United Natural Foods reports fiscal Q4 net income of US$25.1M, up 46.4% from year-ago period, primarily due to improvements in operational efficiency; net sales up 16% to US$1.34B
Nevin Barich
PROVIDENCE, Rhode Island
,
September 11, 2012
(press release)
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Fiscal Year 2012 Highlights
• Net sales increased 15.6% year-over-year to $5.24 billion
• Operating income increased 19.7% for fiscal 2012, or 19.0% excluding restructuring and onboarding expenses
• Operating margin improved 10 basis points to 3.0%, or 9 basis points to 3.1% excluding restructuring and onboarding expenses
• Earnings per diluted share totaled $1.86, or $1.94 excluding restructuring and onboarding expenses
Fourth Quarter Fiscal 2012 Highlights
• Fourth quarter fiscal 2012 net sales increased 16.0% over the comparable fiscal 2011 quarter to $1.34 billion
• Fourth quarter earnings per diluted share totaled $0.51
United Natural Foods, Inc. (Nasdaq: UNFI) (the "Company") today reported net sales for the fourth quarter of fiscal 2012 ended July 28, 2012 of $1.34 billion, an increase of 16.0%, or $185.0 million, compared with $1.16 billion for the comparable quarter in fiscal 2011.
Net income for the fourth quarter of fiscal 2012 increased by $8.0 million, or 46.4%, to $25.1 million compared with $17.2 million for the comparable quarter in fiscal 2011. This was primarily due to improvements in our operational efficiency, as well as pre-tax expenses of $6.3 million recognized during the fourth quarter of fiscal 2011 in connection with the restructuring of the Company's UNFI Specialty Distribution Services division ("UNFI Specialty"), including the impairment of the Company's Harrison, Arkansas facility and other expenses incurred in connection with the divestiture of the Company's general merchandise and conventional non-food lines of business (collectively the "restructuring expenses"). Excluding the restructuring expenses recognized in the fourth quarter of fiscal 2011, net income for the fourth quarter of fiscal 2012 increased by $4.2 million, or 20.1%, to $25.1 million, from $20.9 million for the comparable fiscal 2011 period. Earnings per diluted share for the fourth quarter of fiscal 2012 were $0.51, compared with $0.35 in the prior fiscal year comparable period. Earnings per diluted share for the fourth quarter of fiscal 2012 rose 18.6% to $0.51, from $0.43per diluted share for the fourth quarter of fiscal 2011 excluding the restructuring expenses recognized in that period.
Gross margin was 17.2% for the fourth quarter of fiscal 2012, representing a 41 basis point sequential decline from the gross margin of 17.6% for the third quarter of fiscal 2012. The lower gross margin was due to purchasing and logistics inefficiencies experienced in the fourth quarter of fiscal 2012, and to a lesser extent, the continued shift in the Company's customer mix to lower margin conventional supermarkets and lower fuel surcharge revenues. Gross margin for the fourth quarter of fiscal 2012 was 137 basis points lower than the prior year's comparable quarter, primarily attributable to the continued shift in UNFI's customer mix, as well as the lower fuel surcharge revenues in the fourth quarter of fiscal 2012.
Operating expenses as a percentage of net sales for the fiscal 2012 fourth quarter decreased to 14.0% from 16.0% for the prior year comparable period, in part as a result of the $6.3 million of pre-tax restructuring expenses recognized during the fiscal 2011 fourth quarter. Operating expenses as a percentage of net sales for the fourth quarter of fiscal 2012 decreased 150 basis points compared with the fiscal 2011 fourth quarter after excluding restructuring expenses recognized in that quarter. Operating income as a percentage of net sales was 3.2% for the fiscal 2012 fourth quarter, compared with 2.5% in the prior year comparable quarter. Operating income as a percentage of net sales for the fourth quarter of fiscal 2012 increased 12 basis points compared with the fiscal 2011 fourth quarter after excluding restructuring expenses recognized in that quarter.
Fiscal Year 2012 Summary
Net sales for fiscal 2012 totaled $5.24 billion, a 15.6% increase over the prior fiscal year. Diluted earnings per share were $1.86 for fiscal 2012, a 16.3% increase over $1.60 per diluted share for fiscal 2011. Excluding the restructuring expenses that were recognized in both periods and the expenses recognized in fiscal 2012 related to the onboarding of a national customer (the "onboarding expenses"), earnings per diluted share were $1.94 for fiscal 2012, a 15.5% increase over fiscal 2011 earnings per diluted share of $1.68. Earnings per diluted share for fiscal 2012 also included the additional dilutive effect of the Company's common stock offering of 4.43 million new shares completed in the first quarter of fiscal 2011.
Gross margin at 17.5% of net sales for fiscal 2012 was 72 basis points lower in fiscal 2012 than fiscal 2011, primarily as a result of the continued shift in customer mix. Total operating expenses as a percentage of net sales for fiscal 2012 were 14.5%, compared with 15.3% for the prior fiscal year. Excluding the restructuring expenses that were recognized in each period and the onboarding expenses recognized in fiscal 2012, total operating expenses were 14.4% of net sales for fiscal 2012, 81 basis points lower than the prior fiscal year. Operating income for fiscal 2012 increased by$25.5 million, or 19.7%, over fiscal 2011 to $155.2 million, resulting in an operating margin of 3.0%. Excluding the restructuring expenses that were recognized in each period and the onboarding expenses recognized in fiscal 2012, operating income increased $25.9 million, or 19.0% over fiscal 2011 to $161.8 million for fiscal 2012, resulting in an operating margin of 3.1% as a percentage of net sales.
"Fiscal 2012 was another record year for us as we continued to achieve substantial sales and earnings growth," commented Steven L. Spinner, President & Chief Executive Officer of UNFI. "Demand for our products and services continued to accelerate as our teams executed quite well against our ongoing strategies for growth. We look forward to building on these trends in fiscal year 2013."
Introduction of Fiscal 2013 Guidance
UNFI also has provided its financial outlook for fiscal 2013, ending August 3, 2013, which is a 53-week fiscal year compared with the 52-week fiscal 2012.
For fiscal 2013, the Company expects net sales in the range of approximately $5.88 to $5.98 billion, an increase of approximately 12.3% to 14.2% over fiscal 2012.
The Company estimates GAAP earnings per diluted share for fiscal 2013 in the range of approximately $2.14 to $2.24 per share, an increase of approximately 15.1% to 20.4% over fiscal 2012 GAAP earnings per diluted share of $1.86, and an increase of approximately 10.3% to 15.5% over fiscal 2012 earnings per diluted share of $1.94 excluding the restructuring and onboarding expenses described above that were recognized in fiscal 2012.
Capital expenditures for fiscal 2013 are estimated to be in the range of approximately $70 million to $80 million. The Company's forecasts are subject to numerous risks, including those described under the "Safe Harbor Statement" below.
Conference Call & Webcast
The Company's fourth quarter fiscal 2012 conference call and audio webcast will be held at 10:00 a.m. EDT on September 11, 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.
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