Market Overview - U.S. stocks experienced an upward trend, with the Nasdaq Composite increasing by over 300 points on Thursday [1] - The Dow Jones rose by 1.50% to 41,729.20, while the NASDAQ gained 1.91% to 18,076.43, and the S&P 500 increased by 1.44% to 5,712.61 [1] - Energy shares saw a rise of 1.2%, while health care stocks fell by 0.9% [1] Company Earnings - US Foods Holding Corp. reported weaker-than-expected earnings for Q1, with earnings of 68 cents per share, missing the consensus estimate of 69 cents [2] - Quarterly sales for US Foods were $9.35 billion, also below the analyst consensus estimate of $9.38 billion [2] Commodity Market - Oil prices increased by 2.4% to $59.48, while gold prices decreased by 1% to $3,357.70 [4] - Silver prices rose by 0.1% to $32.825, and copper prices fell by 0.5% to $4.6385 [4] Asian and European Markets - European shares were mostly higher, with the eurozone's STOXX 600 gaining 0.37% [5] - Asian markets closed mixed, with Japan's Nikkei gaining 0.41% and India's BSE Sensex falling by 0.51% [6] Notable Stock Movements - SunOpta Inc. shares surged by 30% to $5.91 after reporting better-than-expected Q1 results and raising FY25 sales guidance [8] - Sezzle Inc. shares increased by 44% to $76.07 following strong Q1 results and an upward revision of FY25 guidance [8] - Solidion Technology Inc. shares rose by 37% to $0.13 after presenting new technology for lithium-ion facilities [8] - Argenx SE shares dropped by 15% to $531.86 after disappointing Q1 results [8] - Vor Biopharma Inc. shares plummeted by 68% to $0.1725 after announcing exploration of strategic alternatives [8] - ADMA Biologics Inc. shares fell by 19% to $19.09 following underwhelming quarterly results [8]

Financial Data and Key Metrics Changes - In the first quarter, net sales increased by 4.5% to $9.4 billion, driven by case volume growth of 1.1% and food cost inflation and mix impact of 3.4% [32] - Adjusted EBITDA grew by 9.3% to $389 million, with adjusted EBITDA margin increasing by 18 basis points to 4.2% [33][34] - Adjusted diluted EPS increased by 26% to $0.68, reflecting strong earnings growth and accretive share repurchases [34][40] Business Line Data and Key Metrics Changes - Independent restaurant volume grew by 2.5%, while healthcare growth remained strong at 6.1% and hospitality accelerated to 3.6% [32][33] - Chain restaurant volume declined by 4.3%, consistent with broader industry trends [33] - Total adjusted gross profit grew by 5% to $1.6 billion, driven by volume growth and increased private label penetration [23] Market Data and Key Metrics Changes - Total volume increased by 1.1%, with independent restaurant case growth impacted by severe weather [10] - Foot traffic in the broader industry was down 3% for the first quarter, with a low in February down approximately 6% [11] - The company expects independent case growth to be in the range of 2% to 5% for the full year [40] Company Strategy and Development Direction - The company is focused on four strategic pillars: culture, service, growth, and profit, with ongoing initiatives to improve safety, delivery efficiency, and market share [16][19][21][23] - A new $1 billion share repurchase program was authorized, building on previous buybacks [8] - The company plans to retain and improve the ChefStor business despite exploring strategic alternatives [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving fiscal year 2025 guidance despite a challenging macro environment, expecting adjusted EBITDA growth of 8% to 12% and adjusted diluted EPS growth of 17% to 23% [40] - The company is monitoring the tariff environment and its potential impact, noting that imported products account for a small portion of their business [12][13] - Management highlighted the resilience of the foodservice distribution industry and the company's ability to adjust to macroeconomic conditions [14][15] Other Important Information - The company reported a significant improvement in associate retention, with annualized selector turnover improving by approximately 20 percentage points [26] - The corporate credit rating was upgraded to BB+ by S&P, reflecting improvements in financial performance [39] Q&A Session Summary Question: What does the EBITDA growth say about the self-help momentum of the business? - Management expressed confidence in maintaining guidance, attributing EBITDA growth to strong execution of self-help initiatives and a differentiated business model [46][48] Question: Have any expense-saving measures been initiated? - Management confirmed that $30 million in expense savings is incremental to previous actions, focusing on pushing resources back into the field [55][56] Question: What are the trends in chains and healthcare? - Management noted that chain business is being optimized while healthcare continues to show strong growth, with expectations for continued share gains [88][90] Question: How is the competitive environment evolving? - Management indicated no significant changes in competition, with smaller regional competitors driving much of the competitive intensity [71][72] Question: What are the current trends in independent case growth? - Management reported that independent case growth is currently at the lower end of the 2% to 5% range but expects improvement as new account generation ramps up [66][68]

