SpartanNash Company

Welcome to the Spartan Nash Third Quarter 2023 Earnings Conference Call. At this time, all participants will be 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. Please go ahead.

Good morning, and welcome to the Spartan Nash Company Third 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.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 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.spartannash.com forward slash investors. And now, it is my pleasure to turn the call over to Tony.

Thank you, Kaylee, and good morning, everyone. Glad to be here. To kick us off, I want to call out some highlights from our most recent ESG report that we published last month. We are still early in our sustainability journey and are making strides that I am happy to share with you all today. From 2021 to 2022, we've reduced fleet mileage by 12%, exceeding our 10% goal. We decreased DC ozone depleting emissions by a whopping 59%. We converted 85% of our retail stores and DCs to LED lighting. And we diverted more than 4 million pounds of food from landfills. On the governance side, we demonstrated our ongoing commitment to board refreshment, exemplified by the addition of three new directors in 2022 and one new director this past August. As a people-first company, I'm incredibly proud of the team's continued focus on safety. Since 2020, one of our biggest accomplishments has been an improved safety record, including a 72% decrease in lost-time incidents. Over the past year, our ESG committee and subcommittees have strategically embedded our 2025 ESG goals into our Master Action Plan. We are committed to creating solutions that improve the lives of our associates and the communities we serve. We encourage all stakeholders to read the 2022 ESEA report, which is available on the company website. We had the privilege of serving the U.S. military. As a grocery wholesaler, we bring the taste of home to the men, women, and families of the U.S. military around the world. This Veterans Day weekend, we honor those who have served the United States of America. Now, turning to our Q3 results. Consolidated net sales came in at $2.3 billion, a decrease of 1.4% from a year ago. Similar to last quarter, we continue to experience a decrease in sales on our Amazon business. Outside of this impact, we observed positive sales trends in our wholesale segment as well as for the consolidated company. We continue to work closely with Amazon as they manage through changes in their grocery format. Adjusted EBITDA increased 6%, improving 19 basis points compared to the prior year quarter. Our solid bottom-line performance amid a challenging environment is attributable to the benefits from our transformational initiatives. Even in an environment where national brands' volumes declined, our own brand's portfolio held strong. Our new and refreshed own brand's products are helping consumers across all income levels further stretch their dollars. Speaking of solutions to help our customers and retail shoppers, we have made huge strides since launching our merchandising transformation last year. As a food solutions company, we have been relentless on combating food inflation. For more than a year, our enhanced category planning has leveraged data from commodity markets and other industrial benchmarks to address rising input costs. Our methodical cost management has helped us capture share and provide additive value to our wholesale customers and retail shoppers. We continue to appreciate and grow with vendors who are collaborating with us to find creative solutions. We are now in the process of launching the next phase of our merchandising transformation through our compelling offer. This program is accelerating our customer-led capabilities in the following areas. One, simplifying the assortment using advanced analytics. Two, showcasing the power of our own brands. Three, reducing costs to serve in our warehouses and stores. Four, improving in-stocks for shoppers. And five, creating an easier to navigate planogram. All these actions lead to a better overall shopping experience. There is significant unlocked potential within our retail stores, and based on our learnings, we also plan to scale the program to independent customers to help them drive their business. Turning to our recently remodeled upmarket stores, we are growing at double the rate of the rest of our retail portfolio due to these stores' innovative offerings. We continue to reinvest in our stores and are on target to renovate or refresh 25% of the base during the planned period from 2021 through 2025. Our retail team continues to find solutions, for example, We are currently implementing a cash and deposit automation program. By significantly reducing administrative hours, the program enables our store associates to provide better customer service while optimizing our shopper experience. Our signature strength is to be the most customer-focused, innovative food solutions company. Now that we are executing on our winning recipe, we're even attracting former customers. They have seen our momentum and are boomeranging back to Spartan Ash. We are eagerly welcoming them back into our family. They see us as a long-term strategic partner as they focus on their next phase of growth. This is a true testament to the progress we have made over the past three years. We are winning with these customers because of our reliable service made possible through our optimized supply chain network. The benefits our merchandising transformation provides to our wholesale customers and an aligned team of associates. who are focused on helping our customers take their grocery business to the next level. In addition, we are winning new wholesale customers. This is due to our differentiated services and execution of our winning recipe. We look forward to growing our businesses together. Overall, we are seeing the labor market and applicant flow stabilize. Since last November, we reduced our turnover rate by nearly 12%, with more mature onboarding and training and development investments We are focused on hiring the right people, training them to do a great job, and retaining them for the long term. I love recognizing associates for their hard work. Our leadership team recently honored our frontline associates throughout our supply chain and retail through our Circle of Excellence program. Congrats to all those winners. Thank you for all you do to deliver the ingredients for a better life. This past quarter, we hosted our annual leadership summits. And the theme was flying in formation. I'm already seeing the impact of that inspiring messaging throughout our company. Our team has fully embraced cross-functional work. We are aligned, we are focused, and we are relentless in our pursuit of providing food solutions. Thank you again to our associates who are flying in formation. I will now turn things over to our CFO, Jason Monaco, to share more details about our financials.