Q3 2024 SpartanNash Co Earnings Call
Dr. A question and answer session.
Speaker Change: I would like to now turn the call over to Kelly Campbell, Spartan Nash as head of Investor Relations.
Daily.
Thank you and good morning.
Speaker Change: The call today from the company are President and Chief Executive Officer, Tony Carson Executive Vice President and Chief Financial Officer, Jason Monotone.
Speaker Change: By now everyone should have access to the earnings release, which was issued this morning at approximately seven a M eastern time for.
Speaker Change: For a copy of the earnings release as well as the company's supplemental earnings presentation. Please visit <unk> web site Www Dot Spartan Nash dotcom forward slash investors.
Speaker Change: This call is being recorded and a replay will be available on the company's website.
Speaker Change: 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.
Speaker Change: If you will refer to Spartan Ashes 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.
Speaker Change: Please remember that all forward looking statements made today reflect our current expectations only and Spartan <unk> undertakes no obligation to update or revise these forward looking statements.
Speaker Change: The company will also make a number of references to non-GAAP financial measures.
Speaker Change: The company believes these measures provide investors with useful perspective on the underlying growth trends of the business and 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 ashes website at Spartan as dotcom forward slash investors.
Tony Carson: And now it is my pleasure to turn the call over to Tony.
Tony Carson: Thanks, Gary and good morning, everyone glad to be here I want to start today's call with a focus on our people first culture. We recently celebrated our frontline hourly associates with our annual Circle of Excellence Awards. These associates walks the spark Nash Green carpet, while the company's senior leaders cheered. The model. We have now inducted more than 200 associates that is highly <unk>.
Tony Carson: <unk> circle of excellence the circle back things is one of several recognition programs. We have implemented in the past few years that are helping us to move the needle with associate engagement and retention in fact, our total company retention rate has improved by nearly 20% since we launched our strategic plan.
Tony Carson: Turning to other recent news I want to speak for a moment about the acquisition announcements we made in October.
Tony Carson: I am pleased to say that we are on track to close the fresh encountered deal this month.
The acquisition will add 49 stores, our retail portfolio, which expands our footprint in Ohio, and Indiana and allows us to begin serving Kentucky. In addition to expanding our retail footprint. We are also winning in wholesale by capturing new sales professional counters other distributors.
Tony Carson: Additionally, last week, we announced the acquisition of Mark of Enterprises, which consists of three fuel centers and convenience stores in Michigan. We are energized by the opportunities within the C store space, especially due to the channels stable demand. This transaction is expected to close by the end of this year, we moved forward to welcoming the Markham team members into our family of associates.
that are helping us to move the needle with associate engagement and retention. In fact, our total company retention rate has improved by nearly 20% since we launched our strategic plan.
Tony Carson: Looking ahead, we're continuing to evaluate M&A opportunities based on our disciplined M&A framework, which is designed to maximize shareholder value.
Turning to other recent news, I wanted to speak for a moment about the acquisition announcements we made in October. I'm pleased to say that we are on track to close the Fresh Encounter deal this month.
Tony Carson: Before we jump into recent results I want to provide some color on the grocery industry and provide an update on our outlook.
Tony Carson: According to syndicated data the markets, where we operate grew only 40 basis points during the past quarter compared to Q3 of 2023, while total U S grocery was up about 1.1%.
The acquisition will add 49 stores to our retail portfolio, which expands our footprint in Ohio and Indiana and allows us to begin serving Kentucky. In addition to expanding our retail footprint, we are also winning in wholesale by capturing new sales from fresh encounters other distributors.
Tony Carson: The slower market growth and our other geographies has weighed on both the retail and wholesale segments.
Speaker Change: Okay. So what does this mean for <unk> Nash.
Additionally, last week we announced the acquisition of Markham Enterprises, which consists of three fuel centers and convenience stores in Michigan.
Speaker Change: As we announced today in our earnings release, we are updating our 2020 for guidance and also giving an early read into next year, Jason will dive into the details in a moment, but first I want to provide some context.
We are energized by the opportunities within the CSTOR space, especially due to the channel's stable demand. This transaction is expected to close by the end of this year, and we look forward to welcoming the Markham team members into our family of associates.
Speaker Change: While we are pleased to see that our transformational initiatives are outperforming our expectations. We expect these headwinds to persist into 2025 impacting our previously communicated targets in our long range plan, we are taking a practical and methodical approach to mitigating the macro pressures and we are steadfast in our commitment to drive.
Looking ahead, we're continuing to evaluate M&A opportunities based on our disciplined M&A frameworks, which is designed to maximize shareholder value.
Before we jump into recent results, I want to provide some color on the grocery industry and provide an update on our outlook. According to syndicated data, the markets where we operate grew only 40 basis points during the past quarter compared to Q3 of 2023, while total U.S. grocery was up about 1.1%.
Speaker Change: Our results and growing shareholder value.
Speaker Change: Okay shifting gears to recap the third quarter.
Speaker Change: Our consolidated net sales decreased 60 basis points to 2.25 billion.
Speaker Change: Lower volume in the wholesale segment was partially offset by higher volume in our retail segment.
The slower market growth in our other geographies has weighed on both the retail and wholesale segments.
Speaker Change: On the wholesale side, a 1.6% decrease was due to lower volumes inclusive of a two 9% headwind within this segment from our Amazon business.
Okay, so what does this mean for Sarton Nash?
As we announced today in our earnings release, we are updating our 2024 guidance and also giving an early read into next year. Jason will dive into the details in a moment, but first I want to provide some context.
Speaker Change: One of the continued bright spots within the wholesale segment as our military business compared to prior year quarters. The military channel has grown sales over the past 11 consecutive quarters and continues to bolster our growth.
While we are pleased to see that our transformational initiatives are outperforming our expectations, we expect these headwinds to persist into 2025, impacting our previously communicated targets in our long-range plan.
Speaker Change: Now turning to our retail segment, our retail business grew one 9% bolstered by incremental sales from the recently acquired Metcalf stores.
We are taking a practical and methodical approach to mitigating the macro pressures, and we are steadfast in our commitment to driving results and growing shareholder value.
Speaker Change: From a comp standpoint, we are starting to see some positive trends, although our comparable store sales were down 70 basis points. Our same store sales improved sequentially each period during the past quarter and we had the three best periods of the year so far in Q3.
Speaker Change: Turning to profitability, our Q3, adjusted EBITDA was $65 million, while adjusted EBITDAR margin of two 7% was flat compared to last year's third quarter.
On the wholesale side, a 1.6% decrease is due to lower volumes, inclusive of a 2.9% headwind within the segment from our Amazon business.
