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United Natural Foods Reports Sales and Earnings for the Fourth Quarter and Fiscal Year Ended July 29, 2006; Provides Fiscal 2007 Guidance

August 30, 2006
     - QUARTERLY NET SALES OF $619.8 MILLION INCREASED 14% FROM THE FOURTH
       QUARTER OF FISCAL 2005.

     - QUARTERLY EARNINGS PER DILUTED SHARE OF $0.30 INCREASED 7% FROM THE
       $0.28 PER DILUTED SHARE REPORTED IN THE FOURTH QUARTER OF FISCAL 2005.

     - FISCAL 2006 ANNUAL NET SALES INCREASED 18% FROM THE PRIOR YEAR TO $2.43
       BILLION.

     - FISCAL 2006 ANNUAL EARNINGS PER DILUTED SHARE OF $1.09, EXCLUDING
       SPECIAL ITEMS, AND $1.02 PER DILUTED SHARE, INCLUDING SPECIAL ITEMS.

     - FISCAL 2007 REVENUES EXPECTED TO INCREASE 11% - 15% TO $2.7 BILLION -
       $2.8 BILLION.

     - FISCAL 2007 EARNINGS PER DILUTED SHARE EXPECTED TO INCREASE 15% - 19%
       TO $1.25 - $1.30.

DAYVILLE, Conn., Aug. 30 /PRNewswire-FirstCall/ -- United Natural Foods, Inc. (Nasdaq: UNFI) (the "Company") today reported net income of $12.7 million for the fourth quarter of fiscal 2006, ended July 29, 2006, or $0.30 per share on a diluted basis. Net sales for the fourth quarter of fiscal 2006 were $619.8 million, an increase of $76.8 million, or 14.1%, from the $543.0 million recorded in the fourth quarter of fiscal 2005, ended July 31, 2005. Based on a comparable number of shipping days, revenue growth was 15.5% for the current quarter compared to the fourth quarter of fiscal 2005, and revenue growth, excluding the impact of the Roots & Fruits acquisition completed in July 2005, was 14.9% compared to the fourth quarter of fiscal 2005. The Company references comparable shipping days as there was one fewer shipping day in the fourth quarter of fiscal 2006 compared to the fourth quarter of fiscal 2005.

Net income for the fourth quarter of fiscal 2006 increased 7.6% to $12.7 million, or $0.30 per diluted share, compared to $11.8 million, or $0.28 per diluted share, including special items, for the quarter ended July 31, 2005. Net income for the fourth quarter of fiscal 2006 increased 9.0% to $12.7 million, or $0.30 per diluted share, compared to $11.6 million, or $0.28 per diluted share, excluding special items, for the quarter ended July 31, 2005. The special items for the fourth quarter of fiscal 2005 included certain costs associated with the opening of the Company's Greenwood, Indiana facility and the closing of its Hawaii facility. In addition, special items in the fourth quarter of fiscal 2005 included other income related to the early termination of an interest rate swap agreement. There were no special items recorded in the fourth quarter of fiscal 2006.

During the fourth quarter of fiscal 2006, the Company recorded a non-recurring loss on the sale of certain equipment held for sale at the Company's Auburn, California facility of $0.5 million, which is reflected in operating expenses for the quarter. Operating expenses were negatively impacted further by an operating loss of $0.9 million related to the start-up of a new location of the Company's Albert's Organics division in Greenwood, Indiana.

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 fourth quarter of fiscal 2006, share-based compensation negatively impacted earnings before taxes by $0.8 million or 13 basis points.

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 fourth quarter of fiscal 2005:

    Quarter Ended July 31, 2005
                                           Pretax                  Per diluted
    (in thousands, except per share        Income     Net of Tax      share
     data)

    Income, excluding special items:       $18,116      $11,633        $0.28

    Special items - Income/(Expense):
    Termination of interest rate swap
     agreement
    (included in other income, net)            557          346         0.01
    Related to the opening of the
     Greenwood, Indiana facility              (254)        (158)       (0.00)
    (included in operating expenses)
    Related to the closing of the Hawaii
     facility (included in operating
     expenses)                                 (67)         (42)       (0.00)

    Income, including special items:       $18,352      $11,779        $0.28*

    * Total reflects rounding

All Non-GAAP numbers have been adjusted to exclude special charges. A description of the Company's use of Non-GAAP information is provided under "Non-GAAP Results" below.

Record Full Year Results

Net income, excluding special items, for fiscal 2006 increased $4.4 million, or 10.5%, to $46.1 million, or $1.09 per diluted share, from $41.7 million, or $1.00 per diluted share, for fiscal 2005. Fiscal 2006 net income, including special items, was $43.3 million, or $1.02 per diluted share, compared to $41.6 million, or $1.00 per diluted share, for fiscal 2005. For the fiscal year ended July 29, 2006, share-based compensation negatively impacted earnings before taxes by $5.5 million or approximately $0.08 per diluted share.

Net sales for fiscal 2006 were $2.43 billion, an increase of 18.2%, or $374.0 million, over the $2.06 billion recorded in fiscal 2005. Fiscal 2006 revenue growth, excluding acquisitions, was 16.6% compared to the prior fiscal year. Based on a comparable number of shipping days, net sales grew by 18.8% over fiscal 2005, and revenue growth, excluding acquisitions, was 17.3% over the prior fiscal year. The fiscal year ended July 29, 2006 had two fewer shipping days than fiscal 2005.

Special items for fiscal 2006 included: (i) incremental and redundant costs incurred during the transition from our former warehouses and outside storage facility in Auburn, California into our facility in Rocklin, California, (ii) certain costs associated with opening the Greenwood, Indiana facility, and (iii) non-recurring cash and non-cash expenses incurred in accordance with the employment transition agreement we entered into during the first quarter of fiscal 2006 with Steven H. Townsend, the Company's former Chairman and Chief Executive Officer. Special items for fiscal 2005 included: (i) certain costs associated with closing the Mounds View, Minnesota and Hawaii facilities, (ii) certain costs associated with opening the Greenwood, Indiana facility, and (iii) other income related to the early termination of an interest rate swap agreement.

The following table presents 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 fiscal 2006 and 2005:

    Year ended July 29, 2006                 Pretax                Per diluted
    (in thousands, except per share data)    Income    Net of Tax     share

    Income, excluding special items:         $73,923    $46,100        $1.09

    Special items - (Expense):
    Employment transition agreement costs
     (included in operating expenses)         (3,512)    (2,190)       (0.05)
    Rocklin, CA facility relocation costs
     (included in operating expenses)           (925)      (577)       (0.01)
    Greenwood, IN facility openings costs
     (included in operating expenses)            (90)       (56)       (0.00)

    Income, including special items:         $69,396    $43,277        $1.02*

    * Total reflects rounding



    Year ended July 31, 2005                   Pretax              Per diluted
    (in thousands, except per share data)      Income   Net of Tax    share

    Income, excluding special items:           $67,284    $41,716      $1.00

    Special items - Income/(Expense):
    Termination of interest rate swap
     agreement (included in other income, net)     557        346       0.01
    Related to the closing of the Mounds
     View, Minnesota facility
     (included in operating expenses)             (456)      (283)     (0.01)
    Related to the opening of the Greenwood,
     Indiana facility (included in operating
     expenses)                                    (266)      (165)     (0.00)
    Related to the closing of the Hawaii
     facility (included in operating expenses)     (67)       (42)     (0.00)

    Income, including special items:           $67,052    $41,572      $1.00

All non-GAAP numbers have been adjusted to exclude special charges. A description of the Company's use of non-GAAP information is provided under "Non-GAAP Results" below.

