US Foods (USFD) came out with quarterly earnings of $0.85 per share, beating the Zacks Consensus Estimate of $0.82 per share. This compares to earnings of $0.70 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 3.66%. A quarter ago, it was expected that this company would post earnings of $0.94 per share when it actually produced earnings of $0.93, delivering a surprise of -1.06%.Over the last four quarters, the company has surp ...

Financial Data and Key Metrics Changes - In Q2 2024, net sales increased by 7.7% to $9.7 billion, driven by total case volume growth of 5.2% and food cost inflation of 2.9% [17] - Adjusted EBITDA grew by 13.2% to a record $489 million, with an adjusted EBITDA margin expanding by 25 basis points to an all-time high of 5% [18] - Adjusted EPS increased by 17.7% to $0.93, continuing to grow at a faster rate than adjusted EBITDA [18] Business Line Data and Key Metrics Changes - Independent restaurant volume grew by 5.7%, including 250 basis points from acquisitions, marking the 13th consecutive quarter of market share gains [17] - Healthcare growth remained strong at 6%, while hospitality growth improved to 2.1% due to successful onboarding of new business [18] - Adjusted gross profit increased by 8% to $1.7 billion, with private label brands growing to over 52% penetration with independent customers [13][18] Market Data and Key Metrics Changes - Restaurant foot traffic was down approximately 3% during Q2 2024, impacting overall market dynamics [8] - Despite the headwinds, the company captured profitable market share, particularly in independent restaurants [8] - The company expects to exceed its 1.5 times market growth goal for restaurants for the full year [12] Company Strategy and Development Direction - The company aims to become the undisputed best in the industry, focusing on safety, growth, profitability, and digital leadership [5] - A financial algorithm for 2025 through 2027 was laid out, targeting 5% CAGR in sales, 10% CAGR in adjusted EBITDA, and 20% annual growth in adjusted diluted EPS [6] - The company is committed to deploying over $4 billion of capital, with approximately half allocated for share repurchases [6] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a softer macro environment but expressed confidence in achieving the 2% to 4% organic case volume target for the year [28] - The company remains focused on controlling internal factors to drive growth despite external challenges [28] - Management expects continued strong performance in healthcare and hospitality sectors, with a robust pipeline of new business [30] Other Important Information - The company has authorized a $1 billion share repurchase program, with $21 million repurchased in June and approximately $61 million in Q3 to date [22] - The company is exploring strategic alternatives for CHE'STORE, emphasizing support for the business and its associates during the process [14] Q&A Session Summary Question: Can you elaborate on end demand and customer type evolution? - Management expressed confidence in achieving the 2% to 4% case growth target despite a softer macro environment, noting lower foot traffic but continued growth in healthcare and hospitality [28][30] Question: What adjustments are being made to the business in the current backdrop? - Adjustments include modifications to the TM compensation plan to incentivize aggressive growth and a focus on driving private label brand growth [31] Question: Can you provide insights on market share gains and competition? - Management confirmed 13 consecutive quarters of market share gains, supported by third-party data, and emphasized the ability to generate new accounts despite macro challenges [36][37] Question: How is the company addressing increased promotional activity in the market? - Management acknowledged increased promotional activity but stated it has not hindered their growth, highlighting their own promotional strategies [47] Question: What is the outlook for hospitality growth in the back half of the year? - Management expects continued strengthening in hospitality growth, supported by a strong pipeline of new business [45] Question: Can you provide an update on the MOXe platform adoption? - MOXe is fully rolled out across independent restaurants, with customers buying 10% more on average, and it is aiding in private label penetration [68][69]

US Foods (USFD) came out with quarterly earnings of $0.93 per share, missing the Zacks Consensus Estimate of $0.94 per share. This compares to earnings of $0.79 per share a year ago. These figures are adjusted for nonrecurring items. This quarterly report represents an earnings surprise of -1.06%. A quarter ago, it was expected that this company would post earnings of $0.53 per share when it actually produced earnings of $0.54, delivering a surprise of 1.89%. Over the last four quarters, the company has sur ...

