PROVIDENCE, R.I., Dec. 11,
2019 /PRNewswire/ -- United Natural Foods, Inc. (NYSE: UNFI) (the
"Company" or "UNFI") today reported financial results for the first
quarter of fiscal 2020 (13 weeks) ended November 2, 2019.
First Quarter Fiscal 2020 Highlights
- Net Sales Increased to $6.0
billion, including an incremental $3.1 billion from SUPERVALU
- Re-affirms guidance for full year net sales, Adjusted EPS,
and Adjusted EBITDA
- Balance sheet reflects addition of approximately
$1 billion in operating lease assets
and liabilities as UNFI adopts new lease accounting standard (ASC
842)
- GAAP results reflect non-cash goodwill and asset impairment
charge
"We entered the new fiscal year operating with an unmatched
geographic footprint, the largest variety of products and services
in the industry and the critical scale needed to succeed over the
long term. We delivered first quarter results in-line with
our expectations and are pleased to reaffirm our fiscal 2020
outlook for net sales, Adjusted EBITDA and Adjusted EPS," said
Steven L. Spinner, Chairman and
Chief Executive Officer. "We remain confident that UNFI is
well-positioned today and for the future to deliver an
industry-leading and sustainable supply chain platform for all
customer channels. As we look to the remainder of fiscal
2020, we are committed to converting our sales momentum into
improved earnings and cash flow."
|
13-Week Period
Ended
|
|
|
|
($ in thousands,
except per share data)
|
November 2,
2019
|
|
October 27,
2018
|
|
Change
|
|
Net
Sales
|
$
|
6,019,585
|
|
$
|
2,868,156
|
|
$
|
3,151,429
|
|
Net
Loss(1)
|
$
|
(383,927)
|
|
$
|
(19,294)
|
|
$
|
(364,633)
|
|
Adjusted
EBITDA(2)
|
$
|
121,694
|
|
$
|
86,194
|
|
$
|
35,500
|
|
Net Loss Per
Diluted Share (EPS)(1)
|
$
|
(7.21)
|
|
$
|
(0.38)
|
|
$
|
(6.83)
|
|
Adjusted Earnings
Per Diluted Share (EPS)(2)
|
$
|
0.12
|
|
$
|
0.59
|
|
$
|
(0.47)
|
|
|
|
(1)
|
Includes the pre-tax
effect of goodwill and asset impairment charges of $425.4
million.
|
|
(2)
|
Please refer to the
tables in this press release for a reconciliation of these non-GAAP
financial measures to the most directly comparable financial
measure calculated in accordance with U.S. GAAP.
|
First Quarter Fiscal 2020 Summary
Net sales from continuing operations by customer
channel for the first quarter of fiscal 2020 compared to the first
quarter of fiscal 2019 were as follows ($ in millions):
|
|
|
|
|
|
13-Week Period
Ended
|
|
Customer Channel
(1)
|
|
Total %
Growth
|
|
Legacy UNFI
% Growth
|
|
November 2,
2019
|
|
October 27,
2018
|
|
Supermarkets
|
|
305.3%
|
|
3.6%
|
|
$
|
3,769
|
|
$
|
930
|
|
Supernatural
|
|
8.2%
|
|
8.2%
|
|
1,111
|
|
1,027
|
|
Independents
|
|
13.6%
|
|
(2.3)%
|
|
758
|
|
667
|
|
Other
|
|
56.1%
|
|
(9.0)%
|
|
381
|
|
244
|
|
Total
|
|
109.9%
|
|
2.8%
|
|
$
|
6,019
|
|
$
|
2,868
|
|
|
|
(1)
|
During the first
quarter of fiscal 2020, the presentation of net sales by customer
channel was adjusted to reflect reclassification of customer types
resulting from management's determination that a customer serviced
by both Supervalu and legacy UNFI should be classified as a
Supermarket customer given that customer's operations. In addition,
during the second quarter of fiscal 2019, net sales attributable to
Supervalu was incorporated into the Company's definition of sales
by customer channel. There was no impact to the Condensed
Consolidated Statements of Operations as a result of the
reclassification of customer types. As a result of these
adjustments, net sales to the Company's Supermarkets channel for
the first quarter of fiscal 2019 increased approximately $223
million compared to the previously reported amounts, while net
sales to our Other channel increased approximately $1 million with
an offsetting elimination of the Supervalu customer
channel.
|
Gross margin for the first quarter of fiscal 2020
was 12.81% of net sales compared to 14.38% of net sales for the
first quarter of fiscal 2019, which included a $1.8 million, or 0.06% of net sales, inventory
fair value adjustment related to the Supervalu acquisition. The
decline in the gross margin rate was primarily driven by the
addition of SUPERVALU at a lower gross profit rate.
