PROVIDENCE, R.I., Oct. 1,
2019 /PRNewswire/ -- United Natural Foods, Inc. (NYSE:
UNFI) (the "Company" or "UNFI") today reported financial results
for the fourth quarter and fiscal year ended August 3,
2019.
Highlights
- Fourth Quarter Net Sales Increased to $6.41 billion, or 2.8% when excluding the
contribution from SUPERVALU and the additional week in the quarter
compared to last year's fourth quarter
- Fourth Quarter Net income of $18.9
million
- Fourth Quarter Earnings Per Diluted Share (EPS) of
$0.36; Adjusted EPS of $0.44
- Net outstanding debt decreased by $166 million since the end of the third quarter
and $353 million since the end of the
first quarter
|
Fourth Quarter
Ended
|
|
Fiscal
Year
|
|
($ in thousands,
except for per share data)
|
August 3,
2019
(14
weeks)
|
|
July 28,
2018
(13
weeks)
|
|
August 3,
2019
(53
weeks)
|
|
Net
sales
|
$
|
6,407,086
|
|
|
$
|
2,592,248
|
|
|
$
|
21,387,068
|
|
|
Net Income
(Loss)
|
$
|
18,937
|
|
|
$
|
32,788
|
|
|
$
|
(284,990)
|
|
|
Adjusted
EBITDA(1)
|
$
|
165,542
|
|
|
$
|
85,064
|
|
|
$
|
562,484
|
|
|
Earnings (Loss)
Per Diluted Share (EPS)
|
$
|
0.36
|
|
|
$
|
0.64
|
|
|
$
|
(5.56)
|
|
|
Adjusted Earnings
Per Diluted Share (EPS) (1)
|
$
|
0.44
|
|
|
$
|
0.76
|
|
|
$
|
2.08
|
|
|
|
|
(1)
|
Please refer to the
tables in this press release for a reconciliation of these non-GAAP
financial measures to the most directly comparable financial
measure calculated in accordance with U.S. GAAP.
|
"This past fiscal year has been a transformational one for us as
we began realizing some of the key benefits and competitive
advantages from the SUPERVALU acquisition that will be the
foundation of our long-term success," said Steven L. Spinner, Chairman and Chief Executive
Officer. "As we begin the new fiscal year, I see tremendous focus
and enthusiasm across the organization as we execute our
strategy. This passion will be a tailwind as we drive to
accelerate cross-selling efforts, realize new cost efficiencies,
aggressively pay down debt and deliver results in the quarters to
come."
Fourth Quarter Fiscal 2019 Summary
Net sales from continuing operations by customer channel
for the fourth quarter of fiscal 2019 compared to the fourth
quarter of fiscal 2018 were as follows ($ in millions):
|
|
|
|
Comparable
13-Week
Legacy UNFI
% Growth
|
|
Fourth Quarter
Ended
|
|
Customer
Channel
|
|
Total %
Growth
|
|
|
August 3,
2019
(14
weeks)
|
|
July 28,
2018
(13
weeks)(1)
|
|
Supermarkets
|
|
473.5%
|
|
(0.9)%
|
|
$
|
4,024
|
|
|
$
|
702
|
|
|
Supernatural
|
|
18.5%
|
|
10.1%
|
|
1,164
|
|
|
982
|
|
|
Independents
|
|
26.6%
|
|
0.4%
|
|
848
|
|
|
670
|
|
|
Other
|
|
55.5%
|
|
(10.0)%
|
|
371
|
|
|
238
|
|
|
Total
|
|
147.2%
|
|
2.8%
|
|
$
|
6,407
|
|
|
$
|
2,592
|
|
|
|
|
(1)
|
During the second
quarter of fiscal 2019, the presentation of net sales by customer
channel was adjusted to reflect changes in the classification of
customer types as a result of a detailed review of customer channel
definitions. There was no impact to the Consolidated Statements of
Operations as a result of revising the classification of customer
types. As a result of this adjustment, net sales to our
supermarkets channel and to our other channel for the fourth
quarter of fiscal 2018 decreased approximately $5 million and $14
million, respectively, compared to the previously reported amounts,
while net sales to the independents channel for the fourth quarter
of fiscal 2018 increased approximately $19 million compared to the
previously reported amounts.
|
Gross margin for the fourth quarter of fiscal 2019
was 12.83% of net sales compared to 14.50% of net sales for
the fourth quarter of fiscal 2018. The largest driver of
the decline in the gross margin rate was the addition of SUPERVALU
at a lower gross profit rate.
