Drove Net Sales of $9.0 Billion, Up 2.1%
from Q2 2022
Increased Gross Profit 15% to $1.6 Billion
and Net Income to $182 Million
Delivered Record Adjusted EBITDA of $432
Million and Expanded Adjusted EBITDA Margin by 60 bps
Repurchased $166 Million of Shares and
Prepaid $60 Million of Debt
Raises Adjusted EBITDA Guidance for Fiscal
Year 2023 to $1.51 Billion - $1.54 Billion
US Foods Holding Corp. (NYSE: USFD), one of the largest
foodservice distributors in the United States, today announced
results for the second quarter fiscal year 2023.
Second Quarter Fiscal 2023
Highlights
- Net income available to common shareholders improved to $182
million
- Adjusted EBITDA increased 17.4% to $432 million
- Diluted EPS was $0.73; Adjusted Diluted EPS was $0.79
- Net sales increased 2.1% to $9.0 billion
- Total case volume increased 2.7%; independent restaurant case
volume increased 4.8%
Six Month Fiscal 2023
Highlights
- Net income available to common shareholders was $257
million
- Adjusted EBITDA increased 26.3% to $769 million
- Diluted EPS was $1.05; Adjusted Diluted EPS was $1.29
- Net sales increased 5.6% to $17.6 billion
- Total case volume increased 4.0%; independent restaurant case
volume increased 6.2%
“I am proud that our team continued to build on our momentum by
delivering another very strong quarter. The resiliency of our
business model and laser focus on execution is driving sustained
improvement and creating shareholder value,” said Dave Flitman,
CEO. “We continue to drive healthy case volume growth overall and
especially in our target customer types, with broadline independent
restaurant customer case volume increasing 5.5%. This represents
the ninth consecutive quarter we have taken share with
independents. We also grew case volume 7% in both healthcare and
hospitality. Adjusted EBITDA increased 17% versus prior year to
$432 million, a record quarterly Adjusted EBITDA for US Foods. I am
very pleased with our progress to date, and I am even more excited
about the significant opportunity ahead as we continue to execute
our strategy.”
“Our financial performance for the second quarter builds on our
momentum,” added Dirk Locascio, CFO. “We drove meaningful
improvement in operating leverage again this quarter, resulting in
60 basis points of Adjusted EBITDA margin expansion. Additionally,
we remain steadfast with our stated priorities for capital. We
deployed our strong free cash flow through a balanced approach of
reinvesting in the business, executing $166 million of
opportunistic share repurchases, prepaying $60 million of debt and
acquiring Renzi Foodservice, which closed in the third quarter. Due
to our strong financial results and continued effective execution
of our strategy, we are raising our Adjusted EBITDA guidance for
fiscal 2023 to a range of $1.51 billion to $1.54 billion.”
Second Quarter Fiscal 2023
Results
Net income available to common shareholders was $182 million, an
improvement of $121 million compared to the prior year. Adjusted
EBITDA was $432 million, an increase of $64 million or 17.4%,
compared to the prior year. Adjusted EBITDA margin was 4.8%, an
increase of 60 basis points compared to the prior year. Diluted EPS
was $0.73; Adjusted Diluted EPS was $0.79.
Net sales were $9.0 billion for the quarter, an increase of 2.1%
from the prior year, driven by case volume growth partially offset
by food cost deflation of 0.3%. Total case volume increased 2.7%
from the prior year driven by a 4.8% increase in independent
restaurant case volume, a 6.9% increase in hospitality volume and a
6.6% increase in healthcare volume, offset by a 4.5% decrease in
chain volume. Independent restaurant case growth was negatively
impacted by approximately 0.7% from slower growth in CHEF’STORE
primarily due to system conversion challenges, which are largely
resolved. Broadline independent restaurant customer case growth was
5.5%.
Gross profit was $1.6 billion, an increase of 15.0% 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, optimized pricing and a favorable
year-over-year LIFO adjustment. The Company’s LIFO method of
inventory costing resulted in a benefit of $15 million in 2023,
compared to expense of $65 million in 2022, related to a reduction
in inventory values in multiple product categories. Gross profit as
a percentage of net sales was 17.7%. Adjusted Gross profit was $1.6
billion, an 8.8% increase from the prior year. Adjusted Gross
profit as a percentage of net sales was 17.5% and adjusted Gross
profit per case continued at strong levels due to the
aforementioned factors.
Operating expenses of $1.3 billion increased by $36 million, or
2.9% from the prior year. Operating expenses increased primarily
due to increased total case volume, higher seller compensation
costs and higher incentive compensation costs, partially offset by
lower distribution cost per case from lower fuel costs and cost
savings initiatives including routing improvements and focused
efforts positively impacting labor turnover and productivity.
Operating expenses as a percentage of Net sales were 14.1%.
Adjusted Operating expenses for the quarter were $1.1 billion, an
increase of $61 million or 5.6% from the prior year due to the
aforementioned factors. Adjusted Operating expenses as a percent of
net sales were 12.7%.
Six Month Fiscal 2023
Results
Net income available to common shareholders was $257 million, an
improvement of $212 million compared to the prior year. Adjusted
EBITDA was $769 million, an increase of $160 million or 26.3%,
compared to the prior year. Adjusted EBITDA margin was 4.4%, an
increase of 70 basis points compared to the prior year. Diluted EPS
was $1.05; Adjusted Diluted EPS was $1.29.
Net sales were $17.6 billion for the first six months of 2023,
an increase of 5.6% from the prior year, driven by case volume
growth and food cost inflation of 1.6%. Total case volume increased
4.0% from the prior year driven by a 6.2% increase in independent
restaurant volume, a 12.1% increase in hospitality volume and a
6.3% increase in healthcare volume, partially offset by a 2.9%
decrease in chain volume. Independent restaurant case growth was
negatively impacted by approximately 0.9% from slower growth in
CHEF’STORE primarily due to system conversion challenges, which are
largely resolved. Broadline independent restaurant customer case
growth was 7.1%.
Gross profit was $3.0 billion, an increase of 17.0% 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, optimized pricing and a favorable
year-over-year LIFO adjustment. The Company’s LIFO method of
inventory costing resulted in an expense of $5 million in 2023,
compared to expense of $137 million in 2022, related to a reduction
in inventory values in multiple product categories. Gross profit as
a percentage of Net sales was 17.2%. Adjusted Gross profit was $3.0
billion, an 11.3% increase from the prior year. Adjusted Gross
profit as a percentage of Net sales was 17.2%.
Operating expenses of $2.5 billion increased $113 million, or
4.7% from the prior year. Operating expenses increased primarily
due to increased total case volume, higher seller compensation
costs and higher incentive compensation costs, partially offset by
lower fuel costs and cost savings initiatives including routing
improvements and focused efforts positively impacting labor
turnover and productivity. Operating expenses as a percentage of
Net sales were 14.3%. Adjusted Operating expenses for the first six
months of 2023 were $2.3 billion, an increase of $138 million or
6.5% from the prior year due to the aforementioned factors.
Adjusted Operating expenses as a percent of Net sales were
12.8%.
Cash Flow and Debt
Cash flow provided by operating activities for the first six
months of fiscal 2023 was $653 million, an increase of $394 million
from the prior year due to earnings growth and strong working
capital management. Cash capital expenditures for the six months of
fiscal 2023 totaled $108 million, a decrease of $35 million from
the prior year period, and related to investments in information
technology, property and equipment for fleet replacement and
maintenance of distribution facilities.
During the second quarter of fiscal 2023, the Company used
cash-on-hand to make a $60 million voluntary prepayment on the 2019
Incremental Term Loan Facility. Additionally, the Company entered
into interest rate cap agreements totaling $450 million of notional
value against the Company's Term Loans with a term of two years.
