ROSEMONT, Ill.–(BUSINESS WIRE)–US Foods Holding Corp. BB #:134354, one of the largest foodservice distributors in the United States, today announced results for the fourth quarter and full fiscal year 2023.
Fourth Quarter Fiscal 2023 Highlights
- Net sales increased 4.9% to $8.9 billion
- Total case volume increased 5.6%; independent restaurant case volume increased 7.3%
- Gross profit increased 9.4% to $1.6 billion
- Net income available to common shareholders was $147 million
- Adjusted EBITDA increased 10.9% to $388 million
- Diluted EPS increased 59.5% to $0.59; Adjusted Diluted EPS increased 16.4% to $0.64
Fiscal Year 2023 Highlights
- Net sales increased 4.5% to $35.6 billion
- Total case volume increased 4.4%; independent restaurant case volume increased 6.9%
- Gross profit increased 11.9% to $6.1 billion
- Net income available to common shareholders was $499 million
- Adjusted EBITDA increased 19.0% to $1.56 billion
- Diluted EPS increased 100.0% to $2.02; Adjusted Diluted EPS increased 22.9% to $2.63
“2023 was an exciting year at US Foods and marked my first full year with this strong company. Through execution of our strategy and long-range plan, we captured profitable market share and enhanced margins,” said Dave Flitman, CEO. “This resulted in record full-year 2023 Adjusted EBITDA of $1.56 billion, driven by strong case growth with our independent restaurant, healthcare and hospitality customers and the implementation of key operational initiatives. I believe our differentiated model and our sustainable competitive advantages will drive continued market outperformance and we are well-positioned to win in any macro environment. As we move into 2024, we will continue to execute our strategy and maintain our disciplined approach to capital deployment to drive long-term value creation for our shareholders. We have strong momentum entering this year, which is a reflection of the hard work and tireless commitment of our 30,000 dedicated associates.”
“I am proud of our associates’ ability to deliver solid financial results in the fourth quarter and record Adjusted EBITDA for 2023,” added Dirk Locascio, CFO. “We generated strong free cash flow, reduced our debt, invested organically and inorganically via two tuck-in acquisitions that expand our position in underserved markets and repurchased shares. Our debt reduction and Adjusted EBITDA growth resulted in net leverage reduction from 3.5x at the end of 2022 to 2.8x at the end of 2023, within our targeted range. I am confident that our 2023 financial performance and our healthy balance sheet will enable us to execute our capital allocation priorities in 2024.”
Fourth Quarter Fiscal 2023 Results
Net sales of $8.9 billion for the quarter increased 4.9% from the prior year, driven by case volume growth. Total case volume increased 5.6% from the prior year on a 7.3% increase in independent restaurant case volume, an 8.1% increase in healthcare volume, a 5.0% increase in hospitality volume and a 0.8% increase in chain volume.
Gross profit of $1.6 billion increased $136 million, or 9.4%, from the prior year, primarily as a result of an increase in total case volume, cost of goods sold optimization, optimized pricing and a favorable year-over-year LIFO adjustment. Gross profit as a percent of Net sales was 17.8%. Adjusted Gross profit was $1.5 billion, a 6.1% increase from the prior year. Adjusted Gross profit as a percent of Net sales was 17.3% and adjusted Gross profit per case continued at strong levels due to the aforementioned factors.
Operating expenses of $1.3 billion increased $54 million, or 4.3%, from the prior year. Operating expenses increased primarily due to increased total case volume and higher seller compensation costs, partially offset by lower distribution cost per case from cost savings initiatives including routing improvements and focused efforts positively impacting labor turnover and productivity as well as lower fuel costs.
Operating expenses as a percent of Net sales were 14.7%. Adjusted Operating expenses for the quarter were $1.2 billion, an increase of $47 million, or 4.2% from the prior year, due to the aforementioned factors. Adjusted Operating expenses as a percent of Net sales were 13.0%.
Net income available to common shareholders was $147 million, an increase of $64 million compared to the prior year. Adjusted EBITDA was $388 million, an increase of $38 million, or 10.9%, compared to the prior year. Adjusted EBITDA margin was 4.3%, an increase of 23 basis points compared to the prior year. Diluted EPS was $0.59; Adjusted Diluted EPS was $0.64.
