UNFI Piper Jaffray Non-Deal Roadshow- 09-01-2015

8/20/2019 UNFI Piper Jaffray Non-Deal Roadshow- 09-01-2015

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BUILDING OUT THE STOREStephens Non-Deal Roadshow

September 1, 2015

Boston, MA


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2

Disclaimer

The following information contains forward-looking statements. These forward looking statements are based on Management’s

current expectations and beliefs, as well as a number of assumptions, estimates and projections concerning future events.These statements, which are identified by words like "anticipate," "believe," "could," "estimate," "expect," "intend," "may,""plans," "seek," "should,” "will," "would" and similar expressions, are subject to risks, uncertainties, changes in circumstances,assumptions and other important factors, many of which are outside Management’s control, that could cause actual results todiffer materially from the results discussed in the forward-looking statements. Such factors include, but are not limited to: ourdependence on principal customers; the relatively low margins and economic sensitivity of our business; our sensitivity togeneral economic conditions, including the current economic environment, changes in disposable income levels and consumerspending trends; increased fuel costs; our ability to reduce our expenses in amounts sufficient to offset our increased focus onsales to conventional supermarkets and the resulting lower gross margins on these sales; the ability to identify and successfullycomplete acquisitions of other natural, organic and specialty food and related product distributors; management's allocation ofcapital and the timing of capital expenditures; and our sensitivity to inflationary pressures. A more detailed description of these

and other risks is contained in our most recent annual report on Form 10-K filed with the Securities and Exchange Commissionon October 1, 2014 and in any prospectus. You are cautioned not to put undue reliance on such forward-looking statementsbecause actual results may vary materially from those expressed or implied. All forward looking statements are based oninformation available to Management on this date, and United Natural Foods, Inc. assumes no obligation to, and expresslydisclaims any obligation to, update or revise any forward-looking statements, whether as a result of new information, futureevents or otherwise.

This presentation also contains certain non-GAAP financial measures such as EBITDA and free cash flow. Management believesthat EBITDA and free cash flow are measures commonly reported by issuers and widely used by investors as indicators of acompany’s operating performance and cash flow liquidity. These non-GAAP financial measures, while providing useful

information, should not be considered in isolation or as a substitute for United Natural Foods, Inc.’s net earnings as an indicatorof operating performance or as an alternative to cash flow as a measure of liquidity. Investors should carefully consider thespecific items included in our computations of EBITDA and free cash flow. EBITDA and pro forma free cash flow do not have anystandardized meanings prescribed by GAAP and, therefore, are unlikely to be comparable to similar measures presented byother companies. Reconciliations between certain non-GAAP financial measures and the GAAP financial measures are included inthis presentation as relevant.


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Overview

• Investment Highlights

• Company Overview

• We are the Market Leader

• Growth

– Building out the Store

– Thrive Drives Margin Growth

• Financials

• Culture of Sustainability


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Investment Highlights

INVESTMENT HIGHLIGHTS


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5

Key Investment Highlights

• #1 Merchandiser of Natural and Organic in North America at $8

Billion USD• Highly Efficient Supply Chain & Logistics with 33 Distribution

Centers

• Long-Standing Customer & Supplier Relationships

• Attractive Market Fundamentals — Large, Growing and Fragmented• Diverse Supplier, Product & Customer Base

• UNFI has outpaced industry growth by > 200 basis points per year

• Strategically Acquisitive

• Annual Growth rate >14%

• Sales & Earnings Doubled since 2009


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COMPANY OVERVIEW


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Company Overview

• Leading distributor of natural, organic and specialty products(1)

• Serve more than 40,000 customer locations with over 80,000different products

• Product innovation – introduction of 12,000+ new products per year

• Serves customers nationwide in U.S. and Canada with 33 distributioncenters and more than 7.8 million square feet in warehouse space

• A sophisticated logistics, supply chain & transportation managementsystem

• More than 8,800 associates

• Strong culture of Sustainability & Philanthropy

(1) Based on sales volume


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Nationwide Presence in the U. S. and Canada

33 distribution centers in the

U.S. and Canada.

