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Exhibit 99.1

 

GRAPHIC

 

IMMEDIATE RELEASE

March 6, 2012

 

UNITED NATURAL FOODS, INC. ANNOUNCES

SECOND QUARTER FISCAL 2012 RESULTS

 

Q2 NET INCOME INCREASES 17.5% YEAR-OVER-YEAR TO $22.0 MILLION

 

Highlights

 

·                  Net sales in the second quarter of fiscal 2012 increased 15.5% over the prior year quarter to $1.29 billion

·                  Diluted EPS of $0.45 for the second quarter of fiscal 2012, an increase of 15.4% compared with diluted EPS of $0.39 for the second quarter of fiscal 2011

·                  Fiscal 2012 net sales guidance raised to a range of $5.11 billion to $5.17 billion

 

Providence, Rhode Island — March 6, 2012 — United Natural Foods, Inc. (Nasdaq: UNFI) (the “Company”) today reported that net sales for the second quarter of fiscal 2012 ended January 28, 2012 totaled $1.29 billion, an increase of 15.5%, or $172.5 million, over the $1.11 billion in net sales recorded in the second quarter of fiscal 2011.

 

“Sales growth continued to accelerate in the second quarter of fiscal 2012, despite facing our toughest prior year sales comparisons” said Steven Spinner, UNFI’s President and Chief Executive Officer. “This acceleration reflects the onboarding of our new national customer, the growing consumer demand for natural and organic products and the continued movement by consumers towards a healthier lifestyle.”

 

Gross margin was 17.3% for the second quarter of fiscal 2012, which represents a 48 basis point decline from gross margin of 17.8% for the prior year comparable period.  Gross margin for the second quarter of fiscal 2012 was impacted by the continued shift in customer mix to the conventional supermarket channel and approximately $1.7 million in inventory write-offs, primarily of perishable and bulk products, caused by higher inventory levels during the quarter.

 

Total operating expenses were 14.4% as a percentage of net sales for the second quarter of fiscal 2012, the lowest quarterly percentage since the third quarter of fiscal 2007, and a decrease of 56 basis points compared with the second quarter of fiscal 2011.  This improvement was driven by UNFI’s ongoing initiatives to enhance productivity throughout the organization and reduce operating expenses as a percentage of net sales.  Total operating expenses increased by $18.7 million, or 11.2%, to $185.6 million, compared with the second quarter of fiscal 2011, which had operating expenses of $166.9 million.

 

Operating income as a percentage of net sales increased 6 basis points to 2.9% for the second quarter of fiscal 2012 compared to the second quarter of fiscal 2011.  Net income for the second quarter of fiscal 2012 increased by $3.3 million, or 17.5%, to $22.0 million, or $0.45 per diluted share, from $18.7 million, or $0.39 per diluted share, for the second quarter of fiscal 2011.

 

GRAPHIC

 



 

“During the quarter, we continued to reduce operating costs as a percentage of net sales by implementing operational productivity improvements,” added Mr. Spinner. “We are very pleased with our progress to date and believe that increased sales volume and continued efforts to control expenses should drive further expansion of our operating margin.”

 

First Half Fiscal 2012 Summary

 

Net sales for the first half of fiscal 2012 totaled $2.50 billion, a 15.5% increase over the comparable prior fiscal year period.  Gross margin was 46 basis points less than the comparable prior year period, at 17.6% of net sales for the six months ended January 28, 2012.

 

At 15.0% of net sales, total operating expenses for the six months ended January 28, 2012 were 17 basis points lower than the comparable prior year period.  Operating expenses for the first half of fiscal 2012 included expenses of approximately $6.8 million related to the previously announced restructuring and divestiture of the Company’s conventional non-foods and general merchandise lines of business and onboarding expenses related to the Company’s newest national customer.  Excluding these expenses, operating expenses as a percentage of net sales were 14.8% for the first half of fiscal 2012, a decrease of 44 basis points compared with the first half of fiscal 2011.

 

Operating income as a percentage of net sales was 2.5% for the first half of fiscal 2012.  Excluding approximately $6.8 million of restructuring and onboarding expenses noted above, operating income as a percentage of net sales was 2.8% for the first six months of fiscal 2012, consistent with the same period in fiscal 2011.

