- NET SALES INCREASED 29% TO $911.9 MILLION FOR 2008 FOURTH QUARTER AND
22% TO $3.37 BILLION FOR FISCAL YEAR 2008.
- ACHIEVES QUARTERLY NET INCOME OF $0.30 PER DILUTED SHARE.
- INTRODUCES FISCAL 2009 GUIDANCE WITH FORECASTED EPS GROWTH OF 15% TO 22%
ON SALES GROWTH OF 10% TO 12%.
DAYVILLE, Conn., Sept. 3 /PRNewswire-FirstCall/ -- United Natural Foods,
Inc. (Nasdaq: UNFI) (the "Company") today reported net sales for the fourth
quarter of fiscal 2008, ended August 2, 2008, of $911.9 million, an increase
of $205.1 million, or 29.0%, from net sales of $706.8 million realized in the
fourth quarter of fiscal 2007, ended July 28, 2007. Excluding the effect of
the Company's November 2007 acquisition of Millbrook Distribution Services,
Inc. ("Millbrook"), net sales increased by approximately $143.2 million, or
20.3%, to $850.0 million. Comparable sales growth for the fourth quarter of
fiscal 2008, excluding the Millbrook acquisition and the 14th week included in
the fourth quarter of fiscal 2008, was 11.9%.
Gross margin was 19.5% for the fourth quarter of fiscal 2008, which
represents an 83 basis point improvement from the gross margin of 18.7%
reported for the fourth quarter of fiscal 2007, and an 81 basis point
sequential improvement when compared with the gross margin of 18.7% reported
in the third quarter of fiscal 2008.
The Company reported net income of $12.8 million, or $0.30 per diluted
share, for the fourth quarter of fiscal 2008, which was relatively flat
compared to net income of $13.1 million, or $0.31 per diluted share, reported
for the fourth quarter of fiscal 2007. Millbrook, which the Company acquired
in the second quarter of fiscal 2008, negatively impacted net income by
approximately $2.9 million, or $0.07 per diluted share, during the fourth
quarter of fiscal 2008. Excluding the effect of Millbrook, net income for the
quarter ended August 2, 2008 would have been $15.7 million, or $0.37 per
diluted share, compared to $13.1 million, or $0.31 per diluted share for the
comparable quarter ended July 28, 2007.
For the quarter ended August 2, 2008, operating expenses were 16.9% of net
sales, or $154.0 million, an increase of $45.8 million, or 42.3%, over
operating expenses of $108.2 million, or 15.3% of net sales, for the fourth
quarter of fiscal 2007. In the fourth quarter of fiscal 2008, several items
negatively impacted the Company's operating expenses and net income.
Operating expenses in the fourth quarter of fiscal 2008 were negatively
impacted by $2.7 million in labor and other duplicate expenses related to the
Company's relocation from its facility in Fontana, California to a new
distribution facility in Moreno Valley, California, which is scheduled to
opened in the first week of September 2008, and the Company's previously
announced new facility in York, Pennsylvania. An increase in fuel costs of
$4.0 million, excluding fuel costs specific to Millbrook, also contributed to
the increase in operating expenses as a percentage of net sales for the fourth
quarter of fiscal 2008.
The Company recorded share-based compensation expense of $1.2 million, in
the fourth quarter of fiscal 2008, in accordance with SFAS No. 123R,
Share-Based Payment, compared to $1.0 million of share-based compensation
expense recorded in the fourth quarter of fiscal 2007.
Full Year Results
Net sales for fiscal 2008 totaled a record $3.37 billion, an increase of
22.2%, or $611.6 million, over the $2.75 billion of net sales recorded in
fiscal 2007. Gross margin was 18.8% for fiscal 2008, which represents a 33
basis point improvement from the gross margin of 18.5% for fiscal 2007.
Net income for fiscal 2008 decreased $1.7 million, or 3.3%, to
$48.5 million, or $1.13 per diluted share, from $50.2 million, or $1.17 per
diluted share, for fiscal 2007.
Fiscal year 2008 operating expenses were 16.1% of net sales, or
$541.4 million, an increase of $125.3 million, or 30.1%, over operating
expenses of $416.1 million, or 15.1% of net sales, for fiscal 2007.
Operating expenses during fiscal 2008 were negatively impacted by
approximately $10.6 million of operating losses associated with the Company's
Specialty distribution division, which consists of Millbrook, and $6.3 million
in labor and other start-up expenses related to the Company's new distribution
facilities in Sarasota, Florida, Ridgefield, Washington, Moreno Valley,
California and York, Pennsylvania.