Speaker Change: As we've previously discussed our transformational initiatives have delivered benefits in entire year ahead of schedule. All of these benefits are helping to partially offset the headwinds I discussed earlier and we plan to capture more benefits from the 2024 investments by the end of this year.
One of the continued bright spots within the wholesale segment is our military business. Compared to prior year quarters, the military channel has grown sales over the past 11 consecutive quarters and continues to bolster our growth.
Speaker Change: This includes our shrink production and non product procurement initiatives expected to generate $20 million in run rate savings by year end.
Now turning to our retail segment, our retail business grew 1.9% bolstered by incremental sales from the recently acquired Metcalfe stores.
Speaker Change: Before I turn the call over to Jason I want to thank our team for their steadfast commitment in executing our long term strategic plan.
From a comp standpoint, we are starting to see some positive trends. Although our comparable store sales were down 70 basis points, our same store sales improved sequentially each period during the past quarter, and we had the three best periods of the year so far in Q3.
Speaker Change: Since its inception in 2021, we have made significant progress.
Speaker Change: This progress has improved associate safety and retention.
US to win new business expanded operating productivity increased our margins and captured cost savings enabled us to further collaborate with suppliers delivered value add products and outstanding service to our wholesale customers and retail shoppers and allowed us to make increased investments in our.
Turning to profitability, our Q3 adjusted EBITDA was $60.5 million, while adjusted EBITDA margin of 2.7% was flat compared to last year's third quarter.
So, as we've previously discussed, our transformational initiatives have delivered benefits an entire year ahead of schedule. All of these benefits are helping to partially offset the headwinds I discussed earlier.
Speaker Change: People we.
Speaker Change: We expect these initiatives to continue generating benefits into 2025 and beyond.
And we plan to capture more benefits from the 2020 foreign investments by the end of this year. This includes our shrink production and non-product procurement initiatives, expected to generate $20 million in run rate savings by year end.
Speaker Change: All of these elements have also built a solid foundation for organic and inorganic growth supporting our effort to drive results and grow shareholder value.
Speaker Change: And now I'll turn the call over to Jason to walk you through the quarterly financials in greater detail.
Before I turn the call over to Jason, I want to thank our team for their steadfast commitment in executing our long-term strategic plan.
Jason Monotone: Thanks, Tony and welcome to everyone joining us on today's call.
Jason Monotone: Turning to our quarterly results net sales in the quarter decreased by <unk>, 6% to $2.25 billion versus third quarter 2023 sales of 2.2 dollars 6 billion.
Since its inception in 2021, we have made significant progress.
Jason Monotone: As Tony mentioned lower volume in the wholesale segment was partially offset by higher volume in our retail segment.
Jason Monotone: Gross profit for the quarter increased to $355 million or 15, 8% of net sales compared to $348 million or 15, 3% of net sales in the prior year's third quarter or.
We expect these initiatives to continue generating benefits into 2025 and beyond. All of these elements have also built a solid foundation for organic and inorganic growth, supporting our effort to drive results and grow shareholder value.
Jason Monotone: Our gross profit dollar increase was somewhat offset by volume declines while the 50 basis point margin increase was driven by an accretive sales mix.
Jason Monotone: Higher vendor funding and a reduction in LIFO expense.
With that, I'll now turn the call over to Jason to walk you through the quarterly financials in greater detail.
Jason Monotone: As a percent of sales our reported operating expenses increased 32 basis points from the prior year.
Jason: Thanks, Tony. And welcome to everyone joining us on today's call. Turning to our quarterly results. Net sales in the quarter decreased by 0.6% to $2.25 billion versus third quarter 2023 sales of $2.26 billion.
Jason Monotone: Higher restructuring charges as well as retail store labor and healthcare costs led to higher SG&A in the third quarter.
Jason Monotone: These increases were however, partially offset by lower corporate administrative costs and benefits realized from the merchandising transformation.
Jason Monotone: We expect returns from the investments we've made in 2024 to materialize by the end of this year.
Jason: As Tony mentioned, lower volume in the wholesale segment was partially offset by higher volume in our retail segment.
Jason Monotone: Compared to the prior year quarter interest expense increased $600000 to $9 9 million.
Jason: Gross profit for the quarter increased to $355 million or 15.8% of net sales compared to $348 million or 15.3% of net sales in the prior year's third quarter.
Jason Monotone: Consolidated net earnings decreased by $200000 to $10 9 million, while EPS was flat to last year at 32 cents per diluted share.
Jason: Our gross profit dollar increase was somewhat offset by volume declines, while the 50 basis point margin increase was driven by an accretive sales mix, higher vendor funding, and a reduction in LIFO expense.
Jason Monotone: Net margin of 0.49% was flat compared to the prior year quarter.
Jason Monotone: On an adjusted basis net earnings decreased $2 $3 million to $16 5 million or <unk> 48 per diluted share compared to 54 cents last year.
Jason: As a percent of sales, our reported operating expenses increased 32 basis points from the prior year. Higher restructuring charges, as well as retail store labor and health care costs, led to higher SG&A in the third quarter.
Jason Monotone: Adjusted EBITDA decreased by $400000 compared to the prior year quarter to $65 million.
Jason Monotone: Now turning to our segments compared to the prior year quarter net sales in wholesale decreased $25 $9 million or one 6%.
Jason: These increases were, however, partially offset by lower corporate administrative costs and benefits realized from the merchandising transformation.
Jason: We expect returns from the investments we've made in 2024 to materialize by the end of this year.
Jason Monotone: Primarily due to reduced case volumes with independent retailers and one national account customer.
Partially offset by growth in other national account customers and the military channel.
Jason: Compared to the prior year quarter, interest expense increased $600,000 to $9.9 million.
Jason Monotone: Okay.
Wholesale adjusted EBITDA was $44 $8 million, an increase of 14, 8% compared to last years $39 million.
Jason Monotone: The improved results were driven by a higher gross profit rate lower corporate administrative costs.
Jason Monotone: And benefits from the merchandising transformation initiative.
Jason: On an adjusted basis, net earnings decreased $2.3 million to $16.5 million, or $0.48 per diluted share, compared to $0.54 last year.
Jason Monotone: Which more than offset the sales declines.
Wholesale reported third quarter operating earnings were $21 1 million compared to $18 $2 million in the prior year's third quarter.
Jason: Adjusted EBITDA decreased by $400,000 compared to the prior year quarter to $60.5 million.
Jason Monotone: The favorability was partially offset by higher restructuring charges in the current quarter.
Now, turning to our segments.
Jason Monotone: Now moving to the retail segment while.
Jason: Compared to the prior year quarter, net sales and wholesale decreased $25.9 million or 1.6%, primarily due to reduced case volumes with independent retailers and one national account customer, partially offset by growth in other national account customers and the military channel.
