United Natural Foods, Inc. Announces First Quarter Fiscal 2012 Results Q1 FISCAL 2012 NET SALES INCREASED BY 15.6% OVER Q1 FISCAL 2011 TO $1.2 BILLION

PROVIDENCE, R.I., Nov. 30, 2011 /PRNewswire/ -- 

Highlights

  • Net income of $15.2 million for the first quarter of fiscal 2012, or $19.4 million excluding restructuring and onboarding expenses
  • Diluted EPS of $0.31 for the first quarter of fiscal 2012, or $0.40 excluding restructuring and onboarding expenses

United Natural Foods, Inc. (Nasdaq: UNFI) today reported that net sales for the first quarter of fiscal 2012 ended October 29, 2011 totaled $1.217 billion, an increase of 15.6%, or $164.5 million, over  the $1.053 billion in net sales recorded in the first quarter of fiscal 2011. Excluding the impact of sales related to the Company's prior year acquisition of certain inventory and distribution assets of Whole Foods Market, Inc., which generated incremental net sales of approximately $25.4 million during the first quarter of fiscal 2012, first quarter fiscal 2012 net sales increased by 13.2%, or $139.1 million, to $993.6 million

"Sales growth in the first quarter of fiscal 2012 was robust as we geared up for what we believe should be a strong holiday season.  We also successfully rolled out service to our newest national customer while maintaining high service levels to our broad customer base," said Steven Spinner, President and Chief Executive Officer.

Gross margin was 17.8% for the first quarter of fiscal 2012, which represents a 44 basis point decline from gross margin of 18.3% for the first quarter of fiscal 2011.  Gross margin for the first quarter of fiscal 2012 was negatively affected by the continued shift in customer mix, and approximately $1.0 million in incremental inventory write-offs of products in certain categories. The Company's gross margin during the first quarter of fiscal 2012 was also negatively affected by higher freight and service costs incurred, in part, due to the initial period of distribution to its newest national customer.

Total operating expenses increased by $28.4 million, or 17.4%, to $191.1 million, compared to the first quarter of fiscal 2011, which had operating expenses of $162.7 million.  Operating expenses for the first quarter of fiscal 2012 included expenses of approximately $6.9 million related to the previously announced restructuring and divestiture of the Company's conventional non-foods and general merchandise lines of business and onboarding expenses related to the Company's newest national customer.  Excluding these expenses, operating expenses as a percentage of net sales were 15.1% for the first quarter of fiscal 2012, a decrease of 33 basis points compared with the first quarter of fiscal 2011. Total operating expenses including the restructuring and onboarding expenses were 15.7% as a percentage of net sales for the first quarter of fiscal 2012, an increase of 24 basis points compared to the first quarter of fiscal 2011.  Share-based compensation expense increased $1.3 million to $3.9 million in the first quarter of fiscal 2012, compared to $2.7 million in the first quarter of fiscal 2011. The majority of this increase was due to a lower than expected forfeiture rate on restricted stock units that vested during the quarter.       

Operating income as a percentage of net sales decreased to 2.1% for the first quarter of fiscal 2012 from 2.8% for the first quarter of fiscal 2011.  Excluding the approximately $6.9 million of restructuring and onboarding expenses noted above, operating income as a percentage of net sales was 2.7% for the first quarter of fiscal 2012.  Net income for the first quarter of fiscal 2012 decreased by $2.2 million, or 12.9%, to $15.2 million, or $0.31 per diluted share, from $17.4 million, or $0.39 per diluted share, for the first quarter of fiscal 2011.  Excluding the restructuring and onboarding expenses, earnings per diluted share were $0.40 for the first quarter of fiscal 2012.  In addition, earnings per diluted share compared to the prior year comparable quarter was affected by the dilutive impact from the Company's equity offering completed late in the first quarter of fiscal 2011. 

"We have continued to demonstrate our ability to build market share across channels through new customers and existing customer expansion," added Mr. Spinner. "Looking forward, we'll have an enhanced focus toward driving efficiencies and expense control as we continue to adapt to higher growth in lower margin customers."

