EX-99.1 2 ex99-1.htm ex99-1.htm
Exhibit 99.1
 
IMMEDIATE RELEASE
June 2, 2010

UNITED NATURAL FOODS ANNOUNCES THIRD QUARTER FISCAL 2010
DILUTED EPS OF $0.45, A 15% INCREASE OVER THE PRIOR YEAR PERIOD

Third Quarter Highlights
 
·
Net sales increased 10.8% to $985.7 million compared with the third quarter of fiscal 2009
 
·
Fiscal 2010 sales guidance raised to a range of 6.5% - 7.5% year over year growth, or $3.68 billion to $3.72 billion

Providence, Rhode Island – June 2, 2010 -- United Natural Foods, Inc. (Nasdaq: UNFI) today reported net sales of $985.7 million for the third quarter of fiscal 2010, ended May 1, 2010, an increase of approximately $96.2 million, or 10.8%, from net sales of $889.5 million recorded in the third quarter of fiscal 2009.

“Our fiscal 2010 third quarter reflected the continuing rebound of the natural and organic industry as our growth accelerated during most of the quarter, resulting in both record revenues and net income,” said Steven Spinner, President and Chief Executive Officer.  “In addition, now that we have entered our fourth fiscal quarter, we have begun servicing all of our previously announced new customers.”

Net income was $19.5 million, or $0.45 per diluted share, for the third quarter of fiscal 2010 compared with net income for the third quarter of fiscal 2009 of $16.8 million, or $0.39 per diluted share.

Gross margin was 18.5% for the third quarter of fiscal 2010, which represents a 46 basis point decline from gross margin of 19.0% for the third quarter of fiscal 2009, primarily due to the continued shift in growth in the Company’s customer mix, and moderated inflation.

Operating expenses as a percentage of net sales decreased by 0.5% to 15.1% of net sales, or $148.6 million in the third quarter of fiscal 2010, compared to 15.6% or $138.3 million in the third quarter of fiscal 2009.  Operating expenses were positively impacted by the growth in the supernatural and supermarket channels which in general have lower operating expenses, and the continued roll-out of process improvement programs across all UNFI divisions.  The Company recorded $0.4 million in expenses during the quarter related to severance for a previously announced separation agreement, and $0.5 million in start-up costs associated with on-boarding of new customers.

In the third quarter of fiscal 2010, the supernatural channel experienced growth of 17.7%, the supermarket channel had growth of 12.2%, and the independent channel showed continued improvement with growth of 6.9%.
 


 
 

 

Fiscal 2010 Year to Date Summary

Sales for the first nine months of fiscal 2010 were $2.77 billion, a 6.4% increase over the prior fiscal year comparable period.  Diluted EPS was $1.17 per share, a 14.7% increase over the first nine months of fiscal 2009.
At 15.3% of net sales, operating expenses were 0.7% lower than the prior fiscal year comparable period.  Gross margin was 0.6% less than the first nine months of fiscal 2009, at 18.6% of net sales for the first nine months of fiscal 2010.

“In May, we announced the definitive agreement to acquire the Canadian food distribution assets of the SunOpta Distribution Group business, and we expect the transaction to close later this month,” said Mr. Spinner. “This morning, in a separate press release, we announced the extension of our long-term partnership with Whole Foods Market for an additional seven years, resulting in an amended agreement to serve them for the next decade.  We are well situated to continue our strategy to increase market share with both new and existing customers, drive operational excellence, operate as one company and further our sustainability and philanthropic causes which will serve as the primary vehicles for our long-term success.”

Updates to Fiscal 2010 Guidance
Based on the Company’s performance through the first nine months of 2010 and the current outlook for the remainder of the year including the proposed acquisition of certain assets of the SDG business, the Company is raising its net sales guidance for fiscal year 2010, ending July 31, 2010, to a range of $3.68 billion to $3.72 billion, which represents a 6.5% to 7.5% increase in total net sales over fiscal 2009.  The Company had previously provided, on December 10, 2009, a net sales guidance target of $3.54 billion to $3.63 billion.

In addition, the Company is narrowing its earnings per share guidance for fiscal 2010 to a range of $1.55 to $1.58 per diluted share.  The Company had previously announced earnings per share guidance of $1.48 to $1.58 per diluted share.  The Company’s revised guidance reflects the impact of improved operating efficiencies and cost controls.

Conference Call & Webcast
The Company’s third quarter fiscal 2010 conference call and audio webcast will be held at 10:00 a.m. ET on June 2, 2010.  The 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 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 17,000 customer locations 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 – 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.

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
(401) 528-8634
(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 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 30, 2009 and its quarterly reports on Form 10-Q filed thereafter, and include, but are not limited to, the ability of the Company to consummate the proposed acquisition of the SDG business, the Company's ability to successfully deploy its operational initiatives in the Canadian market, the occurrence of any event, change, or other circumstance that could give rise to the termination of the acquisition agreement entered into by the Company and SunOpta in connection with the Company's proposed acquisition of the SDG business; 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; 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.

