UNITED NATURAL FOODS INC (UNFI) SEC Filing 10-Q Quarterly report for the period ending Saturday, October 27, 2018

PDFPDF Microsoft WordWord Microsoft ExcelExcel SubscribeRSS E-mailEmail Smartphone and TabletMobile last10k.com/sec-filings/unfi/0001020859-18-000142.htm


unfilogoa07.jpg
December 6, 2018

UNITED NATURAL FOODS, INC. REPORTS FIRST QUARTER FISCAL 2019 RESULTS

Net Sales Increased 16.7% to $2.87 Billion
Provides Fiscal 2019 Guidance Inclusive of SUPERVALU

Providence, Rhode Island- December 6, 2018 -- United Natural Foods, Inc. (Nasdaq: UNFI) (the "Company" or "UNFI") today reported financial results for the first quarter of fiscal 2019 ended October 27, 2018.

First Quarter Fiscal 2019 Highlights
 
13-Week Period Ended
 
 
($ in thousands, except for per share data)
October 27,
2018
 
October 28,
2017
 
Change
Net Sales
$
2,868,156

 
$
2,457,545

 
$
410,611

16.7
 %
Net (Loss) Income
$
(19,294
)
 
$
30,505

 
$
(49,799
)
(163.2
)%
Adjusted EBITDA(1)
$
86,194

 
$
84,824

 
$
1,370

1.6
 %
(Loss) Earnings Per Diluted Share (EPS)
$
(0.38
)
 
$
0.60

 
$
(0.98
)
(163.3
)%
Adjusted EPS(1)
$
0.59

 
$
0.60

 
$
(0.01
)
(1.7
)%
(1)
Please refer to the tables in this press release for a reconciliation of non-GAAP financial measures to the most directly comparable financial measure calculated in accordance with GAAP.

"We closed on the previously announced purchase of SUPERVALU which will accelerate UNFI's transformation of food distribution throughout North America," said Steven L. Spinner, Chairman and Chief Executive Officer. "The integration of the two companies is well underway and we continue to be excited about the long-term creation of value for our shareholders we expect to deliver with this combination."

First Quarter Fiscal 2019 Summary
Net sales of continuing operations by customer channel for the first quarter of fiscal 2019 compared to the first quarter of fiscal 2018 were as follows ($ in millions):
 
 
 
 
13-Week Period Ended
Customer Channel
 
% Growth
 
October 27, 2018
 
October 28, 2017
Supernatural
 
20.4%
 
$
1,027

 
$
853

Independents
 
4.4%
 
667

 
639

Supermarkets
 
0.6%
 
707

 
704

Other
 
(7.3)%
 
243

 
262

Supervalu
 
 
 
224

 

Total
 
16.7%
 
$
2,868

 
$
2,458


Gross margin for the first quarter of fiscal 2019 was 14.38% of net sales and included a $1.8 million, or 0.06% of net sales, inventory fair value adjustment charge related to the acquisition of SUPERVALU. When adjusted for this charge, gross margin in the first quarter of fiscal 2019 was 14.44% of net sales compared to 14.94% of net sales in last fiscal



The following information was filed by UNITED NATURAL FOODS INC on Thursday, December 6, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

Sentiment Analysis off   on

Filter by Sentiment:
Filter by Category:

