United Natural Foods, Inc. (NYSE: UNFI) (the “Company” or “UNFI”) today reported financial results for the second quarter of fiscal 2024 (13 weeks) ended January 27, 2024.
Second Quarter Fiscal 2024 Performance (comparisons to second quarter fiscal 2023)
- Net sales decreased 0.5% to $7.8 billion
- Net loss of $15 million; Loss per diluted share (EPS) of $(0.25)
- Adjusted EBITDA decreased 29.3% to $128 million
- Adjusted EPS decreased to $0.07
Recent Financial and Operational Summary
- Revising fiscal 2024 outlook to reduce net sales expectations, while maintaining the midpoints and narrowing the ranges for net income, EPS, adjusted EPS, and adjusted EBITDA
-
Continuing to drive improved operational execution and efficiency
- Management disciplines and operational processes continuing to drive shrink reduction
-
Network automation and optimization progressing
- Expect Centralia, WA automation system to go live this spring
- Announced Manchester, PA distribution center to be automated
- Launched northeast distribution center optimization; expected to be complete in Fiscal 2025
- Streamlined organization more agile and better able to make quicker decisions closer to the customer
“Our second quarter results reflect our continued focus and progress on execution and profitability improvement through the important holiday selling season. Greater than anticipated benefits from our near-term value creation initiatives and further advances in managing shrink partially offset the expected reduction in procurement gains and start-up costs associated with a new distribution center,” said Sandy Douglas, UNFI’s Chief Executive Officer.
“We are making steady progress on the multiple work-streams underlying both our near-term and longer-term transformation into a more efficient and effective partner to our customers, while we also enhance profitability and long-term shareholder value creation.”
Second Quarter Fiscal 2024 Summary
|
13-Week Period Ended |
|
Percent
|
|||||||
($ in millions, except for per share data) |
January 27, 2024 |
|
January 28, 2023 |
|
||||||
Net sales |
$ |
7,775 |
|
|
$ |
7,816 |
|
|
(0.5 |
)% |
Chains |
$ |
3,266 |
|
|
$ |
3,322 |
|
|
(1.7 |
)% |
Independent retailers |
$ |
1,907 |
|
|
$ |
1,980 |
|
|
(3.7 |
)% |
Supernatural |
$ |
1,751 |
|
|
$ |
1,659 |
|
|
5.5 |
% |
Retail |
$ |
631 |
|
|
$ |
660 |
|
|
(4.4 |
)% |
Other |
$ |
615 |
|
|
$ |
609 |
|
|
1.0 |
% |
Eliminations |
$ |
(395 |
) |
|
$ |
(414 |
) |
|
(4.6 |
)% |
Net (loss) income |
$ |
(15 |
) |
|
$ |
19 |
|
|
(178.9 |
)% |
Adjusted EBITDA (1) |
$ |
128 |
|
|
$ |
181 |
|
|
(29.3 |
)% |
EPS |
$ |
(0.25 |
) |
|
$ |
0.31 |
|
|
(180.6 |
)% |
Adjusted EPS (1) |
$ |
0.07 |
|
|
$ |
0.78 |
|
|
(91.0 |
)% |
| (1) | Please refer to the tables in this press release for a reconciliation of these non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP. |
Net sales decreased 0.5% in the second quarter of fiscal 2024 compared to the same period in the prior year, primarily driven by a decline in unit volumes, which was partially offset by inflation and new business with existing customers, primarily in our Supernatural channel.
Gross profit in the second quarter of fiscal 2024 was $1.0 billion, a decrease of $34 million, or 3.2%, compared to the second quarter of fiscal 2023. The gross profit rate in the second quarter of fiscal 2024 was 13.3% of net sales and included a $6 million LIFO charge. Excluding this non-cash charge, gross profit rate was 13.4% of net sales. Gross profit rate in the second quarter of fiscal 2023 was 13.7% of net sales and included a $29 million LIFO charge. Excluding this non-cash charge, gross profit rate in the second quarter of fiscal 2023 was 14.0% of net sales. The decrease in gross profit rate, excluding the LIFO charge, was primarily driven by lower levels of procurement gains resulting from decelerating inflation.
Operating expenses in the second quarter of fiscal 2024 were $1,010 million compared to $1,002 million in the second quarter of fiscal 2023. Operating expenses included Business Transformation Costs of $14 million in the second quarter of fiscal 2024 and $4 million in the second quarter of fiscal 2023. Excluding these costs, operating expenses in the second quarter of fiscal 2024 were $996 million, or 12.8% of net sales, and $998 million, or 12.8% of net sales, in the second quarter of fiscal 2023. Improvements in transportation costs as well as operating leverage led to a sequential decrease in operating expenses as a percentage of net sales compared to the first quarter of fiscal 2024.
Interest expense, net for the second quarter of fiscal 2024 was $40 million compared to $39 million for the second quarter of fiscal 2023. The increase in interest expense, net was primarily driven by higher average interest rates. The second quarter of fiscal 2023 included approximately $3 million in non-cash charges primarily related to the acceleration of unamortized debt issuance costs and original issue discounts resulting from debt prepayments.
