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Albertsons Companies, Inc. - Quarter Report: 2025 June (Form 10-Q)

Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations
19
Item 3 - Quantitative and Qualitative Disclosures About Market Risk
31
Item 4 - Controls and Procedures
31
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
32
Item 1A - Risk Factors
32
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds
32
Item 3 - Defaults Upon Senior Securities
33
Item 4 - Mine Safety Disclosures
33
Item 5 - Other Information
33
Item 6 - Exhibits
33
SIGNATURES
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PART I - FINANCIAL INFORMATION
Item 1 - Condensed Consolidated Financial Statements (unaudited)

Albertsons Companies, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in millions, except share data)
(unaudited)

   )  )  )    
June 14,
2025
February 22,
2025
ASSETS
Current assets
Cash and cash equivalents$ $ 
Receivables, net  
Inventories, net  
Other current assets  
Total current assets  
Property and equipment, net  
Operating lease right-of-use assets  
Intangible assets, net  
Goodwill  
Other assets  
TOTAL ASSETS$ $ 
LIABILITIES
Current liabilities
Accounts payable$ $ 
Accrued salaries and wages  
Current maturities of long-term debt and finance lease obligations  
Current operating lease obligations  
Other current liabilities  
Total current liabilities  
Long-term debt and finance lease obligations  
Long-term operating lease obligations  
Deferred income taxes  
Other long-term liabilities  
Commitments and contingencies
STOCKHOLDERS' EQUITY
Class A common stock, $ par value; shares authorized, and shares issued as of June 14, 2025 and February 22, 2025, respectively
  
 
 
()
 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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Albertsons Companies, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in millions)
(unaudited)

16 weeks ended
June 14,
2025
June 15,
2024
Cash flows from operating activities:
Net income$ $ 
Adjustments to reconcile net income to net cash provided by operating activities:
(Gain) loss on property dispositions and impairment losses, net() 
Depreciation and amortization  
Operating lease right-of-use assets amortization  
LIFO expense  
Deferred income tax()()
Contributions to pension and post-retirement benefit plans, net of expense (income)()()
Deferred financing costs  
Equity-based compensation expense  
Other operating activities  
Changes in operating assets and liabilities:
Receivables, net()()
Inventories, net() 
Accounts payable, accrued salaries and wages and other accrued liabilities()()
Operating lease liabilities()()
Self-insurance assets and liabilities() 
Other operating assets and liabilities  
Net cash provided by operating activities  
Cash flows from investing activities:
Payments for property, equipment and intangibles, including lease buyouts()()
Proceeds from sale of assets  
Other investing activities  
Net cash used in investing activities()()
Cash flows from financing activities:
Proceeds from issuance of long-term debt, including ABL facility  
Payments on long-term borrowings, including ABL facility()()
Payments of obligations under finance leases()()
Dividends paid on common stock()()
Treasury stock purchase, at cost() 
Employee tax withholding on vesting of restricted stock units()()
Other financing activities() 
Net cash used in financing activities()()
Net (decrease) increase in cash and cash equivalents and restricted cash() 
Cash and cash equivalents and restricted cash at beginning of period  
Cash and cash equivalents and restricted cash at end of period$ $ 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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Albertsons Companies, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders' Equity
(in millions, except share data)
(unaudited)


Class A Common StockAdditional paid-in capitalTreasury StockAccumulated other comprehensive incomeRetained earningsTotal stockholders' equity
SharesAmountSharesAmount
Balance as of February 22, 2025 $ $  $()$ $ $ 
Equity-based compensation— —  — — — —  
Shares issued and employee tax withholding on vesting of restricted stock units — ()— — — — ()
Repurchase of common stock— — —  ()— — ()
Cash dividends declared on common stock ($ per common share)
— — — — — — ()()
Net income— — — — — —   
Other comprehensive loss, net of tax— — — — — ()— ()
Other activity— —  — — — () 
Balance as of June 14, 2025 $ $  $()$ $ $ 


    
Class A Common StockAdditional paid-in capitalTreasury StockAccumulated other comprehensive incomeRetained earningsTotal stockholders' equity
SharesAmountSharesAmount
Balance as of February 24, 2024 $ $  $()$ $ $ 
Equity-based compensation— —  — — — —  
Shares issued and employee tax withholding on vesting of restricted stock units  ()— — — — ()
Cash dividends declared on common stock ($ per common share)
— — — — — — ()()
  %$  %
(1) Digital related sales are included in the categories to which the revenue pertains.
(2) Consists primarily of general merchandise, grocery, dairy and frozen foods.
(3) Consists primarily of produce, meat, deli and prepared foods, bakery, floral and seafood.
(4) Consists primarily of wholesale revenue to third parties, commissions, rental income, media advertising revenue and other miscellaneous revenue.

