PROVIDENCE, R.I., June 2, 2010 /PRNewswire via COMTEX/ --Third Quarter Highlights
- Net sales increased 10.8% to $985.7 million compared with the third quarter of fiscal 2009
- Fiscal 2010 sales guidance raised to a range of 6.5% - 7.5% year over year growth, or $3.68 billion to $3.72 billion
United Natural Foods, Inc. (Nasdaq: UNFI) today reported net sales of $985.7 million for the third quarter of fiscal 2010, ended May 1, 2010, an increase of approximately $96.2 million, or 10.8%, from net sales of $889.5 million recorded in the third quarter of fiscal 2009.
"Our fiscal 2010 third quarter reflected the continuing rebound of the natural and organic industry as our growth accelerated during most of the quarter, resulting in both record revenues and net income," said Steven Spinner, President and Chief Executive Officer. "In addition, now that we have entered our fourth fiscal quarter, we have begun servicing all of our previously announced new customers."
Net income was $19.5 million, or $0.45 per diluted share, for the third quarter of fiscal 2010 compared with net income for the third quarter of fiscal 2009 of $16.8 million, or $0.39 per diluted share.
Gross margin was 18.5% for the third quarter of fiscal 2010, which represents a 46 basis point decline from gross margin of 19.0% for the third quarter of fiscal 2009, primarily due to the continued shift in growth in the Company's customer mix, and moderated inflation.
Operating expenses as a percentage of net sales decreased by 0.5% to 15.1% of net sales, or $148.6 million in the third quarter of fiscal 2010, compared to 15.6% or $138.3 million in the third quarter of fiscal 2009. Operating expenses were positively impacted by the growth in the supernatural and supermarket channels which in general have lower operating expenses, and the continued roll-out of process improvement programs across all UNFI divisions. The Company recorded $0.4 million in expenses during the quarter related to severance for a previously announced separation agreement, and $0.5 million in start-up costs associated with on-boarding of new customers.
In the third quarter of fiscal 2010, the supernatural channel experienced growth of 17.7%, the supermarket channel had growth of 12.2%, and the independent channel showed continued improvement with growth of 6.9%.
Fiscal 2010 Year to Date Summary
Sales for the first nine months of fiscal 2010 were $2.77 billion, a 6.4% increase over the prior fiscal year comparable period. Diluted EPS was $1.17 per share, a 14.7% increase over the first nine months of fiscal 2009.
At 15.3% of net sales, operating expenses were 0.7% lower than the prior fiscal year comparable period. Gross margin was 0.6% less than the first nine months of fiscal 2009, at 18.6% of net sales for the first nine months of fiscal 2010.
"In May, we announced the definitive agreement to acquire the Canadian food distribution assets of the SunOpta Distribution Group business, and we expect the transaction to close later this month," said Mr. Spinner. "This morning, in a separate press release, we announced the extension of our long-term partnership with Whole Foods Market for an additional seven years, resulting in an amended agreement to serve them for the next decade. We are well situated to continue our strategy to increase market share with both new and existing customers, drive operational excellence, operate as one company and further our sustainability and philanthropic causes which will serve as the primary vehicles for our long-term success."
Updates to Fiscal 2010 Guidance
Based on the Company's performance through the first nine months of 2010 and the current outlook for the remainder of the year including the proposed acquisition of certain assets of the SDG business, the Company is raising its net sales guidance for fiscal year 2010, ending July 31, 2010, to a range of $3.68 billion to $3.72 billion, which represents a 6.5% to 7.5% increase in total net sales over fiscal 2009. The Company had previously provided, on December 10, 2009, a net sales guidance target of $3.54 billion to $3.63 billion.
In addition, the Company is narrowing its earnings per share guidance for fiscal 2010 to a range of $1.55 to $1.58 per diluted share. The Company had previously announced earnings per share guidance of $1.48 to $1.58 per diluted share. The Company's revised guidance reflects the impact of improved operating efficiencies and cost controls.
