EX-99.1 2 ex99-1.htm EARNINGS RELEASE ex99-1.htm
Exhibit 99.1
 

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IMMEDIATE RELEASE
May 20, 2008

UNITED NATURAL FOODS REPORTS SALES AND EARNINGS
FOR THE THIRD QUARTER OF FISCAL 2008

·  
QUARTERLY NET SALES OF $887 MILLION INCREASED 21% FROM THE THIRD QUARTER OF FISCAL 2007.
·  
REPORTS QUARTERLY NET INCOME OF $13 MILLION, OR $0.30 PER DILUTED SHARE.

Dayville, Connecticut – May 20, 2008 -- United Natural Foods, Inc. (Nasdaq: UNFI) (the “Company”) today reported net sales of $887.0 million for the third quarter of fiscal 2008, ended April 26, 2008, an increase of approximately $154.4 million, or 21%, from net sales of $732.5 million recorded in the third quarter of fiscal 2007.  Excluding the effect of the Company’s November 2007 acquisition of Millbrook Distribution Services, Inc. (“Millbrook”), net sales increased by approximately $77.2 million, or 10.5%, to $809.7 million.

The Company reported net income of $13.0 million, or $0.30 per diluted share, for the third quarter of fiscal 2008. Millbrook, which the Company acquired in the second quarter of fiscal 2008, negatively impacted net income by approximately $2.4 million, or $0.06 per diluted share, for the third quarter of fiscal 2008. The Company previously announced that the Millbrook acquisition was expected to be dilutive to earnings by approximately $0.10 to $0.12 in the second half of fiscal 2008, and these results are in line with the Company’s projections. Excluding the effect of Millbrook, net income for the quarter ended April 26, 2008 would have been $15.4 million, or $0.36 per diluted share, compared to $13.7 million, or $0.32 per diluted share for the comparable quarter ended April 28, 2007.

Operating expenses were $141.0 million, or 15.9% of net sales for the quarter ended April 26, 2008, compared to $104.8 million, or 14.3% of net sales, for the third quarter of fiscal 2007.  The Company continues to experience start-up inefficiencies at its Sarasota, Florida and Portland, Oregon area distribution facilities, which negatively impacted operating margins in the quarter. These facilities opened in September, 2007 and December, 2007, respectively.  The Company typically achieves optimum efficiencies from new facilities within six to nine months following their opening. The Company recorded share-based compensation expense of $1.1 million, in the third quarter of fiscal 2008, in accordance with SFAS No. 123R, Share-Based Payment, compared to $1.0 million of share-based compensation expense recorded for the third quarter of fiscal 2007.


260 LAKE ROAD      DAYVILLE, CT 06241    TELEPHONE: (860) 779-2800
 
 
 
 

“Despite operating in an environment of rising fuel and commodity prices, our growth was in line with our expectations, with solid growth across our sales channels,” said Michael Funk, President and Chief Executive Officer. “During the quarter, we continued to make progress achieving efficiencies at our Millbrook specialty division, and we remain confident that we can achieve breakeven operating results in that division in the first quarter of fiscal 2009, as previously announced. Independent customers generated comparable sales growth of approximately 11%, reflecting the continued strength of the industry, while our sales to conventional supermarkets increased by approximately 78% driven largely by sales in our Millbrook specialty division. As we approach the end of fiscal 2008, and look forward to 2009, we continue to see significant opportunities to capitalize on profitable sales growth, including enhancing relationships with natural product retailers, expanding our specialty foods operations, and gaining new customers in all of our channels.”

Updates Fiscal 2008 Earnings Guidance
The Company is narrowing its projected net sales guidance for fiscal year 2008, ending August 2, 2008, to $3.3 billion to $3.35 billion, which represents a 19% to 20% increase in net sales over fiscal 2007. Previously, the Company had projected net sales for fiscal 2008 to be in the range of $3.27 billion to $3.35 billion.

