United Natural Foods, Inc. (NYSE: UNFI) (the “Company” or
“UNFI”) today reported financial results for the second quarter of
fiscal 2024 (13 weeks) ended January 27, 2024.
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; Loss per diluted share (EPS) of
$(0.25)
- Adjusted EBITDA decreased 29.3% to $128 million
- Adjusted EPS decreased to $0.07
Recent Financial and Operational
Summary
- Revising fiscal 2024 outlook to reduce net sales
expectations, while maintaining the midpoints and narrowing the
ranges for net income, EPS, adjusted EPS, and adjusted
EBITDA
- Continuing to drive improved operational execution and
efficiency
- Management disciplines and operational processes continuing
to drive shrink reduction
- Network automation and optimization progressing
- Expect Centralia, WA automation system to go live this
spring
- Announced Manchester, PA distribution center to be
automated
- Launched northeast distribution center optimization;
expected to be complete in Fiscal 2025
- Streamlined organization more agile and better able to make
quicker decisions closer to the customer
“Our second quarter results reflect our continued focus and
progress on execution and profitability improvement through the
important holiday selling season. Greater than anticipated benefits
from our near-term value creation initiatives and further advances
in managing shrink partially offset the expected reduction in
procurement gains and start-up costs associated with a new
distribution center,” said Sandy Douglas, UNFI’s Chief Executive
Officer.
“We are making steady progress on the multiple work-streams
underlying both our near-term and longer-term transformation into a
more efficient and effective partner to our customers, while we
also enhance profitability and long-term shareholder value
creation.”
Second Quarter Fiscal 2024
Summary
13-Week Period Ended
Percent Change
($ 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 0.5% in the second quarter of fiscal
2024 compared to the same period in the prior year, primarily
driven by a decline in unit volumes, which was partially offset by
inflation and new business with existing customers, primarily in
our Supernatural channel.
Gross profit in the second quarter of fiscal 2024 was
$1.0 billion, a decrease of $34 million, or 3.2%, compared to the
second quarter of fiscal 2023. The gross profit rate in the second
quarter of fiscal 2024 was 13.3% of net sales and included a $6
million LIFO charge. Excluding this non-cash charge, gross profit
rate was 13.4% of net sales. Gross profit rate in the second
quarter of fiscal 2023 was 13.7% of net sales and included a $29
million LIFO charge. Excluding this non-cash charge, gross profit
rate in the second quarter of fiscal 2023 was 14.0% of net sales.
The decrease in gross profit rate, excluding the LIFO charge, was
primarily driven by lower levels of procurement gains resulting
from decelerating inflation.
Operating expenses in the second quarter of fiscal 2024
were $1,010 million compared to $1,002 million in the second
quarter of fiscal 2023. Operating expenses included Business
Transformation Costs of $14 million in the second quarter of fiscal
2024 and $4 million in the second quarter of fiscal 2023. Excluding
these costs, operating expenses in the second quarter of fiscal
2024 were $996 million, or 12.8% of net sales, and $998 million, or
12.8% of net sales, in the second quarter of fiscal 2023.
Improvements in transportation costs as well as operating leverage
led to a sequential decrease in operating expenses as a percentage
of net sales compared to the first quarter of fiscal 2024.
Interest expense, net for the second quarter of fiscal
2024 was $40 million compared to $39 million for the second quarter
of fiscal 2023. The increase in interest expense, net was primarily
driven by higher average interest rates. The second quarter of
fiscal 2023 included approximately $3 million in non-cash charges
primarily related to the acceleration of unamortized debt issuance
costs and original issue discounts resulting from debt
prepayments.
Effective tax rate for the second quarter of fiscal 2024
was a benefit of 26.3% on pre-tax loss compared to an expense rate
of 29.0% on pre-tax income for the second quarter of fiscal 2023.
The change from the second quarter of fiscal 2023 is primarily
driven by the reduction in pre-tax income during the second quarter
of fiscal 2023.
Net loss for the second quarter of fiscal 2024 was $15
million. Net income for the second quarter of fiscal 2023 was $19
million.
Net loss per diluted share (EPS) was $(0.25) for the
second quarter of fiscal 2024 compared to net income per diluted
share of $0.31 for the second quarter of fiscal 2023. Adjusted EPS
was $0.07 for the second quarter of fiscal 2024 compared to $0.78
in the second quarter of fiscal 2023.
Adjusted EBITDA for the second quarter of fiscal 2024 was
$128 million compared to $181 million for the second quarter of
fiscal 2023.
Capital Allocation and Financing Overview
- Free Cash Flow – During the second quarter of fiscal
2024, free cash flow was $116 million compared to $448 million in
the second quarter of fiscal 2023. The results for the second
quarter of fiscal 2024 reflect net cash provided by operating
activities of $183 million, primarily driven by an expected decline
in seasonal working capital levels, and payments for capital
expenditures of $67 million. Cash provided by operating activities
in the second quarter of fiscal 2023 included approximately $282
million from the monetization of certain qualified accounts
receivables.
- Leverage – Total outstanding debt, net of cash, was
$2.16 billion at the end of the second quarter of fiscal 2024,
reflecting a decrease of $124 million compared to the end of the
first quarter of fiscal 2024. The net debt to Adjusted EBITDA
leverage ratio was 4.3x as of January 27, 2024.
