UNFI Announces Fourth Quarter And Fiscal 2018 Results

UNFI Announces Fourth Quarter And Fiscal 2018 Results

Record Fiscal 2018 Net Sales of $10.23 Billion

Provides Details on Pending SUPERVALU Acquisition

PR Newswire

PROVIDENCE, R.I., Sept. 20, 2018 /PRNewswire/ -- United Natural Foods, Inc. UNFI (the "Company") today reported financial results for the fourth quarter and fiscal year ended July 28, 2018.

Fourth Quarter and Full Year Fiscal 2018 Highlights



13-Week Period Ended







Fiscal Year Ended





($ in thousands, except for per share data)

July 28,

 2018



July 29,

 2017



Change



July 28,

 2018



July 29,

 2017



Change

Net Sales

$

2,592,248





$

2,341,033





10.7

%



$

10,226,683





$

9,274,471





10.3

%

Operating Income

$

49,757





$

61,469





(19.1)

%



$

227,225





$

226,025





0.5

%

Adjusted Operating Income(1)

$

59,344





$

64,387





(7.8)

%



$

248,205





$

232,889





6.6

%

Net Income

$

32,788





$

38,869





(15.6)

%



$

165,670





$

130,155





27.3

%

Adjusted EBITDA(1)

$

80,993





$

86,508





(6.4)

%



$

335,836





$

318,940





5.3

%

Earnings Per Diluted Share (EPS)

$

0.64





$

0.76





(15.8)

%



$

3.26





$

2.56





27.3

%

Adjusted EPS(1)

$

0.76





$

0.72





5.6

%



$

3.11





$

2.57





21.0

%













































(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 GAAP.

"We continued to deliver solid top-line growth across our customer channels, demonstrating sustained strong demand for UNFI's product assortment and services. On the bottom-line, our results reflected the impact of customer mix shift and higher than anticipated freight costs, while improvement in our working capital has resulted in record free cash flow for the quarter," said Steven L. Spinner, Chairman and Chief Executive Officer. "We are on track to close the SUPERVALU transaction in the fourth quarter of calendar 2018, and our teams are hard at work planning for the integration to capture the significant synergies and strategic benefits of this transformative combination, positioning our company for growth and value creation."

Fourth Quarter Fiscal 2018 Summary

Net sales by customer channel for the fourth quarter of fiscal 2018 compared to the fourth quarter in fiscal 2017 were as follows ($ in millions):









13-Week Period Ended

Customer Channel



Y-o-Y Growth



July 28, 2018



July 29, 2017

Supernatural



27.5%



$

982





$

770



Independents



5.7%



651





616



Supermarkets



1.1%



707





699



Other



(1.5)%



252





256



Total







$

2,592





$

2,341



Other customer channel decline of 1.5% is driven primarily by the divestiture of Earth Origins Market ("Earth Origins") retail business. In the fourth quarter, the Company divested all remaining natural food retail stores that operate under the Earth Origins banner to AMCON Distributing Company.

Gross margin for the fourth quarter of fiscal 2018 was 14.50%, a decrease of 125 basis points from 15.75% for the same period last year. Gross margin was impacted by a shift in customer mix where net sales growth of our largest customer outpaced growth of other customers with higher margin and by an increase in inbound freight costs.

Operating expenses increased $19.1 million, to $326.2 million in the fourth quarter of fiscal 2018 compared to $307.1 million in the fourth quarter of fiscal 2017. The Company recorded $4.6 million of restructuring and divestiture expenses in the fourth quarter of fiscal 2018 related to the previously announced restructuring and subsequent sale of its Earth Origins retail business and approximately $5.0 million of acquisition related costs associated with the pending SUPERVALU transaction. Total operating expenses were 12.58% of net sales for the fourth quarter of fiscal 2018, a 54 basis point decrease compared to the same period last fiscal year.

Adjusted operating expenses, which exclude costs associated with the pending SUPERVALU acquisition and restructuring charges related to the Company's divestiture of Earth Origins retail business, were $316.6 million, or 12.21% of net sales, for the fourth quarter of fiscal 2018 compared to adjusted operating expenses, which exclude restructuring costs related to the Company's prior year restructuring program, of $304.2 million, or 12.99% of net sales, for the fourth quarter of fiscal 2017. The decrease in adjusted operating expenses as a percentage of net sales was primarily driven by leveraging of fixed costs.

