PROVIDENCE, R.I.,
March 5, 2019 /PRNewswire/ --
United Natural Foods, Inc. (NYSE: UNFI) (the "Company" or "UNFI")
today reported financial results for the second quarter of fiscal
2019 ended January 26, 2019.
Second Quarter Fiscal 2019 Highlights
- Net Sales Increased To $6.15
Billion, Including $3.47
Billion From SUPERVALU
- Legacy UNFI Sales Increased 5.8%
- Results Include $370.9
Million Non-Cash Goodwill Impairment Charge
|
13-Week Period Ended
|
|
|
($ in thousands, except per share
data)
|
January 26,
2019
|
|
January 27,
2018
|
|
Change
|
Net Sales
|
$
|
6,149,206
|
|
|
$
|
2,528,011
|
|
|
$
|
3,621,195
|
|
Net (Loss) Income
|
$
|
(341,725)
|
|
|
$
|
50,486
|
|
|
$
|
(392,211)
|
|
Adjusted
EBITDA(1)
|
$
|
142,573
|
|
|
$
|
79,824
|
|
|
$
|
62,749
|
|
(Loss) Earnings Per Diluted Share
(EPS)
|
$
|
(6.72)
|
|
|
$
|
0.99
|
|
|
$
|
(7.71)
|
|
Adjusted
EPS(1)
|
$
|
0.44
|
|
|
$
|
0.71
|
|
|
$
|
(0.27)
|
|
(1)
|
Please refer to the
tables in this press release for a reconciliation of non-GAAP
financial measures to the most directly comparable financial
measure calculated in accordance with GAAP.
|
"I'm pleased by the tremendous work and meaningful
progress our team accomplished this quarter on the integration of
SUPERVALU and the positioning of UNFI as the premier food
distribution company in North
America," said Steven L.
Spinner, Chairman and Chief Executive Officer. "We
know realizing all the benefits of this combination will take time,
and we're focused on executing against our plan for the
long-term. We experienced higher than anticipated costs,
largely associated with our network realignment projects resulting
primarily from SUPERVALU's previous acquisitions, which we believe
will be short-term in nature. I'm confident we have the
people and resources focused on this integration and remain
optimistic about our drive towards operating as one company with
the broadest product selection, services offering and scaled supply
chain."
Second Quarter Fiscal 2019 Summary
Net sales from continuing operations
by customer channel for the second quarter of fiscal 2019 compared
to the second quarter of fiscal 2018 were as follows ($ in
millions):
|
|
|
|
|
|
13-Week Period Ended
|
Customer Channel
(1)
|
|
Total % Growth
|
|
Legacy UNFI
% Growth
|
|
January 26,
2019 (2)
|
|
January 27,
2018
|
Supernatural
|
|
18.2%
|
|
18.2%
|
|
$
|
1,100
|
|
|
$
|
931
|
|
Independents
|
|
25.3%
|
|
4.6%
|
|
810
|
|
|
646
|
|
Supermarkets
|
|
444.6%
|
|
(1.4)%
|
|
3,902
|
|
|
716
|
|
Other
|
|
44.0%
|
|
(17.4)%
|
|
337
|
|
|
235
|
|
Total
|
|
143.2%
|
|
5.8%
|
|
$
|
6,149
|
|
|
$
|
2,528
|
|
(1)
|
During the second
quarter of fiscal 2019, the presentation of net sales by customer
channel was adjusted to reflect changes in the classification of
customer types as a result of a detailed review of customer channel
definitions. Fiscal 2018 amounts have been restated to reflect this
change which decreased supermarkets channel net sales by
approximately $12 million and other channel net sales by
approximately $15 million which were offset by a $27 million
increase to independents channel net sales.
|
(2)
|
Net sales by customer
channel for the 13-week period ended January 26, 2019 includes
SUPERVALU.
|
Gross margin for the second quarter of
fiscal 2019 was 12.39% of net sales and included an $8.6 million, or 0.14% of net sales, inventory
fair value adjustment charge related to the acquisition of
SUPERVALU. When excluding this charge, gross margin in the second
quarter of fiscal 2019 was 12.53% of net sales compared to 14.70%
of net sales for the second quarter of fiscal 2018. The
decline in the gross margin rate was driven by the addition of
SUPERVALU at a lower gross profit rate as well as a shift in
customer mix, including the faster growth of the supernatural
channel relative to the other customer channels.
