-period").

Wholesale net sales decreased $25.9 million, or 1.6% to $1.58 billion in the third quarter from $1.60 billion in the prior year quarter. Wholesale net sales for the year-to-date period decreased $176.3 million, or 3.3%, to $5.14 billion from $5.32 billion in the prior year-to-date period. The decreases were due primarily to lower case volumes in both the national accounts and independent retailers customer channels. Overall case volumes for the segment were down in the current quarter and current year-to-date period by 3.2% and 5.6%, respectively.

Retail net sales increased $12.4 million, or 1.9%, to $674.6 million in the third quarter from $662.2 million in the prior year quarter. Net sales for the year-to-date period decreased $20.0 million, or 0.9%, to $2.14 billion from $2.16 billion in the prior year-to-date period. Comparable store sales decreased 0.7% and 1.9% in the current quarter and current year-to-date periods, respectively.

The comparable store sales declines were due primarily to lower consumer demand trends, which included a 4.0% and 4.5% decline in unit volumes in the current quarter and current year-to-date periods, respectively. The decreases in comparable store sales in both the current quarter and current year-to-date periods included offsetting increases in pharmacy sales. Retail's comparable store sales decreases were more than offset by incremental sales from newly acquired stores in the current quarter and partially offset by incremental sales from newly acquired stores in the current year. Additionally, lower fuel sales reduced Retail's reported net sales by 0.8% and 0.6% 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 $7.1 million to $354.6 million in the third quarter from $347.5 million in the prior year quarter. As a percent of net sales, gross profit for the current quarter was 15.8% compared to 15.3% in the prior year quarter. Gross profit for the year-to-date period increased $1.4 million from $1.147 billion in the prior year-to-date period to $1.148 billion 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 increases in the current quarter and current year were driven by lower last-in-first-out ("LIFO") expense of $5.1 million, or 22 basis points and $17.4 million, or 23 basis points, respectively, and favorable segment sales mix. 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 third quarter increased $1.3 million to $324.1 million from $322.8 million in the prior year quarter, representing 14.4% of net sales in the third quarter compared to 14.3% in the prior year quarter. SG&A expense for the year-to-date period decreased $13.9 million to $1.05 billion, from $1.06 billion in the prior year-to-date period, representing 14.4% in the current year-to-date period compared to 14.2% as a percentage of net sales in the prior year-to-date period. The increase in selling, general and administrative expenses as a rate of sales in the current quarter was due primarily to increased Retail store labor and healthcare costs, partially offset by lower corporate administrative costs and benefits realized from the merchandising transformation. The increase in selling, general and administrative expenses as a rate of sales in the year-to-date period was due primarily to increased Retail store labor and depreciation and amortization expense, partially offset by lower incentive compensation and benefits realized from both the merchandising transformation and go-to-market strategy changes.

Acquisition and Integration, net – Third quarter and prior year quarter results included net charges of $0.3 million and $2.1 million, respectively. The year-to-date period and prior year-to-date period included charges of $3.2 million and $2.3 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 Retail segment.

Restructuring and Asset Impairment, net – Third quarter and prior year quarter results included net charges of $5.4 million and a net gain of $0.5 million, respectively. The year-to-date period and prior year-to-date period included charges of $17.3 million and $1.4 million, respectively. The charges in the current quarter were primarily incurred within the Wholesale segment related to the closure of a distribution center, partially offset by gains within the Retail segment recognized from the early termination of lease agreements for two previously closed locations. The year-to-date charges also include impairment losses within the Retail segment related to an indefinite-lived trade name and long-lived assets due to changes in the competitive environment. The prior year quarter gain primarily relates to a $0.3 million gain for additional insurance proceeds related to a distribution location that sustained significant storm damage within the Wholesale segment, in addition to revised estimates for turnover and other lease ancillary costs associated with previously closed locations. The 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 by segment and variances in operating earnings.


