Exhibit 99.1
[LETTERHEAD OF UNITED NATURAL FOODS, INC.]
FOR IMMEDIATE RELEASE
August 31, 2007
UNITED NATURAL FOODS ANNOUNCES FOURTH QUARTER
AND FISCAL YEAR 2007 RESULTS;
PROVIDES FISCAL 2008 GUIDANCE
Dayville, Connecticut - August 31, 2007 -- United Natural Foods, Inc. (Nasdaq:
UNFI) (the "Company") today reported net income of $13.1 million, or $0.31 per
diluted share, for the fourth quarter of fiscal 2007, ended July 28, 2007, an
increase of 3.5% from net income of $12.7 million, or $0.30 per diluted share,
reported for the fourth quarter of fiscal 2006, ended July 29, 2006. The Company
reported net sales for the fourth quarter of fiscal 2007 of $706.8 million, an
increase of $87.0 million, or 14.0%, from the $619.8 million of net sales
recorded in the fourth quarter of fiscal 2006.
Gross margin was 18.7% for the fourth quarter of fiscal 2007, which represents a
54 basis point decline from the gross margin of 19.2% for the fourth quarter of
fiscal 2006. Gross margin in the fourth quarter of 2007 increased 94 basis
points when compared with the 17.7% gross margin reported in the third quarter
of fiscal 2007, ended April 28, 2007.
For the fourth quarter ended July 28, 2007, operating expenses were 15.3% of net
sales, or $108.2 million, an increase of $11.5 million, or 11.9%, over operating
expenses of $96.7 million, or 15.6% of net sales, for the fourth quarter of
fiscal 2006. In the fourth quarter of fiscal 2007, several items negatively
impacted the Company's operating expenses and net income. Operating expenses in
the fourth quarter of fiscal 2007 were negatively impacted by $0.9 million in
labor and other start-up expenses related to the Company's new distribution
facilities in Sarasota, Florida and Ridgefield, Washington, which are expected
to open in September and December 2007, respectively. Higher health insurance
expenses of $0.6 million and an increase in fuel costs of $0.9 million also
contributed to the increase in operating expenses as a percentage of net sales
compared to the third quarter of fiscal 2007.
In the fourth 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 $0.8
million of share-based compensation expense for the fourth quarter of fiscal
2006.
Record Full Year Results
Net sales for fiscal 2007 were $2.75 billion, an increase of 13.2%, or $320.7
million, over the $2.43 billion of net sales recorded in fiscal 2006. Gross
margin was 18.5% for fiscal 2007, which represents a 64 basis point decline from
the gross margin of 19.1% for fiscal 2006.
Net income for fiscal 2007 increased $6.9 million, or 15.9%, to $50.2 million,
or $1.17 per diluted share, from $43.3 million, or $1.02 per diluted share, for
fiscal 2006.
Fiscal year 2007 operating expenses were 15.1% of net sales, or $416.1 million,
an increase of $30.1 million, or 7.8%, over operating expenses of $386.0
million, or 15.9% of net sales, for fiscal 2006.
Operating expenses during fiscal 2007 were negatively impacted by approximately
$2.2 million of losses related to the Company's two Auburn, California
facilities, $0.7 million in fees and abandoned leasehold improvements and $0.9
million in labor and other start-up expenses related to the Company's new
distribution facilities in Sarasota, Florida and Ridgefield, Washington.
Operating expenses in fiscal 2006 were negatively impacted by $3.5 million in
expenses related to an employment transition agreement entered into with a
former executive and $0.9 million in costs incurred during the transition from
our former warehouses and outside storage facility in Auburn, California into
our facility in Rocklin, California.
For the fiscal year ended July 28, 2007, share-based compensation expense was
$4.0 million, compared with $5.5 million for the fiscal year ended July 29,
2006.
Comments from Management
"Our sales growth in the 2007 fourth quarter remained strong and consistent with
our forecast of 13% to 15% growth." said Michael Funk, President and Chief
Executive Officer.
