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US Foods Reports Fourth Quarter and Fiscal Year 2023 Earnings

Net Sales Grew 4.5% to $35.6 Billion in Fiscal Year 2023, Driven by Strong Case Growth

Adjusted EBITDA Grew 19.0% to a Record $1.56 Billion in Fiscal Year 2023

Strong Cash Flow, Achieved Net Leverage Target, Repurchased Shares and Executed Accretive Tuck-in M&A

Announces Fiscal Year 2024 Guidance, Including Adjusted EBITDA of $1.69 to $1.74 Billion1

US Foods Holding Corp. (NYSE: USFD), one of the largest foodservice distributors in the United States, today announced results for the fourth quarter and full fiscal year 2023.

Fourth Quarter Fiscal 2023 Highlights

  • Net sales increased 4.9% to $8.9 billion
  • Total case volume increased 5.6%; independent restaurant case volume increased 7.3%
  • Gross profit increased 9.4% to $1.6 billion
  • Net income available to common shareholders was $147 million
  • Adjusted EBITDA increased 10.9% to $388 million
  • Diluted EPS increased 59.5% to $0.59; Adjusted Diluted EPS increased 16.4% to $0.64

Fiscal Year 2023 Highlights

  • Net sales increased 4.5% to $35.6 billion
  • Total case volume increased 4.4%; independent restaurant case volume increased 6.9%
  • Gross profit increased 11.9% to $6.1 billion
  • Net income available to common shareholders was $499 million
  • Adjusted EBITDA increased 19.0% to $1.56 billion
  • Diluted EPS increased 100.0% to $2.02; Adjusted Diluted EPS increased 22.9% to $2.63

“2023 was an exciting year at US Foods and marked my first full year with this strong company. Through execution of our strategy and long-range plan, we captured profitable market share and enhanced margins,” said Dave Flitman, CEO. “This resulted in record full-year 2023 Adjusted EBITDA of $1.56 billion, driven by strong case growth with our independent restaurant, healthcare and hospitality customers and the implementation of key operational initiatives. I believe our differentiated model and our sustainable competitive advantages will drive continued market outperformance and we are well-positioned to win in any macro environment. As we move into 2024, we will continue to execute our strategy and maintain our disciplined approach to capital deployment to drive long-term value creation for our shareholders. We have strong momentum entering this year, which is a reflection of the hard work and tireless commitment of our 30,000 dedicated associates.”

“I am proud of our associates’ ability to deliver solid financial results in the fourth quarter and record Adjusted EBITDA for 2023,” added Dirk Locascio, CFO. “We generated strong free cash flow, reduced our debt, invested organically and inorganically via two tuck-in acquisitions that expand our position in underserved markets and repurchased shares. Our debt reduction and Adjusted EBITDA growth resulted in net leverage reduction from 3.5x at the end of 2022 to 2.8x at the end of 2023, within our targeted range. I am confident that our 2023 financial performance and our healthy balance sheet will enable us to execute our capital allocation priorities in 2024.”

Fourth Quarter Fiscal 2023 Results

Net sales of $8.9 billion for the quarter increased 4.9% from the prior year, driven by case volume growth. Total case volume increased 5.6% from the prior year on a 7.3% increase in independent restaurant case volume, an 8.1% increase in healthcare volume, a 5.0% increase in hospitality volume and a 0.8% increase in chain volume.

Gross profit of $1.6 billion increased $136 million, or 9.4%, from the prior year, primarily as a result of an increase in total case volume, cost of goods sold optimization, optimized pricing and a favorable year-over-year LIFO adjustment. Gross profit as a percent of Net sales was 17.8%. Adjusted Gross profit was $1.5 billion, a 6.1% increase from the prior year. Adjusted Gross profit as a percent of Net sales was 17.3% and adjusted Gross profit per case continued at strong levels due to the aforementioned factors.

Operating expenses of $1.3 billion increased $54 million, or 4.3%, from the prior year. Operating expenses increased primarily due to increased total case volume and higher seller compensation costs, partially offset by lower distribution cost per case from cost savings initiatives including routing improvements and focused efforts positively impacting labor turnover and productivity as well as lower fuel costs. Operating expenses as a percent of Net sales were 14.7%. Adjusted Operating expenses for the quarter were $1.2 billion, an increase of $47 million, or 4.2% from the prior year, due to the aforementioned factors. Adjusted Operating expenses as a percent of Net sales were 13.0%.

Net income available to common shareholders was $147 million, an increase of $64 million compared to the prior year. Adjusted EBITDA was $388 million, an increase of $38 million, or 10.9%, compared to the prior year. Adjusted EBITDA margin was 4.3%, an increase of 23 basis points compared to the prior year. Diluted EPS was $0.59; Adjusted Diluted EPS was $0.64.

Fiscal Year 2023 Results

Net sales of $35.6 billion increased 4.5% from the prior year, driven by case volume growth. Total case volume increased 4.4% from the prior year on a 6.9% increase in independent restaurant case volume, a 7.2% increase in healthcare volume and an 8.9% increase in hospitality volume, offset by a 2.1% decrease in chain volume.

