United Natural Foods(UNFI) - 2024 Q4 - Annual Results

Performance Highlights for Q4 and Full Year 2024 UNFI reported a 10.0% increase in Q4 net sales to $8.2 billion, driven partly by an extra week, while the company experienced a net loss of $37 million, Adjusted EBITDA saw a significant increase of 53.8% to $143 million Q4 Fiscal 2024 Key Metrics | Metric | Q4 2024 (14 weeks) | Q4 2023 (13 weeks) | Change | Notes | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $8.2 billion | $7.4 billion | +10.0% | +2.1% on a comparable 13-week basis | | Net Loss | $37 million | $68 million | N/A | Improved from prior year | | Loss per Share (EPS) | $(0.63) | $(1.15) | N/A | Improved from prior year | | Adjusted EBITDA | $143 million | $93 million | +53.8% | Includes ~$10M benefit from extra week | | Adjusted EPS | $0.01 | $(0.25) | N/A | Turned positive from a loss | - Full year fiscal 2024 performance reached the upper end of the company's outlook ranges for key financial metrics, driven by improving volume trends and efficiency initiatives[1] - Net debt and net leverage decreased sequentially from the end of Q3 to $2.06 billion and 4.0x, respectively, at the end of Q4[1] - The company is advancing its network optimization by consolidating the Billings and Bismarck distribution centers into other facilities to improve efficiency and service[1] Detailed Financial Analysis In Q4 2024, net sales reached $8.2 billion, a 2.1% increase on a comparable 13-week basis, aided by improving unit volumes and inflation, resulting in an Adjusted EPS of $0.01 - Q4 net sales were $8.2 billion, including a $582 million benefit from an additional week, with comparable sales growing 2.1% driven by improving unit volumes and inflation[6] - Gross profit rate was 13.7% with a $12 million LIFO benefit, compared to 13.0% with a $36 million LIFO charge in Q4 2023, remaining flat at 13.5% excluding LIFO[7] - Operating expenses as a percentage of sales decreased from 13.5% in Q4 2023 to 13.2% in Q4 2024, reflecting benefits from cost-saving initiatives[7] - Net loss for Q4 2024 was $37 million, or $(0.63) per diluted share, an improvement from a net loss of $68 million, or $(1.15) per diluted share, in Q4 2023[9] Capital Allocation and Financial Position The company generated $71 million in free cash flow during the fourth quarter, with total net debt at $2.06 billion and a net debt to adjusted EBITDA leverage ratio of 4.0x, maintaining strong liquidity at approximately $1.28 billion Capital and Liquidity Summary (as of Aug 3, 2024) | Metric | Value | Notes | | :--- | :--- | :--- | | Q4 Free Cash Flow | $71 million | Down from $117 million in Q4 2023 | | Total Net Debt | $2.06 billion | Increased by $115 million during fiscal 2024 | | Net Leverage Ratio | 4.0x | N/A | | Total Liquidity | $1.28 billion | Includes $40M cash and $1.24B unused ABL facility | Fiscal 2025 Outlook For fiscal year 2025 (a 52-week year), UNFI projects net sales between $30.3 billion and $30.8 billion, anticipates a net loss ranging from $3 million to $41 million, with Adjusted EPS forecasted between $0.20 and $0.80, and Adjusted EBITDA expected between $520 million and $580 million, with free cash flow projected at approximately $100 million Fiscal 2025 Full-Year Guidance | Metric | Outlook Range | | :--- | :--- | | Net Sales | $30.3 - $30.8 billion | | Net Loss | $(41) - $(3) million | | EPS | $(0.65) - $(0.05) | | Adjusted EPS | $0.20 - $0.80 | | Adjusted EBITDA | $520 - $580 million | | Capital & Cloud Expenditures | ~$300 million | | Free Cash Flow | ~$100 million | Consolidated Financial Statements Consolidated Statements of Operations For the full fiscal year 2024, UNFI's net sales increased to $30.98 billion from $30.27 billion in 2023, but operating income significantly declined to $8 million from $120 million, resulting in a net loss of $112 million compared to a $24 million net income in the prior year Fiscal Year 2024 vs 2023 Performance (in millions) | Metric | FY 2024 (53 weeks) | FY 2023 (52 weeks) | | :--- | :--- | :--- | | Net Sales | $30,980 | $30,272 | | Gross Profit | $4,201 | $4,131 | | Operating Income | $8 | $120 | | Net (Loss) Income | $(112) | $24 | Consolidated Balance Sheets As of August 3, 2024, UNFI's total assets increased slightly to $7.53 billion from $7.39 billion, with inventories decreasing to $2.18 billion and long-term debt increasing to $2.08 billion, while total stockholders' equity decreased from $1.74 billion to $1.64 billion Balance Sheet Highlights (in millions) | Account | Aug 3, 2024 | July 29, 2023 | | :--- | :--- | :--- | | Total Current Assets | $3,402 | $3,463 | | Inventories, net | $2,179 | $2,292 | | Total Assets | $7,528 | $7,394 | | Long-term Debt | $2,081 | $1,956 | | Total Liabilities | $5,887 | $5,650 | | Total Stockholders' Equity | $1,641 | $1,744 | Consolidated Statements of Cash Flows For fiscal year 2024, net cash provided by operating activities significantly decreased to $253 million from $624 million, with net cash used in investing activities stable at $342 million, and $92 million generated from financing activities, leading to a net increase in cash of $3 million for the year Fiscal Year Cash Flow Summary (in millions) | Cash Flow Activity | FY 2024 (53 weeks) | FY 2023 (52 weeks) | | :--- | :--- | :--- | | Net Cash from Operating Activities | $253 | $624 | | Net Cash used in Investing Activities | $(342) | $(339) | | Net Cash from (used in) Financing Activities | $92 | $(292) | | Net Increase (Decrease) in Cash | $3 | $(7) | Non-GAAP Reconciliations and Supplemental Information Reconciliation to Adjusted EBITDA For fiscal year 2024, UNFI's Adjusted EBITDA was $518 million, down from $640 million in 2023, calculated by adding back items like interest, taxes, depreciation & amortization ($319 million), share-based compensation, LIFO charge ($7 million), restructuring expenses ($36 million), and business transformation costs ($52 million) to a net loss of $110 million Adjusted EBITDA Reconciliation (FY 2024, in millions) | Description | Amount | | :--- | :--- | | Net Loss including noncontrolling interests | $(110) | | Interest, Taxes, D&A, etc. | +457 | | Share-based compensation | +37 | | LIFO charge | +7 | | Restructuring, acquisition, integration expenses | +36 | | Loss on sale of assets and other asset charges | +57 | | Business transformation costs | +52 | | Adjusted EBITDA | $518 | Reconciliation to Adjusted EPS UNFI's full-year Adjusted EPS for fiscal 2024 was $0.14, a sharp decline from $2.23 in 2023, with the adjustment from a GAAP net loss of $112 million to an adjusted net income of $9 million involving adding back non-cash charges, restructuring costs, LIFO charges, and business transformation costs, then applying a normalized tax impact Adjusted EPS Reconciliation (FY 2024) | Metric | FY 2024 | FY 2023 | | :--- | :--- | :--- | | Net (Loss) Income (in millions) | $(112) | $24 | | Adjustments (Restructuring, LIFO, etc.) | +150 | +175 | | Tax Impact of Adjustments | $(29) | $(63) | | Adjusted Net Income (in millions) | $9 | $136 | | Adjusted EPS | $0.14 | $2.23 | Net Debt, Leverage, and Free Cash Flow At the end of fiscal 2024, the company's net debt was calculated at $2.064 billion, resulting in a net debt to Adjusted EBITDA leverage ratio of 4.0x based on $518 million in Adjusted EBITDA, and reported a negative free cash flow of $92 million for the full year - The net debt to Adjusted EBITDA leverage ratio was 4.0x at the end of fiscal year 2024, based on $2,064 million in net debt and $518 million in Adjusted EBITDA[23] - Full-year free cash flow was negative $92 million, calculated from $253 million in net cash from operations minus $345 million in capital expenditures[24] Comparable Growth Rates (53rd Week Adjustment) To provide a clearer year-over-year comparison, UNFI presented financial results adjusted for the extra (53rd) week in fiscal 2024, showing comparable net sales growth of 0.4% but a significant 20.6% decline in comparable Adjusted EBITDA from $640 million in FY2023 to an adjusted $508 million in FY2024 Comparable 52-Week Performance vs FY2023 | Metric | FY 2024 (Comparable 52-week) | FY 2023 (52-week) | Comparable Change | | :--- | :--- | :--- | :--- | | Net Sales | $30,398 million | $30,272 million | +0.4% | | Adjusted EBITDA | $508 million | $640 million | -20.6% |