PROVIDENCE, R.I.,
March 11, 2020 /PRNewswire/ -- United Natural Foods, Inc.
(NYSE: UNFI) (the "Company" or "UNFI") today reported financial
results for the second quarter of fiscal 2020 (13 weeks) ended
February 1, 2020.
Second Quarter Fiscal 2020 Highlights
- Net Sales of $6.14 billion
compared to $6.15 billion in last
year's fiscal second quarter
- Total outstanding net debt reduced by $149 million compared to the first quarter of
fiscal 2020
- Gross margin rate increased compared to last year's fiscal
second quarter
- Second quarter GAAP and adjusted results include charges of
$0.44 per diluted share associated
with three customer bankruptcies
- Update to fiscal 2020 guidance
"UNFI continues to evolve as the industry leader providing
retailers with today's most sought-after products," said
Steven L. Spinner, Chairman and
Chief Executive Officer. "Despite considerable industry
headwinds, I'm encouraged by our underlying performance and the
momentum that is building within our business. Prior to
charges associated with the three customer bankruptcies that
impacted the quarter, we grew Adjusted EBITDA by low double digits,
and we remain optimistic as we move into the second half of our
fiscal year and confident in UNFI's long-term growth
prospects."
|
13-Week Period
Ended
|
|
|
($ in millions,
except per share data)
|
February 1,
2020
|
|
January 26,
2019
|
|
%
Change
|
Net
Sales
|
$
|
6,138
|
|
|
$
|
6,149
|
|
|
(0.2)
|
%
|
Supermarkets
channel(1)
|
$
|
3,879
|
|
|
$
|
3,928
|
|
|
(1.2)
|
%
|
Supernatural
channel
|
$
|
1,210
|
|
|
$
|
1,100
|
|
|
10.0
|
%
|
Independents
channel(1)
|
$
|
631
|
|
|
$
|
675
|
|
|
(6.5)
|
%
|
Other
channel(1)
|
$
|
418
|
|
|
$
|
446
|
|
|
(6.3)
|
%
|
Net
Loss
|
$
|
(31)
|
|
|
$
|
(342)
|
|
|
|
Adjusted
EBITDA(2)
|
$
|
131
|
|
|
$
|
143
|
|
|
|
Net Loss Per
Diluted Share (EPS)
|
$
|
(0.57)
|
|
|
$
|
(6.72)
|
|
|
|
Adjusted Earnings
Per Diluted Share (EPS)(2)
|
$
|
0.32
|
|
|
$
|
0.44
|
|
|
|
|
(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. During the
second quarter of fiscal 2020, the presentation of net sales by
customer channel was adjusted to reflect conventional military
sales within Other instead of Independents based on management's
determination to better reflect the focus of its ongoing business
and the definition of customer channels. There was no impact to the
Condensed Consolidated Statements of Income 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 second quarter of fiscal 2019 increased approximately $26
million compared to the previously reported amounts, while net
sales to the Other channel for the second quarter of fiscal 2019
increased $109 million compared to previously reported amounts. Net
sales to the Company's Independents channel for the second quarter
of fiscal 2019 decreased $135 million compared to the previously
reported amounts. In addition, net sales to the Company's Other
channel for the first quarter of fiscal 2020 increased $90 million
compared to the previously reported amounts, with an offsetting
elimination to the Independents channel.
|
(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.
|
Second Quarter Fiscal 2020 Summary
Net sales from continuing operations benefited from
continued growth in our Supernatural channel, which was offset by
sales declines in other customer channels.
Gross margin for the second quarter of fiscal 2020
was 12.63% of net sales compared to 12.39% of net sales for the
second quarter of fiscal 2019, which included an $8.6 million, or 0.14% of net sales, inventory
fair value adjustment related to the Supervalu acquisition. When
excluding this charge, gross margin in the second quarter of fiscal
2019 was 12.53% of net sales. The increase in gross margin rate was
primarily driven by lower inbound freight expense. Included
in gross margin for the second quarter of fiscal 2020 was inventory
shrink expense of approximately $4.2
million, or 0.07% of net sales, associated with customer
bankruptcies.
