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Exhibit 99.1

 

GRAPHIC

 

IMMEDIATE RELEASE

June 5, 2012

 

UNITED NATURAL FOODS, INC. ANNOUNCES

THIRD QUARTER FISCAL 2012 RESULTS

 

Q3 NET INCOME INCREASES 24.3% YEAR-OVER-YEAR TO $29.0 MILLION

 

Highlights

 

·                  Fiscal 2012 third quarter net sales increased 15.3% over the prior year third quarter to $1.39 billion

 

·                  Diluted EPS of $0.59 for the third quarter of fiscal 2012, a 22.9% increase compared with the prior year third quarter diluted EPS of $0.48

 

·                  Operating margin of 3.5% for the third quarter of fiscal 2012, an increase of 27 basis points compared with the prior year third quarter

 

Providence, Rhode Island — June 5, 2012 — United Natural Foods, Inc. (Nasdaq: UNFI) today reported net sales for the third quarter of fiscal 2012 ended April 28, 2012 of $1.39 billion, a $184.0 million, or 15.3%, increase compared with net sales of $1.20 billion recorded in the third quarter of fiscal 2011.

 

“Continued demand for UNFI’s products and services drove our 15.3% net sales growth during the fiscal third quarter,” said Steven Spinner, UNFI’s President and Chief Executive Officer. “Our results demonstrate UNFI’s continued commitment to growing at a rate that exceeds the industry while delivering exemplary customer service to the organic and specialty foods retailer.”

 

Gross margin was 17.6% for the third quarter of fiscal 2012, representing a 53 basis point decline from gross margin of 18.2% for the prior year comparable period.  Gross margin for the third quarter of fiscal 2012 was impacted primarily by the continued shift in customer mix to the conventional supermarket channel.

 

Total operating expenses as a percentage of net sales were 14.1% for the third quarter of fiscal 2012, a decrease of 81 basis points compared with the third 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 $16.3 million, or 9.0%, to $195.9 million compared with the third quarter of fiscal 2011, which had operating expenses of $179.6 million.

 

Operating income as a percentage of net sales increased 27 basis points to 3.5% for the third quarter of fiscal 2012 compared with the third quarter of fiscal 2011.  Net income for the third quarter of fiscal 2012 increased by $5.7 million, or 24.3%, to $29.0 million or $0.59 per diluted share, from $23.4 million, or $0.48 per diluted share, for the third quarter of fiscal 2011.

 

“Our associates’ continued efforts towards productivity improvements combined with our strong sales volume contributed to our operating margin expansion in the quarter,” added Mr. Spinner. “We believe our year to date

 

GRAPHIC

 



 

results have left us in a solid position to achieve our operating result targets for fiscal 2012, which supports our revised fiscal 2012 guidance.”

 

Fiscal 2012 Year to Date Summary

 

Net sales for the nine months ended April 28, 2012 totaled $3.89 billion, a 15.5% increase over the comparable prior fiscal year period.  Gross margin was 49 basis points less than the comparable prior year period, at 17.6% of net sales for the nine months ended April 28, 2012.

 

At 14.7% of net sales, total operating expenses for the nine months ended April 28, 2012 were 39 basis points lower than the comparable prior year period.  Operating expenses for the nine months ended April 28, 2012 include approximately $6.9 million of expenses 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 14.5% for the nine months ended April 28, 2012, a decrease of 57 basis points compared with the first nine months of fiscal 2011.

 

Operating income as a percentage of net sales was 2.9% for the nine months ended April 28, 2012, compared to 3.0% for the same period in fiscal 2011.  Excluding the approximately $6.9 million of restructuring and onboarding expenses noted above, operating income as a percentage of net sales was 3.1% for the first nine months of fiscal 2012, an increase of 8 basis points compared with the same period in fiscal 2011.

 

Diluted earnings per share for the nine months ended April 28, 2012 was $1.35, an 8.0% increase from diluted earnings per share during the first nine months of fiscal 2011.  Excluding the restructuring and onboarding expenses noted above, diluted earnings per share was $1.44 for the nine months ended April 28, 2012, a 15.2% increase over the nine months ended April 30, 2011.  In addition, diluted earnings per share was affected by an increase in the weighted average diluted common shares outstanding to 49.0 million for the nine months ended April 28, 2012, from 47.5 million for the same period in fiscal 2011, resulting from the Company’s public offering of 4,427,500 shares of its common stock completed late in the first quarter of fiscal 2011.

