Reaffirms Full-Year Guidance
United Natural Foods, Inc. (NYSE: UNFI) (the “Company” or
“UNFI”) today reported financial results for the first quarter of
fiscal 2023 (13 weeks) ended October 29, 2022.
First Quarter Fiscal 2023 Highlights
(comparisons to first quarter fiscal 2022)
- Net sales increased 7.6% to $7.5 billion, primarily driven
by inflation and new business
- Gross profit increased $54 million, or 5.2%, to nearly $1.1
billion; prior to LIFO, gross profit increased 6.1%
- Net income decreased 13.2% to $66 million; Earnings per
diluted share (EPS) decreased 14.4% to $1.07
- Adjusted EBITDA increased 3.5% to $207 million
- Adjusted EPS increased 2.7% to $1.13
- Entered into commercial agreement to implement an
industry-leading warehouse automation system
- Subsequent to quarter end, reduced net debt by $253 million
with initial proceeds from A/R monetization
“Our performance this quarter reflects continued execution of
our strategy in a dynamic operating environment as we improved fill
rates and operating performance and saw more customers buying more
categories from us than ever before,” said Sandy Douglas, UNFI’s
Chief Executive Officer. “We are leveraging our scale,
diversification, and capabilities to enhance connectivity between
customers and suppliers, finding unique ways to create more value
for both. We continued to invest in people and technology as part
of our commitment to becoming a more effective, more efficient, and
more disciplined business, well-positioned to capture a growing
share of our $140 billion core addressable market and create even
more value for shareholders.”
Mr. Douglas concluded, “Looking ahead, our customer pipeline is
robust, with new customer acquisition and expansion from existing
customers expected in the second half of the year. We have enduring
confidence in the opportunities before us and in our ability to
capture them. We remain energized and focused on meeting the needs
of our customers during the important holiday selling season, while
delivering our fiscal 2023 guidance.”
13-Week Period Ended
($ in millions, except for per share
data)
October 29, 2022
October 30, 2021
Percent Change
Net sales
$
7,532
$
6,997
7.6
%
Chains
$
3,224
$
3,082
4.6
%
Independent retailers
$
1,947
$
1,750
11.3
%
Supernatural
$
1,513
$
1,378
9.8
%
Retail
$
613
$
602
1.8
%
Other
$
635
$
580
9.5
%
Eliminations
$
(400
)
$
(395
)
1.3
%
Net income
$
66
$
76
(13.2
) %
Adjusted EBITDA(1)
$
207
$
200
3.5
%
EPS(2)
$
1.07
$
1.25
(14.4
) %
Adjusted EPS(1)(2)
$
1.13
$
1.10
2.7
%
(1)
During fiscal 2022, the Company revised
its definition of Adjusted EBITDA and Adjusted EPS to exclude the
impact of the non-cash LIFO charge or benefit. The Company believes
that this change provides a better indicator of its underlying
operating performance and permits better comparability between
periods. Prior-year periods have been recast to reflect the new
definition. 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 and for a reconciliation of previously reported Adjusted
EBITDA and Adjusted EPS to their revised presentation under the new
definitions.
(2)
The decrease in EPS compared to the
increase in Adjusted EPS in the first quarter of fiscal 2023 was
primarily driven by a higher LIFO charge compared to the first
quarter of fiscal 2022 which is excluded from adjusted EPS.
First Quarter Fiscal 2023
Summary
Net sales increased 7.6% in the first quarter of fiscal
2023 compared to the same period last year, primarily driven by
inflation and new business. This new business resulted from selling
new or expanded categories to existing customers and adding new
customers from our robust pipeline. These increases were partially
offset by an expected decrease in unit volume consistent with the
overall industry.
Gross profit in the first quarter of fiscal 2023
increased $54 million, or 5.2%, compared to the first quarter of
fiscal 2022. Excluding the non-cash LIFO charge in both periods,
gross profit increased $64 million, or 6.1%. The gross profit rate
in the first quarter of fiscal 2023 was 14.6% of net sales and
included a $21 million LIFO charge. Excluding this non-cash charge,
gross profit rate was 14.8% of net sales. Gross profit rate in the
first quarter of fiscal 2022 was 14.9% of net sales and included an
$11 million LIFO charge. Excluding this non-cash charge, gross
profit rate in the first quarter of fiscal 2022 was 15.0% of net
sales. The decrease in gross profit rate, excluding the LIFO
charge, was driven by changes in customer mix as we continued to
grow sales with larger customers.
