US Foods FY Conference Summary Company Overview - **Company**: US Foods (NYSE: USFD) - **Date**: September 10, 2025 - **Key Speaker**: Dirk Locascio, CFO Core Industry Insights - **Industry**: Restaurant and Food Distribution - **Market Context**: The company remains confident in achieving its long-range plan, targeting 10% EBITDA growth and 20% EPS growth [4][10] Key Points and Arguments Financial Guidance and Performance - US Foods reiterated its full-year guidance and long-range plan, expressing increased confidence compared to the previous year [4] - The company expects to achieve significant value for stakeholders regardless of external market conditions [5] Business Growth and Strategy - **Independent Case Growth**: The company anticipates momentum in independent case growth, supported by a 4% new account growth, the best in some time [6][7] - **Traffic Growth**: US Foods expects restaurant traffic to improve over time, which is crucial for maintaining growth [10] - **Chain Business**: A strategic exit in the chain restaurant segment resulted in a 300 basis point drag on growth, but new business onboarding is expected to mitigate this headwind [11] Pronto Initiative - **Pronto Legacy**: The Pronto legacy business is operational in 44 markets, focusing on smaller trucks for dense areas, with expectations of over $900 million in sales this year [13][15] - **Pronto Penetration**: The initiative aims to enhance service offerings and is projected to reach $1.5 billion by 2027 [15][17] Cost Management and Operational Efficiency - **Gross Margins**: Multiple initiatives, including strategic vendor management and inventory loss initiatives, are expected to contribute positively to gross margins [18][19] - **OPEX Productivity**: The implementation of Descartes routing technology is expected to improve efficiency, with a 2% improvement in cases per mile already observed [21][22] Indirect Spending and AI Integration - The company is targeting $60 million in savings from indirect spending by 2027, with $30 million already generated last year [25] - AI is being integrated into procurement and sales processes, enhancing operational efficiency and customer service [27][30] Automation and Warehouse Facilities - US Foods has launched a semi-automated warehouse in Illinois, with plans for further automation in Texas, aimed at improving productivity and customer service [32][33] Healthcare and Hospitality Segments - **Healthcare Growth**: The healthcare segment has shown impressive case growth, supported by technology investments and strong partnerships [39] - **Hospitality Focus**: The company is investing in business development across hospitality, particularly in recreation venues, while maintaining growth in lodging [40] Specialty Business Development - US Foods is focusing on organic growth in the specialty business, particularly in produce and protein, while also leveraging the Pronto initiative [42][43] Digital Transformation - The company has achieved 78% independent restaurant penetration through digital channels, with a goal of reaching 95% [46][47] Additional Important Insights - The company emphasizes continuous improvement and sustainable growth strategies rather than short-term gains [20] - US Foods is committed to enhancing customer relationships through technology and digital platforms, ensuring ease of business interactions [48] This summary encapsulates the key insights and strategic directions discussed during the US Foods FY Conference, highlighting the company's confidence in its growth trajectory and operational initiatives.

Core Viewpoint - US Foods Holding Corp. reaffirms its fiscal year 2025 guidance and long-range growth plan for 2025 to 2027, indicating confidence in its operational strategies and market position [1] Financial Performance - The company reported strong results for the first half of 2025, highlighting progress in self-help initiatives and growth in Adjusted EBITDA [1]

