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 third
quarter and first nine months of fiscal 2017.
Third Quarter Highlights
-
Total case volume increased 2.0%; independent restaurant case volume
increased 6.0%.
-
Net sales increased 6.2% to $6.2 billion.
-
Gross profit of $1.1 billion increased 6.4%.
-
Operating income of $190 million increased $75 million.
-
Net income of $96 million decreased $37 million.
-
Adjusted EBITDA increased 9.4% to $267 million.
-
Diluted EPS of $0.42; Adjusted Diluted EPS of $0.39.
Nine Month Highlights
-
Total case volume increased 3.3%; independent restaurant case volume
increased 4.8%.
-
Net sales increased 5.3% to $18.2 billion.
-
Gross profit of $3.1 billion increased 3.9%.
-
Operating income of $392 million increased $94 million.
-
Net income of $188 million increased $55 million.
-
Adjusted EBITDA increased 8.6% to $768 million.
-
Diluted EPS of $0.83; Adjusted Diluted EPS of $0.95.
CEO Perspective
“Strong volume growth with our targeted customers and adjusted EBITDA
growth of over nine percent underscored our third quarter performance,”
said President and CEO Pietro Satriano. “Our Great Food. Made Easy.
strategy continues to resonate with customers as demonstrated by the
increased demand for our portfolio of value added services. Customer
response to our most recent Scoop™ offering has been the strongest to
date and highlights the continued momentum in our business.”
Third Quarter Results
Total case volume increased 2.0% from prior year, of which 1.0% was
organic growth, and independent restaurant case volume increased 6.0%,
of which 4.1% was organic growth. The increase in total case volume was
driven by growth with independent restaurants, healthcare and
hospitality customers, offset by the planned exit of national chain
customers. Hurricanes negatively impacted independent restaurant case
volume growth by an estimated 0.3% and total case volume growth by an
estimated 0.1%.
Net sales of $6.2 billion represent a 6.2% increase from prior year,
driven by total case volume growth, product mix changes and
year-over-year inflation in center of the plate as well as produce and
grocery categories. Sales from acquisitions completed in the last 12
months increased total Net sales by approximately 1.9%.
Gross profit of $1.1 billion increased $66 million, or 6.4% from prior
year. The increase was driven by higher volume, margin expansion
initiatives and the greater year-over-year benefit from the Last-in,
first-out (LIFO) inventory reserve. Gross profit as a percentage of Net
sales was 17.7%. Adjusted Gross profit was $1.1 billion, a 4.8% increase
from the prior year, driven by higher volume and margin expansion
initiatives. Adjusted Gross profit as a percentage of Net sales was
17.3%.
Operating expenses were $909 million, a decrease of 0.9% from prior
year. Operating expenses benefitted from lower restructuring charges due
to the completion of several initiatives in 2016, a decline in
Depreciation and amortization due to the full amortization of an
intangible asset related to the sponsor’s acquisition of the company in
2007 and ongoing efforts to reduce operating expenses. These decreases
were partially offset by increased operating costs primarily driven by
higher volume combined with wage inflation. Adjusted Operating expenses
for the quarter were $807 million, a 3.3% increase from prior year,
primarily driven by higher volume.
Operating income was $190 million, a $75 million increase from prior
year, driven by the Gross profit and Operating expense factors discussed
above.
Net income for the quarter was $96 million, down $37 million from $133
million in the prior year. Prior year Net income included a $78 million
income tax benefit primarily from the release of a tax valuation
allowance while current year Net income reflects an income tax expense
of $51 million. Adjusted EBITDA of $267 million increased $23 million,
or 9.4% compared to prior year, driven by volume growth and the Adjusted
Gross profit and Adjusted Operating expense factors discussed above.
Diluted EPS was $0.42 and Adjusted Diluted EPS was $0.39.
Nine Month Results
Total case volume increased 3.3% from prior year, of which 2.0% was
organic growth, and independent restaurant case volume increased 4.8%,
of which 3.4% was organic growth. The increase in total cases reflects
growth with independent restaurants, healthcare and hospitality
customers, and select national chain customers.
Net sales of $18.2 billion represent a 5.3% increase from prior year,
primarily driven by case volume growth and year-over-year inflation in
several center of the plate and grocery categories, partially offset by
beef deflation. Sales from acquisitions completed in the last 12 months
increased total Net sales by approximately 1.7%.
