United Natural Foods (NYSE:UNFI) FY 2025 Annual General Meeting December 16, 2025 03:30 PM ET Company ParticipantsDanielle Benedict - CHROMichael S. Funk - DirectorJames M. Loree - DirectorDaphne J. Dufresne - DirectorDavid Williamson - CEO of RetailJames L. Muehlbauer - DirectorGloria R. Boyland - DirectorLynn S. Blake - DirectorMatteo Tarditi - President and CFOSandy Douglas - CEOJames C. Pappas - DirectorMark Bushway - President of Natural Organic Specialty and Fresh Products and Chief Supply Chain Offic ...

Financial Data and Key Metrics Changes - Fiscal 2025 marked the first full year of executing the company's refresh strategy, with financial performance aligning with or exceeding initial guidance for key metrics [31] - The company generated $239 million in free cash flow in fiscal 2025, reducing year-end debt to its lowest level since 2018 [33][36] Business Line Data and Key Metrics Changes - The company consolidated four distribution centers into modern facilities, enhancing assortment options while lowering operating costs [32] - Investments in automation and larger facilities were made to support growth and improve capabilities for customers [32] Market Data and Key Metrics Changes - The company is targeting a $90 billion market that includes natural, organic, specialty, multicultural, and conventional grocery retailers [31] - The focus is on earning a higher share of business within this growing market by offering differentiated products and services [31] Company Strategy and Development Direction - The strategy emphasizes adding value for customers and suppliers while improving operational efficiency [31] - The company aims to strengthen capabilities to help customers compete effectively and support suppliers in brand growth [32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategy due to strong customer performance and resilience, leading to accelerated multi-year objectives [31] - The company is committed to continuous improvement and delivering value to all stakeholders [33] Other Important Information - The fiscal 2025 impact report was published, outlining progress against key sustainability focus areas [34] Q&A Session Summary Question: How can we have two years of losses? What different initiatives are you pursuing to achieve durable profits? - Management explained that losses were primarily due to non-cash depreciation and strategic actions taken to position the company for future profitability, with fiscal 2025 actions already benefiting profitability in fiscal 2026 [36][37] Question: How is the company adapting to the onset of the MAHA movement and accompanying directives from Washington? - Management noted ongoing dialogue around policies encouraging healthy consumption, which aligns with existing consumer trends that the company embraces [38]

Financial Data and Key Metrics Changes - For Q4 2025, net sales were $7.7 billion, down from $8.2 billion in the previous year, reflecting a 1.6% growth when excluding the $582 million benefit from an extra week in last year's quarter [22][23] - Full-year net sales rose 4.6%, with volumes growing 1.4% and inflation at about 1.8% [24] - Adjusted EBITDA for Q4 was $116 million, compared to $133 million in the prior year, with full-year adjusted EBITDA at $552 million, slightly above the midpoint of guidance [27][28] - Free cash flow for Q4 was $86 million, bringing the full-year total to around $240 million, a significant improvement from a cash use of approximately $90 million in fiscal 2024 [28][29] Business Line Data and Key Metrics Changes - The natural segment grew by 9% on a comparable 13-week basis, outperforming the market, while conventional segment sales declined by 6% [23] - For the full year, volume growth outperformed Nielsen's industry benchmarks, largely due to the strength of the customer base and new business with existing customers [24] Market Data and Key Metrics Changes - The company is targeting a $90 billion addressable market, focusing on natural, organic, specialty, multicultural, and conventional grocery retailers [10] - The growth in the natural segment is supported by enduring consumer trends towards health and wellness [17][92] Company Strategy and Development Direction - The company aims to become the food industry's most valued partner by providing innovative products and services to help retailers and suppliers grow [9] - The refresh strategy focuses on creating more value for customers and suppliers while improving operational efficiency [10][13] - The company expects to achieve net sales growth in the low single digits from fiscal 2024 to 2027, with adjusted EBITDA growth in the low double-digit range [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's trajectory and ability to create sustainable long-term value despite challenges faced during the cyber incident [20] - The company anticipates continued growth in the natural segment and improved profitability through operational efficiencies and strategic investments [21][34] Other Important Information - The company reduced net debt to around $1.8 billion, the lowest level since 2018, and reduced net leverage by 0.7 turns compared to the previous year [8][29] - The company is focused on enhancing capabilities in merchandising, revenue growth management, and technology to drive long-term growth [31] Q&A Session Summary Question: Opportunities in natural merchandising initiatives - Management highlighted three key areas: innovation for natural retailers, deepening involvement for conventional retailers, and simplifying the experience for emerging suppliers [37] Question: Improving conventional profitability - Management noted that natural products have historically higher margins and emphasized efforts to improve product mix, efficiency, and lean operations across both segments [40] Question: Updated three-year guidance and customer attrition - Management indicated solid growth in the customer file and better-than-expected organic growth, particularly in natural and organic segments [46] Question: Industry promotional backdrop - Management observed a disciplined increase in promotional activities, with volume sold on deal still below 2019 levels [48] Question: Volume metrics and cyber incident impact - Management clarified that volumes were up about 1.5% for the full year, with a more significant impact from the cyber incident on conventional sales [51] Question: Factors leading to raised adjusted EBITDA algorithm - Management attributed the increase to better-than-expected top-line growth, progress in shrink reduction, and productivity improvements [52] Question: Relationship with Amazon - Management refrained from commenting on specific customers but emphasized a tailored strategy for enterprise accounts and support for small independents [56] Question: Capital investment and facility expansion - Management discussed ongoing rationalization and expansion of distribution centers, with a focus on automation and efficiency [61][62] Question: Margin gain flow in 2026 - Management outlined key components for EBITDA growth, including the exit of unprofitable contracts and continuous progress on shrink and supplier programs [66] Question: Tariff impact - Management is closely monitoring tariffs and working with suppliers and customers to manage costs effectively [68]