Safeway — Safeway Investor Conference 2011
21 slides from Safeway's conference presentation, Mar 8, 2011
Slide 1: Reconciliations and Financial Slides from the Safeway Investor Conference
Reconciliations and Financial Slides from the Safeway Investor Conference March 8, 2011 Exhibit 99.2
Slide 2: Safe Harbor Language
This presentation may contain forward-looking statements. Such statements may relate to topics such as sales, margins, earnings estimates, guidance, free cash flow, cash flow available for return to shareholders / debt paydown, capital spending, and other related subjects. These statements are based
Slide 3: Reconciliation of Diluted EPS
Reconciliation of Diluted EPS Low High Diluted earnings per share $ 1.45 $ 1.65 Net interest expense (0.01) (0.01) Share repurchase (0.06) (0.06) Tax effect of Canadian dividend 0.22 0.22 Diluted earnings per share, before Canadian dividend $ 1.60 $ 1.80 2011G
Slide 4: Reconciliation of GAAP Cash Flow Measure to Free Cash Flow
$ Millions Reconciliation of GAAP Cash Flow Measure to Free Cash Flow* (1) Without repatriation Low High Low High Net cash flow from operating activities 1,850 $ 1,950 $ 1,950 $ 2,050 $ 1,850 $ 2,549 $ 2,251 $ 2,190 $ 2,175 $ 1,881 $ Decrease (increase) in payables related to third party gift cards,
Slide 5: Reconciliation of GAAP Cash Flow Measure to Free Cash Flow
$ Millions Reconciliation of GAAP Cash Flow Measure to Free Cash Flow Low High Low High Low High Low High Net cash flow from operating activities 2,000 $ 2,200 $ 2,200 $ 2,400 $ 2,300 $ 2,500 $ 2,400 $ 2,600 $ Net cash flow used by investing activities (1,000) (1,000) (1,100) (1,100) (1,100) (1,100)
Slide 6: Reconciliation of Operating Profit Margin Basis Point Change Excluding Fuel & Unusual Items
Reconciliation of Operating Profit Margin Basis Point Change Excluding Fuel & Unusual Items Low High * Low High NM (5) (574) (11) Unusual items: Texas store closures (29) Goodwill impairment charges (483) Impairment charges (incl. Dominick's) (13) Labor buyout and health and welfare contributions (1
Slide 7: Reconciliation of Net (Loss) Income to Adjusted EBITDA (Interest Coverage)
$ Millions Reconciliation of Net (Loss) Income to Adjusted EBITDA (Interest Coverage) Net income (loss) attributable to Safeway Inc. $589.8 ($1,097.5) $965.3 $888.4 $870.6 $561.1 $560.2 ($169.8) Add (subtract): Income taxes 290.6 144.2 539.3 515.2 369.4 287.9 233.7 310.9 Interest expense 298.5 331.7
Slide 8: Reconciliation of Net Cash Flow from Operating Activities to Adjusted EBITDA
Reconciliation of Net Cash Flow from Operating Activities to Adjusted EBITDA $ Millions Net cash flow from operating activities $1,849.7 $2,549.7 $2,250.9 $2,190.5 $2,175.0 $1,881.0 $2,226.4 $1,609.6 Add (subtract): Income taxes 290.6 144.2 539.3 515.2 369.4 287.9 233.7 310.9 Interest expense 298.5
Slide 9: Reconciliation of Gross Margin BP Change Excluding Fuel
Reconciliation of Gross Margin BP Change Excluding Fuel Basis point (decrease) increase over prior year: Basis point change in gross margin (34) (36) (8) (11) Fuel (59) Basis point change in gross margin, excluding fuel (7) (35) (26)
Slide 10: Reconciliation of Gross Margin BP Change Excluding Fuel
