US Foods Holding Corp. (NYSE: USFD), one of the largest
foodservice distributors in the United States, today announced
results for the second quarter and first six months of fiscal
2017.
Second Quarter
Highlights
- Total case volume increased 3.6%;
independent restaurant case volume increased 4.7%.
- Net sales increased 6.1% to $6.2
billion.
- Gross profit of $1.1 billion increased
1.9%.
- Operating income of $126 million
increased $28 million.
- Net income of $65 million improved $78
million from a 2016 Net loss of $13 million.
- Adjusted EBITDA increased 10.0% to $286
million.
- Diluted EPS of $0.29; Adjusted Diluted
EPS of $0.37.
Six Month Highlights
- Total case volume increased 4.0%;
independent restaurant case volume increased 4.3%.
- Net sales increased 4.8% to $11.9
billion.
- Gross profit of $2.0 billion increased
2.6%.
- Operating income of $202 million
increased $19 million.
- Net income of $92 million exceeded
prior year break-even.
- Adjusted EBITDA increased 8.2% to $501
million.
- Diluted EPS of $0.41; Adjusted Diluted
EPS of $0.56.
CEO Perspective
“Strong Adjusted EBITDA growth of 10% and above-market
independent restaurant case growth of 4.7% highlight another
successful quarter for the company,” said President and CEO Pietro
Satriano. “We have successfully closed five acquisitions this year
as we continue to focus on accretive M&A opportunities.
Continued growth with targeted customers, in combination with our
portfolio of value-added services, innovative products and enhanced
digital platform, position us for success in the second half of the
year.”
Second Quarter Results
Total case volume increased 3.6% from prior year, of which 2.3%
was organic growth, and independent restaurant case volume
increased 4.7%, of which 3.7% was organic growth. The increase in
total cases reflects growth with independent restaurants,
healthcare and hospitality customers, and select national chain
business.
Net sales of $6.2 billion represent a 6.1% increase from prior
year, driven by total case volume growth, product mix changes and
year-over-year inflation in grocery, produce, poultry and seafood.
Sales from acquisitions completed in the last 12 months increased
total Net sales by approximately 1.8%.
Gross profit of $1.1 billion increased $20 million, or 1.9% from
prior year. The increase was driven by higher volume combined with
margin expansion initiatives, partially offset by the
year-over-year change in the Last-in, first-out (LIFO) inventory
reserve. Gross profit as a percentage of Net sales was 17.1%.
Adjusted Gross profit, which excludes the impact of LIFO, was $1.1
billion, a 5.6% increase from the prior year, driven by the Gross
profit items discussed above. Adjusted Gross profit as a percentage
of Net sales was 17.6%.
Operating expenses were $928 million, a decrease of 0.9% from
prior year. Operating expenses benefitted from the non-recurrence
of the prior year $31 million contract termination fee with our
Sponsors, lower restructuring charges due to the completion of
several initiatives in 2016, and ongoing efforts to reduce
operating expenses. These decreases were partially offset by
increased distribution costs related to higher volume combined with
higher employee related costs. Adjusted Operating expenses for the
quarter were $798 million, a 3.9% increase from prior year,
primarily driven by higher volume and employee related costs.
Operating income was $126 million, a $28 million increase from
prior year, driven by the Gross profit and Operating expense items
discussed above.
Net income for the quarter was $65 million, up $78 million from
a $13 million Net loss in the prior year. Adjusted EBITDA of $286
million increased $26 million, or 10.0% compared to prior year,
driven by volume growth and the Adjusted Gross profit and Adjusted
Operating expense factors discussed above. Diluted EPS was $0.29
and Adjusted Diluted EPS was $0.37.
Six Month Results
Total case volume increased 4.0% from prior year, of which 2.5%
was organic growth, and independent restaurant case volume
increased 4.3%, of which 3.2% was organic growth. The increase in
total cases reflects growth with independent restaurants,
healthcare and hospitality customers, and select national chain
business.
Net sales of $11.9 billion represent a 4.8% increase from prior
year, primarily driven by case volume growth and year-over-year
inflation in grocery, seafood, poultry and cheese. Sales from
acquisitions completed in the last 12 months increased total Net
sales by approximately 1.6%.
