United Natural Foods, Inc. Reports Second Quarter Fiscal 2024 Results
- UNFI reported a 0.5% decrease in net sales to $7.8 billion for Q2 of fiscal 2024.
- The company experienced a net loss of $15 million and a loss per diluted share of $(0.25) in the same period.
- Adjusted EBITDA decreased by 29.3% to $128 million compared to the prior year.
- UNFI revised its fiscal 2024 outlook, reducing net sales expectations while maintaining midpoints for net income, EPS, adjusted EPS, and adjusted EBITDA.
- The company focuses on operational execution, efficiency, shrink reduction, and network automation to enhance profitability and shareholder value.
- UNFI's gross profit rate declined due to lower procurement gains, while operating expenses remained stable.
- Free cash flow decreased to $116 million in Q2 of fiscal 2024, with total outstanding debt reduced to $2.16 billion.
- The updated fiscal 2024 outlook includes narrowed ranges for net sales, net loss, EPS, adjusted EPS, and adjusted EBITDA.
- Gross profit rate decreased in Q2 of fiscal 2024 primarily due to lower procurement gains.
- Adjusted EBITDA decreased by 29.3% compared to the same period in the prior year.
- Free cash flow decreased to $116 million in the second quarter of fiscal 2024.
- Total outstanding debt reduced to $2.16 billion, with a net debt to Adjusted EBITDA leverage ratio of 4.3x.
- UNFI revised its fiscal 2024 outlook, reducing net sales expectations.
Insights
The reported financial results of United Natural Foods, Inc. reveal a slight decline in net sales by 0.5%, indicating a challenging quarter for the company. This dip in sales, coupled with a net loss of $15 million and a substantial decrease in Adjusted EBITDA by 29.3%, suggests a contraction in operational profitability. The net loss per diluted share has notably shifted from a positive $0.31 to a negative $(0.25), which is a significant downturn year-over-year. Such a performance could be reflective of broader market conditions or company-specific issues such as operational inefficiencies or competitive pressures.
From a financial perspective, the revision of fiscal 2024 outlook with reduced net sales expectations, while maintaining midpoints for other financial metrics, may indicate management's efforts to set realistic targets amidst market challenges. The net debt to Adjusted EBITDA leverage ratio at 4.3x suggests a moderate level of financial leverage, which investors typically monitor as an indicator of financial health and risk. The free cash flow decrease from $448 million to $116 million year-over-year is also noteworthy, potentially impacting the company's ability to invest in growth or return capital to shareholders.
Analyzing the performance of United Natural Foods, Inc.'s different sales channels reveals varied results, with the Supernatural channel experiencing a sales increase of 5.5%. This could indicate a consumer shift towards health-conscious and organic products, a sector where UNFI has a strong presence. However, declines in sales to chains, independent retailers and retail may point to a more competitive landscape or changes in consumer purchasing behaviors.
The company's investment in network automation and optimization, as mentioned, is a strategic move that could lead to long-term cost savings and operational efficiencies. The expected completion of the northeast distribution center optimization in Fiscal 2025 is a forward-looking initiative that could enhance the company's distribution capabilities and customer service levels. These operational improvements are crucial in the food distribution industry, where margins are typically thin and efficiency gains can be a significant competitive advantage.
UNFI's focus on operational execution, efficiency improvements and shrink reduction is critical in the food wholesale industry where product margins are low and operational costs can be high. Shrink reduction, which involves minimizing the loss of inventory due to factors such as theft, vendor fraud and administrative errors, can significantly impact the bottom line. The company's investment in automation, such as the Centralia, WA and Manchester, PA distribution centers, is a strategic move to reduce labor costs and increase throughput.
However, the start-up costs associated with new distribution centers can be substantial and may have contributed to the net loss reported. It's important to monitor how these investments will pay off in terms of increased efficiency and whether they will lead to improved financial performance in the long run. The streamlining of the organization to become more agile suggests a response to the need for faster decision-making and adaptability in a dynamic retail environment.
