Smart & Final Stores Inc. reported financial results Tuesday for the fiscal first quarter ended March 22, 2015.

First Quarter Highlights:

• Net sales increased 11.9% to $822.2 million
• Comparable store sales growth of 6.1%
• Net income of $4.9 million, or $0.06 per diluted share
• Adjusted net income increased 66.8% to $7.7 million, or $0.10 per diluted share
• Adjusted EBITDA increased 15.9% to $35.0 million
• 258 stores at quarter-end, including 102 Smart & Final Extra! stores

“The year is off to a strong start, with Smart & Final Stores delivering against our business plans and financial objectives,” said Dave Hirz, President and Chief Executive Officer. “Once again, sales performance across both of our banners was strong, resulting in a 6.1% total company comparable store sales increase. Underlying our robust sales performance is the expansion of our Smart & Final Extra! stores and our supporting slate of merchandising and marketing initiatives.”

Mr. Hirz continued, “We have a unique retail model which is resonating with today’s consumers. Our two banners – Smart & Final and Cash & Carry – are highly complementary, offering shoppers a wide range of quality products with exceptional value and in a highly convenient shopping experience.  And importantly, our growth plans are on track, with new store development, a steady pace of Smart & Final legacy-to-Extra! store conversions, and merchandising and marketing activities all contributing positively to our financial performance.”

In order to aid understanding of the Company’s business performance, it has presented results in conformity with accounting principles generally accepted in the United States (“GAAP”) and has also presented adjusted net income, adjusted net income per share, adjusted net income per diluted share, EBITDA and adjusted EBITDA, which are non-GAAP measures that are explained and reconciled to the comparable GAAP measures in the tables included in this release. Where applicable, the numbers below are first presented on a GAAP basis and then on an adjusted basis.

First Quarter Fiscal 2015 Financial Results
Net sales were $822.2 million, an 11.9% increase as compared to $735.0 million in the same period of 2014. Net sales growth was driven by a 6.1% increase in comparable store sales and from the net sales contribution of new stores. The growth in comparable store sales was comprised of a 4.2% increase in comparable transaction count and a 1.9% increase in comparable average transaction size.

Net sales for Smart & Final banner stores were $628.8 million, an 11.9% increase as compared to $561.9 million in the same period of 2014.  Comparable store sales growth for the Smart & Final banner was 4.9% in the first quarter.

Net sales for Cash & Carry banner stores were $193.3 million, an 11.7% increase as compared to $173.1 million in the same period of 2014.  Comparable store sales growth for the Cash & Carry banner was 10.2% in the first quarter.

Gross margin from operations was $122.2 million, a 16.8% increase as compared to $104.6 million in the same period of 2014. Gross margin rate in the first quarter was 14.9% as compared to 14.2% in the same period of 2014.

Operating and administrative expenses were $107.0 million, a 15.8% increase as compared to $92.4 million in the same period of 2014. This increase was primarily related to higher sales volumes, increased store support costs and public company costs.

Net income was $4.9 million, as compared $2.5 million in the same period of 2014. Net income per diluted share was $0.06 as compared to $0.04 in the same period of 2014.

Adjusted net income was $7.7 million, an increase of 66.8% as compared to $4.6 million for the same period of 2014. Adjusted net income per diluted share was $0.10 as compared to $0.08 in the same period of 2014.

Adjusted EBITDA was $35.0 million, an increase of 15.9% as compared to $30.2 million in the same period of 2014.

Growth and Development
During the fiscal first quarter of 2015, the Company opened four new Smart & Final Extra! stores. As of March 22, 2015, the Company operated a total of 102 Smart & Final Extra! and 103 legacy Smart & Final stores, and 53 Cash & Carry stores.

In the second quarter of fiscal 2015, the Company expects to open five new Smart & Final Extra! stores, complete four conversions of legacy Smart & Final stores to the Extra! format, including one store relocation, and relocate one Cash & Carry store.

For the remainder of fiscal year 2015, the Company expects to open 16 additional new Smart & Final Extra! stores, complete nine additional conversions of legacy stores to the Extra! format, including three store relocations, and open three additional Cash & Carry stores, including one store relocation. The Company continues to expect the pace of new store openings to be relatively consistent throughout 2015.

Leverage and Liquidity
At March 22, 2015, the Company’s debt, net of debt discount, was $588.4 million and cash and cash equivalents was $124.1 million.

The Company generated cash from operations of $38.1 million in the 12 weeks ended March 22, 2015. The Company invested $24.4 million in capital expenditures, including openings of Extra! format stores and improvements of existing assets.

Outlook

The Company is reiterating the following previously issued outlook for Fiscal Year 2015:

First Quarter 2015 Conference Call
The Company will host a conference call today at 1:30 p.m. PT / 4:30 p.m. ET to discuss its fiscal first quarter 2015 financial results. To participate in the call, please dial (877) 407-0784 (U.S.) or (201) 689-8560 (International) ten minutes prior to the start time. The conference call can also be accessed on the “Investors” section of the Company’s web site at http://www.smartandfinal-investor.com/.

For those unable to participate during the live broadcast, a telephonic replay of the call will also be available beginning today at approximately 7:30 p.m. Eastern Time, by dialing (877) 870-5176 (U.S.) or (858) 384-5517 (International) and entering the replay pin number: 13603649.  The telephonic replay will be available until 11:59 p.m. Eastern Time, on Tuesday, May 12, 2015.

About Smart & Final
Smart & Final Stores, Inc. (NYSE: SFS), is a value-oriented food and everyday staples retailer that serves household and business customers. The Company is headquartered in Commerce (located in Los Angeles), CA, where it was founded over 140 years ago.  As of March 22, 2015, the Company operated 258 grocery and foodservice stores under the “Smart & Final”, “Smart & Final Extra!” and “Cash & Carry Smart Foodservice” banners in California, Oregon, Washington, Arizona, Nevada, and Idaho, with an additional 15 stores in northern Mexico operated through a joint venture.