Rite Aid — Q3 FY2018 Earnings Presentation
28 slides from Rite Aid's earnings presentation, Jan 3, 2018
Slide 1: Third Quarter Fiscal 2018 Supplemental Information
PHARMACY With us, ifs personal. 3D QUARTER FISCAL 2018 SUPPLEMENTAL INFORMATION January 3, 2018
Slide 2: Forward-looking statements
Statements in this presentation that are not historical, are forward - looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 . Such statements include, but are not limited to, statements regarding the expected timing of the closing of
Slide 3: Cautionary Note Regarding Pro Forma Information
CAUTIONARY NOTE REGARDING PRO FORMA INFORMATION : The following presentation provides certain pro forma information regarding the impact of Rite Aid’s proposed sale of stores and assets to Walgreens Boots Alliance, Inc . on Rite Aid’s results of operations and capital structure . The pro forma infor
Slide 4: Non-GAAP Financial Measures
Non - GAAP Financial Measures The following presentation includes a non - GAAP financial measure, Adjusted EBITDA . Rite Aid defines Adjusted EBITDA as net income (loss) excluding the impact of income taxes, interest expense, depreciation and amortization, LIFO adjustments, charges or credits for fa
Slide 5: Q3 Fiscal 2018 Summary - Total Company
Revenue (1) 7,739.9$ 8,122.1$ Net Income 81.0$ 15.0$ Net Income Per Diluted Share 0.08$ 0.01$ Adjusted EBITDA 214.2$ 2.77% 274.1$ 3.37% 13 Weeks Ended December 2, 2017 13 Weeks Ended November 26, 2016 Q3 - Fiscal 2018 Summary ($ in millions, except per share amounts) TOTAL COMPANY (1) Includes reven
Slide 6: Q3 Fiscal 2018 Summary - Continuing Operations
Revenue 5,353.2$ 5,669.1$ Net (loss) Income (18.2)$ 23.6$ Net (loss) Income Per Diluted Share (0.02)$ 0.02$ Adjusted Net Income 1.6$ 26.8$ Adjusted Net Income per Diluted Share 0.00$ 0.03$ Adjusted EBITDA 129.2$ 2.41% 191.3$ 3.38% 13 Weeks Ended December 2, 2017 13 Weeks Ended November 26, 2016 Q3 -
Slide 7: Reconciliation of Net (Loss) Income to Adjusted EBITDA
Q3 - Fiscal 2018 Reconciliation of Net (Loss) Income to Adjusted EBITDA ($ in thousands) 13 Weeks Ended December 2, 2017 13 Weeks Ended November 26, 2016 Net (Loss) Income - Continuing Operations (18,182)$ 23,610$ Adjustments: Interest expense 50,308 50,304 Income tax benefit (16,061) (4,682) Deprec
Slide 8: Reconciliation of Net (Loss) Income to Adjusted Net Income
Q3 - Fiscal 2018 Reconciliation of Net (Loss) Income to Adjusted Net Income ($ in thousands, except per share amounts) 13 Weeks Ended December 2, 2017 13 Weeks Ended November 26, 2016 Net (Loss) Income $ (18,182) $ 23,610 Add back - Income tax benefit (16,061) (4,682) (Loss) Income before income tax
Slide 9: Non-GAAP measures reconciliation note
ese non - GAAP measures to their applicable GAAP measures. CONTINUING OPERATIONS
Slide 10: Q3 Fiscal 2018 Summary - Retail Pharmacy Segment
Q3 - Fiscal 2018 Summary RETAIL PHARMACY SEGMENT Retail Pharmacy Segment revenue decreased $123 million or 3.0%, due to a 2.4% decrease in comparable script growth, a decrease in reimbursement rates and a 0.5% decrease in same store front end sales. Adjusted EBITDA Gross Profit decreased $53.5 milli
Slide 11: Reconciliation of Adjusted EBITDA Gross Profit
Reconciliation of Adjusted EBITDA Gross Profit RETAIL PHARMACY SEGMENT ($ in thousands) 13 Weeks Ended December 2, 2017 13 Weeks Ended November 26, 2016 Revenues 3,959,002$ 4,082,278$ Gross Profit 1,087,888 1,141,794 Addback: LIFO charge 6,784 8,373 Customer loyalty card program revenue deferral (12
Slide 12: Reconciliation of Adjusted EBITDA SG&A
Reconciliation of Adjusted EBITDA SG&A RETAIL PHARMACY SEGMENT ($ in thousands) 13 Weeks Ended December 2, 2017 13 Weeks Ended November 26, 2016 Total Revenues 3,959,002$ 4,082,278$ Selling, general and administrative expenses 1,086,857 1,095,409 Less: Depreciation and amortization (SG&A portion onl
Slide 13: Pharmacy Services Segment Results
Pharmacy Services Segment Results ($ in millions) 13 Weeks Ended December 2, 2017 13 Weeks Ended November 26, 2016 Revenues 1,445.1$ 1,645.8$ Cost of Revenues 1,346.3 1,542.8 Gross Profit 98.8 103.0 Selling, General and Administrative Expense (79.7) (73.2) Addback: Depreciation and Amortization 21.2
Slide 14: Q3 FY2018 Summary - Pharmacy Services Segment
Q3 - FY 2018 Summary PHARMACY SERVICES SEGMENT Revenues decreased $201 million, due primarily to a decrease in covered lives at Envision Insurance Company. Adjusted EBITDA decreased $12.1 million. The decrease is due to a reduction in revenue and an increase in SG&A expense.
Slide 15: Comparable Store Sales Growth
FY 18 FY 16 FY 17 FRONT END SALES RX SALES SCRIPT COUNT 0.9% 0.8% 0.7% 0.1% 1.5% 0.5% 0.1% 0.1% - 1.1% - 0.8% - 0.5% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 5.0% 3.3% 1.8% 0.5% 0.4% - 3.4% - 4.0% - 4.7% - 5.5% - 4.9% - 3.5% Comparable Store Sales Growth CONTINUING OPERATIONS 3.6% 2.0% 2.0% 2.5% 2.8% 0.2% -
Slide 16: Capitalization Table
Capitalization Table ($ in thousands) Note: Debt in the capitalization table is shown net of unamortized debt issuance costs. December 2, 2017 March 4, 2017 Secured Debt: Senior secured revolving credit facility due January 2020 1,906,692$ 2,405,082$ Tranche 1 Term Loan (second lien) due August 2020
Slide 17: Leverage Ratio
Leverage Ratio ($ in thousands) Pro Forma December 2, 2017 March 4, 2017 December 2, 2017 Gross Debt w/o Debt Issuance Costs 6,889,647$ 7,402,477$ 3,103,167$ Less: cash and cash equivalents 169,800 245,410 169,800 Net Debt 6,719,847$ 7,157,067$ 2,933,367$ Adjusted EBITDA Retail Pharmacy Segment 701,
Slide 18: Debt Maturity Profile
Debt Maturity Profile Maturity table as of December 2, 2017. Note : Maturities reflect calendar year. $1,907 $1,733 $295 $128 $470 $500 $902 $810 $1,800 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 $5,000 $5,500 2016 2017 2018 2019 2020 2021 2022 2023 . . . . . . 2027 2028 ($ in m
Slide 19: Asset Sale Pro-Forma Information
RITE PHARMACY With us, it's personal. ASSET SALE PRO-FORMA INFORMATION
Slide 20: WBA / Rite Aid Asset Purchase Agreement Update
WBA / Rite Aid Asset Purchase Agreement Update On November 27, 2017, the company completed the pilot closing and first subsequent closing under the amended and restated asset purchase agreement with WBA resulting in the transfer of 97 Rite Aid stores and related assets to WBA during the third quarte
Slide 21: Current Store Profile
Current Store Profile As of 12/2/2017 139 14 73 1 576 22 3 270 10 224 115 80 52 25 91 87 222 534 103 79 130 37 68 MA144 RI 43 CT 53 NJ 251 DE 42 D.C. 7 174 595 MD 140 Rite Aid States & Store Count Rite Aid Distribution Centers
Slide 22: Pro-Forma Store Profile
Pro - Forma Store Profile Rite Aid States & Store Count Rite Aid Distribution Centers As of 12/2/2017 139 14 73 1 576 3 270 217 9 532 82 6 62 MA 10 CT 34 NJ 133 DE 42 . 322 MD 44 Map represents remaining stores and distribution centers following sale to Walgreens Boots Alliance pursuant to the Amend
Slide 23: Strong Presence in Key States
Strong Presence in Key States Represents our position in CBSA’s where we have a presence, based on store count. Stores 1 st 2 nd 3 rd California 576 35% 32% 18% Pennsylvania 532 66% 21% 10% Michigan 270 72% 3% 10% Ohio 217 62% 15% 3% New York 322 30% 10% 25% Washington 139 42% 37% 16% Oregon 73 55%
Slide 24: Asset Sale Pro-Forma Information - Key Assumptions
Asset Sale Pro - Forma Information – Key Assumptions LTM December 2017 data presented on a 52 - week basis instead of on a 53 - week basis Net proceeds of $4.025 billion used to pay down debt (refer to "Sources and Uses" slide) Corporate administration costs are assumed to be reduced by $96 million
Slide 25: Pro-Forma Reconciliation of Net Income to Adjusted EBITDA
Pro - Forma Financial Information – Reconciliation of Net Income to Adjusted EBITDA ($ in thousands) (1) Includes adjustments to reflect results on a 52 week basis and account for the sale of the divested stores including the gain re cognized on store sales through December 2, 2017. (2) Includes the
Slide 26: Pro-Forma Sources & Uses
Pro - Forma Sources & Uses ($ in millions) Sources Estimated Purchase Price 4,375$ Total Sources 4,375$ Uses Estimated Accrued Liabilities (Net of Retained Assets) (1) 200$ Estimated Restructuring Charges and Transaction Costs 65 Estimated Income Tax Expense on Sale of Assets (2) 85 Estimated Debt R
Slide 27: Pro-Forma Store Metrics
LTM November 2017 Current Rite Aid Pro-Forma Store Count Overview: Store Count 4,404 2,569 Average Square Feet (000s) 13 14 Wellness Remodels 2,505 1,611 (% of Portfolio) 57% 63% Customer World Stores 417 303 (% of Portfolio) 9% 12% Average Per Store ($ in thousands): FE Sales 1,845$ 2,118$ Rx Sales
Slide 28: Rite Aid Pharmacy closing slide
PHARMACY With us, its personal.