Gross profit of $3.1 billion increased $118 million, or 3.9% from prior
year. The increase was driven by higher volume and margin expansion
initiatives, partially offset by the adverse year-over-year change in
the LIFO inventory reserve. Gross profit as a percentage of Net sales
was 17.3%. Adjusted Gross profit was $3.2 billion, a 5.3% increase from
the prior year, driven by higher volume and margin expansion
initiatives. Adjusted Gross profit as a percentage of Net sales was
17.4%.
Operating expenses were $2.8 billion, an increase of 0.9% from prior
year, primarily as a result of higher volume combined with wage
inflation. These volume related increases were partially offset by the
absence of the prior year contract termination fee with our sponsors,
lower restructuring charges due to the completion of several initiatives
in 2016, a decline in Depreciation and amortization due to the full
amortization of the intangible asset mentioned above and ongoing efforts
to reduce operating expenses. Adjusted Operating expenses for the first
nine months were $2.4 billion, a 4.3% increase from prior year,
primarily driven by higher volume.
Operating income was $392 million, a $94 million increase from prior
year, driven by the Gross profit and Operating expense factors discussed
above.
Net income for the first nine months was $188 million, up $55 million
from $133 million in the prior year. Prior year Net income included a
$78 million income tax benefit primarily from the release of a tax
valuation allowance while current year Net income reflects an income tax
expense of $78 million. Adjusted EBITDA of $768 million increased $61
million, or 8.6% compared to prior year, driven by volume growth and the
Adjusted Gross profit and Adjusted Operating expense factors discussed
above. Diluted EPS was $0.83 and Adjusted Diluted EPS was $0.95.
Cash Flows and Capital Transactions
Net cash provided by operating activities for the first nine months of
fiscal 2017 was $506 million, an increase of $66 million from prior year
related to the increase in net income which was driven by improved
business performance and reduced interest expense. Cash capital
expenditures for the first nine months totaled $163 million, an increase
of $58 million from prior year, due to the timing of payments made for
assets acquired late in the fourth quarter of fiscal 2016 and increased
capital spending, as planned.
Net Debt at the end of the third quarter was $3.6 billion, a decrease of
$119 million versus the end of the same prior year period. The ratio of
Net Debt to Adjusted EBITDA was 3.4x at the end of the quarter, down
from 3.8x at the end of the same prior year period.
Outlook for Fiscal 2017
The company is updating our fiscal 2017 guidance. We now expect unit
growth of 2.5-3.0%, Net sales growth of 4.5-5.0%, Adjusted EBITDA growth
of 8-9%, Net income growth of 20-25%, Cash CAPEX of $220-$230 million,
Interest expense of $170-$175 million, Depreciation and amortization of
$375-$380 million and Adjusted Diluted EPS of $1.35-$1.40.
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 fiscal 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 third quarter fiscal 2017 earnings call will be broadcast live
via the Internet on November 7, 2017 at 9:00 a.m. CST. The call can also
be accessed live over the phone by dialing (855) 788-2805; the
conference ID number is 35394301. The presentation slides that will be
reviewed during the webcast will be available in the Financial
Information section of the Investor Relations website shortly before the
webcast begins. The webcast 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 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 the LIFO inventory reserve changes and hurricane
related inventory losses and relief donations. 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 total 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 September 30, 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 Provided by Operations or Cash Flows Used in
