Reports Record Revenue of $576 million and $0.27 diluted EPS, Excluding Special Items and the Impact of Share-based CompensationDAYVILLE, Conn., Nov 29, 2005 /PRNewswire-FirstCall via COMTEX News Network/ -- United Natural Foods,
Inc. (Nasdaq: UNFI) today reported net sales for the first quarter of fiscal
2006, ended October 29, 2005, of $575.6 million, an increase of $98.1 million,
or 21%, from the $477.5 million recorded in the first quarter of fiscal 2005.
Strong growth in all sales channels of the wholesale segment contributed to
the record sales.
The Company reported net income of $10.3 million, or $0.24 per diluted
share, excluding special items but including the impact of share-based
compensation, for the first quarter of fiscal 2006. Net income for the first
quarter of fiscal 2006, excluding the impact of the adoption of Statement of
Financial Accounting Standard No. 123R, Share-Based Payment ("FAS 123R"), and
special items, was $11.3 million, or $0.27 per diluted share. Net income for
the first quarter of fiscal 2006, including the effect of special items and
the adoption of FAS 123R, was $7.7 million, or $0.18 per diluted share. This
compares with net income of $9.9 million, or $0.24 per diluted share, for the
first quarter of fiscal 2005 ended October 31, 2004. There were no special
items for the first quarter of fiscal 2005.
In December 2004, the Financial Accounting Standards Board finalized FAS
123R which requires all companies to expense share-based payments, including
stock options, at fair value as of the beginning of the first annual reporting
period that begins after June 15, 2005. As such, we began expensing stock
options on August 1, 2005. Although we have adopted the modified prospective
method allowed under FAS 123R, the charge to earnings during fiscal 2006
includes the impact of stock options granted in prior years, because the
expense is recognized over the vesting period of the options, which has
typically been four years. For the first quarter of fiscal 2006, share-based
compensation, excluding special items of $1.0 million, negatively impacted
earnings by $1.5 million before taxes, or $0.02 in earnings per diluted share.
For the first quarter of fiscal 2006 ended October 29, 2005, special items
consisted of incremental and redundant costs incurred during the transition
from our former warehouses and outside storage facility in Auburn, California
into our new larger facility in Rocklin, California, certain incremental costs
associated with the opening of our new Greenwood, Indiana facility and non-
recurring cash and non-cash expenses incurred in accordance with the
employment transition agreement we entered into during the quarter with Steven
H. Townsend, our former President and Chief Executive Officer.
The following table details the non-GAAP measures for the first quarter of
fiscal 2006:
Quarter Ended October 29, 2005 Pretax Per diluted
(in thousands, except per share data) Income Net of Tax share
Income, excluding special items and
share-based compensation: $18,160 $11,259 $0.27
Share-based compensation expense
(included in operating expenses) (1,514) (939) (0.02)
Income, excluding special items: $16,646 $10,320 $0.24*
Special items - (Expense)
Employment transition agreement costs
(included in operating expenses) (3,512) (2,177) (0.05)
Rocklin, CA facility relocation costs
(included in operating expenses) (672) (416) (0.01)
Greenwood, IN facility openings costs
(included in operating expenses) (92) (57) (0.00)
Income, including special items: $12,371* $7,670 $0.18
* Total reflects rounding.
All non-GAAP numbers have been adjusted to exclude special items. A
reconciliation of specific adjustments to GAAP results for the quarter ended
October 29, 2005 is included in the financial table shown above. A
description of the Company's use of non-GAAP information is provided under
"Non-GAAP Results" below.
Comments from Management
"We are extremely pleased to start off fiscal 2006 with another strong
quarter of financial results," said Michael Funk, Chief Executive Officer.
"Reflecting the efforts of a well-focused team and the successful execution of
our sales and operating strategies which have been designed to meet the
growing demand across all of our served channels of business for natural and
organic products, we realized record sales, and strong earnings per share."
