- Quarterly Net Sales of $887 Million Increased 21% From the Third Quarter
of Fiscal 2007.
- Reports Quarterly Net Income of $13 Million, or $0.30 Per Diluted Share.
DAYVILLE, Conn., May 20 /PRNewswire-FirstCall/ -- United Natural Foods,
Inc. (Nasdaq: UNFI) (the "Company") today reported net sales of $887.0 million
for the third quarter of fiscal 2008, ended April 26, 2008, an increase of
approximately $154.4 million, or 21%, from net sales of $732.5 million
recorded in the third quarter of fiscal 2007. Excluding the effect of the
Company's November 2007 acquisition of Millbrook Distribution Services, Inc.
("Millbrook"), net sales increased by approximately $77.2 million, or 10.5%,
to $809.7 million.
The Company reported net income of $13.0 million, or $0.30 per diluted
share, for the third quarter of fiscal 2008. Millbrook, which the Company
acquired in the second quarter of fiscal 2008, negatively impacted net income
by approximately $2.4 million, or $0.06 per diluted share, for the third
quarter of fiscal 2008. The Company previously announced that the Millbrook
acquisition was expected to be dilutive to earnings by approximately $0.10 to
$0.12 in the second half of fiscal 2008, and these results are in line with
the Company's projections. Excluding the effect of Millbrook, net income for
the quarter ended April 26, 2008 would have been $15.4 million, or $0.36 per
diluted share, compared to $13.7 million, or $0.32 per diluted share for the
comparable quarter ended April 28, 2007.
Operating expenses were $141.0 million, or 15.9% of net sales for the
quarter ended April 26, 2008, compared to $104.8 million, or 14.3% of net
sales, for the third quarter of fiscal 2007. The Company continues to
experience start-up inefficiencies at its Sarasota, Florida and Portland,
Oregon area distribution facilities, which negatively impacted operating
margins in the quarter. These facilities opened in September, 2007 and
December, 2007, respectively. The Company typically achieves optimum
efficiencies from new facilities within six to nine months following their
opening. The Company recorded share-based compensation expense of $1.1
million, in the third quarter of fiscal 2008, in accordance with SFAS No.
123R, Share-Based Payment, compared to $1.0 million of share-based
compensation expense recorded for the third quarter of fiscal 2007.
"Despite operating in an environment of rising fuel and commodity prices,
our growth was in line with our expectations, with solid growth across our
sales channels," said Michael Funk, President and Chief Executive Officer.
"During the quarter, we continued to make progress achieving efficiencies at
our Millbrook specialty division, and we remain confident that we can achieve
breakeven operating results in that division in the first quarter of fiscal
2009, as previously announced. Independent customers generated comparable
sales growth of approximately 11%, reflecting the continued strength of the
industry, while our sales to conventional supermarkets increased by
approximately 78% driven largely by sales in our Millbrook specialty division.
As we approach the end of fiscal 2008, and look forward to 2009, we continue
to see significant opportunities to capitalize on profitable sales growth,
including enhancing relationships with natural product retailers, expanding
our specialty foods operations, and gaining new customers in all of our
channels."
Updates Fiscal 2008 Earnings Guidance
The Company is narrowing its projected net sales guidance for fiscal year
2008, ending August 2, 2008, to $3.3 billion to $3.35 billion, which
represents a 19% to 20% increase in net sales over fiscal 2007. Previously,
the Company had projected net sales for fiscal 2008 to be in the range of
$3.27 billion to $3.35 billion.
In addition, the Company is reaffirming its earnings per share guidance
for fiscal 2008 with a range of $1.12 to $1.14 per diluted share. The
Company's guidance reflects the expectation that the Millbrook acquisition
will be dilutive to earnings by $0.18 to $0.19 per diluted share in fiscal
2008. Finally, the Company is reaffirming its anticipated fiscal 2008 capital
expenditures guidance of approximately $50.0 to $55.0 million. The Company
expects that its capital expenditures in the fourth quarter will be associated
primarily with its previously announced plans to open distribution facilities
in Moreno Valley, California and York, Pennsylvania, which are expected to
begin operations in fiscal 2009.
The Company's guidance is based on a number of assumptions, which are
subject to change and many of which are outside of 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.
