Executive Summary

Q3 2024 was operationally resilient: revenue fell 0.6% to $2.25B, GAAP EPS was flat at $0.32, and adjusted EPS declined to $0.48; adjusted EBITDA was $60.5M with margin 2.7% flat YoY as gross margin expanded 50 bps to 15.8% despite lower volumes .
Mix and merchandising gains, lower LIFO, and leaner corporate costs offset Wholesale volume pressure (incl. a 2.9% Amazon headwind) and Retail labor/healthcare inflation; Retail sales grew 1.9% aided by Metcalfe’s, though comps were -0.7% with sequential improvement through the quarter .
Guidance narrowed/lowered: FY24 adj. EBITDA to $252–$257M (from $255–$270M) and adj. EPS to $1.85–$1.95 (from $1.85–$2.10); sales unchanged at $9.5–$9.7B; FY24 capex trimmed to $135–$140M (from $135–$145M) .
2025 preview: low single‑digit topline and mid single‑digit adj. EBITDA growth vs. FY24, bolstered by two tuck‑in deals (Fresh Encounter and Markham) expected to add >$10M adj. EBITDA annually and ~+$225M net sales after eliminations for Fresh Encounter plus >$20M from Markham . Potential stock catalysts: tightened FY24 profitability outlook, evidence of Retail comp inflection, Wholesale ex‑Amazon stabilization, and M&A accretion trajectory .

What Went Well and What Went Wrong

What Went Well
- Gross margin expanded 50 bps to 15.8% on accretive mix, higher vendor funding, and lower LIFO; adj. EBITDA margin held at 2.7% YoY despite volume declines .
- Wholesale adj. EBITDA rose 14.8% YoY to $44.8M on better gross profit rate and merchandising transformation benefits; military channel posted its 11th consecutive YoY growth quarter .
- Retail sales +1.9% aided by Metcalfe’s; comps improved sequentially, with “the 3 best periods of the year so far in Q3” per CEO Tony Sarsam .
- Quote: “Our transformational initiatives are outperforming our expectations… helping to partially offset headwinds… and we plan to capture more benefits from the 2024 investments by the end of this year.” — CEO Tony Sarsam .
What Went Wrong
- Consolidated net sales -0.6% on lower Wholesale volumes; Amazon represented a 2.9% headwind within Wholesale; Retail comps -0.7% .
- Higher restructuring charges, store labor and healthcare costs pressured SG&A; Retail adj. EBITDA fell to $15.7M (from $21.9M) on wage/healthcare and lower gross rate .
- Leverage ticked up: net long‑term debt/adj. EBITDA to 2.4x from 2.2x in Q2 amid investment and M&A pipeline build; FY24 adj. EBITDA guidance trimmed to $252–$257M .

Financial Results

Overall performance: sequential and YoY (oldest → newest)

Metric	Q3 2023	Q2 2024	Q3 2024
Revenue ($USD Billions)	$2.264	$2.231	$2.251
GAAP Diluted EPS ($)	$0.32	$0.34	$0.32
Adjusted EPS ($)	$0.54	$0.59	$0.48
Adjusted EBITDA ($USD Millions)	$60.9	$64.5	$60.5

Margins snapshot (oldest → newest)

Margin	Q3 2023	Q2 2024	Q3 2024
Gross Margin %	15.3%	15.8%	15.8%
Adjusted EBITDA Margin %	2.7% (flat YoY)	2.9%	2.7%
Net Margin %	0.49% (Q3’24 net margin noted) —	—	0.49%

Segment performance

Q3 2024 vs Q3 2023 (YoY)

Segment	Net Sales ($MM) Q3’23	Net Sales ($MM) Q3’24	Op. Earnings ($MM) Q3’23	Op. Earnings ($MM) Q3’24
Wholesale	$1,602.0	$1,576.1	$18.2	$21.1
Retail	$662.2	$674.6	$4.9	$3.9
Total	$2,264.2	$2,250.7	$23.1	$24.9

Q3 2024 vs Q2 2024 (Sequential)

Segment	Net Sales ($MM) Q2’24	Net Sales ($MM) Q3’24	Op. Earnings ($MM) Q2’24	Op. Earnings ($MM) Q3’24
Wholesale	$1,554.6	$1,576.1	$22.1	$21.1
Retail	$676.1	$674.6	$4.1	$3.9
Total	$2,230.8	$2,250.7	$26.1	$24.9

KPIs and balance sheet (oldest → newest where applicable)

KPI	Q1 2024	Q2 2024	Q3 2024
Retail comp sales (%)	-2.5%	-2.5%	-0.7% (sequential improvement)
Wholesale ex‑Amazon growth	—	—	~+3% ex Amazon (quarter commentary)
Amazon headwind (Wholesale)	~4.5% segment headwind	Largely Amazon-driven decline (qualitative)	2.9% segment headwind
Military channel	+2% YoY (Q1)	10+ quarters YoY growth	11 consecutive quarters YoY growth
Net long‑term debt / adj. EBITDA	2.4x (Q1 end)	2.2x	2.4x

Note: Q1 2024 was a 16‑week quarter vs 12‑week Q2/Q3 .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total Net Sales	FY 2024	$9.5B – $9.7B	$9.5B – $9.7B	Maintained
Adjusted EBITDA	FY 2024	$255M – $270M	$252M – $257M	Lowered (midpoint ↓)
Adjusted EPS	FY 2024	$1.85 – $2.10	$1.85 – $1.95	Narrowed lower
Capex + IT Capital	FY 2024	$135M – $145M	$135M – $140M	Narrowed lower
2025 Preview	FY 2025	—	Low single‑digit sales growth; mid single‑digit adj. EBITDA growth vs FY24	New preview
Dividends	Ongoing	—	Declared $0.2175/share on Sept 11 for Oct 4 payment	Capital return update

Earnings Call Themes & Trends

Topic	Q1 2024 (Prev‑2)	Q2 2024 (Prev‑1)	Q3 2024 (Current)	Trend
Margin initiatives (merchandising, supply chain, go‑to‑market)	On track; $125–$150M gross benefits targeted by end‑2024; +$7M merchandising benefits YoY	Continued gross margin lift; investing in non‑product procurement and shrink for 2H benefits	Outperforming expectations; adj. EBITDA margin 2.7% flat YoY despite volume headwinds	Positive execution, cushioning macro headwinds
Retail comps	-2.5% with SNAP/weather drags; pharmacy GLP‑1 tailwind <1%	-2.5%; CVP pilot launched; lowering prices on 6,000 items	-0.7% with sequential improvement, Retail sales +1.9% aided by Metcalfe’s	Improving sequential trend
Amazon	~40% decline YoY within the customer; ~4.5% headwind to Wholesale	Primary driver of national accounts decline	2.9% headwind to Wholesale; stabilizing but not modeled for growth	Stabilizing, still a drag
Military channel	>2% YoY increase	10+ quarters YoY growth	11 consecutive quarters YoY growth	Consistent bright spot
Private label (Our Family, Finest Reserve)	Penetration +50 bps YoY; Finest Reserve launch strong	Finest Reserve momentum; PL supports value focus	High‑20s penetration; Finest Reserve continues to scale	Structural support to traffic/value
Promotions/vendor funding	Vendor participation improved; moving toward pre‑COVID promo rates	Promotions effective; near pre‑COVID promo rate	Expect continued vendor support in tight volume environment	Supportive, aiding gross margin
CVP/digital/tech	AI‑assisted retail pricing; remodels underway	CVP pilot: freshness/value/convenience at lower prices; double‑digit growth target	Digital services to independents (ESLs, enhanced media); CVP informs broader rollout	Scaling playbook
M&A	Metcalfe’s added Q2 footprint	More active pipeline; disciplined framework	Fresh Encounter (49 stores) and Markham (3 c‑stores) announced; >$10M adj. EBITDA accretion expected	Accretive tuck‑ins ramping