Effective tax rate for the second quarter of fiscal 2024 was a benefit of 26.3% on pre-tax loss compared to an expense rate of 29.0% on pre-tax income for the second quarter of fiscal 2023. The change from the second quarter of fiscal 2023 is primarily driven by the reduction in pre-tax income during the second quarter of fiscal 2023.
Net loss for the second quarter of fiscal 2024 was $15 million. Net income for the second quarter of fiscal 2023 was $19 million.
Net loss per diluted share (EPS) was $(0.25) for the second quarter of fiscal 2024 compared to net income per diluted share of $0.31 for the second quarter of fiscal 2023. Adjusted EPS was $0.07 for the second quarter of fiscal 2024 compared to $0.78 in the second quarter of fiscal 2023.
Adjusted EBITDA for the second quarter of fiscal 2024 was $128 million compared to $181 million for the second quarter of fiscal 2023.
Capital Allocation and Financing Overview
- Free Cash Flow – During the second quarter of fiscal 2024, free cash flow was $116 million compared to $448 million in the second quarter of fiscal 2023. The results for the second quarter of fiscal 2024 reflect net cash provided by operating activities of $183 million, primarily driven by an expected decline in seasonal working capital levels, and payments for capital expenditures of $67 million. Cash provided by operating activities in the second quarter of fiscal 2023 included approximately $282 million from the monetization of certain qualified accounts receivables.
- Leverage – Total outstanding debt, net of cash, was $2.16 billion at the end of the second quarter of fiscal 2024, reflecting a decrease of $124 million compared to the end of the first quarter of fiscal 2024. The net debt to Adjusted EBITDA leverage ratio was 4.3x as of January 27, 2024.
- Liquidity – As of January 27, 2024, total liquidity was approximately $1.43 billion, consisting of approximately $34 million in cash, plus the unused capacity of approximately $1.40 billion under the Company’s asset-based lending facility.
Fiscal 2024 Outlook (1)
The Company is updating its full-year outlook to the following:
Fiscal Year Ending August 3, 2024 (53 weeks) |
|
Previous Full Year Outlook |
|
Updated Full Year Outlook |
Net sales ($ in billions) |
|
$30.9 - $31.5 |
|
$30.5 - $31.0 |
Net loss ($ in millions) |
|
$(120) - $(46) |
|
$(101) - $(65) |
EPS (2) |
|
$(2.02) - $(0.76) |
|
$(1.70) - $(1.08) |
Adjusted EPS (2)(3)(4) |
|
$(0.88) - $0.38 |
|
$(0.56) - $0.06 |
Adjusted EBITDA (4) ($ in millions) |
|
$450 - $550 |
|
$475 - $525 |
Capital and cloud implementation expenditures (4)(5) ($ in millions) |
|
~ $400 |
|
~ $400 |
| (1) | The outlook provided above is for fiscal 2024 only. The outlook is forward-looking, is based on management's current estimates and expectations and is subject to a number of risks, including many that are outside of management's control. See cautionary Safe Harbor Statement below. The 53rd week is expected to add approximately $600 million to Net sales and $9 million to Adjusted EBITDA in the ranges provided. |
|
| (2) | (Loss) earnings per share amounts as presented include rounding. |
|
| (3) | The Company uses an adjusted effective tax rate in calculating Adjusted EPS. The adjusted effective tax rate is calculated based on adjusted net (loss) income before tax. It also excludes the potential impact of changes to uncertain tax positions, valuation allowances, tax impacts related to the vesting of share-based compensation awards and discrete GAAP tax items which could impact the comparability of the operational effective tax rate. The Company believes using this adjusted effective tax rate provides better consistency across the interim reporting periods since each of these discrete items can cause volatility in the GAAP tax rate that is not indicative of the underlying ongoing operations of the Company. By providing this non-GAAP measure, management intends to provide investors with a meaningful, consistent comparison of the Company’s effective tax rate on ongoing operations. |
|
| (4) | Please refer to the tables in this press release for a reconciliation of these non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP. |
|
| (5) | Reflects the sum of payments for capital expenditures and cloud technology implementation expenditures. The Company believes that providing this non-GAAP measure provides investors with better visibility to the Company’s total investment spend. The increase compared to fiscal 2023 is primarily driven by investments in the Company’s transformation program. The components of fiscal 2024 will be primarily dependent on the nature of certain contracts to be executed. |
Conference Call and Webcast
The Company’s second quarter fiscal 2024 conference call and audio webcast will be held today, Wednesday, March 6, 2024 at 8:30 a.m. ET. A webcast of the conference call (and supplemental materials) will be available to the public, on a listen only basis, via the internet at the Investors section of the Company’s website www.unfi.com. The call can also be accessed at (888) 660 - 6768 (conference ID 1099581). An online archive of the webcast (and supplemental materials) will be available for 120 days.
