Exhibit 99.1
Kroger Reports First
Quarter 2022 Results
and Raises Full-Year
Guidance
First Quarter Highlights
| · | Identical Sales without fuel increased 4.1% |
| · | Operating Profit of $1,505 million; Adjusted FIFO Operating Profit of $1,601
million |
| · | EPS of $0.90; Adjusted EPS of $1.45 |
| · | Company is widening its competitive moats to deliver value for customers |
| o | Fresh Department identical sales increased 5.2% |
| o | Our Brands identical sales increased 6.3% |
| o | Digitally engaged households grew by more than half a million and digital coupon downloads increased 11% |
CINCINNATI, June 16, 2022 -- The
Kroger Co. (NYSE: KR) today reported its first quarter 2022 results and will update investors on how Leading with Fresh and Accelerating
with Digital initiatives continue to position Kroger for long-term sustainable growth.
Comments from Chairman and CEO Rodney McMullen
“Kroger achieved strong first quarter results as we successfully
executed on our strategy of Leading with Fresh and Accelerating with Digital. We are incredibly proud of our associates who continue
to put the customer at the center of everything we do.
Our team is doing an outstanding job managing costs in an inflationary
environment, which is allowing us to continue to invest in our associates while providing our customers the freshest food at affordable
prices when and where they need it. We are delivering everyday value through personalized experiences, trusted Our Brands products,
data-driven promotions, and seamless e-commerce solutions.
Looking ahead, we are well positioned to continue delivering for our
customers, investing in our associates, and driving sustainable returns for shareholders.”
First Quarter Financial Results
| | |
1Q22 ($ in millions; except EPS) | | |
1Q21 ($ in millions; except EPS) | |
| ID Sales* (Table 4) | |
| 4.1 | % | |
| (4.1) | % |
| EPS | |
$ | 0.90 | | |
$ | 0.18 | |
| Adjusted EPS (Table 6) | |
$ | 1.45 | | |
$ | 1.19 | |
| Operating Profit | |
$ | 1,505 | | |
$ | 805 | |
| Adjusted FIFO Operating Profit (Table 7) | |
$ | 1,601 | | |
$ | 1,375 | |
| FIFO Gross Margin Rate* | |
| Decreased 26 basis points | | |
| | |
| OG&A Rate* | |
| Decreased 46 basis points | | |
| | |
*without fuel and adjustment items, if applicable
Total company sales were $44.6 billion in the first quarter, compared
to $41.3 billion for the same period last year. Excluding fuel, sales increased 3.8% compared to the same period last year.
Gross margin was 21.6% of sales for the first quarter. The FIFO gross
margin rate, excluding fuel, decreased 26 basis points compared to the same period last year. This decrease was primarily attributable
to continued strategic price investments and higher supply chain costs offset by sourcing benefits and the cycling of a write-down related
to a donation of personal protective equipment inventory from prior year.
The LIFO charge for the quarter was $93 million, compared to a LIFO
charge of $37 million for the same period last year driven by higher inflation.
The Operating, General & Administrative rate decreased 46
basis points, excluding fuel and adjustment items, which reflects sales leverage, continued execution of cost savings initiatives, and
lower contributions to multi-employer pension plans offset by investments in associates.
The income tax rate for the first quarter was 18.0%, compared to 20.2%
for the same period last year. This decrease was primarily attributable to higher tax deductions related to employee stock option exercises.
Capital Allocation Strategy
Kroger continues to generate strong free cash
flow and remains committed to investing in the business to drive long-term sustainable net earnings growth, maintaining its current investment
grade debt rating, and returning excess free cash flow to shareholders via share repurchases and a growing dividend over time.
Kroger's net total debt to adjusted EBITDA
ratio is 1.68, compared to 1.79 a year ago (Table 5). The company's net total debt to adjusted EBITDA ratio target range is 2.30 to 2.50.
During the quarter, Kroger repurchased $665
million shares and as of the end of the first quarter, $301 million remains on the board authorization announced on December 30,
2021.
2022 Guidance
Comments from CFO Gary Millerchip
“Our relentless focus on executing our
strategy and sustained food at home trends led to a strong first quarter. The Kroger team is effectively navigating a dynamic retail environment.
Our diverse and resilient business model gives us confidence to raise our full-year guidance. We now expect identical sales without fuel
to be in the range of 2.5% to 3.5%, adjusted FIFO operating profit of $4.3 billion to $4.4 billion, and adjusted net earnings per diluted
share to be in the range of $3.85 to $3.95. We remain confident in our ability to deliver sustainable earnings growth and total shareholder
returns of 8-11% over time.”