Second Quarter Fiscal 2024 Performance (comparisons to second quarter fiscal 2023)
-
Net sales decreased
0.5% to$7.8 billion -
Net loss of
$15 million $(0.25) -
Adjusted EBITDA decreased
29.3% to$128 million -
Adjusted EPS decreased to
$0.07
Recent Financial and Operational Summary
- Revising fiscal 2024 outlook to reduce net sales expectations, while maintaining the midpoints and narrowing the ranges for net income, EPS, adjusted EPS, and adjusted EBITDA
-
Continuing to drive improved operational execution and efficiency
- Management disciplines and operational processes continuing to drive shrink reduction
-
Network automation and optimization progressing
-
Expect
Centralia, WA automation system to go live this spring -
Announced
Manchester, PA distribution center to be automated - Launched northeast distribution center optimization; expected to be complete in Fiscal 2025
-
Expect
- Streamlined organization more agile and better able to make quicker decisions closer to the customer
“Our second quarter results reflect our continued focus and progress on execution and profitability improvement through the important holiday selling season. Greater than anticipated benefits from our near-term value creation initiatives and further advances in managing shrink partially offset the expected reduction in procurement gains and start-up costs associated with a new distribution center,” said Sandy Douglas, UNFI’s Chief Executive Officer.
“We are making steady progress on the multiple work-streams underlying both our near-term and longer-term transformation into a more efficient and effective partner to our customers, while we also enhance profitability and long-term shareholder value creation.”
Second Quarter Fiscal 2024 Summary
|
13-Week Period Ended |
|
Percent
|
|||||||
($ in millions, except for per share data) |
January 27, 2024 |
|
January 28, 2023 |
|
||||||
Net sales |
$ |
7,775 |
|
|
$ |
7,816 |
|
|
(0.5 |
)% |
Chains |
$ |
3,266 |
|
|
$ |
3,322 |
|
|
(1.7 |
)% |
Independent retailers |
$ |
1,907 |
|
|
$ |
1,980 |
|
|
(3.7 |
)% |
Supernatural |
$ |
1,751 |
|
|
$ |
1,659 |
|
|
5.5 |
% |
Retail |
$ |
631 |
|
|
$ |
660 |
|
|
(4.4 |
)% |
Other |
$ |
615 |
|
|
$ |
609 |
|
|
1.0 |
% |
Eliminations |
$ |
(395 |
) |
|
$ |
(414 |
) |
|
(4.6 |
)% |
Net (loss) income |
$ |
(15 |
) |
|
$ |
19 |
|
|
(178.9 |
)% |
Adjusted EBITDA (1) |
$ |
128 |
|
|
$ |
181 |
|
|
(29.3 |
)% |
EPS |
$ |
(0.25 |
) |
|
$ |
0.31 |
|
|
(180.6 |
)% |
Adjusted EPS (1) |
$ |
0.07 |
|
|
$ |
0.78 |
|
|
(91.0 |
)% |
| (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 decreased
Gross profit in the second quarter of fiscal 2024 was
Operating expenses in the second quarter of fiscal 2024 were
Interest expense, net for the second quarter of fiscal 2024 was
Effective tax rate for the second quarter of fiscal 2024 was a benefit of
Net loss for the second quarter of fiscal 2024 was
Net loss per diluted share (EPS) was
Adjusted EBITDA for the second quarter of fiscal 2024 was
Capital Allocation and Financing Overview
-
Free Cash Flow – During the second quarter of fiscal 2024, free cash flow was
$116 million $448 million $183 million $67 million $282 million -