Management Commentary

Strategic message: “We continue to invest in our business to expand margin, capture additional cost savings… and deliver value‑add products… These elements have established a solid foundation to drive organic and inorganic growth, including the upcoming acquisitions of Fresh Encounter and Markham.” — CEO Tony Sarsam .
Profitability drivers: “Gross profit… increased to 15.8% of net sales… driven by an accretive sales mix, higher vendor funding and a reduction in LIFO expense… [offset by] higher restructuring charges… retail store labor and health care costs.” — CFO Jason Monaco .
2025 outlook and M&A: “In fiscal 2025, we expect low single‑digit top‑line growth and mid single‑digit adjusted EBITDA growth… Fresh Encounter… >$350M retail sales (~$225M total company after eliminations) and Markham… >$20M sales annually… In aggregate… add more than $10M in adjusted EBITDA.” — CFO Jason Monaco and press releases .
Retail playbook: “We are starting to see some positive trends… comps were down 70 bps… and we had the 3 best periods of the year so far in Q3.” — CEO Tony Sarsam .

Q&A Highlights

C‑store/fuel strategy (Markham): Expanding stable, synergistic fuel/convenience with cross‑loyalty benefits near supermarkets; expect continued organic/inorganic investment in the space .
Amazon trajectory: Relationship stabilizing after prolonged declines; not counting on growth in outlook .
Private label penetration: “High 20%” penetration; Finest Reserve premium line performing well; PL supports traffic and value .
Promotions/vendor funding: Expect continued vendor investment to drive volumes in tighter environment; merchandising transformation strengthens vendor relationships .
Wholesale ex‑Amazon: Up nearly 3% ex Amazon in the quarter; dollar channel cited as a growth vector .

Estimates Context

S&P Global/Capital IQ consensus estimates could not be retrieved at this time; therefore, comparisons to Wall Street consensus (revenue, EPS, EBITDA) are unavailable. Values retrieved from S&P Global.

Where estimates may need to adjust:

FY24 profitability midpoint lowered (adj. EBITDA and EPS), which may drive modest downward revisions to 2H profitability; early FY25 commentary implies a baseline for upward estimate adjustments tied to M&A accretion and execution on margin programs .

Key Takeaways for Investors

Margin resiliency continues: 50 bps gross margin expansion and flat 2.7% adj. EBITDA margin YoY demonstrate mix, vendor funding, and merchandising progress offsetting volume headwinds .
FY24 profitability bar modestly lower, but controlled: Narrowed adj. EBITDA/EPS ranges reflect macro and cost pressures; execution focus shifts to 4Q delivery and 2025 setup .
Retail is bending the curve: Sequential comp improvement and 1.9% sales growth with Metcalfe’s support—watch CVP rollout and deeper promotions as potential traffic catalysts .
Wholesale stabilization ex‑Amazon is emerging: ~+3% ex Amazon; military remains a durable growth engine; Amazon becoming less of a delta but still a drag in models .
Balance sheet capacity for M&A: ~2.4x net leverage and ~$500M liquidity provide flexibility; Fresh Encounter/Markham accretion (> $10M adj. EBITDA) underpins FY25 growth preview .
Trading setup: Near term, stock may key off tightened FY24 profitability guide and evidence of Retail comp inflection; medium term, M&A integration, vendor funding durability, and Amazon stabilization are narrative drivers .
Capital returns continue: Quarterly dividend maintained at $0.2175 per share during the period .

Additional Context: Other Relevant Press Releases in the Period

Fresh Encounter acquisition: 49 stores in OH/IN/KY; expands retail footprint by 33%; closing expected late November (subject to conditions) .
Markham Enterprises acquisition: Three c‑stores/fuel centers in Michigan; close expected in December (subject to conditions) .
Dividend: $0.2175 per share declared Sept 11, payable Oct 4 .

SpartanNash Co (SPTN)·Q3 2024 Earnings Summary