United Natural Foods, Inc. Reports Second Quarter Fiscal 2023 Results
United Natural Foods reported second-quarter fiscal 2023 results, revealing a 5.4% increase in net sales to $7.8 billion. However, gross profit fell by 0.6%, totaling nearly $1.1 billion. Net income plummeted 71.2% to $19 million, with diluted EPS decreasing 71.3% to $0.31. Adjusted EBITDA also declined by 17.7% to $181 million. The company has withdrawn its long-term fiscal 2024 targets, significantly lowering its FY2023 profitability forecast while maintaining its sales outlook. Notably, UNFI reduced net debt by $427 million during the quarter, bolstered by accounts receivable monetization.
- Net sales increased 5.4% to $7.8 billion.
- Reduced net debt by $427 million sequentially.
- Free cash flow rose to $448 million.
- Net income decreased 71.2% to $19 million.
- Adjusted EBITDA fell 17.7% to $181 million.
- Withdrew fiscal 2024 targets and reduced FY2023 profitability outlook.
Second Quarter Fiscal 2023 Highlights (comparisons to second quarter fiscal 2022)
-
Net sales increased
5.4% to , primarily driven by inflation and new business$7.8 billion -
Gross profit decreased
, or$6 million 0.6% , to nearly ; prior to LIFO charge, gross profit rose$1.1 billion 0.4% -
Net income decreased
71.2% to ; Earnings per diluted share (EPS) decreased$19 million 71.3% to$0.31 -
Adjusted EBITDA decreased
17.7% to$181 million -
Adjusted EPS decreased
42.6% to$0.78 -
Reduced net debt by
sequentially, including the benefits from Accounts Receivable monetization$427 million - Raising FY2023 sales outlook, reiterating capital expenditure outlook and lowering profitability outlook
- Continuing transformation agenda to improve operational execution and profitability
“Our second quarter sales grew over
“Our improvement efforts are already well underway. We’ve assembled a highly skilled and motivated management team that is developing a multifaceted transformation plan to continue to drive improvements in our customer and supplier experience, and address legacy integration and capability gaps in our digital and physical infrastructure. We look forward to sharing our transformation agenda and how we expect it to generate sustained improvements to shareholder returns,”
|
13-Week Period Ended |
|
Percent
|
|||||||
($ in millions, except for per share data) |
|
|
|
|
||||||
Net sales |
$ |
7,816 |
|
|
$ |
7,416 |
|
|
5.4 |
% |
Chains |
$ |
3,322 |
|
|
$ |
3,243 |
|
|
2.4 |
% |
Independent retailers |
$ |
1,980 |
|
|
$ |
1,905 |
|
|
3.9 |
% |
Supernatural |
$ |
1,659 |
|
|
$ |
1,453 |
|
|
14.2 |
% |
Retail |
$ |
660 |
|
|
$ |
643 |
|
|
2.6 |
% |
Other |
$ |
609 |
|
|
$ |
581 |
|
|
4.8 |
% |
Eliminations |
$ |
(414 |
) |
|
$ |
(409 |
) |
|
1.2 |
% |
Net income |
$ |
19 |
|
|
$ |
66 |
|
|
(71.2 |
)% |
Adjusted EBITDA(1) |
$ |
181 |
|
|
$ |
220 |
|
|
(17.7 |
)% |
EPS |
$ |
0.31 |
|
|
$ |
1.08 |
|
|
(71.3 |
)% |
Adjusted EPS(1) |
$ |
0.78 |
|
|
$ |
1.36 |
|
|
(42.6 |
)% |
(1) |
During fiscal 2022, the Company revised its definition of Adjusted EBITDA and Adjusted EPS to exclude the impact of the non-cash LIFO charge or benefit. The Company believes that this change provides a better indicator of its underlying operating performance and permits better comparability between periods. Prior-year periods have been recast to reflect the new definition. 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 |
Second Quarter Fiscal 2023 Summary
Net sales increased
Gross profit in the second quarter of fiscal 2023 was