Operating expenses in the first quarter of fiscal 2023
were $1,000 million, or 13.3% of net sales, compared to $932
million, or 13.3% of net sales, in the first quarter of fiscal
2022. Operating expenses in the quarter were primarily driven by
continued investments in servicing our customers, which led to
higher transportation and distribution center labor costs in the
first quarter of fiscal 2023, and higher occupancy costs. These
were partially offset by leveraging fixed expenses across higher
sales. Operating expenses as a percent of net sales improved
sequentially from the fourth quarter of fiscal 2022 to the first
quarter of fiscal 2023.
Interest expense, net for the first quarter of fiscal
2023 was $35 million compared to $40 million for the first quarter
of fiscal 2022. The decrease in interest expense, net was primarily
driven by lower outstanding debt balances.
Effective tax rate for the first quarter of fiscal 2023
was 6.9% compared to a benefit of 1.3% on pre-tax income for the
first quarter of fiscal 2022. The change was driven mainly by the
reduction of tax benefits related to the vesting of employee stock
awards during the first quarter of fiscal 2023.
Net income for the first quarter of fiscal 2023 was $66
million. Net income for the first quarter of fiscal 2022 was $76
million.
Net income per diluted share (EPS) was $1.07 for the
first quarter of fiscal 2023 compared to net income per diluted
share of $1.25 for the first quarter of fiscal 2022. Adjusted EPS
was $1.13 for the first quarter of fiscal 2023 compared to $1.10 in
the first quarter of fiscal 2022.
Adjusted EBITDA for the first quarter of fiscal 2023 was
$207 million compared to $200 million for the first quarter of
fiscal 2022.
Capital Allocation and Financing Overview
- Free Cash Flow – During the first quarter of 2023, free
cash flow was $(329) million, compared to $(137) million in the
first quarter of fiscal 2022. The results for the first quarter of
fiscal 2023 reflect net cash used in operating activities of $262
million, driven by expected seasonally higher levels of working
capital and the impact of inflation, and payments for capital
expenditures of $67 million.
- Leverage – The net debt to adjusted EBITDA leverage
ratio was 3.0x as of October 29, 2022. Total outstanding debt, net
of cash, increased by $378 million during the first quarter of
fiscal 2023 to $2.49 billion primarily driven by investments in
working capital.
- Liquidity – As of October 29, 2022, total liquidity was
approximately $1.3 billion, consisting of approximately $39 million
in cash, plus the ability to borrow an aggregate of approximately
$1.25 billion under the Company’s asset-based lending
facility.
- Repurchase program – During the first quarter of fiscal
2023, the Company repurchased approximately 339,000 shares at an
average price of $35.85 for an aggregate cost of approximately $12
million, including fees and commissions.
- Accounts Receivable monetization - Early in the second
quarter of fiscal 2023, the Company entered into a monetization
program with an initial sale of qualified accounts receivable of
approximately $253 million. Proceeds have been used to pay down
debt.
Fiscal 2023 Outlook (1)
The Company is reaffirming its full-year outlook for fiscal
2023.
Fiscal Year Ending July 29,
2023
% Growth Over FY22 at
Midpoint
Net sales ($ in billions)
$29.8 - $30.4
4%
Net income ($ in millions)
$247 - $266
3%
EPS
$3.95 - $4.25
1%
Adjusted EPS(2)(3)(4)
$4.85 - $5.15
4%
Adjusted EBITDA(3)($ in millions)
$850 - $880
4%
Capital expenditures ($ in millions)
~ $350
39%
(1)
The outlook provided above is for fiscal
2023 only and replaces and supersedes any and all guidance provided
prior to the date hereof covering fiscal 2023. This outlook is
forward-looking, is based on management's current estimates and
expectations and is subject to a number of risks, including many
that are outside of management's control. See cautionary Safe
Harbor Statement below.
