Updates Fiscal 2008 Guidance to Reflect Projected Impact of Millbrook
Acquisition
DAYVILLE, Conn., Nov. 20 /PRNewswire-FirstCall/ --United Natural Foods,
Inc. (Nasdaq: UNFI) (the "Company") today reported net sales for the first
quarter of fiscal 2008, ended October 27, 2007, of $736.4 million, an increase
of $90.0 million, or 13.9%, from the $646.4 million in net sales recorded in
the first quarter of fiscal 2007. The supernatural channel of the wholesale
segment contributed to the increase in net sales, showing a comparable growth
rate of approximately 22%.
The Company reported net income of $13.6 million, or $0.32 per diluted
share, for the first quarter of fiscal 2008. Net income for the first quarter
of fiscal 2007 was $12.4 million, or $0.29 per diluted share.
Gross margin was 18.4% for the first quarter of fiscal 2008, which
represents a 72 basis point decline from the gross margin of 19.1% for the
first quarter of fiscal 2007. The decline in gross margin was due primarily to
new customer contracts combined with a shift in the mix of customer growth.
Operating expenses as a percentage of net sales during the first quarter
of fiscal 2008 decreased by 43 basis points to 15.1% of net sales, or $111.3
million, and were negatively impacted by $2.3 million in operating expenses
related to start-up activities at the Company's Sarasota, Florida and
Portland, Oregon area distribution facilities. The Sarasota, Florida facility
commenced shipments in September 2007, and the Portland, Oregon area facility
is expected to commence operations in early December 2007. For the quarter
ended October 28, 2006, operating expenses were $100.4 million, or 15.5% of
net sales.
In the quarter ended October 27, 2007, the Company recorded share-based
compensation expense of $1.0 million in accordance with Statement of Financial
Accounting Standard No. 123R, Share-Based Payment, which was consistent with
the same period in fiscal 2007.
The Company's results for the first quarter of fiscal 2008 do not reflect
the Company's recent acquisition of Millbrook Distribution Services, Inc.
("Millbrook"), which closed on November 2, 2007.
"We are pleased to announce that first quarter sales came in near the top
end of our 11% to 14% growth forecast and that operating results were solid
despite $2.3 million of start-up costs related to expansion of our
distribution center network" said Michael Funk, President and Chief Executive
Officer. "With the Sarasota, Florida facility now open, and the Portland,
Oregon area facility expected to open in early December, we look forward to
realizing the transportation savings and operational efficiencies expected to
be provided by these facilities in the second half of the fiscal year."
Mr. Funk added, "At this time, we continue to implement strategies
designed to grow and diversify our business and recently closed on the
acquisition of Millbrook. This opportunity is consistent with our long-term
plans to expand our presence in the Specialty Foods segment and enhance the
breadth of our products, resources and distribution network. We're excited to
welcome Millbrook, its customers and associates to our organization."
Updates Fiscal 2008 Guidance to Reflect Projected Impact of Millbrook
Acquisition
The Company is raising its net sales guidance for fiscal 2008, ending
August 2, 2008, to reflect the recent acquisition of Millbrook, which closed
on November 2, 2007. Fiscal 2008 projected revenues are expected to increase
to $3.27 to $3.35 billion, representing an increase of 19% to 22% over net
sales in fiscal 2007. Previously, the Company had announced net sales guidance
from $3.05 to $3.13 billion, reflecting net sales growth of 11% to 14%. At
this time, the Company expects fiscal 2008 U.S. GAAP earnings per diluted
share guidance to remain in the range of $1.40 to $1.45 per share, an increase
of 19% to 24% over fiscal 2007. The Company expects the Millbrook acquisition
to be dilutive by approximately $0.04 in the second quarter of fiscal 2008,
and neutral to slightly accretive for the remainder of fiscal 2008.
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.
Conference Call
Management will conduct a conference call and audio webcast at 11:00 a.m.
EST on November 20, 2007 to review the Company's quarterly results, market
trends and future outlook. The conference call dial-in number is (303) 262-
2004. An audio webcast of the conference call will be available to the public,
on a listen-only basis, via the Internet at www.earnings.comor 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 17,000 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 and 2007 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.
"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 September 26, 2007, 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.
