building a platform for growth - spartannash...(1) combined ttp includes results of the 52 weeks...

December 2016

Building a Platform for Growth

Forward Looking Statements This presentation includes “forward-looking statements” about the plans, strategies, objectives, goals or expectations of SpartanNash Company. These forward-looking statements are identifiable by words or phrases indicating that the Company is “positioned” or “poised” for or “expects” a particular result; that a particular occurrence or event has “potential” or “will” occur or be pursued or “continue” in the future; or that a development is an “opportunity,” “priority,” “strategy,” or “focus.” projections of revenue and other results and statements regarding the Company’s capital plan, strategies, expected synergies, and responses to trends are inherently forward-looking. Actual results may differ materially from stated expectations, and you should not place undue reliance on forward-looking statements. Although we expect to continue to pay a quarterly cash dividend, adoption of a dividend policy does not commit the board of directors to declare future dividends. Each future dividend will be considered and declared by the Board of Directors at its discretion.

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Who We Are

SpartanNash is the 5th Largest Distributor and

has a Platform for Continuing GROWTH!

Company Highlights

4

Military 29%

Food Distribution 42%

• Ranked #351 on the Fortune 500

• Leading consumer-centric distributor and food retailer

• Company nearly tripled sales since FY 2013 27%

25% 48%

TTP Pro-forma Sales (1): Total $8.3 billion

MilitaryRetailDistribution

$0.0$5.0

$10.0$15.0$20.0$25.0$30.0$35.0 2015 Top Distributors (2)

(sales in billions)

(1) TTP Pro-forma sales include Caito sales of $600MM as part of the Food Distribution segment. (2) Source: Supermarket News which excludes impact from recent or upcoming acquisitions, mergers and divestitures , including the Save-A-Lot

divestiture for Supervalu and AWG’s merger with Affiliated.

Expansive Footprint Platform for growth

Food Distribution covers 47 states Military Distribution offers

Worldwide solution

Investment Highlights

5

• Strong balance sheet • Return of capital to shareholders

through annual dividend of $.60 per common share - Yield of 1.7% (as of 11/30/16)

- Represents an 11.1% increase from prior

- Dividend has increased 6 years in a row

• Successful merger with Nash Finch Company: - Synergies exceeded $52MM

- Our distribution infrastructure positions us for growth

• Recently announced acquisition of Caito Foods expected to close in January of 2017

Experienced Leadership Senior team averages Over 30 years in the industry

(1) Net Long-term Debt and Adjusted EBITDA are non-GAAP financial measures, please see Adjusted EBITDA Note on page 27 and Net Long-Term Debt Note on page 28, which does not include the impact of the Caito/BRT acquisition.

Financial Stability

Net Long-term debt to Adjusted EBITDA

ratio of 2.0x(1)

Strategic Initiatives

SpartanNash Strategic Initiatives

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Improving operating efficiency by: • Completing integration of Nash Finch

operations and realization of annual synergies

- Synergies exceeded $52 million target • Rationalizing warehouse infrastructure

- Westville, IN

- Statesboro, GA

• Continuing to improve operational efficiencies in both distribution networks and retail operations

• Utilizing capital and technology to improve our distribution network and infrastructure

Increasing sales and margins by: • Participating in the consolidation of the food

industry • Continuing expansion into adjacent channels

of distribution in Food and Military Distribution

• Leveraging our distribution network to increase penetration in our traditional and non-traditional account base

• Investing in the business with an emphasis on West retail region – including a substantial rebranding of the Omaha market and introduction of loyalty and merchandising programs

• Utilizing retail presence in key markets to complement distribution

Caito Foods

Caito Overview

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• Recently announced acquisition of Caito Foods and BRT – food distributor with focus on fresh

- Annual sales in excess of $600MM - Purchase price of $217.5MM plus potential earnouts up to $12.4MM - Expected to close early January 2017 - Three facilities that distribute fresh produce and floral arrangements to retail

stores and food service wholesalers - Operates separate cold fresh cut processing facility providing:

• fresh cut fruit and vegetables, packaged salads, sandwiches and party trays - Newly constructed USDA certified kitchen facility, providing fresh/healthy ready to

eat product – expected to produce product and generate revenue in Q1 2017: • Example Products: Quiche, grilled chicken, meatloaf, pastas, pot pies, etc.

