United Natural Foods, Inc. (NYSE: UNFI) (the “Company” or
“UNFI”) today reported financial results for the fourth quarter (14
weeks) and fiscal year (53 weeks) ended August 3, 2024.
Fourth Quarter Fiscal 2024 Performance
(comparisons to fourth quarter fiscal 2023)
- Net sales increased 10.0% to $8.2 billion; grew 2.1% on a
comparable 13-week basis
- Net loss of $37 million; Loss per diluted share (EPS) of
$(0.63)
- Adjusted EBITDA(1) increased 53.8% to $143 million, including
an approximate $10 million benefit from the additional week
- Adjusted EPS(1) of $0.01
Recent Financial and Operational
Summary
- Improving volume trends, new business with existing customers
as well as benefits from near-term efficiency initiatives led to
full year performance at upper end of outlook ranges for key
financial metrics
- Net debt and net leverage(1) decreased sequentially to $2.06
billion and 4.0x, respectively, at year end from $2.13 billion and
4.6x, respectively, at the end of the third quarter
- Advancing network optimization by consolidating Billings and
Bismarck distribution centers into other facilities
- Expected to improve customer and supplier experience in the
region through better technology access, a broader product
assortment and more efficient and effective service
- Introducing three-year business plan and financial objectives
driving customer and supplier value, margin expansion, free cash
flow generation and deleveraging
“We delivered fourth quarter results that drove fiscal 2024
performance to the upper end of our previously provided outlook.
This capped a year in which we generated four consecutive quarters
of sequentially increasing profitability, significantly
strengthened our foundation, and built momentum as we enter fiscal
2025. During fiscal 2024, we drove strong same customer growth,
extended our agreement with our largest customer, realized
approximately $150 million dollars in benefits from structural
efficiency initiatives, significantly reduced shrink, lengthened
the maturity on our term loan, and onboarded our new President and
CFO, Matteo Tarditi.”
“We are also actioning key elements of our updated strategy that
has resulted from our ongoing board- and management-led financial
review, which we expect will drive accelerating performance and
create sustainable value for our customers and suppliers.
Simultaneously, we are working to improve free cash flow generation
and to reduce net leverage by optimizing our distribution center
network, reducing the capital intensity of our business, and
driving efficiencies across the organization. We expect these two
elements of our strategy will work together to help us generate
meaningful shareholder value,” said Sandy Douglas, UNFI’s Chief
Executive Officer.
Fourth Quarter
Fiscal 2024 Summary(2)
Fourth Quarter Ended
Fiscal Year Ended
($ in millions, except for per share
data)
August 3, 2024 (14
weeks)
July 29, 2023 (13
weeks)
Percent Change
August 3, 2024 (53
weeks)
July 29, 2023 (52
weeks)
Percent Change
Net sales
$
8,155
$
7,417
10.0
%
$
30,980
$
30,272
2.3
%
Chains
$
3,425
$
3,141
9.0
%
$
12,967
$
12,816
1.2
%
Independent retailers
$
1,983
$
1,897
4.5
%
$
7,605
$
7,699
(1.2
)%
Supernatural
$
1,844
$
1,555
18.6
%
$
6,941
$
6,374
8.9
%
Retail
$
628
$
609
3.1
%
$
2,436
$
2,480
(1.8
)%
Other
$
650
$
593
9.6
%
$
2,555
$
2,477
3.1
%
Eliminations
$
(375
)
$
(378
)
(0.8
)%
$
(1,524
)
$
(1,574
)
(3.2
)%
Net (loss) income
$
(37
)
$
(68
)
N/M
$
(112
)
$
24
N/M
Adjusted EBITDA(1)
$
143
$
93
53.8
%
$
518
$
640
(19.1
)%
(Loss) earnings per diluted share
(EPS)
$
(0.63
)
$
(1.15
)
N/M
$
(1.89
)
$
0.40
N/M
Adjusted earnings (loss) per diluted
share (Adjusted EPS)(1)
$
0.01
$
(0.25
)
N/M
$
0.14
$
2.23
(93.7
)%
Net cash provided by operating
activities
$
191
$
222
(14.0
)%
$
253
$
624
(59.5
)%
Payments for capital
expenditures
$
(120
)
$
(105
)
14.3
%
$
(345
)
$
(323
)
6.8
%
Free cash flow(1)
$
71
$
117
(39.3
)%
$
(92
)
$
301
N/M
N/M - not meaningful
(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 measure
calculated in accordance with GAAP.