 

Diluted earnings per share for the first half of fiscal 2012 was $0.76, a 1.3% decrease from diluted earnings per share during the first half of fiscal 2011.  Excluding the restructuring and onboarding expenses noted above, diluted earnings per share was $0.84 for the six months ended January 28, 2012, a 9.1% increase over the six months ended January 29, 2011.  In addition, diluted earnings per share was affected by an increase in the weighted average diluted common shares outstanding to 48.9 million for the first half of fiscal 2012, from 46.8 million for the same period in fiscal 2011, resulting from the Company’s equity offering completed late in the first quarter of fiscal 2011.

 

“Our Albert’s Organics division continues to grow its market share and exceed our expectations, fully embracing the Company’s strategy of leveraging our complete product mix and industry expertise to expand market share,” added Mr. Spinner. “As we look to the second half of fiscal 2012, we anticipate further expansion of existing relationships while working to add new customers across all channels and continuing to reduce operating costs and enhance productivity throughout our organization.”

 

The following table details the amounts and effect of the restructuring and onboarding expenses and the reconciliation of net income, excluding the restructuring and onboarding expenses (non-GAAP basis), to net income, including the restructuring and onboarding expenses (GAAP basis) for the six months ended January 28, 2012:

 

Six Months Ended January 28, 2012

 

(in thousands, except per share data)

 

Pretax
Income

 

Net of Tax

 

Per diluted
share

 

 

 

 

 

 

 

 

 

Income, excluding restructuring and onboarding expenses:

 

$

68,171

 

$

41,312

 

$

0.84

 

 

 

 

 

 

 

 

 

Special items:

 

 

 

 

 

 

 

Restructuring expenses related to divestiture

 

(5,219

)

(3,163

)

(0.06

)

Onboarding expenses related to national customer

 

(1,618

)

(981

)

(0.02

)

 

 

 

 

 

 

 

 

Income, including restructuring and onboarding expenses:

 

$

61,334

 

$

37,168

 

$

0.76

 

 



 

All non-GAAP numbers have been adjusted to exclude the restructuring and onboarding expenses.  A description of the Company’s use of non-GAAP information is provided under “non-GAAP Financial Measures” below.

 

Updated Fiscal 2012 Guidance

 

Based on UNFI’s fiscal 2012 performance to date and the current outlook for the remainder of the 2012 fiscal year, the Company is raising its net sales guidance for fiscal year 2012, ending July 28, 2012, to a range of $5.11 billion to $5.17 billion, which represents a 12.8% to 14.1% increase in total net sales over fiscal 2011.  The Company previously provided, on September 8, 2011, a net sales guidance target of $5.0 billion to $5.1 billion, an increase of approximately 10.4% to 12.6% over fiscal 2011, respectively.

 

In addition, the Company is narrowing and raising the lower end of its GAAP diluted earnings per share guidance for fiscal 2012 to range from $1.79 to $1.86.  This reflects the impact of sales trends and anticipated leverage in operating efficiencies.  UNFI previously provided, on September 8, 2011, GAAP earnings guidance of $1.75 to $1.87 per diluted share.  The Company expects to incur approximately $6.5 million to $7.0 million in operating expenses associated with its previously announced divestiture of conventional non-foods and general merchandise lines of business and the start-up expenses associated with the on-boarding of a new national customer during fiscal 2012. Excluding the impact of these expenses, UNFI expects diluted earnings per share for fiscal 2012 in the range of approximately $1.88 to $1.94 per share, which represents an increase of approximately 11.9% to 15.5% over fiscal 2011 diluted earnings per share of $1.68 excluding expenses in that period associated with its divestiture of conventional non-foods and general merchandise lines of business.