Operating expenses in the second quarter of fiscal
2020 were $750.8 million, or 12.23%
of net sales, compared to $751.9
million, also 12.23% of net sales, for the second quarter of
fiscal 2019. Operating expenses in the second quarter of
fiscal 2020 and fiscal 2019, as a percent of net sales, were
approximately equal as cost savings in the second quarter of fiscal
2020 were offset by approximately $28.9
million, or 0.47% of net sales, of bad debt expense
associated with customer bankruptcies.
Restructuring, acquisition and integration related
expenses in the second quarter of fiscal 2020 were
$29.7 million, including costs and
charges related to the disposal of existing retail and surplus real
estate, distribution network consolidation, and employee-related
costs, compared to $47.1 million in
the second quarter of fiscal 2019.
Operating (loss) income in the second quarter of fiscal
2020 was $(5.1) million and included
expense of $33.1 million associated
with customer bankruptcies and $29.7
million of restructuring, acquisition and integration
related expenses. When excluding the restructuring,
acquisition and integration expenses, operating income in the
second quarter of fiscal 2020 was $24.6
million, or 0.40% of net sales. Operating loss in the second
quarter of fiscal 2019 was $(408.1)
million and included a goodwill impairment charge of
$370.9 million, restructuring,
acquisition, and integration related expenses of $47.1 million, and a fair value inventory
adjustment charge associated with the purchase of SUPERVALU of
$8.6 million. When excluding
these items, operating income for the second quarter of fiscal 2019
was $18.5 million, or 0.30% of net
sales. The increase in adjusted operating income, as a
percent of net sales, was driven by higher gross margins.
Interest expense, net for the second quarter of
fiscal 2020 was $48.6 million.
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 then-outstanding SUPERVALU senior notes and $1.0 million of unamortized debt issuance costs
for certain term loan prepayments made in the second quarter of
fiscal 2019 with asset sale proceeds. When excluding these amounts,
interest expense, net was $55.2
million in the second quarter of fiscal 2019. The
decrease in interest expense, net was driven by lower amounts of
outstanding debt and lower average interest rates.
Effective tax rate for continuing operations for the
second quarter of fiscal 2020 was a benefit of 35.5% compared to a
benefit of 20.2% for the second quarter of fiscal 2019. The second
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 a tax benefit on the goodwill
impairment charge in the second quarter of fiscal 2019 which did
not recur in the second quarter of fiscal 2020.
Net loss for the second quarter of fiscal 2020 was
$(30.7) million compared to
$(341.7) million for the second
quarter of fiscal 2019. The second quarter of fiscal 2019
included a $370.9 million pre-tax
goodwill impairment charge as well as $17.4
million in additional restructuring, acquisition and
integration related expenses compared to the second quarter of
fiscal 2020.
Net (loss) income per diluted share (EPS) was
$(0.57) for the second quarter of
fiscal 2020 compared to $(6.72) for
the second quarter of fiscal 2019. Adjusted EPS was
$0.32 for the second quarter of
fiscal 2020 compared to adjusted EPS of $0.44 in the second quarter of fiscal 2019,
reflecting customer bankruptcy charges and lower net income from
discontinued operations in the second quarter of fiscal 2020.
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 second quarter of fiscal 2020 was
$131.1 million compared to
$142.6 million for the second quarter
of fiscal 2019. Adjusted EBITDA for the second quarter of
fiscal 2020 included expense of $33.1
million associated with customer bankruptcies.
Total Outstanding Debt, net of cash, decreased
$149 million in the second quarter of
fiscal 2020 (compared to the first quarter of fiscal 2020) driven
by an expected decrease in net working capital following the
holiday selling period.
Fiscal 2020 Outlook (1)
Fiscal 2020 guidance for net sales is unchanged from previously
provided guidance. Fiscal 2020 guidance for Net Loss, EPS,
Adjusted EPS and Adjusted EBITDA has been changed to reflect
charges taken in the second quarter associated with customer
bankruptcy filings.