(2)
Please refer to the table in this press
release detailing comparable growth rates for relevant financial
metrics adjusted for the impact of the 53rd week in fiscal
2024.
Fourth Quarter Fiscal 2024
Summary
Net sales in the fourth quarter of fiscal 2024 were $8.2
billion, including an approximate $582 million benefit from the
additional week in fiscal 2024, compared to $7.4 billion in the
fourth quarter of fiscal 2023. Excluding this additional week,
sales increased 2.1% driven by improving unit volumes which turned
positive toward the end of the fourth quarter. Sales also benefited
from inflation.
Gross profit in the fourth quarter of fiscal 2024 was
$1.1 billion, an increase of $150 million, or 15.5%, compared to
the fourth quarter of fiscal 2023. On a comparable 13-week basis,
gross profit grew 7.0% compared to the prior year quarter. The
gross profit rate in the fourth quarter of fiscal 2024 was 13.7% of
net sales, including a $12 million LIFO benefit. Gross profit rate
was 13.0% of net sales in the fourth quarter of fiscal 2023 which
included a $36 million LIFO charge. Excluding the impact of LIFO,
the gross profit rate was 13.5% of net sales in the fourth quarter
of both fiscal years. The benefit of lower shrink expense was
offset by lower product margin rates and a shift in business
mix.
Operating expenses in the fourth quarter of fiscal 2024
were $1,075 million, or 13.2% of net sales, compared to $1,004
million, or 13.5% of net sales, in the fourth quarter of fiscal
2023. The decrease in operating expenses as a percentage of sales
was driven by the benefits from cost saving initiatives.
Interest expense, net for the fourth quarter of fiscal
2024 was $50 million and included $10 million in costs and charges
related to the refinancing of the secured term loan, compared to
$35 million for the fourth quarter of fiscal 2023. The increase in
interest expense, excluding the refinancing costs, was primarily
driven by higher average interest rates and the additional week in
the current year quarter.
Effective tax rate for the fourth quarter of fiscal 2024
was a benefit of 15.9% on a pre-tax loss compared to a benefit of
35.0% of pre-tax loss for the fourth quarter of fiscal 2023. The
effective tax rate for the fourth quarter of fiscal 2024 includes
charges related to share-based compensation and the deductibility
of charitable contributions. The effective tax rate for the fourth
quarter of fiscal 2023 included benefits from a favorable state
audit settlement and the reduction in pre-tax income during the
fourth quarter of fiscal 2023.
Net loss for the fourth quarter of fiscal 2024 was $37
million. Net loss for the fourth quarter of fiscal 2023 was $68
million.
Net loss per diluted share (EPS) was $(0.63) for the
fourth quarter of fiscal 2024 compared to net loss per diluted
share of $(1.15) for the fourth quarter of fiscal 2023. Adjusted
EPS was $0.01 for the fourth quarter of fiscal 2024, compared to an
adjusted EPS loss of $(0.25) in the fourth quarter of fiscal
2023.
Adjusted EBITDA for the fourth quarter of fiscal 2024 was
$143 million, compared to $93 million for the fourth quarter of
fiscal 2023.
Capital Allocation and Financing Overview
- Free Cash Flow – During the fourth quarter of 2024, free
cash flow was $71 million, compared to $117 million in last year’s
fourth quarter. This quarter’s results reflect net cash provided by
operating activities of $191 million less payments for capital
expenditures of $120 million.
- Net Leverage – Total outstanding debt, net of cash,
ended the quarter at $2.06 billion, reflecting an increase of $115
million during fiscal 2024. The net debt to adjusted EBITDA
leverage ratio was 4.0x as of August 3, 2024.
- Liquidity – As of August 3, 2024, total liquidity was
approximately $1.28 billion, consisting of approximately $40
million in cash, plus the unused capacity of approximately $1.24
billion under the Company’s asset-based lending facility.
Fiscal 2025 Outlook (1)
The Company is providing the following outlook for fiscal 2025,
a 52-week year.