About United Natural Foods
UNFI is North America’s premier grocery wholesaler delivering the widest variety of fresh, branded, and owned brand products to more than 30,000 locations throughout North America, including natural product superstores, independent retailers, conventional supermarket chains, eCommerce providers, and foodservice customers. UNFI also provides a broad range of value-added services and segmented marketing expertise, including proprietary technology, data, market insights, and shelf management to help customers and suppliers build their businesses and brands. As the largest full-service grocery partner in North America, UNFI is committed to building a food system that is better for all and is uniquely positioned to deliver great food, more choices, and fresh thinking to customers. To learn more about how UNFI is delivering value for its stakeholders, visit 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 for the year ended July 29, 2023 filed with the Securities and Exchange Commission (the “SEC”) on September 26, 2023 and other filings the Company makes with the SEC, and include, but are not limited to, our dependence on principal customers; the relatively low margins of our business, which are sensitive to inflationary and deflationary pressures and intense competition, including as a result of the continuing consolidation of retailers and the growth of consumer choices for grocery and consumable purchases; our ability to realize the anticipated benefits of our transformation initiatives; changes in relationships with our suppliers; our ability to operate, and rely on third parties to operate, reliable and secure technology systems; labor and other workforce shortages and challenges; the addition or loss of significant customers or material changes to our relationships with these customers; our ability to realize anticipated benefits of our acquisitions; our ability to continue to grow sales, including of our higher margin natural and organic foods and non-food products, and to manage that growth; our ability to maintain sufficient volume in our wholesale segment to support our operating infrastructure; the impact and duration of any pandemics or disease outbreaks; our ability to access additional capital; increases in healthcare, pension and other costs under our and multiemployer benefit plans; the potential for additional asset impairment charges; our sensitivity to general economic conditions including inflation, changes in disposable income levels and consumer purchasing habits; our ability to timely and successfully deploy our warehouse management system throughout our distribution centers and our transportation management system across the Company and to achieve efficiencies and cost savings from these efforts; the potential for disruptions in our supply chain or our distribution capabilities from circumstances beyond our control, including due to lack of long-term contracts, severe weather, labor shortages or work stoppages or otherwise; moderated supplier promotional activity, including decreased forward buying opportunities; union-organizing activities that could cause labor relations difficulties and increased costs; our ability to maintain food quality and safety; and volatility in fuel costs. 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 estimates 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 estimates are subject to change and could differ materially from final reported results. The Company may from time to time update these publicly announced estimates, but it is not obligated to do so.
Non-GAAP Financial Measures: To supplement the financial information presented on a U.S. generally accepted accounting principles (“GAAP”) basis, the Company has included in this press release the non-GAAP financial measures Adjusted EBITDA, adjusted earnings per diluted common share (“Adjusted EPS”), adjusted effective tax rate, free cash flow, net debt to Adjusted EBITDA leverage ratio and capital and cloud implementation expenditures. Adjusted EPS is a consolidated measure, which the Company reconciles by adding Net income attributable to UNFI plus the LIFO charge or benefit, Goodwill impairment benefits and charges, Restructuring, acquisition, and integration related expenses, gains and losses on sales of assets, certain legal charges and gains, surplus property depreciation and interest expense, losses on debt extinguishment, the impact of diluted shares when GAAP earnings is presented as a loss and non-GAAP earnings represent income, and the tax impact of adjustments and the adjusted effective tax rate, which tax impact is calculated using the adjusted effective tax rate, and certain other non-cash charges or items, as determined by management. The non-GAAP adjusted effective tax rate excludes the potential impact of changes to various uncertain tax positions and valuation allowances, as well as tax impacts related to the vesting of share-based compensation awards. The non-GAAP Adjusted EBITDA measure is a consolidated measure which the Company reconciles by adding Net (loss) income including noncontrolling interests, less Net income attributable to noncontrolling interests, plus Non-operating income and expenses, including Net periodic benefit income, excluding service cost, Interest expense, net and Other (income) expense, net, plus (Benefit) provision for income taxes and Depreciation and amortization all calculated in accordance with GAAP, plus adjustments for Share-based compensation, non-cash LIFO charge or benefit, Restructuring, acquisition and integration related expenses, Goodwill impairment charges, Loss (gain) on sale of assets and other asset charges, certain legal charges and gains, and certain other non-cash charges or other items, as determined by management. The changes to the definition of Adjusted EBITDA in the fourth quarter of fiscal 2023 from prior periods reflect changes to line item references in our Consolidated Financial Statements, which do not impact the calculation of Adjusted EBITDA. The non-GAAP free cash flow measure is defined as net cash (used in) provided by operating activities less payments for capital expenditures. The non-GAAP net debt to Adjusted EBITDA leverage ratio is defined as the total carrying value of the Company’s outstanding short- and long-term debt and finance lease liabilities less net cash and cash equivalents, the sum of which is divided by the trailing four quarters Adjusted EBITDA. The non-GAAP capital and cloud implementation expenditures measure is defined as the sum of payments for capital expenditures and cloud technology implementation expenditures.
The reconciliation of these non-GAAP financial measures to their comparable GAAP financial measures and the calculation of net debt to Adjusted EBITDA leverage are presented in the tables appearing below. The presentation of 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 the non-GAAP financial measures Adjusted EBITDA and Adjusted EPS aids in making period-to-period comparisons, assessing the performance of the Company’s business and understanding the underlying operating performance and core business trends by excluding certain adjustments not expected to recur in the normal course of business or that are not meaningful indicators of actual and estimated operating performance. The inclusion of free cash flow assists investors in understanding the cash generating ability of the Company separate from cash generated by the sale of assets. Net debt to Adjusted EBITDA leverage ratio is a commonly used metric that assists investors in understanding and evaluating the Company’s capital structure and changes to its capital structure over time. The Company believes that providing non-GAAP capital and cloud implementation expenditures provides investors with better visibility into the Company's total investment expenditures. The components of capital and cloud implementation expenditures for fiscal 2024 will be primarily dependent on the nature of certain contracts to be executed. The Company currently expects to continue to exclude the items listed above from non-GAAP financial measures. Management utilizes and plans to utilize these non-GAAP financial measures to compare the Company’s operating performance during the 2024 fiscal year to the comparable periods in the 2023 fiscal year and to internally prepared projections. These non-GAAP financial measures may differ from similarly titled measures of other companies.