View our Sentiment Analysis Tour
Filter by Subcategory:
Click a sentiment analysis snippet below from UNITED NATURAL FOODS INC's Management Discussions to find these positive and negative remarks within their 10-Q Quarterly report:
  • 18489023_310
    Revenue - Product
    After the valuation process is completed, the held for sale business is reported at the lower of its carrying value or fair value less cost to sell, and no additional depreciation or amortization expense is recognized.
  • 18489023_326
    Other - Other
    Risk Factors of this Quarterly Report on Form 10-Q or our other reports filed with the SEC from time to time, as the occurrence of any of these events could have an adverse effect, which may be material, on our business, results of operations and financial condition.
  • 18489023_200
    MA - Other
    This change was primarily due to an increase in cash paid for acquisitions in the 13-week period ended October 27, 2018 for the acquisition of Supervalu compared to the 13-week period ended October 28, 2017, offset in part by cash received from the sale and leaseback of two distribution centers for $149.5 million.
  • 18489023_295
    Financial - Expense
    Amortization of net actuarial loss expense recognition We recognize the amortization of net actuarial loss on the SUPERVALU Retirement Plan over the remaining life expectancy of inactive participants based on our determination that almost all of the defined benefit pension plan participants are inactive and the plan is frozen to new participants.
  • 18489023_114
    Financial - Earnings
    A significant reduction in operating earnings or the incurrence of operating losses could have a negative impact on our operating cash flow, which may limit our ability to pay down our outstanding indebtedness as planned.
  • 18489023_46
    Financial - Expense
    These costs and charges, which may be material, include severance, multiemployer plan charges and related costs.
  • 18489023_204
    Financial - Shares / Equity
    On October 6, 2017, the Company announced that its Board of Directors authorized a share repurchase program for up to $200.0 million of the Company?s outstanding common stock.
  • 18489023_218
    Other - Other
    Plan trustees typically are responsible for determining the level of benefits to be provided to participants as well as the investment of the assets and plan administration.
  • 18489023_91
    Financial - Shares / Equity
    These charges were primarily due to $33.8 million of charges related for change-in-control payments made to satisfy outstanding equity awards and severance related costs and acquisition and integration costs of approximately $31.9 million.
  • 18489023_275
    Revenue - Product
    If vendor advertising allowances were substantially reduced or eliminated, we would consider changing the volume, type and frequency of the advertising, which could increase or decrease our advertising expense.
  • 18489023_178
    Financial - Debt
    Derivatives and Hedging Activity The Company enters into interest rate swap contracts from time to time to mitigate its exposure to changes in market interest rates as part of its overall strategy to manage its debt portfolio to achieve an overall desired position of notional debt amounts subject to fixed and floating interest rates.
  • 18489023_166
    Other - Other
    Under the Term Loan Agreement, the Term Borrowers may, at their option, increase the amount of the Term B Tranche, add one or more additional tranches of term loans or add one or more additional tranches of revolving credit commitments, without the consent of any Term Lenders not participating in such additional borrowings, up to an aggregate amount of $656.25 million plus additional amounts based on satisfaction of certain leverage ratio tests, subject to certain customary conditions and applicable lenders committing to provide the additional funding.
  • 18489023_129
    MA - Other
    The ABL Credit Facility replaced the Company?s $900.0 million prior asset-based revolving credit facility (the "Former ABL Credit Facility"), and $1,475.0 million of proceeds from the ABL Credit Facility were used to finance the Supervalu acquisition and related transaction costs.
  • 18489023_28
    MA - Other
    On July 25, 2018, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") pursuant to which we agreed to acquire Supervalu for an aggregate purchase price of approximately $2.3 billion (the "Merger"), including the assumption of outstanding debt and liabilities.
  • 18489023_289
    Other - Other
    The 10-year rolling average annualized return for a portfolio of investments applied in a manner consistent with our target allocations have generated average returns of approximately 8.04 percent based on returns from 1990 to 2017.
  • 18489023_292
    Financial - Expense
    Similarly, for postretirement benefits, a 100 basis point increase in the healthcare cost trend rate would increase the accumulated postretirement benefit obligation by approximately $3.2 million as of the end of the first quarter of fiscal 2019 and would increase service and interest cost by less than $0.1 million.
  • 18489023_163
    MA - Other
    The entire amount of the net proceeds from the Term Loan Facility were used to finance the Supervalu acquisition and related transaction costs.
  • 18489023_274
    Financial - Expense
    However, if such changes were to occur, cost of sales and advertising expense could change, depending on the specific vendors involved.
  • 18489023_21
    Other - Other
    Our strategic plan is focused on increasing the type of products we distribute to our customers, including perishable products and conventional produce to "build out the store" and cover center of the store, as well as perimeter offerings.
  • 18489023_24
    MA - Other