Fiscal Year Ending August 2, 2025 (52
weeks)
Net sales ($ in billions)
$30.3 - $30.8
Net loss ($ in millions)
$(41) - $(3)
EPS (2)
$(0.65) - $(0.05)
Adjusted EPS (2)(3)(4)
$0.20 - $0.80
Adjusted EBITDA (4) ($ in millions)
$520 - $580
Capital and cloud implementation
expenditures (5)(6)($ in millions)
~ $300
Free cash flow (6)
~ $100
(1)
The outlook provided above is for fiscal
2025 only. This outlook is forward-looking, is based on
management’s current estimates and expectations and is subject to a
number of risks, including many that are outside of management’s
control. See cautionary Safe Harbor Statement below.
(2)
(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. The outlook for Adjusted EPS reflects a tax
rate of 26%.
(4)
The Company is unable to provide a full
reconciliation to the most comparable GAAP measure without
unreasonable effort due to the difficulty in predicting the amounts
for certain adjustment items.
(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.
(6)
The components of capital and cloud
implementation expenditures for fiscal 2025 will be primarily
dependent on the nature of certain contracts to be executed. As
such, the Company is unable to reconcile the outlook for free cash
flow as well as capital and cloud implementation expenditures in
fiscal 2025 to the most directly comparable financial measures
calculated in accordance with GAAP.
Conference Call and Webcast
The Company’s fourth quarter and full year fiscal 2024
conference call and audio webcast will be held today, Tuesday,
October 1, 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 strategic 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 strategic transactions; our ability to
continue to grow sales, including of our higher margin natural and
organic foods and non-food products; our ability to maintain
sufficient volume in our wholesale distribution and services
businesses to support our operating infrastructure; our ability to
access additional capital; increases in healthcare, pension and
other costs under our single employer benefit plan 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 non-GAAP free cash flow measure is defined as net
cash provided by (used in) 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 2025 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
2025 fiscal year to the comparable periods in the 2024 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.
CONSOLIDATED STATEMENTS OF
OPERATIONS (unaudited)
(in millions, except for per
share data)
Fourth Quarter Ended
Fiscal Year Ended
August 3, 2024 (14
weeks)
July 29, 2023 (13
weeks)
August 3, 2024 (53
weeks)
July 29, 2023 (52
weeks)
Net sales
$
8,155
$
7,417
$
30,980
$
30,272
Cost of sales
7,039
6,451
26,779
26,141
Gross profit
1,116
966
4,201
4,131
Operating expenses
1,075
1,004
4,100
3,973
Restructuring, acquisition and integration
related expenses
19
7
36
8
Loss on sale of assets and other asset
charges
20
30
57
30
Operating income (loss)
2
(75
)
8
120
Net periodic benefit income, excluding
service cost
(4
)
(7
)
(15
)
(29
)
Interest expense, net
50
35
162
144
Other income, net
—
—
(2
)
(2
)
(Loss) income before income taxes
(44
)
(103
)
(137
)
7
Benefit for income taxes
(7
)
(36
)
(27
)
(23
)
Net (loss) income including noncontrolling
interests
(37
)
(67
)
(110
)
30
Less net income attributable to
noncontrolling interests
—
(1
)
(2
)
(6
)
Net (loss) income attributable to United
Natural Foods, Inc.
$
(37
)
$
(68
)
$
(112
)
$
24
Basic (loss) earnings per share
$
(0.63
)
$
(1.15
)
$
(1.89
)
$
0.41
Diluted (loss) earnings per share
$
(0.63
)
$
(1.15
)
$
(1.89
)
$
0.40
Weighted average shares outstanding:
Basic
59.5
58.6
59.3
59.2
Diluted
59.5
58.6
59.3
60.7
UNITED NATURAL FOODS,
INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
(in millions, except for par
values)
August 3, 2024
July 29, 2023
ASSETS
Cash and cash equivalents
$
40
$
37
Accounts receivable, net
953
889
Inventories, net
2,179
2,292
Prepaid expenses and other current
assets
230
245
Total current assets
3,402
3,463
Property and equipment, net
1,820
1,767
Operating lease assets
1,370
1,228
Goodwill
19
20
Intangible assets, net
649
722
Deferred income taxes
87
32
Other long-term assets
181
162
Total assets
$
7,528
$
7,394
LIABILITIES AND STOCKHOLDERS'
EQUITY
Accounts payable
$
1,688
$
1,781
Accrued expenses and other current
liabilities
288
283
Accrued compensation and benefits
197
143
Current portion of operating lease
liabilities
181
180
Current portion of long-term debt and
finance lease liabilities
11
18
Total current liabilities
2,365
2,405
Long-term debt
2,081
1,956
Long-term operating lease liabilities
1,263
1,099
Long-term finance lease liabilities
12
12
Pension and other postretirement benefit
obligations
15
16
Other long-term liabilities
151
162
Total liabilities
5,887
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; 62.0 shares issued and 59.5 shares outstanding at
August 3, 2024; 61.0 shares issued and 58.5 shares outstanding at
July 29, 2023
1
1
Additional paid-in capital
635
606
Treasury stock at cost
(86
)
(86
)
Accumulated other comprehensive loss
(47
)
(28
)
Retained earnings
1,138
1,250
Total United Natural Foods, Inc.
