United Natural Foods Inc (UNFI) is experiencing a surge in its stock price in pre-market trading after the company delivered impressive fourth-quarter earnings that exceeded analyst expectations. The grocery wholesaler reported a robust 10% year-over-year increase in sales, reaching $8.15 billion, surpassing the analyst consensus estimate of $7.94 billion. This growth was fueled by inflation and a positive shift in unit volume towards the end of the quarter.
UNFI’s strong performance extended beyond sales. Gross margin expanded to 13.7% from 13.0% in the previous year, attributed to lower shrink expenses. This resulted in a 15.5% year-over-year increase in gross profit, reaching $1.1 billion. Adjusted EBITDA also experienced a significant jump, soaring 53.8% year-over-year to $143 million. The company’s adjusted EPS of $0.01 outperformed the consensus loss estimate of $0.10. Free cash flow for the quarter stood at $71 million.
As of August 3rd, UNFI had approximately $40 million in cash on hand, along with an unused capacity of approximately $1.24 billion under its asset-based lending facility.
Looking ahead, UNFI projects FY25 sales in the range of $30.3 billion to $30.8 billion, exceeding the consensus estimate of $30.9 billion. The company also anticipates adjusted EPS to fall between $0.20 and $0.80, surpassing the consensus estimate of $0.57.
Sandy Douglas, UNFI’s Chief Executive Officer, expressed confidence in the company’s performance, stating, “We are also actioning key elements of our updated strategy that has resulted from our ongoing board- and management-led financial review, which we expect will drive accelerating performance and create sustainable value for our customers and suppliers.” He further highlighted the company’s achievements during fiscal 2024, including strong customer growth, extending an agreement with its largest customer, realizing $150 million in benefits from efficiency initiatives, significantly reducing shrink, extending the maturity on its term loan, and welcoming new President and CFO, Matteo Tarditi.
Investors interested in gaining exposure to UNFI can consider funds like Northern Lights Fund Trust III Counterpoint Quantitative Equity ETF (CPAI) and Invesco Exchange-Traded Fund Trust II Invesco S&P SmallCap 600 Revenue ETF (RWJ).
In pre-market trading on Tuesday, UNFI shares climbed 9.51% to $18.42.