UNFI has elected to move onto the LIFO method of inventory
valuation for certain product categories. This, combined with
a higher inflation assumption for the combined business, is
expected to add an additional $10-$15 million in
non-cash expense to fiscal 2019 results.
Operating expenses in the second
quarter of fiscal 2019 were $751.9
million, or 12.23% of net sales, compared to $320.1 million, or 12.66% of net sales for the
second quarter of fiscal 2018. The decrease in operating
expenses, as a percent of net sales, was driven by the benefit of
acquisition synergies.
Restructuring, acquisition, and integration related
expenses in the second quarter of fiscal 2019 were
$47.1 million including certain
charges related to the divestiture of retail banners.
Goodwill and asset impairment charges
were $370.9 million in the
second quarter of fiscal 2019 resulting from an impairment
assessment conducted in the second quarter, which indicated a
goodwill impairment attributed to the SUPERVALU Wholesale reporting
unit. Goodwill and asset impairment charges were $11.2 million in the second quarter of fiscal
2018 related to the Company's Earth Origins Market retail business,
which was completely disposed of in the fourth quarter of fiscal
2018. Following this impairment charge, approximately
$481.1 million of goodwill remains on
the balance sheet.
Operating (loss) income was
$(408.1) million in the second
quarter of fiscal 2019 and included a goodwill impairment charge of
$370.9 million, restructuring,
acquisition, and integration related expenses of $47.1 million, and an $8.6
million inventory fair value adjustment charge associated
with the purchase of SUPERVALU. When excluding these items,
operating income was $18.5 million,
or 0.30% of net sales, in the second quarter of fiscal 2019.
Operating income in the second quarter of fiscal 2018 was
$40.2 million, or 1.59% of net sales
and included goodwill and impairment charges of $11.2 million. When excluding these
charges, operating income for the second quarter of fiscal 2018 was
$51.4 million or 2.04% of net
sales. The decrease in operating income, as a percent of net
sales, was primarily driven by lower gross margins, as a percent of
net sales, partially offset by lower operating expenses, as a
percent of net sales.
Adjusted EBITDA for the second quarter
of fiscal 2019 was $142.6 million
compared to $79.8 million for the
second quarter of fiscal 2018. The increase was predominantly
driven by the addition of SUPERVALU.
Interest expense, net for the second
quarter of fiscal 2019 was $58.7
million and included expense of $2.5 million related to interest on the
now-retired SUPERVALU senior notes and $1.0
million of unamortized debt issuance costs for certain term
loan prepayments made in the quarter with asset sale proceeds. When
excluding these amounts, interest expense, net was $55.2 million compared to $4.1 million for the second quarter of fiscal
2018. The increase in interest expense, net was driven by the
acquisition financing.
Effective tax rate for continuing
operations for the second quarter of fiscal 2019 was 20.2% compared
to (38.4)% for the second quarter of fiscal 2018. The second
quarter of fiscal 2019 effective tax rate reflects a tax benefit
based on consolidated pre-tax loss from continuing operations. In
the second quarter of fiscal 2018, the Company recognized a
provisional one-time non-cash net tax benefit from the Tax Cuts and
Jobs Act of $21.9 million
representing the estimated impact of the remeasurement of U.S. net
deferred tax liabilities based on the new lower corporate income
tax rate. Excluding this provisional one-time net tax benefit of
$21.9 million, the Company's
effective tax rate would have been 21.6% for the second quarter of
fiscal 2018.
In February, UNFI made cash tax payments of approximately
$59 million in conjunction with
anticipated 338g tax elections related to the acquisition of
SUPERVALU. These elections allow UNFI to utilize a portion of
SUPERVALU's $2.9 billion capital loss
carryforward to generate estimated net cash tax savings of
$300 million over the next 15
years.
