Exhibit 99.1
[LETTERHEAD OF UNITED NATURAL FOODS, INC.]
IMMEDIATE RELEASE
November 21, 2006
UNITED NATURAL FOODS ANNOUNCES DILUTED EPS OF $0.29
AND RECORD REVENUE OF $646 MILLION FOR THE FIRST QUARTER OF FISCAL 2007
Reports 12.3% increase in comparable net sales over prior year
Dayville, Connecticut - November 21, 2006 -- United Natural Foods, Inc. (Nasdaq:
UNFI) (the "Company") today reported net sales for the first quarter of fiscal
2007, ended October 28, 2006, of $646.4 million, an increase of $70.8 million,
or 12.3%, from the $575.6 million recorded in the first quarter of fiscal 2006.
The Company reported net income of $12.4 million, or $0.29 per diluted share,
for the first quarter of fiscal 2007. Net income for the first quarter of fiscal
2006, excluding special items, was $10.3 million, or $0.24 per diluted share.
Net income for the first quarter of fiscal 2006, including special items, was
$7.7 million, or $0.18 per diluted share. There were no special items for the
first quarter of fiscal 2007.
In the quarter ended October 28, 2006, the Company recorded share-based
compensation expense of $1.0 million in accordance with Statement of Financial
Accounting Standard No. 123R, Share-Based Payment. Operating expenses during the
quarter were negatively impacted by an operating loss of $0.6 million related to
its Greenwood, Indiana location of the Company's Albert's Organics division. As
a result, the Company closed this facility and began serving this market from
the Albert's Organics' Minneapolis, Minnesota facility, effective October 31,
2006.
In addition, the Company is pleased to announce that Whole Foods Market
Distribution, Inc. (Nasdaq: WFMI) has recently signed an amendment to the
seven-year primary distribution agreement announced in October 2006 between the
Company and Whole Foods Market Distribution, Inc. Under the amendment, the
Company has been named the primary wholesale natural grocery distributor to the
Southern Pacific region of Whole Foods Market, Inc. ("Whole Foods Market"),
which includes Southern California, Arizona and Southern Nevada. The Company
expects to transition this new business during January 2007. When the new Whole
Foods Market business is combined with other business gained during the 2007
first quarter, the Company expects to generate incremental revenues of
approximately $47.0 to $52.0 million during fiscal 2007, and approximately $95.0
to $105.0 million on an annualized basis.
"We are quite pleased with our results for the first quarter, and have
confidence in our ability to continue to execute our sales and operating
strategies throughout the rest of fiscal 2007" said Michael Funk, Chief
Executive Officer. "Sales growth in our supermarket channel continues to be
quite strong. Coupled with our expanded Whole Foods relationship in the Southern
Pacific region of the United States and a strong pipeline of new Whole Foods
stores expected to open in the near future, we expect to realize continued sales
momentum in this business channel."
Mr. Funk added, "Over the next twelve to twenty-one months, we look forward to
further building out our infrastructure by opening new facilities in the Pacific
Northwest, Florida and Texas markets, which we originally announced back in
August. These new facilities will significantly reduce our annual miles traveled
in those regions. In addition, we plan to continue to move forward with our
installation of warehouse technologies in our existing facilities. Combined with
our commitment to increase sales of our branded products to 5% of revenues by
the end of fiscal 2008, we remain optimistic regarding our future growth
prospects."
For the first quarter of fiscal 2006, ended October 29, 2005, share-based
compensation negatively impacted earnings by $2.5 million including special
items, or $1.5 million excluding special items. Special items in the first
quarter of fiscal 2006 consisted of incremental and redundant costs incurred
during the transition from our former warehouses and outside storage facility in
Auburn, California into our new larger facility in Rocklin, California, certain
incremental costs associated with the opening of our new Greenwood, Indiana
facility and non-recurring cash and non-cash expenses incurred in accordance
with the employment transition agreement we entered into during the quarter with
our former President and Chief Executive Officer.
