United Natural Foods Cuts FY16 Outlook; To Buy Haddon House Food For $217.5 Mln

(RTTNews) - United Natural Foods Inc. (UNFI) said that it cut its fiscal year 2016 outlook. It also agreed to acquire all outstanding stock of Haddon House Food Products, Inc. and certain affiliated entities as well as certain real estate, in a cash transaction for about $217.5 million.

United Natural Foods expects GAAP net earnings per share in the range of $0.43 to $0.45 for the second quarter of fiscal 2016 compared to fiscal 2015 GAAP earnings per diluted share of $0.55 for the same period.

Adjusted for estimated severance and other transition costs due to the previously disclosed restructuring plan of $2.0 million for the three ended January 30, 2016, and anticipated acquisition costs of approximately $1.0 million in the second quarter, adjusted earnings per share is expected to be in the range of $0.47 to $0.49 for the second quarter of fiscal 2016 compared to adjusted earnings per diluted share of $0.65 for the same period of fiscal 2015, which exclude the non-recurring reduction in net sales occurring in the second quarter of fiscal 2015.

For the second quarter of fiscal 2016, the Company anticipates net sales in the range of $2.046 billion to $2.048 billion, an increase of approximately 1.5% from net sales of $2.017 billion in the same period last year.

The Company anticipates adjusted net sales for the second quarter of fiscal 2016 to increase 6.4% to 6.5% compared to the same period in fiscal 2015, excluding the year-over-year impact of the previously disclosed termination of a customer distribution contract and, for the second quarter of fiscal 2015, the previously disclosed non-recurring reduction in net sales.

Analysts polled by Thomson Reuters expected the company to report earnings of $0.62 per share and revenues of $2.07 billion for the second-quarter. Analysts' estimates typically exclude special items.

For fiscal 2016, ending July 30, 2016, the Company now expects net sales in the range of approximately $8.31 billion to $8.43 billion, an increase of approximately 1.5% to 3.0% over fiscal 2015. The Company expects GAAP earnings per share for fiscal 2016 in the range of approximately $2.27 to $2.37 compared to fiscal 2015 GAAP earnings per share of $2.76.

Adjusting for severance and other transition costs related to the aforementioned restructuring plan of $4.8 million in the first half of fiscal 2016 related to the previously disclosed termination of a customer distribution agreement and anticipated acquisition costs of approximately $1.0 million in the second quarter, adjusted earnings per diluted share for fiscal 2016 is estimated to be in the range of $2.34 to $2.44, compared to fiscal 2015 adjusted earnings per diluted share of $2.85.

The Company's revised guidance did not reflect any anticipated sales or earnings in connection with the announcement this morning to acquire Haddon House Food Products,.

Wall Street currently is looking for fiscal year 2016 earnings of $2.81 per share on annual revenues of $8.46billion. .

Previously, the Company estimated net sales in the range of approximately $8.43 billion to $8.59 billion, an increase of approximately 3.0% to 5.0% over fiscal 2015. The Company estimated GAAP earnings per share for fiscal 2016 in the range of approximately $2.73 to $2.84 compared to fiscal 2015 GAAP earnings per diluted share of $2.76. Adjusting earnings per share for fiscal 2016 were estimated to be in the range of $2.79 to $2.89.

Separately, United Natural Foods announced that it has entered into a definitive agreement to acquire all outstanding stock of Haddon House Food Products, Inc. ("Haddon") and certain affiliated entities as well as certain real estate, in a cash transaction for approximately $217.5 million, subject to certain customary post-closing adjustments.

Founded in 1960 by the Anderson family, Haddon is a well-respected distributor and merchandiser of natural and organic and gourmet ethnic products throughout the Eastern United States. Haddon has a diverse, multi-channel customer base including conventional supermarkets, gourmet food stores and independently owned product retailers.

Consummation of the transaction is subject to the satisfaction of customary closing conditions, including compliance with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and is expected to close at the start of the fourth quarter of fiscal 2016.

Upon closing, Haddon will be operated as a wholly-owned subsidiary of the Company. The transaction is expected to be accretive to the Company's earnings in fiscal 2017. The Company expects to finance the purchase price with a combination of available cash and borrowings under its revolving credit facility.