SpartanNash — Investor Day (November 2022)
65 slides from SpartanNash's investor day presentation, Nov 2, 2022
Slide 1: Investor Day
INVESTOR DAY 11.2.2022 | NYC SPARTANNASH INVESTOR DAY Property of SpartanNash Company
Slide 2: General Disclaimer
General Disclaimer Forward-Looking Statements Non-GAAP Financial Measures The matters discussed in this presentation and in the Company's website-accessible Investor This presentation includes information regarding certain non-GAAP financial measures, Day webcast include "forward-looking statements"
Slide 3: Tony Sarsam
20 YEARS Manufacturing Finance TONY Sales/DSD Go-to-Market Strategy 7 YEARS SARSAM COO, Ice Cream President, DSD Division @tonysarsam 5 YEARS CEO 3 YEARS CEO EDUCATION B.S., Chemical Engineering Master of Science, Management SPARTANNASH INVESTOR DAY Property of SpartanNash Company 3
Slide 4: Key Takeaways
Key Takeaways SpartanNash has driven significant shareholder value since the start of our turnaround, and we will share plans with you today that continue to drive sustainable value for years to come. We have a clear and credible strategy, the detailed programs in place, and a purpose-built leadersh
Slide 5: Agenda
Agenda WHO WE ARE AND OUR ESG JOURNEY OUR WINNING RECIPE™ ADRIENNE CHANCE TONY SARSAM S V P, C O M M U N I C AT I O N S & E X E C U T I V E D I R E C T O R , S PA R TA N N A S H F O U N D AT I O N CHIEF EXECUTIVE OFFICER COMPONENTS OF F I N A N C I A L S & VA L U E O U R S T R AT E G Y C R E AT I O
Slide 6: SpartanNash History
SpartanNash History 1885 2013 1918 SPARTANNASH INVESTOR DAY Property of SpartanNash Company 6
Slide 7: A Leading Food Solutions Company
A Leading Food Solutions Company Two Core Complementary Segments… WHOLESALE(1) RETAIL 17,500+ 2,100 Independent Associates $8.9B Retailers Served 71% FY 2021 29% 147 Total Net Sales % of Net Sales Corporate-Owned Retail Stores 19 Distribution Centers(2) …Supported by National Supply Chain Network an
Slide 8: $125 Billion Wholesale Addressable Market
$125 Billion Wholesale Addressable Market(1) $118B $7B (2) Opportunity Current Market Share (1) Internal estimate and Nielsen TDLinx data of Wholesale demand within 250 miles of existing warehouses. (2) Based on the mid-range of the full year 2022 Wholesale net sales outlook of ~$6.8B (updated on 8/
Slide 9: People First Culture
The Start of a New Era PEOPLE FIRST CULTURE SPARTANNASH INVESTOR DAY Property of SpartanNash Company 9
Slide 10: Highly Accomplished, Purpose-Built and Diverse Management Team
Highly Accomplished, Purpose-Built and Diverse Management Team Tony Sarsam Adrienne Chance Ileana McAlary Amy McClellan Jason Monaco Bennett Morgan President and Chief SVP, Communications & SVP, Chief Legal Officer SVP, Chief EVP, Chief SVP, Chief Executive Officer Executive Director, SpartanNash an
Slide 11: What You Will See with This New SpartanNash Management Team
What You Will See with This New SpartanNash Management Team Growth Mindset Focus on Winning SPARTANNASH INVESTOR DAY Property of SpartanNash Company 11
Slide 12: People First Actions
PEOPLE FIRST ACTIONS SPARTANNASH INVESTOR DAY Property of SpartanNash Company
Slide 13: SPARTANNASH INVESTOR DAY Property of SpartanNash Company
SPARTANNASH INVESTOR DAY Property of SpartanNash Company
Slide 14: Driving Meaningful Improvements in KPIs
…And We're Driving Meaningful Improvements in KPIs(1) +2.3x +53% 10% 97% Increase in Improvement in Reduction in Ontime New Applicants Safety Incident Rate Fleet Mileage Deliveries Resulting in +2x +30% 10,000 +8% Glassdoor Entry-Level Metric Ton Carbon Throughput Rating Increase Retail Wages Footpr
Slide 15: We Deliver the Ingredients for a Better Life
We Deliver the Ingredients for a Better Life • Retention Rate • Safety Incident Rate • Merchandising Transformation Benefits • Raw Fill Rate Cost Per Case • Market Share SPARTANNASH INVESTOR DAY Property of SpartanNash Company 15
Slide 16: Long-Term Goals: Accelerating Growth
Long-Term Goals: Accelerating Growth 2025 Outlook $10B+ $300mm+ Net Sales Adj. EBITDA 12% GROWTH FROM 2021 40% INCREASE FROM 2021 AT 3% CAGR AT 9% CAGR 1 $1B sales growth from share gains and continued expansion into value-add offerings Incremental adjusted EBITDA through margin-enhancing innovation
Slide 17: Playing to Win!