Mr. Funk added, "We're pleased to report that our gross margins rebounded nicely
during the quarter, as we had discussed on the third quarter earnings conference
call. I'm very impressed with the Company's ability to focus on the margin
enhancing initiatives during the fourth quarter. However, during the fourth
quarter, we incurred start-up operating costs associated with our new facilities
in Florida and the Portland, Oregon area, which will continue into the first
quarter of fiscal 2008. Nonetheless, the transportation savings and operational
efficiencies generated from these investments should benefit us during the
second half of fiscal 2008 and into the future."
"We look forward to executing on our fiscal 2008 plan which will deliver
shareholders a 19 to 24% increase in earnings and top line growth between 11%
and 14%," Mr. Funk concluded.
Announces Fiscal 2008 Guidance
The Company also has provided its financial outlook for fiscal 2008, ending
August 2, 2008.
For fiscal 2008, the Company expects revenues to increase by approximately 11%
to 14% from fiscal 2007 to a range of $3.05 billion to $3.13 billion. Fiscal
2008 U.S. GAAP earnings per diluted share are expected to be in the range of
$1.40 to $1.45 per share, an increase of 19% to 24% over fiscal 2007. After
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, fiscal 2008 earnings per diluted share are expected to increase 16%
to 20% over fiscal 2007 earnings per diluted share.
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.
Capital expenditures are expected to be in the range of $50 million to $55
million during fiscal 2008. Included in the Company's 2008 capital expenditures
guidance are certain costs associated with the Sarasota, Florida and Ridgefield,
Washington facilities. The Company expects to begin operating out of the
Sarasota, Florida facility in the middle of the first quarter of fiscal 2008,
and the Ridgefield, Washington facility should commence operations in the second
fiscal quarter.
Conference Call
Management will conduct a conference call and audio webcast at 11:00 a.m. EDT on
August 31, 2007 to review the Company's quarterly results, market trends and
future outlook. The conference call dial-in number is (303) 275-2170. 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 and 2007 as one of its "Most
Admired Companies," and ranked by Business Ethics as one of its "100 Best
Corporate Citizens for 2006."
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 June 7,
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)
Quarters ended Years ended
---------------------- --------------------------
July 28, July 29, July 28, July 29,
2007 2006 2007 2006
--------- --------- ----------- -----------
Net sales $ 706,786 $ 619,804 $ 2,754,280 $ 2,433,594
Cost of sales 574,791 500,729 2,244,702 1,967,684
--------- --------- ----------- -----------
Gross profit 131,995 119,075 509,578 465,910
--------- --------- ----------- -----------
Operating expenses 108,210 96,667 415,337 385,982
Impairment on assets held for sale -- -- 756 --
--------- --------- ----------- -----------
Total operating expenses 108,210 96,667 416,093 385,982
--------- --------- ----------- -----------
Operating income 23,785 22,408 93,485 79,928
--------- --------- ----------- -----------
Other expense (income):
Interest expense 2,807 2,900 12,089 11,210
Interest income (357) (78) (975) (297)
Other, net (176) (173) 156 (381)
--------- --------- ----------- -----------
Total other expense 2,274 2,649 11,270 10,532
--------- --------- ----------- -----------
Income before income taxes 21,511 19,759 82,215 69,396
Provision for income taxes 8,387 7,084 32,062 26,119
--------- --------- ----------- -----------
Net income $ 13,124 $ 12,675 $ 50,153 $ 43,277
========= ========= =========== ===========
Basic per share data:
Net income $ 0.31 $ 0.30 $ 1.18 $ 1.04
========= ========= =========== ===========
Weighted average basic shares of common stock 42,602 42,103 42,445 41,682
========= ========= =========== ===========
Diluted per share data:
Net income $ 0.31 $ 0.30 $ 1.17 $ 1.02
========= ========= =========== ===========
Weighted average diluted shares of common stock 42,847 42,572 42,786 42,304
