US Foods Holding Corp

Previous wording

The following discussion and analysis should be read together with the accompanying unaudited consolidated financial statements and the notes thereto included in this Quarterly Report and the audited consolidated financial statements and the notes thereto in the 2023 Annual Report. The following discussion and analysis contain certain financial measures that are not required by or presented in accordance with GAAP. We believe these non-GAAP measures provide meaningful supplemental information about our operating performance and liquidity. Information regarding reconciliations of and the rationale for these measures is discussed under “Non-GAAP Reconciliations” below. Results of operations for the 13 weeks and 39 weeks ended September 28, 2024 are compared to the 13 weeks and 39 weeks ended September 30, 2023, unless specifically noted otherwise.

Current wording

The following discussion and analysis should be read together with the accompanying unaudited consolidated financial statements and the notes thereto included in this Quarterly Report and the audited consolidated financial statements and the notes thereto in the 2024 Annual Report. The following discussion and analysis contain certain financial measures that are not required by or presented in accordance with GAAP. We believe these non-GAAP measures provide meaningful supplemental information about our operating performance and liquidity. Information regarding reconciliations of and the rationale for these measures is discussed under “Non-GAAP Reconciliations” below. Results of operations for the 13 weeks ended March 29, 2025 are compared to the 13 weeks ended March 30, 2024, unless specifically noted otherwise.

Previous wording

At US Foods, we strive to inspire and empower chefs and foodservice operators to bring great food experiences to consumers. This mission is supported by our brand promise of WE HELP YOU MAKE IT.™, which is centered on bringing four key elements to the forefront for our customers; more quality products, including our large portfolio of exclusive brands, more tools, centering on our MOXē business platform, more support from our sellers and our team of experts and lastly, more deliveries, enabled by our traditional broadline services and Pronto™ program. We operate as one business with standardized business processes, shared systems infrastructure, and an organizational model that optimizes national scale with local execution, allowing us to manage our business as a single operating segment. We have centralized activities where scale matters and our local field structure focuses on customer-facing activities.

Current wording

At US Foods, we strive to inspire and empower chefs and foodservice operators to bring great food experiences to consumers. This mission is supported by our strategy of WE HELP YOU MAKE IT™, which is centered on bringing four key elements to the forefront for our customers; (1) more quality products, including our large portfolio of exclusive brands, (2) more tools, centering on our MOXē business platform, (3) more support from our sellers and our team of experts and lastly, (4) more deliveries, enabled by our traditional broadline services and Pronto™ program. We operate as one business with standardized business processes, shared systems infrastructure, and an organizational model that optimizes national scale with local execution, allowing us to manage our business as a single operating segment. We have centralized activities where scale matters and our local field structure focuses on customer-facing activities.

Previous wording

For the 13 weeks and 39 weeks ended September 28, 2024, compared to the same period a year ago, total case volume increased 3.8% and 4.4%, respectively, and independent restaurant case volume increased 4.1% and 4.8%, respectively. For the 13 weeks and 39 weeks ended September 28, 2024, compared to the same period a year ago, total organic case volume increased 1.1% and 1.5%, respectively, and organic independent restaurant case volume increased 2.4% and 2.8%, respectively. Net sales increased $622 million, or 6.8%, and $1,725 million, or 6.5% for the 13 weeks and 39 weeks ended September 28, 2024, respectively, driven primarily by organic case volume growth, the impact of acquisitions andfood cost inflation of 3.2% and 2.5% for the 13 weeks and 39 weeks ended September 28, 2024, respectively.

Current wording

For the 13 weeks ended March 29, 2025, compared to the same period a year ago, total case volume increased 1.1%, driven by a 2.5% increase in independent restaurant case volume, a 6.1% increase in healthcare volume, a 3.6% increase in hospitality volume, partially offset by a 4.3% decrease in chain volume. For the 13 weeks ended March 29, 2025, compared to the same period a year ago, total organic case volume increased 0.1%, which includes 1.3% organic independent restaurant case volume growth. Net sales increased $402 million, or 4.5% for the 13 weeks ended March 29, 2025, driven by case volume growth andfood cost inflation of 3.0% for the 13 weeks ended March 29, 2025.

