Press release·03/03/2025 05:17:33

Overview of US Foods’ Financial Performance

US Foods, a leading foodservice distributor, has reported its financial results for the fiscal year 2024. The company saw strong growth across several key metrics, demonstrating its resilience and ability to navigate the challenges of the industry.

Revenue and Profit Trends

US Foods’ net sales increased by 6.4% to $37,877 million in fiscal year 2024, driven by a 4.2% increase in total case volume and 2.6% food cost inflation. The company experienced growth across all its customer segments, with independent restaurant case volume increasing by 4.4%, healthcare volume up 5.7%, hospitality volume rising 2.1%, and chain volume growing 3.2%. Organic broadline sales of private brands represented approximately 34% of net sales in both 2024 and 2023.

Gross profit increased by 6.3% to $6,534 million, primarily due to the increase in total case volume, improved cost of goods sold, and pricing optimization, partially offset by an unfavorable year-over-year LIFO adjustment. Gross profit as a percentage of net sales remained steady at 17.3% in both fiscal years 2024 and 2023.

Operating expenses, which include distribution, selling, and administrative costs, as well as restructuring activity and asset impairment charges, increased by 5.9% to $5,435 million. This increase was mainly driven by higher distribution costs, reflecting increased labor costs, partially offset by continued distribution productivity improvements and actions to streamline administrative processes and costs. As a percentage of net sales, operating expenses decreased slightly from 14.4% in 2023 to 14.3% in 2024.

Operating income increased by $82 million to $1,099 million, representing 2.9% of net sales in both fiscal years 2024 and 2023. The increase in operating income was due to the factors discussed above.

Net income available to common shareholders decreased by $5 million to $494 million in fiscal year 2024. This decrease was primarily due to a recognition of a $124 million net actuarial loss for pension settlement, which was a non-recurring expense related to the termination of certain defined benefit plans.

Adjusted EBITDA and Non-GAAP Measures

US Foods also reported several non-GAAP financial measures, including Adjusted EBITDA and Adjusted Net Income, to provide additional insights into its operating performance.

Adjusted EBITDA, which excludes the impact of certain items such as restructuring costs, share-based compensation, and other one-time expenses, increased by 11.7% to $1,741 million in fiscal year 2024. As a percentage of net sales, Adjusted EBITDA improved from 4.4% in 2023 to 4.6% in 2024.

Adjusted Net Income, which further adjusts net income for the tax effect of the excluded items, increased from $658 million in 2023 to $770 million in 2024.

The company’s management believes these non-GAAP measures provide meaningful supplemental information about its operating performance and liquidity, and they are used internally to evaluate the company’s performance and make operational decisions.

Liquidity and Capital Resources

As of December 28, 2024, US Foods had approximately $1.5 billion in cash and available liquidity. The company’s primary sources of liquidity include cash provided by operations, as well as access to capital from bank borrowings and other financing arrangements.

The aggregate carrying value of US Foods’ indebtedness was $4,928 million, net of $28 million of unamortized deferred financing costs, as of December 28, 2024. This included outstanding borrowings and letters of credit under the company’s ABL Facility, as well as various senior notes and term loan facilities.

Cash flows provided by operating activities increased by $34 million to $1,174 million in fiscal year 2024, driven by changes in operating assets and liabilities. Cash flows used in investing activities, which primarily consisted of capital expenditures and acquisitions, increased from $495 million in 2023 to $552 million in 2024.

Cash flows used in financing activities were $831 million in 2024, which included $948 million of common stock repurchases, $725 million from the issuance of the 2024 Incremental Term Loan Facility, and $500 million from the issuance of the 2033 Unsecured Senior Notes, partially offset by the repayment of the 2019 Incremental Term Loan Facility and other debt obligations.

US Foods believes that the combination of cash generated from operations, available borrowing capacity, and access to capital markets will be sufficient to meet its anticipated cash requirements for at least the next twelve months, while maintaining sufficient liquidity for normal operating purposes.

Strengths and Weaknesses

Strengths:

• Diversified customer base across independent restaurants, healthcare, hospitality, and chains, providing a balanced revenue stream
• Strong growth in case volumes, particularly in the independent restaurant segment, demonstrating the company’s ability to capture market share
• Successful implementation of pricing optimization and cost management initiatives, which helped maintain gross profit margins
• Robust liquidity position and access to capital, providing financial flexibility to invest in the business and pursue strategic opportunities

Weaknesses:

• Increase in operating expenses, particularly distribution costs, which partially offset the improvements in gross profit
• Decline in net income available to common shareholders due to the recognition of a one-time pension settlement charge
• Reliance on non-GAAP financial measures to present a more favorable view of the company’s performance, which may not provide a complete picture for all investors

Outlook and Future Considerations

Looking ahead, US Foods remains focused on executing its “WE HELP YOU MAKE IT” strategy, which emphasizes providing customers with more quality products, tools, support, and deliveries. The company’s recent acquisition of IWC Food Service and its exploration of a potential sale of the CHEF’STORE wholesale restaurant supply business suggest a continued focus on optimizing its portfolio and aligning with its core delivered broadline operations.

Key factors that may impact the company’s future performance include its ability to navigate ongoing labor and supply chain challenges, effectively manage inflationary pressures, and continue driving operational efficiencies. Additionally, the company’s success in integrating acquisitions and executing its strategic initiatives will be crucial in maintaining its competitive edge and delivering value to shareholders.

Overall, US Foods’ fiscal year 2024 results demonstrate its resilience and adaptability in a dynamic industry. While the company faces some near-term headwinds, its diversified customer base, focus on operational excellence, and strong financial position position it well to capitalize on future growth opportunities and create long-term value for its stakeholders.