Strategically located to provide:

• efficient service

• close to the customer• speed to market

• reduced carbon footprint

UNFI Distributio n

Atlanta, GA

Auburn, WA

Aurora, CO

Chesterfield, NHDayville, CT

Greenwood, IN

Hudson Valley, NY

Iowa City, IA

Lancaster, TX

Leicester, MA

Moreno Valley, CA

Racine, WI

Ridgefield, WA

Rocklin, CA

Sarasota, FL

Twin Cities (Prescott, WI)

York, PA

UNFI Distributio n - Opening Soon!

Gilroy, CA – Winter 2016

Canadian Distribution

Richmond, BC

Burnaby, BC

Concord, ON

St. Laurent, QC

Trudeau Distribution

Minneapolis, MN

Tony’s Fine Foods

West Sacramento, CA

Ridgefield, WA

Yuba City, CA

Alber t’s Org anic s

Aurora, CO

Logan Township, NJ

Charlotte, NC

Chesterfield, NH

Mounds View, MN

Sarasota, FL

Vernon, CA

Woodstock Farms® Manufacturing

Edison, NJ

Select Nutrition

Auburn, CA

Philadelphia, PA (includes Honest Green)

Earth Origins

Lake Mary, FL

Palm Harbor, FL

Port Charlotte, FL

Sarasota, FL

Ocala, FL

Gainesville, FL

St. Petersburg, FL

Easton, MD

Baltimore, MD

Centerville, MA


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UNFI Broadline Distribution Network

ROC

MOR

SEA

RID

DEN

TEX

IOW

GRW

ATL

SAR

YRK

CHE

DAY

GIL

TWC

SNW

RAC

HVA

ExistingNew

NYCSanFrancisco

Chicago

Houston

LosAngeles

Seattle

Dallas

Closest by far to all major customer markets

Denver


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UNFI Broadline Distribution Network

Closest to our natural & organic supplier partners

ROC

MOR

Allowing for freight optimization:Consolidation of LTL vendors – into full loads

Resulting in the lowest inventoryacquisition and inbound transportationcosts in our industry


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Company Overview – Diversified Products

Highly Diversified customer, product

and suppliers

Strategic business units that build out

the store across multiple categories:

• Nutritional & Personal Care

• Frozen Foods• Dairy

• Produce & Perishables

• Protein

• Specialty Cheese

• Grocery / General Merchandise

• Gourmet & Ethnic

• Ecommerce

• Deli

• Foodservice

• Bakery


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WE ARE THE MARKET LEADER


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We are the Market Leader

Largest distributor of natural, organic and

specialty products(1) in the U.S. and Canada.

Integrated platform allows for thedistribution of natural, organic and specialtyproduct to a broad range of customers.

Network creates significant advantages oversmaller or regional distributors:

• Broader product selection

• Additional service offerings

• Operational excellence

• Scale

Grocery /General

Merchandise54%

Produce &Perishables

20%

Frozen Foods13%

Bulk & FoodService

Products5%

Personal CareItems

5%

Nutritional

Supplements& SportsNutrition

3%

Sales by Product

Supernatural35%

Independent32%

ConventionalSupermarket

26%Other

7%

Sales by Channel

(1) Based on sales volume (2) Third quarter of fiscal 2015 (3) Third quarter of fiscal 2015

(2)

(3)


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Attractive Market Fundamentals

Large, Growing and Fragmented

Rapidly growing natural, organic and specialty products driven by demand for

a healthy lifestyle, food safety and the consumer’s environmental awareness.

10.5% growth rate in natural products(1) at retail, and 8.0% growth rate inspecialty products(2) with marginal growth for overall grocery industry.(1)(2)

Specialty foods represent 10.6% of total U.S. food sales.(3)

Only one national competitor ~40% the size of UNFI.(4)

Highly fragmented competitive environment. 200+ local and regionalcompetitors across the U.S.

