Exhibit 99.1
[LETTERHEAD OF UNITED NATURAL FOODS, INC.]
IMMEDIATE RELEASE
May 22, 2007
UNITED NATURAL FOODS REPORTS RECORD REVENUES OF $732.5 MILLION
FOR THE THIRD QUARTER OF FISCAL 2007 ON 15% COMPARABLE GROWTH
Updates Guidance for Fiscal 2007
Dayville, Connecticut - May 22, 2007 -- United Natural Foods, Inc. (Nasdaq:
UNFI) (the "Company") today reported net income of $13.7 million, or $0.32 per
diluted share, for the third quarter of fiscal 2007, ended April 28, 2007. The
Company reported revenues for the third quarter of fiscal 2007 of $732.5
million, an increase of $95.4 million, or 15.0%, from the $637.1 million
recorded in the third quarter of fiscal 2006. Both the supernatural and
supermarket channels of the wholesale segment contributed to the record sales,
with both channels showing comparable growth rates in excess of 20%.
For the third quarter of fiscal 2007, net income increased 11.4% to $13.7
million, or $0.32 per diluted share, compared to $12.3 million, or $0.29 per
diluted share, for the third quarter of fiscal 2006.
Gross margin as a percent of sales for the third quarter of fiscal 2007 was
17.7%, which represents a 1.2% decline from the gross margin of 18.9% for the
third quarter of fiscal 2006, ended April 29, 2006. The gross margin decline was
driven by a combination of factors. First, the Company's level of forward buying
in the Western Region during the third quarter of fiscal 2007 continued to run
below historical levels, negatively impacting gross margin by approximately $1.9
million. Second, the Company incurred an unusually high level of inventory
adjustments within broadline distribution during the quarter of approximately
$1.9 million. Third, a number of new customer agreements were in place during
the third quarter compared to the prior fiscal year. Additionally, unanticipated
delays in the completion of its previously announced strategy to acquire
emerging brands and launch new products have prevented the Company's United
Natural Brands' division from contributing the planned level of sales and
incremental gross margin expected.
For the quarter ended April 28, 2007, operating expenses were 14.3% of net
sales, or $104.8 million, an increase of $7.4 million, or 7.5%, over operating
expenses of $97.5 million, or 15.3% of net sales, for the third quarter of
fiscal 2006.
In the third quarter of fiscal 2007, the Company recorded share-based
compensation expense of $1.0 million, in accordance with Statement of Financial
Accounting Standard ("SFAS") No. 123R, Share-Based Payment, compared to $1.2
million of share-based compensation expense for the third quarter of fiscal
2006, which ended April 29, 2006.
"Our sales growth during the third quarter improved as we had expected, driven
by solid growth of over 23% in our supermarket channel. Also, growth in the
supernatural channel exceeded 20% for the quarter due to continued strong
consumer demand for natural and organic products, aided by new store openings
and our increased market share in the West," said Michael Funk, President and
Chief Executive Officer.
Mr. Funk added, "We experienced some short-term erosion of gross margin during
the quarter due to our forward buying of inventory remaining below historical
levels and specific inventory write-offs in broadline distribution, but we
remain confident that the gross margin will improve over the next two quarters
with these issues behind us."
Updates Fiscal 2007 Earnings Guidance
The Company is updating its projected revenues guidance to $2.75 billion to $2.8
billion for fiscal year 2007, ending July 28, 2007, which represents a 13% to
15% increase over fiscal 2006. In addition, the Company is revising its GAAP
guidance on earnings per share for fiscal 2007 to a range of $1.20 to $1.22 per
diluted share. Previously, on February 20, 2007, the Company had announced GAAP
earnings per share guidance of $1.25 to $1.30 per diluted share for fiscal 2007.
Excluding the impact of $2.2 million of losses related to the Company's two
Auburn, California facilities and $0.7 million in fees related to the early
termination of unused leased space and the write-off of abandoned leasehold
improvements at a facility in Minnesota, both reported in the second quarter of
fiscal 2007, the Company is revising its earnings per share guidance for fiscal
2007 to a range of $1.24 to $1.26 per diluted share. Previously, the Company
announced earnings per share guidance for fiscal 2007, excluding these items, of
a range of $1.27 to $1.30 per diluted share. Finally, the Company also
reiterated its anticipated fiscal 2007 capital expenditures guidance of $40 to
$45 million.
The Company's guidance is based on a number of assumptions, which are subject to
change and many of which are outside the Company's control. If any of these
assumptions vary, the Company's guidance may change. There can be no assurance
that the Company will achieve these results.
Conference Call
Management will conduct a conference call and audio webcast at 11:00 a.m. EDT on
May 22, 2007 to review the Company's quarterly results, market trends and future
outlook. The conference call dial-in number is (303) 262-2075. 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 was ranked by Forbes in 2005 as one of the "Best Managed Companies
in America," ranked by Fortune in 2007 and 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
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 quarterly report on Form 10-Q filed with the Commission on March
6, 2007, 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.