Operating expenses in the first quarter of fiscal
2020 were $775.4 million and included
charges of $12.5 million related to
customer notes receivable, surplus property expense of $3.6 million, and legal reserve charge of
$1.9 million. When excluding
these items, operating expenses were $757.5
million, or 12.58% of net sales, compared to $363.2 million, or 12.66% of net sales for the
first quarter of fiscal 2019. The decrease in operating
expenses as a percent of net sales (after adjusting for the items
above) was driven by the addition of SUPERVALU at a lower operating
expense rate and the benefit of cost synergies from the SUPERVALU
acquisition, both of which were partially offset by higher
depreciation and amortization expense.
Goodwill and asset impairment charges were
$425.4 million in the first quarter
of fiscal 2020 primarily reflecting the remaining goodwill
attributable to the U.S. Wholesale reporting unit.
Restructuring, acquisition and integration related
expenses in the first quarter of fiscal 2020 were
$14.3 million, including costs and
charges related to the disposal of surplus real estate,
distribution network consolidation, and employee-related costs.
Operating (loss) income was $(444.0) million in the first quarter of fiscal
2020 and included goodwill and asset impairment charges of
$425.4 million; restructuring,
acquisition and integration related expenses of $14.3 million; customer notes receivable charges
of $12.5 million; closed property
expense of $3.6 million, and legal
reserve charge of $1.9
million. When excluding these items, operating
income was $13.6 million, or 0.23% of
net sales, in the first quarter of fiscal 2020. Operating
loss in the first quarter of fiscal 2019 was $(18.8) million and included restructuring,
acquisition and integration related expenses of $68.0 million and a fair value inventory
adjustment charge associated with the purchase of SUPERVALU of
$1.8 million. When excluding
these items, operating income for the first quarter of fiscal 2019
was $51.0 million, or 1.78% of net
sales. The decrease in adjusted operating income, as a
percent of net sales, was driven by lower gross margins, as a
percent of net sales, and higher depreciation and amortization
expense both resulting from the SUPERVALU acquisition, as a percent
of net sales.
Interest expense, net for the first quarter of
fiscal 2020 was $49.5 million.
Interest expense for the first quarter of fiscal 2019 was
$7.5 million. The increase in
interest expense, net was driven by an increase in debt outstanding
due to the SUPERVALU acquisition financing.
Effective tax rate for continuing operations for the
first quarter of fiscal 2020 was 15.3% compared to 16.6% for the
first quarter of fiscal 2019. The first quarter effective tax rate
for both fiscal years reflects a tax benefit based on consolidated
pre-tax loss from continuing operations. The change in the
effective tax rate for the quarter was primarily driven by the
impact of the goodwill impairment charge.
Net loss for the first quarter of fiscal 2020 was
$(383.9) million, including
$25.0 million of income related to
discontinued operations, compared to $(19.3)
million for the first quarter of fiscal 2019. The
decrease in net income was primarily the result of the goodwill and
asset impairment charges, higher depreciation and amortization
expense, and higher interest expense, partially offset by lower
restructuring, acquisition, and integration expenses and the
benefit of higher net income from discontinued operations.
Net Loss Per Diluted Share (EPS) was $(7.21) for the first quarter of fiscal 2020
compared to $(0.38) for the first
quarter of fiscal 2019. Adjusted EPS was $0.12 for the first quarter of fiscal 2020
compared to adjusted EPS of $0.59 in
the first quarter of fiscal 2019, reflecting higher interest
expense and lower operating income, offset in part by net income
from discontinued operations. The income tax rate used for
adjusted EPS represents a forecasted rate for the full year.
Beginning in fiscal 2020, in calculating adjusted EPS, the Company
uses an adjusted effective tax rate. See footnotes in the
reconciliation tables below for more information.
Adjusted EBITDA for the first quarter of fiscal 2020 was
$121.7 million compared to
$86.2 million for the first quarter
of fiscal 2019. The increase was predominantly driven by the
addition of SUPERVALU.
Total Outstanding Debt, net of cash, increased in the
first quarter of fiscal 2020 (compared to the fourth quarter of
fiscal 2019) due to an increase in working capital to support the
holiday selling period. The Company expects this increase in
working capital to reverse by the end of the second quarter.