The following table details the amounts and effect of the restructuring and onboarding expenses and the reconciliation of net income, excluding the restructuring and onboarding expenses (Non-GAAP basis), to net income, including the restructuring and onboarding expenses (GAAP basis) for the quarter ended October 29, 2011:

 

Quarter Ended October 29, 2011

 

(in thousands, except per share data)

 

Pretax

Income

 

 

Net of Tax

 

Per diluted

share

 

 

 

 

Income, excluding restructuring and onboarding expenses:

$31,933

$19,352

$0.40

 

 

 

 

Special items – Income/(Expense):

 

 

 

Restructuring expenses related to divestiture

(5,345)

(3,239)

(0.07)

Onboarding expenses related to national customer

(1,577)

(956)

(0.02)

 

 

 

 

Income, including restructuring and onboarding expenses:

$25,011

$15,157

$0.31

 

All Non-GAAP numbers have been adjusted to exclude the restructuring and onboarding expenses.  A description of the Company's use of Non-GAAP information is provided under "Non-GAAP Financial Measures" below.

Conference Call & Webcast
The Company's first quarter fiscal 2012 conference call and audio webcast will be held at 10:00 a.m. EST on November 30, 2011.  The 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. (http://www.unfi.com) carries and distributes more than 60,000 products to more than 23,000 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 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.

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 28, 2011 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 these sales; the Company's ability to timely and successfully deploy its new warehouse management system throughout its distribution facilities; 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.

 

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) which, in each case exclude expenses and associated with the restructuring and divestiture of the Company's general merchandise and conventional non-foods lines of business and the start-up costs associated with the onboarding of the Company's newest national customer.  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 first quarter of fiscal 2012 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 2012 fiscal year versus the comparable periods in the 2011 fiscal year and to internally prepared projections.


 

 

UNITED NATURAL FOODS, INC.

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(In thousands, except per share data)

 

 

 

 

Three months ended

 

October 29, 

2011

 

October 30, 

2010

 

 

 

 

Net sales

$1,217,428

 

$1,052,967

Cost of sales

1,000,315

 

860,635

 

 

 

 

                 Gross profit

217,113

 

192,332

 

 

 

 

Operating expenses

185,713

 

162,676

Restructuring and asset impairment

5,345

 

-

                Total operating expenses

191,058

 

162,676

 

 

 

 

                Operating income

26,055

 

29,656

 

 

 

 

Other expense (income):

 

 

 

         Interest expense

1,073

 

1,386

         Interest income

(170)

 

(208)

         Other, net

141

 

(53)

                 Total other expense

1,044

 

 

1,125

 

 

 

 

                 Income before income taxes

25,011

 

28,531

 

 

 

 

Provision for income taxes

9,854

 

11,127

 

 

 

 

                Net income

$    15,157

 

$    17,404

 

 

 

 

Basic per share data:

 

 

 

     Net income

$     0.31

 

$     0.39

 

 

 

 

     Weighted average basic shares

        of common stock

 

48,594

 

 

44,771

 

 

 

 

Diluted per share data:

 

 

 

     Net income

$     0.31

 

$     0.39

 

 

 

 

            Weighted average diluted shares

        of common stock

 

48,889

 

 

45,101

 


 

UNITED NATURAL FOODS, INC.

CONSOLIDATED BALANCE SHEETS (Unaudited)

(In thousands, except per share data)

 

 

October 29,

2011

 

July 30,

2011

ASSETS

 

 

 

Current assets:

 

 

 

    Cash and cash equivalents

$    17,016

 

$    16,867

    Accounts receivable, net

309,541

 

257,482

    Notes receivable, trade, net

3,309

 

2,826

    Inventories

649,026

 

514,506

    Assets held for sale

2,557

 

-

    Prepaid expenses and other current assets

27,319

 

30,788

    Deferred income taxes

21,884

 

