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United Natural Foods, Inc. Announces Third Quarter Fiscal 2011 Results
Q3 2011 Net Sales Increased 22.1% Over Q3 2010 To $1.20 Billion

PROVIDENCE, R.I., June 2, 2011 /PRNewswire via COMTEX/ --

Financial Highlights

  • Net income of $23.4 million for the third quarter of fiscal 2011, a 19.9% increase over net income from the comparable fiscal 2010 period
  • Diluted EPS of $0.48 for the third quarter of fiscal 2011

United Natural Foods, Inc. (Nasdaq: UNFI) today reported that net income for the third quarter of fiscal 2011 ended April 30, 2011 increased by $3.9 million, or 19.9%, to $23.4 million, from $19.5 million for the comparable quarter in fiscal 2010. Earnings per diluted share for the third quarter of fiscal 2011 was $0.48, including the dilutive effect from our equity offering completed in the first quarter of fiscal 2011, which represents an increase of 6.9% from $0.45 per diluted share for the third quarter of fiscal 2010. Net sales for the third quarter of fiscal 2011 totaled $1.20 billion, an increase of 22.1%, or $218.3 million, over net sales of $985.7 million recorded in the third quarter of fiscal 2010. Excluding the impact of sales related to the Company's June 2010 Canadian acquisition and its October 2010 acquisition of certain inventory and distribution assets of Whole Foods Market, Inc., which generated combined estimated incremental net sales of approximately $95.9 million during the third quarter, third quarter fiscal 2011 net sales increased by 12.4%, or $122.4 million, to $1.11 billion.

"During the quarter we continued to see strong demand for UNFI's products across our customer channels and delivered strong earnings growth despite tough comparisons versus the prior year and increasing fuel costs," commented Steven Spinner, President and Chief Executive Officer. "In particular, the Independent channel had sales growth of 14.0%, reflecting our continued commitment to our largest group of customers. Excluding our acquisitions, the Independent channel increased by 8.0%."

Gross margin was 18.2% for the third quarter of fiscal 2011, which represents a 33 basis point improvement from the gross margin of 17.8% for the second quarter of fiscal 2011. The higher gross margin compared to the prior sequential quarter was due to higher fuel surcharges, lower inventory adjustments and the non-recurrence of the higher inbound freight expenses that we experienced in the second fiscal quarter of 2011 as we expedited deliveries to maintain service levels. The decrease of 36 basis points from the gross margin of 18.5% for the third quarter of fiscal 2010 is primarily the result of the continued shift in the Company's customer mix.

Operating expenses as a percentage of net sales decreased to 14.9% for the fiscal 2011 third quarter, a decrease of approximately 15 basis points compared to the fiscal 2010 third quarter. Operating income as a percentage of net sales decreased to 3.2% for the third quarter of fiscal 2011 from 3.4% for the comparable prior year quarter, a decline of 20 basis points, and increased by 38 basis points compared to the second quarter of fiscal 2011, when the Company's operating income as a percentage of net sales was 2.8%.

Fiscal 2011 Year to Date Summary

Net sales for the first nine months of fiscal 2011 totaled $3.37 billion, a 21.8% increase over the prior fiscal year comparable period. Diluted EPS was $1.25 per share including the dilutive effect from our equity offering completed in the first quarter of fiscal 2011, a 6.8% increase over the first nine months of fiscal 2010. Gross margin was 47 basis points less than the comparable prior year period, at 18.1% of net sales for the first nine months of fiscal 2011. At 15.1% of net sales through the nine months ended April 30, 2011, operating expenses were 25 basis points lower than the comparable prior year period.

Updates to Fiscal 2011 Guidance

Based on the Company's performance through the first nine months of fiscal 2011 and the current outlook for the remainder of the year, the Company is updating its net sales guidance for fiscal year 2011, ending July 31, 2011, to a range of $4.48 billion to $4.52 billion, which represents a 19.2% to 20.3% increase in total net sales over fiscal 2010. The Company had previously provided, on March 3, 2011, a net sales guidance target of $4.4 billion to $4.5 billion.