While our comp store sales were off 0.7% for the quarter. We saw segment sales grow one 9% to $675 million versus the prior year quarter due to contributions from met calf's as Tony mentioned earlier.
And our supermarkets ex fuel centers were up two 9% compared to the prior year quarter.
Jason: Wholesale adjusted EBITDA was $44.8 million, an increase of 14.8% compared to last year's $39 million.
Jason Monotone: Retail adjusted EBITDA was $15 7 million compared to $21 9 million in the prior year's quarter.
Jason: The approved results were driven by a higher gross profit rate, lower corporate administrative costs, and benefits from the Merchandising Transformation Initiative, which more than offset the sales declines.
Jason Monotone: About half of the change was due to higher health care costs with the remainder driven by higher store wage rates and a lower gross profit rate.
Jason Monotone: These increases were partially offset by higher sales volume and lower corporate administrative expenses.
Jason: Wholesale reported third quarter operating earnings were $21.1 million compared to $18.2 million in the prior year's third quarter.
Jason Monotone: Retail reported operating earnings were $3 $9 million compared to $4 $9 million in the third quarter of 2023.
Jason: The favorability was partially offset by higher restructuring charges in the current quarter.
Speaker Change: Now, moving to the retail segment. While our comp store sales were off 0.7% for the quarter, we saw segment sales grow 1.9% to $675 million versus the prior year quarter due to contributions from Metcalfe, as Tony mentioned earlier.
Speaker Change: Now turning to our balance sheet, our leverage ratio of net long term debt to adjusted EBITDA increased in the third quarter to 2.4 times compared to two two times at the end of the second quarter.
Speaker Change: Year to date, we generated $123 $3 million of cash from operating activities, an increase of more than 28% compared to the same period last year.
Speaker Change: And our supermarkets, ex-fuel centers, were up 2.9% compared to the prior year quarter.
Speaker Change: The increase was due largely to ongoing earnings and our efforts to improve our working capital position.
Jason: Retail adjusted EBITDA was $15.7 million compared to $21.9 million in the prior year's quarter.
Speaker Change: Our liquidity at the end of the third quarter is about $500 million, giving.
Jason: About half of the change was due to higher health care costs, with the remainder driven by higher store wage rates and a lower gross profit rate. These increases were partially offset by higher sales volume and lower corporate administrative expenses.
Speaker Change: Giving us capacity to fund our strategic plan and M&A.
Speaker Change: As reported in our earnings release, we updated and narrowed our full year guidance based on current market conditions, which have been partially offset by our operating performance to date and the ongoing benefits, we expect to realize from our transformational initiatives.
Jason: Retail reported operating earnings were $3.9 million compared to $4.9 million in the third quarter of 2023.
Speaker Change: Turning to the guidance ranges, we still expect net sales to be nine five to $9 7 billion.
Jason: Now, turning to our balance sheet, our leverage ratio of net long-term debt to adjusted EBITDA increased in the third quarter to 2.4 times, compared to 2.2 times at the end of the second quarter.
Speaker Change: Adjusted EBITDA is now expected to be $252 million to $257 million with the midpoint of the new guidance about the bottom of the prior range.
Jason: Year-to-date, we generated $123.3 million of cash from operating activities, an increase of more than 28% compared to the same period last year.
And adjusted EPS is now expected to be $1 85 to $1 95 per diluted share within the previous guidance range.
Speaker Change: Based on our spending to date, we also narrowed our capex guidance and expect it to be in the range of $135 million to $140 million.
Jason: Our liquidity at the end of the third quarter is about $500 million, giving us capacity to fund our strategic plan and M&A.
Speaker Change: We also continue to expect food inflation to be about 1% for the fiscal year.
Jason: As reported in our earnings release, we updated and narrowed our full year guidance based on current market conditions, which have been partially offset by our operating performance to date and the ongoing benefits we expect to realize from our transformational initiatives.
Speaker Change: As a reminder, our full year guidance includes the benefits of tuck in acquisitions.
Before I turn the call back over to Tony I wanted to provide more color on his comments about next year.
Speaker Change: For your reference we still plan to give our typical full year guidance. During our next earnings report for Q4 as.
Jason: Turning to the guidance ranges, we still expect net sales to be $9.5 to $9.7 billion.
Speaker Change: As Tony mentioned earlier, the industry has been operating in a dynamic environment when.
Jason: Adjusted EBITDA is now expected to be $252 to $257 million, with the midpoint of the new guidance about the bottom of the prior range.
Speaker Change: When we met with many of you in late 2022 at our Investor Day.
Speaker Change: Our team set long term targets based on the market conditions and trends at that time, resulting in our growth to $10 billion in revenue and $300 million and adjusted EBITDA.
Jason: And adjusted EPS is now expected to be $1.85 to $1.95 per diluted share within the previous guidance range.
Speaker Change: Since 2020 to the market conditions have been more volatile than the industry expected.
Jason: Based on our spending to date, we also narrowed our CapEx guidance and expect it to be in the range of $135 to $140 million.
Speaker Change: While softer market conditions have manifested recently in our geographies. We remain focused on the controllable. This includes the execution of our margin enhancing transformational initiatives, which are outperforming our expectations.
Jason: We also continue to expect food inflation to be about 1% for the fiscal year.
Jason: As a reminder, our full year guidance includes the benefits of tuck-in acquisitions.
Speaker Change: Circling back around in fiscal 2025, we expect low single digit topline growth and mid single digit adjusted EBITDA growth compared to the updated 2024 guidance ranges achieved.
Jason: Before I turn the call back over to Tony, I wanted to provide more color on his comments about next year.
Achieving this outlook will deliver a compound annual growth rate of approximately 7% versus 2019.
Jason: As Tony mentioned earlier, the industry has been operating in a dynamic environment.
Speaker Change: Included in our 2025 expectations are the benefits of two tuck in acquisitions.
First impression counter is expected to contribute more than $350 million in retail segment sales.
Speaker Change: Or about $225 million on a total company basis after wholesale eliminations.
Jason: Since 2022, the market conditions have been more volatile than the industry expected.
Speaker Change: As Tony mentioned, our wholesale business is also benefiting from this transaction since we will be picking up volume from other distributors, which contributes to their turn for this investment.
Jason: While softer market conditions have manifested recently in our geographies, we remain focused on the controllables. This includes the execution of our margin-enhancing transformational initiatives which are outperforming our expectations.
Speaker Change: We are making progress on the deal and expect fresh encountered to close this month.
Jason: Circling back around, in fiscal 2025, we expect low single-digit top-line growth and mid-single-digit adjusted EBITDA growth compared to the updated 2024 guidance ranges.
Speaker Change: The second acquisition that we announced marcum is expected to add more than $20 million in net sales on an annual basis. This deal is on track to close by the end of this year.
Jason: Achieving this outlook would deliver a compound annual growth rate of approximately 7% versus 2019.
Speaker Change: In aggregate on an annual basis, we expect these acquisitions to add more than $10 million and adjusted EBITDA.
Speaker Change: We're funding both of these acquisitions through our existing credit line and expect them to be accretive in 2025.
Jason: Included in our 2025 expectations are the benefits of two Tuckin acquisitions.
Jason: First, Fresh Encounter is expected to contribute more than $350 million in retail segment sales, or about $225 million on a total company basis after wholesale eliminations.
Speaker Change: And with that I'd like to turn the call back over to Tony.
Thank you Jason we are really pleased with the progress we are making our strategic initiatives are providing a strong foundation for growth. Furthermore, we are leveraging that progress in our core capabilities to pursue deals that fit into our M&A criteria.
Speaker Change: As Tony mentioned, our wholesale business is also benefiting from this transaction since we will be picking up volume from other distributors, which contributes to the return for this investment.
Speaker Change: One key area of growth is within our retail business and I am pleased to announce that we recently welcomed Jim Barry as our new senior Vice President and Chief retail Officer.
Speaker Change: Jimmy is stepping into this position preceded by our executive Vice President corporate retail comps Watson as Tom will depart the organization and work to support the company through a smooth transition.
Jason: We are making progress on the deal and expect Fresh Encounter to close this month.
Jason: The second acquisition that we announced, Markham, is expected to add more than $20 million in net sales on an annual basis. This deal is on track to close by the end of this year.
Drew oversee retail strategy and operations across Britain Nash is growing rebuilt corporate I'd like to offer Jumah, a warm welcome to Spartan Nash and offer our thanks to Tom for his contributions to the company throughout the years.
Jason: In aggregate, on an annual basis, we expect these acquisitions to add more than $10 million in adjusted EBITDA.
Jason: We're funding both of these acquisitions through our existing credit line and expect them to be accretive in 2025.
Speaker Change: Alright, before we open the call for Q&A I would like to take a moment to thank our veterans Spartan Nash has the privilege of serving active military members and veterans by distributing groceries to more than 160 commentaries and 400 exchanges worldwide.
Speaker Change: And with that, I'd like to turn the call back over to Tony.
Tony Metcalfe: Thank you, Jason. We are really pleased with the progress we are making. Our strategic initiatives are providing a strong foundation for growth. Furthermore, we are leveraging that progress and our core capabilities to pursue deals that fit into our M&A criteria.
This Monday on Veterans day, we honor veterans and their families who sacrificed so much. So we can live freely with.
With gratitude I want to extend my heartfelt thanks to all of our veterans, including the one hundreds of Spartan Nash associates, who are veterans.
Speaker Change: One key area of growth is within our retail business, and I'm pleased to announce that we recently welcomed Juma Berry as our new Senior Vice President and Chief Retail Officer.
With that I'd like to turn the call back over to the operator and open it up for your questions.
Jason: Vice President, Corporate Retail, Tom Swanson, as Tom will depart the organization and work to support the company through a smooth transition.
Thank you if you would like to ask a question. Please press star one on your telephone keypad now you will be placed into the queue in the order received.
Jason: Juma will oversee retail strategy and operations across Spartan Nash's growing retail footprint. I'd like to offer Juma a warm welcome to Spartan Nash and offer our thanks to Tom for his contributions to the company throughout the years.
Speaker Change: Please be prepared to ask your question when prompted.
Speaker Change: Once again, if you have a question. Please press star one on your phone now.
Our first question comes from.
All right.
Speaker Change: Chuck Cerankosky from Northcoast research.
Jason: Before we open the call for Q&A, I would like to take a moment to thank our veterans.
Speaker Change: He's asking your question.
Jason: Spartan Nash has the privilege of serving active military members and veterans by distributing groceries to more than 160 commissaries and 400 exchanges worldwide.
Speaker Change: Good morning, everyone.
Speaker Change: Looking at the Marcum acquisition and the fuel side of it can you talk about what youre doing there the strategic importance.
Jason: This Monday on Veterans Day, we honor veterans and their families who sacrificed so much so we can live freely.
Speaker Change: The importance of being in the fuel distribution business.
Jason: With gratitude, I want to extend my heartfelt thanks to all of our veterans, including the hundreds of Spartan-Nash associates who are veterans.
And how much kind of cost savings does that bring to spark Nash.
Jason: With that, I'd like to turn the call back over to the operator and open it up for your questions.
Speaker Change: Alright, good morning, Jack So yes, sure as I mentioned on the call are there as we run them right. Now are previously ran about 36 of those fuel centers and we.
Speaker Change: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad now. You will be placed into the queue in the order received.
Speaker Change: We find that the stability of that product for for shoppers and our entire focus fueling up is actually something really attractive the margins are good.
Please be prepared to ask your question when prompted.
Jason: Once again, if you have a question, please press star one on your phone now.
Speaker Change: In the.
Speaker Change: The overall revenue is consistent in good as well, so we think thats a place whereas.
Our first question comes from.
Speaker Change: Looking for opportunities to to change and grow our footprint. We have we'll have an eye toward those types of things and this one this one came up and what they really attractive deal for us so.
Chuck Sarankoski from North Coast Research
Please ask your question.
Chuck Sarankoski: Good morning everyone. Looking at the Markham acquisition and the fuel side of it, can you talk about what you're doing there, the strategic importance of being in the fuel distribution business?
Speaker Change: I just jumped in and we think that's possible, we'll actually do more of those.
Speaker Change: Are we looking for ways to expand what we do what we do well.
Jason Monotone: Yeah, Chuck this is Jason.
Jason Monotone: The only thing I'd add here is these are three kind of traditional fuel stations and convenience stores. There are they're relatively co located to existing supermarkets that we have been in the market now here in Michigan, and we see not just opportunities in the C store space, which is which is huge but we also see opportunities in the <unk>.
Speaker Change: and how much kind of cost savings does that bring to Spartan Ash?
Speaker Change: Unknown Speaker And we find that the stability of that product for, for shoppers and for folks fueling up is actually something that's really attractive. The margins are good and, and the.
Jason Monotone: Energy between our suite, our supermarkets, the loyalty programs that exist and those stores based on their location. So we're excited about the <unk> acquisition, we're excited about fuel and convenience stores and you should expect to see us continue to invest both organically and inorganically in that space.