Operating expenses in the fourth quarter of fiscal
2019 were $776.9 million, or 12.13%
of net sales, compared to $316.6
million, or 12.21% of net sales in the fourth quarter of
fiscal 2018. The decrease in operating expenses as a percent of net
sales is 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 benefit was
$39.9 million in the fourth quarter
of fiscal 2019, resulting from adjustments to the purchase price
allocation undertaken in the fourth quarter related primarily to
tax assets and liabilities acquired in the SUPERVALU acquisition.
The fiscal 2019 goodwill impairment charge of $292.8 million reflects the preliminary goodwill
impairment charge of $370.9 million
and the favorable adjustments to the charge of $38.3 million in the third quarter and
$39.9 million described above.
Restructuring, acquisition and integration related
expenses in the fourth quarter of fiscal 2019 were
$19.0 million, primarily driven by
employee-related costs and charges.
Operating income was $66.3
million in the fourth quarter of fiscal 2019 and included
the benefit from a goodwill and asset impairment adjustment of
$39.9 million partially offset by
restructuring, acquisition, and integration related expenses of
$19.0 million. When excluding
these items, operating income was $45.4
million, or 0.71% of net sales, in the fourth quarter of
fiscal 2019. Operating income in the fourth quarter of fiscal
2018 was $49.8 million and included
restructuring charges and acquisition costs of $9.6 million. When excluding these items,
operating income for the fourth quarter of fiscal 2018 was
$59.4 million, or 2.29% of net sales.
The decrease in adjusted operating income, as a percent of net
sales, was driven by lower gross margins resulting from the
addition of SUPERVALU at a lower gross margin rate, partially
offset by lower operating expenses.
Interest expense, net for the fourth quarter of
fiscal 2019 was $58.8 million and
included expense of $0.3 million for
accelerated unamortized debt issuance costs and original issue
discount related to term loan prepayments made in the quarter with
asset sale proceeds. When excluding this amount, interest expense,
net was $58.5 million compared to
$4.0 million for the fourth quarter
of fiscal 2018. The increase in interest expense, net was driven by
the SUPERVALU acquisition financing.
Effective tax rate for continuing operations for the
fourth quarter of fiscal 2019 was 94.2% compared to 28.8% for the
fourth quarter of fiscal 2018. The change in the effective
tax rate for the fourth quarter compared to last year's fourth
quarter was primarily driven by purchase accounting adjustments
that impacted the goodwill impairment benefit recorded in the
quarter. The goodwill and asset impairment benefit recorded
in the fourth quarter increased the effective tax rate by
approximately 59.8%.
Net income for the fourth quarter of fiscal 2019 was
$18.9 million, including $18.0 million of net income related to
discontinued operations, compared to $32.8
million for the fourth quarter of fiscal 2018. The
decrease in net income was primarily the result of higher interest
and tax expense, partly offset by the contribution from
discontinued operations and higher operating income, including the
benefit from the goodwill and asset impairment adjustment. Net loss
for fiscal 2019 was $285.0 million
and was primarily driven by the $292.8
million goodwill and asset impairment charge and full-year
restructuring, acquisition, and integration related expenses that
totaled $153.5 million.
Earnings Per Diluted Share (EPS) was $0.36 for the fourth quarter of fiscal 2019
compared to $0.64 for the fourth
quarter of fiscal 2018. Net loss per common share for fiscal 2019
was $5.56 and was primarily driven by
the goodwill and asset impairment charge and restructuring,
acquisition, and integration related expenses.
Adjusted EBITDA for the fourth quarter of
fiscal 2019 was $165.5 million compared to
$85.1 million for
the fourth quarter of fiscal 2018. The
increase was predominantly driven by the addition of SUPERVALU.
Net debt reduction during the fourth quarter was
$166 million, primarily the result of
cash from operations and the proceeds from asset sales, net of
capital expenditures.
