United Natural Foods(US:UNFI)2022-03-09 21:55Financial 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].