Financial Data and Key Metrics Changes - The company reported a 3.8% increase in net sales to $10.1 billion, driven by case volume growth of 0.9% and food cost inflation and mix impact of 2.9% [29] - Adjusted EBITDA increased by 12% year-over-year, achieving a record of $548 million, with an adjusted EBITDA margin expansion of 40 basis points to 5.4% [30][31] - Adjusted diluted EPS rose by 28% to $1.19 per share, significantly outpacing adjusted EBITDA growth [31] Business Line Data and Key Metrics Changes - Independent restaurant organic volume grew by 2.3%, healthcare by 4.9%, and hospitality by 2.4% [30] - The company gained market share for the seventeenth consecutive quarter with independent restaurants and the nineteenth consecutive quarter with healthcare [11][30] - Chain restaurant volume declined by 4%, primarily due to a strategic exit impacting total chain volume growth by approximately 300 basis points [14] Market Data and Key Metrics Changes - Independent case growth accelerated to approximately 3% in June and July, with expectations for continued growth in the back half of the year [12][30] - The company reported a 2.7% independent volume growth, aligning with its guidance of 2% to 5% for the year [12] - Restaurant foot traffic improved sequentially but remained down 1.1% from the prior year [14] Company Strategy and Development Direction - The company remains focused on its strategic pillars: culture, service, growth, and profit, aiming for continuous improvement in operational efficiency and customer service [15][19][25] - Investments in semi-automated facilities and the Pronto delivery service are expected to enhance operational efficiencies and drive growth [24][25] - The company is committed to a disciplined capital allocation strategy, balancing investments in growth with share repurchases [11][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to achieve long-term growth targets despite a soft but stable industry environment [38][86] - The company anticipates continued market share gains and expects to maintain a strong pipeline in healthcare and hospitality [88] - Management acknowledged the impact of macroeconomic factors on the industry but remains optimistic about future growth opportunities [86] Other Important Information - The company repurchased $250 million of shares in the second quarter, with a total of $273 million repurchased year-to-date [11][35] - The company aims to hire an additional 3,000 military veterans by 2030 as part of its Mission 2030 recruitment initiative [28] Q&A Session Summary Question: Changes in M&A Philosophy - Management stated there is no change in M&A philosophy, emphasizing the exploration of strategic opportunities to create value for stakeholders [45] Question: Independent Restaurant Traffic Dynamics - Management noted that independent restaurant traffic has improved but not to the extent desired, with case growth accelerating in recent months [46][48] Question: Confidence in Sales Guidance - Management expressed confidence in achieving sales guidance due to onboarding new concepts and improving independent case growth [52][53] Question: Inflation Trends - Management confirmed that inflation has moderated, particularly in categories like beef and eggs, aligning with industry expectations [54] Question: Sales Force Expansion - Management plans to maintain mid-single-digit growth in the sales force, emphasizing the quality of new hires and the importance of productivity [57][59] Question: Independent Case Growth Confidence - Management expressed confidence in independent case growth, supported by a strong pipeline and market share gains [92] Question: Chain Business Strategy - Management clarified that the strategy for the chain business remains focused on optimization rather than capital investment for growth [95] Question: Pronto Service Update - Management reported positive developments in the Pronto service, with increased case growth and market penetration [102] Question: Market Share Goals - Management remains committed to gaining market share with targeted customer types, expecting continued growth as macro conditions improve [104][105]

Financial Data and Key Metrics Changes - The company reported a 3.8% increase in net sales to $10.1 billion, driven by a 0.9% case volume growth and a 2.9% impact from food cost inflation and mix [27][28] - Adjusted EBITDA increased by 12% year-over-year, reaching a record $548 million, with an adjusted EBITDA margin expanding by 40 basis points to 5.4% [29][30] - Adjusted diluted EPS rose by 28% to $1.19 per share, significantly outpacing adjusted EBITDA growth [30][34] Business Line Data and Key Metrics Changes - Independent restaurant organic volume grew by 2.3%, healthcare by 4.9%, and hospitality by 2.4% [28][29] - The company gained market share in independent restaurants for the seventeenth consecutive quarter and in healthcare for the nineteenth consecutive quarter [9][12] - Chain restaurant volume declined by 4%, primarily due to a strategic exit that negatively impacted total chain volume growth by approximately 300 basis points [13][29] Market Data and Key Metrics Changes - Independent case growth accelerated to approximately 3% in June and July, with expectations for continued growth in the back half of the year [12][92] - The company reported a 2.7% independent volume growth, aligning with its guidance of 2% to 5% for the year [11] - Restaurant foot traffic improved sequentially but remained down 1.1% from the prior year [13] Company Strategy and Development Direction - The company remains focused on its strategic pillars, including culture, service, growth, and profit, to drive long-term value [14][24] - Investments in semi-automated facilities and the Pronto delivery service are expected to enhance operational efficiency and support growth initiatives [23][24] - The company is committed to maintaining a disciplined capital allocation strategy, balancing investments in growth with share repurchases [10][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver on its long-range plan, despite a soft but stable industry environment [86][87] - The company anticipates continued market share gains and expects to achieve a 5% sales CAGR and a 10% adjusted EBITDA CAGR through 2027 [42][87] - Management acknowledged the impact of macroeconomic factors on the industry but remains optimistic about future growth opportunities [85][86] Other Important Information - The company repurchased $250 million of shares in the second quarter, with a total of $273 million repurchased year-to-date [10][34] - The company has a strong cash flow, with operating cash flow increasing by $104 million to $725 million year-to-date [34] - The company is committed to hiring an additional 3,000 military veterans by 2030 as part of its Mission 2030 recruitment initiative [26] Q&A Session Summary Question: Changes in M&A Philosophy - Management stated there is no change in M&A philosophy, emphasizing the exploration of strategic opportunities to create value for stakeholders [44] Question: Independent Restaurant Traffic Dynamics - Management noted that independent restaurant traffic has improved but not to the extent desired, with case growth accelerating in recent months [46][48] Question: Confidence in Sales Guidance - Management expressed confidence in reaching the midpoint of sales guidance due to onboarding new concepts and improving independent case growth [52][53] Question: Inflation Trends - Management acknowledged tempered inflation in the quarter, particularly in beef and eggs, with overall inflation remaining within the industry’s preferred range [54][55] Question: Sales Force Expansion - Management confirmed plans to maintain mid-single-digit growth in the sales force, emphasizing the quality of new hires and ongoing focus on penetration improvement [57][60] Question: Pronto Service Update - Management reported positive developments in the Pronto service, with case growth and market penetration exceeding initial expectations [100][102] Question: Market Share Goals - Management remains focused on gaining market share with targeted customer types, expecting continued growth as macro conditions improve [104][105]