Fiscal Year Ending
August 1, 2020
|
|
|
Net Sales ($ in
billions)
|
|
$23.5 -
$24.3
|
Net Loss ($ in
millions)
|
|
$(395) -
$(363)
|
Loss Per Share
(EPS)
|
|
$(7.39) -
$(6.79)
|
Adjusted Earnings Per
Diluted Share (EPS) (2) (3)
|
|
$0.85 -
$1.45
|
Adjusted
EBITDA(3) ($ in millions)
|
|
$520 -
$560
|
|
(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 also excludes 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. 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 second
quarter fiscal 2020 conference call and audio webcast will be held
today, Wednesday, March 11, 2020 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
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 or its distribution capabilities by
circumstances beyond its control, including a health epidemic; 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 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 charges, restructuring, acquisition,
and integration related expenses, pension settlement charges, note
receivable charges, surplus 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 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 a 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 performance
of our business and understanding the underlying operating
performance and 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. 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
|
|
26-Week Period
Ended
|
|
|
February 1,
2020
|
|
January 26,
2019
|
|
February 1,
2020
|
|
January 26,
2019
|
Net sales
|
|
$
|
6,137,604
|
|
|
$
|
6,149,206
|
|
|
$
|
12,157,189
|
|
|
$
|
9,017,362
|
|
Cost of
sales
|
|
5,362,144
|
|
|
5,387,423
|
|
|
10,610,687
|
|
|
7,843,248
|
|
Gross
profit
|
|
775,460
|
|
|
761,783
|
|
|
1,546,502
|
|
|
1,174,114
|
|
Operating
expenses
|
|
750,845
|
|
|
751,922
|
|
|
1,526,259
|
|
|
1,115,087
|
|
Goodwill and asset
impairment charges
|
|
—
|
|
|
370,871
|
|
|
425,405
|
|
|
370,871
|
|
Restructuring,
acquisition and integration related expenses
|
|
29,686
|
|
|
47,125
|
|
|
43,936
|
|
|
115,129
|
|
Operating
loss
|
|
(5,071)
|
|
|
(408,135)
|
|
|
(449,098)
|
|
|
(426,973)
|
|
Other expense
(income):
|
|
|
|
|
|
|
|
|
Net periodic benefit
income, excluding service cost
|
|
(3,277)
|
|
|
(10,906)
|
|
|
(14,661)
|
|
|
(11,750)
|
|
Interest expense,
net
|
|
48,621
|
|
|
58,707
|
|
|
98,139
|
|
|
66,232
|
|
Other, net
|
|
(520)
|
|
|
(824)
|
|
|
(566)
|
|
|
(727)
|
|
Total other expense,
net
|
|
44,824
|
|
|
46,977
|
|
|
82,912
|
|
|
53,755
|
|
Loss from continuing
operations before income taxes
|
|
(49,895)
|
|
|
(455,112)
|
|
|
(532,010)
|
|
|
(480,728)
|
|
Benefit for income
taxes
|
|
(17,728)
|
|
|
(91,809)
|
|
|
(91,481)
|
|
|
(96,064)
|
|
Net loss from
continuing operations
|
|
(32,167)
|
|
|
(363,303)
|
|
|
(440,529)
|
|
|
(384,664)
|
|
Income from
discontinued operations, net of tax
|
|
2,107
|
|
|
21,407
|
|
|
27,061
|
|
|
23,477
|
|
Net loss including
noncontrolling interests
|
|
(30,060)
|
|
|
(341,896)
|
|
|
(413,468)
|
|
|
(361,187)
|
|
Less net (income)
loss attributable to noncontrolling interests
|
|
(650)
|
|
|
171
|
|
|
(1,169)
|
|
|
168
|
|
Net loss attributable
to United Natural Foods, Inc.