Reconciliation of Gross Margin BP Change Excluding Fuel Basis point (decrease) increase over prior year: Q1 Q2 Q3 Q4 Basis point change in gross margin (31) (32) (13) (56) Fuel Basis point change in gross margin, excluding fuel (5) (31) - Burnaby warehouse closure Basis point change in gross margin,
Slide 11: Reconciliation of Operating and Administrative Expense Margin BP Change Excluding Fuel
Reconciliation of Operating and Administrative Expense Margin BP Change Excluding Fuel Basis point increase (decrease) over prior year: Q1 Q2 Q3 Q4 Basis point change in operating and administrative expense margin (44) Fuel Basis point change in operating and administrative expense margin, excluding
Slide 12: Reconciliation of Operating & Administrative Expense BP Change Excluding Fuel and Unusual Items
Excluding Fuel and Unusual Items Reconciliation of Operating & Administrative Expense BP Change Basis point (decrease) increase over prior year: (38) (29) (93) (53) Unusual items: Texas store closures (29) Impairment charges (incl. Dominick's) Labor buyout and health and welfare contributions (7) St
Slide 13: 2011 Guidance – Before Canadian Dividend
2011 Guidance – Before Canadian Dividend Earnings per Share $1.60 – $1.80 ID Sales 1.0% – 1.5% Operating Profit Margin Change 1,2 flat to slightly positive Cash Capital Expenditures ~$1.0B Free Cash Flow 1,3 $0.85B – $0.95B ¹ See website for reconciliation ² X-Fuel ³ Excludes Blackhawk gift card pay
Slide 14: 2011 Guidance – Post Repatriation
2011 Guidance – Post Repatriation EPS Without repatriation $1.60 - $1.80 With repatriation $1.45 - $1.65 Free Cash Flow Without repatriation $0.85B - $0.95B With repatriation $0.75B - $0.85B Cash Flow Available for Return to Shareholders / Debt Paydown Without repatriation $0.85B - $0.95B With repat
Slide 15: 2010 Results
2010 Results Original Revised Actual ID Sales X-Fuel 0.0% - 1.0% (1.0)% - (1.5)% (2.0)% Inflation / (Deflation) 0.4% NA (1.2)% Operating Profit Margin Change (X-Fuel) (10) – 5bps NA (50)bps Capital Expenditures $0.9 - $1.0B ~ $0.9B $838M Free Cash Flow $0.09 - $1.1B NC $1,058 Earnings Per Share $1.6
Slide 16: Consistent Sales Improvement
Consistent Sales Improvement 0.3 (0.8) (2.0) (2.5) (3.1) (4.1) (0.7) (1.5) (3.0) -5.0 -4.0 -3.0 -2.0 -1.0 0.0 1.0 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 8 weeks ID Sales X-Fuel – Total Company
Slide 17: Lifestyle Stores Completed
Lifestyle Stores Completed 2011F New Remodel
Slide 18: Capital Spending as a % of Sales
Capital Spending as a % of Sales 3.4% 3.6% 4.2% 4.2% 3.6% 2.1% 2.0% 2.4% 2.3% 2.4% 2.3% 2.2% 2.3% '04 '05 '06 '07 '08 '09 '10 '11F '12F '13F '14F '15F '10- '15 $1.2 $1.4 $1.7 $1.8 $1.6 $0.9 $0.8 $1.0 $1.0 $1.1 $1.1 $1.1 $ Billions 12 year average = 2.9%
Slide 19: Free Cash Flow and Capital Spending
0.5 0.4 0.4 0.7 1.5 1.0 1.3 - 1.5 1.2 - 1.4 1.1 - 1.3 1.0 - 1.2 0.75 - 0.85* 2011F 2012F 2013F 2014F 2015F Free Cash Flow $ Billions 1.4 1.7 1.7 1.6 0.9 0.8 1.0 1.0 1.1 1.1 1.1 Capital Spending See website for reconciliation *Includes tax on Canada dividend Excludes Blackhawk gift card payables, net
Slide 20: Adjusting Quarter Earnings Per Share
Adjusting th Quarter Earnings Per Share – Proper Adjustment To Item Analyst Normal Last Year Comments Tax Rate (3) ¢ (3) ¢ (5) ¢ Property Gain (5) (3) (4) Integral to business Property Impairment - (1) LIFO (5) (3) Unprecedented deflation Currency (2) (1) (1) Casa Ley (2) - (1) Subtotal (17) ¢ (9) ¢
Slide 21: Safeway
SAFEWAY (9)