Net (loss) income for the second
quarter of fiscal 2019 was $(341.7)
million, including $21.4
million of income related to discontinued operations
compared to $50.5 million for the
second quarter of fiscal 2018. The decrease in net income was
primarily the result of goodwill and asset impairment charges as
well as restructuring, acquisition, and integration related
expenses and increased interest expense.
(Loss) Earnings Per Share (EPS) was
$(6.72) for the second quarter of
fiscal 2019 compared to $0.99 for the
second quarter of fiscal 2018. Adjusted EPS was $0.44 for the second quarter of fiscal 2019
compared to adjusted EPS of $0.71 in
the second quarter of fiscal 2018, reflecting lower operating
income and higher interest expense.
Debt reduction during the second
quarter (compared to first quarter balances) was approximately
$120 million with cash from
operations, net of capital expenditures, and the proceeds from
asset sales. In addition, capital lease obligations were
reduced by approximately $47 million,
including $31 million that are now
considered long term liabilities.
Fiscal 2019 Guidance
UNFI is
updating fiscal 2019 guidance, other than for net sales, to reflect
the Company's most recent business performance and outlook, for the
53-week fiscal 2019 (inclusive of SUPERVALU) as follows:
Fiscal Year Ending August 3, 2019 (53
weeks)
|
|
FY 2019
|
Net Sales ($ in
billions)
|
|
$21.5 -
$22.0
|
Earnings Per Share
(EPS)
|
|
$(6.50) -
$(6.10)
|
Adjusted Earnings Per
Share (EPS) (1)
|
|
$2.00 -
$2.40
|
Net Income ($ in
millions)
|
|
$(332) -
$(312)
|
Adjusted EBITDA ($
in millions) (1)
|
|
$580 -
$610
|
(1)
|
Please refer to the
tables in this press release for a reconciliation of non-GAAP
financial measures to the most directly comparable financial
measure calculated in accordance with GAAP.
|
Conference Call and Webcast
The
Company's second quarter fiscal 2019 conference call and audio
webcast will be held today, Tuesday, March
5, 2019 at 5:00 p.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. An online archive of the webcast
(and supplemental materials) 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.
|
INVESTOR CONTACT:
|
|
|
|
Steve
Bloomquist
|
|
|
|
Vice President,
Investor Relations
|
|
|
|
952-828-4144
|
|
|
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 quarterly report on Form 10-Q for the period ended
October 27, 2018 filed with the
Securities and Exchange Commission (the "SEC") on December 6, 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 potential for additional goodwill impairment
charges as a result of purchase accounting adjustments or
otherwise; the Company's reliance on the continued growth in sales
of 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 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 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 estimated adjusted
earnings per diluted common share for the fiscal year ending
August 3, 2019. The non-GAAP
measures adjusted earnings per diluted common share and estimated
adjusted earnings per diluted common share exclude goodwill and
asset impairment charges, restructuring, acquisition, and
integration related expenses, loss on debt extinguishment and
interest on SUPERVALU's senior notes during their mandatory
redemption period, and inventory fair value adjustment
expense. The non-GAAP measures adjusted EBITDA and estimated
adjusted EBITDA exclude total other expense, net, (benefit)
provision for income taxes, depreciation and amortization,
share-based compensation, goodwill and asset impairment charges,
restructuring, acquisition and integration related expenses, and
inventory fair value adjustment related to the acquisition of
SUPERVALU.
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.