Fiscal 2020 Outlook (1)
|
Fiscal Year Ending
August 1, 2020
|
|
|
|
Net Sales ($ in
billions)
|
|
$23.5 -
$24.3
|
|
Net Income ($ in
millions)
|
|
$19 - $48
|
|
Earnings Per Diluted
Share (EPS)
|
|
$0.35 -
$0.89
|
|
Adjusted Earnings Per
Diluted Share (EPS) (2) (3)
|
|
$1.22 -
$1.76
|
|
Adjusted
EBITDA(3) ($ in millions)
|
|
$560 -
$600
|
|
Capital Expenditures
(% of Net Sales)
|
|
~ 1%
|
|
|
(1)
|
The outlook provided
above is for fiscal 2020 only and replaces and supersedes any and
all guidance provided prior to the date hereof covering fiscal 2020
or subsequent years. 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 will use 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 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.
|
|
(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 & Webcast
The Company's fourth
quarter and full year fiscal 2019 conference call and audio webcast
will be held today, Tuesday, October 1, 2019 at 5:00 p.m. EDT. Supplemental materials for
the call will be available at the Investors section of the
Company's website at www.unfi.com. A webcast of the
conference call will be available to the public, on a listen-only
basis, via the Internet at the Investors section of the Company's
website at www.unfi.com. The call can also be accessed at (877) 682
- 3423 (conference ID 7151199). 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 quarterly report on Form 10-Q for the period ended
October 27, 2018 filed with the
Securities and Exchange Commission (the "SEC") on December 6, 2018 and other filings the Company
makes with the SEC, and include, but are not limited to, the
Company's dependence on principal customers; the Company's
sensitivity to general economic conditions including changes in
disposable income levels and consumer spending trends; the
Company's ability to realize anticipated benefits of its
acquisitions and dispositions, in particular, its acquisition of
SUPERVALU; the possibility that restructuring, asset impairment,
and other charges and costs we may incur in connection with the
sale or closure of our retail operations will exceed our current
expectations; the potential for additional goodwill impairment
charges as a result of purchase accounting adjustments or
otherwise; the Company's reliance on the continued growth in sales
of higher margin natural and organic foods and non-food products in
comparison to lower margin conventional grocery products; increased
competition in the Company's industry as a result of increased
distribution of natural, organic and specialty products by
conventional grocery distributors and direct distribution of those
products by large retailers and online distributors; increased
competition as a result of continuing consolidation of retailers in
the natural product industry and the growth of supernatural chains;
the Company's ability to timely and successfully deploy its
warehouse management system throughout its distribution centers and
its transportation management system across the Company and to
achieve efficiencies and cost savings from these efforts; the
addition or loss of significant customers or material changes to
the Company's relationships with these customers; volatility in
fuel costs; volatility in foreign exchange rates; the Company's
sensitivity to inflationary and deflationary pressures; the
relatively low margins and economic sensitivity of the Company's
business; the potential for disruptions in the Company's supply
chain by circumstances beyond its control; the risk of interruption
of supplies due to lack of long-term contracts, severe weather,
work stoppages or otherwise; moderated supplier promotional
activity, including decreased forward buying opportunities; 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, 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, tax benefit
related to U.S. tax reform enacted in December 2017, a legal reserve adjustment,
discontinued operations store closures and other charges, net 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 net income (loss) from
continuing operations before total other expense, net, (benefit)
provision for income taxes, depreciation and amortization,
share-based compensation, goodwill and asset impairment charges,
restructuring, acquisition and integration related expenses,
inventory fair value adjustment related to the acquisition of
SUPERVALU, discontinued operations store closures and certain other
non-cash charges, net and a legal reserve adjustment. 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.
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS (unaudited)
|
|
(In thousands,
except for per share data)
|
|
|
|
Fourth Quarter
Ended
|
|
Fiscal Year
Ended
|
|
August 3,
2019
(14
weeks)
|
|
July 28,
2018
(13
weeks)
|
|
August 3,
2019
(53
weeks)
|
|
July 28,
2018
(52
weeks)
|
|
Net sales
|
$
|
6,407,086
|
|
|
$
|
2,592,248
|
|
|
$
|
21,387,068
|
|
|
$
|
10,226,683
|
|
|
Cost of
sales
|
5,584,740
|
|
|
2,216,306
|
|
|
18,602,058
|
|
|
8,703,916
|
|
|
Gross
profit
|
822,346
|
|
|
375,942
|
|
|
2,785,010
|
|
|
1,522,767
|
|
|
Operating
expenses
|
776,945
|
|
|
316,598
|
|
|
2,629,713
|
|
|
1,274,562
|
|
|
Goodwill and asset
impairment (benefit) charges
|
(39,851)
|
|
|
—
|
|
|
292,770
|
|
|
11,242
|
|
|
Restructuring,
acquisition and integration related expenses
|
18,972
|
|
|
9,587
|
|
|
153,539
|
|
|
9,738
|
|
|
Operating income
(loss)
|
66,280
|
|
|
49,757
|
|
|
(291,012)
|
|
|
227,225
|
|
|
Other expense
(income):
|
|
|
|
|
|
|
|
|
Net periodic benefit
income, excluding service cost
|
(12,035)
|
|
|
—
|
|
|
(34,726)
|
|
|
—
|
|
|
Interest expense,
net
|
58,814
|
|
|
3,965
|
|
|
179,963
|
|
|
16,025
|
|
|
Other, net
|
(1,188)
|
|
|
(240)
|
|
|
(957)
|
|
|
(1,545)
|
|
|
Total other expense,
net
|
45,591
|
|
|
3,725
|
|
|
144,280
|
|
|
14,480
|
|
|
Income (loss) from
continuing operations before income
taxes
|
20,689
|
|
|
46,032
|
|
|
(435,292)
|
|
|
212,745
|
|
|
Provision (benefit)
for income taxes
|
19,482
|
|
|
13,244
|
|
|
(84,609)
|
|
|
47,075
|
|
|
Net income (loss)
from continuing operations
|
1,207
|
|
|
32,788
|
|
|
(350,683)
|
|
|
165,670
|
|
|
Income from
discontinued operations, net of tax
|
17,953
|
|
|
—
|
|
|
65,800
|
|
|
—
|
|
|
Net income (loss)
including noncontrolling interests
|
19,160
|
|
|
32,788
|
|
|
(284,883)
|
|
|
165,670
|
|
|
Less net income
attributable to noncontrolling interests
|
(223)
|
|
|
—
|
|
|
(107)
|
|
|
—
|
|
|
Net income (loss)
attributable to United Natural Foods,
Inc.
|
$
|
18,937
|
|
|
$
|
32,788
|
|
|
$
|
(284,990)
|
|
|
$
|
165,670
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss)
per share:
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
0.02
|
|
|
$
|
0.65
|
|
|
$
|
(6.84)
|
|
|
$
|
3.28
|
|
|
Discontinued
operations
|
$
|
0.34
|
|
|
$
|
—
|
|
|
$
|
1.28
|
|
|
$
|
—
|
|
|
Basic income (loss)
per share
|
$
|
0.36
|
|
|
$
|
0.65
|
|
|
$
|
(5.56)
|
|
|
$
|
3.28
|
|
|
Diluted earnings
(loss) per share:
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
0.02
|
|
|
$
|
0.64
|
|
|
$
|
(6.84)
|
|
|
$
|
3.26
|
|
|
Discontinued
operations
|
$
|
0.33
|
|
|
$
|
—
|
|
|
$
|
1.27
|
|
|
$
|
—
|
|
|
Diluted income (loss)
per share
|
$
|
0.36
|
|
|
$
|
0.64
|
|
|
$
|
(5.56)
|
|
|
$
|
3.26
|
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
52,631
|
|
|
50,431
|
|
|
51,245
|
|
|
50,530
|
|
|
Diluted
|
52,976
|
|
|
50,901
|
|
|
51,537
|
|
|
50,837
|
|
|
UNITED NATURAL
FOODS, INC.
|
|
CONSOLIDATED
BALANCE SHEETS (unaudited)
|
|
(In thousands,
except for per share data)
|
|
|
|
August 3,
2019
|
|
July 28,
2018
|
|
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
$
|
42,350
|
|
|
$
|
23,315
|
|
|
Accounts receivable,
net
|
1,065,699
|
|
|
579,702
|
|
|
Inventories
|
2,089,416
|
|
|
1,135,775
|
|
|
Prepaid expenses and
other current assets
|
226,727
|
|
|
50,122
|
|
|
Current assets of
discontinued operations
|
143,729
|
|
|
—
|
|
|
Total current
assets
|
3,567,921
|