Leverage – Total outstanding debt, net of cash, was
$2.16 billion $124 million -
Liquidity – As of January 27, 2024, total liquidity was approximately
$1.43 billion $34 million $1.40 billion
Fiscal 2024 Outlook (1)
The Company is updating its full-year outlook to the following:
Fiscal Year Ending August 3, 2024 (53 weeks) |
|
Previous Full Year Outlook |
|
Updated Full Year Outlook |
Net sales ($ in billions) |
|
|
|
|
Net loss ($ in millions) |
|
|
|
|
EPS (2) |
|
|
|
|
Adjusted EPS (2)(3)(4) |
|
|
|
|
Adjusted EBITDA (4) ($ in millions) |
|
|
|
|
Capital and cloud implementation expenditures (4)(5) ($ in millions) |
|
~ |
|
~ |
| (1) |
The outlook provided above is for fiscal 2024 only. The 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 second quarter fiscal 2024 conference call and audio webcast will be held today, Wednesday, March 6, 2024 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 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 the Company’s 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 believes that providing non-GAAP capital and cloud implementation expenditures provides investors with better visibility into the Company's total investment expenditures. 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 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 |
|
26-Week Period Ended |
||||||||||||
|
|
January 27,
|
|
January 28,
|
|
January 27,
|
|
January 28,
|
||||||||
Net sales |
|
$ |
7,775 |
|
|
$ |
7,816 |
|
|
$ |
15,327 |
|
|
$ |
15,348 |
|
Cost of sales |
|
|
6,740 |
|
|
|
6,747 |
|
|
|
13,262 |
|
|
|
13,183 |
|
Gross profit |
|
|
1,035 |
|
|
|
1,069 |
|
|
|
2,065 |
|
|
|
2,165 |
|
Operating expenses |
|
|
1,010 |
|
|
|
1,002 |
|
|
|
2,033 |
|
|
|
2,002 |
|
Restructuring, acquisition and integration related expenses |
|
|
4 |
|
|
|
3 |
|
|
|
8 |
|
|
|
5 |
|
Loss (gain) on sale of assets and other asset charges |
|
|
5 |
|
|
|
1 |
|
|
|
24 |
|
|
|
(4 |
) |
Operating income |
|
|
16 |
|
|
|
63 |
|
|
|
— |
|
|
|
162 |
|
Net periodic benefit income, excluding service cost |
|
|
(4 |
) |
|
|
(7 |
) |
|
|
(7 |
) |
|
|
(14 |
) |
Interest expense, net |
|
|
40 |
|
|
|
39 |
|
|
|
75 |
|
|
|
74 |
|
Other income, net |
|
|
(1 |
) |
|
|
— |
|
|
|
(1 |
) |
|
|
(1 |
) |
(Loss) income before income taxes |
|
|
(19 |
) |
|
|
31 |
|
|
|
(67 |
) |
|
|
103 |
|
(Benefit) provision for income taxes |
|
|
(5 |
) |
|
|
9 |
|
|
|
(14 |
) |
|
|
14 |
|
Net (loss) income including noncontrolling interests |
|
|
(14 |
) |
|
|
22 |
|
|
|
(53 |
) |
|
|
89 |
|
Less net income attributable to noncontrolling interests |
|
|
(1 |
) |
|
|
(3 |
) |
|
|
(1 |
) |
|
|
(4 |
) |
Net (loss) income attributable to United Natural Foods, Inc. |
|
$ |
(15 |
) |
|
$ |
19 |
|
|
$ |
(54 |
) |
|
$ |
85 |
|
|
|
|
|
|
|
|
|
|
||||||||
Basic (loss) earnings per share |
|
$ |
(0.25 |
) |
|
$ |
0.32 |
|
|
$ |
(0.92 |
) |
|
$ |
1.43 |
|
Diluted (loss) earnings per share |
|
$ |
(0.25 |
) |
|
$ |
0.31 |
|
|
$ |
(0.92 |
) |
|
$ |
1.38 |
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
|
59.4 |
|
|
|
59.8 |
|
|
|
59.0 |
|
|
|
59.3 |
|
Diluted |
|
|
59.4 |
|
|
|
61.0 |
|
|
|
