Q1 Fiscal 2014 Diluted EPS Increased 30.2% to $0.56 from $0.43 for Q1
Fiscal 2013
Q1 Fiscal 2014 Diluted EPS Increased 21.7% over Q1 Fiscal 2013
Adjusted Diluted EPS of $0.46
PROVIDENCE, R.I.--(BUSINESS WIRE)--Dec. 3, 2013--
United Natural Foods, Inc. (Nasdaq: UNFI) (the "Company") today reported
financial results for the first quarter of fiscal 2014 ended November 2,
2013.
First Quarter Fiscal 2014 Highlights
-
Net sales increased 13.6%, or $192.0 million, to $1.6 billion compared
to $1.4 billion in the same period last fiscal year
-
Diluted EPS was $0.56 for the first quarter of fiscal 2014, an
increase of 30.2% from $0.43 for the same period last fiscal year.
When adjusting the prior year diluted EPS for certain items as
detailed below, diluted EPS increased 21.7% from $0.46 for the same
period last fiscal year.
"Continued demand and UNFI's focus on its core strategies delivered
strong results during the first quarter of fiscal 2014," said Steven
Spinner, President and Chief Executive Officer.
Net sales for the first quarter of fiscal 2014 increased 13.6% to $1.6
billion from $1.4 billion in the first quarter of fiscal 2013. Gross
margin was 16.9% for the first quarter of fiscal 2014, a 20 basis point
increase from gross margin of 16.7% for the first quarter of fiscal
2013. Compared to the fourth quarter of fiscal 2013, gross margin
decreased 39 basis points primarily due to the continued shift in
customer mix to the conventional supermarket and supernatural channels.
Total operating expenses were 13.9% as a percentage of net sales for the
first quarter of fiscal 2014, a decrease of 21 basis points compared
with the first quarter of fiscal 2013. Total operating expenses
increased $23.8 million, or 11.9%, to $223.2 million in the first
quarter of fiscal 2014 as compared to $199.4 million in the first
quarter of fiscal 2013, primarily due to higher sales volume. Total
operating expenses for the first quarter of fiscal 2013 included $1.6
million of expenses related to the termination of a licensing agreement
and the write-off of the associated intangible asset. Excluding these
expenses from the first quarter of fiscal 2013, total operating expenses
for the first quarter of fiscal 2014 increased 12.8%, or $25.4 million,
compared to the first quarter of fiscal 2013. Total operating expenses
in the first quarter of fiscal 2013 also included $1.0 million of
expenses related to the labor action at the Company's Auburn, Washington
facility.
On a GAAP basis, operating income increased 31.3%, or $11.5 million, to
$48.0 million for the first quarter of fiscal 2014 compared to $36.6
million for the first quarter of fiscal 2013. Operating income as a
percentage of net sales for the first quarter of fiscal 2014 increased
41 basis points to 3.0% compared to the first quarter of fiscal 2013.
Adjusting operating income for the first quarter of fiscal 2013 to
exclude expenses associated with the write-off of the intangible asset,
operating income for the first quarter of fiscal 2014 increased 25.7%,
or $9.8 million, from $38.2 million for the first quarter of fiscal
2013. Operating income as a percentage of net sales increased 29 basis
points from adjusted operating income as a percentage of net sales of
2.7% for the first quarter of fiscal 2013.
GAAP net income for the first quarter of fiscal 2014 increased $6.2
million, or 28.9%, to $27.8 million, or $0.56 per diluted share, from
$21.5 million, or $0.43 per diluted share, for the first quarter of
fiscal 2013. Other expense, net for the first quarter of fiscal 2013
included $4.9 million in expense associated with an agreement to settle
a multi-state unclaimed property audit. When adjusting net income for
the first quarter of fiscal 2013 for this expense and the expenses
associated with the write-off of the intangible asset, partially offset
by a net discrete tax benefit of $2.7 million primarily related to the
reversal of reserves for uncertain tax positions, net income for the
first quarter of fiscal 2014 increased $5.0 million, or 21.8%, from
$22.8 million, or $0.46 per diluted share, for the first quarter of
fiscal 2013.