|
|
1,788,914
|
|
|
Property and
equipment, net
|
1,639,259
|
|
|
571,146
|
|
|
Goodwill
|
442,256
|
|
|
362,495
|
|
|
Intangible assets,
net
|
1,041,058
|
|
|
193,209
|
|
|
Deferred income
taxes
|
31,087
|
|
|
—
|
|
|
Other
assets
|
107,319
|
|
|
48,708
|
|
|
Long-term assets of
discontinued operations
|
352,065
|
|
|
—
|
|
|
Total
assets
|
$
|
7,180,965
|
|
|
$
|
2,964,472
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Accounts
payable
|
$
|
1,476,857
|
|
|
$
|
517,125
|
|
|
Accrued expenses and
other current liabilities
|
249,426
|
|
|
103,526
|
|
|
Accrued compensation
and benefits
|
148,296
|
|
|
66,132
|
|
|
Current portion of
long-term debt and capital lease obligations
|
112,103
|
|
|
12,441
|
|
|
Current liabilities
of discontinued operations
|
122,265
|
|
|
—
|
|
|
Total current
liabilities
|
2,108,947
|
|
|
699,224
|
|
|
Long-term
debt
|
2,819,050
|
|
|
308,836
|
|
|
Long-term capital
lease obligations
|
108,208
|
|
|
31,487
|
|
|
Pension and other
postretirement benefit obligations
|
237,266
|
|
|
—
|
|
|
Deferred income
taxes
|
1,042
|
|
|
44,384
|
|
|
Other long-term
liabilities
|
393,595
|
|
|
34,586
|
|
|
Long-term liabilities
of discontinued operations
|
1,923
|
|
|
—
|
|
|
Total
liabilities
|
5,670,031
|
|
|
1,118,517
|
|
|
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; 53,501 shares issued and
52,886 shares
outstanding at August 3, 2019; 51,025 issued and 50,411
shares outstanding shares at July 28, 2018
|
535
|
|
|
510
|
|
|
Additional paid-in
capital
|
530,801
|
|
|
483,623
|
|
|
Treasury stock at
cost
|
(24,231)
|
|
|
(24,231)
|
|
|
Accumulated other
comprehensive loss
|
(108,953)
|
|
|
(14,179)
|
|
|
Retained
earnings
|
1,115,519
|
|
|
1,400,232
|
|
|
Total United Natural
Foods, Inc. stockholders' equity
|
1,513,671
|
|
|
1,845,955
|
|
|
Noncontrolling
interests
|
(2,737)
|
|
|
—
|
|
|
Total stockholders'
equity
|
1,510,934
|
|
|
1,845,955
|
|
|
Total liabilities and
stockholders' equity
|
$
|
7,180,965
|
|
|
$
|
2,964,472
|
|
|
UNITED NATURAL
FOODS, INC.
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS (unaudited)
|
|
|
Fiscal Year
Ended
|
|
(In
thousands)
|
August 3,
2019
(53
weeks)
|
|
July 28,
2018
(52
weeks)
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
Net (loss) income
including noncontrolling interests
|
$
|
(284,883)
|
|
|
$
|
165,670
|
|
|
Income from
discontinued operations, net of tax
|
65,800
|
|
|
—
|
|
|
Net (loss) income
from continuing operations
|
(350,683)
|
|
|
165,670
|
|
|
Adjustments to
reconcile net (loss) income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
246,825
|
|
|
87,631
|
|
|
Share-based
compensation
|
25,551
|
|
|
25,783
|
|
|
Loss on disposal of
assets
|
2,859
|
|
|
2,820
|
|
|
Gain associated with
disposal of investment
|
—
|
|
|
(699)
|
|
|
Closed property and
other restructuring charges
|
26,875
|
|
|
—
|
|
|
Goodwill and asset
impairments
|
292,770
|
|
|
11,242
|
|
|
Net pension and other
postretirement benefit income
|
(34,553)
|
|
|
—
|
|
|
Deferred income tax
benefit
|
(60,798)
|
|
|
(14,819)
|
|
|
LIFO
charge
|
24,120
|
|
|
—
|
|
|
Change in accounting
estimate
|
—
|
|
|
(20,909)
|
|
|
Provision for
doubtful accounts
|
9,749
|
|
|
12,006
|
|
|
Loss on debt
extinguishment
|
2,903
|
|
|
—
|
|
|
Non-cash interest
expense
|
12,751
|
|
|
275
|
|
|
Changes in operating
assets and liabilities, net of acquired businesses
|
|
|
|
|
Accounts
receivable
|
52,735
|
|
|
(67,283)
|
|
|
Inventories
|
177,094
|
|
|
(108,795)
|
|
|
Prepaid expenses and
other assets
|
(43,167)
|
|
|
4,473
|
|
|
Accounts
payable
|
(40,149)
|
|
|
3,961
|
|
|
Accrued expenses,
other liabilities and other
|
(169,760)
|
|
|
7,682
|
|
|
Net cash provided by
operating activities of continuing operations
|
175,122
|
|
|
109,038
|
|
|
Net cash provided by
operating activities of discontinued operations
|
109,408
|
|
|
—
|
|
|
Net cash provided by
operating activities
|
284,530
|
|
|
109,038
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