UNITED NATURAL FOODS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in millions, except for per share data) |
||||||||||||||||
|
|
13-Week Period Ended |
|
26-Week Period Ended |
||||||||||||
|
|
January 27,
|
|
January 28,
|
|
January 27,
|
|
January 28,
|
||||||||
Net sales |
|
$ |
7,775 |
|
|
$ |
7,816 |
|
|
$ |
15,327 |
|
|
$ |
15,348 |
|
Cost of sales |
|
|
6,740 |
|
|
|
6,747 |
|
|
|
13,262 |
|
|
|
13,183 |
|
Gross profit |
|
|
1,035 |
|
|
|
1,069 |
|
|
|
2,065 |
|
|
|
2,165 |
|
Operating expenses |
|
|
1,010 |
|
|
|
1,002 |
|
|
|
2,033 |
|
|
|
2,002 |
|
Restructuring, acquisition and integration related expenses |
|
|
4 |
|
|
|
3 |
|
|
|
8 |
|
|
|
5 |
|
Loss (gain) on sale of assets and other asset charges |
|
|
5 |
|
|
|
1 |
|
|
|
24 |
|
|
|
(4 |
) |
Operating income |
|
|
16 |
|
|
|
63 |
|
|
|
— |
|
|
|
162 |
|
Net periodic benefit income, excluding service cost |
|
|
(4 |
) |
|
|
(7 |
) |
|
|
(7 |
) |
|
|
(14 |
) |
Interest expense, net |
|
|
40 |
|
|
|
39 |
|
|
|
75 |
|
|
|
74 |
|
Other income, net |
|
|
(1 |
) |
|
|
— |
|
|
|
(1 |
) |
|
|
(1 |
) |
(Loss) income before income taxes |
|
|
(19 |
) |
|
|
31 |
|
|
|
(67 |
) |
|
|
103 |
|
(Benefit) provision for income taxes |
|
|
(5 |
) |
|
|
9 |
|
|
|
(14 |
) |
|
|
14 |
|
Net (loss) income including noncontrolling interests |
|
|
(14 |
) |
|
|
22 |
|
|
|
(53 |
) |
|
|
89 |
|
Less net income attributable to noncontrolling interests |
|
|
(1 |
) |
|
|
(3 |
) |
|
|
(1 |
) |
|
|
(4 |
) |
Net (loss) income attributable to United Natural Foods, Inc. |
|
$ |
(15 |
) |
|
$ |
19 |
|
|
$ |
(54 |
) |
|
$ |
85 |
|
|
|
|
|
|
|
|
|
|
||||||||
Basic (loss) earnings per share |
|
$ |
(0.25 |
) |
|
$ |
0.32 |
|
|
$ |
(0.92 |
) |
|
$ |
1.43 |
|
Diluted (loss) earnings per share |
|
$ |
(0.25 |
) |
|
$ |
0.31 |
|
|
$ |
(0.92 |
) |
|
$ |
1.38 |
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
|
59.4 |
|
|
|
59.8 |
|
|
|
59.0 |
|
|
|
59.3 |
|
Diluted |
|
|
59.4 |
|
|
|
61.0 |
|
|
|
59.0 |
|
|
|
61.3 |
|
UNITED NATURAL FOODS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (in millions, except for par values) |
||||||||
|
|
January 27,
|
|
July 29,
|
||||
ASSETS |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
34 |
|
|
$ |
37 |
|
Accounts receivable, net |
|
|
990 |
|
|
|
889 |
|
Inventories, net |
|
|
2,311 |
|
|
|
2,292 |
|
Prepaid expenses and other current assets |
|
|
246 |
|
|
|
245 |
|
Total current assets |
|
|
3,581 |
|
|
|
3,463 |
|
Property and equipment, net |
|
|
1,766 |
|
|
|
1,767 |
|
Operating lease assets |
|
|
1,430 |
|
|
|
1,228 |
|
Goodwill |
|
|
20 |
|
|
|
20 |
|
Intangible assets, net |
|
|
685 |
|
|
|
722 |
|
Deferred income taxes |
|
|
34 |
|
|
|
32 |
|
Other long-term assets |
|
|
155 |
|
|
|
162 |
|
Total assets |
|
$ |
7,671 |
|
|
$ |
7,394 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
||||
Accounts payable |
|
$ |
1,722 |
|
|
$ |
1,781 |
|
Accrued expenses and other current liabilities |
|
|
247 |
|
|
|
283 |
|
Accrued compensation and benefits |
|
|
168 |
|
|
|
143 |
|
Current portion of operating lease liabilities |
|
|
187 |
|
|
|
180 |
|
Current portion of long-term debt and finance lease liabilities |
|
|
12 |
|
|
|
18 |
|
Total current liabilities |
|
|
2,336 |
|
|
|
2,405 |
|
Long-term debt |
|
|
2,176 |
|
|
|
1,956 |
|
Long-term operating lease liabilities |
|
|
1,298 |
|
|
|
1,099 |
|
Long-term finance lease liabilities |
|
|
7 |
|
|
|
12 |
|
Pension and other postretirement benefit obligations |
|
|
15 |
|
|
|
16 |
|
Other long-term liabilities |
|
|
147 |
|
|
|
162 |
|
Total liabilities |
|
|
5,979 |
|
|
|
5,650 |
|
Stockholders’ equity: |
|
|
|
|
||||
Preferred stock, $0.01 par value, authorized 5.0 shares; none issued or outstanding |
|
|
— |
|
|
|
— |
|
Common stock, $0.01 par value, authorized 100.0 shares; 61.9 shares issued and 59.4 shares outstanding at January 27, 2024; 61.0 shares issued and 58.5 shares outstanding at July 29, 2023 |
|
|
1 |
|
|
|
1 |
|
Additional paid-in capital |
|
|
616 |
|
|
|
606 |
|
Treasury stock at cost |
|
|
(86 |
) |
|
|
(86 |
) |
Accumulated other comprehensive loss |
|
|
(35 |
) |
|
|
(28 |
) |
Retained earnings |
|
|
1,196 |
|
|
|
1,250 |
|
Total United Natural Foods, Inc. stockholders’ equity |
|
|
1,692 |
|
|
|
1,743 |
|
Noncontrolling interests |
|
|
— |
|
|
|
1 |
|
Total stockholders’ equity |
|
|
1,692 |
|
|
|
1,744 |
|
Total liabilities and stockholders’ equity |
|
$ |
7,671 |
|
|
$ |
7,394 |
|
UNITED NATURAL FOODS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) |
||||||||
|
|
26-Week Period Ended |
||||||
(in millions) |
|
January 27,
|
|
January 28,
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
||||
Net (loss) income including noncontrolling interests |
|
$ |
(53 |
) |
|
$ |
89 |
|
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: |
|
|
|
|
||||
Depreciation and amortization |
|
|
152 |
|
|
|
147 |
|
Share-based compensation |
|
|
16 |
|
|
|
23 |
|
Gain on sale of assets |
|
|
(7 |
) |
|
|
(9 |
) |
Long-lived asset impairment charges |
|
|
21 |
|
|
|
— |
|
Net pension and other postretirement benefit income |
|
|
(7 |
) |
|
|
(14 |
) |
Deferred income tax expense |
|
|
— |
|
|
|
1 |
|
LIFO charge |
|
|
13 |
|
|
|
50 |
|
Provision (recoveries) for losses on receivables |
|
|
2 |
|
|
|
(3 |
) |
Non-cash interest expense and other adjustments |
|
|
5 |
|
|
|
8 |
|
Changes in operating assets and liabilities |
|
|
(213 |
) |
|
|
(22 |
) |
Net cash (used in) provided by operating activities |
|
|
(71 |
) |
|
|
270 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
||||
Payments for capital expenditures |
|
|
(141 |
) |
|
|
(151 |
) |
Proceeds from dispositions of assets |
|
|
11 |
|
|
|
12 |
|
Payments for investments |
|
|
(12 |
) |
|
|
(4 |
) |
Net cash used in investing activities |
|
|
(142 |
) |
|
|
(143 |
) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
||||
Proceeds from borrowings under revolving credit line |
|
|
1,422 |
|
|
|
1,944 |
|
Proceeds from issuance of other loans |
|
|
14 |
|
|
|
— |
|
Repayments of borrowings under revolving credit line |
|
|
(1,180 |
) |
|
|
(1,861 |
) |
Repayments of long-term debt and finance leases |
|
|
(37 |
) |
|
|
(143 |
) |
Repurchases of common stock |
|
|
— |
|
|
|
(29 |
) |
Payments of employee restricted stock tax withholdings |
|
|
(6 |
) |
|
|
(39 |
) |
Distributions to noncontrolling interests |
|
|
(2 |
) |
|
|
(2 |
) |
Repayments of other loans |
|
|
— |
|
|
|
(1 |
) |
Other |
|
|
(1 |
) |
|
|
— |
|
Net cash provided by (used in) financing activities |
|
|
210 |
|
|
|
(131 |
) |
EFFECT OF EXCHANGE RATE ON CASH |
|
|
— |
|
|
|
— |
|
NET DECREASE IN CASH AND CASH EQUIVALENTS |
|
|
(3 |
) |
|
|
(4 |
) |
Cash and cash equivalents, at beginning of period |
|
|
37 |
|
|
|
44 |
|
Cash and cash equivalents, at end of period |
|
$ |
34 |
|
|
$ |
40 |
|
Supplemental disclosures of cash flow information: |
|
|
|
|
||||
Cash paid for interest |
|
$ |
74 |
|
|
$ |
65 |
|
Cash (refunds) payments for federal, state, and foreign income taxes, net |
|
$ |
(13 |
) |
|
$ |
3 |
|
Leased assets obtained in exchange for new operating lease liabilities |
|
$ |
298 |
|
|
$ |
133 |
|
Additions of property and equipment included in Accounts payable |
|
$ |
31 |
|
|
$ |
31 |
|
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION (unaudited)
UNITED NATURAL FOODS, INC.
