UNFI Reports Adjusted Net Sales Up 8% for FY2016

United Natural Foods Inc. (UNFI) has reported net sales for fiscal 2016 of $8.5 billion, up 3.5 percent from last year’s $8.2 billion. Adjusted net sales for the year were up 8 percent, excluding the year-over-year impact of the previously disclosed termination of a customer distribution contract and a second-quarter fiscal 2015 reduction in net sales.

Net sales for the fourth quarter increased 7.4 percent to $2.2 billion, from $2.1 billion for the quarter last year.

"We are pleased with UNFI’s accomplishments in fiscal 2016, which demonstrate our team’s focus on our strategic initiatives, particularly in light of a challenging operating environment," said Steven Spinner, president and CEO of Providence, R.I.-based UNFI. "We believe our efforts to further enhance UNFI’s perishable perimeter product offerings, combined with the scale of our leading national distribution network, position us well for growth in sales and profitability over the next several years."

For fiscal 2017, UNFI expects net sales to be in the $9.4 billion-to-$9.6 billion range, or an 11.3 percent-to-13.3 percent increase over this year. GAAP earnings per diluted share are estimated to be $2.53 to $2.63 per share, an increase of 1.2 percent to 5.2 percent over fiscal 2016 GAAP earnings per diluted share of $2.50.

In other news, the wholesaler’s board of directors approved an increase in board size to nine members and elected Daphne Dufresne to the board, effective Oct. 1. Dufresne is managing director for RLJ Equity Partners, a Bethesda, Md.-based private equity fund, where she helped build the investment team, raise capital to fund its operations and develop a partnership with The Carlyle Group, a global private equity firm.

Fourth-quarter FY2016 Summary

Net sales were up 7.4 percent to $2.2 billion; adjusted net sales for the quarter increased 12.7 percent, excluding the year-over-year impact of the previously disclosed termination of a customer distribution contract. The net sales contribution from the acquisitions of Nor-Cal Produce and Haddon House Food Products was about $139 million for the quarter.

Cash flow from operations for the fourth quarter was $91 million, with capital expenditures of $12.3 million, resulting in  free cash flow of $78.7 million for the period.

FY2016 Summary

Net sales totaled $8.5 billion, up 3.5 percent; and adjusted net sales were up 8 percent. The net sales contribution for fiscal 2016 from the acquisitions of Nor-Cal and Haddon was about $51.4 million and $100.4 million, respectively.

Gross margin decreased 30 basis points to 15.1 percent, compared with 15.4 in 2015. The decrease was due to competitive pricing pressures, moderated supplier promotional activity, a reduction in fuel surcharges, and an unfavorable impact of foreign exchange for the company’s Canadian business.

Cash flow from operations for the year was $296.6 million, with cap ex of $41.4 million, resulting in free cash flow of $255.2 million.