Comments from Management

Michael Funk, the Company's President and Chief Executive Officer commented, "We had another strong year and are extremely pleased with the Company's financial and operating performance in fiscal 2006. Our financial success reflects the positioning of our sales and marketing strategies which have enabled us to achieve growth above industry levels across our primary distribution channels. Our team of associates continues to execute our strategy in each of our markets and we remain focused on serving our growing customer base. In addition, we continue to efficiently leverage our expenses. Throughout fiscal 2006, we improved our operating expenses over last year, in spite of higher fuel costs and operating expenses associated with the adoption of share-based compensation. Our net sales, net income and earnings per share, excluding special items, all met or exceeded the high end of our initial guidance, reaffirming our position within the industry and validating our operating strategies. At the same time, we continued to strengthen our industry presence by growing our branded products business and fostering new business relationships with new and emerging customers in the industry."

Fiscal 2007 Guidance

The Company also has provided its financial outlook for fiscal 2007, ending July 28, 2007.

For fiscal 2007, revenues are expected to increase approximately 11% to 15% from fiscal 2006 to a range of $2.7 billion to $2.8 billion. Fiscal 2007 earnings per diluted share are expected to be in the range of $1.25 to $1.30 per share, an increase of 15% to 19% over fiscal 2006, excluding special items. Special items for fiscal 2006 are discussed above under "Record Full Year Results." At this time, the Company is not aware of any special items that may be incurred in fiscal 2007.

The Company's guidance is based on a number of assumptions, which are subject to change and many of which are outside the Company's control. 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.

The Company expects to continue to invest in its people, facilities, equipment and new technologies during fiscal 2007 in order to capitalize on the ongoing strength and growth of the natural and organic foods industry. Capital expenditures are expected to be in the range of $40 million to $45 million during fiscal 2007. The Company anticipates new facilities being constructed in Florida, Texas and the Pacific Northwest in the next twenty four months.

Mr. Funk said, "As we look ahead, we are excited about our Company's prospects for fiscal 2007 and beyond. Our efforts remain focused on helping our customers be more successful in their marketplace while improving our service levels and maintaining our position as America's premier certified organic distributor. We will continue to invest in our people, facilities, equipment and new technologies while providing high quality product assortments and value-added support services."

Conference Call

Management will conduct a conference call and audio webcast at 11:00 a.m. EDT on August 30, 2006 to review the Company's quarterly results, market trends and future outlook. The conference call dial-in number is (303) 262-2050. An 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 Investor Relations section of the Company's website at 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, 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 www.unfi.com.

                           Financial Tables Follow

"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 June 8, 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)

                                    Quarters ended           Years ended
                                 July 29,   July 31,     July 29,    July 31,
                                   2006      2005          2006         2005

    Net sales                    $619,804  $542,981     $2,433,594 $2,059,568
    Cost of sales                 500,729   437,652      1,967,684  1,664,523

        Gross profit              119,075   105,329        465,910    395,045

    Operating expenses             96,517    85,857        385,404    321,685
    Restructuring charge                -         -              -        170
    Amortization of intangibles       150       169            578        660
        Total operating expenses   96,667    86,026        385,982    322,515

        Operating income           22,408    19,303         79,928     72,530

    Other expense (income):
        Interest expense            2,900     1,682         11,210      6,568
        Other income, net            (251)     (731)          (678)    (1,090)
        Total other expense         2,649       951         10,532      5,478

        Income before income
         taxes                     19,759    18,352         69,396     67,052

    Provision for income taxes      7,084     6,573         26,119     25,480

        Net income                $12,675   $11,779        $43,277    $41,572

    Per share data - basic:
        Net income                  $0.30     $0.29          $1.04      $1.02

    Weighted average basic shares
     of common stock               42,103    41,139         41,682     40,639

    Per share data - diluted:
        Net income                  $0.30     $0.28          $1.02      $1.00

    Weighted average diluted shares
     of common stock               42,572    41,951         42,304     41,607



                          UNITED NATURAL FOODS, INC.
                   CONSOLIDATED BALANCE SHEETS (Unaudited)
                    (In thousands, except per share data)

                                                     July 29,       July 31,
                                                       2006           2005
    ASSETS
    Current assets:
        Cash and cash equivalents                     $20,054        $12,615
        Accounts receivable, net                      147,686        136,472
        Notes receivable, trade, net                    1,254            877
        Inventories                                   257,259        235,700
        Prepaid expenses and other current assets      12,229          9,811
        Deferred income taxes                          11,278          7,419
           Total current assets                       449,760        402,894

