Rite Aid — Q4 FY2020 Earnings Presentation
25 slides from Rite Aid's earnings presentation, Apr 16, 2020
Slide 1: Supplemental Presentation Fourth Quarter Fiscal 2020
April 16, 2020 Supplemental Presentation Fourth Quarter Fiscal 2020
Slide 2: Cautionary Statement Regarding Forward Looking Statements
Cautionary Statement Regarding Forward Looking Statements Statements in this presentation that are not historical, are forward - looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 . Such statements include, but are not limited to, s
Slide 3: Cautionary Note Regarding Pro Forma Information
Cautionary Note Regarding Pro Forma Information The following presentation provides certain pro forma information regarding the impact of Rite Aid’s pending sale of a distribution center and assets to WBA on Rite Aid’s results of operations and capital structure . The pro forma information is for il
Slide 4: Non-GAAP Financial Measures
The following presentation includes the non - GAAP financial measures, Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share, Adjusted EBITDA Gross Profit and Adjusted EBITDA SG&A . Rite Aid defines Adjusted EBITDA as net income (loss) excluding the impact of inco
Slide 5: Key Fourth Quarter FY 2020 Highlights
Fourth Quarter Adjusted EBITDA of $135.6 million exceeded prior year by $1.5 million Retail Pharmacy: • Same store 30 - day equivalent prescription count grew 5.0% • Front end sales increased 1.5% excluding tobacco related products • Stable Adjusted EBITDA gross profit and good expense control • Cyc
Slide 6: Q4 Fiscal 2020 Summary
($ in millions, except per share amounts) Q4 Fiscal 2020 Summary 6 13 Weeks Ended February 29, 2020 13 Weeks Ended March 2, 2019 Revenues $ 5,727.2 $ 5,379.6 Net Loss $ (343.5) $ (255.6) Net Loss per Diluted Share $ (6.43) $ (4.83) Adjusted Net Loss per Diluted Share $ (0.37) $ (0.25) Adjusted EBITD
Slide 7: Reconciliation of Net Loss to Adjusted EBITDA
($ in thousands) Q 4 - Fiscal 2020 Reconciliation of Net Loss to Adjusted EBITDA 7 13 Weeks Ended February 29, 2020 13 Weeks Ended March 2, 2019 Net Loss $ (343,461) $ (255,629) Adjustments: Interest expense 53,429 52,695 Income tax expense 351,729 195,004 Depreciation and amortization 79,300 86,925
Slide 8: Reconciliation of Net Loss to Adjusted Net Loss
($ in thousands, except per share amounts) Q4 - Fiscal 2020 Reconciliation of Net Loss to Adjusted Net Loss 8 13 Weeks Ended February 29, 2020 13 Weeks Ended March 2, 2019 Net Loss $ (343,461) $ (255,629) Add back - Income tax expense 351,729 195,004 Income (loss) before income taxes $ 8,268 $ (60,6
Slide 9: Q4 Fiscal 2020 Summary – Retail Pharmacy Segment
Q4 - Fiscal 2020 Summary – Retail Pharmacy Segment 9 (1) Refer to slides 11 and 12 for the reconciliations of these non - GAAP measures to their applicable GAAP measures. ($ in millions) 13 Weeks Ended February 29 , 2020 13 Weeks Ended March 2, 2019 Revenues $ 3,993.3 $ 3,971.2 Adjusted EBITDA Gross
Slide 10: Retail Pharmacy Segment commentary
• Retail pharmacy segment revenue was $ 22 million higher than last year’s fourth quarter, driven by an increase in same store sales, partially offset by a reduction in store count since the end of Fiscal 2019 . Same store sales increased 160 bps with front end same store sales up 150 bps, after exc
Slide 11: Reconciliation of Adj. EBITDA Gross Profit – Retail Pharmacy Segment
($ in millions) Reconciliation of Adj. EBITDA Gross Profit – Retail Pharmacy Segment 11 13 Weeks Ended February 29, 2020 13 Weeks Ended March 2, 2019 Revenues $ 3,993.3 $ 3,971.2 Gross Profit 1,141.0 1,058.0 Addback: LIFO (credit) charge (72.4) 4.0 Depreciation and amortization (COGS portion only) 1
Slide 12: Reconciliation of Adj. EBITDA SG&A – Retail Pharmacy Segment
($ in millions) Reconciliation of Adj. EBITDA SG&A - Retail Pharmacy Segment 12 13 Weeks Ended February 29, 2020 13 Weeks Ended March 2, 2019 Revenues $ 3,993.3 $ 3,971.2 Selling, general and administrative expenses 1,060.5 1,055.4 Less: Depreciation and amortization (SG&A portion only) 62.1 68.2 St
Slide 13: Pharmacy Services Segment Results