Operating expenses in the second quarter of fiscal 2023 were
Interest expense, net for the second quarter of fiscal 2023 was
Effective tax rate for the second quarter of fiscal 2023 was
Net income for the second quarter of fiscal 2023 was
Net income per diluted share (EPS) was
Adjusted EBITDA for the second quarter of fiscal 2023 was
Capital Allocation and Financing Overview
-
Free Cash Flow – During the second quarter of 2023, free cash flow was
, compared to$448 million in the second quarter of fiscal 2022. The results for the second quarter of fiscal 2023 reflect net cash provided by operating activities of$74 million , primarily driven by the monetization of certain qualified accounts receivables as described below and cash generated from working capital, partially offset by payments for capital expenditures of$532 million .$84 million
-
Leverage – The net debt to adjusted EBITDA leverage ratio was 2.6x as of
January 28, 2023 . Total outstanding debt, net of cash, ended the quarter at , reflecting a decrease of$2.07 billion in the second quarter of fiscal 2023 (compared to the end of the first quarter of fiscal 2023) primarily driven by cash provided by operations in the second quarter of fiscal 2023.$427 million
-
Liquidity – As of
January 28, 2023 , total liquidity was approximately , consisting of approximately$1.57 billion in cash, plus the ability to borrow an aggregate of approximately$40 million under the Company’s asset-based lending facility.$1.53 billion
-
Repurchase program – During the second quarter of fiscal 2023, the Company repurchased approximately 390,000 shares at an average price of
for an aggregate cost of approximately$41.36 , including fees and commissions.$17 million
-
Accounts Receivable monetization - Early in the second quarter of fiscal 2023, the Company entered into a monetization program for the sale of certain accounts receivable which generated net cash proceeds of approximately
. Proceeds have been used to pay down debt.$282 million
Fiscal 2023 Outlook (1)
The Company has withdrawn its long-term fiscal year 2024 financial targets and updated its full year outlook to the following:
Fiscal Year Ending |
Previous Full Year
|
|
Updated Full Year
|
|
% Change Over FY22 at
|
Net sales ($ in billions) |
|
|
|
|
|
Net income ($ in millions) |
|
|
|
|
(53)% |
EPS (2) |
|
|
|
|
(53)% |
Adjusted EPS (2)(3)(4) |
|
|
|
|
(28)% |
Adjusted EBITDA (4) ($ in millions) |
|
|
|
|
(10)% |
Capital expenditures ($ in millions) |
~ |
|
~ |
|
|
(1) | The outlook provided above is for fiscal 2023 only and replaces and supersedes any and all guidance provided prior to the date hereof covering fiscal 2023. 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. |
|
(2) | 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 income before tax. It also excludes the potential impact of changes to uncertain tax positions, valuation allowances, stock compensation accounting (ASU 2016-09) 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. |
Conference Call and Webcast
The Company’s second quarter fiscal 2023 conference call and audio webcast will be held today,
About
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
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 2023 fiscal year to the comparable periods in the 2022 fiscal year and to internally prepared projections. These non-GAAP financial measures may differ from similarly titled measures of other companies.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in millions, except for per share data) |