 

The following table details the amounts and effect of the restructuring and onboarding expenses described above and the reconciliation of net income and diluted earnings per share, in each case excluding the restructuring and onboarding expenses (non-GAAP basis), to net income, including the restructuring and onboarding expenses (GAAP basis) for the nine months ended April 28, 2012:

 

Nine Months Ended April 28, 2012
(in thousands, except per share data)

 

Pretax
Income

 

Net of Tax

 

Per diluted
share

 

 

 

 

 

 

 

 

 

Income, excluding special items:

 

$

116,161

 

$

70,393

 

$

1.44

 

 

 

 

 

 

 

 

 

Special items:

 

 

 

 

 

 

 

Restructuring expenses related to divestiture

 

(5,255

)

(3,185

)

(0.07

)

Onboarding expenses related to national customer

 

(1,664

)

(1,008

)

(0.02

)

 

 

 

 

 

 

 

 

Income, including special items:

 

$

109,242

 

$

66,200

 

$

1.35

 

 

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 $5.18 billion to $5.22 billion, which represents a 14.3% to 15.3% increase in total net sales over fiscal 2011.  On

 



 

March 6, 2012, the Company previously provided fiscal 2012 net sales guidance of a range of $5.11 billion to $5.17 billion, an increase of approximately 12.8% to 14.1% over fiscal 2011, respectively.

 

The Company is narrowing and raising its GAAP diluted earnings per share guidance for fiscal 2012 to a range of approximately $1.84 to $1.88.  This reflects the impact of sales trends and anticipated leverage in operating efficiencies.  UNFI previously provided, on March 6, 2012, GAAP earnings guidance of $1.79 to $1.86 per diluted share.  The Company expects to incur approximately $6.8 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 $1.92 to $1.96, which represents an increase of approximately 14.3% to 16.7% 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.

 

In addition, the Company is lowering its guidance on fiscal 2012 capital expenditures to a range of $35 to $40 million.  The Company had previously provided capital expenditure guidance of $47 to $52 million on September 8, 2011.

 

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 guidance, including the expected restructuring and onboarding expenses (GAAP basis) for the fiscal year ending July 28, 2012.  All per diluted share amounts in the following table reflect an estimated number of approximately 49.2 million weighted average diluted shares outstanding.

 

 

 

Low Range

 

High range

 

Year Ended July 28, 2012
(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:

 

$

155,003

 

$

94,552

 

$

1.92

 

$

159,686

 

$

96,610

 

$

1.96

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Special items:

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring expenses related to divestiture and onboarding expenses related to national customer (included in total operating expenses)

 

(7,000

)

(4,270

)

(0.09

)

(6,800

)

(4,114

)

(0.08

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income, including special items:

 

$

148,003

 

$

90,282

 

$

1.84

*

$

152,886

 

$

92,496

 

$

1.88

 

 


*Total reflects rounding

 

Conference Call & Webcast

 

The Company’s third quarter fiscal 2012 conference call and audio webcast will be held at 10:00 a.m. EDT on June 5, 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 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 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 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 nine months ended April 28, 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

 

Nine months ended

 

 

 

April 28,
2012

 

April 30,
2011

 

April 28,
2012

 

April 30,
2011

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,388,023

 

$

1,203,983

 

$

3,892,361

 

$

3,371,399

 

Cost of sales

 

1,143,492

 

985,439

 

3,207,570

 

2,761,891

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

244,531

 

218,544

 

684,791

 

609,508

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

195,856

 

179,638

 

567,330

 

509,004

 

Restructuring and asset impairment expenses

 

37

 

 

5,255

 

200

 

Total operating expenses

 

195,893

 

179,638

 

572,585

 

509,204

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

48,638

 

38,906

 

112,206

 

100,304

 

 

 

 

 

 

 

 

 

 

 

Other expense (income):

 

 

 

 

 

 

 

 

 

Interest expense

 

1,111

 

1,146

 

3,566

 

3,830

 

Interest income

 

(176

)

(750

)

(565

)

(1,015

)

Other, net

 

(205

)

(427

)

(37

)

(682

)

Total other expense (income)

 

730

 

(31

)

2,964

 

2,133

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

47,908

 

38,937

 

109,242

 

98,171

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

18,876

 

15,575

 

43,042

 

38,676

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

29,032

 

$

23,362

 

$

66,200

 

$

59,495

 

 

 

 

 

 

 

 

 

 

 

Basic per share data:

 

 

 

 

 

 

 

 

 

Net income

 

$

0.59

 

$

0.48

 

$

1.36

 

$

1.26

 

 

 

 

 

 

 

 

 

 

 

Weighted average basic shares of common stock

 

48,848

 

48,406

 

48,717

 

47,129

 

 

 

 

 

 

 

 

 

 

 

Diluted per share data:

 

 

 

 

 

 

 

 

 

Net income

 

$

0.59

 

$

0.48

 

$

1.35

 

$

1.25

 

 

 

 

 

 

 

 

 

 

 

Weighted average diluted shares of common stock

 

49,207

 

48,793

 

49,017

 

47,470

 

 



 

UNITED NATURAL FOODS, INC.

CONSOLIDATED BALANCE SHEETS (Unaudited)

(In thousands, except per share data)

 

 

 

April 28,
2012

 

July 30,
2011

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

14,202

 

$

16,867

 

Accounts receivable, net

 

336,132

 

257,116

 

Inventories

 

639,753

 

514,506

 

Assets held for sale

 

2,557

 

 

Deferred income taxes

 

21,642

 

22,023

 

Prepaid expenses and other current assets

 

23,793

 

33,980

 

Total current assets

 

1,038,079

 

844,492

 

 

 

 

 

 

 

Property and equipment, net

 

276,122

 

285,151

 

 

 

 

 

 

 

Other assets:

 

 

 

 

 

Goodwill

 

194,328

 

191,943

 

Intangible assets, net

 

53,817

 

58,336

 

Other

 

20,131

 

21,066

 

Total assets

 

$

1,582,477

 

$

1,400,988

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

253,499

 

$

217,074

 

Notes payable

 

165,000

 

115,000

 

Accrued expenses and other current liabilities

 

103,581

 

83,900

 

Current portion of long-term debt

 

43,923

 

47,447

 

Total current liabilities

 

566,003

 

463,421

 

 

 

 

 

 

 

Deferred income taxes

 

38,542

 

38,551

 

Other long-term liabilities

 

29,526

 

28,363

 

Long-term debt, excluding current portion

 

725

 

986

 

Total liabilities

 

634,796

 

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; 48,905 issued and 48,888 outstanding shares at April 28, 2012; 48,520 issued and 48,493 outstanding shares at July 30, 2011

 

489

 

485

 

Additional paid-in capital

 

357,683

 

345,036

 

Treasury stock

 

(451

)

(708

)

Unallocated shares of Employee Stock Ownership Plan

 

(382

)

(542

)

Accumulated other comprehensive income

 

3,608

 

4,862

 

Retained earnings

 

586,734

 

520,534

 

Total stockholders’ equity

 

947,681

 

869,667

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

1,582,477

 

$

1,400,988

 

 



 

UNITED NATURAL FOODS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In thousands)

 

 

 

Nine months ended

 

 

 

April 28,
2012

 

April 30,
2011

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

Net income

 

$

66,200

 

$

59,495

 

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

 

 

 

 

 

Depreciation and amortization

 

29,077

 

26,898

 

Share-based compensation

 

8,965

 

7,395

 

Excess tax benefits from share-based payment arrangements

 

(792

)

(1,519

)

Provision for doubtful accounts

 

3,490

 

849

 

Gain on disposals of property and equipment

 

(309

)

(3

)

Changes in assets and liabilities, net of acquisitions:

 

 

 

 

 

Accounts receivable

 

(81,492

)

(62,168

)

Inventories

 

(123,288

)

(101,778

)

Prepaid expenses and other assets

 

9,935

 

(393

)

Accounts payable

 

30,484

 

25,881

 

Accrued expenses and other current liabilities

 

22,796

 

12,511

 

Net cash used in operating activities

 

(34,934

)

(32,832

)

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

Capital expenditures

 

(19,994

)

(24,456

)

Purchases of acquired businesses, net of cash acquired

 

(3,329

)

(21,984

)

Proceeds from disposals of property and equipment

 

328

 

82

 

Net cash used in investing activities

 

(22,995

)

(46,358

)

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

Net proceeds from issuance of common stock

 

 

138,301

 

Repayments of long-term debt

 

(3,784

)

(3,774

)

Net borrowings (repayments) under note payable

 

50,000

 

(65,570

)

Increase in bank overdraft

 

5,421

 

12,224

 

Payment of employee restricted stock tax withholdings

 

(1,449

)

(2,665

)

Proceeds from exercise of stock options

 

4,601

 

9,761

 

Tax benefits from equity awards

 

792

 

1,519

 

Net cash provided by financing activities

 

55,581

 

89,796

 

 

 

 

 

 

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH

 

(317

)

(90

)

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

 

(2,665

)

10,516

 

Cash and cash equivalents at beginning of period

 

16,867

 

13,802

 

Cash and cash equivalents at end of period

 

$

14,202

 

$

24,318

 

 

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

Interest, net of amounts capitalized

 

$

3,525

 

$

3,545

 

Income taxes, net of refunds

 

$

31,675

 

$

27,674