Nash Finch Beats Zacks Estimates

Nash Finch Company (NAFC - Analyst Report) reported third-quarter 2010 earnings (excluding one-time items) of $1.08 per share, easily beating the Zacks Consensus Estimate of 64 cents by 44 cents. However, earnings were flat year-over-year. Net income from continuing operations of Nash Finch plunged to $15.3 million from $21.9 million in the prior-year quarter.

Quarterly Details

Total sales of Nash Finch for the third quarter 2010 were $1.51 billion, down 7.5% from $1.63 billion in the prior-year quarter. Lower sales at its segments led to the overall decrease in total revenue.

Nash Finch’s cost of sales for the quarter was $1.38 billion, down from $1.50 billion in second-quarter 2009. Selling, general and administrative expense totaled $81.1 million, down from $84.7 million in the prior-year quarter.

Earnings before interest, income tax, depreciation and amortization (EBITDA) for the third quarter of 2010 were $22.8 million, down from $31.6 million in the prior-year quarter.

Interest expense of Nash Finch for the quarter decreased to $7.1 million from $7.6 million in the third quarter of 2009.

Segment Update

Military Distribution: Sales in the quarter were $620.8 million, down 2.5% from $637.1 million in third-quarter 2009. Lower domestic sales, partially offset by an increase in overseas sales led to the year-over-year decline. EBITDA improved 0.8% year-over-year to $15.9 million in the quarter under review.

During the third quarter of 2010, the company announced its intention to purchase a 303,000 square foot facility in Bloomington, Indiana and two facilities totaling 538,000 square feet in Oklahoma City, Oklahoma in order to support the expansion of its military distribution segment.

Food Distribution & Retail: Food Distribution sales decreased 10.7% year-over-year to $890.1 million while Retail sales declined 10.9% year-over-year to $158.6 million. The decrease was primarily attributable to the previously announced transition of a portion of a customer buying group to another supplier during the second quarter 2010. Retail same store sales declined 6.3% compared to the prior-year quarter.

EBITDA at Food Distribution was $20.2 million, down 10.2% year-over-year while at Retail it declined 1.2% year-over-year to $7.7 million.

Financial Update

Cash and cash equivalents of Nash Finch were $785 million versus $830 million in the fourth quarter 2009. Long-term debt increased to $299.3 million at quarter-end from $257.6 million in the fourth quarter 2009.

Net cash provided by operating activities decreased to $16.3 million year to date from $22.3 million in the same period during 2009. Capital expenditure increased substantially to $39.8 million for the first nine months of 2010 from $12.6 million in the prior-year.

Share Repurchase and Dividend

Nash Finch bought back 141.0 million shares at an average price of $35.11 totaling $5 million during the quarter. Since the buyback authorization in November 2009, the company bought back a total of 613.5 million shares for $21.3 million, at an average price of $34.70.

The board of directors of Nash Finch authorized the company to spend up to $25.0 million to repurchase shares. The authorization will lapse on December 31, 2010.

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