(1) Natural Foods Merchandiser/Nutrition Business Journal – June 2014. Market size reflects calendar 2013(2) NASFT – The State of the Specialty Food Industry 2014 – April 2014. The study excludes sales at Whole Foods, Wal-Mart & Trader Joe’s. Market size reflects 2013(3) NASFT – The State of the Specialty Food Industry 2013 – April 2013. The study excludes sales at Whole Foods, Wal-Mart & Trader Joe’s. Market size reflects 2012(4) KeHE Distributors sales of “$2.8 billion for fiscal 2014” per Moody’s Investors Service – July 2014

$109.5 Billion (1) Natural Products Industry $88.3 Billion (2) Specialty Industry


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Market Growth – Great for UNFI

New DoorsDrivingGrowth

Saturation?

Overall

DemandContinues

Industry

DynamicsSupport UNFI

network

Major barriers to

entry

PerishablesRule

UNFI is

Diversified


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GROWTHBUILDING OUT THE STORE


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Pipeline for Growth

Expansion of Revenue Pipeline

Expansion of Operating Margin Pipeline

M&A & Tony’s

DEMAND e-Commerce

Customer Expansion

THRIVE

I/O WMS

CAPACITY


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Building out the Store 2015-2017


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Increase Market Share of Existing Customers’ Business

Primary supplier to majority of natural

products customer base includingWhole Foods

Expand share in existing channels

Broadest product selection

Growth through SKU expansion

Selected Current Customers

Leading Brands


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Opportunity: New Channels – Gourmet & Ethnic

Opportunity – $5B Long term

UNFI =12% of the Natural & Organicmarket, but only 1.5% of theGourmet & Ethnic Market.

5% ($4.3B/yr.) of Gourmet & Ethnicsales occur in the Natural Channel.

Gourmet & Ethnic products aregrowing +14.5%.

Natural

UNFI

UNFI

OPPORTUNITY

Gourmet& Ethnic

(+14.5%)

12%

1.5%

$50B

$6.0B

Building out Ethic Gourmet Channel


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UNFI Provides The Broadest Selection

4,100Active Suppliers

65,000Unique SKUs

6,000+ New Products/Yr .

UNFI Retail Category Management (RCM)

The Right SKUs Customized for the Retailer’s Shelf


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UNFI Provides Delivery Intelligence

• The Only IntelligentOrdering Device

• FREE to Customers

• $858m Current Orders• Promotion Information

• Faster CatalogDownloads

• Higher Fill Rate

Proximity to the

Customer

Customers Can:

• Check their in-progressdelivery status

• Understand if theirdelivery was “on time” ,or “within theirscheduled window”

• Shorter Distanceto the Customer= Faster Deliveries


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UNFI Provides Delivery Intelligence

Customer PlacesOrder on

iUNFI device

Order is pickedat Local UNFI DC

Customer is notifiedand ready to receiveorder with full staff


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Customer Need: Translate Retail to E-Tail

The Landscape

Consumer Demand for Grocery e-Commerce is Growing andThreatens the Traditional Retail Model

1% Online

+$600b +21.1%Online

+3.1%Offline

Millennials

Are More Willingto Pay a Premiumfor Home Delivery

≈2X more likelythan Gen X

≈3X more thanBoomers

Groceries are thebiggest untapped

Opportunity ine-Commerce

2013-2018Expected CAGR

Grocery

Source: BI Intelligence & Harris Interactive June 2014


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UNFI is Prepared for e-commerce

2012

Acquisition of

Current• 15,000 SKUs• Select Nutrition-PA• Primarily Non-Grocery

May 2015

• Hudson Valley• 8-14K “each” SKUs• 20K Case SKUs• Direct to Home or Direct

to Store• High Quality Images

Future• Expand Drop Ship

Capability to Mid Westand West DC’s

• Broad Assortment

• Shorter ShippingDistance

Direct to Store• Lower freight• in-store traffic

Direct to Home• Convenient


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Tony’s Nationwide Consolidation


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Building out “the perimeter”


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Continue to Selectively Pursue Opportunistic Acquisitions

Recent strategic acquisitions include:

• September / October 2010 – Acquired Whole Foods Markets’ remainingtwo non-perishable distribution centers(1)

• November 2011 – B.K. Sethi Distribution Ltd.