Financial Data and Key Metrics Changes - In the first quarter, adjusted EBITDA grew more than 9% and adjusted diluted EPS increased 26% compared to the same period last year [7][33] - First quarter net sales increased 4.5% to $9.4 billion, driven by case volume growth of 1.1% and food cost inflation and mix impact of 3.4% [33] - Adjusted EBITDA margin increased by 18 basis points to 4.2% [34] - Adjusted gross profit grew 5% to $1.6 billion, driven by volume growth, improved cost of goods savings, and increased private label penetration [24] Business Line Data and Key Metrics Changes - Independent restaurant case growth was 2.5%, while healthcare and hospitality grew 6.1% and 3.6% respectively [9][33] - Chain restaurant volume declined 4.3%, aligning with industry foot traffic trends [33] - Total volume increased 1.1%, with independent case growth accelerating from February to March [12] Market Data and Key Metrics Changes - The broader industry faced headwinds with foot traffic down 3% for the first quarter, hitting a low in February but improving in March [11] - The company operates in a $270 billion addressable market, with food away from home continuing to grow steadily [13] Company Strategy and Development Direction - The company is focused on four strategic pillars: culture, service, growth, and profit [16] - A new $1 billion share repurchase program was authorized, building on previous buybacks [7] - The company plans to retain and improve the ChefStor business despite exploring strategic alternatives [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving fiscal year 2025 guidance despite a challenging macro environment [41] - The company is monitoring the tariff environment and sourcing alternative products where necessary [12] - Management highlighted the resilience of the business model and the ability to adjust to macroeconomic conditions [15] Other Important Information - The company reported a significant improvement in associate retention, with selector turnover improving by approximately 20 percentage points [26] - The corporate credit rating was upgraded to BB+ by S&P based on financial performance improvements [40] Q&A Session Summary Question: What does the EBITDA growth say about the company's self-help momentum? - Management expressed confidence in maintaining guidance, attributing success to strong strategy execution and self-help initiatives [48] Question: What is the current status of independent case growth? - Management noted good strength in independent case growth, with expectations for continued improvement [51] Question: Have any expense-saving measures been initiated? - Management confirmed that $30 million in expense savings is incremental to previous plans, focusing on field resources [58] Question: How is the competitive environment evolving? - Management indicated no significant changes in competition, with a focus on gaining share in fragmented markets [74] Question: What are the trends in chain and healthcare business? - Management noted a decline in chain business but strong growth in healthcare, with expectations for continued share gains [92]

Company Performance - US Foods reported quarterly earnings of $0.68 per share, missing the Zacks Consensus Estimate of $0.69 per share, but showing an increase from $0.54 per share a year ago, representing an earnings surprise of -1.45% [1] - The company posted revenues of $9.35 billion for the quarter ended March 2025, which was below the Zacks Consensus Estimate by 0.37%, but an increase from $8.95 billion year-over-year [2] - Over the last four quarters, US Foods has surpassed consensus EPS estimates two times and topped consensus revenue estimates three times [2] Stock Outlook - The immediate price movement of US Foods' stock will depend on management's commentary during the earnings call and the sustainability of earnings expectations [3][4] - US Foods shares have increased by about 2.5% since the beginning of the year, contrasting with the S&P 500's decline of -4.3% [3] Earnings Estimates - The current consensus EPS estimate for the upcoming quarter is $1.11 on revenues of $10.15 billion, and for the current fiscal year, it is $3.77 on revenues of $39.51 billion [7] - The estimate revisions trend for US Foods is currently unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Industry Context - The Zacks Industry Rank for Food - Miscellaneous places it in the top 34% of over 250 Zacks industries, suggesting that the industry outlook can significantly impact stock performance [8] - Campbell's, another company in the same industry, is expected to report quarterly earnings of $0.65 per share, reflecting a year-over-year decline of -13.3% [9]

First Quarter Fiscal Year 2025 Results May 8, 2025 Disclaimer Page 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," ...