Gross profit of $6.1 billion increased $656 million, or 11.9%, from the prior year, primarily as a result of an increase in total case volume, cost of goods sold optimization, increased freight income from improved inbound logistics and optimized pricing. Gross profit as a percent of Net sales was 17.3%. Adjusted Gross profit was $6.1 billion, a 9.0% increase from the prior year. Adjusted Gross profit as a percent of Net sales was 17.3% and adjusted Gross profit per case was strong due to the aforementioned factors.

Operating expenses of $5.1 billion increased $233 million, or 4.8%, from the prior year. Operating expenses increased primarily due to increased total case volume and higher seller compensation costs, partially offset by lower distribution cost per case from cost savings initiatives including routing improvements and focused efforts positively impacting labor turnover and productivity as well as lower fuel costs. Operating expenses as a percent of Net sales were 14.4%. Adjusted Operating expenses were $4.6 billion, an increase of $243 million, or 5.6% from the prior year, due to the aforementioned factors. Adjusted Operating expenses as a percent of Net sales were 12.9%.

Net income available to common shareholders was $499 million, an increase of $271 million compared to the prior year. Adjusted EBITDA was $1.56 billion, an increase of $249 million, or 19.0% compared to the prior year. Adjusted EBITDA margin was 4.4%, an increase of 53 basis points compared to the prior year. Diluted EPS was $2.02; Adjusted Diluted EPS was $2.63.

Cash Flow and Debt

Cash flow provided by operating activities for fiscal 2023 was $1.14 billion, an increase of $375 million from the prior year due to earnings growth and strong working capital management. Cash capital expenditures for fiscal 2023 were $309 million, an increase of $44 million from the prior year, and related to investments in information technology, property and equipment, fleet replacement and maintenance of distribution facilities.

During the fourth quarter of fiscal 2023, the Company repurchased 1.6 million shares of common stock at an aggregate purchase price of $65 million and for the full fiscal year repurchased 7.4 million shares of common stock at an aggregate purchase price of $294 million. The Company has approximately $192 million in remaining funds authorized under its $500 million share repurchase program.

Net Debt at the end of fiscal year 2023 was $4.4 billion, a decrease of $238 million versus the end of fiscal 2022. The ratio of Net Debt to Adjusted EBITDA was 2.8x at the end of fiscal 2023, as compared to 3.5x at the end of fiscal 2022.

M&A Update

Subsequent to quarter-end, the Company has signed a definitive agreement to acquire IWC Food Service, a broadline distributor which serves the greater Nashville area. IWC has approximately 220 associates and $200 million in annual sales. Pending regulatory approval, the Company is targeting to close the transaction in the second quarter of 2024.

During the fourth quarter of fiscal 2023, the Company acquired Saladino's Foodservice, an independently owned broadline distributor based in central California for a purchase price of $56 million.

Outlook for Fiscal Year 20241

The Company is providing First Quarter 2024 guidance of:

  • Adjusted EBITDA of $340 to $355 million

The Company is providing Fiscal Year 2024 guidance of:

  • Net Sales of $37.5 to $38.5 billion
  • Adjusted EBITDA of $1.69 to $1.74 billion
  • Adjusted Diluted EPS of $3.00 to $3.20

____________________

1
The Company is not providing a reconciliation of certain forward-looking non-GAAP financial measures, including Adjusted EBITDA and Adjusted Diluted EPS, because the Company is unable to predict with reasonable certainty the financial impact of certain significant items, including restructuring costs and asset impairment charges, share-based compensation expenses, non-cash impacts of LIFO reserve adjustments, losses on extinguishments of debt, business transformation costs, other gains and losses, business acquisition and integration related costs and diluted earnings per share. These items are uncertain, depend on various factors, and could have a material impact on GAAP reported results for the guidance periods. For the same reasons, the Company is unable to address the significance of the unavailable information, which could be material to future results.

Conference Call and Webcast Information

US Foods will host a live webcast to discuss fourth quarter and fiscal year 2023 results on February 15, 2024 at 8 a.m. CST. The call can also be accessed live over the phone by dialing (877) 344-2001; the conference ID number is 2528845.

Presentation slides will be available shortly before the webcast begins. The webcast, slides, and a copy of this press release can be found in the Investor Relations section of our website at https://ir.usfoods.com.

About US Foods

With a promise to help its customers Make It, US Foods is one of America’s great food companies and a leading foodservice distributor, partnering with approximately 250,000 restaurants and foodservice operators to help their businesses succeed. With more than 70 broadline locations and approximately 90 cash and carry stores, US Foods and its 30,000 associates provides its customers with a broad and innovative food offering and a comprehensive suite of e-commerce, technology and business solutions. US Foods is headquartered in Rosemont, Ill. Visit www.usfoods.com to learn more.

