EX-99.1 2 ex99-1.txt EARNINGS RELEASE Exhibit 99.1 [LETTERHEAD OF UNITED NATURAL FOODS, INC.] IMMEDIATE RELEASE November 21, 2006 UNITED NATURAL FOODS ANNOUNCES DILUTED EPS OF $0.29 AND RECORD REVENUE OF $646 MILLION FOR THE FIRST QUARTER OF FISCAL 2007 Reports 12.3% increase in comparable net sales over prior year Dayville, Connecticut - November 21, 2006 -- United Natural Foods, Inc. (Nasdaq: UNFI) (the "Company") today reported net sales for the first quarter of fiscal 2007, ended October 28, 2006, of $646.4 million, an increase of $70.8 million, or 12.3%, from the $575.6 million recorded in the first quarter of fiscal 2006. The Company reported net income of $12.4 million, or $0.29 per diluted share, for the first quarter of fiscal 2007. Net income for the first quarter of fiscal 2006, excluding special items, was $10.3 million, or $0.24 per diluted share. Net income for the first quarter of fiscal 2006, including special items, was $7.7 million, or $0.18 per diluted share. There were no special items for the first quarter of fiscal 2007. In the quarter ended October 28, 2006, the Company recorded share-based compensation expense of $1.0 million in accordance with Statement of Financial Accounting Standard No. 123R, Share-Based Payment. Operating expenses during the quarter were negatively impacted by an operating loss of $0.6 million related to its Greenwood, Indiana location of the Company's Albert's Organics division. As a result, the Company closed this facility and began serving this market from the Albert's Organics' Minneapolis, Minnesota facility, effective October 31, 2006. In addition, the Company is pleased to announce that Whole Foods Market Distribution, Inc. (Nasdaq: WFMI) has recently signed an amendment to the seven-year primary distribution agreement announced in October 2006 between the Company and Whole Foods Market Distribution, Inc. Under the amendment, the Company has been named the primary wholesale natural grocery distributor to the Southern Pacific region of Whole Foods Market, Inc. ("Whole Foods Market"), which includes Southern California, Arizona and Southern Nevada. The Company expects to transition this new business during January 2007. When the new Whole Foods Market business is combined with other business gained during the 2007 first quarter, the Company expects to generate incremental revenues of approximately $47.0 to $52.0 million during fiscal 2007, and approximately $95.0 to $105.0 million on an annualized basis. "We are quite pleased with our results for the first quarter, and have confidence in our ability to continue to execute our sales and operating strategies throughout the rest of fiscal 2007" said Michael Funk, Chief Executive Officer. "Sales growth in our supermarket channel continues to be quite strong. Coupled with our expanded Whole Foods relationship in the Southern Pacific region of the United States and a strong pipeline of new Whole Foods stores expected to open in the near future, we expect to realize continued sales momentum in this business channel." Mr. Funk added, "Over the next twelve to twenty-one months, we look forward to further building out our infrastructure by opening new facilities in the Pacific Northwest, Florida and Texas markets, which we originally announced back in August. These new facilities will significantly reduce our annual miles traveled in those regions. In addition, we plan to continue to move forward with our installation of warehouse technologies in our existing facilities. Combined with our commitment to increase sales of our branded products to 5% of revenues by the end of fiscal 2008, we remain optimistic regarding our future growth prospects." For the first quarter of fiscal 2006, ended October 29, 2005, share-based compensation negatively impacted earnings by $2.5 million including special items, or $1.5 million excluding special items. Special items in the first quarter of fiscal 2006 consisted of incremental and redundant costs incurred during the transition from our former warehouses and outside storage facility in Auburn, California into our new larger facility in Rocklin, California, certain incremental costs associated with the opening of our new Greenwood, Indiana facility and non-recurring cash and non-cash expenses incurred in accordance with the employment transition agreement we entered into during the quarter with our former President and Chief Executive Officer. The following table details the amounts and effect of special items and a reconciliation of net income and per share amounts, excluding special items (non-GAAP basis), to net income and per share amounts, including special items (GAAP basis), for the first quarter of fiscal 2006:
------------------------------------------------------------------------------------------------ Quarter Ended October 29, 2005 Pretax Per diluted (in thousands, except per share data) Income Net of Tax share ------ ---------- ----- Income, excluding special items: $16,646 $10,320 $0.24* Special items - (Expense) Employment transition agreement costs (included in operating expenses) (3,512) (2,177) (0.05) Rocklin, CA facility relocation costs (included in operating expenses) (672) (416) (0.01) Greenwood, IN facility openings costs (included in operating expenses) (92) (57) (0.00) ------------------------------------------------------------------------------------------------ Income, including special items: $12,371* $7,670 $0.18 ================================================================================================ * Total reflects rounding.