stockholders’ equity
1,641
1,743
Noncontrolling interests
—
1
Total stockholders’ equity
1,641
1,744
Total liabilities and stockholders’
equity
$
7,528
$
7,394
UNITED NATURAL FOODS,
INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS (unaudited)
Fiscal Year Ended
(in millions)
August 3, 2024 (53
weeks)
July 29, 2023 (52
weeks)
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net (loss) income including noncontrolling
interests
$
(110
)
$
30
Adjustments to reconcile net (loss) income
to net cash provided by operating activities:
Depreciation and amortization
319
304
Share-based compensation
39
38
Gain on sale of assets
(7
)
(9
)
Long-lived asset impairment charges
43
25
Net pension and other postretirement
benefit income
(15
)
(29
)
Deferred income tax benefit
(49
)
(36
)
LIFO charge
7
119
Provision (recoveries) for losses on
receivables
3
(1
)
Non-cash interest expense and other
adjustments
18
13
Changes in operating assets and
liabilities, net of acquired businesses
Accounts and notes receivable
(68
)
327
Inventories
104
(57
)
Prepaid expenses and other assets
(157
)
(108
)
Accounts payable
(81
)
53
Accrued expenses and other liabilities
207
(45
)
Net cash provided by operating
activities
253
624
CASH FLOWS FROM INVESTING
ACTIVITIES:
Payments for capital expenditures
(345
)
(323
)
Proceeds from dispositions of assets
25
16
Payments for investments
(22
)
(32
)
Net cash used in investing activities
(342
)
(339
)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from borrowings under revolving
credit line
2,571
2,976
Proceeds from issuance of other loans
15
—
Repayments of borrowings under revolving
credit line
(2,270
)
(3,004
)
Repayments of long-term debt and finance
leases
(191
)
(154
)
Repurchases of common stock
—
(62
)
Payments of employee restricted stock tax
withholdings
(7
)
(40
)
Payments for debt issuance costs
(18
)
—
Distributions to noncontrolling
interests
(4
)
(6
)
Repayments of other loans
(2
)
(2
)
Other
(2
)
—
Net cash provided by (used in) financing
activities
92
(292
)
EFFECT OF EXCHANGE RATE ON CASH
—
—
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
3
(7
)
Cash and cash equivalents, at beginning of
period
37
44
Cash and cash equivalents, at end of
period
$
40
$
37
Supplemental disclosures of cash flow
information:
Cash paid for interest
$
159
$
133
Cash refunds for federal, state and
foreign income taxes, net
$
(14
)
$
(5
)
Additions of property and equipment
included in Accounts payable
$
21
$
32
SUPPLEMENTAL NON-GAAP
FINANCIAL INFORMATION
UNITED NATURAL FOODS,
INC.
Reconciliation of Net (loss)
income including noncontrolling interests to Adjusted EBITDA
(unaudited)
Fourth Quarter Ended
Fiscal Year Ended
(in millions)
August 3, 2024 (14
weeks)
July 29, 2023 (13
weeks)
August 3, 2024 (53
weeks)
July 29, 2023 (52
weeks)
Net (loss) income including noncontrolling
interests
$
(37
)
$
(67
)
$
(110
)
$
30
Adjustments to net (loss) income including
noncontrolling interests:
Less net income attributable to
noncontrolling interests
—
(1
)
(2
)
(6
)
Net periodic benefit income, excluding
service cost
(4
)
(7
)
(15
)
(29
)
Interest expense, net
50
35
162
144
Other income, net
—
—
(2
)
(2
)
Benefit for income taxes
(7
)
(36
)
(27
)
(23
)
Depreciation and amortization
91
80
319
304
Share-based compensation
11
5
37
38
LIFO (benefit) charge
(12
)
36
7
119
Restructuring, acquisition and integration
related expenses(1)
19
7
36
8
Loss on sale of assets and other asset
charges(2)
20
30
57
30
Multiemployer pension plan withdrawal
charges(3)
—
1
—
1
Other retail expense(4)
—
1
—
1
Business transformation costs(5)
12
9
52
25
Other adjustments(6)
—
—
4
—
Adjusted EBITDA
$
143
$
93
$
518
$
640
(1)
Fiscal 2024 and fiscal 2023 primarily
reflects costs associated with certain employee severance.