Company Performance - US Foods reported quarterly earnings of $1.19 per share, exceeding the Zacks Consensus Estimate of $1.14 per share, and up from $0.93 per share a year ago, representing an earnings surprise of +4.39% [1] - The company posted revenues of $10.08 billion for the quarter ended June 2025, which was 1.01% below the Zacks Consensus Estimate, but an increase from $9.71 billion year-over-year [2] - Over the last four quarters, US Foods has surpassed consensus EPS estimates three times and topped consensus revenue estimates two times [2] Stock Performance - US Foods shares have increased approximately 25.5% since the beginning of the year, significantly outperforming the S&P 500's gain of 7.9% [3] - The current consensus EPS estimate for the upcoming quarter is $1.03 on revenues of $10.24 billion, and for the current fiscal year, it is $3.83 on revenues of $39.8 billion [7] Industry Outlook - The Zacks Industry Rank indicates that the Food - Miscellaneous sector is currently in the bottom 23% of over 250 Zacks industries, suggesting potential challenges for stocks in this category [8] - The performance of US Foods may be influenced by the overall outlook for the industry, as empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions [5][8]

Financial Performance - The company's Q2 2025 net sales increased by 3.8% to $10.082 billion compared to Q2 2024[39] - Adjusted EBITDA for Q2 2025 grew by 12.1% to $548 million compared to Q2 2024[39] - Adjusted diluted EPS increased by 28.0% to $1.19 in Q2 2025 compared to Q2 2024[39] - For the first half of 2025, net sales increased by 4.2% to $19.433 billion[39] - Year-to-date Adjusted EBITDA increased by 10.9% to $937 million[39] - Year-to-date Adjusted Diluted EPS increased by 27.2% to $1.87[39] Volume and Market Share - Total case volume increased by 0.9% in Q2 2025[39] and 1.0% year-to-date[39] - Independent restaurant case volume increased by 2.7% in Q2 2025[39] and 2.6% year-to-date[39] - The company gained market share with independent restaurants, healthcare, and hospitality customer types[11] Strategic Initiatives and Capital Allocation - The company repurchased $250 million of shares during the second quarter[11] - The company delivered more than $50 million in year-to-date cost of goods savings through strategic vendor management[37] - The company is on track to generate $45 million in total indirect spend savings this year[37] Financial Targets - The company is targeting approximately 5% net sales CAGR, approximately 10% Adjusted EBITDA CAGR, and approximately 20% Adjusted Diluted EPS CAGR from 2025E to 2027E[61]

