Roundy’s, Inc. (“Roundy’s”) (NYSE: RNDY - News), a leading grocer in the Midwest, today reported financial results for the first quarter ended March 31, 2012.
•Net sales increased 2.4% to $938.2 million for the first quarter
•Adjusted net income, which excludes the impact of debt extinguishment and one-time IPO expenses, grew 20.4% to $10.6 million, or $0.28 diluted earnings per common share, for the first quarter
•Adjusted EBITDA decreased 4.2% to $48.7 million for the first quarter
•Raised approximately $111.9 million of proceeds in initial public offering and reduced total debt by approximately 14.4% to $702.2 million
“Our first quarter results reflect the strength of our overall business strategy,” said Robert Mariano, Roundy’s chairman, president and chief executive officer. “Despite continued weakness in consumer discretionary spending, which negatively impacted our same store sales, we were pleased with our total sales growth and solid performance in the Chicago market. In addition, our focus on maintaining an efficient operating structure led to strong cost controls during the quarter. While the economic environment in many of our markets remains challenging, we believe our commitment to providing high quality products and a differentiated customer experience at a great value for our customers will continue to serve our business well.”
Financial Results for First Quarter of 2012
Net sales for the first quarter of 2012 were $938.2 million, an increase of $22.2 million, or 2.4%, from $916.0 million for the first quarter of 2011. Same store sales decreased 2.1% from the prior year due to continued weakness in the consumer environment and the effect of competitive store openings. As anticipated, results were also negatively affected by lower sales during the 2012 pro football postseason playoffs compared to 2011 when the Green Bay Packers appeared in the Super Bowl and the quarterly calendar shift of the New Year’s holiday, when sales are typically slow, which fell in first quarter this year while last year it fell in the fourth quarter of 2010.
Gross profit for the first quarter of 2012 increased 0.6% to $256.8 million, from $255.3 million in the first quarter of 2011. Gross profit as a percentage of net sales was 27.4% for the first quarter of 2012, compared to 27.9% in the first quarter of 2011. The decrease in gross profit as a percentage of net sales primarily reflects the impact of increased promotion and pricing activity.
Operating and administrative expenses for the first quarter of 2012 increased to $226.1 million, from $222.4 in the same period last year. Operating and administrative expenses as a percentage of net sales decreased to 24.1% in the first quarter of 2012, from 24.3% in the same period last year, due to lower maintenance and utility costs resulting from the unseasonably mild winter this year and reduced store closing costs.
For the first quarter of 2012, adjusted net income was $10.6 million, or $0.28 diluted earnings per common share, compared to $8.8 million, or $0.29 diluted earnings per common share, for the first quarter of 2011. Adjusted net income for the first quarter of 2012 excludes an $8.4 million after-tax charge, or $0.22 per diluted common share, for the early extinguishment of debt and one-time IPO expenses. Reported net income for the first quarter of 2012 was $2.3 million, or $0.06 diluted earnings per common share.
Adjusted EBITDA for the quarter ended March 31, 2012 was $48.7 million, compared to $50.8 million in the first quarter of 2011. The decrease was primarily due to the effect of a more challenging economic environment and a difficult year-over-year sales comparison, which resulted in lower same store sales and a more promotional market that reduced the Company’s gross margin rate.
During the first quarter, the Company opened one new store, a Mariano’s Fresh Market in the Chicago area, and relocated one store in Wisconsin. The Company does not anticipate opening any new stores during the fiscal 2012 second quarter.
Balance Sheet and Cash Flow
On February 13, 2012, Roundy’s completed an initial public offering (“IPO”) and raised approximately $111.9 million in net proceeds through the sale of 14.7 million shares of common stock. The Company used the proceeds from the offering, together with proceeds from a new senior credit facility to repay all of its outstanding borrowings and other amounts owing under its existing credit facilities. The new senior credit facility consists of a $675.0 million term loan and a $125.0 million revolving credit facility, which will expire in February 2019 and February 2017, respectively.
Net cash used in operating activities for the first quarter was $6.9 million, compared to $47.2 million provided by operating activities during the same period last year. The decrease was due primarily to the unusual timing of payments for accounts payable in the first quarter of 2011 as a result of vendor payments that were made near the end of 2010 rather than in early 2011, as well as increased inventory levels related to the earlier timing of the Easter holiday as compared to 2011.
Subject to declaration by its board of directors, the Company expects to initiate a quarterly dividend of approximately $0.23 per share on all outstanding shares of common stock during its second fiscal quarter. The Company currently intends to pay regular quarterly dividends; however, the declaration of such future dividends is subject to the final determination of the Company's board of directors.