	12 Weeks Ended							40 Weeks Ended
(In thousands)	October 5, 2024		October 7, 2023		Variance			October 5, 2024		October 7, 2023		Variance
Wholesale	$	21,054	$	18,153	$	2,901		$	79,123	$	66,020	$	13,103
Retail		3,865		4,918		(1,053	)		2,538		17,150		(14,612	)
Total operating earnings	$	24,919	$	23,071	$	1,848		$	81,661	$	83,170	$	(1,509	)

Operating earnings increased $1.8 million, or 8.0% to $24.9 million in the third quarter from $23.1 million in the prior year quarter. Operating earnings for the year-to-date period decreased $1.5 million, or 1.8%, to $81.7 million from $83.2 million in the prior year-to-date period. The changes in operating earnings was due to the changes in net sales, gross profit and operating expenses discussed above.

Wholesale operating earnings increased $2.9 million, or 16.0%, to $21.1 million in the third quarter from $18.2 million in the prior year quarter. Operating earnings for the year-to-date period increased $13.1 million, or 19.8%, to $79.1 million from $66.0 million in the prior year-to-date period. The increase in operating earnings in the current quarter was due to an improvement in the gross profit rate, lower corporate administrative expenses, and benefits realized from the merchandising transformation initiative, partially offset by lower unit volumes and higher restructuring charges. The increase in operating earnings in the year-to-date period was due to an improvement in the gross profit rate, lower incentive compensation, and benefits realized from the merchandising transformation initiative, partially offset by lower unit volumes and higher restructuring charges.

Retail operating earnings decreased $1.1 million, or 21.4%, to $3.9 million in the third quarter from $4.9 million in the prior year quarter. Operating earnings for the year-to-date period decreased $14.6 million, or 85.2%, to $2.5 million from $17.2 million in the prior year-to-date period. The decrease in operating earnings in the current quarter was due to increased healthcare costs and higher store labor, partially offset by higher sales volume, lower corporate administrative expenses and lower acquisition and integration charges. The decrease in operating earnings in the year-to-date period was 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 $0.6 million, or 6.8%, to $9.9 million in the third quarter from $9.3 million in the prior year quarter. Interest expense for the year-to-date period increased $3.7 million, or 12.3%, to $33.9 million from $30.2 million in the prior year-to-date period. Higher average debt balances on the Company's credit facility accounted for $0.8 million and $3.1 million of the increase in interest expense in the current quarter and current year, respectively.

Income Taxes – The effective income tax rates were 28.3% and 23.7% for the third quarter and prior year quarter, respectively. For the year-to-date period and prior year-to-date period, the effective tax rates were 28.6% and 24.4%, 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 change in contingencies, as well as 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, operating and non-operating costs associated with the postretirement plan amendment and settlement and a non-operating benefit associated with a pension refund from an annuity provider. 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. The pension refund from an annuity provider is related to a terminated pension plan and is a non-operating benefit which is adjusted out of adjusted earnings from continuing operations. 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 to adjusted operating earnings for the 12- and 40- weeks ended October 5, 2024 and October 7, 2023.


	12 Weeks Ended						40 Weeks Ended
(In thousands)	October 5, 2024			October 7, 2023			October 5, 2024		October 7, 2023
Operating earnings	$	24,919		$	23,071		$	81,661	$	83,170
Adjustments:
LIFO expense		1,517			6,606			5,046		22,445
Acquisition and integration, net		272			2,130			3,212		2,259
Restructuring and asset impairment, net		5,397			(458	)		17,272		1,371
Organizational realignment, net		240			2,681			1,915		4,710
Severance associated with cost reduction initiatives		279			39			420		311
Legal settlement		—			—			—		900
Postretirement plan amendment and settlement		—			—			99		94
Adjusted operating earnings	$	32,624		$	34,069		$	109,625	$	115,260
Wholesale:
Operating earnings	$	21,054		$	18,153		$	79,123	$	66,020
Adjustments:
LIFO expense		1,153			4,411			3,861		16,734
Acquisition and integration, net		71			65			2,048		189
Restructuring and asset impairment, net		6,824			(293	)		6,792		688
Organizational realignment, net		148			1,673			1,194		2,939
Severance associated with cost reduction initiatives		131			39			230		296
Legal settlement		—			—			—		900
Postretirement plan amendment and settlement		—			—			62		59
Adjusted operating earnings	$	29,381		$	24,048		$	93,310	$	87,825
Retail:
Operating earnings	$	3,865		$	4,918		$	2,538	$	17,150
Adjustments:
LIFO expense		364			2,195			1,185		5,711
Acquisition and integration, net		201			2,065			1,164		2,070
Restructuring and asset impairment, net		(1,427	)		(165	)		10,480		683
Organizational realignment, net		92			1,008			721		1,771
Severance associated with cost reduction initiatives		148			—			190		15
Postretirement plan amendment and settlement		—			—			37		35
Adjusted operating earnings	$	3,243		$	10,021		$	16,315	$	27,435