Capital
expenditures
|
(207,817)
|
|
|
(44,608)
|
|
|
Purchases of acquired
businesses, net of cash acquired
|
(2,292,435)
|
|
|
(39)
|
|
|
Proceeds from
dispositions of assets
|
173,747
|
|
|
283
|
|
|
Proceeds from
disposal of investments
|
—
|
|
|
756
|
|
|
Payments for
long-term investment
|
(110)
|
|
|
(3,397)
|
|
|
Payment of company
owned life insurance premiums
|
(170)
|
|
|
—
|
|
|
Net cash used in
investing activities of continuing operations
|
(2,326,785)
|
|
|
(47,005)
|
|
|
Net cash provided by
investing activities of discontinued operations
|
67,998
|
|
|
—
|
|
|
Net cash used in
investing activities
|
(2,258,787)
|
|
|
(47,005)
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
Proceeds from
borrowings of long-term debt
|
1,926,642
|
|
|
—
|
|
|
Proceeds from
borrowings under revolving credit line
|
3,971,504
|
|
|
556,061
|
|
|
Proceeds from
issuance of other loans
|
22,358
|
|
|
—
|
|
|
Repayments of
borrowings under revolving credit line
|
(3,101,679)
|
|
|
(569,671)
|
|
|
Repayments of
long-term debt and capital lease obligations
|
(779,909)
|
|
|
(12,128)
|
|
|
Repurchase of common
stock
|
—
|
|
|
(24,231)
|
|
|
Proceeds from the
issuance of common stock and exercise of stock options
|
23,975
|
|
|
975
|
|
|
Payment of employee
restricted stock tax withholdings
|
(2,727)
|
|
|
(4,563)
|
|
|
Payments for debt
issuance costs
|
(62,600)
|
|
|
—
|
|
|
Net cash provided by
(used in) financing activities of continuing operations
|
1,997,564
|
|
|
(53,557)
|
|
|
Net cash used in by
financing activities of discontinued operations
|
(1,212)
|
|
|
—
|
|
|
Net cash provided by
(used in) financing activities
|
1,996,352
|
|
|
(53,557)
|
|
|
EFFECT OF EXCHANGE
RATE ON CASH
|
(143)
|
|
|
(575)
|
|
|
NET INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS
|
21,952
|
|
|
7,901
|
|
|
Cash and cash
equivalents at beginning of period
|
23,315
|
|
|
15,414
|
|
|
Cash and cash
equivalents at end of period
|
45,267
|
|
|
23,315
|
|
|
Less: cash and cash
equivalents of discontinued operations
|
(2,917)
|
|
|
—
|
|
|
Cash and cash
equivalents of continuing operations
|
$
|
42,350
|
|
|
$
|
23,315
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
Cash paid for
interest
|
$
|
183,042
|
|
|
$
|
16,471
|
|
|
Cash paid for federal
and state income taxes, net of refunds
|
$
|
77,676
|
|
|
$
|
64,042
|
|
|
SUPPLEMENTAL
NON-GAAP FINANCIAL INFORMATION
|
|
UNITED NATURAL
FOODS, INC.
|
|
|
Reconciliation of
Net Income (Loss) per Diluted Common Share to Adjusted Net Income
per Diluted Common Share
(unaudited)
|
|
|
|
Fourth Quarter
Ended
|
|
Fiscal Year
Ended
|
|
August 3,
2019
(14
weeks)
|
|
July 28,
2018
(13
weeks)
|
|
August 3,
2019
(53
weeks)
|
|
July 28,
2018
(52
weeks)
|
|
Net income (loss)
attributable to UNFI per diluted common share
|
$
|
0.36
|
|
|
$
|
0.64
|
|
|
$
|
(5.56)
|
|
|
$
|
3.26
|
|
|
Restructuring,
acquisition, and integration related
expenses(1)
|
0.36
|
|
|
0.19
|
|
|
2.99
|
|
|
0.19
|
|
|
Goodwill and asset
impairment (benefit) charges(2)
|
(0.75)
|
|
|
—
|
|
|
5.70
|
|
|
0.22
|
|
|
Loss on debt
extinguishment(3)
|
0.01
|
|
|
—
|
|
|
0.06
|
|
|
—
|
|
|
Interest expense on
senior notes(4)
|
—
|
|
|
—
|
|
|
0.06
|
|
|
—
|
|
|
Inventory fair value
adjustment(5)
|
—
|
|
|
—
|
|
|
0.20
|
|
|
—
|
|
|
Net tax benefit
related to U.S. Tax Reform(6)
|
—
|
|
|
(0.02)
|
|
|
—
|
|
|
(0.43)
|
|
|
Legal settlement
income, net of reserve adjustment(7)
|
(0.07)
|
|
|
—
|
|
|
(0.03)
|
|
|
—
|
|
|
Discontinued
operations store closures and other charges,
net(8)
|
0.17
|
|
|
—
|
|
|
0.44
|
|
|
—
|
|
|
Tax impact of
adjustments(9)
|
0.35
|
|
|
(0.06)
|
|
|
(1.78)
|
|
|
(0.13)
|
|
|
Adjusted net income
per diluted common share(10)
|
$
|
0.44
|
|
|
$
|
0.76
|
|
|
$
|
2.08
|
|
|
$
|
3.11
|
|
|
|
(Totals may not
add due to rounding)
|
|
|
(1)
|
Primarily reflects
expenses resulting from the acquisition of SUPERVALU, including
severance costs, store closure charges, and acquisition and
integration expenses.
