Nash Finch Reports First Quarter 2012 Results

Nash Finch Company (NASDAQ: NAFC), one of the leading food distribution companies in the United States, today announced financial results for the twelve weeks (first quarter) ended March 24, 2012.

Financial Results

Total Company sales for the first quarter 2012 were $1.06 billion compared to $1.10 billion in the prior-year quarter, a decrease of 3.7%. Excluding the impact of selling or closing six retail stores, total company first quarter comparable sales decreased 3.1% relative to last year.

Consolidated EBITDA¹, adjusted to exclude the impact of significant items totaling $1.0 million in both the first quarter 2012 and 2011, respectively, was $23.9 million, or 2.3% of sales in the first quarter of 2012 as compared to $30.8 million, or 2.8% of sales in the first quarter of 2011. Including the impact of significant items, Consolidated EBITDA for the first quarter 2012 was $22.8 million, or 2.2% of sales, as compared to $29.8 million, or 2.7% of sales, in the prior year quarter.

"As anticipated, we, along with the industry in general, experienced lower price inflation trends during the first quarter, which played a part in the decline in EBITDA during the first quarter of 2012," said Alec Covington President and CEO of Nash Finch. "In addition, investments we made in key marketing programs also impacted our EBITDA results, but those programs will better position our food distribution and retail segments for improved revenue growth in the future."

"We recently completed the acquisition of 12 Bag 'N Save stores in the Omaha, NE area and welcome these associates and customers to the Nash Finch family. We expect this acquisition to be accretive to shareholders in 2012 and we are moving swiftly to integrate these new stores into our Nash Finch corporate retail group."

Net earnings in the first quarter, adjusted to exclude the impact of significant items totaling $0.7 million or $0.05 per diluted share in 2012 and $1.8 million or $0.14 per diluted share in the 2011 quarter, were $6.2 million or $0.47 per diluted share in the first quarter of 2012, compared to $9.3 million or $0.71 per diluted share in the first quarter of 2011. Including the impact of significant items, our reported net earnings for the first quarter of 2012 were $5.5 million or $0.42 per diluted share, as compared to net earnings of $7.5 million, or $0.57 per diluted share, in the prior year quarter, and are detailed in the table below.

The following table identifies the significant items affecting our Consolidated EBITDA, net earnings and diluted earnings per share for the first quarter 2012 and prior year results:

The military segment net sales decreased 1.1% in the first quarter 2012 compared to first quarter 2011, primarily due to decreased sales to overseas commissaries.

The military segment EBITDA decreased by $1.7 million in the first quarter 2012 compared to the prior year period. Military EBITDA as a percentage of sales declined to 2.5% in the first quarter 2012 as compared to 2.8% in the prior year.

"We continue to be under pressure in this segment due to increased competition, but are resolute in our plan to deliver the first military distribution world wide platform jointly with our West Coast strategic partners, Coastal Pacific Food Distributors. During the first quarter our newest distribution center in Oklahoma City came online and I am pleased to report the operation is running smoothly. I congratulate all of the associates involved in this achievement," said Covington.

Sales for the combined food distribution and retail segment decreased by 6.2% in the first quarter 2012 as compared to the prior year quarter. The decrease in sales was negatively impacted in the quarter by $11.0 million due to the sale or closing of six retail stores since the end of the fourth quarter of 2010. After adjusting to exclude this impact, our comparable sales declined 4.4% for the first quarter. The decline was primarily due to a reduction in sales to existing wholesale customers in addition to a same store sales decline of 1.4% in our retail stores.

The food distribution and retail segment EBITDA decreased by $5.3 million in the first quarter 2012 compared to the same period last year. The food distribution and retail segment EBITDA as a percentage of sales was 1.8% in the first quarter 2012 as compared to 2.6% in the prior year period. The decrease in first quarter EBITDA was partially due to higher inflation in the previous year quarter resulting in a higher than normal prior year gross margin performance. In addition, declines in perishable commodity prices in the current year have also temporarily impacted gross margin performance.

"We are pleased with the improving trends in same store sales achieved by both our food distribution and retail segments in spite of an unusually mild winter, however, we are disappointed with the EBITDA results achieved by those segments. The results were partially due to a decrease in inflation and the lag between the investments we are making and the results we believe those investments will deliver," said Covington. "We have already seen increased product movement in produce and private label, two of the major initiatives being launched this year to help fuel future growth in both our food distribution and retail segments."

Financial Target Progress

Improvements on our key financial targets have been achieved to date since the targets were announced as part of the Company's strategic plan in November 2006. Our debt leverage ratio has improved from 3.11x in fiscal 2006 to 2.39x in the first quarter 2012. In addition, the ratio of free cash flow to net assets excluding the impact of strategic projects has increased from 8.7% in fiscal 2006 to 9.8% in the first quarter 2012.

The following table charts the Company's progress towards its long-term financial targets that are anticipated to be attained through successful execution of the strategic plan.

Liquidity

Total debt at the end of the first quarter 2012 decreased by $21.6 million to $316.0 million as compared to the end of the first quarter 2011. The Company continues to focus on effectively managing its balance sheet and is currently in compliance with all of its debt covenants. The debt leverage ratio as of the end of the first quarter 2012 was 2.39x. Availability on the Company's revolving credit facility at the end of the quarter was $252.4 million.

¹ References to EBITDA, Consolidated EBITDA, and segment EBITDA are calculated as earnings before interest, income tax, depreciation and amortization, adjusted to exclude extraordinary gains or losses, gains or losses from sales of assets other than inventory in the ordinary course of business, and non-cash charges (such as LIFO, asset impairments, closed store lease costs and share-based compensation), less cash payments made during the current period on non-cash charges recorded in prior periods. Consolidated EBITDA should not be considered an alternative measure of our net income, operating performance, cash flows or liquidity. Consolidated EBITDA is provided as additional information as a key metric used to determine payout pursuant to our Short-Term and Long-Term Incentive Plans. The Company also believes investors find the information useful because it reflects the resources available for strategic investments including, for example, capital needs of the business, strategic acquisitions and debt service.