Financial Data and Key Metrics Changes - First quarter net sales increased by 4.8% to $8.9 billion, driven by total case volume growth of 4.2% and food cost inflation of 1.5% [9] - Adjusted EBITDA grew by 5.6% from the prior year to $356 million, slightly above the high end of guidance, despite a $20 million negative impact from labor disruptions and weather-related issues [149][128] - Adjusted gross profit grew nearly 7% to $1.5 billion, with adjusted EBITDA margin remaining largely unchanged at 4% [125][128] Business Line Data and Key Metrics Changes - Independent restaurant volume increased by 4.6% overall and 2.9% organically, while health care and hospitality grew by 6.4% and 0.9%, respectively [9] - The company achieved a record in cases per mile in February and March, with a 4% improvement in cases per mile compared to Q1 2023 [6] - Private label penetration increased by 90 basis points year-over-year to over 52% [26] Market Data and Key Metrics Changes - Despite a slight year-over-year decrease in restaurant foot traffic, broadliners increased their volume within the overall food service distribution channel, indicating industry resilience [23] - The company expects hospitality to accelerate through Q2 and the second half of the year as new customers are onboarded [9][47] Company Strategy and Development Direction - The company is focused on accelerating profitable growth and gaining market share, aiming for 1.5x market growth for restaurants in 2024 [119] - Continued investments in operational rigor and technology modernization are expected to enhance service levels and delivery efficiency [24][117] - The Pronto small truck delivery service is positioned as a competitive differentiator, with expectations of approximately $600 million in annualized sales [152] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the macro environment but expressed confidence in the company's ability to control outcomes and gain profitable market share [33][30] - The company remains focused on executing its strategy and maintaining disciplined capital deployment to drive long-term shareholder value [131] - Management expects adjusted EBITDA for fiscal year 2024 to be in the range of $1.69 billion to $1.74 billion, reaffirming guidance despite a softer macro environment [130] Other Important Information - The company repurchased $13 million of shares during the first quarter, with plans to increase share repurchases through the remainder of the year [11][23] - The company is set to host an Investor Day on June 5, where it will share long-range plan targets [3][31] Q&A Session Summary Question: Impact of softer traffic environment on internal targets - Management noted that while there have been challenges, the company has opportunities to focus on controllable factors like gaining profitable market share [33] Question: Growth expectations in health care and hospitality - Management expects hospitality to accelerate in Q2 and the second half of the year, driven by onboarding new customers [47] Question: Size of sales force and impact on share gains - Management believes that a low to mid-single-digit addition to the sales force is appropriate and will not hinder growth [41] Question: Performance of CHEF STORE in the current macro backdrop - CHEF STORE has returned to case growth, and the company plans to continue adding stores [60] Question: Increase in private label penetration - The increase is attributed to a combination of factors, including improved sales force confidence and compensation changes [65] Question: M&A outlook and impact on guidance - Management indicated that while IWC will contribute to growth, they do not need to pursue additional M&A aggressively at this time [145]

Disclaimer Page We report our financial results in accordance with U.S. generally accepted accounting principles ("GAAP"). However, this presentation includes the following non-GAAP financial measures: Adjusted Gross profit, Adjusted Operating expenses, EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net income, Adjusted Diluted Earnings Per Share (EPS), Net Debt and Net Leverage Ratio. These non-GAAP financial measures exclude the impact of certain items and, therefore, have not been calculated i ...

