United Natural Foods, Inc. Reports Third Quarter Fiscal 2024 Results
United Natural Foods (NYSE: UNFI) reported its financial results for Q3 FY2024. Net sales decreased by 0.1% to $7.5 billion while net loss was $21 million, translating to an EPS loss of $0.34. Adjusted EBITDA fell by 18.2% to $130 million and adjusted EPS dropped to $0.10. Despite these declines, UNFI noted improved financial performance driven by disciplined expense management and supply chain efficiencies. The company extended its term loan maturity to May 2031 and continues to refine its multi-year strategic plan to start in FY2025. Free cash flow for the quarter was $49 million, down from $65 million in Q3 FY2023. UNFI revised its FY2024 outlook, lowering expectations for net income and EPS but raising midpoints for adjusted EBITDA and adjusted EPS.
- Gross profit increased by $20 million to $1.0 billion.
- Sequential improvement in volumes and adjusted EBITDA for three consecutive quarters.
- Disciplined expense management and supply chain efficiencies.
- Extended term loan maturity to May 2031.
- Raised midpoints for FY2024 adjusted EBITDA and adjusted EPS outlook.
- Net sales decreased by 0.1% to $7.5 billion.
- Net loss of $21 million compared to net income of $7 million in Q3 FY2023.
- Adjusted EBITDA decreased by 18.2% to $130 million.
- Adjusted EPS fell by 81.5% to $0.10.
- Operating expenses increased by $25 million to $992 million.
- Interest expense increased to $37 million due to higher average interest rates.
- Free cash flow decreased to $49 million from $65 million.
- Net debt to Adjusted EBITDA leverage ratio at 4.6x.
Insights
United Natural Foods, Inc.'s (UNFI) third-quarter results for fiscal 2024 present a mixed picture. While net sales remained relatively flat at
The company's efforts in expense management, including supply chain efficiencies, have led to improved sequential financial performance. However, the decrease in gross profit rate, despite being nearly offset by lower shrink expenses, indicates challenges in maintaining profitability. The higher operating expenses, driven by an increase in incentive compensation, also signal potential cost management issues.
UNFI's liquidity remains strong, with
UNFI's performance across different customer segments reveals notable trends. Net sales declines in chains (
The company's ongoing strategic initiatives, focusing on cost reduction and supply chain efficiencies, are steps in the right direction. However, translating these operational improvements into consistent profit growth will be key. The plan to generate free cash flow nearing
Investors should monitor the effectiveness of the revised fiscal 2024 outlook and the impact of cost reduction actions on overall financial health. The shift towards a more efficient, strategically aligned operation is promising, but the execution risk remains a critical factor to watch.
Third Quarter Fiscal 2024 Performance (comparisons to third quarter fiscal 2023)
-
Net sales decreased
0.1% to$7.5 billion -
Net loss of
$21 million $(0.34) -
Adjusted EBITDA decreased
18.2% to$130 million -
Adjusted EPS decreased to
$0.10
Recent Financial and Operational Summary
-
Continuing to reset profitability and strengthen foundation while revamping long-term strategy
- Drove sequentially improving financial performance, including gradually improving volumes and the third sequential quarter of accelerating adjusted EBITDA, primarily due to disciplined expense management, including supply chain efficiencies
- Extended term loan maturity to May 2031
- Financial review progressing, multi-year strategic plan starting in fiscal 2025 being finalized; expect continued strengthening of operational and financial performance and capital structure
-
Revising fiscal 2024 outlook:
- Charges related to cost reduction actions driving lower expected ranges for net income and EPS
- Raising adjusted EBITDA and adjusted EPS midpoints; reducing capital and cloud implementation expenditures
“We delivered another quarter in-line with our fiscal 2024 plan and our third consecutive quarter of improving profitability driven by continued progress on near-term operational and efficiency initiatives. This progress includes significant cost reduction actions and supply chain efficiencies, and we see opportunity to drive further improvement across these areas,” said Sandy Douglas, UNFI’s Chief Executive Officer.
