On October 1, 2024, United Natural Foods Inc (UNFI, Financial) released its 8-K filing detailing the financial results for the fourth quarter and full fiscal year ended August 3, 2024. United Natural Foods Inc is a wholesale distributor of natural, organic, and specialty foods and nonfood products across North America. The company serves various retail formats including conventional supermarket chains, natural product superstores, independent retail operators, and foodservice channels such as e-commerce platforms.
Performance Overview
United Natural Foods Inc (UNFI, Financial) reported net sales of $8.2 billion for the fourth quarter of fiscal 2024, a 10.0% increase compared to $7.4 billion in the same period last year. On a comparable 13-week basis, net sales grew by 2.1%. The company posted a net loss of $37 million, translating to a loss per diluted share (EPS) of $(0.63). However, adjusted EPS came in at $0.01, surpassing analyst estimates of $(0.16).
For the full fiscal year, net sales reached $30.98 billion, up 2.3% from $30.27 billion in fiscal 2023. The net loss for the year was $112 million, with a loss per diluted share of $(1.89). Adjusted EBITDA for the year was $518 million, a decrease from $640 million in the previous year.
Key Financial Metrics
| Metric | Q4 FY2024 | Q4 FY2023 | FY2024 | FY2023 |
|---|---|---|---|---|
| Net Sales | $8.2 billion | $7.4 billion | $30.98 billion | $30.27 billion |
| Net (Loss) Income | $(37) million | $(68) million | $(112) million | $24 million |
| Adjusted EBITDA | $143 million | $93 million | $518 million | $640 million |
| Adjusted EPS | $0.01 | $(0.25) | $0.14 | $2.23 |
Operational Highlights
United Natural Foods Inc (UNFI, Financial) attributed its performance to improving volume trends, new business with existing customers, and benefits from near-term efficiency initiatives. The company also reported a sequential decrease in net debt and net leverage to $2.06 billion and 4.0x, respectively, at year-end from $2.13 billion and 4.6x at the end of the third quarter.
Additionally, UNFI is advancing its network optimization by consolidating its Billings and Bismarck distribution centers into other facilities, which is expected to improve customer and supplier experience through better technology access, a broader product assortment, and more efficient service.
Financial Achievements and Challenges
Despite the net loss, UNFI's adjusted EBITDA increased by 53.8% to $143 million in Q4 FY2024, including a $10 million benefit from the additional week. This improvement is significant for a company in the Retail - Defensive industry, as it indicates better operational efficiency and cost management.
However, the company faces challenges such as higher interest expenses and a net loss for the year. The effective tax rate for Q4 FY2024 was a benefit of 15.9% on a pre-tax loss, compared to a benefit of 35.0% in the same period last year. This change was due to charges related to share-based compensation and the deductibility of charitable contributions.
Commentary
"We delivered fourth quarter results that drove fiscal 2024 performance to the upper end of our previously provided outlook. This capped a year in which we generated four consecutive quarters of sequentially increasing profitability, significantly strengthened our foundation, and built momentum as we enter fiscal 2025," said Sandy Douglas, UNFI’s Chief Executive Officer.
Income Statement, Balance Sheet, and Cash Flow
Gross profit for Q4 FY2024 was $1.1 billion, a 15.5% increase compared to the same period last year. Operating expenses were $1.075 billion, or 13.2% of net sales, down from 13.5% in Q4 FY2023. Interest expense, net for Q4 FY2024 was $50 million, up from $35 million in the same period last year, primarily due to higher average interest rates and the additional week in the current year quarter.
Net cash provided by operating activities for the full fiscal year was $253 million, down from $624 million in the previous year. Free cash flow for Q4 FY2024 was $71 million, compared to $117 million in Q4 FY2023.
Analysis
United Natural Foods Inc (UNFI, Financial) has shown resilience and operational efficiency in a challenging market environment. The company's ability to grow net sales and adjusted EBITDA while managing costs effectively is a positive indicator for value investors. However, the net loss and higher interest expenses are areas of concern that need to be monitored closely.
Overall, UNFI's performance in Q4 and FY2024 demonstrates its capability to navigate through market challenges and capitalize on growth opportunities, making it a company worth watching for potential investors.
Explore the complete 8-K earnings release (here) from United Natural Foods Inc for further details.