|
|||||||||||||||
|
13-Week Period Ended |
|
26-Week Period Ended |
||||||||||||
(in millions) |
January 27,
|
|
January 28,
|
|
January 27,
|
|
January 28,
|
||||||||
Net (loss) income including noncontrolling interests |
$ |
(14 |
) |
|
$ |
22 |
|
|
$ |
(53 |
) |
|
$ |
89 |
|
Adjustments to net (loss) income including noncontrolling interests: |
|
|
|
|
|
|
|
||||||||
Less net income attributable to noncontrolling interests |
|
(1 |
) |
|
|
(3 |
) |
|
|
(1 |
) |
|
|
(4 |
) |
Net periodic benefit income, excluding service cost |
|
(4 |
) |
|
|
(7 |
) |
|
|
(7 |
) |
|
|
(14 |
) |
Interest expense, net |
|
40 |
|
|
|
39 |
|
|
|
75 |
|
|
|
74 |
|
Other income, net |
|
(1 |
) |
|
|
— |
|
|
|
(1 |
) |
|
|
(1 |
) |
(Benefit) provision for income taxes |
|
(5 |
) |
|
|
9 |
|
|
|
(14 |
) |
|
|
14 |
|
Depreciation and amortization |
|
74 |
|
|
|
73 |
|
|
|
152 |
|
|
|
147 |
|
Share-based compensation |
|
10 |
|
|
|
11 |
|
|
|
16 |
|
|
|
23 |
|
LIFO charge |
|
6 |
|
|
|
29 |
|
|
|
13 |
|
|
|
50 |
|
Restructuring, acquisition and integration related expenses |
|
4 |
|
|
|
3 |
|
|
|
8 |
|
|
|
5 |
|
Loss (gain) on sale of assets and other asset charges (1) |
|
5 |
|
|
|
1 |
|
|
|
24 |
|
|
|
(4 |
) |
Business transformation costs (2) |
|
14 |
|
|
|
4 |
|
|
|
29 |
|
|
|
9 |
|
Other adjustments (3) |
|
— |
|
|
|
— |
|
|
|
4 |
|
|
|
— |
|
Adjusted EBITDA |
$ |
128 |
|
|
$ |
181 |
|
|
$ |
245 |
|
|
$ |
388 |
|
| (1) | Fiscal 2024 includes a $21 million non-cash asset impairment charge related to one of our corporate-owned office locations in the first quarter of fiscal 2024. |
|
| (2) | Reflects costs associated with business transformation initiatives, primarily including third-party consulting costs and licensing costs, which are included within Operating expenses in the Condensed Consolidated Statements of Operations. |
|
| (3) | Primarily reflects third-party professional service fees related to shareholder negotiations. |
Reconciliation of Net (loss) income attributable to United Natural Foods, Inc. to Adjusted net (loss) income and Adjusted EPS (unaudited) |
||||||||||||||||
|
|
13-Week Period Ended |
|
26-Week Period Ended |
||||||||||||
(in millions, except per share amounts) |
|
January 27,
|
|
January 28,
|
|
January 27,
|
|
January 28,
|
||||||||
Net (loss) income attributable to United Natural Foods, Inc. |
|
$ |
(15 |
) |
|
$ |
19 |
|
|
$ |
(54 |
) |
|
$ |
85 |
|
Restructuring, acquisition and integration related expenses |
|
|
4 |
|
|
|
3 |
|
|
|
8 |
|
|
|
5 |
|
(Gain) loss on sale of assets and other asset charges other than losses on sales of receivables (1) |
|
|
— |
|
|
|
(4 |
) |
|
|
14 |
|
|
|
(9 |
) |
LIFO charge |
|
|
6 |
|
|
|
29 |
|
|
|
13 |
|
|
|
50 |
|
Surplus property depreciation and interest expense (2) |
|
|
1 |
|
|
|
— |
|
|
|
2 |
|
|
|
1 |
|
Loss on debt extinguishment |
|
|
— |
|
|
|
3 |
|
|
|
— |
|
|
|
3 |
|
Business transformation costs (3) |
|
|
14 |
|
|
|
4 |
|
|
|
29 |
|
|
|
9 |
|
Other adjustments (4) |
|
|
— |
|
|
|
— |
|
|
|
4 |
|
|
|
— |
|
Tax impact of adjustments and adjusted effective tax rate (5) |
|
|
(6 |
) |
|
|
(7 |
) |
|
|
(14 |
) |
|
|
(27 |
) |
Adjusted net income |
|
$ |
4 |
|
|
$ |
47 |
|
|
$ |
2 |
|
|
$ |
117 |
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted weighted average shares outstanding |
|
|
60.0 |
|
|
|
61.0 |
|
|
|
59.9 |
|
|
|
61.3 |
|
Adjusted EPS (6) |
|
$ |
0.07 |
|
|
$ |
0.78 |
|
|
$ |
0.03 |
|
|
$ |
1.92 |
|
| (1) | (Gain) loss on sale of assets and other asset charges, as reflected here, does not include losses on sales of receivables under the accounts receivable monetization program, which are included in Loss (gain) on sale of assets and other asset charges on the Consolidated Statements of Operations and are not adjusted in the calculation of Adjusted EPS. Fiscal 2024 includes a $21 million non-cash asset impairment charge related to one of our corporate-owned office locations in the first quarter of fiscal 2024. |
|
| (2) | Reflects surplus, non-operating property depreciation and interest expense. |
|
| (3) | Reflects costs associated with business transformation initiatives, primarily including third-party consulting costs and licensing costs, which are included within Operating expenses in the Condensed Consolidated Statements of Operations. |
|
| (4) | Primarily reflects third-party professional service fees related to shareholder negotiations. |
|