Fiscal 2020 Outlook (1)
|
Fiscal Year Ending
August 1, 2020
|
|
|
|
Net Sales ($ in
billions)
|
|
$23.5 -
$24.3
|
|
Net Income ($ in
millions)
|
|
$(353) -
$(324)
|
|
Loss Per Share
(EPS)
|
|
$(6.60) -
$(6.06)
|
|
Adjusted Earnings Per
Diluted Share (EPS) (2) (3)
|
|
$1.22 -
$1.76
|
|
Adjusted
EBITDA(3) ($ in millions)
|
|
$560 -
$600
|
|
|
|
(1)
|
The outlook provided
above is for fiscal 2020. 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 language
below.
|
|
(2)
|
Beginning with
periods ending after August 3, 2019, the Company is using an
adjusted effective tax rate in calculating Adjusted EPS. The
adjusted effective tax rate will be calculated based on adjusted
net income before tax. It will also exclude the potential
impact of changes to uncertain tax positions, valuation allowances,
stock compensation accounting (ASU 2016-09) and discrete GAAP tax
items which could impact the comparability of the operational
effective tax rate. This change is reflected in the
Company's outlook for Adjusted EPS for fiscal 2020. 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.
|
|
(3)
|
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.
|
Conference Call and Webcast
The Company's first
quarter fiscal 2020 conference call and audio webcast will be held
today, Wednesday, December 11, 2019 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. 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.)
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.
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 annual report on Form 10-K for the period ended
August 3, 2019 filed with the
Securities and Exchange Commission (the "SEC") on October 1, 2019 and other filings the Company
makes with the SEC, and include, but are not limited to, the
Company's dependence on principal customers; the potential for
additional asset impairment charges; 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 our retail
operations will exceed our current expectations; 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 grocery products; increased competition in the
Company's industry as a result of increased distribution of
natural, organic and specialty products 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; and union-organizing activities that could cause
labor relations difficulties and increased costs, and our ability
to identify and successfully complete asset or business
acquisitions. 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, adjusted
earnings per diluted common share, and adjusted effective tax rate.
The measure adjusted earnings per diluted common share excludes
goodwill and asset impairment benefits and charges, restructuring,
acquisition, and integration related expenses, note receivable
charges, closed property depreciation and interest, loss on debt
extinguishment and interest on SUPERVALU's senior notes during
their mandatory redemption period, inventory fair value adjustment
expense related to the acquisition of SUPERVALU, a legal reserve
adjustment, discontinued operations store closures and other
charges, net, the impact of diluted shares and the tax impact of
adjustments, which tax impact for fiscal 2020 outlook is calculated
using the adjusted effective tax rate. The non-GAAP measure
adjusted EBITDA is defined as a consolidated measure inclusive of
continuing and discontinued operations results, which we reconcile
by adding Net (loss) income from continuing operations,
plus Total other expense, net and (Benefit)
provision for income taxes, plus Depreciation and
amortization calculated in accordance with GAAP, plus non-GAAP
adjustments for Share-based compensation, Restructuring,
acquisition and integration related expenses, goodwill and asset
impairment charges, certain legal charges and gains, certain other
non-cash charges or items, as determined by management, plus
Adjusted EBITDA of discontinued operations calculated in manner
consistent with the results of continuing operations outlined
above. The non-GAAP adjusted effective tax rate excludes the
potential impact of changes to various uncertain tax positions and
valuation allowances, as well as stock compensation accounting (ASU
2016-09).
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
2020 fiscal year to the comparable periods in the 2019 fiscal year
and to internally prepared projections.
|
UNITED NATURAL
FOODS, INC.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
|
|
(In thousands,
except for per share data)
|
|
|
|
13-Week Period
Ended
|
|
|
November 2,
2019
|
|
October 27,
2018
|
|
Net sales
|
|
$
|
6,019,585
|
|
$
|
2,868,156
|
|
Cost of
sales
|
|
5,248,543
|
|
2,455,825
|
|
Gross
profit
|
|
771,042
|
|
412,331
|
|
Operating
expenses
|
|
775,414
|
|
363,165
|
|
Goodwill and asset
impairment charges
|
|
425,405
|
|
—
|
|
Restructuring,
acquisition and integration related expenses
|
|
14,250
|
|
68,004
|
|
Operating
loss
|
|
(444,027)
|
|
(18,838)
|
|
Other expense
(income):
|
|
|
|
|
|
Net periodic benefit
income, excluding service cost
|
|
(11,384)
|
|
(844)
|
|
Interest expense,
net
|
|
49,518
|
|
7,525
|
|
Other, net
|
|
(46)
|
|
97
|
|
Total other expense,
net
|
|
38,088
|
|
6,778
|
|
Loss from continuing
operations before income taxes
|
|
(482,115)
|
|
(25,616)
|
|
Benefit for income
taxes
|
|
(73,753)
|
|
(4,255)
|
|
Net loss from
continuing operations
|
|
(408,362)
|
|
(21,361)
|
|
Income from
discontinued operations, net of tax
|
|
24,954
|
|
2,070
|
|
Net loss including
noncontrolling interests
|
|
(383,408)
|
|
(19,291)
|
|
Less net income
attributable to noncontrolling interests
|
|
(519)
|
|
(3)
|
|
Net loss attributable
to United Natural Foods, Inc.
