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.

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]