“Our ongoing board- and management-led financial review is also nearing an important milestone, which is our new multi-year strategic plan that will begin in fiscal 2025. We are beginning to see tangible benefits to our financial performance stemming from this process and are focused on driving short- and long-term improvement by optimizing controllable variables in our new plan. We expect our updated strategy to generate free cash flow approaching
Third Quarter Fiscal 2024 Summary
|
13-Week Period Ended |
|
Percent Change |
|||||||
($ in millions, except for per share data) |
April 27, 2024 |
|
April 29, 2023 |
|
||||||
Net sales |
$ |
7,498 |
|
|
$ |
7,507 |
|
|
(0.1 |
)% |
Chains |
$ |
3,092 |
|
|
$ |
3,129 |
|
|
(1.2 |
)% |
Independent retailers |
$ |
1,816 |
|
|
$ |
1,875 |
|
|
(3.1 |
)% |
Supernatural |
$ |
1,734 |
|
|
$ |
1,647 |
|
|
5.3 |
% |
Retail |
$ |
571 |
|
|
$ |
598 |
|
|
(4.5 |
)% |
Other |
$ |
644 |
|
|
$ |
640 |
|
|
0.6 |
% |
Eliminations |
$ |
(359 |
) |
|
$ |
(382 |
) |
|
(6.0 |
)% |
Net (loss) income |
$ |
(21 |
) |
|
$ |
7 |
|
|
(400.0 |
)% |
Adjusted EBITDA (1) |
$ |
130 |
|
|
$ |
159 |
|
|
(18.2 |
)% |
EPS |
$ |
(0.34 |
) |
|
$ |
0.12 |
|
|
(383.3 |
)% |
Adjusted EPS (1) |
$ |
0.10 |
|
|
$ |
0.54 |
|
|
(81.5 |
)% |
(1) |
Please refer to the tables in this press release for a reconciliation of these non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP. |
Net sales decreased
Gross profit in the third quarter of fiscal 2024 was
Operating expenses in the third quarter of fiscal 2024 were
Interest expense, net for the third quarter of fiscal 2024 was
Effective tax rate for the third quarter of fiscal 2024 was a benefit of
Net loss for the third quarter of fiscal 2024 was
Net loss per diluted share (EPS) was
Adjusted EBITDA for the third quarter of fiscal 2024 was
Capital Allocation and Financing Overview
-
Free Cash Flow – During the third quarter of fiscal 2024, free cash flow was
$49 million $65 million $125 million $76 million -
Leverage – Total outstanding debt, net of cash, was
$2.13 billion $30 million -
Liquidity – As of April 27, 2024, total liquidity was approximately
$1.26 billion $39 million $1.23 billion
Fiscal 2024 Outlook (1)
The Company is updating its full-year outlook which lowers its expectations for net income and EPS primarily due to charges related to cost reduction actions. Adjusted EBITDA and Adjusted EPS, which exclude these amounts, are expected to be higher than the previously provided outlook:
Fiscal Year Ending August 3, 2024 (53 weeks) |
|
Previous Full Year Outlook Provided March 6, 2024 |
|
Previous Midpoint |
|
Updated Full Year Outlook |
|
Updated Midpoint |
|
Change in Midpoint |
Net sales ($ 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. Figures presented include the impact of the term loan amendment and extension and ABL loan amendment, each of which occurred on May 1, 2024. |
|
(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 third quarter fiscal 2024 conference call and audio webcast will be held today, Wednesday, June 5, 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 |
|
39-Week Period Ended |
||||||||||||
|
|
April 27,
|
|
April 29,
|
|
April 27,
|
|
April 29,