|
|
$
|
(383,927)
|
|
$
|
(19,294)
|
|
|
|
|
|
|
Basic (loss) earnings
per share:
|
|
|
|
|
|
Continuing
operations
|
|
$
|
(7.67)
|
|
$
|
(0.42)
|
|
Discontinued
operations
|
|
$
|
0.46
|
|
$
|
0.04
|
|
Basic loss per
share
|
|
$
|
(7.21)
|
|
$
|
(0.38)
|
|
Diluted (loss)
earnings per share:
|
|
|
|
|
|
Continuing
operations
|
|
$
|
(7.67)
|
|
$
|
(0.42)
|
|
Discontinued
operations
|
|
$
|
0.46
|
|
$
|
0.04
|
|
Diluted loss per
share
|
|
$
|
(7.21)
|
|
$
|
(0.38)
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
Basic
|
|
53,213
|
|
50,583
|
|
Diluted
|
|
53,213
|
|
50,583
|
|
UNITED NATURAL
FOODS, INC.
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS (unaudited)
|
|
(In thousands,
except for per share data)
|
|
|
|
November 2,
2019
|
|
August 3,
2019
|
|
ASSETS
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
39,758
|
|
$
|
42,350
|
|
Accounts receivable,
net
|
|
1,136,924
|
|
1,065,699
|
|
Inventories
|
|
2,324,979
|
|
2,089,416
|
|
Prepaid expenses and
other current assets
|
|
192,463
|
|
226,727
|
|
Current assets of
discontinued operations
|
|
155,883
|
|
143,729
|
|
Total current
assets
|
|
3,850,007
|
|
3,567,921
|
|
Property and
equipment, net
|
|
1,494,309
|
|
1,639,259
|
|
Operating lease
assets
|
|
1,051,128
|
|
—
|
|
Goodwill
|
|
19,791
|
|
442,256
|
|
Intangible assets,
net
|
|
999,586
|
|
1,041,058
|
|
Deferred income
taxes
|
|
98,768
|
|
31,087
|
|
Other
assets
|
|
106,038
|
|
107,319
|
|
Long-term assets of
discontinued operations
|
|
343,892
|
|
352,065
|
|
Total
assets
|
|
$
|
7,963,519
|
|
$
|
7,180,965
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Accounts
payable
|
|
$
|
1,606,470
|
|
$
|
1,476,857
|
|
Accrued expenses and
other current liabilities
|
|
246,563
|
|
249,426
|
|
Accrued compensation
and benefits
|
|
164,605
|
|
148,296
|
|
Current portion of
operating lease liabilities
|
|
127,327
|
|
—
|
|
Current portion of
long-term debt and finance lease liabilities
|
|
34,458
|
|
112,103
|
|
Current liabilities
of discontinued operations
|
|
100,878
|
|
122,265
|
|
Total current
liabilities
|
|
2,280,301
|
|
2,108,947
|
|
Long-term
debt
|
|
3,051,238
|
|
2,819,050
|
|
Long-term operating
lease liabilities
|
|
949,978
|
|
—
|
|
Long-term finance
lease liabilities
|
|
68,682
|
|
108,208
|
|
Pension and other
postretirement benefit obligations
|
|
220,550
|
|
237,266
|
|
Deferred income
taxes
|
|
1,047
|
|
1,042
|
|
Other long-term
liabilities
|
|
267,080
|
|
393,595
|
|
Long-term liabilities
of discontinued operations
|
|
1,403
|
|
1,923
|
|
Total
liabilities
|
|
6,840,279
|
|
5,670,031
|
|
Stockholders'
equity:
|
|
|
|
|
|
Preferred stock,
$0.01 par value, authorized 5,000 shares; none issued or
outstanding
|
|
—
|
|
—
|
|
Common stock, $0.01
par value, authorized 100,000 shares; 54,121 shares issued and
53,506 shares
outstanding at November 2, 2019; 53,501 shares issued and
52,886 shares outstanding at August 3, 2019
|
|
541
|
|
535
|
|
Additional paid-in
capital
|
|
532,958
|
|
530,801
|
|
Treasury stock at
cost
|
|
(24,231)
|
|
(24,231)
|
|
Accumulated other
comprehensive loss
|
|
(111,691)
|
|
(108,953)
|
|
Retained
earnings
|
|
728,979
|
|
1,115,519
|
|
Total United Natural
Foods, Inc. stockholders' equity
|
|
1,126,556
|
|
1,513,671
|
|
Noncontrolling
interests
|
|
(3,316)
|
|
(2,737)
|
|
Total stockholders'
equity
|
|
1,123,240
|
|
1,510,934
|
|
Total liabilities and
stockholders' equity
|
|
$
|
7,963,519
|
|
$
|
7,180,965
|
|
UNITED NATURAL
FOODS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (unaudited)
|
|
|
|
13-Week Period
Ended
|
|
(In
thousands)
|
|
November 2,
2019
|
|
October 27,
2018
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
