United Natural Foods, Inc. (NYSE:UNFI) Q1 2023 Earnings Conference Call December 7, 2022 8:30 AM ET Company Participants Steve Bloomquist - VP, IR Sandy Douglas - CEO John Howard - CFO Conference Call Participants John Heinbockel - Guggenheim Leah Jordan - Goldman Sachs Andrew Wolf - CL King Bill Kirk - MKM Partners Eric Larson - Seaport Research Partners Kelly Bania - BMO Capital Scott Mushkin - R5 Capital Peter Saleh - BTIG Operator Good morning, my name is Devin and I will be your conference operator for ...

First Quarter Fiscal 2023 Earnings Conference Call TM December 7, 2022 Disclaimer Certain information in this presentation and discussed on the conference call which this presentation accompanies constitutes forward-looking information within the meaning of the Private Securities Litigation Reform Act of 1995. Statements in this presentation regarding the Company's business that are not historical facts are "forward-looking statements" that involve risks and uncertainties and are based on current expectatio ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended July 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-15723 UNITED NATURAL FOODS, INC. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or o ...

United Natural Foods, Inc. (NYSE:UNFI) Q4 2022 Earnings Conference Call September 27, 2022 8:30 AM ET Company Participants Steve Bloomquist - Vice President, Investor Relations Sandy Douglas - Chief Executive Officer John Howard - Chief Financial Officer Eric Dorne - Chief Operating Officer Chris Testa - President Conference Call Participants Bill Kirk - MKM Partners John Heinbockel - Guggenheim Mark Carden - UBS Eric Larson - Seaport Research Partners Andrew Wolf - CL King Scott Mushkin - R5 Capital Anthon ...

Fourth Quarter 2022 Earnings Conference Call September 27, 2022 Disclaimer Certain information in this presentation and discussed on the conference call which this presentation accompanies constitutes forward-looking information within the meaning of the Private Securities Litigation Reform Act of 1995. Statements in this presentation 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 ...

Part I. Financial Information [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company's financial statements for the period ended April 30, 2022, show an increase in total assets to **$7.88 billion** and a rise in total liabilities to **$6.09 billion** compared to July 31, 2021, with net sales growing to **$7.24 billion** and net income attributable to the company increasing to **$67 million** for the 13-week period, while operating activities used **$31 million** in cash for the 39-week period, a significant shift from the **$336 million** provided in the prior year Condensed Consolidated Balance Sheet Highlights (in millions) | Account | April 30, 2022 | July 31, 2021 | | :--- | :--- | :--- | | **Total current assets** | $3,980 | $3,550 | | **Total assets** | $7,878 | $7,525 | | **Total current liabilities** | $2,389 | $2,487 | | **Long-term debt** | $2,377 | $2,175 | | **Total liabilities** | $6,094 | $6,011 | | **Total stockholders' equity** | $1,784 | $1,514 | Condensed Consolidated Statement of Operations Highlights (in millions) | Metric | 13-Week Period Ended April 30, 2022 | 13-Week Period Ended May 1, 2021 | | :--- | :--- | :--- | | Net sales | $7,242 | $6,631 | | Gross profit | $1,012 | $970 | | Operating income | $123 | $92 | | Net income attributable to UNFI | $67 | $48 | | Diluted EPS | $1.10 | $0.80 | Condensed Consolidated Statement of Cash Flows Highlights (in millions) | Cash Flow Activity | 39-Week Period Ended April 30, 2022 | 39-Week Period Ended May 1, 2021 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(31) | $336 | | Net cash provided by (used in) investing activities | $45 | $(111) | | Net cash used in financing activities | $(7) | $(232) | | Net increase (decrease) in cash | $7 | $(7) | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management reports a **9.2%** increase in net sales for Q3 2022, driven by inflation and new business across all customer channels, with gross profit rising despite a decrease in gross margin rate from **14.6%** to **14.0%** due to a significant **$72 million** LIFO charge, while total liquidity stood at **$909 million** and total debt increased to **$2.39 billion** to fund working capital [Results of Operations](index=35&type=section&id=Results%20of%20Operations) For Q3 2022, net sales increased **9.2%** to **$7.24 billion**, driven by inflation and new business, with gross profit increasing by **4.3%** to **$1.01 billion** despite a 60 basis point decline in gross margin rate to **14.0%** due to a **$72 million** LIFO charge, and operating income boosted to **$123 million** by an **$87 million** gain on asset sale Net Sales by Customer Channel (in millions) | Customer Channel | Q3 2022 | Q3 2021 | % Change | | :--- | :--- | :--- | :--- | | Chains | $3,111 | $2,957 | 5.2% | | Independent retailers | $1,833 | $1,599 | 14.6% | | Supernatural | $1,468 | $1,287 | 14.1% | | Retail | $602 | $590 | 2.0% | | Other | $625 | $579 | 7.9% | | **Total net sales** | **$7,242** | **$6,631** | **9.2%** | - The increase in net sales was primarily driven by inflation and new business from both existing and new customers, including the benefit of cross-selling, partially offset by supply chain challenges[147](index=147&type=chunk) - Gross margin rate decreased to **14.0%** from **14.6%** year-over-year, largely due to a LIFO charge of **$72 million** in Q3 2022 compared to just **$5 million** in Q3 2021, though excluding the LIFO charge, the gross margin rate actually increased to **15.0%** from **14.7%**, driven by improvements in the Wholesale segment[158](index=158&type=chunk) - The company recorded a pre-tax gain on sale of approximately **$87 million** in Q3 2022 from a sale-leaseback transaction of its Riverside, California distribution center[164](index=164&type=chunk) [Segment Results](index=39&type=section&id=Segment%20Results) In Q3 2022, the Wholesale segment's net sales grew by **$610 million**, and its Adjusted EBITDA increased by **3.0%** to **$171 million**, driven by gross profit expansion that outpaced higher operating costs, while the Retail segment saw a modest **2.4%** increase in identical store sales but its Adjusted EBITDA decreased by **39.1%** to **$14 million** due to higher employee and occupancy costs Segment Performance - Q3 2022 vs Q3 2021 (in millions) | Segment | Net Sales Q3 2022 | Net Sales Q3 2021 | Adjusted EBITDA Q3 2022 | Adjusted EBITDA Q3 2021 | | :--- | :--- | :--- | :--- | :--- | | Wholesale | $6,977 | $6,367 | $171 | $166 | | Retail | $602 | $590 | $14 | $23 | - Wholesale's Adjusted EBITDA increase was driven by gross profit expansion (excluding LIFO), which was partially offset by a **58 basis point** increase in the operating expense rate due to investments in transportation and labor[181](index=181&type=chunk) - Retail's Adjusted EBITDA decreased significantly due to higher operating expenses from increased employee and occupancy costs[182](index=182&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) As of April 30, 2022, the company had total liquidity of **$909 million**, consisting of **$861 million** in unused credit and **$48 million** in cash, with total debt increasing by **$203 million** to **$2.39 billion** to fund a **$528 million** increase in working capital, and cash flow from operations being a use of **$31 million** for the 39-week period, a stark contrast to the **$338 million** provided in the prior-year period - Total liquidity as of April 30, 2022 was **$909 million**, comprising **$861 million** of unused credit under the ABL facility and **$48 million** in cash[186](index=186&type=chunk) - Total debt increased by **$203 million** from July 31, 2021, to **$2.39 billion**, mainly due to increased borrowings under the ABL Credit Facility to fund working capital increases[186](index=186&type=chunk) - Subsequent to the quarter, on June 3, 2022, the company entered into a new **$2.6 billion** ABL Credit Facility, replacing the previous **$2.1 billion** facility, with the new facility maturing in 2027 and transitioning from LIBOR to SOFR as the benchmark interest rate[58](index=58&type=chunk)[192](index=192&type=chunk) Cash Flow Summary (in millions) | Cash Flow Activity | 39-Week Period Ended April 30, 2022 | 39-Week Period Ended May 1, 2021 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(31) | $338 | | Net cash provided by (used in) investing activities | $45 | $(112) | | Net cash used in financing activities | $(7) | $(232) | [Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk exposures stem from fluctuations in interest rates on its borrowings and interest rate swap agreements, as well as price increases in diesel fuel, with no material changes to these exposures since the last Annual Report, except for the transition from LIBOR to SOFR - Primary market risks are from interest rate fluctuations on borrowings and swaps, and diesel fuel price increases[212](index=212&type=chunk) - The company has transitioned its debt and derivative instruments from LIBOR to SOFR as a benchmark interest rate, as disclosed in Notes 7 and 8[212](index=212&type=chunk) [Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of April 30, 2022, with no material changes to the company's internal control over financial reporting during the third quarter of fiscal 2022 - The CEO and CFO concluded that as of the evaluation date (April 30, 2022), the company's disclosure controls and procedures were effective[213](index=213&type=chunk) - No changes in internal control over financial reporting occurred during the third quarter of fiscal 2022 that materially affected, or are reasonably likely