United Natural Foods Inc Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Leah Jordan - Goldman Sachs - Analyst : Good morning, and thank you for taking my question. And thank you for the initial outlook into fiscal 2025. On that, seeing if you could provide some more detail on the working capital improvements you highlighted. What is achievable near term to support the fiscal -- the free cash flow outlook for next year? And then what could take longer in your multiyear outlook? And then, just on the CapEx reduction, why does it make sense now, and how should we think about the long-term run rate? Is it that $300 million beyond '25? Thank you.

Question: Leah Jordan - Goldman Sachs - Analyst : Great, thank you. And for my follow-up, I just wanted to ask about the Whole Foods contract. Great to see that extension there. But just given the term was longer than typical you guys renegotiate for, can you talk about how that came about, and how we should compare it to your prior agreement? Any updates around volume commitments or profitability from here? Thank you.

Question: Leah Jordan - Goldman Sachs - Analyst : Thank you.

Question: Sachin Verma - UBS - Analyst : Hi, this is Sachin Verma on behalf of Mark Carden. My question is, are you still seeing much of an uptick in demand for value-added services for independents given the challenging macro? Or are they being more cautious with their spend?

Question: Sachin Verma - UBS - Analyst : Thank you. And my follow-up is, how is promotional activity trending relative to your expectations? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 05, 2024 / 12:30PM, UNFI.N - Q3 2024 United Natural Foods Inc Earnings Call

Question: Sachin Verma - UBS - Analyst : Thank you.

Question: Eli Lapp - BMO Capital Markets - Analyst : Thanks. I was wondering if you could just spend a minute going through the line item, the working capital line item from the past six months, the $165 million versus $15 million last year. Just you could give us some of the intrinsics there. That would be helpful. Thank you.

Question: Eli Lapp - BMO Capital Markets - Analyst : Okay, thank you.

Question: Julio Marquez - Guggenheim Securities LLC - Analyst : Hi. This is Julio Marquez on for John Heinbockel. Thanks for taking our question. So you mentioned you had gone through the $150 million of cost reductions and also mentioned the second round. Is there any way you can maybe size that opportunity for us or maybe parse -- pick apart where that might be coming from? And then, quick follow-up on the productivity results from the Centralia automation. What's the scope of the opportunity there for existing facilities with this new modified version? Thank you. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 05, 2024 / 12:30PM, UNFI.N - Q3 2024 United Natural Foods Inc Earnings Call

Question: Julio Marquez - Guggenheim Securities LLC - Analyst : Great, thank you.

Question: Andrew Wolf - C.L. King & Associates - Analyst : I'd like to ask sort of an open-ended general question about automation and sort of long term, obviously. What is the role of automation going to be for United Natural Foods versus sort of where you're thinking about CapEx and trying to generate free cash flow?

Question: Carla Casella - JPMorgan - Analyst : -- in that slide, you showed the $500 million term loan and $130 million FILO as a sub facility to the ABL. So does the $130 million count against your availability on the ABL going forward? And can you say where availability is pro forma today?

Question: Carla Casella - JPMorgan - Analyst : Okay. That's after quarter end?

Question: Carla Casella - JPMorgan - Analyst : Okay, awesome. And then in your multiyear plan slide, you mentioned DC network changes to reduce fixed asset base. Does that mean you're looking at consolidating or selling or closing facilities? Or would you potentially consider sale leasebacks to reduce debt? And any sense you have there in terms of where the cap rates are today?

Question: Carla Casella - JPMorgan - Analyst : Okay, great. Thanks. And just any more color you can give us in terms of the margin on the -- and maybe it helps if you give us some sense of the margin between the different businesses and where you're -- how it may differ if you're offering more services to one of your channels versus another?

Question: Carla Casella - JPMorgan - Analyst : Okay, great. Thank you.