Net loss including
noncontrolling interests
|
|
$
|
(383,408)
|
|
$
|
(19,291)
|
|
Income from
discontinued operations, net of tax
|
|
24,954
|
|
2,070
|
|
Net loss from
continuing operations
|
|
(408,362)
|
|
(21,361)
|
|
Adjustments to
reconcile net loss from continuing operations to net cash used in
operating activities:
|
|
|
|
|
|
Depreciation and
amortization
|
|
75,141
|
|
24,793
|
|
Share-based
compensation
|
|
1,247
|
|
8,089
|
|
(Gain) loss on
disposition of assets
|
|
(1,308)
|
|
6
|
|
Closed property and
other restructuring charges
|
|
4,969
|
|
412
|
|
Goodwill and asset
impairment charges
|
|
425,405
|
|
—
|
|
Net pension and other
postretirement benefit income
|
|
(11,370)
|
|
(844)
|
|
Deferred income tax
(benefit) expense
|
|
(62,560)
|
|
1,214
|
|
LIFO
charge
|
|
6,546
|
|
—
|
|
Provision for
doubtful accounts
|
|
13,098
|
|
3,037
|
|
Loss on debt
extinguishment
|
|
73
|
|
1,114
|
|
Non-cash interest
expense
|
|
3,833
|
|
345
|
|
Changes in operating
assets and liabilities, net of acquired businesses
|
|
(182,257)
|
|
(118,124)
|
|
Net cash used in
operating activities of continuing operations
|
|
(135,545)
|
|
(101,319)
|
|
Net cash provided by
(used in) operating activities of discontinued
operations
|
|
676
|
|
(5,701)
|
|
Net cash used in
operating activities
|
|
(134,869)
|
|
(107,020)
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
Capital
expenditures
|
|
(41,122)
|
|
(16,381)
|
|
Purchases of acquired
businesses, net of cash acquired
|
|
—
|
|
(2,273,829)
|
|
Proceeds from
dispositions of assets
|
|
1,605
|
|
149,529
|
|
Payments for
long-term investment
|
|
(162)
|
|
(110)
|
|
Payments of company
owned life insurance premiums
|
|
(1,204)
|
|
—
|
|
Net cash used in
investing activities of continuing operations
|
|
(40,883)
|
|
(2,140,791)
|
|
Net cash provided by
(used in) investing activities of discontinued
operations
|
|
17,002
|
|
(89)
|
|
Net cash used in
investing activities
|
|
(23,881)
|
|
(2,140,880)
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
Proceeds from
borrowings of long-term debt
|
|
2,050
|
|
1,905,547
|
|
Proceeds from
borrowings under revolving credit line
|
|
1,338,446
|
|
1,805,300
|
|
Repayments of
borrowings under revolving credit line
|
|
(1,100,746)
|
|
(688,000)
|
|
Repayments of
long-term debt and finance leases
|
|
(83,510)
|
|
(110,000)
|
|
Proceeds from the
issuance of common stock and exercise of stock options
|
|
1,735
|
|
118
|
|
Payment of employee
restricted stock tax withholdings
|
|
(819)
|
|
(3,126)
|
|
Payments for debt
issuance costs
|
|
—
|
|
(60,309)
|
|
Net cash provided by
financing activities of continuing operations
|
|
157,156
|
|
2,849,530
|
|
Net cash used in
financing activities of discontinued operations
|
|
(1,060)
|
|
—
|
|
Net cash provided by
financing activities
|
|
156,096
|
|
2,849,530
|
|
EFFECT OF EXCHANGE
RATE CHANGES ON CASH
|
|
(10)
|
|
(49)
|
|
NET INCREASE IN
CASH AND CASH EQUIVALENTS
|
|
(2,664)
|
|
601,581
|
|
Cash and cash
equivalents, at beginning of period
|
|
45,267
|
|
23,315
|
|
Cash and cash
equivalents, including restricted cash at end of period
|
|
42,603
|
|
624,896
|
|
Less: cash and cash
equivalents of discontinued operations
|
|
(2,845)
|
|
(4,633)
|
|
Cash and cash
equivalents including restricted cash of continuing
operations
|
|
$
|
39,758
|
|
$
|
620,263
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
|
Cash paid for
interest
|
|
$
|
49,296
|
|
$
|
7,325
|
|
Cash (refunds)
payments for federal and state income taxes, net
|
|
$
|
(28,874)
|
|
$
|
462
|
|
SUPPLEMENTAL
NON-GAAP FINANCIAL INFORMATION
|
|
UNITED NATURAL
FOODS, INC.
|
|
|
Reconciliation of
Net loss per Diluted Common Share to Adjusted Net income per
Diluted Common Share (unaudited)
|
|
|
13-Week Period
Ended
|
|
November 2,
2019
|
|
October 27,
2018
|
|
Net loss attributable
to UNFI per diluted common share
|
$
|
(7.21)
|
|
$
|
(0.38)
|
|
Goodwill and asset
impairment charges(1)
|
7.99
|
|
—
|
|
Restructuring,
acquisition and integration related
expenses(2)
|
0.27
|
|
1.34
|
|
Note receivable
charges(3)
|
0.24
|
|
—
|
|
Surplus property
depreciation and interest expense(4)
|
0.08
|
|
—
|
|
Loss on debt
extinguishment(5)
|
—
|
|
0.02
|
|
Interest expense on
senior notes(6)
|
—
|
|
0.01
|
|
Inventory fair value
adjustment(7)
|
—
|
|
0.04
|
|
Legal reserve
charge(8)
|
0.03
|
|
—
|
|
Discontinued
operations store closures and other charges,
net(9)
|
0.01
|
|
—
|
|
Tax impact of
adjustments and adjusted effective tax
rate(10)
|
(1.29)
|
|
(0.43)
|
|
Impact
of diluted shares(11)
|
—
|
|
(0.01)
|
|
Adjusted net income
per diluted common share(10)
|
$
|
0.12
|
|
$
|
0.59
|
|
|
|
(1)
|
Reflects a goodwill
impairment charge attributable to a reorganization of our reporting
units and a sustained decrease in market capitalization and
enterprise value of the Company, resulting in a decline in the
estimated fair value of the U.S. Wholesale reporting unit. In
addition, this charge includes a goodwill finalization charge
attributable to the SUPERVALU acquisition and an asset impairment
charge.
|
|
(2)
|
Fiscal 2020 primarily
reflects closed property reserve charges and administrative and
operational restructuring costs. Fiscal 2019 primarily reflects
expenses resulting from the acquisition of SUPERVALU and
acquisition and integration expenses, including employee-related
costs.
|
|
(3)
|
Reflects reserves and
charges for notes receivable issued by the SUPERVALU business prior
to its acquisition to finance the purchase of stores by its
customers.
|
|
(4)
|
Reflects surplus,
non-operating property depreciation and interest expense, including
accelerated depreciation related to a location we are recognizing a
gain on included in Restructuring, acquisition and integration
related expenses.
|
|
(5)
|
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.
|
|
(6)
|
Interest expense
recorded on the SUPERVALU senior notes in the mandatory 30-day
redemption notice period.
|
|
(7)
|
Reflects a non-cash
charge related to the step-up in inventory values as part of
purchase accounting.
|
|
(8)
|
Reflects a charge to
settle a legal proceeding and a charge related to our assessment of
legal proceedings.
|
|
(9)
|
Amounts represent
store closure charges and costs, and inventory charges related to
discontinued operations.
