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Press release content from Business Wire. The AP news staff was not involved in its creation.
PRESS RELEASE: Paid content from Business Wire
Press release content from Business Wire. The AP news staff was not involved in its creation.

US Foods Reports Third Quarter Fiscal 2021 Earnings

November 8, 2021 GMT

ROSEMONT, Ill.--(BUSINESS WIRE)--Nov 8, 2021--

US Foods Holding Corp. (NYSE: USFD), one of the largest foodservice distributors in the United States, today announced results for the third quarter of fiscal 2021. In this press release for year to date results, we refer to certain organic financial results which exclude contributions from Smart Foodservice through April 23, 2021. Smart Foodservice was acquired on April 24, 2020.

Third Quarter Fiscal 2021 Highlights

  • Total case volume increased 18.5%; independent restaurant case volume increased 25.1%
  • Net sales increased 34.9% to $7.9 billion
  • Gross profit increased 27.4% to $1.2 billion
  • Net income available to common shareholders was $55 million
  • Adjusted EBITDA increased 39.2% to $291 million
  • Diluted EPS was $0.24; Adjusted Diluted EPS was $0.48

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Nine Month Fiscal 2021 Highlights

  • Total case volume increased 20.8%; independent restaurant case volume increased 33.5%
  • Total organic case volume increased 17.8%; organic independent restaurant case volume increased 29.4%
  • Net sales increased 30.5% to $21.8 billion
  • Gross profit increased 25.9% to $3.4 billion
  • Net income available to common shareholders was $62 million
  • Adjusted EBITDA increased 67.7% to $795 million
  • Diluted EPS was $0.28; Adjusted Diluted EPS was $1.17

CEO Perspective

“In the third quarter, US Foods’ continued operational and financial discipline helped drive increased volumes and profitable growth,” said Chairman and CEO Pietro Satriano. “While supply chain headwinds persist and are expected to continue into 2022, we’re pleased to see tangible and enduring signs that the industry is recovering, which allows us to refocus our energy and resources on our Great Food. Made Easy. strategy. We are focused on profitably growing market share, smartly optimizing our margins and improving operational efficiencies. Together, these initiatives are designed to position US Foods to benefit from a strengthening economy and create value for our shareholders.”

Third Quarter Fiscal 2021 Results

Total case volume increased 18.5% from the prior year and independent restaurant case volume increased 25.1%, all on an organic basis. Net sales of $7.9 billion increased 34.9% from the prior year. The increase in both case volume and Net sales was primarily driven by increased leisure and business travel and continued increased restaurant traffic. Net sales also benefited from food cost inflation of 11.5% in the third quarter of fiscal 2021.

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Gross profit of $1.2 billion increased $267 million, or 27.4%, from the prior year, primarily driven by an increase in total case volume and inflation in multiple product categories, including beef, poultry and pork. The increase in Gross profit was partially offset by an unfavorable year-over-year LIFO adjustment. Gross profit as a percentage of Net sales was 15.7%. Adjusted Gross profit was $1.3 billion, an increase of $296 million or 30.3% from the prior year, primarily driven by an increase in total case volume and product cost inflation. Adjusted Gross profit as a percentage of Net sales was 16.1%.

Operating expenses were $1.1 billion, an increase of $210 million or 23.4% from the prior year. The increase was primarily due to higher supply chain labor costs, higher non-labor distribution costs directly attributed to the increase in total case volume, and a reduction in the allowance for doubtful accounts in the prior year period. These increases were partially offset by cost savings actions initiated in the second half of fiscal 2020. Operating expenses as a percent of Net sales were 14.0%. Adjusted Operating expenses were $988 million, an increase of $214 million or 27.6% from the prior year, primarily due to the higher labor and distribution costs discussed above, which were partially offset by cost savings actions initiated in the second half of fiscal 2020. Adjusted Operating expenses as a percent of Net sales were 12.5%.

Net income available to common shareholders was $55 million, an increase of $57 million compared to the prior year. Adjusted EBITDA was $291 million, an increase of $82 million or 39.2%, compared to the prior year. Diluted EPS was $0.24; Adjusted Diluted EPS was $0.48.

Nine Month Fiscal 2021 Results

Total case volume increased 20.8% from the prior year, while total organic case volume increased 17.8%. Independent restaurant case volume increased 33.5%, while organic independent restaurant case volume increased 29.4%. Net sales of $21.8 billion increased 30.5%. The increase in both case volume and Net sales was primarily the result of increased restaurant traffic from lifting governmental in-person dining restrictions and increased leisure and business travel. Net sales also benefited from food cost inflation of 7.5% in the first nine months of fiscal 2021.

