US Foods Reports Second Quarter Fiscal 2017 Earnings
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 |
US Foods
INVESTOR CONTACT:
Melissa Napier
(847) 720-2767
Melissa.Napier@usfoods.com
or
MEDIA CONTACT:
Debra Ceffalio
(847) 720-1652
Debra.Ceffalio@usfoods.com
View source version on businesswire.com: http://www.businesswire.com/news/home/20170809005528/en/