Updates Guidance for Fiscal 2007
DAYVILLE, Conn., May 22 /PRNewswire-FirstCall/ -- United Natural Foods,
Inc. (Nasdaq: UNFI) (the "Company") today reported net income of $13.7
million, or $0.32 per diluted share, for the third quarter of fiscal 2007,
ended April 28, 2007. The Company reported revenues for the third quarter of
fiscal 2007 of $732.5 million, an increase of $95.4 million, or 15.0%, from
the $637.1 million recorded in the third quarter of fiscal 2006. Both the
supernatural and supermarket channels of the wholesale segment contributed to
the record sales, with both channels showing comparable growth rates in excess
of 20%.
For the third quarter of fiscal 2007, net income increased 11.4% to $13.7
million, or $0.32 per diluted share, compared to $12.3 million, or $0.29 per
diluted share, for the third quarter of fiscal 2006.
Gross margin as a percent of sales for the third quarter of fiscal 2007
was 17.7%, which represents a 1.2% decline from the gross margin of 18.9% for
the third quarter of fiscal 2006, ended April 29, 2006. The gross margin
decline was driven by a combination of factors. First, the Company's level of
forward buying in the Western Region during the third quarter of fiscal 2007
continued to run below historical levels, negatively impacting gross margin by
approximately $1.9 million. Second, the Company incurred an unusually high
level of inventory adjustments within broadline distribution during the
quarter of approximately $1.9 million. Third, a number of new customer
agreements were in place during the third quarter compared to the prior fiscal
year. Additionally, unanticipated delays in the completion of its previously
announced strategy to acquire emerging brands and launch new products have
prevented the Company's United Natural Brands' division from contributing the
planned level of sales and incremental gross margin expected.
For the quarter ended April 28, 2007, operating expenses were 14.3% of net
sales, or $104.8 million, an increase of $7.4 million, or 7.5%, over operating
expenses of $97.5 million, or 15.3% of net sales, for the third quarter of
fiscal 2006.
In the third quarter of fiscal 2007, the Company recorded share-based
compensation expense of $1.0 million, in accordance with Statement of
Financial Accounting Standard ("SFAS") No. 123R, Share-Based Payment, compared
to $1.2 million of share-based compensation expense for the third quarter of
fiscal 2006, which ended April 29, 2006.
"Our sales growth during the third quarter improved as we had expected,
driven by solid growth of over 23% in our supermarket channel. Also, growth in
the supernatural channel exceeded 20% for the quarter due to continued strong
consumer demand for natural and organic products, aided by new store openings
and our increased market share in the West," said Michael Funk, President and
Chief Executive Officer.
Mr. Funk added, "We experienced some short-term erosion of gross margin
during the quarter due to our forward buying of inventory remaining below
historical levels and specific inventory write-offs in broadline distribution,
but we remain confident that the gross margin will improve over the next two
quarters with these issues behind us."
Updates Fiscal 2007 Earnings Guidance
The Company is updating its projected revenues guidance to $2.75 billion
to $2.8 billion for fiscal year 2007, ending July 28, 2007, which represents a
13% to 15% increase over fiscal 2006. In addition, the Company is revising its
GAAP guidance on earnings per share for fiscal 2007 to a range of $1.20 to
$1.22 per diluted share. Previously, on February 20, 2007, the Company had
announced GAAP earnings per share guidance of $1.25 to $1.30 per diluted share
for fiscal 2007. Excluding the impact of $2.2 million of losses related to the
Company's two Auburn, California facilities and $0.7 million in fees related
to the early termination of unused leased space and the write-off of abandoned
leasehold improvements at a facility in Minnesota, both reported in the second
quarter of fiscal 2007, the Company is revising its earnings per share
guidance for fiscal 2007 to a range of $1.24 to $1.26 per diluted share.
Previously, the Company announced earnings per share guidance for fiscal 2007,
excluding these items, of a range of $1.27 to $1.30 per diluted share.
Finally, the Company also reiterated its anticipated fiscal 2007 capital
expenditures guidance of $40 to $45 million.
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.
