Rite Aid Reports Fourth Quarter and Full Year Fiscal 2010 Results.
* Full Year Net Loss of $0.59 per Diluted Share Compared to Prior Year Net Loss of $3.49 per Diluted Share, which Included Significant Non-Cash Charges
* Fourth Quarter Adjusted EBITDA of $205.1 Million Compared to Adjusted EBITDA of $270.5 Million in Prior Fourth Quarter
* Full Year Adjusted EBITDA of $925.0 Million Compared to Adjusted EBITDA of $991.1 Million in Prior Year
* Continued Strong Liquidity of $944.5 Million at Quarter End
CAMP HILL, Pa. -- Rite Aid Corporation (NYSE: RAD) today reported financial results for the fourth quarter and fiscal year ended February 27, 2010.
For the fourth quarter, the company reported revenues of $6.5 billion, a net loss of $208.4 million or $0.24 per diluted share and adjusted EBITDA of $205.1 million or 3.2 percent of revenues. Results were negatively impacted by lower sales and continued pressure on pharmacy margins resulting from less profit on new generics and a significant reduction in reimbursement rates. An improvement in front end margin and good SG&A cost control were not enough to offset the decline in pharmacy margin.
"It was a difficult quarter with continued weak consumer demand, a weaker cough cold and flu season than last year and continued pressure on pharmacy reimbursement," said Mary Sammons, Rite Aid chairman and CEO. "But our team did a good job of improving front end margins and holding tight on expenses. Thanks to our working capital initiatives, we moved into the new fiscal year with a strong liquidity position."
Fourth Quarter Summary
Revenues for the 13-week fourth quarter were $6.5 billion versus revenues of $6.7 billion in the prior year fourth quarter. Revenues decreased 3.6 percent, primarily as a result of store closings and a decline in same store sales.
Same store sales for the quarter decreased 2.4 percent over the prior year 13-week period, consisting of a 2.6 percent decrease in the front end and a 2.4 percent decrease in the pharmacy. Pharmacy sales included an approximate 202 basis point negative impact from new generic introductions. The number of prescriptions filled in same stores decreased 1.7 percent over the prior year period. Prescription sales accounted for 66.6 percent of total drugstore sales, and third party prescription revenue was 96.0 percent of pharmacy sales.
The fourth quarter net loss was $208.4 million or $0.24 per diluted share compared to last year's fourth quarter net loss of $2.3 billion or $2.67 per diluted share, which included significant non-cash charges related to goodwill impairment, store impairment and an additional tax valuation allowance against deferred tax assets. Without these non-cash charges, last year's fourth quarter net loss was $116.9 million or $0.14 per diluted share.
Adjusted EBITDA (which is reconciled to net loss on the attached table) was $205.1 million or 3.2 percent of revenues for the fourth quarter compared to $270.5 million or 4.0 percent of revenues for the like period last year. As previously disclosed, adjusted EBITDA for the prior year fourth quarter reflects a $9.1 million reclassification of accounts receivable securitization fee as interest expense to make it comparable to the current period.
In the fourth quarter, the company opened 1 store, relocated 1 store, remodeled 1 store and closed 22 stores. Stores in operation at the end of the fourth quarter totaled 4,780.
Full Year Results
For the 52-week fiscal year ended February 27, 2010, Rite Aid had revenues of $25.7 billion as compared to revenues of $26.3 billion for the 52-week prior year. Revenues declined 2.4 percent, primarily driven by 121 net fewer stores and a decline in same store sales.
Same store sales for the year decreased 0.9 percent over the prior 52-week comparable period. This decrease consisted of a 2.9 percent front-end same store sales decrease and a 0.1 percent increase in pharmacy same store sales. The number of prescriptions filled in same stores increased 0.8 percent. Prescription sales accounted for 67.9 percent of total revenue, and third party prescription revenue was 96.2 percent of pharmacy sales.
Net loss for fiscal 2010 was $506.7 million or $0.59 per diluted share compared to last year's net loss of $2.9 billion or $3.49 per diluted share, which included significant non-cash charges related to goodwill impairment, store impairment and an additional tax valuation allowance against deferred tax assets that accounted for $2.2 billion or $2.70 per diluted share. Excluding these significant non-cash charges, last year's net loss would have been $640 million or $0.79 per diluted share. Contributing to this year's net loss were lower same store sales impacted by a continued weak economy and lower pharmacy margin partially offset by a decrease in SG&A expense.
