United Natural Foods, Inc. Reports Third Quarter Fiscal 2022 Results
United Natural Foods (UNFI) reported Q3 fiscal 2022 results, showcasing a 9.2% increase in net sales to $7.2 billion and a 39.6% rise in net income to $67 million. Earnings per share (EPS) hit $1.10, marking a 37.5% growth. Adjusted EBITDA rose 5.9% to $196 million. The company updates its full-year outlook, projecting net sales between $28.8 and $29.1 billion. UNFI also refinanced its credit facility, adding $500 million to bolster liquidity. CEO Sandy Douglas emphasized the effectiveness of their strategic initiatives amid market challenges.
- Net sales increased 9.2% to $7.2 billion.
- Net income grew 39.6% to $67 million.
- EPS increased 37.5% to $1.10.
- Adjusted EBITDA rose 5.9% to $196 million.
- Full-year outlook revised upward for multiple financial metrics.
- Operating expenses increased to 13.4% of net sales.
- A $72 million LIFO charge impacted gross margin.
Raises Full-Year Outlook
Third Quarter Fiscal 2022 Highlights (comparisons to third quarter fiscal 2021)
-
Net sales of
, an increase of$7.2 billion 9.2% -
Net income of
, an increase of$67 million 39.6% -
Earnings per diluted share (EPS) of
, an increase of$1.10 37.5% -
Revises definitions of Adjusted EBITDA and Adjusted EPS to exclude the non-cash LIFO charge or benefit
-
Adjusted EBITDA of
, an increase of$196 million 5.9% -
Adjusted EPS of
, an increase of$1.10 10.0%
-
Adjusted EBITDA of
- Updates full-year outlook for Net sales, Net income, EPS, Adjusted EBITDA and Adjusted EPS
-
Refinances and upsizes revolving credit facility by
with$500 million June 2027 maturity date
“Our third quarter performance further demonstrates UNFI’s agility and its focus on servicing customers despite a challenging operating environment. It’s apparent that our Fuel the Future strategy is working and beginning to benefit our customers,” said UNFI Chief Executive Officer,
|
13-Week Period Ended |
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|
||||||||
($ in millions, except per share data) |
|
|
|
|
Percent
|
||||||
|
$ |
7,242 |
|
|
$ |
6,631 |
|
|
9.2 |
% |
|
Chains |
$ |
3,111 |
|
|
$ |
2,957 |
|
|
5.2 |
% |
|
Independent retailers |
$ |
1,833 |
|
|
$ |
1,599 |
|
|
14.6 |
% |
|
Supernatural |
$ |
1,468 |
|
|
$ |
1,287 |
|
|
14.1 |
% |
|
Retail |
$ |
602 |
|
|
$ |
590 |
|
|
2.0 |
% |
|
Other |
$ |
625 |
|
|
$ |
579 |
|
|
7.9 |
% |
|
Eliminations |
$ |
(397 |
) |
|
$ |
(381 |
) |
|
4.2 |
% |
|
Net Income |
$ |
67 |
|
|
$ |
48 |
|
|
39.6 |
% |
|
Adjusted EBITDA(1) |
$ |
196 |
|
|
$ |
185 |
|
|
5.9 |
% |
|
EPS |
$ |
1.10 |
|
|
$ |
0.80 |
|
|
37.5 |
% |
|
Adjusted EPS(1) |
$ |
1.10 |
|
|
$ |
1.00 |
|
|
10.0 |
% |
(1) |
During the third quarter of 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 |
|
(2) |
In the fourth quarter of fiscal 2021, the Company reclassified two Shoppers retail stores from discontinued operations to continuing operations for all prior periods. In the second quarter of fiscal 2022, the Company sold the remaining retail stores previously reported in discontinued operations. |
Third Quarter Fiscal 2022 Summary
Net sales increased
Gross margin rate in the third quarter of fiscal 2022 was
Operating expenses in the third quarter of fiscal 2022 were