² Organic Revenue Growth is the percentage change in revenues for a fiscal period(s) compared to the similar prior year fiscal period(s), excluding incremental revenue obtained through acquisitions.

³ Consolidated EBITDA Margin is calculated by dividing Consolidated EBITDA by sales.

⁴ Trailing Four Quarter Free Cash Flow to Net Assets ratio is defined as cash provided from operations less capital expenditures for property, plant & equipment during the trailing four quarters divided by the average net assets for the current period and prior year comparable period (total assets less current liabilities plus current portion of long-term debt and capital leases).

⁵ Trailing Four Quarter Free Cash Flow to Net Assets excluding impact of strategic projects ratio is defined as cash provided from operations less capital expenditures for property, plant & equipment (excluding capital expenditures for strategic projects) during the trailing four quarters divided by the average net assets (excluding average net assets generated from strategic projects) for the current period and prior year comparable period (total assets less current liabilities plus current portion of long-term debt and capital leases).

⁶ Total Leverage Ratio is defined as total debt (current portion of long-term debt and capital leases, long-term debt and capitalized lease obligations) divided by the trailing four quarters Consolidated EBITDA.

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A conference call to review the first quarter 2012 results is scheduled at 10 a.m. CT (11 a.m. ET) on April 27, 2012. Interested participants can listen to the conference call over the Internet by logging onto the "Investor Relations" portion of Nash Finch's website at http://www.nashfinch.com. A replay of the webcast will be available and the transcript of the call will be archived on the "Investor Relations" portion of Nash Finch's website under the heading "Audio Archives." A copy of this press release and the other financial and statistical information about the periods to be discussed in the conference call will be available at the time of the call on the "Investor Relations" portion of the Nash Finch website under the caption "Press Releases."

Nash Finch Company is a Fortune 500 company and one of the leading food distribution companies in the United States. Nash Finch's core business, food distribution, serves independent retailers and military commissaries in 36 states, the District of Columbia, Europe, Cuba, Puerto Rico, the Azores, Bahrain and Egypt. The Company also owns and operates a base of retail stores, primarily supermarkets under the Econofoods®, Family Thrift Center®, AVANZA®, Family Fresh Market®, Savers Choice™, Bag 'N Save® and Sun Mart® trade names. Further information is available on the Company's website at www.nashfinch.com.

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.Such statements relate to trends and events that may affect our future financial position and operating results.Any statement contained in this release that is not statements of historical fact may be deemed forward-looking statements.For example, words such as "may," "will," "should," "likely," "expect," "anticipate," "estimate," "believe," "intend, " "potential" or "plan," or comparable terminology, are intended to identify forward-looking statements.Such statements are based upon current expectations, estimates and assumptions, and entail various risks and uncertainties that could cause actual results to differ materially from those expressed in such forward-looking statements.Important factors known to us that could cause or contribute to material differences include, but are not limited to, the following:

• the effect of competition on our food distribution, military and retail businesses;

• general sensitivity to economic conditions, including the uncertainty related to the current state of the economy in the U.S. and worldwide economic slowdown; disruptions to the credit and financial markets in the U.S. and worldwide; changes in market interest rates; continued volatility in energy prices and food commodities;

• macroeconomic and geopolitical events affecting commerce generally;

• changes in consumer buying and spending patterns;

• our ability to identify and execute plans to expand our food distribution, military and retail operations;

• possible changes in the military commissary system, including those stemming from the redeployment of forces, congressional action and funding levels;

• our ability to identify and execute plans to improve the competitive position of our retail operations;

• the success or failure of strategic plans, new business ventures or initiatives;

• our ability to successfully integrate and manage current or future businesses we acquire, including the ability to manage credit risks and retain the customers of those operations;

• changes in credit risk from financial accommodations extended to new or existing customers;

• significant changes in the nature of vendor promotional programs and the allocation of funds among the programs;

• limitations on financial and operating flexibility due to debt levels and debt instrument covenants;

• legal, governmental, legislative or administrative proceedings, disputes, or actions that result in adverse outcomes;

• our ability to identify and remediate any material weakness in our internal controls that could affect our ability to detect and prevent fraud, expose us to litigation, or prepare financial statements and reports in a timely manner;

• changes in accounting standards;

• technology failures that may have a material adverse effect on our business;

• severe weather and natural disasters that may impact our supply chain;

• unionization of a significant portion of our workforce;

• costs related to a multi-employer pension plan which has liabilities in excess of plan assets;

• changes in health care, pension and wage costs and labor relations issues;

• product liability claims, including claims concerning food and prepared food products;

• threats or potential threats to security;

• unanticipated problems with product procurement; and

• maintaining our reputation and corporate image.

A more detailed discussion of many of these factors, as well as other factors that could affect the Company's results, is contained in the Company's periodic reports filed with the SEC.You should carefully consider each of these factors and all of the other information in this release.We believe that all forward-looking statements are based upon reasonable assumptions when made.However, we caution that it is impossible to predict actual results or outcomes and that accordingly you should not place undue reliance on these statements.Forward-looking statements speak only as of the date when made and we undertake no obligation to revise or update these statements in light of subsequent events or developments.Actual results and outcomes may differ materially from anticipated results or outcomes discussed in forward-looking statements. You are advised, however, to consult any future disclosures we make on related subjects in future reports to the Securities and Exchange Commission (SEC).

Contacts:

Nash Finch Company
Bob Dimond, 952-844-1060
Executive VP & CFO