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 40- weeks ended October 5, 2024 and October 7, 2023.


	12 Weeks Ended
	October 5, 2024					October 7, 2023
				per diluted					per diluted
(In thousands, except per share amounts)	Earnings			share		Earnings			share
Net earnings	$	10,920		$	0.32	$	11,127		$	0.32
Adjustments:
LIFO expense		1,517					6,606
Acquisition and integration, net		272					2,130
Restructuring and asset impairment, net		5,397					(458	)
Organizational realignment, net		240					2,681
Severance associated with cost reduction initiatives		279					39
Postretirement plan amendment and settlement		—					(762	)
Pension refund from annuity provider		(239	)				—
Total adjustments		7,466					10,236
Income tax effect on adjustments (a)		(1,895	)				(2,600	)
Total adjustments, net of taxes		5,571			0.16		7,636			0.22
Adjusted earnings from continuing operations	$	16,491		$	0.48	$	18,763		$	0.54

	40 Weeks Ended
	October 5, 2024					October 7, 2023
				per diluted					per diluted
(In thousands, except per share amounts)	Earnings			share		Earnings			share
Net earnings	$	35,380		$	1.03	$	41,932		$	1.20
Adjustments:
LIFO expense		5,046					22,445
Acquisition and integration, net		3,212					2,259
Restructuring and asset impairment, net		17,272					1,371
Organizational realignment, net		1,915					4,710
Severance associated with cost reduction initiatives		420					311
Postretirement plan amendment and settlement		(1,458	)				(2,411	)
Pension refund from annuity provider		(239	)				—
Legal settlement		—					900
Total adjustments		26,168					29,585
Income tax effect on adjustments (a)		(6,698	)				(7,525	)
Total adjustments, net of taxes		19,470			0.57		22,060			0.63
Adjusted earnings from continuing operations	$	54,850		$	1.60	$	63,992		$	1.83

(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 40- weeks ended October 5, 2024 and October 7, 2023.