• August 2012 – Disley Food Services, Inc. & Purity Organic Holdings, Inc.

• September 2012 – Honest Green (Green Irene, LLC)

• September 2013 – Trudeau Foods, LLC

• July 2014 – Tony’s Fine Foods

• Fragmented competitive landscape provides additional acquisitionopportunities, including potential for “fold-in” regional specialtyacquisitions

• Canadian footprint provides a platform for growth• Potential to acquire “SKU extensions”

Oct ’02 Dec ’02 Dec ‘04 Jul ’05 Nov ’07 Jan ‘08 Jun ‘10 Sept/Oct ‘10 Sep ’13 Jul ’14

Canadian food

distribution Assets ( 1)


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Investment HighlightsFINANCIAL HIGHLIGHTS


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$1,670$2,060

$2,434$2,754

$3,366 $3,455$3,757

$4,530

$5,236

$6,064

$6,794

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14

$58$73 $80

$93 $92$110 $115

$130

$155

$185

$211

$25

$50

$75

$100

$125

$150

$175

$200

$225

$250

FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14

N o t e : D o l l a r s i n m i l l i o n s

Growth 20.6% 12.0%8.7%21.0% 23.3% 18.2% 13.2% 22.2

%2.6% 15.8

%

Growth 43.3% 24.0% 10.2% 17.0% (1.1)% 18.9% 4.5% 12.9% 13.6%

Sustained Financial Strength

Sales

Operating Income

30

15.6%

19.6%19.6%


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Channel Growth FY 12 – FY 15

31

23.4%22.2%

10.6% 10.4%

16.8% 16.4%15.3%

13.8%15.1%

9.2%7.6%

5.9%

22.0%

23.0%

24.0%

25.0%

26.0%

27.0%

28.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

Q

4 F Y 1 2

Q

1 F Y 1 3

Q

2 F Y 1 3

Q

3 F Y 1 3

Q

4 F Y 1 3

Q

1 F Y 1 4

Q

2 F Y 1 4

Q

3 F Y 1 4

Q

4 F Y 1 4

Q

1 F Y 1 5

Q

2 F Y 1 5

Q 3 F Y 1 5

Comparable Sales Growth % of Total UNFI Sales

Supermarket Channel FY12-FY15

9.5%9.0%

7.6%8.0% 7.7%

8.6%

11.0%

9.7%

8.4% 8.2%

6.9%

3.2%

31.0%

32.0%

33.0%

34.0%

35.0%

36.0%

37.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Q 4 F Y 1 2

Q 1 F Y 1 3

Q 2 F Y 1 3

Q 3 F Y 1 3

Q 4 F Y 1 3

Q 1 F Y 1 4

Q 2 F Y 1 4

Q 3 F Y 1 4

Q 4 F Y 1 4

Q 1 F Y 1 5

Q 2 F Y 1 5

Q 3 F Y 1 5


Independent Channel FY12-FY15

• Our growth consistently exceeds overall

industry growth despite fluctuations between

channels or individual customers.

17.5%

16.4%

14.4%

15.4%

13.4%

12.6% 12.7%

11.9%

9.3%

11.0%10.7%

9.8%

32.0%

33.0%

34.0%

35.0%

36.0%

37.0%

38.0%

8.0%

9.0%

10.0%

11.0%

12.0%

13.0%

14.0%

15.0%16.0%

17.0%

18.0%

Q

4 F Y 1 2

Q

1 F Y 1 3

Q

2 F Y 1 3

Q

3 F Y 1 3

Q

4 F Y 1 3

Q

1 F Y 1 4

Q

2 F Y 1 4

Q

3 F Y 1 4

Q

4 F Y 1 4

Q

1 F Y 1 5

Q

2 F Y 1 5

Q 3 F Y 1 5


Supernatural Channel FY12-FY15


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$1,217$1,287

$1,388$1,344

$1,410 $1,446

$1,566$1,642 $1,602 $1,646

$1,782 $1,765

$1,992 $2,024$2,115

$900

$1,100

$1,300

$1,500

$1,700

$1,900

$2,100

$2,300

1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13* 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15

