United Natural Foods Sees Customers' Appetites Grow in Fiscal 2012, Readies to Serve Up Expansions in 2013

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Researched by Industrial Info Resources (Sugar Land, Texas)--United Natural Foods Incorporated (NASDAQ:UNFI) (UNFI) (Providence, Rhode Island), a leading food distributor in the U.S. and Canada, reported solid overall gains in fiscal fourth-quarter and full-year 2012, as demand continued a long period of growth and the company prepared for further expansions. Net income was reported to be $25.14 million for the quarter, a 46.36% increase from fourth-quarter 2011, and $91.34 million for the year, a 19.13% increase from 2011.

Net sales stood at $1.34 billion for the quarter, a 15.97% increase from the same period last year, and $5.24 billion for the year, a record for the company and a 15.59% increase from 2011. During the fourth quarter, UNFI continued to see a movement in its customer base to conventional supermarkets, which contributed to the lower gross margin. During the full year, the company added specialty cheese and natural protein to its product lines, which, along with the integration of specialty across North America, contributed to $150 million in added revenue.

Net sales from UNFI's broadline distribution in Canada grew 18%, partly due to strategic acquisitions made during the year. The company's Field Day brand, which is only available to its independent retailers, grew more than 80%. All of the company's core channels of distribution grew during fiscal 2012.

Stronger net income for the quarter also was a result of $6.3 million in pre-tax expenses recorded in fourth-quarter 2011, attributed to a restructuring of the Specialty Distribution Services division. Operating expenses declined from 16% to 14% of net sales during the fourth quarter, partly as a result of fourth-quarter 2011's restructuring expenses. Capital expenditures totaled $31.49 million for fiscal year 2012, compared with $40.78 million in 2011.

Industrial Info is tracking $47 million in active projects involving United Natural Foods, including the $32 million, Phase I expansion of a food distribution center in Aurora, Colorado. The project involves constructing a 545,596-square-foot distribution center, with 120,000 square feet for a carbon dioxide cascade refrigeration system, to distribute natural, organic and specialty foods. ARCO Design-Build (Atlanta, Georgia) is serving as the general contractor. The project is expected to be completed in May 2013.

"Since 2010, UNFI sales have grown over $1.4 billion, or 40%," said Steven Spinner, the president, chairman and chief executive officer of UNFI, in a conference call. "Our strategies are working, and our business is continuing to outpace the growth of the industry as UNFI continues to expand its customer base and its product offerings."

UNFI executives expect capital expenditures for the full fiscal year 2013 to total between $70 million and $80 million. Net sales are estimated to total between $5.88 million and $5.98 million, or an increase of between 12.3% and 14.2% from 2012.

"UNFI will be embarking on a three-year plan to increase capacity to meet forecasted demand," Spinner said in the conference call. "Our new facility in Denver, Colorado, is under way, and we expect to announce added facilities in the Northeast, Midwest, and Northern California within the next six to 12 months."

He later added, "We view this need to add capacity as a terrific opportunity. Our history demonstrates that with added capacity come lower costs that serve local markets, and increased sales growth to support growing demand."

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.