United Natural Foods’ FQ3 results top expectations, keeps FY25 profit guidance

Led by higher wholesale volume, inflation, and demand for natural foods, United Natural Foods’ (NYSE:UNFI) fiscal third quarter results beat on both the top- and bottom-line, driving the stock price up more than 7% in premarket trading.

“I’m pleased that our focus on becoming a more efficient and effective value-adding partner for our customers and suppliers is leading to steady margin improvement, including a higher year-over-year adjusted EBITDA margin rate and increased free cash flow,” said Sandy Douglas, UNFI’s CEO.

United Natural Foods (NYSE:UNFI), a major supplier to Amazon’s (AMZN) Whole Foods grocery chain, realized a 7.5% increase in sales with the sale of natural foods rising 12% and conventional foods up 2.7%. This contributed to a 340% increase in the company’s profit to $0.44 per share, $0.22 better than expected. Adjusted EBITDA improved 21% to $157M.

On the balance sheet, free cash flow more than doubled to $119M, reflecting net cash provided by operations of $173M less $54M paid for capital expenditures.

To reflect the impact from the recent cybersecurity incident and exiting its northeast supply agreement with Key Food Stores, United Natural Foods (NYSE:UNFI) lowered its unadjusted EPS estimate to a loss of $0.90 to $1.30 per share from initial guidance of a loss of $0.15 to a profit of $0.05 per share.

However, despite solid FQ3 results, the company is maintaining its current guidance for an adjusted profit of $0.70 to $0.90 per share on sales of $31.3B to $31.7B. This straddles the consensus estimates of $0.82 and $31.57B, respectively.

Expectations for adjusted EBITDA was also left unchanged at $550M to $580M and free cash flow of greater than $150M.