United Natural Foods, Inc. (UNFI - Free Report) reported second-quarter fiscal 2023 results, with the top line beating the Zacks Consensus Estimate and increasing year over year. The bottom line missed the consensus mark and declined from the year-ago quarter’s reported figure.
Results were hurt by inflationary pressures and supply chain volatility. Management raised its fiscal 2023 sales outlook while reducing its profitability view for fiscal 2023. In addition, the company withdrew its fiscal 2024 target.
Quarter in Detail
United Natural’s adjusted earnings came in at 78 cents per share, down 42.6% from the year-ago quarter’s figure. The metric missed the Zacks Consensus Estimate of $1.38.
Net sales rose 5.4% to $7,816 million and beat the Zacks Consensus Estimate of $7,811.7 million. The year-over-year upside was mainly backed by inflation and new business. Gains from the new business resulted from selling expanded or new categories to existing and new customers. These factors were somewhat offset by the anticipated decline in units sold.
Sales increased across all UNFI’s channels. Chains, Independent retailers, Supernatural and Retail channels witnessed sales growth of 2.4%, 3.9%, 14.2% and 2.6%, respectively. Other channel sales advanced 4.8%.
United Natural’s gross profit fell 0.6% to $1,069 million. Gross margin (excluding non-cash charges) of 14% contracted from 14.8% in the year-ago quarter. The downside can be attributed to reduced current-period procurement gains stemming from decelerating inflation rate and reduced inventory gains.
The operating expenses came in at $1,002 million, up from $944 million reported in the year-ago quarter.
Adjusted EBITDA came in at $181 million, up from the $220 million reported in the year-ago quarter.
Other Updates
The Zacks Rank #3 (Hold) company ended the quarter with total liquidity of nearly $1.57 billion, including cash of nearly $40 million and borrowing capacity of about $1.53 billion under the company’s asset-backed lending facility. Total outstanding debt (net of cash) was $2.07 billion. For 26-week ended Jan 28, 2023, the company provided net cash in operating activities of $270 million. The company incurred a capital expenditure of $84 million in this period.
The company expects capital expenditures of nearly $350 million for fiscal 2023.
During the second quarter of fiscal 2023, management bought back nearly 390,000 shares for nearly $17 million.
Fiscal 2023 Guidance
For fiscal 2023, the company anticipates net sales in the range of $30.1-$30.5 billion. At the midpoint, the metric suggests a 5% rise from the fiscal 2022 reported levels. Earlier, management had anticipated fiscal 2023 net sales in the range of $29.8-$30.4 billion.
The company expects adjusted EBITDA in the range of $715-$785 million, indicating a 10% decline at the midpoint of the guidance. Earlier, management had anticipated adjusted EBITDA in the range of $850-$880 million, indicating a 4% rise at the midpoint of the guidance.
The company anticipates fiscal 2023 adjusted earnings in the range of $3.05-$3.90 per share, down from the previous guidance range of $4.85-$5.15. At the midpoint, the metric indicates a 28% slump from the fiscal 2022 reported levels.
Shares of the company have declined 25.3% in the past three months compared with the industry’s decline of 6.3%.
Some Top-Ranked Food Bets
Some top-ranked stocks are Post Holding (POST - Free Report) , Lamb Weston (LW - Free Report) and Mondelez International, Inc. (MDLZ - Free Report) .
Post Holdings, which is a consumer-packaged goods company, sports a Zacks Rank #1 (Strong Buy) at present. Post Holdings has a trailing four-quarter earnings surprise of 34.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for POST’s current financial year’s sales and earnings suggest growth of 1.6% and 111.3%, respectively, from the year-ago reported numbers.
Lamb Weston, which is a frozen potato product company, currently carries a Zacks Rank #2 (Buy). LW has a trailing four-quarter earnings surprise of 52.6%, on average.
The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year sales and earnings suggests an increase of 19.3% and 89.9%, respectively, from the year-ago reported number.
Mondelez International, which manufactures, markets, and sells snack food and beverage products, carries a Zacks Rank 2. MDLZ has a trailing four-quarter earnings surprise of 7.5%, on average.
The Zacks Consensus Estimate for Mondelez’s current financial year sales and earnings suggests growth of 9% and 7.5%, respectively, from the corresponding year-ago reported figures.
