ROSEMONT, Ill.--(BUSINESS WIRE)--
US Foods Holding Corp. (NYSE: USFD), one of the largest foodservice
distributors in the United States, today announced results for the
second quarter and first six months of fiscal 2017.
Second Quarter Highlights
-
Total case volume increased 3.6%; independent restaurant case volume
increased 4.7%.
-
Net sales increased 6.1% to $6.2 billion.
-
Gross profit of $1.1 billion increased 1.9%.
-
Operating income of $126 million increased $28 million.
-
Net income of $65 million improved $78 million from a 2016 Net loss of
$13 million.
-
Adjusted EBITDA increased 10.0% to $286 million.
-
Diluted EPS of $0.29; Adjusted Diluted EPS of $0.37.
Six Month Highlights
-
Total case volume increased 4.0%; independent restaurant case volume
increased 4.3%.
-
Net sales increased 4.8% to $11.9 billion.
-
Gross profit of $2.0 billion increased 2.6%.
-
Operating income of $202 million increased $19 million.
-
Net income of $92 million exceeded prior year break-even.
-
Adjusted EBITDA increased 8.2% to $501 million.
-
Diluted EPS of $0.41; Adjusted Diluted EPS of $0.56.
CEO Perspective
“Strong Adjusted EBITDA growth of 10% and above-market independent
restaurant case growth of 4.7% highlight another successful quarter for
the company,” said President and CEO Pietro Satriano. “We have
successfully closed five acquisitions this year as we continue to focus
on accretive M&A opportunities. Continued growth with targeted
customers, in combination with our portfolio of value-added services,
innovative products and enhanced digital platform, position us for
success in the second half of the year.”
Second Quarter Results
Total case volume increased 3.6% from prior year, of which 2.3% was
organic growth, and independent restaurant case volume increased 4.7%,
of which 3.7% was organic growth. The increase in total cases reflects
growth with independent restaurants, healthcare and hospitality
customers, and select national chain business.
Net sales of $6.2 billion represent a 6.1% increase from prior year,
driven by total case volume growth, product mix changes and
year-over-year inflation in grocery, produce, poultry and seafood. Sales
from acquisitions completed in the last 12 months increased total Net
sales by approximately 1.8%.
Gross profit of $1.1 billion increased $20 million, or 1.9% from prior
year. The increase was driven by higher volume combined with margin
expansion initiatives, partially offset by the year-over-year change in
the Last-in, first-out (LIFO) inventory reserve. Gross profit as a
percentage of Net sales was 17.1%. Adjusted Gross profit, which excludes
the impact of LIFO, was $1.1 billion, a 5.6% increase from the prior
year, driven by the Gross profit items discussed above. Adjusted Gross
profit as a percentage of Net sales was 17.6%.
Operating expenses were $928 million, a decrease of 0.9% from prior
year. Operating expenses benefitted from the non-recurrence of the prior
year $31 million contract termination fee with our Sponsors, lower
restructuring charges due to the completion of several initiatives in
2016, and ongoing efforts to reduce operating expenses. These decreases
were partially offset by increased distribution costs related to higher
volume combined with higher employee related costs. Adjusted Operating
expenses for the quarter were $798 million, a 3.9% increase from prior
year, primarily driven by higher volume and employee related costs.
Operating income was $126 million, a $28 million increase from prior
year, driven by the Gross profit and Operating expense items discussed
above.
Net income for the quarter was $65 million, up $78 million from a $13
million Net loss in the prior year. Adjusted EBITDA of $286 million
increased $26 million, or 10.0% compared to prior year, driven by volume
growth and the Adjusted Gross profit and Adjusted Operating expense
factors discussed above. Diluted EPS was $0.29 and Adjusted Diluted EPS
was $0.37.
Six Month Results
Total case volume increased 4.0% from prior year, of which 2.5% was
organic growth, and independent restaurant case volume increased 4.3%,
of which 3.2% was organic growth. The increase in total cases reflects
growth with independent restaurants, healthcare and hospitality
customers, and select national chain business.
Net sales of $11.9 billion represent a 4.8% increase from prior year,
primarily driven by case volume growth and year-over-year inflation in
grocery, seafood, poultry and cheese. Sales from acquisitions completed
in the last 12 months increased total Net sales by approximately 1.6%.
Gross profit of $2.0 billion increased $51 million, or 2.6% from prior
year. The increase was driven by higher volume combined with margin
expansion initiatives, partially offset by the year-over-year change in
the LIFO inventory reserve. Gross profit as a percentage of Net sales
was 17.1%. Adjusted Gross profit, which excludes the impact of LIFO, was
$2.1 billion, a 5.5% increase from the prior year, driven by the Gross
profit items discussed above. Adjusted Gross profit as a percentage of
Net sales was 17.5%.
Operating expenses were $1.8 billion, an increase of 1.8% from prior
year, related to higher distribution costs from increased volume
combined with higher employee related costs and insurance related
charges. These increases were partially offset by the non-recurrence of
the prior year $31 million contract termination fee with our Sponsors,
lower restructuring charges due to the completion of several initiatives
in 2016, and ongoing efforts to reduce operating expenses. Adjusted
Operating expenses for the first six months were $1.6 billion, a 4.8%
increase from prior year, driven by higher volume combined with higher
employee related costs and insurance related charges.
Operating income was $202 million, a $19 million increase from prior
year, driven by the Gross profit and Operating expense items discussed
above.