Gross profit of $2.0 billion increased $51 million, or 2.6% from
prior year. The increase was driven by higher volume combined with
margin expansion initiatives, partially offset by the
year-over-year change in the LIFO inventory reserve. Gross profit
as a percentage of Net sales was 17.1%. Adjusted Gross profit,
which excludes the impact of LIFO, was $2.1 billion, a 5.5%
increase from the prior year, driven by the Gross profit items
discussed above. Adjusted Gross profit as a percentage of Net sales
was 17.5%.
Operating expenses were $1.8 billion, an increase of 1.8% from
prior year, related to higher distribution costs from increased
volume combined with higher employee related costs and insurance
related charges. These increases were partially offset by the
non-recurrence of the prior year $31 million contract termination
fee with our Sponsors, lower restructuring charges due to the
completion of several initiatives in 2016, and ongoing efforts to
reduce operating expenses. Adjusted Operating expenses for the
first six months were $1.6 billion, a 4.8% increase from prior
year, driven by higher volume combined with higher employee related
costs and insurance related charges.
Operating income was $202 million, a $19 million increase from
prior year, driven by the Gross profit and Operating expense items
discussed above.
Net income for the first six months was $92 million, up from
break-even performance in the prior year. Adjusted EBITDA of $501
million increased $38 million, or 8.2% compared to prior year,
driven by volume growth and the Adjusted Gross profit and Adjusted
Operating expense factors discussed above. Diluted EPS was $0.41
and Adjusted Diluted EPS was $0.56.
Cash Flows and Capital
Transactions
Net cash provided by operating activities for the first six
months of fiscal 2017 was $368 million, an increase of $67 million
from prior year related to our growth in net income which was
driven by improved business performance and reduced interest
expense. Cash capital expenditures for the first six months totaled
$108 million, an increase of $41 million from prior year, due to
the timing of payments made for assets acquired late in Q4 fiscal
2016 and increased capital spending, as planned.
Net Debt at the end of the quarter was $3.6 billion, a decrease
of $172 million versus the same prior year period. The ratio of Net
Debt to Adjusted EBITDA was 3.5x at the end of the quarter, down
from 4.0x in the same prior year period.
Outlook for Fiscal 2017
The company is updating select elements of fiscal 2017 guidance.
We now expect Net sales growth of 3-5%, interest expense of
$175-$180 million, cash taxes of $20-$25 million and Adjusted
Diluted EPS of $1.30-$1.40. All other elements of the company’s
guidance provided during the Q4 fiscal 2016 earnings call on
February 15, 2017, remain unchanged.
Please see the “Forward-Looking Statements” section in this
release for a discussion of certain risks related to this
outlook.
The company is not providing a reconciliation of our full year
2017 Adjusted EBITDA or Adjusted Diluted EPS outlook because we are
not able to accurately estimate all of the adjustments on a
forward-looking basis, and such items could have a significant
impact on our GAAP financial results as a result of their
variability.
Conference Call and Webcast
Information
US Foods second quarter fiscal 2017 earnings call will be
broadcast live via the Internet on August 9, 2017 at 9:00 a.m. CDT.
The call can also be accessed live over the phone by dialing (855)
788-2805; the conference ID number is 35394300. The presentation
slides reviewed during the webcast will be available shortly before
that time. The webcast, slides, and a copy of this news release
will be available in the Investor Relations section of our website
for a limited period of time at www.usfoods.com/investors.
About US Foods
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 nearly 25,000 employees and more than 60 locations,
US Foods 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.,
and generates approximately $23 billion in annual revenue. Visit
www.usfoods.com to learn more.
Forward-Looking Statements
This press release contains “forward-looking statements” within
the meaning of the federal securities laws, including those
statements under “Outlook for Fiscal 2017”. Forward-looking
statements include information concerning our liquidity and our
possible or assumed future results of operations, including
descriptions of our business strategies. These statements often
include words such as “believe,” “expect,” “project,” “anticipate,”
“intend,” “plan,” “estimate,” “target,” “seek,” “will,” “may,”
“would,” “should,” “could,” “forecasts,” “mission,” “strive,”
“more,” “goal,” or similar expressions. The statements are based on
assumptions that we have made, based on our experience in the
industry as well as our perceptions of historical trends, current
conditions, expected future developments, and other factors we
think are appropriate. We believe these judgments are reasonable.