|
|
(10)
|
Represents the tax
effect of the pre-tax adjustments and beginning in the first
quarter of fiscal 2020 an adjustment to utilize an adjusted
effective tax rate to calculate Adjusted EPS. 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 exercise 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. For the first quarter of fiscal 2020, the use
of the adjusted effective tax rate to calculate Adjusted EPS did
not affect the Adjusted EPS of $0.12. If the Company had
utilized an adjusted effective tax rate in calculating Adjusted EPS
in the first quarter of fiscal 2019, the tax impact of adjustments
and adjusted effective tax rate would have been ($0.34) per diluted
share and Adjusted EPS would have been $0.68 per diluted
share.
|
|
(11)
|
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 from continuing operations and Income from discontinued
operations, net of tax to Adjusted EBITDA
(unaudited)
|
|
|
13-Week Period
Ended
|
|
(in
thousands)
|
November 2,
2019
|
|
October 27,
2018
|
|
Net loss from
continuing operations
|
$
|
(408,362)
|
|
$
|
(21,361)
|
|
Adjustments to
continuing operations net loss:
|
|
|
|
|
Total other expense,
net
|
38,088
|
|
6,778
|
|
Benefit for income
taxes
|
(73,753)
|
|
(4,255)
|
|
Depreciation and
amortization
|
75,141
|
|
24,793
|
|
Share-based
compensation
|
3,672
|
|
8,089
|
|
Restructuring,
acquisition and integration related expenses
|
14,250
|
|
68,004
|
|
Goodwill and asset
impairment charges
|
425,405
|
|
—
|
|
Note receivable
charges
|
12,516
|
|
—
|
|
Inventory fair value
adjustment
|
—
|
|
1,819
|
|
Legal reserve
charge
|
1,850
|
|
—
|
|
Adjusted EBITDA of
discontinued operations(1)(2)
|
32,887
|
|
2,327
|
|
Adjusted
EBITDA
|
$
|
121,694
|
|
$
|
86,194
|
|
|
|
|
|
Income from
discontinued operations, net of tax(1)(2)
|
$
|
24,954
|
|
$
|
2,070
|
|
Adjustments to
discontinued operations net income:
|
|
|
|
|
Less net income
attributable to noncontrolling interests
|
(519)
|
|
(3)
|
|
Total other expense,
net
|
(1,091)
|
|
(249)
|
|
Provision for income
taxes
|
8,090
|
|
749
|
|
Other expense
(income)
|
—
|
|
(140)
|
|
Share-based
compensation
|
253
|
|
—
|
|
Restructuring, store
closure and other charges, net(3)
|
1,200
|
|
(100)
|
|
Adjusted EBITDA of
discontinued operations(1)(2)
|
$
|
32,887
|
|
$
|
2,327
|
|
|
|
(1)
|
In the third quarter
of fiscal 2019, UNFI expanded its GAAP reconciliations to provide
additional supplemental information regarding its adjustments
within discontinued operations to arrive at the consolidated
measure of Adjusted EBITDA. Previously, these line items were
presented together as Net (loss) income attributable to United
Natural Foods, Inc. These lines have been separated to provide for
a separate presentation of the adjustments included within Adjusted
EBITDA related to discontinued operations. This additional
information had no impact on the previously presented calculation
and definition of Adjusted EBITDA. For additional information
regarding our discontinued operations, refer to UNFI's Annual
Report on Form 10-K for the year ended August 3, 2019.
|
|
(2)
|
Adjusted EBITDA of
discontinued operations excludes $12.5 million of operating lease
rent expense for the first quarter of fiscal 2020 related to stores
within discontinued operations, but for which GAAP requires the
expense to be included within continuing operations, as we expect
to remain primarily obligated under these leases. Due to these GAAP
requirements to show rent expense, along with other administrative
expenses of discontinued operations within continuing operations,
UNFI believes the inclusion of discontinued operations results
within Adjusted EBITDA provides UNFI and investors a meaningful
measure of performance.
|
|
(3)
|
Amounts represent
store closure charges and costs, and operational wind-down and
inventory charges related to discontinued operations.
