Increases Guidance for Fiscal 2006 Revenues
DAYVILLE, Conn., May 25 /PRNewswire-FirstCall/ -- United Natural Foods,
Inc. (Nasdaq: UNFI) (the "Company") today reported net income of $12.3
million, or $0.29 per diluted share, for the third quarter of fiscal 2006,
ended April 29, 2006. The Company reported revenues for the third quarter of
fiscal 2006 of $637.1 million, an increase of $102.7 million, or 19.2%, from
the $534.3 million recorded in the third quarter of fiscal 2005. Strong growth
across all major sales channels of the wholesale segment contributed to the
record sales.
For the third quarter of fiscal 2006, net income increased 15.1% to $12.3
million, or $0.29 per diluted share, compared to $10.7 million, or $0.26 per
diluted share, for the third quarter of fiscal 2005. Net income, excluding
special items, for the third quarter of fiscal 2006 increased 14.4% to $12.3
million, or $0.29 per diluted share, compared to $10.8 million, or $0.26 per
diluted share, for the third quarter of fiscal 2005. There were no special
items in the third quarter of fiscal 2006. Special items in the third quarter
of fiscal 2005 consisted of certain incremental labor costs associated with
closing the Mounds View, Minnesota facility, which was completed in the third
quarter of fiscal 2005, and opening the Greenwood, Indiana facility, which
occurred in August 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, the Company began expensing
stock options on August 1, 2005. The Company has adopted the modified
prospective method allowed under FAS 123R. The charge to earnings during
fiscal 2006 includes the impact of the vesting of stock options granted in
prior years, because the expense is recognized over the vesting period of the
options, which is typically four years. For the third quarter of fiscal 2006,
share-based compensation negatively impacted earnings before taxes by $1.2
million or 19 basis points.
"Fiscal 2006 continues to be a strong year and we are very proud of our
financial performance in the third quarter," said Michael Funk, President and
Chief Executive Officer. "We posted another quarter of growth across all three
major sales channels and realized a 19% increase in revenues and a 15%
increase in earnings. These results reflect the continued strong consumer
demand for natural and organic products as well as the underlying strength of
our sales channels across all regions in the country."
Mr. Funk added, "Looking ahead we remain focused on serving the needs of
our customers and committed to our core strategies and approach to the market.
Given the continuing strong underlying demand in our markets we remain well
positioned to achieve record financial results in fiscal 2006 and to achieve
our objectives for growth in fiscal 2007."
All non-GAAP numbers have been adjusted to exclude special items. A
reconciliation of specific adjustments to GAAP results for the quarter ended
April 30, 2005 is included in the financial table shown below. A description
of the Company's use of non-GAAP information is provided under "Non-GAAP
Results" below.
The following table details the non-GAAP measures for the third quarter of
fiscal 2005:
Quarter ended April 30, 2005
(in thousands, except per share data)
Pretax Income Net of Tax Per diluted share
Income, excluding
special items: $17,489 $10,756 $0.26
Special items - (Expense)
Related to the closing of
the Mounds View, Minnesota
facility (included in
operating expenses) (103) (63) (0.00)
Related to the opening of
the Greenwood, Indiana
facility (included in
operating expenses) (11) (7) (0.00)
Income, including
special items: $17,375 $10,686 $0.26
Raises Fiscal 2006 Revenue Guidance and Revises Earnings Guidance The Company is raising its projected revenues guidance to $2.42 to $2.45
billion for fiscal 2006, ending July 29, 2006. In addition, the Company is
narrowing its guidance on earnings per share, excluding special items, to a
range of $1.08 - $1.10 per diluted share. Previously, the Company had
announced revenue guidance from $2.38 to $2.42 billion and earnings per share
guidance, excluding potential special items, from $1.05 - $1.10 per diluted
share for the fiscal year. At this time, the Company is further narrowing the
anticipated impact of share-based compensation expense to approximately $5.5
million to $6.2 million on a pre-tax basis, or $0.08 to $0.09 per diluted
share after taxes. Previously, the Company had expected to incur approximately
$5.5 million to $6.8 million of share-based compensation expense on a pre-tax
basis, or $0.08 to $0.10 per diluted share after taxes, excluding potential
special items. Finally, the Company also lowered anticipated fiscal 2006
capital expenditures to a range of $18 to $23 million from prior guidance of
$30 to $35 million due to revised timing of planned expenditures.
Actual share-based compensation expenses recorded during the remainder of
fiscal 2006 may fluctuate beyond the guidance provided based on various
factors, such as additional equity awards granted to employees, changes in the
Company's stock price, and actual results in comparison to the underlying
assumptions used in estimating the fair value of share-based payments.
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.