 

The following table details the amounts and effect of the expected restructuring and onboarding expenses and the reconciliation of net income and diluted earnings per share guidance, excluding the expected restructuring and onboarding expenses (non-GAAP basis), to net income and diluted earnings per share guidance, including the expected restructuring and onboarding expenses (GAAP basis) for the fiscal year ending July 28, 2012:

 

Year Ended July 28, 2012

 

 

 

Low Range

 

High range

 

(in thousands, except per share data)

 

Pretax
Income

 

Net of
Tax

 

Per
diluted
share

 

Pretax
Income

 

Net of
Tax

 

Per
diluted
share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income, excluding special items:

 

$

151,259

 

$

92,268

 

$

1.88

 

$

158,133

 

$

95,671

 

$

1.94

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Special items:

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses related to restructuring of UNFI Specialty and start-up costs associated with on-boarding a new national customer (included in total operating expenses)

 

(7,000

)

(4,270

)

(0.09

)

(6,500

)

(3,933

)

(0.08

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income, including special items:

 

$

144,259

 

$

87,998

 

$

1.79

 

$

151,633

 

$

91,738

 

$

1.86

 

 

Conference Call & Webcast

 

The Company’s second quarter fiscal 2012 conference call and audio webcast will be held at 10:00 a.m. EST on March 6, 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 60,000 products to more than 23,000 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, and recognized by the Nutrition Business Journal for its 2009 Environment and Sustainability Award.

 

For more information on United Natural Foods, Inc., visit the Company’s website at www.unfi.com.

 

AT THE COMPANY:

 

FINANCIAL RELATIONS BOARD

Mark Shamber

 

Joseph Calabrese

Chief Financial Officer

 

General Information

(401) 528-8634

 

(212) 827-3772

 

“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 28, 2011 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 these sales; the Company’s ability to timely and successfully deploy its new warehouse management system throughout its distribution facilities; increased fuel costs; the Company’s sensitivity to inflationary pressures; the relatively low margins and economic sensitivity of the Company’s business; the ability to identify and successfully complete acquisitions of other natural, organic and specialty food and related product 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 diluted earnings per share) which, in each case exclude expenses and associated with the restructuring and divestiture of the Company’s general merchandise and conventional non-foods lines of business and the start-up costs associated with the onboarding of the Company’s newest national customer.  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 diluted earnings per share for the first half of fiscal 2012 and expected full year fiscal 2012 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 2012 fiscal year versus the comparable periods in the 2011 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

 

Six months ended

 

 

 

January 28,
2012

 

January 29,
2011

 

January 28,
2012

 

January 29,
2011

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,286,910

 

$

1,114,449

 

$

2,504,338

 

$

2,167,416

 

Cost of sales

 

1,063,763

 

915,817

 

2,064,078

 

1,776,452

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

223,147

 

198,632

 

440,260

 

390,964

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

185,760

 

166,890

 

371,473

 

329,366

 

Restructuring and asset impairment expenses (recoveries)

 

(126

)

 

5,219

 

200

 

Total operating expenses

 

185,634

 

166,890

 

376,692

 

329,566

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

37,513

 

31,742

 

63,568

 

61,398

 

 

 

 

 

 

 

 

 

 

 

Other expense (income):

 

 

 

 

 

 

 

 

 

Interest expense

 

1,382

 

1,298

 

2,455

 

2,684

 

Interest income

 

(219

)

(57

)

(389

)

(265

)

Other, net

 

27

 

(202

)

168

 

(255

)

Total other expense

 

1,190

 

1,039

 

2,234

 

2,164

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

36,323

 

30,703

 

61,334

 

59,234

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

14,312

 

11,974

 

24,166

 

23,101

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

22,011

 

$

18,729

 

$

37,168

 

$

36,133

 

 

 

 

 

 

 

 

 

 

 

Basic per share data:

 

 

 

 

 

 

 

 

 

Net income

 

$

0.45

 

$

0.39

 

$

0.76

 

$

0.78

 

 

 

 

 

 

 

 

 

 

 

Weighted average basic shares of common stock

 

48,774

 

48,232

 

48,665

 

46,508

 

 

 

 

 

 

 

 

 

 

 

Diluted per share data:

 

 

 

 

 

 

 

 

 

Net income

 

$

0.45

 

$

0.39

 

$

0.76

 

$

0.77

 

 

 

 

 

 

 

 

 

 

 

Weighted average diluted shares of common stock

 

49,019

 

48,538

 

48,933

 

46,819

 

 



 

UNITED NATURAL FOODS, INC.

