United Natural Foods, Inc. Announces First Quarter Fiscal 2014 Results

  United Natural Foods, Inc. Announces First Quarter Fiscal 2014 Results

 Q1 Fiscal 2014 Diluted EPS Increased 30.2% to $0.56 from $0.43 for Q1 Fiscal
                                     2013

   Q1 Fiscal 2014 Diluted EPS Increased 21.7% over Q1 Fiscal 2013 Adjusted
                             Diluted EPS of $0.46

Business Wire

PROVIDENCE, R.I. -- December 3, 2013

United Natural Foods, Inc. (Nasdaq: UNFI) (the "Company") today reported
financial results for the first quarter of fiscal 2014 ended November2, 2013.

First Quarter Fiscal 2014 Highlights

  *Net sales increased 13.6%, or $192.0 million, to $1.6 billion compared to
    $1.4 billion in the same period last fiscal year
  *Diluted EPS was $0.56 for the first quarter of fiscal 2014, an increase of
    30.2% from $0.43 for the same period last fiscal year. When adjusting the
    prior year diluted EPS for certain items as detailed below, diluted EPS
    increased 21.7% from $0.46 for the same period last fiscal year.

"Continued demand and UNFI's focus on its core strategies delivered strong
results during the first quarter of fiscal 2014," said Steven Spinner,
President and Chief Executive Officer.

Net sales for the first quarter of fiscal 2014 increased 13.6% to $1.6 billion
from $1.4 billion in the first quarter of fiscal 2013. Gross margin was 16.9%
for the first quarter of fiscal 2014, a 20 basis point increase from gross
margin of 16.7% for the first quarter of fiscal 2013. Compared to the fourth
quarter of fiscal 2013, gross margin decreased 39 basis points primarily due
to the continued shift in customer mix to the conventional supermarket and
supernatural channels.

Total operating expenses were 13.9% as a percentage of net sales for the first
quarter of fiscal 2014, a decrease of 21 basis points compared with the first
quarter of fiscal 2013. Total operating expenses increased $23.8 million, or
11.9%, to $223.2 million in the first quarter of fiscal 2014 as compared to
$199.4 million in the first quarter of fiscal 2013, primarily due to higher
sales volume. Total operating expenses for the first quarter of fiscal 2013
included $1.6 million of expenses related to the termination of a licensing
agreement and the write-off of the associated intangible asset. Excluding
these expenses from the first quarter of fiscal 2013, total operating expenses
for the first quarter of fiscal 2014 increased 12.8%, or $25.4 million,
compared to the first quarter of fiscal 2013. Total operating expenses in the
first quarter of fiscal 2013 also included $1.0 million of expenses related to
the labor action at the Company's Auburn, Washington facility.

On a GAAP basis, operating income increased 31.3%, or $11.5 million, to $48.0
million for the first quarter of fiscal 2014 compared to $36.6 million for the
first quarter of fiscal 2013. Operating income as a percentage of net sales
for the first quarter of fiscal 2014 increased 41 basis points to 3.0%
compared to the first quarter of fiscal 2013. Adjusting operating income for
the first quarter of fiscal 2013 to exclude expenses associated with the
write-off of the intangible asset, operating income for the first quarter of
fiscal 2014 increased 25.7%, or $9.8 million, from $38.2 million for the first
quarter of fiscal 2013. Operating income as a percentage of net sales
increased 29 basis points from adjusted operating income as a percentage of
net sales of 2.7% for the first quarter of fiscal 2013.

GAAP net income for the first quarter of fiscal 2014 increased $6.2 million,
or 28.9%, to $27.8 million, or $0.56 per diluted share, from $21.5 million, or
$0.43 per diluted share, for the first quarter of fiscal 2013. Other expense,
net for the first quarter of fiscal 2013 included $4.9 million in expense
associated with an agreement to settle a multi-state unclaimed property audit.
When adjusting net income for the first quarter of fiscal 2013 for this
expense and the expenses associated with the write-off of the intangible
asset, partially offset by a net discrete tax benefit of $2.7 million
primarily related to the reversal of reserves for uncertain tax positions, net
income for the first quarter of fiscal 2014 increased $5.0 million, or 21.8%,
from $22.8 million, or $0.46 per diluted share, for the first quarter of
fiscal 2013.

