United Natural Foods, Inc. Announces First Quarter Fiscal 2013
Results
PROVIDENCE, R.I., Nov. 30, 2012 /PRNewswire/ --
Highlights
- GAAP net income of $21.5 million
for the first quarter of fiscal 2013; adjusted net income of
$22.8 million, a 17.8% increase over
adjusted net income for the first quarter of fiscal 2012
- GAAP diluted EPS of $0.43 for the
first quarter of fiscal 2013; adjusted diluted EPS of $0.46, a 16.1% increase over adjusted diluted EPS
for the first quarter of fiscal 2012
United Natural Foods, Inc. (Nasdaq: UNFI) (the "Company")
today reported that net sales for the first quarter of fiscal
2013, ended October 27, 2012, totaled
$1.410 billion, an increase of 15.8%,
or $192.6 million, over $1.217
billion in net sales recorded in the first quarter of fiscal 2012.
The Company's previously-announced acquisitions of certain assets
of three distributors completed during the first quarter of fiscal
2013 contributed $11.2 million in net
sales during the first quarter of fiscal 2013. Excluding
these incremental net sales, the Company's net sales increased by
$181.4 million, or 14.9%, in the
first quarter of fiscal 2013 compared to the first quarter of
fiscal 2012.
"Despite moderated inflation and higher than anticipated product
shortages, strong consumer demand continued to drive steady growth
for our products and services during the quarter," said
Steven Spinner, President and Chief
Executive Officer. "We anticipate growth for the holiday season
should remain strong as consumers continue to move towards a
healthier lifestyle."
Total operating expenses in the first quarter of fiscal 2013
increased by $8.3 million, or 4.4%,
to $199.4 million, compared to the
first quarter of fiscal 2012, which had total operating expenses of
$191.1 million. Total operating
expenses were 14.1% as a percentage of net sales for the first
quarter of fiscal 2013, a decrease of 155 basis points compared
with the first quarter of fiscal 2012. Total operating
expenses for the first quarter of fiscal 2013 included expenses of
approximately $1.6 million related to
the termination of a licensing agreement and the write-off of
the associated intangible asset. Total operating expenses for
the first quarter of fiscal 2012 included $5.3 million in expenses related to the
restructuring and divestiture of the Company's conventional
non-foods and general merchandise lines of business and
$1.6 million in expenses related to
the onboarding of a new national customer. Excluding these
expenses in each period, operating expenses as a percentage of net
sales were 14.0% for the first quarter of fiscal 2013, a decrease
of 110 basis points compared with the first quarter of fiscal
2012.
Non-cash rent expense associated with the Company's previously
announced new Aurora, Colorado
distribution facility, which is scheduled to open in the fourth
quarter of fiscal 2013, represented approximately $0.8 million in expense during the first quarter
of fiscal 2013.
On a GAAP basis, operating income as a percentage of net sales
increased 21.2% to 2.6% for the first quarter of fiscal 2013 from
2.1% for the first quarter of fiscal 2012. Operating income
for the first quarter of fiscal 2013 was $36.6 million, an increase of approximately
$10.5 million, or 40.3%, from the
comparable quarter in fiscal 2012. Adjusted to exclude the expenses
associated with the write-off of the intangible asset, operating
income as a percentage of net sales was 2.7% for the first quarter
of fiscal 2013 and is consistent with the prior year comparable
quarter's operating income as a percentage of net sales adjusted to
exclude the restructuring and onboarding expenses. Operating
income adjusted for the items described above increased 15.8% in
the first quarter of fiscal 2013 to $38.2
million compared to $33.0
million in the first quarter of fiscal 2012.
Gross margin was 16.7% for the first quarter of fiscal 2013,
which represents a 110 basis point decline from gross margin of
17.8% for the first quarter of fiscal 2012. Gross margin for
the first quarter of fiscal 2013 was negatively affected by higher
supplier out of stocks, increased inbound freight costs as well as
the Company's drive to maintain higher service levels, which
together represented approximately 70% of the year over year
decline. The continued shift in customer mix towards the
supernatural and conventional supermarket channels also negatively
impacted gross margin during the first quarter of fiscal 2013.
Other expense, net, reflects $4.9
million in expense associated with an agreement in principle
to settle a multi-state unclaimed property audit primarily related
to an acquisition completed in 2007. The Company finalized a
settlement agreement in November, and will make payment in the
second quarter of fiscal 2013.