Gross profit of $3.4 billion increased $702 million, or 25.9%, from the prior year, primarily as a result of an increase in total case volume, inflation in multiple product categories, including poultry, beef, and disposables and the addition of Smart Foodservice. The increase in Gross profit was partially offset by an unfavorable year-over-year LIFO adjustment. Gross profit as a percentage of Net sales was 15.6%. Adjusted Gross profit was $3.6 billion, an increase of $803 million or 29.1% from the prior year, primarily driven by an increase in total case volume, product cost inflation and the addition of Smart Foodservice. Adjusted Gross profit as a percentage of Net sales was 16.3%.

Operating expenses were $3.1 billion, an increase of $308 million or 10.9% from the prior year. The increase was primarily due to higher supply chain labor costs, higher non-labor distribution costs directly attributed to the increase in total case volume, and the addition of Smart Foodservice. These increases were partially offset by $98 million in lower allowance for doubtful accounts expense in the first nine months of fiscal 2021 compared to the first nine months of fiscal 2020 and cost savings initiatives put into place during the second half of fiscal 2020. Operating expenses as a percent of Net sales were 14.3%. Adjusted Operating expenses were $2.8 billion, an increase of $485 million or 21.1% from the prior year, primarily due to the higher labor and distribution costs discussed above, which were partially offset by cost savings initiatives put in place during the second half of fiscal 2020. Adjusted Operating expenses as a percent of Net sales were 12.8%.

Net income available to common shareholders was $62 million, an increase of $293 million compared to the prior year. Adjusted EBITDA was $795 million, an increase of $321 million or 67.7%, compared to the prior year. Diluted EPS was $0.28; Adjusted Diluted EPS was $1.17.

Cash Flow and Debt

Net cash provided by operating activities in the first nine months of fiscal 2021 was $520 million, a decrease of $13 million from the prior year. Net cash provided by operating activities for the first nine months of fiscal 2020 benefited from a reduction in working capital needs related to the COVID-19 pandemic. Cash capital expenditures for the first nine months of fiscal 2021 totaled $173 million, an increase of $19 million from the prior year period due to the timing of capital projects in fiscal 2021.

Net Debt at the end of the third quarter of fiscal 2021 was $4.6 billion. The ratio of Net Debt to Adjusted EBITDA was 4.8x at the end of the third quarter of fiscal 2021, compared to 7.6x at the end of fiscal 2020.

Conference Call and Webcast Information

US Foods’ will host a live webcast to discuss third quarter fiscal 2021 results on Monday, November 8, 2021, at 9:00 a.m. CST. The call can also be accessed live over the phone by dialing (844) 292-0976; the conference ID number is 9696933. The presentation slides reviewed during the webcast will be available shortly before the webcast begins. The webcast, slides, and a copy of this press release can be found in the Investor Relations section of our website at https://ir.usfoods.com.

About US Foods

US Foods is one of America’s great food companies and a leading foodservice distributor, partnering with approximately 300,000 restaurants and foodservice operators to help their businesses succeed. With 70 broadline locations and 80 cash and carry stores, 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. Visit www.usfoods.com to learn more.

Forward-Looking Statements

Statements in this press release which are not historical in nature are “forward-looking statements” within the meaning of the federal securities laws. These statements often include words such as “believe,” “expect,” “project,” “anticipate,” “intend,” “plan,” “outlook,” “estimate,” “target,” “seek,” “will,” “may,” “would,” “should,” “could,” “forecast,” “mission,” “strive,” “more,” “goal,” or similar expressions (although not all forward-looking statements may contain such words) and are based upon various assumptions and our experience in the industry, as well as historical trends, current conditions, and expected future developments. However, you should understand that these statements are not guarantees of performance or results and there are a number of risks, uncertainties and other important factors that could cause our actual results to differ materially from those expressed in the forward-looking statements, including, among others: economic factors affecting consumer confidence and discretionary spending and reducing the consumption of food prepared away from home; the extent and duration of the negative impact of the COVID-19 pandemic on us; cost inflation/deflation and commodity volatility; competition; reliance on third party suppliers and interruption of product supply or increases in product costs; changes in our relationships with customers and group purchasing organizations; our ability to increase or maintain the highest margin portions of our business; achievement of expected benefits from cost savings initiatives; increases in fuel costs; changes in consumer eating habits; cost and pricing structures; impairment charges for goodwill, indefinite-lived intangible assets or other long-lived assets; environmental, health and safety and other governmental regulation, including actions taken by national, state and local governments to contain the COVID-19 pandemic, such as travel restrictions or bans, social distancing requirements, and required closures of non-essential businesses; product recalls and product liability claims; our reputation in the industry; indebtedness and restrictions under agreements governing our indebtedness; interest rate increases; changes in the method of determining London Interbank Offered Rate (“LIBOR”) or the replacement of LIBOR with an alternative reference rate; labor relations and increased labor costs and continued access to qualified and diverse labor; risks associated with intellectual property, including potential infringement; disruption of existing technologies and implementation of new technologies; cybersecurity incidents and other technology disruptions; effective integration of acquired businesses; changes in tax laws and regulations and resolution of tax disputes; adverse judgments or settlements resulting from litigation; extreme weather conditions, natural disasters and other catastrophic events, including pandemics and the rapid spread of contagious illnesses; costs and risks associated with current and changing government laws and regulations, and potential changes as a result of initiatives by the Biden administration; and management of retirement benefits and pension obligations.