However, you should understand that these statements are not
guarantees of performance or results. Our actual results could
differ materially from those expressed in the forward-looking
statements. 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 the
forward-looking statements contained in this release. Such risks,
uncertainties, and other important factors include, among others:
our ability to remain profitable during times of cost
inflation/deflation, commodity volatility, and other factors;
industry competition and our ability to successfully compete; our
reliance on third-party suppliers, including the impact of any
interruption of supplies or increases in product costs; risks
related to our indebtedness, including our substantial amount of
debt, our ability to incur substantially more debt, and increases
in interest rates; restrictions and limitations placed on us by
agreements and instruments governing our debt; any change in our
relationships with group purchasing organizations; any change in
our relationships with long-term customers; our ability to increase
sales to independent restaurant customers; our ability to
successfully consummate and integrate acquisitions; our ability to
achieve the benefits that we expect from our cost savings
initiatives; shortages of fuel and increases or volatility in fuel
costs; any declines in the consumption of food prepared away from
home, including as a result of changes in the economy or other
factors affecting consumer confidence; liability claims related to
products we distribute; our ability to maintain a good reputation;
costs and risks associated with labor relations and the
availability of qualified labor; changes in industry pricing
practices; changes in competitors’ cost structures; our ability to
retain customers not obligated by long-term contracts to continue
purchasing products from us; environmental, health and safety
costs; costs and risks associated with government laws and
regulations, including related to environmental, health, safety,
food safety, transportation, labor and employment, and changes in
existing laws or regulations; technology disruptions and our
ability to implement new technologies; costs and risks associated
with a potential cybersecurity incident; our ability to manage
future expenses and liabilities associated with our retirement
benefits and pension plans; disruptions to our business caused by
extreme weather conditions; costs and risks associated with
litigation; changes in consumer eating habits; costs and risks
associated with our intellectual property protections; and risks
associated with potential infringements of the intellectual
property of others.
For a detailed discussion of these risks and uncertainties, see
the section entitled “Risk Factors” in our Annual Report on Form
10-K for the year ended December 31, 2016, which was filed with the
Securities and Exchange Commission (“SEC”) on February 28, 2017.
All forward-looking statements made in this release are qualified
by these cautionary statements. The forward-looking statements
contained in this release speak only as of the date of this
release. We undertake no obligation, other than as may be required
by law, to update or revise any forward-looking or cautionary
statements to reflect changes in assumptions, the occurrence of
events, unanticipated or otherwise, or changes in future operating
results over time or otherwise. Comparisons of results between
current and prior periods are not intended to express any future
trends, or indications of future performance, unless expressed as
such, and should only be viewed as historical data.
Explanation of Non-GAAP Financial Measures
We provide Adjusted Gross profit, Adjusted Operating expenses,
EBITDA, Adjusted EBITDA, Net Debt, Adjusted Net income and Adjusted
Diluted Earnings Per Share (EPS) as supplemental measures to GAAP
measures regarding our operational performance. 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 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 Last-in, first-out
(LIFO) inventory reserve changes. 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, as well other items noted in our debt agreements.
We believe EBITDA and Adjusted EBITDA 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. Examples of items
excluded from Adjusted EBITDA include Restructuring charges, Loss
on extinguishment of debt, Sponsor fees, Share-based compensation
expense, Pension settlements, the non-cash impacts of LIFO reserve
adjustments, Business transformation costs (business costs
associated with the redesign of systems and processes), and other
items as specified in our debt agreements.
We use Net Debt to review the liquidity of our operations. Net
Debt is defined as long-term debt plus the current portion of
long-term debt net of restricted cash held on deposit in accordance
with our credit agreements, and total Cash and cash
equivalents remaining on the balance sheet as of July 1, 2017. 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 From Operating or
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, amortization, 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 charges, Loss on extinguishment of debt, Sponsor
fees, Share-based compensation expense, Pension settlements, the
non-cash impacts of LIFO reserve adjustments, Business
transformation costs (business costs associated with the redesign
of systems and processes), and other items, and adjusted for the
tax effect of the exclusions and discrete tax items. We believe
that Adjusted Net income is 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 EPS, 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 EPS 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 and
Adjusted Diluted Earnings per Share is useful to investors because
these metrics are frequently 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
for certain covenants and restricted activities under our debt
agreements. We also believe these 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 amounts presented in accordance with our
definitions of Adjusted Gross profit, Adjusted Operating expense,
EBITDA, Adjusted EBITDA, Net Debt, Adjusted Net Income and Adjusted
Diluted EPS may not be the same as similar measures used by other
companies. Not all companies and analysts calculate these measures
in the same manner. We compensate for these limitations by using
these non-GAAP financial measures as supplements to GAAP financial
measures and by presenting the reconciliations of the non-GAAP
financial measures to their most comparable GAAP financial
measures.