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NOTE 2 -


 $ $ $ Non-current investments (2)    Derivative contracts (3)    Total$ $ $ $ Liabilities:Derivative contracts (3)$ $ $ $ Total$ $ $ $ 
(1) Primarily relates to Mutual Funds (Level 1) and Certificates of Deposit (Level 2). Included in Other current assets.
(2) Primarily relates to investments in Exchange-Traded Funds (Level 1) and certain equity investments, U.S. Treasury Notes and Corporate Bonds (Level 2). Included in Other assets.
(3) Primarily relates to energy derivative contracts. Included in Other assets and Other current liabilities.
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 $ $ $ Non-current investments (2)    Derivative contracts (3)    Total$ $ $ $ Liabilities:Derivative contracts (3)$ $ $ $ Total$ $ $ $ 
(1) Primarily relates to Mutual Funds (Level 1), and certain equity investments and Certificates of Deposit (Level 2). Included in Other current assets.
(2) Primarily relates to investments in Exchange-Traded Funds (Level 1) and certain equity investments, U.S. Treasury Notes and Corporate Bonds (Level 2). Included in Other assets.
(3) Primarily relates to energy derivative contracts. Included in Other assets or Other current liabilities.

The Company records cash and cash equivalents, restricted cash, accounts receivable and accounts payable at cost. The recorded values of these financial instruments approximate fair value based on their short-term nature.

The estimated fair value of the Company's debt, including current maturities, was based on Level 2 inputs, being market quotes or values for similar instruments, and interest rates currently available to the Company for the issuance of debt with similar terms and remaining maturities as a discount rate for the remaining principal payments. As of June 14, 2025, the fair value of total debt was $ million compared to the carrying value of $ million, excluding debt discounts and deferred financing costs. As of February 22, 2025, the fair value of total debt was $ million compared to the carrying value of $ million, excluding debt discounts and deferred financing costs.
Assets Measured at Fair Value on a Non-Recurring Basis


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NOTE 3 -

million and $ million, respectively, and deferred financing costs of $ million and $ million, respectively, consisted of the following (in millions):
June 14,
2025
February 22,
2025
Senior Unsecured Notes due 2026 to 2033, interest rate range of % to %
$ $ 
New Albertsons L.P. Notes due 2026 to 2031, interest rate range of % to %
  
Safeway Inc. Notes due 2027 to 2031, interest rate range of % to %
  
ABL Facility  
Other financing obligations  
Finance lease obligations   
Total debt  
Less current maturities()()
Long-term portion$ $ 

ABL Facility

As of June 14, 2025, there was $ million outstanding under the asset-based loan facility (the "ABL Facility"), and letters of credit ("LOC") issued under the LOC sub-facility were $ million. As of February 22, 2025, there were amounts outstanding under the ABL Facility and LOC issued under the LOC sub-facility were $ million.

Senior Unsecured Notes
On March 11, 2025, the Company and substantially all of its subsidiaries completed the issuance of $ million in aggregate principal amount of % senior unsecured notes due March 15, 2033 (the "2033 Notes"). Interest on the 2033 Notes is payable semi-annually in arrears on March 15 and September 15 of each year, with the first payment commencing on September 15, 2025. On March 17, 2025, proceeds from the 2033 Notes, together with approximately $ million of cash on hand, were used to (i) redeem in full the $ million outstanding of the Company's % senior unsecured notes due March 15, 2026 and (ii) pay fees and expenses related to the issuance of the 2033 Notes.