(2)
The Company uses an adjusted effective tax
rate in calculating Adjusted EPS. The adjusted effective tax rate
is 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 provides better
consistency across the interim reporting periods since each of
these discrete items can cause volatility in the GAAP tax rate that
is not indicative of the underlying ongoing operations of the
Company. By providing this non-GAAP measure, management intends to
provide investors with a meaningful, consistent comparison of the
Company’s effective tax rate on ongoing operations.
(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.
(4)
Lower non-cash pension income and higher
depreciation and amortization expense from elevated investments are
expected to reduce adjusted EPS growth by approximately 4% on a
combined basis.
Conference Call and Webcast
The Company’s first quarter fiscal 2023 conference call and
audio webcast will be held today, Wednesday, December 7, 2022 at
8:30 a.m. ET. A webcast of the conference call (and supplemental
materials) will be available to the public, on a listen only basis,
via the internet at the Investors section of the Company’s website
www.unfi.com. The call can also be
accessed at (888) 660 - 6768 (conference ID 1099581). An online
archive of the webcast (and supplemental materials) will be
available for 120 days.
About United Natural Foods
UNFI is North America's premier grocery wholesaler delivering
the widest variety of fresh, branded, and owned brand products to
more than 30,000 locations throughout North America, including
natural product superstores, independent retailers, conventional
supermarket chains, ecommerce providers, and foodservice customers.
UNFI also provides a broad range of value-added services and
segmented marketing expertise, including proprietary technology,
data, market insights, and shelf management to help customers and
suppliers build their businesses and brands. As the largest
full-service grocery partner in North America, UNFI is committed to
building a food system that is better for all and is uniquely
positioned to deliver great food, more choices, and fresh thinking
to customers. To learn more about how UNFI is Fueling the Future of
Food, visit www.unfi.com.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995: Statements in this press release regarding the
Company’s business that are not historical facts are
“forward-looking statements” that involve risks and uncertainties
and are based on current expectations and management estimates;
actual results may differ materially. The risks and uncertainties
which could impact these statements are described in the Company’s
filings under the Securities Exchange Act of 1934, as amended,
including its annual report on Form 10-K for the year ended July
30, 2022 filed with the Securities and Exchange Commission (the
“SEC”) on September 27, 2022 and other filings the Company makes
with the SEC, and include, but are not limited to, our dependence
on principal customers; the relatively low margins of our business,
which are sensitive to inflationary and deflationary pressures; the
impact and duration of any pandemics or disease outbreaks; our
ability to operate, and rely on third parties to operate, reliable
and secure technology systems; labor and other workforce shortages
and challenges; our ability to realize anticipated benefits of our
strategic initiatives, including any acquisitions; the addition or
loss of significant customers or material changes to our
relationships with these customers; our sensitivity to general
economic conditions including inflation, changes in disposable
income levels and consumer spending trends; our ability to continue
to grow sales, including of our higher margin natural and organic
foods and non-food products, and to manage that growth; increased
competition in our industry, including as a result of continuing
consolidation of retailers and the growth of chains, direct
distribution by large retailers and the growth of online
distributors; our ability to timely and successfully deploy our
warehouse management system throughout our distribution centers and
our transportation management system across the Company and to
achieve efficiencies and cost savings from these efforts; the
potential for disruptions in our supply chain or our distribution
capabilities from circumstances beyond our control, including due
to lack of long-term contracts, severe weather, labor shortage or
work stoppages or otherwise; moderated supplier promotional
activity, including decreased forward buying opportunities;
union-organizing activities that could cause labor relations
difficulties and increased costs; the potential for additional
asset impairment charges; our ability to maintain food quality and
safety; volatility in fuel costs; volatility in foreign exchange
rates; 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 the non-GAAP financial measures Adjusted EBITDA, adjusted
earnings per diluted common share (“Adjusted EPS”), adjusted
effective tax rate, free cash flow and net debt to Adjusted EBITDA
leverage ratio. Adjusted EPS is a consolidated measure, which the
Company reconciles by adding Net income attributable to UNFI plus
the LIFO charge or benefit, Goodwill impairment benefits and
charges, Restructuring, acquisition, and integration related
expenses, gains and losses on sales of assets, certain legal
charges and gains, surplus property depreciation and interest
expense, losses on debt extinguishment, the impact of diluted
shares when GAAP earnings is presented as a loss and non-GAAP
earnings represent income, and the tax impact of adjustments and
the adjusted effective tax rate, which tax impact is calculated
using the adjusted effective tax rate, and certain other non-cash
charges or items, as determined by management. The non-GAAP
adjusted effective tax rate excludes the potential impact of
changes to various uncertain tax positions and valuation
allowances, as well as stock compensation accounting (ASU 2016-09).
The non-GAAP Adjusted EBITDA measure is a consolidated measure
which the Company reconciles by adding Net income (loss) including
noncontrolling interests, less Net income attributable to
noncontrolling interests, plus non-operating income and expenses,
including Net periodic benefit income, excluding service cost,
Interest expense, net and Other (income) expense, net, plus
Provision (benefit) for income taxes and Depreciation and
amortization all calculated in accordance with GAAP, plus
adjustments for Share-based compensation, non-cash LIFO charge or
benefit, Restructuring, acquisition and integration related
expenses, Goodwill impairment charges, (Gain) loss on sale of
assets, certain legal charges and gains, and certain other non-cash
charges or other items, as determined by management. The changes to
the definition of Adjusted EBITDA from prior periods reflect
changes to line item references in our Condensed Consolidated
Financial Statements, which do not impact the calculation of
Adjusted EBITDA. The non-GAAP free cash flow measure is defined as
net cash provided by operating activities less payments for capital
expenditures. The non-GAAP net debt to Adjusted EBITDA leverage
ratio is defined as the total carrying value of the Company’s
outstanding short- and long-term debt and finance lease liabilities
less net cash and cash equivalents, the sum of which is divided by
Adjusted EBITDA.
The reconciliation of these non-GAAP financial measures to their
comparable GAAP financial measures and the calculation of net debt
to Adjusted EBITDA leverage are presented in the tables appearing
below. The presentation of non-GAAP financial measures is not
intended to be considered in isolation or as a substitute for any
measure prepared in accordance with GAAP. The Company believes that
presenting the non-GAAP financial measures Adjusted EBITDA and
Adjusted EPS aids in making period-to-period comparisons, assessing
the performance of our business and understanding the underlying
operating performance and core business trends by excluding certain
adjustments not expected to recur in the normal course of business
or that are not meaningful indicators of actual and estimated
operating performance. The inclusion of free cash flow assists
investors in understanding the cash generating ability of the
Company separate from cash generated by the sale of assets. Net
debt to Adjusted EBITDA leverage ratio is a commonly used metric
that assists investors in understanding and evaluating the
Company’s capital structure and changes to its capital structure
over time. The Company 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 2023 fiscal
year to the comparable periods in the 2022 fiscal year and to
internally prepared projections. These non-GAAP financial measures
may differ from similarly titled measures of other companies.
UNITED NATURAL FOODS,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (unaudited)
(in millions, except for per
share data)
13-Week Period Ended
October 29,
2022
October 30,
2021
Net sales
$
7,532
$
6,997
Cost of sales
6,436
5,955
Gross profit
1,096
1,042
Operating expenses
1,000
932
Restructuring, acquisition and integration
related expenses
2
3
Gain on sale of assets
(5
)
—
Operating income
99
107
Net periodic benefit income, excluding
service cost
(7
)
(10
)
Interest expense, net
35
40
Other (income) expense, net
(1
)
1
Income before income taxes
72
76
Provision (benefit) for income taxes
5
(1
)
Net income including noncontrolling
interests
67
77
Less net income attributable to
noncontrolling interests
(1
)
(1
)
Net income attributable to United Natural
Foods, Inc.
$
66
$
76
Basic earnings per share
$
1.12
$
1.34
Diluted earnings per share
$
1.07
$
1.25
Weighted average shares outstanding:
Basic
58.8
57.0
Diluted
61.6
61.1
UNITED NATURAL FOODS,
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS (unaudited)
(in millions, except for par
values)
October 29,
2022
July 30, 2022
ASSETS
Cash and cash equivalents
$
39
$
44
Accounts receivable, net
1,351
1,214
Inventories, net
2,756
2,355
Prepaid expenses and other current
assets
214
184
Total current assets
4,360
3,797
Property and equipment, net
1,684
1,690
Operating lease assets
1,187
1,176
Goodwill
20
20
Intangible assets, net
801
819
Other long-term assets
147
126
Total assets
$
8,199
$
7,628
LIABILITIES AND STOCKHOLDERS’
EQUITY
Accounts payable
$
1,924
$
1,742
Accrued expenses and other current
liabilities
258
260
Accrued compensation and benefits
199
232
Current portion of operating lease
liabilities
157
156
Current portion of long-term debt and
finance lease liabilities
27
27
Total current liabilities
2,565
2,417
Long-term debt
2,485
2,109
Long-term operating lease liabilities
1,078
1,067
Long-term finance lease liabilities
20
23
Pension and other postretirement benefit
obligations
18
18
Deferred income taxes
17
8
Other long-term liabilities
181
194
Total liabilities
6,364
5,836
Stockholders’ equity:
Preferred stock, $0.01 par value,
authorized 5.0 shares; none issued or outstanding
—
—
Common stock, $0.01 par value, authorized
100.0 shares; 60.9 shares issued and 59.9 shares outstanding at
October 29, 2022; 58.9 shares issued and 58.3 shares outstanding at
July 30, 2022
1
1
Additional paid-in capital
583
608
Treasury stock at cost
(36
)
(24
)
Accumulated other comprehensive loss
(5
)
(20
)
Retained earnings
1,292
1,226
Total United Natural Foods, Inc.
stockholders’ equity
1,835
1,791
Noncontrolling interests
—
1
Total stockholders’ equity
1,835
1,792
Total liabilities and stockholders’
equity
$
8,199
$
7,628
UNITED NATURAL FOODS,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (unaudited)
13-Week Period Ended
(in millions)
October 29,
2022
October 30,
2021
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income including noncontrolling
interests
$
67
$
77
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization
74
69
Share-based compensation
12
11
Gain on sale of assets
(5
)
—
Closed property and other restructuring
charges
—
1
Net pension and other postretirement
benefit income
(7
)
(10
)
Deferred income tax expense
2
—
LIFO charge
21
11
Provision for losses on receivables
—
1
Non-cash interest expense and other
adjustments
3
5
Changes in operating assets and
liabilities
(429
)
(246
)
Net cash used in operating activities
(262
)
(81
)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Payments for capital expenditures
(67
)
(56
)
Proceeds from dispositions of assets
7
1
Payments for investments
(1
)
(26
)
Net cash used in investing activities
(61
)
(81
)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from borrowings under revolving
credit line
1,206
1,238
Repayments of borrowings under revolving
credit line
(829
)
(1,028
)
Repayments of long-term debt and finance
leases
(6
)
(13
)
Repurchases of common stock
(12
)
—
Proceeds from the issuance of common stock
and exercise of stock options
—
5
Payments of employee restricted stock tax
withholdings
(37
)
(33
)
Distributions to noncontrolling
interests
(2
)
(2
)
Repayments of other loans
(1
)
—
Net cash provided by financing
activities
319
167
EFFECT OF EXCHANGE RATE ON CASH
(1
)
—
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS
(5
)
5
Cash and cash equivalents, at beginning of
period
44
41
Cash and cash equivalents, at end of
period
$
39
$
46
Supplemental disclosures of cash flow
information:
Cash paid for interest
$
40
$
46
Cash (refunds) for federal, state, and
foreign income taxes, net
$
(1
)
$
(1
)
Leased assets obtained in exchange for new
operating lease liabilities
$
57
$
71
Additions of property and equipment
included in Accounts payable
$
26
$
17
SUPPLEMENTAL NON-GAAP
FINANCIAL INFORMATION (unaudited)
UNITED NATURAL FOODS,
INC.