The Company's maximum exposure to the variable component of
interest will be 5% on the notional amount covered by the interest
rate cap. This reduces the impact of any future interest rate
increases.
Net Debt at the end of the second quarter of fiscal 2023 was
$4.4 billion. The ratio of Net Debt to Adjusted EBITDA was 3.0x at
the end of the second quarter of fiscal 2023, compared to 3.5x at
the end of fiscal 2022 and 4.2x at the end of the second quarter of
fiscal 2022.
During the second quarter of fiscal 2023, the Company
repurchased 4.2 million shares of common stock at an aggregate
purchase price of $166 million, including $150 million as part of
the Series A Preferred Stock conversion on May 26, 2023. The
Company has approximately $286 million in remaining funds
authorized under its $500 million share repurchase program.
Outlook for Fiscal Year
20231
The Company is updating its previously announced fiscal year
2023 guidance to:
- Adjusted EBITDA of $1.51-$1.54 billion, compared to previous
guidance of $1.45-$1.51 billion
- Adjusted Diluted EPS of $2.55-$2.65, compared to previous
guidance of $2.45-$2.65
- Interest expense of $320-$325 million, compared to previous
guidance of $310-$325 million
- Total capital expenditures of $410-$430 million, consisting of
$290-$310 million of cash capital expenditures and ~$120 million of
fleet capital leases
- Net Debt to Adjusted EBITDA leverage below 3.0x by end of
fiscal year 2023
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 second quarter
fiscal 2023 results on Thursday, August 10, 2023, at 9 a.m. CDT.
The call can also be accessed live over the phone by dialing (877)
344-2001; the conference passcode is 2528845. The presentation
slides reviewed during the webcast 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 70
broadline locations and more than 85 cash and carry stores, US
Foods and its 29,000 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
2023,” 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; the
replacement of LIBOR with an alternative reference rate; disruption
of existing technologies and implementation of new technologies;
cybersecurity incidents and other technology disruptions; risks
associated with intellectual property, including potential
infringement; 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 31, 2022 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)
July 1, 2023
December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
379
$
211
Accounts receivable, less allowances of
$32 and $30
1,829
1,705
Vendor receivables, less allowances of $7
and $8
203
143
Inventories—net
1,531
1,616
Prepaid expenses
121
124
Assets held for sale
2
2
Other current assets
17
19
Total current assets
4,082
3,820
Property and equipment—net
2,173
2,171
Goodwill
5,625
5,625
Other intangibles—net
763
785
Other assets
386
372
Total assets
$
13,029
$
12,773
LIABILITIES, MEZZANINE EQUITY AND
SHAREHOLDERS’ EQUITY
Current liabilities:
Cash overdraft liability
$
190
$
175
Accounts payable
2,137
1,855
Accrued expenses and other current
liabilities
601
650
Current portion of long-term debt
120
116
Total current liabilities
3,048
2,796
Long-term debt
4,631
4,738
Deferred tax liabilities
300
298
Other long-term liabilities
446
446
Total liabilities
8,425
8,278
Mezzanine equity:
Series A convertible preferred stock
—
534
Shareholders’ equity:
Common stock
3
2
Additional paid-in capital
3,621
3,036
Retained earnings
1,267
1,010
Accumulated other comprehensive loss
(71
)
(73
)
Treasury Stock
(216
)
(14
)
Total shareholders’ equity
4,604
3,961
Total liabilities, mezzanine equity and
shareholders’ equity
$
13,029
$
12,773
US FOODS HOLDING CORP.