In addition, the Company is reaffirming its earnings per share guidance for fiscal 2008 with a range of $1.12 to $1.14 per diluted share. The Company’s guidance reflects the expectation that the Millbrook acquisition will be dilutive to earnings by $0.18 to $0.19 per diluted share in fiscal 2008. Finally, the Company is reaffirming its anticipated fiscal 2008 capital expenditures guidance of approximately $50.0 to $55.0 million.  The Company expects that its capital expenditures in the fourth quarter will be associated primarily with its previously announced plans to open distribution facilities in Moreno Valley, California and York, Pennsylvania, which are expected to begin operations in fiscal 2009.

The Company’s guidance is based on a number of assumptions, which are subject to change and many of which are outside of the Company’s control.  If any of these assumptions vary, the Company’s guidance may change.  There can be no assurance that the Company will achieve these results.

Conference Call
Management will conduct a conference call and audio webcast at 11:00 a.m. ET on May 20, 2008 to review the Company’s quarterly results, market trends and future outlook. The conference call dial-in number is (303) 275-2170. 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 on the Company’s website for 30 days.

About United Natural Foods
United Natural Foods, Inc. carries and distributes more than 60,000 products to more than 17,000 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 and 2007 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



 
 
 
 



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 quarterly report on Form 10-Q filed with the Securities and Exchange Commission on March 6, 2008, 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.

 
 
 
 


UNITED NATURAL FOODS, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share data)

   
Three months ended
   
Nine months ended
 
   
April 26,
2008
   
April 28,
2007
   
April 26,
2008
   
April 28,
2007
 
                         
Net sales
  $ 886,962     $ 732,516     $ 2,454,007     $ 2,047,494  
Cost of sales
    721,119       602,573       1,998,021       1,669,912  
                                 
                Gross profit
    165,843       129,943       455,986       377,582  
                                 
Operating expenses
    141,018       104,818       387,384       307,126  
Impairment on assets held for sale
    -       -       -       756  
                Total operating expenses
    141,018       104,818       387,384       307,882  
                                 
                Operating income
    24,825       25,125       68,602       69,700  
                                 
Other expense (income):
                               
         Interest expense
    4,186       3,021       12,137       9,282  
         Interest income
    (140 )     (324 )     (472 )     (618 )
         Other, net
    80       (39 )     154       332  
                Total other expense
    4,126       2,658       11,819       8,996  
                                 
                Income before income taxes
    20,699       22,467       56,783       60,704  
                                 
Provision for income taxes
    7,700       8,762       21,123       23,675  
                                 
                Net income
  $ 12,999     $ 13,705     $ 35,660     $ 37,029  
                                 
Basic per share data:
                               
     Net income
  $ 0.30     $ 0.32     $ 0.84     $ 0.87  
                                 
     Weighted average basic shares
         of common stock
    42,727       42,595       42,678       42,396  
                                 
Diluted per share data:
                               
     Net income
  $ 0.30     $ 0.32     $ 0.83     $ 0.87  
                                 
     Weighted average diluted shares
       of common stock
    42,847       42,884       42,858       42,784  

 
 
 
 


UNITED NATURAL FOODS, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands)
   
April 26,
 2008
   
July 28,
2007
 
ASSETS
           
Current assets:
           
    Cash and cash equivalents
  $ 19,481     $ 17,010  
    Accounts receivable, net
    185,680       160,329  
    Notes receivable, trade, net
    1,544       1,836  
    Inventories
    413,539       312,377  
    Prepaid expenses and other current assets
    12,296       8,199  
    Assets held for sale
    -       5,935  
    Deferred income taxes
    9,474       9,474  
       Total current assets
    642,014       515,160  
                 
Property & equipment, net
    218,899       185,083  
                 
Other assets:
               
    Goodwill
    181,692       79,903  
    Notes receivable, trade, net
    2,870       2,647  
    Intangible assets, net
    28,877       8,552  
    Other
    10,258       9,553  
       Total assets
  $ 1,084,610     $ 800,898  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current liabilities:
               
    Notes payable
  $ 295,000     $ 120,000  
    Accounts payable
    182,097       134,576  
    Accrued expenses and other current liabilities
    64,880       37,132  
    Current portion of long-term debt
    4,995       6,934  
       Total current liabilities
    546,972       298,642  
                 
Long-term debt, excluding current portion
    60,231       65,067  
Deferred income taxes
    1,201       9,555  
Other long-term liabilities
    10,454       839  
       Total liabilities
    618,858       374,103  
                 
Stockholders’ equity:
               
   Preferred stock, $0.01 par value, authorized 5,000 shares at April 26, 2008 and July 28, 2007; none issued and outstanding
    -       -  
   Common stock, $0.01 par value, authorized 100,000 shares; 43,103 issued and 42,874 outstanding shares at April 26, 2008; 43,051 issued and 42,822 outstanding shares at July 28, 2007
    431       431  
   Additional paid-in capital
    168,088       163,473  
   Unallocated shares of Employee Stock Ownership Plan
    (1,081 )     (1,203 )
   Treasury stock
    (6,092 )     (6,092 )
   Accumulated other comprehensive (loss) income
    (1,041 )     399  
   Retained earnings
    305,447       269,787  
     Total stockholders’ equity
    465,752       426,795  
Total liabilities and stockholders’ equity
  $ 1,084,610     $ 800,898  


 
 
 
 

 
UNITED NATURAL FOODS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)

   
Nine months ended
 
   
April 26,
2008
   
April 28,
2007
 
CASH FLOWS FROM OPERATING ACTIVITIES:
           
Net income
  $ 35,660     $ 37,029  
Adjustments to reconcile net income to net cash
               
  (used in) provided by operating activities:
               
    Depreciation and amortization
    15,694       13,793  
    Share-based compensation
    3,503       2,956  
    Provision for doubtful accounts
    1,665       1,008  
    Gain on forgiveness of loan
    (157 )     -  
    Loss on disposals of property & equipment
    8       1,999  
    Impairment on assets held for sale
    -       756  
Changes in assets and liabilities, net of acquired companies:
               
  Accounts receivable
    (15,215 )     (20,808 )
  Inventory
    (77,007 )     (43,391 )
  Prepaid expenses and other assets
    (1,080 )     (5,688 )
  Notes receivable, trade
    69       409  
  Accounts payable
    2,074       25,829  
  Accrued expenses and other current liabilities
    (1,663 )     (2,029 )
  Income taxes payable
    923       636  
     Net cash (used in) provided by operating activities
    (35,526 )     12,499  
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Purchases of acquired business, net of cash acquired
    (107,726 )     (6,470 )
Capital expenditures
    (32,024 )     (20,684 )
Proceeds from disposals of property and equipment
    -       5,448  
Other investing activities
    -       (1,042 )
     Net cash used in investing activities
    (139,750 )     (22,748 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Net borrowings (repayments) under note payable
    175,000       (11,004 )
Increase in bank overdraft
    9,482       6,246  
Proceeds from exercise of stock options
    848       7,086  
Repayments on long-term debt
    (7,754 )     (4,438 )
Tax benefit from stock option exercises
    171       2,853  
Principal payments of capital lease obligations
    -       (4 )
Proceeds from borrowings of long-term debt
    -       10,000  
     Net cash provided by financing activities
    177,747       10,739  
                 
NET INCREASE IN CASH AND CASH EQUIVALENTS
    2,471       490  
Cash and cash equivalents at beginning of period
    17,010       20,054  
Cash and cash equivalents at end of period
  $ 19,481     $ 20,544  
                 
Supplemental disclosures of cash flow information:
               
Cash paid during the period for:
               
     Interest, net of amounts capitalized
  $ 11,431     $ 9,235  
     Federal and state income taxes, net of refunds
  $ 18,877     $ 19,771