United Natural Foods reported financial results for the first quarter of fiscal 2015 ended November 1, 2014.
First Quarter Fiscal 2015 Highlights
Net sales increased 24.4% to $1.99 billion compared to $1.60 billion for the same period last fiscal year
Operating income increased 21.6% to $58.4 million for the first quarter of fiscal 2015 compared to $48.0 million for the same period last fiscal year
Diluted EPS increased 17.9% to $0.66 for the first quarter of fiscal 2015, compared to $0.56 for the same period last fiscal year
"UNFI achieved record sales of almost $2 billion during our first quarter of fiscal 2015 and comparable sales growth recovered nicely after experiencing a modest slowdown during the first few weeks of the quarter," said Steven Spinner, President and Chief Executive Officer.
Net sales for the first quarter of fiscal 2015 increased 24.4%, or $390.5 million, to $1.99 billion from $1.60 billion in the first quarter of fiscal 2014. The first quarter of fiscal 2015 included incremental net sales of approximately $227.7 million, resulting from the Company's acquisitions of Trudeau Foods in the first quarter of fiscal 2014 and Tony's Fine Foods ("Tony's") in the fourth quarter of fiscal 2014.
Gross margin decreased 92 basis points to 16.0% for the first quarter of fiscal 2015 compared to 16.9% for the same period last year. Gross margin for the first quarter of fiscal 2015 was negatively impacted primarily by the dilution from Tony's sales in the quarter, while shifting customer mix, inbound freight costs and foreign exchange from the declining value of the Canadian dollar on the Company's Canadian business also contributed to the year-over-year decline.
Total operating expenses were 13.1% as a percentage of net sales for the first quarter of fiscal 2015, a decrease of 85 basis points compared with the same period last fiscal year. Total operating expenses increased $37.5 million, or 16.8%, to $260.6 million for the first quarter of fiscal 2015 as compared to $223.2 million in the first quarter of fiscal 2014, primarily due to higher sales volume. Total operating expenses for the first quarter of fiscal 2015 included non-recurring costs of approximately $1.0 million related to the startup of the Company's Hudson Valley, New York facility, $0.6 million associated with the write-off of an intangible asset related to the Company's Canadian division, which was acquired in June 2010, and approximately $0.3 million in remaining costs related to the Company's acquisition of Tony's.
Operating income increased 21.6%, or $10.4 million, to $58.4 million for the first quarter of fiscal 2015 compared to $48.0 million for the first quarter of fiscal 2014. As a percentage of net sales, operating income for the first quarter of fiscal 2015 decreased 7 basis points to 2.9% compared to the same period last fiscal year.
Net income for the first quarter of fiscal 2015 increased $5.3 million, or 19.0%, to $33.0 million, or $0.66 per diluted share, from $27.8 million, or $0.56 per diluted share, for the first quarter of fiscal 2014.
"Tony's Fine Foods performed extremely well during their first quarter as part of UNFI, and we look forward to rolling this perishable platform out across the US as we look to both existing and new customers," added Mr. Spinner. "As we discussed at our analyst day in October, our newest distribution facilities, located in Racine, Wisconsin and Hudson Valley, New York, were designed to handle the unique storage requirements of these exciting products."
Fiscal 2015 Guidance
Based on UNFI's performance to date and the current outlook for the remainder of fiscal 2015, UNFI is reaffirming its previous guidance for fiscal 2015 provided on September 17, 2014. For fiscal 2015, ending August 1, 2015, the Company expects net sales in the range of approximately $8.13 to $8.38 billion, an increase of approximately 19.7% to 23.7% over fiscal 2014. The Company estimates GAAP earnings per diluted share for fiscal 2015 in the range of approximately $2.88 to $3.01 per share, an increase of approximately 14.3% to 19.4% over fiscal 2014 GAAP earnings per diluted share of $2.52.
Conference Call & Webcast
The Company's first quarter 2015 conference call and audio webcast will be held today, Thursday, December 4, 2014 at 8:30 a.m. EST. The audio webcast of the conference call will be available to the public, on a listen-only basis, via the Internet at the Investors section of the Company's website at www.unfi.com. The online archive of the webcast will be available on the Company's website for 30 days.