Operating income decreased $11.7 million to $49.8 million for the fourth quarter of fiscal 2018 compared to $61.5 million for the fourth quarter of fiscal 2017.

Adjusted operating income, which excludes acquisition costs and restructuring charges noted above, decreased 7.8% to $59.3 million for the fourth quarter of fiscal 2018 compared to adjusted operating income of $64.4 million for the fourth quarter last year. The decrease in operating income was driven by gross margin headwinds, which were partially offset by leveraging fixed costs.

Effective tax rate for the fourth quarter of fiscal 2018 decreased to 28.8% from 38.8% in the same period last fiscal year. Excluding a tax benefit of $0.8 million recorded in the fourth quarter of fiscal 2018 associated with the remeasurement of U.S. net deferred tax liabilities resulting from the Tax Cuts and Jobs Act of 2017 ("Tax Act"), the Company's adjusted effective tax rate decreased to 30.6% for the fourth quarter of fiscal 2018.

Net income for the fourth quarter of fiscal 2018 decreased 15.6%, or $6.1 million, to $32.8 million from $38.9 million, for the fourth quarter of fiscal 2017.

Adjusted EBITDA for the fourth quarter of fiscal 2018 was $81.0 million, a decrease of 6.4% from Adjusted EBITDA of $86.5 million for the fourth quarter of fiscal 2017. This decline was driven by the same factors that impacted adjusted operating income.

EPS decreased $0.12 to $0.64 for the fourth quarter of fiscal 2018 compared to $0.76 for the fourth quarter of fiscal 2017.

Adjusted EPS increased $0.04, or 5.6%, to $0.76 for the fourth quarter of fiscal 2018 compared to adjusted EPS of $0.72 for the fourth quarter of fiscal 2017. Adjusted EPS benefited from a lower tax rate due to the Tax Act. However, this benefit was partially offset by the impact of customer mix shift and inbound freight costs.

Fiscal Year 2018 Sales by Channel

Net sales by customer channel for fiscal 2018 compared to fiscal 2017 were as follows ($ in millions):









Fiscal Year Ended

Customer Channel



Y-o-Y Growth



July 28, 2018



July 29, 2017

Supernatural



21.4%



$

3,758





$

3,096



Independents



6.0%



2,573





2,427



Supermarkets



4.0%



2,856





2,747



Other



3.5%



1,039





1,004



Total







$

10,227



*

$

9,274

























* Reflects rounding

Fiscal 2018 Results Compared to Guidance





FY 2018

Fiscal Year (FY) Ending July 28, 2018



Actual



Guidance

Net Sales ($ in billions)



$10.23



$10.23 - $10.28

EPS



$3.26



$3.39 - $3.44

Adjusted EPS (1)



$3.11



$3.18 - $3.23

Effective Tax Rate



22.1%



23.8% - 24.1%

Adjusted Effective Tax Rate (1)



32.3%



32.1% - 32.4%

Capital Expenditures as a % of Net Sales



0.44%



0.6% - 0.7%

Free Cash Flow(1) ($ in millions)



$65



$10 - $30











(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 measures calculated in accordance with GAAP.

Cash Flow Generation and Balance Sheet



13-Week Period Ended







Fiscal Year Ended





($ in thousands)

July 28,

 2018



July 29,

 2017



Change



July 28,

 2018



July 29,

 2017



Change

Cash Flow from Operations

$

164,638





$

117,679









$

109,472





$

280,776







Less: Capital Expenditures

14,962





16,108









44,608





56,112







Free Cash Flow

$

149,676





$

101,571





$

48,105





$

64,864





$

224,664





$

(159,800)



















































The Company's liquidity position remains strong with availability of $650.2 million, as of July 28, 2018, under its revolving credit facility.