| (5) | Represents the tax effect of the pre-tax adjustments using an adjusted effective tax rate. The adjusted effective tax rate is calculated based on adjusted net income before tax, and its impact reflects the exclusion of changes to uncertain tax positions, valuation allowances, tax impacts related to the vesting of share-based compensation awards and discrete GAAP tax items which could impact the comparability of the operational effective tax rate. The Company believes using this adjusted effective tax rate will provide better consistency across the interim reporting periods since each of these discrete items can cause volatility in the GAAP tax rate that is not indicative of the underlying ongoing operations of the Company. By providing this non-GAAP measure, management intends to provide investors with a meaningful, consistent comparison of the Company’s effective tax rate on ongoing operations. |
|
| (6) | Adjusted earnings per share amounts are calculated using actual unrounded figures. |
Calculation of net debt to Adjusted EBITDA leverage ratio (unaudited) |
|||
(in millions, except ratios) |
January 27, 2024 |
||
Current portion of long-term debt and finance lease liabilities |
$ |
12 |
|
Long-term debt |
|
2,176 |
|
Long-term finance lease liabilities |
|
7 |
|
Less: Cash and cash equivalents |
|
(34 |
) |
Net carrying value of debt and finance lease liabilities |
|
2,161 |
|
Adjusted EBITDA (1) |
$ |
497 |
|
Adjusted EBITDA leverage ratio |
4.3x |
||
| (1) | Adjusted EBITDA for purposes of this calculation reflects the summation of the trailing four quarters ended January 27, 2024. Refer to the following table for the reconciliation of Adjusted EBITDA trailing four quarters. |
Reconciliation of trailing four quarters Net loss including noncontrolling interests to Adjusted EBITDA (unaudited) |
||||
(in millions) |
|
52-Week Period
|
||
Net loss including noncontrolling interests |
|
$ |
(112 |
) |
Adjustments to net loss including noncontrolling interests: |
|
|
||
Less net income attributable to noncontrolling interests |
|
|
(3 |
) |
Net periodic benefit income, excluding service cost |
|
|
(22 |
) |
Interest expense, net |
|
|
145 |
|
Other income, net |
|
|
(2 |
) |
Benefit for income taxes |
|
|
(51 |
) |
Depreciation and amortization |
|
|
309 |
|
Share-based compensation |
|
|
31 |
|
LIFO charge |
|
|
82 |
|
Restructuring, acquisition and integration related expenses |
|
|
11 |
|
Loss on sale of assets and other asset charges |
|
|
58 |
|
Multiemployer pension plan withdrawal charges |
|
|
1 |
|
Other retail expense |
|
|
1 |
|
Business transformation costs |
|
|
45 |
|
Other adjustments |
|
|
4 |
|
Adjusted EBITDA (1) |
|
$ |
497 |
|
(1) |
Adjusted EBITDA for purposes of this calculation reflects the summation of the trailing four quarters ended January 27, 2024. |
Reconciliation of Net cash (used in) provided by operating activities to Free cash flow (unaudited) |
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
13-Week Period Ended |
|
26-Week Period Ended |
||||||||||||
(in millions) |
January 27, 2024 |
|
January 28, 2023 |
|
January 27, 2024 |
|
January 28, 2023 |
||||||||
Net cash provided by (used in) operating activities |
$ |
183 |
|
|
$ |
532 |
|
|
$ |
(71 |
) |
|
$ |
270 |
|
Payments for capital expenditures |
|
(67 |
) |
|
|
(84 |
) |
|
|
(141 |
) |
|
|
(151 |
) |
Free cash flow |
$ |
116 |
|
|
$ |
448 |
|
|
$ |
(212 |
) |
|
$ |
119 |
|
Reconciliation of Payments for capital expenditures to Capital and cloud implementation expenditures (unaudited) |
|||||||||||
|
13-Week Period Ended |
|
26-Week Period Ended |
||||||||
(in millions) |
January 27, 2024 |
|
January 28, 2023 |
|
January 27, 2024 |
|
January 28, 2023 |
||||
Payments for capital expenditures |
$ |
67 |
|
$ |
84 |
|
$ |
141 |
|
$ |
151 |
Cloud technology implementation expenditures (1) |
|
8 |
|
|
2 |
|
|
17 |
|
|
3 |
Capital and cloud implementation expenditures |
$ |
75 |
|
$ |
86 |
|
$ |
158 |
|
$ |
154 |
| (1) | Cloud technology implementation expenditures are included in operating activities in the Condensed Consolidated Statements of Cash Flows. |
FISCAL 2024 OUTLOOK
Reconciliation of 2024 outlook for estimated Net loss attributable to United Natural Foods, Inc. to Adjusted net (loss) income and estimated Adjusted EPS (unaudited) |
|||||||||||
|
|
Fiscal Year Ending August 3, 2024 |
|||||||||
(in millions, except per share amounts) |