Track Record of Delivering Strong Financial Results

Net Sales

Sales Growth

Note: Green represents comparable sales growth, excluding acquisitions. Blue represents total sales growth including the impact of acquisitions.

13% 15% 15%16% 15%

11% 12%

21%13% 13% 13%

4%

10% 8% 7%

16% 15% 15% 16% 16%

12% 13%

22%

14% 14% 14%

7%

24%23%

19%

0%

5%

10%

15%

20%

25%

30%

1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13* 1Q14 2Q14 3Q14 4Q14** 1Q15 2Q15 3Q15

N o t e : D o l l a r s i n m i l l i o n s

32

14 weeks

14 weeks

* Fiscal 2013’s fourth quarter comparable growth, adjusting for the extra week, was 13.4%

** Fiscal 2014’s fourth quarter comparable growth, adjusting for the extra week in FY13, was 15.8%.


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Leverage Profile

1.39

1.17

0.60

0.690.85 0.82

0.72

1.09 1.091.15

1.73

2.00 1.951.86

0.0

0.5

1.0

1.5

2.0

2.5

2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15

T i m e s L e v e r e d

Note: The Company defines leverage as total outstanding debt divided by the sum of operating income anddepreciation & amortization on a trailing twelve months basis.

33


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Fiscal 2016 Guidance

Revenues expected to increase by approximately 4.0% to 6.0% over

fiscal 2015, to a range of $8.51 billion to $8.67 billion.

GAAP diluted earnings per share in the range of $2.80 to $2.93, anincrease of approximately 1.1% to 6.2% over fiscal 2015.

Adjusted diluted earnings per share in the range of $2.86 to $2.98, an

increase of approximately 0.0% to 4.6% over fiscal 2015, adjusted forthe impact of the $7.7 million reduction in net sales.

Gross capital expenditures in the range of $49 - 59 million.

Effective tax rate expected to be 39.4% - 39.8%.

The Company’s guidance is based on a number of assumptions, which are subject to change and many ofwhich are outside the control of the Company. If any of these assumptions vary, the Company’s guidancemay change. There can be no assurance that the Company will achieve these results.


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Culture of Sustainability

CULTURE OF SUSTAINABILITY


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Sustainable Commitment

Decreasing our Carbon Footprint

In 2014, fleet efficiency improved by 3.3%, saving 287,000 gallons ofdiesel fuel and 3,185 mtCO2e.

4.1M reduction of miles in HVA & RAC translates into a reduction indiesel fuel of 575,000 gallons and 6,382 mtCO2e annually.

4.5 million kWh of renewable energy annually with our own solar panels.

We avoid GHG 3,103 mtCO2e annually, the equivalent of 392 passengervehicles per year.

carbonemissions

renewableenergy


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Gold Standard

LEED Certified Buildings

6 Gold LEED certifications totaling nearly3 Million SF nationally

2 new facilities currently underconstruction are expected to achieve

Gold LEED certification as well

LEED Attributes• 75% of construction waste

diverted from landfill• At least 20% of all building

material made with recycledcontent

• Water use reduction of at least40% compared to typicalcomparable building


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Summary

• Strong History of Growth in Revenue and Earnings

• Market Dynamics support double digit growth

• UNFI infrastructure, supply chain, logistic anddiversified customer, supplier and product base

• Sales & Earnings doubled since 2009

• A culture of doing “what is right”

Documents

UNFI Piper Jaffray Non-Deal Roadshow- 09-01-2015