AN INCREASE OF 13.9% OVER THE PRIOR YEAR PERIOD
- Net sales increased 6.0% to $898 million over net sales for the second quarter of fiscal 2009
- Net income increased 15% to $15.7 million versus prior year comparable quarter
First Half Fiscal 2010 Highlights
- Diluted EPS increased 14.3% to $0.72 compared with $0.63 in comparable fiscal 2009 period
- Net sales increased 4.2% to $1.78 billion
- Net Income increased 16.1% versus prior year to $31.2 million
United Natural Foods, Inc. (Nasdaq: UNFI) today reported that net income for the second quarter of fiscal 2010 ended January 30, 2010 increased $2.1 million, or 15.0%, to $15.7 million, or $0.36 per diluted share, from $13.6 million, or $0.32 per diluted share, for the second quarter of fiscal 2009. Net sales for the second quarter of fiscal 2010 were $898.2 million, an increase of 6.0%, or $50.6 million, from net sales of $847.6 million recorded in the second quarter of fiscal 2009.
"The second quarter of fiscal year 2010 marks another period of solid revenues and profitability for UNFI," said Steven Spinner, President and Chief Executive Officer. "Improving sales trends have provided us with a solid level of top-line growth as we continue to work to gain market share and incremental business. UNFI has been awarded approximately $100 million in annual new business during the last six months, which is expected to phase in throughout fiscal 2010. As we begin the second half of fiscal 2010, I look forward to continued revenue growth throughout our company."
Gross margin was 18.5% for the second quarter of fiscal 2010, which represents a 0.6% decline from the gross margin of 19.1% for the second quarter of fiscal 2009. The lower gross margin compared to the prior year's comparable period was largely due to a combination of lower fuel surcharge revenues, a shift in customer mix and moderated inflation.
Operating expenses as a percentage of net sales decreased by 0.6% during the second quarter of fiscal 2010 when compared to the second quarter of 2009 to 15.5% of net sales, or $139.0 million versus 16.1% in the prior year. Operating expenses were positively impacted by lower fuel costs and the continued implementation of expense control programs across all UNFI divisions. The Company recorded $0.7 million in expenses during the quarter related to severance for a previously announced separation agreement and start-up costs associated with on-boarding of new customers.
First Half 2010 Summary
Sales for the first half of 2010 were $1.78 billion, a 4.2% increase over the prior fiscal year comparable period. Diluted EPS was $0.72 per share, a 14.3% increase over prior year. At 15.5% of net sales, operating expenses were 78 basis points lower than prior year. Gross margin was 68 basis points less than prior year, at 18.6% of net sales for the first six months of fiscal 2010.
"UNFI will continue to enhance its national leadership position in the natural, organic and specialty foods channel," said Mr. Spinner. "Our strategy to increase market share, drive operational excellence, operate as one company and further our sustainability and philanthropic causes will serve as the primary vehicle for success over the long term."
2010 Second Quarter Conference Call Webcast
The Company's second quarter fiscal 2010 conference call and audio webcast will be held at 10:00 a.m. EST on March 2, 2010. 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 Investors section of the Company's website at www.unfi.com. 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. (www.unfi.com) carries and distributes more than 60,000 products to more than 17,000 customer locations 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, 2007 and 2009 as one of its "Most Admired Companies," winner of the Supermarket News 2008 Sustainability Excellence Award, and recognized by the Nutrition Business Journal for its 2009 Environment and Sustainability Award.
Financial Tables Follow
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 and are based on current expectations and management estimates; actual results may differ materially. The risks and uncertainties which could impact these statements are described in the Company's filings under the Securities Exchange Act of 1934, as amended, including its annual report on Form 10-K filed with the Securities and Exchange Commission on September 30, 2009 and its quarterly report on Form 10-Q filed on December 10, 2009, and include, but are not limited to, the Company's dependence on principal customers; the Company's sensitivity to general economic conditions, including the current economic environment, changes in disposable income levels and consumer spending trends; increased fuel costs; the Company's sensitivity to inflationary pressures; the relatively low margins and economic sensitivity of the Company's business; the ability to identify and successfully complete acquisitions of other foodservice distributors; and management's allocation of capital and the timing of capital expenditures. 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 are based on a number of assumptions, many of which are outside the Company's control and 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 Six months ended
------------------ ----------------
January January January January
30, 2010 31, 2009 30, 2010 31, 2009
-------- -------- -------- --------
