BOISE, Idaho--(BUSINESS WIRE)--Oct 18, 2021--

Albertsons Companies, Inc. (NYSE: ACI) (the "Company") today reported results for the second quarter of fiscal 2021, which ended September 11, 2021.

"We are pleased with our second quarter results as we continue to execute our transformation strategy. The favorable consumer backdrop together with our focus on in-store excellence, accelerating our digital and omni-channel capabilities, increasing productivity and strengthening our talent and culture, are driving increased identical sales and improved performance,” said Vivek Sankaran, CEO. "Based on this strong performance, today we announced a 20% increase to our quarterly dividend, and have raised our fiscal year 2021 outlook."

Sales and other revenue was $16.5 billion during the 12 weeks ended September 11, 2021 ("second quarter of fiscal 2021") compared to $15.8 billion during the 12 weeks ended September 12, 2020 ("second quarter of fiscal 2020"). The increase was primarily driven by the Company's 1.5% increase in identical sales and higher fuel sales.

Gross profit margin decreased to 28.6% during the second quarter of fiscal 2021 compared to 29.0% during the second quarter of fiscal 2020. Excluding the impact of fuel, gross profit margin was flat compared to the second quarter of fiscal 2020 primarily due to higher product, supply chain and advertising costs, offset by benefits related to productivity initiatives, favorable product mix and improved pharmacy margins related to administering COVID-19 vaccines.

Selling and administrative expenses were 25.6% of sales during the second quarter of fiscal 2021 and the second quarter of fiscal 2020. Excluding the impact of fuel, selling and administrative expenses as a percentage of sales increased 55 basis points. The increase in selling and administrative expenses was primarily attributable to employee costs, depreciation and other expenses related to the Company's investments in its digital and omni-channel capabilities and strategic priorities. These increases were partially offset by lower COVID-19 related expenses and the execution of productivity initiatives. As it relates to the year over year increase in employee costs, labor related to the reopening of certain fresh departments, market-driven wage rate increases and higher equity-based compensation expense drove this increase.

Interest expense was $109.3 million during the second quarter of fiscal 2021 compared to $128.6 million during the second quarter of fiscal 2020. The decrease in interest expense was primarily attributable to lower average interest rates and lower average borrowings.

Other income, net was $18.9 million during the second quarter of fiscal 2021 compared to other income, net of $11.4 million during the second quarter of fiscal 2020.

Income tax expense was $100.3 million, representing a 25.4% effective tax rate, during the second quarter of fiscal 2021 compared to $111.2 million, representing a 28.1% effective tax rate, during the second quarter of fiscal 2020. The decrease in the effective income tax rate was primarily driven by non-deductible transaction-related costs incurred during the second quarter of fiscal 2020.

Net income was $295.2 million, or $0.52 per Class A common share, during the second quarter of fiscal 2021 compared to $284.5 million, or $0.49 per Class A common share, during the second quarter of fiscal 2020.

Adjusted net income was $369.5 million, or $0.64 per Class A common share, during the second quarter of fiscal 2021 compared to $356.4 million, or $0.60 per Class A common share, during the second quarter of fiscal 2020.

Adjusted EBITDA was $965.4 million, or 5.8% of sales, during the second quarter of fiscal 2021 compared to $948.4 million, or 6.0% of sales, during the second quarter of fiscal 2020. The increase in Adjusted EBITDA was primarily attributable to the Company's higher sales, partially offset by higher selling and administrative expenses.

The following table provides a comparison of the second quarter of fiscal 2021 to the 12 weeks ended September 7, 2019 ("second quarter of fiscal 2019") for certain financial measures, including a compounded annual growth rate ("CAGR"), to demonstrate the two-year growth in the Company's business. The Company believes these supplemental comparisons provide meaningful and useful information to investors about the trends in its business relative to pre-COVID-19 pandemic periods.

Sales and other revenue was $16.5 billion during the second quarter of fiscal 2021 compared to $14.2 billion during the second quarter of fiscal 2019. The increase in sales compared to the second quarter of fiscal 2019 was primarily due to the 15.3% increase in two-year stacked identical sales. Identical sales were driven in part by the 248% two-year stacked increase in digital sales.

Gross profit margin was 28.6% during the second quarter of fiscal 2021 compared to 27.8% during the second quarter of fiscal 2019. Excluding the impact of fuel, gross profit margin increased by approximately 85 basis points compared to the second quarter of fiscal 2019, primarily driven by sales leverage, improvements in shrink expense, productivity initiatives, and improved pharmacy margins related to administering COVID-19 vaccines, partially offset by growth in digital sales.

Selling and administrative expenses were 25.6% of sales during the second quarter of fiscal 2021 compared to 26.8% of sales for the second quarter of fiscal 2019. Excluding the impact of fuel, selling and administrative expenses as a percentage of sales decreased approximately 120 basis points primarily due to sales leverage and the execution of productivity initiatives, partially offset by increases in employee costs and other expenses related to the Company's investments in its digital and omni-channel capabilities and strategic priorities, higher equity-based compensation expense as well as incremental COVID-19 expenses.

The Company's capital allocation strategy is balanced, prioritizing capital investment to drive future growth, continued deleveraging of the balance sheet, and the return of capital to stockholders via quarterly dividends and opportunistic share repurchases, all anchored on strong and consistent free cash flow.

