01—Abstract
Summary
Summary of the 10-K filed February 17, 2022. Cited figures are marked; the original filing is the authoritative source.
US Foods Holding Corp. reported fiscal 2021 (52 weeks ended January 1, 2022) net sales of $29.49 billiona, up from $22.89 billion in fiscal 2020, which was a 53-week year.
Total case volume increased 16.9% and independent restaurant case volume increased 28.0%, reflecting the easing of COVID-19 restrictions, year-over-year inflation in multiple product categories, and the April 2020 acquisition of Smart Foodservice. Gross profit rose to $4.66 billionb, but gross margin compressed to 15.8% from 16.3%, mainly due to higher LIFO expense of $165 million. Operating income swung to $424 million from an operating loss of $77 million, and net income was $164 million versus a net loss of $226 million.
Adjusted EBITDA increased to $1.06 billionc, or 3.6% of net sales, from $648 million, and free cash flow was $145 million compared with $224 million in the prior year. The balance sheet remains leveraged. Total debt was $5.01 billion at year-end, with approximately 47% of principal bearing floating rates.
The company refinanced several tranches during 2021, issuing $900 milliond of 4.75% notes due 2029, $500 million of 4.625% notes due 2030, and a $900 million 2021 Incremental Term Loan Facility. Liquidity was approximately $1.9 billion, including $1,722 million of available ABL Facility capacity. Management stated that it expects cash from operations and available borrowing capacity to cover obligations for the next 12 months.
Fiscal 2022 cash capital expenditures are expected to be between $280 million and $300 million. The filing also flags several risks for investors. KKR holds the equivalent of approximately 10% of common stock on an as-converted basis through its $500 million Series A Preferred Stock investment.
Sachem Head Capital Management disclosed on February 15, 2022 its intent to nominate seven directors to the ten-member board at the 2022 annual meeting. The company describes itself as a low-margin business and cites ongoing COVID-19 effects, labor and supply chain pressures, and integration risks from the Food Group and Smart Foodservice acquisitions.
02—Key points
Key Highlights
- Net sales rose 28.8% to $29.49 billion in fiscal 2021, driven by a 16.9% increase in total case volume and an 11.9% increase in the net sales rate per case.
- Operating income was $424 million versus an operating loss of $77 million in fiscal 2020; net income was $164 million versus a net loss of $226 million.
- Adjusted EBITDA was $1.06 billion, up 63.1%, or 3.6% of net sales versus 2.8% in fiscal 2020.
- Gross profit as a percentage of net sales fell to 15.8% from 16.3%, primarily due to $165 million of LIFO expense compared with $25 million in fiscal 2020.
- Total debt was $5.01 billion as of January 1, 2022, with approximately 47% at floating rates; liquidity was approximately $1.9 billion.
- Free cash flow was $145 million versus $224 million in fiscal 2020, as operating cash flow was $419 million and capital expenditures were $274 million.
- KKR owns approximately 10% of common stock on an as-converted basis, and Sachem Head disclosed plans on February 15, 2022 to nominate seven directors to the ten-member board.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, US Foods Holding kept $0.01.
- Revenue$34.06B100.0%
- Cost of revenue−$28.57B83.9%
- Gross profit$5.49B16.1%
- Operating costs−$4.90B14.4%
- Operating income$594.0M1.7%
- Interest, other & tax−$329.0M1.0%
- Net income$265.0M0.8%
Where FY2022 revenue went
$34.06B- Cost of revenue: $28.57B, 84% of revenue
- SG&A: $4.89B, 14% of revenue
- Net income: $265.0M, 0.8% of revenue
- Interest, other & tax: $329.0M, 1.0% of revenue
Kept 0.8% as net incomeNet income $265.0M · 0.8%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 17, 2022Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $34.06B$22.89B | +48.8% |
| Cost of Revenue | $28.57B$19.17B | +49.0% |
| Gross Profit | $5.49B$3.72B | +47.7% |
| SG&A Expenses | $4.89B$3.76B | +30.1% |
| Operating Expenses | $4.90B$3.80B | +29.0% |
| Operating Income | $594.00M-$77.00M | +871.4% |
| Interest Expense | $213.00M$238.00M | −10.5% |
| Net Income | $265.00M-$226.00M | +217.3% |
| EPS (Basic) | $1.02$-1.15 | +188.7% |
| EPS (Diluted) | $1.01$-1.15 | +187.8% |
| Shares Outstanding (Basic) | 224.00M220.00M | +1.8% |
| Shares Outstanding (Diluted) | 226.00M220.00M | +2.7% |
05—Questions
Frequently Asked Questions
How did US Foods perform in fiscal 2021 compared with fiscal 2020?
Net sales increased $6,602 million, or 28.8%, to $29,487 million, driven by volume recovery as COVID-19 restrictions eased, inflation in multiple product categories, and the Smart Foodservice acquisition. Operating income improved to $424 million from an operating loss of $77 million, and net income was $164 million versus a net loss of $226 million.
What drove the change in gross margin?
Gross profit as a percentage of net sales was 15.8% in fiscal 2021, compared with 16.3% in fiscal 2020. The filing attributes the decline primarily to higher LIFO expense of $165 million in fiscal 2021 versus $25 million in fiscal 2020, partly offset by pricing optimization and higher sales.
How is the company's debt structure and liquidity position?
Total debt was $5,011 million as of January 1, 2022. The company issued $900 million of 4.75% Unsecured Senior Notes due 2029 and $500 million of 4.625% Unsecured Senior Notes due 2030, and entered into a $900 million 2021 Incremental Term Loan Facility. It had no borrowings under its ABL Facility and $1,722 million of available capacity, with total cash and available liquidity of approximately $1.9 billion.
What are the expected capital expenditures and dividend policy?
The company expects cash capital expenditures of $280 million to $300 million in fiscal 2022, excluding approximately $110 million under fleet financing leases. It has not paid common stock dividends since its NYSE listing and has no plans to pay them in the foreseeable future; Series A Preferred Stock dividends were $28 million in cash and $15 million paid in kind in fiscal 2021.
What shareholder matters should investors be aware of?
KKR Fresh Holdings L.P. holds the equivalent of approximately 10% of common stock on an as-converted basis through its 500,000 shares of Series A Preferred Stock and has the right to designate one director. On February 15, 2022, Sachem Head Capital Management disclosed its intent to nominate seven directors for election to the ten-member board at the 2022 annual meeting.
06—Continue