Net income for the first six months was $92 million, up from break-even
performance in the prior year. Adjusted EBITDA of $501 million increased
$38 million, or 8.2% compared to prior year, driven by volume growth and
the Adjusted Gross profit and Adjusted Operating expense factors
discussed above. Diluted EPS was $0.41 and Adjusted Diluted EPS was
$0.56.
Cash Flows and Capital Transactions
Net cash provided by operating activities for the first six months of
fiscal 2017 was $368 million, an increase of $67 million from prior year
related to our growth in net income which was driven by improved
business performance and reduced interest expense. Cash capital
expenditures for the first six months totaled $108 million, an increase
of $41 million from prior year, due to the timing of payments made for
assets acquired late in Q4 fiscal 2016 and increased capital spending,
as planned.
Net Debt at the end of the quarter was $3.6 billion, a decrease of $172
million versus the same prior year period. The ratio of Net Debt to
Adjusted EBITDA was 3.5x at the end of the quarter, down from 4.0x in
the same prior year period.
Outlook for Fiscal 2017
The company is updating select elements of fiscal 2017 guidance. We now
expect Net sales growth of 3-5%, interest expense of $175-$180 million,
cash taxes of $20-$25 million and Adjusted Diluted EPS of $1.30-$1.40.
All other elements of the company’s guidance provided during the Q4
fiscal 2016 earnings call on February 15, 2017, remain unchanged.
Please see the “Forward-Looking Statements” section in this release for
a discussion of certain risks related to this outlook.
The company is not providing a reconciliation of our full year 2017
Adjusted EBITDA or Adjusted Diluted EPS outlook because we are not able
to accurately estimate all of the adjustments on a forward-looking
basis, and such items could have a significant impact on our GAAP
financial results as a result of their variability.
Conference Call and Webcast Information
US Foods second quarter fiscal 2017 earnings call will be broadcast live
via the Internet on August 9, 2017 at 9:00 a.m. CDT. The call can also
be accessed live over the phone by dialing (855) 788-2805; the
conference ID number is 35394300. The presentation slides reviewed
during the webcast will be available shortly before that time. The
webcast, slides, and a copy of this news release will be available in
the Investor Relations section of our website for a limited period of
time at www.usfoods.com/investors.
About US Foods
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 nearly 25,000 employees and more than 60 locations, US Foods
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., and generates approximately
$23 billion in annual revenue. Visit www.usfoods.com
to learn more.
Forward-Looking Statements
This press release contains “forward-looking statements” within the
meaning of the federal securities laws, including those statements under
“Outlook for Fiscal 2017”. Forward-looking statements include
information concerning our liquidity and our possible or assumed future
results of operations, including descriptions of our business
strategies. These statements often include words such as “believe,”
“expect,” “project,” “anticipate,” “intend,” “plan,” “estimate,”
“target,” “seek,” “will,” “may,” “would,” “should,” “could,”
“forecasts,” “mission,” “strive,” “more,” “goal,” or similar
expressions. The statements are based on assumptions that we have made,
based on our experience in the industry as well as our perceptions of
historical trends, current conditions, expected future developments, and
other factors we think are appropriate. We believe these judgments are
reasonable. However, you should understand that these statements are not
guarantees of performance or results. Our actual results could differ
materially from those expressed in the forward-looking statements. 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 the forward-looking statements contained in this
release. Such risks, uncertainties, and other important factors include,
among others: our ability to remain profitable during times of cost
inflation/deflation, commodity volatility, and other factors; industry
competition and our ability to successfully compete; our reliance on
third-party suppliers, including the impact of any interruption of
supplies or increases in product costs; risks related to our
indebtedness, including our substantial amount of debt, our ability to
incur substantially more debt, and increases in interest rates;
restrictions and limitations placed on us by agreements and instruments
governing our debt; any change in our relationships with group
purchasing organizations; any change in our relationships with long-term
customers; our ability to increase sales to independent restaurant
customers; our ability to successfully consummate and integrate
acquisitions; our ability to achieve the benefits that we expect from
our cost savings initiatives; shortages of fuel and increases or
volatility in fuel costs; any declines in the consumption of food
prepared away from home, including as a result of changes in the economy
or other factors affecting consumer confidence; liability claims related
to products we distribute; our ability to maintain a good reputation;
costs and risks associated with labor relations and the availability of
qualified labor; changes in industry pricing practices; changes in
competitors’ cost structures; our ability to retain customers not
obligated by long-term contracts to continue purchasing products from
us; environmental, health and safety costs; costs and risks associated
with government laws and regulations, including related to
environmental, health, safety, food safety, transportation, labor and
employment, and changes in existing laws or regulations; technology
disruptions and our ability to implement new technologies; costs and
risks associated with a potential cybersecurity incident; our ability to
manage future expenses and liabilities associated with our retirement
benefits and pension plans; disruptions to our business caused by
extreme weather conditions; costs and risks associated with litigation;
changes in consumer eating habits; costs and risks associated with our
intellectual property protections; and risks associated with potential
infringements of the intellectual property of others.
For a detailed discussion of these risks and uncertainties, see the
section entitled “Risk Factors” in our Annual Report on Form 10-K for
the year ended December 31, 2016, which was filed with the Securities
and Exchange Commission (“SEC”) on February 28, 2017. All
forward-looking statements made in this release are qualified by these
cautionary statements. The forward-looking statements contained in this
release speak only as of the date of this release. We undertake no
obligation, other than as may be required by law, to update or revise
any forward-looking or cautionary statements to reflect changes in
assumptions, the occurrence of events, unanticipated or otherwise, or
changes in future operating results over time or otherwise. Comparisons
of results between current and prior periods are not intended to express
any future trends, or indications of future performance, unless
expressed as such, and should only be viewed as historical data.
