United Natural Foods, Inc. Reports First Quarter Fiscal 2024 Results
- Net sales increased by 0.3% compared to the same period last year.
- The company affirmed its fiscal 2024 outlook for net sales, Adjusted EBITDA, and Adjusted EPS.
- The company reported a net loss of $39 million and an adjusted EBITDA decrease of 43.5% to $117 million.
- Net loss of $39 million and adjusted EBITDA decrease of 43.5% raise concerns about profitability and operational efficiency.
- Gross profit decreased by 6.0% compared to the first quarter of fiscal 2023.
First Quarter Fiscal 2024 Performance (comparisons to first quarter fiscal 2023)
-
Net sales increased
0.3% to$7.6 billion -
Net loss of
$39 million $(0.67) -
Adjusted EBITDA decreased
43.5% to$117 million -
Adjusted EPS decreased to
$(0.04)
Recent Financial and Operational Summary
- Affirmed fiscal 2024 outlook for net sales, Adjusted EBITDA, Adjusted EPS and capital and cloud implementation expenditures; updated net loss and EPS expectations to reflect an asset charge and gain on sale
-
Delivered benefits of
$150 million -
Drove improved operational execution and transformation progress
- Revamped processes and management routines resulting in meaningful shrink reduction
- Completed consolidation of Logan Township into Allentown distribution center and the automation system expansion at Carlisle distribution center
- Onboarded new directors, CIO and Retail CEO
“Our performance this quarter exceeded our expectations as we drove improved operational execution, which helped deliver savings from our near-term value creation initiatives earlier in the year than previously expected. These savings partially offset the anticipated decline in procurement gains resulting from lower levels of inflation,” said Sandy Douglas, UNFI’s Chief Executive Officer.
“As we work to restore profitability in the near-term, we also continue to make progress on our multi-year transformation agenda designed to enhance shareholder value by structurally improving our capabilities, efficiency and profitability while meaningfully enhancing the customer and supplier experience. Given our leadership position and the tremendous long-term value creation opportunity we see for our customers, suppliers and our shareholders, we refuse to be incremental in our approach. We remain focused on sustaining operating and transformation momentum as we service our customers throughout the busy holiday season and will continue to drive operational improvement as quickly as possible. ”
First Quarter Fiscal 2024 Summary
|
13-Week Period Ended |
|
Percent Change |
|||||||
($ in millions, except for per share data) |
October 28, 2023 |
|
October 29, 2022 |
|
||||||
Net sales |
$ |
7,552 |
|
|
$ |
7,532 |
|
|
0.3 |
% |
Chains |
$ |
3,184 |
|
|
$ |
3,224 |
|
|
(1.2 |
)% |
Independent retailers |
$ |
1,899 |
|
|
$ |
1,947 |
|
|
(2.5 |
)% |
Supernatural |
$ |
1,612 |
|
|
$ |
1,513 |
|
|
6.5 |
% |
Retail |
$ |
606 |
|
|
$ |
613 |
|
|
(1.1 |
)% |
Other |
$ |
646 |
|
|
$ |
635 |
|
|
1.7 |
% |
Eliminations |
$ |
(395 |
) |
|
$ |
(400 |
) |
|
(1.3 |
)% |
Net (loss) income |
$ |
(39 |
) |
|
$ |
66 |
|
|
(159.1 |
)% |
Adjusted EBITDA (1) |
$ |
117 |
|
|
$ |
207 |
|
|
(43.5 |
)% |
EPS |
$ |
(0.67 |
) |
|
$ |
1.07 |
|
|
(162.6 |
)% |
Adjusted EPS (1) |
$ |
(0.04 |
) |
|
$ |
1.13 |
|
|
(103.5 |
)% |
(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 increased
Gross profit in the first quarter of fiscal 2024 was
Operating expenses in the first quarter of fiscal 2024 were