|
|
(2)
|
Fiscal 2019 reflects
a goodwill impairment charge and the related adjustment
attributable to the SUPERVALU acquisition. Fiscal 2018 reflects
goodwill and asset impairment charges recorded related to the
previously disposed Earth Origin's Market retail
business.
|
|
(3)
|
Reflects non-cash
charges related to the acceleration of unamortized debt issuance
costs due to term loan prepayments and extinguishment charges from
the Company's term loan, which was in place prior to the
acquisition of SUPERVALU.
|
|
(4)
|
Interest expense
recorded in connection with the redemption of acquired SUPERVALU
senior notes.
|
|
(5)
|
Non-cash charge
related to the step-up in inventory values from purchase
accounting.
|
|
(6)
|
The amounts reflected
in the 13-week and 52-week period ended July 28, 2018 represents
the earnings per share impact of a $0.8
million and $21.7 million benefit, respectively,
related to the remeasurement of net deferred tax liabilities as a
result of U.S. tax reform enacted in December 2017.
|
|
(7)
|
Reflects income
received to settle a legal proceeding and a charge related to our
assessment of legal proceedings.
|
|
(8)
|
Amounts represent
store closure charges and an inventory fair value adjustment
related to discontinued operations, net of the effect of fees
received from credit card companies related to a
settlement.
|
|
(9)
|
Represents the tax
effect of the adjustments; fiscal 2018 excludes the net tax benefit
related to U.S. Tax Reform.
|
|
(10)
|
The computation of
adjusted diluted earnings per share is calculated using diluted
weighted average shares outstanding, which includes the net effect
of dilutive stock awards.
|
|
Reconciliation of
Net Income (Loss) from continuing operations and Income from
discontinued operations, net of tax
to Adjusted EBITDA (unaudited)
|
|
(in
thousands)
|
|
|
|
|
|
Fourth Quarter
Ended
|
|
Fiscal Year
Ended
|
|
August 3,
2019
(14
weeks)
|
|
July 28,
2018
(13
weeks)
|
|
August 3,
2019
(53
weeks)
|
|
July 28,
2018
(52
weeks)
|
|
Net income (loss)
from continuing operations(1)
|
$
|
1,207
|
|
|
$
|
32,788
|
|
|
$
|
(350,683)
|
|
|
$
|
165,670
|
|
|
Adjustments to
continuing operations net income (loss):
|
|
|
|
|
|
|
|
|
Total other expense,
net
|
45,591
|
|
|
3,725
|
|
|
144,280
|
|
|
14,480
|
|
|
Provision (benefit)
for income taxes
|
19,482
|
|
|
13,244
|
|
|
(84,609)
|
|
|
47,075
|
|
|
Depreciation and
amortization
|
77,045
|
|
|
21,649
|
|
|
246,825
|
|
|
87,631
|
|
|
Share-based
compensation
|
11,116
|
|
|
4,071
|
|
|
38,879
|
|
|
25,783
|
|
|
Restructuring,
acquisition, and integration related
expenses
|
18,972
|
|
|
9,587
|
|
|
153,539
|
|
|
9,738
|
|
|
Goodwill and asset
impairment (benefit) charges
|
(39,851)
|
|
|
—
|
|
|
292,770
|
|
|
11,242
|
|
|
Inventory fair value
adjustment
|
—
|
|
|
—
|
|
|
10,463
|
|
|
—
|
|
|
Legal settlement
income, net of reserve adjustment
|
(3,590)
|
|
|
—
|
|
|
(1,390)
|
|
|
—
|
|
|
Adjusted EBITDA of
discontinued operations(2)
|
35,570
|
|
|
—
|
|
|
112,410
|
|
|
$
|
—
|
|
|
Adjusted
EBITDA
|
$
|
165,542
|
|
|
$
|
85,064
|
|
|
$
|
562,484
|
|
|
$
|
361,619
|
|
|
|
|
|
|
|
|
|
|
Income from
discontinued operations, net of tax(1)
|
$
|
17,953
|
|
|
$
|
—
|
|
|
$
|
65,800
|
|
|
$
|
—
|
|
|
Adjustments to
discontinued operations net income:
|
|
|
|
|
|
|
|
|
Less net (income)
loss attributable to noncontrolling
interests(1)
|
(223)
|
|
|
—
|
|
|
(107)
|
|
|
—
|
|
|
Total other expense,
net
|
3,335
|
|
|
—
|
|
|
2,378
|
|
|
—
|
|
|
Provision for income
taxes
|
8,081
|
|
|
—
|
|
|
21,840
|
|
|
—
|
|
|
Other
expense
|
31
|
|
|
|
|
860
|
|
|
—
|
|
|
Share-based
compensation
|
310
|
|
|
—
|
|
|
1,616
|
|
|
—
|
|
|
Restructuring, store
closure and other charges, net(3)
|
6,083
|
|
|
—
|
|
|
20,023
|
|
|
—
|
|
|
Adjusted EBITDA of
discontinued operations(2)
|
$
|
35,570
|
|
|
$
|
—
|
|
|
$
|
112,410
|
|
|
$
|
—
|
|
|
|
(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 Quarterly
Report on Form 10-Q filed on June 5, 2019.
|
|
(2)
|
Adjusted EBITDA of
discontinued operations excludes $7.9 million, $0.0 million, and
$32.2 million and $0.0 million, respectively, as presented in this
table, 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. We expect to assign these
leases with the obligation to pay this rent expense to buyers of
our retail discontinued operations upon sale. 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 an inventory fair value
adjustment related to discontinued operations, net of the effect of
fees received from credit card companies related to a
settlement.
|
|
FISCAL 2020
GUIDANCE
|
|
|
|
Reconciliation of
2020 Guidance for Estimated GAAP Net Income 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 income
attributable to United Natural Foods, Inc. per diluted common
share
|
$
|
0.35
|
|
|
$
|
0.89
|
|
|
Estimated restructuring, acquisition and integration related
expenses
|
1.05
|
|
|
1.05
|
|
|
Tax impact of
adjustments
|
(0.18)
|
|
|
(0.18)
|
|
|
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 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 (FIN 48), tax impacts related to
ASU 2006-09 regarding stock compensation and valuation
allowances. Refer to the below reconciliation for adjusted
effective tax rate.
|
|
Reconciliation of
2020 Guidance for Net Income Attributable to United Natural Foods,
Inc. to Adjusted EBITDA
(unaudited)
|
|
(in
thousands)
|
|
|
|
Fiscal Year Ending
August 1, 2020
|
|
Low
Range
|
|
Estimate
|
|
High
Range
|
|
Net income
attributable to United Natural Foods, Inc.
|
$
|
19,000
|
|
|
|
|
$
|
48,000
|
|
|
Provision for income
taxes
|
17,000
|
|
|
|
|
28,000
|
|
|
Restructuring,
acquisition and integration related costs(1)
|
|
|
56,000
|
|
|
|
|
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 divestiture of retail
banners.
|
|
(2)
|
Fiscal year ending
August 1, 2020 Adjusted EBITDA includes results reflected in our
Discontinued Operations related to a certain retail business.
Management expects to divest that retail business during fiscal
2020 and will update guidance accordingly.
|
|
Reconciliation of
2020 U.S. GAAP Effective Tax Rate to Adjusted Tax Rate
(unaudited)
|
|
|
|
|
Estimated Fiscal
2020
|
|
U.S. GAAP Effective
Tax Rate
|
|
44
|
%
|
|
Discrete quarterly
recognition of GAAP items (1)
|
|
(10)
|
%
|
|
Tax impact of other
charges and adjustments (2)
|
|
(2)
|
%
|
|
Changes in valuation
allowances (3)
|
|
(3)
|
%
|
|
Adjusted Effective
Tax Rate
|
|
29
|
%
|
|
|
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 impact of stock-based
compensation under ASU 2016-09 (Improvements to Employee Share
Based Payment Accounting) 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-fourth-quarter-fiscal-2019-results-300929063.html
SOURCE United Natural Foods, Inc.