    Following the acquisition of Whole Foods Market by Amazon.com, Inc. in August 2017, our sales to Whole Foods Market increased resulting in year-over-year growth in net sales to this customer in the first quarter of fiscal 2019 of 20% compared to the first quarter fiscal 2018.
  • 18489023_86
    Financial - Earnings
    Our gross profit as a percentage of net sales decreased to 14.38% for the 13-week period ended October 27, 2018 compared to 14.94% for the 13-week period ended October 28, 2017.
  • 18489023_156
    Financial - Debt
    The Former Term Loan Agreement included financial covenants that required (i) the ratio of the Company?s consolidated EBITDA (as defined in the Former Term Loan Agreement) minus the unfinanced portion of Capital Expenditures (as defined in the Former Term Loan Agreement) to the Company?s consolidated Fixed Charges (as defined in the Former Term Loan Agreement) to be at least 1.20 to 1.00 as of the end of any period of four fiscal quarters, (ii) the ratio of the Company?s Consolidated Funded Debt (as defined in the Former Term Loan Agreement) to the Company?s EBITDA for the four fiscal quarters most recently ended to be not more than 3.00 to 1.00 as of the end of any fiscal quarter and (iii) the ratio, expressed as a percentage, of the Company?s outstanding borrowings under the Former Term Loan Facility), divided by the Mortgaged Property Value (as defined in the Former Term Loan Agreement) to be not more than 75% at any time.
  • 18489023_27
    Other - Other
    Our continued growth has allowed us to expand our existing facilities and open new facilities in an effort to achieve increasing operating efficiencies.
  • 18489023_106
    Financial - Income
    The decrease in the effective income tax rate was primarily driven by a full year of tax savings due to the TCJA.
  • 18489023_103
    MA - Other
    As a result of the Supervalu acquisition, we acquired defined benefit pension and other postretirement benefit obligations and expect to record net periodic benefit plan income, excluding service costs, of $35 million for fiscal 2019.
  • 18489023_315
    Revenue - Product
    However, our sales and operating results may vary significantly from quarter to quarter due to factors such as changes in our operating expenses, management?s ability to execute our operating and growth strategies, personnel changes, demand for natural products, supply shortages and general economic conditions.
  • 18489023_5
    Financial - Shares / Equity
    We believe our significant scale and footprint will generate long-term shareholder value by positioning us to continue to grow sales of natural, organic, specialty, produce, and conventional grocery products across our vast network.
  • 18489023_278
    Other - Other
    Our defined benefit pension plan, the SUPERVALU Retirement Plan, and certain supplemental executive retirement plans were closed to new participants and service crediting ended for all participants as of December 31, 2007.
  • 18489023_104
    Financial - Income
    (Benefit) Provision for Income Taxes Our effective income tax rate for continuing operations was 16.6% and 41.8% for the 13-week periods ended October 27, 2018 and October 28, 2017, respectively.
  • 18489023_76
    Revenue - Product
    The increase in net sales to Whole Foods Market is primarily due to an increase in same store sales following its acquisition by Amazon.com, Inc. in August 2017 coupled with growth in new product categories, most notably the health, beauty and supplement categories.
  • 18489023_184
    Other - Other
    The agreements have an effective date of November 16, 2018 and expire at varied dates between March 2023 and October 2025.
  • 18489023_187
    Other - Other
    The agreements have an effective date of November 30, 2018 and expire at varied dates between October 2021 and October 2024.
  • 18489023_159
    Other - Other
    On October 1, 2018, the Company prepaid the $110.0 million of borrowings outstanding under the Former Term Loan Agreement utilizing borrowings under its Former ABL Credit Facility and terminated the Former Term Loan Agreement.
  • 18489023_269
    Other - Other
    The amount and timing of recognition of vendor funds as well as the amount of vendor funds to be recognized as a reduction to ending inventory requires management judgment and estimates.
  • 18489023_102
    Financial - Expense
    We expect interest expense to increase substantially in future periods due to the increased indebtedness incurred to finance the acquisition of Supervalu.
  • 18489023_268
    Other - Other
    Vendor funds that have been earned as a result of completing the required performance under the terms of the underlying agreements but for which the product has not yet been sold are recognized as reductions of inventory.
  • 18489023_299
    Financial - Cash Flow
    We believe the "full yield curve" approach reflects a greater correlation between projected benefit cash flows and the corresponding yield curve spot rates and provides a more precise measurement of interest and service costs.
  • 18489023_309
    Revenue - Product
    Evaluating the recoverability of the assets of a business classified as held for sale follows a defined order in which property and intangible assets subject to amortization are considered only after the recoverability of goodwill, indefinite lived intangible assets and other assets are assessed.
  • 18489023_179
    Other - Other
    Interest rate swap contracts are entered into for periods consistent with related underlying exposures and do not constitute positions independent of those exposures.
  • 18489023_62
    Revenue - Product
    As part of the sale, Coborn's will enter into a long-term agreement for the Company to serve as the primary supplier of the Hornbacher's locations and an expanded supply agreement for Coborn?s other locations.