EDT on May 25, 2006 to review the Company's quarterly results, market trends
and future outlook. The conference call dial-in number is (303) 262-2138. 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 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. United Natural Foods 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 quarterly report on Form 10-Q
filed with the Commission on March 9, 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)
Three months ended Nine months ended
April 29, April 30, April 29, April 30,
2006 2005 2006 2005
Net sales $637,068 $534,335 $1,813,790 $1,516,587
Cost of sales 516,904 432,387 1,466,955 1,226,872
Gross profit 120,164 101,948 346,835 289,715
Operating expenses 97,318 82,655 288,887 235,828
Restructuring charge - - - 170
Amortization of
intangibles 142 177 428 490
Total operating
expenses 97,460 82,832 289,315 236,488
Operating income 22,704 19,116 57,520 53,227
Other expense (income):
Interest expense 2,747 1,877 8,310 4,887
Other, net (162) (136) (426) (359)
Total other expense 2,585 1,741 7,884 4,528
Income before
income taxes 20,119 17,375 49,636 48,699
Provision for
income taxes 7,819 6,689 19,035 18,906
Net income $12,300 $10,686 $30,601 $29,793
Per share data - basic:
Net income $0.29 $0.26 $0.74 $0.74
Weighted average basic
shares of common stock 41,885 40,900 41,568 40,470
Per share data - diluted:
Net income $0.29 $0.26 $0.73 $0.72
Weighted average diluted
shares of common stock 42,446 41,774 42,210 41,494
UNITED NATURAL FOODS, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands)
April 29, July 31,
2006 2005
ASSETS
Current assets:
Cash and cash equivalents $6,061 $12,615
Accounts receivable, net 156,952 136,472
Notes receivable, trade, net 1,075 877
Inventories 260,496 235,700
Deferred income taxes 7,419 7,419
Prepaid expenses and other current assets 15,218 9,811
Total current assets 447,221 402,894
Property & equipment, net 163,167 167,909
Other assets:
Goodwill 76,962 73,808
Notes receivable, trade, net 2,367 1,802
Intangible assets, net 290 307
Other 7,119 4,538
Total assets $697,126 $651,258
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $124,981 119,177
Notes payable 117,001 $123,574
Accrued expenses and other
current liabilities 30,222 34,915
Current portion of long-term debt 5,475 5,843
Total current liabilities 277,679 283,509
Long-term debt, excluding current portion 61,127 64,852
Deferred income taxes 7,493 6,904
Other long-term liabilities 1,638 474
Total liabilities 347,937 355,739
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value,
authorized 5,000 shares at April 29, 2006
and July 31, 2005, respectively; none
issued and outstanding - -
Common stock, $0.01 par value,
authorized 50,000 shares; 42,426 issued
and 42,197 outstanding shares at April 29, 2006;
41,287 issued and outstanding shares
at July 31, 2005 424 413
Additional paid-in capital 148,419 120,354
Unallocated shares of ESOP (1,482) (1,605)
Accumulated other comprehensive income 962 -
Retained earnings 206,958 176,357
Treasury stock, at cost, 229 and 0 shares
at April 29, 2006 and July 31, 2005,
respectively (6,092) -
Total stockholders' equity 349,189 295,519
Total liabilities and stockholders' equity $697,126 $651,258
UNITED NATURAL FOODS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
Nine months ended
April 29, April 30,
2006 2005
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $30,601 $29,793
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 12,557 9,944
Gains on disposals of property & equipment (25) (26)
Provision for doubtful accounts 2,800 1,378
Share-based compensation 4,712 -
Changes in assets and liabilities,
net of acquired companies:
Accounts receivable (23,215) (29,151)
Inventory (24,479) (28,322)
Prepaid expenses and other assets 1,067 (5,157)
Notes receivable, trade (763) (400)
Accounts payable 5,599 20,557
Accrued expenses and other
current liabilities (3,258) (4,131)
Tax benefit of stock options - 7,167
Net cash provided by operating activities 5,596 1,652
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (14,804) (41,197)
Purchases of acquired businesses,
net of cash acquired (3,292) (6,219)
Proceeds from disposals of property and equipment 57 248
Net cash used in investing activities (18,039) (47,168)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 17,879 8,403
Net (repayments) borrowings under note payable (6,573) 37,781
Purchases of treasury stock (6,092) -
Tax benefit of stock options 5,485 -
Repayments on long-term debt (4,401) (5,591)
Principal payments of capital lease obligations (409) (513)
Net cash provided by financing activities 5,889 40,080
NET DECREASE IN CASH (6,554) (5,436)
Cash at beginning of period 12,615 13,633
Cash at end of period $6,061 $8,197
Supplemental disclosures of cash flow information:
Interest paid, net of amounts
capitalized $8,021 $4,903
Federal and state income taxes paid,
net of refunds $14,993 $14,107
SOURCE United Natural Foods, Inc.
CONTACT: Mark Shamber, Acting Chief Financial Officer of United Natural
Foods, Inc., 1-860-779-2800; or Joseph Calabrese, General Information of
Financial Relations Board, 1-212-827-3772
Web site: http://www.unfi.com
(UNFI)