For a detailed discussion of these and other risks, uncertainties and factors, see the section entitled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended January 2, 2021, which was filed with the Securities and Exchange Commission (“SEC”) on February 16, 2021. The forward-looking statements contained in this press release speak only as of the date of this press release. We undertake no obligation to update or revise any forward-looking statements, except as may be required by law.

Non-GAAP Financial Measures

We report our financial results in accordance with U.S. generally accepted accounting principles (“GAAP”). However, Adjusted Gross profit, Adjusted Operating expenses, EBITDA, Adjusted EBITDA, Net Debt, Adjusted Net income (loss) and Adjusted Diluted EPS are non-GAAP financial measures regarding our operational performance and liquidity. 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 as supplemental measures to GAAP measures 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. 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 as other items specified in the agreements governing our indebtedness.

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. EBITDA is Net income (loss), plus Interest expense-net, Income tax provision (benefit), and Depreciation and amortization. Adjusted EBITDA is EBITDA adjusted for (1) Restructuring costs and asset impairments; (2) Share-based compensation expense; (3) the non-cash impact of LIFO reserve adjustments; (4) loss on extinguishment of debt; (5) Business transformation costs; and (6) other gains, losses or charges as specified in the agreements governing our indebtedness.

We use Net Debt as a supplemental measure to GAAP measures to review the liquidity of our operations. Net Debt is defined as total debt net of total Cash, cash equivalents and restricted cash remaining on the balance sheet as of the end of the most recent fiscal quarter. 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 (loss) 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, interest expense, and Income taxes on a consistent basis from period to period. Adjusted Net income (loss) is Net income (loss) excluding such items as Restructuring benefits and costs, asset impairments, Share-based compensation expense, the non-cash impacts of LIFO reserve adjustments, loss on extinguishment of debt, Business transformation costs and other items, and adjusted for the tax effect of the exclusions and discrete tax items. We believe that Adjusted Net income (loss) may be 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 Earnings per Share, 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 Earnings per Share 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 may be 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 in connection with certain covenants and restricted activities under the agreements governing our indebtedness. We also believe these and similar 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 our definitions of Adjusted Gross profit, Adjusted Operating expenses, EBITDA, Adjusted EBITDA, Net Debt, Adjusted Net income (loss) and Adjusted Diluted EPS may not be calculated in the same manner as similar measures used by other companies. Definitions and reconciliations of the non-GAAP financial measures to their most comparable GAAP financial measures are included in the schedules attached to this press release. We have not, however, provided a reconciliation of our full fiscal 2021 Adjusted EBITDA or Adjusted Diluted EPS outlook because we are not able to accurately estimate all 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.

 

US FOODS HOLDING CORP.

Consolidated Balance Sheets

(Unaudited)

($ in millions)

 

October 2,
2021

 

January 2,
2021

 

 

 

 

 

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

772

 

 

$

828

 

Accounts receivable, less allowances of $39 and $67

 

1,549

 

 

1,084

 

Vendor receivables, less allowances of $6 and $5

 

204

 

 

121

 

Inventories—net

 

1,565

 

 

1,273

 

Prepaid expenses

 

115

 

 

132

 

Assets held for sale

 

12

 

 

1

 

Other current assets

 

18

 

 

26

 

Total current assets

 

4,235

 

 

3,465

 

Property and equipment—net

 

1,988

 

 

2,021

 

Goodwill

 

5,625

 

 

5,637

 

Other intangibles—net

 

841

 

 

892

 

Deferred tax assets

 

12

 

 

1

 

Other assets

 

416

 

 

407

 

Total assets

 

$

13,117

 

 

$

12,423

 

 

 

 

 

 

LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS' EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Cash overdraft liability

 

$

182

 

 

$

136

 

Accounts payable

 

1,963

 

 

1,218

 

Accrued expenses and other current liabilities

 

592

 

 

497

 