As computed on the attached table, adjusted EBITDA of $925.0 million or 3.6 percent of revenues for the year compared to $991.1 million or 3.8 percent of revenues for last year. As previously disclosed, adjusted EBITDA for the prior year reflects a $26.1 million reclassification of accounts receivable securitization fees as interest expense to make it comparable to the current period.
For the year, the company opened 17 new stores, relocated 41 stores, remodeled 8 stores and closed 138 stores. Stores in operation at the end of the year totaled 4,780.
Outlook for Fiscal 2011
The company's outlook for fiscal 2011 is based on current trends, a continued weak economy with high unemployment and the impact of the investment Rite Aid is making in its new customer loyalty program.
Rite Aid said it expects sales to be between $25.2 billion and $ 25.6 billion in fiscal 2011 with same store sales expected to range from a decrease of 1.0 percent to an increase of 1.0 percent over fiscal 2010.
Adjusted EBITDA (which is reconciled to net loss on the attached table) is expected to be between $875 million and $975 million.
Net loss for fiscal 2011 is expected to be between $355 million and $570 million or a loss per diluted share of $0.41 to $0.65. Capital expenditures are expected to be approximately $250 million.
Conference Call Broadcast
Rite Aid will hold an analyst call at 8:30 a.m. Eastern Time today with remarks by Rite Aid's management team. The call will be simulcast via the internet and can be accessed through the websites www.riteaid.com in the conference call section of investor information and www.StreetEvents.com. Slides related to materials discussed on the call will be available on both sites. A playback of the call will be available on both sites starting at 12 p.m. Eastern Time today. A playback of the call will also be available by telephone for 48 hours beginning at 12 p.m. Eastern Time today until 11:59 p.m. Eastern Time on April 2. The playback number is 1-800-642-1687 from within the U.S. and Canada or 1-706-645-9291 from outside the U.S. and Canada with the eight-digit reservation number 61582179.
Rite Aid Corporation is one of the nation's leading drugstore chains with nearly 4,800 stores in 31 states and the District of Columbia. Information about Rite Aid, including corporate background and press releases, is available through the company's website at http://www.riteaid.com.
This press release contains forward-looking statements, including guidance, which are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. Factors that could cause actual results to differ materially from those expressed or implied in such forward-looking statements include our high level of indebtedness, our ability to make interest and principal payments on our debt and satisfy the other covenants contained in our senior secured credit facility and other debt agreements; general economic conditions, inflation and interest rate movements; our ability to improve the operating performance of our stores in accordance with our long term strategy; our ability to realize same store sales growth; our ability to hire and retain pharmacists and other store personnel; the efforts of private and public third-party payors to reduce prescription drug reimbursements and encourage mail order; competitive pricing pressures, including aggressive promotional activity from our competitors; decisions to close additional stores and distribution centers, which could result in further charges to our operating statement; our ability to manage expenses; our ability to realize the benefits from actions to further reduce costs and investment in working capital; continued consolidation of the drugstore industry; changes in state or federal legislation or regulations; the outcome of lawsuits and governmental investigations and health care reform. Consequently, all of the forward-looking statements made in this press release, including our guidance, are qualified by these and other factors, risks and uncertainties. Readers are also directed to consider other risks and uncertainties discussed in documents filed by the Company with the Securities and Exchange Commission. Forward-looking statements can be identified through the use of words such as "may", "will", "intend", "plan", "project", "expect", "anticipate", "could", "should", "would", "believe", "estimate", "contemplate", and "possible".
See the attached table for a reconciliation of a non-GAAP financial measure, Adjusted EBITDA to net income (loss), the most comparable GAAP financial measure. We define Adjusted EBITDA as net income (loss) from operations excluding the impact of income taxes, interest expense and securitization costs, depreciation and amortization, LIFO adjustments, charges or credits for store closing and impairment, inventory write-downs related to closed stores, stock-based compensation expense, debt modifications and retirements, sale of assets and investments, revenue deferrals related to customer loyalty programs and other non-recurring items. We reference this non-GAAP financial measure frequently in our decision-making because it provides supplemental information that facilitates internal comparisons to the historical operating performance of prior periods and external comparisons to competitors' historical operating performance. In addition, incentive compensation is based on Adjusted EBITDA and we base our forward-looking estimates on Adjusted EBITDA to facilitate quantification of planned business activities and enhance subsequent follow-up with comparisons of actual to planned Adjusted EBITDA. We include this non-GAAP financial measure in our earnings announcement in order to provide transparency to our investors and enable investors to better compare our operating performance with the operating performance of our competitors.
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|Date:||Mar 31, 2010|
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