Interest expense, net for the third quarter of fiscal 2022 was
Effective tax rate for the third quarter of fiscal 2022 was
Net income for the third quarter of fiscal 2022 was
Net income per diluted share (EPS) was
Adjusted EBITDA for the third quarter of fiscal 2022 was
Total outstanding debt, net of cash, ended the quarter at
Fiscal 2022 Outlook (1)
The Company is providing the following updated full-year outlook for fiscal 2022. The Company has revised its definitions of Adjusted EPS and Adjusted EBITDA to exclude the impact of the non-cash LIFO charge or benefit to better enable investors to assess Company’s operating performance and is providing its updated outlook on that basis. The Company is also updating guidance to reflect increased operating performance expectations. The updated net income and EPS ranges also include an increased LIFO charge and the gain on sale and leaseback of a distribution center. The first column presents the guidance provided on
Fiscal Year Ending |
Initial Outlook
|
|
Initial Outlook on
|
|
Updated
|
|
% Growth
|
|
|
|
|
|
|
|
|
Net Income ($ in millions) |
|
|
|
|
|
|
|
EPS |
|
|
|
|
|
|
|
Adjusted EPS(2)(3)(4) |
|
|
|
|
|
|
|
Adjusted EBITDA(3)(4) ($ in millions) |
|
|
|
|
|
|
|
Capital Expenditures ($ in millions) |
~ |
|
~ |
|
~ |
|
(19)% |
Year-end net debt to Adjusted EBITDA leverage ratio(3) |
< 3.0x |
|
< 3.0x |
|
2.6x |
|
|
(1) |
The outlook provided above is for fiscal 2022 only and replaces and supersedes any and all guidance provided prior to the date hereof covering fiscal 2022. 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) |
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. |
|
(3) | 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. |
|
(4) | During the third quarter of fiscal 2022, the Company revised its definitions 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. The percentage growth has been calculated using the new definitions of Adjusted EBITDA and Adjusted EPS for prior-year results. |
|
(5) |
As part of its fiscal 2022 second quarter release on |
Conference Call and Webcast
The Company’s third quarter fiscal 2022 conference call and audio webcast will be held today,
About
UNFI is
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 2022 fiscal year to the comparable periods in the 2021 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 |
|
39-Week Period Ended |
||||||||||||
|
|
|
|
|
|
|
|
||||||||
Net sales |
$ |
7,242 |
|
|
$ |
6,631 |
|
|
$ |
21,655 |
|
|
$ |
20,215 |
|
Cost of sales |
|
6,230 |
|
|
|
5,661 |
|
|
|
18,526 |
|
|
|
17,280 |
|
Gross profit |
|
1,012 |
|
|
|
970 |
|
|
|
3,129 |
|
|
|
2,935 |
|
Operating expenses |
|
969 |
|
|
|
868 |
|
|
|
2,845 |
|
|
|
2,642 |
|
Restructuring, acquisition and integration related expenses |
|
8 |
|
|
|
10 |
|
|
|
16 |
|
|
|
44 |
|
Gain on sale of assets |
|
(88 |
) |
|
|
— |
|
|
|
(87 |
) |
|
|
— |
|
Operating income |
|
123 |
|
|
|
92 |
|
|
|
355 |
|
|
|
249 |
|
Net periodic benefit income, excluding service cost |
|
(10 |
) |
|
|
(17 |
) |
|
|
(30 |
) |
|
|
(51 |
) |
Interest expense, net |
|
37 |
|
|
|
44 |
|
|
|
121 |
|
|
|
164 |
|
Other, net |
|
(1 |
) |
|
|
(1 |
) |
|
|
(2 |
) |
|
|
(4 |
) |
