United Natural Foods, Inc. · NYSE:UNFI
United Natural Foods — Merger or Acquisition (September 2018)
22 slides from United Natural Foods's merger presentation, Sep 20, 2018
Slide 1: Supplemental Presentation on UNFI's Pending Supervalu Acquisition
Supplemental Presentation on UNFI’s Pending Supervalu Acquisition 1
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains, and certain statements made by representatives of UNFI, and respective affiliates, from time to time may contain, “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of
Slide 3: Transforming into North America's Premier Wholesale Distributor
Transforming into North America’s Premier Wholesale Distributor Leader in Food Wholesale Industry with Significant Scale and ✓ Reach ✓ Significant Cost Synergies And Growth Opportunities Well Positioned to Continue to Capture Natural / Organic ✓ Growth Across All Channels Experienced Management Team
Slide 4: Combination Creates Compelling Value for Customers and Shareholders
Combination Creates Compelling Value for Customers and Shareholders 1 Delivers Significant Synergies Creates run-rate cost synergy opportunity of more than $175 million, with ~95% of synergies expected to be achieved by year 3; more than $185 million in cost synergies by year 4. 2 Diversifies Custom
Slide 5: Leading Food Wholesaler Offering Best-in-Class Services with an Expansive Footprint
Leading Food Wholesaler Offering Best-in-Class Services with an Expansive Footprint #1 #2 $20B+ 60+ ~45,000 ~250K 5,775+ . Natural and U.S. Food Net Sales(2) Distribution Customers SKUS Private Organic Wholesaler(1) Centers Supplied Brands SKUS Wholesaler UNFI Owned Properties UNFI Leased Properties
Slide 6: Diversified, Long-Tenured Customer Base
Diversified, Long-Tenured Customer Base Only two of UNFI top 25 customers overlap with SVU top 25 customers Average customer relationship for UNFI and SUPERVALU’s top 25 customers spans over 20 years Source: Company filings Note: “Other” category for UNFI includes E-Commerce Retailers and Food Servi
Slide 7: Synergies Timeline and Deal Costs
Synergies Timeline and Deal Costs Expect to generate run rate cost synergies of more than $175 million in year 3 Sources of Cost Synergies Timeline to Achieve One-Time Costs(1) $ in millions $110 100% 95% $95 65% 25% $35 Year 1 Year 2 Year 3 Year 4 Year 1 Year 2-Year 5 Cost Synergies Deal Costs Cost
Slide 8: Significant Cost Synergy Opportunities
Significant Cost Synergy Opportunities Remove duplicative contracts and roles Consolidate IT platforms & infrastructure Overhead Integration Reduce insurance premiums and align benefits Optimize facilities and overhead Relocate inventory from 3rd party warehouses to nearby UNFI / SUPERVALU
Slide 9: Detailed Integration Planning Underway
Detailed Integration Planning Underway Experienced Team Supplemented By Outside Resources UNFI Management has substantial experience integrating businesses having Management completed 9 acquisitions in the last 6 years totaling over $1.8 billion of sales Experience Integrating Management expects
Slide 10: Planned Retail Divestiture
Planned Retail Divestiture Objective is to divest remaining retail business as soon as practical following the close Total Stores Leased / Owned Commentary • Serves the Hampton Roads and Richmond, VA areas 38 37/1 • SVU Discontinued Exit Complete Operations • Serves the St. Louis and central Illinoi
Slide 11: Year 1 Expectations
Year 1 Expectations Expect performance consistent with historical results, while leveraging the benefits of the combination Combined Company Continue to capture synergies associated with prior acquisitions Divest remaining retail business in a thoughtful and economic manner, as soon as reasona
Slide 12: Disciplined Capital Allocation Strategy
Disciplined Capital Allocation Strategy ✓ Long-term leverage target of 2.0x to 2.5x ✓ Invest in the business to support profitable growth ✓ Active working capital management to enhance free cash flow Forego near-term M&A and over the long-term consider ✓ strategic and synergistic bolt-on M&A Opportu
Slide 13: Sources & Uses and Leverage
Sources & Uses and Leverage ($ in millions) ($ in millions) Pro Forma Sources $ Pro Forma Capitalization Combined New ABL Facility ($2,000) $1,200 Total Debt Net of Cash $3,502 New Term Loan B 2,050 Rolled Capital Leases 252 Financial Statistics Total Sources $3,502 LTM SVU Adj. EBITDA (wholesale an
Slide 14: Transforming into North America's Premier Wholesale Distributor
Transforming into North America’s Premier Wholesale Distributor Leader in Food Wholesale Industry with Significant Scale and ✓ Reach ✓ Significant Cost Synergies and Growth Opportunities Well Positioned to Continue to Capture Natural / Organic Growth ✓ Across All Channels Experienced Management Team
Slide 15: Appendix
Appendix 15
Slide 16: Historical Pro Forma Financials ($'mm)
Historical Pro Forma Financials ($’mm) Net Sales Adjusted EBITDA $22,683 $674 $19,063 $631 $16,472 $16,502 $564 $574 12,456 9,789 338 312 8,287 8,032 251 271 9,274 10,227 8,185 8,470 313 303 319 336 FY 2015 FY 2016 FY 2017 FY 2018 FY 2015 FY 2016 FY 2017 FY 2018 Capital Expenditures % of net 1.3% 0.