Financial Performance - Net sales increased by 4.8% to $8.9 billion, driven by case volume growth and food cost inflation of 1.5%[3] - Total case volume increased by 4.2%, with independent restaurant case volume rising by 4.6%[3] - Gross profit rose by 4.9% to $1.5 billion, with gross profit as a percentage of net sales at 16.7%[4] - Adjusted EBITDA increased by 5.6% to $356 million, with an adjusted EBITDA margin of 4.0%[6] - Net income available to common shareholders was $82 million, an increase of $7 million compared to the prior year[6] - Adjusted net income for the period was $134 million, up 7.2% from $125 million year-over-year[36] - The company reported a diluted EPS of $0.33, compared to $0.32 in the prior year, marking a 3.1% increase[36] Operating Expenses and Cash Flow - Operating expenses increased by 7.4% to $1.3 billion, primarily due to higher distribution costs and labor costs[5] - Cash flow from operating activities was $139 million, a decrease of $140 million from the prior year[7] - Cash flows from operating activities for the period were $139 million, down from $279 million in the same quarter last year[33] Debt and Liabilities - Net Debt at the end of the quarter was $4.4 billion, with a Net Debt to Adjusted EBITDA ratio of 2.8x[8] - Total Debt as of March 30, 2024, is $4,701 million, a slight decrease from $4,810 million on April 1, 2023[40] - Net Debt as of March 30, 2024, is $4,434 million, compared to $4,518 million on April 1, 2023[40] - Total liabilities rose to $8,565 million, up from $8,438 million at the end of the previous year[28] Assets and Guidance - Total assets increased to $13,390 million as of March 30, 2024, compared to $13,187 million at the end of December 2023[28] - The company reaffirmed its Fiscal Year 2024 guidance, projecting net sales of $37.5 to $38.5 billion and adjusted EBITDA of $1.69 to $1.74 billion[15] Acquisitions and Costs - The company closed the acquisition of IWC Food Service for approximately $220 million, expanding its presence in the Nashville area[10] - The company incurred restructuring costs and asset impairment charges of $13 million during the quarter[36] - The company incurred acquisition and integration related costs of $3 million for the 13 weeks ended March 30, 2024[10] Financial Metrics - Adjusted EBITDA for the trailing twelve months is $1,578 million, up from $1,406 million for the same period last year[40] - The Net Leverage Ratio remains stable at 2.8 as of March 30, 2024, unchanged from December 30, 2023[40] - The company’s financial metrics indicate a positive trend in operational performance with a significant increase in Adjusted EBITDA year-over-year[40] Other Financial Information - The total cash, cash equivalents, and restricted cash as of March 30, 2024, is $267 million[40] - The CEO sign-on bonus was $3 million for the 13 weeks ended April 1, 2023[10] - Adjusted Diluted EPS is calculated using Adjusted net income divided by weighted average diluted shares outstanding[10] - The company’s income tax provision is adjusted for the tax effect of pre-tax items excluded from Adjusted net income[10]

Cautionary Statements Regarding Forward-Looking Information Statements in this presentation which are not historical in nature are "forward-looking statements" within the meaning of the federal securities laws. These statements often include words such as "believe," "expect," "project," "anticipate," "intend," "plan," "outlook," "estimate," "target," "seek," "will," "may," "would," "should," "could," "forecast," "mission," "strive," "more," "goal," or similar expressions (although not all forward-looking st ...