  • 18489023_317
    Other - Other
    In some cases you can identify these statements by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plans," "planned," "seek," "should," "will," and "would," or similar words.
  • 18489023_157
    Other - Other
    On August 22, 2018, the Company notified its lenders of its intention to prepay its borrowings outstanding under its Former Term Loan Facility on October 1, 2018, which were approximately $110.0 million as of July 28, 2018.
  • 18489023_51
    Financial - Expense
    The assets of these retail operations were recorded at what we believe to be their estimated fair value less costs to sell.
  • 18489023_20
    Revenue - Geography
    Through these efforts, we believe that we have been able to broaden our geographic penetration, expand our customer base, enhance and diversify our product selections and increase our market share.
  • 18489023_78
    Revenue - Product
    Net sales to our independents channel increased by approximately $28 million, or 4%, during the 13-week period ended October 27, 2018 compared to the 13-week period ended October 28, 2017, and accounted for 23% and 26% of our total net sales for the 13-week period ended October 27, 2018 and October 28, 2017, respectively.
  • 18489023_229
    Other - Other
    Furthermore, if we were to significantly reduce contributions, exit certain markets or otherwise cease making contributions to these plans, it could trigger one or more partial or complete withdrawal that would require us to record a withdrawal liability.
  • 18489023_75
    Revenue - Product
    Our net sales by customer channel for the 13-week period ended October 27, 2018 and October 28, 2017 were as follows (in millions): * Reflects rounding Whole Foods Market is our only supernatural customer, and net sales to Whole Foods Market for the 13-week period ended October 27, 2018 increased by approximately $174 million, or 20%, as compared to the prior fiscal year?s comparable period, and accounted for approximately 36% of our total net sales for the 13-week period ended October 27, 2018 compared to 35% for the 13-week period ended October 28, 2017.
  • 18489023_94
    Financial - Income
    Operating (Loss) Income Reflecting the factors described above, operating income decreased approximately 134.2%, or $73.9 million, to an operating loss of $18.8 million for the 13-week period ended October 27, 2018, from operating income of $55.1 million for the 13-week period ended October 28, 2017.
  • 18489023_313
    Revenue - Product
    The sale of a business can result in the recognition of a gain or loss that differs from that anticipated prior to closing.
  • 18489023_241
    Other - Other
    (6) Represents the minimum rents payable under operating leases, excluding common area maintenance, insurance or tax payments, for which we are also obligated, offset by minimum subtenant rentals of $95.7 million total, $19.2 million, $21.1 million, $27.5 million, $11.1 million and $16.8 million, respectively.
  • 18489023_139
    Financial - Debt
    The Company had $1,327.3 million of ABL Loans as of October 27, 2018, which are presented net of debt issuance costs of $11.9 million and are included in Notes payable in the Condensed Consolidated Balance Sheet.
  • 18489023_124
    Financial - Cash Flow
    Our continued access to short-term and long-term financing through credit markets depends on numerous factors including the condition of the credit markets and our results of operations, cash flows, financial position and credit ratings.
  • 18489023_67
    Other - Other
    Supervalu has provided back-office administrative support services under transition services agreements ("TSA") with New Albertson?s, Inc. ("NAI") and Albertson?s LLC and also provide services as needed to transition and wind down the TSA with NAI and Albertson?s LLC.
  • 18489023_210
    Other - Other
    Guarantees We have outstanding guarantees and are contingently liable under other contractual arrangements.
  • 18489023_79
    Revenue - Product
    The increase in net sales in this channel is primarily due to growth in our wholesale division, which includes our broadline distribution business.
  • 18489023_81
    Revenue - Product
    The increase in net sales in this channel is primarily due to growth in our wholesale division, which includes our broadline distribution business.
  • 18489023_142
    Financial - Earnings
    The borrowings of the U.S. Borrowers under the ABL Credit Facility bear interest at rates that, at the U.S. Borrowers? option, can be either: (i) a base rate and an applicable margin, or (ii) a LIBOR rate and an applicable margin.
  • 18489023_48
    Financial - Expense
    At this time, however, we are unable to make a reasonable estimate of the amount or type of costs and charges expected to be incurred in connection with the foregoing actions.
  • 18489023_64
    Revenue - Product
    In connection with the sale of Save-A-Lot on December 5, 2016, Supervalu entered into a services agreement (the "Services Agreement") with Moran Foods, LLC ("Moran Foods"), the entity that operates the Save-A-Lot business.
  • 18489023_148
    Financial - Earnings
    The Borrowers are also required to pay a letter of credit fronting fee to each letter of credit issuer equal to 0.125% per annum of the amount available to be drawn under each such letter of credit, as well as a fee to all lenders equal to the applicable margin for LIBOR or Canadian dollar bankers? acceptance equivalent rate loans, as applicable, times the average daily amount available to be drawn under all outstanding letters of credit.
  • 18489023_216
    Other - Other
    These multiemployer plans generally provide retirement benefits to participants based on their service to contributing employers.