"As we grow into new facilities, channels and geographies, UNFI is well
positioned to continue its growth," concluded Mr. Spinner.

Affirmed Fiscal 2014 Guidance

Based on UNFI's performance to date and the current outlook for the remainder
of fiscal 2014, UNFI is affirming its previous guidance for fiscal 2014
provided on September 12, 2013. For fiscal 2014, ending August 2, 2014, which
is a 52-week fiscal year compared with the 53-week fiscal 2013, the Company
expects net sales in the range of approximately $6.65 to $6.78 billion, an
increase of approximately 9.7% to 11.8% over fiscal 2013. Adjusting for the
53^rd week in fiscal 2013, sales growth for fiscal 2014 is expected in the
range of approximately 11.8% to 14.0%. The Company estimates GAAP earnings per
diluted share for fiscal 2014 in the range of approximately $2.40 to $2.50 per
share, an increase of approximately 10.1% to 14.7% over fiscal 2013 GAAP
earnings per diluted share of $2.18.

Conference Call & Webcast

The Company's first quarter 2014 conference call and audio webcast will be
held today, Tuesday December3, 2013 at 5:00 p.m. EST. The audio webcast of
the conference call will be available to the public, on a listen-only basis,
via the Internet 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 31,000 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 as one of its "Most Admired
Companies" and in 2012 as one of its "Most Admired American 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.

"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 and are based on current expectations and management
estimates; actual results may differ materially. The risks and uncertainties
which could impact these statements are described in the Company's filings
under the Securities Exchange Act of 1934, as amended, including its annual
report on Form 10-K filed with the Securities and Exchange Commission ("SEC")
on October 1, 2013 and other filings the Company makes with the SEC, and
include, but are not limited to, the Company's dependence on principal
customers; the Company's sensitivity to general economic conditions, including
the current economic environment, changes in disposable income levels and
consumer spending trends; the Company's ability to reduce its expenses in
amounts sufficient to offset its increased focus on sales to conventional
supermarkets and the resulting lower gross margins on the sales; the Company's
reliance on the continued growth in sales of natural and organic foods and
non-food products in comparison to conventional products; the Company's
ability to timely and successfully deploy its new warehouse management system
throughout its distribution centers; increased fuel costs; the Company's
sensitivity to inflationary and deflationary pressures; the relatively low
margins and economic sensitivity of the Company's business; the potential for
disruptions in the Company's supply chain by circumstances beyond its control;
the risk of interruption of supplies due to lack of long-term contracts,
severe weather, work stoppages or otherwise; the ability to identify and
successfully complete acquisitions of other natural, organic and specialty
food and non-food products distributors; and management's allocation of
capital and the timing of capital expenditures. 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 are based on a number of assumptions, many of which are
outside the Company's control and 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 Financial Measures: To supplement its financial statements presented
on a generally accepted accounting principles (“GAAP”) basis, the Company has
included in this press release non-GAAP financial measures (including
operating expenses, operating income, net income and earnings per diluted
share) in each case excluding certain unusual expenses as described in more
detail within this press release. The reconciliations of these non-GAAP
financial measures to the comparable GAAP financial measures are presented in
the tables appearing below labeled “Condensed Consolidated Statements of
Income with Adjustments” for the three months ended October 27, 2012. The
presentation of these non-GAAP financial measures is not intended to be
considered in isolation or as a substitute for any measure prepared in
accordance with GAAP. The Company believes that presenting its operating
expenses, operating income, net income and earnings per diluted share for the
applicable periods excluding these expenses facilitates making
period-to-period comparisons and is a meaningful indication of its operating
performance. The Company’s management utilizes this non-GAAP financial
information to compare the Company’s operating performance during the 2013
fiscal year versus the comparable periods in the 2014 fiscal year and to
internally prepared projections.