UNITED NATURAL
FOODS, INC. CONDENSED CONSOLIDATED STATEMENTS OF
INCOME (unaudited) (In thousands, except for per share
data)
|
|
|
|
13-Week Period Ended
|
|
26-Week Period Ended
|
|
|
January
26,
2019
|
|
January
27,
2018
|
|
January
26,
2019
|
|
January
27,
2018
|
Net sales
|
|
$
|
6,149,206
|
|
|
$
|
2,528,011
|
|
|
$
|
9,017,362
|
|
|
$
|
4,985,556
|
|
Cost of
sales
|
|
5,387,423
|
|
|
2,156,489
|
|
|
7,843,248
|
|
|
4,246,818
|
|
Gross
profit
|
|
761,783
|
|
|
371,522
|
|
|
1,174,114
|
|
|
738,738
|
|
Operating
expenses
|
|
751,922
|
|
|
320,076
|
|
|
1,115,087
|
|
|
632,185
|
|
Goodwill and asset
impairment charges
|
|
370,871
|
|
|
11,242
|
|
|
370,871
|
|
|
11,242
|
|
Restructuring,
acquisition, and integration related expenses
|
|
47,125
|
|
|
—
|
|
|
115,129
|
|
|
—
|
|
Operating (loss)
income
|
|
(408,135)
|
|
|
40,204
|
|
|
(426,973)
|
|
|
95,311
|
|
Other expense
(income):
|
|
|
|
|
|
|
|
|
Net periodic benefit
income, excluding service cost
|
|
(10,906)
|
|
|
—
|
|
|
(11,750)
|
|
|
—
|
|
Interest expense,
net
|
|
58,707
|
|
|
4,137
|
|
|
66,232
|
|
|
7,713
|
|
Other, net
|
|
(824)
|
|
|
(418)
|
|
|
(727)
|
|
|
(1,281)
|
|
Total other expense,
net
|
|
46,977
|
|
|
3,719
|
|
|
53,755
|
|
|
6,432
|
|
(Loss) income from
continuing operations before income
taxes
|
|
(455,112)
|
|
|
36,485
|
|
|
(480,728)
|
|
|
88,879
|
|
(Benefit) provision
for income taxes
|
|
(91,809)
|
|
|
(14,001)
|
|
|
(96,064)
|
|
|
7,888
|
|
Net (loss) income
from continuing operations
|
|
(363,303)
|
|
|
50,486
|
|
|
(384,664)
|
|
|
80,991
|
|
Income from
discontinued operations, net of tax
|
|
21,407
|
|
|
—
|
|
|
23,477
|
|
|
—
|
|
Net (loss) income
including noncontrolling interests
|
|
(341,896)
|
|
|
50,486
|
|
|
(361,187)
|
|
|
80,991
|
|
Less net loss
(income) attributable to noncontrolling interests
|
|
171
|
|
|
—
|
|
|
168
|
|
|
—
|
|
Net (loss) income
attributable to United Natural Foods, Inc.
|
|
$
|
(341,725)
|
|
|
$
|
50,486
|
|
|
$
|
(361,019)
|
|
|
$
|
80,991
|
|
|
|
|
|
|
|
|
|
|
Basic per share
data:
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
(7.15)
|
|
|
$
|
1.00
|
|
|
$
|
(7.59)
|
|
|
$
|
1.60
|
|
Discontinued
operations
|
|
0.42
|
|
|
—
|
|
|
$
|
0.46
|
|
|
$
|
—
|
|
Basic (loss) income
per share
|
|
$
|
(6.72)
|
|
|
$
|
1.00
|
|
|
$
|
(7.12)
|
|
|
$
|
1.60
|
|
Diluted per share
data:
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
(7.15)
|
|
|
$
|
0.99
|
|
|
$
|
(7.59)
|
|
|
$
|
1.59
|
|
Discontinued
operations
|
|
0.42
|
|
|
—
|
|
|
0.46
|
|
|
$
|
—
|
|
Diluted (loss) income
per share
|
|
$
|
(6.72)
|
|
|
$
|
0.99
|
|
|
$
|
(7.12)
|
|
|
$
|
1.59
|
|
Weighted average
share outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
50,815
|
|
|
50,449
|
|
|
50,699
|
|
|
50,633
|
|
Diluted
|
|
50,815
|
|
|
50,741
|
|
|
50,699
|
|
|
50,849
|
|
UNITED NATURAL
FOODS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited) (In thousands, except for per share
data)
|
|
|
|
January 26,
2019
|
|
July 28,
2018
|
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
49,515
|
|
|
$
|
23,315
|
|
Accounts receivable,
net
|
|
1,094,874
|