59.0 |
|
|
|
61.3 |
|
UNITED NATURAL FOODS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (in millions, except for par values) |
||||||||
|
|
January 27,
|
|
July 29,
|
||||
ASSETS |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
34 |
|
|
$ |
37 |
|
Accounts receivable, net |
|
|
990 |
|
|
|
889 |
|
Inventories, net |
|
|
2,311 |
|
|
|
2,292 |
|
Prepaid expenses and other current assets |
|
|
246 |
|
|
|
245 |
|
Total current assets |
|
|
3,581 |
|
|
|
3,463 |
|
Property and equipment, net |
|
|
1,766 |
|
|
|
1,767 |
|
Operating lease assets |
|
|
1,430 |
|
|
|
1,228 |
|
Goodwill |
|
|
20 |
|
|
|
20 |
|
Intangible assets, net |
|
|
685 |
|
|
|
722 |
|
Deferred income taxes |
|
|
34 |
|
|
|
32 |
|
Other long-term assets |
|
|
155 |
|
|
|
162 |
|
Total assets |
|
$ |
7,671 |
|
|
$ |
7,394 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
||||
Accounts payable |
|
$ |
1,722 |
|
|
$ |
1,781 |
|
Accrued expenses and other current liabilities |
|
|
247 |
|
|
|
283 |
|
Accrued compensation and benefits |
|
|
168 |
|
|
|
143 |
|
Current portion of operating lease liabilities |
|
|
187 |
|
|
|
180 |
|
Current portion of long-term debt and finance lease liabilities |
|
|
12 |
|
|
|
18 |
|
Total current liabilities |
|
|
2,336 |
|
|
|
2,405 |
|
Long-term debt |
|
|
2,176 |
|
|
|
1,956 |
|
Long-term operating lease liabilities |
|
|
1,298 |
|
|
|
1,099 |
|
Long-term finance lease liabilities |
|
|
7 |
|
|
|
12 |
|
Pension and other postretirement benefit obligations |
|
|
15 |
|
|
|
16 |
|
Other long-term liabilities |
|
|
147 |
|
|
|
162 |
|
Total liabilities |
|
|
5,979 |
|
|
|
5,650 |
|
Stockholders’ equity: |
|
|
|
|
||||
Preferred stock, |
|
|
— |
|
|
|
— |
|
Common stock, |
|
|
1 |
|
|
|
1 |
|
Additional paid-in capital |
|
|
616 |
|
|
|
606 |
|
Treasury stock at cost |
|
|
(86 |
) |
|
|
(86 |
) |
Accumulated other comprehensive loss |
|
|
(35 |
) |
|
|
(28 |
) |
Retained earnings |
|
|
1,196 |
|
|
|
1,250 |
|
Total United Natural Foods, Inc. stockholders’ equity |
|
|
1,692 |
|
|
|
1,743 |
|
Noncontrolling interests |
|
|
— |
|
|
|
1 |
|
Total stockholders’ equity |
|
|
1,692 |
|
|
|
1,744 |
|
Total liabilities and stockholders’ equity |
|
$ |
7,671 |
|
|
$ |
7,394 |
|
UNITED NATURAL FOODS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) |
||||||||
|
|
26-Week Period Ended |
||||||
(in millions) |
|
January 27,
|
|
January 28,
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
||||
Net (loss) income including noncontrolling interests |
|
$ |
(53 |
) |
|
$ |
89 |
|
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: |
|
|
|
|
||||
Depreciation and amortization |
|
|
152 |
|
|
|
147 |
|
Share-based compensation |
|
|
16 |
|
|
|
23 |
|
Gain on sale of assets |
|
|
(7 |
) |
|
|
(9 |
) |
Long-lived asset impairment charges |
|
|
21 |
|
|
|
— |
|
Net pension and other postretirement benefit income |
|
|
(7 |
) |
|
|
(14 |
) |
Deferred income tax expense |
|
|
— |
|
|
|
1 |
|
LIFO charge |
|
|
13 |
|
|
|
50 |
|
Provision (recoveries) for losses on receivables |
|
|
2 |
|
|
|
(3 |
) |
Non-cash interest expense and other adjustments |
|
|
5 |
|
|
|
8 |
|
Changes in operating assets and liabilities |