Fiscal 2019 Outlook, Excluding Impact of the Pending SUPERVALU Acquisition





Guidance

Fiscal Year (FY) Ending August 3, 2019



FY 2019



Y-o-Y Growth



Y-o-Y Growth

52 Week Basis

Net Sales ($ in billions)



$11.1 to $11.3



8.6% to 10.5%



6.5% to 8.4%

EPS(1)



$3.35 to $3.45



2.6% to 5.7%



0.8% to 3.9%

Adjusted EPS(2)



$3.48 to $3.58



11.8% to 15.0%



9.9% to 12.0%

Effective Tax Rate



27.4% to 28.4%









Capital Expenditures as a % of Net Sales



1.5% to 1.7%









Free Cash Flow(2)($ in millions)



$40 to $70























(1) GAAP EPS includes $9.6 million of acquisition related costs associated with the pending acquisition of SUPERVALU. The Company will

likely incur substantially all of these costs even if the deal does not close in FY2019.

(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 GAAP.

Pending SUPERVALU Acquisition

  • On July 25, 2018 UNFI entered into an agreement to acquire SUPERVALU INC. ("SUPERVALU") for $32.50 per share in cash, or approximately $2.9 billion, including the assumption of outstanding debt and liabilities.
  • This combination is financially and strategically compelling as it accelerates UNFI's Build-out-the-Store strategy by expanding product portfolio in the fastest growing segments and broadening the universe of customers and suppliers.
  • The transaction is expected to achieve run-rate cost synergies, net of reverse synergies, of more than $175 million in year 3 and more than $185 million in year 4.
  • At close, the Company's leverage ratio is expected to be approximately 4.7x. The Company's leverage ratio is calculated as gross debt at close divided by trailing twelve months Adjusted EBITDA for the total enterprise. At close, normalized leverage is approximately 3.9x, and includes run-rate cost synergies and significant business adjustments. By year 3, the Company expects to de-lever to approximately 3.2x. Our long-term leverage target is 2.0x to 2.5x.
  • The size and scale of the combined company will provide continued relevance to all customers, including UNFI's largest customer. It will also reduce the Company's dependence on any one customer, while creating a larger platform for UNFI to serve customers and successfully navigate a challenging retail environment.
  • One-time costs including deal and integration costs for year one are expected to be approximately $95 million. Total one-time costs for year two and beyond are expected to be $110 million with the majority expected to be incurred in year 2.
  • The transaction is expected to close in the fourth quarter of calendar 2018.
  • A slide presentation with additional details on the transaction is available on the investor relations section of the Company's website www.unfi.com.

Investor Day

Following the expected close of the SUPERVALU acquisition, the Company plans to host and webcast an investor day in Orlando, FL on January16, 2019, to further discuss its long-term strategic objectives and opportunities. Event details will be communicated following the close of the acquisition.

Conference Call & Webcast

The Company's fourth quarter and full year fiscal 2018 conference call and audio webcast will be held today, Thursday, September 20, 2018 at 5:00 p.m. EDT. The 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 online archive of the webcast will be available on the Company's website for 120 days. Management will reference a slide presentation during prepared remarks and this presentation will be available at the Investors section of the Company's website, under "Events and Presentations."

About United Natural Foods

UNFI delivers healthier food options to people throughout the United States and Canada. UNFI distributes over 110,000 products to more than 40,000 customer locations including natural product superstores, independent retailers, conventional supermarket chains, eCommerce retailers, and food service customers. Recognized as one of the most effectively managed U.S. companies, UNFI was named in the "Management Top 250" list by the Wall Street Journal in 2017. To learn more about how UNFI is Moving Food Forward, visit www.unfi.com.



INVESTOR CONTACT:







Faten Freiha







Director, Investor Relations and Corporate Strategy







401-528-8634





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 filed with the Securities and Exchange Commission (the "SEC") on September 26, 2017 and its quarterly reports on Form 10-Q filed with the SEC on December 7, 2017, March 8, 2018, and June 7, 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 ability to effectively manage operational expenses due to higher volumes from its single supernatural customer and from conventional supermarkets in light of lower margins from these customers; the relatively low margins and economic sensitivity of the Company's business; changes in disposable income levels and consumer spending trends; the Company's reliance on the continued growth in sales of natural and organic foods and non-food products in comparison to conventional products; increased competition in the Company's industry as a result of increased distribution of natural, organic and specialty products by conventional grocery distributors and direct distribution of those products by large retailers and online distributors; the ability to identify and successfully complete acquisitions, including the Company's ability to complete the acquisition of SUPERVALU and to recognize the anticipated benefits of the business combination with SUPERVALU; 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 the 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; the Company's sensitivity to general economic conditions, including the current economic environment; the Company's sensitivity to inflationary and deflationary pressures; volatility in fuel costs; volatility in foreign exchange rates; the potential for disruptions in our supply chain by circumstances beyond the Company's control; the risk of interruption of supplies due to lack of long-term contracts, severe weather, work stoppages or otherwise; consumer demand for natural and organic products outpacing suppliers' ability to produce those products and challenges the Company may experience in obtaining sufficient amounts of products to meet customers' demands; moderated supplier promotional activity, including decreased forward buying opportunities; union-organizing activities that could cause labor relations difficulties and increased costs; management's allocation of capital and the timing of capital expenditures; and, changes in interpretations, assumptions and expectations regarding the Tax Cuts and Jobs Act ("TCJA"), including additional guidance that may be issued by federal and state taxing authorities.