|
|
$
|
(30,710)
|
|
|
$
|
(341,725)
|
|
|
$
|
(414,637)
|
|
|
$
|
(361,019)
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) earnings
per share:
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
(0.60)
|
|
|
$
|
(7.15)
|
|
|
$
|
(8.25)
|
|
|
$
|
(7.59)
|
|
Discontinued
operations
|
|
$
|
0.03
|
|
|
$
|
0.42
|
|
|
$
|
0.49
|
|
|
$
|
0.46
|
|
Basic loss per
share
|
|
$
|
(0.57)
|
|
|
$
|
(6.72)
|
|
|
$
|
(7.77)
|
|
|
$
|
(7.12)
|
|
Diluted (loss)
earnings per share:
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
(0.60)
|
|
|
$
|
(7.15)
|
|
|
$
|
(8.25)
|
|
|
$
|
(7.59)
|
|
Discontinued
operations
|
|
$
|
0.03
|
|
|
$
|
0.42
|
|
|
$
|
0.48
|
|
|
$
|
0.46
|
|
Diluted loss per
share
|
|
$
|
(0.57)
|
|
|
$
|
(6.72)
|
|
|
$
|
(7.77)
|
|
|
$
|
(7.12)
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
53,523
|
|
|
50,815
|
|
|
53,368
|
|
|
50,699
|
|
Diluted
|
|
53,523
|
|
|
50,815
|
|
|
53,368
|
|
|
50,699
|
|
UNITED NATURAL
FOODS, INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS (unaudited)
|
(In thousands,
except for per share data)
|
|
|
|
February 1,
2020
|
|
August 3,
2019
|
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
40,064
|
|
|
$
|
42,350
|
|
Accounts receivable,
net
|
|
1,074,941
|
|
|
1,065,699
|
|
Inventories
|
|
2,134,905
|
|
|
2,089,416
|
|
Prepaid expenses and
other current assets
|
|
224,174
|
|
|
226,727
|
|
Current assets of
discontinued operations
|
|
145,369
|
|
|
143,729
|
|
Total current
assets
|
|
3,619,453
|
|
|
3,567,921
|
|
Property and
equipment, net
|
|
1,470,704
|
|
|
1,639,259
|
|
Operating lease
assets
|
|
1,061,946
|
|
|
—
|
|
Goodwill
|
|
19,734
|
|
|
442,256
|
|
Intangible assets,
net
|
|
978,170
|
|
|
1,041,058
|
|
Deferred income
taxes
|
|
96,044
|
|
|
31,087
|
|
Other
assets
|
|
108,470
|
|
|
107,319
|
|
Long-term assets of
discontinued operations
|
|
327,905
|
|
|
352,065
|
|
Total
assets
|
|
$
|
7,682,426
|
|
|
$
|
7,180,965
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Accounts
payable
|
|
$
|
1,462,843
|
|
|
$
|
1,476,857
|
|
Accrued expenses and
other current liabilities
|
|
245,800
|
|
|
249,426
|
|
Accrued compensation
and benefits
|
|
164,112
|
|
|
148,296
|
|
Current portion of
operating lease liabilities
|
|
131,315
|
|
|
—
|
|
Current portion of
long-term debt and finance lease liabilities
|
|
32,218
|
|
|
112,103
|
|
Current liabilities
of discontinued operations
|
|
122,761
|
|
|
122,265
|
|
Total current
liabilities
|
|
2,159,049
|
|
|
2,108,947
|
|
Long-term
debt
|
|
2,917,131
|
|
|
2,819,050
|
|
Long-term operating
lease liabilities
|
|
967,933
|
|
|
—
|
|
Long-term finance
lease liabilities
|
|
56,799
|
|
|
108,208
|
|
Pension and other
postretirement benefit obligations
|
|
205,651
|
|
|
237,266
|
|
Deferred income
taxes
|
|
1,041
|
|
|
1,042
|
|
Other long-term
liabilities
|
|
275,082
|
|
|
393,595
|
|
Long-term liabilities
of discontinued operations
|
|
646
|
|
|
1,923
|
|
Total
liabilities
|
|
6,583,332
|
|
|
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; 54,175 shares issued and
53,560 shares outstanding at
February 1, 2020; 53,501 shares
issued and 52,886 shares outstanding at August 3, 2019
|
|
542
|
|
|
535
|
|
Additional paid-in
capital
|
|
535,900
|
|
|
530,801
|
|
Treasury stock at
cost
|
|
(24,231)
|
|
|
(24,231)
|
|
Accumulated other
comprehensive loss
|
|
(108,420)
|
|
|
(108,953)
|
|
Retained
earnings
|
|
698,269
|
|
|
1,115,519
|
|
Total United Natural
Foods, Inc. stockholders' equity
|
|
1,102,060
|
|
|