||||||||||||||||
|
|
13-Week Period Ended |
|
26-Week Period Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net sales |
|
$ |
7,816 |
|
|
$ |
7,416 |
|
|
$ |
15,348 |
|
|
$ |
14,413 |
|
Cost of sales |
|
|
6,747 |
|
|
|
6,341 |
|
|
|
13,183 |
|
|
|
12,296 |
|
Gross profit |
|
|
1,069 |
|
|
|
1,075 |
|
|
|
2,165 |
|
|
|
2,117 |
|
Operating expenses |
|
|
1,002 |
|
|
|
944 |
|
|
|
2,002 |
|
|
|
1,876 |
|
Restructuring, acquisition and integration related expenses |
|
|
3 |
|
|
|
5 |
|
|
|
5 |
|
|
|
8 |
|
Loss (gain) on sale of assets |
|
|
1 |
|
|
|
1 |
|
|
|
(4 |
) |
|
|
1 |
|
Operating income |
|
|
63 |
|
|
|
125 |
|
|
|
162 |
|
|
|
232 |
|
Net periodic benefit income, excluding service cost |
|
|
(7 |
) |
|
|
(10 |
) |
|
|
(14 |
) |
|
|
(20 |
) |
Interest expense, net |
|
|
39 |
|
|
|
44 |
|
|
|
74 |
|
|
|
84 |
|
Other income, net |
|
|
— |
|
|
|
(2 |
) |
|
|
(1 |
) |
|
|
(1 |
) |
Income before income taxes |
|
|
31 |
|
|
|
93 |
|
|
|
103 |
|
|
|
169 |
|
Provision for income taxes |
|
|
9 |
|
|
|
25 |
|
|
|
14 |
|
|
|
24 |
|
Net income including noncontrolling interests |
|
|
22 |
|
|
|
68 |
|
|
|
89 |
|
|
|
145 |
|
Less net income attributable to noncontrolling interests |
|
|
(3 |
) |
|
|
(2 |
) |
|
|
(4 |
) |
|
|
(3 |
) |
Net income attributable to |
|
$ |
19 |
|
|
$ |
66 |
|
|
$ |
85 |
|
|
$ |
142 |
|
|
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share |
|
$ |
0.32 |
|
|
$ |
1.13 |
|
|
$ |
1.43 |
|
|
$ |
2.47 |
|
Diluted earnings per share |
|
$ |
0.31 |
|
|
$ |
1.08 |
|
|
$ |
1.38 |
|
|
$ |
2.33 |
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
|
59.8 |
|
|
|
58.3 |
|
|
|
59.3 |
|
|
|
57.6 |
|
Diluted |
|
|
61.0 |
|
|
|
61.0 |
|
|
|
61.3 |
|
|
|
61.0 |
|
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (in millions, except for par values) |
||||||||
|
|
|
|
|
||||
ASSETS |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
40 |
|
|
$ |
44 |
|
Accounts receivable, net |
|
|
992 |
|
|
|
1,214 |
|
Inventories, net |
|
|
2,512 |
|
|
|
2,355 |
|
Prepaid expenses and other current assets |
|
|
197 |
|
|
|
184 |
|
Total current assets |
|
|
3,741 |
|
|
|
3,797 |
|
Property and equipment, net |
|
|
1,719 |
|
|
|
1,690 |
|
Operating lease assets |
|
|
1,218 |
|
|
|
1,176 |
|
|
|
|
20 |
|
|
|
20 |
|
Intangible assets, net |
|
|
783 |
|
|
|
819 |
|
Other long-term assets |
|
|
154 |
|
|
|
126 |
|
Total assets |
|
$ |
7,635 |
|
|
$ |
7,628 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
||||
Accounts payable |
|
$ |
1,797 |
|
|
$ |
1,742 |
|
Accrued expenses and other current liabilities |
|
|
249 |
|
|
|
260 |
|
Accrued compensation and benefits |
|
|
166 |
|
|
|
232 |
|
Current portion of operating lease liabilities |
|
|
161 |
|
|
|
156 |
|
Current portion of long-term debt and finance lease liabilities |
|
|
23 |
|
|
|
27 |
|
Total current liabilities |
|
|
2,396 |
|
|
|
2,417 |
|
Long-term debt |
|
|
2,065 |
|
|
|
2,109 |
|
Long-term operating lease liabilities |
|
|
1,107 |
|
|
|
1,067 |
|
Long-term finance lease liabilities |
|
|
18 |
|
|
|
23 |
|
Pension and other postretirement benefit obligations |
|
|
18 |
|
|
|
18 |
|
Deferred income taxes |
|
|
14 |
|
|
|
8 |
|
Other long-term liabilities |
|
|
172 |
|
|
|
194 |
|
Total liabilities |
|
|
5,790 |
|
|
|
5,836 |
|
Stockholders’ equity: |
|
|
|
|
||||
Preferred stock, |
|
|
— |
|
|
|
— |
|
Common stock, |
|
|
1 |
|
|
|
1 |
|
Additional paid-in capital |
|
|
592 |
|
|
|
608 |
|
|
|
|
(53 |
) |
|
|
(24 |
) |
Accumulated other comprehensive loss |
|
|
(9 |
) |
