US Foods(US:USFD)2021-08-09 19:08Financial Data and Key Metrics Changes - Net sales for Q2 2021 were $7.7 billion, up 68% from Q2 2020 [37] - Adjusted EBITDA for the quarter was $332 million, a significant rebound from the previous year [44] - Adjusted net income in Q2 was $146 million, with adjusted diluted EPS at $0.58 compared to a loss in the prior year [47] Business Line Data and Key Metrics Changes - The restaurant segment is recovering rapidly, with case volumes ahead of 2019 levels [12][10] - The hospitality business is running at over 70% of 2019 case volumes, benefiting from increased leisure travel [14] - The healthcare business remains steady, with expectations for recovery in senior living facilities over time [16] Market Data and Key Metrics Changes - Foot traffic in restaurants is close to returning to pre-pandemic levels, with growth rates in high single digits for long-open markets compared to 2019 [11] - The company expects to return to pro forma 2019 total case volume levels later in 2022 [18] Company Strategy and Development Direction - The "Great Food Made Easy" strategy is driving market share gains, with a focus on product innovation and technology solutions [19][21] - The company is expanding its footprint with new store openings and enhancing its e-commerce platform [30][24] - The integration of recent acquisitions is on track, with expected synergies of $55 million by 2023 [30] Management's Comments on Operating Environment and Future Outlook - Management noted that while the operating environment remains challenging, they are effectively managing labor and supply chain issues [36] - The company anticipates that inflation will moderate, but does not expect the $25 million inflation benefit seen in Q2 to continue into Q3 or Q4 [50][70] - Management expressed confidence in achieving pre-pandemic performance levels, despite ongoing uncertainties in the labor market [46] Other Important Information - The company has proactively paid down $200 million in debt, resulting in a significant drop in leverage ratio [49] - Operating cash flow for the first half of the year was $250 million, indicating strong cash generation despite being in a recovery phase [48] Q&A Session Summary Question: What is the expectation for labor cost increases? - Management expects labor cost increases to moderate towards the end of the year as hiring progresses [56] Question: Update on driver and selector hiring? - The company has filled over a third of the gap in hiring drivers and selectors and is focused on reducing churn [60] Question: Is labor inflation transitory? - Management believes labor supply issues are transitory, particularly in states that have ended supplemental unemployment benefits [64] Question: Clarification on Q3 and Q4 EBITDA expectations? - Management indicated that Q3 and Q4 EBITDA will be lower than Q2 due to the absence of inflation benefits and increased operating expenses [50][70] Question: How is the competitive environment evolving? - The competitive environment remains stable, with some smaller competitors facing challenges, but the company is gaining market share [106]