01—Abstract
Summary
Summary of the 10-Q filed November 7, 2024. Cited figures are marked; the original filing is the authoritative source.
US Foods Holding Corp. reported net sales of $9,728 milliona for the 13 weeks ended September 28, 2024, up 6.8% from $9,106 million a year earlier, driven by a 3.8% increase in total case volume and food cost inflation of 3.2%.
Operating income rose to $279 millionb from $230 million, and net income increased to $148 million from $95 million. For the 39 weeks ended September 28, 2024, net sales were $28,386 million, up 6.5%, with net income of $428 million compared to $359 million. Adjusted EBITDA for the 13 weeks was $455 million, or 4.7% of net sales, compared to $402 million, or 4.4%, in the prior-year quarter.
Cash flow from operating activities for the 39 weeks was $891 millionc, down from $935 million, which the company attributed to less working capital benefit. Free Cash Flow was $658 million for the 39 weeks versus $776 million a year earlier. The company repurchased 10,399,672 shares for approximately $580 million in the quarter under its Amended Share Repurchase Program, leaving approximately $398 million authorized as of September 28, 2024.
Total debt was $4,789 milliond, and the company reported approximately $1.7 billion in cash and available liquidity. Subsequent to quarter end, the company completed a $500 million offering of 5.75% senior unsecured notes due 2033 and amended its term loan credit agreement on October 3, 2024, using proceeds and cash on hand to repay the 2019 Incremental Term Loan Facility. The company also began settling its Terminating Pension Plan in October 2024 through a $414 million annuity purchase and $254 million of lump sum payments, and expects a one-time non-cash pre-tax pension settlement charge of $124 million in the fiscal fourth quarter of 2024.
02—Key points
Key Highlights
- Net sales rose 6.8% to $9,728 million in the 13 weeks ended September 28, 2024, with total case volume up 3.8% and organic case volume up 1.1%.
- Operating income increased $49 million to $279 million, and operating margin was 2.9% versus 2.5% a year earlier.
- Net income was $148 million for the quarter, compared to $95 million in the prior-year period, and diluted EPS was $0.61 versus $0.38.
- Adjusted EBITDA increased 13.2% to $455 million, with Adjusted EBITDA margin of 4.7% compared to 4.4%.
- Operating cash flow for the 39 weeks declined to $891 million from $935 million, while Free Cash Flow fell to $658 million from $776 million.
- The company repurchased $580 million of common stock in the quarter and had approximately $398 million remaining under its Amended Share Repurchase Program as of September 28, 2024.
- Subsequent to quarter end, the company issued $500 million of 5.75% senior notes due 2033 and entered a pension plan termination with a $124 million expected non-cash settlement charge in the fiscal fourth quarter.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2024, US Foods Holding kept $0.02.
- Revenue$9.73B100.0%
- Cost of revenue−$8.06B82.9%
- Gross profit$1.67B17.1%
- Operating costs−$1.39B14.3%
- Operating income$279.0M2.9%
- Interest, other & tax−$131.0M1.3%
- Net income$148.0M1.5%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed November 7, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $9.73B$9.11B | +6.8% |
| Cost of Revenue | $8.06B$7.56B | +6.6% |
| Gross Profit | $1.67B$1.54B | +8.1% |
| SG&A Expenses | $1.38B$1.31B | +5.1% |
| Operating Expenses | $1.39B$1.31B | +5.8% |
| Operating Income | $279.00M$230.00M | +21.3% |
| Net Income | $148.00M$182.00M | −18.7% |
| EPS (Basic) | $0.61$0.38 | +60.5% |
| EPS (Diluted) | $0.61$0.38 | +60.5% |
| Shares Outstanding (Basic) | 241.00M247.00M | −2.4% |
| Shares Outstanding (Diluted) | 243.90M249.00M | −2.0% |
05—Questions
Frequently Asked Questions
How did US Foods perform in the third quarter of fiscal 2024?
Net sales grew 6.8% to $9,728 million, driven by organic case volume growth, acquisitions and food cost inflation of 3.2%. Operating income rose to $279 million from $230 million, and net income increased to $148 million from $95 million.
What drove the change in gross profit and operating expenses?
Gross profit increased $125 million to $1,667 million, primarily from higher total case volume, improved cost of goods sold, pricing optimization and a favorable year-over-year LIFO adjustment. Operating expenses rose $76 million to $1,388 million, mainly due to higher case volume and higher distribution costs reflecting increased labor costs, partly offset by distribution productivity improvement.
How is the company's capital allocation and debt position changing?
The company repurchased about $580 million of stock in the quarter and had $398 million remaining under its Amended Share Repurchase Program. Total debt was $4,789 million as of September 28, 2024. After quarter end, on October 3, 2024, it issued $500 million of 5.75% senior unsecured notes due 2033 and entered new term loan tranches of $725 million and $610 million to repay the 2019 Incremental Term Loan Facility and other amounts.
What is the impact of the pension plan termination?
In October 2024 the company began settling its Terminating Plan through a $414 million annuity contract and made $254 million of lump sum payments. No cash contributions are expected from the company, but management estimates a one-time non-cash pre-tax pension settlement charge of $124 million in the fiscal fourth quarter of 2024.
What are the company's pending strategic actions?
On June 5, 2024, the company announced it intends to explore a potential sale of its CHEF'STORE wholesale restaurant supply business and, if completed, focus entirely on delivered broadline operations. As of September 28, 2024, it was in the process of exploring this sale.
06—Continue