All non-GAAP numbers have been adjusted to exclude special items. A reconciliation of specific adjustments to GAAP results for the quarter ended October 29, 2005 is included in the financial table shown above. A description of the Company's use of non-GAAP information is provided under "Non-GAAP Results" below. Conference Call Management will conduct a conference call and audio webcast at 11:00 a.m. EST on November 21, 2006 to review the Company's quarterly results, market trends and future outlook. The conference call dial-in number is (303) 205-0033. 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 Investor Relations section of the Company's website at www.unfi.com. Please allow extra time prior to the call to visit the site and download the necessary software to listen to the Internet broadcast. The online archive of the webcast will be available for 30 days. About United Natural Foods United Natural Foods, Inc. carries and distributes more than 40,000 products to more than 18,000 customers 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 as one of its "Most Admired Companies," and ranked by Business Ethics as one of its "100 Best Corporate Citizens for 2006." For more information on United Natural Foods, Inc., visit the Company's website at www.unfi.com. Financial Tables Follow For more information on United Natural Foods, Inc., visit the Company's website at www.unfi.com. AT THE COMPANY: FINANCIAL RELATIONS BOARD -------------------------------------------------------------------------------- Mark Shamber Joseph Calabrese Chief Financial Officer General Information (860) 779-2800 (212) 827-3772 "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. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, including but not limited to general business conditions, the impact of competition and our dependence on principal customers, see "Risk Factors" in the Company's annual report on Form 10-K filed with the Commission on October 11, 2006, and its other filings under the Securities Exchange Act of 1934, as amended. 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 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 Results: To supplement its financial statements presented on U.S. generally accepted accounting principles ("GAAP") basis, the Company uses non-GAAP additional measures of operating results, net income and earnings per share adjusted to exclude special charges. The Company believes that the use of these additional measures is appropriate to enhance an overall understanding of its past financial performance and also its prospects for the future as these special charges are not expected to be part of the Company's ongoing business. The adjustments to the Company's GAAP results are made with the intent of providing both management and investors with a more complete understanding of the underlying operational results and trends and its marketplace performance. For example, these adjusted non-GAAP results are among the primary indicators management uses as a basis for its planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for net earnings or diluted earnings per share prepared in accordance with GAAP. A comparison and reconciliation from non-GAAP to GAAP results is included in the tables within this release. UNITED NATURAL FOODS, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands, except per share data) Quarter ended -------------------------- October 28, October 29, 2006 2005 ----------- ----------- Net sales $ 646,433 $ 575,641 Cost of sales 522,861 465,374 ----------- ----------- Gross profit 123,572 110,267 ----------- ----------- Operating expenses 100,281 95,513 Amortization of intangibles 151 145 ----------- ----------- Total operating expenses 100,432 95,658 ----------- ----------- Operating income 23,140 14,609 ----------- ----------- Other expense (income): Interest expense 2,911 2,367 Interest income (114) (68) Other, net (28) (61) ----------- ----------- Total other expense 2,769 2,238 ----------- ----------- Income before income taxes 20,371 12,371 Provision for income taxes 7,945 4,701 ----------- ----------- Net income $ 12,426 $ 7,670 =========== =========== Per share data - basic: Net income $ 0.29 $ 0.19 =========== =========== Weighted average basic shares of common stock 42,147 41,334 =========== =========== Per share data - diluted: Net income $ 0.29 $ 0.18 =========== =========== Weighted average diluted shares of common stock 42,599 42,150 =========== =========== UNITED NATURAL FOODS, INC. CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands)