|
|
579,702
|
|
Inventories
|
|
2,242,724
|
|
|
1,135,775
|
|
Prepaid expenses and
other current assets
|
|
119,659
|
|
|
50,122
|
|
Current assets of
discontinued operations
|
|
159,893
|
|
|
—
|
|
Total current
assets
|
|
3,666,665
|
|
|
1,788,914
|
|
Property and
equipment, net
|
|
1,658,010
|
|
|
571,146
|
|
Goodwill
|
|
481,095
|
|
|
362,495
|
|
Intangible assets,
net
|
|
1,054,222
|
|
|
193,209
|
|
Other
assets
|
|
122,644
|
|
|
48,708
|
|
Long-term assets of
discontinued operations
|
|
415,648
|
|
|
—
|
|
Total
assets
|
|
$
|
7,398,284
|
|
|
$
|
2,964,472
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Accounts
payable
|
|
$
|
1,452,643
|
|
|
$
|
517,125
|
|
Accrued expenses and
other current liabilities
|
|
277,158
|
|
|
103,526
|
|
Accrued compensation
and benefits
|
|
171,669
|
|
|
66,132
|
|
Current portion of
long-term debt and capital lease obligations
|
|
143,614
|
|
|
12,441
|
|
Current liabilities
of discontinued operations
|
|
133,981
|
|
|
—
|
|
Total current
liabilities
|
|
2,179,065
|
|
|
699,224
|
|
Long-term
debt
|
|
2,965,336
|
|
|
308,836
|
|
Long-term capital
lease obligations
|
|
124,599
|
|
|
31,487
|
|
Pension and other
postretirement benefit obligations
|
|
222,231
|
|
|
—
|
|
Deferred income
taxes
|
|
75,462
|
|
|
44,384
|
|
Other long-term
liabilities
|
|
347,082
|
|
|
34,586
|
|
Long-term liabilities
of discontinued operations
|
|
1,141
|
|
|
—
|
|
Total
liabilities
|
|
5,914,916
|
|
|
1,118,517
|
|
Stockholders'
equity:
|
|
|
|
|
Preferred stock,
$0.01 par value, authorized 5,000 shares; none issued or
outstanding
|
|
—
|
|
|
—
|
|
Common stock, par
value $0.01 per share, authorized 100,000 shares; 51,433 shares
issued
and 50,818 shares outstanding at January 26, 2019, 51,025
shares issued and 50,411
shares outstanding at July 28, 2018
|
|
514
|
|
|
510
|
|
Additional paid-in
capital
|
|
495,514
|
|
|
483,623
|
|
Treasury stock at
cost
|
|
(24,231)
|
|
|
(24,231)
|
|
Accumulated other
comprehensive loss
|
|
(25,863)
|
|
|
(14,179)
|
|
Retained
earnings
|
|
1,039,490
|
|
|
1,400,232
|
|
Total United Natural
Foods, Inc. stockholders' equity
|
|
1,485,424
|
|
|
1,845,955
|
|
Noncontrolling
interests
|
|
(2,056)
|
|
|
—
|
|
Total stockholders'
equity
|
|
1,483,368
|
|
|
1,845,955
|
|
Total liabilities and
stockholders' equity
|
|
$
|
7,398,284
|
|
|
$
|
2,964,472
|
|
UNITED NATURAL
FOODS, INC. CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (unaudited)
|
|
|
|
26-Week Period
Ended
|
|
|
January 26,
2019
|
|
January 27,
2018
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
Net (loss) income
including noncontrolling interests
|
|
$
|
(361,187)
|
|
|
$
|
80,991
|
|
Income from
discontinued operations, net of tax
|
|
23,477
|
|
|
—
|
|
Net (loss) income
from continuing operations
|
|
(384,664)
|
|
|
80,991
|
|
Adjustments to
reconcile net (loss) income from continuing operations to net cash
used in operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
97,993
|
|
|
44,249
|
|
Share-based
compensation
|
|
14,511
|
|
|
13,846
|
|
(Gain) loss on
disposition of assets
|
|
(60)
|
|
|
100
|
|
Gain associated with
