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Vision for the Future Investor Presentation November 2006
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Unfi Presentation Nov 2006

Nov 02, 2014

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  • 1. Vision for the Future Investor Presentation November 2006 United Natural Foods 1
  • 2. Forward-Looking Statements and Discussion of and Reconciliation of Non-GAAP Information Safe Harbor Regarding Forward-Looking Statements Please note that this presentation was created as of October 31, 2006, and reflected managements views as of that date. This presentation contains certain statements and projections that are forward-looking statements within the meaning of the Securities Act of 1933, the Securities Exchange Act of 1934 and the Federal Securities Litigation Reform Act of 1995, which represent the Companys expectations or beliefs concerning future events. Although the Company believes that its expectations are reasonable, it cannot and does not give any assurance that such expectations will prove to be correct. Certain phases of the Companys operations are subject to influences and factors outside its control as described in the Companys reports on Forms 10-K and 10-Q and other filings with the Securities and Exchange Commission. Any one of these factors or any combination of these factors could materially affect the results of the Companys operations, and cause actual results to differ materially from the Companys expectations. The Company may update or revise these projections from time to time but is under no obligation to do so. Discussion and Reconciliation of Non-GAAP Information This presentation also includes certain non-GAAP information. Included on the Companys website is a reconciliation of the non-GAAP Information to the most relevant GAAP information and an explanation of why management views the non- GAAP information as relevant. United Natural Foods 2
  • 3. Wholesale Distribution to the Natural Products Industry Diversified sales base of approximately 18,000 customers in every class of trade with more than 40,000 different products Servicing customers nationwide from 17 distribution centers Sophisticated inter-regional logistics system Over 4,500 associates United Natural Foods 3
  • 4. Attractive Industry Fundamentals $51 billion industry fueled by sustainable consumer trends Fastest growing sector of overall food industry 9% growth rate versus 0% - 2% for overall grocery industry Represents approximately 9% - 10% of grocery and related sales Driven by demand for a healthy lifestyle, food safety concerns and concerns over the impact on the environment Competition One national competitorWessanen (parent company of Tree of Life) Regional competitors Natures Best, located in Southern California 200 plus local and regional distributors United Natural Foods 4
  • 5. Percent of Distribution Sales by Channel Revenue growth of approximately 18.8% in FY2006 Strong growth in our major customer channels Supernaturals SuperMarkets Independents Foodservice Supernaturals - Includes two national natural product supermarket chains (Whole Foods Market, Inc. and Wild Oats Markets, Inc.) Independents - Range from mom and pop to regional chains SuperMarkets - Includes conventional Other supermarkets, mass merchandisers, Foodservice 2% Supernaturals club stores, and convenience stores Super 2% Markets 15% Food service Includes Sodexho, Aramark, 35% Med Assets and the Compass Group Other International, buying clubs and 47% non-distribution divisions Independents United Natural Foods 5
  • 6. Multiple Competitive Advantages Largest natural products distributor with national infrastructure Most efficient distributor of Natural and Organic products Larger distribution centers with more freezer / cooler capacity Largest product selection (more than 40,000) supplying all store departments National purchasing power with regional marketing Key relationships with leading natural products retailers Whole Foods agreement runs through September 2013 (7yrs.) Wild Oats agreement runs through March 2009 (5 yrs.) Sub distribution arrangements with Food Service distributors Strong management team Highest service levels in natural products industry 97%+ order fulfillment rates Same day/next day delivery United Natural Foods 6
  • 7. Largest Distributor with Nationwide Presence Wholesale Locations Alberts Organics Hershey Import Natural Retail Group Planned New Distribution Centers United Distribution West United Distribution East United Natural Foods 7
  • 8. Investment in Warehouse Capacity & Technology Over the past six years, we have invested over $150 million in distribution capacity and infrastructure improvements. We have increased our capacity by 124%, or close to 1,900,000 square feet: Fiscal 2006 New facility in Rocklin, California replacing two facilities in Auburn, California Fiscal 2005 New facility in Greenwood, Indiana Fiscal 2004 Iowa City, Iowa, Dayville, Connecticut and Aurora, Colorado expansions Fiscal 2003 Chesterfield, New Hampshire expansion and Aurora, Colorado modernization Fiscal 2002 Atlanta, Georgia and Fontana, California Fiscal 2001 New Oxford, Pennsylvania expansion New facilities planned for the Pacific Northwest, Florida and Texas in fiscal 2007 and fiscal 2008, adding an additional 750,000 sq. ft. of distribution capacity. Capacity utilization of approximately 75% with 3.5 million sq. ft. of warehouse space. Installation of new technologies such as pick-to-voice and pick-to-light into existing facilities to improve productivity, lower operating costs and reduce errors. United Natural Foods 8
