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
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240214259683/en/
INVESTOR CONTACT: Mike Neese (847) 232-5894
Michael.Neese@usfoods.com
MEDIA CONTACT: Sara Matheu (847) 720-2392
Sara.Matheu@usfoods.com
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