PLAYING TO WIN! SPARTANNASH INVESTOR DAY Property of SpartanNash Company
Slide 18: Masiar Tayebi
MASIAR TAYEBI EVP, Chief Strategy & Information Officer PREVIOUS EXPERIENCE SPARTANNASH INVESTOR DAY Property of SpartanNash Company 18
Slide 19: Organic Strategy Components Delivering Our Winning Recipe
Organic Strategy Components Delivering Our Winning Recipe™ CORE CAPABILITIES STRATEGIC PRIORITIES Growth Insights that Act on Insights to Optimize Customer – Product Portfolios Solutions Mindset Drive People Launch Customer-Centric, Innovative Solutions Create a People First Culture to Make SpartanN
Slide 20: Acting on Insights: Product Portfolio Innovation
Acting on Insights: Product Portfolio Innovation Increasing OwnBrands Penetration CORE …to deliver 480+ new innovative products year-to- CAPABILITIES Leverage strength of insights… date grounded in indulgence and convenience Drive Solutions Insights that Three winning core brands. Our latest OwnBran
Slide 21: Acting on Insights: Launching Customer-Centric, Innovative Solutions
Acting on Insights: Launching Customer-Centric, Innovative Solutions CORE CAPABILITIES Launched innovative omnichannel partnerships to delight Launching customer-centric local customers digitally products Drive Solutions Insights that Increase market share through omnichannel offerings, creating sea
Slide 22: We Are Transforming the Supply Chain
Operational Excellence: We Are Transforming the Supply Chain CORE CAPABILITIES Optimized Network Enhanced Transportation Redefined Operations Drive Solutions Insights that Distribution Centers 20% 7mm ~ 8% Of Network Reworked(1) Network Miles Reduced(3) Improvement in Outbound Throughput Operational
Slide 23: Opportunities For Growth through M&A in Addition To Organic Plan
Opportunities For Growth through M&A in Addition To – Not In Place Of – Organic Plan Consistent M&A Assessment Framework Clear Priorities & Recent Inorganic Growth Strategic Fit Wholesale January 2022: Coastal Pacific Standalone Attractiveness partnership bolstering national account business and adv
Slide 24: We are Successfully Executing Our Winning Recipe Strategy
We are Successfully Executing Our Winning Recipe™ Strategy We are firing on all cylinders both organically and inorganically We are executing our strategic priorities to deliver Our Winning Recipe™ and long-range plans achieving $10B+ in sales and $300mm+ in adjusted EBITDA by 2025 We have a clear f
Slide 25: Bennett Morgan
BENNETT MORGAN SVP, Chief Merchandising Officer PREVIOUS EXPERIENCE SPARTANNASH INVESTOR DAY Property of SpartanNash Company 25
Slide 26: Our Merchandising Strategy: A Winning Recipe
Our Merchandising Strategy: A Winning Recipe Vision Customer-led focus to offer the ingredients for a better life Products/Services customers Value that Sustainable growth can’t live without can’t be beat & partnerships Pillars • Simplified, better assortment • Strong price & value perception • Big
Slide 27: Investing in Key Capabilities to Fuel our Growth and Profitability
Investing in Key Capabilities to Fuel our Growth and Profitability 1 Enhanced Category Planning 2 Promotional OwnBrands Effectiveness E-Commerce Transformation Simplified, Build market-leading Better Assortment capabilities through data and insights Loyalty/ Pricing Personalization AI/AA capabilitie
Slide 28: Enhanced Category Planning and Promotional Effectiveness
Enhanced Category Planning and Promotional Effectiveness are Driving Top Line and Bottom Line 1 Better merchandising 2 More successful promotions focused Transformation initiatives with enhanced planning on effectiveness Customer-led Leveraging Expanding view to Adding new robust foundation; data- e