disposal of investments
|
|
—
|
|
|
(699)
|
|
Restructuring
charges
|
|
20,701
|
|
|
—
|
|
Goodwill and asset
impairment charges
|
|
370,871
|
|
|
11,242
|
|
Net pension and other
postretirement benefit income
|
|
(11,750)
|
|
|
—
|
|
Deferred income
taxes
|
|
(65,605)
|
|
|
(22,733)
|
|
LIFO
charge
|
|
6,265
|
|
|
—
|
|
Provision for
doubtful accounts
|
|
7,958
|
|
|
5,569
|
|
Loss on debt
extinguishment
|
|
2,117
|
|
|
—
|
|
Non-cash interest
expense
|
|
4,298
|
|
|
956
|
|
Changes in operating
assets and liabilities, net of acquired businesses
|
|
(62,679)
|
|
|
(136,932)
|
|
Net cash used in
operating activities of continuing operations
|
|
(44)
|
|
|
(3,411)
|
|
Net cash provided by
operating activities of discontinued operations
|
|
25,910
|
|
|
—
|
|
Net cash provided by
(used in) operating activities
|
|
25,866
|
|
|
(3,411)
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
Capital
expenditures
|
|
(80,137)
|
|
|
(15,535)
|
|
Purchase of acquired
businesses, net of cash acquired
|
|
(2,281,934)
|
|
|
(19)
|
|
Proceeds from
dispositions of assets
|
|
168,274
|
|
|
36
|
|
Proceeds from
disposal of investments
|
|
—
|
|
|
756
|
|
Long-term
investment
|
|
(110)
|
|
|
(3,010)
|
|
Other
|
|
363
|
|
|
—
|
|
Net cash used in
investing activities of continuing operations
|
|
(2,193,544)
|
|
|
(17,772)
|
|
Net cash provided by
investing activities of discontinued operations
|
|
44,263
|
|
|
—
|
|
Net cash used in
investing activities
|
|
(2,149,281)
|
|
|
(17,772)
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
Proceeds from
borrowings of long-term debt
|
|
1,905,000
|
|
|
—
|
|
Proceeds from
borrowings under revolving credit line
|
|
2,698,604
|
|
|
311,061
|
|
Repayments of
borrowings under revolving credit line
|
|
(1,666,600)
|
|
|
(247,632)
|
|
Repayments of
long-term debt and capital lease obligations
|
|
(713,366)
|
|
|
(6,054)
|
|
Repurchase of common
stock
|
|
—
|
|
|
(22,237)
|
|
Proceeds from
exercise of stock options
|
|
118
|
|
|
268
|
|
Payment of employee
restricted stock tax withholdings
|
|
(3,141)
|
|
|
(4,424)
|
|
Payments for
capitalized debt issuance costs
|
|
(64,519)
|
|
|
—
|
|
Net cash provided by
financing activities of continuing operations
|
|
2,156,096
|
|
|
30,982
|
|
Net cash used in
financing activities of discontinued operations
|
|
(254)
|
|
|
—
|
|
Net cash provided by
financing activities
|
|
2,155,842
|
|
|
30,982
|
|
EFFECT OF EXCHANGE
RATE CHANGES ON CASH
|
|
(1,868)
|
|
|
188
|
|
NET INCREASE IN
CASH AND CASH EQUIVALENTS
|
|
30,559
|
|
|
9,987
|
|
Cash and cash
equivalents, at beginning of period
|
|
23,315
|
|
|
15,414
|
|
Cash and cash
equivalents, at end of period
|
|
53,874
|
|
|
25,401
|
|
Less: cash and cash
equivalents of discontinued operations
|
|
(4,359)
|
|
|
—
|
|
Cash and cash
equivalents of continuing operations
|
|
$
|
49,515
|
|
|
$
|
25,401
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
Cash paid for
interest
|
|
$
|
66,016
|
|
|
$
|
7,900
|
|
Cash paid for federal
and state income taxes, net of refunds
|
|
$
|
13,449
|
|
|
$
|
36,929
|
|
UNITED NATURAL
FOODS, INC.