US FOODS HOLDING CORP. Consolidated Balance Sheets
($ in millions)* July 1, 2017
December 31, 2016 (Unaudited) ASSETS Current
assets: Cash and cash equivalents $ 150 $ 131 Accounts receivable,
less allowances of $25 and $25 1,366 1,226 Vendor receivables, less
allowances of $3 and $2 157 106 Inventories -- net 1,236 1,223
Prepaid expenses 81 73 Assets held for sale 22 21 Other current
assets 10 10 Total current assets 3,022
2,789 Property and equipment -- net 1,787 1,768 Goodwill 3,957
3,908 Other intangibles -- net 363 387 Deferred tax assets 31 34
Other assets 49 58 Total assets $ 9,208
$ 8,944
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities: Bank checks outstanding $ 162 $ 143 Accounts
payable 1,526 1,295 Accrued expenses and other current liabilities
421 456 Current portion of long-term debt 104
76 Total current liabilities 2,213 1,969 Long term debt
3,623 3,706 Deferred tax liabilities 404 381 Other long-term
liabilities 334 351 Total liabilities
6,575 6,407 Shareholders'
equity: Common stock 2 2 Additional paid-in capital 2,792 2,791
Accumulated deficit (44 ) (136 ) Accumulated other comprehensive
loss (117 ) (119 ) Total shareholders' equity
2,633 2,538 Total liabilities and
shareholders' equity $ 9,208 $ 8,944 *Amounts
may not add due to rounding.
US
FOODS HOLDING CORP. Consolidated Statements of
Operations (Unaudited)
($ in millions, except share and per
share data)*
13-Weeks EndedJuly 1,
2017
13-Weeks EndedJuly 2,
2016
26-Weeks EndedJuly 1,
2017
26-Weeks EndedJuly 2,
2016
Net sales $ 6,159 $ 5,807 $ 11,947 $ 11,400 Cost of goods
sold 5,105 4,773 9,902 9,406
Gross profit 1,054 1,034 2,045 1,994 Distribution, selling and
administrative costs 928 923 1,841 1,787 Restructuring charges
1 13 3 24 Total operating
expenses 928 936 1,843 1,811
Operating income 126 98 202 183 Interest expense -- net 41 70 83
141 Loss on extinguishment of debt - 42
- 42 Income (loss) before income taxes 85 (14 ) 119 - Income
tax provision (benefit) 19 (1 ) 27 -
Net income (loss) $ 65 $ (13 ) $ 92 $ - Net income (loss) per share
Basic $ 0.29 $ (0.07 ) $ 0.42 $ - Diluted $ 0.29 $ (0.07 ) $ 0.41 $
- Weighted-average common shares outstanding Basic 222,754,030
190,077,211 222,059,022 179,599,467 Diluted 226,791,449 190,077,211
226,557,430 179,599,467 Distribution declared and paid per share $
- $ - $ - $ 3.94 *Amounts may not add due to rounding.