Previous wording

Gross profit increased $125 million, or 8.1%, to $1,667 million for the 13 weeks ended September 28, 2024, and increased $310 million, or 6.8%, to $4,868 million for the 39 weeks ended September 28, 2024. For the 13 weeks ended September 28, 2024, the increase was primarily a result of an increase in total case volume, improved cost of goods sold, pricing optimization and a favorable year-over-year LIFO adjustment. For the 39 weeks ended September 28, 2024, the increase was primarily a result of an increase in organic case volume, improved cost of goods sold, the impact of acquisition and pricing optimization, partially offset by an unfavorable year-over-year LIFO adjustment. Gross profit was negatively impacted by LIFO expense of $23 million and $68 million for the 13 weeks and 39 weeks ended September 28, 2024, respectively. Gross profit was negatively impacted by a LIFO expense of $37 million and $42 million for the 13 weeks and 39 weeks ended September 30, 2023, respectively. As a percentage of net sales, gross profit was 17.1% for the 13 weeks ended September 28, 2024, compared to 16.9% for the prior year period and was 17.1% for both the 39 weeks ended September 28, 2024 and September 30, 2023.

Current wording

Gross profit increased $119 million, or 8.0%, to $1,614 million for the 13 weeks ended March 29, 2025. For the 13 weeks ended March 29, 2025, the increase was primarily a result of an increase in total case volume, improved cost of goods sold, pricing optimization, and a favorable year-over-year LIFO adjustment. Gross profit was negatively impacted by LIFO expense of $5 million and $45 million for the 13 weeks ended March 29, 2025 and March 30, 2024. As a percentage of net sales, gross profit was 17.3% for the 13 weeks ended March 29, 2025, compared to 16.7% for the prior year period.

Previous wording

Total operating expenses increased $76 million, or 5.8%, to $1,388 million for the 13 weeks ended September 28, 2024, and increased $252 million, or 6.6%, to $4,071 million for the 39 weeks ended September 28, 2024. For the 13 weeks ended September 28, 2024, the increase was primarily a result of an increase in total case volume and higher distribution costs, reflecting increased labor costs, partially offset by continued distribution productivity improvement as well as actions to streamline administrative processes and costs. For the 39 weeks ended September 28, 2024, the increase was primarily a result of an increase in organic case volume, higher distribution costs, reflecting increased labor costs, the impact of acquisitions and incremental costs to serve our customers during January labor disruptions, partially offset by continued productivity improvement.

Current wording

Total operating expenses increased $60 million, or 4.5%, to $1,390 million for the 13 weeks ended March 29, 2025. For the 13 weeks ended March 29, 2025, the increase was primarily a result of an increase in total case volume and higher distribution, selling and administrative costs, partially offset by continued distribution productivity improvement as well as actions to streamline administrative processes and costs. As a percentage of net sales, operating expenses were 14.9% for the 13 weeks ended March 29, 2025 and March 30, 2024.

Previous wording

(5) Transformational costs represent non-recurring expenses prior to formal launch of strategic projects with anticipated long-term benefits to the Company. These costs generally relate to third party consulting and non-capitalizable technology. For the 13 weeks and 39 weeks ended September 28, 2024, business transformation costs related to projects associated with information technology infrastructure initiatives and workforce efficiencies. For the 13 weeks and 39 weeks ended September 30, 2023, business transformation costs related to projects associated with information technology infrastructure initiatives.

Current wording

(4) Transformational costs represent non-recurring expenses prior to formal launch of strategic projects with anticipated long-term benefits to the Company. These costs generally relate to third party consulting and non-capitalizable technology. For the 13 weeks ended March 29, 2025, business transformation costs related to projects associated with information technology infrastructure initiatives and workforce efficiencies. For the 13 weeks ended March 30, 2024, business transformation costs related to projects associated with information technology and workforce efficiencies.