GAAP net income for the first quarter of fiscal 2013 increased
by $6.4 million, or 42.1%, to
$21.5 million, or $0.43 per diluted share, from $15.2 million, or $0.31 per diluted share, for the first quarter of
fiscal 2012. Earnings per diluted share, adjusted to exclude
the after-tax expenses associated with the write-off of the
intangible asset, the unclaimed property settlement described above
and the discrete tax benefit of $2.7
million primarily related to the reversal of reserves for
uncertain tax positions were $0.46
for the first quarter of fiscal 2013.
"UNFI continued to execute on its strategic plan during our
first quarter," added Mr. Spinner. "I'm proud of our continued
drive towards operational excellence during this very important
holiday season. We are currently in the process of integrating our
recent acquisitions into our existing operations, and expect all
integration tasks to be completed by the end of our third quarter
of fiscal 2013."
Conference Call & Webcast
The Company's first
quarter fiscal 2013 conference call and audio webcast will be held
at 10:00 a.m. EST on November 30, 2012. The audio webcast of the
conference call will be available to the public, on a listen-only
basis, via the Internet at www.earnings.com or at the Investors
section of the Company's website at www.unfi.com. The
online archive of the webcast will be available on the Company's
website for 30 days.
About United Natural Foods
United Natural Foods, Inc.
(http://www.unfi.com) carries and distributes more than 65,000
products to more than 27,000 customer locations throughout
the United States and Canada. The Company serves a wide variety of
retail formats including conventional supermarket chains, natural
product superstores, independent retail operators and the food
service channel. United Natural Foods, Inc. was ranked by Fortune
in 2006 – 2010 and 2012 as one of its "Most Admired Companies,"
winner of the Supermarket News 2008 Sustainability Excellence
Award, recognized by the Nutrition Business Journal for its 2009
Environment and Sustainability Award and chosen by Food Logistics
Magazine as one of its 2012 Top 20 Green Providers.
For more information on United Natural Foods, Inc., visit the
Company's website at www.unfi.com.
"Safe Harbor" Statement under the Private Securities
Litigation Reform Act of 1995: Statements in this press release
regarding the Company's business that are not historical facts are
"forward-looking statements" that involve risks and uncertainties
and are based on current expectations and management estimates;
actual results may differ materially. The risks and uncertainties
which could impact these statements are described in the Company's
filings under the Securities Exchange Act of 1934, as amended,
including its annual report on Form 10-K filed with the Securities
and Exchange Commission on September 26,
2012 and other filings the Company makes with the SEC, and
include, but are not limited to, the Company's dependence on
principal customers; the Company's sensitivity to general economic
conditions, including the current economic environment, changes in
disposable income levels and consumer spending trends; the
Company's ability to reduce its expenses in amounts sufficient to
offset its increased focus on sales to conventional supermarkets
and the resulting lower gross margins on the sales; the Company's
reliance on the continued growth in sales of natural and organic
foods and non-food products in comparison to conventional products;
the Company's ability to timely and successfully deploy its new
warehouse management system throughout its distribution centers;
increased fuel costs; the Company's sensitivity to inflationary and
deflationary pressures; the relatively low margins and economic
sensitivity of the Company's business; the potential for
disruptions in the Company's supply chain by circumstances beyond
its control; the ability to identify and successfully complete
acquisitions of other natural, organic and specialty food and
non-food products distributors; and management's allocation of
capital and the timing of capital expenditures. Any
forward-looking statements are made pursuant to the Private
Securities Litigation Reform Act of 1995 and, as such, speak only
as of the date made. The Company is not undertaking to update any
information in the foregoing reports until the effective date of
its future reports required by applicable laws. Any projections of
future results of operations are based on a number of assumptions,
many of which are outside the Company's control and should not be
construed in any manner as a guarantee that such results will in
fact occur. These projections are subject to change and could
differ materially from final reported results. The Company may from
time to time update these publicly announced projections, but it is
not obligated to do so.