Executive Summary & Highlights [Second Quarter Fiscal 2025 Highlights](index=1&type=section&id=Second%20Quarter%20Fiscal%202025%20Highlights) US Foods reported strong Q2 FY25 results, with significant growth in net sales, net income, and Adjusted EBITDA | Metric | Q2 FY25 Value | YoY Change | | :-------------------------------- | :------------ | :--------- | | Total case volume | +0.9% | | | Independent restaurant case volume | +2.7% | | | Net sales | $10.1 billion | +3.8% | | Gross profit | $1.8 billion | +4.2% | | Net income | $224 million | +13.1% | | Adjusted EBITDA | $548 million | +12.1% | | Diluted EPS | $0.96 | +20.0% | | Adjusted Diluted EPS | $1.19 | +28.0% | [CEO and CFO Commentary](index=1&type=section&id=CEO%20and%20CFO%20Commentary) CEO Dave Flitman highlighted strong execution, market share gains, and record Adjusted EBITDA. CFO Dirk Locascio emphasized consistent strategy and strong cash flow - CEO Dave Flitman noted strong Q2 performance, market share gains with independent restaurant, healthcare, and hospitality customers, leading to record **Adjusted EBITDA of $548 million** and a **40 basis point increase in Adjusted EBITDA margin to 5.4%**[2](index=2&type=chunk) - CFO Dirk Locascio highlighted consistent strategy execution, top-line growth, margin expansion, and **28% Adjusted EPS growth**, supported by accretive share buybacks and strong cash flow funding capital investments and shareholder returns[2](index=2&type=chunk) Second Quarter Fiscal Year 2025 Financial Results [Sales and Volume Performance](index=2&type=section&id=Sales%20and%20Volume%20Performance) Total case volume increased by 0.9% year-over-year, driven by growth in independent restaurant, healthcare, and hospitality segments, partially offset by a decrease in chain volume | Metric | Q2 FY25 Growth | | :-------------------------------- | :------------- | | Total case volume | +0.9% | | Independent restaurant case volume | +2.7% | | Healthcare volume | +4.9% | | Hospitality volume | +2.4% | | Chain volume | -4.0% | | Total organic case volume | +0.5% | | Organic independent restaurant case volume | +2.3% | | Net sales | +3.8% to $10.1 billion | | Food cost inflation | +2.5% | [Profitability Analysis](index=2&type=section&id=Profitability%20Analysis) Gross profit increased by 4.2% to $1.8 billion, primarily due to higher case volume and improved cost of goods sold and inventory management | Metric | Q2 FY25 Value | YoY Change | | :-------------------------------- | :------------ | :--------- | | Gross profit | $1.8 billion | +4.2% | | Gross profit as % of net sales | 17.6% | | | Adjusted Gross profit | $1.8 billion | +5.0% | | Adjusted Gross profit as % of net sales | 17.8% | | [Operating Expenses](index=2&type=section&id=Operating%20Expenses) Operating expenses increased by 3.8% to $1.4 billion, driven by higher case volume and increased distribution, selling, and administrative costs | Metric | Q2 FY25 Value | YoY Change | | :-------------------------------- | :------------ | :--------- | | Operating expenses | $1.4 billion | +3.8% | | Operating expenses as % of net sales | 13.9% | | | Adjusted Operating expenses | $1.2 billion | +2.6% | | Adjusted Operating expenses as % of net sales | 12.3% | | [Net Income and Adjusted EBITDA](index=2&type=section&id=Net%20Income%20and%20Adjusted%20EBITDA) Net income increased by 13.1% to $224 million, with Adjusted EBITDA growing 12.1% to $548 million, and margins improving | Metric | Q2 FY25 Value | YoY Change | | :-------------------------------- | :------------ | :--------- | | Net income | $224 million | +13.1% | | Net income margin | 2.2% | +18 bps | | Adjusted EBITDA | $548 million | +12.1% | | Adjusted EBITDA margin | 5.4% | +40 bps | | Diluted EPS | $0.96 | +20.0% | | Adjusted Diluted EPS | $1.19 | +28.0% | Cash Flow and Debt Management [Cash Flow Activities](index=2&type=section&id=Cash%20Flow%20Activities) Operating cash flow for the first six months of FY25 increased by $104 million to $725 million, driven by higher net income | Metric | 6 Months FY25 Value | YoY Change | | :-------------------------------- | :------------------ | :--------- | | Cash flow from operating activities | $725 million | +$104 million | | Cash capital expenditures | $161 million | +$5 million | [Debt and Leverage](index=2&type=section&id=Debt%20and%20Leverage) Net Debt stood at $4.8 billion at the end of Q2 FY25, with the Net Debt to Adjusted EBITDA ratio improving to 2.6x | Metric | Q2 FY25 Value | FY24 End Value | | :-------------------------------- | :------------ | :------------- | | Net Debt | $4.8 billion | $4.8 billion | | Net Debt to Adjusted EBITDA ratio | 2.6x | 2.8x | [Share Repurchase Program](index=2&type=section&id=Share%20Repurchase%20Program) The Board authorized a new $1 billion share repurchase program, with $250 million in shares repurchased during Q2 FY25 - Board authorized a new share repurchase program of up to **$1 billion** on May 7, 2025[9](index=9&type=chunk) - Repurchased **3.2 million shares for approximately $250 million** during Q2 FY25[9](index=9&type=chunk) Outlook for Fiscal Year 2025 [Updated Guidance](index=3&type=section&id=Updated%20Guidance) US Foods updated its FY25 guidance, maintaining Net Sales growth expectations while raising the lower end of the range for Adjusted EBITDA and Adjusted Diluted EPS growth | Metric | Previous FY25 Guidance | Updated FY25 Guidance | | :-------------------------------- | :--------------------- | :-------------------- | | Net Sales growth | 4% to 6% | 4% to 6% (unchanged) | | Adjusted EBITDA growth | 8% to 12% | 9.5% to 12% | | Adjusted Diluted EPS growth | 17% to 23% | 19.5% to 23% | Company Information [About US Foods](index=3&type=section&id=About%20US%20Foods) US Foods is a leading foodservice distributor serving approximately 250,000 customer locations with a broad food offering and business solutions - One of America's largest foodservice distributors, partnering with **approximately 250,000 customer locations**[11](index=11&type=chunk) - Operates **over 70 broadline locations and more than 90 cash and carry stores with 30,000 associates**[11](index=11&type=chunk) - Provides a broad and innovative food offering, comprehensive e-commerce, technology, and business solutions[11](index=11&type=chunk) Legal and Financial Disclosures [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This section contains cautionary statements regarding forward-looking information, emphasizing that actual results may differ materially due to various risks and uncertainties - Statements about future performance are "forward-looking statements" subject to risks and uncertainties[13](index=13&type=chunk)[14](index=14&type=chunk) - Actual results could differ materially due to economic factors, cost inflation, competition, supply chain issues, regulatory changes, and other factors[13](index=13&type=chunk)[14](index=14&type=chunk) - The company does not undertake to update or revise any forward-looking statements, except as required by law[13](index=13&type=chunk)[14](index=14&type=chunk) [Non-GAAP Financial Measures Explanation](index=4&type=section&id=Non-GAAP%20Financial%20Measures%20Explanation) This section defines and explains the rationale for using various non-GAAP financial measures to assess core operating performance and liquidity - Non-GAAP measures (e.g., Adjusted EBITDA, Adjusted Diluted EPS) are used to provide supplemental information on operational performance and liquidity, excluding certain items not considered part of core operations[15](index=15&type=chunk)[17](index=17&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk) - Management uses these metrics for evaluating performance, setting targets, measuring profitability, assessing financial discipline, and determining variable compensation[15](index=15&type=chunk)[17](index=17&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk) - A reconciliation to the most comparable GAAP measures is provided, and definitions may differ from those used by other companies[15](index=15&type=chunk)[17](index=17&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk) Consolidated Financial Statements [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets present the company's financial position as of June 28, 2025, and December 28, 2024, showing total assets, liabilities, and shareholders' equity | ($ in millions) | June 28, 2025 | December 28, 2024 | | :-------------------------------- | :-------------- | :---------------- | | **ASSETS** | | | | Total current assets | $4,155 | $3,974 | | Property and equipment—net | $2,562 | $2,398 | | Goodwill | $5,767 | $5,766 | | Other intangibles—net | $814 | $836 | |

