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United Natural Q4 Earnings Beat, UNFI Sales Rise on Unit Volume Hike
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United Natural Foods, Inc. (UNFI - Free Report) posted fourth-quarter fiscal 2024 results, with revenues and earnings surpassing the Zacks Consensus Estimate. Also, both metrics showed year-over-year growth. United Natural concluded four consecutive quarters of increasing profitability, driven by robust same-customer growth, an extended agreement with its largest customer, $150 million in benefits from structural efficiency initiatives and a significant reduction in shrink.
The company is executing key elements of its updated strategy developed through an ongoing financial review, aimed at accelerating performance and creating sustainable value for customers and suppliers. Additionally, efforts to enhance the free cash flow and reduce net leverage by optimizing the distribution center network are expected to drive shareholder value.
United Natural Foods, Inc. Price, Consensus and EPS Surprise
United Natural reported adjusted earnings of 1 cent per share for the quarter under review, beating the Zacks Consensus Estimate of a loss of 8 cents. Notably, the company reported an adjusted loss of 25 cents in the year-ago period.
Net sales rose 10% year over year to $8,155 million, surpassing the Zacks Consensus Estimate of $7,874 million. This includes an approximate $582 million gain from an extra week in fiscal 2024. Without the impacts of this additional week, sales grew 2.1% due to improving unit volumes, which turned positive toward the end of the fiscal fourth quarter. Sales were also bolstered by inflation.
Chains, Independent retailers, Supernatural and Retail witnessed year-over-year sales growth of 9%, 4.5%, 18.6% and 3.1%, respectively. Other channels rose 9.6%.
The Zacks Consensus Estimate for net sales growth of Supernatural and Other channels was pegged at 8% and 5.1%, respectively, in the quarter under review.
United Natural Sees Gross Profit Growth and Lower Expenses
UNFI’s gross profit rose 15.5% year over year to $1.12 billion. On a comparable 13-week basis, gross profit grew 7% year over year. The gross margin for the fourth quarter of fiscal 2024 was 13.7%, which includes a $12-million LIFO benefit. In comparison, the gross margin in the fourth quarter of fiscal 2023 was 13%, including a $36-million LIFO charge. Excluding the impacts of LIFO, the gross margin was 13.5% in both fiscal years. The benefits of reduced shrink expenses were offset by lower product margin rates and a shift in the business mix.
Operating expenses were $1.08 billion compared with $1 billion in the year-ago quarter. As a percentage of sales, operating expenses were 13.2% compared with 13.5% in the year-ago period. The decrease was led by the benefits of cost-saving initiatives.
Adjusted EBITDA came in at $143 million, up 53.8% from $93 million in the year-ago quarter. This includes an approximate $10 million benefit from the additional week.
UNFI’s Financial Health Snapshot
The company had total liquidity of $1.28 billion as of Aug. 3, 2024, including cash of nearly $40 million and $1.24 billion under the company’s asset-backed lending facility.
In the fourth quarter of fiscal 2024, the free cash flow was $71 million, down from $117 million in the prior-year quarter. The reported figure reflects $191 million in net cash provided by operating activities, offset by $120 million in capital expenditure.
Total outstanding debt, net of cash, reached $2.06 billion at the end of the quarter, representing a $115 million increase over fiscal 2024. The net debt to adjusted EBITDA leverage ratio was 4.0X as of Aug. 3, 2024.
Image Source: Zacks Investment Research
United Natural’s Guidance for FY25
For fiscal 2025, the company anticipates net sales of $30.3-$30.8 billion. Notably, it reported net sales of $31 billion in fiscal 2024.
Adjusted EBITDA is expected to be $520-$580 million, whereas it reported $518 million in fiscal 2024. UNFI expects to deliver a net loss of $41-$3 million in fiscal 2025.
United Natural envisions fiscal 2025 adjusted earnings between 20 cents and 80 cents. It reported adjusted earnings of 14 cents in fiscal 2024.
The company projects capital and cloud implementation expenditure of $300 million for fiscal 2025. It anticipates a free cash flow of $100 million for fiscal 2025.
Shares of this Zacks Rank #3 (Hold) company have risen 82.2% in the past three months compared with the industry’s growth of 9%.
Better-Ranked Food Bets
Here, we have highlighted three better-ranked stocks, namely BRF Brasil Foods SA (BRFS - Free Report) , Freshpet Inc. (FRPT - Free Report) and Ingredion Incorporated (INGR - Free Report) .
BRF Brasil Foods, formerly Perdigao S.A., is a Brazil-based food company. It presently flaunts a Zacks Rank of 1 (Strong Buy). BRFS has a trailing four-quarter average earnings surprise of 73.8%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for BRF's current financial-year earnings and sales indicates growth of 256.7% and 14.7%, respectively, from the year-ago reported figures.
Freshpet is a pet food company. It has a Zacks Rank #2 (Buy) at present.
The Zacks Consensus Estimate for Freshpet’s current fiscal-year earnings and sales indicates declines of 202.9% and 26.1%, respectively, from the year-ago reported figures. FRPT has a trailing four-quarter average earnings surprise of 132.9%. Ingredion is an ingredients solutions provider specializing in nature-based sweeteners, starches and nutrition ingredients. The company currently carries a Zacks Rank #2. INGR has a trailing four-quarter earnings surprise of 11%, on average.
The Zacks Consensus Estimate for INGR’s current financial year’s earnings suggests growth of 5.6% from the year-ago reported number.