Interest expense, net for the first quarter of fiscal 2024 and fiscal 2023 was
Effective tax rate for the first quarter of fiscal 2024 was a benefit of
Net loss for the first quarter of fiscal 2024 was
Net loss per diluted share (EPS) was
Adjusted EBITDA for the first quarter of fiscal 2024 was
Capital Allocation and Financing Overview
-
Free Cash Flow – During the first quarter of fiscal 2024, free cash flow was
$(328) million $(329) million $254 million $74 million -
Leverage – Total outstanding debt, net of cash, ended the quarter at
$2.29 billion $336 million -
Liquidity – As of October 28, 2023, total liquidity was approximately
$1.29 billion $37 million $1.25 billion
Fiscal 2024 Outlook (1)
The Company is updating its full-year outlook for fiscal 2024 for net loss and EPS to reflect non-cash asset charges and a gain on sale and reaffirming its expectations for net sales, Adjusted EBITDA, Adjusted EPS and capital and cloud implementation expenditures:
Fiscal Year Ending August 3, 2024 (53 weeks) |
|
Previous Full Year Outlook |
|
Updated Full Year Outlook |
|
Change |
Net sales ($ in billions) |
|
|
|
|
|
— |
Net loss ($ in millions) |
|
|
|
|
|
|
EPS (2) |
|
|
|
|
|
|
Adjusted EPS (2)(3)(4) |
|
|
|
|
|
— |
Adjusted EBITDA (4) ($ in millions) |
|
|
|
|
|
— |
Capital and cloud implementation expenditures (5) ($ in millions) |
|
~ |
|
~ |
|
— |
(1) |
The outlook provided above is for fiscal 2024 only. This 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 |
|
(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 first quarter fiscal 2024 conference call and audio webcast will be held today, Wednesday, December 6, 2023 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
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
The reconciliation of these non-GAAP financial measures to their comparable GAAP financial measures (except for capital and cloud implementation expenditures) and the calculation of net debt to Adjusted EBITDA leverage are presented in the tables appearing below. 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 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 our 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 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 |
||||||
|
|
October 28,
|
|
October 29,
|
||||
Net sales |
|
$ |
7,552 |
|
|
$ |
7,532 |
|
Cost of sales |
|
|
6,522 |
|
|
|
6,436 |
|
Gross profit |
|
|
1,030 |
|
|
|
1,096 |
|
Operating expenses |
|
|
1,023 |
|
|
|
1,000 |
|
Restructuring, acquisition and integration related expenses |
|
|
4 |
|
|
|
2 |
|
Loss (gain) on sale of assets and other asset charges |
|
|
19 |
|
|
|
(5 |
) |
Operating (loss) income |
|
|
(16 |
) |
|
|
99 |
|
Net periodic benefit income, excluding service cost |
|
|
(3 |
) |
|
|
(7 |
) |
Interest expense, net |
|
|
35 |
|
|
|
35 |
|
Other income, net |
|
|
— |
|
|
|
(1 |
) |
(Loss) income before income taxes |
|
|
(48 |
) |
|
|
72 |
|
(Benefit) provision for income taxes |
|
|
(9 |
) |
|
|
5 |
|
Net (loss) income including noncontrolling interests |
|
|
(39 |
) |
|
|
67 |
|
Less net income attributable to noncontrolling interests |
|
|
— |
|
|
|
(1 |
) |
Net (loss) income attributable to United Natural Foods, Inc. |
|
$ |
(39 |
) |
|
$ |
66 |
|
|
|
|
|
|
||||
Basic (loss) earnings per share |
|
$ |
(0.67 |
) |
|
$ |
1.12 |
|
Diluted (loss) earnings per share |
|
$ |
(0.67 |
) |
|
$ |
1.07 |
|
|
|
|
|
|
||||
Weighted average shares outstanding: |
|
|
|
|
||||
Basic |
|
|
58.7 |
|
|
|
58.8 |
|
Diluted |
|
|
58.7 |
|
|
|
61.6 |
|