Current portion of long-term debt

 

115

 

 

131

 

Total current liabilities

 

2,852

 

 

1,982

 

Long-term debt

 

5,281

 

 

5,617

 

Deferred tax liabilities

 

288

 

 

270

 

Other long-term liabilities

 

514

 

 

505

 

Total liabilities

 

8,935

 

 

8,374

 

Mezzanine equity:

 

 

 

 

Series A convertible preferred stock

 

534

 

 

519

 

Shareholders’ equity:

 

 

 

 

Common stock

 

2

 

 

2

 

Additional paid-in capital

 

2,952

 

 

2,901

 

Retained earnings

 

723

 

 

661

 

Accumulated other comprehensive loss

 

(29

)

 

(34

)

Total shareholders’ equity

 

3,648

 

 

3,530

 

Total liabilities, mezzanine equity and shareholders' equity

 

$

13,117

 

 

$

12,423

 

US FOODS HOLDING CORP.

Consolidated Statements of Operations

(Unaudited)

 

 

13 Weeks Ended

 

39 Weeks Ended

($ in millions, except share and per share data)

October 2,
2021

 

September 26,
2020

 

October 2,
2021

 

September 26,
2020

Net sales

$

7,890

 

 

$

5,848

 

 

$

21,848

 

 

$

16,747

 

Cost of goods sold

6,649

 

 

4,874

 

 

18,435

 

 

14,036

 

Gross profit

1,241

 

 

974

 

 

3,413

 

 

2,711

 

Operating expenses:

 

 

 

 

 

 

 

Distribution, selling and administrative costs

1,099

 

 

873

 

 

3,115

 

 

2,779

 

Restructuring costs and asset impairment charges

7

 

 

23

 

 

11

 

 

39

 

Total operating expenses

1,106

 

 

896

 

 

3,126

 

 

2,818

 

Operating income (loss)

135

 

 

78

 

 

287

 

 

(107

)

Other income—net

(6

)

 

(6

)

 

(19

)

 

(16

)

Interest expense—net

50

 

 

63

 

 

158

 

 

178

 

Loss on extinguishment of debt

 

 

 

 

23

 

 

 

Income (loss) before income taxes

91

 

 

21

 

 

125

 

 

(269

)

Income tax provision (benefit)

27

 

 

13

 

 

30

 

 

(53

)

Net income (loss)

$

64

 

 

$

8

 

 

$

95

 

 

$

(216

)

 

 

 

 

 

 

 

 

Net income (loss)

$

64

 

 

$

8

 

 

$

95

 

 

$

(216

)

Series A convertible preferred stock dividends

(9

)

 

(10

)

 

(33

)

 

(15

)

Net income (loss) available to common shareholders

$

55

 

 

$

(2

)

 

$

62

 

 

$

(231

)

 

 

 

 

 

 

 

 

Net income (loss) per share

 

 

 

 

 

 

 

Basic

$

0.25

 

 

$

(0.01

)

 

$

0.28

 

 

$

(1.05

)

Diluted

$

0.24

 

 

$

(0.01

)

 

$

0.28

 

 

$

(1.05

)

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding

 

 

 

 

 

 

 

Basic

222,313,747

 

 

220,155,366

 

 

221,624,799

 

 

219,659,697

 

Diluted

225,240,185

 

 

220,155,366

 

 

225,072,474

 

 

219,659,697

 

US FOODS HOLDING CORP.

Consolidated Statements of Cash Flows

(Unaudited)

 

 

39 Weeks Ended

($ in millions)

 

October 2,
2021

 

September 26,
2020

Cash flows from operating activities:

 

 

 

 

Net income (loss)

 

$

95

 

 

$

(216

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

286

 

 

316

 

Gain on disposal of property and equipment—net

 

 

 

(15

)

Intangible asset impairment charges

 

7

 

 

9

 

Loss on extinguishment of debt

 

23

 

 

 

Amortization of deferred financing costs

 

10

 

 

12

 

Deferred tax provision (benefit)

 

19

 

 

(65

)

Share-based compensation expense

 

36

 

 

29

 

(Benefit) provision for doubtful accounts

 

(18

)

 

80

 

Changes in operating assets and liabilities:

 

 

 

 

(Increase) decrease in receivables

 

(530

)

 

182

 

(Increase) decrease in inventories—net

 

(292

)

 

161

 

Decrease in prepaid expenses and other assets

 

9

 

 

30

 

Increase in accounts payable and cash overdraft liability

 

780

 

 

19

 

Increase (decrease) in accrued expenses and other liabilities

 

95

 

 

(9

)

Net cash provided by operating activities

 

520

 

 

533

 

