United Natural Foods, Inc. Reports Fourth Quarter and Full Year Fiscal 2023 Results
- Net sales increased 2.0% to $7.4 billion
- Year-end net debt reduced to $1.95 billion
- Expect full year operating margin benefits in 2024 of nearly $150 million
- Fourth quarter net sales increased 2.0%
- Total liquidity was $1.52 billion
- Adjusted EBITDA decreased 56.3% to $93 million
- Net loss of $68 million; Loss per diluted share of $(1.15)
- Expect further headwinds due to inflation in H1 2024
- Gross profit decreased 8.3% to $1.0 billion
Fourth Quarter Fiscal 2023 Performance
-
Net sales increased
2.0% to$7.4 billion -
Net loss of
$68 million $(1.15) -
Adjusted EBITDA decreased
56.3% to$93 million -
Adjusted EPS decreased to
$(0.25)
Recent Financial and Operational Summary
- Fiscal 2023 sales in-line with most recent outlook; adjusted EBITDA and adjusted EPS at high-end of most recent outlook
-
Year-end net debt reduced to a new post-Supervalu low of
$1.95 billion $1.40 billion -
Actioned nearly
$100 million -
Progressing on key transformation initiatives
-
Optimizing and automating supply chain; broke ground on
Sarasota distribution center - Accelerating and expanding transformation initiative, including the addition of three new board members
- Conducting board-led finance review to drive shareholder value creation
-
Optimizing and automating supply chain; broke ground on
“Our fourth quarter concluded a challenging year in which we continued to emphasize serving customers and suppliers, and we also worked diligently to improve operating effectiveness, efficiency and our technological capabilities. While we grew sales across all of our customer channels, profitability declined primarily due to a decrease in inflation driven procurement gains and elevated shrink. We expect further headwinds as we continue to cycle elevated inflationary benefits during the first half of fiscal 2024,” said Sandy Douglas, UNFI Chief Executive Officer.
“As we look to the new fiscal year, we’re focused on addressing near-term profitability while creating a structurally more efficient technology-enabled food retail services company that can better serve our customers and capitalize on the significant growth opportunities we see ahead. To that end, we’ve already captured nearly
|
Fourth Quarter Ended |
|
Fiscal Year Ended |
||||||||||||||||||
($ in millions, except for per share data) |
July 29, 2023 |
|
July 30, 2022 |
|
Percent Change |
|
July 29, 2023 |
|
July 30, 2022 |
|
Percent Change |
||||||||||
Net sales |
$ |
7,417 |
|
|
$ |
7,273 |
|
|
2.0 |
% |
|
$ |
30,272 |
|
|
$ |
28,928 |
|
|
4.6 |
% |
Chains |
$ |
3,141 |
|
|
$ |
3,126 |
|
|
0.5 |
% |
|
$ |
12,816 |
|
|
$ |
12,562 |
|
|
2.0 |
% |
Independent retailers |
$ |
1,897 |
|
|
$ |
1,872 |
|
|
1.3 |
% |
|
$ |
7,699 |
|
|
$ |
7,360 |
|
|
4.6 |
% |
Supernatural |
$ |
1,555 |
|
|
$ |
1,420 |
|
|
9.5 |
% |
|
$ |
6,374 |
|
|
$ |
5,719 |
|
|
11.5 |
% |
Retail |
$ |
609 |
|
|
$ |
621 |
|
|
(1.9 |
)% |
|
$ |
2,480 |
|
|
$ |
2,468 |
|
|
0.5 |
% |
Other |
$ |
593 |
|
|
$ |
616 |
|
|
(3.7 |
)% |
|
$ |
2,477 |
|
|