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NOTE 4 -

)$()$ $ Service cost    Interest cost    Amortization of prior service cost    Amortization of net actuarial gain()()()()   ) ) ))    )))())) ))))June 15,
2024
 $     2,269 2,269 
The following table summarizes our stores by size:
Number of storesPercent of TotalRetail Square Feet (1)
Square FootageJune 14,
2025
June 15,
2024
June 14,
2025
June 15,
2024
June 14,
2025
June 15,
2024
Less than 30,000211 217 9.3 %9.6 %4.8 4.9 
30,000 to 50,000773 777 34.2 %34.2 %32.4 32.6 
More than 50,0001,280 1,275 56.5 %56.2 %75.6 75.3 
Total stores2,264 2,269 100.0 %100.0 %112.8 112.8 
(1) In millions, reflects total square footage of retail stores operating at the end of the period.

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RESULTS OF OPERATIONS
Comparison of the First Quarter of Fiscal 2025 to the First Quarter of Fiscal 2024.

The following tables and related discussion set forth certain information and comparisons regarding the components of our Condensed Consolidated Statements of Operations for the 16 weeks ended June 14, 2025 ("first quarter of fiscal 2025") and 16 weeks ended June 15, 2024 ("first quarter of fiscal 2024") (dollars in millions, except per share data).
16 weeks ended
June 14,
2025
% of SalesJune 15,
2024
% of Sales
Net sales and other revenue$24,880.8 100.0 %$24,265.4 100.0 %
Cost of sales18,142.5 72.9 17,526.5 72.2 
Gross margin6,738.3 27.1 6,738.9 27.8 
Selling and administrative expenses6,320.9 25.4 6,274.0 25.9 
(Gain) loss on property dispositions and impairment losses, net(31.9)(0.1)5.3 — 
Operating income 449.3 1.8 459.6 1.9 
Interest expense, net141.8 0.6 145.7 0.6 
14.6 
4.9 
14.7 
19.0 
45.0 
318.9 $391.6 
581.3 
0.41 $0.41 
3.2 
6.1 $19.0 

LIQUIDITY AND CAPITAL RESOURCES

The following table sets forth the major sources and uses of cash and cash equivalents and restricted cash for each period (in millions):
16 weeks ended
June 14,
2025
June 15,
2024
Cash and cash equivalents and restricted cash at end of period$155.3 $295.3 
Cash flows provided by operating activities754.4 960.9 
Cash flows used in investing activities(474.1)(538.0)
Cash flows used in financing activities(422.9)(320.8)

Net Cash Provided by Operating Activities

Net cash provided by operating activities was $754.4 million for the first quarter of fiscal 2025 compared to $960.9 million for the first quarter of fiscal 2024. The decrease in cash flow from operating activities during the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024 was due to a decrease in Adjusted EBITDA, cash paid for property taxes and self-insurance claims, changes in working capital, primarily related to inventory and accounts payable, and increases in business transformation costs and contributions to our defined benefit pension plans, partially offset by lower Merger-related costs.

Net Cash Used in Investing Activities

Net cash used in investing activities was $474.1 million for the first quarter of fiscal 2025 compared to $538.0 million for the first quarter of fiscal 2024.

For the first quarter of fiscal 2025, cash used in investing activities consisted primarily of payments for property, equipment and intangibles of $584.6 million, partially offset by proceeds from the sale of assets of $78.2 million, primarily related to real estate. Payments for property, equipment and intangibles in the first quarter of fiscal 2025 included the completion of 36 remodels, the opening of three new stores and continued investment in our digital and technology platforms. For the first quarter of fiscal 2024, cash used in investing activities consisted primarily of payments for property, equipment and intangibles of $543.0 million. Payments for property, equipment and intangibles in the first quarter of fiscal 2024 included the completion of 17 remodels, the opening of one new store and continued investment in our digital and technology platforms.

Net Cash Used in Financing Activities

Net cash used in financing activities was $422.9 million during the first quarter of fiscal 2025 compared to $320.8 million during the first quarter of fiscal 2024.

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Net cash used in financing activities during the first quarter of fiscal 2025 consisted primarily of the repurchase of common stock, dividends paid on our Class A common stock and tax withholding payments on vesting of RSUs, partially offset by $25.0 million of proceeds from the ABL Facility. We also had a $600.0 million issuance and subsequent $600.0 million redemption of senior unsecured notes (as further discussed below under the caption Debt Management). Net cash used in financing activities during the first quarter of fiscal 2024 consisted primarily of the $200.0 million repayment of the ABL Facility, dividends paid on our Class A common stock and tax withholding payments on vesting of RSUs.