|
||||||||
Net sales |
|
$ |
7,498 |
|
|
$ |
7,507 |
|
|
$ |
22,825 |
|
|
$ |
22,855 |
|
Cost of sales |
|
|
6,478 |
|
|
|
6,507 |
|
|
|
19,740 |
|
|
|
19,690 |
|
Gross profit |
|
|
1,020 |
|
|
|
1,000 |
|
|
|
3,085 |
|
|
|
3,165 |
|
Operating expenses |
|
|
992 |
|
|
|
967 |
|
|
|
3,025 |
|
|
|
2,969 |
|
Restructuring, acquisition and integration related expenses (benefits) |
|
|
9 |
|
|
|
(4 |
) |
|
|
17 |
|
|
|
1 |
|
Loss on sale of assets and other asset charges |
|
|
13 |
|
|
|
4 |
|
|
|
37 |
|
|
|
— |
|
Operating income |
|
|
6 |
|
|
|
33 |
|
|
|
6 |
|
|
|
195 |
|
Net periodic benefit income, excluding service cost |
|
|
(4 |
) |
|
|
(8 |
) |
|
|
(11 |
) |
|
|
(22 |
) |
Interest expense, net |
|
|
37 |
|
|
|
35 |
|
|
|
112 |
|
|
|
109 |
|
Other income, net |
|
|
(1 |
) |
|
|
(1 |
) |
|
|
(2 |
) |
|
|
(2 |
) |
(Loss) income before income taxes |
|
|
(26 |
) |
|
|
7 |
|
|
|
(93 |
) |
|
|
110 |
|
(Benefit) provision for income taxes |
|
|
(6 |
) |
|
|
(1 |
) |
|
|
(20 |
) |
|
|
13 |
|
Net (loss) income including noncontrolling interests |
|
|
(20 |
) |
|
|
8 |
|
|
|
(73 |
) |
|
|
97 |
|
Less net income attributable to noncontrolling interests |
|
|
(1 |
) |
|
|
(1 |
) |
|
|
(2 |
) |
|
|
(5 |
) |
Net (loss) income attributable to United Natural Foods, Inc. |
|
$ |
(21 |
) |
|
$ |
7 |
|
|
$ |
(75 |
) |
|
$ |
92 |
|
|
|
|
|
|
|
|
|
|
||||||||
Basic (loss) earnings per share |
|
$ |
(0.34 |
) |
|
$ |
0.12 |
|
|
$ |
(1.26 |
) |
|
$ |
1.55 |
|
Diluted (loss) earnings per share |
|
$ |
(0.34 |
) |
|
$ |
0.12 |
|
|
$ |
(1.26 |
) |
|
$ |
1.51 |
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
|
59.4 |
|
|
|
59.4 |
|
|
|
59.2 |
|
|
|
59.3 |
|
Diluted |
|
|
59.4 |
|
|
|
60.4 |
|
|
|
59.2 |
|
|
|
61.0 |
|
UNITED NATURAL FOODS, INC. |
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) |
||||||||
(in millions, except for par values) |
||||||||
|
|
April 27,
|
|
July 29,
|
||||
ASSETS |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
39 |
|
|
$ |
37 |
|
Accounts receivable, net |
|
|
971 |
|
|
|
889 |
|
Inventories, net |
|
|
2,232 |
|
|
|
2,292 |
|
Prepaid expenses and other current assets |
|
|
269 |
|
|
|
245 |
|
Total current assets |
|
|
3,511 |
|
|
|
3,463 |
|
Property and equipment, net |
|
|
1,776 |
|
|
|
1,767 |
|
Operating lease assets |
|
|
1,396 |
|
|
|
1,228 |
|
Goodwill |
|
|
20 |
|
|
|
20 |
|
Intangible assets, net |
|
|
668 |
|
|
|
722 |
|
Deferred income taxes |
|
|
33 |
|
|
|
32 |
|
Other long-term assets |
|
|
181 |
|
|
|
162 |
|
Total assets |
|
$ |
7,585 |
|
|
$ |
7,394 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
||||
Accounts payable |
|
$ |
1,677 |
|
|
$ |
1,781 |
|
Accrued expenses and other current liabilities |
|
|
258 |
|
|
|
283 |
|
Accrued compensation and benefits |
|
|
186 |
|
|
|
143 |
|
Current portion of operating lease liabilities |
|
|
186 |
|
|
|
180 |
|
Current portion of long-term debt and finance lease liabilities |
|
|
11 |
|
|
|
18 |
|
Total current liabilities |
|
|
2,318 |
|
|
|
2,405 |
|
Long-term debt |
|
|
2,148 |
|
|
|
1,956 |
|
Long-term operating lease liabilities |
|
|
1,270 |
|
|
|
1,099 |
|
Long-term finance lease liabilities |
|
|
11 |
|
|
|
12 |
|
Pension and other postretirement benefit obligations |