Strategic Rationale

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• Increases scale and reach with our combined distribution network - Compliments our geographic footprint

• Improves our capabilities and volume in:

- Fresh produce - Value added produce - Cooked ready-to-eat foods

• Diversifies and increases the size of our

customer base

• Deepens relationships with existing customers - Ability to deliver a broader assortment

of products to customers

• Caito’s management team adds to our expertise and experience in Fresh

5-6%

6-7%

3-4%

2-3%

Food Distribution

Food Distribution - Competitive Landscape

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• Full service value-added distributor of choice to 2,100 independent grocery stores - Offering comprehensive private brand program with 7,100 products - Providing market-leading products and best-in-class services

• Covering 47 states

Food Distribution

13

Key Food Distribution Initiatives:

• Leveraging our network to allow us to gain new customers

• Expanding product offering and relationships with existing accounts

• Increasing private brand penetration

• Enhancing customer service

• Implementing productivity and efficiency initiatives

• Pursuing strategic acquisitions and tuck in opportunities

Military Distribution

Military Food Distribution

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• Dedicated distributor for the Military Resale System offering worldwide solution with global partner

Europe Asia

Sales to Commissaries


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• Premier full line, food and related product supplier for military commissaries (supermarkets) and exchanges for the U.S. government

• Approximately 600 distribution contracts with packaged goods companies - Distribute products to 169 commissaries located within the Continental US and in Europe

- Serve over 440 Exchange locations worldwide

SpartanNash $2.2 B

Source: DeCA reported sales by Commissary and Company Data

All Other $2.2 B


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Key Military Initiatives:

• Partnering with DeCA to recommend solutions and efficiency initiatives

• Targeting additional lines of supply with military and other government agencies

• Leveraging worldwide network and export capabilities for non-military applications

• Implementing supply chain optimization

Retail

Retail

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• 158 supermarkets offering value and a quality shopping experience - Average size of 42,000 sq ft and sales of $13 million per year - 29 fuel centers and 91 locations with pharmacies

Retail

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Key Retail Initiatives:

• Deploying capital, merchandising, and marketing efforts - Store remodels and rebranding Omaha stores - Loyalty and merchandising programs - Pharmacy program - Fuel Rewards

• Leveraging Yes Rewards loyalty data with strategic partners - Improve targeting - Customer segmentation

• Enhancing produce offering

• Focusing on key specialty categories

- Pet

- Craft beer

- Natural and organic

- Wellness

- Food service

• Undertake opportunistic roll-ups

Financial Highlights

Sales

22

In Millions

(1) Combined TTP includes results of the 52 weeks ended December 28, 2013 of the combined operations of Spartan Stores and Nash Finch based on each company’s historical results.

(2) FY 2014 excludes the benefit of $135.2 million of sales attributable to the 53rd week.

Combined TTP (1) (2)

$7,757 $7,781 $7,652

$5,884 $5,906

$5,000

$5,500

$6,000

$6,500

$7,000

$7,500

$8,000

Dec. 2013FY 2014 FY 2015 Q3YTD FY 2015 Q3YTD FY 2016

$75 $111 $123 $90 $84

$49 $21

$18

$16 $29

$50

$60

$70

$80

$90

$100

$110

$120

$130

$140

$150

TTP Dec. 2013 FY 2014 FY 2015 Q3YTD FY 2015 Q3YTD FY 2016

Adjustments to Operating Earnings (4)

Operating Earnings

In Millions

23

(1) TTP includes results of the 52 weeks ended December 28, 2013 of the combined operations of Spartan Stores and Nash Finch based on each company’s historical results. (2) TTP Operating earnings were negatively impacted by $49 during the period, predominantly as a result of merger related expenses and asset impairment/restructuring charges. (3) FY 2014 excludes the benefit of the 53rd week, which was $3.7 million. (4) Adjusted Operating Earnings is a non-GAAP financial measure, please see Adjusted Operating Earnings Note on Slide 26.