Slide 29: Observations on Record Inflation
Observations on Record Inflation ... Underlying Input Costs Don’t Justify Cost Increases From Suppliers Data-driven approach to comparing vendor prices with Supplier public records match expected list cost change based on commodity markets our observation* "[Supplier A] saw its operating profit rise
Slide 30: Partnering With Vendors Focused on Winning Customers
Partnering With Vendors Focused on Winning Customers – One Example Where We’ve Seen Success Goals Requirements Support • Increase Units • New Floorplan • Space Planning • Increase Sales • New Planograms • Vendor Community • Increase Visits • New Fixtures: • Store Operations Yogurt/Dough Unit, sales
Slide 31: Merchandising Transformation Early Results Are Strong
Merchandising Transformation Early Results Are Strong and Will Continue to Drive Positive Change Supporting Our Winning Recipe™ to drive growth Three key focus areas: Products and services the customer can’t live without Value that can’t be beat Sustainable growth and partnerships Customer-led in ev
Slide 32: Adrienne Chance
ADRIENNE CHANCE SVP, Communications & Executive Director, SpartanNash Foundation PREVIOUS EXPERIENCE SPARTANNASH INVESTOR DAY Property of SpartanNash Company 32
Slide 33: 2021/2022 Highlights — Environment
2021/2022 Highlights — Environment Decreased ozone-depleting emissions by 30% in 2022 YTD in distribution centers(1) Optimized supply chain network to reduce fleet mileage annually by 10% or 10,000 metric tons of greenhouse gas emissions (2) Increased fleet MPG by 4% in 2021(1) (1) Calculated using
Slide 34: 2021/2022 Highlights — Social
2021/2022 Highlights — Social Associates • Expanded tuition reimbursement program • Relaunched annual Associate Engagement Survey • Expanded parental leave benefit • Grew internship program for college students • Increased Associate discount at retail stores and fuel centers SPARTANNASH INVESTOR DAY
Slide 35: 2021/2022 Highlights — Social: Communities
2021/2022 Highlights — Social Communities • Disaster Relief • Ukraine • Puerto Rico • Florida • Mississippi • Kentucky • Helping Hands Day 00 $25 ,0 o n ation D • Guinness World Record • Community health advocacy SPARTANNASH INVESTOR DAY Property of SpartanNash Company 35
Slide 36: 2021/2022 Highlights — Governance
2021/2022 Highlights — Governance • 56% diverse 9-person Board of Directors with 8 independent directors, including independent Chairman • Recent and ongoing refreshment of the Board; average director tenure of 4.4 years • Best practice governance polices, including annually-elected directors, separ
Slide 37: Completed Materiality Assessment
Completed Materiality Assessment Focus Areas • Food Waste • Greenhouse Gas Emissions • Community Engagement • Diversity & Inclusion • Product Sustainability SPARTANNASH INVESTOR DAY Property of SpartanNash Company 37
Slide 38: Next Steps
Next Steps • 2022 ESG Report publishing in late summer/early fall 2023 • Defining short- and long-term goals and targets that align organically to Company strategy and our Core Capabilities: • People • Operational Excellence • Insights That Drive Solutions • Continued commitment to putting People Fi
Slide 39: Jason Monaco
JASON MONACO EVP, Chief Financial Officer PREVIOUS EXPERIENCE SPARTANNASH INVESTOR DAY Property of SpartanNash Company 39
Slide 40: Financial Overview
Financial Overview • Demonstrated history of meeting or exceeding financial targets • Delivered strong Q3 preliminary adjusted EBITDA(1) performance; raised full year guidance • Portfolio and scale create compelling financial model • Revenue grows by at least $1 billion and adjusted EBITDA by 40% by
