Albertsons Companies, Inc 10-Q for FY2024 Q1

Albertsons Companies, Inc. (ACI)

10-Q 2023-07-25 For: 2023-06-17

Added on April 07, 2026

About this 10-Q

Albertsons Companies, Inc filed this 10-Q on July 25, 2023, covering the quarter ended June 17, 2023 (FY2024 Q1).

Headline figures

Quarter ended June 17, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $24.05B; up 3.2% from $23.31B a year earlier
Net income: $417.2M; down 13.8% from net income of $484.2M a year earlier
Diluted EPS: $0.72; down 14.3% from $0.84 a year earlier

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Delaware						47-4376911
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, $0.01 par value	ACI	New York Stock Exchange



PART I - FINANCIAL INFORMATION		Page
	Item 1 - Condensed Consolidated Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations and Comprehensive Income	4
	Condensed Consolidated Statements of Cash Flows	5
	Condensed Consolidated Statements of Stockholders' Equity	6
	Notes to Condensed Consolidated Financial Statements	7










	Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations	18
	Item 3 - Quantitative and Qualitative Disclosures About Market Risk	28
	Item 4 - Controls and Procedures	28

PART II - OTHER INFORMATION
	Item 1 - Legal Proceedings	29
	Item 1A - Risk Factors	29
	Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds	29
	Item 3 - Defaults Upon Senior Securities	30
	Item 4 - Mine Safety Disclosures	30
	Item 5 - Other Information	30
	Item 6 - Exhibits	30

SIGNATURES		31


		June 17, 2023		February 25, 2023
ASSETS
Current assets
	Cash and cash equivalents	$	225.2	$	455.8
	Receivables, net	684.3		687.6
	Inventories, net	4,844.9		4,782.0
	Other current assets	306.2		345.0
	Total current assets	6,060.6		6,270.4

Property and equipment, net		9,356.8		9,358.7
Operating lease right-of-use assets		5,881.2		5,879.1
Intangible assets, net		2,473.2		2,465.4
Goodwill		1,201.0		1,201.0
Other assets		844.4		993.6
TOTAL ASSETS		$	25,817.2	$	26,168.2

LIABILITIES
Current liabilities
	Accounts payable	$	4,013.2	$	4,173.1
	Accrued salaries and wages	1,149.5		1,317.4

	Current maturities of long-term debt and finance lease obligations	574.2		1,075.7
	Current maturities of operating lease obligations	668.5		664.8
	Other current liabilities	1,317.7		1,197.8
	Total current liabilities	7,723.1		8,428.8

Long-term debt and finance lease obligations		7,825.0		7,834.4
Long-term operating lease obligations		5,463.9		5,386.2
Deferred income taxes		816.2		854.0
Other long-term liabilities		1,989.0		2,008.4

Commitments and contingencies
Series A convertible preferred stock, $0.01 par value; 1,750,000 shares authorized, no shares issued and outstanding as of June 17, 2023 and 50,000 shares issued and outstanding as of February 25, 2023		—		45.7
Series A-1 convertible preferred stock, $0.01 par value; 1,410,000 shares authorized, no shares issued and outstanding as of June 17, 2023 and February 25, 2023		—		—

STOCKHOLDERS' EQUITY
	Undesignated preferred stock, $0.01 par value; 96,840,000 shares authorized, no shares issued as of June 17, 2023 and February 25, 2023	—		—
	Class A common stock, $0.01 par value; 1,000,000,000 shares authorized, 594,028,505 and 590,968,600 shares issued as of June 17, 2023 and February 25, 2023, respectively	5.9		5.9
	Class A-1 convertible common stock, $0.01 par value; 150,000,000 shares authorized, no shares issued as of June 17, 2023 and February 25, 2023	—		—
	Additional paid-in capital	2,068.3		2,072.7
	Treasury stock, at cost, 18,397,745 and 21,300,945 shares held as of June 17, 2023 and February 25, 2023, respectively	(304.2)		(352.2)
	Accumulated other comprehensive income	70.4		69.3
	Retained earnings (accumulated deficit)	159.6		(185.0)
	Total stockholders' equity	2,000.0		1,610.7
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	25,817.2	$	26,168.2


	16 weeks ended
	June 17, 2023		June 18, 2022
Net sales and other revenue	$	24,050.2	$	23,310.3
Cost of sales	17,387.5		16,765.3
Gross margin	6,662.7		6,545.0