Income from continuing operations before income taxes |
|
97 |
|
|
|
66 |
|
|
|
266 |
|
|
|
140 |
|
Provision for income taxes |
|
29 |
|
|
|
16 |
|
|
|
53 |
|
|
|
32 |
|
Net income from continuing operations |
|
68 |
|
|
|
50 |
|
|
|
213 |
|
|
|
108 |
|
Income from discontinued operations, net of tax |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3 |
|
Net income including noncontrolling interests |
|
68 |
|
|
|
50 |
|
|
|
213 |
|
|
|
111 |
|
Less net income attributable to noncontrolling interests |
|
(1 |
) |
|
|
(2 |
) |
|
|
(4 |
) |
|
|
(5 |
) |
Net income attributable to |
$ |
67 |
|
|
$ |
48 |
|
|
$ |
209 |
|
|
$ |
106 |
|
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share: |
|
|
|
|
|
|
|
||||||||
Continuing operations |
$ |
1.15 |
|
|
$ |
0.85 |
|
|
$ |
3.62 |
|
|
$ |
1.84 |
|
Discontinued operations |
$ |
— |
|
|
$ |
0.01 |
|
|
$ |
— |
|
|
$ |
0.06 |
|
Basic earnings per share |
$ |
1.15 |
|
|
$ |
0.86 |
|
|
$ |
3.62 |
|
|
$ |
1.90 |
|
Diluted earnings per share: |
|
|
|
|
|
|
|
||||||||
Continuing operations |
$ |
1.10 |
|
|
$ |
0.79 |
|
|
$ |
3.44 |
|
|
$ |
1.73 |
|
Discontinued operations |
$ |
— |
|
|
$ |
0.01 |
|
|
$ |
— |
|
|
$ |
0.05 |
|
Diluted earnings per share |
$ |
1.10 |
|
|
$ |
0.80 |
|
|
$ |
3.44 |
|
|
$ |
1.78 |
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
||||||||
Basic |
|
58.4 |
|
|
|
56.5 |
|
|
|
57.9 |
|
|
|
56.0 |
|
Diluted |
|
60.9 |
|
|
|
60.5 |
|
|
|
61.0 |
|
|
|
59.7 |
|
|
|||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) |
|||||||
(in millions, except for par amounts) |
|||||||
|
|
|
|
||||
ASSETS |
|
|
|
||||
Cash and cash equivalents |
$ |
48 |
|
|
$ |
41 |
|
Accounts receivable, net |
|
1,228 |
|
|
|
1,103 |
|
Inventories, net |
|
2,559 |
|
|
|
2,247 |
|
Prepaid expenses and other current assets |
|
145 |
|
|
|
157 |
|
Current assets of discontinued operations |
|
— |
|
|
|
2 |
|
Total current assets |
|
3,980 |
|
|
|
3,550 |
|
Property and equipment, net |
|
1,638 |
|
|
|
1,784 |
|
Operating lease assets |
|
1,192 |
|
|
|
1,064 |
|
|
|
20 |
|
|
|
20 |
|
Intangible assets, net |
|
837 |
|
|
|
891 |
|
Deferred income taxes |
|
31 |
|
|
|
57 |
|
Other long-term assets |
|
180 |
|
|
|
157 |
|
Long-term assets of discontinued operations |
|
— |
|
|
|
2 |
|
Total assets |
$ |
7,878 |
|
|
$ |
7,525 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
||||
Accounts payable |
$ |
1,715 |
|
|
$ |
1,644 |
|
Accrued expenses and other current liabilities |
|
251 |
|
|
|
341 |
|
Accrued compensation and benefits |
|
244 |
|
|
|
243 |
|
Current portion of operating lease liabilities |
|
153 |
|
|
|
135 |
|
Current portion of long-term debt and finance lease liabilities |
|
26 |
|
|
|
120 |
|
Current liabilities of discontinued operations |
|
— |
|
|
|
4 |
|
Total current liabilities |
|
2,389 |
|
|
|
2,487 |
|
Long-term debt |
|
2,377 |
|
|
|
2,175 |
|
Long-term operating lease liabilities |
|
1,084 |
|
|
|
962 |
|
Long-term finance lease liabilities |
|
27 |
|
|
|
35 |
|
Pension and other postretirement benefit obligations |
|
20 |
|
|
|
53 |
|
Other long-term liabilities |
|
197 |
|
|
|
299 |
|
Total liabilities |
|
6,094 |
|
|
|
6,011 |
|
Stockholders’ equity: |
|
|
|
||||
Preferred stock, |
|
— |
|
|
|
— |
|