Previous wording

(6) Includes: (i) aggregate acquisition related costs of $6 million and $10 million for the 13 weeks ended September 28, 2024 and September 30, 2023, respectively, and $17 million and $31 million for the 39 weeks ended September 28, 2024 and September 30, 2023, respectively; (ii) CEO sign on bonus of $3 million for the 39 weeks ended September 30, 2023 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.

Current wording

(5) Includes: (i) aggregate acquisition, integration related costs and divestiture costs of $13 million and $3 million for the 13 weeks ended March 29, 2025 and March 30, 2024, 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.

Previous wording

•Adjusted EBITDA increased $53 million, or 13.2%, to $455 million in 2024. As a percentage of net sales, Adjusted EBITDA was 4.7% in 2024, compared to 4.4% in 2023.

Current wording

•Adjusted EBITDA increased $33 million, or 9.3%, to $389 million in 2025. As a percentage of net sales, Adjusted EBITDA was 4.2% in 2025, compared to 4.0% in 2024.

Previous wording

Net sales increased $1,725 million, or 6.5%, to $28,386 million in 2024 driven by organic case volume growth, the impact of acquisitions and food cost inflation of 2.5%. Total case volume increased 4.4% driven by a 4.8% increase in independent restaurant case volume, a 6.1% increase in healthcare volume, a 2.0% increase in hospitality volume and a 3.5% increase in chain volume. Organic broadline sales of private brands represented approximately 34% of net sales in both 2024 and 2023, respectively.

Current wording

Net sales increased $402 million or 4.5%, to $9,351 million in 2025, driven by case volume growth and food cost inflation of 3.0%. Total case volume increased 1.1% driven by a 2.5% increase in independent restaurant case volume, a 6.1% increase in healthcare volume, a 3.6% increase in hospitality volume, partially offset by a 4.3% decrease in chain volume. Total organic case volume increased 0.1% and organic independent restaurant case volume increased 1.3%. Organic broadline cases of private brands represented approximately 34% of total cases in 2025 and 2024.

Previous wording

Gross profit increased $125 million, or 8.1%, to $1,667 million in 2024, primarily as a result of an increase in total case volume, improved cost of goods sold, pricing optimization and a favorable year-over-year LIFO adjustment. Our LIFO method of inventory costing resulted in an expense of $23 million in 2024 compared to an expense of$37 million in 2023, driven by inflation in poultry, cheese, and seafood. Gross profit as a percentage of net sales was 17.1% in 2024, due to the aforementioned factors. Gross profit as a percentage of net sales was 16.9% in 2023.

Current wording

Gross profit increased $119 million, or 8.0%, to $1,614 million in 2025, primarily as a result of an increase in total case volume, improved cost of goods sold, pricing optimization, and a favorable year-over-year LIFO adjustment. Our LIFO method of inventory costing resulted in an expense of $5 million in 2025 compared to an expense of$45 million in 2024, driven by inflation. Gross profit as a percentage of net sales was 17.3% in 2025, compared to 16.7% in 2024.

Previous wording

Operating expenses, comprised of distribution, selling and administrative costs, increased $76 million, or 5.8%, to $1,388 million in 2024. Operating expenses increased primarily as a result of an increase in total case volume and higher distribution costs, reflecting increased labor costs, partially offset by continued distribution productivity improvement as well as actions to streamline administrative processes and costs. Operating expenses as a percentage of net sales were 14.3% in 2024, compared to 14.4% in 2023.

Current wording

Operating expenses, comprised of distribution, selling and administrative costs, increased $60 million, or 4.5%, to $1,390 million in 2025. Operating expenses increased primarily as a result of an increase in total case volume and higher distribution, selling and administrative costs, partially offset by continued distribution productivity improvement as well as actions to streamline administrative processes and costs. Operating expenses as a percentage of net sales were 14.9% in both 2025 and 2024.