Explanation of Non-GAAP Financial Measures
We provide Adjusted Gross profit, Adjusted Operating expenses, EBITDA,
Adjusted EBITDA, Net Debt, Adjusted Net income and Adjusted Diluted
Earnings Per Share (EPS) as supplemental measures to GAAP measures
regarding our operational performance. 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 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 Last-in, first-out (LIFO) inventory reserve
changes. 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, as well other items noted in our
debt agreements.
We believe EBITDA and Adjusted EBITDA 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. Examples of items excluded from Adjusted
EBITDA include Restructuring charges, Loss on extinguishment of debt,
Sponsor fees, Share-based compensation expense, Pension settlements, the
non-cash impacts of LIFO reserve adjustments, Business transformation
costs (business costs associated with the redesign of systems and
processes), and other items as specified in our debt agreements.
We use Net Debt to review the liquidity of our operations. Net Debt is
defined as long-term debt plus the current portion of long-term debt net
of restricted cash held on deposit in accordance with our credit
agreements, and total Cash and cash equivalents remaining on the balance
sheet as of July 1, 2017. 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 From Operating
or 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,
amortization, 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 charges, Loss on extinguishment of
debt, Sponsor fees, Share-based compensation expense, Pension
settlements, the non-cash impacts of LIFO reserve adjustments, Business
transformation costs (business costs associated with the redesign of
systems and processes), and other items, and adjusted for the tax effect
of the exclusions and discrete tax items. We believe that Adjusted Net
income is 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 EPS, 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
EPS 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
and Adjusted Diluted Earnings per Share is useful to investors because
these metrics are frequently 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 for
certain covenants and restricted activities under our debt agreements.
We also believe these 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 amounts presented in accordance with our
definitions of Adjusted Gross profit, Adjusted Operating expense,
EBITDA, Adjusted EBITDA, Net Debt, Adjusted Net Income and Adjusted
Diluted EPS may not be the same as similar measures used by other
companies. Not all companies and analysts calculate these measures in
the same manner. We compensate for these limitations by using these
non-GAAP financial measures as supplements to GAAP financial measures
and by presenting the reconciliations of the non-GAAP financial measures
to their most comparable GAAP financial measures.
|
US FOODS HOLDING CORP.
|
|
Consolidated Balance Sheets
|
|
|
|
|
|
|
($ in millions)*
|
|
July 1, 2017
|
|
December 31, 2016
|
|
|
(Unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
150
|
|
|
$
|
131
|
|
|
Accounts receivable, less allowances of $25 and $25
|
|
|
1,366
|
|
|
|
1,226
|
|
|
Vendor receivables, less allowances of $3 and $2
|
|
|
157
|
|
|
|
106
|
|
|
Inventories -- net
|
|
|
1,236
|
|
|
|
1,223
|
|
|
Prepaid expenses
|
|
|
81
|
|
|
|
73
|
|
|
Assets held for sale
|
|
|
22
|
|
|
|
21
|
|
|
Other current assets
|
|
|
10
|
|
|
|
10
|
|
|
Total current assets
|
|
|
3,022
|
|
|
|
2,789
|
|
|
Property and equipment -- net
|
|
|
1,787
|
|
|
|
1,768
|
|
|
Goodwill
|
|
|
3,957
|
|
|
|
3,908
|
|
|
Other intangibles -- net
|
|
|
363
|
|
|
|
387
|
|
|
Deferred tax assets
|
|
|
31
|
|
|
|
34
|
|
|
Other assets
|
|
|
49
|
|
|
|
58
|
|
|
Total assets
|
|
$
|
9,208
|
|
|
$
|
8,944
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Bank checks outstanding
|
|
$
|
162
|
|
|
$
|
143
|
|
|
Accounts payable
|
|
|
1,526
|
|
|
|
1,295
|
|
|
Accrued expenses and other current liabilities
|
|
|
421
|
|
|
|
456
|
|
|
Current portion of long-term debt
|
|
|
104
|
|
|
|
76
|
|
|
Total current liabilities
|
|
|
2,213
|
|
|
|
1,969
|
|
|
Long term debt
|
|
|
3,623
|
|
|
|
3,706
|
|
|
Deferred tax liabilities
|
|
|
404
|
|
|
|
381
|
|
|
Other long-term liabilities
|
|
|
334
|
|
|
|
351
|
|
|
Total liabilities
|
|
|
6,575
|
|
|
|
6,407
|
|
|
|
|
|
|
|
Shareholders' equity:
|
|
|
|
|
|
Common stock
|
|
|
2
|
|
|
|
2
|
|
|
Additional paid-in capital
|
|
|
2,792
|
|
|
|
2,791
|
|
|
Accumulated deficit
|
|
|
(44
|
)
|
|
|
(136
|
)
|
|
Accumulated other comprehensive loss
|
|
|
(117
|
)
|
|
|
(119
|
)
|
|
Total shareholders' equity
|
|
|
2,633
|
|
|
|
2,538
|
|
|
Total liabilities and shareholders' equity
|
|
$
|
9,208
|
|
|
$
|
8,944
|
|
|
|
|
|
|
|
*Amounts may not add due to rounding.