|
Reconciliation of
Net (Loss) Income per Diluted Common Share to Adjusted Net Income
per Diluted Common Share
(unaudited)
|
|
|
13-Week Period
Ended
|
|
26-Week Period
Ended
|
|
January 26,
2019
|
|
January 27,
2018
|
|
January 26,
2019
|
|
January 27,
2018
|
Net (loss) income per
diluted common share
|
$
|
(6.72)
|
|
|
$
|
0.99
|
|
|
$
|
(7.12)
|
|
|
$
|
1.59
|
|
Restructuring,
acquisition, and integration related
expenses (1)
|
0.93
|
|
|
—
|
|
|
2.27
|
|
|
—
|
|
Goodwill and asset
impairment charges(2)
|
7.30
|
|
|
0.22
|
|
|
7.32
|
|
|
0.22
|
|
Loss on debt
extinguishment (3)
|
0.02
|
|
|
—
|
|
|
0.04
|
|
|
—
|
|
Interest expense on
senior notes (4)
|
0.05
|
|
|
—
|
|
|
0.06
|
|
|
—
|
|
Inventory fair value
adjustment (5)
|
0.17
|
|
|
—
|
|
|
0.21
|
|
|
—
|
|
Net tax benefit
related to U.S. Tax Reform(6)
|
—
|
|
|
(0.43)
|
|
|
—
|
|
|
(0.43)
|
|
Impact of
discontinued operations(7)
|
0.25
|
|
|
—
|
|
|
0.24
|
|
|
—
|
|
Tax impact of
adjustments(8)
|
(1.54)
|
|
|
(0.07)
|
|
|
(1.97)
|
|
|
(0.07)
|
|
Impact of diluted
shares(9)
|
—
|
|
|
—
|
|
|
(0.01)
|
|
|
—
|
|
Adjusted net income
per diluted common share(9)
|
$
|
0.44
|
|
*
|
$
|
0.71
|
|
|
$
|
1.04
|
|
|
$
|
1.31
|
|
*Includes
rounding
|
|
|
|
|
|
|
|
(1)
|
Primarily reflects
expenses resulting from the acquisition of SUPERVALU, including
employee-related costs, store closure charges, and acquisition and
integration expenses.
|
(2)
|
Fiscal 2019 reflects
a goodwill impairment charge related to the SUPERVALU acquisition.
Fiscal 2018 reflects goodwill and asset impairment charges recorded
related to the previously disposed Earth Origin's Market retail
business.
|
(3)
|
Reflects non-cash
charges related to the acceleration of unamortized debt issuance
costs due to term loan prepayments and extinguishment charges from
the Company's term loan, which was in place prior to the
acquisition of SUPERVALU.
|
(4)
|
Interest expense
recorded on the SUPERVALU senior notes in the mandatory 30-day
redemption notice period.
|
(5)
|
Non-cash charge
related to the step-up in inventory values from purchase
accounting.
|
(6)
|
Fiscal 2018 periods
represent the earnings per share impact of a $21.9 million benefit
related to the remeasurement of net deferred tax liabilities as a
result of U.S. tax reform enacted in December 2017.
|
(7)
|
Amounts represent
store closure charges and an inventory fair value adjustment
related to discontinued operations.
|
(8)
|
Represents the tax
effect of adjustments, using the blended rate for the
period.
|
(9)
|
The computation of
diluted earnings per share is calculated using diluted weighted
average shares outstanding, which includes the net effect of
dilutive stock awards.
|
Reconciliation of
Net (Loss) Income attributable to United Natural Foods, Inc. to
Adjusted EBITDA (unaudited)
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
13-Week Period
Ended
|
|
26-Week Period
Ended
|
|
January 26,
2019
|
|
January 27,
2018
|
|
January 26,
2019
|
|
January 27,
2018
|
Net (loss) income
attributable to United Natural Foods, Inc.