Fiscal Year 2023 Results
Net sales of $35.6 billion increased 4.5% from the prior year, driven by case volume growth. Total case volume increased 4.4% from the prior year on a 6.9% increase in independent restaurant case volume, a 7.2% increase in healthcare volume and an 8.9% increase in hospitality volume, offset by a 2.1% decrease in chain volume.
Gross profit of $6.1 billion increased $656 million, or 11.9%, from the prior year, primarily as a result of an increase in total case volume, cost of goods sold optimization, increased freight income from improved inbound logistics and optimized pricing. Gross profit as a percent of Net sales was 17.3%. Adjusted Gross profit was $6.1 billion, a 9.0% increase from the prior year. Adjusted Gross profit as a percent of Net sales was 17.3% and adjusted Gross profit per case was strong due to the aforementioned factors.
Operating expenses of $5.1 billion increased $233 million, or 4.8%, from the prior year. Operating expenses increased primarily due to increased total case volume and higher seller compensation costs, partially offset by lower distribution cost per case from cost savings initiatives including routing improvements and focused efforts positively impacting labor turnover and productivity as well as lower fuel costs. Operating expenses as a percent of Net sales were 14.4%. Adjusted Operating expenses were $4.6 billion, an increase of $243 million, or 5.6% from the prior year, due to the aforementioned factors. Adjusted Operating expenses as a percent of Net sales were 12.9%.
Net income available to common shareholders was $499 million, an increase of $271 million compared to the prior year. Adjusted EBITDA was $1.56 billion, an increase of $249 million, or 19.0% compared to the prior year. Adjusted EBITDA margin was 4.4%, an increase of 53 basis points compared to the prior year. Diluted EPS was $2.02; Adjusted Diluted EPS was $2.63.
Cash Flow and Debt
Cash flow provided by operating activities for fiscal 2023 was $1.14 billion, an increase of $375 million from the prior year due to earnings growth and strong working capital management. Cash capital expenditures for fiscal 2023 were $309 million, an increase of $44 million from the prior year, and related to investments in information technology, property and equipment, fleet replacement and maintenance of distribution facilities.
During the fourth quarter of fiscal 2023, the Company repurchased 1.6 million shares of common stock at an aggregate purchase price of $65 million and for the full fiscal year repurchased 7.4 million shares of common stock at an aggregate purchase price of $294 million. The Company has approximately $192 million in remaining funds authorized under its $500 million share repurchase program.
Net Debt at the end of fiscal year 2023 was $4.4 billion, a decrease of $238 million versus the end of fiscal 2022. The ratio of Net Debt to Adjusted EBITDA was 2.8x at the end of fiscal 2023, as compared to 3.5x at the end of fiscal 2022.
M&A Update
Subsequent to quarter-end, the Company has signed a definitive agreement to acquire IWC Food Service, a broadline distributor which serves the greater Nashville area. IWC has approximately 220 associates and $200 million in annual sales. Pending regulatory approval, the Company is targeting to close the transaction in the second quarter of 2024.
During the fourth quarter of fiscal 2023, the Company acquired Saladino’s Foodservice, an independently owned broadline distributor based in central California for a purchase price of $56 million.
Outlook for Fiscal Year 2024 [1]
The Company is providing First Quarter 2024 guidance of:
- Adjusted EBITDA of $340 to $355 million
The Company is providing Fiscal Year 2024 guidance of:
- Net Sales of $37.5 to $38.5 billion
- Adjusted EBITDA of $1.69 to $1.74 billion
- Adjusted Diluted EPS of $3.00 to $3.20
1 The Company is not providing a reconciliation of certain forward-looking non-GAAP financial measures, including Adjusted EBITDA and Adjusted Diluted EPS, because the Company is unable to predict with reasonable certainty the financial impact of certain significant items, including restructuring costs and asset impairment charges, share-based compensation expenses, non-cash impacts of LIFO reserve adjustments, losses on extinguishments of debt, business transformation costs, other gains and losses, business acquisition and integration related costs and diluted earnings per share. These items are uncertain, depend on various factors, and could have a material impact on GAAP reported results for the guidance periods. For the same reasons, the Company is unable to address the significance of the unavailable information, which could be material to future results.
About US Foods
With a promise to help its customers Make It, 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 more than 70 broadline locations and approximately 90 cash and carry stores, US Foods and its 30,000 associates 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.
INVESTOR CONTACT:
Mike Neese
(847) 232-5894
Michael.Neese@usfoods.com
MEDIA CONTACT:
Sara Matheu
(847) 720-2392
Sara.Matheu@usfoods.com