  • 9. Largest Product Selection Supplying All Departments Over 40,000 high-quality products in all retail categories Introduce 150 - 350 new products per month Largest vendor Hain Celestial Group at approximately 8% of purchases National, regional, private label assortment 65% common across the company QAI (Quality Assurance International) certification Reaffirms our purpose and commitment to natural and organic products Frozen Foods Produce/Perishables 12% 19% Personal Care Items Grocery/ 6% General Merchandise Bulk & 7% Food Service Products 48% 8% Nutritional Supplements & Sports Nutrition United Natural Foods Is Not Dependent on Any Single Category or Supplier United Natural Foods Is Not Dependent on Any Single Category or Supplier United Natural Foods 9
  • 10. Growth Opportunities Sales growth opportunities within existing channels UNFI branded products Growing at 50% annually Target of 5% of net sales by FY 2008 Fragmented industry offers acquisition opportunities, including branded product lines UNFI has completed 30 acquisitions since 1985 New sales channel opportunities Food service International United Natural Foods 10
  • 11. Financial Highlights United Natural Foods 11
  • 12. Strong Operating Performance ($ in millions) Net Sales Operating Income* $2,434 $2,500 $84 $90 $2,060 CAGR=17.8% CAGR=43.4% $73 $80 $2,000 $1,670 $70 $60 $1,380 $60 $1,500 $46 $1,175 $42 $50 $1,016 $908 $40 $31 $1,000 $30 $20 $500 $10 $10 $0 $0 2000 2001 2002 2003 2004 2005 2006 2000 2001 2002 2003 2004 2005 2006 Fiscal Years Ended July Fiscal Years Ended July *Excludes special items United Natural Foods 12
  • 13. Recent Financial Performance ($ in millions) Net Sales $637 $650 $620 $601 $576 $600 $543 $534 $550 $505 $478 $500 $446 $449 $450 $393 $381 $400 $350 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 Sales Growth 30% 28% 25% 26% 23% 23% 22% 22% 21% 22% 19% 19% 18% 16% 16% 15% 14% 10% 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 NOTE: Fiscal 2006 sales growth percentages are calculated based on comparable shipping days, excluding acquisitions. United Natural Foods 13
  • 14. Operating Margin* (Percent) 4.0 3.8 3.8 3.6 3.5 3.0 3.8 3.7 3.7 3.6 3.6 3.6 3.6 3.5 3.4 3.4 3.4 3.3 2.0 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 *Amount in Green represents operating margin excluding special items. Amount in Blue represents operating margin excluding special items and share-based compensation. United Natural Foods 14
  • 15. Working Capital Days Sales Outstanding 26 25 25 24 24 24 24 24 24 24 24 23 23 22 22 20 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 Days In Inventory 54 52 51 51 50 50 50 50 49 48 48 47 47 46 46 46 46 44 42 40 1Q04 2Q04 Q304 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 United Natural Foods 15
  • 16. Balance Sheet Strength As of As of July 29, July 31, % ($ in millions) 2006 2005 Change Total Assets $ 700.6 $ 651.3 7.6% Total Equity $ 349.2 $ 295.5 23.0% Debt to Equity 0.52 0.66 20.8% Return on Total Capital* 21.0% 20.0% 4.7% Return on Equity* 13.2% 14.2% (7.0%) Enterprise Value $1,484.6 $1,587.0 (6.5%) *Excludes special items and share-based compensation United Natural Foods 16
  • 17. Comparative Stock Performance . 240 230 220 210 200 190 180 170 160 150 140 130 120 110 100 90 80 70 FY03 FY04 FY04 FY04 FY04 FY05 FY05 FY05 FY05 FY06 FY06 FY06 FY06 FY07 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Stock price as of July 31, Nasdaq Composite S & P 500 base period 2003 UNFI Natural & Organic Index* Wholesale Distributor Index** NASDAQ 1,735.02 S & P 500 990.31 UNFI $15.29 * The Natural and Organic Index includes: Wild Oats Markets, Inc., Whole Foods Market Inc., Hain Celestial Group Inc., Lifeway Foods and SunOpta Inc. Natural & Organic Index* (Composite) $61.64 ** Wholesale Distributor Index includes Performance Food Group, Supervalu Inc., Sysco Corp and Nash Finch Wholesale Distributor Index** Co. (Composite) $108.24 United Natural Foods 17
  • 18. Recent Financial Performance DAILY DATA: September 1, 2005 through September 30, 2006 5,000 36 Volume (in thousands) 4,000 32 Price ($) 3,000 2,000 28 1,000 - 24 Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept 05 06 United Natural Foods Inc.: Price (right axis) United Natural Foods Inc.: Volume (left axis) Stock Price (1) 2006A FYE EPS (2) $30.99 $1.09 2007P FYE EPS (3) Market Cap (mm) $1,309.59 $1.30 Firm Value (mm) (4) $1,495.81 Firm Value/LTM Revenue (4) 0.60 (1) Stock price and Market Cap as of 09/30/06. (2) 2006A FYE EPS is presented before special items. (3) 2007P FYE EPS is Wall Street analysts median estimate quoted from First Call as of 10/16/2006. (4) Firm Value as of 09/30/06; LTM: Last twelve months. United Natural Foods 18
  • 19. UNFI Fiscal 2007 Guidance Top line growth of approximately 11% to 15% over fiscal 2006, or $2.7 billion to $2.8 billion. Earnings per share, of $1.25-$1.30 per diluted share. Anticipated share-based compensation expense of approximately $5.5 million to $7.0 million pre-tax, or $0.08 to $0.10 per diluted share after taxes. Capital expenditures of $40 - $45 million. United Natural Foods 19
  • 20. UNFI Guidance (continued) Historically, interest rate swaps, distribution facility expansions, distribution facility relocations and asset impairment charges (including goodwill) have been classified as special items. However, at this time we are not aware of any special items that may be incurred in fiscal 2007. The Companys guidance is based on a number of assumptions, which are subject to change and many of which are outside the control of the Company. If any of these assumptions vary, the Companys guidance may change. There can be no assurance that the Company will achieve these results. United Natural Foods 20
  • 21. NASDAQ: UNFI Named by Forbes Magazine One of Americas Best Big Companies in 2006 and One of America's Best Managed Companies in 2005 and ranked by Business Ethics as one of its 100 Best Corporate Citizens for 2006 United Natural Foods 21