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
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
($ in millions)*
|
|
2017
|
|
|
2016
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
147
|
|
|
$
|
131
|
|
|
Accounts receivable, less allowances of $24 and $25
|
|
|
1,411
|
|
|
|
1,226
|
|
|
Vendor receivables, less allowances of $4 and $2
|
|
|
169
|
|
|
|
106
|
|
|
Inventories—net
|
|
|
1,304
|
|
|
|
1,223
|
|
|
Prepaid expenses
|
|
|
74
|
|
|
|
73
|
|
|
Assets held for sale
|
|
|
22
|
|
|
|
21
|
|
|
Other current assets
|
|
|
8
|
|
|
|
10
|
|
|
Total current assets
|
|
|
3,134
|
|
|
|
2,789
|
|
|
Property and equipment—net
|
|
|
1,794
|
|
|
|
1,768
|
|
|
Goodwill
|
|
|
3,967
|
|
|
|
3,908
|
|
|
Other intangibles—net
|
|
|
374
|
|
|
|
387
|
|
|
Deferred tax assets
|
|
|
31
|
|
|
|
34
|
|
|
Other assets
|
|
|
58
|
|
|
|
58
|
|
|
Total assets
|
|
$
|
9,358
|
|
|
$
|
8,944
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Bank checks outstanding
|
|
$
|
174
|
|
|
$
|
143
|
|
|
Accounts payable
|
|
|
1,519
|
|
|
|
1,295
|
|
|
Accrued expenses and other current liabilities
|
|
|
447
|
|
|
|
456
|
|
|
Current portion of long-term debt
|
|
|
106
|
|
|
|
76
|
|
|
Total current liabilities
|
|
|
2,246
|
|
|
|
1,970
|
|
|
Long term debt
|
|
|
3,597
|
|
|
|
3,706
|
|
|
Deferred tax liabilities
|
|
|
420
|
|
|
|
381
|
|
|
Other long-term liabilities
|
|
|
350
|
|
|
|
351
|
|
|
Total liabilities
|
|
|
6,613
|
|
|
|
6,407
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity:
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
2
|
|
|
|
2
|
|
|
Additional paid-in capital
|
|
|
2,805
|
|
|
|
2,791
|
|
|
Accumulated earnings (deficit)
|
|
|
51
|
|
|
|
(136
|
)
|
|
Accumulated other comprehensive loss
|
|
|
(113
|
)
|
|
|
(119
|
)
|
|
Total shareholders’ equity
|
|
|
2,745
|
|
|
|
2,538
|
|
|
Total liabilities and shareholders' equity
|
|
$
|
9,358
|
|
|
$
|
8,944
|
|
|
|
|
|
*Amounts may not add due to rounding.
|
|
|
|
|
US FOODS HOLDING CORP.
|
|
Consolidated Statements of Operations
|
|
(Unaudited)
|
|
|
|
|
|
13-Weeks Ended
|
|
|
39-Weeks Ended
|
|
|
|
|
September 30,
|
|
|
October 1,
|
|
|
September 30,
|
|
|
October 1,
|
|
|
($ in millions, except share and per share data)*
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
6,204
|
|
|
$
|
5,841
|
|
|
$
|
18,151
|
|
|
$
|
17,241
|
|
|
Cost of goods sold
|
|
|
5,106
|
|
|
|
4,808
|
|
|
|
15,007
|
|
|
|
14,215
|
|
|
Gross profit
|
|
|
1,099
|
|
|
|
1,033
|
|
|
|
3,144
|
|
|
|
3,026
|
|
|
Distribution, selling and administrative costs
|
|
|
908
|
|
|
|
903
|
|
|
|
2,749
|
|
|
|
2,689
|
|
|
Restructuring charges
|
|
|
1
|
|
|
|
15
|
|
|
|
3
|
|
|
|
39
|
|
|
Total operating expenses
|
|
|
909
|
|
|
|
917
|
|
|
|
2,752
|
|
|
|
2,728
|
|
|
Operating income
|
|
|
190
|
|
|
|
115
|
|
|
|
392
|
|
|
|
298
|
|
|
Interest expense—net
|
|
|
43
|
|
|
|
49
|
|
|
|
126
|
|
|
|
190
|
|
|
Loss on extinguishment of debt
|
|
|
-
|
|
|
|
12
|
|
|
|
-
|
|
|
|
54
|
|
|
Income before income taxes
|
|
|
147
|
|
|
|
55
|
|
|
|
266
|
|
|
|
55
|
|
|
Income tax provision (benefit)
|
|
|
51
|
|
|
|
(78
|
)
|
|
|
78
|
|
|
|
(78
|
)
|
|
Net income
|
|
$
|
96
|
|
|
$
|
133
|
|
|
$
|
188
|
|
|
$
|
133
|
|
|
Net income per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.43
|
|
|
$
|
0.60
|
|
|
$
|
0.84
|
|
|
$
|
0.69
|
|
|
Diluted
|
|
$
|
0.42
|
|
|
$
|
0.59
|
|
|
$
|
0.83
|
|
|
$
|
0.68
|
|
|
Weighted-average common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
223,807,520
|
|
|
|
220,608,821
|
|
|
|
222,641,854
|
|
|
|
193,269,252
|
|
|
Diluted
|
|
|
225,862,274
|
|
|
|
225,054,051
|
|
|
|
226,325,711
|
|
|
|
196,805,990
|
|
|
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)
|
|
|
|
|
|
39-Weeks Ended
|
|
|
|
|
September 30,
|
|
|
October 1,
|
|
|
($ in millions)*
|
|
2017
|
|
|
2016
|
|
|
Cash Flows From Operating Activities:
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
188
|
|
|
$
|
133
|
|
|
Adjustments to reconcile net income to net cash provided by
|
|
|
|
|
|
|
|
|
|
operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
295
|
|
|
|
314
|
|
|
Gain on disposal of property and equipment-net
|
|
|
-
|
|
|
|
(5
|
)
|
|
Asset impairment charges
|
|
|
-
|
|
|
|
-
|
|
|
Loss on extinguishment of debt
|
|
|
-
|
|
|
|
54
|
|
|
Amortization and write-off of deferred financing costs
|
|
|
3
|
|
|
|
6
|
|
|
Amortization of Senior Notes original issue premium
|
|
|
-
|
|
|
|
(2
|
)
|
|
Insurance proceeds related to operating activities
|
|
|
-
|
|
|
|
10
|
|
|
Insurance benefit in net income
|
|
|
-
|
|
|
|
(10
|
)
|
|
Deferred tax provision (benefit)
|
|
|
32
|
|
|
|
(82
|
)
|
|
Share-based compensation expense
|
|
|
15
|
|
|
|
14
|
|
|
Provision for doubtful accounts
|
|
|
13
|
|
|
|
7
|
|
|
Changes in operating assets and liabilities, net of business
acquisitions:
|
|
|
|
|
|
|
|
|
|
Increase in receivables
|
|
|
(242
|
)
|
|
|
(150
|
)
|
|
Increase in inventories
|
|
|
(56
|
)
|
|
|
(99
|
)
|
|
(Increase) decrease in prepaid expenses and other assets
|
|
|
(18
|
)
|
|
|
5
|
|
|
Increase in accounts payable and bank checks outstanding
|
|
|
278
|
|
|
|
331
|
|
|
Decrease in accrued expenses and other liabilities
|
|
|
(1
|
)
|
|
|
(88
|
)
|
|
Net cash provided by operating activities
|
|
|
506
|
|
|
|
440
|
|
|
Cash Flows From Investing Activities:
|
|
|
|
|
|
|
|
|
|
Acquisition of businesses—net of cash
|
|
|
(183
|
)
|
|
|
(95
|
)
|
|
Proceeds from sales of property and equipment
|
|
|
2
|
|
|
|
11
|
|
|
Purchases of property and equipment
|
|
|
(163
|
)
|
|
|
(105
|
)
|
|
Proceeds from redemption of industrial revenue bonds
|
|
|
22
|
|
|
|
-
|
|
|
Investment in marketable securities
|
|
|
-
|
|
|
|
(485
|
)
|
|
Investment in Avero, LLC
|
|
|
-
|
|
|
|
(8
|
)
|
|
Net cash used in investing activities
|
|
|
(321
|
)
|
|
|
(681
|
)
|
|
Cash Flows From Financing Activities:
|
|
|
|
|
|
|
|
|
|
Proceeds from debt borrowings
|
|
|
1,711
|
|
|
|
1,936
|
|
|
Proceeds from debt refinancings
|
|
|
-
|
|
|
|
2,214
|
|
|
Principal payments on debt and capital leases
|
|
|
(1,849
|
)
|
|
|
(3,316
|
)
|
|
Repayment of industrial revenue bonds
|
|
|
(22
|
)
|
|
|
-
|
|
|
Redemption of Old Senior Notes
|
|
|
-
|
|
|
|
(1,377
|
)
|
|
Payment for debt financing cost and fees
|
|
|
(1
|
)
|
|
|
(26
|
)
|
|
Proceeds from initial public offering
|
|
|
-
|
|
|
|
1,114
|
|
|
Cash distribution to shareholders
|
|
|
-
|
|
|
|
(666
|
)
|
|
Contingent consideration paid for business acquisition
|
|
|
(6
|
)
|
|
|
-
|
|
|
Proceeds from employee share purchase plan
|
|
|
12
|
|
|
|
-
|
|
|
Proceeds from exercise of stock options
|
|
|
15
|
|
|
|
-
|
|
|
Tax withholding payments for net share-settled equity awards
|
|
|
(28
|
)
|
|
|
-
|
|
|
Proceeds from common stock sales
|
|
|
-
|
|
|
|
3
|
|
|
Common stock and share-based awards settled
|
|
|
(1
|
)
|
|
|
(8
|
)
|
|
Net cash used in financing activities
|
|
|
(169
|
)
|
|
|
(126
|
)
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
16
|
|
|
|
(368
|
)
|
|
Cash and cash equivalents—beginning of period
|
|
|
131
|
|
|
|
518
|
|
|
Cash and cash equivalents—end of period
|
|
$
|
147
|
|
|
$
|
150
|
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
|
Cash paid during the period for:
|
|
|
|
|
|
|
|
|
|
Interest (net of amounts capitalized)
|
|
$
|
106
|
|
|
$
|
175
|
|
|
Income taxes paid—net
|
|
|
5
|
|
|
|
4
|
|
|
Non-cash Investing and Financing Activities:
|
|
|
|
|
|
|
|
|
|
Property and equipment purchases included in accounts payable
|
|
|
19
|
|
|
|
14
|
|
|
Capital lease additions
|
|
|
77
|
|
|
|
77
|
|
|
Cashless exercise of equity awards
|
|
|
29
|
|
|
|
-
|
|
|
Contingent consideration payable for business acquisitions
|
|
|
4
|
|
|
|
6
|
|
|
Marketable securities transferred in connection with
|
|
|
|
|
|
|
|
|
|
the legal defeasance of the CMBS Fixed Loan Facility
|
|
|
-
|
|
|
|
485
|
|
|
CMBS Fixed Loan Facility defeasance
|
|
|
-
|
|
|
|
472
|
|
|
|
|
|
|
|
|
|
|
|
|
*Amounts may not add due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
US FOODS HOLDING CORP.
|
|
Non-GAAP Reconciliation
|
|
(Unaudited)
|
|
|
|
|
|
13-Weeks Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
October 1,
|
|
|
|
|
|
|
|
|
($ in millions, except share and per share data)*
|
|
2017
|
|
|
2016
|
|
|
Change
|
|
|
%
|
|
|
Net income (GAAP)
|
|
$
|
96
|
|
|
|
133
|
|
|
$
|
(37
|
)
|
|
|
(27.8
|
)%
|
|
Interest expense—net
|
|
|
43
|
|
|
|
49
|
|
|
|
(6
|
)
|
|
|
(12.2
|
)%
|
|
Income tax provision (benefit)
|
|
|
51
|
|
|
|
(78
|
)
|
|
|
129
|
|
|
NM
|
|
|
Depreciation and amortization expense
|
|
|
81
|
|
|
|
106
|
|
|
|
(25
|
)
|
|
|
(23.6
|
)%
|
|
EBITDA (Non-GAAP)
|
|
|
271
|
|
|
|
210
|
|
|
|
61
|
|
|
|
29.0
|
%
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring charges (1)
|
|
|
1
|
|
|
|
15
|
|
|
|
(14
|
)
|
|
|
(93.3
|
)%
|
|
Share-based compensation expense (2)
|
|
|
7
|
|
|
|
5
|
|
|
|
2
|
|
|
|
40.0
|
%
|
|
LIFO reserve change (3)
|
|
|
(26
|
)
|
|
|
(7
|
)
|
|
|
(19
|
)
|
|
NM
|
|
|
Loss on extinguishment of debt (4)
|
|
|
-
|
|
|
|
12
|
|
|
|
(12
|
)
|
|
NM
|
|
|
Business transformation costs (5)
|
|
|
7
|
|
|
|
10
|
|
|
|
(3
|
)
|
|
|
(30.0
|
)%
|
|
Other (6)
|
|
|
8
|
|
|
|
-
|
|
|
|
8
|
|
|
NM
|
|
|
Adjusted EBITDA (Non-GAAP)
|
|
|
267
|
|
|
|
244
|
|
|
|
23
|
|
|
|
9.4
|
%
|
|
Depreciation and amortization expense
|
|
|
(81
|
)
|
|
|
(106
|
)
|
|
|
25
|
|
|
|
(23.6
|
)%
|
|
Interest expense—net
|
|
|
(43
|
)
|
|
|
(49
|
)
|
|
|
6
|
|
|
|
(12.2
|
)%
|
|
Income tax provision, as adjusted (7)
|
|
|
(54
|
)
|
|
|
(2
|
)
|
|
|
(52
|
)
|
|
NM
|
|
|
Adjusted Net income (Non-GAAP)
|
|
$
|
89
|
|
|
|
87
|
|
|
$
|
2
|
|
|
|
2.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS (GAAP)
|
|
$
|
0.42
|
|
|
$
|
0.59
|
|
|
$
|
(0.17
|
)
|
|
|
(28.8
|
)%
|
|
Restructuring charges (1)
|
|
|
-
|
|
|
|
0.07
|
|
|
|
(0.07
|
)
|
|
NM
|
|
|
Share-based compensation expense (2)
|
|
|
0.03
|
|
|
|
0.02
|
|
|
|
0.01
|
|
|
|
50.0
|
%
|
|
LIFO reserve change (3)
|
|
|
(0.12
|
)
|
|
|
(0.03
|
)
|
|
|
(0.09
|
)
|
|
NM
|
|
|
Loss on extinguishment of debt (4)
|
|
|
-
|
|
|
|
0.05
|
|
|
|
(0.05
|
)
|
|
NM
|
|
|
Business transformation costs (5)
|
|
|
0.03
|
|
|
|
0.04
|
|
|
|
(0.01
|
)
|
|
|
(25.0
|
)%
|
|
Other (6)
|
|
|
0.04
|
|
|
|
-
|
|