Financial Performance - In fiscal year 2023, total net sales reached $35.6 billion, an increase of 4.5% from $34.1 billion in fiscal year 2022[34] - Net sales increased by $1,540 million, or 4.5%, to $35,597 million in fiscal year 2023, driven by a 4.4% increase in total case volume[187] - Gross profit increased by $656 million, or 11.9%, to $6,148 million, with a gross profit margin of 17.3% in fiscal year 2023[168] - Operating income for fiscal year 2023 was $1,017 million, representing an increase from $594 million in fiscal year 2022[171] - Net income available to common shareholders was $499 million, with a net income per share of $2.09 for fiscal year 2023[171] - Free Cash Flow for fiscal year 2023 was $831 million, up from $500 million in fiscal year 2022[180] - Adjusted EBITDA for fiscal year 2023 was $1,559 million, compared to $1,310 million in fiscal year 2022[180] - The company reported a cash flow from operating activities of $1,140 million in fiscal year 2023, an increase from $765 million in fiscal year 2022[180] Sales and Customer Base - Sales to the top 50 customers represented approximately 44% of net sales, with no single customer accounting for more than 2% of total sales[22] - Group purchasing organizations (GPOs) contributed approximately 23% of net sales in fiscal year 2023[23] - Over 80% of sales utilized digital solutions, enhancing customer relationships and increasing product purchases[28] - The GREAT FOOD. MADE EASY.™ strategy focuses on product innovation and customer experience, aiming to drive growth in target customer segments such as independent restaurants and healthcare[26] Acquisitions and Expansion - The company completed the acquisition of Renzi Foodservice for $142 million and Saladino's Foodservice for $56 million, expanding its reach into New York and California[31] - The company completed two acquisitions in 2023: Renzi Bros., Inc. and Saladino's, Inc.[123] Workforce and Labor Relations - As of December 30, 2023, the company employed approximately 30,000 associates, with about 69% being non-exempt hourly workers[49] - The company is party to 57 collective bargaining agreements covering 6,300 associates, which is 21% of the workforce[50] - During fiscal year 2023, 14 collective bargaining agreements covering approximately 1,100 union associates were renegotiated, with 16 agreements covering about 1,200 union associates set for renegotiation in fiscal year 2024[50] - The company emphasizes the importance of technology in enhancing customer relationships and streamlining operations, particularly for Millennials and Generation Z consumers[30] - The company is committed to building a diverse and inclusive workforce, with approximately 6,300 associates being members of local unions associated with the International Brotherhood of Teamsters and other labor organizations[53] Operational Infrastructure - The company operates approximately 250,000 customer locations nationwide, supported by over 70 distribution facilities and a fleet of over 6,500 trucks[19] - The company operates 74 distribution facilities totaling over 20 million square feet, with 57 owned and 17 leased[147] - The company operates 90 cash and carry locations, all of which are leased, totaling over 2 million square feet[147] - The company has 13 broadline support business production facilities, with 9 owned and 4 leased, totaling over 1 million square feet[147] Financial Obligations and Debt - The company had $4.7 billion of indebtedness outstanding as of December 30, 2023[105] - Approximately 30% of the net principal amount of the company's indebtedness accrued interest at variable rates as of December 30, 2023[110] - The company’s ability to make scheduled payments on its debt depends on ongoing financial and operating performance[106] - The agreements governing the company’s indebtedness contain restrictions that may impact its ability to operate and execute its business strategy[108] - A substantial portion of the company's cash flows from operations may be dedicated to the payment of principal and interest on its indebtedness, reducing funds available for other purposes[110] Regulatory and Compliance Risks - The company is subject to significant governmental regulation, which may lead to increased compliance costs and financial obligations[88] - The company is subject to various U.S. federal, state, and local environmental laws and regulations, impacting its operational compliance[47] - The company faces risks from climate change and related regulatory measures, which could increase operational costs and disrupt business[84] - Changes in tax laws and regulations may adversely impact the company's effective tax rate and financial condition[127] Market and Economic Conditions - The U.S. foodservice distribution industry is sensitive to economic conditions, with potential adverse impacts from inflation and supply chain disruptions affecting consumer spending[70] - The company operates in a low-margin business environment, where commodity cost volatility can significantly affect profitability, especially during inflationary periods[71] - Competition is intense, with low barriers to entry, leading to potential loss of customers to distributors offering lower