Financial Performance - Net sales increased by 4.5% to $9.4 billion in Q1 FY 2025, driven by case volume growth and food cost inflation of 3.0%[4] - Adjusted EBITDA grew by 9.3% to $389 million, with an adjusted EBITDA margin of 4.2%[7] - Net income rose by 40.2% to $115 million, resulting in a net income margin of 1.2%[7] - Total case volume increased by 1.1%, with independent restaurant case volume up by 2.5%[4] - Adjusted diluted EPS increased by 25.9% to $0.68, while diluted EPS rose by 48.5% to $0.49[3] - Gross profit for the same period rose to $1,614 million, compared to $1,495 million in 2024, reflecting an increase of 8.0%[29] - Operating income improved to $224 million, up from $165 million year-over-year, marking a growth of 35.7%[29] - Adjusted diluted EPS increased to $0.49 from $0.33, representing a growth of 48.5%[29] - Adjusted EBITDA for the same period was $389 million, up 9.3% from $356 million year-over-year, with an adjusted EBITDA margin of 4.2%[34] - Net income for the 13 weeks ended March 29, 2025, was $115 million, compared to $82 million in the prior year, an increase of 40.2%[29] Cash Flow and Assets - Cash flow from operating activities for Q1 FY 2025 was $391 million, an increase of $252 million from the prior year[8] - Cash flows from operating activities for the 13 weeks ended March 29, 2025, were $391 million, significantly higher than $139 million in the same period last year[31] - Cash and cash equivalents at the end of the period were $101 million, up from $59 million, indicating a growth of 71.2%[31] - Total current assets as of March 29, 2025, were $4,091 million, compared to $3,974 million at the end of March 2024, an increase of 2.9%[27] Debt and Liabilities - Net debt at the end of Q1 FY 2025 was $4.7 billion, with a net debt to adjusted EBITDA ratio of 2.7x[9] - Total liabilities increased to $9,035 million from $8,908 million, reflecting a rise of 1.4%[27] - Total debt as of March 29, 2025, was $4,805 million, down from $4,928 million as of December 28, 2024[37] - Net debt decreased to $4,704 million from $4,869 million in the previous quarter[37] - The net leverage ratio improved to 2.7 from 2.8 in the previous quarter[37] Strategic Initiatives - The company reaffirmed its FY 2025 guidance of 8% to 12% adjusted EBITDA growth and 17% to 23% adjusted diluted EPS growth[12] - A new $1 billion share repurchase program was authorized, reflecting the company's commitment to return capital to shareholders[4] - The company acquired Jake's Finer Foods for $92 million, enhancing its distribution capabilities[11] Inventory and Operating Expenses - The company reported a decrease in inventories to $1,518 million from $1,626 million, a reduction of 6.7%[27] - Operating expenses increased to $1,390 million, a 4.5% rise from $1,330 million year-over-year[34] - Adjusted net income for the quarter was $159 million, an 18.7% increase from $134 million in the same period last year[34]

Group 1 - The core viewpoint is that US Foods Holding (NYSE: USFD) is positioned to grow EBITDA faster than revenue, making it a buy opportunity [1] - The analysis emphasizes a fundamentals-based approach to value investing, focusing on long-term durability and affordability rather than just low multiples [1] - The company is characterized by steady long-term growth, a lack of cyclicality, and a robust balance sheet, which are key factors for investment consideration [1] Group 2 - There is an acknowledgment of the risks involved in investing in successful companies, particularly the potential of overpaying for stocks [1] - The article suggests that in certain situations, the potential for growth can outweigh immediate price concerns, indicating a broader development runway for USFD [1]