to materially affect, internal controls[214](index=214&type=chunk) Part II. Other Information [Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in several legal proceedings, notably approximately **43** lawsuits consolidated in an MDL related to the national opioid epidemic, and a qui tam action under the False Claims Act regarding prescription drug pricing for government healthcare programs, which is currently pending a petition for writ of certiorari with the U.S. Supreme Court - UNFI is a defendant in approximately **43** lawsuits consolidated in an MDL related to the national opioid epidemic, with the company being defended and indemnified by New Albertson's in a majority of these cases[101](index=101&type=chunk) - The company is subject to a qui tam action (United States ex rel. Schutte and Yarberry v. Supervalu) alleging violations of the False Claims Act related to overcharging government healthcare programs, with relators filing a petition for a writ of certiorari with the U.S. Supreme Court on April 1, 2022, after lower courts ruled in the company's favor[103](index=103&type=chunk) [Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the company's risk factors as disclosed in its Annual Report on Form 10-K for the year ended July 31, 2021 - No material changes to risk factors from the company's most recent Annual Report were reported[217](index=217&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company has a **$200 million** share repurchase program, authorized in October 2017, with **$176 million** remaining available as of April 30, 2022, though no shares were repurchased under this program during the third quarter of fiscal 2022, with **157,117** shares acquired during the quarter to cover taxes from the vesting of employee restricted stock awards - As of April 30, 2022, **$176 million** remains authorized under the company's share repurchase program, with no shares repurchased under the program during the quarter[209](index=209&type=chunk)[220](index=220&type=chunk) Issuer Purchases of Equity Securities (Q3 2022) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | Jan 30 - Mar 5, 2022 | 144,950 | $40.48 | | Mar 6 - Apr 2, 2022 | 8,822 | $40.04 | | Apr 3 - Apr 30, 2022 | 3,345 | $43.84 | | **Total** | **157,117** | **$40.53** | - The shares purchased represent deemed surrenders by employees to cover taxes from the vesting of restricted stock awards, not open market repurchases under the publicly announced program[220](index=220&type=chunk) [Other Information](index=45&type=section&id=Item%205.%20Other%20Information) On June 3, 2022, subsequent to the quarter's end, the company entered into a new **$2.6 billion** secured asset-based revolving credit facility (2022 ABL Loan Agreement), which replaced its previous facility, and also amended its term loan agreement to change the reference rate from LIBOR to Term SOFR - On June 3, 2022, the company entered into a new **$2.6 billion** ABL Loan Agreement, replacing its prior facility[221](index=221&type=chunk) - On June 3, 2022, the company amended its term loan agreement to replace the LIBOR reference rate with Term SOFR[222](index=222&type=chunk) [Exhibits](index=46&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including amendments to credit agreements, CEO and CFO certifications as required by the Sarbanes-Oxley Act, and the financial statements formatted in Inline XBRL - Key exhibits filed include Amendment No. 3 to the Term Loan Agreement and the new Loan Agreement for the ABL facility, both dated June 3, 2022[223](index=223&type=chunk) - Certifications from the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act were also filed[223](index=223&type=chunk)

Financial Data and Key Metrics Changes - Total net sales for Q3 were $7.2 billion, a 9.2% increase compared to the same quarter last year, bringing year-to-date sales to $21.7 billion, a 7.1% increase [31][46] - Adjusted EBITDA for Q3 totaled $196 million, a 5.9% increase from $185 million in the same quarter last year, with year-to-date adjusted EBITDA at $616 million, a 9.2% increase [49][51] - Adjusted EPS for Q3 was $1.10, a 10% increase from $1.00 in the same quarter last year, with year-to-date adjusted EPS at $3.56, a 22% increase over the previous year [51][56] Business Line Data and Key Metrics Changes - Cross-selling with existing customers contributed an additional $95 million in revenue for the quarter, totaling $260 million year-to-date, on track for nearly $1 billion in cross-selling revenue for fiscal 2022 [32][34] - The Professional Services business saw growth rates in adjusted EBITDA more than double that of the wholesale business, indicating strong demand for these services [38] Market Data and Key Metrics Changes - The company reported a decrease in driver vacancy rates to 9% and distribution center vacancy rates improved to less than 7% by the