During the first 28 weeks of fiscal 2021, the Company spent $822.5 million in capital expenditures, which included investments in digital and technology, the opening of six new stores and the completion of 76 store remodels. During the second quarter of fiscal 2021, the Company also paid its quarterly dividend of $0.10 per share of Class A common stock on August 10, 2021 to stockholders of record as of July 26, 2021.

Today the Company also announced a 20% increase to its quarterly dividend, which is now $0.12 per share (up from $0.10 per share) of Class A common stock, payable on November 12, 2021 to stockholders of record as of October 29, 2021. This increase is the result of the Company's continued strong performance and balanced overall approach to capital allocation.

The Company is providing an updated fiscal 2021 outlook and now expects:

The Company is unable to provide a full reconciliation of the GAAP and Non-GAAP Measures (as defined below) used in the updated fiscal 2021 outlook without unreasonable effort because it is not possible to predict certain of the adjustment items with a reasonable degree of certainty. This information is dependent upon future events and may be outside of the Company's control and could have a significant impact on its GAAP financial results for fiscal 2021. The expected effective tax rate does not reflect potential rate adjustments for the resolution of tax audits or potential changes in tax laws, which cannot be predicted with reasonable certainty.

The Company will hold a conference call today at 8:30 a.m. Eastern Time, which will be hosted by Vivek Sankaran, CEO, and Sharon McCollam, President & CFO. The call will be webcast and can be accessed at . A replay of the webcast will be available for at least two weeks following the completion of the call.

Albertsons Companies is a leading food and drug retailer in the United States. As of September 11, 2021, the Company operated 2,278 retail food and drug stores with 1,725 pharmacies, 401 associated fuel centers, 22 dedicated distribution centers and 20 manufacturing facilities. The Company operates stores across 34 states and the District of Columbia under more than 20 well-known banners including Albertsons, Safeway, Vons, Jewel-Osco, Shaw's, Acme, Tom Thumb, Randalls, United Supermarkets, Pavilions, Star Market, Haggen, Carrs, Kings Food Markets and Balducci's Food Lovers Market. The Company is committed to helping people across the country live better lives by making a meaningful difference, neighborhood by neighborhood. In 2020, along with the Albertsons Companies Foundation, the Company gave $260 million in food and financial support, including approximately $95 million through our Nourishing Neighbors Program to ensure those living in our communities have enough to eat. Albertsons Companies also pledged $5 million to organizations supporting social justice. These efforts have helped millions of people in the areas of hunger relief, education, cancer research and treatment, social justice and programs for people with disabilities and veterans' outreach.

This press release includes "forward-looking statements" within the meaning of the federal securities laws. The "forward-looking statements" include our current expectations, assumptions, estimates and projections about our business and our industry. They include statements relating to our future operating or financial performance which the Company believes to be reasonable at this time. You can identify forward-looking statements by the use of words such as "outlook," "may," "should," "could," "estimates," "predicts," "potential," "continue," "anticipates," "believes," "plans," "expects," "future" and "intends" and similar expressions which are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict, including, among others, changes in macroeconomic conditions, the retail consumer behavior and environment and the Company's industry, failure to achieve productivity initiatives, increased rates of food price inflation and factors related to the continued impact of the COVID-19 pandemic, about which there are still many unknowns, including its duration, recurrence, new virus strains, status and effectiveness of vaccinations, duration and scope of related government orders, financial assistance programs, mandates and regulations and the extent of the overall impact to our business and the communities we serve. Such risks and uncertainties could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. In evaluating forward-looking statements, you should carefully consider the risks and uncertainties more fully described in the "Risk Factors" section or other sections in the Company’s reports filed with the SEC including the most recent annual report on Form 10-K and any subsequent periodic reports on Form 10-Q and current reports on Form 8-K. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements and risk factors. Forward-looking statements contained in this press release reflect our view only as of the date of this press release. We undertake no obligation, other than as required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

EBITDA, Adjusted EBITDA, Adjusted net income and Adjusted net income per Class A common share (collectively, the "Non-GAAP Measures") are performance measures that provide supplemental information the Company believes is useful to analysts and investors to evaluate its ongoing results of operations, when considered alongside other GAAP measures such as net income, operating income, gross profit, and net income per Class A common share. These Non-GAAP Measures exclude the financial impact of items management does not consider in assessing the Company's ongoing operating performance, and thereby provide useful measures of its operating performance on a period-to-period basis. Other companies may have different definitions of Non-GAAP Measures and provide for different adjustments, and comparability to the Company's results of operations may be impacted by such differences. The Company also uses Adjusted EBITDA and Net Debt Ratio for board of director and bank compliance reporting. The Company's presentation of Non-GAAP Measures should not be construed as an implication that its future results will be unaffected by unusual or non-recurring items.

As used in this earnings release, the term "identical sales" includes stores operating during the same period in both the current fiscal year and the prior fiscal year, comparing sales on a daily basis. Direct to consumer digital sales are included in identical sales, and fuel sales are excluded from identical sales.

The following tables reconcile Net income to Adjusted net income, and Net income per Class A common share to Adjusted net income per Class A common share for the 28 weeks ended September, 11, 2021, September 12, 2020 and September 7, 2019:

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CONTACT: Melissa Plaisance

melissa.plaisance@albertsons.com

KEYWORD: UNITED STATES NORTH AMERICA IDAHO

INDUSTRY KEYWORD: RETAIL SUPERMARKET FOOD/BEVERAGE

SOURCE: Albertsons Companies, Inc.

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PUB: 10/18/2021 07:30 AM/DISC: 10/18/2021 07:32 AM

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