Previous wording

Our operating income was $279 million in 2024, compared to operating income of $230 million in 2023. The increase in operating income was due to the factors discussed in the relevant sections above.

Current wording

Our operating income was $224 million in 2025, compared to operating income of $165 million in 2024. The increase in operating income was due to the factors discussed in the relevant sections above.

Previous wording

Other expense (income)—net includes components of net periodic pension benefit credits, exclusive of the service cost component associated with our defined benefit and other postretirement plans. We recognized other expense—net of $3 million in 2024 and other income—net of$1 million in 2023. The decrease in other income-net is due to an increase in the pension benefit interest cost and a decrease in the expected return on pension assets compared to 2023.

Current wording

Other income—net includes components of net periodic pension benefit credits, exclusive of the service cost component associated with our defined benefit and other postretirement plans. We recognized other income—net of $1 million in 2025 and other income—net of$1 million in 2024.

Previous wording

Interest expense—net decreased $6 million to $75 million in 2024 primarily due to lower outstanding debt in 2024 compared to 2023.

Current wording

Interest expense—net decreased $2 million to $77 million in 2025 primarily due to lower interest rates in 2025 compared to 2024.

Previous wording

For the 13 weeks ended September 28, 2024, the Company’s effective income tax rate of 26% differed from the 21% federal corporate income tax rate primarily as a result of state income taxes and the recognition of various discrete tax items. These discrete tax items included a tax benefit of $1 million related to a decrease in an unrecognized tax benefit as a result of the expiration of the statute of limitations in several jurisdictions and a tax benefit of $1 million, primarily related to excess tax benefits associated with share-based compensation. For the 13 weeks ended September 30, 2023, the Company’s effective income tax rate of 27% differed from the 21% federal corporate income tax rate primarily as a result of state income taxes and the recognition of various discrete tax items. These discrete tax items were not material individually or in the aggregate.

Current wording

For the 13 weeks ended March 29, 2025, the Company’s effective income tax rate of 22% differed from the 21% federal corporate income tax rate primarily as a result of state income taxes and the recognition of various discrete tax items. These discrete tax items included a tax benefit $6 million, primarily related to excess tax benefits associated with share-based compensation. For the 13 weeks ended March 30, 2024, the Company’s effective income tax rate of 6% differed from the 21% federal corporate income tax rate primarily as a result of state income taxes and the recognition of various discrete tax items. These discrete tax items included a tax benefit of $15 million related to a decrease in an unrecognized tax benefit as a result of the expiration of the statute of limitations in several jurisdictions, a tax benefit of $6 million, primarily related to excess tax benefits associated with share-based compensation and a tax expense of $3 million, primarily related to adjustments to prior year provision estimates.

Previous wording

Our net income was $148 million in 2024, compared to a net income of $95 million in 2023. The improvement in net income was due to the relevant factors discussed above.

Current wording

Our net income was $115 million in 2025, compared to a net income of $82 million in 2024. The improvement in net income was due to the relevant factors discussed above.

Previous wording

Our ongoing operations and strategic objectives require working capital and continuing capital investment. Our primary sources of liquidity include cash provided by operations, as well as access to capital from bank borrowings and other types of debt and financing arrangements. As of September 28, 2024, the Company had approximately $1.7 billion in cash and available liquidity.

Current wording

Our ongoing operations and strategic objectives require working capital and continuing capital investment. Our primary sources of liquidity include cash provided by operations, as well as access to capital from bank borrowings and other types of debt and financing arrangements. As of March 29, 2025, the Company had approximately $1.8 billion in cash and available liquidity.

Previous wording

We had outstanding borrowings totaling $75 million and had issued letters of credit totaling $578 million under the ABL Facility as of September 28, 2024. There was remaining capacity of $1,647 million under the ABL Facility as of September 28, 2024.