Full-Year 2022 Guidance - Updated
| | |
IDs (%) | | |
EPS ($) | | |
Operating
Profit ($B) | | |
Tax
Rate** | | |
Cap Ex ($B) | | |
Free Cash
Flow ($B)*** | |
| Adjusted* | |
| 2.5% - 3.5% | | |
| $3.85 - $3.95 | | |
| $4.3 - $4.4 | | |
| 22% | | |
| $3.8 - $4.0 | | |
| $2.0 - $2.2 | |
* Without adjusted items, if applicable; Identical sales is without
fuel; Operating profit represents FIFO Operating Profit. Kroger is unable to provide a full reconciliation of the GAAP and non-GAAP measures
used in 2022 guidance without unreasonable effort because it is not possible to predict certain of our adjustment items with a reasonable
degree of certainty. This information is dependent upon future events and may be outside of our control and its unavailability could
have a significant impact on 2022 GAAP financial results.
** This rate reflects typical tax adjustments and does not reflect
changes to the rate from the completion of income tax audit examinations or changes in tax laws, which cannot be predicted.
*** 2022 free cash flow guidance includes a $300M payment of deferred
payroll taxes. This excludes planned payments related to the restructuring of multi-employer pension plans.
First Quarter 2022 Highlights
Leading with Fresh
| · | Achieved the two highest single-day floral sales
in Kroger history, led by Valentine’s Day and Mother’s Day and solidified the company’s place as the nation’s
largest floral retailer |
| · | Accelerated End-to-End Fresh Produce initiative
with 355 new stores certified, driving higher fresh sales during the quarter |
| · | Launched 239 new, seasonal Our Brands items,
including fresh products to elevate summer cooking |
| · | Unveiled
a study completed with the University of Cincinnati and Kroger Health to understand how Kroger’s
Food as Medicine platform and dietitians can support customers’ goals
to incorporate more fresh foods and live healthier lives by leveraging technology, health
education, and the OptUP shopping tool |
Accelerating with Digital
| · | Opened two new Kroger Delivery facilities, powered by Ocado, in Dallas, Texas
and Pleasant Prairie, Wisconsin allowing Kroger to serve fresh and affordable products directly to more households |
| · | Expanded the Kroger Delivery network by opening three new spoke
facilities, which serve as last-mile cross-dock locations, including Columbus and Louisville in existing geographies, as well as
Miami, a new geography |
| · | Introduced
national e-commerce experience that expands Kroger's Home and
Baby offerings by selling several thousand new products on Kroger’s Ship Marketplace
in collaboration with Bed Bath & Beyond Inc. |
Associate Experience
| · | Held
nationwide hybrid hiring event with opportunities in retail, e-commerce, manufacturing,
supply chain, merchandising, logistics, corporate, pharmacy, and healthcare roles |
| · | Launched Microsoft Teams Rooms in supermarket locations to improve collaboration
and training capabilities for associates |
| · | Celebrated 45 associates who were recognized by Progressive Grocer to represent
the Top Women in Grocery across three categories including, Senior-Level Executives, Rising Stars and Store Leaders |
| · | Continued Kroger’s commitment to associate well-being by providing
new training to more than 1,500 leaders to develop the skills needed to identify signs and symptoms of mental health problems, demonstrate
support for associates experiencing a crisis, and guidance for self-care |
Live Our Purpose
| · | Directed $210 million of $350 million in annual charitable giving to end
hunger in our communities and gave a record one-year total of 546 million meals to people across the country while achieving 79% waste
diversion from landfills company-wide |
| · | Reduced
barriers to COVID-19 treatment options nationwide by supporting the “Test to Treat”
initiative at The Little Clinic locations for patients exhibiting symptoms of COVID-19 |
| · | Announced
new partnership
with USO to bring mobile food programming to serve local military communities |
| · | Ranked
25th on the 2022 Axios Harris Poll 100, an annual
ranking of the reputations of the most visible U.S. companies |
About Kroger
At
The Kroger Co.
(NYSE: KR), we are dedicated to our Purpose: to Feed the Human Spirit™. We are, across our family of companies nearly half a million
associates who serve over eleven million customers daily through a seamless digital shopping experience and 2,723 retail food stores
under a variety of banner names, serving
America through food inspiration and uplift, and creating #ZeroHungerZeroWaste communities by 2025. To learn more about us, visit our newsroom and investor
relations site.
Kroger's first quarter 2022 ended on May 21,
2022.