UNITED NATURAL FOODS, INC. |
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) |
||||||||
(in millions, except for par values) |
||||||||
|
|
October 28,
|
|
July 29,
|
||||
ASSETS |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
37 |
|
|
$ |
37 |
|
Accounts receivable, net |
|
|
1,013 |
|
|
|
889 |
|
Inventories, net |
|
|
2,648 |
|
|
|
2,292 |
|
Prepaid expenses and other current assets |
|
|
259 |
|
|
|
245 |
|
Total current assets |
|
|
3,957 |
|
|
|
3,463 |
|
Property and equipment, net |
|
|
1,744 |
|
|
|
1,767 |
|
Operating lease assets |
|
|
1,218 |
|
|
|
1,228 |
|
Goodwill |
|
|
19 |
|
|
|
20 |
|
Intangible assets, net |
|
|
703 |
|
|
|
722 |
|
Deferred income taxes |
|
|
32 |
|
|
|
32 |
|
Other long-term assets |
|
|
175 |
|
|
|
162 |
|
Total assets |
|
$ |
7,848 |
|
|
$ |
7,394 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
||||
Accounts payable |
|
$ |
1,934 |
|
|
$ |
1,781 |
|
Accrued expenses and other current liabilities |
|
|
277 |
|
|
|
283 |
|
Accrued compensation and benefits |
|
|
169 |
|
|
|
143 |
|
Current portion of operating lease liabilities |
|
|
181 |
|
|
|
180 |
|
Current portion of long-term debt and finance lease liabilities |
|
|
16 |
|
|
|
18 |
|
Total current liabilities |
|
|
2,577 |
|
|
|
2,405 |
|
Long-term debt |
|
|
2,296 |
|
|
|
1,956 |
|
Long-term operating lease liabilities |
|
|
1,090 |
|
|
|
1,099 |
|
Long-term finance lease liabilities |
|
|
10 |
|
|
|
12 |
|
Pension and other postretirement benefit obligations |
|
|
16 |
|
|
|
16 |
|
Other long-term liabilities |
|
|
160 |
|
|
|
162 |
|
Total liabilities |
|
|
6,149 |
|
|
|
5,650 |
|
Stockholders’ equity: |
|
|
|
|
||||
Preferred stock, |
|
|
— |
|
|
|
— |
|
Common stock, |
|
|
1 |
|
|
|
1 |
|
Additional paid-in capital |
|
|
606 |
|
|
|
606 |
|
Treasury stock at cost |
|
|
(86 |
) |
|
|
(86 |
) |
Accumulated other comprehensive loss |
|
|
(33 |
) |
|
|
(28 |
) |
Retained earnings |
|
|
1,211 |
|
|
|
1,250 |
|
Total United Natural Foods, Inc. stockholders’ equity |
|
|
1,699 |
|
|
|
1,743 |
|
Noncontrolling interests |
|
|
— |
|
|
|
1 |
|
Total stockholders’ equity |
|
|
1,699 |
|
|
|
1,744 |
|
Total liabilities and stockholders’ equity |
|
$ |
7,848 |
|
|
$ |
7,394 |
|
UNITED NATURAL FOODS, INC. |
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) |
||||||||
|
|
13-Week Period Ended |
||||||
(in millions) |
|
October 28,
|
|
October 29,
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
||||
Net (loss) income including noncontrolling interests |
|
$ |
(39 |
) |
|
$ |
67 |
|
Adjustments to reconcile net (loss) income to net cash used in operating activities: |
|
|
|
|
||||
Depreciation and amortization |
|
|
78 |
|
|
|
74 |
|
Share-based compensation |
|
|
6 |
|
|
|
12 |
|
Gain on sale of long-lived assets |
|
|
(7 |
) |
|
|
(5 |
) |
Long-lived asset impairment charges |
|
|
21 |
|
|
|
— |
|
Net pension and other postretirement benefit income |
|
|
(3 |
) |
|
|
(7 |
) |
Deferred income tax expense |
|
|
— |
|
|
|
2 |
|
LIFO charge |
|
|
7 |
|
|
|
21 |
|
Non-cash interest expense and other adjustments |
|
|
2 |
|
|
|
3 |
|
Changes in operating assets and liabilities |
|
|
(319 |
) |
|
|
(429 |
) |
Net cash used in operating activities |
|
|
(254 |
) |
|
|
(262 |
) |
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
||||
Payments for capital expenditures |
|
|
(74 |
) |
|
|
(67 |
) |
Proceeds from dispositions of assets |
|
|
9 |
|
|
|
7 |
|
Payments for investments |
|
|
(7 |
) |
|
|
(1 |
) |
Net cash used in investing activities |
|
|
(72 |