1,513,671
|
|
Noncontrolling
interests
|
|
(2,966)
|
|
|
(2,737)
|
|
Total stockholders'
equity
|
|
1,099,094
|
|
|
1,510,934
|
|
Total liabilities and
stockholders' equity
|
|
$
|
7,682,426
|
|
|
$
|
7,180,965
|
|
UNITED NATURAL
FOODS, INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
|
|
|
|
26-Week Period
Ended
|
(In
thousands)
|
|
February 1,
2020
|
|
January 26,
2019
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
Net loss including
noncontrolling interests
|
|
$
|
(413,468)
|
|
|
$
|
(361,187)
|
|
Income from
discontinued operations, net of tax
|
|
27,061
|
|
|
23,477
|
|
Net loss from
continuing operations
|
|
(440,529)
|
|
|
(384,664)
|
|
Adjustments to
reconcile net loss from continuing operations to net cash used in
operating activities:
|
|
|
|
|
Depreciation and
amortization
|
|
144,360
|
|
|
97,993
|
|
Share-based
compensation
|
|
3,951
|
|
|
14,511
|
|
Loss (gain) on
disposition of assets
|
|
1,269
|
|
|
(60)
|
|
Closed property and
other restructuring charges
|
|
16,907
|
|
|
20,701
|
|
Goodwill and asset
impairment charges
|
|
425,405
|
|
|
370,871
|
|
Net pension and other
postretirement benefit income
|
|
(14,633)
|
|
|
(11,750)
|
|
Deferred income tax
benefit
|
|
(60,260)
|
|
|
(65,605)
|
|
LIFO
charge
|
|
12,943
|
|
|
6,265
|
|
Provision for
doubtful accounts
|
|
45,503
|
|
|
7,958
|
|
Loss on debt
extinguishment
|
|
73
|
|
|
2,117
|
|
Non-cash interest
expense
|
|
7,393
|
|
|
4,298
|
|
Changes in operating
assets and liabilities, net of acquired businesses
|
|
(151,247)
|
|
|
(62,679)
|
|
Net cash used in
operating activities of continuing operations
|
|
(8,865)
|
|
|
(44)
|
|
Net cash provided by
operating activities of discontinued operations
|
|
47,947
|
|
|
25,910
|
|
Net cash provided by
operating activities
|
|
39,082
|
|
|
25,866
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
Capital
expenditures
|
|
(84,627)
|
|
|
(80,137)
|
|
Purchases of acquired
businesses, net of cash acquired
|
|
—
|
|
|
(2,281,934)
|
|
Proceeds from
dispositions of assets
|
|
11,737
|
|
|
168,274
|
|
Payments for
long-term investment
|
|
(162)
|
|
|
(110)
|
|
Payments of company
owned life insurance premiums
|
|
(1,310)
|
|
|
—
|
|
Other
|
|
—
|
|
|
363
|
|
Net cash used in
investing activities of continuing operations
|
|
(74,362)
|
|
|
(2,193,544)
|
|
Net cash provided by
investing activities of discontinued operations
|
|
16,677
|
|
|
44,263
|
|
Net cash used in
investing activities
|
|
(57,685)
|
|
|
(2,149,281)
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
Proceeds from
borrowings of long-term debt
|
|
2,050
|
|
|
1,905,000
|
|
Proceeds from
borrowings under revolving credit line
|
|
2,269,989
|
|
|
2,698,604
|
|
Repayments of
borrowings under revolving credit line
|
|
(2,162,821)
|
|
|
(1,666,600)
|
|
Repayments of
long-term debt and finance leases
|
|
(93,326)
|
|
|
(713,366)
|
|
Proceeds from the
issuance of common stock and exercise of stock options
|
|
2,027
|
|
|
118
|
|
Payment of employee
restricted stock tax withholdings
|
|
(872)
|
|
|
(3,141)
|
|
Payments for debt
issuance costs
|
|
—
|
|
|
(64,519)
|
|
Net cash provided by
financing activities of continuing operations
|
|
17,047
|
|
|
2,156,096
|
|
Net cash used in
financing activities of discontinued operations
|
|
(1,398)
|
|
|
(254)
|
|
Net cash provided by
financing activities
|
|
15,649
|
|
|
2,155,842
|
|
EFFECT OF EXCHANGE
RATE CHANGES ON CASH
|
|
19
|
|
|
(1,868)
|
|
NET (DECREASE)
INCREASE IN CASH AND CASH EQUIVALENTS