Slide 41: Q3 2022 Preliminary Results
Q3 2022 Preliminary Results(1) Net Sales (Billions) Net Earnings (Millions) Adjusted EBITDA(2) (Millions) Q3 2021 Q3 2022 $56.3 Range $15.2 to $58.3 $2.28 to $2.31 $8.9 $51.5 to $9.9 $2.07 (1) The Company will announce its full third quarter results on Wednesday, November 9, 2022. (2) A reconciliati
Slide 42: Fiscal 2022 Guidance Raise
Fiscal 2022 Guidance Raise Net Sales (Billions) Adjusted EBITDA (Millions) +7% $9.5 $237 +12% to $9.7 to $242 $227 $9.3 to $240 to $9.6 $8.9 $214 2022 2022 2022 2022 Prior Current Prior Current Guidance Guidance Guidance Guidance 2021 Range Range 2021(1) Range Range (1) A reconciliation of net earni
Slide 43: Operating Segment Change
Operating Segment Change(1) WHOLESALE RETAIL The change in segments better reflects… • The Company’s updated organization structure • How the Company reviews its performance and allocates resources (1) The Company will recast certain financial information for the comparative prior-year periods withi
Slide 44: Changing the Trajectory of SpartanNash
Changing the Trajectory of SpartanNash Adjusted EBITDA(1) $ in millions $300+ +9% -5% CAGR 2025E CAGR $239.5E(3) $231(2) $230 $231 $236 $235(2) $214 $209 $178 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 (1) See the Appendix for reconciliations of fiscal 2014 to 2021 non-GAAP measures
Slide 45: Long-term Goals: Accelerating Growth
Long-term Goals: Accelerating Growth 2025 Outlook $10B+ $300mm+ Net Sales Adj. EBITDA 12% GROWTH FROM 2021 40% INCREASE FROM 2021 AT 3% CAGR AT 9% CAGR 1 $1B sales growth from share gains and continued expansion into value-add offerings Incremental adjusted EBITDA through margin-enhancing innovation
Slide 46: How We Get There: Long-Term Value Creation Pathway
How We Get There: Long-Term Value Creation Pathway Steady Adjusted EBITDA Growth Across Plan Period Fueled By Strong Plans Supply Chain Merchandising Insights and All Programs Transformation Transformation Innovation Support LRP Launched Launched 2023+ 2025 2021 2022 Embedding our People First Cultu
Slide 47: Plan Drivers: Revenue and Adjusted EBITDA Elements
Plan Drivers: Revenue and Adjusted EBITDA Elements Revenue Adjusted EBITDA (Dollar Amounts in Billions) (Dollar Amounts in Millions) $0.3 $10.0+ $300+ $40-$55 $0.8 $35-$45 $214 $8.9 2021 Wholesale Retail Additional Strategic Strategic 2025 Additional 2025 2021(1) Share Market M&A Growth Plan M&A Gai
Slide 48: Investing To Grow: Return-Based Investing
Investing To Grow: Return-Based Investing Balanced Capital Allocation (2022-2025) Capital Allocation • Disciplined approach to capital allocation IT/ Supply Other Chain • Pivoting to growth-focused investments 25% 45% • Increased investment pace towards industry norms o Capex spending between $120mm
Slide 49: Delivering Strong Return on Investment
Delivering Strong Return on Investment 10.0%+ New Investment – 5.6% Annual Marginal 3.9% Adjusted ROIC Adjusted ROIC Adjusted ROIC 2019 2021 2022-2025 VALUE TRANSITION TURNAROUND GROWTH Annual Marginal Adjusted ROIC over the plan period is expected to be from 10%(1) (1) Annual Marginal Adjusted ROIC
Slide 50: Disciplined Approach to Capital Allocation
Disciplined Approach to Capital Allocation Dividend History Cash Returned Since 2015 $/Share Cumulative Dollar Amounts in Millions Share Repurchases Dividends +7% $0.84 $311 $0.80 $265 R $0.77 CAG $0.76 $232 $112 $0.72 $88 $0.66 $300mm+ $187 $83 $0.60 $166 Returned $73 $0.54 Since 2015 $120 $73 $53
Slide 51: 2025 Plan – Shareholder Return Drivers