$ |
2,402 |
|
|
3.1 |
% |
Eliminations |
$ |
(378 |
) |
|
$ |
(382 |
) |
|
(1.0 |
)% |
|
$ |
(1,574 |
) |
|
$ |
(1,583 |
) |
|
(0.6 |
)% |
Net (loss) income |
$ |
(68 |
) |
|
$ |
39 |
|
|
(274.4 |
)% |
|
$ |
24 |
|
|
$ |
248 |
|
|
(90.3 |
)% |
Adjusted EBITDA(1) |
$ |
93 |
|
|
$ |
213 |
|
|
(56.3 |
)% |
|
$ |
640 |
|
|
$ |
829 |
|
|
(22.8 |
)% |
(Loss) earnings per diluted share (EPS) |
$ |
(1.15 |
) |
|
$ |
0.63 |
|
|
(282.5 |
)% |
|
$ |
0.40 |
|
|
$ |
4.07 |
|
|
(90.2 |
)% |
Adjusted (loss) earnings per diluted share (Adjusted EPS)(1) |
$ |
(0.25 |
) |
|
$ |
1.27 |
|
|
(119.7 |
)% |
|
$ |
2.23 |
|
|
$ |
4.83 |
|
|
(53.8 |
)% |
(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 measure calculated in accordance with GAAP. |
Fourth Quarter Fiscal 2023 Summary
Net sales increased
Gross profit in the fourth quarter of fiscal 2023 was
Operating expenses in the fourth quarter of fiscal 2023 were
Interest expense, net for the fourth quarter of fiscal 2023 was
Effective tax rate for the fourth quarter of fiscal 2023 was a benefit of
Net loss for the fourth quarter of fiscal 2023 was
Net loss per diluted share (EPS) was
Adjusted EBITDA for the fourth quarter of fiscal 2023 was
Capital Allocation and Financing Overview
-
Free Cash Flow – During the fourth quarter of 2023, free cash flow was
$117 million $269 million $222 million $105 million -
Leverage – Total outstanding debt, net of cash, ended the quarter at
$1.95 billion $166 million -
Liquidity – As of July 29, 2023, total liquidity was approximately
$1.52 billion $37 million $1.48 billion -
Repurchase program – During the fourth quarter of 2023, the Company repurchased approximately 791,000 shares at an average price of
$26.49 $21 million
Fiscal 2024 Outlook (1)
The Company is providing the following outlook for fiscal 2024, a 53-week year. This outlook reflects lower levels of anticipated procurement gains, driven by moderating levels of inflation, as well as the restoration of performance-based incentive cash compensation in fiscal 2024.
Fiscal Year Ending August 3, 2024 (53 weeks) |
|
|
|
Net sales ($ in billions) |
|
|
|
Net loss ($ in millions) |
|
|
|
EPS (2) |
|
|
|
Adjusted EPS (2)(3)(4) |
|
|
|
Adjusted EBITDA (4) ($ in millions) |
|
|
|
Capital 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) |
The increase compared to fiscal 2023 is primarily driven by investments in the Company’s transformation program. |
Conference Call and Webcast
The Company’s fourth quarter and full year fiscal 2023 conference call and audio webcast will be held today, Tuesday, September 26, 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 30, 2022 filed with the Securities and Exchange Commission (the “SEC”) on September 27, 2022 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 and the calculation of net debt to Adjusted EBITDA leverage are presented in the tables appearing below. 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. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in millions, except for per share data) |
|||||||||||||||
|
Fourth Quarter Ended |
|
Fiscal Year Ended |