"As we grow into new facilities, channels and geographies, UNFI is well
positioned to continue its growth," concluded Mr. Spinner.
Affirmed Fiscal 2014 Guidance
Based on UNFI's performance to date and the current outlook for the
remainder of fiscal 2014, UNFI is affirming its previous guidance for
fiscal 2014 provided on September 12, 2013. For fiscal 2014, ending
August 2, 2014, which is a 52-week fiscal year compared with the 53-week
fiscal 2013, the Company expects net sales in the range of approximately
$6.65 to $6.78 billion, an increase of approximately 9.7% to 11.8% over
fiscal 2013. Adjusting for the 53rd week in fiscal 2013,
sales growth for fiscal 2014 is expected in the range of approximately
11.8% to 14.0%. The Company estimates GAAP earnings per diluted share
for fiscal 2014 in the range of approximately $2.40 to $2.50 per share,
an increase of approximately 10.1% to 14.7% over fiscal 2013 GAAP
earnings per diluted share of $2.18.
Conference Call & Webcast
The Company's first quarter 2014 conference call and audio webcast will
be held today, Tuesday December 3, 2013 at 5:00 p.m. EST. The audio
webcast of the conference call will be available to the public, on a
listen-only basis, via the Internet 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 65,000 products to more than 31,000
customer locations throughout the United States and Canada. 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 Fortune in 2006 - 2010 as one of its "Most Admired Companies"
and in 2012 as one of its "Most Admired American Companies", winner of
the Supermarket News 2008 Sustainability Excellence Award, recognized by
the Nutrition Business Journal for its 2009 Environment and
Sustainability Award and chosen by Food Logistics Magazine as one of its
2012 Top 20 Green Providers.
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 ("SEC") on
October 1, 2013 and other filings the Company makes with the SEC, 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; the Company's ability to reduce its
expenses in amounts sufficient to offset its increased focus on sales to
conventional supermarkets and the resulting lower gross margins on the
sales; the Company's reliance on the continued growth in sales of
natural and organic foods and non-food products in comparison to
conventional products; the Company's ability to timely and successfully
deploy its new warehouse management system throughout its distribution
centers; increased fuel costs; the Company's sensitivity to inflationary
and deflationary pressures; the relatively low margins and economic
sensitivity of the Company's business; the potential for disruptions in
the Company's supply chain by circumstances beyond its control; the risk
of interruption of supplies due to lack of long-term contracts, severe
weather, work stoppages or otherwise; the ability to identify and
successfully complete acquisitions of other natural, organic and
specialty food and non-food products 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.
Non-GAAP Financial Measures: To supplement its financial
statements presented on a generally accepted accounting principles
(“GAAP”) basis, the Company has included in this press release non-GAAP
financial measures (including operating expenses, operating income, net
income and earnings per diluted share) in each case excluding certain
unusual expenses as described in more detail within this press release.
The reconciliations of these non-GAAP financial measures to the
comparable GAAP financial measures are presented in the tables appearing
below labeled “Condensed Consolidated Statements of Income with
Adjustments” for the three months ended October 27, 2012. The
presentation of these non-GAAP financial measures is not intended to be
considered in isolation or as a substitute for any measure prepared in
accordance with GAAP. The Company believes that presenting its operating
expenses, operating income, net income and earnings per diluted share
for the applicable periods excluding these expenses facilitates making
period-to-period comparisons and is a meaningful indication of its
operating performance. The Company’s management utilizes this non-GAAP
financial information to compare the Company’s operating performance
during the 2013 fiscal year versus the comparable periods in the 2014
fiscal year and to internally prepared projections.
|
|
|
UNITED NATURAL FOODS, INC.