Consolidated Statements of
Operations
(Unaudited)
13 Weeks Ended
26 Weeks Ended
($ in millions, except share and per
share data)
July 1, 2023
July 2, 2022
July 1, 2023
July 2, 2022
Net sales
$
9,013
$
8,827
$
17,555
$
16,625
Cost of goods sold
7,422
7,444
14,539
14,047
Gross profit
1,591
1,383
3,016
2,578
Operating expenses:
Distribution, selling and administrative
costs
1,269
1,233
2,507
2,394
Total operating expenses
1,269
1,233
2,507
2,394
Operating income
322
150
509
184
Other income—net
(2
)
(5
)
$
(3
)
(11
)
Interest expense—net
82
60
$
163
115
Income before income taxes
242
95
349
80
Income tax provision
60
25
85
17
Net income
$
182
$
70
$
264
$
63
Other comprehensive income—net of tax:
Changes in retirement benefit
obligations
—
—
$
1
—
Unrecognized gain on interest rate
caps
1
—
$
1
—
Comprehensive income
183
70
266
63
Net income
$
182
$
70
$
264
$
63
Series A convertible preferred stock
dividends
—
(9
)
(7
)
(18
)
Net income available to common
shareholders
$
182
$
61
$
257
$
45
Net income per share
Basic
$
0.76
$
0.27
$
1.11
$
0.20
Diluted
$
0.73
$
0.27
$
1.05
$
0.20
Weighted-average common shares
outstanding
Basic
238,302,347
224,061,295
232,277,995
223,590,260
Diluted
250,991,512
226,151,045
251,389,602
226,363,401
US FOODS HOLDING CORP.
Consolidated Statements of
Cash Flows
(Unaudited)
26 Weeks Ended
($ in millions)
July 1, 2023
July 2, 2022
Cash flows from operating activities:
Net income
$
264
$
63
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
193
181
Gain on disposal of property and
equipment—net
(2
)
(2
)
Amortization of deferred financing
costs
10
6
Deferred tax provision
1
7
Share-based compensation expense
28
21
Provision for doubtful accounts
16
—
Changes in operating assets and
liabilities:
Increase in receivables
(199
)
(363
)
Decrease (increase) in inventories—net
85
(107
)
(Increase) in prepaid expenses and other
assets
(6
)
(5
)
Increase in accounts payable and cash
overdraft liability
309
450
(Decrease) increase in accrued expenses
and other liabilities
(46
)
8
Net cash provided by operating
activities
653
259
Cash flows from investing activities:
Proceeds from sales of property and
equipment
2
3
Purchases of property and equipment
(108
)
(143
)
Net cash used in investing activities
(106
)
(140
)
Cash flows from financing activities:
Proceeds from debt borrowings
255
1,032
Principal payments on debt and financing
leases
(446
)
(1,087
)
Dividends paid on Series A convertible
preferred stock
(7
)
(18
)
Repurchase of common stock
(200
)
—
Excise tax on common stock repurchases
(2
)
—
Proceeds from employee stock purchase
plan
13
12
Proceeds from exercise of stock
options
22
7
Purchase of interest rate caps
(3
)
—
Tax withholding payments for net
share-settled equity awards
(11
)
(16
)
Net cash used in financing activities
(379
)
(70
)
Net increase in cash, and cash equivalents
and restricted cash
168
49
Cash, cash equivalents and restricted
cash—beginning of period
211
148
Cash, cash equivalents and restricted
cash—end of period
$
379
$
197
Supplemental disclosures of cash flow
information:
Conversion of Series A Convertible
Preferred Stock
$
534
$
—
Interest paid—net of amounts
capitalized
147
105
Income taxes paid—net
67
13
Property and equipment purchases included
in accounts payable
24
26
Leased assets obtained in exchange for
financing lease liabilities
81
57
Leased assets obtained in exchange for
operating lease liabilities
22
6
Cashless exercise of stock options
1
1
US FOODS HOLDING CORP.
Non-GAAP
Reconciliation
(Unaudited)
13 Weeks Ended
($ in millions, except share and per
share data)
July 1, 2023
July 2, 2022
Change
%
Net income available to common
shareholders
$
182
$
61
$
121
198.4
%
Series A Preferred Stock Dividends
—
(9
)
9
(100.0
)%
Net income (GAAP)
182
70
112
160.0
%
Interest expense—net
82
60
22
36.7
%
Income tax provision (benefit)
60
25
35
140.0
%
Depreciation expense
84
81
3
3.7
%
Amortization expense
11
11
—
—
%
EBITDA (Non-GAAP)
419
247
172
69.6
%
Adjustments:
Share-based compensation expense (1)
14
9
5
55.6
%
LIFO reserve adjustment (2)
(15
)
65
(80
)
NM
Business transformation costs (3)
3
15
(12
)
(80.0
)%
Business acquisition and integration
related costs and other (4)
11
30
(19
)
(63.3
)%
COVID-19 other related expenses (5)
—
2
(2
)
(100.0
)%
Adjusted EBITDA (Non-GAAP)
432
368
64
17.4
%
Depreciation expense
(84
)
(81
)
(3
)
3.7
%
Interest expense—net
(82
)
(60
)
(22
)
36.7
%
Income tax provision, as adjusted (6)
(67
)
(58
)
(9
)
15.5
%
Adjusted Net Income (Non-GAAP)
$
199
$
169
$
30
17.8
%
Diluted EPS (GAAP)
$
0.73
$
0.27
$
0.46
170.4
%
Share-based compensation expense (1)
0.06
0.04
0.02
50.0
%
LIFO reserve adjustment (2)
(0.06
)
0.26
(0.32
)
NM
Business transformation costs (3)
0.01
0.06
(0.05
)
(83.3
)%
Business acquisition and integration
related costs and other (4)
0.04
0.12
(0.08
)
(66.7
)%
COVID-19 other related expenses (5)
—
0.01
(0.01
)
(100.0
)%
Income tax provision, as adjusted (6)
0.01
(0.09
)
0.10
NM
Adjusted Diluted EPS (Non-GAAP)
(7)
$
0.79
$
0.67
$
0.12
17.9
%
Weighted-average diluted shares
outstanding (Non-GAAP) (8)
250,991,512
250,908,286
Gross profit (GAAP)
$
1,591
$
1,383
$
208
15.0
%
LIFO reserve change (2)
(15
)
65
(80
)
NM
Adjusted Gross profit
(Non-GAAP)
$
1,576
$
1,448
$
128
8.8
%
Operating expenses (GAAP)
1,269
1,233
$
36
2.9
%
Depreciation expense
(84
)
(81
)
(3
)
3.7
%
Amortization expense
(11
)
(11
)
—
—
%
Share-based compensation expense (1)
(14
)
(9
)
(5
)
55.6
%
Business transformation costs (3)
(3
)
(15
)
12
(80.0
)%
Business acquisition and integration
related costs and other (4)
(11
)
(30
)
19
(63.3
)%
COVID-19 other related expenses (5)
—
(2
)
2
(100.0
)%
Adjusted Operating expenses
(Non-GAAP)
$
1,146
$
1,085
$
61
5.6
%
NM - Not Meaningful
(1)
Share-based compensation expense for
expected vesting of stock awards and employee stock purchase
plan.
(2)
Represents the impact of LIFO reserve
adjustments.
(3)
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 13 weeks ended July 1, 2023,
business transformation costs related to projects associated with
information technology infrastructure initiatives. For the 13 weeks
ended July 2, 2022, business transformation costs consist of new
facility openings, supply chain strategy improvements, and
information technology infrastructure initiatives.
(4)
Includes: (i) aggregate acquisition and
integration related costs of $11 million and $6 million for the 13
weeks ended July 1, 2023 and July 2, 2022, respectively (ii)
contested proxy and related legal and consulting costs of $14
million for the 13 weeks ended July 2, 2022, and (iii) CEO
severance for $5 million for the 13 weeks ended July 2, 2022 and
(v) other gains, losses or costs that we are permitted to addback
for purposes of calculating Adjusted EBITDA under certain
agreements governing our indebtedness.
(5)
Includes COVID-19 related costs that we
are permitted to addback for purposes of calculating Adjusted
EBITDA under certain agreements governing our indebtedness.
(6)
Represents our income tax provision
adjusted for the tax effect of pre-tax items excluded from Adjusted
net income and the removal of applicable discrete tax items.
Applicable discrete tax items include changes in tax laws or rates,
changes related to prior year unrecognized tax benefits, discrete
changes in valuation allowances, and excess tax benefits associated
with share-based compensation. The tax effect of pre-tax items
excluded from Adjusted net income is computed using a statutory tax
rate after taking into account the impact of permanent differences
and valuation allowances.
(7)
Adjusted Diluted EPS is calculated as
Adjusted net income divided by weighted average diluted shares
outstanding (Non-GAAP).
(8)
For purposes of the Adjusted Diluted EPS
calculation (Non-GAAP), when the Company has net income (GAAP),
weighted average diluted shares outstanding (Non-GAAP) is used and
assumes conversion of the Series A convertible preferred stock,
and, when the Company has net loss (GAAP) and assumed conversion of
the Series A convertible preferred stock would be antidilutive,
weighted-average diluted shares outstanding (GAAP) is used.
US FOODS HOLDING CORP.
Non-GAAP
Reconciliation
(Unaudited)
26 Weeks Ended
($ in millions, except share and per
share data)
July 1, 2023
July 2, 2022
Change
%
Net income available to common
shareholders
$
257
$
45
$
212
471.1
%
Series A convertible preferred stock
dividends
(7
)
(18
)
11
(61.1
)%
Net income (GAAP)
264
63
201
319.0
%
Interest expense—net
163
115
48
41.7
%
Income tax provision (benefit)
85
17
68
400.0
%
Depreciation expense
171
159
12
7.5
%
Amortization expense
22
22
—
—
%
EBITDA (Non-GAAP)
705
376
329
87.5
%
Adjustments:
Share-based compensation expense (1)
28
21
7
33.3
%
LIFO reserve change (2)
5
137
(132
)
(96.4
)%
Business transformation costs (3)
7
29
(22
)
(75.9
)%
Business acquisition and integration
related costs and other (4)
24
44
(20
)
(45.5
)%
COVID-19 other related expenses (5)
—
2
(2
)
(100.0
)%
Adjusted EBITDA (Non-GAAP)
769
609
160
26.3
%
Depreciation expense
(171
)
(159
)
(12
)
7.5
%
Interest expense—net
(163
)
(115
)
(48
)
41.7
%
Income tax provision, as adjusted (6)
(111
)
(86
)
(25
)
29.1
%
Adjusted net income (Non-GAAP)
$
324
$
249
$
75
30.1
%
Diluted EPS (GAAP)
$
1.05
$
0.20
$
0.85
425.0
%
Share-based compensation expense (1)
0.11
0.08
0.03
37.5
%
LIFO reserve change (2)
0.02
0.55
(0.53
)
(96.4
)%
Business transformation costs (3)
0.03
0.12
(0.09
)
(75.0
)%
Business acquisition and integration
related costs and other (4)
0.10
0.18
(0.08
)
(44.4
)%
COVID-19 other related expenses (5)
—
0.01
(0.01
)
(100.0
)%
Income tax impact of adjustments (6)
(0.02
)
(0.15
)
0.13
(86.7
)%
Adjusted Diluted EPS (Non-GAAP)
(7)
$
1.29
$
0.99
$
0.30
30.3
%
Weighted-average diluted shares
outstanding (Non-GAAP) (8)
251,389,602
251,120,642
Gross profit (GAAP)
$
3,016
$
2,578
$
438
17.0
%
LIFO reserve change (2)
5
137
(132
)
(96.4
)%
Adjusted Gross profit
(Non-GAAP)
$
3,021
$
2,715
$
306
11.3
%
Operating expenses (GAAP)
$
2,507
$
2,394
$
113
4.7
%
Depreciation expense
(171
)
(159
)
(12
)
7.5
%
Amortization expense
(22
)
(22
)
—
—
%
Share-based compensation expense (1)
(28
)
(21
)
(7
)
33.3
%
Business transformation costs (3)
(7
)
(29
)
22
(75.9
)%
Business acquisition and integration
related costs and other (4)
(24
)
(44
)
20
(45.5
)%
COVID-19 other related expenses (5)
—
(2
)
2
(100.0
)%
Adjusted Operating expenses
(Non-GAAP)
$
2,255
$
2,117
$
138
6.5
%
NM - Not Meaningful
(1)
Share-based compensation expense for
expected vesting of stock awards and employee stock purchase
plan.
(2)
Represents the impact of LIFO reserve
adjustments.
(3)
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 26 weeks ended July 1, 2023,
business transformation costs related to projects associated with
information technology infrastructure initiatives. For the 26 weeks
ended July 2, 2022, business transformation costs consist of new
facility openings, supply chain strategy improvements, and
information technology infrastructure initiatives.
(4)
Includes: (i) aggregate acquisition and
integration related costs of $21 million and $12 million for the 26
weeks ended July 1, 2023 and July 2, 2022, respectively; (ii) CEO
sign on bonus of $3 million for the 26 weeks ended July 1, 2023
(iii) contested proxy and related legal and consulting costs of $21
million for the 26 weeks ended July 2, 2022, respectively; and (iv)
CEO severance for $5 million for the 26 weeks ended July 2, 2022
and (v) other gains, losses or costs that we are permitted to
addback for purposes of calculating Adjusted EBITDA under certain
agreements governing our indebtedness.
(5)
Includes COVID-19 related costs that we
are permitted to addback for purposes of calculating Adjusted
EBITDA under certain agreements governing our indebtedness.
(6)
Represents our income tax provision
adjusted for the tax effect of pre-tax items excluded from Adjusted
net income and the removal of applicable discrete tax items.
Applicable discrete tax items include changes in tax laws or rates,
changes related to prior year unrecognized tax benefits, discrete
changes in valuation allowances, and excess tax benefits associated
with share-based compensation. The tax effect of pre-tax items
excluded from Adjusted net income is computed using a statutory tax
rate after taking into account the impact of permanent differences
and valuation allowances.
(7)
Adjusted Diluted EPS is calculated as
Adjusted net income divided by weighted average diluted shares
outstanding (Non-GAAP).
(8)
For purposes of the Adjusted Diluted EPS
calculation (Non-GAAP), when the Company has net income (GAAP),
weighted average diluted shares outstanding (Non-GAAP) is used and
assumes conversion of the Series A convertible preferred stock,
and, when the Company has net loss (GAAP) and assumed conversion of
the Series A convertible preferred stock would be antidilutive,
weighted-average diluted shares outstanding (GAAP) is used.
US FOODS HOLDING CORP.
Non-GAAP
Reconciliation
Net Debt and Net Leverage
Ratios
($ in millions, except ratios)
July 1, 2023
December 31, 2022
July 2, 2022
Total Debt (GAAP)
$
4,751
$
4,854
$
5,020
Cash, cash equivalents and restricted
cash
(379
)
(211
)
(197
)
Net Debt (Non-GAAP)
$
4,372
$
4,643
$
4,823
Adjusted EBITDA (1)
$
1,470
$
1,310
$
1,161
Net Leverage Ratio (2)
3.0
3.5
4.2
(1)
Trailing Twelve Months (TTM) Adjusted
EBITDA
(2)
Net Debt/TTM Adjusted EBITDA
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230809193850/en/
INVESTOR CONTACT: Adam Dabrowski (847) 720-1688
Adam.Dabrowski@usfoods.com
MEDIA CONTACT: Sara Matheu (847) 720-2392
Sara.Matheu@usfoods.com
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