|
|
(2,935)
|
|
|
30,559
|
|
Cash and cash
equivalents, at beginning of period
|
|
45,263
|
|
|
23,315
|
|
Cash and cash
equivalents at end of period
|
|
42,328
|
|
|
53,874
|
|
Less: cash and cash
equivalents of discontinued operations
|
|
(2,264)
|
|
|
(4,359)
|
|
Cash and cash
equivalents
|
|
$
|
40,064
|
|
|
$
|
49,515
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
Cash paid for
interest
|
|
$
|
94,010
|
|
|
$
|
66,016
|
|
Cash (refunds)
payments for federal and state income taxes, net
|
|
$
|
(24,376)
|
|
|
$
|
13,449
|
|
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
|
|
26-Week Period
Ended
|
|
February 1,
2020
|
|
January 26,
2019
|
|
February 1,
2020
|
|
January 26,
2019
|
Net loss attributable
to UNFI per diluted common share
|
$
|
(0.57)
|
|
|
$
|
(6.72)
|
|
|
$
|
(7.77)
|
|
|
$
|
(7.12)
|
|
Goodwill and asset
impairment charges(1)
|
—
|
|
|
7.30
|
|
|
7.97
|
|
|
7.32
|
|
Restructuring,
acquisition and integration related
expenses(2)
|
0.55
|
|
|
0.93
|
|
|
0.82
|
|
|
2.27
|
|
Pension settlement
charge(3)
|
0.19
|
|
|
—
|
|
|
0.19
|
|
|
—
|
|
Surplus property
depreciation and interest expense(4)
|
0.04
|
|
|
—
|
|
|
0.12
|
|
|
—
|
|
Note receivable
charges(5)
|
—
|
|
|
—
|
|
|
0.23
|
|
|
—
|
|
Loss on debt
extinguishment(6)
|
—
|
|
|
0.02
|
|
|
—
|
|
|
0.04
|
|
Interest expense on
senior notes(7)
|
—
|
|
|
0.05
|
|
|
—
|
|
|
0.06
|
|
Inventory fair value
adjustment(8)
|
—
|
|
|
0.17
|
|
|
—
|
|
|
0.21
|
|
Legal (settlement
income) reserve charge(9)
|
(0.01)
|
|
|
—
|
|
|
0.02
|
|
|
—
|
|
Discontinued
operations store closures and other
charges,
net(10)
|
0.58
|
|
|
0.25
|
|
|
0.60
|
|
|
0.24
|
|
Tax impact of
adjustments and adjusted effective tax
rate(11)
|
(0.46)
|
|
|
(1.54)
|
|
|
(1.73)
|
|
|
(1.97)
|
|
Impact of diluted
shares(12)
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.01)
|
|
Adjusted net income
per diluted common share(11)
|
$
|
0.32
|
|
|
$
|
0.44
|
|
*
|
$
|
0.45
|
|
|
$
|
1.04
|
|
|
* Includes
rounding
|
|
(1)
|
Fiscal 2020
year-to-date 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. Fiscal 2019
year-to-date reflects a goodwill impairment charge attributable to
the SUPERVALU acquisition.
|
(2)
|
Fiscal 2020
year-to-date primarily reflects integration charges, closed
property reserve charges and administrative and operational
restructuring costs. Fiscal 2019 year-to-date primarily reflects
expenses resulting from the acquisition of SUPERVALU and
acquisition and integration expenses, including employee-related
costs.
|
(3)
|
Reflects a non-cash
pension settlement charge associated with the acceleration of a
portion of the accumulated unrecognized actuarial loss as a result
of the lump sum settlement payments.
|
(4)
|
Reflects surplus,
non-operating property depreciation and interest expense, including
accelerated depreciation related to a location on which we
recognized a gain that is included in Restructuring, acquisition
and integration related expenses.
|
(5)
|
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.
|
(6)
|
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.
|
(7)
|
Interest expense
recorded on the SUPERVALU senior notes in the mandatory 30-day
redemption notice period.
|
(8)
|
Reflects a non-cash
charge related to the step-up in inventory values as part of
purchase accounting.
|
(9)
|
Reflects income
received to settle a legal proceeding, a charge to settle a legal
proceeding and a charge related to our assessment of legal
proceedings.