||||||||||||
|
July 29, 2023 |
|
July 30, 2022 |
|
July 29, 2023 |
|
July 30, 2022 |
||||||||
Net sales |
$ |
7,417 |
|
|
$ |
7,273 |
|
|
$ |
30,272 |
|
|
$ |
28,928 |
|
Cost of sales |
|
6,451 |
|
|
|
6,220 |
|
|
|
26,141 |
|
|
|
24,746 |
|
Gross profit |
|
966 |
|
|
|
1,053 |
|
|
|
4,131 |
|
|
|
4,182 |
|
Operating expenses |
|
1,004 |
|
|
|
980 |
|
|
|
3,973 |
|
|
|
3,825 |
|
Restructuring, acquisition and integration related expenses |
|
7 |
|
|
|
5 |
|
|
|
8 |
|
|
|
21 |
|
Loss (gain) on sale of assets and other asset charges |
|
30 |
|
|
|
— |
|
|
|
30 |
|
|
|
(87 |
) |
Operating (loss) income |
|
(75 |
) |
|
|
68 |
|
|
|
120 |
|
|
|
423 |
|
Net periodic benefit income, excluding service cost |
|
(7 |
) |
|
|
(10 |
) |
|
|
(29 |
) |
|
|
(40 |
) |
Interest expense, net |
|
35 |
|
|
|
34 |
|
|
|
144 |
|
|
|
155 |
|
Other income, net |
|
— |
|
|
|
— |
|
|
|
(2 |
) |
|
|
(2 |
) |
(Loss) income before income taxes |
|
(103 |
) |
|
|
44 |
|
|
|
7 |
|
|
|
310 |
|
(Benefit) provision for income taxes |
|
(36 |
) |
|
|
3 |
|
|
|
(23 |
) |
|
|
56 |
|
Net (loss) income including noncontrolling interests |
|
(67 |
) |
|
|
41 |
|
|
|
30 |
|
|
|
254 |
|
Less net income attributable to noncontrolling interests |
|
(1 |
) |
|
|
(2 |
) |
|
|
(6 |
) |
|
|
(6 |
) |
Net (loss) income attributable to United Natural Foods, Inc. |
$ |
(68 |
) |
|
$ |
39 |
|
|
$ |
24 |
|
|
$ |
248 |
|
|
|
|
|
|
|
|
|
||||||||
Basic (loss) earnings per share |
$ |
(1.15 |
) |
|
$ |
0.66 |
|
|
$ |
0.41 |
|
|
$ |
4.28 |
|
Diluted (loss) earnings per share |
$ |
(1.15 |
) |
|
$ |
0.63 |
|
|
$ |
0.40 |
|
|
$ |
4.07 |
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
||||||||
Basic |
|
58.6 |
|
|
|
58.5 |
|
|
|
59.2 |
|
|
|
58.0 |
|
Diluted |
|
58.6 |
|
|
|
61.1 |
|
|
|
60.7 |
|
|
|
61.0 |
|
UNITED NATURAL FOODS, INC. CONSOLIDATED BALANCE SHEETS (unaudited) (in millions, except for par values) |
|||||||
|
July 29,
|
|
July 30,
|
||||
ASSETS |
|
|
|
||||
Cash and cash equivalents |
$ |
37 |
|
|
$ |
44 |
|
Accounts receivable, net |
|
889 |
|
|
|
1,214 |
|
Inventories, net |
|
2,292 |
|
|
|
2,355 |
|
Prepaid expenses and other current assets |
|
245 |
|
|
|
184 |
|
Total current assets |
|
3,463 |
|
|
|
3,797 |
|
Property and equipment, net |
|
1,767 |
|
|
|
1,690 |
|
Operating lease assets |
|
1,228 |
|
|
|
1,176 |
|
Goodwill |
|
20 |
|
|
|
20 |
|
Intangible assets, net |
|
722 |
|
|
|
819 |
|
Deferred income taxes |
|
32 |
|
|
|
— |
|
Other long-term assets |
|
162 |
|
|
|
126 |
|
Total assets |
$ |
7,394 |
|
|
$ |
7,628 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
||||
Accounts payable |
$ |
1,781 |
|
|
$ |
1,742 |
|
Accrued expenses and other current liabilities |
|
283 |
|
|
|
260 |
|
Accrued compensation and benefits |
|
143 |
|
|
|
232 |
|
Current portion of operating lease liabilities |
|
180 |
|
|
|
156 |
|
Current portion of long-term debt and finance lease liabilities |
|
18 |
|
|
|
27 |
|
Total current liabilities |
|
2,405 |
|
|
|
2,417 |
|
Long-term debt |
|
1,956 |
|
|
|
2,109 |
|
Long-term operating lease liabilities |
|
1,099 |
|
|
|