 Please wait while we load the requested 10-Q Quarterly Report. If it does not load, please click the link below:

 https://www.last10k.com/sec-filings/report/1020859/000102085918000142/unfi10q102718.htm

Companies may provide additional information to their SEC Filings as exhibits. Click a link below to view an exhibit that was filed with this report:

Exhibit 18.1 - LETTER REGARDING CHANGE IN ACCOUNTING PRINCIPLES

 Please wait while we load the requested exhibit. If it does not load, please click the link below:

 https://www.last10k.com/sec-filings/report/1020859/000102085918000142/exhibit181q1fy19.htm
Exhibit 31.1 - RULE 13A-14(A)/15D-14(A) CERTIFICATION

 Please wait while we load the requested exhibit. If it does not load, please click the link below:

 https://www.last10k.com/sec-filings/report/1020859/000102085918000142/exhibit311q1fy19.htm
Exhibit 31.2 - RULE 13A-14(A)/15D-14(A) CERTIFICATION

 Please wait while we load the requested exhibit. If it does not load, please click the link below:

 https://www.last10k.com/sec-filings/report/1020859/000102085918000142/exhibit312q1fy19.htm
Exhibit 32.1 - SECTION 1350 CERTIFICATION

 Please wait while we load the requested exhibit. If it does not load, please click the link below:

 https://www.last10k.com/sec-filings/report/1020859/000102085918000142/exhibit321q1fy19.htm
Exhibit 32.2 - SECTION 1350 CERTIFICATION

 Please wait while we load the requested exhibit. If it does not load, please click the link below:

 https://www.last10k.com/sec-filings/report/1020859/000102085918000142/exhibit322q1fy19.htm
  • Form Type: Quarterly
  • Number of times amended: 0
  • Accession Number: 0001020859-18-000142
  • Submitted to the SEC: Thursday, December 6, 2018 5:06:07 PM EST
  • Accepted by the SEC: Thursday, December 6, 2018
  • Period ending: October 2018
  • Industry: Wholesale Groceries General Line
Companies
 

UNFI

UNITED NATURAL FOODS INC

Sponsored links


Health Reports:
Intrinsic Value, Financial Stability and Ratios

External Resources:

External link to SEC.gov Insider Transactions
External link to Bloomberg Stock Quote
External link to StockTwits.com Social Media