|
(10)
|
Amounts represent
store closure charges and costs, operational wind-down and
inventory charges, and asset impairment charges related to
discontinued operations.
|
(11)
|
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 second quarter of fiscal 2020 and
fiscal 2020 year-to-date, the use of the effective tax rate
methodology used in fiscal 2019 to calculate Adjusted EPS would
have resulted in the tax impact of adjustments being ($0.54) and
($1.82) per diluted share, respectively, and Adjusted EPS of $0.24
and $0.36, respectively. If the Company had utilized an adjusted
effective tax rate in calculating Adjusted EPS in the second
quarter of fiscal 2019 and fiscal 2019 year-to-date, the tax impact
of adjustments using the adjusted effective tax rate would have
been ($1.78) and ($2.13) per diluted share, respectively, and
Adjusted EPS would have been $0.20 and $0.88 per diluted share,
respectively.
|
(12)
|
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
|
|
26-Week Period
Ended
|
(in
thousands)
|
February 1,
2020
|
|
January 26,
2019
|
|
February 1,
2020
|
|
January 26,
2019
|
Net loss from
continuing operations
|
$
|
(32,167)
|
|
|
$
|
(363,303)
|
|
|
$
|
(440,529)
|
|
|
$
|
(384,664)
|
|
Adjustments to
continuing operations net loss:
|
|
|
|
|
|
|
|
Total other expense,
net
|
44,824
|
|
|
46,977
|
|
|
82,912
|
|
|
53,755
|
|
Benefit for income
taxes
|
(17,728)
|
|
|
(91,809)
|
|
|
(91,481)
|
|
|
(96,064)
|
|
Depreciation and
amortization
|
69,219
|
|
|
73,200
|
|
|
144,360
|
|
|
97,993
|
|
Share-based
compensation
|
4,880
|
|
|
10,423
|
|
|
8,552
|
|
|
18,512
|
|
Restructuring,
acquisition and integration related expenses
|
29,686
|
|
|
47,125
|
|
|
43,936
|
|
|
115,129
|
|
Goodwill and asset
impairment charges
|
—
|
|
|
370,871
|
|
|
425,405
|
|
|
370,871
|
|
Note receivable
charges
|
—
|
|
|
—
|
|
|
12,516
|
|
|
—
|
|
Inventory fair value
adjustment
|
—
|
|
|
8,644
|
|
|
—
|
|
|
10,463
|
|
Legal (settlement
income) reserve charge
|
(654)
|
|
|
—
|
|
|
1,196
|
|
|
—
|
|
Adjusted EBITDA of
discontinued operations(1)(2)
|
33,050
|
|
|
40,446
|
|
|
65,937
|
|
|
42,772
|
|
Adjusted
EBITDA
|
$
|
131,110
|
|
|
$
|
142,574
|
|
|
$
|
252,804
|
|
|
$
|
228,767
|
|
|
|
|
|
|
|
|
|
Income from
discontinued operations, net of tax(1)(2)
|
$
|
2,107
|
|
|
$
|
21,407
|
|
|
$
|
27,061
|
|
|
$
|
23,477
|
|
Adjustments to
discontinued operations net income:
|
|
|
|
|
|
|
|
Less net income
attributable to noncontrolling interests
|
(650)
|
|
|
171
|
|
|
(1,169)
|
|
|
168
|
|
Total other expense,
net
|
41
|
|
|
(339)
|
|
|
(1,050)
|
|
|
(588)
|
|
Provision for income
taxes
|
286
|
|
|
5,239
|
|
|
8,376
|
|
|
5,987
|
|
Other
expense
|
—
|
|
|
378
|
|
|
—
|
|
|
238
|
|
Share-based
compensation
|
253
|
|
|
532
|
|
|
506
|
|
|
532
|
|
Restructuring, store
closure and other charges, net(3)
|
31,013
|
|
|
13,058
|
|
|
32,213
|
|
|
12,958
|
|
Adjusted EBITDA of
discontinued operations(1)(2)
|
$
|
33,050
|
|
|
$
|
40,446
|
|
|
$
|
65,937
|
|
|
$
|
42,772
|
|
|
(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 rent expense of $11.0 million and
$12.4 million in the second quarters of fiscal 2020 and 2019,
respectively, and $23.5 million and $13.3 million in fiscal 2020
and 2019 year-to-date, respectively, of operating lease rent
expense 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
investors a meaningful measure of total performance.