2025 Plan – Shareholder Return Drivers +2% - 3% +10% - 14% +4% - 6% +4% - 5% Strategic Strategic Dividends Shareholder Additional Growth(1) Plan(2) Return M&A (1) Equivalent to $35-$45 million adjusted EBITDA growth by 2025. (2) Equivalent to $40-$55 million adjusted EBITDA growth by 2025. (3) Yield
Slide 52: Positioned to Win
Positioned to Win • Executing Our Winning Recipe™ to drive shareholder value • Pivoting from turnaround to growth, with clear strategic priorities • Revenue generation and adjusted EBITDA growth, with steady performance through plan period • Strategic capital deployment to invest for growth and impr
Slide 53: Key Takeaways
Key Takeaways SpartanNash has driven significant shareholder value since the start of our turnaround, and we have shared plans with you today that continue to drive sustainable value for years to come. We have a clear and credible strategy, the detailed programs in place, and a purpose-built leaders
Slide 54: Appendix
APPENDIX SPARTANNASH INVESTOR DAY Property of SpartanNash Company 54
Slide 55: Key Macro Environment Assumptions
Key Macro Environment Assumptions • Inflation moderates to pre-COVID levels by 2025 • Volume headwinds due to government assistance reductions, economic headwinds after sustained high inflation and potential for recession and/or stagflation • Market share increases at Wholesale from new business opp
Slide 56: Preliminary Plan Financials
Preliminary Plan Financials +3% +3% 10% -4% 7% 1% 3% 1% 6% 9,348 8,931 9,600 10,000 7,652 7,735 7,964 8,065 8,536 Revenue (USD M) 2015 2016 2017 2018 2019 2020(1) 2021 2022 Guidance 2025 Mid-Point +9% -1% 0% 2% 34% 12% -11% -11% -15% 300 Adjusted 230 231 236 239 214 240 209 178 EBITDA 3.0% 3.0% 3.0%
Slide 57: Business Segment Performance
Business Segment Performance Wholesale Retail +2% +4% 9% -5% 11% -2% Revenue 6,155 6,711 6,350 2,638 2,581 2,381 (USD M) 2019 2020(1) 2021 2019 2020(1) 2021 +30% -4% 6% -12% 86% -9% Adjusted 115 122 117 107 107 EBITDA (USD M, 1.9% 1.8% 63 4.4% 4.1% 1.7% %) 2.6% 2019 2020(1) 2021 2019 2020(1) 2021 Ad
Slide 58: Balance Sheet Metrics
Balance Sheet Metrics (Dollar Amounts in Millions) 2022-2025E 2019 2020 2021 (Excluding M&A) Total Assets $2,276 $2,277 $2,206 $2,200-$2,700 Total Liabilities $1,588 $1,542 $1,423 $1,400-$1,800 Current Ratio 1.8x 1.5x 1.5x 1.3x-1.7x Leverage Ratio 3.7x 2.0x 1.9x <2.5x (Net Debt/Adjusted EBITDA(1)) (
Slide 59: Reconciliation of Preliminary Q3 2022 Results Net Earnings to Adjusted EBITDA
Reconciliation of Preliminary Q3 2022 Results Net Earnings to Adjusted EBITDA SPARTANNASH INVESTOR DAY Property of SpartanNash Company 59
Slide 60: Net Earnings (Loss) to Adjusted EBITDA Reconciliation
Net Earnings (Loss) to Adjusted EBITDA Reconciliation Leverage Ratio (Net Debt to Adjusted EBITDA) Calculation SPARTANNASH INVESTOR DAY Property of SpartanNash Company 60
Slide 61: Wholesale Net Sales & Operating Earnings to Adjusted EBITDA Reconciliation
Wholesale Net Sales & Operating Earnings to Adjusted EBITDA Reconciliation SPARTANNASH INVESTOR DAY Property of SpartanNash Company 61
Slide 62: Retail Operating Earnings to Adjusted EBITDA Reconciliation
Retail Operating Earnings to Adjusted EBITDA Reconciliation SPARTANNASH INVESTOR DAY Property of SpartanNash Company 62
Slide 63: Adjusted Return On Invested Capital (ROIC)
Adjusted Return On Invested Capital (ROIC) (1) Historical adjusted operating earnings amounts are adjusted for LIFO and presented on a basis consistent with the Company’s current non-GAAP measures. SPARTANNASH INVESTOR DAY Property of SpartanNash Company 63
Slide 64: Cash Returned Since 2015
Cash Returned Since 2015 Inclusive of Dividends and Share Repurchases SPARTANNASH INVESTOR DAY Property of SpartanNash Company 64
Slide 65: “e SpartanNash.
“e SpartanNash.