Non-GAAP Financial Measures: To supplement its
financial statements presented on a generally accepted accounting
principles ("GAAP") basis, the Company has included in this press
release non-GAAP financial measures (including operating expenses,
operating income, net income and earnings per diluted share) in
each case excluding certain unusual expenses as described in more
detail within this press release. The reconciliations of
these non-GAAP financial measures to the comparable GAAP financial
measures are presented in the tables appearing below labeled
"Consolidated Statements of Income with Adjustments" for the three
months ended October 27, 2012 and
October 29, 2011. The
presentation of these non-GAAP financial measures is not intended
to be considered in isolation or as a substitute for any measure
prepared in accordance with GAAP. The Company believes that
presenting its operating expenses, operating income, net income and
earnings per diluted share for the first quarter of fiscal 2013
excluding these expenses facilitates making period-to-period
comparisons and is a meaningful indication of its operating
performance. The Company's management utilizes this non-GAAP
financial information to compare the Company's operating
performance during the 2013 fiscal year versus the comparable
periods in the 2012 fiscal year and to internally prepared
projections.
|
UNITED
NATURAL FOODS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share
data)
|
|
|
|
Three
months ended
|
|
October
27, 2012
|
|
October
29, 2011
|
|
|
|
|
|
Net sales
|
$
1,410,037
|
|
$
1,217,428
|
|
Cost of sales
|
1,174,084
|
|
1,000,315
|
|
|
|
|
|
Gross profit
|
235,953
|
|
217,113
|
|
|
|
|
|
Operating expenses
|
197,758
|
|
185,713
|
|
Restructuring and asset impairment
|
1,629
|
|
5,345
|
|
Total operating expenses
|
199,387
|
|
191,058
|
|
|
|
|
|
Operating income
|
36,566
|
|
26,055
|
|
|
|
|
|
Other expense (income):
|
|
|
|
|
Interest expense
|
978
|
|
1,073
|
|
Interest income
|
(173)
|
|
(170)
|
|
Other, net
|
4,781
|
|
141
|
|
Total other expense
|
5,586
|
|
1,044
|
|
|
|
|
|
Income before income taxes
|
30,980
|
|
25,011
|
|
|
|
|
|
Provision for income taxes
|
9,444
|
|
9,854
|
|
|
|
|
|
Net income
|
$
21,536
|
|
$
15,157
|
|
|
|
|
|
Basic per share data:
|
|
|
|
|
Net income
|
$
0.44
|
|
$
0.31
|
|
|
|
|
|
Weighted average basic
shares
of common
stock
|
49,142
|
|
48,594
|
|
|
|
|
|
Diluted per share data:
|
|
|
|
|
Net income
|
$
0.43
|
|
$
0.31
|
|
|
|
|
|
Weighted average diluted
shares
of common
stock
|
49,585
|
|
48,889
|
|
UNITED
NATURAL FOODS, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except per share
data)
|
|
|
|
|
|
October
27,
2012
|
|
July
28,
2012
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
8,939
|
|
$
16,122
|
|
Accounts receivable,
net
|
338,577
|
|
305,177
|
|
Inventories
|
719,673
|
|
578,555
|
|
Deferred income taxes
|
25,353
|
|
25,353
|
|
Prepaid expenses and other current
assets
|
20,610
|
|
21,654
|
|
Total current
assets
|
1,113,152
|
|
946,861
|
|
|
|
|
|
Property
and equipment, net
|
276,393
|
|
278,455
|
|
|
|
|
|
Other
assets:
|
|
|
|
|
Goodwill
|
203,436
|
|
193,741
|
|
Intangible assets, net
|
53,060
|
|
52,496
|
|
Other assets
|
25,683
|
|
22,393
|
|
Total
assets
|
$
1,671,724
|
|
$
1,493,946
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts payable
|
$
349,304
|
|
$
242,179
|
|
Accrued expenses and other current
liabilities
|
104,073
|
|
91,632
|
|
Current portion of long-term
