01—Abstract
Summary
Summary of the 10-Q filed May 9, 2024. Cited figures are marked; the original filing is the authoritative source.
US Foods Holding Corp. reported net sales of $8,949 milliona for the 13 weeks ended March 30, 2024, up from $8,542 million a year earlier, driven by case volume growth and food cost inflation of 1.5%.
Total case volume rose 4.2% and organic case volume rose 1.4%, with organic independent restaurant case volume up 2.9%. Gross profit was $1,495 millionb, with the gross margin flat at 16.7% of net sales, while operating expenses rose to $1,330 million (14.9% of net sales versus 14.5% a year earlier) and operating income fell to $165 million from $187 million. LIFO expense increased to $45 million from $20 million.
Net income was flat at $82 millionc, and diluted EPS was $0.33 versus $0.32 a year earlier. Adjusted EBITDA rose to $356 million from $337 million, with the Adjusted EBITDA margin at 4.0% of net sales. Operating cash flow fell to $139 million from $279 million due to less working capital benefit, and free cash flow was $53 million versus $219 million.
Total debt was $4,701 milliond, and the company had approximately $2.0 billion in cash and available liquidity, including $1,758 million of remaining ABL Facility capacity. The Series A convertible preferred stock is no longer outstanding.
Subsequent to quarter end, on April 5, 2024, the company completed the acquisition of IWC Food Service for approximately $220 million in cash, expanding its reach into Tennessee and the southeastern United States. The company also began terminating the majority of its defined benefit Retirement Plan, with benefits expected to be settled during 2024.
02—Key points
Key Highlights
- Net sales rose 4.8% to $8,949 million, driven by a 4.2% increase in total case volume and food cost inflation of 1.5%.
- Operating income declined to $165 million from $187 million, as operating expenses rose to 14.9% of net sales from 14.5%.
- LIFO expense increased to $45 million from $20 million, weighing on gross profit, which held at 16.7% of net sales.
- Adjusted EBITDA increased $19 million, or 5.6%, to $356 million, with the margin improving to 4.0% from 3.9%.
- Net income was flat at $82 million; diluted EPS was $0.33 compared with $0.32 a year earlier.
- Operating cash flow fell to $139 million from $279 million, and free cash flow declined to $53 million from $219 million.
- Subsequent to quarter end, US Foods completed the acquisition of IWC Food Service for approximately $220 million in cash on April 5, 2024.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2024, US Foods Holding kept $0.01.
- Revenue$8.95B100.0%
- Cost of revenue−$7.45B83.3%
- Gross profit$1.50B16.7%
- Operating costs−$1.33B14.9%
- Operating income$165.0M1.8%
- Interest, other & tax−$83.0M0.9%
- Net income$82.0M0.9%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed May 9, 2024Financial Statements
| Revenue | $8.95B |
| Cost of Revenue | $7.45B |
| Gross Profit | $1.50B |
| SG&A Expenses | $1.32B |
| Operating Expenses | $1.33B |
| Operating Income | $165.00M |
| Interest Expense | $79.00M |
| Net Income | $82.00M |
| EPS (Basic) | $0.33 |
| EPS (Diluted) | $0.33 |
| Shares Outstanding (Basic) | 245.00M |
| Shares Outstanding (Diluted) | 248.00M |
05—Questions
Frequently Asked Questions
How did US Foods' sales and volume perform in the first quarter of 2024?
Net sales increased $407 million, or 4.8%, to $8,949 million. Total case volume increased 4.2%, independent restaurant case volume increased 4.6%, and organic case volume increased 1.4%. Food cost inflation contributed 1.5% to sales growth.
Why did operating income decline even though sales grew?
Operating expenses increased $92 million, or 7.4%, to $1,330 million, reflecting higher organic case volume, higher distribution costs from increased labor costs, acquisition impacts, and incremental costs during January labor disruptions. LIFO expense also rose to $45 million from $20 million, while gross margin held at 16.7%.
How did cash flow and liquidity change?
Operating cash flow was $139 million compared with $279 million a year earlier, due to less working capital benefit. Free cash flow was $53 million. As of March 30, 2024, the company had approximately $2.0 billion in cash and available liquidity, including $1,758 million of remaining ABL Facility capacity, and total debt of $4,701 million.
What significant events occurred after the quarter ended?
On April 5, 2024, US Foods completed the acquisition of IWC Food Service for approximately $220 million, funded with cash on hand. The acquisition extends its reach into Tennessee and the southeastern United States. The company is still measuring the acquired assets and assumed liabilities.
What capital allocation activity took place during the quarter?
The company repurchased 283,988 shares for approximately $13 million under its $500 million share repurchase program, leaving about $179 million authorized. No Series A convertible preferred stock remained outstanding as of March 30, 2024, and the company expects fiscal 2024 cash capital expenditures between $325 million and $375 million.
06—Continue