US FOODS HOLDING CORP. Consolidated
Statements of Cash Flows (Unaudited) 26-Weeks
Ended 26-Weeks Ended ($ in millions)* July 1,
2017 July 2, 2016 Cash Flows From Operating
Activities: Net income (loss) $ 92 $ - Adjustments to reconcile net
income (loss) to net cash provided by operating activities:
Depreciation and amortization 214 208 Gain on disposal of property
and equipment-net - (8 ) Loss on extinguishment of debt - 42
Amortization and write-off of deferred financing costs 2 5
Amortization of Senior Notes original issue premium - (2 )
Insurance proceeds related to operating activities - 7 Insurance
benefit in net loss - (7 ) Deferred tax provision 18 - Share-based
compensation expense 9 10 Provision for doubtful accounts 9 6
Changes in operating assets and liabilities, net of business
acquisitions: Increase in receivables (189 ) (77 ) Decrease
(increase) in inventories 4 (63 ) (Increase) decrease in prepaid
expenses and other assets (21 ) 6 Increase in accounts payable and
bank checks outstanding 276 275 Decrease in accrued expenses and
other liabilities (47 ) (102 )
Net cash provided
by operating activities 368 301
Cash Flows From Investing Activities: Acquisition of businesses—net
of cash (135 ) (95 ) Proceeds from sales of property and equipment
2 9 Purchases of property and equipment (108 ) (67 ) Proceeds from
redemption of industrial revenue bonds 22 - Investment in Avero,
LLC - (8 )
Net cash used in investing
activities (219 ) (161 ) Cash Flows From
Financing Activities: Proceeds from debt borrowings 1,117 1,411
Proceeds from debt refinancings - 2,214 Principal payments on debt
and capital leases (1,213 ) (3,208 ) Repayment of industrial
revenue bonds (22 ) - Redemption of Old Senior Notes - (1,377 )
Payment for debt financing cost and fees - (26 )
Proceeds from initial public offering
- 1,114 Cash distribution to shareholders - (666 ) Contingent
consideration paid for business acquisition (5 ) - Proceeds from
employee share purchase plan 8 - Proceeds from exercise of stock
options 11 - Tax withholding payments for net share-settled equity
awards (26 ) - Proceeds from common stock sales - 3 Common stock
and share-based awards settled - (7 )
Net
cash used in financing activities (131 ) (543 )
Net increase (decrease) in cash and cash equivalents 19 (403 ) Cash
and cash equivalents, beginning of period 131
518 Cash and cash equivalents, end of period $ 150 $
115 Supplemental disclosures of cash flow
information: Cash paid during the period for: Interest (net of
amounts capitalized) $ 79 $ 138 Income taxes paid - net 3 4
Non-cash Investing and Financing Activities: Property and equipment
purchases included in accounts payable 17 13 Capital lease
additions 61 64 Cashless exercise of equity awards 26 - Contingent
consideration payable for business acquisitions 4 6 *Amounts
may not add due to rounding.
US FOODS
HOLDING CORP. Non-GAAP Reconciliation (Unaudited)
($ in millions, except share and per share data)*
13-Weeks EndedJuly 1,
2017
13-Weeks EndedJuly 2,
2016
Change % Net income (loss) (GAAP) $ 65
$ (13 ) $ 78 NM Interest expense, net 41 70 (29 ) (41.4 ) Income
tax provision (benefit) 19 (1 ) 20 NM Depreciation and amortization
expense 106 105 1 1.0
EBITDA (Non-GAAP) 232 161 71 44.1 Sponsor fees (1) -
33 (33 ) NM Restructuring charges (2) 1 13 (12 ) (92.3 )
Share-based compensation expense (3) 5 5 - - LIFO reserve change
(4) 30 (7 ) 37 NM Loss on extinguishment of debt (5) - 42 (42 ) NM
Business transformation costs (6) 13 7 6 85.7 Other (7) 5
5 - -
Adjusted EBITDA
(Non-GAAP) 286 260 26 10.0 Depreciation and amortization
expense (106 ) (105 ) (1 ) 1.0 Interest expense, net (41 ) (70 ) 29
(41.4 ) Income tax (provision) benefit, as adjusted (8) (54
) 1 (55 ) NM
Adjusted Net income
(Non-GAAP) $ 85 $ 85 $ - - %
Diluted EPS (GAAP) $ 0.29 $ (0.07 ) $ 0.36 NM Sponsor fees
(1) - 0.17 (0.17 ) NM Restructuring charges (2) - 0.07 (0.07 ) NM
Share-based compensation expense (3) 0.02 0.03 (0.01 ) (33.3 ) LIFO
reserve change (4) 0.13 (0.03 ) 0.16 NM Loss on extinguishment of