|
|
16 |
|
|
|
16 |
|
Other long-term liabilities |
|
|
141 |
|
|
|
162 |
|
Total liabilities |
|
|
5,904 |
|
|
|
5,650 |
|
Stockholders’ equity: |
|
|
|
|
||||
Preferred stock, |
|
|
— |
|
|
|
— |
|
Common stock, |
|
|
1 |
|
|
|
1 |
|
Additional paid-in capital |
|
|
624 |
|
|
|
606 |
|
Treasury stock at cost |
|
|
(86 |
) |
|
|
(86 |
) |
Accumulated other comprehensive loss |
|
|
(33 |
) |
|
|
(28 |
) |
Retained earnings |
|
|
1,175 |
|
|
|
1,250 |
|
Total United Natural Foods, Inc. stockholders’ equity |
|
|
1,681 |
|
|
|
1,743 |
|
Noncontrolling interests |
|
|
— |
|
|
|
1 |
|
Total stockholders’ equity |
|
|
1,681 |
|
|
|
1,744 |
|
Total liabilities and stockholders’ equity |
|
$ |
7,585 |
|
|
$ |
7,394 |
|
UNITED NATURAL FOODS, INC. |
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) |
||||||||
|
|
39-Week Period Ended |
||||||
(in millions) |
|
April 27,
|
|
April 29,
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
||||
Net (loss) income including noncontrolling interests |
|
$ |
(73 |
) |
|
$ |
97 |
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities: |
|
|
|
|
||||
Depreciation and amortization |
|
|
228 |
|
|
|
224 |
|
Share-based compensation |
|
|
27 |
|
|
|
33 |
|
Gain on sale of assets |
|
|
(7 |
) |
|
|
(9 |
) |
Long-lived asset impairment charges |
|
|
28 |
|
|
|
— |
|
Net pension and other postretirement benefit income |
|
|
(11 |
) |
|
|
(22 |
) |
Deferred income tax expense |
|
|
— |
|
|
|
2 |
|
LIFO charge |
|
|
19 |
|
|
|
83 |
|
Provision (recoveries) for losses on receivables |
|
|
3 |
|
|
|
(2 |
) |
Non-cash interest expense and other adjustments |
|
|
5 |
|
|
|
11 |
|
Changes in operating assets and liabilities |
|
|
(165 |
) |
|
|
(15 |
) |
Net cash provided by operating activities |
|
|
54 |
|
|
|
402 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
||||
Payments for capital expenditures |
|
|
(217 |
) |
|
|
(218 |
) |
Proceeds from dispositions of assets |
|
|
14 |
|
|
|
14 |
|
Payments for investments |
|
|
(23 |
) |
|
|
(7 |
) |
Net cash used in investing activities |
|
|
(226 |
) |
|
|
(211 |
) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
||||
Proceeds from borrowings under revolving credit line |
|
|
1,957 |
|
|
|
2,387 |
|
Proceeds from issuance of other loans |
|
|
15 |
|
|
|
— |
|
Repayments of borrowings under revolving credit line |
|
|
(1,743 |
) |
|
|
(2,348 |
) |
Repayments of long-term debt and finance leases |
|
|
(41 |
) |
|
|
(149 |
) |
Repurchases of common stock |
|
|
— |
|
|
|
(41 |
) |
Payments of employee restricted stock tax withholdings |
|
|
(6 |
) |
|
|
(39 |
) |
Distributions to noncontrolling interests |
|
|
(4 |
) |
|
|
(5 |
) |
Repayments of other loans |
|
|
(2 |
) |
|
|
(2 |
) |
Other |
|
|
(2 |
) |
|
|
— |
|
Net cash provided by (used in) financing activities |
|
|
174 |
|
|
|
(197 |
) |
EFFECT OF EXCHANGE RATE ON CASH |
|
|
— |
|
|
|
— |
|
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
|
|
2 |
|
|
|
(6 |
) |
Cash and cash equivalents, at beginning of period |
|
|
37 |
|
|
|
44 |
|
Cash and cash equivalents, at end of period |
|
$ |
39 |
|
|
$ |
38 |
|
Supplemental disclosures of cash flow information: |
|
|
|
|
||||