|
|
|
|
|
|
|
|
|
|
|
US FOODS HOLDING CORP.
|
|
Consolidated Statements of Operations
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
($ in millions, except share and per share data)*
|
|
13-Weeks Ended
July 1, 2017
|
|
13-Weeks Ended
July 2, 2016
|
|
26-Weeks Ended
July 1, 2017
|
|
26-Weeks Ended
July 2, 2016
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
6,159
|
|
$
|
5,807
|
|
|
$
|
11,947
|
|
$
|
11,400
|
|
Cost of goods sold
|
|
|
5,105
|
|
|
4,773
|
|
|
|
9,902
|
|
|
9,406
|
|
Gross profit
|
|
|
1,054
|
|
|
1,034
|
|
|
|
2,045
|
|
|
1,994
|
|
Distribution, selling and administrative costs
|
|
|
928
|
|
|
923
|
|
|
|
1,841
|
|
|
1,787
|
|
Restructuring charges
|
|
|
1
|
|
|
13
|
|
|
|
3
|
|
|
24
|
|
Total operating expenses
|
|
|
928
|
|
|
936
|
|
|
|
1,843
|
|
|
1,811
|
|
Operating income
|
|
|
126
|
|
|
98
|
|
|
|
202
|
|
|
183
|
|
Interest expense -- net
|
|
|
41
|
|
|
70
|
|
|
|
83
|
|
|
141
|
|
Loss on extinguishment of debt
|
|
|
-
|
|
|
42
|
|
|
|
-
|
|
|
42
|
|
Income (loss) before income taxes
|
|
|
85
|
|
|
(14
|
)
|
|
|
119
|
|
|
-
|
|
Income tax provision (benefit)
|
|
|
19
|
|
|
(1
|
)
|
|
|
27
|
|
|
-
|
|
Net income (loss)
|
|
$
|
65
|
|
$
|
(13
|
)
|
|
$
|
92
|
|
$
|
-
|
|
Net income (loss) per share
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.29
|
|
$
|
(0.07
|
)
|
|
$
|
0.42
|
|
$
|
-
|
|
Diluted
|
|
$
|
0.29
|
|
$
|
(0.07
|
)
|
|
$
|
0.41
|
|
$
|
-
|
|
Weighted-average common shares outstanding
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
222,754,030
|
|
|
190,077,211
|
|
|
|
222,059,022
|
|
|
179,599,467
|
|
Diluted
|
|
|
226,791,449
|
|
|
190,077,211
|
|
|
|
226,557,430
|
|
|
179,599,467
|
|
Distribution declared and paid per share
|
|
$
|
-
|
|
$
|
-
|
|
|
$
|
-
|
|
$
|
3.94
|
|
|
|
|
|
|
|
|
|
|
*Amounts may not add due to rounding.
|
|
|
|
|
|
|
US FOODS HOLDING CORP.
|
|
Consolidated Statements of Cash Flows
|
|
(Unaudited)
|
|
|
|
|
|
|
|
26-Weeks Ended
|
|
26-Weeks Ended
|
|
($ in millions)*
|
|
July 1, 2017
|
|
July 2, 2016
|
|
Cash Flows From Operating Activities:
|
|
|
|
|
|
Net income (loss)
|
|
$
|
92
|
|
|
$
|
-
|
|
|
Adjustments to reconcile net income (loss) to net cash provided by
|
|
|
|
|
|
operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
|
214
|
|
|
|
208
|
|
|
Gain on disposal of property and equipment-net
|
|
|
-
|
|
|
|
(8
|
)
|
|
Loss on extinguishment of debt
|
|
|
-
|
|
|
|
42
|
|
|
Amortization and write-off of deferred financing costs
|
|
|
2
|
|
|
|
5
|
|
|
Amortization of Senior Notes original issue premium
|
|
|
-
|
|
|
|
(2
|
)
|
|
Insurance proceeds related to operating activities
|
|
|
-
|
|
|
|
7
|
|
|
Insurance benefit in net loss
|
|
|
-
|
|
|
|
(7
|
)
|
|
Deferred tax provision
|
|
|
18
|
|
|
|
-
|
|
|
Share-based compensation expense
|
|
|
9
|
|
|
|
10
|
|
|
Provision for doubtful accounts
|
|
|
9
|
|
|
|
6
|
|
|
Changes in operating assets and liabilities, net of business
acquisitions:
|
|
|
|
|
Increase in receivables
|
|
|
(189
|
)
|
|
|
(77
|
)
|
|
Decrease (increase) in inventories
|
|
|
4
|
|
|
|
(63
|
)
|
|
(Increase) decrease in prepaid expenses and other assets
|
|
|
(21
|
)
|
|
|
6
|
|
|
Increase in accounts payable and bank checks outstanding
|
|
|
276
|
|
|
|
275
|
|
|
Decrease in accrued expenses and other liabilities
|
|
|
(47
|
)
|
|
|
(102
|
)
|
|
Net cash provided by operating activities
|
|
|
368
|
|
|
|
301
|
|
|
Cash Flows From Investing Activities:
|
|
|
|
|
|
Acquisition of businesses—net of cash
|
|
|
(135
|
)
|
|
|
(95
|
)
|
|
Proceeds from sales of property and equipment