Operating expenses during fiscal 2007 were negatively impacted by
approximately $2.2 million of losses related to the Company's two Auburn,
California facilities, $0.7 million in fees and abandoned leasehold
improvements and $0.9 million in labor and other start-up expenses related to
the Company's new distribution facilities in Sarasota, Florida and Ridgefield,
Washington.
For the fiscal year ended August 2, 2008, share-based compensation expense
was $4.7 million, compared with $4.0 million of share-based compensation
expense for the fiscal year ended July 28, 2007.
Comments from Management
"I am very pleased to once again report record revenue results for our
fiscal year 2008 fourth quarter and full year, driven by growth from both
existing and new customers. During the quarter, we delivered our fourth
consecutive quarterly increase in comparable sales, matching the high end of
our forecasted range of 10% to 12%, despite a weak economy and slower then
expected growth in the supernatural channel," said Michael Funk, President and
Chief Executive Officer.
"While Specialty division revenues have been below our expectations, we're
beginning to realize positive customer reaction from initiatives designed to
improve service and performance levels. We're confident the business is
stabilized and positioned to yield sales growth in fiscal 2009. Additionally,
we remain diligently focused on fully integrating the specialty division into
our broadline distribution, resulting in a considerable reduction in expenses
and dilution of approximately $0.06 for the entire fiscal year 2009."
Mr. Funk added, "Operationally, we're excited about the opening of our
Moreno Valley, California facility this coming weekend, and with the
additional capacity we've added, the Company is well positioned for increased
efficiencies to handle additional SKU assortments and business."
"We enter 2009 with strong core businesses that will support our growth
initiatives and current expectations for top line growth between 10% to 12%,
and a 15% to 22% increase in earnings to our shareholders," Mr. Funk
concluded.
Introduces Fiscal 2009 Guidance
The Company also has provided its financial outlook for fiscal 2009,
ending August 1, 2009.
For fiscal 2009, the Company expects revenues to increase by approximately
10% to 12% on a comparable basis from fiscal 2008 to a range of $3.63 billion
to $3.70 billion. Fiscal 2009 earnings per diluted share are expected to be
in the range of $1.30 to $1.38 per share, an increase of 15% to 22% over
fiscal 2008. The Company's fiscal 2009 earnings guidance includes the
expectation of approximately $0.06 per diluted share in dilution from the
Company's Specialty division. After adjusting for the impact of the 53-week
year in fiscal 2008, fiscal 2009 earnings per diluted share are expected to
increase 17% to 24% over fiscal 2008 earnings per diluted share.
Capital expenditures are expected to be in the range of $55 million to
$62 million during fiscal 2009. Certain costs associated with the Moreno
Valley, California and York, Pennsylvania facilities, as well as costs
associated with a new facility in Texas are included in the Company's 2009
capital expenditures guidance. The Company will begin operating out of its
Moreno Valley, California facility in September 2008, and the York
Pennsylvania facility should commence operations late in the second fiscal
quarter of 2009. The Company expects to open a new broadline distribution
facility in Texas in the fourth quarter of fiscal 2009.
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
As previously announced, management will conduct a conference call and
audio webcast at 11:00 a.m. EDT on September 3, 2008 to review the Company's
quarterly and annual results, market trends and future outlook. The conference
call dial-in number is (303) 262-2193. 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 60,000
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."