Cash flows from investing activities:

 

 

 

 

Acquisition of businesses—net of cash

 

 

 

(973

)

Proceeds from sales of divested assets

 

5

 

 

7

 

Proceeds from sales of property and equipment

 

2

 

 

33

 

Purchases of property and equipment

 

(173

)

 

(154

)

Net cash used in investing activities

 

(166

)

 

(1,087

)

Cash flows from financing activities:

 

 

 

 

Proceeds from debt borrowings

 

900

 

 

3,645

 

Principal payments on debt and financing leases

 

(1,291

)

 

(2,640

)

Net proceeds from issuance of Series A convertible preferred stock

 

 

 

491

 

Dividends paid on Series A convertible preferred stock

 

(18

)

 

 

Debt financing costs and fees

 

(18

)

 

(33

)

Proceeds from employee stock purchase plan

 

16

 

 

15

 

Proceeds from exercise of stock options

 

13

 

 

2

 

Tax withholding payments for net share-settled equity awards

 

(13

)

 

(5

)

Net cash (used in) provided by financing activities

 

(411

)

 

1,475

 

Net (decrease) increase in cash, cash equivalents and restricted cash

 

(57

)

 

921

 

Cash, cash equivalents and restricted cash—beginning of period

 

829

 

 

98

 

Cash, cash equivalents and restricted cash—end of period

 

$

772

 

 

$

1,019

 

Supplemental disclosures of cash flow information:

 

 

 

 

Interest paid—net of amounts capitalized

 

$

134

 

 

$

122

 

Income taxes paid—net

 

 

 

3

 

Property and equipment purchases included in accounts payable

 

32

 

 

11

 

Property and equipment transferred to assets held for sale

 

11

 

 

24

 

Leased assets obtained in exchange for financing lease liabilities

 

24

 

 

63

 

Leased assets obtained in exchange for operating lease liabilities

 

24

 

 

21

 

Cashless exercise of stock options

 

1

 

 

 

Paid-in-kind Series A convertible preferred stock dividends

 

15

 

 

5

 

US FOODS HOLDING CORP.

Non-GAAP Reconciliation

(Unaudited)

 

 

13 Weeks Ended

 

 

 

 

($ in millions, except share and per share data)

 

October 2, 2021

 

September 26, 2020

 

Change

 

%

Net income (loss) available to common shareholders (GAAP)

 

$

55

 

 

$

(2

)

 

$

57

 

 

NM

 

Series A convertible preferred stock dividends

 

(9

)

 

(10

)

 

1

 

 

(10.0

)%

Net income (GAAP)

 

64

 

 

8

 

 

56

 

 

NM

 

Interest expense—net

 

50

 

 

63

 

 

(13

)

 

(20.6

)%

Income tax provision

 

27

 

 

13

 

 

14

 

 

107.7

%

Depreciation expense

 

79

 

 

88

 

 

(9

)

 

(10.2

)%

Amortization expense

 

12

 

 

21

 

 

(9

)

 

(42.9

)%

EBITDA (Non-GAAP)

 

232

 

 

193

 

 

39

 

 

20.2

%

Adjustments:

 

 

 

 

 

 

 

 

Restructuring costs and asset impairment charges (1)

 

7

 

 

23

 

 

(16

)

 

(69.6

)%

Share-based compensation expense (2)

 

13

 

 

10

 

 

3

 

 

30.0

%

LIFO reserve change (3)

 

32

 

 

3

 

 

29

 

 

NM

 

Business transformation costs (4)

 

3

 

 

 

 

3

 

 

NM

 

COVID-19 bad debt benefit (5)

 

 

 

(30

)

 

30

 

 

(100.0

)%

COVID-19 other related expenses (6)

 

 

 

4

 

 

(4

)

 

(100.0

)%

Business acquisition and integration related costs and other (7)

 

4

 

 

6

 

 

(2

)

 

(33.3

)%

Adjusted EBITDA (Non-GAAP)

 

291

 

 

209

 

 

82

 

 

39.2

%

Depreciation expense

 

(79

)

 

(88

)

 

9

 

 

(10.2

)%

Interest expense—net

 

(50

)

 

(63

)

 

13

 

 

(20.6

)%

Income tax provision, as adjusted (8)

 

(43

)

 

(16

)

 

(27

)

 

168.8

%

Adjusted net income (Non-GAAP) (9)

 

$

119

 

 

$

42

 

 

$

77

 

 

183.3

%

 

 

 

 

 

 

 

 

 

Diluted EPS (GAAP)

 

$

0.24

 

 

$

(0.01

)

 

$

0.25

 

 

NM

 

Restructuring costs and asset impairment charges (1)