|
|
(20 |
) |
Retained earnings |
|
|
1,311 |
|
|
|
1,226 |
|
|
|
|
1,842 |
|
|
|
1,791 |
|
Noncontrolling interests |
|
|
3 |
|
|
|
1 |
|
Total stockholders’ equity |
|
|
1,845 |
|
|
|
1,792 |
|
Total liabilities and stockholders’ equity |
|
$ |
7,635 |
|
|
$ |
7,628 |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) |
||||||||
|
|
26-Week Period Ended |
||||||
(in millions) |
|
|
|
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
||||
Net income including noncontrolling interests |
|
$ |
89 |
|
|
$ |
145 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
||||
Depreciation and amortization |
|
|
147 |
|
|
|
138 |
|
Share-based compensation |
|
|
23 |
|
|
|
23 |
|
(Gain) loss on sale of property and equipment |
|
|
(9 |
) |
|
|
1 |
|
Closed property and other restructuring charges |
|
|
— |
|
|
|
1 |
|
Net pension and other postretirement benefit income |
|
|
(14 |
) |
|
|
(20 |
) |
Deferred income tax expense |
|
|
1 |
|
|
|
— |
|
LIFO charge |
|
|
50 |
|
|
|
30 |
|
Provision for losses on receivables |
|
|
(3 |
) |
|
|
1 |
|
Non-cash interest expense and other adjustments |
|
|
8 |
|
|
|
15 |
|
Changes in operating assets and liabilities |
|
|
(22 |
) |
|
|
(291 |
) |
Net cash provided by operating activities |
|
|
270 |
|
|
|
43 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
||||
Payments for capital expenditures |
|
|
(151 |
) |
|
|
(106 |
) |
Proceeds from dispositions of assets |
|
|
12 |
|
|
|
3 |
|
Payments for investments |
|
|
(4 |
) |
|
|
(26 |
) |
Net cash used in investing activities |
|
|
(143 |
) |
|
|
(129 |
) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
||||
Proceeds from borrowings under revolving credit line |
|
|
1,944 |
|
|
|
2,521 |
|
Repayments of borrowings under revolving credit line |
|
|
(1,861 |
) |
|
|
(2,232 |
) |
Repayments of long-term debt and finance leases |
|
|
(143 |
) |
|
|
(168 |
) |
Repurchases of common stock |
|
|
(29 |
) |
|
|
— |
|
Proceeds from the issuance of common stock and exercise of stock options |
|
|
— |
|
|
|
9 |
|
Payments of employee restricted stock tax withholdings |
|
|
(39 |
) |
|
|
(35 |
) |
Payments for debt issuance costs |
|
|
— |
|
|
|
(1 |
) |
Distributions to noncontrolling interests |
|
|
(2 |
) |
|
|
(3 |
) |
Repayments of other loans |
|
|
(1 |
) |
|
|
— |
|
Net cash (used in) provided by financing activities |
|
|
(131 |
) |
|
|
91 |
|
EFFECT OF EXCHANGE RATE ON CASH |
|
|
— |
|
|
|
— |
|
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS |
|
|
(4 |
) |
|
|
5 |
|
Cash and cash equivalents, at beginning of period |
|
|
44 |
|
|
|
40 |
|
Cash and cash equivalents, at end of period |
|
$ |
40 |
|
|
$ |
45 |
|
Supplemental disclosures of cash flow information: |
|
|
|
|
||||
Cash paid for interest |
|
$ |
65 |
|
|
$ |
67 |
|
Cash payments for federal, state, and foreign income taxes, net |
|
$ |
3 |
|
|
$ |
— |
|
Leased assets obtained in exchange for new operating lease liabilities |
|
$ |
133 |
|
|
$ |
123 |
|
Leased assets obtained in exchange for new finance lease liabilities |
|
$ |
— |
|
|
$ |
1 |
|
Additions of property and equipment included in Accounts payable |
|
$ |
31 |
|
|
$ |
16 |
|
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION (unaudited)
Reconciliation of Net income including noncontrolling interests to Adjusted EBITDA (unaudited) |
|||||||||||||||
|
13-Week Period Ended |
|
26-Week Period Ended |
||||||||||||
(in millions) |
|
|
|
|
|
|
|
||||||||
Net income including noncontrolling interests |
$ |
22 |
|
|
$ |
68 |
|
|
$ |
89 |