Common stock, |
|
1 |
|
|
|
1 |
|
Additional paid-in capital |
|
599 |
|
|
|
599 |
|
|
|
(24 |
) |
|
|
(24 |
) |
Accumulated other comprehensive income (loss) |
|
22 |
|
|
|
(39 |
) |
Retained earnings |
|
1,187 |
|
|
|
978 |
|
|
|
1,785 |
|
|
|
1,515 |
|
Noncontrolling interests |
|
(1 |
) |
|
|
(1 |
) |
Total stockholders’ equity |
|
1,784 |
|
|
|
1,514 |
|
Total liabilities and stockholders’ equity |
$ |
7,878 |
|
|
$ |
7,525 |
|
|
|||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) |
|||||||
|
39-Week Period Ended |
||||||
(in millions) |
|
|
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
||||
Net income including noncontrolling interests |
$ |
213 |
|
|
$ |
111 |
|
Income from discontinued operations, net of tax |
|
— |
|
|
|
3 |
|
Net income from continuing operations |
|
213 |
|
|
|
108 |
|
Adjustments to reconcile net income to net cash (used in) provided by operating activities: |
|
|
|
||||
Depreciation and amortization |
|
210 |
|
|
|
210 |
|
Share-based compensation |
|
33 |
|
|
|
33 |
|
Gain on sale of assets |
|
(87 |
) |
|
|
— |
|
Closed property and other restructuring charges |
|
1 |
|
|
|
3 |
|
Net pension and other postretirement benefit income |
|
(30 |
) |
|
|
(51 |
) |
Deferred income tax benefit |
|
— |
|
|
|
(2 |
) |
LIFO charge |
|
102 |
|
|
|
19 |
|
Provision (recoveries) for losses on receivables |
|
4 |
|
|
|
(3 |
) |
Non-cash interest expense and other adjustments |
|
20 |
|
|
|
45 |
|
Changes in operating assets and liabilities |
|
(497 |
) |
|
|
(24 |
) |
Net cash (used in) provided by operating activities of continuing operations |
|
(31 |
) |
|
|
338 |
|
Net cash used in operating activities of discontinued operations |
|
— |
|
|
|
(2 |
) |
Net cash (used in) provided by operating activities |
|
(31 |
) |
|
|
336 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
||||
Payments for capital expenditures |
|
(158 |
) |
|
|
(165 |
) |
Proceeds from dispositions of assets |
|
231 |
|
|
|
57 |
|
Payments for investments |
|
(28 |
) |
|
|
(4 |
) |
Net cash provided by (used in) investing activities of continuing operations |
|
45 |
|
|
|
(112 |
) |
Net cash provided by investing activities of discontinued operations |
|
— |
|
|
|
1 |
|
Net cash provided by (used in) investing activities |
|
45 |
|
|
|
(111 |
) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
||||
Proceeds from borrowings of long-term debt |
|
— |
|
|
|
500 |
|
Proceeds from borrowings under revolving credit line |
|
3,853 |
|
|
|
3,452 |
|
Repayments of borrowings under revolving credit line |
|
(3,453 |
) |
|
|
(3,369 |
) |
Repayments of long-term debt and finance leases |
|
(369 |
) |
|
|
(787 |
) |
Proceeds from the issuance of common stock and exercise of stock options |
|
9 |
|
|
|
— |
|
Payment of employee restricted stock tax withholdings |
|
(42 |
) |
|
|
(13 |
) |
Payments for debt issuance costs |
|
(1 |
) |
|
|
(12 |
) |
Distributions to noncontrolling interests |
|
(4 |
) |
|
|
(3 |
) |
Net cash used in financing activities |
|
(7 |
) |
|
|
(232 |
) |
EFFECT OF EXCHANGE RATE ON CASH |
|
— |
|
|
|
— |
|
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
|
7 |
|
|
|
(7 |
) |
Cash and cash equivalents, at beginning of period |
|
41 |
|
|
|
47 |
|