UNITED NATURAL FOODS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(In thousands, except per share data amounts)
                                            
                                               Three months ended
                                               November 2,     October 27,
                                               2013              2012
Net sales                                      $ 1,602,011       $ 1,410,037
Cost of sales                                  1,330,835        1,174,084   
Gross profit                                   271,176          235,953     
Operating expenses                             223,150           197,758
Restructuring and asset impairment             —                1,629       
expenses
Total operating expenses                       223,150          199,387     
Operating income                               48,026           36,566      
Other expense (income):
Interest expense                               1,854             978
Interest income                                (120        )     (173        )
Other, net                                     19               4,781       
Total other expense, net                       1,753            5,586       
Income before income taxes                     46,273            30,980
Provision for income taxes                     18,509           9,444       
Net income                                     $ 27,764         $ 21,536    
Basic per share data:
Net income                                     $ 0.56           $ 0.44      
Weighted average basic shares of common        49,439           49,142      
stock outstanding
Diluted per share data:
Net income                                     $ 0.56           $ 0.43      
Weighted average diluted shares of common      49,735           49,585      
stock outstanding
                                                                             


UNITED NATURAL FOODS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(In thousands, except per share amounts)
                                                             
                                               November 2,       August 3,
                                               2013              2013
ASSETS
Current assets:
Cash and cash equivalents                      $ 9,357           $ 11,111
Accounts receivable, net                       398,210           339,590
Inventories                                    838,391           702,161
Prepaid expenses and other current assets      36,192            38,534
Deferred income taxes                          23,822           23,822      
Total current assets                           1,305,972         1,115,218
Property & equipment, net                      362,298           338,594
Goodwill & intangible assets, net              269,020           251,414
Other assets                                   24,625           24,682      
Total assets                                   $ 1,961,915      $ 1,729,908 
                                                                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable                               $ 394,668         $ 283,851
Accrued expenses and other current             102,537           113,397
liabilities
Current portion of long-term debt              1,226            1,019       
Total current liabilities                      498,431           398,267
Notes payable                                  228,099           130,594
Long-term debt, excluding current portion      33,414            33,091
Deferred income taxes                          41,474            41,474
Other long-term liabilities                    27,943           27,336      
Total liabilities                              829,361          630,762     
Stockholders’ equity:
Preferred stock, $0.01 par value, authorized   —                 —
5,000 shares; none issued or outstanding
Common stock, $0.01 par value, authorized
100,000 shares; 49,609 issued and
outstanding shares at November 2, 2013;        496               493
49,330 issued and outstanding shares at
August 3, 2013
Additional paid-in capital                     386,045           380,109
Unallocated shares of Employee Stock           (43         )     (39         )
Ownership Plan
Accumulated other comprehensive loss           (1,383      )     (1,092      )
Retained earnings                              747,439          719,675     
Total stockholders’ equity                     1,132,554        1,099,146   
Total liabilities and stockholders’ equity     $ 1,961,915      $ 1,729,908 

                                                               
UNITED NATURAL FOODS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(In thousands)
                                                   