Selling and administrative expenses	6,012.9		5,864.3
Loss (gain) on property dispositions and impairment losses, net	27.6		(79.4)

Operating income	622.2		760.1

Interest expense, net	154.9		138.9

Other income, net	(16.0)		(6.3)
Income before income taxes	483.3		627.5

Income tax expense	66.1		143.3
Net income	$	417.2	$	484.2

Other comprehensive income (loss), net of tax
Recognition of pension (loss) gain	(0.6)		0.2

Other	1.7		(3.0)
Other comprehensive income (loss)	$	1.1	$	(2.8)

Comprehensive income	$	418.3	$	481.4

Net income per Class A common share
Basic net income per Class A common share	$	0.73	$	0.86
Diluted net income per Class A common share	0.72		0.84

Weighted average Class A common shares outstanding (in millions)
Basic	573.7		513.3
Diluted	580.1		576.3


	Class A Common Stock			Additional paid-in capital		Treasury Stock			Accumulated other comprehensive income		Retained earnings (accumulated deficit)		Total stockholders' equity
	Shares	Amount				Shares	Amount
Balance as of February 25, 2023	590,968,600	$	5.9	$	2,072.7	21,300,945	$	(352.2)	$	69.3	$	(185.0)	$	1,610.7
Equity-based compensation	—	—		27.7		—	—		—		—		27.7
Shares issued and employee tax withholding on vesting of restricted stock units	3,059,905	—		(33.1)		—	—		—		—		(33.1)
Convertible preferred stock conversions	—	—		—		(2,903,200)	48.0		—		(2.3)		45.7

Cash dividends declared on common stock ($0.12 per common share)	—	—		—		—	—		—		(69.0)		(69.0)
Dividends accrued on convertible preferred stock	—	—		—		—	—		—		(0.3)		(0.3)
Net income	—	—		—		—	—		—		417.2		417.2
Other comprehensive income, net of tax	—	—		—		—	—		1.1		—		1.1
Other activity	—	—		1.0		—	—		—		(1.0)		—
Balance as of June 17, 2023	594,028,505	$	5.9	$	2,068.3	18,397,745	$	(304.2)	$	70.4	$	159.6	$	2,000.0


	Fair Value Measurements
	Total		Quoted prices in active markets for identical assets (Level 1)		Significant observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets:


Short-term investments (1)	$	19.0	$	4.6	$	14.4	$	—
Non-current investments (2)	105.1		5.2		99.9		—
Derivative contracts (3)	0.5		—		0.5		—
Total	$	124.6	$	9.8	$	114.8	$	—


	June 17, 2023		February 25, 2023

Senior Unsecured Notes due 2026 to 2030, interest rate range of 3.25% to 7.50%	$	6,499.5	$	6,496.4
Safeway Inc. Notes due 2027 to 2031, interest rate range of 7.25% to 7.45%	375.1		374.9
New Albertsons L.P. Notes due 2026 to 2031, interest rate range of 6.52% to 8.70%	477.3		476.2
ABL Facility	500.0		1,000.0
Other financing obligations	28.7		28.8
Mortgage notes payable, secured	16.7		16.7
Finance lease obligations	501.9		517.1
Total debt	8,399.2		8,910.1
Less current maturities	(574.2)		(1,075.7)
Long-term portion	$	7,825.0	$	7,834.4


	16 weeks ended
	Pension				Other post-retirement benefits
	June 17, 2023		June 18, 2022		June 17, 2023		June 18, 2022
Estimated return on plan assets	$	(30.3)	$	(28.6)	$	—	$	—
Service cost	5.3		6.2		—		—
Interest cost	25.7		15.8		0.2		0.1
Amortization of prior service cost	0.1		0.1		—		—
Amortization of net actuarial (gain) loss	(0.6)		0.2		(0.3)		(0.1)

Expense (income), net	$	0.2	$	(6.3)	$	(0.1)	$	—


	16 weeks ended June 17, 2023
	Total		Pension and Post-retirement benefit plans		Other
Beginning AOCI balance	$	69.3	$	71.7	$	(2.4)

Other comprehensive income before reclassifications	2.3		—		2.3
Amounts reclassified from accumulated other comprehensive income (1)	(0.8)		(0.8)		—
Tax (expense) benefit	(0.4)		0.2		(0.6)
Current-period other comprehensive income (loss), net of tax	1.1		(0.6)		1.7
Ending AOCI balance	$	70.4	$	71.1	$	(0.7)