1,067 |
|
Long-term finance lease liabilities |
|
12 |
|
|
|
23 |
|
Pension and other postretirement benefit obligations |
|
16 |
|
|
|
18 |
|
Deferred income taxes |
|
— |
|
|
|
8 |
|
Other long-term liabilities |
|
162 |
|
|
|
194 |
|
Total liabilities |
|
5,650 |
|
|
|
5,836 |
|
Stockholders’ equity: |
|
|
|
||||
Preferred stock, |
|
— |
|
|
|
— |
|
Common stock, |
|
1 |
|
|
|
1 |
|
Additional paid-in capital |
|
606 |
|
|
|
608 |
|
Treasury stock at cost |
|
(86 |
) |
|
|
(24 |
) |
Accumulated other comprehensive loss |
|
(28 |
) |
|
|
(20 |
) |
Retained earnings |
|
1,250 |
|
|
|
1,226 |
|
Total United Natural Foods, Inc. stockholders’ equity |
|
1,743 |
|
|
|
1,791 |
|
Noncontrolling interests |
|
1 |
|
|
|
1 |
|
Total stockholders’ equity |
|
1,744 |
|
|
|
1,792 |
|
Total liabilities and stockholders’ equity |
$ |
7,394 |
|
|
$ |
7,628 |
|
UNITED NATURAL FOODS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) |
|||||||
|
Fiscal Year Ended |
||||||
(in millions) |
July 29, 2023 |
|
July 30, 2022 |
||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
||||
Net income including noncontrolling interests |
$ |
30 |
|
|
$ |
254 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
||||
Depreciation and amortization |
|
304 |
|
|
|
285 |
|
Share-based compensation |
|
38 |
|
|
|
44 |
|
Gain on sale of property and equipment |
|
(9 |
) |
|
|
(87 |
) |
Closed property and other restructuring charges |
|
— |
|
|
|
2 |
|
Intangible asset impairment charges |
|
25 |
|
|
|
— |
|
Net pension and other postretirement benefit income |
|
(29 |
) |
|
|
(40 |
) |
Deferred income tax (benefit) expense |
|
(36 |
) |
|
|
55 |
|
LIFO charge |
|
119 |
|
|
|
158 |
|
(Recoveries) provisions for losses on receivables |
|
(1 |
) |
|
|
2 |
|
Non-cash interest expense and other adjustments |
|
13 |
|
|
|
24 |
|
Changes in operating assets and liabilities, net of acquired businesses |
|
|
|
||||
Accounts and notes receivable |
|
327 |
|
|
|
(108 |
) |
Inventories |
|
(57 |
) |
|
|
(264 |
) |
Prepaid expenses and other assets |
|
(108 |
) |
|
|
(155 |
) |
Accounts payable |
|
53 |
|
|
|
86 |
|
Accrued expenses and other liabilities |
|
(45 |
) |
|
|
75 |
|
Net cash provided by operating activities |
|
624 |
|
|
|
331 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
||||
Payments for capital expenditures |
|
(323 |
) |
|
|
(251 |
) |
Proceeds from dispositions of assets |
|
16 |
|
|
|
230 |
|
Payments for investments |
|
(32 |
) |
|
|
(28 |
) |
Net cash used in investing activities |
|
(339 |
) |
|
|
(49 |
) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
||||
Proceeds from borrowings under revolving credit line |
|
2,976 |
|
|
|
4,425 |
|
Repayments of borrowings under revolving credit line |
|
(3,004 |
) |
|
|
(4,287 |
) |
Repayments of long-term debt and finance leases |
|
(154 |
) |
|
|
(376 |
) |
Repurchases of common stock |
|
(62 |
) |
|
|
— |
|
Proceeds from the issuance of common stock and exercise of stock options |
|
— |
|
|
|
8 |
|
Payments of employee restricted stock tax withholdings |
|
(40 |
) |
|
|
(41 |
) |
Payments for debt issuance costs |