|
|
$ |
145 |
|
Adjustments to net income including noncontrolling interests: |
|
|
|
|
|
|
|
||||||||
Less net income attributable to noncontrolling interests |
|
(3 |
) |
|
|
(2 |
) |
|
|
(4 |
) |
|
|
(3 |
) |
Net periodic benefit income, excluding service cost |
|
(7 |
) |
|
|
(10 |
) |
|
|
(14 |
) |
|
|
(20 |
) |
Interest expense, net |
|
39 |
|
|
|
44 |
|
|
|
74 |
|
|
|
84 |
|
Other income, net |
|
— |
|
|
|
(2 |
) |
|
|
(1 |
) |
|
|
(1 |
) |
Provision for income taxes |
|
9 |
|
|
|
25 |
|
|
|
14 |
|
|
|
24 |
|
Depreciation and amortization |
|
73 |
|
|
|
69 |
|
|
|
147 |
|
|
|
138 |
|
Share-based compensation |
|
11 |
|
|
|
12 |
|
|
|
23 |
|
|
|
23 |
|
LIFO charge(1) |
|
29 |
|
|
|
19 |
|
|
|
50 |
|
|
|
30 |
|
Restructuring, acquisition and integration related expenses |
|
3 |
|
|
|
5 |
|
|
|
5 |
|
|
|
8 |
|
Loss (gain) on sale of assets |
|
1 |
|
|
|
1 |
|
|
|
(4 |
) |
|
|
1 |
|
Multiemployer pension plan withdrawal benefit(2) |
|
— |
|
|
|
(8 |
) |
|
|
— |
|
|
|
(8 |
) |
Other retail benefit(3) |
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
(1 |
) |
Business transformation costs(4) |
|
4 |
|
|
|
— |
|
|
|
9 |
|
|
|
— |
|
Adjusted EBITDA |
$ |
181 |
|
|
$ |
220 |
|
|
$ |
388 |
|
|
$ |
420 |
|
(1) | During fiscal 2022, the Company revised its definition of Adjusted EBITDA to exclude the impact of the non-cash LIFO charge or benefit. The following illustrates the impact of the revised definition on previously reported periods to show the effect of this change: |
|
|
13-Week Period
|
|
26-Week Period
|
||
(in millions) |
|
|
|
|
||
Adjusted EBITDA (previously reported definition) |
|
$ |
201 |
|
$ |
390 |
LIFO charge |
|
|
19 |
|
|
30 |
Adjusted EBITDA (current definition) |
|
$ |
220 |
|
$ |
420 |
(2) | Reflects an adjustment to multiemployer pension plan withdrawal charge estimates. |
|
(3) | Reflects an insurance recovery associated with event-specific damages to certain retail stores and store closure costs. |
|
(4) | Reflects third-party professional consulting costs for business transformation initiatives, including network automation and optimization, commercial value creation, digital offering enhancement and infrastructure unification and modernization. |
Reconciliation of Net income attributable to |
||||||||||||||||
|
|
13-Week Period Ended |
|
26-Week Period Ended |
||||||||||||
(in millions, except per share amounts) |
|
|
|
|
|
|
|
|
||||||||
Net income attributable to |
|
$ |
19 |
|
|
$ |
66 |
|
|
$ |
85 |
|
|
$ |
142 |
|
Restructuring, acquisition and integration related expenses |
|
|
3 |
|
|
|
5 |
|
|
|
5 |
|
|
|
8 |
|
(Gain) loss on sale of assets other than losses on sales of receivables (1) |
|
|
(4 |
) |
|
|
1 |
|
|
|
(9 |
) |
|
|
1 |
|
LIFO charge |
|
|
29 |
|
|
|
19 |
|
|
|
50 |
|
|
|
30 |
|
Surplus property depreciation and interest expense(2) |
|
|
— |
|
|
|
1 |
|
|
|
1 |
|
|
|
2 |
|
Multiemployer pension plan withdrawal benefit |
|
|
— |
|
|
|
(8 |
) |
|
|
— |
|
|
|
(8 |
) |
Loss on debt extinguishment |
|
|
3 |
|
|
|
5 |
|
|
|
3 |
|
|
|
5 |
|
Other retail benefit(3) |
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
(1 |
) |
Business transformation costs(4) |
|
|
4 |
|
|
|
— |
|
|
|
9 |
|
|
|
— |
|
Tax impact of adjustments and adjusted effective tax rate(5) |
|
|
(7 |
) |
|
|
(5 |
) |
|
|
(27 |
) |
|
|
(29 |
) |
Adjusted net income |
|
$ |
47 |
|
|
$ |
83 |
|
|
$ |
117 |
|
|
$ |
150 |
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted weighted average shares outstanding |
|
|
61.0 |
|
|
|
61.0 |
|
|
|