Speaker Change: The overall revenue is consistent and good as well. So we think that's a place where as we're looking for
Speaker Change: opportunities to to change and grow our footprint. We'll have an eye toward those types of things. This one this one came up and looked like a really attractive deal for us. So we jumped in and we think that that's possible. We'll actually do more of those as we look for ways to expand what we do when we do well.
Speaker Change: And switching.
Speaker Change: To another subject private label, how did that do in the quarter and what might you be doing there thats different from your competitors.
Jason Monotone: Hey, Chuck it's Jason again, we had a stable quarter this quarter our penetration on an owned brands is remains very strong in the high 20, percents and we continue to see strength in not just our primary private label offering of our family our primary brand of our family but.
Yeah, yeah, Chuck, this is Jason.
Jason: The only thing I'd add here is these are three kind of traditional fuel stations and convenience stores. They're relatively co-located to existing supermarkets that we have in the market here in Michigan, and we see not just opportunities in the C-Store space, which is huge, but we also see opportunities in the synergy between our supermarkets.
Jason Monotone: Also.
Jason Monotone: We've seen really nice progress in our finance reserve brand extension that we launched about a year ago now and we're excited about the prospects going forward. So to me. It's it's continuation of meeting consumers, where they are at giving them an opportunity.
Chuck Sarankoski: the loyalty programs that exist and those stores based on their location. So we're excited about the Markham acquisition. We're excited about fuel and convenience stores. And you should expect to see us continue to invest both organically and inorganically in that space.
Jason Monotone: Whether they're looking for a premium offering with finance reserve or looking for a discounted offering in today's environment.
Jason Monotone: We want to make sure groceries arent breaking the bank, we want to make sure that we give consumers what they need and and we've been pleased with with our our family and our brands offering as it has helped us improve the flow of of traffic into our stores. We still have work to do on traffic, but we've seen sequential improvement in foot traffic.
Speaker Change: And switching to another subject, private label. How did that do in the quarter and what might you be doing there that's different from your competitors?
Chuck Sarankoski: Hey Chuck, it's Jason again. We had a stable quarter this quarter. Our penetration on own brands has remained very strong in the high 20%. And we continue to see strength in not just our primary private label offering of our family, our primary brand of our family, but also
Jason Monotone: We attribute that to continuing to be competitive in our entire value offering which includes private label.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Alex Slagle from Jefferies. Please ask your question.
Chuck Sarankoski: We've seen really nice progress in our finest reserve brand extension that we launched about a year ago now.
Alex Slagle: Alright, thanks, good morning.
Chuck Sarankoski: and we're excited about the prospects going forward. So to me, it's a continuation of meeting consumers where they're at, giving them an opportunity, whether they're looking for a premium offering with finest reserve or looking for a discounted offering in today's environment, where we want to make sure groceries aren't breaking the bank. We want to make sure that we give consumers what they need, and we've been pleased with our family and our brands offering.
I guess high level, just two acquisitions in a fairly short period I'm wondering what change whether it was specific opportunities that became available.
Available or maybe the valuations are better are really kind of reached that ideal time for Spartan to make this kind of high level thoughts on that and the timing.
Yeah, you bet. This is Tony again.
Alex Slagle: Mike You said sort of all what you said, we as we've mentioned a number of times in these calls we're always going to be sort vigilant for opportunities to grow through M&A in waves with extra support our overall growth strategy.
Chuck Sarankoski: as it's helped us improve the flow of traffic into our stores. We still have work to do on traffic, but we've seen sequential improvement in foot traffic, and we attribute that to continuing to be competitive in our entire value offering, which includes private label.
Speaker Change: What you said is precisely correct.
Speaker Change: These are two opportunities at the time was right for the the.
Thank you.
Speaker Change: The previous owners NAND and there are folks that we know well.
Speaker Change: Our next question comes from Alex Slagle from Jeffries. Please ask your question.
Speaker Change: In case of a fresh and counter we serve them for I believe 58 years since we have a very deep relationship with them with that organization with those stores and.
Speaker Change: All right, thanks. Good morning. I guess high level, just two acquisitions in a fairly short period and wondering what changed, whether it was specific opportunities that became available or maybe the valuations are better or really kind of reached that ideal time for Spartan to make this kind of move.
Speaker Change: And if you link the two.
Speaker Change: I said earlier about the.
Speaker Change: Overall, the overall growth is sort of it sort of as a baseline. This industry. I think you have to be looking for ways to expand and we have and we're going to look for ways to expand geographically if that makes sense and with ways of expanding within the density of our current geographies. So we're always going to be vigilant and I think we will be looking for these types of opportunities on an ongoing basis.
High-Level Thoughts on that and the timing.
Yeah, you bet. This is Tony again.
Speaker Change: It's like you said, it's sort of all of what you said that we, as we've mentioned a number of times in these, these calls.
Speaker Change: Great.
Speaker Change: The Amazon fresh business any any sense, we're closer to getting back on track there with the formatting changes in it.
Chuck Sarankoski: We're always going to be sort of vigilant for opportunities to grow through M&A in ways that actually support our overall growth strategy. And what you said is precisely correct. These are 2 opportunities that the time was right for.
Speaker Change: Start to Reaccelerate that as we look ahead.
Speaker Change: I'm not sure if you assume any of that in the initial 25 outlook.
Chuck Sarankoski: The previous owners and there are folks that we know well, particularly in the case of Fresh Encounter, we have served them for, I believe, 58 years. So we have a very deep relationship with that organization, with those stores.
Speaker Change: How you are setting the stage on that.
Speaker Change: Yes, I think we're getting to a place.
Speaker Change: Greater stability there it's been it's been a couple of years of declines that we've talked about quite a bit on these calls as well.
Speaker Change: We're working with Amazon in the on the current reality of that business and finding ways to grow and be more.
Chuck Sarankoski: And if you link the talk I said earlier about, you know, the
Chuck Sarankoski: The overall growth is sort of at the baseline in this industry. I think you have to be looking for ways to expand, and we're going to look for ways to expand geographically, if that makes sense, and look for ways to expand even within the density of our current geography. So we're always going to be vigilant, and I think we'll be looking for these types of opportunities on an ongoing basis.
Speaker Change: Productive way for both us and for our customer.
Speaker Change: We're not counting on a lot of growth there.
Speaker Change: In the future of our accounting on having good grammar measure with Amazon and moving our business forward together in partnership we've talked about.
Speaker Change: Alright, thanks for the update.
Speaker Change: Great. And the Amazon Fresh Business, any sense we're closer to getting back on track there with the formatting changes?
Speaker Change: Our next question comes from Ben Wood from BMO capital markets. Please go ahead.
Ben Wood: Hi, good morning.
Speaker Change: Start to reaccelerate that as we look ahead. And I'm not sure if you assume any of that in the initial 25 outlook or how you're setting the stage on that.
This is Ben.
On for Kelly here.
I wanted to can you talk us through the cadence of the quarter and maybe how any update on quarter to date.
Speaker Change: Yeah, I think we're getting to a place of greater stability there. It's been it's been a couple years of declines. We've talked about, you know, quite a bit on these calls as well.
Ben Wood: As far as like sales volumes. It seems like maybe you got some volume improvement on the retail side inflation and promotional perspective anything incremental you are seeing happening with consumer behavior.
Speaker Change: And we're working with Amazon on the current realities of that business and finding ways to grow and be more.
Speaker Change: we can grow in a productive way for both us and for our customer. We're not counting on a lot of growth there, in the future we're counting on having a good, a great relationship with Amazon and moving our businesses forward together. And partnership we've talked about, you know,
Speaker Change: Sure I think one other quick one no kind of working backwards we are.
Speaker Change: And we'll talk we can talk more about that as I mentioned the more questions that we were doing in stores on our consumer.
Speaker Change: Customer value proposition.
Speaker Change: And one of those things you mentioned a minute ago is finding the price points and sort of it.
All right. Thanks for the update.
The overall <unk>.
Speaker Change: Value that makes sense for shoppers and so as we're thinking about that and testing ideas. We're testing both doing more on a more deal and doing a little bit more of our stuff is sold on deal as well as looking for the desk that actually speaks to our shoppers. So these last quarter.
Speaker Change: Our next question comes from Ben Wood from BMO Capital Markets. Please go ahead.
Hi, good morning. This is Ben on for Kelly here.
Unknown Speaker Um,
Speaker Change: Wanted to talk us through the cadence of the quarter and maybe how any update on quarter to date
Speaker Change: Some of our work in some of our geographies and growing to more in depth.
Speaker Change: Looking for again with another resonates with shoppers and that types of deals. They are looking for so that was certainly.
Speaker Change: As far as like sales, volumes, it seems like maybe you got some volume improvement on the retail side, inflation and promotional perspective, anything incremental you're seeing happening with consumer behavior?
Speaker Change: We'll certainly be looking at that as a tool for how we grow our business organically.
Jason Monotone: Yes, Ben this is Jason I think the key.
Speaker Change: Sure, I think one, I'll just make one note kind of working backwards. We are, and we'll talk, we can talk more about this. I imagine I have more questions about what we're doing in stores on our customer value proposition. One of those things you mentioned a minute ago is finding the price points and sort of the overall price value that makes sense for shoppers.
Speaker Change: Tony alluded to the cadence.
Speaker Change: Earlier in the call we had a sequential improvement throughout the throughout the quarter finished the comps at minus 0.7 overall our R. R.
Our growth in retail was was just under 2% our supermarkets were a little north of 2%.
Speaker Change: And I don't want to lose sight of the wholesale business, we talked a little bit earlier about about Amazon and its impact on our wholesale business. We were up nearly 3% ex Amazon. So we've been we've been pleased with with elements of our growth and pleased that we can that we're continuing to drive performance. Obviously, we've got some headwinds we've been working through in the past with Amazon.
Speaker Change: And so as we're thinking about that and testing ideas, we are testing both.
Speaker Change: doing more deals, doing a little bit more stuff sold on deals, as well as looking for the depth that actually speaks to our shoppers. So in these last quarter, we did some work in some of our geographies on going to more depth and looking for, again, with the stuff that resonates with shoppers and that types of deals they're looking for. So it was certainly
Speaker Change: And that's starting to stabilize.
Speaker Change: And we're looking forward to to really building on that the growth, thus far and and that's why you see us.
Speaker Change: We'll certainly be looking at that as a tool for how we grow our business organically.
Speaker Change: Focusing on programs like CPP, we've had some really nice early successes and we're learning and building on that growth, particularly in our fresh space and that that gave us the confidence to come out and say, we see next year.
Yeah, Ben, this is Jason. I think the.
Speaker Change: Tony alluded to the cadence earlier in the call. We had sequential improvement throughout the quarter, finished the comps at minus 0.7.
Speaker Change: Kind of low single digit growth, despite our markets growing it at a 0.4% and we see bottom line growth continuing to drive operating leverage with mid single digit EBITDA growth. So together, we feel we feel good about where we're at and we want to continue to drive the margin enhancing programs the growth initiatives that we've got underway.
Overall, our growth in retail was just under 2%.
Our supermarkets were a little north of 2%.
Speaker Change: And I don't want to lose sight of the wholesale business. We talked a little bit earlier about, uh, about Amazon and its impact and our wholesale business. Uh, we, we were up nearly 3% X Amazon. So we've been, uh, we've been pleased with, uh, with elements of our growth and pleased that we can, that we're continuing to drive performance.
Speaker Change: We continue to build on this success. Despite the recent challenges in the marketplace. So we control we can control and and then.
Speaker Change: Focus on delivering bottom line value for shareholders.
Speaker Change: Obviously, we've got some headwinds we've been working through in the past with Amazon and that's starting to stabilize. And we're looking forward to really building on the growth thus far. And that's why you see us.
Speaker Change: Okay.
Speaker Change: Great. That's helpful. And then just wanted to switch gears here.
Speaker Change: Talk about maybe kind of the value added services.
Speaker Change: focusing on programs like CBP where we've had some really nice early successes and we're learning and building on that growth particularly in our fresh space.
Speaker Change: And then in particular kind of.
Speaker Change: Digital.
Speaker Change: And where your independent customers stand with digital I think in this space.
Speaker Change: and that gave us the confidence to come out and say we see next year kind of low single digit growth despite our markets growing at 0.4%.
Speaker Change: We've seen tremendous digital growth from some of the national.
Peers.
Speaker Change: So wondering what you're hearing from that or are you feeling like there is demand for more of that with the customers.
Speaker Change: and we see bottom-line growth continuing to drive operating leverage with mid-single-digit EBITDA growth. So together, we feel good about where we're at and we want to continue to drive the margin-enhancing programs, the growth initiatives that we've got underway to continue to build on the success despite the recent challenges in the marketplace. So we control what we can control.
Looking for more of that channel.
Speaker Change: Any commentary or learnings that you are seeing anything youre, taking it on on the digital front.
Speaker Change: Well, we are we have a team that is doing great work on growing our overall digital capability for our stores and then where we can offer to our wholesale customers as well we have.
and then focus on delivering bottom line value for shareholders.
Speaker Change: I think some of the stuff that we see anywhere folks are really exploiting digital our R&D easily.
Okay great that's that's helpful and then
Speaker Change: I just wanted to switch gears here and talk about maybe kind of the value-added services and then in particular kind of digital and where your independent customers stand with digital, I think, in the space.
Speaker Change: This is a combination of.
Speaker Change: General merchandise and grocery our stores are going to be typically our customers started to be smaller typically more rural.
Probably will not be given to the types of growth.
Speaker Change: Growth, who sees this as a big metro folks can combine that with soft goods and general merchandise. When there is a desire for that and we're growing it we're growing in our stores.
Speaker Change: Hiding some of those services to our customers as well.
Speaker Change: Yes, great question, maybe I'll take a half a step back then.
Speaker Change: looking for more of that Omni channel, just any commentary or learnings that you're seeing, anything you're digging in on, on the digital front.
Speaker Change: Sure.
Speaker Change: Our value proposition with our customers includes an entire suite of.
Speaker Change: Services and that suite of services is something where we bring value not just because they individually create value, but as a package and the skills and capabilities, we have as a retailer can come to bear.
Speaker Change: We have a team that is doing great work on growing our overall digital capability for our stores and what we can offer to our wholesale customers as well. We have, I think some of the stuff that we see anywhere folks are really exploiting digital are either the, well, mostly it's a combination of.
Speaker Change: And help our independent customers grow and develop and make them win in their business spaces now specifically as it relates.
Speaker Change: As it relates to to the digital space more broadly maybe a couple of things I'll call out we've had.
Speaker Change: of General Merchandise and Grocery. Our stores are going to be typically, our customer stores typically smaller, typically more rural. They probably will not be given to the types of growth we've seen for the big metro folks. You can combine that with soft goods and
Speaker Change: We've had a lot more interest from our customers in electronic shelf labels and we've been rolling those out beginning to roll those out with certain customers. We've had some work around enhanced media and the digital media space. So more broadly when you think about digital I know I think you were alluding to.
Speaker Change: and General Merchandise. But there's a desire for that. We're growing it. We're growing in our stores and we are providing some of those services to our customers as well.
Speaker Change: Digital or online ordering but but more broadly the ecosystem that we play in and and we're providing services and offering those to our customers in a way that helps build an entire package of value. So kind of early early phases, but enhanced media electronic shelf tags, and helping people, helping our customers reach people in new digital ways.
Speaker Change: Yeah, it's a great question. Maybe I'll take a half a step back then. Our value proposition with our customers includes an entire suite of services and that suite of services is something where we bring value not just because they individually create value but as a package.
Speaker Change: and and the skills and capabilities we have as a retailer can come to bear.
Speaker Change: Okay, great. Thank you very much.
Speaker Change: and help our independent customers grow and develop and make them win in their business spaces. Now, specifically, as it relates to the digital space more broadly, maybe a couple of things I'll call out. We've had
Speaker Change: If you would like to ask a question. Please press star one on your telephone keypad now you will be placed into the queue. In the order received please be prepared to ask your question. When prompted once again if you have a question. Please press star one on your phone now.
Speaker Change: We've had a lot more interest from our customers in electronic shelf labels, and we've been rolling those out, beginning to roll those out with certain customers.
Speaker Change: We've had some work around enhanced media and the digital media space.
Speaker Change: Our next question comes from Scott <unk> from RF or five capital.
Speaker Change: So more broadly, when you think about digital, I know, I think you were alluding to kind of just digital or online ordering, but, but more broadly, the, the ecosystem that we play in and, uh, and, and we're providing services and offering those to our customers in a way that helps build an entire package of value. So kind of early, early phases, but, uh, enhanced media, electronic shelf tags.
Speaker Change: Please ask your question.
Speaker Change: Hey, Tony Hey, Jason Thanks for thanks for taking my questions.
Speaker Change: Hello, I kind of had to.
Speaker Change: I guess the first thing is when you look at the industry Okay.
Speaker Change: Some trends emerging.
Speaker Change: One is just growth in the broad line companies Walmart Amazon outside the Amazon fresh.
Speaker Change: and helping people, helping our customers reach people in new digital ways.
Speaker Change: And then too.
Speaker Change: Organic and specialty.
Okay, great. Thank you very much.
Speaker Change: So I guess my question is how do you.
Speaker Change: Bat slash address these trends.
Speaker Change: If you would like to ask a question, please press star 1 on your telephone keypad now. You will be placed into the queue in the order received.
Speaker Change: With your business as it currently sits.
Speaker Change: And then how do you think about these trends with M&A.
Future M&A.
Speaker Change: Please be prepared to ask your question when prompted. Once again, if you have a question, please press star 1 on your phone now.
Speaker Change: Great Great question.
Speaker Change: A couple of thoughts here so as we.
Speaker Change: As we as we think about both our in our consumer value proposition as well as the acquisitions. We're looking at we would have a hard eye toward <unk>.
Speaker Change: Our next question comes from Scott Mushkin from RF, R5 Capital.
Please ask your question.
Speaker Change: <unk>.
Speaker Change: Hey Tony, hey Jason, thanks for thanks for taking my questions. So I kind of had two. I guess the first thing is you look at the industry there's definitely some trends emerging where one is just growth in the broad line companies, Walmart, Amazon, outside the Amazon Fresh.
Speaker Change: Looking for those types of products that are that our shoppers are looking for particularly local is a big thing in our market. So as we think about how.
Speaker Change: These stores again, which are you going to be skewed toward more suburban rural.
Speaker Change: And more and more local products and those that have had that same kind of specialty impact. If you will they are specialized for that market.
and then two is kind of organic and specialty.
Speaker Change: So, I guess my question is, you know, how do you combat slash address these trends with your business as it currently sits? And then how do you think about these trends with M&A?
Speaker Change: And often very unique product, so we're seeing more and more take on that.
Speaker Change: Do you think about what we did with that with the met counts for example that acquisition has some very significant focus on the local and sort of a specialty type items in that community really wants. So so we think that's actually when you really empower empower future as we think about the overall customer value proposition in our stores and making sure those kind of fresh healthy and local options and exploring those.
Future M&A
Speaker Change: Great, great question. And I think I'll offer a couple of thoughts here. So as we
Unknown Speaker
Speaker Change: As we think about both our consumer value proposition as well as the acquisition, we have a keen eye toward looking for those types of products that our shoppers are looking for, particularly local is a big thing in our market. So as we think about how these stores, again, which are going to be skewed toward more suburban, rural, we're bringing in more and more local products and those that have that same kind of specialty impact, if you will, they're specialized for that market.
Speaker Change: <unk> more and more because we're seeing the same thing that you would use an articulated around around that that desire and it will be it'll be something we'll have an eye toward as we think about acquisitions as well and think about how we how we actually get more learnings more types of.
Speaker Change: Elements of our overall.
Speaker Change: Portfolio that speak to that.
Speaker Change: Okay. Thanks Bye.
Speaker Change: My second question.
Speaker Change: So our research, let's say that yes.
Speaker Change: I'll be a lot more from.
Further step up in promotions coming from CPG.
Speaker Change: and often very unique products. So we're seeing more and more take on that. If you think about what we did with the Metcalfe, for example, that acquisition has a very significant focus on the local and specialty-type items that community really wants. So we think that's actually going to be a really important part of our future as we think about the overall customer value proposition in our stores, making sure those kind of fresh, healthy, and local options and exploring those boundaries more and more because we're seeing the same thing that you just articulated around that desire, and it'll be something we'll have an eye to.
Speaker Change: I don't know if thats, what youre thinking as we look at 25 and how.
Speaker Change: How should we if you agree with me how should we think of it.
Speaker Change: In relation to your business as we get into 'twenty five.
Speaker Change: Yes, as I mentioned, a little bit ago.
Speaker Change: We are.
Speaker Change: Looking at ideas around having more more and more differentiated items as well as differentiated price points and we have the same thanks to desire for growth as our and their suppliers. So we are actually working in lockstep with them to find ways to find those deals finding the right way to merchandise them and find those price points and speak to consumers.
Speaker Change: Award, as we think about acquisitions as well, and think about how we actually get more, get more learnings and more types of, you know, elements of our overall portfolio that speak to that.
Speaker Change: Looking at.
Speaker Change: More ideas around bundling around multiple items around the kind of buy one get one by buy three get to those kinds of things and Mercy, we're seeing that actually is starting to resonate with some of our some of our shoppers in some of our community. So I think what you I would say likely see received from US any way you can see us doing more of that and we've had.
Speaker Change: Okay, thanks. My second question, so our research would say that you know there's probably a lot more from a further step up in promotions coming from CPG.
Speaker Change: I don't know if that's what you're thinking as we look at 25 and and how should we if you agree with me how should we think of it
Speaker Change: <unk> be more more depth over the course of this year as we're exploring those ideas and trying to get to again get the right value for the.
in relation to your business as we get into 25.
Speaker Change: People come into our stores.
Speaker Change: And of course at <unk>.
Speaker Change: Precisely right. The food manufacturers are also keenly desirous of finding those right price points as well. So I think youll see I think you'll see more of that.
Speaker Change: Yes, as I mentioned a little bit ago, the, we are.
Speaker Change: looking at ideas around having more and more differentiated items as well as differentiated price points. And we have the same types of desire for growth as our suppliers do. So we're actually working in lockstep with them to find ways to find those deals, find the right way to merchandise them and find those price points that speak to consumers. So we're looking at more ideas around bundling, around multiple items, around the kind of buy one, get one, buy three, get two, those kinds of things. And we're seeing that actually starting to resonate with some of our shoppers and some of our communities. So I think what you, I would say, likely see, what you see from us anyway, you're going to see us doing more of that. And we've had sequentially more depth.
Speaker Change: Yes, Scott this is right up our ally with the merchant.
Speaker Change: Hey, Scott sorry about that it is right up our early with the merch transformation. We've been focused on this for the last the last few years building out capabilities with respect to our engagement and our vendor relationships and really building on those relationships and you've heard us say this before but we think when our consumers when our customers will win.
Speaker Change: We'll win and our vendors will win and that's the way we think about it across the entire supply chain and we want to make sure we bring the best value of our shoppers and along the way our suppliers will win as well in.
Speaker Change: In the in this tighter volume environment across the United States and particularly in our geographies.
Speaker Change: over the course of this year as we're exploring those ideas and trying to get the right value for the people coming to our stores. And of course, as you said, it's precisely right, the food manufacturers are also keenly desirous of finding those right price points as well. So I think you'll see more of that.
Speaker Change: We expect continued promotional activity and investments from from the vendors along the way so that we all continue to win together.
Speaker Change: Hey, Jason is that.
Jason Monotone: Your thoughts in 'twenty five.
Part of why you think EBITDA growth will be there as at the end of the vendor funding will continue to accelerate as a as they try to get.
Speaker Change: Yeah, Scott, this is right up our alley with the merchants.
Speaker Change: Hey Scott, sorry about that. It is right up our alley with the merch transformation. We've been focused on this for the last few years, building out capabilities with respect to our engagement and our vendor relationships.
So their volumes back on track.
Speaker Change: Yes, Scott, we're counting on our programs, particularly around the margin enhancing activities continuing to deliver value. We also recognize it is on the backdrop of the environment. We're in our geographies the market growth is less than the national market growth and that's why we wanted to come out and be transparent now.
Speaker Change: and really building on those relationships. And you've heard us say this before, but we think when our consumers win, our customers will win.
Speaker Change: We want to make sure we bring the best value to our shoppers and along the way our suppliers will win as well. In this tighter volume environment across the United States and particularly in our geographies, I'd expect continued promotional activity and investments from the vendors along the way so that we all continue to win together.
Speaker Change: Now with the kind of the latest or most recent changes in market conditions and say, we believe that our programs work. They think we believe they create long term value.
Were just building it off a lower base with the with the starting point coming out of 2024.
Speaker Change: Alright, perfect. Thanks, guys.
Hey Jason, is that...
Speaker Change: Your thoughts in 25? You know, part of why you think EBITDA growth will be there is that, you know, the vendor funding will continue to accelerate as they try to get their volumes back on track.
Speaker Change: There are no other questions at this time I will now turn the call back over to Tony <unk> for closing remarks.
Tony Carson: Alright, Thank you and thank you all for your participation in today's call. We certainly appreciate your interest in Spartan Nash and from our family the Euro as we like to wish you all a very pleasant good day.
Speaker Change: Yes, Scott, we're counting on our programs, particularly around the margin enhancing activities, continuing to deliver value.
This concludes today's conference call. Thank you for attending.
Speaker Change: We also recognize it's on the backdrop of an environment where
[noise].
Speaker Change: in our geographies, the market growth is less than the national market growth. And that's why we wanted to come out and be transparent now with the kind of the latest or most recent changes in market conditions and say, we believe that that our programs work. They think we believe they create long term value. We're just building it off a lower base with the starting point coming out of 2024.
All right, perfect. Thanks, guys.
Speaker Change: There are no other questions at this time. I will now turn the call back over to Tony Sarsam for closing remarks.
Tony Sarsam: All right, well thank you and thank you all for your participation in today's call. We certainly appreciate your interest in Spartan-Nash and from our family to yours, we'd like to wish you all a very pleasant good day.
This concludes today's conference call. Thank you for attending.