|
— |
|
|
|
(6 |
) |
Distributions to noncontrolling interests |
|
(6 |
) |
|
|
(4 |
) |
Repayments of other loans |
|
(2 |
) |
|
|
— |
|
Other |
|
— |
|
|
|
2 |
|
Net cash used in financing activities |
|
(292 |
) |
|
|
(279 |
) |
EFFECT OF EXCHANGE RATE ON CASH |
|
— |
|
|
|
— |
|
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS |
|
(7 |
) |
|
|
3 |
|
Cash and cash equivalents, at beginning of period |
|
44 |
|
|
|
41 |
|
Cash and cash equivalents, at end of period |
$ |
37 |
|
|
$ |
44 |
|
Supplemental disclosures of cash flow information: |
|
|
|
||||
Cash paid for interest |
$ |
133 |
|
|
$ |
134 |
|
Cash (refunds) payments for federal, state and foreign income taxes, net |
$ |
(5 |
) |
|
$ |
5 |
|
Additions of property and equipment included in Accounts payable |
$ |
32 |
|
|
$ |
45 |
|
|
|||||||||||||||
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION UNITED NATURAL FOODS, INC. |
|||||||||||||||
|
|||||||||||||||
Reconciliation of Net (loss) income including noncontrolling interests to Adjusted EBITDA (unaudited) |
|||||||||||||||
|
|
|
|
||||||||||||
|
Fourth Quarter Ended |
|
Fiscal Year Ended |
||||||||||||
(in millions) |
July 29, 2023 |
|
July 30, 2022 |
|
July 29, 2023 |
|
July 30, 2022 |
||||||||
Net (loss) income including noncontrolling interests |
$ |
(67 |
) |
|
$ |
41 |
|
|
$ |
30 |
|
|
$ |
254 |
|
Adjustments to net (loss) income including noncontrolling interests: |
|
|
|
|
|
|
|
||||||||
Less net income attributable to noncontrolling interests |
|
(1 |
) |
|
|
(2 |
) |
|
|
(6 |
) |
|
|
(6 |
) |
Net periodic benefit income, excluding service cost |
|
(7 |
) |
|
|
(10 |
) |
|
|
(29 |
) |
|
|
(40 |
) |
Interest expense, net |
|
35 |
|
|
|
34 |
|
|
|
144 |
|
|
|
155 |
|
Other income, net |
|
— |
|
|
|
— |
|
|
|
(2 |
) |
|
|
(2 |
) |
(Benefit) provision for income taxes |
|
(36 |
) |
|
|
3 |
|
|
|
(23 |
) |
|
|
56 |
|
Depreciation and amortization |
|
80 |
|
|
|
75 |
|
|
|
304 |
|
|
|
285 |
|
Share-based compensation |
|
5 |
|
|
|
10 |
|
|
|
38 |
|
|
|
43 |
|
LIFO charge |
|
36 |
|
|
|
56 |
|
|
|
119 |
|
|
|
158 |
|
Restructuring, acquisition and integration related expenses(1) |
|
7 |
|
|
|
5 |
|
|
|
8 |
|
|
|
21 |
|
Loss (gain) on sale of assets and other asset charges(2) |
|
30 |
|
|
|
— |
|
|
|
30 |
|
|
|
(87 |
) |
Multiemployer pension plan withdrawal charges (benefit)(3) |
|
1 |
|
|
|
— |
|
|
|
1 |
|
|
|
(8 |
) |
Other retail expense(4) |
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
— |
|
Business transformation costs(5) |
|
9 |
|
|
|
— |
|
|
|
25 |
|
|
|
— |
|
Adjusted EBITDA |
$ |
93 |
|
|
$ |
213 |
|
|
$ |
640 |
|
|
$ |
829 |
|
(1) |
Fiscal 2023 primarily reflects severance costs. Fiscal 2022 primarily reflects costs associated with advisory and transformational activities to position our business for further value-creation related to integration. |
(2) |
Fiscal 2023 includes a |
(3) |
Reflects adjustments to multiemployer pension plan withdrawal charge estimates. |
(4) |