Forward-Looking Statements

Statements in this press release which are not historical in nature, including those under the heading “Outlook for Fiscal Year 2024,” are “forward-looking statements” within the meaning of the federal securities laws. These statements often include words such as “believe,” “expect,” “project,” “anticipate,” “intend,” “plan,” “outlook,” “estimate,” “target,” “seek,” “will,” “may,” “would,” “should,” “could,” “forecast,” “mission,” “strive,” “more,” “goal,” or similar expressions (although not all forward-looking statements may contain such words) and are based upon various assumptions and our experience in the industry, as well as historical trends, current conditions, and expected future developments. However, you should understand that these statements are not guarantees of performance or results and there are a number of risks, uncertainties and other important factors, many of which are beyond our control, that could cause our actual results to differ materially from those expressed in the forward-looking statements, including, among others: economic factors affecting consumer confidence and discretionary spending and reducing the consumption of food prepared away from home; cost inflation/deflation and commodity volatility; competition; reliance on third party suppliers and interruption of product supply or increases in product costs; changes in our relationships with customers and group purchasing organizations; our ability to increase or maintain the highest margin portions of our business; achievement of expected benefits from cost savings initiatives; increases in fuel costs; changes in consumer eating habits; cost and pricing structures; the impact of climate change or related legal, regulatory or market measures; impairment charges for goodwill, indefinite-lived intangible assets or other long-lived assets; the impact of governmental regulations; product recalls and product liability claims; our reputation in the industry; labor relations and increased labor costs and continued access to qualified and diverse labor; indebtedness and restrictions under agreements governing our indebtedness; interest rate increases; disruption of existing technologies and implementation of new technologies; cybersecurity incidents and other technology disruptions; risks associated with intellectual property, including potential infringement; effective consummation of pending acquisitions and effective integration of acquired businesses; potential costs associated with shareholder activism; changes in tax laws and regulations and resolution of tax disputes; certain provisions in our governing documents; health and safety risks to our associates and related losses; adverse judgments or settlements resulting from litigation; extreme weather conditions, natural disasters and other catastrophic events; and management of retirement benefits and pension obligations.

For a detailed discussion of these risks, uncertainties and other factors that could cause our actual results to differ materially from those anticipated or expressed in any forward-looking statements, see the section entitled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 30, 2023 filed with the Securities and Exchange Commission (“SEC”). Additional risks and uncertainties are discussed from time to time in current, quarterly and annual reports filed by the Company with the SEC, which are available on the SEC’s website at www.sec.gov. Additionally, we operate in a highly competitive and rapidly changing environment; new risks and uncertainties may emerge from time to time, and it is not possible to predict all risks nor identify all uncertainties. The forward-looking statements contained in this press release speak only as of the date of this press release and are based on information and estimates available to us at this time. We undertake no obligation to update or revise any forward-looking statements, except as may be required by law.

Non-GAAP Financial Measures

We report our financial results in accordance with U.S. generally accepted accounting principles (“GAAP”). However, Adjusted Gross profit, Adjusted Operating expenses, EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Net Debt, Adjusted Net income and Adjusted Diluted EPS are non-GAAP financial measures regarding our operational performance and liquidity. These non-GAAP financial measures exclude the impact of certain items and, therefore, have not been calculated in accordance with GAAP.

We use Adjusted Gross profit and Adjusted Operating expenses as supplemental measures to GAAP measures to focus on period-over-period changes in our business and believe this information is helpful to investors. Adjusted Gross profit is Gross profit adjusted to remove the impact of the LIFO inventory reserve adjustments. Adjusted Operating expenses are Operating expenses adjusted to exclude amounts that we do not consider part of our core operating results when assessing our performance.

We believe EBITDA, Adjusted EBITDA and Adjusted EBITDA margin provide meaningful supplemental information about our operating performance because they exclude amounts that we do not consider part of our core operating results when assessing our performance. EBITDA is Net income (loss), plus Interest expense-net, Income tax provision (benefit), and Depreciation and amortization. Adjusted EBITDA is EBITDA adjusted for (1) Restructuring costs and asset impairment charges; (2) Share-based compensation expense; (3) the non-cash impact of LIFO reserve adjustments; (4) loss on extinguishment of debt; (5) Business transformation costs; and (6) other gains, losses or costs as specified in the agreements governing our indebtedness. Adjusted EBITDA margin is Adjusted EBITDA divided by total net sales.

We use Net Debt as a supplemental measure to GAAP measures to review the liquidity of our operations. Net Debt is defined as total debt net of total Cash, cash equivalents and restricted cash remaining on the balance sheet as of the end of the most recent fiscal quarter. We believe that Net Debt is a useful financial metric to assess our ability to pursue business opportunities and investments. Net Debt is not a measure of our liquidity under GAAP and should not be considered as an alternative to Cash Flows Provided by Operations or Cash Flows Used in Financing Activities.

We believe that Adjusted Net income is a useful measure of operating performance for both management and investors because it excludes items that are not reflective of our core operating performance and provides an additional view of our operating performance including depreciation, interest expense, and Income taxes on a consistent basis from period to period. Adjusted Net income is Net income (loss) excluding such items as restructuring costs and asset impairment charges, Share-based compensation expense, the non-cash impacts of LIFO reserve adjustments, amortization expense, loss on extinguishment of debt, Business transformation costs and other items, and adjusted for the tax effect of the exclusions and discrete tax items. We believe that Adjusted Net income may be used by investors, analysts, and other interested parties to facilitate period-over-period comparisons and provides additional clarity as to how factors and trends impact our operating performance.