|
|
|
2
|
|
|
|
9
|
|
|
Purchases of property and equipment
|
|
|
(108
|
)
|
|
|
(67
|
)
|
|
Proceeds from redemption of industrial revenue bonds
|
|
|
22
|
|
|
|
-
|
|
|
Investment in Avero, LLC
|
|
|
-
|
|
|
|
(8
|
)
|
|
Net cash used in investing activities
|
|
|
(219
|
)
|
|
|
(161
|
)
|
|
Cash Flows From Financing Activities:
|
|
|
|
|
|
Proceeds from debt borrowings
|
|
|
1,117
|
|
|
|
1,411
|
|
|
Proceeds from debt refinancings
|
|
|
-
|
|
|
|
2,214
|
|
|
Principal payments on debt and capital leases
|
|
|
(1,213
|
)
|
|
|
(3,208
|
)
|
|
Repayment of industrial revenue bonds
|
|
|
(22
|
)
|
|
|
-
|
|
|
Redemption of Old Senior Notes
|
|
|
-
|
|
|
|
(1,377
|
)
|
|
Payment for debt financing cost and fees
|
|
|
-
|
|
|
|
(26
|
)
|
|
Proceeds from initial public offering
|
|
|
-
|
|
|
|
1,114
|
|
|
Cash distribution to shareholders
|
|
|
-
|
|
|
|
(666
|
)
|
|
Contingent consideration paid for business acquisition
|
|
|
(5
|
)
|
|
|
-
|
|
|
Proceeds from employee share purchase plan
|
|
|
8
|
|
|
|
-
|
|
|
Proceeds from exercise of stock options
|
|
|
11
|
|
|
|
-
|
|
|
Tax withholding payments for net share-settled equity awards
|
|
|
(26
|
)
|
|
|
-
|
|
|
Proceeds from common stock sales
|
|
|
-
|
|
|
|
3
|
|
|
Common stock and share-based awards settled
|
|
|
-
|
|
|
|
(7
|
)
|
|
Net cash used in financing activities
|
|
|
(131
|
)
|
|
|
(543
|
)
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
19
|
|
|
|
(403
|
)
|
|
Cash and cash equivalents, beginning of period
|
|
|
131
|
|
|
|
518
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
150
|
|
|
$
|
115
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
Cash paid during the period for:
|
|
|
|
|
|
Interest (net of amounts capitalized)
|
|
$
|
79
|
|
|
$
|
138
|
|
|
Income taxes paid - net
|
|
|
3
|
|
|
|
4
|
|
|
Non-cash Investing and Financing Activities:
|
|
|
|
|
|
Property and equipment purchases
|
|
|
|
|
|
included in accounts payable
|
|
|
17
|
|
|
|
13
|
|
|
Capital lease additions
|
|
|
61
|
|
|
|
64
|
|
|
Cashless exercise of equity awards
|
|
|
26
|
|
|
|
-
|
|
|
Contingent consideration payable for business acquisitions
|
|
|
4
|
|
|
|
6
|
|
|
|
|
|
|
|
*Amounts may not add due to rounding.
|
|
|
|
|
|
|
|
|
|
|
US FOODS HOLDING CORP.
|
|
Non-GAAP Reconciliation
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
($ in millions, except share and per share data)*
|
|
13-Weeks Ended
July 1, 2017
|
|
13-Weeks Ended
July 2, 2016
|
|
Change
|
|
%
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) (GAAP)
|
|
$
|
65
|
|
|
$
|
(13
|
)
|
|
$
|
78
|
|
|
NM
|
|
|
Interest expense, net
|
|
|
41
|
|
|
|
70
|
|
|
|
(29
|
)
|
|
(41.4
|
)
|
|
Income tax provision (benefit)
|
|
|
19
|
|
|
|
(1
|
)
|
|
|
20
|
|
|
NM
|
|
|
Depreciation and amortization expense
|
|
|
106
|
|
|
|
105
|
|
|
|
1
|
|
|
1.0
|
|
|
EBITDA (Non-GAAP)
|
|
|
232
|
|
|
|
161
|
|
|
|
71
|
|
|
44.1
|
|
|
Sponsor fees (1)
|
|
|
-
|
|
|
|
33
|
|
|
|
(33
|
)
|
|
NM
|
|
|
Restructuring charges (2)
|
|
|
1
|
|
|
|
13
|
|
|
|
(12
|
)
|
|
(92.3
|
)
|
|
Share-based compensation expense (3)
|
|
|
5
|
|
|
|
5
|
|
|
|
-
|
|
|
-
|
|
|
LIFO reserve change (4)
|
|
|
30
|
|
|
|
(7
|
)
|
|
|
37
|
|
|
NM
|
|
|
Loss on extinguishment of debt (5)
|
|
|
-
|
|
|
|
42
|
|
|
|
(42
|
)
|
|
NM
|
|
|
Business transformation costs (6)
|
|
|
13
|
|
|
|
7
|
|
|
|
6
|
|
|
85.7
|
|
|
Other (7)
|
|
|
5
|
|
|
|
5
|
|
|
|
-
|
|
|
-
|
|
|
Adjusted EBITDA (Non-GAAP)
|
|
|
286
|
|
|
|
260
|
|
|
|
26
|
|
|
10.0
|
|
|
Depreciation and amortization expense
|
|
|
(106
|
)
|
|