Fiscal 2023 reflects store closure charges and costs, operational wind-down and inventory charges. Fiscal 2022 reflects expenses associated with event-specific damages to certain retail stores. |
(5) |
Reflects third-party costs primarily for business transformation initiatives, including network automation and optimization, commercial value creation, digital offering enhancement and infrastructure unification and modernization. |
Reconciliation of Net (loss) income attributable to United Natural Foods, Inc. to Adjusted net (loss) income and Adjusted EPS (unaudited) |
|||||||||||||||
|
|||||||||||||||
|
Fourth Quarter Ended |
|
Fiscal Year Ended |
||||||||||||
(in millions, except per share amounts) |
July 29, 2023 |
|
July 30, 2022 |
|
July 29, 2023 |
|
July 30, 2022 |
||||||||
Net (loss) income attributable to United Natural Foods, Inc. |
$ |
(68 |
) |
|
$ |
39 |
|
|
$ |
24 |
|
|
$ |
248 |
|
Restructuring, acquisition, and integration related expenses(1) |
|
7 |
|
|
|
5 |
|
|
|
8 |
|
|
|
21 |
|
Loss (gain) on sale of assets and other asset charges other than losses on sales of receivables(2) |
|
25 |
|
|
|
— |
|
|
|
16 |
|
|
|
(87 |
) |
LIFO charge |
|
36 |
|
|
|
56 |
|
|
|
119 |
|
|
|
158 |
|
Surplus property depreciation and interest expense(3) |
|
1 |
|
|
|
1 |
|
|
|
2 |
|
|
|
3 |
|
Multiemployer pension plan withdrawal charges (benefit)(4) |
|
1 |
|
|
|
— |
|
|
|
1 |
|
|
|
(8 |
) |
Loss on debt extinguishment |
|
— |
|
|
|
— |
|
|
|
3 |
|
|
|
7 |
|
Other retail expense(5) |
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
— |
|
Business transformation costs(6) |
|
9 |
|
|
|
— |
|
|
|
25 |
|
|
|
— |
|
Tax impact of adjustments and adjusted effective tax rate(7) |
|
(26 |
) |
|
|
(24 |
) |
|
|
(63 |
) |
|
|
(47 |
) |
Adjusted net (loss) income |
$ |
(14 |
) |
|
$ |
78 |
|
|
$ |
136 |
|
|
$ |
295 |
|
|
|
|
|
|
|
|
|
||||||||
Diluted weighted average shares outstanding |
|
58.6 |
|
|
|
61.1 |
|
|
|
60.7 |
|
|
|
61.0 |
|
Adjusted EPS(8) |
$ |
(0.25 |
) |
|
$ |
1.27 |
|
|
$ |
2.23 |
|
|
$ |
4.83 |
|
(1) |
Fiscal 2023 primarily reflects severance costs. Fiscal 2022 primarily reflects costs associated with advisory and transformational activities to position our business for further value-creation related to integration. |
(2) |
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 from Adjusted EPS. Fiscal 2023 includes a |
(3) |
Reflects surplus, non-operating property depreciation and interest expense. |
(4) |
Reflects adjustments to multiemployer pension plan withdrawal charge estimates. |
(5) |
Fiscal 2023 reflects store closure charges and costs, operational wind-down and inventory charges. Fiscal 2022 reflects expenses associated with event-specific damages to certain retail stores. |
(6) |
Reflects third-party costs primarily for business transformation initiatives, including network automation and optimization, commercial value creation, digital offering enhancement and infrastructure unification and modernization. |
(7) |
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 true 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. |
(8) |
Adjusted (loss) earnings per share amounts are calculated using actual unrounded figures. |
