US: United Natural Foods Q1 profit climbs
By Michelle Russell | 30 November 2012
- Net profit climbs to $21.5m
- Operating from grows 40.8%
- Net sales reach $1.41bn
US distributor United Natural Foods (UNFI) has recorded an increase in first-quarter profit.
In the three months ended 27 October, net profit amounted to US$21.5m compared to earnings of $15.2m last year. Operating profit climbed 40.8% to $36.6m.
Net sales totalled $1.41bn, an increase of 15.8%, driven by the acquisitions of certain assets of three distributors completed during the first quarter.
Despite moderated inflation and higher than anticipated product shortages, strong consumer demand continued to drive steady growth for our products and services during the quarter," said Steven Spinner, president and CEO. "We anticipate growth for the holiday season should remain strong as consumers continue to move towards a healthier lifestyle."
United Natural Foods, Inc. Announces First Quarter Fiscal 2013 Results
Q1 FISCAL 2013 NET SALES INCREASED BY 15.8% OVER Q1 FISCAL 2012 TO $1.4 BILLION
PROVIDENCE, R.I., Nov. 30, 2012 /PRNewswire/ --
GAAP net income of $21.5 million for the first quarter of fiscal 2013; adjusted net income of $22.8 million, a 17.8% increase over adjusted net income for the first quarter of fiscal 2012
GAAP diluted EPS of $0.43 for the first quarter of fiscal 2013; adjusted diluted EPS of $0.46, a 16.1% increase over adjusted diluted EPS for the first quarter of fiscal 2012
United Natural Foods, Inc. (Nasdaq: UNFI) (the "Company") today reported that net sales for the first quarter of fiscal 2013, ended October 27, 2012, totaled $1.410 billion, an increase of 15.8%, or $192.6 million, over $1.217 billion in net sales recorded in the first quarter of fiscal 2012. The Company's previously-announced acquisitions of certain assets of three distributors completed during the first quarter of fiscal 2013 contributed $11.2 million in net sales during the first quarter of fiscal 2013. Excluding these incremental net sales, the Company's net sales increased by $181.4 million, or 14.9%, in the first quarter of fiscal 2013 compared to the first quarter of fiscal 2012.
"Despite moderated inflation and higher than anticipated product shortages, strong consumer demand continued to drive steady growth for our products and services during the quarter," said Steven Spinner, President and Chief Executive Officer. "We anticipate growth for the holiday season should remain strong as consumers continue to move towards a healthier lifestyle."
Total operating expenses in the first quarter of fiscal 2013 increased by $8.3 million, or 4.4%, to $199.4 million, compared to the first quarter of fiscal 2012, which had total operating expenses of $191.1 million. Total operating expenses were 14.1% as a percentage of net sales for the first quarter of fiscal 2013, a decrease of 155 basis points compared with the first quarter of fiscal 2012. Total operating expenses for the first quarter of fiscal 2013 included expenses of approximately $1.6 million related to the termination of a licensing agreement and the write-off of the associated intangible asset. Total operating expenses for the first quarter of fiscal 2012 included $5.3 million in expenses related to the restructuring and divestiture of the Company's conventional non-foods and general merchandise lines of business and $1.6 million in expenses related to the onboarding of a new national customer. Excluding these expenses in each period, operating expenses as a percentage of net sales were 14.0% for the first quarter of fiscal 2013, a decrease of 110 basis points compared with the first quarter of fiscal 2012.
Non-cash rent expense associated with the Company's previously announced new Aurora, Colorado distribution facility, which is scheduled to open in the fourth quarter of fiscal 2013, represented approximately $0.8 million in expense during the first quarter of fiscal 2013.
On a GAAP basis, operating income as a percentage of net sales increased 21.2% to 2.6% for the first quarter of fiscal 2013 from 2.1% for the first quarter of fiscal 2012. Operating income for the first quarter of fiscal 2013 was $36.6 million, an increase of approximately $10.5 million, or 40.3%, from the comparable quarter in fiscal 2012. Adjusted to exclude the expenses associated with the write-off of the intangible asset, operating income as a percentage of net sales was 2.7% for the first quarter of fiscal 2013 and is consistent with the prior year comparable quarter's operating income as a percentage of net sales adjusted to exclude the restructuring and onboarding expenses. Operating income adjusted for the items described above increased 15.8% in the first quarter of fiscal 2013 to $38.2 million compared to $33.0 million in the first quarter of fiscal 2012.
Gross margin was 16.7% for the first quarter of fiscal 2013, which represents a 110 basis point decline from gross margin of 17.8% for the first quarter of fiscal 2012. Gross margin for the first quarter of fiscal 2013 was negatively affected by higher supplier out of stocks, increased inbound freight costs as well as the Company's drive to maintain higher service levels, which together represented approximately 70% of the year over year decline. The continued shift in customer mix towards the supernatural and conventional supermarket channels also negatively impacted gross margin during the first quarter of fiscal 2013.
Other expense, net, reflects $4.9 million in expense associated with an agreement in principle to settle a multi-state unclaimed property audit primarily related to an acquisition completed in 2007. The Company finalized a settlement agreement in November, and will make payment in the second quarter of fiscal 2013.
GAAP net income for the first quarter of fiscal 2013 increased by $6.4 million, or 42.1%, to $21.5 million, or $0.43 per diluted share, from $15.2 million, or $0.31 per diluted share, for the first quarter of fiscal 2012. Earnings per diluted share, adjusted to exclude the after-tax expenses associated with the write-off of the intangible asset, the unclaimed property settlement described above and the discrete tax benefit of $2.7 million primarily related to the reversal of reserves for uncertain tax positions were $0.46 for the first quarter of fiscal 2013.
"UNFI continued to execute on its strategic plan during our first quarter," added Mr. Spinner. "I'm proud of our continued drive towards operational excellence during this very important holiday season. We are currently in the process of integrating our recent acquisitions into our existing operations, and expect all integration tasks to be completed by the end of our third quarter of fiscal 2013."
Conference Call & Webcast
The Company's first quarter fiscal 2013 conference call and audio webcast will be held at 10:00 a.m. EST on November 30, 2012. The audio webcast of the conference call will be available to the public, on a listen-only basis, via the Internet at www.earnings.com or 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 30 days.
About United Natural Foods
United Natural Foods, Inc. (http://www.unfi.com) carries and distributes more than 65,000 products to more than 27,000 customer locations throughout the United States and Canada. The Company serves a wide variety of retail formats including conventional supermarket chains, natural product superstores, independent retail operators and the food service channel. United Natural Foods, Inc. was ranked by Fortune in 2006 - 2010 and 2012 as one of its "Most Admired Companies," winner of the Supermarket News 2008 Sustainability Excellence Award, recognized by the Nutrition Business Journal for its 2009 Environment and Sustainability Award and chosen by Food Logistics Magazine as one of its 2012 Top 20 Green Providers.
For more information on United Natural Foods, Inc., visit the Company's website at 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 filed with the Securities and Exchange Commission on September 26, 2012 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 the current economic environment, changes in disposable income levels and consumer spending trends; the Company's ability to reduce its expenses in amounts sufficient to offset its increased focus on sales to conventional supermarkets and the resulting lower gross margins on the sales; the Company's reliance on the continued growth in sales of natural and organic foods and non-food products in comparison to conventional products; the Company's ability to timely and successfully deploy its new warehouse management system throughout its distribution centers; increased fuel costs; 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 ability to identify and successfully complete acquisitions of other natural, organic and specialty food and non-food products distributors; and management's allocation of capital and the timing of capital expenditures. 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 projections 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 projections are subject to change and could differ materially from final reported results. The Company may from time to time update these publicly announced projections, but it is not obligated to do so.
Non-GAAP Financial Measures: To supplement its financial statements presented on a generally accepted accounting principles ("GAAP") basis, the Company has included in this press release non-GAAP financial measures (including operating expenses, operating income, net income and earnings per diluted share) in each case excluding certain unusual expenses as described in more detail within this press release. The reconciliations of these non-GAAP financial measures to the comparable GAAP financial measures are presented in the tables appearing below labeled "Consolidated Statements of Income with Adjustments" for the three months ended October 27, 2012 and October 29, 2011. The presentation of these 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 its operating expenses, operating income, net income and earnings per diluted share for the first quarter of fiscal 2013 excluding these expenses facilitates making period-to-period comparisons and is a meaningful indication of its operating performance. The Company's management utilizes this non-GAAP financial information to compare the Company's operating performance during the 2013 fiscal year versus the comparable periods in the 2012 fiscal year and to internally prepared projections.
Original source: United Natural Foods
Companies: United Natural Foods
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