Reconciliation of Net income
including noncontrolling interests to Adjusted EBITDA
(unaudited)
13-Week Period Ended
(in millions)
October 29, 2022
October 30, 2021
Net income including noncontrolling
interests
$
67
$
77
Adjustments to net income including
noncontrolling interests:
Less net income attributable to
noncontrolling interests
(1
)
(1
)
Net periodic benefit income, excluding
service cost
(7
)
(10
)
Interest expense, net
35
40
Other (income) expense, net
(1
)
1
Provision (benefit) for income taxes
5
(1
)
Depreciation and amortization
74
69
Share-based compensation
12
11
LIFO charge(1)
21
11
Restructuring, acquisition and integration
related expenses
2
3
Gain on sale of assets
(5
)
—
Other(2)
5
—
Adjusted EBITDA
$
207
$
200
(1)
During fiscal 2022, the Company revised
its definition of Adjusted EBITDA to exclude the impact of the
non-cash LIFO charge or benefit. The following illustrates the
impact of the revised definition on previously reported periods to
show the effect of this change
13-Week Period Ended
(in millions)
October 30, 2021
Adjusted EBITDA (previously reported
definition)
$
189
LIFO charge
11
Adjusted EBITDA (current definition)
$
200
(2)
Includes costs for certain
technology-related initiatives.
Reconciliation of Net income
attributable to United Natural Foods, Inc. to Adjusted net income
and Adjusted EPS (unaudited)
13-Week Period Ended
(in millions, except per share
amounts)
October 29, 2022
October 30, 2021
Net income attributable to United Natural
Foods, Inc.
$
66
$
76
Restructuring, acquisition and integration
related expenses
2
3
Gain on sale of assets
(5
)
—
LIFO charge
21
11
Surplus property depreciation and interest
expense(1)
1
1
Other(2)
5
—
Tax impact of adjustments and adjusted
effective tax rate(3)
(20
)
(24
)
Adjusted net income
$
70
$
67
Diluted weighted average shares
outstanding
61.6
61.1
Adjusted EPS(4)(5)
$
1.13
$
1.10
(1)
Reflects surplus, non-operating property
depreciation and interest expense.
(2)
Includes costs for certain
technology-related initiatives.
(3)
Represents the tax effect of the pre-tax
adjustments using an adjusted effective tax rate. The adjusted
effective tax rate is calculated based on adjusted net income
before tax, and its impact reflects the exclusion of changes to
uncertain tax positions, valuation allowances, tax impacts related
to the 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.
(4)
Earnings per share amounts are calculated
using actual unrounded figures.
(5)
During the third quarter of fiscal 2022,
the Company revised its definition of Adjusted EPS to exclude the
impact of the non-cash LIFO charge. The following illustrates the
impact of the revised definition on previously reported periods to
show the effect of this change:
13-Week Period Ended
October 30, 2021
Adjusted EPS (previously reported
definition)
$
0.97
LIFO charge
0.18
Tax impact of adjustment
(0.05
)
Adjusted EPS (current definition)
$
1.10
Calculation of net debt to
Adjusted EBITDA leverage ratio (unaudited)
(in millions, except ratios)
October 29, 2022
Current portion of long-term debt and
finance lease liabilities
$
27
Long-term debt
2,485
Long-term finance lease liabilities
20
Less: Cash and cash equivalents
(39
)
Net carrying value of debt and finance
lease liabilities
2,493
Adjusted EBITDA(1)
$
836
Adjusted EBITDA leverage ratio(2)
3.0x
(1)
Adjusted EBITDA for purposes of this
calculation reflects the summation of the trailing four quarters
ended October 29, 2022. Refer to the following table for the
reconciliation of Adjusted EBITDA trailing four quarters, which is
calculated under the revised definition discussed above.
(2)
During fiscal 2022, the Company revised
its definition of Adjusted EBITDA, to exclude the impact of
removing the non-cash LIFO charge.
