Capital Allocation and Fiscal Year 2023 Targets
Reconciliations
Non-GAAP Financial Measures
• Free Cash Flow ("FCF")
FCF is a non-GAAP financial measure. FCF is used in addition to and in conjunction with results presented in accordance with accounting
principles generally accepted in the United States ("GAAP"), and FCF should not be relied upon to the exclusion of GAAP financial measures.
Management strongly encourages investors to review our financial statements and publicly-filed reports in their entirety and to not rely on any
single financial measure. FCF, which we reconcile to "Net cash provided by operating activities," is cash flow from operations reduced by
"Expenditures for property, plant and equipment". We believe that FCF, although similar to cash flow from operations, is a useful additional
measure since capital expenditures are a necessary component of ongoing operations. Management also views FCF, as a measure of the
Company's ability to reduce debt, add to cash balances, pay dividends, and repurchase stock. FCF has limitations due to the fact that it does
not represent the residual cash flow available for discretionary expenditures. For example, FCF does not incorporate payments made on
finance lease obligations or required debt service payments. In addition, different companies define FCF differently. Therefore, we believe it
is important to view FCF as a complement to our entire consolidated statements of cash flows. A reconciliation of cash provided by operating
activities to FCF for the thirteen and thirty-nine-week periods ended May 29, 2021 and May 30, 2020, respectively is shown below.
Return on Invested Capital ("ROIC")
ROIC is calculated using a non-GAAP financial measure. We calculate ROIC by dividing non-GAAP net operating profit after tax ("NOPAT")
by average invested capital, a GAAP measure. NOPAT is defined as tax effected income from operations. Average invested capital is defined
as net debt plus shareholder's equity using a trailing 13-month average. We believe that ROIC is useful to investors as a measure of
performance and of the effectiveness of the use of capital in our operations. We use ROIC as one measure to monitor and evaluate operating
performance. This method of determining non-GAAP ROIC may differ from other companies' methods and therefore may not be comparable
to those used by other companies. ROIC should be considered in addition to, rather than as a substitute for, other information provided in
accordance with GAAP. The financial measure calculated under GAAP which is most directly comparable to ROIC is considered to be the
ratio of Net income to Average invested capital. See below for the calculation of ROIC and the reconciliation to the comparable GAAP
measure.
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