debt
|
566
|
|
350
|
|
Total current
liabilities
|
453,943
|
|
334,161
|
|
|
|
|
|
Notes
payable
|
148,933
|
|
115,000
|
|
Deferred
income taxes
|
36,267
|
|
36,260
|
|
Other
long-term liabilities
|
28,193
|
|
29,174
|
|
Long-term
debt, excluding current portion
|
940
|
|
635
|
|
Total
liabilities
|
668,276
|
|
515,230
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
Preferred
stock, $0.01 par value, authorized 5,000 shares; none issued and
outstanding
|
-
|
|
-
|
|
Common
stock, $0.01 par value, authorized 100,000 shares; 49,279 issued
and outstanding shares at October 27, 2012; 49,011 issued and
outstanding shares at July 28,
2012
|
493
|
|
490
|
|
Additional paid-in capital
|
367,285
|
|
364,598
|
|
Unallocated shares of Employee Stock Ownership Plan
|
(48)
|
|
(89)
|
|
Accumulated other comprehensive income
|
2,361
|
|
1,896
|
|
Retained earnings
|
633,357
|
|
611,821
|
|
Total stockholders'
equity
|
1,003,448
|
|
978,716
|
|
|
|
|
|
Total
liabilities and stockholders' equity
|
$
1,671,724
|
|
$
1,493,946
|
|
UNITED
NATURAL FOODS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
|
|
|
|
Three
months ended
|
|
October
27,
2012
|
October
29,
2011
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
Net
income
|
$
21,536
|
$
15,157
|
|
Adjustments to reconcile net income to net cash
used
|
|
|
|
in
operating activities:
|
|
|
|
Depreciation and
amortization
|
10,119
|
9,592
|
|
Share-based
compensation
|
4,714
|
3,910
|
|
Excess tax benefits from
share-based payment arrangements
|
(30)
|
(455)
|
|
Provision for doubtful
accounts
|
691
|
1,296
|
|
Gain on disposals of property and
equipment
|
(19)
|
(258)
|
|
Intangibles impairment
charge
|
1,629
|
-
|
|
Unrealized gain on foreign
exchange
|
122
|
-
|
|
Changes in
assets and liabilities, net of acquisitions:
|
|
|
|
Accounts receivable
|
(30,216)
|
(54,108)
|
|
Inventories
|
(140,067)
|
(135,363)
|
|
Prepaid expenses and other assets
|
(1,463)
|
3,514
|
|
Accounts payable
|
76,165
|
52,539
|
|
Accrued expenses and other current liabilities
|
1,360
|
10,713
|
|
Net cash used in
operating activities
|
(55,459)
|
(93,463)
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
Purchases
of acquired businesses, net of cash acquired
|
(9,235)
|
(31)
|
|
Capital
expenditures
|
(4,573)
|
(7,801)
|
|
Proceeds
from disposals of property and equipment
|
20
|
277
|
|
Net cash used in
investing activities
|
(13,788)
|
(7,555)
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
Net
borrowings under notes payable
|
34,036
|
70,460
|
|
Increase
in bank overdraft
|
30,352
|
31,029
|
|
Payment of
employee restricted stock tax withholdings
|
(3,217)
|
(1,203)
|
|
Proceeds
from exercise of stock options
|
1,165
|
1,756
|
|
Repayments
of long-term debt
|
(100)
|
(1,261)
|
|
Excess tax benefits from
share-based payment arrangements
|
30
|
455
|
|
Capitalized debt issuance costs
|
(7)
|
-
|
|
Net cash provided by
financing activities
|
62,259
|
101,236
|
|
|
|
|
EFFECT
OF EXCHANGE RATE CHANGES ON CASH
|
(195)
|
(69)
|
|
NET
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
|
(7,183)
|
149
|
|
Cash and
cash equivalents at beginning of period
|
16,122
|
16,867
|
|
Cash and
cash equivalents at end of period
|
$
8,939
|
$
17,016
|
|
|
|
|
Supplemental disclosures of cash flow
information:
|
|
|
|
Cash paid
during the period for:
|
|
|
|
Interest, net of amounts
capitalized
|
$
932
|
$
1,056
|
|
Income taxes, net of
refunds
|
$
4,113
|
$
3,716
|
|
UNITED
NATURAL FOODS, INC.