Note: Fuel sales have historically had a low
gross margin rate and operating expense rate as compared to corresponding rates on non-fuel sales. As a result, Kroger discusses the changes
in these rates excluding the effect of fuel.
Please refer to the supplemental information
presented in the tables for reconciliations of the non-GAAP financial measures used in this press release to the most comparable GAAP
financial measure and related disclosure.
This press release contains certain statements
that constitute "forward-looking statements" about the future performance of the company. These statements are based on management's
assumptions and beliefs in light of the information currently available to it. Such statements are indicated by words or phrases such
as "achieve," "committed," "confident," "continue," "deliver," “driving,”
"expect," "future," "guidance," "strategy," "target," "trends," and "well-positioned."
Various uncertainties and other factors could cause actual results to differ materially from those contained in the forward-looking statements.
These include the specific risk factors identified in "Risk Factors" in our annual report on Form 10-K for our last fiscal
year and any subsequent filings, as well as the following:
Kroger's ability to achieve sales, earnings,
incremental FIFO operating profit, and adjusted free cash flow goals may be affected by: COVID-19 pandemic related factors, risks and
challenges, including among others, the length of time that the pandemic continues, future variants, mutations or related strains of the
virus and the effectiveness of vaccines against variants, continued efficacy of vaccines over time and availability of vaccine boosters,
the extent of vaccine refusal, and global access to vaccines, as well as the effect of vaccine and/or testing mandates and related
regulations, the potential for additional future spikes in infection and illness rates including breakthrough infections among the fully
vaccinated, and the corresponding potential for disruptions in workforce availability and customer shopping patterns, re-imposed restrictions
as a result of resurgence and the corresponding future easing of restrictions, and interruptions in domestic and global supply chains
or capacity constraints; whether and when the global pandemic will become endemic, the pace of recovery when the pandemic subsides or
becomes endemic, which may vary materially over time and among the different regions we serve; labor negotiations; potential work stoppages;
changes in the unemployment rate; pressures in the labor market; changes in government-funded benefit programs; changes in the types and
numbers of businesses that compete with Kroger; pricing and promotional activities of existing and new competitors, including non-traditional
competitors, and the aggressiveness of that competition; Kroger's response to these actions; the state of the economy, including interest
rates, the current inflationary environment and future potential inflationary and/or deflationary trends and such trends in certain commodities,
products and/or operating costs; the geopolitical environment including the war in Ukraine; unstable political situations and social unrest;
changes in tariffs; the effect that fuel costs have on consumer spending; volatility of fuel margins; manufacturing commodity costs; diesel
fuel costs related to Kroger's logistics operations; trends in consumer spending; the extent to which Kroger's customers exercise caution
in their purchasing in response to economic conditions; the uncertainty of economic growth or recession; stock repurchases; changes in
the regulatory environment in which Kroger operates; Kroger's ability to retain pharmacy sales from third party payors; consolidation
in the healthcare industry, including pharmacy benefit managers; Kroger's ability to negotiate modifications to multi-employer pension
plans; natural disasters or adverse weather conditions; the effect of public health crises or other significant catastrophic events; the
potential costs and risks associated with potential cyber-attacks or data security breaches; the success of Kroger's future growth plans;
the ability to execute our growth strategy and value creation model, including continued cost savings, growth of our alternative profit
businesses, and our ability to better serve our customers and to generate customer loyalty and sustainable growth through our strategic
moats of fresh, our brands, personalization, and seamless; and the successful integration of merged companies and new partnerships. Our
ability to achieve these goals may also be affected by our ability to manage the factors identified above. Our ability to execute our
financial strategy may be affected by our ability to generate cash flow.
Kroger's effective tax rate may differ from
the expected rate due to changes in tax laws, the status of pending items with various taxing authorities, and the deductibility of certain
expenses.
Kroger assumes no obligation to update the
information contained herein unless required by applicable law. Please refer to Kroger's reports and filings with the Securities and Exchange
Commission for a further discussion of these risks and uncertainties.
Note: Kroger's quarterly conference call
with investors will broadcast live at 10 a.m. (ET) on June 16, 2022 at ir.kroger.com. An on-demand replay of the
webcast will be available at approximately 1 p.m. (ET) on Thursday, June 16, 2022.
1st Quarter 2022 Tables Include:
| 1. | Consolidated Statements of Operations |
| 2. | Consolidated Balance Sheets |
| 3. | Consolidated Statements of Cash Flows |
| 4. | Supplemental Sales Information |
| 5. | Reconciliation of Net Total Debt and Net Earnings Attributable to The Kroger Co. to Adjusted EBITDA |
| 6. | Net Earnings Per Diluted Share Excluding the Adjustment Items |
| 7. | Operating Profit Excluding the Adjustment Items |
--30--
Contacts: Media: Erin Rolfes (513) 762-1304; Investors: Rob Quast (513)
762-4969
Table 1.