Net sales $898,217 $847,635 $1,782,985 $1,711,871
Cost of sales 731,611 685,570 1,451,778 1,382,217
------- ------- --------- ---------
Gross profit 166,606 162,065 331,207 329,654
------- ------- ------- -------
Operating expenses 139,001 136,212 276,411 278,755
------- ------- ------- -------
Total operating
expenses 139,001 136,212 276,411 278,755
------- ------- ------- -------
Operating income 27,605 25,853 54,796 50,899
------ ------ ------ ------
Other expense
(income):
Interest expense 1,557 3,200 2,938 6,611
Interest income (41) (92) (110) (343)
Other, net (10) 196 (19) 147
--- --- --- ---
Total other expense 1,506 3,304 2,809 6,415
----- ----- ----- -----
Income before
income taxes 26,099 22,549 51,987 44,484
Provision for income taxes 10,439 8,929 20,795 17,616
------ ----- ------ ------
Net income $15,660 $13,620 $31,192 $26,868
======= ======= ======= =======
Basic per share data:
Net income $0.36 $0.32 $0.73 $0.63
===== ===== ===== =====
Weighted average
basic shares of
common stock 43,024 42,821 43,003 42,803
====== ====== ====== ======
Diluted per share data:
Net income $0.36 $0.32 $0.72 $0.63
===== ===== ===== =====
Weighted average
diluted shares of
common stock 43,315 42,910 43,266 42,931
====== ====== ====== ======
UNITED NATURAL FOODS, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands, except per share data)
January 30, August 1,
2010 2009
---- ----
ASSETS
------
Current assets:
Cash and cash equivalents $8,046 $10,269
Accounts receivable, net 198,166 179,455
Notes receivable, trade, net 3,066 1,799
Inventories 393,596 366,611
Prepaid expenses and other current assets 13,800 16,423
Deferred income taxes 18,074 18,074
------ ------
Total current assets 634,748 592,631
Property and equipment, net 245,800 242,051
Other assets:
Goodwill 164,333 164,333
Notes receivable, trade, net 741 2,176
Intangible assets, net 37,882 38,358
Other 18,344 19,001
------ ------
Total assets $1,101,848 $1,058,550
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Notes payable $185,775 $200,000
Accounts payable 172,323 155,211
Accrued expenses and other current liabilities 69,119 63,347
Current portion of long-term debt 5,026 5,020
----- -----
Total current liabilities 432,243 423,578
Long-term debt, excluding current portion 51,344 53,858
Deferred income taxes 12,325 12,297
Other long-term liabilities 25,366 24,345
------ ------
Total liabilities 521,278 514,078
------- -------
Stockholders' equity:
Preferred stock, $0.01 par value, authorized 5,000
shares at January 30, 2010 and August 1, 2009; none
issued and outstanding - -
Common stock, $0.01 par value, authorized 100,000
shares; 43,421 issued and 43,192 outstanding shares
at January 30, 2010; 43,237 issued and 43,008
outstanding shares at August 1, 2009 434 432
Additional paid-in capital 179,979 175,182
Unallocated shares of Employee Stock Ownership
Plan (795) (877)
Treasury stock (6,092) (6,092)
Accumulated other comprehensive loss (1,598) (1,623)
Retained earnings 408,642 377,450
------- -------
Total stockholders' equity 580,570 544,472
------- -------
Total liabilities and stockholders' equity $1,101,848 $1,058,550
========== ==========
UNITED NATURAL FOODS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
Six months ended
----------------
January 30, January 31,
2010 2009
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $31,192 $26,868
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 13,356 13,288
Share-based compensation 3,918 3,312
Provision for doubtful accounts 515 1,776
Excess tax benefits from share-based payment
arrangements (301) (133)
(Gain) loss on disposals of property
and equipment (13) 68
Changes in assets and liabilities, net of acquired
companies:
Accounts receivable (19,496) (15,102)
Inventories (26,985) (9,666)
Prepaid expenses and other assets 2,748 (3,392)
Notes receivable, trade 438 113
Accounts payable 13,621 (8,945)
Accrued expenses and other current liabilities 7,147 8,370
----- -----
Net cash provided by operating activities 26,140 16,557
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (15,822) (17,012)
Purchases of acquired businesses, net of cash
acquired (194) (4,301)
Proceeds from disposals of property and equipment 21 -
--- ---
Net cash used in investing activities (15,995) (21,313)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (repayments) borrowings under note payable (14,225) 8,950
Increase (decrease) in bank overdraft 3,491 (27)
Repayments of long-term debt (2,508) (2,075)
Proceeds from exercise of stock options 1,803 566
Payment of employee restricted stock tax
withholdings (1,223) (416)
Excess tax benefits from share-based payment
arrangements 301 133
Capitalized debt issuance costs (7) -
Payments on life insurance policy loans - (3,072)
--- ------
Net cash (used in) provided by financing
activities (12,368) 4,059
------- -----
NET DECREASE IN CASH AND CASH EQUIVALENTS (2,223) (697)
Cash and cash equivalents at beginning of period 10,269 25,333
------ ------
Cash and cash equivalents at end of period $8,046 $24,636
====== =======
Supplemental disclosures of cash flow information:
--------------------------------------------------
Cash paid during the period for:
Interest, net of amounts capitalized $2,437 $6,216
====== ======
Federal and state income taxes, net of refunds $15,554 $17,621
======= =======
SOURCE United Natural Foods, Inc.