Cash and cash equivalents, at end of period |
$ |
48 |
|
|
$ |
40 |
|
Supplemental disclosures of cash flow information: |
|
|
|
||||
Cash paid for interest |
$ |
110 |
|
|
$ |
118 |
|
Cash payments (receipts) for federal, state, and foreign income taxes, net |
$ |
— |
|
|
$ |
(22 |
) |
Leased assets obtained in exchange for new operating lease liabilities |
$ |
260 |
|
|
$ |
227 |
|
Leased assets obtained in exchange for new finance lease liabilities |
$ |
1 |
|
|
$ |
— |
|
Additions of property and equipment included in Accounts payable |
$ |
27 |
|
|
$ |
49 |
|
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION |
|||||||||||||||
|
|||||||||||||||
UNAUDITED |
|||||||||||||||
|
|||||||||||||||
Reconciliation of net income from continuing operations and income from discontinued operations, net of tax to Adjusted EBITDA (unaudited) |
|||||||||||||||
|
13-Week Period Ended |
|
39-Week Period Ended |
||||||||||||
(in millions) |
|
|
|
|
|
|
|
||||||||
Net income from continuing operations |
$ |
68 |
|
|
$ |
50 |
|
|
$ |
213 |
|
|
$ |
108 |
|
Adjustments to continuing operations net income: |
|
|
|
|
|
|
|
||||||||
Less net income attributable to noncontrolling interests |
|
(1 |
) |
|
|
(2 |
) |
|
|
(4 |
) |
|
|
(5 |
) |
Net periodic benefit income, excluding service cost |
|
(10 |
) |
|
|
(17 |
) |
|
|
(30 |
) |
|
|
(51 |
) |
Interest expense, net |
|
37 |
|
|
|
44 |
|
|
|
121 |
|
|
|
164 |
|
Other, net |
|
(1 |
) |
|
|
(1 |
) |
|
|
(2 |
) |
|
|
(4 |
) |
Provision for income taxes |
|
29 |
|
|
|
16 |
|
|
|
53 |
|
|
|
32 |
|
Depreciation and amortization |
|
72 |
|
|
|
66 |
|
|
|
210 |
|
|
|
210 |
|
Share-based compensation |
|
10 |
|
|
|
11 |
|
|
|
33 |
|
|
|
38 |
|
LIFO charge(1) |
|
72 |
|
|
|
5 |
|
|
|
102 |
|
|
|
19 |
|
Restructuring, acquisition and integration related expenses(2) |
|
8 |
|
|
|
10 |
|
|
|
16 |
|
|
|
44 |
|
Gain on sale of assets(3) |
|
(88 |
) |
|
|
— |
|
|
|
(87 |
) |
|
|
— |
|
Multi-employer pension plan withdrawal benefit(4) |
|
— |
|
|
|
— |
|
|
|
(8 |
) |
|
|
— |
|
Other retail expense(5) |
|
— |
|
|
|
2 |
|
|
|
(1 |
) |
|
|
5 |
|
Adjusted EBITDA of continuing operations |
|
196 |
|
|
|
184 |
|
|
|
616 |
|
|
|
560 |
|
Adjusted EBITDA of discontinued operations(6) |
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
4 |
|
Adjusted EBITDA |
$ |
196 |
|
|
$ |
185 |
|
|
$ |
616 |
|
|
$ |
564 |
|
|
|
|
|
|
|
|
|
||||||||
Income from discontinued operations, net of tax |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
3 |
|
Adjustments to discontinued operations net income: |
|
|
|
|
|
|
|
||||||||
Provision for income taxes |
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
— |
|
Restructuring, store closure and other charges, net |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
Adjusted EBITDA of discontinued operations |
$ |
— |
|
|
$ |
1 |
|
|
$ |
— |
|
|
$ |
4 |
|
(1) |
During the third quarter of 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
|
|
39-Week Period
|
|||||
(in millions) |
|
|
|
|||||
Adjusted EBITDA of continuing operations (previously reported definition) |
$ |
179 |
|
|
$ |
541 |
|
|
LIFO Charge |
|
5 |
|
|
|
19 |
|
|
Adjusted EBITDA of continuing operations (revised definition) |
|
184 |
|
|
|
560 |
|
