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

 
IMMEDIATE RELEASE
November 25, 2008

UNITED NATURAL FOODS ANNOUNCES FIRST QUARTER 2009
DILUTED EPS OF $0.31

First Quarter Highlights
 
·
Net Sales increased 17.4% to $864.2 million in the first quarter 2009
 
·
Comparable Net Sales increased 10.1 % in the quarter
 
·
Net Income of $13.2 million

Dayville, Connecticut – November 25, 2008 -- United Natural Foods, Inc. (Nasdaq: UNFI) today reported net sales for the first quarter of fiscal 2009, ended November 1, 2008, of $864.2 million, an increase of $127.8 million, or 17.4%, from the $736.4 million in net sales recorded in the first quarter of fiscal 2008.  Excluding the effect of the Company’s November 2007 acquisition of Millbrook Distribution Services, Inc. (“UNFI Specialty”), net sales increased by approximately $74.7 million, or 10.1%, to $811.1 million.

“We’re quite pleased with our performance in the first quarter, which included delivering comparable sales growth of over 10% in spite of these difficult and uncertain economic conditions” said Steven Spinner, President and Chief Executive Officer. “These results reflect our associates continuing commitment to growing our core businesses.”

Net income was $13.2 million, or $0.31 per diluted share, for the first quarter of fiscal 2009.  Net income for the first quarter of fiscal 2008 totaled $13.6 million, or $0.32 per diluted share. UNFI Specialty, which the Company acquired in the second quarter of fiscal 2008, negatively impacted operating income by approximately $1.6 million, or $0.02 per diluted share, during the first quarter of fiscal 2009.  Excluding the effect of UNFI Specialty, net income for the quarter ended November 1, 2008 would have been $14.7 million, or $0.34 per diluted share.

Gross margin was 19.4% for the first quarter of fiscal 2009, which represents a 99 basis point improvement from the gross margin of 18.4% for the first quarter of fiscal 2008. The improvement in gross margin over the prior year was due primarily to higher gross margin associated with the Company’s UNFI Specialty division and higher fuel surcharge revenues due to the higher average diesel prices compared to the quarter ended October 27, 2007.  The fuel surcharge serves to partially offset higher diesel fuel costs in operating expenses.

Operating expenses as a percentage of net sales increased by 1.4% during the first quarter of fiscal 2009 to 16.5% of net sales, or $142.5 million.  Operating expenses were negatively impacted by $2.5 million in labor and other non recurring expenses related to the Company’s relocation from its Fontana, California facility to a new distribution facility in Moreno Valley, California and the planned relocation of the Company’s current Oxford, Pennsylvania facility to a new facility in York, Pennsylvania.  The Moreno Valley, California facility commenced shipments in September 2008 and the York, Pennsylvania facility is expected to commence operations in mid-January 2009.  Operating expenses increased by $31.3 million, or 28.1% compared to the quarter ended October 27, 2007, which had operating expenses of $111.3 million, or 15.1% of net sales.
 
 
 

 

In the quarter ended November 1, 2008, the Company recorded share-based compensation expense of $1.7 million in accordance with Statement of Financial Accounting Standard No. 123R, Share-Based Payment, which was $0.7 million higher than the same period in fiscal 2008.

“We relocated our distribution facility in Fontana, California to a new facility in Moreno Valley, California, and we are on track to relocate our New Oxford, Pennsylvania facility to York, Pennsylvania in January 2009,” said Mr. Spinner. “These facilities will allow us to achieve greater operational efficiencies and provide us with capabilities to grow our market share in the natural, organic, specialty and supplement channels.”

Mr. Spinner added, “We have seen measurable improvement at UNFI Specialty that is in line with our expectations.  As we look to further integrate UNFI Specialty into our existing business, we continue to believe that we are poised to gain market share during 2009.”

Conference Call & Webcast
The Company’s first quarter 2009 conference call and audio webcast will be held at 11:00 a.m. EST on November 25, 2008. The conference call dial-in number is (303) 262-2053. An audio webcast of the conference call will be available to the public, on a listen-only basis, via the Internet at www.fulldisclosure.com or at the Investor Relations section of the Company’s website at www.unfi.com.

About United Natural Foods
United Natural Foods, Inc. (www.unfi.com) 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,” ranked by Business Ethics as one of its “100 Best Corporate Citizens for 2006” and winner of the Supermarket News 2008 Sustainability Excellence Award.