In addition, the Company is narrowing its earnings per share guidance for fiscal 2011 to a range of $1.67 to $1.69 per diluted share. The Company had previously updated its fiscal 2011 earnings per share guidance to $1.65 to $1.71 per diluted share in a press release on March 3, 2011.

Conference Call & Webcast

The Company's third quarter 2011 conference call and audio webcast will be held at 10:00 a.m. ET on June 2, 2011. The audio webcast of the conference call will be available to the public, on a listen-only basis, via the Internet at www.earnings.com or at the Investors section of the Company's website at www.unfi.com. The online archive of the webcast will be available on the Company's website for 30 days.

About United Natural Foods

United Natural Foods, Inc. (http://www.unfi.com) carries and distributes more than 60,000 products to more than 23,000 customer locations throughout the United States and Canada. The Company serves a wide variety of retail formats including conventional supermarket chains, natural product superstores, independent retail operators and the food service channel. United Natural Foods, Inc. was ranked by Forbes in 2005 as one of the "Best Managed Companies in America," ranked by Fortune in 2006 - 2010 as one of its "Most Admired Companies," winner of the Supermarket News 2008 Sustainability Excellence Award, and recognized by the Nutrition Business Journal for its 2009 Environment and Sustainability Award.

For more information on United Natural Foods, Inc., visit the Company's website at www.unfi.com.

"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 filed with the Securities and Exchange Commission on September 27, 2010 and other filings the Company makes with the SEC, and include, but are not limited to, the Company's dependence on its principal customers; the Company's sensitivity to general economic conditions, including the current economic environment, changes in disposable income levels and consumer spending trends; the Company's ability to timely and successfully deploy its new warehouse management system throughout its distribution facilities; increased fuel costs; the Company's sensitivity to inflationary pressures; the relatively low margins and economic sensitivity of the Company's business; the Company's ability to successfully deploy its operational initiatives in the Canadian market; the ability to identify and successfully complete acquisitions of other natural, organic and specialty food and related product distributors; and management's allocation of capital and the timing of capital expenditures. 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 projections 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 projections are subject to change and could differ materially from final reported results. The Company may from time to time update these publicly announced projections, but it is not obligated to do so.

UNITED NATURAL FOODS, INC.

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(In thousands, except per share data)



Three months ended


Nine months ended


April 30, 2011


May 1, 2010


April 30, 2011


May 1, 2010









Net sales

$1,203,983


$985,694


$3,371,399


$2,768,679

Cost of sales

985,439


803,287


2,761,891


2,255,065









Gross profit

218,544


182,407


609,508


513,614









Total operating expenses

179,638


148,565


509,204


424,976









Operating income

38,906


33,842


100,304


88,638









Other expense (income):








Interest expense

1,146


1,491


3,830


4,429

Interest income

(750)


(89)


(1,015)


(199)

Other, net

(427)


(40)


(682)


(60)

Total other (income) expense

(31)


1,362


2,133


4,170









Income before income taxes

38,937


32,480


98,171


84,468









Provision for income taxes

15,575


12,992


38,676


33,787









Net income

$ 23,362


$ 19,488


$ 59,495


$ 50,681









Basic per share data:








Net income

$ 0.48


$ 0.45


$ 1.26


$ 1.18









Weighted average basic shares

of common stock

48,406


43,245


47,129


43,085









Diluted per share data:








Net income

$ 0.48


$ 0.45


$ 1.25


$ 1.17









Weighted average diluted shares

of common stock

48,793


43,536


47,470


43,328


UNITED NATURAL FOODS, INC.