61.3 |
|
|
|
61.0 |
|
Adjusted EPS(6)(7) |
|
$ |
0.78 |
|
|
$ |
1.36 |
|
|
$ |
1.92 |
|
|
$ |
2.47 |
|
(1) | Gain on sale of assets, 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 on the Condensed Consolidated Statements of Operations and are not adjusted from Adjusted EPS. |
|
(2) | Reflects surplus, non-operating property depreciation and interest expense. |
|
(3) | Reflects an insurance recovery associated with event-specific damages to certain retail stores and store closure costs. |
|
(4) | Reflects third-party professional consulting costs for business transformation initiatives, including network automation and optimization, commercial value creation, digital offering enhancement and infrastructure unification and modernization. |
|
(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 exercise of share-based compensation awards and discrete GAAP tax items which could impact the comparability of the operational effective tax rate. The reconciliation of the adjusted effective tax rate used in calculating Adjusted EPS is provided in the table below. 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. |
|
(6) | Earnings per share amounts are calculated using actual unrounded figures. |
|
(7) | During the third quarter of fiscal 2022, the Company revised its definition of Adjusted EPS to exclude the impact of the non-cash LIFO charge. The following illustrates the impact of the revised definition on previously reported periods to show the effect of this change: |
|
|
13-Week Period
|
|
26-Week Period
|
||||
|
|
|
|
|
||||
Adjusted EPS (previously reported definition) |
|
$ |
1.13 |
|
|
$ |
2.10 |
|
LIFO charge |
|
|
0.31 |
|
|
|
0.49 |
|
Tax impact of adjustment |
|
|
(0.08 |
) |
|
|
(0.12 |
) |
Adjusted EPS (current definition) |
|
$ |
1.36 |
|
|
$ |
2.47 |
|
Calculation of net debt to Adjusted EBITDA leverage ratio (unaudited) |
|||
(in millions, except ratios) |
|
||
Current portion of long-term debt and finance lease liabilities |
$ |
23 |
|
Long-term debt |
|
2,065 |
|
Long-term finance lease liabilities |
|
18 |
|
Less: Cash and cash equivalents |
|
(40 |
) |
Net carrying value of debt and finance lease liabilities |
|
2,066 |
|
Adjusted EBITDA(1) |
$ |
797 |
|
Adjusted EBITDA leverage ratio(2) |
2.6x |
(1) |
Adjusted EBITDA for purposes of this calculation reflects the summation of the trailing four quarters ended |
|
(2) | During fiscal 2022, the Company revised its definition of Adjusted EBITDA, to exclude the impact of the non-cash LIFO charge. |
Reconciliation of trailing four quarters Net income including noncontrolling interests to Adjusted EBITDA (unaudited)
(in millions) |
|
52-Week Period
|
||
Net income including noncontrolling interests |
|
$ |
198 |
|
Adjustments to net income including noncontrolling interests: |
|
|
||
Less net income attributable to noncontrolling interests |
|
|
(7 |
) |
Net periodic benefit income, excluding service cost |
|
|
(34 |
) |
Interest expense, net |
|
|
145 |
|
Other income, net |
|
|
(2 |
) |
Provision for income taxes |
|
|
46 |
|
Depreciation and amortization |
|
|
294 |
|
Share-based compensation |
|
|
43 |
|
LIFO charge |
|
|
178 |
|
Restructuring, acquisition and integration related expenses |
|
|
18 |
|
Gain on sale of assets |
|
|
(92 |
) |
Multiemployer pension plan withdrawal charges |
|
|
— |
|
Other retail expense |
|
|
1 |
|
Business transformation costs |
|
|
9 |
|
Adjusted EBITDA(1) |
|
$ |
797 |
|
(1) |
Adjusted EBITDA for purposes of this calculation reflects the summation of the trailing four quarters ended |