We use Adjusted Diluted Earnings per Share, which is calculated by adjusting the most directly comparable GAAP financial measure, Diluted Earnings per Share, by excluding the same items excluded in our calculation of Adjusted EBITDA to the extent that each such item was included in the applicable GAAP financial measure. We believe the presentation of Adjusted Diluted Earnings per Share is useful to investors because the measurement excludes amounts that we do not consider part of our core operating results when assessing our performance. We also believe that the presentation of Adjusted EBITDA, Adjusted EBITDA margin and Adjusted Diluted Earnings per Share is useful to investors because these metrics may be used by securities analysts, investors and other interested parties in their evaluation of the operating performance of companies in our industry.

Management uses these non-GAAP financial measures (a) to evaluate our historical and prospective financial performance as well as our performance relative to our competitors as they assist in highlighting trends, (b) to set internal sales targets and spending budgets, (c) to measure operational profitability and the accuracy of forecasting, (d) to assess financial discipline over operational expenditures, and (e) as an important factor in determining variable compensation for management and employees. EBITDA and Adjusted EBITDA are also used in connection with certain covenants and restricted activities under the agreements governing our indebtedness. We also believe these and similar non-GAAP financial measures are frequently used by securities analysts, investors, and other interested parties to evaluate companies in our industry.

We caution readers that our definitions of Adjusted Gross profit, Adjusted Operating expenses, EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Net Debt, Adjusted Net income and Adjusted Diluted EPS may not be calculated in the same manner as similar measures used by other companies. Definitions and reconciliations of the non-GAAP financial measures to their most comparable GAAP financial measures are included in the schedules attached to this press release.

US FOODS HOLDING CORP.

Consolidated Balance Sheets

(Unaudited)

 

($ in millions)

 

December 30,

2023

 

December 31,

2022

 

 

 

 

 

ASSETS

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

$

269

 

 

$

211

 

Accounts receivable, less allowances of $18 and $30

 

 

1,854

 

 

 

1,705

 

Vendor receivables, less allowances of $5 and $8

 

 

156

 

 

 

143

 

Inventories—net

 

 

1,600

 

 

 

1,616

 

Prepaid expenses

 

 

138

 

 

 

124

 

Assets held for sale

 

 

 

 

 

2

 

Other current assets

 

 

14

 

 

 

19

 

Total current assets

 

 

4,031

 

 

 

3,820

 

Property and equipment—net

 

 

2,280

 

 

 

2,171

 

Goodwill

 

 

5,697

 

 

 

5,625

 

Other intangibles—net

 

 

803

 

 

 

785

 

Other assets

 

 

376

 

 

 

372

 

Total assets

 

$

13,187

 

 

$

12,773

 

 

 

 

 

 

LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS' EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Cash overdraft liability

 

$

220

 

 

$

175

 

Accounts payable

 

 

2,051

 

 

 

1,855

 

Accrued expenses and other current liabilities

 

 

731

 

 

 

650

 

Current portion of long-term debt

 

 

110

 

 

 

116

 

Total current liabilities

 

 

3,112

 

 

 

2,796

 

Long-term debt

 

 

4,564

 

 

 

4,738

 

Deferred tax liabilities

 

 

293

 

 

 

298

 

Other long-term liabilities

 

 

469

 

 

 

446

 

Total liabilities

 

 

8,438

 

 

 

8,278

 

Mezzanine equity:

 

 

 

 

Series A convertible preferred stock

 

 

 

 

 

534

 

Shareholders' equity:

 

 

 

 

Common stock

 

 

3

 

 

 

2

 

Additional paid-in capital

 

 

3,663

 

 

 

3,036

 

Retained earnings

 

 

1,509

 

 

 

1,010

 

Accumulated other comprehensive loss

 

 

(115

)

 

 

(73

)

Treasury Stock

 

 

(311

)

 

 

(14

)

Total shareholders’ equity

 

 

4,749

 

 

 

3,961

 

Total liabilities, mezzanine equity and shareholders' equity

 

$

13,187

 

 

$

12,773

 

US FOODS HOLDING CORP.

Consolidated Statements of Operations

(Unaudited)

 

 

 

For the quarter ended

 

For the year ended

($ in millions, except share and per share data)

 

December 30,

2023

 

December 31,

2022

 

December 30,

2023

 

December 31,

2022

Net sales

 

$

8,936

 

 

$

8,515

 

 

$

35,597

 

 

$

34,057

 

Cost of goods sold

 

 

7,346

 

 

 

7,061

 

 

 

29,449

 

 

 

28,565

 

Gross profit

 

 

1,590

 

 

 

1,454

 

 

 

6,148

 

 

 

5,492

 

Distribution, selling and administrative costs

 

 

1,298

 

 

 

1,246

 

 

 

5,117

 

 

 

4,886

 

Restructuring costs and asset impairment charges

 

 

14

 

 

 

12

 

 

 

14

 

 

 

12

 

Total operating expenses

 

 

1,312

 

 

 

1,258

 

 

 

5,131

 

 

 

4,898

 

Operating income

 

 

278

 

 

 

196

 

 

 

1,017

 

 

 

594

 

Other income—net

 

 

(2

)

 

 

(6

)

 

 

(6

)

 

 

(22

)

Interest expense—net

 

 

80

 

 

 

75

 

 

 

324

 

 

 

255

 

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

21

 