Calculation of net debt to Adjusted EBITDA leverage ratio (unaudited) |
|||
|
|
||
(in millions, except ratios) |
Fiscal Year Ended July 29, 2023 |
||
Current portion of long-term debt and finance lease liabilities |
$ |
18 |
|
Long-term debt |
|
1,956 |
|
Long-term finance lease liabilities |
|
12 |
|
Less: Cash and cash equivalents |
|
(37 |
) |
Net carrying value of debt and finance lease liabilities |
|
1,949 |
|
Adjusted EBITDA |
$ |
640 |
|
Adjusted EBITDA leverage ratio |
3.0x |
|
|
Reconciliation of Net cash provided by operating activities to Free cash flow (unaudited) |
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
Fourth Quarter Ended |
|
Fiscal Year Ended |
||||||||||||
(in millions) |
July 29, 2023 |
|
July 30, 2022 |
|
July 29, 2023 |
|
July 30, 2022 |
||||||||
Net cash provided by operating activities |
$ |
222 |
|
|
$ |
362 |
|
|
$ |
624 |
|
|
$ |
331 |
|
Payments for capital expenditures |
|
(105 |
) |
|
|
(93 |
) |
|
|
(323 |
) |
|
|
(251 |
) |
Free cash flow |
$ |
117 |
|
|
$ |
269 |
|
|
$ |
301 |
|
|
$ |
80 |
|
|
|||||||||||
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 |
|||||||||
|
|
Low Range |
|
Estimate |
|
High Range |
|||||
Net loss attributable to United Natural Foods, Inc. |
|
$ |
(110 |
) |
|
|
|
$ |
(36 |
) |
|
Restructuring, acquisition and integration related expenses |
|
|
|
2 |
|
|
|
||||
LIFO charge |
|
|
|
25 |
|
|
|
||||
Business transformation costs |
|
|
|
51 |
|
|
|
||||
Tax impact of adjustments and adjusted effective tax rate(1) |
|
|
|
(20 |
) |
|
|
||||
Adjusted net (loss) income |
|
$ |
(52 |
) |
|
|
|
$ |
22 |
|
|
|
|
|
|
|
|
|
|||||
Diluted weighted average shares outstanding |
|
|
59 |
|
|
|
|
|
60 |
|
|
Adjusted (loss) / earnings per diluted share(2) |
|
$ |
(0.88 |
) |
|
|
|
$ |
0.38 |
|
|
(1) |
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. |
(2) |
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. |
|
$ |
(110 |
) |
|
|
|
$ |
(36 |
) |
|
Benefit for income taxes |
|
|
(39 |
) |
|
|
|
|
(13 |
) |
|
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 |
|
|
|
19 |
|
|
|
||||
Restructuring, acquisition and integration related expenses |
|
|
|
2 |
|
|
|
||||
Business transformation costs |
|
|
|
51 |
|
|
|
||||
Adjusted EBITDA |
|
$ |
450 |
|
|
|
|
$ |
550 |
|
|
Reconciliation of estimated 2024 and actual 2023 and 2022 U.S. GAAP effective tax rate to adjusted effective tax rate (unaudited) |
||||||||
|
Estimated
|
|
Actual Fiscal
|
|
Actual Fiscal
|
|||
|
26 |
% |
|
(329 |
)% |
|
18 |
% |
Discrete quarterly recognition of GAAP items(1) |
— |
% |
|
270 |
% |
|
8 |
% |
Tax impact of other charges and adjustments(2) |
— |
% |
|
139 |
% |
|
— |
% |
Changes in valuation allowances(3) |
— |
% |
|
(57 |
)% |
|
— |
% |
Other(4) |
— |
% |
|
— |
% |
|
— |
% |
Adjusted Effective Tax Rate(4) |
26 |
% |
|
23 |
% |
|
26 |
% |
Note: As part of the year-end reconciliation, we have updated the reconciliation of the fiscal 2023 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/20230926908639/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, Inc.