) |
|
|
(61 |
) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
||||
Proceeds from borrowings under revolving credit line |
|
|
597 |
|
|
|
1,206 |
|
Repayments of borrowings under revolving credit line |
|
|
(257 |
) |
|
|
(829 |
) |
Repayments of long-term debt and finance leases |
|
|
(6 |
) |
|
|
(6 |
) |
Repurchases of common stock |
|
|
— |
|
|
|
(12 |
) |
Payments of employee restricted stock tax withholdings |
|
|
(6 |
) |
|
|
(37 |
) |
Distributions to noncontrolling interests |
|
|
(1 |
) |
|
|
(2 |
) |
Repayments of other loans |
|
|
— |
|
|
|
(1 |
) |
Other |
|
|
(1 |
) |
|
|
— |
|
Net cash provided by financing activities |
|
|
326 |
|
|
|
319 |
|
EFFECT OF EXCHANGE RATE ON CASH |
|
|
— |
|
|
|
(1 |
) |
NET DECREASE IN CASH AND CASH EQUIVALENTS |
|
|
— |
|
|
|
(5 |
) |
Cash and cash equivalents, at beginning of period |
|
|
37 |
|
|
|
44 |
|
Cash and cash equivalents, at end of period |
|
$ |
37 |
|
|
$ |
39 |
|
Supplemental disclosures of cash flow information: |
|
|
|
|
||||
Cash paid for interest |
|
$ |
44 |
|
|
$ |
40 |
|
Cash (refunds) for federal, state, and foreign income taxes, net |
|
$ |
(12 |
) |
|
$ |
(1 |
) |
Leased assets obtained in exchange for new operating lease liabilities |
|
$ |
39 |
|
|
$ |
57 |
|
Additions of property and equipment included in Accounts payable |
|
$ |
18 |
|
|
$ |
26 |
|
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION (unaudited) |
||||||||
UNITED NATURAL FOODS, INC. |
||||||||
Reconciliation of Net (loss) income including noncontrolling interests to Adjusted EBITDA (unaudited) |
||||||||
|
|
13-Week Period Ended |
||||||
(in millions) |
|
October 28, 2023 |
|
October 29, 2022 |
||||
Net (loss) income including noncontrolling interests |
|
$ |
(39 |
) |
|
$ |
67 |
|
Adjustments to net (loss) income including noncontrolling interests: |
|
|
|
|
||||
Less net income attributable to noncontrolling interests |
|
|
— |
|
|
|
(1 |
) |
Net periodic benefit income, excluding service cost |
|
|
(3 |
) |
|
|
(7 |
) |
Interest expense, net |
|
|
35 |
|
|
|
35 |
|
Other income, net |
|
|
— |
|
|
|
(1 |
) |
(Benefit) provision for income taxes |
|
|
(9 |
) |
|
|
5 |
|
Depreciation and amortization |
|
|
78 |
|
|
|
74 |
|
Share-based compensation |
|
|
6 |
|
|
|
12 |
|
LIFO charge |
|
|
7 |
|
|
|
21 |
|
Restructuring, acquisition and integration related expenses |
|
|
4 |
|
|
|
2 |
|
Loss (gain) on sale of assets and other asset charges (1) |
|
|
19 |
|
|
|
(5 |
) |
Business transformation costs (2) |
|
|
15 |
|
|
|
5 |
|
Other adjustments (3) |
|
|
4 |
|
|
|
— |
|
Adjusted EBITDA |
|
$ |
117 |
|
|
$ |
207 |
|
(1) |
The first quarter of fiscal 2024 includes a |
|
(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 |
||||||
(in millions, except per share amounts) |
|
October 28, 2023 |
|
October 29, 2022 |
||||
Net (loss) income attributable to United Natural Foods, Inc. |
|
$ |
(39 |
) |
|
$ |
66 |
|
Restructuring, acquisition and integration related expenses |
|
|
4 |
|
|
|
2 |
|
Loss (gain) on sale of assets and other asset charges other than losses on sales of receivables (1) |
|
|
14 |
|
|
|
(5 |
) |
LIFO charge |
|
|
7 |
|
|
|
21 |
|
Surplus property depreciation and interest expense (2) |
|
|
1 |
|
|
|
1 |
|
Business transformation costs (3) |
|
|
15 |
|
|
|
5 |
|
Other adjustments (4) |
|
|
4 |
|
|
|
— |
|
Tax impact of adjustments and adjusted effective tax rate (5) |
|
|
(8 |
) |
|
|
(20 |
) |
Adjusted net (loss) income |
|
$ |
(2 |
) |
|
$ |
70 |
|
|
|
|
|
|
||||
Diluted weighted average shares outstanding |