 

 

 

Income before income taxes

 

 

200

 

 

 

127

 

 

 

678

 

 

 

361

 

Income tax provision

 

 

53

 

 

 

34

 

 

 

172

 

 

 

96

 

Net income

 

$

147

 

 

$

93

 

 

$

506

 

 

$

265

 

 

 

 

 

 

 

 

 

 

Net income

 

$

147

 

 

$

93

 

 

$

506

 

 

$

265

 

Series A convertible preferred stock dividends

 

 

 

 

 

(10

)

 

 

(7

)

 

 

(37

)

Net income available to common shareholders

 

$

147

 

 

$

83

 

 

$

499

 

 

$

228

 

 

 

 

 

 

 

 

 

 

Net income per share

 

 

 

 

 

 

 

 

Basic

 

$

0.60

 

 

$

0.37

 

 

$

2.09

 

 

$

1.02

 

Diluted

 

$

0.59

 

 

$

0.37

 

 

$

2.02

 

 

$

1.01

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding

 

 

 

 

 

 

 

 

Basic

 

 

245,663,206

 

 

 

224,887,647

 

 

 

239,253,961

 

 

 

224,102,656

 

Diluted

 

 

248,204,734

 

 

 

226,995,767

 

 

 

249,984,664

 

 

 

226,474,421

 

US FOODS HOLDING CORP.

Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

For the year ended

($ in millions)

 

December 30,

2023

 

December 31,

2022

Cash Flows From Operating Activities:

 

 

 

 

Net income

 

$

506

 

 

$

265

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

 

395

 

 

 

372

 

Gain on disposal of property and equipment—net

 

 

(6

)

 

 

(5

)

Tangible asset impairment charges

 

 

1

 

 

 

10

 

Loss on extinguishment of debt

 

 

21

 

 

 

 

Amortization of deferred financing costs

 

 

17

 

 

 

12

 

Deferred tax provision

 

 

9

 

 

 

17

 

Share-based compensation expense

 

 

56

 

 

 

45

 

Provision for doubtful accounts

 

 

24

 

 

 

6

 

Changes in operating assets and liabilities, net of business acquisitions:

 

 

 

 

Increase in receivables

 

 

(157

)

 

 

(240

)

Decrease in inventories

 

 

61

 

 

 

70

 

Increase in prepaid expenses and other assets

 

 

(67

)

 

 

(24

)

Increase in accounts payable and cash overdraft liability

 

 

200

 

 

 

193

 

Increase in accrued expenses and other liabilities

 

 

80

 

 

 

44

 

Net cash provided by operating activities

 

 

1,140

 

 

 

765

 

Cash Flows From Investing Activities:

 

 

 

 

Acquisition of businesses - net of cash received

 

 

(196

)

 

 

 

Proceeds from sales of property and equipment

 

 

10

 

 

 

10

 

Purchases of property and equipment

 

 

(309

)

 

 

(265

)

Net cash used in investing activities

 

 

(495

)

 

 

(255

)

Cash Flows From Financing Activities:

 

 

 

 

Repurchase of Senior Note Debt

 

 

(1,000

)

 

 

 

Issuance of new Senior Note Debt

 

 

1,000

 

 

 

 

Principal payments on debt repricing

 

 

(43

)

 

 

 

Proceeds from debt repricing

 

 

43

 

 

 

 

Proceeds from debt borrowings

 

 

456

 

 

 

1,207

 

Principal payments on debt and financing leases

 

 

(766

)

 

 

(1,620

)

Dividends paid on Series A convertible preferred stock

 

 

(7

)

 

 

(37

)

Debt financing costs and fees

 

 

(11

)

 

 

(4

)

Repurchase of common stock

 

 

(294

)

 

 

(14

)

Proceeds from employee stock purchase plan

 

 

24

 

 

 

22

 

Proceeds from exercise of stock options

 

 

26

 

 

 

15

 

Purchase of interest rate caps

 

 

(3

)

 

 

 

Tax withholding payments for net share-settled equity awards

 

 

(12

)

 

 

(16

)

Net cash used in financing activities

 

 

(587

)

 

 

(447

)

Net increase in cash and cash equivalents

 

 

58

 

 

 

63

 

Cash, cash equivalents and restricted cash—beginning of year

 

 

211

 

 

 

148

 

Cash, cash equivalents and restricted cash—end of year

 

$

269

 

 

$

211

 

Supplemental disclosures of cash flow information:

 

 

 

 

Conversion of Series A Convertible Preferred Stock

 

$

534

 

 

$

 

Interest paid—net of amounts capitalized

 

 

294

 

 

 

243

 

Income taxes paid—net

 

 

161

 

 

 

68

 

Property and equipment purchases included in accounts payable

 

 

39

 

 

 

36

 

Leased assets obtained in exchange for financing lease liabilities

 

 

125

 

 

 

207

 

Leased assets obtained in exchange for operating lease liabilities

 

 

67

 

 

 

41

 

Cashless exercise of stock options

 

 

2

 

 

 

1

 

US FOODS HOLDING CORP.