prices or better service[72] - Changes in consumer eating habits, including a shift towards sustainable and locally grown products, may reduce demand for the company's offerings[82] Cybersecurity and Technology - The company has implemented cybersecurity measures, but risks remain regarding potential breaches that could impact operations and financial results[115] - Failure to comply with data privacy regulations could result in substantial fines and reputational damage[120] - The company may incur significant costs related to protecting against or remediating cyberattacks[117] - The company has a comprehensive cybersecurity program aligned with the NIST Cyber Security Framework, focusing on risk management and incident response[139] - The company has not experienced any cybersecurity incidents that materially affected its business strategy or financial condition[142] Shareholder Returns - The company has repurchased 7,396,224 shares at an aggregate price of approximately $294 million under its Share Repurchase Program[157] - As of December 30, 2023, approximately $192 million remains authorized for share repurchases under the program[157] - The company’s Board of Directors has approved a Share Repurchase Program allowing for the repurchase of up to $500 million of its common stock[157] - The company has not paid any dividends on its common stock since it began trading publicly in 2016[154]

Financial Data and Key Metrics Changes - The company achieved record full year 2023 adjusted EBITDA of $1.56 billion, driven by strong case growth and market share gains, with an adjusted EBITDA margin expansion of 53 basis points [19][25] - Net sales grew by 4.5% to $35.6 billion, with total case volume increasing by 4.4%, including a 6.9% rise in independent restaurant case volume [20][19] - Adjusted diluted EPS increased by 23% to $2.63, reflecting strong operational execution [25][19] Business Line Data and Key Metrics Changes - Independent restaurant case volume grew by 6.9%, healthcare volumes increased by 7.2%, and hospitality volumes rose by 8.9% [20] - Adjusted gross profit increased by 9% to $6.1 billion, with adjusted gross profit per case rising by 4.5% [25][28] - The company reported a 5% improvement in routing effectiveness through its Descartes routing pilot [12] Market Data and Key Metrics Changes - The company maintained its market share in January, with strong performance in independent restaurants, healthcare, and hospitality sectors [55] - The company expects to continue gaining market share with independent restaurants for 11 consecutive quarters [20] Company Strategy and Development Direction - The company focuses on four strategic pillars: culture, service, growth, and profit, aiming for sustainable improvements and growth [1][2] - The company is committed to enhancing its digital platforms, MOXe and VITALS, to drive growth and improve customer experience [10][14] - The company plans to expand its differentiated small truck delivery model, Pronto, into additional markets [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving double-digit adjusted EPS growth and continued market outperformance due to strong operational execution and strategic initiatives [32][19] - The company anticipates slight inflation of 0.5% to 1.5% in 2024, with a focus on maintaining operational discipline [50][91] - Management highlighted the importance of ongoing productivity improvements and cost management to enhance margins [25][40] Other Important Information - The company reduced its net leverage to 2.8x, down 0.7 turns from 2022, and plans to maintain a target leverage range between 2.5x and 3x for 2024 [29] - The company donated over $13 million in food and supplies to hunger relief efforts in 2023, equivalent to approximately 5 million meals [11] Q&A Session All Questions and Answers Question: Capital allocation strategy with strong free cash flow - Management indicated that with strong cash flow, the focus will be on share repurchases and opportunistic M&A, rather than significant debt paydown [34] Question: Case growth outlook amidst weather disruptions - Management reported a recovery in volumes post-labor disruption and weather events, maintaining confidence in the 4% to 6% case growth target for the year [35][55] Question: Impact of headcount growth on case growth - Management expects case growth to outpace headcount growth by 30% to 50%, with a focus on independent restaurants as the most profitable segment [38] Question: Sales compensation changes and industry trends - Management confirmed that recent changes to sales compensation were well received and aimed at incentivizing sellers for profitable growth [59][89] Question: Productivity and operational efficiency improvements - Management highlighted ongoing efforts in supply chain productivity and routing efficiencies, with expectations for continued improvements in 2024 [61][87]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (I.R.S. Employer Identification Number) 9399 W. Higgins Road, Suite 100 Rosemont, IL 60018 (847) 720-8000 (Address, including Zip Code, and telephone number, including area code, of registrant's principal executive offices) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECU ...