The following is a summary of the United Natural Foods, Inc. (UNFI) Q4 2024 Earnings Call Transcript:

Financial Performance:

• UNFI reported Q4 2024 sales of $8.2 billion, with total yearly sales increasing 0.4% on a 52-week basis.

• The fourth quarter saw a gross margin rate (excluding LIFO) of 13.5%, with both wholesale and retail gross margin rates up from the previous year.

• Adjusted EBITDA for Q4 was $143 million compared to $93 million in the prior year's fourth quarter.

• Adjusted EPS for the quarter was $0.01 compared to a net loss of $0.25 in the previous year's fourth quarter.

• Free cash flow in Q4 was $71 million, contributing to a net leverage reduction to 4.0 turns from 4.6 in Q3.

Business Progress:

• UNFI is focusing on a network optimization strategy, optimizing distribution centers and engaging in asset sales such as the planned sale of the Billings and Bismarck DCs.

• Introduced advanced DC technology solutions and UNFI Media Network to bolster retail media networks for clients.

• Continued execution of a multiyear efficiency initiative that realized approximately $150 million in benefits.

• Implementation of a consolidated fee structure and single partnership model provides clients enhanced access to metric-driven growth strategies.

Opportunities:

• Continues to focus on expanding margins through higher-margin natural and organic product sales and digital professional services, which both feed into the main strategy of strengthening segment-specific growth.

• Eyeing the resilient $90 billion industry segment, especially in natural and specialty volumes expected to grow at a low single-digit rate.

• Plans to grow the margin-accretive digital and professional services business and add offerings that leverage competitive advantages.

Risks:

• Recognizes potential impact from network optimization moves, suggesting possible revenue contractions from DC closures counterbalanced by achieving greater operational efficiency and customer service improvements.

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