The following table details the amounts and effect of special items and a
reconciliation of net income and per share amounts, excluding special items
(non-GAAP basis), to net income and per share amounts, including special items
(GAAP basis), for the first quarter of fiscal 2006:
- ------------------------------------------------------------------------------------------------
Quarter Ended October 29, 2005 Pretax Per diluted
(in thousands, except per share data) Income Net of Tax share
------ ---------- -----
Income, excluding special items: $16,646 $10,320 $0.24*
Special items - (Expense)
Employment transition agreement costs
(included in operating expenses) (3,512) (2,177) (0.05)
Rocklin, CA facility relocation costs (included
in operating expenses) (672) (416) (0.01)
Greenwood, IN facility openings costs
(included in operating expenses) (92) (57) (0.00)
- ------------------------------------------------------------------------------------------------
Income, including special items: $12,371* $7,670 $0.18
================================================================================================
* Total reflects rounding.
All non-GAAP numbers have been adjusted to exclude special items. A
reconciliation of specific adjustments to GAAP results for the quarter ended
October 29, 2005 is included in the financial table shown above. A description
of the Company's use of non-GAAP information is provided under "Non-GAAP
Results" below.
Conference Call
Management will conduct a conference call and audio webcast at 11:00 a.m. EST on
November 21, 2006 to review the Company's quarterly results, market trends and
future outlook. The conference call dial-in number is (303) 205-0033. An 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 Investor Relations section
of the Company's website at www.unfi.com. Please allow extra time prior to the
call to visit the site and download the necessary software to listen to the
Internet broadcast. The online archive of the webcast will be available for 30
days.
About United Natural Foods
United Natural Foods, Inc. carries and distributes more than 40,000 products to
more than 18,000 customers nationwide. 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 Forbes in 2005 as one of the "Best Managed
Companies in America," ranked by Fortune in 2006 as one of its "Most Admired
Companies," and ranked by Business Ethics as one of its "100 Best Corporate
Citizens for 2006." For more information on United Natural Foods, Inc., visit
the Company's website at www.unfi.com.
Financial Tables Follow
For more information on United Natural Foods, Inc., visit the Company's website
at www.unfi.com.
AT THE COMPANY: FINANCIAL RELATIONS BOARD
- --------------------------------------------------------------------------------
Mark Shamber Joseph Calabrese
Chief Financial Officer General Information
(860) 779-2800 (212) 827-3772
"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. For a discussion of such risks and uncertainties, which could
cause actual results to differ from those contained in the forward-looking
statements, including but not limited to general business conditions, the impact
of competition and our dependence on principal customers, see "Risk Factors" in
the Company's annual report on Form 10-K filed with the Commission on October
11, 2006, and its other filings under the Securities Exchange Act of 1934, as
amended. 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 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 Results: To supplement its financial statements presented on U.S.
generally accepted accounting principles ("GAAP") basis, the Company uses
non-GAAP additional measures of operating results, net income and earnings per
share adjusted to exclude special charges. The Company believes that the use of
these additional measures is appropriate to enhance an overall understanding of
its past financial performance and also its prospects for the future as these
special charges are not expected to be part of the Company's ongoing business.
The adjustments to the Company's GAAP results are made with the intent of
providing both management and investors with a more complete understanding of
the underlying operational results and trends and its marketplace performance.
For example, these adjusted non-GAAP results are among the primary indicators
management uses as a basis for its planning and forecasting of future periods.
The presentation of this additional information is not meant to be considered in
isolation or as a substitute for net earnings or diluted earnings per share
prepared in accordance with GAAP. A comparison and reconciliation from non-GAAP
to GAAP results is included in the tables within this release.
UNITED NATURAL FOODS, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share data)
Quarter ended
--------------------------
October 28, October 29,
2006 2005
----------- -----------
Net sales $ 646,433 $ 575,641
Cost of sales 522,861 465,374
----------- -----------
Gross profit 123,572 110,267
----------- -----------
Operating expenses 100,281 95,513
Amortization of intangibles 151 145
----------- -----------
Total operating expenses 100,432 95,658
----------- -----------
Operating income 23,140 14,609
----------- -----------
Other expense (income):
Interest expense 2,911 2,367
Interest income (114) (68)
Other, net (28) (61)
----------- -----------
Total other expense 2,769 2,238
----------- -----------
Income before income taxes 20,371 12,371
Provision for income taxes 7,945 4,701
----------- -----------
Net income $ 12,426 $ 7,670
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Per share data - basic:
Net income $ 0.29 $ 0.19
=========== ===========
Weighted average basic shares of common stock 42,147 41,334
=========== ===========
Per share data - diluted:
Net income $ 0.29 $ 0.18
=========== ===========
Weighted average diluted shares of common stock 42,599 42,150
=========== ===========
UNITED NATURAL FOODS, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands)
October 28, July 29,
2006 2006
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 8,416 $ 20,054
Accounts receivable, net 164,476 147,686
Notes receivable, trade, net 1,251 1,254
Inventories 300,214 257,259
Prepaid expenses and other current assets 14,856 12,596
Deferred income taxes 10,911 10,911
----------- -----------
Total current assets 500,124 449,760
Property & equipment, net 163,579 163,247
Other assets:
Goodwill 78,044 78,016
Notes receivable, trade, net 2,499 2,760
Intangible assets, net 214 251
Other 9,615 6,561
----------- -----------
Total assets $ 754,075 $ 700,595
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 138,691 $ 102,146
Notes payable 118,001 125,005
Accrued expenses and other current liabilities 36,236 34,245
Current portion of long-term debt 5,675 5,433
----------- -----------
Total current liabilities 298,603 266,829
Long-term debt, excluding current portion 68,083 59,716
Deferred income taxes 8,586 9,693
Other long-term liabilities 658 883
----------- -----------
Total liabilities 375,930 337,121
----------- -----------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value, authorized 5,000 shares at October 28,
2006 and July 29, 2006; none issued and outstanding -- --
Common stock, $0.01 par value, authorized 50,000 shares; 42,628 issued
and 42,399 outstanding shares at October 28, 2006; 42,477 issued and
42,248 outstanding shares at July 29, 2006 426 425
Additional paid-in capital 153,819 149,840
Unallocated shares of Employee Stock Ownership Plan (1,339) (1,380)
Treasury stock (6,092) (6,092)
Accumulated other comprehensive (loss) income (729) 1,047
Retained earnings 232,060 219,634
----------- -----------
Total stockholders' equity 378,145 363,474
----------- -----------
Total liabilities and stockholders' equity $ 754,075 $ 700,595
=========== ===========
UNITED NATURAL FOODS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
Quarter ended
--------------------------
October 28, October 29,
2006 2005
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 12,426 $ 7,670
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation and amortization 4,555 3,754
Loss (gain) on disposals of property & equipment 5 (9)
Provision for doubtful accounts 660 369
Share-based compensation 954 2,535
Changes in assets and liabilities, net of acquisitions:
Accounts receivable (17,450) (17,510)
Inventories (42,955) (34,749)
Prepaid expenses and other assets (6,585) (625)
Notes receivable, trade 264 (246)
Accounts payable 30,729 30,871
Accrued expenses and other current liabilities (3,914) 2,189
Income taxes payable 4,064 --
----------- -----------
Net cash used in operating activities (17,247) (5,751)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (4,760) (7,683)
Payments for acquisitions, net of cash acquired (28) (517)
Proceeds from disposals of property and equipment 19 21
----------- -----------
Net cash used in investing activities (4,769) (8,179)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 10,000 --
Net (repayments) borrowings under note payable (7,004) 15,401
Increase (decrease) in bank overdraft 5,816 (5,898)
Proceeds from exercise of stock options 2,152 1,713
Tax effect of stock options 874 1,284
Repayments on long-term debt (1,458) (1,131)
Principal payments of capital lease obligations (2) (148)
----------- -----------
Net cash provided by financing activities 10,378 11,221
----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (11,638) (2,709)
Cash and cash equivalents at beginning of period 20,054 12,615
----------- -----------
Cash and cash equivalents at end of period $ 8,416 $ 9,906
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized $ 2,996 $ 2,561
=========== ===========
Income taxes, net of refunds $ 2,639 $ 4,470
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