CONSOLIDATED BALANCE SHEETS (Unaudited)

(In thousands, except per share data)

 

 

 

January 28,
2012

 

July 30,
2011

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

26,736

 

$

16,867

 

Accounts receivable, net

 

322,818

 

257,116

 

Inventories

 

595,429

 

514,506

 

Assets held for sale

 

2,557

 

 

Deferred income taxes

 

21,757

 

22,023

 

Prepaid expenses and other current assets

 

29,755

 

33,980

 

Total current assets

 

999,052

 

844,492

 

 

 

 

 

 

 

Property and equipment, net

 

277,733

 

285,151

 

 

 

 

 

 

 

Other assets:

 

 

 

 

 

Goodwill

 

193,576

 

191,943

 

Intangible assets, net

 

55,237

 

58,336

 

Other

 

21,225

 

21,066

 

Total assets

 

$

1,546,823

 

$

1,400,988

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

240,534

 

$

217,074

 

Notes payable

 

190,000

 

115,000

 

Accrued expenses and other current liabilities

 

90,059

 

83,900

 

Current portion of long-term debt

 

45,098

 

47,447

 

Total current liabilities

 

565,691

 

463,421

 

 

 

 

 

 

 

Deferred income taxes

 

38,535

 

38,551

 

Other long-term liabilities

 

30,048

 

28,363

 

Long-term debt, excluding current portion

 

813

 

986

 

Total liabilities

 

635,087

 

531,321

 

 

 

 

 

 

 

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; 48,822 issued and 48,805 outstanding shares at January 28, 2012; 48,520 issued and 48,493 outstanding shares at July 30, 2011

 

488

 

485

 

Additional paid-in capital

 

352,765

 

345,036

 

Treasury stock

 

(451

)

(708

)

Unallocated shares of Employee Stock Ownership Plan

 

(421

)

(542

)

Accumulated other comprehensive loss

 

1,653

 

4,862

 

Retained earnings

 

557,702

 

520,534

 

Total stockholders’ equity

 

911,736

 

869,667

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

1,546,823

 

$

1,400,988

 

 



 

UNITED NATURAL FOODS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In thousands)

 

 

 

Six months ended

 

 

 

January 28,
2012

 

January 29,
2011

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

Net income

 

$

37,168

 

$

36,133

 

Adjustments to reconcile net income to net cash used in operating activities:

 

 

 

 

 

Depreciation and amortization

 

19,190

 

17,242

 

Share-based compensation

 

6,433

 

4,833

 

Excess tax benefits from share-based payment arrangements

 

(441

)

(795

)

Provision for doubtful accounts

 

1,832

 

1,031

 

Gain on disposals of property and equipment

 

(306

)

(44

)

Changes in assets and liabilities, net of acquisitions:

 

 

 

 

 

Accounts receivable

 

(67,522

)

(42,872

)

Inventories

 

(79,545

)

(76,422

)

Prepaid expenses and other assets

 

3,278

 

(1,268

)

Accounts payable

 

14,203

 

12,337

 

Accrued expenses and other current liabilities

 

7,905

 

(1,891

)

Net cash used in operating activities

 

(57,805

)

(51,716

)

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

Capital expenditures

 

(12,922

)

(14,267

)

Purchases of acquired businesses, net of cash acquired

 

(2,450

)

(21,911

)

Proceeds from disposals of property and equipment

 

325

 

63

 

Net cash used in investing activities

 

(15,047

)

(36,115

)

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

Net proceeds from issuance of common stock

 

 

138,301

 

Repayments of long-term debt

 

(2,522

)

(2,515

)

Net borrowings (repayments) under note payable

 

75,000

 

(57,570

)

Increase in bank overdraft

 

8,851

 

9,744

 

Payment of employee restricted stock tax withholdings

 

(1,392

)

(2,540

)

Proceeds from exercise of stock options

 

2,508

 

5,114

 

Tax benefits from equity awards

 

441

 

795

 

Net cash provided by financing activities

 

82,886

 

91,329

 

 

 

 

 

 

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH

 

(165

)

(16

)

NET INCREASE IN CASH AND CASH EQUIVALENTS

 

9,869

 

3,482

 

Cash and cash equivalents at beginning of period

 

16,867

 

13,802

 

Cash and cash equivalents at end of period

 

$

26,736

 

$

17,284

 

 

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

Interest, net of amounts capitalized

 

$

2,423

 

$

2,408

 

Income taxes, net of refunds

 

$

18,023

 

$

15,354