end of Q3, reflecting stabilization in workforce [11][41] - The food-at-home inflation rate was reported at 10.8%, impacting consumer behavior and sales dynamics [9] Company Strategy and Development Direction - The "Fuel the Future" strategy aims for long-term sustainable growth, focusing on enhancing customer value, improving supplier partnerships, providing career opportunities for associates, and supporting community and environmental initiatives [14][16][24] - The company is committed to a disciplined approach to value creation, focusing on strategic areas that drive economic profit rather than growth for growth's sake [28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ability to grow the business further, citing a robust new business pipeline and improvements in supply levels [10][33] - The company anticipates continued challenges from inflation and supply chain issues but remains confident in its agility and resilience [59] Other Important Information - The company revised its definition of adjusted EBITDA and adjusted EPS to exclude the impact of LIFO expense, which is expected to provide a clearer view of underlying operating performance [47][48] - Full-year sales guidance has been raised to a range of $28.8 billion to $29.1 billion, reflecting improved performance and market conditions [55][56] Q&A Session Summary Question: Did the quarter beat internal expectations and what is the outlook for Q4 and FY2023? - Management indicated that Q3 results were in line with internal expectations and did not provide specific guidance for Q4 or FY2023 but affirmed confidence in achieving long-term targets [64][65] Question: What caused the increase in the LIFO charge? - The increase in the LIFO charge was attributed to rising inflation, with no fundamental changes in inventory balances [66][67] Question: How quickly can the company gain market share with the One-UNFI initiative? - The One-UNFI initiative is a multi-year process, with incremental opportunities identified to enhance supply chain efficiency and customer service [75] Question: How does scale benefit the company in the current environment? - Scale provides flexibility in distribution and purchasing power, allowing the company to better serve its customers and suppliers [82][84] Question: Is there a shift from branded to private label products? - There has been an acceleration in private label brand sales, reflecting changing consumer preferences amid inflation [93][97] Question: What is the outlook for promotional activities and their impact on margins? - Promotional dollars are expected to improve as fill rates stabilize, but there is a lag in promotional activity following fill rate improvements [96][98]

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Financial Performance - Net sales for the 13-week period ended January 29, 2022, increased by $516 million, or 7.5%, to $7,416 million compared to $6,900 million for the same period in 2021[132]. - Gross profit for the second quarter of fiscal 2022 increased by $80 million, or 8.0%, to $1,075 million, with a gross profit margin of 14.50%[147]. - Adjusted EBITDA for the 13-week period ended January 29, 2022, was $201 million, a decrease of $5 million from $206 million in the same period in 2021[132]. - Operating expenses increased by $74 million, or 8.5%, to $944 million, representing 12.73% of net sales for the second quarter of fiscal 2022[149]. - Net income from continuing operations for the 13-week period ended January 29, 2022, was $68 million, an increase of $10 million from $58 million in the same period in 2021[132]. - Independent retailers' net sales increased by 12.0% to $1,905 million for the 13-week period ended January 29, 2022, compared to $1,701 million in the same period in 2021[137]. - Supernatural channel net sales increased by 11.9% to $1,453 million for the 13-week period ended January 29, 2022, compared to $1,298 million in the same period in 2021[137]. - The company's gross profit for fiscal 2022 year-to-date increased by $152 million, or 7.7%, to $2,117 million compared to $1,965 million for fiscal 2021 year-to-date[148]. - The increase in net sales for fiscal 2022 year-to-date was primarily driven by inflation and new business from both existing and new customers[143]. - The company experienced a modest increase in retail identical store sales of 0.3% due to higher average basket sizes[146]. - Operating income increased by $75 million to $232 million for fiscal 2022 year-to-date, from an operating loss of $157 million for fiscal 2021 year-to-date[154]. - Net income attributable to United Natural Foods, Inc. was $142 million, or $2.33 per diluted common share, for fiscal 2022 year-to-date, compared to $58 million, or $0.98 per diluted common share, for fiscal 2021 year-to-date[161]. - Total net sales increased by $516 million to $7,416 million for the second quarter