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United Natural Q4 Earnings Beat, UNFI Sales Rise on Unit Volume Hike
United Natural Foods, Inc. (UNFI - Free Report) posted fourth-quarter fiscal 2024 results, with revenues and earnings surpassing the Zacks Consensus Estimate. Also, both metrics showed year-over-year growth. United Natural concluded four consecutive quarters of increasing profitability, driven by robust same-customer growth, an extended agreement with its largest customer, $150 million in benefits from structural efficiency initiatives and a significant reduction in shrink.
The company is executing key elements of its updated strategy developed through an ongoing financial review, aimed at accelerating performance and creating sustainable value for customers and suppliers. Additionally, efforts to enhance the free cash flow and reduce net leverage by optimizing the distribution center network are expected to drive shareholder value.
United Natural Foods, Inc. Price, Consensus and EPS Surprise
United Natural Foods, Inc. price-consensus-eps-surprise-chart | United Natural Foods, Inc. Quote
UNFI’s Quarterly Performance: Key Metrics & Insights
United Natural reported adjusted earnings of 1 cent per share for the quarter under review, beating the Zacks Consensus Estimate of a loss of 8 cents. Notably, the company reported an adjusted loss of 25 cents in the year-ago period.
Find latest EPS estimates and surprises on Zacks Earnings Calendar.
Net sales rose 10% year over year to $8,155 million, surpassing the Zacks Consensus Estimate of $7,874 million. This includes an approximate $582 million gain from an extra week in fiscal 2024. Without the impacts of this additional week, sales grew 2.1% due to improving unit volumes, which turned positive toward the end of the fiscal fourth quarter. Sales were also bolstered by inflation.
Chains, Independent retailers, Supernatural and Retail witnessed year-over-year sales growth of 9%, 4.5%, 18.6% and 3.1%, respectively. Other channels rose 9.6%.
The Zacks Consensus Estimate for net sales growth of Supernatural and Other channels was pegged at 8% and 5.1%, respectively, in the quarter under review.
United Natural Sees Gross Profit Growth and Lower Expenses
UNFI’s gross profit rose 15.5% year over year to $1.12 billion. On a comparable 13-week basis, gross profit grew 7% year over year. The gross margin for the fourth quarter of fiscal 2024 was 13.7%, which includes a $12-million LIFO benefit. In comparison, the gross margin in the fourth quarter of fiscal 2023 was 13%, including a $36-million LIFO charge. Excluding the impacts of LIFO, the gross margin was 13.5% in both fiscal years. The benefits of reduced shrink expenses were offset by lower product margin rates and a shift in the business mix.
Operating expenses were $1.08 billion compared with $1 billion in the year-ago quarter. As a percentage of sales, operating expenses were 13.2% compared with 13.5% in the year-ago period. The decrease was led by the benefits of cost-saving initiatives.
Adjusted EBITDA came in at $143 million, up 53.8% from $93 million in the year-ago quarter. This includes an approximate $10 million benefit from the additional week.
UNFI’s Financial Health Snapshot
The company had total liquidity of $1.28 billion as of Aug. 3, 2024, including cash of nearly $40 million and $1.24 billion under the company’s asset-backed lending facility.
In the fourth quarter of fiscal 2024, the free cash flow was $71 million, down from $117 million in the prior-year quarter. The reported figure reflects $191 million in net cash provided by operating activities, offset by $120 million in capital expenditure.
Total outstanding debt, net of cash, reached $2.06 billion at the end of the quarter, representing a $115 million increase over fiscal 2024. The net debt to adjusted EBITDA leverage ratio was 4.0X as of Aug. 3, 2024.
Image Source: Zacks Investment Research
United Natural’s Guidance for FY25
For fiscal 2025, the company anticipates net sales of $30.3-$30.8 billion. Notably, it reported net sales of $31 billion in fiscal 2024.
Adjusted EBITDA is expected to be $520-$580 million, whereas it reported $518 million in fiscal 2024. UNFI expects to deliver a net loss of $41-$3 million in fiscal 2025.
United Natural envisions fiscal 2025 adjusted earnings between 20 cents and 80 cents. It reported adjusted earnings of 14 cents in fiscal 2024.
The company projects capital and cloud implementation expenditure of $300 million for fiscal 2025. It anticipates a free cash flow of $100 million for fiscal 2025.
Shares of this Zacks Rank #3 (Hold) company have risen 82.2% in the past three months compared with the industry’s growth of 9%.
Better-Ranked Food Bets
Here, we have highlighted three better-ranked stocks, namely BRF Brasil Foods SA (BRFS - Free Report) , Freshpet Inc. (FRPT - Free Report) and Ingredion Incorporated (INGR - Free Report) .
BRF Brasil Foods, formerly Perdigao S.A., is a Brazil-based food company. It presently flaunts a Zacks Rank of 1 (Strong Buy). BRFS has a trailing four-quarter average earnings surprise of 73.8%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for BRF's current financial-year earnings and sales indicates growth of 256.7% and 14.7%, respectively, from the year-ago reported figures.
Freshpet is a pet food company. It has a Zacks Rank #2 (Buy) at present.
The Zacks Consensus Estimate for Freshpet’s current fiscal-year earnings and sales indicates declines of 202.9% and 26.1%, respectively, from the year-ago reported figures. FRPT has a trailing four-quarter average earnings surprise of 132.9%.
Ingredion is an ingredients solutions provider specializing in nature-based sweeteners, starches and nutrition ingredients. The company currently carries a Zacks Rank #2. INGR has a trailing four-quarter earnings surprise of 11%, on average.
The Zacks Consensus Estimate for INGR’s current financial year’s earnings suggests growth of 5.6% from the year-ago reported number.