Safeway — Investor Presentation (December 2008)
17 slides from Safeway's investor presentation, Dec 4, 2008
Slide 1: Safe Harbor Language
This presentation may contain forward-looking statements. Such statements may relate to topics such as sales, margins, earnings growth, earnings estimates, guidance, free cash flow, operating profit, operating improvements, capital spending, total debt and debt reduction, Lifestyle stores, and other
Slide 2: Reconciliation of Net Income to Adjusted EBITDA (Interest Coverage)
$ Millions 7.6x $2,953.3 8.9 (8.7) - - 27.1 48.4 13.9 1,071.2 388.9 515.2 $888.4 Add (subtract): - - - 9.0 Dividend received from unconsolidated affiliate 729.1 - - - Goodwill impairment charges 7.1 (12.6) (15.8) (21.1) Equity in (earnings) losses of unconsolidated affiliates $2,537.5 $2,111.3 $2,30
Slide 3: Reconciliation of Net Cash Flow from Operating Activities to Adjusted EBITDA
Reconciliation of Net Cash Flow from Operating Activities to Adjusted EBITDA $Millions - - - - (5.3) Amortization of deferred finance cost - - - - 38.3 Excess tax benefit from exercise of stock options 12.1 15.1 18.1 29.2 33.0 Contribution to pension plans $2,953.3 (6.9) (45.6) 42.3 5.8 (72.1) (130.
Slide 4: Reconciliation of Net Income to Adjusted EBITDA (Interest Coverage)
$ Millions 8.4x $3,088.4 - 3.1 37.7 55.6 30.2 1,114.0 366.6 552.6 $928.6 (A+B-C) Rolling Four Quarters Sept 6, 2008 Add (subtract): 8.9 - 8.9 Dividend received from unconsolidated affiliate (10.5) 1.3 (8.7) Equity in loss (earnings) of unconsolidated affiliate $1,981.2 $2,116.3 $2,953.3 Adjusted EBI
Slide 5: Reconciliation of Net Cash Flow from Operating Activities to Adjusted EBITDA
$ Millions - (6.4) (130.8) (137.2) Deferred income taxes (5.1) (3.2) (6.9) (5.0) Other $3,088.4 118.7 21.3 (10.9) 35.0 (80.2) 5.2 (5.0) 366.6 552.6 $2,227.3 (A+B-C) Rolling Four Quarters Sept 6, 2008 Add (subtract): 19.4 (1.6) 42.3 Gain (loss) on property retirements and lease exit costs, net 0.6 (1
Slide 6: Reconciliation of EPS
Reconciliation of EPS As Adjusted for Unusual Items *Adjusted for a two-for-one stock split effected February 25, 1998 and a two-for-one stock split effected January 30, 1996. 2008G Low High EPS as reported* $0.09 $0.25 $0.49 $0.67 $0.97 $1.12 $1.59 $1.88 $2.13 $2.44 ($1.77) ($0.38) $1.25 $1.25 $1.9
Slide 7: Reconciliation of Gross Margin BP Change Excluding Fuel
Reconciliation of Gross Margin BP Change Excluding Fuel (11) (57) Basis point change in gross margin, excluding fuel Fuel Basis point change in gross margin Basis point (decrease) increase over prior year: 36 Weeks Ended Sept. 6, 2008
Slide 8: Reconciliation of Operating & Administrative Expense BP Change
Excluding Fuel and Unusual Items (13) - - - - - (29) (26) - - - - - (60) Fuel (29) (22) - - Vons strike (9) - (7) Labor buyout and health and welfare contributions - - (15) - Stock option expense (59) (36) Basis point change in operating and administrative expense, excluding fuel and unusual items (
Slide 9: Reconciliation of GAAP Cash Flow Measure to Free Cash Flow
$ Millions Reconciliation of GAAP Cash Flow Measure to Free Cash Flow* *Excludes cash flow from payables related to third-party gift cards, net of receivables. Cash from the sale of third-party gift cards is held for a short period of time and then remitted, less Safeway's commission, to card partne
Slide 10: Reconciliation of Operating Profit Margin Basis Point Change
(13) (11) (204) Goodwill impairment charges High (5) Low High Low Fuel impact Vons strike (15) Labor buyout and health and welfare contributions Stock option expense (50) Operating profit margin, excluding fuel and unusual items (77) Other impairment charges (including Dominick’s) (29) Texas store c
Slide 11: 2008 Guidance
2008 Guidance ID Sales X-Fuel 3.0% - 3.2% 1.0% - 2.0% ² Operating Margin 15 - 35 bps NC Improvement X-Fuel Cash Capital $1.70 - $1.75B $1.60B Expenditures Free Cash Flow ¹ $500 - $700M NC Earnings per Share $2.25 - $2.35 NC Original Revised Excludes Blackhawk Gift Card payables, net of receivables R
Slide 12: Safeway
SAFEWAY (9.
Slide 13: Financial Guidance For 2009
Financial Guidance For 2009 EPS $2.34 - $2.44 X-Fuel ID sales 2.0% - 3.0% Operating profit margin change 5 - 20 bps Cash capital spending ~ $1.2B Free cash flow $1.0 - $1.2B Excludes Fuel Excludes BHN Gift Card payables, net of receivables See website for reconciliation
Slide 14: Rollout of Lifestyle Stores
Rollout of Lifestyle Stores '03 '04 '05 '06 '07 '08E '09F '10F % of Stores Completed 1,024 1,280 1,425 1,575
Slide 15: Current ID Results for Lifestyle Stores
Current ID Results for Lifestyle Stores 1st Yr 2nd Yr 3rd Yr 4th Yr Non- LS Store Count Lifestyle Non-Lifestyle Lifestyle Sales Change by Year 35% 65% Indexed Adj. for competitive openings Yr sales vs. Proforma Base, Yr - Yr Prior Year Yr 2 - Yr 4 excluding Grand opening Promo Period Data Incl thru
Slide 16: Free Cash Flow and Capital Spending
1.6 - 1.8 1.4 - 1.6 1.2 - 1.4 1.0 - 1.2 0.5 - 0.7 0.4 0.4 0.6 2008G 2009G 2010F 2011F 2012F Free Cash Flow $ Billions 1.4 1.7 1.7 1.6 1.2 1.2 1.2 1.2 Capital Spending See website for reconciliation Excludes Blackhawk Gift Card payables, net of receivables
Slide 17: Total Debt
Total Debt $ Billions $4.5 - $4.7 $5.4 $8.4 $5.7 $5.9 $6.4 $7.8 $6.8 2008E 2009F 7-year Potential Debt Reduction $3.7B - $3.9B