- Liquidity – As of January 27, 2024, total liquidity was
approximately $1.43 billion, consisting of approximately $34
million in cash, plus the unused capacity of approximately $1.40
billion under the Company’s asset-based lending facility.
Fiscal 2024 Outlook (1)
The Company is updating its full-year outlook to the
following:
Fiscal Year Ending August 3, 2024 (53
weeks)
Previous Full Year
Outlook
Updated Full Year
Outlook
Net sales ($ in billions)
$30.9 - $31.5
$30.5 - $31.0
Net loss ($ in millions)
$(120) - $(46)
$(101) - $(65)
EPS (2)
$(2.02) - $(0.76)
$(1.70) - $(1.08)
Adjusted EPS (2)(3)(4)
$(0.88) - $0.38
$(0.56) - $0.06
Adjusted EBITDA (4) ($ in millions)
$450 - $550
$475 - $525
Capital and cloud implementation
expenditures (4)(5) ($ in millions)
~ $400
~ $400
(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 $600 million to Net sales and $9 million to
Adjusted EBITDA in the ranges provided.
(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 North America, including
natural product superstores, independent retailers, conventional
supermarket chains, eCommerce providers, and foodservice customers.
UNFI also provides a broad range of value-added services and
segmented marketing expertise, including proprietary technology,
data, market insights, and shelf management to help customers and
suppliers build their businesses and brands. As the largest
full-service grocery partner in North America, UNFI is committed to
building a food system that is better for all and is uniquely
positioned to deliver great food, more choices, and fresh thinking
to customers. To learn more about how UNFI is delivering value for
its stakeholders, visit 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 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 U.S. generally accepted accounting
principles (“GAAP”) basis, the Company has included in this press
release the non-GAAP financial measures Adjusted EBITDA, adjusted
earnings per diluted common share (“Adjusted EPS”), adjusted
effective tax rate, free cash flow, net debt to Adjusted EBITDA
leverage ratio and capital and cloud implementation expenditures.
Adjusted EPS is a consolidated measure, which the Company
reconciles by adding Net income attributable to UNFI plus the LIFO
charge or benefit, Goodwill impairment benefits and charges,
Restructuring, acquisition, and integration related expenses, gains
and losses on sales of assets, certain legal charges and gains,
surplus property depreciation and interest expense, losses on debt
extinguishment, the impact of diluted shares when GAAP earnings is
presented as a loss and non-GAAP earnings represent income, and the
tax impact of adjustments and the adjusted effective tax rate,
which tax impact is calculated using the adjusted effective tax
rate, and certain other non-cash charges or items, as determined by
management. The non-GAAP adjusted effective tax rate excludes the
potential impact of changes to various uncertain tax positions and
valuation allowances, as well as tax impacts related to the vesting
of share-based compensation awards. The non-GAAP Adjusted EBITDA
measure is a consolidated measure which the Company reconciles by
adding Net (loss) income including noncontrolling interests, less
Net income attributable to noncontrolling interests, plus
Non-operating income and expenses, including Net periodic benefit
income, excluding service cost, Interest expense, net and Other
(income) expense, net, plus (Benefit) provision for income taxes
and Depreciation and amortization all calculated in accordance with
GAAP, plus adjustments for Share-based compensation, non-cash LIFO
charge or benefit, Restructuring, acquisition and integration
related expenses, Goodwill impairment charges, Loss (gain) on sale
of assets and other asset charges, certain legal charges and gains,
and certain other non-cash charges or other items, as determined by
management. The changes to the definition of Adjusted EBITDA in the
fourth quarter of fiscal 2023 from prior periods reflect changes to
line item references in our Consolidated Financial Statements,
which do not impact the calculation of Adjusted EBITDA. The
non-GAAP free cash flow measure is defined as net cash (used in)
provided by operating activities less payments for capital
expenditures. The non-GAAP net debt to Adjusted EBITDA leverage
ratio is defined as the total carrying value of the Company’s
outstanding short- and long-term debt and finance lease liabilities
less net cash and cash equivalents, the sum of which is divided by
the trailing four quarters Adjusted EBITDA. The non-GAAP capital
and cloud implementation expenditures measure is defined as the sum
of payments for capital expenditures and cloud technology
implementation expenditures.
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,
2024
January 28,
2023
January 27,
2024
January 28,
2023
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,
2024
July 29, 2023
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, $0.01 par value,
authorized 5.0 shares; none issued or outstanding
—
—
Common stock, $0.01 par value, authorized
100.0 shares; 61.9 shares issued and 59.4 shares outstanding at
January 27, 2024; 61.0 shares issued and 58.5 shares outstanding at
July 29, 2023
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,
2024
January 28,
2023
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.
Reconciliation of Net (loss) income including noncontrolling
interests to Adjusted EBITDA (unaudited)
13-Week Period Ended
26-Week Period Ended
(in millions)
January 27, 2024
January 28, 2023
January 27, 2024
January 28, 2023
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 $21 million
non-cash asset impairment charge related to one of our
corporate-owned office locations in the first quarter of fiscal
2024.
(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, 2024
January 28, 2023
January 27, 2024
January 28, 2023
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
$21 million non-cash asset impairment charge related to one of our
corporate-owned office locations in the first quarter of fiscal
2024.
(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 Ended January
27, 2024
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 Fiscal
2024
Actual Fiscal 2023
U.S. GAAP effective tax rate
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
United Natural Foods (NYSE:UNFI)
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