UNITED NATURAL FOODS, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share data)
Quarters ended
October 27, October 28,
2007 2006
Net sales $736,389 $646,433
Cost of sales 600,918 522,861
Gross profit 135,471 123,572
Operating expenses 111,266 100,432
Total operating expenses 111,266 100,432
Operating income 24,205 23,140
Other expense (income):
Interest expense 2,891 2,911
Interest income (179) (114)
Other, net 69 (28)
Total other expense 2,781 2,769
Income before income taxes 21,424 20,371
Provision for income taxes 7,863 7,945
Net income $13,561 $12,426
Basic per share data:
Net income $0.32 $0.29
Weighted average basic shares of common
stock 42,610 42,147
Diluted per share data:
Net income $0.32 $0.29
Weighted average diluted shares of common
stock 42,829 42,599
UNITED NATURAL FOODS, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands, except per share data)
October 27, July 28,
2007 2007
ASSETS
Current assets:
Cash and cash equivalents $19,446 $17,010
Accounts receivable, net 174,021 160,329
Notes receivable, trade, net 6,965 1,836
Inventories 364,876 312,377
Prepaid expenses and other current assets 11,050 8,199
Assets held for sale 5,935 5,935
Deferred income taxes 9,474 9,474
Total current assets 591,767 515,160
Property and equipment, net 193,195 185,083
Other assets:
Goodwill 79,903 79,903
Notes receivable, trade, net 2,129 2,647
Intangible assets, net 9,121 8,552
Other 8,649 9,553
Total assets $884,764 $800,898
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $152,500 $134,576
Notes payable 173,118 120,000
Accrued expenses and other current
liabilities 37,511 37,132
Current portion of long-term debt 6,702 6,934
Total current liabilities 369,831 298,642
Long-term debt, excluding current portion 63,458 65,067
Deferred income taxes 9,273 9,555
Other long-term liabilities 1,094 839
Total liabilities 443,656 374,103
Stockholders' equity:
Preferred stock, $0.01 par value, authorized
5,000 shares at - -
October 27, 2007 and July 28, 2007; none issued
and outstanding
Common stock, $0.01 par value, authorized
100,000 shares;
43,059 issued and 42,831 outstanding shares at 431 431
October 27, 2007;
43,051 issued and 42,822 outstanding shares at
July 28, 2007
Additional paid-in capital 164,649 163,473
Unallocated shares of Employee Stock
Ownership Plan (1,162) (1,203)
Treasury stock (6,092) (6,092)
Accumulated other comprehensive (loss) income (66) 399
Retained earnings 283,348 269,787
Total stockholders' equity 441,108 426,795
Total liabilities and stockholders' equity $884,764 $800,898
UNITED NATURAL FOODS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
Three months ended
October 27, October 28,
2007 2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $13,561 $12,426
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 4,678 4,555
Loss on disposals of property and equipment 8 5
Deferred income taxes (101) -
Provision for doubtful accounts 472 660
Share-based compensation 1,004 954
Gain on forgiveness of loan (157) -
Changes in assets and liabilities, net of
acquisitions:
Accounts receivable (14,164) (17,450)
Inventories (52,246) (42,955)
Prepaid expenses and other assets (2,693) (6,585)
Notes receivable, trade 389 264
Accounts payable 29,828 30,729
Accrued expenses and other current
liabilities 462 150
Net cash used in operating activities (18,959) (17,247)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (12,623) (4,760)
Purchases of acquired businesses, net of cash
acquired (686) (28)
Payment for loans receivable (5,000) -
Proceeds from disposals of property and
equipment - 19
Net cash used in investing activities (18,309) (4,769)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under note payable 32,500 (7,006)
Increase in bank overdraft 8,714 5,816
Repayments of long-term debt (1,684) (1,458)
Proceeds from exercise of stock options 134 2,152
Tax benefit from exercises of stock options 40 874
Proceeds from issuance of long-term debt - 10,000
Net cash provided by financing activities 39,704 10,378
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 2,436 (11,638)
Cash and cash equivalents at beginning of period 17,010 20,054
Cash and cash equivalents at end of period $19,446 $8,416
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest paid, net of amounts capitalized $2,779 $2,996
Federal and state income taxes paid, net of
refunds $7,956 $2,639
SOURCE United Natural Foods, Inc.
CONTACT: Mark Shamber, Chief Financial Officer, 1-860-779-2800; or
Joseph Calabrese, General Information, 1-212-827-3772
Web site: http://www.unfi.com
(UNFI)