	16 weeks ended June 18, 2022
	Total		Pension and Post-retirement benefit plans		Other
Beginning AOCI balance	$	69.0	$	67.1	$	1.9
Other comprehensive loss before reclassifications	(4.0)		—		(4.0)
Amounts reclassified from accumulated other comprehensive income (1)	0.2		0.2		—
Tax benefit	1.0		—		1.0
Current-period other comprehensive (loss) income, net of tax	(2.8)		0.2		(3.0)
Ending AOCI balance	$	66.2	$	67.3	$	(1.1)


	Number of stores		Percent of Total				Retail Square Feet (1)
Square Footage	June 17, 2023	June 18, 2022	June 17, 2023		June 18, 2022		June 17, 2023	June 18, 2022
Less than 30,000	218	220	9.6	%	9.7	%	4.9	5.0
30,000 to 50,000	780	781	34.3	%	34.4	%	32.7	32.7
More than 50,000	1,274	1,272	56.1	%	55.9	%	75.3	75.2
Total Stores	2,272	2,273	100.0	%	100.0	%	112.9	112.9





















	16 weeks ended
	June 17, 2023		% of Sales		June 18, 2022		% of Sales
Net sales and other revenue	$	24,050.2	100.0	%	$	23,310.3	100.0	%
Cost of sales	17,387.5		72.3		16,765.3		71.9
Gross margin	6,662.7		27.7		6,545.0		28.1
Selling and administrative expenses	6,012.9		25.0		5,864.3		25.2
Loss (gain) on property dispositions and impairment losses, net	27.6		0.1		(79.4)		(0.3)

Operating income	622.2		2.6		760.1		3.2
Interest expense, net	154.9		0.6		138.9		0.6

Other income, net	(16.0)		(0.1)		(6.3)		—
Income before income taxes	483.3		2.1		627.5		2.6
Income tax expense	66.1		0.3		143.3		0.6
Net income	$	417.2	1.8	%	$	484.2	2.0	%

Basic net income per Class A common share	$	0.73			$	0.86
Diluted net income per Class A common share	0.72				0.84


		Albertsons Companies, Inc. (Registrant)

Date:	July 25, 2023	By:	/s/ Vivek Sankaran
			Vivek Sankaran
			Chief Executive Officer and Director (Principal Executive Officer)


Date:	July 25, 2023	By:	/s/ Sharon McCollam
			Sharon McCollam
			President and Chief Financial Officer (Principal Financial Officer)


	16 weeks ended
		June 17, 2023		June 18, 2022
Numerator:

Net income		$	417.2	$	484.2
Adjustments:
Gain on interest rate swaps and energy hedges, net (d)		(0.6)		(18.5)
Business transformation (1)(b)		12.1		33.8
Equity-based compensation expense (b)		31.9		35.3
Loss (gain) on property dispositions and impairment losses, net		27.6		(79.4)
LIFO expense (a)		34.0		62.1
Government-mandated incremental COVID-19 pandemic related pay (2)(b)		—		5.9
Merger-related costs (3)(b)		47.1		6.1
Certain legal and regulatory accruals and settlements, net (b)		—		32.8
Amortization of debt discount and deferred financing costs (c)		4.7		5.1

Amortization of intangible assets resulting from acquisitions (b)		15.4		15.4

Miscellaneous adjustments (4)(f)		(2.4)		28.1
Tax impact of adjustments to Adjusted net income		(41.3)		(28.9)
Adjusted net income		$	545.7	$	582.0

Denominator:

Weighted average Class A common shares outstanding - diluted		580.1		576.3
Adjustments:

Restricted stock units and awards (5)		6.7		6.9
Adjusted weighted average Class A common shares outstanding - diluted		586.8		583.2

Adjusted net income per Class A common share - diluted		$	0.93	$	1.00


			I, Vivek Sankaran, certify that:


1.			I have reviewed this Quarterly Report on Form 10-Q of Albertsons Companies, Inc.;


2.			Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.			Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.			The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


			a)			Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


			b)			Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


			c)			Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


			d)			Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


			a)			All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


			b)			Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


1.			The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


2.			The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



						/s/ Sharon McCollam
						Sharon McCollam
						President and Chief Financial Officer (Principal Financial Officer)