    Property & equipment, net                         163,247        167,909

    Other assets:
        Goodwill                                       78,016         73,808
        Notes receivable, trade, net                    2,760          1,802
        Intangible assets, net                            251            307
        Other                                           6,561          4,538

           Total assets                              $700,595       $651,258

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
        Notes payable                                $125,005       $123,574
        Accounts payable                              102,146        119,177
        Accrued expenses and other current
         liabilities                                   34,245         34,915
        Current portion of long-term debt               5,433          5,843
           Total current liabilities                  266,829        283,509

    Long-term debt, excluding current portion          59,716         64,852
    Deferred income taxes                               9,693          6,904
    Other long-term liabilities                           883            474
           Total liabilities                          337,121        355,739

    Commitments and contingencies

    Stockholders' equity:
      Preferred stock, $0.01 par value,
       authorized 5,000 shares at July 29,
       2006 and July 31, 2005; none issued
       and outstanding                                      -              -
      Common stock, $0.01 par value, authorized
       50,000 shares; 42,477 issued and 42,248
       outstanding shares at July 29, 2006; 41,287
       issued and outstanding shares at July 31, 2005     425            413
      Additional paid-in capital                      149,840        120,354
      Unallocated shares of Employee Stock
       Ownership Plan                                  (1,380)        (1,605)
      Treasury stock                                   (6,092)             -
      Accumulated other comprehensive income            1,047              -
      Retained earnings                               219,634        176,357
         Total stockholders' equity                   363,474        295,519

    Total liabilities and stockholders' equity       $700,595       $651,258



                          UNITED NATURAL FOODS, INC.
              CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
                                (In thousands)

                                                            Years ended
                                                        July 29,     July 31,
                                                          2006         2005
    CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                           $43,277     $41,572
    Adjustments to reconcile net income to net cash
      provided by (used in) operating activities:
        Depreciation and amortization                     17,099      13,573
        Gains on disposals of property & equipment          (140)        (29)
        Deferred income taxes                             (1,355)      1,763
        Provision for doubtful accounts                    2,829       2,296
        Stock-based compensation                           5,507         162
    Changes in assets and liabilities, net of
     acquired companies:
      Accounts receivable                                (13,978)    (27,262)
      Inventory                                          (21,242)    (34,645)
      Prepaid expenses and other assets                    4,349      (3,291)
      Notes receivable, trade                             (1,335)       (306)
      Accounts payable                                    (8,936)      4,893
      Accrued expenses and other current
      liabilities                                           (887)      4,199
        Tax benefit of stock options                           -       8,095
          Net cash provided by operating activities       25,188      11,020

    CASH FLOWS FROM INVESTING ACTIVITIES:
    Capital expenditures                                 (19,290)    (65,951)
    Purchases of acquired businesses, net of cash
     acquired                                             (3,286)    (16,615)
    Proceeds from disposals of property and equipment        224         242
          Net cash used in investing activities          (22,352)    (82,324)

    CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from exercise of stock options               18,679      10,991
    Purchases of treasury stock                           (6,092)          -
    Repayments on long-term debt                          (5,854)     (8,438)
    Tax benefit of stock options                           5,312           -
    (Decrease) increase in bank overdraft                 (8,300)     27,326
    Net borrowings under note payable                      1,431      10,850
    Principal payments of capital lease obligations         (573)       (731)
    Proceeds from issuance of long-term debt, net              -      30,288
          Net cash provided by financing activities        4,603      70,286

    NET INCREASE (DECREASE) IN CASH                        7,439      (1,018)
    Cash at beginning of period                           12,615      13,633
    Cash at end of period                                $20,054     $12,615

    Supplemental disclosures of cash flow information:
    Cash paid during the period for:
         Interest paid, net of amounts capitalized       $10,352      $7,006
         Federal and state income taxes paid, net of
          refunds                                        $23,111     $16,609

SOURCE United Natural Foods, Inc.

CONTACT: Mark Shamber, Acting 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.
Web site: http://www.unfi.com
(UNFI)

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