|
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited)
|
|
(In thousands, except per share data amounts)
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
November 2,
2013
|
|
|
October 27,
2012
|
|
Net sales
|
|
|
$
|
1,602,011
|
|
|
|
$
|
1,410,037
|
|
|
Cost of sales
|
|
|
1,330,835
|
|
|
|
1,174,084
|
|
|
Gross profit
|
|
|
271,176
|
|
|
|
235,953
|
|
|
Operating expenses
|
|
|
223,150
|
|
|
|
197,758
|
|
|
Restructuring and asset impairment expenses
|
|
|
—
|
|
|
|
1,629
|
|
|
Total operating expenses
|
|
|
223,150
|
|
|
|
199,387
|
|
|
Operating income
|
|
|
48,026
|
|
|
|
36,566
|
|
|
Other expense (income):
|
|
|
|
|
|
|
|
Interest expense
|
|
|
1,854
|
|
|
|
978
|
|
|
Interest income
|
|
|
(120
|
)
|
|
|
(173
|
)
|
|
Other, net
|
|
|
19
|
|
|
|
4,781
|
|
|
Total other expense, net
|
|
|
1,753
|
|
|
|
5,586
|
|
|
Income before income taxes
|
|
|
46,273
|
|
|
|
30,980
|
|
|
Provision for income taxes
|
|
|
18,509
|
|
|
|
9,444
|
|
|
Net income
|
|
|
$
|
27,764
|
|
|
|
$
|
21,536
|
|
|
Basic per share data:
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
0.56
|
|
|
|
$
|
0.44
|
|
|
Weighted average basic shares of common stock outstanding
|
|
|
49,439
|
|
|
|
49,142
|
|
|
Diluted per share data:
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
0.56
|
|
|
|
$
|
0.43
|
|
|
Weighted average diluted shares of common stock outstanding
|
|
|
49,735
|
|
|
|
49,585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNITED NATURAL FOODS, INC.
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
|
|
(In thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
November 2,
2013
|
|
|
August 3,
2013
|
|
ASSETS
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
9,357
|
|
|
|
$
|
11,111
|
|
|
Accounts receivable, net
|
|
398,210
|
|
|
|
339,590
|
|
|
Inventories
|
|
838,391
|
|
|
|
702,161
|
|
|
Prepaid expenses and other current assets
|
|
36,192
|
|
|
|
38,534
|
|
|
Deferred income taxes
|
|
23,822
|
|
|
|
23,822
|
|
|
Total current assets
|
|
1,305,972
|
|
|
|
1,115,218
|
|
|
Property & equipment, net
|
|
362,298
|
|
|
|
338,594
|
|
|
Goodwill & intangible assets, net
|
|
269,020
|
|
|
|
251,414
|
|
|
Other assets
|
|
24,625
|
|
|
|
24,682
|
|
|
Total assets
|
|
$
|
1,961,915
|
|
|
|
$
|
1,729,908
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
394,668
|
|
|
|
$
|
283,851
|
|
|
Accrued expenses and other current liabilities
|
|
102,537
|
|
|
|
113,397
|
|
|
Current portion of long-term debt
|
|
1,226
|
|
|
|
1,019
|
|
|
Total current liabilities
|
|
498,431
|
|
|
|
398,267
|
|
|
Notes payable
|
|
228,099
|
|
|
|
130,594
|
|
|
Long-term debt, excluding current portion
|
|
33,414
|
|
|
|
33,091
|
|
|
Deferred income taxes
|
|
41,474
|
|
|
|
41,474
|
|
|
Other long-term liabilities
|
|
27,943
|
|
|
|
27,336
|
|
|
Total liabilities
|
|
829,361
|
|
|
|
630,762
|
|
|
Stockholders’ equity:
|
|
|
|
|
|
|
Preferred stock, $0.01 par value, authorized 5,000 shares; none
issued or outstanding
|
|
—
|
|
|
|
—
|
|
|
Common stock, $0.01 par value, authorized 100,000 shares; 49,609
issued and outstanding shares at November 2, 2013; 49,330 issued and
outstanding shares at August 3, 2013
|
|
496
|
|
|
|
493
|
|
|
Additional paid-in capital
|
|
386,045
|
|
|
|
380,109
|
|
|
Unallocated shares of Employee Stock Ownership Plan
|
|
(43
|
)
|
|
|
(39
|
)
|
|
Accumulated other comprehensive loss
|
|
(1,383
|
)
|
|
|
(1,092
|
)
|
|
Retained earnings
|
|
747,439
|
|
|
|
719,675
|
|
|
Total stockholders’ equity
|
|
1,132,554
|
|
|
|
1,099,146
|
|
|
Total liabilities and stockholders’ equity
|
|
$
|
1,961,915
|
|
|
|
$
|
1,729,908
|
|
|
|
|
|
UNITED NATURAL FOODS, INC.