|
|
0.04
|
|
|
NM
|
|
|
Income tax impact of adjustments (7)
|
|
|
(0.02
|
)
|
|
|
(0.35
|
)
|
|
|
0.32
|
|
|
|
(93.3
|
)%
|
|
Adjusted Diluted EPS (Non-GAAP)
|
|
$
|
0.39
|
|
|
$
|
0.39
|
|
|
$
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average diluted shares outstanding (GAAP)
|
|
|
225,862,274
|
|
|
|
225,054,051
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit (GAAP)
|
|
$
|
1,099
|
|
|
$
|
1,033
|
|
|
$
|
66
|
|
|
|
6.4
|
%
|
|
LIFO reserve change (3)
|
|
|
(26
|
)
|
|
|
(7
|
)
|
|
|
(19
|
)
|
|
NM
|
|
|
Impact from hurricanes (8)
|
|
|
2
|
|
|
|
-
|
|
|
|
2
|
|
|
NM
|
|
|
Adjusted Gross profit (Non-GAAP)
|
|
$
|
1,075
|
|
|
$
|
1,026
|
|
|
$
|
49
|
|
|
|
4.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (GAAP)
|
|
$
|
909
|
|
|
$
|
917
|
|
|
$
|
(8
|
)
|
|
|
(0.9
|
)%
|
|
Depreciation and amortization expense
|
|
|
(81
|
)
|
|
|
(106
|
)
|
|
|
25
|
|
|
|
(23.6
|
)%
|
|
Restructuring charges (1)
|
|
|
(1
|
)
|
|
|
(15
|
)
|
|
|
14
|
|
|
|
(93.3
|
)%
|
|
Share-based compensation expense (2)
|
|
|
(7
|
)
|
|
|
(5
|
)
|
|
|
(2
|
)
|
|
|
40.0
|
%
|
|
Business transformation costs (5)
|
|
|
(7
|
)
|
|
|
(10
|
)
|
|
|
3
|
|
|
|
(30.0
|
)%
|
|
Other (6)
|
|
|
(6
|
)
|
|
|
-
|
|
|
|
(6
|
)
|
|
NM
|
|
|
Adjusted Operating expenses (Non-GAAP)
|
|
$
|
807
|
|
|
$
|
781
|
|
|
$
|
26
|
|
|
|
3.3
|
%
|
|
|
|
*Amounts may not add due to rounding.
|
|
NM-
|
|
Percentage change not meaningful.
|
|
(1)
|
|
Consists primarily of severance and related costs and organizational
realignment costs.
|
|
(2)
|
|
Share-based compensation expense for vesting of stock awards and
employee share purchase plan.
|
|
(3)
|
|
Represents the non-cash impact of LIFO reserve adjustments.
|
|
(4)
|
|
Loss related to September 2016 CMBS Fixed Facility defeasance.
|
|
(5)
|
|
Consists primarily of costs related to significant process and
systems redesign across multiple functions.
|
|
(6)
|
|
Other includes gains, losses or charges as specified under our debt
agreements.
|
|
(7)
|
|
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
released the valuation allowance against federal and certain state
net deferred tax assets in the 13-week period ended October 1, 2016.