|
Adjusted EBITDA of discontinued operations |
|
1 |
|
|
|
4 |
|
|
Adjusted EBITDA (revised definition) |
$ |
185 |
|
$ |
564 |
(2) |
|
Fiscal 2021 primarily reflects costs associated with advisory and transformational activities as we position our business for further value-creation following the Supervalu acquisition. |
||
(3) |
|
Fiscal 2022 primarily reflects the gain on sale of our |
||
(4) |
|
Reflects an adjustment to multi-employer withdrawal charge estimates. |
||
(5) |
|
Reflects expenses associated with event-specific damages to certain retail stores and store closure costs. |
||
(6) | The two remaining retail stores in discontinued operations were sold in the second quarter of fiscal 2022. |
Reconciliation of net income per diluted common share (EPS) to adjusted net income per diluted common share (Adjusted EPS) (unaudited) |
|||||||||||||||
|
13-Week Period Ended |
|
39-Week Period Ended |
||||||||||||
|
|
|
|
|
|
|
|
||||||||
Net income attributable to UNFI per diluted common share |
$ |
1.10 |
|
|
$ |
0.80 |
|
|
$ |
3.44 |
|
|
$ |
1.78 |
|
Restructuring, acquisition and integration related expenses(1) |
|
0.14 |
|
|
|
0.16 |
|
|
|
0.26 |
|
|
|
0.74 |
|
Gain on sale of assets(2) |
|
(1.45 |
) |
|
|
— |
|
|
|
(1.43 |
) |
|
|
— |
|
LIFO charge(3) |
|
1.18 |
|
|
|
0.09 |
|
|
|
1.66 |
|
|
|
0.32 |
|
Surplus property depreciation and interest expense(4) |
|
— |
|
|
|
0.02 |
|
|
|
0.01 |
|
|
|
0.04 |
|
Multi-employer pension plan withdrawal benefit(5) |
|
— |
|
|
|
— |
|
|
|
(0.13 |
) |
|
|
— |
|
Loss on debt extinguishment(6) |
|
0.03 |
|
|
|
0.01 |
|
|
|
0.12 |
|
|
|
0.51 |
|
Other retail expense(7) |
|
0.01 |
|
|
|
0.01 |
|
|
|
0.01 |
|
|
|
0.06 |
|
Discontinued operations store closures and other charges, net(8) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.01 |
|
Tax impact of adjustments and adjusted effective tax rate(9) |
|
0.09 |
|
|
|
(0.09 |
) |
|
|
(0.38 |
) |
|
|
(0.53 |
) |
Adjusted net income per diluted common share(10) |
$ |
1.10 |
|
|
$ |
1.00 |
|
|
$ |
3.56 |
|
|
$ |
2.93 |
|
(1) |
Fiscal 2021 primarily reflects costs associated with advisory and transformational activities as we position our business for further value-creation following the Supervalu acquisition. |
||
(2) |
Fiscal 2022 primarily reflects the gain on sale of our |
||
(3) |
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 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
|
|
39-Week Period
|
|||||
(in millions) |
|
|
|
|||||
Adjusted net income per diluted common share (previously reported definition) |
|
0.94 |
|
|
$ |
2.70 |
|
|
LIFO Charge |
|
0.09 |
|
|
|
0.32 |
|
|
Tax impact of adjustment |
|
(0.03 |
) |
|
|
(0.09 |
) |
|
Adjusted net income per diluted common share (revised definition) |
|
1.00 |
|
|
$ |
2.93 |
|
(4) |
Reflects surplus, non-operating property depreciation and interest expense. |
||
(5) |
Reflects an adjustment to multi-employer withdrawal charge estimates. |
||
(6) |
Reflects non-cash charges related to the acceleration of unamortized debt issuance costs and original issue discounts due to term loan prepayments. |
||
(7) |
Reflects expenses associated with event-specific damages to certain retail stores and store closure costs. |
||
(8) |