|
$
|
(341,725)
|
|
|
$
|
50,486
|
|
|
$
|
(361,019)
|
|
|
$
|
80,991
|
|
Total other expense,
net
|
46,977
|
|
|
3,719
|
|
|
53,755
|
|
|
6,432
|
|
(Benefit) provision
for income taxes
|
(91,809)
|
|
|
(14,001)
|
|
|
(96,064)
|
|
|
7,888
|
|
Depreciation and
amortization
|
73,200
|
|
|
21,807
|
|
|
97,993
|
|
|
44,249
|
|
Share-based
compensation
|
10,423
|
|
|
6,571
|
|
|
18,512
|
|
|
13,846
|
|
Restructuring,
acquisition, and integration related
expenses
|
47,125
|
|
|
—
|
|
|
115,129
|
|
|
—
|
|
Goodwill and asset
impairment charges
|
370,871
|
|
|
11,242
|
|
|
370,871
|
|
|
11,242
|
|
Inventory fair value
adjustment
|
8,644
|
|
|
—
|
|
|
10,463
|
|
|
—
|
|
Impact of
discontinued operations(1)
|
18,867
|
|
|
—
|
|
|
19,127
|
|
|
—
|
|
Adjusted
EBITDA
|
$
|
142,573
|
|
|
$
|
79,824
|
|
|
$
|
228,767
|
|
|
$
|
164,648
|
|
(1)
|
Amount represents the
cumulative effect of differences between net income from
discontinued operations, excluding earnings from noncontrolling
interests, and adjusted EBITDA of discontinued operations
adjustments, including total other expense, net, provision for
income taxes, share-based compensation, and store closure charges
and costs.
|
Reconciliation of
2019 Guidance for Estimated Net (Loss) Income per Common Share
to Estimated Non-GAAP Adjusted Diluted Income per Common
Share (unaudited)
|
|
|
Fiscal Year Ending
August 3, 2019
|
|
Low
Range
|
Estimate
|
High
Range
|
Net loss per diluted
common share
|
$
|
(6.50)
|
|
|
$
|
(6.10)
|
|
Goodwill and asset
impairment charges
|
|
7.30
|
|
|
Restructuring,
acquisition and integration related costs (1)
|
|
3.33
|
|
|
Tax impact of
adjustments
|
|
(2.12)
|
|
|
Impact of diluted
shares
|
|
(0.01)
|
|
|
Adjusted net income
per diluted common share
|
$
|
2.00
|
|
|
$
|
2.40
|
|
(1)
|
Includes certain
costs and charges associated with divestiture of retail banners,
charges related to surplus property, the loss on debt
extinguishment and interest expense on SUPERVALU's senior notes,
and inventory fair value adjustments.
|
Reconciliation of
2019 Guidance for Net (Loss) Income to Adjusted EBITDA
(unaudited)
|
(in
thousands)
|
|
|
|
|
Fiscal Year Ending
August 3, 2019
|
|
Low
Range
|
Estimate
|
High
Range
|
Net loss attributable
to United Natural Foods, Inc.
|
$
|
(332,000)
|
|
|
$
|
(312,000)
|
|
(Benefit) provision
for Income tax
|
(76,000)
|
|
|
(66,000)
|
|
Goodwill and asset
impairment charges
|
|
371,000
|
|
|
Restructuring,
acquisition, and integration related costs
(1)
|
|
172,000
|
|
|
Net interest
expense
|
|
186,000
|
|
|
Total other (income)
expense, net
|
|
(2,000)
|
|
|
Depreciation and
amortization
|
|
252,000
|
|
|
Share-based
compensation
|
|
43,000
|
|
|
Net periodic benefit
income, excluding service costs
|
|
(34,000)
|
|
|
Adjusted
EBITDA
|
$
|
580,000
|
|
|
$
|
610,000
|
|
|
|
|
|
(1)
|
Includes certain
costs and charges associated with divestiture of retail banners,
charges related to surplus property, the loss on debt
extinguishment and interest expense on SUPERVALU's senior notes,
and inventory fair value adjustments.
|
Reconciliation of
Adjusted EBITDA Guidance: December 2018 vs. March 2019
(Unaudited)
|
(in
thousands)
|
|
|
Midpoint December
2018 Adjusted EBITDA Guidance
|
$
|
657,500
|
|
Updated Distribution
Center Network Realignment
|
(37,500)
|
|
Customer Mix Shift
and Decreased Vendor Promotional Activity
|
(12,500)
|
|
LIFO Election and
Inflation Impact
|
(12,500)
|
|
Midpoint March 2019
Adjusted EBITDA Guidance
|
$
|
595,000
|
|
View original
content:http://www.prnewswire.com/news-releases/united-natural-foods-inc-reports-second-quarter-fiscal-2019-results-300807105.html
SOURCE United Natural Foods, Inc.