Core Insights - US Foods Holding Corp. (USFD) reported strong fourth-quarter fiscal 2024 results, with both revenue and earnings exceeding expectations and showing year-over-year growth [1][2][3] - Management is optimistic about achieving a 5% sales CAGR, 10% adjusted EBITDA CAGR, and 20% adjusted EPS CAGR through 2027, focusing on long-term value creation and margin expansion [1] Financial Performance - Adjusted earnings per share for the quarter were 84 cents, surpassing the Zacks Consensus Estimate of 80 cents, and reflecting a 31.3% increase from 64 cents in the prior-year period [2] - Consolidated net sales reached $9,491 million, exceeding the Zacks Consensus Estimate of $9,474 million, and marking a 6.2% increase from $8,936 million in the previous year [3] - Total case volume grew by 3.5% year over year, with independent restaurant volume increasing by 3.2%, healthcare by 4.7%, hospitality by 2.4%, and chain volume by 2.6% [4] - Adjusted gross profit rose 7.2% year over year to $1,659 million, with an adjusted gross margin of 17.5%, up from 17.3% in the fourth quarter of fiscal 2023 [4] Operating Expenses and EBITDA - Adjusted operating expenses increased by 4.8% year over year to $1,217 million, but as a percentage of net sales, they decreased by 20 basis points to 12.8% [5] - Adjusted EBITDA grew 13.7% year over year to $441 million, with an adjusted EBITDA margin of 4.6%, an increase of 30 basis points compared to the prior year [5] Financial Health - At the end of the quarter, US Foods had cash and cash equivalents of $59 million, long-term debt of $4,819 million, and total shareholders' equity of $4,528 million [6] - For the year ended December 28, 2024, cash flow from operating activities was $1,174 million, with capital expenditures totaling $341 million [6] Share Repurchase and Future Outlook - In the fourth quarter of fiscal 2024, the company repurchased 5 million shares of common stock for a total of $323 million [7] - For 2025, management anticipates net sales growth of 4% to 6%, with adjusted EBITDA growth of 8% to 12%, and adjusted earnings growth of 17% to 23% [8] Stock Performance - USFD has seen a 9% increase in stock price over the past three months, contrasting with a 4.5% decline in the industry [9]