CONSOLIDATED BALANCE SHEETS (Unaudited)

(In thousands, except per share data)



April 30,

2011


July 31,

2010

ASSETS




Current assets:




Cash and cash equivalents

$ 24,318


$ 13,802

Accounts receivable, net

279,650


217,097

Notes receivable, trade, net

2,207


3,111

Inventories

550,249


439,702

Prepaid expenses and other current assets

19,059


21,793

Deferred income taxes

20,560


20,560

Total current assets

896,043


716,065





Property and equipment, net

282,859


279,255





Other assets:




Goodwill

190,504


186,925

Intangible assets, net

60,962


50,201

Notes receivable, trade, net

2,251


235

Other

19,325


18,118

Total assets

$1,451,944


$1,250,799





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable

$240,487


$201,685

Notes payable

177,000


242,570

Accrued expenses and other current liabilities

82,205


72,587

Current portion of long-term debt

5,043


5,033

Total current liabilities

504,735


521,875





Long-term debt, excluding current portion

44,649


48,433

Deferred income taxes

21,476


20,598

Other long-term liabilities

30,036


29,446

Total liabilities

600,896


620,352





Stockholders' equity:




Preferred stock, $0.01 par value, authorized 5,000 shares;
none issued and outstanding

-


-

Common stock, $0.01 par value, authorized 100,000 shares;
48,502 issued and 48,475 outstanding shares at April 30, 2011;
43,558 issued and 43,531 outstanding shares at July 31, 2010

485


435

Additional paid-in capital

342,988


188,727

Treasury stock

(708)


(708)

Unallocated shares of Employee Stock Ownership Plan

(591)


(713)

Accumulated other comprehensive income (loss)

5,518


(1,155)

Retained earnings

503,356


443,861

Total stockholders' equity

851,048


630,447





Total liabilities and stockholders' equity

$1,451,944


$1,250,799


UNITED NATURAL FOODS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In thousands)



Nine months ended


April 30,

2011

May 1,

2010

CASH FLOWS FROM OPERATING ACTIVITIES:



Net income

$59,495

$50,681

Adjustments to reconcile net income to net cash (used in)

provided by operating activities:



Depreciation and amortization

26,898

20,219

Share-based compensation

7,395

6,517

Excess tax benefits from share-based payment arrangements

(1,519)

(399)

Provision for doubtful accounts

849

781

Gain on disposals of property and equipment

(3)

(3)

Changes in assets and liabilities, net of acquisitions:




Accounts receivable

(62,168)

(32,564)


Inventories

(101,778)

(72,141)


Prepaid expenses and other assets

502

4,373


Notes receivable, trade

(895)

38


Accounts payable

25,881

37,591


Accrued expenses and other liabilities

12,511

18,037

Net cash (used in) provided by operating activities

(32,832)

33,130




CASH FLOWS FROM INVESTING ACTIVITIES:



Capital expenditures

(24,456)

(30,912)

Proceeds from disposals of property and equipment

82

20

Purchases of acquired businesses, net of cash acquired

(21,984)

(235)

Net cash used in investing activities

(46,358)

(31,127)




CASH FLOWS FROM FINANCING ACTIVITIES:



Net proceeds from issuance of common stock

138,301

-

Net repayments under notes payable

(65,570)

(13,000)

Increase in bank overdraft

12,224

11,697

Payment of employee restricted stock tax withholdings

(2,665)

(1,272)

Proceeds from exercise of stock options

9,761

3,751

Repayments of long-term debt

(3,774)

(4,157)

Excess tax benefits from share-based payment arrangements

1,519

399

Capitalized debt issuance costs

-

(7)

Net cash provided by (used in) financing activities

89,796

(2,589)




EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

(90)

-

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

10,516

(586)

Cash and cash equivalents at beginning of period

13,802

10,269

Cash and cash equivalents at end of period

$24,318

$9,683




Supplemental disclosures of cash flow information:



Cash paid during the period for:



Interest, net of amounts capitalized

$3,545

$3,559

Income taxes, net of refunds

$27,674

$23,025


SOURCE United Natural Foods, Inc.