United Natural Foods, Inc. (NASDAQ:UNFI) Q1 2018 Earnings Conference Call Transcript

Dec 07, 2017 • 05:00 pm ET


United Natural Foods, Inc. (NASDAQ:UNFI) Q1 2018 Earnings Conference Call Transcript


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Greetings, and welcome to the United Natural Foods Inc. First Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Katie Turner, for opening remarks.

Katie Turner

Thank you. Good afternoon, and thank you for joining us on UNFI's first quarter fiscal 2018 earnings conference call. By now, you should have received a copy of the earnings release issued this afternoon. This press release and webcast of today's call are available under the Investors section of the company's website, at www.unfi.com.

On the call today are Steve Spinner, Chairman and CEO; Sean Griffin, COO; and Mike Zechmeister, CFO.

(Forward-Looking Cautionary Statements)

In addition, in today's earnings release and during the call, management will provide GAAP and non-GAAP financial measures. These non-GAAP financial measures include EBITDA, EBITDA margin, free cash flow, and leverage. A complete reconciliation and explanation of these data changes and reconciliations to the most directly comparable GAAP measures is located on the Investors section of the company's website.

And I'd now like to turn the call over to Steve Spinner.

Steve Spinner

Thank you, Katie. Good evening, everyone. Today, we're excited to discuss our first quarter business highlights and then Mike will review our financial results and annual guidance. Finally, Sean, Mike, and I will take your questions once we've finished our prepared remarks. We're out of the gate in our first quarter fiscal year 2018 with very strong topline growth, which we will expect to continue throughout our fiscal year.

All of our significant customer channels saw broad-based growth with our broadline business shipping over 100 million units and leading UNFI to record quarterly sales of $2.4 billion in the first quarter. We are very encouraged by what we see. It's increasing and broad-based demand for the capabilities and solutions UNFI provides to our very diverse customer base. We expect this business momentum to continue for the balance of the year, as reflected in our increased sales and earnings guidance for fiscal 2018, which Mike will address shortly.

We believe we are uniquely positioned and, in the nexus of robust industry activity and interest in better-for-you food products and services across brick-and-mortar retail, e-commerce, food service, and international relationships. Wherever the demand is, we believe UNFI is the preferred solution. As the aforementioned momentum came on quite quickly, our ability to respond and execute at a high service and low-cost manner was challenged during the quarter.

Typically, our operational teams would plan and prepare several months in advance for the kind of ramp-up we saw in Q1, in this case we adjusted in real-time. We did incur higher than normal overtime and outside storage expenses, leading to overall lower productivity levels and higher expense ratios. I would really like to solute UNFI's management and associates teams who worked tirelessly and around the clock including dealing with two