 

0.03

 

 

0.10

 

 

(0.07

)

 

(70.0

)%

Share-based compensation expense (2)

 

0.05

 

 

0.05

 

 

 

 

%

LIFO reserve change (3)

 

0.13

 

 

0.01

 

 

0.12

 

 

NM

 

Business transformation costs (4)

 

0.01

 

 

 

 

0.01

 

 

NM

 

COVID-19 bad debt benefit (5)

 

 

 

(0.14

)

 

0.14

 

 

(100.0

)%

COVID-19 other related expenses (6)

 

 

 

0.02

 

 

(0.02

)

 

(100.0

)%

Business acquisition and integration related costs and other (7)

 

0.02

 

 

0.03

 

 

(0.01

)

 

(33.3

%)

Income tax provision, as adjusted (8)

 

 

 

0.13

 

 

(0.13

)

 

(100.0

)%

Adjusted Diluted EPS (Non-GAAP) (10)

 

$

0.48

 

 

$

0.19

 

 

$

0.29

 

 

152.6

%

 

 

 

 

 

 

 

 

 

Weighted-average diluted shares outstanding (Non-GAAP) (11)

 

249,997,426

 

 

220,155,366

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit (GAAP)

 

$

1,241

 

 

$

974

 

 

$

267

 

 

27.4

%

LIFO reserve change (3)

 

32

 

 

3

 

 

29

 

 

NM

 

Adjusted Gross profit (Non-GAAP)

 

$

1,273

 

 

$

977

 

 

$

296

 

 

30.3

%

 

 

 

 

 

 

 

 

 

Operating expenses (GAAP)

 

$

1,106

 

 

$

896

 

 

$

210

 

 

23.4

%

Depreciation and amortization expense

 

(91

)

 

(109

)

 

18

 

 

(16.5

)%

Restructuring costs and asset impairment charges (1)

 

(7

)

 

(23

)

 

16

 

 

(69.6

)%

Share-based compensation expense (2)

 

(13

)

 

(10

)

 

(3

)

 

30.0

%

Business transformation costs (4)

 

(3

)

 

 

 

(3

)

 

NM

 

COVID-19 bad debt benefit (5)

 

 

 

30

 

 

(30

)

 

(100.0

)%

COVID-19 other related expenses (6)

 

 

 

(4

)

 

4

 

 

(100.0

)%

Business acquisition and integration related costs and other (7)

 

(4

)

 

(6

)

 

2

 

 

(33.3

)%

Adjusted Operating expenses (Non-GAAP)

 

$

988

 

 

$

774

 

 

$

214

 

 

27.6

%

NM - Not Meaningful
(1)

Consists primarily of severance and related costs, organizational realignment costs and asset impairment charges.

(2)

Share-based compensation expense for expected vesting of stock awards and employee stock purchase plan.

(3)

Represents the non-cash impact of LIFO reserve adjustments.

(4)

Consists primarily of costs related to significant process and systems redesign across multiple functions.

(5)

Includes the change in the reserve for doubtful accounts expense reflecting the collection risk associated with our customer base as a result of the COVID-19 pandemic.

(6)

Includes COVID-19 costs that we are permitted to addback under certain agreements governing our indebtedness.

(7)

Includes: (i) aggregate acquisition and integration related costs of $4 million and $5 million for the 13 weeks ended October 2, 2021 and September 26, 2020, respectively; and (ii) other gains, losses or costs that we are permitted to addback for purposes of calculating Adjusted EBITDA under certain agreements governing our indebtedness.

(8)

Represents our income tax provision 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 taking into account the impact of permanent differences and valuation allowances.

(9)

Effective as of the first quarter 2021, we have presented Adjusted net income. Previously, we presented Adjusted net income available to common shareholders.

(10)

Adjusted Diluted EPS is calculated as Adjusted net income divided by weighted average diluted shares outstanding (Non-GAAP), see note 11. Prior period amounts have been revised to conform with current year presentation.

(11)

For purposes of the Adjusted Diluted EPS calculation (Non-GAAP), when the Company has net income (GAAP), weighted average diluted shares outstanding (Non-GAAP) is used and assumes conversion of the Series A convertible preferred stock, and, when the Company has net loss (GAAP) and assumed conversion of the Series A convertible preferred stock would be antidilutive, weighted-average diluted shares outstanding (GAAP) is used.

US FOODS HOLDING CORP.