|
Low Range |
|
Estimate |
|
High Range |
|||||
Net loss attributable to United Natural Foods, Inc. |
|
$ |
(101 |
) |
|
|
|
$ |
(65 |
) |
|
Restructuring, acquisition and integration related expenses |
|
|
|
2 |
|
|
|
||||
LIFO charge |
|
|
|
25 |
|
|
|
||||
Loss on sale of assets and other asset charges (1) |
|
|
|
13 |
|
|
|
||||
Business transformation costs |
|
|
|
51 |
|
|
|
||||
Tax impact of adjustments and adjusted effective tax rate (2) |
|
|
|
(23 |
) |
|
|
||||
Adjusted net (loss) income |
|
$ |
(33 |
) |
|
|
|
$ |
3 |
|
|
|
|
|
|
|
|
|
|||||
Diluted weighted average shares outstanding |
|
|
59 |
|
|
|
|
|
60 |
|
|
Adjusted EPS (3) |
|
$ |
(0.56 |
) |
|
|
|
$ |
0.06 |
|
|
| (1) | Loss on sale of assets and other asset charges, as reflected here, does not include losses on sales of receivables under the accounts receivable monetization program, which are included in Loss (gain) on sale of assets and other asset charges on the Consolidated Statements of Operations and are not adjusted in the calculation of Adjusted EPS. |
|
| (2) | The estimated adjusted effective tax rate excludes the potential impact of changes in uncertain tax positions, tax impacts related to the vesting of share-based compensation awards and valuation allowances. Refer to the reconciliation for adjusted effective tax rate. |
|
| (3) | Adjusted (loss) earnings per share amounts as presented include rounding. |
Reconciliation of 2024 outlook for Net loss attributable to United Natural Foods, Inc. to Adjusted EBITDA (unaudited) |
|||||||||||
|
|
Fiscal Year Ending August 3, 2024 |
|||||||||
(in millions) |
|
Low Range |
|
Estimate |
|
High Range |
|||||
Net loss attributable to United Natural Foods, Inc. |
|
$ |
(101 |
) |
|
|
|
$ |
(65 |
) |
|
Benefit for income taxes |
|
|
(36 |
) |
|
|
|
|
(22 |
) |
|
LIFO charge |
|
|
|
25 |
|
|
|
||||
Interest expense, net |
|
|
|
161 |
|
|
|
||||
Depreciation and amortization |
|
|
|
314 |
|
|
|
||||
Share-based compensation and other |
|
|
|
42 |
|
|
|
||||
Net periodic benefit income, excluding service costs |
|
|
|
(15 |
) |
|
|
||||
Loss on sale of assets and other asset charges |
|
|
|
32 |
|
|
|
||||
Restructuring, acquisition and integration related expenses |
|
|
|
2 |
|
|
|
||||
Business transformation costs |
|
|
|
51 |
|
|
|
||||
Adjusted EBITDA |
|
$ |
475 |
|
|
|
|
$ |
525 |
|
|
Reconciliation of estimated 2024 and actual 2023 U.S. GAAP effective tax rate to adjusted effective tax rate (unaudited) |
||||||
|
|
Estimated
|
|
Actual Fiscal
|
||
U.S. GAAP effective tax rate |
|
22 |
% |
|
(329 |
)% |
Discrete quarterly recognition of GAAP items (1) |
|
43 |
% |
|
270 |
% |
Tax impact of other charges and adjustments (2) |
|
(37 |
)% |
|
139 |
% |
Changes in valuation allowances (3) |
|
1 |
% |
|
(57 |
)% |
Other (4) |
|
(3 |
)% |
|
— |
% |
Adjusted effective tax rate (4) |
|
26 |
% |
|
23 |
% |
| Note: As part of the year-end reconciliation, we update the reconciliation of the GAAP effective tax rate for actual results. | ||
| (1) | Reflects changes in tax laws, uncertain tax positions, the tax impacts related to the exercise of share-based compensation awards and any prior-year deferred tax or payable adjustments. This includes prior-year Internal Revenue Service or other tax jurisdiction audit adjustments. |
|
| (2) | Reflects the tax impact of pre-tax adjustments that are excluded from pre-tax income when calculating Adjusted EPS. |
|
| (3) | Reflects changes in valuation allowances related to changes in judgment regarding the realizability of deferred tax assets or current year operations. |
|
| (4) | The Company establishes an estimated adjusted effective tax rate at the beginning of the fiscal year based on the best available information. The Company re-evaluates its estimated adjusted effective tax rate as appropriate throughout the year and adjusts for any material changes. The actual adjusted effective tax rate at the end of the fiscal year is based on actual results and accordingly may differ from the estimated adjusted effective tax rate used during the year. |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240306821992/en/
Contacts
INVESTOR CONTACTS:
Steve Bloomquist
Vice President, Investor Relations
952-828-4144 sbloomquist@unfi.com
Kristyn Farahmand
Senior Vice President, Investor Relations and Transformation Finance
401-213-2160 kristyn.farahmand@unfi.com