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 generally accepted accounting principles ("GAAP") basis, the Company has included in this press release non-GAAP financial measures for adjusted operating expenses, adjusted operating income, adjusted EBITDA, adjusted earnings per diluted common share, adjusted effective tax rate, and free cash flow. The Company has also included in this press release non-GAAP financial measures for estimated adjusted earnings per diluted share and estimated free cash flow for the fiscal year ending August 3, 2019. The non-GAAP measures adjusted operating expenses, adjusted operating income, and adjusted earnings per diluted common share all exclude restructuring and asset impairment expenses and acquisition costs related to the pending acquisition of SUPERVALU for the fiscal 2018 periods. Adjusted earnings per diluted share also excludes a net tax benefit related to tax reform for fiscal 2018 and a gain the Company recorded for the sale of an investment in fiscal 2017. The non-GAAP measure adjusted EBITDA excludes depreciation, amortization, other expense and income, net, (which includes a gain the Company recognized on the sale of an investment for the fiscal 2017 period) income taxes, restructuring and asset impairment expenses and acquisition costs for the fiscal 2018 period. The non-GAAP measures adjusted effective tax rate exclude a net tax benefit related to tax reform. Free cash flow is cash flows from operating activities less capital expenditures. 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 and is a meaningful indication of its actual and estimated operating performance. The Company's management utilizes and plans to utilize this non-GAAP financial information to compare the Company's operating performance to comparable periods and to internally prepared projections.

 

 

UNITED NATURAL FOODS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(In thousands, except per share data)





13-Week Period Ended



Fiscal Year Ended



July 28,

 2018



July 29,

 2017



July 28,

 2018



July 29,

 2017

Net sales

$

2,592,248





$

2,341,033





$

10,226,683





$

9,274,471



Cost of sales

2,216,306





1,972,434





8,703,916





7,845,550



Gross profit

375,942





368,599





1,522,767





1,428,921



Operating expenses

321,565





304,212





1,279,529





1,196,032



Restructuring and asset impairment expenses

4,620





2,918





16,013





6,864



Total operating expenses

326,185





307,130





1,295,542





1,202,896



Operating income

49,757





61,469





227,225





226,025



Other (income) expense:















Interest expense

4,103





3,926





16,471





17,114



Interest income

(138)





(82)





(446)





(360)



Other, net

(240)





(5,912)





(1,545)





(5,152)



Total other (income) expense, net

3,725





(2,068)





14,480





11,602



Income before income taxes

46,032





63,537





212,745





214,423



Provision for income taxes

13,244





24,668





47,075





84,268



Net income

$

32,788





$

38,869





$

165,670





$

130,155



Basic per share data:















Net income

$

0.65





$

0.77





$

3.28





$

2.57



Weighted average basic shares of common stock

50,431





50,617





50,530





50,570



Diluted per share data:















Net income

$

0.64





$

0.76





$

3.26





$

2.56



Weighted average diluted shares of common stock

50,901





50,947





50,837





50,775



 

 

UNITED NATURAL FOODS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(In thousands, except per share data)







July 28,

 2018



July 29,

 2017

ASSETS









Current assets:









Cash and cash equivalents



$

23,315





$

15,414



Accounts receivable, net



579,702





525,636



Inventories



1,135,775





1,031,690



Deferred income taxes







40,635



Prepaid expenses and other current assets



50,122





49,295



Total current assets



1,788,914





1,662,670



Property and equipment, net



571,146





602,090



Goodwill



362,495





371,259



Intangible assets, net



193,209





208,289



Other assets



48,708





42,255



Total assets



$

2,964,472





$

2,886,563













LIABILITIES AND STOCKHOLDERS' EQUITY









Current liabilities:









