SpartanNash Company

Good morning and welcome to the Spartan Ash Company third quarter 2022 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw a question, please press star then two. Please note, this event is being recorded. I will now turn the conference over to Kaylee Campbell. Please go ahead.

Good morning and welcome to the Spartan Ash Company third quarter 2022 earnings conference call. On the call today from the company are President and Chief Executive Officer Tony Sarsom and Executive Vice President and Chief Financial Officer Jason Monaco. By now, everyone should have access to the earnings release, which was issued this morning at approximately 7 a.m. Eastern Time. For a copy of the earnings release as well as the company's supplemental earnings presentation, please visit Spartan Ash's website at www.spartanash.com forward slash investors. This call is being recorded and a replay will be available on the company's website. Before we begin, the company would like to remind you that today's discussion was will include a number of forward-looking statements. If you will refer to Spartan Ash's earnings release from this morning, as well as the company's most recent SEC filing, you will see a discussion of factors that could cause the company's actual results to differ materially from these forward-looking statements. Please remember, Spartan Ash undertakes no obligation to update or revise these forward-looking statements. The company will also make a number of references to non-GAAP financial measures. The company believes these measures provide investors with useful perspective on the underlying growth trends of the business, and it has included in the earnings release a full reconciliation of non-GAAP financial measures to the most comparable GAAP measures, which can be found on Spartan Ash's website at www.spartanash.com forward slash investors. It is now my pleasure to turn the call over to Tony.

Thank you, Kaylee, and good morning, everyone. We're coming off an absolutely epic week at Spartan Ash. On Monday, we took our people-first culture up a notch with a big Halloween celebration. On Wednesday, we hosted our first Investor Day in New York. I'd like to thank those of you who attended. It was a pleasure getting to know you better and sharing more about our long-range plan and company strategy. Last Thursday, we had the opportunity to ring the NASDAQ opening bell. We came prepared with our own cowbells to ring, and the energy in the room was electric. We also featured photos of associates from all levels of the company on the seven-story NASDAQ tower in Times Square. Then on Friday, we celebrated eight female leaders from Spartan Nash at the Top Women in Grocery Awards. And this week, we salute our military heroes on Veterans Day. We are proud to employ many veterans within Spartan Nash and to serve our military commissaries and exchanges. Thank you to those of you who have served our great nation. We are forever grateful for your service. Now, turning to our long-term goals. We have driven significant shareholder value since the start of our turnaround, and we are building on this momentum. We have a clear and credible strategy, detailed programs in place, and a purpose-built leadership team. Our entire team is energized about continuing to execute on our winning recipe and the path to achieving our long-term targets. Despite significant macro headwinds, we expect to achieve more than $300 million in adjusted EBITDA by 2025. This goal will be achieved through long-term value creation from continued organic growth, the successful supply chain transformation, our recently launched merchandising transformation, and the work we are doing around our brand identity and marketing innovation. Additionally, we continue to evaluate inorganic opportunities, which would be incremental to our adjusted EBITDA target. Now, jumping into our results. This morning we announced our full third quarter results following last week's preliminary release. Compared to prior year, we increased both net sales and adjusted EBITDA by approximately 11%. In the wholesale segment, which now includes what we historically reported as food distribution and military, we grew the top line by more than 11% and adjusted EBITDA by more than 30% compared to prior year. We are really pleased to see these significant improvements in cost rates realized from our supply chain transformation. At the end of the quarter, we reached an impressive 97% on-time delivery rate year-to-date. And compared to the prior year quarter, wholesale spill rate improved by 4%, while throughput rate improved by a stunning 8.5%. As of the end of the quarter, we secured $24 million in run rate cost savings from our supply chain transformation. We have made great progress in achieving our transformational goal of $25 to $35 million in cost savings by the end of this year. In retail, our comparable store sales remain strong, increasing 8% for the quarter. Our gross margin expanded sequentially by 88 basis points compared to the second quarter. And we are pleased that we delivered total retail year-over-year unit share growth, fueled in part by our strong own-brand performance with share growth both in dollars and units. Building on our marketing insights, our retail team has developed a detailed plan to ensure consistency of execution and a local hometown experience every time shoppers visit our stores. Our strategy includes added investments in our people, differentiated above and beyond customer service, a better in-stock position, and new shopper loyalty benefits. Year-over-year growth in our fresh volume has outpaced the rest of the store. We are committed to the best in fresh and recently rolled out our 200% money-back guarantee program. Our recently renovated D&W Fresh Market stores bring unique product offerings to the Michigan-based upmarket banner. These modern stores offer a terrific shopping experience and are materially outpacing our company average. Now more than ever, we remain laser-focused on our mission of delivering the ingredients for a better life. We are committed to providing food solutions for our wholesale and retail customers during this unprecedented inflationary environment. Our retail shoppers and the consumers served by our independent customers are eating more at home while continuing to seek indulgent food experiences. Our own brands offer a great option to satisfy these indulgent cravings while not emptying shoppers' wallets. Our marketing innovation continues to drive results, and our team is just getting started. As we build our private label programs, we are unlocking even more opportunities to help our independent retail customers and our own shoppers combat inflation. Now, I want to touch on our merchandising transformation, which is a key component to reaching our 2025 goals. Our merchandising team's vision is a customer-led focus to offer the ingredients for a better life, which resonates with our winning recipe. The key pillars include products and services customers can't live without, unbeatable value, and sustainable growth. I'd like to share a little about what we are doing to offer unbeatable value. As a food solutions company, we are focused on combating rising food costs, whether the customer is buying at a regular price or on promotion. Our merchandising team has upgraded their data-driven approach to comparing vendor cost increases with the underlying input costs based on commodity markets and other industrial benchmarks. Our methodical cost management helps drive growth and provide value for our wholesale and retail customers. We are providing an opportunity for our vendors to join us on this sustainable growth journey, and I'm happy to report that many leading vendors are partnering with us to find creative solutions during this inflationary environment. We look forward to providing you with regular updates as we build on our merchandise and transformation. I am confident that the pillars of this program, based on market-leading capabilities, will drive both top and bottom line results. Before turning the call to Jason, I wanted to highlight our recent guidance increase for fiscal 2022. Our adjusted EBITDA range is now $237 to $242 million, growing at approximately 12% versus the prior year. The updated guidance was driven by the ongoing benefits we are realizing from the supply chain transformation and our year-to-date results. Looking forward, we remain confident that we have the right team in place to execute on our winning recipe and drive growth both near and long term. And now I'll turn the call over to Jason, who will walk through the quarterly financials in greater detail.