========= ========= =========== ===========
UNITED NATURAL FOODS, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands, except per share data)
July 28, July 29,
2007 2006
---------- ----------
ASSETS
- ------
Current assets:
Cash and cash equivalents $ 17,010 $ 20,054
Accounts receivable, net 160,329 151,642
Notes receivable, trade, net 1,236 1,254
Inventories 312,377 257,259
Prepaid expenses and other current assets 8,199 5,728
Assets held for sale 5,935 6,868
Deferred income taxes 9,801 10,911
---------- ----------
Total current assets 514,887 453,716
Property and equipment, net 185,083 163,247
Other assets:
Goodwill 79,903 78,016
Notes receivable, trade, net 3,247 2,760
Intangible assets, net 8,552 251
Other 9,553 6,561
---------- ----------
Total assets $ 801,225 $ 704,551
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable $ 134,576 $ 102,146
Notes payable 120,000 125,005
Accrued expenses and other current liabilities 37,132 38,201
Current portion of long-term debt 6,934 5,433
---------- ----------
Total current liabilities 298,642 270,785
Long-term debt, excluding current portion 65,067 59,716
Deferred income taxes 9,882 9,693
Other long-term liabilities 839 883
---------- ----------
Total liabilities 374,430 341,077
---------- ----------
Stockholders' equity:
Preferred stock, $0.01 par value, authorized 5,000 shares at
July 28, 2007 and July 29, 2006; none issued and outstanding -- --
Common stock, $0.01 par value, authorized 100,000 shares;
43,051 issued and 42,822 outstanding shares at July 28, 2007;
42,477 issued and 42,248 outstanding shares at July 29, 2006 431 425
Additional paid-in capital 163,473 149,840
Unallocated shares of Employee Stock Ownership Plan (1,203) (1,380)
Treasury stock (6,092) (6,092)
Accumulated other comprehensive income 399 1,047
Retained earnings 269,787 219,634
---------- ----------
Total stockholders' equity 426,795 363,474
---------- ----------
Total liabilities and stockholders' equity $ 801,225 $ 704,551
========== ==========
UNITED NATURAL FOODS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
Years ended
--------------------------
July 28, July 29,
2007 2006
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 50,153 $ 43,277
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 18,376 17,099
Loss (gain) on disposals of property and equipment 1,997 (140)
Impairment on assets held for sale 756 --
Deferred income taxes 1,707 (1,355)
Provision for doubtful accounts 1,528 2,829
Share-based compensation 3,994 5,507
Changes in assets and liabilities, net of acquisitions:
Accounts receivable (10,216) (17,934)
Inventories (52,975) (21,242)
Prepaid expenses and other assets (5,772) 4,348
Notes receivable, trade (469) (1,335)
Accounts payable 27,739 (8,936)
Accrued expenses and other current liabilities (1,308) 3,070
---------- ----------
Net cash provided by operating activities 35,510 25,188
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (46,804) (19,290)
Purchases of acquired businesses, net of cash acquired (9,303) (3,286)
Proceeds from disposals of property and equipment 5,452 224
Other investing activities (1,010) --
---------- ----------
Net cash used in investing activities (51,665) (22,352)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 10,000 --
Proceeds from exercise of stock options 7,127 18,679
Repayments on long-term debt (6,216) (5,854)
Net (repayments) borrowings under note payable (5,005) 1,431
Increase (decrease) in bank overdraft 4,691 (8,300)
Tax benefit from exercises of stock options 2,518 5,312
Principal payments of capital lease obligations (4) (573)
Purchases of treasury stock -- (6,092)
---------- ----------
Net cash provided by financing activities 13,111 4,603
---------- ----------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (3,044) 7,439
Cash and cash equivalents at beginning of period 20,054 12,615
---------- ----------
Cash and cash equivalents at end of period $ 17,010 $ 20,054
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest paid, net of amounts capitalized $ 11,877 $ 10,352
========== ==========
Federal and state income taxes paid, net of refunds $ 28,607 $ 21,485
========== ==========