Non-GAAP Reconciliation

(Unaudited)

 

 

 

For the quarter ended

 

 

Consolidated US Foods

($ in millions, except share and per share data)

 

December 30,

2023

 

December 31,

2022

 

Change

 

%

Net income available to common shareholders (GAAP)

 

$

147

 

 

$

83

 

 

$

64

 

 

77.1

%

Series A Preferred Stock Dividends

 

 

 

 

 

(10

)

 

 

10

 

 

(100.0

)%

Net income (GAAP)

 

 

147

 

 

 

93

 

 

 

54

 

 

58.1

%

Interest expense—net

 

 

80

 

 

 

75

 

 

 

5

 

 

6.7

%

Income tax provision

 

 

53

 

 

 

34

 

 

 

19

 

 

55.9

%

Depreciation expense

 

 

93

 

 

 

87

 

 

 

6

 

 

6.9

%

Amortization expense

 

 

12

 

 

 

12

 

 

 

 

 

%

EBITDA (Non-GAAP)

 

 

385

 

 

 

301

 

 

 

84

 

 

27.9

%

Adjustments:

 

 

 

 

 

 

 

 

Restructuring costs and asset impairment charges (1)

 

 

12

 

 

 

12

 

 

 

 

 

%

Share-based compensation expense (2)

 

 

13

 

 

 

11

 

 

 

2

 

 

18.2

%

LIFO reserve adjustments (3)

 

 

(43

)

 

 

4

 

 

 

(47

)

 

NM

 

Business transformation costs (4)

 

 

12

 

 

 

11

 

 

 

1

 

 

9.1

%

Business acquisition and integration related costs and other (5)

 

 

9

 

 

 

11

 

 

 

(2

)

 

(18.2

)%

Adjusted EBITDA (Non-GAAP)

 

 

388

 

 

 

350

 

 

 

38

 

 

10.9

%

Depreciation expense

 

 

(93

)

 

 

(87

)

 

 

(6

)

 

6.9

%

Interest expense—net

 

 

(80

)

 

 

(75

)

 

 

(5

)

 

6.7

%

Income tax provision, as adjusted (6)

 

 

(55

)

 

 

(50

)

 

 

(5

)

 

10.0

%

Adjusted Net income (Non-GAAP)

 

$

160

 

 

$

138

 

 

$

22

 

 

15.9

%

 

 

 

 

 

 

 

 

 

Diluted EPS (GAAP)

 

$

0.59

 

 

$

0.37

 

 

$

0.22

 

 

59.5

%

Restructuring costs and asset impairment charges (1)

 

 

0.05

 

 

 

0.05

 

 

 

 

 

%

Share-based compensation expense (2)

 

 

0.05

 

 

 

0.04

 

 

 

0.01

 

 

25.0

%

LIFO reserve adjustments (3)

 

 

(0.17

)

 

 

0.02

 

 

 

(0.19

)

 

NM

 

Business transformation costs (4)

 

 

0.05

 

 

 

0.04

 

 

 

0.01

 

 

25.0

%

Business acquisition and integration related costs and other (5)

 

 

0.04

 

 

 

0.04

 

 

 

 

 

%

Income tax provision, as adjusted (6)

 

 

0.03

 

 

 

(0.01

)

 

 

0.04

 

 

NM

 

Adjusted Diluted EPS (Non-GAAP)(7)

 

$

0.64

 

 

$

0.55

 

 

$

0.09

 

 

16.4

%

 

 

 

 

 

 

 

 

 

Weighted-average diluted shares outstanding (Non- GAAP) (8)

 

 

248,204,734

 

 

 

251,753,008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit (GAAP)

 

$

1,590

 

 

$

1,454

 

 

$

136

 

 

9.4

%

LIFO reserve adjustments (3)

 

 

(43

)

 

 

4

 

 

 

(47

)

 

NM

 

Adjusted Gross profit (Non-GAAP)

 

$

1,547

 

 

$

1,458

 

 

$

89

 

 

6.1

%

 

 

 

 

 

 

 

 

 

Operating expenses (GAAP)

 

$

1,312

 

 

$

1,258

 

 

$

54

 

 

4.3

%

Depreciation expense

 

 

(93

)

 

 

(87

)

 

 

(6

)

 

6.9

%

Amortization expense

 

 

(12

)

 

 

(12

)

 

 

 

 

%

Restructuring costs and asset impairment charges (1)

 

 

(12

)

 

 

(12

)

 

 

 

 

%

Share-based compensation expense (2)

 

 

(13

)

 

 

(11

)

 

 

(2

)

 

18.2

%

Business transformation costs (4)

 

 

(12

)

 

 

(11

)

 

 

(1

)

 

9.1

%

Business acquisition and integration related costs and other (5)

 

 

(9

)

 

 

(11

)

 

 

2

 

 

(18.2

)%

Adjusted Operating expenses (Non-GAAP)

 

$

1,161

 

 

$

1,114

 

 

$

47

 

 

4.2

%

NM - Not Meaningful

(1)

Consists primarily of non-CEO severance and related costs associated with organizational realignment and other impairment charges. For the quarter ended December 31, 2022, also consists of the write-off of old leases ROU asset and lease liability of $9 million associated with entering into new lease agreements for four distribution facilities.

(2)

Share-based compensation expense for expected vesting of stock awards and employee stock purchase plan.