We were required to reflect the portion of the valuation allowance
release related to the 2016 ordinary income in the estimated annual
effective tax rate and the portion of the valuation allowance
release related to future years’ income discretely in the 13-weeks
ended October 1, 2016. We maintained a valuation allowance on
certain state net operating loss and tax credit carryforwards
expected to expire unutilized as a result of insufficient forecasted
taxable income in the carryforward period, or the utilization of
which are subject to limitation.
|
|
(8)
|
|
Impact from hurricanes consists of costs recognized in Cost of Sales
for inventory losses from recent hurricanes and product donations
that we made for hurricane relief.
|
|
|
|
US FOODS HOLDING CORP.
|
|
Non-GAAP Reconciliation
|
|
(Unaudited)
|
|
|
|
|
|
39-Weeks Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
October 1,
|
|
|
|
|
|
|
|
|
($ in millions, except share and per share data)*
|
|
2017
|
|
|
2016
|
|
|
Change
|
|
|
%
|
|
|
Net income (GAAP)
|
|
$
|
188
|
|
|
$
|
133
|
|
|
$
|
55
|
|
|
|
41.4
|
%
|
|
Interest expense—net
|
|
|
126
|
|
|
|
190
|
|
|
|
(64
|
)
|
|
|
(33.7
|
)%
|
|
Income tax provision (benefit)
|
|
|
78
|
|
|
|
(78
|
)
|
|
|
156
|
|
|
NM
|
|
|
Depreciation and amortization expense
|
|
|
295
|
|
|
|
314
|
|
|
|
(19
|
)
|
|
|
(6.1
|
)%
|
|
EBITDA (Non-GAAP)
|
|
|
687
|
|
|
|
559
|
|
|
|
128
|
|
|
|
22.9
|
%
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sponsor fees (1)
|
|
|
-
|
|
|
|
36
|
|
|
|
(36
|
)
|
|
NM
|
|
|
Restructuring charges (2)
|
|
|
3
|
|
|
|
39
|
|
|
|
(36
|
)
|
|
|
(92.3
|
)%
|
|
Share-based compensation expense (3)
|
|
|
15
|
|
|
|
14
|
|
|
|
1
|
|
|
|
7.1
|
%
|
|
LIFO reserve change (4)
|
|
|
14
|
|
|
|
(25
|
)
|
|
|
39
|
|
|
NM
|
|
|
Loss on extinguishment of debt (5)
|
|
|
-
|
|
|
|
54
|
|
|
|
(54
|
)
|
|
NM
|
|
|
Business transformation costs (6)
|
|
|
33
|
|
|
|
26
|
|
|
|
7
|
|
|
|
26.9
|
%
|
|
Other (7)
|
|
|
16
|
|
|
|
5
|
|
|
|
11
|
|
|
NM
|
|
|
Adjusted EBITDA (Non-GAAP)
|
|
|
768
|
|
|
|
707
|
|
|
|
61
|
|
|
|
8.6
|
%
|
|
Depreciation and amortization expense
|
|
|
(295
|
)
|
|
|
(314
|
)
|
|
|
19
|
|
|
|
(6.1
|
)%
|
|
Interest expense—net
|
|
|
(126
|
)
|
|
|
(190
|
)
|
|
|
64
|
|
|
|
(33.7
|
)%
|
|
Income tax provision, as adjusted (8)
|
|
|
(133
|
)
|
|
|
(2
|
)
|
|
|
(131
|
)
|
|
NM
|
|
|
Adjusted Net income (Non-GAAP)
|
|
$
|
214
|
|
|
$
|
201
|
|
|
$
|
13
|
|
|
|
6.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS (GAAP)
|
|
$
|
0.83
|
|
|
$
|
0.68
|
|
|
$
|
0.15
|
|
|
|
22.1
|
%
|
|
Sponsor fees (1)
|
|
|
-
|
|
|
|
0.18
|
|
|
|
(0.18
|
)
|
|
NM
|
|
|
Restructuring charges (2)
|
|
|
0.01
|
|
|
|
0.20
|
|
|
|
(0.19
|
)
|
|
|
(95.0
|
)%
|
|
Share-based compensation expense (3)
|
|
|
0.07
|
|
|
|
0.07
|
|
|
|
-
|
|
|
|
0.0
|
%
|
|
LIFO reserve change (4)
|
|
|
0.06
|
|
|
|
(0.13
|
)
|
|
|
0.19
|
|
|
NM
|
|
|
Loss on extinguishment of debt (5)
|
|
|
-
|
|
|
|
0.27
|
|
|
|
(0.27
|
)
|
|
NM
|
|
|
Business transformation costs (6)
|
|
|
0.15
|
|
|
|
0.13
|
|
|
|
0.02
|
|
|
|
15.4
|
%
|
|
Other (7)
|
|
|
0.07
|
|
|
|
0.02
|
|
|
|
0.05
|
|
|
NM
|
|
|
Income tax impact of adjustments (8)
|
|
|
(0.24
|
)
|
|
|
(0.40
|
)
|
|
|
0.15
|
|
|
|
(38.7
|
)%
|
|
Adjusted Diluted EPS (Non-GAAP)
|
|
$
|
0.95
|
|
|
$
|
1.02
|
|
|
$
|