Current wording

We had outstanding borrowings totaling $75 million and had issued letters of credit totaling $567 million under the ABL Facility as of March 29, 2025. There was remaining capacity of $1,658 million under the ABL Facility as of March 29, 2025. Subsequent to the fiscal quarter ended March 29, 2025, outstanding letters of credit were reduced by approximately $118 million after additional surety bonds were issued in the first quarter of 2025 to secure the Company’s obligations with respect to its insurance program.

Previous wording

The agreements governing our indebtedness contain customary covenants. These include, among other things, covenants that restrict our ability to incur certain additional indebtedness, create or permit liens on our assets, pay dividends, or engage in mergers or consolidations. The Company had approximately $2.3 billion of restricted payment capacity under these covenants and approximately $2.3 billion of its net assets were restricted after taking into consideration the net deferred tax assets and intercompany balances that eliminate in consolidation as of September 28, 2024.

Current wording

The agreements governing our indebtedness contain customary covenants. These include, among other things, covenants that restrict our ability to incur certain additional indebtedness, create or permit liens on our assets, pay dividends, or engage in mergers or consolidations. The Company had approximately $2.5 billion of restricted payment capacity under these covenants and approximately $2.1 billion of its net assets were restricted after taking into consideration the net deferred tax assets and intercompany balances that eliminate in consolidation as of March 29, 2025.

Previous wording

Cash flows provided by operating activities was $891 million for the 39 weeks ended September 28, 2024, representing a decrease of $44 million as compared to cash flows provided by operating activities of $935 million for the 39 weeks ended September 30, 2023, due to less working capital benefit for the 39 weeks ended September 28, 2024 compared to the 39 weeks ended September 30, 2023.

Current wording

Cash flows provided by operating activities was $391 million for the 13 weeks ended March 29, 2025, representing an increase of $252 million as compared to cash flows provided by operating activities of $139 million for the 13 weeks ended March 30, 2024, due to changes in operating assets and liabilities for the 13 weeks ended March 29, 2025 compared to the 13 weeks ended March 30, 2024.

Previous wording

During the 39 weeks ended September 28, 2024, the Company completed the asset acquisition of IWC Food Service. Total consideration consisted of cash of approximately $220 million (less the amount of cash received, which was $6 million) for a net purchase price of $214 million. In addition, cash flows used in investing activities in the 39 weeks ended September 28, 2024 and September 30, 2023 included cash expenditures of $236 million and $167 million, respectively, related to investments in information technology, property and equipment and maintenance of distribution facilities.

Current wording

During the 13 weeks ended March 29, 2025, the Company completed the asset acquisition of Jake’s Finer Foods. Cash paid for the acquisition of Jake’s Finer Foods consisted of cash of approximately $85 million. Investing activities for the 13 weeks ended March 29, 2025, also included the cash proceeds from the sale of Freshway of$38 million. In addition, cash flows used in investing activities in the 13 weeks ended March 29, 2025 and March 30, 2024 included cash expenditures of $84 million and $87 million, respectively, related to investments in information technology, property and equipment and maintenance of distribution facilities.

Previous wording

We expect total cash capital expenditures in fiscal year 2024 to be between $325 million and $350 million. We expect to fund our capital expenditures with available cash or cash generated from operations and through fleet financing.

Current wording

We expect total cash capital expenditures in fiscal year 2025 to be between $375 million and $425 million. We expect to fund our capital expenditures with available cash or cash generated from operations and through fleet financing.

Previous wording

Cash flows used by financing activities in the 39 weeks ended September 30, 2023 included $95 million of scheduled payments under our Term Loan Facilities and financing leases, $1 billion for refinancing of the Senior Notes due 2025, $10 million of financing fees related to the refinancing, $65 million of voluntary prepayments of our 2021 Incremental Term Loan Facility, $120 million of voluntary prepayments of our 2019 Incremental Term Loan Facility, $3 million associated with interest rate cap purchases, $7 million of dividends on our Series A Preferred Stock and no net payments under the ABL Facility. Financing activities in the 39 weeks ended September 30, 2023 also included $229 million common stock repurchased under the Amended Share Repurchase Program, $19 million of proceeds received from stock purchases under our employee stock purchase plan and $23 million of proceeds from the exercise of employee stock options, which were offset by $12 million of employee tax withholdings paid in connection with the vesting of stock awards.