EDT on May 22, 2007 to review the Company's quarterly results, market trends
and future outlook. The conference call dial-in number is (303) 262-2075. 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 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 was ranked by Forbes in 2005 as one of the
"Best Managed Companies in America," ranked by Fortune in 2007 and 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 March 6, 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)
Three months ended Nine months ended
April 28, April 29, April 28, April 29,
2007 2006 2007 2006
Net sales $732,516 $637,068 $2,047,494 $1,813,790
Cost of sales 602,573 516,904 1,669,912 1,466,955
Gross profit 129,943 120,164 377,582 346,835
Operating expenses 104,670 97,318 306,689 288,887
Impairment on assets held
for sale - - 756 -
Amortization of intangibles 148 142 437 428
Total operating expenses 104,818 97,460 307,882 289,315
Operating income 25,125 22,704 69,700 57,520
Other expense (income):
Interest expense 3,021 2,747 9,282 8,310
Interest income (324) (78) (618) (219)
Other, net (39) (84) 332 (207)
Total other expense 2,658 2,585 8,996 7,884
Income before income
taxes 22,467 20,119 60,704 49,636
Provision for income taxes 8,762 7,819 23,675 19,035
Net income $13,705 $12,300 $37,029 $30,601
Per share data - basic:
Net income $0.32 $0.29 $0.87 $0.74
Weighted average basic
shares of common stock 42,595 41,885 42,396 41,568
Per share data - diluted:
Net income $0.32 $0.29 $0.87 $0.73
Weighted average diluted
shares of common stock 42,884 42,446 42,784 42,210
UNITED NATURAL FOODS, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands)
April 28, July 29,
2007 2006
ASSETS
Current assets:
Cash and cash equivalents $20,544 $20,054
Accounts receivable, net 167,486 147,686
Notes receivable, trade, net 1,285 1,254
Inventories 302,468 257,259
Prepaid expenses and other current assets 13,822 12,596
Deferred income taxes 10,911 10,911
Total current assets 516,516 449,760
Property & equipment, net 163,365 163,247
Other assets:
Goodwill 79,900 78,016
Notes receivable, trade, net 2,320 2,760
Intangible assets, net 5,957 251
Other 9,535 6,561
Total assets $777,593 $700,595
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $134,221 102,146
Notes payable 114,001 $125,005
Accrued expenses and other current liabilities 33,232 34,245
Current portion of long-term debt 6,269 5,433
Total current liabilities 287,723 266,829
Long-term debt, excluding current portion 67,510 59,716
Deferred income taxes 9,029 9,693
Other long-term liabilities 874 883
Total liabilities 365,136 337,121
Stockholders' equity:
Preferred stock, $0.01 par value,
authorized 5,000 shares at April 28, 2007
and July 29, 2006; none issued and outstanding - -
Common stock, $0.01 par value,
authorized 100,000 shares; 43,042 issued and
42,813 outstanding shares at April 28, 2007;
42,477 issued and 42,248 outstanding shares
at July 29, 2006 430 425
Additional paid-in capital 162,730 149,840
Unallocated shares of Employee Stock Ownership
Plan (1,257) (1,380)
Treasury stock (6,092) (6,092)
Accumulated other comprehensive (loss) income (17) 1,047
Retained earnings 256,663 219,634
Total stockholders' equity 412,457 363,474
Total liabilities and stockholders' equity $777,593 $700,595
UNITED NATURAL FOODS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
Nine months ended
April 28, April 29,
2007 2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $37,029 $30,601
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 13,793 12,557
(Gain) loss on disposals of property &
equipment 1,999 (25)
Impairment on assets held for sale 756 -
Provision for doubtful accounts 1,008 2,800
Share-based compensation 2,956 4,712
Changes in assets and liabilities,
net of acquired companies:
Accounts receivable (20,808) (23,215)
Inventory (43,391) (24,479)
Prepaid expenses and other assets (5,688) 1,067
Notes receivable, trade 409 (763)
Accounts payable 25,829 12,996
Accrued expenses and other current liabilities (1,393) (3,258)
Net cash provided by operating activities 12,499 12,993
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (20,684) (14,804)
Purchases of acquired businesses,
net of cash acquired (6,470) (3,292)
Proceeds from sale of property and equipment 5,448 57
Other investing activities (1,042) -
Net cash used in investing activities (22,748) (18,039)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayments under note payable (11,004) (6,573)
Proceeds from borrowings of long-term debt 10,000 -
Proceeds from exercise of stock options 7,086 17,879
Increase (decrease) in bank overdraft 6,246 (7,397)
Repayments on long-term debt (4,438) (4,401)
Tax benefit from exercise of stock options 2,853 5,485
Principal payments of capital lease obligations (4) (409)
Purchases of treasury stock - (6,092)
Net cash provided by (used in) financing
activities 10,739 (1,508)
NET INCREASE (DECREASE) IN CASH 490 (6,554)
Cash at beginning of period 20,054 12,615
Cash at end of period $20,544 $6,061
Supplemental disclosures of cash flow information:
Interest paid, net of amounts capitalized $9,235 $8,021
Federal and state income taxes paid,
net of refunds $19,771 $14,993
SOURCE United Natural Foods, Inc.
CONTACT: Mark Shamber, Chief Financial Officer, United Natural Foods,
Inc., 1-860-779-2800; or Joseph Calabrese, Financial Relations Board, General
Information, 1-212-827-3772
Web site: http://www.unfi.com
(UNFI)