US Foods Conference Call Summary Company Overview - **Company**: US Foods (NYSE: USFD) - **Market Cap**: Over $20 billion - **Sales**: More than $39 billion in fiscal 2025 - **Adjusted EPS Growth**: Increased over 26% in fiscal 2025 - **Industry Position**: Only pure-play, US-focused, broadline food service distributor with national scale [1][2] Core Industry Focus - **Target Segments**: - Independent restaurants - Healthcare - Hospitality - **Revenue Contribution**: - Restaurants: 56% - Healthcare and Hospitality: 27% - Combined, these segments represent 83% of total revenue [3][6] Strategic Pillars - **Four-Pillar Strategy**: Culture, Service, Growth, and Profit [4] - **Execution Focus**: Emphasis on operational rigor and consistent execution to drive top and bottom line growth [23] Financial Performance - **Revenue Growth**: Compounded annual growth rate (CAGR) of 5% over the last three years [21] - **Adjusted EBITDA**: Achieved record-adjusted EBITDA of $1.93 billion with a margin expansion of 30 basis points [20] - **Cash Flow**: Generated $1.4 billion in operating cash flow in 2025, with significant capital returns to shareholders [22][26] - **Market Share**: Gained 600 basis points of market share since 2019, now at 38% for the big three players in the industry [8][35] Growth Drivers - **Digital Innovation**: - Industry-leading digital ecosystem with platforms like MOX and Vitals, enhancing customer service and operational efficiency [10][11] - MOX platform has an 86% customer satisfaction rate and has reduced sales workload by 30% [15] - **Exclusive Brand Portfolio**: Represents 35% of revenue, with a penetration rate of 54% in independent restaurants [14][51] - **Pronto Platform**: Achieved $1 billion in revenue, tripling in the last three years, targeting smaller, more frequent deliveries [17][18] Market Trends - **Food Service Growth**: The food service distribution market grew from $306 billion in 2019 to $377 billion in 2025, a 23% increase [7] - **Consumer Behavior**: Despite economic pressures, consumers continue to dine out, indicating resilience in the food service industry [55][56] Future Outlook - **2026 Guidance**: - Sales growth of 4%-6% - Adjusted EBITDA growth of 9%-13% - Adjusted diluted EPS growth of 18%-24% [28][29] - **Long-Term Strategy**: Committed to generating over $4 billion in deployable capital from 2025 to 2027, with significant investments in business reinvestment and shareholder returns [31] Key Differentiators - **Scale and Focus**: Unique position as the only national scale distributor focused solely on the US market [9] - **Service Excellence**: Continuous improvement in service levels, aiming to maintain customer loyalty and satisfaction [41] Additional Insights - **Operational Efficiency**: Use of AI and automation to enhance service delivery and inventory management [43][44] - **Market Fragmentation**: The food service distribution industry remains highly fragmented, providing opportunities for continued share growth [9] This summary encapsulates the key points from the US Foods conference call, highlighting the company's strategic focus, financial performance, growth drivers, and future outlook.

Financial Data and Key Metrics Changes - For the year 2025, adjusted EBITDA grew 11% to over $1.9 billion, with an EBITDA margin expansion of 30 basis points to a record 4.9% [7][25] - Adjusted earnings per share (EPS) reached a record of $3.98, reflecting a 26% growth, which was more than double the adjusted EBITDA growth rate [7][25] - Fourth quarter net sales increased 3.3% to $9.8 billion, driven by total case volume growth of 0.8% and food cost inflation and mix impact of 2.5% [23][24] Business Line Data and Key Metrics Changes - Independent restaurant case volume grew 4.1%, marking the strongest net new independent account growth of the year at approximately 4.7% [10][23] - Healthcare and hospitality segments grew 2.9% and 3.1%, respectively, in the fourth quarter, with continued share gains in both customer types [10][23] - Chain restaurant volume decreased by 3.4%, primarily due to slower industry traffic and strategic exits [23] Market Data and Key Metrics Changes - Chain restaurant foot traffic was down 2.8% for the fourth quarter, reflecting a deceleration from the previous quarter [9] - Despite industry headwinds, the company maintained confidence in capturing profitable market share in a fragmented industry [9] Company Strategy and Development Direction - The company is focused on executing its long-range plan from 2025 to 2027, emphasizing operational excellence and productivity initiatives [5][6] - The introduction of AI capabilities in technology platforms aims to enhance customer engagement and operational efficiency [8][14] - The company is transitioning to a 100% variable compensation structure for its sales force, expected to drive long-term growth [17][66] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the underlying momentum in business despite weather-related disruptions and a challenging macro environment [32][33] - The company expects to achieve its 2026 full-year guidance despite early-year weather impacts, projecting adjusted EBITDA growth of 9%-13% and adjusted diluted EPS growth of 18%-24% [31][32] - Management remains confident in the ability to deliver solid top-line performance and double-digit adjusted EBITDA growth [33] Other Important Information - The company repurchased approximately $930 million of its shares and completed two tuck-in acquisitions for over $130 million [8][29] - The corporate credit rating was upgraded by Moody's to Ba1, reflecting solid operating performance and improved credit metrics [30] Q&A Session Summary Question: Can you provide more color on quarter-to-date volumes and underlying momentum? - Management noted strong early January performance, rebounding from weather disruptions, and highlighted the strongest organic independent case growth in two years [41][42] Question: What are your expectations regarding inflation and its impact on gross profit per case? - Management indicated that self-help initiatives remain the primary drivers of gross profits, with disinflation having a minimal impact on overall performance [46][47] Question: How do you view the maturation of the sales force and its impact on case growth? - Management expects productivity from the sales force to ramp up significantly in the latter half of 2026, with a focus on net new account generation [51][52] Question: What is the outlook for case growth across different customer types? - Management anticipates independent case growth of 4%-7% for the year, with strong pipelines in healthcare and hospitality [75][76] Question: Can you elaborate on the sales compensation structure transition? - Management clarified that the transition to a 100% variable compensation structure may take 2-3 years for the majority of sellers, with positive feedback from sales leaders [66][68]