                                                     Three months ended
                                                     November 2,  October 27,
                                                     2013          2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                           $  27,764     $  21,536
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization                        11,238        10,119
Share-based compensation                             5,478         4,714
Gain on disposals of property and equipment          (67       )   (19       )
Excess tax benefits from share-based payment         (2,332    )   (30       )
arrangements
Impairment of intangible asset                       —             1,629
Unrealized loss on foreign exchange                  209           122
Provision for doubtful accounts                      933           691
Non-cash interest expense                            616           —
Changes in assets and liabilities, net of acquired
businesses:
Accounts receivable                                  (55,678   )   (30,216   )
Inventories                                          (131,765  )   (140,067  )
Prepaid expenses and other assets                    2,367         (1,463    )
Accounts payable                                     100,198       76,165
Accrued expenses and other liabilities               (8,625    )   1,360     
Net cash used in operating activities                (49,664   )   (55,459   )
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures                                 (33,247   )   (4,573    )
Purchases of acquired businesses, net of cash        (22,973   )   (9,235    )
acquired
Proceeds from disposals of property and equipment    99           20        
Net cash used in investing activities                (56,121   )   (13,788   )
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt                         (86       )   (100      )
Proceeds from borrowings under revolving credit      192,715       217,477
line
Repayments of borrowings under revolving credit      (95,210   )   (183,441  )
line
Increase in bank overdraft                           6,347         30,352
Proceeds from exercise of stock options              1,551         1,165
Payment of employee restricted stock tax             (3,422    )   (3,217    )
withholdings
Excess tax benefits from share-based payment         2,332         30
arrangements
Capitalized debt issuance costs                      —            (7        )
Net cash provided by financing activities            104,227      62,259    
EFFECT OF EXCHANGE RATE CHANGES ON CASH              (196      )   (195      )
NET DECREASE IN CASH AND CASH EQUIVALENTS            (1,754    )   (7,183    )
Cash and cash equivalents at beginning of period     11,111       16,122    
Cash and cash equivalents at end of period           $  9,357     $  8,939  
                                                                   
Supplemental disclosures of cash flow information:
Cash paid for interest                               $  1,074     $  932    
Cash paid for federal and state income taxes, net    $  5,989     $  4,113  
of refunds


UNITED NATURAL FOODS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME WITH ADJUSTMENTS
Reconciliation of GAAP Results to Non-GAAP Presentation (Unaudited)
(In thousands, except per share data)
              
                Three months ended October 27, 2012
                GAAP                       Adjustments      Adjusted
                                                                                      
Net sales       $ 1,410,037   100.00 %      $  —              $ 1,410,037   100.00 %
Cost of sales   1,174,084    83.27  %      —                1,174,084    83.27  %
Gross profit    235,953      16.73  %      —                235,953      16.73  %
Operating       197,758       14.03  %      —                 197,758       14.03  %
expenses
Restructuring
and asset       1,629        0.12   %      (1,629    ) (a)   —            —      %
impairment
expenses
Total
operating       199,387      14.14  %  *   (1,629    )       197,758      14.03  %
expenses
Operating       36,566       2.59   %      1,629            38,195       2.71   %  *
income
Other expense
(income):
Interest        978           0.07   %      —                 978           0.07   %
expense
Interest        (173        ) (0.01  )%     —                 (173        ) (0.01  )%
income
Other, net      4,781        0.34   %      (4,900    ) (b)   (119        ) (0.01  )%
Total other     5,586        0.40   %      (4,900    )       686          0.05   %
expense, net
Income before   30,980        2.20   %  *   6,529             37,509        2.66   %
income taxes
Provision for   9,444        0.67   %      5,274      (c)   14,718       1.04   %
income taxes
Net income      $ 21,536     1.53   %      $  1,255         $ 22,791     1.62   %
                                                                                      
Basic per
share data:
Net income      $ 0.44                     $  0.03          $ 0.46       *
Weighted
average basic
shares of       49,142                     —                49,142      
common stock
outstanding
                                                                                      
Diluted per
share data:
Net income      $ 0.43                     $  0.03          $ 0.46      
Weighted
average
diluted         49,585                     —                49,585      
shares of
common stock
outstanding
                                                                                      

* Total
reflects
rounding
(a) Represents expense incurred as a result of the termination of a long-term licensing
agreement and the write-off of the associated intangible asset.
(b) Represents expense incurred in connection with agreement to settle multi-state
unclaimed property audit.
(c) Represents the additional tax expense related to adjustments for the expenses
above, as well as a discrete tax benefit of $2.7 million primarily related to the
reversal of reserves for uncertain tax positions.

Contact:

AT THE COMPANY:
United Natural Foods, Inc.
Mark Shamber
Chief Financial Officer
(401) 528-8634
or
ICR
Katie Turner
General Information
(646) 277-1228