 
 

 

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


   
Three months ended
   
Nine months ended
 
   
May 1,
2010
   
May 2,
2009
   
May 1,
2010
   
May 2,
2009
 
                         
Net sales
  $ 985,694     $ 889,538     $ 2,768,679     $ 2,601,409  
Cost of sales
    803,287       720,787       2,255,065       2,103,004  
                                 
                 Gross profit
    182,407       168,751       513,614       498,405  
                                 
Operating expenses
    148,565       138,327       424,976       417,082  
                Total operating expenses
    148,565       138,327       424,976       417,082  
                                 
                Operating income
    33,842       30,424       88,638       81,323  
                                 
Other expense (income):
                               
         Interest expense
    1,491       1,723       4,429       8,333  
         Interest income
    (89 )     11       (199 )     (331 )
         Other, net
    (40 )     134       (60 )     281  
                 Total other expense
    1,362       1,868       4,170       8,283  
                                 
                 Income before income taxes
    32,480       28,556       84,468       73,040  
                                 
Provision for income taxes
    12,992       11,777       33,787       29,393  
                                 
                Net income
  $ 19,488     $ 16,779     $ 50,681     $ 43,647  
                                 
Basic per share data:
                               
     Net income
  $ 0.45     $ 0.39     $ 1.18     $ 1.02  
                                 
     Weighted average basic shares
        of common stock
    43,245       42,871       43,085       42,827  
                                 
Diluted per share data:
                               
     Net income
  $ 0.45     $ 0.39     $ 1.17     $ 1.02  
                                 
Weighted average diluted shares
   of common stock
    43,536       42,943       43,328       42,939  



 
 

 

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

   
May 1,
2010
   
August 1,
2009
 
ASSETS
           
Current assets:
           
    Cash and cash equivalents
  $ 9,683     $ 10,269  
    Accounts receivable, net
    210,957       179,455  
    Notes receivable, trade, net
    3,064       1,799  
    Inventories
    438,752       366,611  
    Deferred income taxes
    18,074       18,074  
    Prepaid expenses and other current assets
    12,102       16,423  
       Total current assets
    692,632       592,631  
                 
Property and equipment, net
    254,603       242,051  
                 
Other assets:
               
    Goodwill
    163,346       164,333  
    Notes receivable, trade, net
    1,154       2,176  
    Intangible assets, net
    37,484       38,358  
    Other
    18,311       19,001  
Total assets
  $ 1,167,530     $ 1,058,550  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current liabilities:
               
    Notes payable
  $ 187,000     $ 200,000  
    Accounts payable
    198,623       155,211  
    Accrued expenses and other current liabilities
    85,094       63,347  
    Current portion of long-term debt
    5,029       5,020  
       Total current liabilities
    475,746       423,578  
                 
Long-term debt, excluding current portion
    49,692       53,858  
Deferred income taxes
    13,075       12,297  
Other long-term liabilities
    24,191       24,345  
       Total liabilities
    562,704       514,078  
                 
Stockholders’ equity:
               
Preferred stock, $0.01 par value, authorized 5,000 shares at May 1, 2010 and August 1, 2009; none issued and outstanding
    -       -  
Common stock, $0.01 par value, authorized 100,000 shares; 43,496 issued and 43,268 outstanding shares at May 1, 2010; 43,237 issued and 43,008 outstanding shares at August 1, 2009
    435       432  
  Additional paid-in capital
    184,574       175,182  
  Unallocated shares of Employee Stock Ownership Plan
    (754 )     (877 )
  Treasury stock
    (6,092 )     (6,092 )
  Accumulated other comprehensive loss
    (1,468 )     (1,623 )
  Retained earnings
    428,131       377,450  
     Total stockholders’ equity
    604,826       544,472  
                 
Total liabilities and stockholders’ equity
  $ 1,167,530     $ 1,058,550  

 
 

 

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

   
Nine months ended
 
   
May 1,
2010
   
May 2,
2009
 
CASH FLOWS FROM OPERATING ACTIVITIES:
           
Net income
  $ 50,681     $ 43,647  
Adjustments to reconcile net income to net cash provided by
               
  operating activities:
               
    Depreciation and amortization
    20,219       20,329  
    Share-based compensation
    6,517       4,607  
    Provision for doubtful accounts
    781       3,526  
    Excess tax benefits from share-based payment arrangements
    (399 )     (133 )
    (Gain) loss on disposals of property and equipment
    (3 )     290  
Changes in assets and liabilities, net of acquisitions:
               
    Accounts receivable
    (32,564 )     (20,760 )
    Inventories
    (72,141 )     (21,314 )
    Prepaid expenses and other assets
    4,458       (1,002 )
    Notes receivable, trade
    38       369  
    Accounts payable
    31,715       (1,195 )
    Accrued expenses and other current liabilities
    23,913       12,327  
       Net cash provided by operating activities
    33,215       40,691  
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Capital expenditures
    (30,912 )     (25,421 )
Purchases of acquired businesses, net of cash acquired
    (320 )     (4,468 )
Proceeds from disposals of property and equipment
    20       -  
       Net cash used in investing activities
    (31,212 )     (29,889 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Net repayments under note payable
    (13,000 )     (39,477 )
Increase in bank overdraft
    11,697       17,152  
Repayments of long-term debt
    (4,157 )     (3,726 )
Payments on life insurance policy loans
    -       (3,072 )
Capitalized debt issuance costs
    (7 )     (647 )
Proceeds from exercise of stock options
    3,751       613  
Payment of employee restricted stock tax withholdings
    (1,272 )     (425 )
Excess tax benefits from share based payment arrangements
    399       133  
       Net cash used in financing activities
    (2,589 )     (29,449 )
                 
NET DECREASE IN CASH AND CASH EQUIVALENTS
    (586 )     (18,647 )
Cash and cash equivalents at beginning of period
    10,269       25,333  
Cash and cash equivalents at end of period
  $ 9,683     $ 6,686  
                 
Supplemental disclosures of cash flow information:
               
Cash paid during the period for:
               
     Interest, net of amounts capitalized
  $ 3,559     $ 7,713  
     Federal and state income taxes, net of refunds
  $ 23,025     $ 29,734