Amounts represent store closure charges and costs, operational wind-down and inventory charges, and asset impairment charges related to discontinued operations. |
||
(9) |
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 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. |
||
(10) | The computation of diluted earnings per share is calculated using diluted weighted average shares outstanding, which includes the net effect of dilutive stock awards. |
Calculation of net debt to Adjusted EBITDA leverage ratio (unaudited) |
|||
|
|||
(in millions, except ratios) |
|
||
Current portion of long-term debt and finance lease liabilities |
$ |
26 |
|
Long-term debt |
|
2,377 |
|
Long-term finance lease liabilities |
|
27 |
|
Less: Cash and cash equivalents |
|
(48 |
) |
Net carrying value of debt and finance lease liabilities |
|
2,382 |
|
Adjusted EBITDA(1) |
$ |
822 |
|
Adjusted EBITDA leverage ratio(2) |
2.9x |
(1) |
Adjusted EBITDA for purposes of this calculation reflects the summation of the trailing four quarters ended |
||
(2) |
During the third quarter of fiscal 2022, the Company revised its definition of Adjusted EBITDA, which has the effect of removing the non-cash LIFO charge or benefit from Adjusted EBITDA. The Adjusted EBITDA leverage ratio would have been 3.3x prior to the 0.4x impact of removing the LIFO charge. |
Reconciliation of trailing four quarters net income from continuing operations and income from discontinued operations, net of tax to Adjusted EBITDA (unaudited) |
|||
(in millions) |
52-Week Period
|
||
Net income from continuing operations |
$ |
254 |
|
Adjustments to continuing operations net income: |
|
||
Less net income attributable to noncontrolling interests |
|
(5 |
) |
Net periodic benefit income, excluding service cost |
|
(64 |
) |
Interest expense, net |
|
161 |
|
Other, net |
|
(6 |
) |
Provision for income taxes |
|
55 |
|
Depreciation and amortization |
|
285 |
|
Share-based compensation |
|
44 |
|
LIFO charge(1) |
|
107 |
|
Restructuring, acquisition and integration related expenses |
|
28 |
|
Gain on sale of assets |
|
(91 |
) |
Multiemployer pension plan withdrawal charges |
|
55 |
|
Adjusted EBITDA of continuing operations |
|
822 |
|
Adjusted EBITDA of discontinued operations |
|
— |
|
Adjusted EBITDA |
$ |
822 |
|
|
|
||
Income from discontinued operations, net of tax |
$ |
3 |
|
Adjustments to discontinued operations net income: |
|
||
Benefit for income taxes |
|
(1 |
) |
Restructuring, store closure and other charges, net |
|
(2 |
) |
Adjusted EBITDA of discontinued operations |
$ |
— |
|
(1) |
|
Adjusted EBITDA for purposes of this calculation reflects the summation of the trailing four quarters ended |
Reconciliation of net cash (used in) provided by operating activities to free cash flow (unaudited) |
|||||||
|
|
|
|
||||
|
39-Week Period Ended |
||||||
(in millions) |
|
|
|
||||
Net cash (used in) provided by operating activities |
$ |
(31 |
) |
|
$ |
336 |
|
Payments for capital expenditures |
|
(158 |
) |
|
|
(165 |
) |
Free cash flow |
$ |
(189 |
) |
|
$ |
171 |
|
FISCAL 2022 GUIDANCE
Reconciliation of 2022 guidance for estimated net income per diluted common share to estimated non-GAAP adjusted net income per diluted common share (unaudited) |