|
|
58.7 |
|
|
|
61.6 |
|
Adjusted EPS (6) |
|
$ |
(0.04 |
) |
|
$ |
1.13 |
|
(1) |
Loss (gain) 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. The first quarter of fiscal 2024 includes a |
|
(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) |
October 28, 2023 |
||
Current portion of long-term debt and finance lease liabilities |
$ |
16 |
|
Long-term debt |
|
2,296 |
|
Long-term finance lease liabilities |
|
10 |
|
Less: Cash and cash equivalents |
|
(37 ) |
|
Net carrying value of debt and finance lease liabilities |
|
2,285 |
|
Adjusted EBITDA (1) |
$ |
550 |
|
Adjusted EBITDA leverage ratio |
4.2x |
||
(1) |
Adjusted EBITDA for purposes of this calculation reflects the summation of the trailing four quarters ended October 28, 2023. 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 Ended
|
||
Net loss including noncontrolling interests |
|
$ |
(76 |
) |
Adjustments to net income including noncontrolling interests: |
|
|
||
Less net income attributable to noncontrolling interests |
|
|
(5 |
) |
Net periodic benefit income, excluding service cost |
|
|
(25 |
) |
Interest expense, net |
|
|
144 |
|
Other income, net |
|
|
(1 |
) |
Benefit for income taxes |
|
|
(37 |
) |
Depreciation and amortization |
|
|
308 |
|
Share-based compensation |
|
|
32 |
|
LIFO charge |
|
|
105 |
|
Restructuring, acquisition and integration related expenses |
|
|
10 |
|
Loss on sale of assets and other asset charges |
|
|
54 |
|
Multiemployer pension plan withdrawal charges |
|
|
1 |
|
Other retail expense |
|
|
1 |
|
Business transformation costs |
|
|
35 |
|
Other adjustments |
|
|
4 |
|
Adjusted EBITDA (1) |
|
$ |
550 |
|
(1) |
Adjusted EBITDA for purposes of this calculation reflects the summation of the trailing four quarters ended October 28, 2023. |
Reconciliation of Net cash used in operating activities to Free cash flow (unaudited) |
|||||||
|
|
|
|
||||
|
13-Week Period Ended |
||||||
(in millions) |
October 28,
|
|
October 29,
|
||||
Net cash used in operating activities |
$ |
(254 |
) |
|
$ |
(262 |
) |
Payments for capital expenditures |
|
(74 |
) |
|
|
(67 |
) |
Free cash flow |
$ |
(328 |
) |
|
$ |
(329 |
) |
FISCAL 2024 GUIDANCE |
|||||||||||
Reconciliation of 2024 guidance 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. |
|
$ |
(120 |
) |
|
|
|
$ |
(46 |
) |
|
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 |
|
$ |
(52 |
) |
|
|
|
$ |
22 |
|
|
|
|
|
|
|
|
|
|||||
Diluted weighted average shares outstanding |
|
|
59 |
|
|
|
|
|
60 |
|
|
Adjusted EPS (3) |
|
$ |
(0.88 |
) |
|
|
|
$ |
0.38 |
|
|
(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 guidance 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. |
|
$ |
(120 |
) |
|
|
|
$ |
(46 |
) |
|
Benefit for income taxes |
|
|
(42 |
) |
|
|
|
|
(16 |
) |
|
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 |
|
$ |
450 |
|
|
|
|
$ |
550 |
|
|
Reconciliation of estimated 2024 and actual 2023 U.S. GAAP effective tax rate to adjusted effective tax rate (unaudited)
|
|
Estimated Fiscal 2024 |
|
Actual Fiscal 2023 |
|
|
22 % |
|
(329) % |
Discrete quarterly recognition of GAAP items (1) |
|
(47) % |
|
270 % |
Tax impact of other charges and adjustments (2) |
|
30 % |
|
139 % |
Changes in valuation allowances (3) |
|
2 % |
|
(57) % |
Other (4) |
|
19 % |
|
— % |
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/20231206455390/en/
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
Source: United Natural Foods
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