THE KROGER CO.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
(unaudited)
| | |
FIRST QUARTER | |
| | |
2022 | | |
2021 | |
| SALES | |
$ | 44,600 | | |
| 100.0% | | |
$ | 41,298 | | |
| 100.0% | |
| | |
| | | |
| | | |
| | | |
| | |
| OPERATING EXPENSES | |
| | | |
| | | |
| | | |
| | |
| MERCHANDISE COSTS, INCLUDING ADVERTISING,
WAREHOUSING AND TRANSPORTATION (a), AND LIFO CHARGE (b) | |
| 34,952 | | |
| 78.3 | | |
| 31,947 | | |
| 77.4 | |
| OPERATING, GENERAL AND ADMINISTRATIVE (a) | |
| 6,997 | | |
| 15.7 | | |
| 7,424 | | |
| 18.0 | |
| RENT | |
| 256 | | |
| 0.6 | | |
| 261 | | |
| 0.6 | |
| DEPRECIATION AND AMORTIZATION | |
| 890 | | |
| 2.0 | | |
| 861 | | |
| 2.1 | |
| | |
| | | |
| | | |
| | | |
| | |
| OPERATING PROFIT | |
| 1,505 | | |
| 3.4 | | |
| 805 | | |
| 2.0 | |
| | |
| | | |
| | | |
| | | |
| | |
| OTHER INCOME (EXPENSE) | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | |
| INTEREST EXPENSE | |
| (177 | ) | |
| (0.4 | ) | |
| (165 | ) | |
| (0.4 | ) |
| NON-SERVICE COMPONENT OF COMPANY-SPONSORED PENSION PLAN
COSTS | |
| 16 | | |
| - | | |
| 18 | | |
| - | |
| LOSS ON INVESTMENTS | |
| (532 | ) | |
| (1.2 | ) | |
| (479 | ) | |
| (1.2 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| NET EARNINGS BEFORE INCOME TAX EXPENSE | |
| 812 | | |
| 1.8 | | |
| 179 | | |
| 0.4 | |
| | |
| | | |
| | | |
| | | |
| | |
| INCOME TAX EXPENSE | |
| 146 | | |
| 0.3 | | |
| 36 | | |
| 0.1 | |
| | |
| | | |
| | | |
| | | |
| | |
| NET EARNINGS INCLUDING NONCONTROLLING INTERESTS | |
| 666 | | |
| 1.5 | | |
| 143 | | |
| 0.4 | |
| |
| | | |
| | | |
| | | |
| | |
| NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | |
| 2 | | |
| - | | |
| 3 | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | |
| NET EARNINGS ATTRIBUTABLE TO THE
KROGER CO. | |
$ | 664 | | |
| 1.5% | | |
$ | 140 | | |
| 0.3% | |
| | |
| | | |
| | | |
| | | |
| | |
| NET EARNINGS ATTRIBUTABLE TO THE KROGER CO. PER BASIC COMMON SHARE | |
$ | 0.91 | | |
| | | |
$ | 0.18 | | |
| | |
| | |
| | | |
| | | |
| | | |
| | |
| AVERAGE NUMBER OF COMMON SHARES USED IN BASIC CALCULATION | |
| 722 | | |
| | | |
| 752 | | |
| | |
| | |
| | | |
| | | |
| | | |
| | |
| NET EARNINGS ATTRIBUTABLE TO THE KROGER CO. PER DILUTED COMMON SHARE | |
$ | 0.90 | | |
| | | |
$ | 0.18 | | |
| | |
| | |
| | | |
| | | |
| | | |
| | |
| AVERAGE NUMBER OF COMMON SHARES USED IN DILUTED CALCULATION | |
| 733 | | |
| | | |
| 760 | | |
| | |
| | |
| | | |
| | | |
| | | |
| | |
| DIVIDENDS DECLARED PER COMMON SHARE | |
$ | 0.21 | | |
| | | |
$ | 0.18 | | |
| | |
| Note: |
Certain percentages may not sum due to rounding. |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Note: |
The Company defines First-In First-Out (FIFO) gross profit as sales minus merchandise costs, including advertising, warehousing and transportation, but excluding the Last-In First-Out (LIFO) charge. |
| |
|
| |
The Company defines FIFO gross margin as FIFO gross profit divided by sales. |
| |
|
| |
The Company defines FIFO operating profit as operating profit excluding the LIFO charge. |
| |
|
| |
The Company defines FIFO operating margin as FIFO operating profit divided by sales. |
| |
|
| |
The above FIFO financial metrics are important measures used by management to evaluate operational effectiveness. Management believes these FIFO financial metrics are useful to investors and analysts because they measure our day-to-day operational effectiveness. |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (a) |
Merchandise costs ("COGS") and operating, general and administrative expenses ("OG&A") exclude depreciation and amortization expense and rent expense which are included in separate expense lines. |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (b) |
LIFO charges of $93 and $37 were recorded in the first quarters of 2022 and 2021, respectively. |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 2.
THE KROGER CO.
CONSOLIDATED BALANCE SHEETS
(in millions)
(unaudited)
| | |
May 21, | | |
May 22, | |
| | |
2022 | | |
2021 | |
| ASSETS | |
| | | |
| | |
| Current Assets | |
| | | |
| | |
| Cash | |
$ | 245 | | |
$ | 360 | |
| Temporary cash investments | |
| 1,137 | | |
| 1,949 | |
| Store deposits in-transit | |
| 1,110 | | |
| 1,011 | |
| Receivables | |
| 1,887 | | |
| 1,936 | |
| Inventories | |
| 7,358 | | |
| 6,767 | |
| Prepaid and other current assets | |
| 539 | | |
| 522 | |
| | |
| | | |
| | |
| Total current assets | |
| 12,276 | | |
| 12,545 | |
| | |
| | | |
| | |
| Property, plant and equipment, net | |
| 24,209 | | |
| 23,057 | |
| Operating lease assets | |
| 6,760 | | |
| 6,663 | |
| Intangibles, net | |
| 928 | | |
| 978 | |
| Goodwill | |
| 3,076 | | |
| 3,076 | |
| Other assets | |
| 1,842 | | |
| 2,492 | |
| | |
| | | |
| | |
| Total Assets | |
$ | 49,091 | | |
$ | 48,811 | |
| | |
| | | |
| | |
| LIABILITIES AND SHAREOWNERS' EQUITY | |
| | | |
| | |
| Current Liabilities | |
| | | |
| | |
| Current portion of long-term debt
including obligations under finance leases | |
$ | 587 | | |
$ | 1,150 | |
| Current portion of operating lease liabilities | |
| 652 | | |
| 644 | |
| Trade accounts payable | |
| 7,556 | | |
| 7,015 | |
| Accrued salaries and wages | |
| 1,171 | | |
| 1,165 | |
| Other current liabilities | |
| 6,272 | | |
| 5,236 | |
| | |
| | | |
| | |
| Total current liabilities | |
| 16,238 | | |
| 15,210 | |
| | |
| | | |
| | |
| Long-term debt including obligations under finance leases | |
| 13,052 | | |
| 12,974 | |
| Noncurrent operating lease liabilities | |
| 6,460 | | |
| 6,385 | |
| Deferred income taxes | |
| 1,532 | | |
| 1,541 | |
| Pension and postretirement benefit obligations | |
| 455 | | |
| 507 | |
| Other long-term liabilities | |
| 1,961 | | |
| 2,965 | |
| | |
| | | |
| | |
| Total Liabilities | |
| 39,698 | | |
| 39,582 | |
| | |
| | | |
| | |
| Shareowners' equity | |
| 9,393 | | |
| 9,229 | |
| | |
| | | |
| | |
| Total Liabilities and Shareowners' Equity | |
$ | 49,091 | | |
$ | 48,811 | |
| | |
| | | |
| | |
| Total common shares outstanding at end of period | |
| 720 | | |
| 748 | |
| Total diluted shares year-to-date | |
| 733 | | |
| 760 | |
Table 3.
THE KROGER CO.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
| | |
YEAR-TO-DATE | |
| | |
2022 | | |
2021 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | |
| | | |
| | |
| Net earnings including noncontrolling interests | |
$ | 666 | | |
$ | 143 | |
| Adjustments to reconcile net earnings including
noncontrolling interests to net cash provided by operating activities: | |
| | | |
| | |
| Depreciation and amortization | |
| 890 | | |
| 861 | |
| Operating lease asset amortization | |
| 186 | | |
| 191 | |
| LIFO charge | |
| 93 | | |
| 37 | |
| Stock-based employee compensation | |
| 57 | | |
| 56 | |
| Company-sponsored pension plans | |
| (12 | ) | |
| (14 | ) |
| Deferred income taxes | |
| (30 | ) | |
| (2 | ) |
| Loss on the sale of assets | |
| - | | |
| 9 | |
| Loss on investments | |
| 532 | | |
| 479 | |
| Other | |
| 54 | | |
| 100 | |
| Changes in operating assets and liabilities: | |
| | | |
| | |
| Store deposits in-transit | |
| (28 | ) | |
| 84 | |
| Receivables | |
| (2 | ) | |
| 14 | |
| Inventories | |
| (676 | ) | |
| 205 | |
| Prepaid and other current assets | |
| 117 | | |
| 369 | |
| Trade accounts payable | |
| 439 | | |
| 341 | |
| Accrued expenses | |
| (748 | ) | |
| (549 | ) |
| Income taxes receivable and payable | |
| (70 | ) | |
| (175 | ) |
| Operating lease liabilities | |
| (214 | ) | |
| (214 | ) |
| Other | |
| (152 | ) | |
| 320 | |
| | |
| | | |
| | |
| Net cash provided by operating activities | |
| 1,102 | | |
| 2,255 | |
| | |
| | | |
| | |
| CASH FLOWS FROM INVESTING ACTIVITIES: | |
| | | |
| | |
| Payments for property and equipment, including payments for lease buyouts | |
| (745 | ) | |
| (819 | ) |
| Proceeds from sale of assets | |
| 14 | | |
| 7 | |
| Other | |
| 8 | | |
| (40 | ) |
| | |
| | | |
| | |
| Net cash used by investing activities | |
| (723 | ) | |
| (852 | ) |
| | |
| | | |
| | |
| CASH FLOWS FROM FINANCING ACTIVITIES: | |
| | | |
| | |
| Payments on long-term debt including obligations under finance leases | |
| (45 | ) | |
| (328 | ) |
| Dividends paid | |
| (154 | ) | |
| (138 | ) |
| Proceeds from issuance of capital stock | |
| 113 | | |
| 31 | |
| Treasury stock purchases | |
| (665 | ) | |
| (402 | ) |
| Proceeds from financing arrangement | |
| - | | |
| 166 | |
| Other | |
| (67 | ) | |
| (110 | ) |
| | |
| | | |
| | |
| Net cash used by financing activities | |
| (818 | ) | |
| (781 | ) |
| | |
| | | |
| | |
| NET (DECREASE) INCREASE IN CASH AND TEMPORARY CASH INVESTMENTS | |
| (439 | ) | |
| 622 | |
| | |
| | | |
| | |
| CASH AND TEMPORARY CASH INVESTMENTS: | |
| | | |
| | |
| BEGINNING OF YEAR | |
| 1,821 | | |
| 1,687 | |
| END OF PERIOD | |
$ | 1,382 | | |
$ | 2,309 | |
| | |
| | | |
| | |
| Reconciliation of capital investments: | |
| | | |
| | |
| Payments for property and equipment, including payments for lease buyouts | |
$ | (745 | ) | |
$ | (819 | ) |
| Payments for lease buyouts | |
| 3 | | |
| - | |
| Changes in construction-in-progress payables | |
| (229 | ) | |
| 153 | |
| Total capital investments, excluding lease buyouts | |
$ | (971 | ) | |
$ | (666 | ) |
| | |
| | | |
| | |
| Disclosure of cash flow information: | |
| | | |
| | |
| Cash paid during the year for interest | |
$ | 198 | | |
$ | 185 | |
| Cash paid during the year for income taxes | |
$ | 244 | | |
$ | 205 | |
Table 4. Supplemental Sales Information
(in millions, except percentages)
(unaudited)
Items identified below should not be considered as alternatives to sales or any other GAAP measure of performance. Identical sales is an industry-specific measure and it is important to review it in conjunction with Kroger's financial results reported in accordance with GAAP. Other companies in our industry may calculate identical sales differently than Kroger does, limiting the comparability of the measure.
| IDENTICAL SALES (a) |
| | |
| | |
| |
| | |
FIRST QUARTER | |
| | |
2022 | | |
2021 | |
| EXCLUDING FUEL | |
$ | 38,148 | | |
$ | 36,644 | |
| | |
| | | |
| | |
| EXCLUDING FUEL | |
| 4.1 | % | |
| (4.1 | )% |
| (a) | Kroger
defines identical sales, excluding fuel, as sales to retail customers, including sales from all departments at identical supermarket
locations, Kroger Specialty Pharmacy businesses, jewelry and ship-to-home solutions. Kroger defines a supermarket as identical
when it has been in operation without expansion or relocation for five full quarters. Kroger defines Kroger Specialty Pharmacy
businesses as identical when physical locations have been in operation continuously for five full quarters and discontinued patient therapies
are excluded from the identical sales calculation starting in the quarter of transfer or termination. |
Table 5. Reconciliation of Net Total Debt and
Net Earnings Attributable to The Kroger Co. to Adjusted EBITDA
(in millions, except for ratio)
(unaudited)
The items identified below should not be considered an alternative to any GAAP measure of performance or access to liquidity. Net total debt to adjusted EBITDA is an important measure used by management to evaluate the Company's access to liquidity. The items below should be reviewed in conjunction with Kroger's financial results reported in accordance with GAAP.
The following table provides a reconciliation of net total debt.
| | |
| | |
| | |
| |
| | |
May 21, | | |
May 22, | | |
| |
| | |
2022 | | |
2021 | | |
Change | |
| Current portion of long-term debt including obligations under finance leases | |
$ | 587 | | |
$ | 1,150 | | |
$ | (563 | ) |
| Long-term debt including obligations under finance leases | |
| 13,052 | | |
| 12,974 | | |
| 78 | |
| | |
| | | |
| | | |
| | |
| Total debt | |
| 13,639 | | |
| 14,124 | | |
| (485 | ) |
| | |
| | | |
| | | |
| | |
| Less: Temporary cash investments | |
| 1,137 | | |
| 1,949 | | |
| (812 | ) |
| | |
| | | |
| | | |
| | |
| Net total debt | |
$ | 12,502 | | |
$ | 12,175 | | |
$ | 327 | |
The following table provides a reconciliation from net earnings attributable to The Kroger Co. to adjusted EBITDA, as defined in the Company's credit agreement, for 2022 and 2021.
| | |
ROLLING FOUR QUARTERS ENDED | |
| | |
May 21, | | |
May 22, | |
| | |
2022 | | |
2021 | |
| Net earnings attributable to The Kroger Co. | |
$ | 2,179 | | |
$ | 1,513 | |
| LIFO charge (credit) | |
| 253 | | |
| (1 | ) |
| Depreciation and amortization | |
| 2,853 | | |
| 2,783 | |
| Interest expense | |
| 583 | | |
| 535 | |
| Income tax expense | |
| 495 | | |
| 445 | |
| Adjustment for pension plan withdrawal liabilities | |
| - | | |
| 1,437 | |
| Adjustment for company-sponsored pension plan settlement charges | |
| 87 | | |
| - | |
| Adjustment for loss (gain) on investments | |
| 874 | | |
| (204 | ) |
| Adjustment for Home Chef contingent consideration | |
| 30 | | |
| 172 | |
| Adjustment for transformation costs (a) | |
| 92 | | |
| 117 | |
| Other | |
| (8 | ) | |
| (6 | ) |
| | |
| | | |
| | |
| Adjusted EBITDA | |
$ | 7,438 | | |
$ | 6,791 | |
| | |
| | | |
| | |
| Net total debt to adjusted EBITDA ratio | |
| 1.68 | | |
| 1.79 | |
| (a) | Transformation
costs primarily include costs related to business closure costs and third party professional consulting fees associated with business
transformation and cost saving initiatives. |
Table 6. Net Earnings Per Diluted Share Excluding the Adjustment Items
(in millions, except per share amounts)
(unaudited)
The purpose of this table is to better illustrate comparable operating results from our ongoing business, after removing the effects on net earnings per diluted common share for certain items described below. Adjusted net earnings and adjusted net earnings per diluted share are useful metrics to investors and analysts because they present more accurately year-over-year comparisons for net earnings and net earnings per diluted share because adjusted items are not the result of normal operations. Items identified in this table should not be considered alternatives to net earnings attributable to The Kroger Co. or any other GAAP measure of performance. These items should not be reviewed in isolation or considered substitutes for the Company's financial results as reported in accordance with GAAP. Due to the nature of these items, as further described below, it is important to identify these items and to review them in conjunction with the Company's financial results reported in accordance with GAAP.