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United Natural Foods, Inc. (UNFI - Free Report) reported second-quarter fiscal 2023 results, with the top line beating the Zacks Consensus Estimate and increasing year over year. The bottom line missed the consensus mark and declined from the year-ago quarter’s reported figure.
Results were hurt by inflationary pressures and supply chain volatility. Management raised its fiscal 2023 sales outlook while reducing its profitability view for fiscal 2023. In addition, the company withdrew its fiscal 2024 target.
Quarter in Detail
United Natural’s adjusted earnings came in at 78 cents per share, down 42.6% from the year-ago quarter’s figure. The metric missed the Zacks Consensus Estimate of $1.38.
Net sales rose 5.4% to $7,816 million and beat the Zacks Consensus Estimate of $7,811.7 million. The year-over-year upside was mainly backed by inflation and new business. Gains from the new business resulted from selling expanded or new categories to existing and new customers. These factors were somewhat offset by the anticipated decline in units sold.
Sales increased across all UNFI’s channels. Chains, Independent retailers, Supernatural and Retail channels witnessed sales growth of 2.4%, 3.9%, 14.2% and 2.6%, respectively. Other channel sales advanced 4.8%.
United Natural’s gross profit fell 0.6% to $1,069 million. Gross margin (excluding non-cash charges) of 14% contracted from 14.8% in the year-ago quarter. The downside can be attributed to reduced current-period procurement gains stemming from decelerating inflation rate and reduced inventory gains.
The operating expenses came in at $1,002 million, up from $944 million reported in the year-ago quarter.
Adjusted EBITDA came in at $181 million, up from the $220 million reported in the year-ago quarter.
Other Updates
The Zacks Rank #3 (Hold) company ended the quarter with total liquidity of nearly $1.57 billion, including cash of nearly $40 million and borrowing capacity of about $1.53 billion under the company’s asset-backed lending facility. Total outstanding debt (net of cash) was $2.07 billion. For 26-week ended Jan 28, 2023, the company provided net cash in operating activities of $270 million. The company incurred a capital expenditure of $84 million in this period.
The company expects capital expenditures of nearly $350 million for fiscal 2023.
During the second quarter of fiscal 2023, management bought back nearly 390,000 shares for nearly $17 million.
Fiscal 2023 Guidance
For fiscal 2023, the company anticipates net sales in the range of $30.1-$30.5 billion. At the midpoint, the metric suggests a 5% rise from the fiscal 2022 reported levels. Earlier, management had anticipated fiscal 2023 net sales in the range of $29.8-$30.4 billion.
The company expects adjusted EBITDA in the range of $715-$785 million, indicating a 10% decline at the midpoint of the guidance. Earlier, management had anticipated adjusted EBITDA in the range of $850-$880 million, indicating a 4% rise at the midpoint of the guidance.
The company anticipates fiscal 2023 adjusted earnings in the range of $3.05-$3.90 per share, down from the previous guidance range of $4.85-$5.15. At the midpoint, the metric indicates a 28% slump from the fiscal 2022 reported levels.
Shares of the company have declined 25.3% in the past three months compared with the industry’s decline of 6.3%.
Some Top-Ranked Food Bets
Some top-ranked stocks are Post Holding (POST - Free Report) , Lamb Weston (LW - Free Report) and Mondelez International, Inc. (MDLZ - Free Report) .
Post Holdings, which is a consumer-packaged goods company, sports a Zacks Rank #1 (Strong Buy) at present. Post Holdings has a trailing four-quarter earnings surprise of 34.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for POST’s current financial year’s sales and earnings suggest growth of 1.6% and 111.3%, respectively, from the year-ago reported numbers.
Lamb Weston, which is a frozen potato product company, currently carries a Zacks Rank #2 (Buy). LW has a trailing four-quarter earnings surprise of 52.6%, on average.
The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year sales and earnings suggests an increase of 19.3% and 89.9%, respectively, from the year-ago reported number.
Mondelez International, which manufactures, markets, and sells snack food and beverage products, carries a Zacks Rank 2. MDLZ has a trailing four-quarter earnings surprise of 7.5%, on average.
The Zacks Consensus Estimate for Mondelez’s current financial year sales and earnings suggests growth of 9% and 7.5%, respectively, from the corresponding year-ago reported figures.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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