Reports 12.3% Increase in Comparable Net Sales Over Prior Year
DAYVILLE, Conn., Nov. 21 /PRNewswire-FirstCall/ -- United Natural Foods,
Inc. (Nasdaq: UNFI) (the "Company") today reported net sales for the first
quarter of fiscal 2007, ended October 28, 2006, of $646.4 million, an increase
of $70.8 million, or 12.3%, from the $575.6 million recorded in the first
quarter of fiscal 2006.
The Company reported net income of $12.4 million, or $0.29 per diluted
share, for the first quarter of fiscal 2007. Net income for the first quarter
of fiscal 2006, excluding special items, was $10.3 million, or $0.24 per
diluted share. Net income for the first quarter of fiscal 2006, including
special items, was $7.7 million, or $0.18 per diluted share. There were no
special items for the first quarter of fiscal 2007.
In the quarter ended October 28, 2006, the Company recorded share-based
compensation expense of $1.0 million in accordance with Statement of Financial
Accounting Standard No. 123R, Share-Based Payment. Operating expenses during
the quarter were negatively impacted by an operating loss of $0.6 million
related to its Greenwood, Indiana location of the Company's Albert's Organics
division. As a result, the Company closed this facility and began serving
this market from the Albert's Organics' Minneapolis, Minnesota facility,
effective October 31, 2006.
In addition, the Company is pleased to announce that Whole Foods Market
Distribution, Inc. (Nasdaq: WFMI) has recently signed an amendment to the
seven-year primary distribution agreement announced in October 2006 between
the Company and Whole Foods Market Distribution, Inc. Under the amendment,
the Company has been named the primary wholesale natural grocery distributor
to the Southern Pacific region of Whole Foods Market, Inc. ("Whole Foods
Market"), which includes Southern California, Arizona and Southern Nevada.
The Company expects to transition this new business during January 2007. When
the new Whole Foods Market business is combined with other business gained
during the 2007 first quarter, the Company expects to generate incremental
revenues of approximately $47.0 to $52.0 million during fiscal 2007, and
approximately $95.0 to $105.0 million on an annualized basis.
"We are quite pleased with our results for the first quarter, and have
confidence in our ability to continue to execute our sales and operating
strategies throughout the rest of fiscal 2007," said Michael Funk, Chief
Executive Officer. "Sales growth in our supermarket channel continues to be
quite strong. Coupled with our expanded Whole Foods relationship in the
Southern Pacific region of the United States and a strong pipeline of new
Whole Foods stores expected to open in the near future, we expect to realize
continued sales momentum in this business channel."
Mr. Funk added, "Over the next twelve to twenty-one months, we look
forward to further building out our infrastructure by opening new facilities
in the Pacific Northwest, Florida and Texas markets, which we originally
announced back in August. These new facilities will significantly reduce our
annual miles traveled in those regions. In addition, we plan to continue to
move forward with our installation of warehouse technologies in our existing
facilities. Combined with our commitment to increase sales of our branded
products to 5% of revenues by the end of fiscal 2008, we remain optimistic
regarding our future growth prospects."
For the first quarter of fiscal 2006, ended October 29, 2005, share-based
compensation negatively impacted earnings by $2.5 million including special
items, or $1.5 million excluding special items. Special items in the first
quarter of fiscal 2006 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 our former President and Chief Executive Officer.
The following table details the amounts and effect of special items and a
reconciliation of net income and per share amounts, excluding special items
(non-GAAP basis), to net income and per share amounts, including special items
(GAAP basis), for the first quarter of fiscal 2006:
Quarter Ended October 29, 2005 Pretax Net Per diluted
(in thousands, except per share data) Income of Tax share
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.
Conference Call
Management will conduct a conference call and audio webcast at 11:00 a.m.
EST on November 21, 2006 to review the Company's quarterly results, market
trends and future outlook. The conference call dial-in number is
(303) 205-0033. An audio webcast of the conference call will be available to
the public, on a listen-only basis, via the Internet at
http://www.earnings.com or at the Investor Relations section of the Company's
website at http://www.unfi.com. Please allow extra time prior to the call to
visit the site and download the necessary software 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 18,000 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. United Natural Foods, Inc. was ranked by Forbes in 2005 as one of
the "Best Managed Companies in America," ranked by Fortune in 2006 as one of
its "Most Admired Companies," and ranked by Business Ethics as one of its "100
Best Corporate Citizens for 2006." 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 11, 2006, 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 U.S.
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. 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. 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 GAAP.