22,023

       Total current assets

1,030,652

 

844,492

 

 

 

 

Property and equipment, net

281,573

 

285,151

 

 

 

 

Other assets:

 

 

 

    Goodwill

193,836

 

191,943

    Intangible assets, net

54,132

 

58,336

    Notes receivable, trade, net

1,890

 

2,148

    Other

18,514

 

18,918

Total assets

$1,580,597

 

$1,400,988

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

Current liabilities:

 

 

 

    Accounts payable

$300,408

 

$217,074

    Notes payable

185,460

 

115,000

    Accrued expenses and other current liabilities

92,780

 

83,900

    Current portion of long-term debt

46,272

 

47,447

       Total current liabilities

624,920

 

463,421

 

 

 

 

Deferred income taxes

38,539

 

38,551

Other long-term liabilities

29,047

 

28,363

Long-term debt, excluding current portion

900

 

986

       Total liabilities

693,406

 

531,321

 

 

 

 

Stockholders' equity:

 

 

 

Preferred stock, $0.01 par value, authorized 5,000 shares; none issued

  and outstanding

 

-

 

 

-

Common stock, $0.01 par value, authorized 100,000 shares; 48,770

  issued and 48,753 outstanding shares at October 29, 2011; 48,520

  issued and 48,493 outstanding shares at July 30, 2011                                          

 

 

488

 

 

 

485

  Additional paid-in capital

349,693

 

345,036

  Treasury stock

(451)

 

(542)

  Unallocated shares of Employee Stock Ownership Plan

(462)

 

(708)

  Accumulated other comprehensive loss

2,232

 

4,862

  Retained earnings

535,691

 

520,534

     Total stockholders' equity

887,191

 

869,667

 

 

 

 

Total liabilities and stockholders' equity

$1,580,597

 

$1,400,988

 

 


 

UNITED NATURAL FOODS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In thousands)

 

 

Three months ended

 

October 29,

2011

October 30,

2010

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

Net income

$15,157

$17,404

Adjustments to reconcile net income to net cash used

 

 

 

in operating activities:

 

 

 

 Depreciation and amortization

9,592

8,355

 

 Share-based compensation

3,910

2,657

 

 Excess tax benefits from share-based payment arrangements

(455)

(301)

 

 Provision for doubtful accounts

1,296

216

 

 Gain on disposals of property and equipment

(258)

(20)

Changes in assets and liabilities, net of acquisitions:

 

 

 

Accounts receivable

(54,108)

(36,802)

 

Inventories

(135,363)

(90,060)

 

Prepaid expenses and other assets

3,739

3,240

 

Notes receivable, trade

(225)

(1,131)

 

Accounts payable

52,539

50,598

 

Accrued expenses and other current liabilities

10,713

12,940

 

   Net cash used in operating activities

(93,463)

(32,904)

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

Capital expenditures

(7,801)

(7,549)

Proceeds from disposals of property and equipment

277

20

Purchases of acquired businesses, net of cash acquired

(31)

(21,842)

 

   Net cash used in investing activities

(7,555)

(29,371)

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

Net proceeds from issuance of common stock

-

138,305

Net borrowings (repayments) under note payable

70,460

(96,425)

Increase in bank overdraft

31,029

18,326

Payment of employee restricted stock tax withholdings

(1,203)

(1,966)

Proceeds from exercise of stock options

1,756

1,910

Repayments of long-term debt

(1,261)

(1,257)

Tax benefits from equity awards

455

301

 

   Net cash provided by financing activities

101,236

59,194

 

 

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH

(69)

(15)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

149

(3,096)

Cash and cash equivalents at beginning of period

16,867

13,802

Cash and cash equivalents at end of period

$17,016

$10,706

 

 

 

Supplemental disclosures of cash flow information:

 

 

Cash paid during the period for:

 

 

 

 Interest, net of amounts capitalized

$1,056

$1,259

 

 Income taxes, net of refunds

$3,716

$2,516

SOURCE United Natural Foods, Inc.



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