|
(105
|
)
|
|
|
(1
|
)
|
|
1.0
|
|
|
Interest expense, net
|
|
|
(41
|
)
|
|
|
(70
|
)
|
|
|
29
|
|
|
(41.4
|
)
|
|
Income tax (provision) benefit, as adjusted (8)
|
|
|
(54
|
)
|
|
|
1
|
|
|
|
(55
|
)
|
|
NM
|
|
|
Adjusted Net income (Non-GAAP)
|
|
$
|
85
|
|
|
$
|
85
|
|
|
$
|
-
|
|
|
-
|
%
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS (GAAP)
|
|
$
|
0.29
|
|
|
$
|
(0.07
|
)
|
|
$
|
0.36
|
|
|
NM
|
|
|
Sponsor fees (1)
|
|
|
-
|
|
|
|
0.17
|
|
|
|
(0.17
|
)
|
|
NM
|
|
|
Restructuring charges (2)
|
|
|
-
|
|
|
|
0.07
|
|
|
|
(0.07
|
)
|
|
NM
|
|
|
Share-based compensation expense (3)
|
|
|
0.02
|
|
|
|
0.03
|
|
|
|
(0.01
|
)
|
|
(33.3
|
)
|
|
LIFO reserve change (4)
|
|
|
0.13
|
|
|
|
(0.03
|
)
|
|
|
0.16
|
|
|
NM
|
|
|
Loss on extinguishment of debt (5)
|
|
|
-
|
|
|
|
0.22
|
|
|
|
(0.22
|
)
|
|
NM
|
|
|
Business transformation costs (6)
|
|
|
0.06
|
|
|
|
0.03
|
|
|
|
0.03
|
|
|
NM
|
|
|
Other (7)
|
|
|
0.02
|
|
|
|
0.03
|
|
|
|
(0.01
|
)
|
|
(33.3
|
)
|
|
Income tax impact of adjustments (8)
|
|
|
(0.15
|
)
|
|
|
-
|
|
|
|
(0.15
|
)
|
|
NM
|
|
|
Effect of dilutive shares assuming net income (9)
|
|
|
-
|
|
|
|
(0.01
|
)
|
|
|
0.01
|
|
|
(100.0
|
)
|
|
Adjusted Diluted EPS (Non-GAAP)
|
|
$
|
0.37
|
|
|
$
|
0.44
|
|
|
$
|
(0.07
|
)
|
|
(15.9
|
)%
|
|
|
|
|
|
|
|
|
|
|
Weighted-average diluted shares outstanding (GAAP)
|
|
226,791,449
|
|
|
|
190,077,211
|
|
|
|
|
|
|
Dilutive shares assuming net income (9)
|
|
|
n/a
|
|
|
|
3,761,565
|
|
|
|
|
|
|
Adjusted Diluted shares (Non-GAAP)
|
|
|
n/a
|
|
|
|
193,838,776
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit (GAAP)
|
|
$
|
1,054
|
|
|
$
|
1,034
|
|
|
$
|
20
|
|
|
1.9
|
|
|
LIFO reserve change (4)
|
|
|
30
|
|
|
|
(7
|
)
|
|
|
37
|
|
|
NM
|
|
|
Adjusted Gross profit (Non-GAAP)
|
|
$
|
1,084
|
|
|
$
|
1,027
|
|
|
$
|
57
|
|
|
5.6
|
%
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (GAAP)
|
|
$
|
928
|
|
|
$
|
936
|
|
|
$
|
(8
|
)
|
|
(0.9
|
)
|
|
Depreciation and amortization expense
|
|
|
(106
|
)
|
|
|
(105
|
)
|
|
|
(1
|
)
|
|
1.0
|
|
|
Sponsor fees (1)
|
|
|
-
|
|
|
|
(33
|
)
|
|
|
33
|
|
|
NM
|
|
|
Restructuring charges (2)
|
|
|
(1
|
)
|
|
|
(13
|
)
|
|
|
12
|
|
|
(92.3
|
)
|
|
Share-based compensation expense (3)
|
|
|
(5
|
)
|
|
|
(5
|
)
|
|
|
-
|
|
|
NM
|
|
|
Business transformation costs (6)
|
|
|
(13
|
)
|
|
|
(7
|
)
|
|
|
(6
|
)
|
|
85.7
|
|
|
Other (7)
|
|
|
(5
|
)
|
|
|
(5
|
)
|
|
|
-
|
|
|
NM
|
|
|
Adjusted Operating expenses (Non-GAAP)
|
|
$
|
798
|
|
|
$
|
768
|
|
|
$
|
30
|
|
|
3.9
|
%
|
|
|
|
|
|
|
|
|
|
|
*Amounts may not add due to rounding.
|
|
NM- Percentage change not meaningful.
|
|
(1)
|
|
Consists of fees paid to the Sponsors for consulting and management
advisory services. On June 1, 2016, the consulting agreements with
each of the Sponsors were terminated for an aggregate termination
fee of $31 million.
|
|
(2)
|
|
Consists primarily of severance and related costs and organizational
realignment costs.
|
|
(3)
|
|
Share-based compensation expense for vesting of stock awards and
employee share purchase plan.
|
|
(4)
|
|
Represents the non-cash impact of LIFO reserve adjustments.
|
|
(5)
|
|
Includes fees paid to debt holders, third party costs, the write off
of certain pre-existing unamortized debt issuance costs and
unamortized issue premium, and an early redemption premium.
|
|
(6)
|
|
Consists primarily of costs related to significant process and
systems redesign across multiple functions.
|
|
(7)
|
|
Other includes gains, losses or charges as specified under USF’s
debt agreements.
|
|
(8)
|
|
Represents our Income tax provision (benefit) 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 considering
the impact of permanent differences and valuation allowances. We
maintained a valuation allowance against federal and state net
deferred tax assets in the 13-week and 26-week periods ended July 2,
2016. The result was an immaterial tax effect related to pre-tax
items excluded from Adjusted Net income in the 13-week and 26-week
periods ended July 2, 2016.
|
|
(9)
|
|
The effect of the "Dilutive shares assuming net income" represents
the difference between the Adjusted Diluted EPS calculated using the
GAAP based weighted-average dilutive shares outstanding, compared to
the Adjusted Diluted EPS calculated using the weighted-average
shares outstanding plus the effect of potentially dilutive
securities that would have been applicable, if the company had net
income during the period. Since the company was in a net loss
position for the quarter ended July 2, 2016, basic and diluted
shares are the same because the inclusion of additional shares would
be anti-dilutive.
|
|
|
|
|
|
|
|
|
|
|
US FOODS HOLDING CORP.
|
|
Non-GAAP Reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26-Weeks Ended
|
|
26-Weeks Ended
|
|
|
|
|
|
($ in millions*)
|
|
July 1, 2017
|
|
July 2, 2016
|
|
Change
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) (GAAP)
|
|
$
|
92
|
|
|
$
|
-
|
|
|
$
|
92
|
|
|
NM
|
|
|
Interest expense, net
|
|
|
83
|
|
|
|
141
|
|
|
|
(58
|
)
|
|
(41.1
|
)
|
|
Income tax provision (benefit)
|
|
|
27
|
|
|
|
-
|
|
|
|
27
|
|
|
NM
|
|
|
Depreciation and amortization expense
|
|
|
214
|
|
|
|
208
|
|
|
|
6
|
|
|
2.9
|
|
|
EBITDA (Non-GAAP)
|
|
|
416
|
|
|
|
349
|
|
|
|
67
|
|
|
19.2
|
|
|
Sponsor fees (1)
|
|
|
-
|
|
|
|
36
|
|
|
|
(36
|
)
|
|
NM
|
|
|
Restructuring charges (2)
|
|
|
3
|
|
|
|
24
|
|
|
|
(21
|
)
|
|
(87.5
|
)
|
|
Share-based compensation expense (3)
|
|
|
9
|
|
|
|
10
|
|
|
|
(1
|
)
|
|
(10.0
|
)
|
|
LIFO reserve change (4)
|
|
|
40
|
|
|
|
(18
|
)
|
|
|
58
|
|
|
NM
|
|
|
Loss on extinguishment of debt (5)
|
|
|
-
|
|
|
|
42
|
|
|
|
(42
|
)
|
|
NM
|
|
|
Business transformation costs (6)
|
|
|
27
|
|
|
|
16
|
|
|
|
11
|
|
|
68.8
|
|
|
Other (7)
|
|
|
7
|
|
|
|
4
|
|
|
|
3
|
|
|
75.0
|
|
|
Adjusted EBITDA (Non-GAAP)
|
|
|
501
|
|
|
|
463
|
|
|
|
38
|
|
|
8.2
|
|
|
Depreciation and amortization expense
|
|
|
(214
|
)
|
|
|
(208
|
)
|
|
|
(6
|
)
|
|
2.9
|
|
|
Interest expense, net
|
|
|
(83
|
)
|
|
|
(141
|
)
|
|
|
58
|
|
|
(41.1
|
)
|
|
Income tax (provision) benefit, as adjusted (8)
|
|
|
(79
|
)
|
|
|
-
|
|
|
|
(79
|
)
|
|
NM
|
|
|
Adjusted Net income (Non-GAAP)
|
|
$
|
125
|
|
|
$
|
114
|
|
|
$
|
11
|
|
|
9.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS (GAAP)
|
|
$
|
0.41
|
|
|
$
|
-
|
|
|
$
|
0.41
|
|
|
NM
|
|
|
Sponsor fees (1)
|
|
|
-
|
|
|
|
0.20
|
|
|
|
(0.20
|
)
|
|
NM
|
|
|
Restructuring charges (2)
|
|
|
0.01
|
|
|
|
0.13
|
|
|
|
(0.12
|
)
|
|
(92.3
|
)
|
|
Share-based compensation expense (3)
|
|
|
0.04
|
|
|
|
0.05
|
|
|
|
(0.01
|
)
|
|
(20.0
|
)
|
|
LIFO reserve change (4)
|
|
|
0.18
|
|
|
|
(0.10
|
)
|
|
|
0.28
|
|
|
NM
|
|
|
Loss on extinguishment of debt (5)
|
|
|
-
|
|
|
|
0.23
|
|
|
|
(0.23
|
)
|
|
NM
|
|
|
Business transformation costs (6)
|
|
|
0.12
|
|
|
|
0.09
|
|
|
|
0.03
|
|
|
33.3
|
|
|
Other (7)
|
|
|
0.03
|
|
|
|
0.02
|
|
|
|
0.01
|
|
|
50.0
|
|
|
Income tax impact of adjustments (8)
|
|
|
(0.23
|
)
|
|
|
-
|
|
|
|
(0.23
|
)
|
|
NM
|
|
|
Effect of dilutive shares assuming net income (9)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
NM
|
|
|
Adjusted Diluted EPS (Non-GAAP)
|
|
$
|
0.56
|
|
|
$
|
0.62
|
|
|
$
|
(0.06
|
)
|
|
(9.7
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average diluted shares outstanding (GAAP)
|
|
|
226,557,430
|
|
|
|
179,599,467
|
|
|
|
|
|
|
Dilutive shares assuming net income (9)
|
|
|
n/a
|
|
|
|
3,082,493
|
|
|
|
|
|
|
Adjusted Diluted shares (Non-GAAP)
|
|
|
n/a
|
|
|
|
182,681,960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit (GAAP)
