United Natural Q2 Earnings Beat, Sales Up on Wholesale Volume Growth

United Natural Foods, Inc. UNFI delivered an impressive second-quarter performance, with revenues and earnings surpassing the Zacks Consensus Estimate and increasing year over year. The company also raised its fiscal 2025 outlook.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.United Natural reported adjusted earnings of 22 cents per share for the quarter under review, beating the Zacks Consensus Estimate earnings of 18 cents. Also, the bottom line increased from 7 cents per share reported in the year-earlier quarter.United Natural Foods, Inc. Price, Consensus and EPS Surprise United Natural Foods, Inc. price-consensus-eps-surprise-chart | United Natural Foods, Inc. QuoteNet sales rose 4.9% year over year to $8,158 million, surpassing the Zacks Consensus Estimate of $7,957 million. The increase was driven by a 3% rise in wholesale unit volumes, reflecting new business with existing and new customers, along with the effects of inflation. The increase was led by natural product growth.The second-quarter results highlight UNFI’s focus on sustainable value creation, profitability improvement and net leverage reduction, aligning with its long-term growth strategy. Achieving six consecutive quarters of sequential adjusted EBITDA growth reflects strong operational execution.UNFI continues to execute its multi-year strategy, strengthening partnerships and enhancing value for customers and suppliers. In February, the company completed the closure of its Fort Wayne distribution center as part of its efforts to streamline operations. The previously announced product-centered realignment is driving further growth and efficiency.UNFI’s Quarterly Performance by DivisionIn the second quarter of fiscal 2025, UNFI announced changes to its commercial wholesale organization by creating two divisions — one for regular grocery products, and another for natural, organic, specialty and fresh products. This will help them offer more customized solutions to customers and suppliers. Their long-term strategy is based on understanding how they can add the most value in a growing $90 billion market.Natural and Conventional experienced year-over-year sales growth of 8.2% and 2.1%, respectively, while the retail segment witnessed a year-over-year sales decline of 3.3%.Analysis of UNFI’s Costs & MarginsUNFI’s gross profit rose 3.6% year over year to $1,072 million. The gross profit margin of 13.1% contracted 20 basis points (bps) from 13.3% reported in the year-ago quarter. The factors attributable to the decline were lower product margin rates and changes in the business mix, partially offset by supplier programs, reduced shrink and increased retail gross margin rate.Operating expenses were $1,031 million compared with $1,010 million in the year-ago quarter. As a percentage of sales, operating expenses were 12.6% compared with 13% in the year-ago period. The decrease was led by the benefits of cost-saving initiatives and the leveraging impact of increased sales.Adjusted EBITDA came in at $145 million, up 13.3% from $128 million in the year-ago quarter. This marks the sixth consecutive quarter of sequential growth in adjusted EBITDA. The increase was further supported by UNFI's continued focus on stakeholder value creation and lean management.UNFI’s Financial Health SnapshotThe company had a total liquidity of $1.31 billion as of Feb. 1, 2025, including cash of nearly $44 million and $1.27 billion under the company’s asset-backed lending facility.In the second quarter of fiscal 2025, the free cash flow was $193 million, up from $116 million in the prior-year quarter. The reported figure reflects $247 million in net cash provided by operating activities, offset by $54 million in capital expenditure.Total outstanding debt, net of cash, reached $2.05 billion at the end of the quarter, representing a $182 million decrease over the first quarter of fiscal 2025. The net debt to adjusted EBITDA leverage ratio was 3.7 as of Feb. 1, 2025.United Natural’s Guidance for FY25For fiscal 2025, the company anticipates net sales of $31.3-$31.7 billion compared to $30.6-$31 billion expected earlier. The company reported net sales of $31 billion in fiscal 2024.Adjusted EBITDA is now expected to be $550-$580 million, compared with the $530-$580 million mentioned earlier. UNFI expects to deliver between a net loss of $13 million and net earnings of $3 million in fiscal 2025 versus the net loss of $31-$3 million expected earlier.United Natural envisions fiscal 2025 adjusted earnings between 70 cents and 90 cents versus the previous projection of 40 cents and 80 cents. It reported adjusted earnings of 14 cents in fiscal 2024.The company projects capital and cloud implementation expenditure of around $300 million for fiscal 2025. It anticipates a free cash flow of more than $150 million for fiscal 2025.Shares of this Zacks Rank #3 (Hold) company have risen 59.3% in the past six months against the industry’s decline of 10.4%.UNFI Stock's Past Six-Month PerformanceImage Source: Zacks Investment ResearchTop Three Consumer Staple PicksPilgrim’s Pride PPC, which produces, processes, markets and distributes fresh, frozen and value-added chicken and pork products, currently sports a Zacks Rank of 1 (Strong Buy). PPC delivered a positive earnings surprise of 25.7% in the trailing four quarters, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Pilgrim’s Pride’s current financial-year earnings indicates a decline of 2.6% from the prior-year reported level.Tyson Foods, Inc. TSN operates as a food company worldwide. It currently carries a Zacks Rank #2 (Buy). TSN delivered a trailing four-quarter earnings surprise of almost 52%, on average.The Zacks Consensus Estimate for Tyson Foods’ current fiscal-year sales and earnings indicates growth of almost 0.9% and 23.6%, respectively, from the prior-year reported levels.Post Holdings POST, which is a consumer-packaged goods holding company, has a Zacks Rank of 2 at present. POST has a trailing four-quarter average earnings surprise of 22.3%.The Zacks Consensus Estimate for Post Holdings’ current financial-year sales and EPS implies growth of 0.3% and 2.2%, respectively, from the year-ago numbers.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Tyson Foods, Inc. (TSN): Free Stock Analysis Report Pilgrim's Pride Corporation (PPC): Free Stock Analysis Report United Natural Foods, Inc. (UNFI): Free Stock Analysis Report Post Holdings, Inc. (POST): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks