United Natural Foods Inc (NYSE:UNFI) Q4 2020 Earnings Conference Call - Final Transcript

Sep 29, 2020 • 08:30 am ET

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United Natural Foods Inc (NYSE:UNFI) Q4 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Ladies and gentlemen, thank you for standing by, and welcome to the UNFI Fourth Quarter Fiscal 2020 Earnings Call. [Operator Instructions].

After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Steve Bloomquist, Vice President, Investor Relations. Thank you. Please go ahead, sir.

Executive
Steve Bloomquist

Good morning, everyone. Thank you for joining us on UNFI's fourth quarter fiscal 2020 earnings conference call. By now, you should have received a copy of the earnings release issued yesterday afternoon. The press release, webcast and a supplemental slide deck are available under the Investors section of the Company's website at www.unfi.com.

Joining me for today's call are Steve Spinner, our Chairman and Chief Executive Officer; John Howard, our Chief Financial Officer; Chris Testa, President of UNFI; and Eric Dorne, our Chief Operating Officer. Steve, Chris and John will provide a business update, after which we'll take your questions.

Before we begin, I'd like to remind everyone that comments made by management during today's call may contain forward-looking statements. These forward-looking statements include plans, expectations, estimates and projections that might involve significant risks and uncertainties. These risks are discussed in the Company's earnings release and SEC filings. Actual results may differ materially from the results discussed in these forward-looking statements. And lastly, I'd like to point out that during today's call, management will refer to certain non-GAAP financial measures. Definitions and reconciliations to the most comparable GAAP financial measures are included in our press release.

With that, I'll now turn the call over to Steve.

Executive
Steven L. Spinner

Thank you, Steve. Good morning, everyone, and thanks for joining us on our year-end call. As you saw, in addition to reporting our fourth quarter and fiscal year results, we also announced the succession plan for my role as CEO. I'll speak more about that shortly, but first, we'll discuss our fiscal 2020 results.

We finished the fiscal year early last month and it truly was a monumental year for UNFI in many respects. Our financial results in the fourth quarter and for the year produced record sales and adjusted EBITDA, driven initially by the strength of our integration work and consumer demand driven by COVID, as well as UNFI's execution success. Fourth quarter sales grew 8%, while adjusted EBITDA grew 28%, resulting in a 50 basis point expansion in our adjusted EBITDA margin. This strong margin performance is a testament to the efficiency of our network and our ability to generate operating leverage as we increase our top line.

For the full year, we generated $284 million of free cash flow and reduced our net debt outstanding by nearly $390 million, exceeding our full year debt reduction expectations. Our net debt to adjusted EBITDA leverage ratio finished the year at 4 times, about a full turn lower than at the end of last year. Now, these results wouldn't have been possible without the people and