Non-GAAP Reconciliation

(Unaudited)

 

 

39 Weeks Ended

 

 

 

 

($ in millions, except share and per share data)

 

October 2, 2021

 

September 26, 2020

 

Change

 

%

Net income (loss) available to common shareholders (GAAP)

 

$

62

 

 

$

(231

)

 

$

293

 

 

(126.8

)%

Series A convertible preferred stock dividends

 

(33

)

 

(15

)

 

(18

)

 

120.0

%

Net income (loss) (GAAP)

 

95

 

 

(216

)

 

311

 

 

(144.0

)%

Interest expense—net

 

158

 

 

178

 

 

(20

)

 

(11.2

)%

Income tax provision (benefit)

 

30

 

 

(53

)

 

83

 

 

(156.6

)%

Depreciation expense

 

242

 

 

257

 

 

(15

)

 

(5.8

)%

Amortization expense

 

44

 

 

59

 

 

(15

)

 

(25.4

)%

EBITDA (Non-GAAP)

 

569

 

 

225

 

 

344

 

 

152.9

%

Adjustments:

 

 

 

 

 

 

 

 

Restructuring and asset impairment costs (1)

 

11

 

 

39

 

 

(28

)

 

(71.8

)%

Share-based compensation expense (2)

 

36

 

 

29

 

 

7

 

 

24.1

%

LIFO reserve change (3)

 

150

 

 

9

 

 

141

 

 

NM

 

Loss on extinguishment of debt (4)

 

23

 

 

 

 

23

 

 

NM

 

Business transformation costs (5)

 

17

 

 

8

 

 

9

 

 

112.5

%

COVID-19 bad debt (benefit) expense (6)

 

(15

)

 

65

 

 

(80

)

 

(123.1

)%

COVID-19 product donations and inventory adjustments (7)

 

 

 

40

 

 

(40

)

 

(100.0

)%

COVID-19 other related expenses (8)

 

1

 

 

15

 

 

(14

)

 

(93.3

)%

Business acquisition and integration related costs and other (9)

 

3

 

 

44

 

 

(41

)

 

(93.2

)%

Adjusted EBITDA (Non-GAAP)

 

795

 

 

474

 

 

321

 

 

67.7

%

Depreciation expense

 

(242

)

 

(257

)

 

15

 

 

(5.8

)%

Interest expense—net

 

(158

)

 

(178

)

 

20

 

 

(11.2

)%

Income tax provision, as adjusted (10)

 

(103

)

 

(14

)

 

(89

)

 

NM

 

Adjusted net income (Non-GAAP) (11)

 

$

292

 

 

$

25

 

 

$

267

 

 

NM

 

 

 

 

 

 

 

 

 

 

Diluted EPS (GAAP)

 

$

0.28

 

 

$

(1.05

)

 

$

1.33

 

 

(126.7

)%

Restructuring and asset impairment costs (1)

 

0.04

 

 

0.18

 

 

(0.14

)

 

(77.8

)%

Share-based compensation expense (2)

 

0.14

 

 

0.13

 

 

0.01

 

 

7.7

%

LIFO reserve change (3)

 

0.60

 

 

0.04

 

 

0.56

 

 

NM

 

Loss on extinguishment of debt (4)

 

0.09

 

 

 

 

0.09

 

 

NM

 

Business transformation costs (5)

 

0.07

 

 

0.04

 

 

0.03

 

 

75.0

%

COVID-19 bad debt (benefit) expense (6)

 

(0.06

)

 

0.30

 

 

(0.36

)

 

(120.0

)%

COVID-19 product donations and inventory adjustments (7)

 

 

 

0.18

 

 

(0.18

)

 

(100.0

)%

COVID-19 other related expenses (8)

 

 

 

0.07

 

 

(0.07

)

 

(100.0

)%

Business acquisition and integration related costs and other (9)

 

0.01

 

 

0.20

 

 

(0.19

)

 

(95.0

)%

Income tax impact of adjustments (10)

 

 

 

0.02

 

 

(0.02

)

 

(100.0

)%

Adjusted Diluted EPS (Non-GAAP) (12)

 

$

1.17

 

 

$

0.11

 

 

$

1.06

 

 

NM

 

 

 

 

 

 

 

 

 

 

Weighted-average diluted shares outstanding (Non-GAAP) (13)

 

249,692,471

 

 

219,659,697

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit (GAAP)

 

$

3,413

 

 

$

2,711

 

 

$

702

 

 

25.9

%

LIFO reserve change (3)

 

150

 

 

9

 

 

141

 

 

NM

 

COVID-19 product donations and inventory adjustments (7)

 

 

 

40

 

 

(40

)

 

(100.0

)%

Adjusted Gross profit (Non-GAAP)

 

$

3,563

 

 

$

2,760

 

 

$

803

 

 

29.1

%

 

 

 

 

 

 

 

 

 

Operating expenses (GAAP)

 

$

3,126

 