Reconciliation of trailing
four quarters Net income including noncontrolling interests to
Adjusted EBITDA (unaudited)
(in millions)
52-Week Period Ended October
29, 2022
Net income including noncontrolling
interests
$
244
Adjustments to net income including
noncontrolling interests:
Less net income attributable to
noncontrolling interests
(6
)
Net periodic benefit income, excluding
service cost
(37
)
Interest expense, net
150
Other (income) expense, net
(4
)
Provision for income taxes
62
Depreciation and amortization
290
Share-based compensation
44
LIFO charge
168
Restructuring, acquisition and integration
related expenses
20
Gain on sale of assets
(92
)
Multiemployer pension plan withdrawal
charges
(8
)
Other
5
Adjusted EBITDA(1)
$
836
(1)
Adjusted EBITDA for purposes of this
calculation reflects the summation of the trailing four quarters
ended October 29, 2022.
Reconciliation of Net cash
used in operating activities to Free cash flow (unaudited)
13-Week Period Ended
(in millions)
October 29, 2022
October 30, 2021
Net cash used in operating activities
$
(262
)
$
(81
)
Payments for capital expenditures
(67
)
(56
)
Free cash flow
$
(329
)
$
(137
)
FISCAL
2023 GUIDANCE
Reconciliation of 2023
guidance for estimated EPS to estimated Adjusted EPS
(unaudited)
Fiscal Year Ending July 29,
2023
Low Range
Estimate
High Range
EPS
$
3.95
$
4.25
LIFO charge
1.20
Tax impact of adjustments and adjusted
effective tax rate(1)
(0.30
)
Adjusted EPS
$
4.85
$
5.15
(1)
The estimated adjusted effective tax rate
excludes the potential impact of changes in uncertain tax
positions, tax impacts related to ASU 2016-09 regarding stock
compensation and valuation allowances. Refer to the reconciliation
for adjusted effective tax rate.
Reconciliation of 2023
guidance for Net income attributable to United Natural Foods, Inc.
to Adjusted EBITDA (unaudited)
Fiscal Year Ending July 29,
2023
(in millions)
Low Range
Estimate
High Range
Net income attributable to United Natural
Foods, Inc.
$
247
$
266
Provision for income taxes
86
97
LIFO charge
75
Interest expense, net
138
Depreciation and amortization
287
Share-based compensation and other
46
Net periodic benefit income, excluding
service costs
(29
)
Adjusted EBITDA
$
850
$
880
Reconciliation of estimated
2023 and actual 2022 U.S. GAAP effective tax rate to adjusted
effective tax rate (unaudited)
Estimated
Fiscal 2023
Actual Fiscal 2022
U.S. GAAP effective tax rate
23
%
18
%
Discrete quarterly recognition of GAAP
items(1)
3
%
8
%
Tax impact of other charges and
adjustments(2)
—
%
—
%
Changes in valuation allowances(3)
—
%
—
%
Other(4)
—
%
—
%
Adjusted effective tax rate(4)
26
%
26
%
Note: As part of the year-end
reconciliation, we update the reconciliation of the GAAP effective
tax rate for actual results.
(1)
Reflects changes in tax laws excluding the
CARES Act, uncertain tax positions, the tax impacts related to the
exercise of share-based compensation awards and any prior-year
deferred tax or payable adjustments. This includes prior-year
Internal Revenue Service or other tax jurisdiction audit
adjustments.
(2)
Reflects the tax impact of pre-tax
adjustments that are excluded from pre-tax income when calculating
adjusted EPS.
(3)
Reflects changes in valuation allowances
related to changes in judgment regarding the realizability of
deferred tax assets or current year operations.
(4)
The Company establishes an estimated
adjusted effective tax rate at the beginning of the fiscal year
based on the best available information. The Company re-evaluates
its estimated adjusted effective tax rate as appropriate throughout
the year and adjusts for any material changes. The actual adjusted
effective tax rate at the end of the fiscal year is based on actual
results and accordingly may differ from the estimated adjusted
effective tax rate used during the year.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221207005121/en/
INVESTOR CONTACTS: Steve Bloomquist Vice President,
Investor Relations 952-828-4144 sbloomquist@unfi.com Kristyn
Farahmand Senior Vice President, Investor Relations and
Transformation Finance 401-213-2160 kristyn.farahmand@unfi.com
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