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
November 2,
2013
|
|
October 27,
2012
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net income
|
|
$
|
27,764
|
|
|
$
|
21,536
|
|
|
Adjustments to reconcile net income to net cash used in operating
activities:
|
|
|
|
|
|
|
Depreciation and amortization
|
|
11,238
|
|
|
10,119
|
|
|
Share-based compensation
|
|
5,478
|
|
|
4,714
|
|
|
Gain on disposals of property and equipment
|
|
(67
|
)
|
|
(19
|
)
|
|
Excess tax benefits from share-based payment arrangements
|
|
(2,332
|
)
|
|
(30
|
)
|
|
Impairment of intangible asset
|
|
—
|
|
|
1,629
|
|
|
Unrealized loss on foreign exchange
|
|
209
|
|
|
122
|
|
|
Provision for doubtful accounts
|
|
933
|
|
|
691
|
|
|
Non-cash interest expense
|
|
616
|
|
|
—
|
|
|
Changes in assets and liabilities, net of acquired businesses:
|
|
|
|
|
|
|
Accounts receivable
|
|
(55,678
|
)
|
|
(30,216
|
)
|
|
Inventories
|
|
(131,765
|
)
|
|
(140,067
|
)
|
|
Prepaid expenses and other assets
|
|
2,367
|
|
|
(1,463
|
)
|
|
Accounts payable
|
|
100,198
|
|
|
76,165
|
|
|
Accrued expenses and other liabilities
|
|
(8,625
|
)
|
|
1,360
|
|
|
Net cash used in operating activities
|
|
(49,664
|
)
|
|
(55,459
|
)
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
Capital expenditures
|
|
(33,247
|
)
|
|
(4,573
|
)
|
|
Purchases of acquired businesses, net of cash acquired
|
|
(22,973
|
)
|
|
(9,235
|
)
|
|
Proceeds from disposals of property and equipment
|
|
99
|
|
|
20
|
|
|
Net cash used in investing activities
|
|
(56,121
|
)
|
|
(13,788
|
)
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
Repayments of long-term debt
|
|
(86
|
)
|
|
(100
|
)
|
|
Proceeds from borrowings under revolving credit line
|
|
192,715
|
|
|
217,477
|
|
|
Repayments of borrowings under revolving credit line
|
|
(95,210
|
)
|
|
(183,441
|
)
|
|
Increase in bank overdraft
|
|
6,347
|
|
|
30,352
|
|
|
Proceeds from exercise of stock options
|
|
1,551
|
|
|
1,165
|
|
|
Payment of employee restricted stock tax withholdings
|
|
(3,422
|
)
|
|
(3,217
|
)
|
|
Excess tax benefits from share-based payment arrangements
|
|
2,332
|
|
|
30
|
|
|
Capitalized debt issuance costs
|
|
—
|
|
|
(7
|
)
|
|
Net cash provided by financing activities
|
|
104,227
|
|
|
62,259
|
|
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
|
(196
|
)
|
|
(195
|
)
|
|
NET DECREASE IN CASH AND CASH EQUIVALENTS
|
|
(1,754
|
)
|
|
(7,183
|
)
|
|
Cash and cash equivalents at beginning of period
|
|
11,111
|
|
|
16,122
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
9,357
|
|
|
$
|
8,939
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
1,074
|
|
|
$
|
932
|
|
|
Cash paid for federal and state income taxes, net of refunds
|
|
$
|
5,989
|
|
|
$
|
4,113
|
|
|
|
|
UNITED NATURAL FOODS, INC.
