- 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)