(1,2)

Operating Earnings/Adjusted Operating Earnings (4)

(3)

$124

$132 $141

Adjusted Operating Earnings (4)

$106 $113

(2) TTP Dec. 2013 (1)

In Millions

24

(1) TTP includes results of the 52 weeks ended December 28, 2013 of the combined operations of Spartan Stores and Nash Finch based on each company’s historical results.

(2) FY 2014 excludes the benefit of the 53rd week, which was $3.7 million. (3) Adjusted EBITDA is a non-GAAP financial measure, please see Adjusted EBITDA Note on page 27.

Adjusted EBITDA (3)

$207

$231 $230

$180 $180

$100

$120

$140

$160

$180

$200

$220

$240

FY 2014 FY 2015 Q3 YTD FY 2015 Q3 YTD FY 2016

Balance Sheet & Operating Metrics As of October 8, 2016:

• TTP Sales of $7.6 billion and TTP Adjusted EBITDA(1) of $230 million

• $200 million of Strategic Availability under revolving credit facility

• Net long-term debt to Adjusted EBITDA of 2.0-to-1.0

• Return of capital to shareholders through annual dividend of $0.60 per common share with a yield of 1.7%, dividend rate has increased by 131% over the past 5 years

Strong cash flow and access to capital will support operational and strategic initiatives

25

(1) Please see Adjusted EBITDA Note on page 27 and Net Long-Term Debt Note on page 28.

Adjusted Operating Earnings Note (000’s)

26

Note: Adjusted operating earnings is a non-GAAP operating financial measure that the Company defines as operating earnings (loss) plus or minus adjustments for items that do not reflect the ongoing operating activities of the Company and costs associated with the closing of operational locations. The Company believes that adjusted operating earnings provide a meaningful representation of its operating performance for the Company. The Company considers adjusted operating earnings as an additional way to measure operating performance on an ongoing basis. Adjusted operating earnings is meant to reflect the ongoing operating performance of its military, food distribution and retail operations; consequently, it excludes the impact of items that could be considered “non-operating” or “non-core” in nature, and also excludes the contributions of activities classified as discontinued operations. Because adjusted operating earnings is a performance measure that management uses to allocate resources, assess performance against its peers and evaluate overall performance, the Company believes it provides useful information for investors. In addition, securities analysts, fund managers and other shareholders and stakeholders that communicate with the Company request its operating financial results in adjusted operating earnings format. Adjusted operating earnings is not a measure of performance under accounting principles generally accepted in the United States of America, and should not be considered as a substitute for operating earnings (loss), cash flows from operating activities and other income or cash flow statement data. The Company’s definition of adjusted operating earnings may not be identical to similarly titled measures reported by other companies.


(2) 53 weeks ended January 3, 2015 excludes operating earnings benefit of $3,673 attributable to the 53 rd week .

FY 2014 FY 2015 Q3YTD FY 2015 Q3YTD FY 2016Combined

TTP (1)53 Weeks Ending(2)

52 Weeks Ending

40 Weeks Ending

40 Weeks Ending

12/28/2013 1/3/2015 1/2/2016 10/10/2015 10/8/2016Unaudited Unaudited Unaudited

Operating Earnings $74,886 $114,846 $122,875 $89,871 $84,147Add (Subtract):

Restructuring charges (gains) and asset impairment 19,622 6,166 8,802 7,762 23,714 Merger integration and acquisition 27,310 12,675 8,433 7,252 4,237 Stock compensation modifications 4,174 - - - - Pension settlement accounting 621 1,578 - - - Incremental incentive compensation on tax planning benefit - 900 549 - - Gain on termination of supply agreement (2,667) - - - - Fees and expenses related to tax planning strategies - - 569 569 - Other unusual items 10 - - 371 839

Adjusted operating earnings, including 53rd week $123,956 $136,165 $141,228 $105,825 $112,93753rd week - (3,673) - - -