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 1, 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)

   
Quarters ended
 
   
November 1,
2008
   
October 27,
2007
 
             
Net sales
  $ 864,236     $ 736,389  
Cost of sales
    696,648       600,918  
                 
                 Gross profit
    167,588       135,471  
                 
Operating expenses
    142,543       111,266  
                Total operating expenses
    142,543       111,266  
                 
                Operating income
    25,045       24,205  
                 
Other expense (income):
               
         Interest expense
    3,410       2,891  
         Interest income
    (252 )     (179 )
         Other, net
    (48 )     69  
                 Total other expense
    3,110       2,781  
                 
                 Income before income taxes
    21,935       21,424  
                 
Provision for income taxes
    8,686       7,863  
                 
                Net income
  $ 13,249     $ 13,561  
                 
Basic per share data:
               
                Net income
  $ 0.31     $ 0.32  
                 
Weighted average basic shares of common stock
    42,764       42,610  
                 
Diluted per share data:
               
                Net income
  $ 0.31     $ 0.32  
                 
Weighted average diluted shares of common stock
    42,919       42,829  


 
 

 

UNITED NATURAL FOODS, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands, except per share data)

   
November 1,
2008
   
August 2,
2008
 
ASSETS
           
Current assets:
           
    Cash and cash equivalents
  $ 7,474     $ 25,333  
    Accounts receivable, net
    191,522       179,063  
    Notes receivable, trade, net
    1,354       1,412  
    Inventories
    468,547       394,364  
    Prepaid expenses and other current assets
    12,352       13,307  
    Deferred income taxes
    14,221       14,221  
       Total current assets
    695,470       627,700  
                 
Property and equipment, net
    239,995       234,115  
                 
Other assets:
               
    Goodwill
    166,465       170,609  
    Notes receivable, trade, net
    2,179       2,349  
    Intangible assets, net
    38,669       33,689  
    Other
    18,771       16,021  
Total assets
  $ 1,161,549     $ 1,084,483  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current liabilities:
               
    Notes payable
  $ 299,198     $ 288,050  
    Accounts payable
    197,498       160,418  
    Accrued expenses and other current liabilities
    75,119       63,308  
    Current portion of long-term debt
    4,989       5,027  
       Total current liabilities
    576,804       516,803  
                 
Long-term debt, excluding current portion
    57,705       58,485  
Deferred income taxes
    11,002       9,058  
Other long-term liabilities
    20,588       20,087  
       Total liabilities
    666,099       604,433  
                 
Stockholders’ equity:
               
Preferred stock, $0.01 par value, authorized 5,000 shares at November 1, 2008 and August 2, 2008; none issued and outstanding
    -       -  
Common stock, $0.01 par value, authorized 100,000 shares; 43,128 issued and 42,900 outstanding shares at November 1, 2008; 43,100 issued and 42,871 outstanding shares at August 2, 2008
    431       431  
  Additional paid-in capital
    171,624       169,238  
  Unallocated shares of Employee Stock Ownership Plan
    (999 )     (1,040 )
  Treasury stock
    (6,092 )     (6,092 )
  Accumulated other comprehensive loss
    (1,029 )     (753 )
  Retained earnings
    331,515       318,266  
     Total stockholders’ equity
    495,450       480,050  
                 
Total liabilities and stockholders’ equity
  $ 1,161,549     $ 1,084,483  

 
 

 

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

   
Three months ended
 
   
November 1,
2008
   
October 27,
2007
 
CASH FLOWS FROM OPERATING ACTIVITIES:
           
Net income
  $ 13,249     $ 13,561  
Adjustments to reconcile net income to net cash
               
  used in operating activities:
               
    Depreciation and amortization
    6,369       4,678  
    Loss on disposals of property and equipment
    53       8  
    Deferred income taxes
    -       (101 )
    Provision for doubtful accounts
    842       472  
    Share-based compensation
    1,686       1,004  
    Gain on forgiveness of loan
    -       (157 )
Changes in assets and liabilities, net of acquisitions:
               
    Accounts receivable
    (13,350 )     (14,164 )
    Inventories
    (73,646 )     (52,246 )
    Prepaid expenses and other assets
    3,536       (2,693 )
    Notes receivable, trade
    228       389  
    Accounts payable
    20,527       29,828  
    Accrued expenses and other current liabilities
    9,307       462  
      Net cash used in operating activities
    (31,199 )     (18,959 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Capital expenditures
    (11,415 )     (12,623 )
Purchases of acquired businesses, net of cash acquired
    (190 )     (686 )
Payment for loans receivable
    -       (5,000 )
      Net cash used in investing activities
    (11,605 )     (18,309 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Net borrowings under note payable
    11,148       32,500  
Increase in bank overdraft
    16,989       8,714  
Payments on life insurance policy loans
    (3,072 )     -  
Repayments of long-term debt
    (818 )     (1,684 )
Proceeds from exercise of stock options
    565       134  
Tax benefit from exercises of stock options
    133       40  
      Net cash provided by financing activities
    24,945       39,704  
                 
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
    (17,859 )     2,436  
Cash and cash equivalents at beginning of period
    25,333       17,010  
Cash and cash equivalents at end of period
  $ 7,474     $ 19,446  
                 
Supplemental disclosures of cash flow information:
               
Cash paid during the period for:
               
     Interest, net of amounts capitalized
  $ 3,271     $ 2,779  
     Federal and state income taxes, net of refunds
  $ 1,169     $ 7,956