 

$

2,818

 

 

$

308

 

 

10.9

%

Depreciation and amortization expense

 

(286

)

 

(316

)

 

30

 

 

(9.5

)%

Restructuring and asset impairment costs (1)

 

(11

)

 

(39

)

 

28

 

 

(71.8

)%

Share-based compensation expense (2)

 

(36

)

 

(29

)

 

(7

)

 

24.1

%

Business transformation costs (4)

 

(17

)

 

(8

)

 

(9

)

 

112.5

%

COVID-19 bad debt (benefit) expense (6)

 

15

 

 

(65

)

 

80

 

 

(123.1

)%

COVID-19 other related expenses (8)

 

(1

)

 

(15

)

 

14

 

 

(93.3

)%

Business acquisition and integration related costs and other (9)

 

(3

)

 

(44

)

 

41

 

 

(93.2

)%

Adjusted Operating expenses (Non-GAAP)

 

$

2,787

 

 

$

2,302

 

 

$

485

 

 

21.1

%

NM - Not Meaningful

(1)

Consists primarily of severance and related costs, organizational realignment costs and asset impairment charges.

(2)

Share-based compensation expense for expected vesting of stock awards and employee stock purchase plan.

(3)

Represents the non-cash impact of LIFO reserve adjustments.

(4)

Includes early redemption premium and the write-off of certain pre-existing debt issuance costs.

(5)

Consists primarily of costs related to significant process and systems redesign across multiple functions.

(6)

Includes the change in the reserve for doubtful accounts expense reflecting the collection risk associated with our customer base as a result of the COVID-19 pandemic.

(7)

Includes COVID-19 related expenses related to inventory adjustments and product donations.

(8)

Includes COVID-19 costs that we are permitted to addback under certain agreements governing our indebtedness.

(9)

Includes: (i) aggregate acquisition and integration related costs of $16 million and $43 million for the 39 weeks ended October 2, 2021 and September 26, 2020, respectively; and partially offset by (ii) favorable legal settlement recovery of $13 million for the 39 weeks ended October 2, 2021; and (iii) other gains, losses or costs that we are permitted to addback for purposes of calculating Adjusted EBITDA under certain agreements governing our indebtedness.

(10)

Represents our income tax provision 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 taking into account the impact of permanent differences and valuation allowances. 

(11)

Effective as of the first quarter 2021, we have presented Adjusted net income. Previously, we presented Adjusted net income available to common shareholders.

(12)

Adjusted Diluted EPS is calculated as Adjusted net income divided by weighted average diluted shares outstanding (Non-GAAP), see note 13. Prior period amounts have been revised to conform with current year presentation.

(13)

For purposes of the Adjusted Diluted EPS calculation (Non-GAAP), when the Company has net income (GAAP), weighted average diluted shares outstanding (Non-GAAP) is used and assumes conversion of the Series A convertible preferred stock, and, when the Company has net loss (GAAP) and assumed conversion of the Series A convertible preferred stock would be antidilutive, weighted-average diluted shares outstanding (GAAP) is used.

US FOODS HOLDING CORP.

Non-GAAP Reconciliation

Net Debt and Net Leverage Ratios

 

($ in millions, except ratios)

 

October 2, 2021

 

January 2, 2021

 

September 26, 2020

Total Debt (GAAP)

 

$

5,396

 

 

$

5,748

 

 

$

5,787

 

Cash, cash equivalents and restricted cash

 

(772

)

 

(828

)

 

(1,019

)

Net Debt (Non-GAAP)

 

$

4,624

 

 

$

4,920

 

 

$

4,768

 

Adjusted EBITDA (1)

 

$

969

 

 

$

648

 

 

$

809

 

Net Leverage Ratio (2)

 

4.8

 

 

7.6

 

 

5.9

 

 
(1) Trailing Twelve Months (TTM) Adjusted EBITDA
(2) Net Debt/TTM Adjusted EBITDA

 

View source version on businesswire.com:https://www.businesswire.com/news/home/20211108005574/en/

CONTACT: INVESTOR CONTACT:

Melissa Napier

(847) 720-2767

melissa.napier@usfoods.comMEDIA CONTACT:

Sara Matheu

(847) 720-2392

sara.matheu@usfoods.com

KEYWORD: UNITED STATES NORTH AMERICA ILLINOIS

INDUSTRY KEYWORD: SUPERMARKET RETAIL RESTAURANT/BAR FOOD/BEVERAGE

SOURCE: US Foods

Copyright Business Wire 2021.

PUB: 11/08/2021 06:45 AM/DISC: 11/08/2021 06:47 AM

http://www.businesswire.com/news/home/20211108005574/en