US Foods(US:USFD)2024-02-15 21:45Financial 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]