Financial Performance - Total net sales for fiscal year 2024 reached $37.877 billion, an increase of 6.4% from $35.597 billion in fiscal year 2023[33]. - Net sales increased by $2,280 million, or 6.4%, in fiscal year 2024, primarily driven by case volume growth and food cost inflation of 2.6%[166]. - Gross profit rose by $386 million, or 6.3%, to $6,534 million, maintaining a gross profit margin of 17.3%[167]. - Operating income for fiscal year 2024 was $1,099 million, representing an increase from $1,017 million in fiscal year 2023[169]. - Net income available to common shareholders was $494 million, with a diluted net income per share of $2.02[169]. - Adjusted EBITDA increased by $182 million, or 11.7%, to $1,741 million in fiscal year 2024, with an Adjusted EBITDA margin of 4.6%[186]. - Free Cash Flow was $836 million in fiscal year 2024, compared to $841 million in fiscal year 2023[182]. - The effective income tax rate for fiscal year 2024 was 23%, compared to 25% in fiscal year 2023[191][192]. Sales and Customer Base - Sales to the top 50 customers accounted for approximately 47% of net sales in fiscal year 2024, with no single customer representing more than 2% of total sales[21]. - Group purchasing organizations (GPOs) contributed approximately 25% of net sales in fiscal year 2024[22]. - The product category of meats and seafood generated $12.93 billion in sales for fiscal year 2024, representing a 8.1% increase from $11.953 billion in fiscal year 2023[33]. - Total case volume increased by 4.2%, with independent restaurant case volume growing by 4.4% in fiscal year 2024[166]. Operations and Infrastructure - The company operates over 70 distribution facilities and a fleet of over 6,500 trucks, enabling efficient service delivery[18]. - The company operates 180 facilities totaling approximately 23.26 million square feet, with 72% owned and 28% leased[145]. - The company operates 74 distribution facilities, 93 cash and carry locations, and 13 broadline support business production facilities[145]. Acquisitions and Investments - The company completed the acquisition of IWC Food Service for a net purchase price of $214 million, enhancing its distribution channels in the southeast United States[30]. - Cash flows used in investing activities included $341 million in fiscal year 2024 for investments in information technology and $214 million for the acquisition of IWC Food Service[210]. Workforce and Labor Relations - As of December 28, 2024, the company employed approximately 30,000 associates, with 22% (6,600 associates) covered by collective bargaining agreements[47]. - In fiscal year 2024, 14 collective bargaining agreements covering about 1,100 union associates were renegotiated, while 16 agreements covering approximately 1,750 union associates are set for renegotiation in fiscal year 2025[47]. - Approximately 70% of associates are non-exempt, paid on an hourly basis, and 88% work in field-based roles within distribution and retail operations[49]. - The company is committed to a comprehensive health and welfare benefits program, including medical, dental, and wellness programs, as well as a 401(k) savings plan[48]. - The diversity and inclusion strategy focuses on increasing workforce diversity, creating an inclusive environment, and supporting diverse communities[51]. Regulatory and Compliance - The company is subject to various federal, state, and local regulations, including environmental laws and safety standards[45][52]. - The company is subject to significant governmental regulation, which may lead to increased compliance costs and financial obligations[84]. - The company is committed to monitoring and responding to evolving legal and regulatory requirements impacting its operations[87]. Financial Position and Debt - As of December 28, 2024, the company had $4.9 billion of outstanding indebtedness[102]. - Approximately 32% of the net principal amount of the company's indebtedness accrued interest at variable rates as of December 28, 2024[108]. - The company’s ability to make scheduled payments on its debt depends on ongoing financial and operating performance[103]. - A material portion of cash flows from operations may be dedicated to the payment of principal and interest on indebtedness, reducing funds available for other purposes[108]. - The company may face increased vulnerability to adverse economic and industry conditions due to its debt levels[108]. Market Conditions and Competition - The U.S. foodservice distribution industry is sensitive to economic conditions, with potential adverse impacts from inflation and supply chain disruptions affecting consumer confidence and discretionary spending[64]. - Competition is intense in the foodservice distribution industry, with low switching costs for customers, which may lead to pressure on profit margins[66]. - Changes in consumer eating habits, including a shift towards sustainable and locally grown products, may reduce demand for the company's offerings[77]. - Competitors adopting lower cost structures may force the company to adjust its pricing and cost structure to remain competitive[78]. Sustainability and Environmental Initiatives - The Serve Good program features over 900 sustainably-sourced products, contributing to waste reduction and aligning with consumer preferences for sustainability[25]. - The company aims to reduce absolute Scope 1 and 2 GHG emissions by 32.5% by 2032 from a 2019 base year[82]. - Climate change and related regulatory measures may create financial and operational risks, increasing compliance costs and affecting supply chain operations[79]. Technology and Cybersecurity - Digital solutions are utilized in over 80% of sales transactions, enhancing customer relationships and increasing purchase volumes[27]. - The company relies heavily on technology for operations, and disruptions could negatively affect customer service and profits[111]. - The company has implemented cybersecurity measures, but risks remain, including potential significant costs from cyberattacks[116]. - The company has invested in a comprehensive cybersecurity program aligned with the NIST Cyber Security Framework to protect critical assets and information[136][137]. Shareholder Returns and Stock Performance - For the year ended December 28, 2024, the company repurchased 16,400,895 shares at an aggregate purchase price of approximately $958 million under the Amended Share Repurchase Program[156]. - The company has not paid any dividends on its common stock since it began trading publicly in 2016 and has no plans to do so in the foreseeable future[152][153]. - The company has approximately $75 million remaining in its Amended Share Repurchase Program as of December 28, 2024[156].

Fourth Quarter and Fiscal Year 2024 Results February 13, 2025 Disclaimer Page 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 ...