UNITED NATURAL FOODS, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share data)
Three months ended Nine months ended
-------------------------- ------------------------------
April 28, April 29, April 28, April 29,
2007 2006 2007 2006
--------- --------- ----------- -----------
Net sales $ 732,516 $ 637,068 $ 2,047,494 $ 1,813,790
Cost of sales 602,573 516,904 1,669,912 1,466,955
--------- --------- ----------- -----------
Gross profit 129,943 120,164 377,582 346,835
--------- --------- ----------- -----------
Operating expenses 104,670 97,318 306,689 288,887
Impairment on assets held for sale -- -- 756 --
Amortization of intangibles 148 142 437 428
--------- --------- ----------- -----------
Total operating expenses 104,818 97,460 307,882 289,315
--------- --------- ----------- -----------
Operating income 25,125 22,704 69,700 57,520
--------- --------- ----------- -----------
Other expense (income):
Interest expense 3,021 2,747 9,282 8,310
Interest income (324) (78) (618) (219)
Other, net (39) (84) 332 (207)
--------- --------- ----------- -----------
Total other expense 2,658 2,585 8,996 7,884
--------- --------- ----------- -----------
Income before income taxes 22,467 20,119 60,704 49,636
Provision for income taxes 8,762 7,819 23,675 19,035
--------- --------- ----------- -----------
Net income $ 13,705 $ 12,300 $ 37,029 $ 30,601
========= ========= =========== ===========
Per share data - basic:
Net income $ 0.32 $ 0.29 $ 0.87 $ 0.74
========= ========= =========== ===========
Weighted average basic shares of common stock 42,595 41,885 42,396 41,568
========= ========= =========== ===========
Per share data - diluted:
Net income $ 0.32 $ 0.29 $ 0.87 $ 0.73
========= ========= =========== ===========
Weighted average diluted shares of common stock 42,884 42,446 42,784 42,210
========= ========= =========== ===========
UNITED NATURAL FOODS, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands)
April 28, July 29,
2007 2006
---------- ----------
ASSETS
- ------
Current assets:
Cash and cash equivalents $ 20,544 $ 20,054
Accounts receivable, net 167,486 147,686
Notes receivable, trade, net 1,285 1,254
Inventories 302,468 257,259
Prepaid expenses and other current assets 13,822 12,596
Deferred income taxes 10,911 10,911
---------- ----------
Total current assets 516,516 449,760
---------- ----------
Property & equipment, net 163,365 163,247
Other assets:
Goodwill 79,900 78,016
Notes receivable, trade, net 2,320 2,760
Intangible assets, net 5,957 251
Other 9,535 6,561
---------- ----------
Total assets $ 777,593 $ 700,595
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable $ 134,221 102,146
Notes payable 114,001 $ 125,005
Accrued expenses and other current liabilities 33,232 34,245
Current portion of long-term debt 6,269 5,433
---------- ----------
Total current liabilities 287,723 266,829
Long-term debt, excluding current portion 67,510 59,716
Deferred income taxes 9,029 9,693
Other long-term liabilities 874 883
---------- ----------
Total liabilities 365,136 337,121
---------- ----------
Stockholders' equity:
Preferred stock, $0.01 par value, authorized 5,000 shares at
April 28, 2007 and July 29, 2006; none issued and outstanding -- --
Common stock, $0.01 par value, authorized 100,000 shares; 43,042
issued and 42,813 outstanding shares at April 28, 2007; 42,477
issued and 42,248 outstanding shares at July 29, 2006 430 425
Additional paid-in capital 162,730 149,840
Unallocated shares of Employee Stock Ownership Plan (1,257) (1,380)
Treasury stock (6,092) (6,092)
Accumulated other comprehensive (loss) income (17) 1,047
Retained earnings 256,663 219,634
---------- ----------
Total stockholders' equity 412,457 363,474
---------- ----------
Total liabilities and stockholders' equity $ 777,593 $ 700,595
========== ==========
UNITED NATURAL FOODS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
Nine months ended
----------------------
April 28, April 29,
2007 2006
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 37,029 $ 30,601
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 13,793 12,557
(Gain) loss on disposals of property & equipment 1,999 (25)
Impairment on assets held for sale 756 --
Provision for doubtful accounts 1,008 2,800
Share-based compensation 2,956 4,712
Changes in assets and liabilities, net of acquired companies:
Accounts receivable (20,808) (23,215)
Inventory (43,391) (24,479)
Prepaid expenses and other assets (5,688) 1,067
Notes receivable, trade 409 (763)
Accounts payable 25,829 12,996
Accrued expenses and other current liabilities (1,393) (3,258)
--------- ---------
Net cash provided by operating activities 12,499 12,993
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (20,684) (14,804)
Purchases of acquired businesses, net of cash acquired (6,470) (3,292)
Proceeds from sale of property and equipment 5,448 57
Other investing activities (1,042) --
--------- ---------
Net cash used in investing activities (22,748) (18,039)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayments under note payable (11,004) (6,573)
Proceeds from borrowings of long-term debt 10,000 --
Proceeds from exercise of stock options 7,086 17,879
Increase (decrease) in bank overdraft 6,246 (7,397)
Repayments on long-term debt (4,438) (4,401)
Tax benefit from exercise of stock options 2,853 5,485
Principal payments of capital lease obligations (4) (409)
Purchases of treasury stock -- (6,092)
--------- ---------
Net cash provided by (used in) financing activities 10,739 (1,508)
--------- ---------
NET INCREASE (DECREASE) IN CASH 490 (6,554)
Cash at beginning of period 20,054 12,615
--------- ---------
Cash at end of period $ 20,544 $ 6,061
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Supplemental disclosures of cash flow information:
Interest paid, net of amounts capitalized $ 9,235 $ 8,021
========= =========
Federal and state income taxes paid, net of refunds $ 19,771 $ 14,993
========= =========