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)
Quarter ended
October 28, October 29,
2006 2005
Net sales $646,433 $575,641
Cost of sales 522,861 465,374
Gross profit 123,572 110,267
Operating expenses 100,281 95,513
Amortization of intangibles 151 145
Total operating expenses 100,432 95,658
Operating income 23,140 14,609
Other expense (income):
Interest expense 2,911 2,367
Interest income (114) (68)
Other, net (28) (61)
Total other expense 2,769 2,238
Income before income taxes 20,371 12,371
Provision for income taxes 7,945 4,701
Net income $12,426 $7,670
Per share data -- basic:
Net income $0.29 $0.19
Weighted average basic shares of common stock 42,147 41,334
Per share data -- diluted:
Net income $0.29 $0.18
Weighted average diluted shares of common stock 42,599 42,150
UNITED NATURAL FOODS, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands)
October 28, July 29,
2006 2006
ASSETS
Current assets:
Cash and cash equivalents $8,416 $20,054
Accounts receivable, net 164,476 147,686
Notes receivable, trade, net 1,251 1,254
Inventories 300,214 257,259
Prepaid expenses and other current assets 14,856 12,596
Deferred income taxes 10,911 10,911
Total current assets 500,124 449,760
Property & equipment, net 163,579 163,247
Other assets:
Goodwill 78,044 78,016
Notes receivable, trade, net 2,499 2,760
Intangible assets, net 214 251
Other 9,615 6,561
Total assets $754,075 $700,595
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $138,691 $102,146
Notes payable 118,001 125,005
Accrued expenses and other current
liabilities 36,236 34,245
Current portion of long-term debt 5,675 5,433
Total current liabilities 298,603 266,829
Long-term debt, excluding current portion 68,083 59,716
Deferred income taxes 8,586 9,693
Other long-term liabilities 658 883
Total liabilities 375,930 337,121
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value, authorized
5,000 shares at October 28, 2006 and
July 29, 2006; none issued and outstanding - -
Common stock, $0.01 par value, authorized
50,000 shares; 42,628 issued and 42,399
outstanding shares at October 28, 2006;
42,477 issued and 42,248 outstanding shares
at July 29, 2006 426 425
Additional paid-in capital 153,819 149,840
Unallocated shares of Employee Stock
Ownership Plan (1,339) (1,380)
Treasury stock (6,092) (6,092)
Accumulated other comprehensive (loss) income (729) 1,047
Retained earnings 232,060 219,634
Total stockholders' equity 378,145 363,474
Total liabilities and stockholders' equity $754,075 $700,595
UNITED NATURAL FOODS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
Quarter ended
October 28, October 29,
2006 2005
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $12,426 $7,670
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 4,555 3,754
Loss (gain) on disposals of property & equipment 5 (9)
Provision for doubtful accounts 660 369
Share-based compensation 954 2,535
Changes in assets and liabilities, net of
acquisitions:
Accounts receivable (17,450) (17,510)
Inventories (42,955) (34,749)
Prepaid expenses and other assets (6,585) (625)
Notes receivable, trade 264 (246)
Accounts payable 30,729 30,871
Accrued expenses and other current liabilities (3,914) 2,189
Income taxes payable 4,064 -
Net cash used in operating activities (17,247) (5,751)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (4,760) (7,683)
Payments for acquisitions, net of cash acquired (28) (517)
Proceeds from disposals of property and equipment 19 21
Net cash used in investing activities (4,769) (8,179)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 10,000 -
Net (repayments) borrowings under note payable (7,004) 15,401
Increase (decrease) in bank overdraft 5,816 (5,898)
Proceeds from exercise of stock options 2,152 1,713
Tax effect of stock options 874 1,284
Repayments on long-term debt (1,458) (1,131)
Principal payments of capital lease obligations (2) (148)
Net cash provided by financing activities 10,378 11,221
NET DECREASE IN CASH AND CASH EQUIVALENTS (11,638) (2,709)
Cash and cash equivalents at beginning of period 20,054 12,615
Cash and cash equivalents at end of period $8,416 $9,906
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized $2,996 $2,561
Income taxes, net of refunds $2,639 $4,470
SOURCE United Natural Foods, Inc.
CONTACT: Mark Shamber, Chief Financial Officer of United Natural Foods,
Inc., 1-860-779-2800; or General Information: Joseph Calabrese of Financial
Relations Board, 1-212-827-3772, for United Natural Foods, Inc.
Web site: http://www.unfi.com
(UNFI WFMI)