ET on May 20, 2008 to review the Company's quarterly results, market trends
and future outlook. The conference call dial-in number is (303) 275-2170. 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 on the Company's website 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." 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 Securities and Exchange Commission on March 6, 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 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 26, April 28, April 26, April 28,
2008 2007 2008 2007
Net sales $886,962 $732,516 $2,454,007 $2,047,494
Cost of sales 721,119 602,573 1,998,021 1,669,912
Gross profit 165,843 129,943 455,986 377,582
Operating expenses 141,018 104,818 387,384 307,126
Impairment on assets held for
sale - - - 756
Total operating expenses 141,018 104,818 387,384 307,882
Operating income 24,825 25,125 68,602 69,700
Other expense (income):
Interest expense 4,186 3,021 12,137 9,282
Interest income (140) (324) (472) (618)
Other, net 80 (39) 154 332
Total other expense 4,126 2,658 11,819 8,996
Income before income
taxes 20,699 22,467 56,783 60,704
Provision for income taxes 7,700 8,762 21,123 23,675
Net income $12,999 $13,705 $35,660 $37,029
Basic per share data:
Net income $0.30 $0.32 $0.84 $0.87
Weighted average basic
shares of common stock 42,727 42,595 42,678 42,396
Diluted per share data:
Net income $0.30 $0.32 $0.83 $0.87
Weighted average diluted
shares of common stock 42,847 42,884 42,858 42,784
UNITED NATURAL FOODS, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands)
April 26, July 28,
2008 2007
ASSETS
Current assets:
Cash and cash equivalents $19,481 $17,010
Accounts receivable, net 185,680 160,329
Notes receivable, trade, net 1,544 1,836
Inventories 413,539 312,377
Prepaid expenses and other current assets 12,296 8,199
Assets held for sale - 5,935
Deferred income taxes 9,474 9,474
Total current assets 642,014 515,160
Property & equipment, net 218,899 185,083
Other assets:
Goodwill 181,692 79,903
Notes receivable, trade, net 2,870 2,647
Intangible assets, net 28,877 8,552
Other 10,258 9,553
Total assets $1,084,610 $800,898
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $295,000 $120,000
Accounts payable 182,097 134,576
Accrued expenses and other current
liabilities 64,880 37,132
Current portion of long-term debt 4,995 6,934
Total current liabilities 546,972 298,642
Long-term debt, excluding current portion 60,231 65,067
Deferred income taxes 1,201 9,555
Other long-term liabilities 10,454 839
Total liabilities 618,858 374,103
Stockholders' equity:
Preferred stock, $0.01 par value, authorized
5,000 shares at April 26, 2008 and July 28,
2007; none issued and outstanding - -
Common stock, $0.01 par value, authorized
100,000 shares; 43,103 issued and 42,874
outstanding shares at April 26, 2008; 43,051
issued and 42,822 outstanding shares at July
28, 2007 431 431
Additional paid-in capital 168,088 163,473
Unallocated shares of Employee Stock
Ownership Plan (1,081) (1,203)
Treasury stock (6,092) (6,092)
Accumulated other comprehensive (loss)
income (1,041) 399
Retained earnings 305,447 269,787
Total stockholders' equity 465,752 426,795
Total liabilities and stockholders' equity $1,084,610 $800,898
UNITED NATURAL FOODS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
Nine months ended
April 26, April 28,
2008 2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $35,660 $37,029
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation and amortization 15,694 13,793
Share-based compensation 3,503 2,956
Provision for doubtful accounts 1,665 1,008
Gain on forgiveness of loan (157) -
Loss on disposals of property & equipment 8 1,999
Impairment on assets held for sale - 756
Changes in assets and liabilities, net of
acquired companies:
Accounts receivable (15,215) (20,808)
Inventory (77,007) (43,391)
Prepaid expenses and other assets (1,080) (5,688)
Notes receivable, trade 69 409
Accounts payable 2,074 25,829
Accrued expenses and other current
liabilities (1,663) (2,029)
Income taxes payable 923 636
Net cash (used in) provided by operating
activities (35,526) 12,499
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of acquired business, net of cash
acquired (107,726) (6,470)
Capital expenditures 32,024) (20,684)
Proceeds from disposals of property and
equipment - 5,448
Other investing activities - (1,042)
Net cash used in investing activities (139,750) (22,748)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under note payable 175,000 (11,004)
Increase in bank overdraft 9,482 6,246
Proceeds from exercise of stock options 848 7,086
Repayments on long-term debt (7,754) (4,438)
Tax benefit from stock option exercises 171 2,853
Principal payments of capital lease obligations - (4)
Proceeds from borrowings of long-term debt - 10,000
Net cash provided by financing activities 177,747 10,739
NET INCREASE IN CASH AND CASH EQUIVALENTS 2,471 490
Cash and cash equivalents at beginning of period 17,010 20,054
Cash and cash equivalents at end of period $19,481 $20,544
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest, net of amounts capitalized $11,431 $9,235
Federal and state income taxes, net of refunds $18,877 $19,771
SOURCE United Natural Foods, Inc.
CONTACT: Mark Shamber, Chief Financial Officer of United Natural Foods,
Inc., 1-860-779-2800; Joseph Calabrese, General Information, Financial
Relations Board, 1-212-827-3772
Web site: http://www.unfi.com
http://www.earnings.com
(UNFI)