(0.07
|
)
|
|
|
(6.9
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average diluted shares outstanding (GAAP)
|
|
|
226,325,711
|
|
|
|
196,805,990
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit (GAAP)
|
|
$
|
3,144
|
|
|
$
|
3,026
|
|
|
$
|
118
|
|
|
|
3.9
|
%
|
|
LIFO reserve change (4)
|
|
|
14
|
|
|
|
(25
|
)
|
|
|
39
|
|
|
NM
|
|
|
Impact from hurricanes (9)
|
|
|
2
|
|
|
|
-
|
|
|
|
2
|
|
|
NM
|
|
|
Adjusted Gross profit (Non-GAAP)
|
|
$
|
3,160
|
|
|
$
|
3,001
|
|
|
$
|
159
|
|
|
|
5.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (GAAP)
|
|
$
|
2,752
|
|
|
$
|
2,728
|
|
|
$
|
24
|
|
|
|
0.9
|
%
|
|
Depreciation and amortization expense
|
|
|
(295
|
)
|
|
|
(314
|
)
|
|
|
19
|
|
|
|
(6.1
|
)%
|
|
Sponsor fees (1)
|
|
|
-
|
|
|
|
(36
|
)
|
|
|
36
|
|
|
NM
|
|
|
Restructuring charges (2)
|
|
|
(3
|
)
|
|
|
(39
|
)
|
|
|
36
|
|
|
|
(92.3
|
)%
|
|
Share-based compensation expense (3)
|
|
|
(15
|
)
|
|
|
(14
|
)
|
|
|
(1
|
)
|
|
|
7.1
|
%
|
|
Business transformation costs (6)
|
|
|
(33
|
)
|
|
|
(26
|
)
|
|
|
(7
|
)
|
|
|
26.9
|
%
|
|
Other (7)
|
|
|
(14
|
)
|
|
|
(5
|
)
|
|
|
(9
|
)
|
|
NM
|
|
|
Adjusted Operating expenses (Non-GAAP)
|
|
$
|
2,392
|
|
|
$
|
2,294
|
|
|
$
|
98
|
|
|
|
4.3
|
%
|
|
|
|
*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, an early redemption premium and the loss
on our September 2016 CMBS Fixed Facility defeasance.
|
|
(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 our 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
released the valuation allowance against federal and certain state
net deferred tax assets in the 39-week period ended October 1, 2016.
We were required to reflect the portion of the valuation allowance
release related to the 2016 ordinary income in the estimated annual
effective tax rate and the portion of the valuation allowance
release related to future years’ income discretely in the 39-weeks
ended October 1, 2016. We maintained a valuation allowance on
certain state net operating loss and tax credit carryforwards
expected to expire unutilized as a result of insufficient forecasted
taxable income in the carryforward period, or the utilization of
which are subject to limitation.
|
|
(9)
|
|
Impact from hurricanes consists of costs recognized in Cost of Sales
for inventory losses from recent hurricanes and product donations
that we made for hurricane relief.
|
|
|
|
US FOODS HOLDING CORP.
|
|
Non-GAAP Reconciliation
|
|
Net Debt and Net Leverage Ratios
|
|
(Unaudited)
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
October 1,
|
|
|
($ in millions, except ratios)*
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Debt (GAAP)
|
|
$
|
3,703
|
|
|
$
|
3,782
|
|
|
$
|
3,831
|
|
|
Cash and cash equivalents
|
|
|
(147
|
)
|
|
|
(131
|
)
|
|
|
(150
|
)
|
|
Restricted cash
|
|
|
-
|
|
|
|
-
|
|
|
|
(6
|
)
|
|
Net Debt (Non-GAAP)
|
|
$
|
3,556
|
|
|
$
|
3,651
|
|
|
$
|
3,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (1)
|
|
$
|
1,033
|
|
|
$
|
972
|
|
|
$
|
962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Leverage Ratio (2)
|
|
|
3.4
|
|
|
|
3.8
|
|
|
|
3.8
|
|
|
|
|
|
|
(1)
|
|
Trailing Twelve Months (TTM) EBITDA
|
|
(2)
|
|
Net debt/(TTM) Adjusted EBITDA
|
|
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20171107005876/en/
Source: US Foods