|
|
(213 |
) |
|
|
(22 |
) |
Net cash (used in) provided by operating activities |
|
|
(71 |
) |
|
|
270 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
||||
Payments for capital expenditures |
|
|
(141 |
) |
|
|
(151 |
) |
Proceeds from dispositions of assets |
|
|
11 |
|
|
|
12 |
|
Payments for investments |
|
|
(12 |
) |
|
|
(4 |
) |
Net cash used in investing activities |
|
|
(142 |
) |
|
|
(143 |
) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
||||
Proceeds from borrowings under revolving credit line |
|
|
1,422 |
|
|
|
1,944 |
|
Proceeds from issuance of other loans |
|
|
14 |
|
|
|
— |
|
Repayments of borrowings under revolving credit line |
|
|
(1,180 |
) |
|
|
(1,861 |
) |
Repayments of long-term debt and finance leases |
|
|
(37 |
) |
|
|
(143 |
) |
Repurchases of common stock |
|
|
— |
|
|
|
(29 |
) |
Payments of employee restricted stock tax withholdings |
|
|
(6 |
) |
|
|
(39 |
) |
Distributions to noncontrolling interests |
|
|
(2 |
) |
|
|
(2 |
) |
Repayments of other loans |
|
|
— |
|
|
|
(1 |
) |
Other |
|
|
(1 |
) |
|
|
— |
|
Net cash provided by (used in) financing activities |
|
|
210 |
|
|
|
(131 |
) |
EFFECT OF EXCHANGE RATE ON CASH |
|
|
— |
|
|
|
— |
|
NET DECREASE IN CASH AND CASH EQUIVALENTS |
|
|
(3 |
) |
|
|
(4 |
) |
Cash and cash equivalents, at beginning of period |
|
|
37 |
|
|
|
44 |
|
Cash and cash equivalents, at end of period |
|
$ |
34 |
|
|
$ |
40 |
|
Supplemental disclosures of cash flow information: |
|
|
|
|
||||
Cash paid for interest |
|
$ |
74 |
|
|
$ |
65 |
|
Cash (refunds) payments for federal, state, and foreign income taxes, net |
|
$ |
(13 |
) |
|
$ |
3 |
|
Leased assets obtained in exchange for new operating lease liabilities |
|
$ |
298 |
|
|
$ |
133 |
|
Additions of property and equipment included in Accounts payable |
|
$ |
31 |
|
|
$ |
31 |
|
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION (unaudited)
UNITED NATURAL FOODS, INC.
|
|||||||||||||||
|
13-Week Period Ended |
|
26-Week Period Ended |
||||||||||||
(in millions) |
January 27,
|
|
January 28,
|
|
January 27,
|
|
January 28,
|
||||||||
Net (loss) income including noncontrolling interests |
$ |
(14 |
) |
|
$ |
22 |
|
|
$ |
(53 |
) |
|
$ |
89 |
|
Adjustments to net (loss) income including noncontrolling interests: |
|
|
|
|
|
|
|
||||||||
Less net income attributable to noncontrolling interests |
|
(1 |
) |
|
|
(3 |
) |
|
|
(1 |
) |
|
|
(4 |
) |
Net periodic benefit income, excluding service cost |
|
(4 |
) |
|
|
(7 |
) |
|
|
(7 |
) |
|
|
(14 |
) |
Interest expense, net |
|
40 |
|
|
|
39 |
|
|
|
75 |
|
|
|
74 |
|
Other income, net |
|
(1 |
) |
|
|
— |
|
|
|
(1 |
) |
|
|
(1 |
) |
(Benefit) provision for income taxes |
|
(5 |
) |
|
|
9 |
|
|
|
(14 |
) |
|
|
14 |
|
Depreciation and amortization |
|
74 |
|
|
|
73 |
|
|
|
152 |
|
|
|
147 |
|
Share-based compensation |
|
10 |
|
|
|
11 |
|
|
|
16 |
|
|
|
23 |
|
LIFO charge |
|
6 |
|
|
|
29 |
|
|
|
13 |
|
|
|
50 |
|
Restructuring, acquisition and integration related expenses |
|
4 |
|
|
|
3 |
|
|
|
8 |
|
|
|
5 |
|
Loss (gain) on sale of assets and other asset charges (1) |
|
5 |
|
|
|
1 |
|
|
|
24 |
|