Mr. Funk added, "We remain focused on providing superior service to our
entire customer base and are pleased to report sales growth of 21% and
comparable distribution sales growth of 18% excluding the acquisitions made
during fiscal 2005. Fuel costs remained high in the quarter, negatively
impacting our operating margins by 10 bps. Our service levels remain high and
our business metrics are strong. We also successfully opened our new Rocklin,
CA facility and closed two owned facilities in Northern California as well as
a third off site storage facility."
Confirms Fiscal 2006 Earnings Guidance
The Company is confirming its guidance for fiscal 2006, ending July 29,
2006, with projected revenues remaining in the $2.25 to $2.35 billion range,
and projected earnings per share, excluding special items but including the
impact of share-based compensation, expected to be in a range of $1.03 - $1.08
per diluted share. In July 2005 the Company had announced earnings per share
guidance, excluding special items and share-based compensation, from $1.14 -
$1.19 per diluted share.
Historically, the Company has classified expenses related to distribution
facility expansions and distribution facility relocations as special items.
However, at this time the Company does not know the extent or significance of
these items or whether the Company will in fact incur any additional special
items in fiscal 2006. The Company's guidance is based on a number of
assumptions, which are subject to change and many of which are outside the
control of the Company. If any of these assumptions vary, the Company's
guidance may change. There can be no assurance that the Company will achieve
these results. A description of the Company's use of non-GAAP information is
provided under "Non-GAAP Results" below.
Conference Call
Management will conduct a conference call and audio webcast at 11:00 a.m.
EST on November 29, 2005 to review the Company's quarterly and annual results,
market trends and future outlook. The conference call dial-in number is (303)
262-2141. The audio webcast will be available, on a listen only basis, via the
Internet at http://www.earnings.com or at the Investor Relations section of
the Company's website, http://www.unfi.com. Please allow extra time prior to
the webcast to visit the site and download any software required to listen to
the Internet broadcast. The online archive of the webcast will be available
for 30 days.
About United Natural Foods
United Natural Foods, Inc. carries and distributes more than 40,000
products to more than 20,000 customers nationwide. The Company serves a wide
variety of retail formats including conventional supermarket chains, natural
product superstores, independent retail operators and the food service
channel. For more information on United Natural Foods, Inc., visit the
Company's website at http://www.unfi.com.
For more information on United Natural Foods, Inc., visit the Company's
website at http://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. For a discussion of such risks and uncertainties,
which could cause actual results to differ from those contained in the
forward-looking statements, including but not limited to general business
conditions, the impact of competition and our dependence on principal
customers, see "Risk Factors" in the Company's annual report on Form 10-K
filed with the Commission on October 13, 2005, and its other filings under the
Securities Exchange Act of 1934, as amended. 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 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 Results: To supplement its financial statements presented on a
generally accepted accounting principles ("GAAP") basis, the Company uses non-
GAAP additional measures of operating results, net income and earnings per
share adjusted to exclude special charges and/or share-based compensation. The
Company believes that the use of these additional measures is appropriate to
enhance an overall understanding of its past financial performance and also
its prospects for the future as these special charges are not expected to be
part of the Company's ongoing business, while the measures excluding share-
based compensation provide comparability to the prior fiscal year. The
adjustments to the Company's GAAP results are made with the intent of
providing both management and investors with a more complete understanding of
the underlying operational results and trends and its marketplace performance.
For example, these adjusted non-GAAP results are among the primary indicators
management uses as a basis for its planning and forecasting of future periods.
The presentation of this additional information is not meant to be considered
in isolation or as a substitute for net earnings or diluted earnings per share
prepared in accordance with generally accepted accounting principles in the
United States of America. A comparison and reconciliation from non-GAAP to
GAAP results is included in the tables within this release.