(3)

Represents the impact of LIFO reserve adjustments.

(4)

Transformational costs represent non-recurring expenses prior to formal launch of strategic projects with anticipated long-term benefits to the Company. These costs generally relate to third party consulting and non-capitalizable construction or technology. For the quarter ended December 30, 2023, business transformation costs related to projects associated with information technology infrastructure initiatives. For the quarter ended December 31, 2022, business transformation costs consist of new facility openings, supply chain strategy improvements, and information technology infrastructure initiatives.

(5)

Includes: (i) aggregate acquisition and integration related costs of $9 million and $5 million for the quarter ended December 30, 2023 and December 31, 2022, respectively; (ii) other gains, losses or costs that we are permitted to addback for purposes of calculating Adjusted EBITDA under certain agreements governing our indebtedness.

(6)

Represents our income tax provision adjusted for the tax effect of pre-tax items excluded from Adjusted Net Income and the removal of applicable discrete tax items. Applicable discrete tax items include changes in tax laws or rates, changes related to prior year unrecognized tax benefits, discrete changes in valuation allowances, and excess tax benefits associated with share-based compensation. The tax effect of pre-tax items excluded from Adjusted Net Income is computed using a statutory tax rate after taking into account the impact of permanent differences and valuation allowances.

(7)

Adjusted Diluted EPS is calculated as Adjusted net income divided by weighted average diluted shares outstanding (Non-GAAP).

(8)

For purposes of the Adjusted Diluted EPS calculation (Non-GAAP), when the Company has net income (GAAP), weighted average diluted shares outstanding (Non-GAAP) is used and assumes conversion of the Series A convertible preferred stock, and, when the Company has net loss (GAAP) and assumed conversion of the Series A convertible preferred stock would be antidilutive, weighted-average diluted shares outstanding (GAAP) is used.

US FOODS HOLDING CORP.

Non-GAAP Reconciliation

(Unaudited)

 

 

 

For the year ended

 

 

Consolidated US Foods

($ in millions, except share and per share data)

 

December 30,

2023

 

December 31,

2022

 

Change

 

%

Net income available to common shareholders (GAAP)

 

$

499

 

 

$

228

 

 

$

271

 

 

118.9

%

Series A Preferred Stock Dividends

 

 

(7

)

 

 

(37

)

 

 

30

 

 

(81.1

)%

Net income (GAAP)

 

 

506

 

 

 

265

 

 

 

241

 

 

90.9

%

Interest expense—net

 

 

324

 

 

 

255

 

 

 

69

 

 

27.1

%

Income tax provision

 

 

172

 

 

 

96

 

 

 

76

 

 

79.2

%

Depreciation expense

 

 

349

 

 

 

327

 

 

 

22

 

 

6.7

%

Amortization expense

 

 

46

 

 

 

45

 

 

 

1

 

 

2.2

%

EBITDA (Non-GAAP)

 

 

1,397

 

 

 

988

 

 

 

409

 

 

41.4

%

Adjustments:

 

 

 

 

 

 

 

 

Restructuring costs and asset impairment charges (1)

 

 

14

 

 

 

12

 

 

 

2

 

 

16.7

%

Share-based compensation expense (2)

 

 

56

 

 

 

45

 

 

 

11

 

 

24.4

%

LIFO reserve adjustments (3)

 

 

(1

)

 

 

147

 

 

 

(148

)

 

(100.7

)%

Loss on extinguishment of debt (4)

 

 

21

 

 

 

 

 

 

21

 

 

NM

 

Business transformation costs (5)

 

 

28

 

 

 

52

 

 

 

(24

)

 

(46.2

)%

Business acquisition and integration related costs and other (6)

 

 

44

 

 

 

66

 

 

 

(22

)

 

(33.3

)%

Adjusted EBITDA (Non-GAAP)

 

 

1,559

 

 

 

1,310

 

 

 

249

 

 

19.0

%

Depreciation expense

 

 

(349

)

 

 

(327

)

 

 

(22

)

 

6.7

%

Interest expense—net

 

 

(324

)

 

 

(255

)

 

 

(69

)

 

27.1

%

Income tax provision, as adjusted (7)

 

 

(228

)

 

 

(190

)

 

 

(38

)

 

20.0

%

Adjusted Net income (Non-GAAP)

 

$

658

 

 

$

538

 

 

$

120

 

 

22.3

%

 

 

 

 

 

 

 

 

 

Diluted EPS (GAAP)

 

$

2.02

 

 

$

1.01

 

 

$

1.01

 

 

100.0

%

Restructuring costs and asset impairment charges (1)

 

 

0.06

 

 

 

0.05

 

 

 

0.01

 

 

20.0

%

Share-based compensation expense (2)

 

 

0.22

 

 

 

0.18

 

 

 

0.04

 

 

22.2

%

LIFO reserve adjustments (3)

 

 

 

 

 

0.59

 

 

 

(0.59

)

 

(100.0

)%

Loss on extinguishment of debt (4)

 

 

0.08

 

 

 

 

 

 

0.08

 

 

NM

 

Business transformation costs (5)

 

 

0.11

 

 

 

0.21

 

 

 

(0.10

)

 

(47.6

)%

Business acquisition and integration related costs and other (6)