Debt Management

As of June 14, 2025, we had $25.0 million borrowings outstanding under our ABL Facility and total availability of $3,947.6 million (net of letter of credit usage).

On March 11, 2025, we completed the issuance of $600.0 million in aggregate principal amount of 6.250% senior unsecured notes due March 15, 2033 (the "2033 Notes"). Interest on the 2033 Notes is payable semi-annually in arrears on March 15 and September 15 of each year, with the first payment commencing on September 15, 2025. On March 17, 2025, proceeds from the 2033 Notes, together with approximately $5.7 million of cash on hand, were used to (i) redeem in full the $600.0 million outstanding of our 7.500% senior unsecured notes due March 15, 2026 and (ii) pay fees and expenses related to the issuance of the 2033 Notes.

Dividends

We have established a dividend policy pursuant to which we intend to pay a quarterly dividend on our Class A common stock. Cash dividends paid on our Class A common stock were $85.7 million ($0.15 per common share) and $69.5 million ($0.12 per common share) during the first quarter of fiscal 2025 and first quarter of fiscal 2024, respectively. On July 15, 2025, we announced the next quarterly dividend payment of $0.15 per share of Class A common stock to be paid on August 8, 2025 to stockholders of record as of the close of business on July 25, 2025.

Common Stock Repurchase Program

The Board has authorized a multi-year share repurchase program of up to $2.0 billion of our common stock. The share repurchase program could include open market repurchases, accelerated share repurchase programs, tender offers, block trades, potential privately negotiated transactions, or trading plans in compliance with the federal securities laws. During the first quarter of fiscal 2025, we repurchased an aggregate of 14.2 million shares of common stock for a total of $314.8 million.

Liquidity

Based on current operating trends, we believe that we have significant sources of cash to meet our liquidity needs for the next 12 months and for the foreseeable future, including cash on hand, cash flows from operating activities and other sources of liquidity, including the ABL Facility. We estimate our liquidity needs over the next 12 months to be approximately $5.5 billion, which includes anticipated requirements for incremental working capital, capital expenditures, pension obligations, interest payments, quarterly dividends on Class A common stock, common stock repurchases, operating leases and finance leases. In addition, we may enter into refinancing and sale leaseback transactions from time to time. We believe we have adequate cash flow to continue to maintain our current debt ratings and to respond effectively to competitive conditions.

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CRITICAL ACCOUNTING POLICIES

The preparation of Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. We have chosen accounting policies that we believe are appropriate to report accurately and fairly our operating results and financial position, and we apply those accounting policies in a fair and consistent manner. See the Critical Accounting Policies section included in our Annual Report on Form 10-K for the fiscal year ended February 22, 2025, filed with the SEC on April 21, 2025, for a discussion of our significant accounting policies.

RECENTLY ISSUED AND RECENTLY ADOPTED ACCOUNTING STANDARDS

See Note 1 - Basis of Presentation and Summary of Significant Accounting Policies of our unaudited interim Condensed Consolidated Financial Statements located elsewhere in this Form 10-Q.

Item 3 - Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in our exposure to market risk from the information provided in our Annual Report on Form 10-K for the fiscal year ended February 22, 2025, filed with the SEC on April 21, 2025.

Item 4 - Controls and Procedures

Based on their evaluation of our disclosure controls and procedures (as defined in Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934 (the "Exchange Act")) as of the end of the period covered by this Form 10-Q, our Principal Executive Officer and Principal Financial Officer concluded our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and is accumulated and communicated to management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the first quarter of fiscal 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION

Item 1 - Legal Proceedings

The Company is subject from time to time to various claims and lawsuits arising in the ordinary course of business, including lawsuits involving trade practices, lawsuits alleging violations of state and/or federal wage and hour laws (including alleged violations of meal and rest period laws and alleged misclassification issues), real estate disputes and other matters. Some of these claims or suits purport or may be determined to be class actions and/or seek substantial damages. It is the opinion of the Company's management that although the amount of liability with respect to certain of the matters described in this Form 10-Q cannot be ascertained at this time, any resulting liability of these and other matters, including any punitive damages, will not have a material adverse effect on the Company's business or overall financial condition. See the matters under the caption Legal Proceedings in Note 5 - Commitments and Contingencies and Off Balance Sheet Arrangements in the unaudited interim Condensed Consolidated Financial Statements located elsewhere in this Form 10-Q.