of fiscal 2022, compared to $6,900 million for the second quarter of fiscal 2021[163]. - Wholesale's net sales increased by $514 million to $7,132 million for the second quarter of fiscal 2022, compared to $6,618 million for the second quarter of fiscal 2021[163]. - Adjusted EBITDA for wholesale decreased by 15.4% for the second quarter of fiscal 2022 compared to the second quarter of fiscal 2021, driven by higher operating expenses[169]. Operational Developments - The company operates 75 retail grocery stores, including 55 Cub Foods corporate stores and 20 Shoppers Food Warehouse stores[117]. - The company has a distribution center network with 56 centers representing approximately 30 million square feet of warehouse space[105]. - The company acquired a distribution center in Riverside, California for approximately $153 million and monetized it through a sale-leaseback transaction for $225 million[114]. - The company expects to record a pre-tax gain of approximately $85 million from the sale-leaseback transaction in the third quarter of fiscal 2022[114]. - The company plans to improve operating performance through the ValuePath initiative, which will be implemented through the end of fiscal 2023[107]. - The company believes its Fuel the Future strategy will accelerate growth through tailored, data-driven solutions for existing customers and new customer acquisitions[109]. - The company anticipates continued growth in eCommerce utilization by grocery consumers, driven by the pandemic[110]. - The company is facing a tighter operating labor market, leading to increased reliance on third-party resources and higher costs[112]. Financial Position - Total liquidity as of January 29, 2022, was $1,036 million, consisting of $991 million unused credit and $45 million in cash and cash equivalents[174]. - Total debt increased by $135 million to $2,323 million as of January 29, 2022, primarily due to additional borrowings under the ABL Credit Facility[174]. - Working capital increased by $246 million to $1,309 million as of January 29, 2022, primarily due to increases in inventory and accounts receivable[174]. - The effective tax rate for fiscal 2022 year-to-date was 14.2%, compared to 21.6% for fiscal 2021 year-to-date, primarily driven by discrete tax benefits from employee stock award vestings[159]. - The company borrowed a net $289 million under the ABL Credit Facility and repaid $158 million on the Term Loan Facility during fiscal 2022 year-to-date[178]. - Capital expenditures for fiscal 2022 year-to-date were $106 million, an increase of $14 million compared to $92 million for fiscal 2021 year-to-date, primarily due to investments in a new distribution center[183]. - The company expects fiscal 2022 capital spending to be approximately $250 million, focusing on optimizing and expanding the distribution network and technology platform investments[183]. - Net cash provided by operating activities of continuing operations decreased to $43 million in fiscal 2022 year-to-date from $207 million in fiscal 2021 year-to-date, a change of $164 million[184]. - Net cash used in investing activities of continuing operations increased to $129 million in fiscal 2022 year-to-date from $51 million in fiscal 2021 year-to-date, a change of $78 million[185]. - The company expects to contribute approximately $46 million to multiemployer pension plans related to continuing operations in fiscal 2022[191]. - As of January 29, 2022, the company had $1,231 million of floating rate notional debt subject to active interest rate swap contracts[181]. - The fair value of interest rate derivatives represented a total net liability of $39 million, subject to volatility based on changes in market interest rates[181]. - The company has $176 million remaining authorized under its share repurchase program, with no shares repurchased in fiscal 2022 year-to-date[194]. - The company is subject to a fixed charge coverage ratio of at least 1.0 to 1.0 under the ABL Loan Agreement, which has not been triggered as of the filing date[179]. Cost and Inflation - The company experienced cost inflation of approximately 5% across its businesses in the second quarter of fiscal 2022[119]. - Operating expenses increased by $102 million, or 5.7%, to $1,876 million for fiscal 2022 year-to-date, compared to $1,774 million for fiscal 2021 year-to-date[150].

United Natural Foods, Inc. (NYSE:UNFI) Q2 2022 Earnings Conference Call March 9, 2022 8:30 AM ET Company Participants Steve Bloomquist - Vice President of Investor Relations Sandy Douglas - Chief Executive Officer Chris Testa - President John Howard - Chief Financial Officer Eric Dorne - Chief Operating Officer Conference Call Participants John Heinbockel - Guggenheim Bill Kirk - MKM Partners Eric Larson - Seaport Research William Reuter - Bank of America Kelly Bania - BMO Carla Casella - JPMorgan Operator ...