Wall Street expects a year-over-year increase in earnings on higher revenues when US Foods (USFD) reports results for the quarter ended June 2025. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates. The earnings report, which is expected to be released on August 7, might help the stock move higher if these key numbers are better than expectations. ...

Market Dynamics - US Foods Holding stock reached an all-time high following reports of a potential acquisition of Performance Food Group [1] - Performance Food Group's shares also surged to a record high [1]

Group 1 - Performance Food Group (PFGC.US) has attracted acquisition interest from US Foods Holding Corp (USFD.US), potentially creating a food distribution company with nearly $100 billion in total sales [1] - Following the acquisition news, Performance Food's stock rose nearly 8% in pre-market trading [1] - US Foods Holding Corp's stock has increased over 50% in the past 12 months, giving it a market capitalization of $18.6 billion, while Performance Food's market cap stands at $14.1 billion [1] Group 2 - US Foods provides food services to restaurants, hospitals, schools, and hotels, with revenue of $37.9 billion last year and approximately 30,000 employees across over 70 locations [1] - Performance Food operates in the US and Canada, covering three segments: Performance Foodservice, Vistar (candy and snack distributor), and Core-Mark (convenience store business) [2] - Any potential transaction between the two companies may face regulatory scrutiny, as seen in a previous failed acquisition attempt by Sysco in 2015 [2]