UNITED NATURAL FOODS, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share data)
Three months ended
October 29, October 31,
2005 2004
Net sales $575,641 $477,542
Cost of sales 465,374 385,099
Gross profit 110,267 92,443
Operating expenses (includes $2,535 and $0
of share-based compensation expense in 2005
and 2004, respectively) 95,513 74,597
Restructuring charge -- 170
Amortization of intangibles 145 141
Total operating expenses 95,658 74,908
Operating income 14,609 17,535
Other expense (income):
Interest expense 2,367 1,433
Other, net (129) (101)
Total other expense 2,238 1,332
Income before income taxes 12,371 16,203
Income taxes 4,701 6,319
Net income $7,670 $9,884
Per share data (basic):
Net income $0.19 $0.25
Weighted average basic shares of common stock 41,334 40,123
Per share data (diluted):
Net income $0.18 $0.24
Weighted average diluted shares of common stock 42,150 41,580
UNITED NATURAL FOODS, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands)
October 29, July 31,
2005 2005
ASSETS
Current assets:
Cash and cash equivalents $9,906 $12,615
Accounts receivable, net 153,488 136,472
Notes receivable, trade, net 832 877
Inventories 270,449 235,700
Prepaid expenses and other current assets 10,023 9,811
Deferred income taxes 7,419 7,419
Total current assets 452,117 402,894
Property & equipment, net 171,971 167,909
Other assets:
Goodwill 74,552 73,808
Notes receivable, trade, net 2,093 1,802
Intangible assets, net 276 307
Other 5,277 4,538
Total assets $706,286 $651,258
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $144,191 $119,177
Notes payable 138,975 123,574
Accrued expenses and other current liabilities 35,805 34,915
Current portion of long-term debt 5,657 5,843
Total current liabilities 324,628 283,509
Long-term debt, excluding current portion 63,907 64,852
Deferred income taxes 7,032 6,904
Other long-term liabilities 1,747 474
Total liabilities 397,314 355,739
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value,
authorized 5,000 shares
at October 29, 2005 and July 31, 2005,
respectively; none issued and outstanding - -
Common stock, $0.01 par value, authorized
50,000 shares; issued and outstanding 41,436
and 41,287 at October 29, 2005 and
July 31, 2005, respectively 414 413
Additional paid-in capital 125,885 120,354
Unallocated shares of ESOP (1,564) (1,605)
Accumulated other comprehensive income 210 -
Retained earnings 184,027 176,357
Total stockholders' equity 308,972 295,519
Total liabilities and stockholders' equity $706,286 $651,258
UNITED NATURAL FOODS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
Three months ended
October 29, October 31,
2005 2004
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $7,670 $9,884
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation and amortization 3,754 3,092
(Gain) loss on disposals of property & equipment (9) 9
Provision for doubtful accounts 369 466
Share-based compensation 2,535 -
Changes in assets and liabilities, net of acquisitions:
Accounts receivable (17,510) (27,227)
Inventories (34,749) (18,084)
Prepaid expenses and other assets (625) (1,876)
Notes receivable, trade (246) (384)
Accounts payable 24,973 34,666
Accrued expenses and other current liabilities 2,189 (841)
Income taxes payable - 5,021
Tax effect of stock options - 74
Net cash (used in) provided by operating activities (11,649) 4,800
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (7,683) (3,590)
Payments for acquisitions, net of cash acquired (517) -
Proceeds from disposals of property and equipment 21 25
Net cash used in investing activities (8,179) (3,565)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under note payable 15,401 (7,866)
Proceeds from exercise of stock options 1,713 205
Tax effect of stock options 1,284 -
Repayments on long-term debt (1,131) (1,292)
Principal payments of capital lease obligations (148) (162)
Net cash provided by (used in) financing activities 17,119 (9,115)
NET DECREASE IN CASH AND CASH EQUIVALENTS (2,709) (7,880)
Cash and cash equivalents at beginning of period 12,615 13,633
Cash and cash equivalents at end of period $9,906 $5,753
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $2,561 $1,377
Income taxes, net of refunds $4,470 $1,166
SOURCE United Natural Foods, Inc.
Rick Puckett, Chief Financial Officer of United Natural Foods, Inc., +1-860-779-2800;
or Joseph Calabrese, of Financial Relations Board, +1-212-827-3772, for United
Natural Foods, Inc.
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