US Foods(USFD) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights Second Quarter Fiscal 2025 Highlights 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 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] - 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] Second Quarter Fiscal Year 2025 Financial Results Sales and Volume Performance 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 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 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 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 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 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 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] - Repurchased 3.2 million shares for approximately $250 million during Q2 FY25[9] Outlook for Fiscal Year 2025 Updated Guidance 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 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] - Operates over 70 broadline locations and more than 90 cash and carry stores with 30,000 associates[11] - Provides a broad and innovative food offering, comprehensive e-commerce, technology, and business solutions[11] Legal and Financial Disclosures Forward-Looking Statements 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][14] - Actual results could differ materially due to economic factors, cost inflation, competition, supply chain issues, regulatory changes, and other factors[13][14] - The company does not undertake to update or revise any forward-looking statements, except as required by law[13][14] Non-GAAP Financial Measures Explanation 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][17][21][22] - Management uses these metrics for evaluating performance, setting targets, measuring profitability, assessing financial discipline, and determining variable compensation[15][17][21][22] - A reconciliation to the most comparable GAAP measures is provided, and definitions may differ from those used by other companies[15][17][21][22] Consolidated Financial Statements Consolidated Balance Sheets 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 | |