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Ruddick Corporation Reports Results for the First Quarter of Fiscal 2008
CHARLOTTE, N.C.-(Business Wire)-January 31, 2008 - Ruddick Corporation (NYSE:RDK) (the "Company") today reported that consolidated sales for the first quarter of fiscal 2008 ended December 30, 2007 increased by 10.9% to $976.7 million from $880.8 million in the first quarter of fiscal 2007. The increase in sales during the quarter was attributable to sales increases at the Company's Harris Teeter supermarket subsidiary that were offset, in part, by a sales decline at the Company's American & Efird ("A&E") sewing thread and technical textiles subsidiary.
In the first quarter of fiscal 2008, consolidated net income was $23.3 million, or $0.48 per diluted share, compared to $18.3 million, or $0.38 per diluted share, in the prior year's first quarter. The 27.6% increase in net earnings over the prior year was driven by improved operating profit at Harris Teeter.
Harris Teeter's sales increased by 12.6% to $896.6 million in the first quarter of fiscal 2008 compared to sales of $796.3 million in the first quarter of fiscal 2007. The increase in sales was attributable to new store activity, partially offset by store closings and divestitures, and a comparable store sales increase of 4.40% for the quarter. During the first quarter of fiscal 2008, Harris Teeter opened two new stores and completed the remodeling and expansion of one store. Since the end of the first quarter of fiscal 2007, Harris Teeter has opened 16 new stores while closing or divesting 5 stores for a net addition of 11 stores. Harris Teeter operated 166 stores at December 30, 2007.
Operating profit at Harris Teeter increased by 24.8% to $44.2 million (4.93% of sales) in the first quarter of fiscal 2008 as compared to $35.4 million (4.45% of sales) in the first quarter of fiscal 2007 (an improvement of 48 basis points). Operating profit was impacted by new store pre-opening costs of $3.7 million (0.41% of sales) and $5.0 million (0.62% of sales) in the first quarter of fiscal 2008 and fiscal 2007, respectively. New store pre-opening costs fluctuate between reporting periods depending on the new store opening schedule.
Harris Teeter's operating profit improved primarily as a result of increased store sales attributed to comparable store sales gains driven by our continuous attention to customer service, and through targeted promotional spending and retail pricing programs. The sales increases along with a continued emphasis on operational efficiencies and cost controls have provided the leverage to offset the incremental costs associated with Harris Teeter's new store program (pre-opening costs and incremental start-up costs) and increased associate benefit costs, credit and debit card fees and other occupancy costs.
Thomas W. Dickson, Chairman of the Board, President and Chief Executive Officer of Ruddick Corporation commented that, "We are pleased to report another quarter of positive comparable store sales gains and operating profit increases at Harris Teeter during periods of increasing our overall store count. Our commitment to superior customer service and our company-wide execution of focused promotional programs enabled us to continue to grow our market share and our customer base."
A&E sales for the first quarter of fiscal 2008 were $80.1 million as compared to $84.5 million in the first quarter of fiscal 2007. Foreign sales accounted for approximately 55% of A&E total sales for the first quarter of both fiscal 2008 and fiscal 2007.
A&E's operating profit was $0.2 million for the first quarter of fiscal 2008 compared to $0.4 million in the first quarter of fiscal 2007. A&E continued to realize operating profit improvements in their Asian operations during the first quarter of fiscal 2008, however, weak apparel thread manufacturing operating schedules in the Americas offset the improvements in Asia. Management continues to rationalize A&E's operations in the Americas and focus on providing best-in-class service to its customers while expanding its product lines throughout A&E's supply chain.
Mr. Dickson said, "Our transformation of A&E's business from one that is dependent on the U.S. apparel industry to one that supplies sewing threads and technical textiles on a global basis is not yet complete. However, we continue to make good progress in streamlining our U.S. operations and growing our business in Asia. The challenging retail environment that we faced in many parts of the world last year has continued through the first quarter of fiscal 2008. We remain committed to our strategic plans that are designed to provide a wide range of quality products and services that create value for our customers around the world."
Consolidated capital expenditures for the Company during the first quarter of fiscal 2008 totaled $42.8 million and depreciation and amortization totaled $26.6 million. Total capital expenditures for the 13 weeks ended December 30, 2007, were comprised of $40.9 million for Harris Teeter and $1.9 million for A&E.
Harris Teeter's continued improvement in operating performance and financial position provides the flexibility to expand its store development program for new and replacement stores along with the remodeling and expansion of existing stores. Harris Teeter plans to open an additional 13 new stores (2 of which will replace existing stores) and complete the major remodeling on 6 more stores (3 of which will be expanded in size) during the remainder of fiscal 2008. The new store development program for fiscal 2008 is expected to result in a 9.0% increase in retail square footage as compared to an 11.9% increase in fiscal 2007. Harris Teeter routinely evaluates its existing store operations in regards to its overall business strategy and from time to time will close or divest older or underperforming stores.
Harris Teeter's capital expenditures are presently planned to be approximately $202 million for fiscal 2008 and calls for the continued expansion of its existing markets, including the Washington, D.C. metro market area which incorporates northern Virginia, the District of Columbia, southern Maryland and coastal Delaware. Real estate development by its nature is both unpredictable and subject to external factors including weather, construction schedules and costs. Any change in the amount and timing of new store development would impact the expected capital expenditures, sales and operating results.
Fiscal 2008 consolidated capital expenditures are planned to total approximately $214 million, consisting of $202 million for Harris Teeter and $12 million for A&E. Such capital investment is expected to be financed by internally generated funds and borrowings under the Company's new revolving credit facility.
On December 20, 2007, the Company entered into a new credit agreement that provides for a five-year revolving credit facility in the aggregate amount of up to $350 million and a non-amortizing term loan of $100 million due December 20, 2012. The credit agreement also provides for an optional increase of the revolving credit facility by an additional amount of up to $100 million and two 1-year maturity extension options, both of which require consent of the lenders. The new credit agreement replaced a previously existing $350 million revolving credit facility dated June 7, 2006. In the normal course of business, the Company will continue to evaluate other financing opportunities based on the Company's needs and market conditions.
The Company's management remains cautious in its expectations for the remainder of fiscal 2008 due to the intensely competitive retail grocery market and challenging textile and apparel environment. Pre-opening and start-up costs associated with the record number of new stores opened in fiscal 2007 and planned for fiscal 2008 could prove challenging. Further operating improvement will be dependent on the Company's ability to offset increased operating costs with additional operating efficiencies, and to effectively execute the Company's strategic expansion plans.
This news release may contain forward-looking statements that involve uncertainties. A discussion of various important factors that could cause results to differ materially from those expressed in such forward-looking statements is shown in reports filed by the Company with the Securities and Exchange Commission and include: generally adverse economic and industry conditions; changes in the competitive environment; economic or political changes in countries where the Company operates; changes in federal, state or local regulations affecting the Company; the passage of future tax legislation, or any negative regulatory or judicial position which prevails; management's ability to predict the adequacy of the Company's liquidity to meet future requirements; changes in the Company's expansion plans and their effect on store openings, closings and other investments; the ability to predict the required contributions to the Company's pension and other retirement plans; the cost and availability of energy and raw materials; the continued solvency of third parties on leases the Company guarantees; the Company's ability to recruit, train and retain effective employees; changes in labor and employer benefits costs, such as increased health care and other insurance costs; the Company's ability to successfully integrate the operations of acquired businesses; the extent and speed of successful execution of strategic initiatives; and, unexpected outcomes of any legal proceedings arising in the normal course of business. Other factors not identified above could cause actual results to differ materially from those included, contemplated or implied by the forward-looking statements made in this news release.
Ruddick Corporation is a holding company with two primary operating subsidiaries: Harris Teeter, Inc., a leading regional supermarket chain with operations in eight southeastern states and American & Efird, Inc., one of the world's largest global manufacturers and distributors of industrial sewing thread, embroidery thread and technical textiles.
Selected information regarding Ruddick Corporation and its subsidiaries is attached. For more information on Ruddick Corporation, visit our web site at: www.ruddickcorp.com. -0- *T RUDDICK CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited) 13 Weeks Ended ————————————- December 30, December 31, 2007 2006 —————— —————— NET SALES Harris Teeter $896,604 $796,261 American & Efird 80,139 84,513 —————— —————— Total 976,743 880,774 —————— —————— COST OF SALES Harris Teeter 623,177 553,417 American & Efird 62,533 65,945 —————— —————— Total 685,710 619,362 —————— —————— GROSS PROFIT Harris Teeter 273,427 242,844 American & Efird 17,606 18,568 —————— —————— Total 291,033 261,412 —————— —————— SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Harris Teeter 229,192 207,406 American & Efird 17,376 18,164 Corporate 1,579 2,031 —————— —————— Total 248,147 227,601 —————— —————— OPERATING PROFIT (LOSS) Harris Teeter 44,235 35,438 American & Efird 230 404 Corporate (1,579) (2,031) —————— —————— Total 42,886 33,811 —————— —————— OTHER EXPENSE (INCOME) Interest expense 4,961 4,377 Interest income (90) (30) Investment losses (gains) 54 (27) Minority interest 87 170 —————— —————— Total 5,012 4,490 —————— —————— INCOME BEFORE TAXES 37,874 29,321 INCOME TAXES 14,526 11,024 —————— —————— NET INCOME $ 23,348 $ 18,297 ============ ============ NET INCOME PER SHARE Basic $ 0.49 $ 0.39 Diluted $ 0.48 $ 0.38 WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING Basic 47,853 47,433 Diluted 48,363 47,973 DIVIDENDS DECLARED PER SHARE - Common $ 0.12 $ 0.11 *T -0- *T RUDDICK CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands) (unaudited) December 30, December 31, 2007 2006 —————— —————— ASSETS ——————————————————————- CURRENT ASSETS Cash and Cash Equivalents $ 14,777 $ 15,761 Accounts Receivable, Net 114,404 103,995 Inventories 304,146 283,554 Deferred Income Taxes 10,386 12,039 Prepaid Expenses and Other Current Assets 22,384 19,653 —————— —————— Total Current Assets 466,097 435,002 PROPERTY, NET 903,471 744,169 INVESTMENTS 101,837 105,897 DEFERRED INCOME TAXES 8,654 - GOODWILL 8,169 8,169 INTANGIBLE ASSETS 27,044 31,990 OTHER LONG-TERM ASSETS 71,326 68,124 —————— —————— Total Assets $1,586,598 $1,393,351 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY ——————————————————————- CURRENT LIABILITIES Notes Payable $ 11,223 $ 11,217 Current Portion of Long-Term Debt and Capital Lease Obligations 7,992 9,456 Accounts Payable 204,369 184,246 Federal and State Income Taxes 7,642 7,524 Deferred Income Taxes 64 - Accrued Compensation 37,209 29,153 Other Current Liabilities 80,774 75,252 —————— —————— Total Current Liabilities 349,273 316,848 LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS 316,347 248,562 DEFERRED INCOME TAXES 1,195 6,975 PENSION LIABILITIES 65,945 52,744 OTHER LONG-TERM LIABILITIES 90,312 73,591 MINORITY INTEREST 5,796 7,095 SHAREHOLDERS' EQUITY Common Stock 84,490 73,835 Retained Earnings 711,532 647,455 Accumulated Other Comprehensive Income (Loss), Net (38,292) (33,754) —————— —————— Total Shareholders' Equity 757,730 687,536 —————— —————— Total Liabilities and Shareholders' Equity $1,586,598 $1,393,351 ============ ============ *T -0- *T RUDDICK CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) 13 Weeks Ended ————————————- December 30, December 31, 2007 2006 —————— —————— CASH FLOW FROM OPERATING ACTIVITIES Net Income $ 23,348 $ 18,297 Non-Cash Items Included in Net Income Depreciation and Amortization 26,639 24,006 Deferred Income Taxes (1,411) (4,314) Net (Gain) Loss on Sale of Property (273) 81 Share-Based Compensation 1,184 926 Other, Net 21 1,007 Changes in Operating Accounts Utilizing Cash (52,644) (29,690) —————— —————— NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (3,136) 10,313 —————— —————— INVESTING ACTIVITIES Capital Expenditures (42,763) (40,633) Purchase of Other Investments (789) (1,512) Proceeds from Sale of Property and Partnership Distributions 616 6,224 Investments in Company-Owned Life Insurance (979) (1,769) Other, Net (86) (1,423) —————— —————— NET CASH USED IN INVESTING ACTIVITIES (44,001) (39,113) —————— —————— FINANCING ACTIVITIES Net (Payments on) Proceeds from Short-Term Borrowings (612) 955 Net (Payments on) Proceeds from Revolver Borrowings (59,200) 17,500 Proceeds from Long-Term Borrowings 100,000 - Payments on Long-Term Debt (692) (186) Dividends Paid (5,808) (5,264) Proceeds from Stock Issued 1,416 1,580 Share-Based Compensation Tax Benefits 1,257 1,025 Other, Net (1,305) (237) —————— —————— NET CASH PROVIDED BY FINANCING ACTIVITIES 35,056 15,373 —————— —————— DECREASE IN CASH AND CASH EQUIVALENTS (12,081) (13,427) EFFECT OF FOREIGN CURRENCY FLUCTUATIONS ON CASH 111 - CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 26,747 29,188 —————— —————— CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 14,777 $ 15,761 ============ ============ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash Paid During the Period for: Interest $ 5,681 $ 3,855 Income Taxes $ 1,995 $ 622 Non-Cash Activity: Assets Acquired Under Capital Leases $ 19,276 $ 2,975 *T -0- *T RUDDICK CORPORATION OTHER STATISTICS December 30, 2007 (dollars in millions) Consolidated Harris American Ruddick Teeter & Efird Corporate Corporation ——— ———— ————- —————— Depreciation and Amortization: 1st Quarter $22.2 $4.4 $- $26.6 Capital Expenditures: 1st Quarter $40.9 $1.9 $- $42.8 Purchase of Other Investment Assets: 1st Quarter $ 0.8 $ - $- $ 0.8 Harris Teeter Store Count: Quarter —————— Beginning number of stores 164 Opened during the period 2 Closed during the period - —————— Stores in operation at end of period 166 ============ Quarter —————— Harris Teeter Comparable Store Sales Increase 4.40% Definition of Comparable Store Sales: ——————————————————— Comparable store sales are computed using corresponding calendar weeks to account for the occasional extra week included in a fiscal year. A new store must be in operation for 14 months before it enters into the calculation of comparable store sales. A closed store is removed from the calculation in the month in which its closure is announced. A new store opening within an approximate two-mile radius of an existing store with the intention of closing the existing store is included as a replacement store in the comparable store sales measure as if it were the same store. Sales increases resulting from existing comparable stores that are expanded in size are included in the calculations of comparable store sales. *T