The following table summarizes items that affected the Company's financial results during the periods presented.
| | |
| FIRST QUARTER | |
| | |
2022 | | |
2021 | |
| Net earnings attributable to The Kroger Co. | |
$ | 664 | | |
$ | 140 | |
| | |
| | | |
| | |
| Adjustment for pension plan withdrawal liabilities (a)(b) | |
| - | | |
| 344 | |
| Adjustment for loss on investments (a)(c) | |
| 404 | | |
| 367 | |
| Adjustment for Home Chef contingent consideration (a)(d) | |
| 6 | | |
| 33 | |
| Adjustment for transformation costs (a)(e) | |
| - | | |
| 34 | |
| | |
| | | |
| | |
| 2022 and 2021 Adjustment Items | |
| 410 | | |
| 778 | |
| | |
| | | |
| | |
| Net earnings attributable to The Kroger Co.excluding the adjustment items above | |
$ | 1,074 | | |
$ | 918 | |
| | |
| | | |
| | |
| Net earnings attributable to The Kroger Co. per diluted common share | |
$ | 0.90 | | |
$ | 0.18 | |
| | |
| | | |
| | |
| Adjustment for pension plan withdrawal liabilities (f) | |
| - | | |
| 0.45 | |
| Adjustment for loss on investments (f) | |
| 0.54 | | |
| 0.48 | |
| Adjustment for Home Chef contingent consideration (f) | |
| 0.01 | | |
| 0.04 | |
| Adjustment for transformation costs (f) | |
| - | | |
| 0.04 | |
| | |
| | | |
| | |
| 2022 and 2021 Adjustment Items | |
| 0.55 | | |
| 1.01 | |
| | |
| | | |
| | |
| Net earnings attributable to The Kroger Co. per diluted
common share excluding the adjustment items above | |
$ | 1.45 | | |
$ | 1.19 | |
| | |
| | | |
| | |
| Average number of common shares used in diluted
calculation | |
| 733 | | |
| 760 | |
| Table 6. Net Earnings Per Diluted Share Excluding the Adjustment Items (continued) |
| (in millions, except per share amounts) |
| (unaudited) |
| |
|
| (a) |
The amounts presented represent the after-tax effect of each adjustment. |
| |
|
| (b) |
The pre-tax adjustment to OG&A expenses for pension plan withdrawal liabilities was $449. |
| |
|
| (c) |
The pre-tax adjustments for loss on investments were $532 and $479 in the first quarters of 2022 and 2021, respectively. |
| |
|
| (d) |
The pre-tax adjustments to OG&A expenses for Home Chef contingent consideration were $7 and $43 in the first quarters of 2022 and 2021, respectively. |
| |
|
| (e) |
The pre-tax adjustment to OG&A expenses for transformation costs was $44. Transformation costs primarily include costs related to business closure costs and third party professional consulting fees associated with business transformation and cost saving initiatives. |
| |
|
| (f) |
The amounts presented represent the net earnings (loss) per diluted common share effect of each adjustment. |
| |
|
| Note: |
2022 First Quarter Adjustment Items include adjustments for the loss on investments and Home Chef contingent consideration adjustment. |
| |
|
| |
2021 First Quarter Adjustment Items include adjustments for pension plan withdrawal liabilities, loss on investments, Home Chef contingent consideration adjustment and strategic transformation costs. |
Table 7. Operating Profit Excluding the Adjustment Items
(in millions)
(unaudited)
The purpose of this table is to better illustrate comparable operating results from our ongoing business, after removing the effects on operating profit for certain items described below. Adjusted FIFO operating profit is a useful metric to investors and analysts because it presents more accurately year-over year comparisons for operating profit because adjusted items are not the result of normal operations. Items identified in this table should not be considered alternatives to operating profit or any other GAAP measure of performance. These items should not be reviewed in isolation or considered substitutes for the Company's financial results as reported in accordance with GAAP. Due to the nature of these items, as further described below, it is important to identify these items and to review them in conjunction with the Company's financial results reported in accordance with GAAP.
The following table summarizes items that affected the Company's financial results during the periods presented.
| | |
| FIRST QUARTER | |
| | |
2022 | | |
2021 | |
| Operating profit | |
$ | 1,505 | | |
$ | 805 | |
| LIFO charge | |
| 93 | | |
| 37 | |
| | |
| | | |
| | |
| FIFO Operating profit | |
| 1,598 | | |
| 842 | |
| | |
| | | |
| | |
| Adjustment for pension plan withdrawal liabilities | |
| - | | |
| 449 | |
| Adjustment for Home Chef contingent consideration | |
| 7 | | |
| 43 | |
| Adjustment for transformation costs (a) | |
| - | | |
| 44 | |
| Other | |
| (4 | ) | |
| (3 | ) |
| | |
| | | |
| | |
| 2022 and 2021 Adjustment items | |
| 3 | | |
| 533 | |
| | |
| | | |
| | |
| Adjusted FIFO operating profit excluding the adjustment items
above | |
$ | 1,601 | | |
$ | 1,375 | |
| (a) | Transformation
costs primarily include costs related to business closure costs and third party professional consulting fees associated with business
transformation and cost saving initiatives. |
