Safeway — Investor Day (December 2006)
17 slides from Safeway's investor day presentation, Dec 12, 2006
Slide 1: Reconciliation of GAAP Cash Flow Measure to Free Cash Flow
Reconciliation of GAAP Cash Flow Measure to Free Cash Flow $513.1 $639.0 $814.6 $1,156.1 $567.5 $400- $600 $400- $600 Free cash flow 523.1 - - - - - - Cash used for acquisitions (2,242.3) (1,395.7) (795.0) (1,070.3) (1,313.5) (1,650.0)- (1,750.0) (1,600.0)- (1,700.0) Net cash flow used by investing
Slide 2: Reconciliation of Net Income to Adjusted EBITDA (Interest Coverage)
Reconciliation of Net Income to Adjusted EBITDA (Interest Coverage) ($Million) 36 Weeks Ended Sept. 9, 2006 Net income (loss) $ 562.6 $ 561.1 $ 560.2 $ (169.8) $ (828.1) $ 1,253.9 Add (subtract): Income taxes 242.2 287.9 233.7 310.9 660.4 841.1 Interest expense 274.6 402.6 411.2 442.4 430.8 446.9 De
Slide 3: Reconciliation of Net Cash Flow from Operating Activities to Adjusted EBITDA
Reconciliation of Net Cash Flow from Operating Activities to Adjusted EBITDA ($ Million) 36 Weeks Ended Sept. 9, 2006 Net cash flow from operating activities $ 1,453.6 $ 1,881.0 $ 2,226.4 $ 1,609.6 $ 2,034.7 $ 2,232.3 Add (subtract): Income taxes 242.2 287.9 233.7 310.9 660.4 841.1 Interest expense
Slide 4: Adjusted Diluted Earnings Per Share
Reconciliation of Adjusted Diluted Earnings Per Share 36 Weeks Ended Sept. 9, 2006 Sept. 10, 2005 Reported earnings per diluted share $ 1.25 $ 0.86 $ 1.25 $ 1.25 Texas store impairment - 0.08 0.08 - Texas store exit activities - - 0.07 - Employee buyout - 0.03 0.08 - Dominick's store exit activities
Slide 5: Change to Gross Margin BP Change Excluding Fuel and Unusual Items
Reconciliation of Gross Margin BP Change to Gross Margin BP Change Excluding Fuel and Unusual Items Basis point increase (decrease) over prior year: 36 Weeks 2007 Guidance 2006 Guidance Ended High Low High Low Sept. 9, 2006 Basis point change in gross margin (5) (13) (17) (26) (16) (65) (44) (147) F
Slide 6: Change to Operating & Administrative Expense BP Change Excluding Fuel and Unusual Items
Reconciliation of Operating & Administrative Expense BP Change to Operating & Administrative Expense BP Change Excluding Fuel and Unusual Items Basis point increase (decrease) over prior year: 36 Weeks 2007 Guidance 2006 Guidance Ended High Low High Low Sept. 9, 2006 Basis point change in operating
Slide 7: High Level Review - 2006 Q3 YTD
High Level Review - 2006 Q3 YTD ID sales momentum has continued to build O&A margin X-fuel has improved 29 basis points Gross margin X-fuel has improved by 17 basis points Adjusted EPS has grown by 23%* We received a $318 million tax refund with more refunds expected to follow * See website for adju
Slide 8: 2006 Adjusted Earnings Growth
$1.72 $1.25 2006AE 2006 Adjusted Earnings Growth $1.40 $1.71 2006AE Excludes $318 Million Refund Reported EPS Adjusted EPS 22% 2005 adjusted for unusual items and tax benefits. 2006AE adjusted for Q1-Q3 tax benefits. Does not include Q406 tax benefits, if any. See website for reconciliation.
Slide 9: 2006 Investor Guidance
Non-Fuel ID Sales 3.0% 3.1 - 3.3% ¹ 10 - 30 BPs Gross Margin (10) - 0 BPs 0 - 10 BPs ² 10 BPs (Ex Fuel) O&A (Ex Fuel) 25 - 35 BPs 30 - 40 BPs ² 5 BPs Free Cash Flow $400 - $600 $400 - $600 NC Adjusted EPS $1.55 - $1.65 $1.65 - $1.75 ³ 10¢ 2006 Investor Guidance Original 2Q Revised Guidance Differenc
Slide 10: 2007 Guidance
2007 Guidance ID Sales X-Fuel 3.3% Gross Margin Improvement X-Fuel 15 - 25 bps* O&A Improvement X-Fuel 5- 15 bps* Cash Capital Expenditures $1.7 billion Free Cash Flow $400 - $600 million* Earnings Per Share $1.90- $2.00 Guidance * See website for reconciliation
Slide 11: Long Term Outlook
Long Term Outlook ID Sales X-Fuel 3.0 - 4.0% Operating profit margin X-Fuel 5.5 - 6.0% Depreciation 2.5% Annual EPS Growth 12.0 - 15.0%
Slide 12: Safeway EPS Growth Rate Adjusted for Unusual Items
$1.71 $1.40 $1.15 '04 '05 '06AE '07G Safeway Growth Rate - EPS Adjusted for Unusual Items* - 22% 22% 11 - 17% Growth Rate $1.90 - $2.00 * 2004 & 2005 adjusted for unusual items and tax benefits. 2006AE adjusted for Q1–Q3 tax benefits, does not include Q406 tax benefits, if any. See website for recon
Slide 13: Rollout of Lifestyle Stores
Rollout of Lifestyle Stores '03 '04 '05 '06E '07F '08F '09F % of Stores Completed 1,060 1,360 1,660
Slide 14: Current ID Results for Lifestyle Stores
65% 35% 78% 22% Current ID Results for Lifestyle Stores 1st Yr 2nd Yr 3rd Yr Store Count ID Contribution* Lifestyle Non-Lifestyle Lifestyle Sales Change by Year Adj. for competitive openings Yr Sales vs. Proforma Base; Yr & Yr3 vs Prior year Yr 2 & Yr 3 excl. grand opening promo period Data incl thr
Slide 15: Remaining store base expected to generate strong sales increases and investment returns
Remaining store base expected to generate strong sales increases and investment returns Lifestyle Store Investments Deliver Consistently Strong Returns Returns are strong regardless of size, location or income level – Smaller square footage stores provide an equal or better return than large stores
Slide 16: Cash Capital Spending
3.4 3.6 4.1 4.0 3.8 3.7 2.9 2.9 2.9 2.9 3.4 '04 '05 '06E '07F '08F '09F '10F '11F '12F '13F '04 - '13 % of Sales * Excludes any major new initiatives Cash Capital Spending
Slide 17: As a Company, Blackhawk Network . . .
As a Company, Blackhawk Network . . . Has very low capital requirements Is not people intensive Is expected to contribute $100 million in pre-tax income in 2007 Has an annual growth rate in excess of 100% See SEC filings for risk factors