debt (5) - 0.22 (0.22 ) NM Business transformation costs (6) 0.06
0.03 0.03 NM Other (7) 0.02 0.03 (0.01 ) (33.3 ) Income tax impact
of adjustments (8) (0.15 ) - (0.15 ) NM Effect of dilutive shares
assuming net income (9) - (0.01 ) 0.01
(100.0 )
Adjusted Diluted EPS (Non-GAAP) $ 0.37
$ 0.44 $ (0.07 ) (15.9 )%
Weighted-average
diluted shares outstanding (GAAP) 226,791,449 190,077,211
Dilutive shares assuming net income (9) n/a
3,761,565
Adjusted Diluted shares (Non-GAAP) n/a
193,838,776
Gross profit (GAAP) $ 1,054 $ 1,034 $ 20
1.9 LIFO reserve change (4) 30 (7 ) 37
NM
Adjusted Gross profit (Non-GAAP) $ 1,084
$ 1,027 $ 57 5.6 %
Operating
expenses (GAAP) $ 928 $ 936 $ (8 ) (0.9 ) Depreciation and
amortization expense (106 ) (105 ) (1 ) 1.0 Sponsor fees (1) - (33
) 33 NM Restructuring charges (2) (1 ) (13 ) 12 (92.3 ) Share-based
compensation expense (3) (5 ) (5 ) - NM Business transformation
costs (6) (13 ) (7 ) (6 ) 85.7 Other (7) (5 ) (5 )
- NM
Adjusted Operating expenses
(Non-GAAP) $ 798 $ 768 $ 30 3.9 %
*Amounts may not add due to rounding. NM- Percentage change not
meaningful. (1) Consists of fees paid to the Sponsors for
consulting and management advisory services. On June 1, 2016, the
consulting agreements with each of the Sponsors were terminated for
an aggregate termination fee of $31 million. (2) Consists primarily
of severance and related costs and organizational realignment
costs. (3) Share-based compensation expense for vesting of stock
awards and employee share purchase plan. (4) Represents the
non-cash impact of LIFO reserve adjustments. (5) Includes fees paid
to debt holders, third party costs, the write off of certain
pre-existing unamortized debt issuance costs and unamortized issue
premium, and an early redemption premium. (6) Consists primarily of
costs related to significant process and systems redesign across
multiple functions. (7) Other includes gains, losses or charges as
specified under USF’s debt agreements. (8) Represents our Income
tax provision (benefit) 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
considering the impact of permanent differences and valuation
allowances. We maintained a valuation allowance against federal and
state net deferred tax assets in the 13-week and 26-week periods
ended July 2, 2016. The result was an immaterial tax effect related
to pre-tax items excluded from Adjusted Net income in the 13-week
and 26-week periods ended July 2, 2016. (9) The effect of the
"Dilutive shares assuming net income" represents the difference
between the Adjusted Diluted EPS calculated using the GAAP based
weighted-average dilutive shares outstanding, compared to the
Adjusted Diluted EPS calculated using the weighted-average shares
outstanding plus the effect of potentially dilutive securities that
would have been applicable, if the company had net income during
the period. Since the company was in a net loss position for the
quarter ended July 2, 2016, basic and diluted shares are the same
because the inclusion of additional shares would be anti-dilutive.
US FOODS HOLDING CORP.
Non-GAAP Reconciliation 26-Weeks Ended
26-Weeks Ended ($ in millions*) July 1, 2017
July 2, 2016 Change % Net income
(loss) (GAAP) $ 92 $ - $ 92 NM Interest expense, net 83 141 (58
) (41.1 ) Income tax provision (benefit) 27 - 27 NM Depreciation
and amortization expense 214 208
6 2.9
EBITDA (Non-GAAP) 416 349 67 19.2
Sponsor fees (1) - 36 (36 ) NM Restructuring charges (2) 3 24 (21 )
(87.5 ) Share-based compensation expense (3) 9 10 (1 ) (10.0 ) LIFO
reserve change (4) 40 (18 ) 58 NM Loss on extinguishment of debt
(5) - 42 (42 ) NM Business transformation costs (6) 27 16 11 68.8
Other (7) 7 4 3 75.0
Adjusted EBITDA (Non-GAAP) 501 463 38 8.2
Depreciation and amortization expense (214 ) (208 ) (6 ) 2.9
Interest expense, net (83 ) (141 ) 58 (41.1 ) Income tax
(provision) benefit, as adjusted (8) (79 ) -
(79 ) NM
Adjusted Net income (Non-GAAP) $ 125
$ 114 $ 11 9.6 %
Diluted EPS
(GAAP) $ 0.41 $ - $ 0.41 NM Sponsor fees (1) - 0.20 (0.20 ) NM
Restructuring charges (2) 0.01 0.13 (0.12 ) (92.3 ) Share-based
compensation expense (3) 0.04 0.05 (0.01 ) (20.0 ) LIFO reserve
change (4) 0.18 (0.10 ) 0.28 NM Loss on extinguishment of debt (5)
- 0.23 (0.23 ) NM Business transformation costs (6) 0.12 0.09 0.03
33.3 Other (7) 0.03 0.02 0.01 50.0 Income tax impact of adjustments
(8) (0.23 ) - (0.23 ) NM Effect of dilutive shares assuming net
income (9) - - - NM
Adjusted Diluted EPS (Non-GAAP) $ 0.56 $ 0.62
$ (0.06 ) (9.7 )%
Weighted-average diluted shares
outstanding (GAAP) 226,557,430 179,599,467
Dilutive shares
assuming net income (9) n/a 3,082,493
Adjusted Diluted shares (Non-GAAP) n/a 182,681,960
Gross profit (GAAP) $ 2,045 $ 1,994 $ 51 2.6 LIFO
reserve change (4) 40 (18 ) 58
NM
Adjusted Gross profit (Non-GAAP) $ 2,085 $
1,976 $ 109 5.5 %
Operating expenses
(GAAP) $ 1,843 $ 1,811 $ 32 1.8 Depreciation and amortization
expense (214 ) (208 ) (6 ) 2.9 Sponsor fees (1) - (36 ) 36 NM
Restructuring charges (2) (3 ) (24 ) 21 (87.5 ) Share-based
compensation expense (3) (9 ) (10 ) 1 (10.0 ) Business
transformation costs (6) (27 ) (16 ) (11 ) 68.8 Other (7) (7
) (4 ) (3 ) 75.0
Adjusted Operating
expenses (Non-GAAP) $ 1,585 $ 1,513 $ 72
4.8 % *Amounts may not add due to rounding. NM- Percentage
change not meaningful. (1) Consists of fees paid to the
Sponsors for consulting and management advisory services. On June
1, 2016, the consulting agreements with each of the Sponsors were
terminated for an aggregate termination fee of $31 million. (2)
Consists primarily of severance and related costs and
organizational realignment costs. (3) Share-based compensation
expense for vesting of stock awards and employee share purchase
plan. (4) Represents the non-cash impact of LIFO reserve
adjustments. (5) Includes fees paid to debt holders, third party
costs, the write off of certain pre-existing unamortized debt
issuance costs and unamortized issue premium, and an early
redemption premium. (6) Consists primarily of costs related to
significant process and systems redesign across multiple functions.
(7) Other includes gains, losses or charges as specified under
USF’s debt agreements. (8) Represents our Income tax provision
(benefit) 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 considering the impact of permanent
differences and valuation allowances. We maintained a valuation
allowance against federal and state net deferred tax assets in the
13-week and 26-week periods ended July 2, 2016. The result was an
immaterial tax effect related to pre-tax items excluded from
Adjusted Net income in the 13-week and 26-week periods ended July
2, 2016. (9) The effect of the "Dilutive shares assuming net
income" represents the difference between the Adjusted Diluted EPS
calculated using the GAAP based weighted-average dilutive shares
outstanding ,compared to the Adjusted Diluted EPS calculated using
the weighted-average shares outstanding plus the effect of
potentially dilutive securities that would have been applicable, if
the company had net income during the period. Since the company was
in a net loss position for the 26-weeks ended July 2, 2016, basic
and diluted shares are the same because the inclusion of additional
shares would be anti-dilutive.
US FOODS
HOLDING CORP.
Non-GAAP Reconciliation
Net Debt and Net Leverage Ratios ($ in millions,
except ratios)* July 1, 2017 December 31, 2016
July 2, 2016 (Unaudited) (Unaudited)
Total Debt (GAAP) $ 3,727 3,782 $ 3,871 Restricted cash - -
(6 ) Cash and cash equivalents
(150
) (131 )
(115 ) Net Debt (Non-GAAP)
$ 3,577 $
3,651 $ 3,749
Adjusted EBITDA (1)
$ 1,010
$ 972 $
943 Net Leverage Ratio (2)
3.5 3.8
4.0 *Amounts may not add due to
rounding. (1) Trailing Twelve Months (TTM) EBITDA (2) Net
debt/(TTM) Adjusted EBITDA
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170809005528/en/
US FoodsINVESTOR CONTACT:Melissa Napier(847)
720-2767Melissa.Napier@usfoods.comorMEDIA CONTACT:Debra
Ceffalio(847) 720-1652Debra.Ceffalio@usfoods.com
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