The Company continually evaluates its exposure to loss contingencies arising from pending or threatened litigation and believes it has made provisions where the loss contingency is probable and can be reasonably estimated. Nonetheless, assessing and predicting the outcomes of these matters involves substantial uncertainties. While management currently believes that the aggregate estimated liabilities currently recorded are reasonable, it remains possible that differences in actual outcomes or changes in management's evaluation or predictions could arise that could be material to the Company's results of operations or cash flows.

Environmental Matters

Our operations are subject to regulation under environmental laws, including those relating to waste management, air emissions and underground storage tanks. In addition, as an owner and operator of commercial real estate, we may be subject to liability under applicable environmental laws for clean-up of contamination at our facilities. SEC regulations require us to disclose certain environmental matters arising under federal, state or local environmental provisions if we reasonably believe that such proceedings may result in monetary sanctions above a stated threshold. Pursuant to SEC regulations, we use a threshold of $1 million for purposes of determining whether disclosure of any such proceedings is required.

Item 1A - Risk Factors

There have been no material changes to the risk factors previously included in our Annual Report on Form 10-K for the fiscal year ended February 22, 2025, filed with the SEC on April 21, 2025, under the heading "Risk Factors".

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds

(a) Unregistered Sales of Equity Securities

None.

(b) Use of Proceeds

None.

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(c) Purchases of Equity Securities

On December 11, 2024, the Board authorized a multi-year share repurchase program of up to $2.0 billion of the Company's common stock. The share repurchase program could include open market repurchases, accelerated share repurchase programs, tender offers, block trades, potential privately negotiated transactions, or trading plans in compliance with the federal securities laws. During the first quarter of fiscal 2025, the Company repurchased an aggregate of 14.2 million shares of common stock for a total of $314.8 million pursuant to such share repurchase authorization.

Share repurchase activity during the first quarter of fiscal 2025 was as follows:
PeriodTotal Number of Shares PurchasedAverage Price Paid per Share (1)Total Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsDollar Value of Shares that May Yet be Purchased Under the Plans or Programs (in millions) (1)
February 23, 2025 through March 22, 2025780,337 $20.66 780,337 $1,901.3 
March 23, 2025 through April 19, 2025285,649 20.88 285,649 1,895.4 
April 20, 2025 through May 17, 20259,686,371 22.11 9,686,371 1,681.2 
May 18, 2025 through June 14, 20253,497,178 21.81 3,497,178 1,604.9 
Total14,249,535 $21.93 14,249,535 $1,604.9 
(1) Excludes excise tax on share repurchases in excess of issuances, which is included as part of the cost basis of the shares acquired.

Item 3 - Defaults Upon Senior Securities

None.

Item 4 - Mine Safety Disclosures

Not Applicable.

Item 5 - Other Information

In the first quarter of fiscal 2025, none of the Company's directors or officers or a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement, as defined in Item 408(a) of Regulation S-K.

Item 6 - Exhibits

10.1 Form of special retention stock agreement

31.1 Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2 Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1 Certification of the Principal Executive Officer and of the Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

EXHIBIT 101.INS - Inline XBRL Instance Document

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EXHIBIT 101.SCH - Inline XBRL Taxonomy Extension Schema Document

EXHIBIT 101.CAL - Inline XBRL Taxonomy Extension Calculation Linkbase Document

EXHIBIT 101.DEF - Inline XBRL Taxonomy Extension Definition Linkbase Document

EXHIBIT 101.LAB - Inline XBRL Taxonomy Extension Label Linkbase Document

EXHIBIT 101.PRE - Inline XBRL Taxonomy Extension Presentation Linkbase Document

EXHIBIT 104 - Cover Page Interactive Data File (embedded within the Inline XBRL document)
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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Albertsons Companies, Inc.
(Registrant)
Date:July 22, 2025By:/s/ Susan Morris
Susan Morris
Chief Executive Officer and Director
(Principal Executive Officer)

Date:July 22, 2025By:/s/ Sharon McCollam
Sharon McCollam
President and Chief Financial Officer
(Principal Financial Officer)

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