Cash paid for interest |
|
$ |
118 |
|
|
$ |
114 |
|
Cash refunds for federal, state, and foreign income taxes, net |
|
$ |
(10 |
) |
|
$ |
(4 |
) |
Leased assets obtained in exchange for new operating lease liabilities |
|
$ |
317 |
|
|
$ |
198 |
|
Leased assets obtained in exchange for new finance lease liabilities |
|
$ |
6 |
|
|
$ |
— |
|
Additions of property and equipment included in Accounts payable |
|
$ |
29 |
|
|
$ |
42 |
|
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION (unaudited) |
|||||||||||||||
UNITED NATURAL FOODS, INC. |
|||||||||||||||
Reconciliation of Net (loss) income including noncontrolling interests to Adjusted EBITDA (unaudited) |
|||||||||||||||
|
13-Week Period Ended |
|
39-Week Period Ended |
||||||||||||
(in millions) |
April 27, 2024 |
|
April 29, 2023 |
|
April 27, 2024 |
|
April 29, 2023 |
||||||||
Net (loss) income including noncontrolling interests |
$ |
(20 |
) |
|
$ |
8 |
|
|
$ |
(73 |
) |
|
$ |
97 |
|
Adjustments to net (loss) income including noncontrolling interests: |
|
|
|
|
|
|
|
||||||||
Less net income attributable to noncontrolling interests |
|
(1 |
) |
|
|
(1 |
) |
|
|
(2 |
) |
|
|
(5 |
) |
Net periodic benefit income, excluding service cost |
|
(4 |
) |
|
|
(8 |
) |
|
|
(11 |
) |
|
|
(22 |
) |
Interest expense, net |
|
37 |
|
|
|
35 |
|
|
|
112 |
|
|
|
109 |
|
Other income, net |
|
(1 |
) |
|
|
(1 |
) |
|
|
(2 |
) |
|
|
(2 |
) |
(Benefit) provision for income taxes |
|
(6 |
) |
|
|
(1 |
) |
|
|
(20 |
) |
|
|
13 |
|
Depreciation and amortization |
|
76 |
|
|
|
77 |
|
|
|
228 |
|
|
|
224 |
|
Share-based compensation |
|
10 |
|
|
|
10 |
|
|
|
26 |
|
|
|
33 |
|
LIFO charge |
|
6 |
|
|
|
33 |
|
|
|
19 |
|
|
|
83 |
|
Restructuring, acquisition and integration related expenses (benefits) |
|
9 |
|
|
|
(4 |
) |
|
|
17 |
|
|
|
1 |
|
Loss on sale of assets and other asset charges (1) |
|
13 |
|
|
|
4 |
|
|
|
37 |
|
|
|
— |
|
Business transformation costs (2) |
|
11 |
|
|
|
7 |
|
|
|
40 |
|
|
|
16 |
|
Other adjustments (3) |
|
— |
|
|
|
— |
|
|
|
4 |
|
|
|
— |
|
Adjusted EBITDA |
$ |
130 |
|
|
$ |
159 |
|
|
$ |
375 |
|
|
$ |
547 |
|
(1) |
Fiscal 2024 primarily includes a |
|
(2) |
Reflects costs associated with business transformation initiatives, primarily including third-party consulting costs and licensing costs, and third-party professional service fees related to the board-led financial review in the third quarter of fiscal 2024, all of 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 in the first quarter of fiscal 2024. |
Reconciliation of Net (loss) income attributable to United Natural Foods, Inc. to Adjusted net (loss) income and Adjusted EPS (unaudited) |
||||||||||||||||
|
|
13-Week Period Ended |
|
39-Week Period Ended |
||||||||||||
(in millions, except per share amounts) |
|
April 27, 2024 |
|
April 29, 2023 |
|
April 27, 2024 |
|
April 29, 2023 |
||||||||
Net (loss) income attributable to United Natural Foods, Inc. |
|
$ |
(21 |
) |
|
$ |
7 |
|
|
$ |
(75 |
) |
|
$ |
92 |
|
Restructuring, acquisition and integration related expenses (benefits) |
|
|
9 |
|
|
|
(4 |
) |
|
|
17 |
|
|
|
1 |
|
Loss (gain) on sale of assets and other asset charges other than losses on sales of receivables (1) |
|
|
7 |
|
|
|
— |
|
|
|
21 |
|
|
|
(9 |
) |
LIFO charge |
|
|
6 |
|
|
|
33 |
|
|
|
19 |
|
|
|
83 |
|
Surplus property depreciation and interest expense (2) |
|
|
1 |
|
|
|
— |
|
|
|
3 |
|
|
|
1 |
|
Loss on debt extinguishment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3 |
|
Business transformation costs (3) |
|
|
11 |
|
|
|
7 |
|
|
|
40 |
|
|
|
16 |
|
Other adjustments (4) |
|
|
— |
|
|
|
— |
|
|
|
4 |
|
|
|
— |
|
Tax impact of adjustments and adjusted effective tax rate (5) |
|
|
(7 |
) |
|
|
(10 |
) |
|
|
(21 |
) |
|
|
(37 |
) |
Adjusted net income |
|
$ |
6 |
|
|
$ |
33 |
|
|
$ |
8 |
|
|
$ |
150 |
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted weighted average shares outstanding |
|
|
59.8 |
|
|
|
60.4 |
|
|
|
60.2 |
|
|
|
61.0 |
|
Adjusted EPS (6) |
|
$ |
0.10 |
|
|
$ |
0.54 |
|
|
$ |
0.13 |
|
|
$ |
2.46 |
|
(1) |
Loss (gain) on sale of assets and other asset charges, as reflected here, does not include losses on sales of receivables under the accounts receivable monetization program, which are included in Loss 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, and third-party professional service fees related to the board-led financial review in the third quarter of fiscal 2024, all of 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 in the first quarter of fiscal 2024. |
|
(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) |
April 27, 2024 |
||
Current portion of long-term debt and finance lease liabilities |
$ |
11 |
|
Long-term debt |
|
2,148 |
|
Long-term finance lease liabilities |
|
11 |
|
Less: Cash and cash equivalents |
|
(39 |
) |
Net carrying value of debt and finance lease liabilities |
|
2,131 |
|
Adjusted EBITDA (1) |
$ |
468 |
|
Adjusted EBITDA leverage ratio |
4.6x |
||
(1) |
Adjusted EBITDA for purposes of this calculation reflects the summation of the trailing four quarters ended April 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 |
|
$ |
(140 |
) |
Adjustments to net loss including noncontrolling interests: |
|
|
||
Less net income attributable to noncontrolling interests |
|
|
(3 |
) |
Net periodic benefit income, excluding service cost |
|
|
(18 |
) |
Interest expense, net |
|
|
147 |
|
Other income, net |
|
|
(2 |
) |
Benefit for income taxes |
|
|
(56 |
) |
Depreciation and amortization |
|
|
308 |
|
Share-based compensation |
|
|
31 |
|
LIFO charge |
|
|
55 |
|
Restructuring, acquisition and integration related expenses |
|
|
24 |
|
Loss on sale of assets and other asset charges |
|
|
67 |
|
Multiemployer pension plan withdrawal charges |
|
|
1 |
|
Other retail expense |
|
|
1 |
|
Business transformation costs |
|
|
49 |
|
Other adjustments |
|
|
4 |
|
Adjusted EBITDA (1) |
|
$ |
468 |
|
(1) |
Adjusted EBITDA for purposes of this calculation reflects the summation of the trailing four quarters ended April 27, 2024. |
Reconciliation of Net cash provided by operating activities to Free cash flow (unaudited) |
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
13-Week Period Ended |
|
39-Week Period Ended |
||||||||||||
(in millions) |
April 27, 2024 |
|
April 29, 2023 |
|
April 27, 2024 |
|
April 29, 2023 |
||||||||
Net cash provided by operating activities |
$ |
125 |
|
|
$ |
132 |
|
|
$ |
54 |
|
|
$ |
402 |
|
Payments for capital expenditures |
|
(76 |
) |
|
|
(67 |
) |
|
|
(217 |
) |
|
|
(218 |
) |
Free cash flow |
$ |
49 |
|
|
$ |
65 |
|
|
$ |
(163 |
) |
|
$ |
184 |
|
Reconciliation of Payments for capital expenditures to Capital and cloud implementation expenditures (unaudited) |
|||||||||||
|
13-Week Period Ended |
|
39-Week Period Ended |
||||||||
(in millions) |
April 27, 2024 |
|
April 29, 2023 |
|
April 27, 2024 |
|
April 29, 2023 |
||||
Payments for capital expenditures |
$ |
76 |
|
$ |
67 |
|
$ |
217 |
|
$ |
218 |
Cloud technology implementation expenditures (1) |
|
11 |
|
|
6 |
|
|
28 |
|
|
9 |
Capital and cloud implementation expenditures |
$ |
87 |
|
$ |
73 |
|
$ |
245 |
|
$ |
227 |
(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 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. |
|
$ |
(109 |
) |
|
|
|
$ |
(85 |
) |
|
Benefit for income taxes |
|
|
(32 |
) |
|
|
|
|
(26 |
) |
|
LIFO charge |
|
|
|
25 |
|
|
|
||||
Interest expense, net |
|
|
|
161 |
|
|
|
||||
Depreciation and amortization |
|
|
|
311 |
|
|
|
||||
Share-based compensation and other |
|
|
|
38 |
|
|
|
||||
Net periodic benefit income, excluding service costs |
|
|
|
(15 |
) |
|
|
||||
Loss on sale of assets and other asset charges |
|
|
|
41 |
|
|
|
||||
Restructuring, acquisition and integration related expenses |
|
|
|
22 |
|
|
|
||||
Business transformation costs |
|
|
|
48 |
|
|
|
||||
Adjusted EBITDA |
|
$ |
490 |
|
|
|
|
$ |
520 |
|
|
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. |
|
$ |
(109 |
) |
|
|
|
$ |
(85 |
) |
|
LIFO charge |
|
|
|
25 |
|
|
|
||||
Loss on debt extinguishment |
|
|
|
10 |
|
|
|
||||
Loss on sale of assets and other asset charges (1) |
|
|
|
21 |
|
|
|
||||
Restructuring, acquisition and integration related expenses |
|
|
|
22 |
|
|
|
||||
Business transformation costs |
|
|
|
48 |
|
|
|
||||
Tax impact of adjustments and adjusted effective tax rate (2) |
|
|
|
(29 |
) |
|
|
||||
Adjusted net (loss) income |
|
$ |
(12 |
) |
|
|
|
$ |
12 |
|
|
|
|
|
|
|
|
|
|||||
Diluted weighted average shares outstanding |
|
|
59 |
|
|
|
|
|
60 |
|
|
Adjusted EPS (3) |
|
$ |
(0.20 |
) |
|
|
|
$ |
0.20 |
|
|
(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 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 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) |
|
14 |
% |
|
270 |
% |
Tax impact of other charges and adjustments (2) |
|
(21 |
)% |
|
139 |
% |
Changes in valuation allowances (3) |
|
4 |
% |
|
(57 |
)% |
Other (4) |
|
— |
% |
|
— |
% |
Adjusted effective tax rate (4) |
|
19 |
% |
|
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/20240605460526/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 were UNFI's net sales for Q3 FY2024?
What was UNFI's net loss in Q3 FY2024?
How did UNFI's adjusted EBITDA perform in Q3 FY2024?
What was UNFI's EPS for Q3 FY2024?
What are the key reasons for UNFI's decreased net sales in Q3 FY2024?
How did UNFI's gross profit change in Q3 FY2024?
What factors contributed to UNFI's higher operating expenses in Q3 FY2024?
What is UNFI's fiscal 2024 outlook for adjusted EBITDA and adjusted EPS?
How did UNFI's free cash flow perform in Q3 FY2024?