Slide 17: Historical Financials – SVU Retail Segment ($'mm)
Historical Financials – SVU Retail Segment ($’mm) Sales Adjusted EBITDA $3,145 $179 $3,028 $2,936 $125 $73 FY 2016 FY 2017 LTM FY 2016 FY 2017 LTM Capital Expenditures $83 $74 $64 FY 2016 FY 2017 LTM 17 Source: Company data, based on SVU Fiscal Year-End. Reconciliations for these Non-GAAP metrics ar
Slide 18: GAAP to Non-GAAP Reconciliations - UNFI
GAAP to Non-GAAP Reconciliations - UNFI Reconciliation of Net Income to Adjusted EBITDA(1) $ in thousands FY 15 FY 16 FY 17 FY 18 Net income $138,734 $125,766 $130,155 $165,670 Depreciation and amortization 63,800 71,006 86,051 87,631 Total other (income) expense, net 12,188 15,887 11,602 14,480 Pro
Slide 19: SVU Net Sales by Segment
SVU Net Sales by Segment FY 2015 – TTM 1Q 2019 Net Sales - Based on SVU Fiscal Year-End FY 2017 FY 2016 FY 2015 Wholesale $ 7,705 $ 7,935 $ 8,198 Retail 3,028 3,145 3,120 Corporate 179 203 196 Total $ 10,912 $ 11,283 $ 11,514 Net Sales - Based on SVU Fiscal Year-End FY 2017 FY 2016 FY 2015 Wholesale
Slide 20: GAAP to Non-GAAP Reconciliations – SVU
GAAP to Non-GAAP Reconciliations – SVU FY 2015 - FY 2017 Based on SVU Fiscal Year FY 2017 FY 2016 FY 2015 Reconciliation of segment operating earnings to total operating earnings, as reported Wholesale operating earnings $ 225 $ 218 $ 230 Retail operating loss (3) 66 62 Corporate operating loss (27)
Slide 21: GAAP to Non-GAAP Reconciliations – SVU
GAAP to Non-GAAP Reconciliations – SVU TTM as of Q1 2019 Based on SVU Fiscal year 1Q 2019 4Q 2018 3Q 2018 2Q 2018 TTM 1Q 2019 Wholesale operating earnings 49 68 43 56 216 Retail operating loss (20) 1 (4) (10) (33) Corporate operating loss (17) (1) (4) (17) (39) Total operating earnings $ 12 $ 68 $ 3
Slide 22: Calendarizing SVU Adjusted EBITDA and Capital Expenditures
Calendarizing SVU Adjusted EBITDA and Capital Expenditures Based on SVU Fiscal Year TTM 1Q 2019 FY 2017 FY 2016 FY 2015 Wholesale adjusted EBITDA $ 320 $ 270 $ 275 $ 360 Corporate adjusted EBITDA 18 23 (20) (112) Supervalu adjusted EBITDA, excluding Retail $ 338 $ 293 $ 255 $ 248 Calendarization Imp
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