	12 Weeks Ended						40 Weeks Ended
(In thousands)	October 5, 2024			October 7, 2023			October 5, 2024			October 7, 2023
Net earnings	$	10,920		$	11,127		$	35,380		$	41,932
Income tax expense		4,300			3,450			14,152			13,530
Other expenses, net		9,699			8,494			32,129			27,708
Operating earnings		24,919			23,071			81,661			83,170
Adjustments:
LIFO expense		1,517			6,606			5,046			22,445
Depreciation and amortization		24,159			23,042			78,147			75,245
Acquisition and integration, net		272			2,130			3,212			2,259
Restructuring and asset impairment, net		5,397			(458	)		17,272			1,371
Cloud computing amortization		1,748			1,259			5,606			3,685
Organizational realignment, net		240			2,681			1,915			4,710
Severance associated with cost reduction initiatives		279			39			420			311
Stock-based compensation		2,519			2,461			8,139			10,073
Stock warrant		184			319			700			1,279
Non-cash rent		(655	)		(531	)		(2,281	)		(2,094	)
(Gain) loss on disposal of assets		(92	)		258			(48	)		304
Legal settlement		—			—			—			900
Postretirement plan amendment and settlement		—			—			99			94
Adjusted EBITDA	$	60,487		$	60,877		$	199,888		$	203,752
Wholesale:
Operating earnings	$	21,054		$	18,153		$	79,123		$	66,020
Adjustments:
LIFO expense		1,153			4,411			3,861			16,734
Depreciation and amortization		12,747			12,151			41,126			39,165
Acquisition and integration, net		71			65			2,048			189
Restructuring and asset impairment, net		6,824			(293	)		6,792			688
Cloud computing amortization		1,098			834			3,622			2,499
Organizational realignment, net		148			1,673			1,194			2,939
Severance associated with cost reduction initiatives		131			39			230			296
Stock-based compensation		1,711			1,621			5,572			6,615
Stock warrant		184			319			700			1,279
Non-cash rent		(246	)		—			(789	)		(138	)
(Gain) loss on disposal of assets		(108	)		24			(127	)		(11	)
Legal settlement		—			—			—			900
Postretirement plan amendment and settlement		—			—			62			59
Adjusted EBITDA	$	44,767		$	38,997		$	143,414		$	137,234
Retail:
Operating earnings	$	3,865		$	4,918		$	2,538		$	17,150
Adjustments:
LIFO expense		364			2,195			1,185			5,711
Depreciation and amortization		11,412			10,891			37,021			36,080
Acquisition and integration, net		201			2,065			1,164			2,070
Restructuring and asset impairment, net		(1,427	)		(165	)		10,480			683
Cloud computing amortization		650			425			1,984			1,186
Organizational realignment, net		92			1,008			721			1,771
Severance associated with cost reduction initiatives		148			—			190			15
Stock-based compensation		808			840			2,567			3,458
Non-cash rent		(409	)		(531	)		(1,492	)		(1,956	)
Loss on disposal of assets		16			234			79			315
Postretirement plan amendment and settlement		—			—			37			35
Adjusted EBITDA	$	15,720		$	21,880		$	56,474		$	66,518

Liquidity and Capital Resources

Cash Flow Information

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


	40 Weeks Ended
(In thousands)	October 5, 2024			October 7, 2023
Cash flow activities
Net cash provided by operating activities	$	123,255		$	95,680
Net cash used in investing activities		(110,652	)		(82,003	)
Net cash used in financing activities		(13,057	)		(25,209	)
Net decrease in cash and cash equivalents		(454	)		(11,532	)
Cash and cash equivalents at beginning of the period		17,964			29,086
Cash and cash equivalents at end of the period	$	17,510		$	17,554

Net cash provided by operating activities. Net cash provided by operating activities increased $27.6 million in the current year-to-date period compared to the prior year-to-date period, due primarily to ongoing working capital initiatives, as well as timing.

Net cash used in investing activities. Net cash used in investing activities increased $28.6 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 $97.9 million in the current year and cloud computing application development spend, which is included in operating activities, was $8.4 million, compared to capital expenditures of $86.2 million and cloud computing application development spend of $4.1 million in the prior year. The increase in capital expenditures in the current year compared to the prior year is in line with investments connected to the Company's long-term plan. The Wholesale and Retail segments utilized 50.8% and 49.2% of capital expenditures, respectively, in the current year.

Net cash used in financing activities. Net cash used in financing activities decreased $12.2 million in the current year compared to the prior year, primarily due to increased net proceeds from the senior credit facility in the current year compared to the prior year.

Debt Management

Total debt, including finance lease liabilities, was $636.7 million and $597.5 million as of October 5, 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 October 5, 2024, the senior secured credit facility had outstanding borrowings of $559.1 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 $384.7 million at October 5, 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 $18.0 million were outstanding as of October 5, 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 October 5, 2024 compared to 1.63-to-1 at December 30, 2023, and its investment in working capital was $438.1 million at October 5, 2024 compared to $417.6 million at December 30, 2023. The net long-term debt to total capital ratio was 0.44-to-1 at October 5, 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 adjusted EBITDA is a non-GAAP financial measure that is calculated by dividing adjusted EBITDA, on a rolling 52-week basis, by net long-term debt, as defined previously. 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 and adjusted EBITDA are not substitutes for GAAP financial measures and may differ from similarly titled measures of other companies.

Following is a reconciliation of “Long-term debt and finance lease liabilities” to Net long-term debt as of October 5, 2024 and December 30, 2023 and "Net earnings" to Adjusted EBITDA on the rolling 52- week basis ended October 5, 2024 and December 30, 2023.


(In thousands)	October 5, 2024			December 30, 2023
Current portion of long-term debt and finance lease liabilities	$	9,747		$	8,813
Long-term debt and finance lease liabilities		626,957			588,667
Total debt		636,704			597,480
Cash and cash equivalents		(17,510	)		(17,964	)
Net long-term debt	$	619,194		$	579,516


	Rolling 52- Weeks Ended
(In thousands, except for ratio)	October 5, 2024			December 30, 2023
Net earnings	$	45,685		$	52,237
Income tax expense		18,510			17,888
Other expenses, net		41,008			36,587
Operating earnings		105,203			106,712
Adjustments:
LIFO (benefit) expense		(1,295	)		16,104
Depreciation and amortization		101,541			98,639
Acquisition and integration, net		4,369			3,416
Restructuring and asset impairment, net		25,091			9,190
Cloud computing amortization		6,955			5,034
Organizational realignment, net		2,444			5,239
Severance associated with cost reduction initiatives		427			318
Stock-based compensation		10,602			12,536
Stock warrant		980			1,559
Non-cash rent		(2,786	)		(2,599	)
(Gain) loss on disposal of assets		(93	)		259
Legal settlement		—			900
Postretirement plan amendment and settlement		99			94
Adjusted EBITDA	$	253,537		$	257,401

Net long-term debt to adjusted EBITDA ratio		2.4			2.3

Following is a reconciliation of "Net long-term debt" and "Total shareholders' equity" to Total capital as of October 5, 2024 and December 30, 2023.


(In thousands)	October 5, 2024		December 30, 2023
Net long-term debt	$	619,194	$	579,516
Total shareholders' equity		781,308		778,182
Total capital	$	1,400,502	$	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 October 5, 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 October 5, 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 October 5, 2024. These commitments consist primarily of purchase commitments, standby letters of credit of $18.0 million as of October 5, 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 October 5, 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 third 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 not any share repurchases of common stock made under this program during the third quarter of 2024. At October 5, 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)
July 14 - August 10, 2024
Employee Transactions		—	$	—	N/A			N/A
Repurchase Program		—	$	—		—	$		10,401
August 11 - September 7, 2024
Employee Transactions		409	$	21.19	N/A			N/A
Repurchase Program		—	$	—		—	$		10,401
September 8 - October 5, 2024
Employee Transactions		246	$	22.13	N/A			N/A
Repurchase Program		—	$	—		—	$		10,401
Total for quarter ended October 5, 2024
Employee Transactions		655	$	21.54	N/A			N/A
Repurchase Program		—	$	—		—	$		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 October 5, 2024, no Rule 10b5-1 trading arrangements or "non-Rule 10b5-1 trading arrangements" (as defined by S-K Item 408(c)) were entered into or terminated by our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act).


Michigan		38-0593940
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

850 76th Street, S.W. P.O. Box 8700 Grand Rapids, Michigan		49518
(Address of Principal Executive Offices)		(Zip Code)


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 September 13, 2024.

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 October 5, 2024, has been formatted in Inline XBRL.


	SPARTANNASH COMPANY (Registrant)
Date: November 7, 2024	By	/s/ Jason Monaco
		Jason Monaco Executive Vice President and Chief Financial Officer (Principal Financial Officer)

Date: November 7, 2024	By	/s/ R. Todd Riksen
		R. Todd Riksen Vice President and Corporate Controller (Principal Accounting Officer)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


		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	9

	Notes to Condensed Consolidated Financial Statements	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30

Item 4.	Controls and Procedures	30

PART II.	OTHER INFORMATION	31

Item 1.	Legal Proceedings	31

Item 1A.	Risk Factors	31

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31

Item 5.	Other Information	31

Item 6.	Exhibits	32

	Signatures	33