|
|
$
|
2,045
|
|
|
$
|
1,994
|
|
|
$
|
51
|
|
|
2.6
|
|
|
LIFO reserve change (4)
|
|
|
40
|
|
|
|
(18
|
)
|
|
|
58
|
|
|
NM
|
|
|
Adjusted Gross profit (Non-GAAP)
|
|
$
|
2,085
|
|
|
$
|
1,976
|
|
|
$
|
109
|
|
|
5.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (GAAP)
|
|
$
|
1,843
|
|
|
$
|
1,811
|
|
|
$
|
32
|
|
|
1.8
|
|
|
Depreciation and amortization expense
|
|
|
(214
|
)
|
|
|
(208
|
)
|
|
|
(6
|
)
|
|
2.9
|
|
|
Sponsor fees (1)
|
|
|
-
|
|
|
|
(36
|
)
|
|
|
36
|
|
|
NM
|
|
|
Restructuring charges (2)
|
|
|
(3
|
)
|
|
|
(24
|
)
|
|
|
21
|
|
|
(87.5
|
)
|
|
Share-based compensation expense (3)
|
|
|
(9
|
)
|
|
|
(10
|
)
|
|
|
1
|
|
|
(10.0
|
)
|
|
Business transformation costs (6)
|
|
|
(27
|
)
|
|
|
(16
|
)
|
|
|
(11
|
)
|
|
68.8
|
|
|
Other (7)
|
|
|
(7
|
)
|
|
|
(4
|
)
|
|
|
(3
|
)
|
|
75.0
|
|
|
Adjusted Operating expenses (Non-GAAP)
|
|
$
|
1,585
|
|
|
$
|
1,513
|
|
|
$
|
72
|
|
|
4.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
*Amounts may not add due to rounding.
|
|
NM- Percentage change not meaningful.
|
|
(1)
|
|
Consists of fees paid to the Sponsors for consulting and management
advisory services. On June 1, 2016, the consulting agreements with
each of the Sponsors were terminated for an aggregate termination
fee of $31 million.
|
|
(2)
|
|
Consists primarily of severance and related costs and organizational
realignment costs.
|
|
(3)
|
|
Share-based compensation expense for vesting of stock awards and
employee share purchase plan.
|
|
(4)
|
|
Represents the non-cash impact of LIFO reserve adjustments.
|
|
(5)
|
|
Includes fees paid to debt holders, third party costs, the write off
of certain pre-existing unamortized debt issuance costs and
unamortized issue premium, and an early redemption premium.
|
|
(6)
|
|
Consists primarily of costs related to significant process and
systems redesign across multiple functions.
|
|
(7)
|
|
Other includes gains, losses or charges as specified under USF’s
debt agreements.
|
|
(8)
|
|
Represents our Income tax provision (benefit) 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 considering
the impact of permanent differences and valuation allowances. We
maintained a valuation allowance against federal and state net
deferred tax assets in the 13-week and 26-week periods ended July 2,
2016. The result was an immaterial tax effect related to pre-tax
items excluded from Adjusted Net income in the 13-week and 26-week
periods ended July 2, 2016.
|
|
(9)
|
|
The effect of the "Dilutive shares assuming net income" represents
the difference between the Adjusted Diluted EPS calculated using the
GAAP based weighted-average dilutive shares outstanding ,compared to
the Adjusted Diluted EPS calculated using the weighted-average
shares outstanding plus the effect of potentially dilutive
securities that would have been applicable, if the company had net
income during the period. Since the company was in a net loss
position for the 26-weeks ended July 2, 2016, basic and diluted
shares are the same because the inclusion of additional shares would
be anti-dilutive.
|
|
|
|
|
|
|
|
|
US FOODS HOLDING CORP.
|
|
Non-GAAP Reconciliation
|
|
Net Debt and Net Leverage Ratios
|
|
|
|
|
|
|
|
|
($ in millions, except ratios)*
|
|
July 1, 2017
|
|
December 31, 2016
|
|
July 2, 2016
|
|
|
(Unaudited)
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Total Debt (GAAP)
|
|
$
|
3,727
|
|
|
|
3,782
|
|
|
$
|
3,871
|
|
|
Restricted cash
|
|
|
-
|
|
|
|
-
|
|
|
|
(6
|
)
|
|
Cash and cash equivalents
|
|
|
(150
|
)
|
|
|
(131
|
)
|
|
|
(115
|
)
|
|
Net Debt (Non-GAAP)
|
|
$
|
3,577
|
|
|
$
|
3,651
|
|
|
$
|
3,749
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (1)
|
|
$
|
1,010
|
|
|
$
|
972
|
|
|
$
|
943
|
|
|
|
|
|
|
|
|
|
Net Leverage Ratio (2)
|
|
|
3.5
|
|
|
|
3.8
|
|
|
|
4.0
|
|
|
|
|
|
|
|
|
|
*Amounts may not add due to rounding.
|
|
(1) Trailing Twelve Months (TTM) EBITDA
|
|
(2) Net debt/(TTM) Adjusted EBITDA
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170809005528/en/
Source: US Foods