|
|
(4 |
) |
Business transformation costs (2) |
|
14 |
|
|
|
4 |
|
|
|
29 |
|
|
|
9 |
|
Other adjustments (3) |
|
— |
|
|
|
— |
|
|
|
4 |
|
|
|
— |
|
Adjusted EBITDA |
$ |
128 |
|
|
$ |
181 |
|
|
$ |
245 |
|
|
$ |
388 |
|
| (1) |
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 |
|
26-Week Period Ended |
||||||||||||
(in millions, except per share amounts) |
|
January 27,
|
|
January 28,
|
|
January 27,
|
|
January 28,
|
||||||||
Net (loss) income attributable to United Natural Foods, Inc. |
|
$ |
(15 |
) |
|
$ |
19 |
|
|
$ |
(54 |
) |
|
$ |
85 |
|
Restructuring, acquisition and integration related expenses |
|
|
4 |
|
|
|
3 |
|
|
|
8 |
|
|
|
5 |
|
(Gain) loss on sale of assets and other asset charges other than losses on sales of receivables (1) |
|
|
— |
|
|
|
(4 |
) |
|
|
14 |
|
|
|
(9 |
) |
LIFO charge |
|
|
6 |
|
|
|
29 |
|
|
|
13 |
|
|
|
50 |
|
Surplus property depreciation and interest expense (2) |
|
|
1 |
|
|
|
— |
|
|
|
2 |
|
|
|
1 |
|
Loss on debt extinguishment |
|
|
— |
|
|
|
3 |
|
|
|
— |
|
|
|
3 |
|
Business transformation costs (3) |
|
|
14 |
|
|
|
4 |
|
|
|
29 |
|
|
|
9 |
|
Other adjustments (4) |
|
|
— |
|
|
|
— |
|
|
|
4 |
|
|
|
— |
|
Tax impact of adjustments and adjusted effective tax rate (5) |
|
|
(6 |
) |
|
|
(7 |
) |
|
|
(14 |
) |
|
|
(27 |
) |
Adjusted net income |
|
$ |
4 |
|
|
$ |
47 |
|
|
$ |
2 |
|
|
$ |
117 |
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted weighted average shares outstanding |
|
|
60.0 |
|
|
|
61.0 |
|
|
|
59.9 |
|
|
|
61.3 |
|
Adjusted EPS (6) |
|
$ |
0.07 |
|
|
$ |
0.78 |
|
|
$ |
0.03 |
|
|
$ |
1.92 |
|
| (1) |
(Gain) 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. 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) |
January 27, 2024 |
||
Current portion of long-term debt and finance lease liabilities |
$ |
12 |
|
Long-term debt |
|
2,176 |
|
Long-term finance lease liabilities |
|
7 |
|
Less: Cash and cash equivalents |
|
(34 |
) |
Net carrying value of debt and finance lease liabilities |
|
2,161 |
|
Adjusted EBITDA (1) |
$ |
497 |
|
Adjusted EBITDA leverage ratio |
4.3x |
||
| (1) | Adjusted EBITDA for purposes of this calculation reflects the summation of the trailing four quarters ended January 27, 2024. 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
|
||
Net loss including noncontrolling interests |
|
$ |
(112 |
) |
Adjustments to net loss including noncontrolling interests: |
|
|
||
Less net income attributable to noncontrolling interests |
|
|
(3 |
) |
Net periodic benefit income, excluding service cost |
|
|
(22 |
) |
Interest expense, net |
|
|
145 |
|
Other income, net |
|
|
(2 |
) |
Benefit for income taxes |
|
|
(51 |
) |
Depreciation and amortization |
|
|
309 |
|
Share-based compensation |
|
|
31 |
|
LIFO charge |
|
|
82 |
|
Restructuring, acquisition and integration related expenses |
|
|
11 |
|
Loss on sale of assets and other asset charges |
|
|
58 |
|
Multiemployer pension plan withdrawal charges |
|
|
1 |
|
Other retail expense |
|
|
1 |
|
Business transformation costs |
|
|
45 |
|
Other adjustments |
|
|
4 |
|
Adjusted EBITDA (1) |
|
$ |
497 |
|
(1) |
