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United Natural Foods, Inc.$15.05$.432.94%

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 United Natural Foods, Inc. Reports First Quarter Fiscal 2019 Results
   Thursday, December 06, 2018 4:05:00 PM ET

PROVIDENCE, R.I., Dec. 6, 2018 /PRNewswire/ -- United Natural Foods, Inc. (Nasdaq: UNFI) (the "Company" or "UNFI") today reported financial results for the first quarter of fiscal 2019 ended October 27, 2018.

First Quarter Fiscal 2019 Highlights

































 

"We closed on the previously announced purchase of SUPERVALU which will accelerate UNFI's transformation of food distribution throughout North America," said Steven L. Spinner, Chairman and Chief Executive Officer. "The integration of the two companies is well underway and we continue to be excited about the long-term creation of value for our shareholders we expect to deliver with this combination."

First Quarter Fiscal 2019 Summary
Net sales of continuing operations by customer channel for the first quarter of fiscal 2019 compared to the first quarter of fiscal 2018 were as follows ($ in millions):







































 

Gross margin for the first quarter of fiscal 2019 was 14.38% of net sales and included a $1.8 million, or 0.06% of net sales, inventory fair value adjustment charge related to the acquisition of SUPERVALU.  When adjusted for this charge, gross margin in the first quarter of fiscal 2019 was 14.44% of net sales compared to 14.94% of net sales in last fiscal year's first quarter. The decline in the gross margin rate was driven by a shift in customer mix, including the growth of the supernatural channel, and increased inbound freight expense, partially offset by higher levels of vendor support and greater fuel surcharge income.

Operating expenses in the first quarter of fiscal 2019 were $363.2 million, or 12.66% of net sales, compared to $312.1 million, or 12.70% of net sales, for the first quarter of fiscal 2018. The decrease in operating expenses, as a percent of net sales, was driven by lower health care costs and fixed cost leverage partially offset by increased labor and fuel costs.

Restructuring, acquisition, and integration related expenses in the first quarter of fiscal 2019 were $68.0 million.  This was primarily driven by $33.8 million of expenses related to change-in-control payments made to satisfy outstanding equity awards and severance as well as acquisition and integration costs of approximately $31.9 million.

Operating (loss) income was $(18.8) million in the first quarter of fiscal 2019 and included restructuring, acquisition, and integration related expenses of $68.0 million and a $1.8 million inventory fair value adjustment charge associated with the purchase of SUPERVALU.  When adjusted for these items, operating income was $51.0 million, or 1.78% of net sales, in the first quarter of fiscal 2019.  Operating income in the first quarter of fiscal 2018 was $55.1 million, or 2.24% of net sales.  The decrease in adjusted operating income was driven by lower gross margins, as a percent of net sales, and higher labor costs.

Interest expense for the first quarter of fiscal 2019 was $7.7 million and included expense of $0.7 million related to interest on the SUPERVALU senior notes during the redemption waiting period. When excluding this amount, interest expense was $7.0 million compared to $3.7 million for the first quarter of fiscal 2018.  The increase in interest expense was driven by the acquisition financing.

Adjusted EBITDA for the first quarter of fiscal 2019 was $86.2 million compared to $84.8 million for the first quarter of fiscal 2018.

Effective tax rate for continuing operations for the first quarter of fiscal 2019 was 16.6% compared to 41.8% for the first quarter of fiscal 2018.  The first quarter of fiscal 2019 effective tax rate reflects a  tax benefit based on consolidated pre-tax loss from continuing operations. The decrease in the effective income tax rate was primarily driven by a full year of tax savings due to the Tax Cuts and Jobs Act of 2017 offset by an increase in non-deductible compensation expense.

Net (loss) income for the first quarter of fiscal 2019 was $(19.3) million, including $2.1 million of income related to discontinued operations, compared to $30.5 million for the first quarter of fiscal 2018.

(Loss) Earnings Per Share (EPS) was $(0.38) for the first quarter of fiscal 2019 compared to $0.60 for the first quarter of fiscal 2018.  When adjusted for the impact of restructuring, acquisition, and integration related expenses as well as the inventory fair value adjustment charge, a loss on debt extinguishment and interest expense related to the SUPERVALU senior notes, adjusted EPS was $0.59 for the first quarter of fiscal 2019.