Current wording

Cash flows used in financing activities in the 13 weeks ended March 29, 2025 included $147 million in net payments under the ABL Facility and $23 million in scheduled payments under our financing leases. Financing activities in the 13 weeks ended March 29, 2025 also included $23 million common stock repurchased under the Amended Share Repurchase Program, $6 million of proceeds received from stock purchases under our employee stock purchase plan, $1 million of proceeds from the exercise of employee stock options, which were offset by $33 million of employee tax withholdings paid in connection with the vesting of stock awards.

Previous wording

Cash flows used in financing activities in the 39 weeks ended September 28, 2024 included $91 million of scheduled payments under our Term Loan Facilities and financing leases, $75 million in net proceeds under the ABL Facility, $14 million for repricing of the 2021 Term Loan Facility and $1 million of financing fees related to the 2021 Term Loan Facility repricing. Financing activities in the 39 weeks ended September 28, 2024 also included $628 million common stock repurchased under the Amended Share Repurchase Program, $19 million of proceeds received from stock purchases under our employee stock purchase plan, $14 million of proceeds from the exercise of employee stock options, which were offset by $20 million of employee tax withholdings paid in connection with the vesting of stock awards.

Current wording

Cash flows used by financing activities in the 13 weeks ended March 30, 2024 included $31 million of scheduled payments under our Term Loan Facilities and financing leases, $14 million for repricing of the 2021 Incremental Term Loan Facility, $1 million of financing fees related to the 2021 Incremental Term Loan Facility repricing and no net payments under the ABL Facility. Financing activities in the 13 weeks ended March 30, 2024 also included $13 million common stock repurchased under the Amended Share Repurchase Program, $5 million of proceeds received from stock purchases under our employee stock purchase plan, $5 million of proceeds from the exercise of employee stock options and $20 million of employee tax withholdings paid in connection with the vesting of stock awards.

Previous wording

We had $578 million of letters of credit outstanding primarily securing the Company’s obligations with respect to its insurance program and certain real estate leases, under the ABL Facility as of September 28, 2024.

Current wording

We had $567 million of letters of credit outstanding primarily securing the Company’s obligations with respect to its insurance program and certain real estate leases, under the ABL Facility as of March 29, 2025. For the 13 weeks ended March 29, 2025 and for the fiscal year ended December 28, 2024, we held approximately $176 million and $58 million of surety bonds, primarily in favor of certain commercial insurers to secure obligations with respect to our insurance programs. In certain cases, surety bonds may be used as an alternative to letters of credit. Subsequent to the fiscal quarter ended March 29, 2025, outstanding letters of credit were reduced by approximately $118 million after additional surety bonds were issued in the first quarter of 2025 to secure the Company’s obligations with respect to its insurance program.

Previous wording

We have prepared the financial information in this Quarterly Report in accordance with GAAP. Preparing the Company’s consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during these reporting periods. We base our estimates and judgments on historical experience and other factors we believe are reasonable under the circumstances. These assumptions form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Part II, Item 7—“Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the 2023 Annual Report includes a summary of the critical accounting policies we believe are the most important to aid in understanding our financial results. There have been no changes to those critical accounting policies that have had a material impact on our reported amounts of assets, liabilities, revenue, or expenses during the 39 weeks ended September 28, 2024.

Current wording

We have prepared the financial information in this Quarterly Report in accordance with GAAP. Preparing the Company’s consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during these reporting periods. We base our estimates and judgments on historical experience and other factors we believe are reasonable under the circumstances. These assumptions form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Part II, Item 7—“Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the 2024 Annual Report includes a summary of the critical accounting policies we believe are the most important to aid in understanding our financial results. There have been no changes to those critical accounting policies that have had a material impact on our reported amounts of assets, liabilities, revenue, or expenses during the 13 weeks ended March 29, 2025.