Adjusted EBITDA for purposes of this calculation reflects the summation of the trailing four quarters ended January 27, 2024. |
Reconciliation of Net cash (used in) provided by operating activities to Free cash flow (unaudited) |
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
13-Week Period Ended |
|
26-Week Period Ended |
||||||||||||
(in millions) |
January 27, 2024 |
|
January 28, 2023 |
|
January 27, 2024 |
|
January 28, 2023 |
||||||||
Net cash provided by (used in) operating activities |
$ |
183 |
|
|
$ |
532 |
|
|
$ |
(71 |
) |
|
$ |
270 |
|
Payments for capital expenditures |
|
(67 |
) |
|
|
(84 |
) |
|
|
(141 |
) |
|
|
(151 |
) |
Free cash flow |
$ |
116 |
|
|
$ |
448 |
|
|
$ |
(212 |
) |
|
$ |
119 |
|
Reconciliation of Payments for capital expenditures to Capital and cloud implementation expenditures (unaudited) |
|||||||||||
|
13-Week Period Ended |
|
26-Week Period Ended |
||||||||
(in millions) |
January 27, 2024 |
|
January 28, 2023 |
|
January 27, 2024 |
|
January 28, 2023 |
||||
Payments for capital expenditures |
$ |
67 |
|
$ |
84 |
|
$ |
141 |
|
$ |
151 |
Cloud technology implementation expenditures (1) |
|
8 |
|
|
2 |
|
|
17 |
|
|
3 |
Capital and cloud implementation expenditures |
$ |
75 |
|
$ |
86 |
|
$ |
158 |
|
$ |
154 |
| (1) | Cloud technology implementation expenditures are included in operating activities in the Condensed Consolidated Statements of Cash Flows. |
FISCAL 2024 OUTLOOK
Reconciliation of 2024 outlook 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. |
|
$ |
(101 |
) |
|
|
|
$ |
(65 |
) |
|
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 |
|
$ |
(33 |
) |
|
|
|
$ |
3 |
|
|
|
|
|
|
|
|
|
|||||
Diluted weighted average shares outstanding |
|
|
59 |
|
|
|
|
|
60 |
|
|
Adjusted EPS (3) |
|
$ |
(0.56 |
) |
|
|
|
$ |
0.06 |
|
|
| (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 outlook 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. |
|
$ |
(101 |
) |
|
|
|
$ |
(65 |
) |
|
Benefit for income taxes |
|
|
(36 |
) |
|
|
|
|
(22 |
) |
|
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 |
|
$ |
475 |
|
|
|
|
$ |
525 |
|
|
Reconciliation of estimated 2024 and actual 2023 U.S. GAAP effective tax rate to adjusted effective tax rate (unaudited) |
||||||
|
|
Estimated
|
|
Actual Fiscal
|
||
|
|
22 |
% |
|
(329 |
)% |
Discrete quarterly recognition of GAAP items (1) |
|
43 |
% |
|
270 |
% |
Tax impact of other charges and adjustments (2) |
|
(37 |
)% |
|
139 |
% |
Changes in valuation allowances (3) |
|
1 |
% |
|
(57 |
)% |
Other (4) |
|
(3 |
)% |
|
— |
% |
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/20240306821992/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.
FAQ
What was UNFI's net sales for Q2 of fiscal 2024?
What was UNFI's net loss in Q2 of fiscal 2024?
How did UNFI's adjusted EBITDA perform in Q2 of fiscal 2024?
What did UNFI revise in its fiscal 2024 outlook?
What factors contributed to UNFI's gross profit rate decline in Q2 of fiscal 2024?
How did UNFI's free cash flow change in Q2 of fiscal 2024?
What was UNFI's total outstanding debt at the end of Q2 of fiscal 2024?
What is UNFI's net debt to Adjusted EBITDA leverage ratio as of January 27, 2024?