|
|
Reconciliation of
2020 Guidance for Estimated Net Loss per diluted Common Share
to
|
|
Estimated Non-GAAP
Adjusted Net Income per diluted Common Share
(unaudited)
|
|
|
Fiscal Year Ending
August 1, 2020
|
|
Low
Range
|
|
High
Range
|
|
Net loss attributable
to United Natural Foods, Inc. per diluted common share
|
$
|
(6.60)
|
|
$
|
(6.06)
|
|
Goodwill and asset
impairment charges
|
7.99
|
|
7.99
|
|
Restructuring,
acquisition and integration related costs
|
1.05
|
|
1.05
|
|
Note receivable
charges
|
0.24
|
|
0.24
|
|
Closed property
depreciation and interest expense
|
0.08
|
|
0.08
|
|
Legal reserve
charge
|
0.03
|
|
0.03
|
|
Discontinued
operations store closures and other charges, net
|
0.01
|
|
0.01
|
|
Tax impact of
adjustments and adjusted effective tax
rate(3)
|
(1.58)
|
|
(1.58)
|
|
Adjusted net income
per diluted common share(1)(2)
|
$
|
1.22
|
|
$
|
1.76
|
|
|
|
(1)
|
Fiscal year ending
August 1, 2020 Adjusted net income per diluted common share
includes results reflected in our discontinued operations related
to a full year of operations of a certain retail business.
Management expects to divest that retail business during fiscal
2020 and will update guidance accordingly.
|
|
(2)
|
The estimated
adjusted effective tax rate excludes the potential impact of
changes in uncertain tax positions, tax impacts related to ASU
2006-09 regarding stock compensation and valuation allowances.
Refer to the below reconciliation for adjusted effective tax
rate.
|
|
(3)
|
The impact of the
adjusted effective tax rate represents approximately $(0.35) of the
$(1.58).
|
|
Reconciliation of
2020 Guidance for Net loss Attributable to United Natural Foods,
Inc. to Adjusted EBITDA (unaudited)
|
|
|
Fiscal Year Ending
August 1, 2020
|
|
(in
thousands)
|
Low
Range
|
|
Estimate
|
|
High
Range
|
|
Net loss attributable
to United Natural Foods, Inc.
|
$
|
(353,000)
|
|
|
|
$
|
(324,000)
|
|
Benefit for income
taxes
|
(52,000)
|
|
|
|
(41,000)
|
|
Restructuring,
acquisition and integration related costs(1)
|
|
|
56,000
|
|
|
|
Note receivable
charges
|
|
|
13,000
|
|
|
|
Legal reserve
charge
|
|
|
2,000
|
|
|
|
Discontinued
operations store closures and other charges, net
|
|
|
1,000
|
|
|
|
Goodwill and asset
impairment charges
|
|
|
425,000
|
|
|
|
Net interest
expense
|
|
|
196,000
|
|
|
|
Total other (income)
expense, net
|
|
|
(2,000)
|
|
|
|
Depreciation and
amortization
|
|
|
268,000
|
|
|
|
Share-based
compensation
|
|
|
48,000
|
|
|
|
Net periodic benefit
income, excluding service costs
|
|
|
(42,000)
|
|
|
|
Adjusted
EBITDA(2)
|
$
|
560,000
|
|
|
|
$
|
600,000
|
|
|
|
(1)
|
Excludes potential
costs and charges associated with divestitures of retail
banners.
|
|
(2)
|
Fiscal year ending
August 1, 2020 Adjusted EBITDA includes results reflected in our
Discontinued Operations related to a full year of operations of a
certain retail business. Management expects to divest that retail
business during fiscal 2020 which could impact guidance.
|
|
Reconciliation of
Estimated 2020 and Actual 2020 U.S. GAAP Effective Tax Rate to
Adjusted Tax Rate (unaudited)
|
|
|
|
Estimated
Fiscal
2020
|
|
Actual Fiscal
2019
|
|
U.S. GAAP Effective
Tax Rate
|
|
12
|
%
|
|
18
|
%
|
|
Discrete quarterly
recognition of GAAP items(1)
|
|
1
|
%
|
|
(2)
|
%
|
|
Tax impact of other
charges and adjustments(2)
|
|
1
|
%
|
|
—
|
%
|
|
Changes in valuation
allowances(3)
|
|
(1)
|
%
|
|
—
|
%
|
|
Impact of Goodwill
Impairment
|
|
15
|
%
|
|
11
|
%
|
|
Other
|
|
1
|
%
|
|
—
|
%
|
|
Adjusted Effective
Tax Rate
|
|
29
|
%
|
|
27
|
%
|
|
|
Note: As part of the
year-end reconciliation, we will 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
audit adjustments.
|
|
(2)
|
Reflects the tax
impact of pre-tax adjustments that are excluded from pre-tax income
when calculating adjusted earnings per share.
|
|
(3)
|
Reflects changes in
valuation allowances related to changes in judgment regarding the
realizability of deferred tax assets or current year
operations.
|
View original
content:http://www.prnewswire.com/news-releases/united-natural-foods-inc-reports-first-quarter-fiscal-2020-results-300972807.html
SOURCE United Natural Foods, Inc.