|
(3)
|
Amounts represent
store closure charges and costs, operational wind-down and
inventory charges, and asset impairment 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
|
|
Estimate
|
|
High
Range
|
Net loss attributable
to United Natural Foods, Inc. per diluted common share
|
$
|
(7.39)
|
|
|
|
|
$
|
(6.79)
|
|
Goodwill and asset
impairment charges
|
|
|
7.97
|
|
|
|
Restructuring,
acquisition and integration related costs
|
|
|
0.97
|
|
|
|
Note receivable
charges
|
|
|
0.23
|
|
|
|
Pension settlement
charge
|
|
|
0.19
|
|
|
|
Surplus property
depreciation and interest expense
|
|
|
0.20
|
|
|
|
Legal settlement
income, reserve charge
|
|
|
0.02
|
|
|
|
Discontinued
operations store closures and other charges, net
|
|
|
0.62
|
|
|
|
Tax impact of
adjustments and adjusted effective tax
rate(1)
|
|
|
(1.96)
|
|
|
|
Adjusted net income
per diluted common share(2)(3)
|
$
|
0.85
|
|
|
|
|
$
|
1.45
|
|
|
(1)
|
The impact of the
adjusted effective tax rate represents approximately $(0.20) of the
$(1.96).
|
(2)
|
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 Cub Foods.
|
(3)
|
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 reconciliation for adjusted effective tax
rate.
|
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.
|
$
|
(395,000)
|
|
|
|
|
$
|
(363,000)
|
|
Benefit for income
taxes
|
(81,000)
|
|
|
|
|
(73,000)
|
|
Goodwill and asset
impairment charges
|
|
|
425,000
|
|
|
|
Restructuring,
acquisition and integration related costs(1)
|
|
|
52,000
|
|
|
|
Note receivable
charges
|
|
|
13,000
|
|
|
|
Pension settlement
charge
|
|
|
10,000
|
|
|
|
Closed property
depreciation and interest expense
|
|
|
10,000
|
|
|
|
Legal settlement
income, reserve charge
|
|
|
2,000
|
|
|
|
Discontinued
operations store closures and other charges, net
|
|
|
33,000
|
|
|
|
Net interest
expense
|
|
|
191,000
|
|
|
|
Other (income)
expense, net
|
|
|
(2,000)
|
|
|
|
Depreciation and
amortization
|
|
|
278,000
|
|
|
|
Share-based
compensation
|
|
|
33,000
|
|
|
|
Net periodic benefit
income, excluding service costs
|
|
|
(49,000)
|
|
|
|
Adjusted
EBITDA(2)
|
$
|
520,000
|
|
|
|
|
$
|
560,000
|
|
|
(1)
|
Excludes potential
future 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 Cub
Foods.
|
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
|
|
16
|
%
|
|
18
|
%
|
Discrete quarterly
recognition of GAAP items(1)
|
|
2
|
%
|
|
(2)
|
%
|
Tax impact of other
charges and adjustments(2)
|
|
(6)
|
%
|
|
—
|
%
|
Changes in valuation
allowances(3)
|
|
5
|
%
|
|
—
|
%
|
Impact of Goodwill
Impairment
|
|
9
|
%
|
|
11
|
%
|
Other(4)
|
|
3
|
%
|
|
—
|
%
|
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.
|
(4)
|
Tax impacts related
to full-year forecasted tax opportunities and related costs.
The Company establishes an estimated Adjusted Effective Tax Rate at
the beginning of the fiscal year based on the best available
information. The Company will re-evaluate its estimated Adjusted
Effective Tax Rate as appropriate throughout the year and adjust
for any material changes. The actual Adjusted Effective Tax Rate at
the end of the fiscal year will be based on actual results and may
differ from the estimated Adjusted Effective Tax Rate used during
the year.
|
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content:http://www.prnewswire.com/news-releases/united-natural-foods-inc-reports-second-quarter-fiscal-2020-results-301021208.html
SOURCE United Natural Foods, Inc.