October 28, July 29, 2006 2006 ----------- ----------- ASSETS Current assets: Cash and cash equivalents $ 8,416 $ 20,054 Accounts receivable, net 164,476 147,686 Notes receivable, trade, net 1,251 1,254 Inventories 300,214 257,259 Prepaid expenses and other current assets 14,856 12,596 Deferred income taxes 10,911 10,911 ----------- ----------- Total current assets 500,124 449,760 Property & equipment, net 163,579 163,247 Other assets: Goodwill 78,044 78,016 Notes receivable, trade, net 2,499 2,760 Intangible assets, net 214 251 Other 9,615 6,561 ----------- ----------- Total assets $ 754,075 $ 700,595 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 138,691 $ 102,146 Notes payable 118,001 125,005 Accrued expenses and other current liabilities 36,236 34,245 Current portion of long-term debt 5,675 5,433 ----------- ----------- Total current liabilities 298,603 266,829 Long-term debt, excluding current portion 68,083 59,716 Deferred income taxes 8,586 9,693 Other long-term liabilities 658 883 ----------- ----------- Total liabilities 375,930 337,121 ----------- ----------- Commitments and contingencies Stockholders' equity: Preferred stock, $0.01 par value, authorized 5,000 shares at October 28, 2006 and July 29, 2006; none issued and outstanding -- -- Common stock, $0.01 par value, authorized 50,000 shares; 42,628 issued and 42,399 outstanding shares at October 28, 2006; 42,477 issued and 42,248 outstanding shares at July 29, 2006 426 425 Additional paid-in capital 153,819 149,840 Unallocated shares of Employee Stock Ownership Plan (1,339) (1,380) Treasury stock (6,092) (6,092) Accumulated other comprehensive (loss) income (729) 1,047 Retained earnings 232,060 219,634 ----------- ----------- Total stockholders' equity 378,145 363,474 ----------- ----------- Total liabilities and stockholders' equity $ 754,075 $ 700,595 =========== ===========
UNITED NATURAL FOODS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
Quarter ended -------------------------- October 28, October 29, 2006 2005 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 12,426 $ 7,670 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 4,555 3,754 Loss (gain) on disposals of property & equipment 5 (9) Provision for doubtful accounts 660 369 Share-based compensation 954 2,535 Changes in assets and liabilities, net of acquisitions: Accounts receivable (17,450) (17,510) Inventories (42,955) (34,749) Prepaid expenses and other assets (6,585) (625) Notes receivable, trade 264 (246) Accounts payable 30,729 30,871 Accrued expenses and other current liabilities (3,914) 2,189 Income taxes payable 4,064 -- ----------- ----------- Net cash used in operating activities (17,247) (5,751) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (4,760) (7,683) Payments for acquisitions, net of cash acquired (28) (517) Proceeds from disposals of property and equipment 19 21 ----------- ----------- Net cash used in investing activities (4,769) (8,179) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of long-term debt 10,000 -- Net (repayments) borrowings under note payable (7,004) 15,401 Increase (decrease) in bank overdraft 5,816 (5,898) Proceeds from exercise of stock options 2,152 1,713 Tax effect of stock options 874 1,284 Repayments on long-term debt (1,458) (1,131) Principal payments of capital lease obligations (2) (148) ----------- ----------- Net cash provided by financing activities 10,378 11,221 ----------- ----------- NET DECREASE IN CASH AND CASH EQUIVALENTS (11,638) (2,709) Cash and cash equivalents at beginning of period 20,054 12,615 ----------- ----------- Cash and cash equivalents at end of period $ 8,416 $ 9,906 =========== =========== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest, net of amounts capitalized $ 2,996 $ 2,561 =========== =========== Income taxes, net of refunds $ 2,639 $ 4,470 =========== ===========