Fiscal 2019 Guidance
UNFI is now providing fiscal 2019 guidance, inclusive of SUPERVALU, for its 53-week fiscal 2019 as follows:









 

Conference Call and Webcast
The Company's first quarter fiscal 2019 conference call and audio webcast will be held today, Thursday, December 6, 2018 at 5:00 p.m. ET.  A webcast of the conference call 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 .  An online archive of the webcast will be available for 120 days.

About United Natural Foods

(NOTE: On October 22, 2018, UNFI completed the acquisition of SUPERVALU, INC. For more information on the acquisition, please visit www.bettertogether.unfi.com .)

UNFI is North America's premier food wholesaler delivering the widest variety of products to customer locations throughout North America including natural product superstores, independent retailers, conventional supermarket chains, ecommerce retailers, and food service customers.  By providing this deeper 'full-store' selection and compelling brands for every aisle, UNFI is uniquely positioned to deliver great food, more choices, and fresh thinking to customers everywhere. Combined with SUPERVALU, UNFI is the largest publicly-traded grocery distributor in America with expected annual sales of over $21 billion. To learn more about how UNFI is Moving Food Forward, 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 filed with the Securities and Exchange Commission (the "SEC") on September 24, 2018 and other filings the Company makes with the SEC, and include, but are not limited to, the Company's dependence on principal customers; the Company's sensitivity to general economic conditions including changes in disposable income levels and consumer spending trends; the Company's ability to realize anticipated benefits of its acquisitions and dispositions, in particular, its acquisition of SUPERVALU; the possibility that restructuring, asset impairment, and other charges and costs we may incur in connection with the sale or closure of SUPERVALU's retail operations will exceed current estimates; the Company's reliance on the continued growth in sales of its higher margin natural and organic foods and non-food products in comparison to lower margin conventional products; increased competition in the Company's industry as a result of increased distribution of natural, organic and specialty products by conventional grocery distributors and direct distribution of those products by large retailers and online distributors; increased competition as a result of continuing consolidation of retailers in the natural product industry and the growth of supernatural chains; the Company's ability to timely and successfully deploy its warehouse management system throughout its distribution centers and its transportation management system across the Company and to achieve the efficiencies and cost savings from these efforts; the addition or loss of significant customers or material changes to the Company's relationships with these customers; volatility in fuel costs; volatility in foreign exchange rates; the Company's sensitivity to inflationary and deflationary pressures; the relatively low margins and economic sensitivity of the Company's business; the potential for disruptions in the Company's supply chain by circumstances beyond its control; the risk of interruption of supplies due to lack of long-term contracts, severe weather, 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; and the ability to identify and successfully complete acquisitions of other natural, organic and specialty food and non-food products distributors.   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 non-GAAP financial measures for adjusted gross margin, adjusted operating (loss) income, adjusted EBITDA, and adjusted earnings per diluted common share. The Company has also included in this press release projected non-GAAP financial measures for estimated adjusted EBITDA and adjusted earnings per diluted common share for the fiscal year ending August 3, 2019. The non-GAAP measures adjusted total operating expenses, adjusted operating (loss) income, adjusted earnings per diluted common share and estimated adjusted earnings per diluted common share all exclude restructuring and asset impairment expenses, and acquisition and integration related costs. The non-GAAP measure adjusted EBITDA excludes total other expense, net, provision for income taxes, depreciation and amortization, share-based compensation, restructuring and asset impairment expenses and acquisition and integration related costs. The non-GAAP measure estimated adjusted effective tax rate also excludes restructuring and asset impairment expenses, and acquisition and integration related costs.

The reconciliation of these non-GAAP financial measures to their comparable GAAP financial measures 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 non-GAAP financial measures aids in making period-to-period comparisons, assessing the underlying operating performance of the Company and understanding core business trends, and is a meaningful indication of its actual and estimated operating performance. The Company currently expects to continue to exclude the items listed above from non-GAAP financial measures and may also exclude other items that may arise.  Management utilizes and plans to utilize these non-GAAP financial measures to compare the Company's operating performance during the 2019 fiscal year to the comparable periods in the 2018 fiscal year and to internally prepared projections.

 

 






































































































































 

 






































































































































































 

 





































































































































































































 

 

































 

 

































 

 
































 

 




































 

Cision View original content:http://www.prnewswire.com/news-releases/united-natural-foods-inc-reports-first-quarter-fiscal-2019-results-300761580.html

SOURCE United Natural Foods, Inc.



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