Conference Call & Webcast
The Company's third quarter fiscal 2010 conference call and audio webcast will be held at 10:00 a.m. ET on June 2, 2010. The audio webcast of the conference call will be available to the public, on a listen-only basis, via the Internet at www.fulldisclosure.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. (http://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 - 2010 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 reports on Form 10-Q filed thereafter, and include, but are not limited to, the ability of the Company to consummate the proposed acquisition of the SDG business, the Company's ability to successfully deploy its operational initiatives in the Canadian market, the occurrence of any event, change, or other circumstance that could give rise to the termination of the acquisition agreement entered into by the Company and SunOpta in connection with the Company's proposed acquisition of the SDG business; 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 natural, organic and specialty food and related product 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 Nine months ended
------------------ -----------------
May 1, May 2, May 1, May 2,
2010 2009 2010 2009
---- ---- ---- ----
Net sales $985,694 $889,538 $2,768,679 $2,601,409
Cost of sales 803,287 720,787 2,255,065 2,103,004
------- ------- --------- ---------
Gross profit 182,407 168,751 513,614 498,405
------- ------- ------- -------
Operating expenses 148,565 138,327 424,976 417,082
Total
operating
expenses 148,565 138,327 424,976 417,082
------- ------- ------- -------
Operating
income 33,842 30,424 88,638 81,323
------ ------ ------ ------
Other expense
(income):
Interest expense 1,491 1,723 4,429 8,333
Interest income (89) 11 (199) (331)
Other, net (40) 134 (60) 281
--- --- --- ---
Total other
expense 1,362 1,868 4,170 8,283
----- ----- ----- -----
Income before
income taxes 32,480 28,556 84,468 73,040
Provision for income
taxes 12,992 11,777 33,787 29,393
------ ------ ------ ------
Net income $19,488 $16,779 $50,681 $43,647
======= ======= ======= =======
Basic per share data:
Net income $0.45 $0.39 $1.18 $1.02
===== ===== ===== =====
Weighted average
basic shares of
common stock 43,245 42,871 43,085 42,827
====== ====== ====== ======
Diluted per share
data:
Net income $0.45 $0.39 $1.17 $1.02
===== ===== ===== =====
Weighted average
diluted shares of
common stock 43,536 42,943 43,328 42,939
====== ====== ====== ======
UNITED NATURAL FOODS, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands, except per share data)
May 1, August 1,
------ ---------
2010 2009
---- ----
ASSETS
------
Current assets:
Cash and cash equivalents $9,683 $10,269
Accounts receivable, net 210,957 179,455
Notes receivable, trade, net 3,064 1,799
Inventories 438,752 366,611
Deferred income taxes 18,074 18,074
Prepaid expenses and other current
assets 12,102 16,423
Total current assets 692,632 592,631
Property and equipment, net 254,603 242,051
Other assets:
Goodwill 163,346 164,333
Notes receivable, trade, net 1,154 2,176
Intangible assets, net 37,484 38,358
Other 18,311 19,001
------ ------
Total assets $1,167,530 $1,058,550
========== ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY
-----------------------------
Current liabilities:
Notes payable $187,000 $200,000
Accounts payable 198,623 155,211
Accrued expenses and other current
liabilities 85,094 63,347
Current portion of long-term debt 5,029 5,020
Total current liabilities 475,746 423,578
Long-term debt, excluding current
portion 49,692 53,858
Deferred income taxes 13,075 12,297
Other long-term liabilities 24,191 24,345
------ ------
Total liabilities 562,704 514,078
------- -------
Stockholders' equity:
Preferred stock, $0.01 par value,
authorized 5,000 shares at May 1,
2010 and August 1, 2009; none
issued and outstanding - -
Common stock, $0.01 par value,
authorized 100,000 shares; 43,496
issued and 43,268 outstanding
shares at May 1, 2010; 43,237
issued and 43,008 outstanding
shares at August 1, 2009 435 432
Additional paid-in capital 184,574 175,182
Unallocated shares of Employee
Stock Ownership Plan (754) (877)
Treasury stock (6,092) (6,092)
Accumulated other comprehensive
loss (1,468) (1,623)
Retained earnings 428,131 377,450
------- -------
Total stockholders' equity 604,826 544,472
------- -------
Total liabilities and stockholders'
equity $1,167,530 $1,058,550
========== ==========
UNITED NATURAL FOODS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
Nine months ended
-----------------
May 1, May 2,
------ ------
2010 2009
---- ----
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $50,681 $43,647
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 20,219 20,329
Share-based compensation 6,517 4,607
Provision for doubtful accounts 781 3,526
Excess tax benefits from share-
based payment arrangements (399) (133)
(Gain) loss on disposals of property
and equipment (3) 290
Changes in assets and liabilities,
net of acquisitions:
Accounts receivable (32,564) (20,760)
Inventories (72,141) (21,314)
Prepaid expenses and other assets 4,458 (1,002)
Notes receivable, trade 38 369
Accounts payable 31,715 (1,195)
Accrued expenses and other current
liabilities 23,913 12,327
Net cash provided by operating
activities 33,215 40,691
------ ------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures (30,912) (25,421)
Purchases of acquired businesses,
net of cash acquired (320) (4,468)
Proceeds from disposals of property
and equipment 20 -
Net cash used in investing
activities (31,212) (29,889)
------- -------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Net repayments under note payable (13,000) (39,477)
Increase in bank overdraft 11,697 17,152
Repayments of long-term debt (4,157) (3,726)
Payments on life insurance policy
loans - (3,072)
Capitalized debt issuance costs (7) (647)
Proceeds from exercise of stock
options 3,751 613
Payment of employee restricted stock
tax withholdings (1,272) (425)
Excess tax benefits from share based
payment arrangements 399 133
Net cash used in financing
activities (2,589) (29,449)
------ -------
NET DECREASE IN CASH AND CASH
EQUIVALENTS (586) (18,647)
Cash and cash equivalents at
beginning of period 10,269 25,333
Cash and cash equivalents at end of
period $9,683 $6,686
====== ======
Supplemental disclosures of cash
flow information:
--------------------------------
Cash paid during the period for:
Interest, net of amounts capitalized $3,559 $7,713
====== ======
Federal and state income taxes, net
of refunds $23,025 $29,734
======= =======
SOURCE United Natural Foods, Inc.