Accounts payable



$

517,125





$

534,616



Accrued expenses and other current liabilities



169,658





157,243



Current portion of long-term debt



12,441





12,128



Total current liabilities



699,224





703,987



Notes payable



210,000





223,612



Deferred income taxes



44,384





98,833



Other long-term liabilities



27,200





28,347



Long-term debt, excluding current portion



137,709





149,863



Total liabilities



1,118,517





1,204,642



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; 51,025 shares issued and

50,411 shares outstanding at July 28, 2018; 50,622 issued and outstanding shares at July

29, 2017



510





506



Additional paid-in capital



483,623





460,011



Treasury shares



(24,231)







Accumulated other comprehensive loss



(14,179)





(13,963)



Retained earnings



1,400,232





1,235,367



Total stockholders' equity



1,845,955





1,681,921



Total liabilities and stockholders' equity



$

2,964,472





$

2,886,563



 

 

UNITED NATURAL FOODS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)



Fiscal Year Ended

(In thousands)

July 28,

 2018



July 29,

 2017

CASH FLOWS FROM OPERATING ACTIVITIES:







Net income

$

165,670





$

130,155



Adjustments to reconcile net income to net cash provided by operating activities:







Depreciation and amortization

87,631





86,051



Deferred income tax benefit

(14,819)





(1,891)



Share-based compensation

25,783





25,675



Excess tax deficit from share-based payment arrangements





1,320



Loss on disposition of assets

2,820





943



Restructuring and asset impairment

3,370





640



Goodwill impairment

7,872







Gain associated with disposal of investment

(699)





(6,106)



Change in accounting estimate

(20,909)







Provision for doubtful accounts

12,006





5,728



   Non-cash interest expense

275





175



Changes in assets and liabilities, net of acquired companies:







Accounts receivable

(67,283)





(38,757)



Inventories

(108,795)





(6,929)



Prepaid expenses and other assets

4,473





(6,383)



Accounts payable

4,395





90,217



Accrued expenses and other liabilities

7,682





(62)



Net cash provided by operating activities

109,472





280,776



CASH FLOWS FROM INVESTING ACTIVITIES:







Capital expenditures

(44,608)





(56,112)



Purchases of acquired businesses, net of cash acquired

(39)





(9,207)



Long-term investment

(3,397)





(2,000)



Proceeds from disposal of investment

756





9,192



Payment of company owned life insurance premiums





(2,000)



Proceeds from disposition of assets

283





168



Net cash used in investing activities

(47,005)





(59,959)



CASH FLOWS FROM FINANCING ACTIVITIES:







Proceeds from borrowings under revolving credit line

556,061





215,662



Repayments of borrowings under revolving credit line

(569,671)





(418,693)



Repayments of long-term debt

(12,128)





(11,546)



Repurchase of common stock

(24,231)







Decrease in bank overdraft

(434)





(7,445)



Proceeds from exercise of stock options

975





274



Payment of employee restricted stock tax withholdings

(4,563)





(1,313)



Excess tax deficit from share-based payment arrangements





(1,320)



Capitalized debt issuance costs





(180)



Net cash used in financing activities

(53,991)





(224,561)



Effect of exchange rate changes on cash and cash equivalents

(575)





565



NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

7,901





(3,179)











Cash and cash equivalents at beginning of period

15,414





18,593



Cash and cash equivalents at end of period

$

23,315





$

15,414



Supplemental disclosures of cash flow information:







Cash paid for interest

$

16,471





$

17,115



Cash paid for federal and state income taxes, net of refunds

$

64,042





$

78,984



 

 

UNITED NATURAL FOODS, INC.





Reconciliation of Operating Expenses and Operating Expenses as a Percentage of Net Sales to Adjusted Operating

Expenses and Adjusted Operating Expenses as a Percentage of Net Sales (unaudited)

(in thousands, except percentages)



















13-Week Period Ended







Fiscal Year Ended







July 28, 2018



July 29, 2017



Change



July 28, 2018



July 29, 2017



Change

Net Sales

$

2,592,248





$

2,341,033





10.7

%



$

10,226,683





$

9,274,471





10.3

%

Total operating expenses

326,185





307,130





6.2

%



1,295,542





1,202,896





7.7

%

Restructuring and asset impairment

expenses

(4,620)





(2,918)









(16,013)





(6,864)







Acquisition costs

(4,967)













(4,967)











Adjusted total operating expenses

$

316,598





$

304,212





4.1

%



$

1,274,562





$

1,196,032





6.6

%

























Total operating expenses as a

percentage of net sales

12.58

%



13.12

%







12.67

%



12.97

%





Adjusted total operating expenses as

a percentage of net sales

12.21

%



12.99

%







12.46

%



12.90

%





 

Reconciliation of Operating Income to Adjusted Operating Income (unaudited)

(in thousands, except percentages)



















13-Week Period Ended







Fiscal Year Ended







July 28,

2018



July 29,

2017



Change



July 28,

2018



July 29,

2017



Change

Operating income

$

49,757





$

61,469





(19.1)

%



$

227,225





$

226,025





0.5

%

Restructuring and asset impairment

expenses

4,620





2,918









16,013





6,864







Acquisition related costs

4,967













4,967











Adjusted operating income

$

59,344





$

64,387





(7.8)

%



$

248,205





$

232,889





6.6

%

 

 

UNITED NATURAL FOODS, INC.





Reconciliation of Net Income to Adjusted EBITDA (unaudited)

(in thousands, except percentages)



















13-Week Period Ended







Fiscal Year Ended







July 28,

2018



July 29,

2017



Change



July 28,

2018



July 29,

2017



Change

Net income

$

32,788





$

38,869





(15.6)

%



$

165,670





$

130,155





27.3

%

Depreciation and amortization

21,649





22,121









87,631





86,051







Total other (income) expense, net *

3,725





(2,068)









14,480





11,602







Provision for income taxes

13,244





24,668









47,075





84,268







Restructuring and asset impairment expenses

4,620





2,918









16,013





6,864







Acquisition related costs

4,967













4,967











Adjusted EBITDA

$

80,993





$

86,508





(6.4)

%



$

335,836





$

318,940





5.3

%

























* Other (income) expense, net for the 13-week period and fiscal year ended July 29, 2017 includes a gain of $6.1 million related to the sale of the Company's stake in Kicking Horse Coffee.

 

Reconciliation of GAAP Earnings per Diluted Common Share to Adjusted Earnings per Diluted Common Share

(unaudited)





13-Week Period Ended



Fiscal Year Ended





July 28,

2018



July 29,

2017



July 28,

2018



July 29,

2017



GAAP earnings per diluted common share

$

0.64





$

0.76





$

3.26





$

2.56





Restructuring and asset impairment expenses (1)

0.09





0.06





0.31





0.14





Acquisition costs (2)

0.10









0.10









Gain on sale of investment (3)





(0.12)









(0.12)





Tax impact of adjustments (4)

(0.06)





0.02





(0.13)





(0.01)





Net tax benefit related to U.S. Tax Reform (5)

(0.02)









(0.43)









Adjusted earnings per diluted common share

$

0.76



*

$

0.72





$

3.11





$

2.57





* includes rounding





















(1)

Represents restructuring and impairment charges, which includes a loss on the disposition of assets, primarily related to the Company's Earth Origins retail business during fiscal 2018 and severance and other employee separation costs recorded during fiscal 2017.

(2)

Acquisition costs recorded during the period related to the pending SUPERVALU acquisition.

(3)

Represents gain on sale of $6.1 million recorded in the 13-week period ended July 29, 2017 related to the sale of the Company's stake in Kicking Horse Coffee.

(4)

Represents the tax effect of adjustments, defined in (1) through (3) above, using the blended rate for the period.

(5)

Represents the earnings per share impact of $0.8 million and $21.7 million benefit for the fourth quarter and fiscal year end July 28, 2018, respectively, related to the remeasurement of net deferred tax liabilities as a result of U.S. tax reform enacted in December 2017.

 

 

UNITED NATURAL FOODS, INC.