||||||||||
|
Fiscal Year Ending |
|||||||||
|
|
|
Estimate |
|
|
|||||
Net income attributable to |
$ |
3.75 |
|
|
|
|
$ |
4.00 |
|
|
Gain on sale of assets |
|
|
(1.39 |
) |
|
|
||||
LIFO charge(1) |
|
|
2.20 |
|
|
|
||||
Restructuring, acquisition and integration related expenses |
|
|
0.33 |
|
|
|
||||
Discontinued operations store closures and other charges, net |
|
|
0.05 |
|
|
|
||||
Tax impact of adjustments and adjusted effective tax rate(1)(2) |
|
|
(0.29 |
) |
|
|
||||
Adjusted net income per diluted common share |
$ |
4.65 |
|
|
|
$ |
4.90 |
(1) |
|
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 or benefit. The impact of the definition change resulted in an increase in estimated Adjusted EPS of |
|
(2) | 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. |
Reconciliation of 2022 guidance for net income attributable to |
||||||||||
|
||||||||||
|
Fiscal Year Ending |
|||||||||
(in millions) |
|
|
Estimate |
|
|
|||||
Net income attributable to |
$ |
230 |
|
|
|
|
$ |
245 |
|
|
Provision for income taxes |
|
82 |
|
|
|
|
|
87 |
|
|
Gain on sale of assets |
|
|
(85 |
) |
|
|
||||
Restructuring, acquisition and integration related costs |
|
|
20 |
|
|
|
||||
Discontinued operations store closures and other charges, net |
|
|
3 |
|
|
|
||||
Interest expense, net |
|
|
147 |
|
|
|
||||
Depreciation and amortization |
|
|
275 |
|
|
|
||||
Share-based compensation |
|
|
43 |
|
|
|
||||
LIFO charge |
|
|
135 |
|
|
|
||||
Net periodic benefit income, excluding service costs |
|
|
(40 |
) |
|
|
||||
Adjusted EBITDA(1) |
$ |
810 |
|
|
|
$ |
830 |
(1) |
During the third quarter of fiscal 2022, the Company revised its definition of Adjusted EBITDA to exclude the impact of the non-cash LIFO charge or benefit. |
Reconciliation of estimated 2022 and actual 2021 U.S. GAAP effective tax rate to adjusted effective tax rate (unaudited) |
||||
|
|
Estimated
|
|
Actual Fiscal
|
|
|
21 % |
|
18 % |
Discrete quarterly recognition of GAAP items(1) |
|
5 % |
|
6 % |
Tax impact of other charges and adjustments(2) |
|
— % |
|
3 % |
Changes in valuation allowances(3) |
|
— % |
|
(1) % |
Adjusted effective tax rate(4) |
|
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 the tax impact of pre-tax adjustments other than the goodwill impairment 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. |
Calculation of 2022 guidance net debt to Adjusted EBITDA leverage ratio (unaudited) |
|||
|
|||
(in millions, except ratios) |
Fiscal Year
|
||
Net carrying value of debt and finance lease liabilities |
$ |
2,114 |
|
Adjusted EBITDA (at mid-point)(1) |
$ |
820 |
|
Adjusted EBITDA leverage ratio(1) |
2.6x |
(1) |
During the third quarter of fiscal 2022, the Company revised its definition of Adjusted EBITDA to exclude the impact of the non-cash LIFO charge or benefit. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20220607005253/en/
INVESTOR CONTACT:
Vice President, Investor Relations
952-828-4144 sbloomquist@unfi.com
Source:
FAQ
What were the financial results of UNFI for Q3 fiscal 2022?
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What is UNFI's full-year outlook for fiscal 2022?
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