($ in millions) Pharmacy Services Segment Results 13 13 Weeks Ended February 29, 2020 13 Weeks Ended March 2, 2019 Revenues $ 1,801.1 $ 1,463.3 Cost of Revenues 1,675.5 1,357.0 Gross Profit 125.6 106.3 Selling, General and Administrative Expenses (93.8) (87.8) Loss on sale of assets, net (18.4) - Ad
Slide 14: Q4 FY 2020 Summary – Pharmacy Services Segment
• R evenues of $1.8 billion, which was an increase of $338 million, or 23%, due to an increase in our Medicare Part D revenues as we continue to grow our membership. • Adjusted EBITDA of $50.4 million was $12.6 million better than last year’s fourth quarter adjusted EBITDA of $37.8 million. Pharmacy
Slide 15: Comparable Store Sales Growth
Comparable Store Sales Growth 15 FRONT END SALES - 1.8% - 0.1% - 1.5% - 1.9% - 0.3% - 1.8% - 0.5% 0.3% - 0.6% 1.0% 1.50% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 0.1% - 0.1% 1.6% 3.1% 2.1% 2.3% 1.5% 0.1% 1.6% - 1.5% 1.1% 2.4% 0.8% 3.7% 2.7% 2.8% 5.0% Excluding cigarette and tobacco products (1) Script count growth s
Slide 16: Capitalization Table
($ in thousands) Capitalization Table 16 Secured Debt: Senior secured revolving credit facility due December 2023 $ 630,833 $ 850,931 FILO term loan due December 2023 446,954 446,082 1,077,787 1,297,013 Unsecured Guaranteed Debt : 6.125% senior secured notes due April 2023 1,145,060 1,736,508 7.5% s
Slide 17: Pro Forma Leverage Ratio
($ in thousands) Pro Forma Leverage Ratio 17 February 29, 2020 Total Debt: $ 3,105,434 Less: Cash and cash equivalents (218,180) Less: Distribution center sale proceeds (38,861) Pro Forma Net Debt $ 2,848,393 LTM Adjusted EBITDA: Retail Pharmacy Segment 370,435 Pharmacy Services Segment 167,776 LTM
Slide 18: FY 2021 Guidance
($ in thousands) FY 2021 Guidance 18 Total Revenues $ 22,500,000 $22,900,000 PBM Revenues $ 6,750,000 $ 6,850,000 Same store sales 1.50 % 2.50 % Gross Capital Expenditures $ 350,000 $ 350,000 Reconciliation of net loss to adjusted EBITDA: Net loss $ (119,000 ) $(91,000 ) Adjustments: Interest expens
Slide 19: FY 2021 Guidance (cont.)
($ in thousands, except per share amounts) FY 2021 Guidance (cont.) 19 Net loss $(119,000) $(91,000 ) Add back - income tax expense 3,000 15,000 Loss before income taxes (116,000 ) (76,000 ) Adjustments: Amortization expense 64,000 64 ,000 LIFO credit (35,000) (35,000) Restructuring - related costs
Slide 20: FY 2021 Guidance (cont.)
($ in thousands) FY 2021 Guidance (cont.) 20 Guidance Range Low High Adjusted EBITDA $ 500,000 $ 540,000 Cash interest expense (210,000) (210,000) Restructuring - related costs (60,000) (60,000) Closed store rent (30,000) (30,000) Working capital benefit 200,000 210,000 Cash flow from operations 400
Slide 21: Rite Aid on the Front Lines of the COVID-19 Crisis
• Working with the White House COVID - 19 Response Working Group to pilot new testing models . • Announcing plans to hire an additional 5,000 full and part - time associates to support store and distribution center teams . • Implementing Hero Pay and Hero Bonus programs, along with increasing our as
Slide 22: COVID-19 Crisis (cont.)
• Launching a new telehealth service RediClinic@Home to better serve patient needs . • Designating 9 a.m. to 10 a.m. as a senior shopping hour to limit exposure for customers 60 and older and offering a 30% discount to wellness+ rewards members every Wednesday in April . • Establishing social distan
Slide 23: COVID-19 – Financial Impact to Date
COVID - 19 – FINANCIAL IMPACT TO DATE • March Revenues: Front End Sales Increased 33% (excluding cigarettes and tobacco) : • Sanitizers • Wipes • Paper Products • OTC Items • March Scripts increased 8.3 % (on a 30 - day adjusted basis) • Acceleration in 90 day maintenance prescriptions . • Benefits
Slide 24: COVID-19 Impact on Outlook
COVID - 19 IMPACT ON OUTLOOK At this time, the impact of COVID - 19 on fiscal 2021 Adjusted EBITDA has not been material, as increased sales volumes in March are expected to be offset by declines in sales during the remainder of the first quarter of fiscal 2021 and the cost investments described abo
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