CONSOLIDATED STATEMENTS OF INCOME
WITH ADJUSTMENTS
Reconciliation of GAAP Results to
Non-GAAP Presentation (Unaudited)
(In thousands, except
per share data)
|
|
|
|
Three
months ended October 27, 2012
|
|
GAAP
|
Adjustments
|
Adjusted
|
|
|
|
|
|
|
|
Net sales
|
$
1,410,037
|
-
|
$
1,410,037
|
|
|
Cost of sales
|
1,174,084
|
-
|
1,174,084
|
|
|
|
|
|
|
|
Gross profit
|
235,953
|
-
|
235,953
|
|
|
|
|
|
|
|
Operating expenses
|
197,758
|
-
|
197,758
|
|
|
Restructuring and asset impairment
|
1,629
|
(1,629)(a)
|
-
|
|
|
Total operating expenses
|
199,387
|
(1,629)
|
197,758
|
|
|
|
|
|
|
|
Operating income
|
36,566
|
1,629
|
38,195
|
|
|
|
|
|
|
|
Other expense (income):
|
|
|
|
|
|
Interest expense
|
978
|
-
|
978
|
|
|
Interest income
|
(173)
|
-
|
(173)
|
|
|
Other, net
|
4,781
|
(4,900)(b)
|
(119)
|
|
|
Total other expense
|
5,586
|
(4,900)
|
686
|
|
|
|
|
|
|
|
Income before income taxes
|
30,980
|
6,529
|
37,509
|
|
|
|
|
|
|
|
Provision for income taxes
|
9,444
|
5,274(c)
|
14,718
|
|
|
|
|
|
|
|
Net income
|
$
21,536
|
$
1,255
|
$
22,791
|
|
|
|
|
|
|
|
Basic per share data:
|
|
|
|
|
|
Net income
|
$
0.44
|
$
0.03
|
$
0.46*
|
|
|
|
|
|
|
|
Weighted average basic
shares
of common
stock
|
49,142
|
-
|
49,142
|
|
|
|
|
|
|
|
Diluted per share data:
|
|
|
|
|
|
Net income
|
$
0.43
|
$
0.03
|
$
0.46
|
|
|
|
|
|
|
|
Weighted average diluted
shares
of common
stock
|
49,585
|
-
|
49,585
|
|
|
|
|
|
|
|
* Total
reflects rounding
(a)
Represents expense incurred as a result of the termination of a
long-term licensing agreement and the write-off of the associated
intangible asset.
(b)
Represents expense accrued in connection with agreement in
principle to settle multi-state unclaimed property
audit.
(c)
Represents the additional tax expense related to adjustment for the
expenses above, as well as a discrete tax benefit of $2.7 million
primarily related to the reversal of reserves for uncertain tax
positions.
|
|
UNITED
NATURAL FOODS, INC.
CONSOLIDATED STATEMENTS OF INCOME
WITH ADJUSTMENTS
Reconciliation of GAAP Results to
Non-GAAP Presentation (Unaudited)
(In thousands, except
per share data)
|
|
|
|
Three
months ended October 29, 2011
|
|
GAAP
|
Adjustments
|
Adjusted
|
|
|
|
|
|
|
|
Net sales
|
$
1,217,428
|
-
|
$
1,217,428
|
|
|
Cost of sales
|
1,000,315
|
-
|
1,000,315
|
|
|
|
|
|
|
|
Gross profit
|
217,113
|
-
|
217,113
|
|
|
|
|
|
|
|
Operating expenses
|
185,713
|
(1,577)(a)
|
184,136
|
|
|
Restructuring and asset impairment
|
5,345
|
(5,345)(b)
|
-
|
|
|
Total operating expenses
|
191,058
|
(6,922)
|
184,136
|
|
|
|
|
|
|
|
Operating income
|
26,055
|
6,922
|
32,977
|
|
|
|
|
|
|
|
Other expense (income):
|
|
|
|
|
|
Interest expense
|
1,073
|
-
|
1,073
|
|
|
Interest income
|
(170)
|
-
|
(170)
|
|
|
Other, net
|
141
|
-
|
141
|
|
|
Total other expense
|
1,044
|
-
|
1,044
|
|
|
|
|
|
|
|
Income before income taxes
|
25,011
|
6,922
|
31,933
|
|
|
|
|
|
|
|
Provision for income taxes
|
9,854
|
2,727(c)
|
12,581
|
|
|
|
|
|
|
|
Net income
|
$
15,157
|
$
4,195
|
$
19,352
|
|
|
|
|
|
|
|
Basic per share data:
|
|
|
|
|
|
Net income
|
$
0.31
|
$
0.09
|
$
0.40
|
|
|
|
|
|
|
|
Weighted average basic
shares
of common
stock
|
48,594
|
-
|
48,594
|
|
|
|
|
|
|
|
Diluted per share data:
|
|
|
|
|
|
Net income
|
$
0.31
|
$
0.09
|
$
0.40
|
|
|
|
|
|
|
|
Weighted average diluted
shares
of common
stock
|
48,889
|
-
|
48,889
|
|
|
|
|
|
|
|
(a)
Represents expense incurred in connection with the onboarding of a
new national customer.
(b)
Represents expense incurred in connection with the restructuring
and divestiture of the Company's conventional non-foods and general
merchandise lines of business.
(c)
Represents the additional tax expense related to adjustment for the
expenses above.
|
SOURCE United Natural Foods, Inc.