|
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME WITH ADJUSTMENTS
|
|
Reconciliation of GAAP Results to Non-GAAP Presentation
(Unaudited)
|
|
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
Three months ended October 27, 2012
|
|
|
|
|
GAAP
|
|
|
Adjustments
|
|
|
Adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
1,410,037
|
|
100.00
|
%
|
|
|
$
|
—
|
|
|
|
$
|
1,410,037
|
|
100.00
|
%
|
|
|
Cost of sales
|
|
1,174,084
|
|
83.27
|
%
|
|
|
—
|
|
|
|
1,174,084
|
|
83.27
|
%
|
|
|
Gross profit
|
|
235,953
|
|
16.73
|
%
|
|
|
—
|
|
|
|
235,953
|
|
16.73
|
%
|
|
|
Operating expenses
|
|
197,758
|
|
14.03
|
%
|
|
|
—
|
|
|
|
197,758
|
|
14.03
|
%
|
|
|
Restructuring and asset impairment expenses
|
|
1,629
|
|
0.12
|
%
|
|
|
(1,629
|
)
|
(a)
|
|
—
|
|
—
|
%
|
|
|
Total operating expenses
|
|
199,387
|
|
14.14
|
%
|
*
|
|
(1,629
|
)
|
|
|
197,758
|
|
14.03
|
%
|
|
|
Operating income
|
|
36,566
|
|
2.59
|
%
|
|
|
1,629
|
|
|
|
38,195
|
|
2.71
|
%
|
*
|
|
Other expense (income):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
978
|
|
0.07
|
%
|
|
|
—
|
|
|
|
978
|
|
0.07
|
%
|
|
|
Interest income
|
|
(173
|
)
|
(0.01
|
)%
|
|
|
—
|
|
|
|
(173
|
)
|
(0.01
|
)%
|
|
|
Other, net
|
|
4,781
|
|
0.34
|
%
|
|
|
(4,900
|
)
|
(b)
|
|
(119
|
)
|
(0.01
|
)%
|
|
|
Total other expense, net
|
|
5,586
|
|
0.40
|
%
|
|
|
(4,900
|
)
|
|
|
686
|
|
0.05
|
%
|
|
|
Income before income taxes
|
|
30,980
|
|
2.20
|
%
|
*
|
|
6,529
|
|
|
|
37,509
|
|
2.66
|
%
|
|
|
Provision for income taxes
|
|
9,444
|
|
0.67
|
%
|
|
|
5,274
|
|
(c)
|
|
14,718
|
|
1.04
|
%
|
|
|
Net income
|
|
$
|
21,536
|
|
1.53
|
%
|
|
|
$
|
1,255
|
|
|
|
$
|
22,791
|
|
1.62
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic per share data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
0.44
|
|
|
|
|
$
|
0.03
|
|
|
|
$
|
0.46
|
|
*
|
|
|
Weighted average basic shares of common stock outstanding
|
|
49,142
|
|
|
|
|
—
|
|
|
|
49,142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted per share data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
0.43
|
|
|
|
|
$
|
0.03
|
|
|
|
$
|
0.46
|
|
|
|
|
Weighted average diluted shares of common stock outstanding
|
|
49,585
|
|
|
|
|
—
|
|
|
|
49,585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Total reflects rounding
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Represents expense incurred as a result of the termination of a
long-term licensing agreement and the write-off of the associated
intangible asset.
|
|
(b) Represents expense incurred in connection with agreement to
settle multi-state unclaimed property audit.
|
|
(c) Represents the additional tax expense related to adjustments for
the expenses above, as well as a discrete tax benefit of $2.7
million primarily related to the reversal of reserves for uncertain
tax positions.
|
Source: United Natural Foods, Inc.
AT THE COMPANY:
United Natural Foods, Inc.
Mark
Shamber
Chief Financial Officer
(401) 528-8634
or
ICR
Katie
Turner
General Information
(646) 277-1228