Adjusted operating earnings, excluding 53rd week $123,956 $132,492 $141,228 $105,825 $112,937

Adjusted EBITDA Note (000’s)

27

Notes: Consolidated Adjusted EBITDA is a non-GAAP operating financial measure that we define as operating earnings plus depreciation and amortization, and other non-cash items including deferred (stock) compensation, the LIFO provision, as well as adjustments for unusual items that do not reflect the ongoing operating activities of SpartanNash and costs associated with the closing of operational locations. We believe that Adjusted EBITDA provides a meaningful representation of our operating performance for SpartanNash as a whole and for our operating segments. We consider Adjusted EBITDA as an additional way to measure operating performance on an ongoing basis. Adjusted EBITDA is meant to reflect the ongoing operating performance of our military, food distribution and retail operations; consequently, it excludes the impact of items that could be considered “non-operating” or “non-core” in nature, and also excludes the contributions of activities classified as discontinued operations. Because Adjusted EBITDA is a performance measure that management uses to allocate resources, assess performance against its peers, and evaluate overall performance, we believe it provides useful information for our investors. In addition, securities analysts, fund managers and other shareholders and stakeholders that communicate with us request our operating financial results in Adjusted EBITDA format. Adjusted EBITDA is not a measure of performance under accounting principles generally accepted in the United States of America, and should not be considered as a substitute for net earnings, cash flows from operating activities and other income or cash flow statement data. Our definition of Adjusted EBITDA may not be identical to similarly titled measures reported by other companies.

Combined TTP (1)

FY 2014 53 Weeks Ending (2)

FY 2015 52

Weeks Ending

Q3YTD FY 2015

40 Weeks Ending

Q3YTD FY 2016

40 Weeks Ending

12/28/2013 1/3/2015 1/2/2016 10/10/2015 10/8/2016Consolidated Net earnings $23,221 $58,596 $62,710 $45,981 $43,982Plus: Discontinued operations 727 524 456 21 268 Income taxes 17,450 31,329 37,093 27,444 25,635 Debt Extinguishment 8,289 0 1,171 0 0 Non-operating expense 25,199 24,397 21,445 16,425 14,262Operating earnings $74,886 $114,846 $122,875 $89,871 $84,147

Plus: Depreciation and amortization 80,120 86,994 83,334 64,960 58,931 LIFO expense (income) (2,347) 5,604 (1,201) 3,195 2,130 Provision for asset impairments and exit costs 20,660 6,166 8,802 7,762 23,714 Other unusual items (2,823) 2,478 (530) (409) 3 Merger fees 27,310 12,675 8,433 7,252 4,237 Fees and expenses related to tax strategies 0 0 569 569 0 Non-cash stock compensation & other charges 9,212 5,679 7,240 6,470 7,010Adjusted EBITDA $207,018 $234,442 $229,522 $179,670 $180,172 53rd week 0 (3,673) 0 0 0Adjusted EBITDA, excluding 53rd week $207,018 $230,769 $229,522 $179,670 $180,172


(2) 53 weeks ended January 3, 2015 excludes EBITDA benefit of $3,673 attributable to the 53rd week .

Net Long-Term Debt Note (000’s)

28

Notes: Total net long-term debt is a non-GAAP financial measure that is defined as long term debt and capital lease obligations plus current maturities of long-term debt and capital lease obligations less cash and cash equivalents. The Company believes investors find the information useful because it reflects the amount of long term debt obligations that are not covered by available cash and temporary investments.

10/10/2015 1/2/2016 10/8/2016Current maturities of long-term debt and capital lease obligations 21,993 19,003 18,998 Long-term debt and capital lease obligations 516,704 467,793 475,365 Total debt 538,697 486,796 494,363 Cash and cash equivalents (8,510) (22,719) (26,398) Total net long-term debt 530,187 464,077 467,965

Reconciliation of Long-Term Debt and Capital Lease Obligations to Total Net Long-Term Debt and Capital Lease Obligations(A Non-GAAP Financial Measure)

(In thousands)(Unaudited)

building a platform for growth - spartannash...(1) combined ttp includes results of the 52 weeks...

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