SpartanNash Company

Welcome to the Spartan Nash Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. I would now like to turn the call over to Kaylee Campbell, Head of Investor Relations.

Good morning, and welcome to the Spartan Nash Company Second Quarter 2023 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.spartannash.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 will include a number of forward-looking statements. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in the 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 filings, 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 that all forward-looking statements made today reflect our current expectations only, and 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 certain 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. And now, it is my pleasure to turn the call over to Tony.

Thank you, Kaylee, and good morning, everyone. First, I want to thank our independent grocery customers, suppliers, and analysts who recently attended our largest ever Food Solutions Expo. More than 2,000 industry folks gathered for three days of networking, educational sessions, model store tours, and auctions. Attendees got to sample our new, fresh, and finest upscale private label offerings. They saw a demonstration of our autonomous in-stock scanning robot powered by Simbay Robotics. And we instituted a new awards program for our top suppliers. Those 10 companies were presented with a Spartan Nash Impact Award for the ways they partnered with us to create a terrific customer and shopper experience. We also celebrate our fastest growing customers and our customers who are going above and beyond to give back to their communities. We did so with our new Vision Awards program. Our vision of seeing a day when our customers say, I can't live without them, really came to life at the Expo. Speaking of customers, You may have seen in our earnings release this morning that we are refreshing our go-to-market strategy. This plan builds on our signature strength of being the most customer-focused, innovative food solutions company. Along with providing our customers with enhanced service, the plan is expected to contribute $20 million in run rate cost savings starting later this year. I will get into the specifics of this program in a few minutes. Right now, I want to highlight the progress we are making on our strategic plan which demonstrates our strong turnaround story. We are energized about how the plan incorporates long-term value creation through our transformational initiatives and related margin expansion opportunities. These initiatives, our supply chain transformation, merchandising transformation, and marketing innovation continue to gain momentum. In fact, we expect to realize more than 50% of the total growth benefits from our transformational initiatives by the end of this year. This progress gives us confidence in achieving our long-term target of more than 40% increase in adjusted EBITDA to over $300 million by fiscal 2025. Turning to the current year, I'm very proud of our team for delivering solid results in the first half of 2023. Jason will provide details on our full year guidance later. And I am proud to say that today we reiterated our bottom line expectations. Now it's pivot time. to highlights from our second quarter. Compared to prior year quarter, our net sales increased 1.7% to $2.31 million, and our retail comparable sales remained strong with a 3.9% increase. We also improved our throughput rate by 3% since last quarter, and most notably, we increased our adjusted EBITDA by 7% to $66.1 million. Another highlight from the quarter relates to our retail banner consolidation work. As we announced last month, we consolidated three brands representing 8% of our store base. These stores were remodeled and re-bannered as Family Fair, our flagship retail banner. Shoppers are embracing the enhanced store experience and new loyalty program. Our investments are accelerating growth and delivering bottom line benefits. Overall, Our rebanners and remodels continue to drive double-digit sales growth. And, although a small sample of our total, the upmarket stores that were remodeled last year continue to experience an average sales lift of 17% year-over-year. Banner consolidation is part of our long-term strategic plan, which leverages the strength and equity of our brands for growth and operational efficiency. As part of the plan, we remain on target to remodel or refresh 25% of our stores. So, overall for the quarter, we were able to maintain profitability despite the macro pressures that our entire industry is experiencing. We credit this success, the transformational initiatives that our team continues to aggressively execute upon. In an environment like this, we are determined to provide solutions for our wholesale customers and retail shoppers. And as I mentioned earlier, we announced changes to our go-to-market strategy. Our team has deliberately developed this plan, which improves both the efficiency and effectiveness of our organization. Our new go-to-market strategy involves, one, realigning all associates who have contact with customers into the sales function and providing all customers with a single point of contact so their support and service is highly coordinated. Two, focusing on operational excellence in our stores by expanding on training and brand standards. Three, executing on the value-added service we provide to our independent grocery customers to help them grow. And four, completing integrations from prior M&A activities and setting up an organizational structure that enables easier integrations for the future. These changes will help us to realize our signature strength to be the most customer-focused, innovative food solutions company. We have the right strategy, teams, and capabilities to execute on our long-term plan, and we are in a prime position to grow. I will now turn things over to our CFO, Jason Monaco, to share more details about our financials.