"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 Securities and Exchange Commission on June 5, 2008, 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 and capital expenditures
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 Years ended
August 2, July 28, August 2, July 28,
2008 2007 2008 2007
Net sales $911,850 $706,786 $3,365,857 $2,754,280
Cost of sales 733,943 574,791 2,731,965 2,244,702
Gross profit 177,907 131,995 633,892 509,578
Operating expenses 154,029 108,210 541,413 415,337
Impairment on assets
held for sale - - - 756
Total operating
expenses 154,029 108,210 541,413 416,093
Operating income 23,878 23,785 92,479 93,485
Other expense (income):
Interest expense 3,996 2,807 16,133 12,089
Interest income (296) (357) (768) (975)
Other, net (235) (176) (82) 156
Total other expense 3,465 2,274 15,283 11,270
Income before
income taxes 20,413 21,511 77,196 82,215
Provision for
income taxes 7,594 8,387 28,717 32,062
Net income $12,819 $13,124 $48,479 $50,153
Basic per share data:
Net income $0.30 $0.31 $1.14 $1.18
Weighted average
basic shares of
common stock 42,737 42,602 42,690 42,445
Diluted per share data:
Net income $0.30 $0.31 $1.13 $1.17
Weighted average
diluted shares
of common stock 42,860 42,847 42,855 42,786
UNITED NATURAL FOODS, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands, except per share data)
August 2, July 28,
2008 2007
ASSETS
Current assets:
Cash and cash equivalents $25,333 $17,010
Accounts receivable, net 179,063 160,329
Notes receivable, trade, net 1,412 1,836
Inventories 394,364 312,377
Prepaid expenses and other current assets 13,307 8,199
Deferred income taxes 14,221 9,474
Assets held for sale - 5,935
Total current assets 627,700 515,160
Property and equipment, net 234,115 185,083
Other assets:
Goodwill 170,609 79,903
Intangible assets, net 33,689 8,552
Notes receivable, trade, net 2,349 2,647
Other long-term assets 16,021 9,553
Total assets $1,084,483 $800,898
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $288,050 $120,000
Accounts payable 160,418 134,576
Accrued expenses and
other current liabilities 63,308 37,132
Current portion of long-term debt 5,027 6,934
Total current liabilities 516,803 298,642
Long-term debt, excluding current portion 58,485 65,067
Deferred income taxes 9,058 9,555
Other long-term liabilities 20,087 839
Total liabilities 604,433 374,103
Stockholders' equity:
Preferred stock, $0.01 par value, authorized
5,000 shares at August 2, 2008 and
July 28, 2007; none issued and outstanding - -
Common stock, $0.01 par value, authorized
100,000 shares; 43,100 issued and
42,871 outstanding shares at August 2, 2008;
43,051 issued and 42,822 outstanding
shares at July 28, 2007 431 431
Additional paid-in capital 169,238 163,473
Unallocated shares of Employee
Stock Ownership Plan (1,040) (1,203)
Treasury stock (6,092) (6,092)
Accumulated other comprehensive income (753) 399
Retained earnings 318,266 269,787
Total stockholders' equity 480,050 426,795
Total liabilities and stockholders' equity $1,084,483 $800,898
UNITED NATURAL FOODS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
Years ended
August 2, July 28,
2008 2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $48,479 $50,153
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 22,544 18,376
Loss on disposals of property and equipment 158 1,997
Impairment on assets held for sale - 756
Deferred income taxes 2,257 1,707
Provision for doubtful accounts 2,707 1,528
Share-based compensation 4,674 3,994
Gain on forgiveness of loan (157) -
Changes in assets and liabilities,
net of acquisitions:
Accounts receivable (8,339) (10,216)
Inventories (58,112) (52,975)
Prepaid expenses and other assets (6,434) (5,772)
Notes receivable, trade 713 (469)
Accounts payable (8,319) 27,739
Accrued expenses and other current liabilities 9,050 (1,308)
Net cash provided by operating activities 9,221 35,510
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (51,083) (46,804)
Purchases of acquired businesses,
net of cash acquired (107,812) (9,303)
Proceeds from disposals
of property and equipment - 5,452
Other investing activities - (1,010)
Net cash used in investing activities (158,895) (51,665)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments)
under notes payable 168,050 (5,005)
Repayments on long-term debt (8,332) (6,216)
(Decrease) increase in bank overdraft (1,435) 4,691
Capitalized debt issuance costs (1,285) -
Proceeds from exercises of stock options 828 7,127
Tax benefit from exercises of stock options 171 2,518
Proceeds from issuance of long-term debt - 10,000
Principal payments of capital lease obligations - (4)
Net cash provided by financing activities 157,997 13,111
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 8,323 (3,044)
Cash and cash equivalents
at beginning of period 17,010 20,054
Cash and cash equivalents at end of period $25,333 $17,010
Supplemental disclosures of
cash flow information:
Cash paid during the period for:
Interest paid, net of amounts capitalized $16,469 $11,877
Federal and state income taxes paid,
net of refunds $27,618 $28,607
SOURCE United Natural Foods, Inc.
CONTACT: Mark Shamber, Chief Financial Officer of United Natural Foods,
Inc., +1-860-779-2800; or Joseph Calabrese, General Information, Financial
Relations Board, for United Natural Foods, Inc., +1-212-827-3772/
/Web site: http://www.unfi.com /
(UNFI)