(2)
Fiscal 2024 primarily 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, a $7 million non-cash asset impairment charge related to the
decision to close certain retail store locations in the third
quarter of fiscal 2024, a $15 million non-cash impairment charge
related to the decision to close certain leased and owned
distribution center locations in the fourth quarter of fiscal 2024
and $21 million in losses on the sales of receivables under the
accounts receivable monetization program. Fiscal 2023 primarily
includes a $25 million intangible asset impairment charge
attributable to a rationalization of our brands portfolio in an
effort to focus on our core private brand offerings and $14 million
in losses on the sales of receivables.
(3)
Fiscal 2023 reflects adjustments to
multiemployer pension plan withdrawal charge estimates.
(4)
Fiscal 2023 reflects store closure costs,
operational wind-down and inventory charges.
(5)
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 fiscal
2024, all of which are included within Operating expenses in the
Consolidated Statements of Operations.
(6)
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)
Fourth Quarter Ended
Fiscal Year Ended
(in millions, except per share
amounts)
August 3, 2024 (14
weeks)
July 29, 2023 (13
weeks)
August 3, 2024 (53
weeks)
July 29, 2023 (52
weeks)
Net (loss) income attributable to United
Natural Foods, Inc.
$
(37
)
$
(68
)
$
(112
)
$
24
Restructuring, acquisition, and
integration related expenses(1)
19
7
36
8
Loss on sale of assets and other asset
charges other than losses on sales of receivables(2)
15
25
36
16
LIFO (benefit) charge
(12
)
36
7
119
Surplus property depreciation and interest
expense(3)
2
1
5
2
Multiemployer pension plan withdrawal
charges(4)
—
1
—
1
Loss on debt extinguishment
10
—
10
3
Other retail expense(5)
—
1
—
1
Business transformation costs(6)
12
9
52
25
Other adjustments(7)
—
—
4
—
Tax impact of adjustments and adjusted
effective tax rate(8)
(8
)
(26
)
(29
)
(63
)
Adjusted net income (loss)
$
1
$
(14
)
$
9
$
136
Diluted weighted average shares
outstanding
60.0
58.6
60.4
60.7
Adjusted EPS(9)
$
0.01
$
(0.25
)
$
0.14
$
2.23
(1)
Fiscal 2024 and fiscal 2023 primarily
reflects costs associated with certain employee severance.
(2)
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. Fiscal 2024 primarily
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, a $7 million non-cash asset impairment charge related
to the decision to close certain retail store locations in the
third quarter of fiscal 2024 and a $15 million non-cash impairment
charge related to the decision to close certain leased and owned
distribution center locations in the fourth quarter of fiscal 2024.
Fiscal 2023 primarily includes a $25 million intangible asset
impairment charge attributable to a rationalization of our brands
portfolio in an effort to focus on our core private brand
offerings.
(3)
Reflects surplus, non-operating property
depreciation and interest expense.
(4)
Fiscal 2023 reflects adjustments to
multiemployer pension plan withdrawal charge estimates.
(5)
Fiscal 2023 reflects store closure costs,
operational wind-down and inventory charges.
(6)
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 fiscal
2024, all of which are included within Operating expenses in the
Consolidated Statements of Operations.
(7)
Primarily reflects third-party
professional service fees related to shareholder negotiations in
the first quarter of fiscal 2024.
(8)
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
true operations of the Company. By providing this non-GAAP measure,
management intends to provide investors with a meaningful,
consistent comparison of the Company’s effective tax rate on
ongoing operations.
(9)
Adjusted earnings (loss) per share amounts
are calculated using actual unrounded figures.