Reconciliation of Net cash provided by operating activities to Free cash flow (unaudited) |
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
13-Week Period Ended |
|
26-Week Period Ended |
||||||||||||
(in millions) |
|
|
|
|
|
|
|
||||||||
Net cash provided by operating activities |
$ |
532 |
|
|
|
124 |
|
|
$ |
270 |
|
|
$ |
43 |
|
Payments for capital expenditures |
|
(84 |
) |
|
|
(50 |
) |
|
|
(151 |
) |
|
|
(106 |
) |
Free cash flow |
$ |
448 |
|
|
$ |
74 |
|
|
$ |
119 |
|
|
$ |
(63 |
) |
FISCAL 2023 GUIDANCE
Reconciliation of 2023 guidance for estimated Net income attributable to |
|||||||||
|
|
Fiscal Year Ending |
|||||||
(in millions, except per share amounts) |
|
|
|
Estimate |
|
|
|||
Net income attributable to |
|
$ |
90 |
|
|
|
$ |
142 |
|
Restructuring, acquisition and integration related expenses |
|
|
|
10 |
|
|
|
||
LIFO charge |
|
|
|
100 |
|
|
|
||
Business transformation costs |
|
|
|
20 |
|
|
|
||
Tax impact of adjustments and adjusted effective tax rate(1) |
|
|
|
(35 |
) |
|
|
||
Adjusted net income |
|
$ |
185 |
|
|
|
$ |
237 |
|
|
|
|
|
|
|
|
|||
Diluted weighted average shares outstanding |
|
|
61 |
|
|
|
|
61 |
|
Adjusted EPS(2) |
|
$ |
3.05 |
|
|
|
$ |
3.90 |
(1) | The estimated adjusted effective tax rate excludes the potential impact of changes in uncertain tax positions, tax impacts related to ASU 2016-09 regarding stock compensation and valuation allowances. Refer to the reconciliation for adjusted effective tax rate |
|
(2) | Adjusted EPS amounts as presented include rounding. |
Reconciliation of 2023 guidance for Net income attributable to |
|||||||||
|
|
Fiscal Year Ending |
|||||||
(in millions) |
|
|
|
Estimate |
|
|
|||
Net income attributable to |
|
$ |
90 |
|
|
|
$ |
142 |
|
Provision for income taxes |
|
|
32 |
|
|
|
|
50 |
|
LIFO charge |
|
|
|
100 |
|
|
|
||
Interest expense, net |
|
|
|
140 |
|
|
|
||
Other expense, net |
|
|
|
11 |
|
|
|
||
Depreciation and amortization |
|
|
|
297 |
|
|
|
||
Share-based compensation |
|
|
|
44 |
|
|
|
||
Net periodic benefit income, excluding service costs |
|
|
|
(29 |
) |
|
|
||
Business transformation costs |
|
|
|
20 |
|
|
|
||
Restructuring, acquisition and integration related expenses |
|
|
|
10 |
|
|
|
||
Adjusted EBITDA |
|
$ |
715 |
|
|
|
$ |
785 |
Reconciliation of estimated 2023 and actual 2022 U.S. GAAP effective tax rate to adjusted effective tax rate (unaudited) |
||||||
|
|
Estimated
|
|
Actual Fiscal
|
||
|
|
21 |
% |
|
18 |
% |
Discrete quarterly recognition of GAAP items(1) |
|
6 |
% |
|
8 |
% |
Changes in valuation allowances(2) |
|
(1 |
)% |
|
— |
% |
Adjusted effective tax rate(3) |
|
26 |
% |
|
26 |
% |
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 excluding the CARES Act, 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 |
|
(2) | Reflects changes in valuation allowances related to changes in judgment regarding the realizability of deferred tax assets or current year operations. |
|
(3) | 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/20230308005148/en/
INVESTOR CONTACTS:
Vice President, Investor Relations
952-828-4144 sbloomquist@unfi.com
Senior Vice President, Investor Relations and Transformation Finance
401-213-2160 kristyn.farahmand@unfi.com
Source:
FAQ
What were the net sales for UNFI in Q2 fiscal 2023?
How did UNFI's net income change in Q2 fiscal 2023?
What is the adjusted EPS for UNFI in the second quarter of fiscal 2023?
What is the full year outlook for UNFI's sales in fiscal 2023?