Reconciliation of GAAP Effective Tax Rate to Non-GAAP Effective Tax Rate (unaudited)

(in thousands, except percentages)



July 28, 2018



13-Week Period

Ended



Fiscal Year Ended

Income before income taxes

$

46,032







$

212,745

















Provision for income taxes

13,244



28.8

%



47,075



22.1

%

Net tax benefit related to U.S. Tax Reform (1)

836



1.8

%



21,719



10.2

%

Adjusted provision for income taxes

$

14,080



30.6

%



$

68,794



32.3

%





(1)

Represents the impact of a $0.8 million and $21.7 million net benefit for the fourth quarter and fiscal year ended July 28, 2018, respectively, related to the remeasurement of net deferred tax liabilities as a result of U.S. tax reform enacted in December 2017.

 

FISCAL 2019 GUIDANCE





Reconciliation of 2019 Guidance for Estimated GAAP Diluted Earnings per Common Share to

Estimated Non-GAAP Adjusted Diluted Earnings per Common Share (unaudited)





Fiscal Year Ending August 3, 2019





Low Range



High Range



GAAP diluted earnings per common share

$

3.35





$

3.45





Estimated acquisition costs (1)

0.19





0.19





Tax effect of adjustments (2)

(0.05)





(0.05)





Non-GAAP adjusted diluted earnings per common share

$

3.48



*

$

3.58



*

* Includes rounding













(1)

Estimated acquisition costs that the Company will incur as a result of the pending acquisition of SUPERVALU.

(2)

Represents the tax effect of the estimated acquisition costs related to pending acquisition of SUPERVALU using the estimated rate for the reporting period.

 

Reconciliation of GAAP Operating Cash Flow to Non-GAAP Free Cash Flow

Included in Fiscal 2019 Guidance (unaudited)









Fiscal year ended August 3, 2019

($ in thousands)

Low Range

High Range

Net cash provided by operating activities

$

200,500



$

262,750



Capital expenditures

160,500



192,750



Free cash flow

$

40,000



$

70,000



 

 

UNITED NATURAL FOODS, INC.





FISCAL 2018 GUIDANCE



Reconciliation of 2018 Guidance for Estimated GAAP Diluted Earnings per Common Share to

Estimated Non-GAAP Adjusted Diluted Earnings per Common Share (unaudited)





Fiscal Year Ending July 28, 2018





Low Range



High Range



GAAP diluted earnings per common share

$

3.39





$

3.44





Restructuring and asset impairment expenses (1)

0.25





0.25





Tax impact of adjustments (2)

(0.08)





(0.08)





Net tax benefit related to U.S. Tax Reform (3)

(0.38)





(0.38)





Non-GAAP adjusted diluted earnings per common share

$

3.18





$

3.23

















(1)

Represented total estimated fiscal 2018 restructuring and impairment charges related to the Company's Earth Origins retail business which included additional restructuring charges primarily related to future exit costs of approximately $1.4 million which were expected to be incurred during the fourth quarter of fiscal 2018.

(2)

Represented the tax effect of the total estimated fiscal 2018 restructuring and impairment charges related to the Company's Earth Origins retail business using the estimated rate for the reporting period.

(3)

Represented the impact of the estimated benefit related to the remeasurement of net deferred tax liabilities as a result of U.S. tax reform enacted in December 2017.

 

Reconciliation of 2018 Guidance for Estimated GAAP Effective Tax Rate to Estimated Non-GAAP Effective Tax Rate (unaudited)













Fiscal Year Ending July 28, 2018





Low Range



High Range



Estimated GAAP Effective Tax Rate

23.8

%



24.1

%



Net tax benefit related to U.S. Tax Reform (1)

8.3

%



8.3

%



Adjusted Estimated GAAP Effective Tax Rate

32.1

%



32.4

%















(1)

Represented the impact of the estimated benefit related to the remeasurement of net deferred tax liabilities as a result of U.S. tax reform enacted in December 2017.

 

Reconciliation of GAAP Operating Cash Flow to Non-GAAP Free Cash Flow

Included in Fiscal 2018 Guidance (unaudited)









Fiscal year ended July 28, 2018

($ in thousands)

Low Range

High Range

Net cash provided by operating activities

$

66,000



$

107,000



Capital expenditures

56,000



77,000



Free cash flow

$

10,000



$

30,000



 

 

 

Cision View original content:http://www.prnewswire.com/news-releases/unfi-announces-fourth-quarter-and-fiscal-2018-results-300716418.html

SOURCE United Natural Foods, Inc.

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