 

 

0.18

 

 

 

0.26

 

 

 

(0.08

)

 

(30.8

)%

Income tax provision, as adjusted (7)

 

 

(0.04

)

 

 

(0.16

)

 

 

0.12

 

 

(75.0

)%

Adjusted Diluted EPS (Non-GAAP) (8)

 

$

2.63

 

 

$

2.14

 

 

$

0.49

 

 

22.9

%

 

 

 

 

 

 

 

 

 

Weighted-average diluted shares outstanding (Non-GAAP) (9)

 

 

249,984,664

 

 

 

251,231,662

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit (GAAP)

 

$

6,148

 

 

$

5,492

 

 

$

656

 

 

11.9

%

LIFO reserve adjustments (3)

 

 

(1

)

 

 

147

 

 

 

(148

)

 

(100.7

)%

Adjusted Gross profit (Non-GAAP)

 

$

6,147

 

 

$

5,639

 

 

$

508

 

 

9.0

%

 

 

 

 

 

 

 

 

 

Operating expenses (GAAP)

 

$

5,131

 

 

$

4,898

 

 

$

233

 

 

4.8

%

Depreciation expense

 

 

(349

)

 

 

(327

)

 

 

(22

)

 

6.7

%

Amortization expense

 

 

(46

)

 

 

(45

)

 

 

(1

)

 

2.2

%

Restructuring costs and asset impairment charges (1)

 

 

(14

)

 

 

(12

)

 

 

(2

)

 

16.7

%

Share-based compensation expense (2)

 

 

(56

)

 

 

(45

)

 

 

(11

)

 

24.4

%

Business transformation costs (5)

 

 

(28

)

 

 

(52

)

 

 

24

 

 

(46.2

)%

Business acquisition and integration related costs and other (6)

 

 

(44

)

 

 

(66

)

 

 

22

 

 

(33.3

)%

Adjusted Operating expenses (Non-GAAP)

 

$

4,594

 

 

$

4,351

 

 

$

243

 

 

5.6

%

NM - Not Meaningful

(1)

Consists primarily of non-CEO severance and related costs associated with organizational realignment and other impairment charges. For fiscal year 2022, also consists of the write-off of old leases ROU asset and lease liability of $9 million associated with entering into new lease agreements for four distribution facilities.

(2)

Share-based compensation expense for expected vesting of stock awards and employee stock purchase plan.

(3)

Represents the impact of LIFO reserve adjustments.

(4)

Includes early redemption premium and the write-off of certain pre-existing debt issuance costs.

(5)

Transformational costs represent non-recurring expenses prior to formal launch of strategic projects with anticipated long-term benefits to the Company. These costs generally relate to third party consulting and non-capitalizable construction or technology. For fiscal year 2023, business transformation costs related to projects associated with information technology infrastructure initiatives. For fiscal year 2022, business transformation costs consist of new facility openings, supply chain strategy improvements, and information technology infrastructure initiatives.

(6)

Includes: (i) aggregate acquisition and integration related costs of $41 million and $22 million for fiscal years 2023 and 2022, respectively; (ii) CEO sign on bonus of $3 million for fiscal year 2023 (iii) contested proxy and related legal and consulting costs of $21 million for fiscal year 2022; (iv) CEO severance of $5 million for fiscal year 2022; (v) other gains, losses or costs that we are permitted to add back for purposes of calculating Adjusted EBITDA under certain agreements governing our indebtedness.

(7)

Represents our income tax provision adjusted for the tax effect of pre-tax items excluded from Adjusted Net Income and the removal of applicable discrete tax items. Applicable discrete tax items include changes in tax laws or rates, changes related to prior year unrecognized tax benefits, discrete changes in valuation allowances, and excess tax benefits associated with share-based compensation. The tax effect of pre-tax items excluded from Adjusted Net Income is computed using a statutory tax rate after taking into account the impact of permanent differences and valuation allowances.

(8)

Adjusted Diluted EPS is calculated as Adjusted net income divided by weighted average diluted shares outstanding (Non-GAAP).

(9)

For purposes of the Adjusted Diluted EPS calculation (Non-GAAP), when the Company has net income (GAAP), weighted average diluted shares outstanding (non-GAAP) is used and assumes conversion of the Series A convertible preferred stock and, when the Company has net loss (GAAP) and assumed conversion of the Series A convertible preferred stock would be antidilutive, weighted-average diluted shares outstanding (GAAP) is used.

US FOODS HOLDING CORP.

Non-GAAP Reconciliation

Net Debt and Net Leverage Ratios

 

($ in millions, except ratios)

 

December 30,

2023

 

December 31,

2022

Total Debt (GAAP)

 

$

4,674

 

 

$

4,854

 

Cash, cash equivalents and restricted cash

 

 

(269

)

 

 

(211

)

Net Debt (Non-GAAP)

 

$

4,405

 

 

$

4,643

 

Adjusted EBITDA (1)

 

$

1,559

 

 

$

1,310

 

Net Leverage Ratio (2)

 

 

2.8

 

 

 

3.5

 

 

(1) Trailing Twelve Months (TTM) Adjusted EBITDA

(2) Net Debt/TTM Adjusted EBITDA

 

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