Calculation of net debt to
Adjusted EBITDA leverage ratio (unaudited)
(in millions, except ratios)
Fiscal Year Ended
August 3, 2024
Current portion of long-term debt and
finance lease liabilities
$
11
Long-term debt
2,081
Long-term finance lease liabilities
12
Less: Cash and cash equivalents
(40
)
Net carrying value of debt and finance
lease liabilities
2,064
Adjusted EBITDA
$
518
Adjusted EBITDA leverage ratio
4.0x
Reconciliation of Net cash
provided by operating activities to Free cash flow
(unaudited)
Fourth Quarter Ended
Fiscal Year Ended
(in millions)
August 3, 2024
July 29, 2023
August 3, 2024
July 29, 2023
(14 weeks)
(13 weeks)
(53 weeks)
(52 weeks)
Net cash provided by operating
activities
$
191
$
222
$
253
$
624
Payments for capital expenditures
(120
)
(105
)
(345
)
(323
)
Free cash flow
$
71
$
117
$
(92
)
$
301
Reconciliation of Payments for
capital expenditures to Capital and cloud implementation
expenditures (unaudited)
Fourth Quarter Ended
Fiscal Year Ended
(in millions)
August 3, 2024
July 29, 2023
August 3, 2024
July 29, 2023
(14 weeks)
(13 weeks)
(53 weeks)
(52 weeks)
Payments for capital expenditures
$
120
$
105
$
345
$
323
Cloud technology implementation
expenditures (1)
5
12
25
21
Capital and cloud implementation
expenditures (2)
$
125
$
117
$
370
$
344
(1)
Cloud technology implementation
expenditures are included in operating activities in the
Consolidated Statements of Cash Flows.
(2)
Certain amounts in fiscal 2024 have been
reclassified from Cloud technology implementation expenditures to
Payments for capital expenditures. These reclassifications had no
impact on total Capital and cloud implementation expenditures, or
on prior year reported amounts.
Fiscal 2024 Comparable Growth
Rates (unaudited)
Fourth Quarter Ended
Fiscal Year Ended
($ in millions)
August 3, 2024 (13
weeks)(1)
July 29, 2023 (13
weeks)
Comparable 13 Week Percent
Change(2)
August 3, 2024 (52
weeks)(1)
July 29, 2023 (52
weeks)
Comparable 52 Week Percent
Change(2)
Net sales
$
7,573
$
7,417
2.1
%
$
30,398
$
30,272
0.4
%
Chains
$
3,180
$
3,141
1.2
%
$
12,722
$
12,816
(0.7
)%
Independent retailers
$
1,842
$
1,897
(2.9
)%
$
7,464
$
7,699
(3.1
)%
Supernatural
$
1,711
$
1,555
10.0
%
$
6,808
$
6,374
6.8
%
Retail
$
583
$
609
(4.3
)%
$
2,391
$
2,480
(3.6
)%
Other
$
606
$
593
2.2
%
$
2,511
$
2,477
1.4
%
Eliminations
$
(349
)
$
(378
)
(7.7
)%
$
(1,498
)
$
(1,574
)
(4.8
)%
Adjusted EBITDA
$
133
$
93
43.0
%
$
508
$
640
(20.6
)%
(1)
Excludes the estimated impact of the 53rd
week in fiscal 2024.
(2)
The comparable 13-week and 52-week percent
changes remove the estimated contribution from the additional week
in fiscal 2024 which is calculated by subtracting one-fifth of the
respective metrics for the last five-week period within the 14-week
fourth quarter of fiscal 2024.
Reconciliation of actual 2024
and 2023 U.S. GAAP effective tax rate to adjusted effective tax
rate (unaudited)
Actual Fiscal 2024
Actual Fiscal 2023
U.S. GAAP Effective Tax Rate
20
%
(329
)%
Discrete quarterly recognition of GAAP
items(1)
20
%
270
%
Tax impact of other charges and
adjustments(2)
(24
)%
139
%
Changes in valuation allowances(3)
5
%
(57
)%
Other(4)
—
%
—
%
Adjusted Effective Tax Rate(4)
21
%
23
%
Note: As part of the year-end
reconciliation, we have updated the reconciliation of the fiscal
2024 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/20241001971381/en/
INVESTOR CONTACTS: Steve Bloomquist Vice President,
Investor Relations 952-828-4144 sbloomquist@unfi.com
Kristyn Farahmand Senior Vice President, Investor Relations and
Corporate Development 401-213-2160 kristyn.farahmand@unfi.com
United Natural Foods (NYSE:UNFI)
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