Albertsons Companies(ACI) - 2024 Q3 - Quarterly Report

Financial Performance - Net sales for the 12 weeks ended December 2, 2023, were $18,557.3 million, an increase from$18,154.9 million for the same period in 2022, representing a growth of 2.2%[9] - Gross margin for the 12 weeks ended December 2, 2023, was $5,197.3 million, compared to$5,121.7 million in the prior year, reflecting an increase of 1.5%[9] - Operating income for the 12 weeks ended December 2, 2023, was $566.1 million, a decrease from$582.4 million in the same period last year, indicating a decline of 2.2%[9] - Net income for the 12 weeks ended December 2, 2023, was $361.4 million, down from$375.5 million in the prior year, representing a decrease of 3.5%[9] - Basic net income per Class A common share for the 12 weeks ended December 2, 2023, was $0.63, compared to$0.20 in the same period last year[9] Assets and Liabilities - Total assets as of December 2, 2023, were $26,496.5 million, an increase from$26,168.2 million as of February 25, 2023[6] - Total liabilities as of December 2, 2023, were $22,019.3 million, compared to$21,200.5 million as of February 25, 2023, reflecting an increase of 3.8%[6] - Total stockholders' equity as of December 2, 2023, was $2,527.3 million, an increase from$2,216.6 million[15] - The company had $4.5 million in restricted cash as of December 2, 2023, down from$8.0 million as of February 25, 2023[22] Cash Flow and Investments - Cash flows from operating activities for the 40 weeks ended December 2, 2023, were $1,045.5 million, compared to$1,202.4 million for the same period in 2022, indicating a decrease of 13.1%[9] - Net cash provided by operating activities decreased to $1,730.8 million from$2,072.0 million, reflecting a decline of 16.5%[12] - Net cash used in investing activities was $1,328.8 million, down from$1,478.7 million, indicating a reduction of 10.1%[12] - Cash and cash equivalents at the end of the period were $227.2 million, a substantial decrease from$4,420.3 million at the end of the previous year[12] Debt and Interest - Interest expense for the 12 weeks ended December 2, 2023, was $116.3 million, an increase from$84.3 million in the same period last year, reflecting a rise of 38%[9] - The fair value of total debt as of December 2, 2023, was $7,841.7 million, compared to a carrying value of$8,134.3 million, reflecting a decrease in fair value[50] - As of December 2, 2023, total debt decreased to $8,534.8 million from$8,910.1 million as of February 25, 2023, representing a reduction of approximately 4.2%[53] Taxation - The effective tax rate for the 12 weeks ended December 2, 2023, was 20.8%, down from 24.4% for the same period in 2022, primarily due to an increase in federal tax credits[29] - For the 40 weeks ended December 2, 2023, the company reported an effective tax rate of 17.9%, compared to 24.1% for the same period in 2022[30] Legal Matters - The company is involved in ongoing litigation related to the False Claims Act, with potential damages exceeding $100 million before trebling and excluding penalties[68] - The company has recorded an estimated liability for ongoing legal matters, although management believes that the aggregate estimated liabilities are reasonable[62] - The Company recorded a liability of$21.5 million for settlements related to opioid litigation in New Mexico and Nevada, which was paid by insurers in Q4 of fiscal 2022[73] Sales Performance - Pharmacy sales increased to $2,282.8 million for the 12 weeks ended December 2, 2023, compared to$1,724.4 million in the same period last year, representing a growth of 32.4%[35] - Non-perishable product sales accounted for 49.8% of total revenue for the 12 weeks ended December 2, 2023, slightly down from 51.0% in the same period last year[35] - Fresh product sales represented 30.8% of total revenue for the 12 weeks ended December 2, 2023, compared to 31.7% in the prior year[35] Merger and Acquisition Activities - The merger agreement with Kroger includes a cash consideration of $34.10 per share, reduced by a special cash dividend of$6.85 per share[38] - The company and Kroger announced a definitive agreement for the sale of select stores and distribution centers to C&S Wholesale Grocers, LLC[42] Stockholder Information - The company declared cash dividends of $0.12 per common share, totaling$69.0 million for the period[15] - The company reported a basic net income of $361.4 million for the 12 weeks ended December 2, 2023, resulting in a basic net income per Class A common share of$0.63[86] - The diluted net income per Class A common share for the 12 weeks ended December 2, 2023, was $0.62, with a net income allocated to Class A common stockholders of$361.4 million[86] Operational Metrics - The company operated 2,271 stores as of December 2, 2023, with a total retail square footage of 112.9 million[106][107] - The company has 1,726 pharmacies and 1,332 in-store branded coffee shops as of December 2, 2023[98] - Identical sales increased by 2.9% in the third quarter of fiscal 2023[104] - Digital sales surged by 21% compared to the previous year[104] Other Comprehensive Income - The ending balance of accumulated other comprehensive income (AOCI) was $68.7 million as of December 2, 2023[80] - The Company has recorded a total comprehensive income of$68.7 million for the 40 weeks ended December 2, 2023[79] Accounting and Reporting - The company is currently evaluating the impact of recently issued accounting standards on its consolidated financial statements[36][37] - Fair value measurements are categorized into a three-level hierarchy based on the transparency of inputs[44]