US Foods reports third-quarter fiscal year 2022 earnings

Nov. 17, 2022
US Foods Holding Corp. announced results for the third quarter fiscal year 2022.

US Foods Holding Corp., one of the largest foodservice distributors in the United States, announced results for the third quarter fiscal year 2022.

Third-quarter fiscal 2022 highlights

Net income available to common shareholders improved to $100 million.

Adjusted EBITDA increased 20.6% to $351 million.

Diluted EPS was $0.43; adjusted diluted EPS was $0.60.

Net sales increased 13.0% to $8.9 billion.

Total case volume increased 0.7%; independent restaurant case volume increased 2.9%.

Gross profit increased 17.6% to $1.5 billion.

Nine-month fiscal 2022 highlights

Net income available to common shareholders was $145 million.

Adjusted EBITDA increased 20.8% to $960 million.

Diluted EPS was $0.64; adjusted diluted EPS was $1.59.

Net sales increased 16.9% to $25.5 billion.

Total case volume increased 1.3%; independent restaurant case volume increased 3.8%.

Gross profit increased 18.3% to $4.0 billion.

Andrew Iacobucci, interim CEO, said in the announcement, “US Foods delivered strong results in the third quarter as we continue to execute on the three pillars of our long-range plan, which we introduced earlier this year. Our performance reflects sustained positive momentum, as we drove profitable market share in key customer types and effectively managed gross profit and operating expenses. Our nearly 21% adjusted EBITDA growth underscores our confidence in achieving the high end of our prior adjusted outlook for the year and reflects the progress we are making on our long-range plan. Finally, further highlighting confidence in our future, our Board has authorized a $500 million share repurchase program, which we see as highly accretive to shareholder value at our current share price.”

Third-quarter fiscal 2022 results

Net income available to common shareholders was $100 million, an improvement of $45 million compared to the prior year. Adjusted EBITDA was $351 million, an increase of $60 million or 20.6%, compared to the prior year. Adjusted EBITDA margin was 3.9%, an increase of 20 basis points compared to the prior year. Diluted EPS was $0.43; adjusted diluted EPS was $0.60.

Net sales were $8.9 billion for the quarter, an increase of 13.0% from the prior year, driven by food cost inflation of 12% compared to the same quarter a year ago. Total case volume increased 0.7% from the prior year driven by a 2.9% increase in independent restaurant case volume, a 19.7% increase in hospitality volume and a 2.7% increase in healthcare volume, offset by a 6.8% decrease in chain volume. Year-over-year total case growth for the third quarter was negatively impacted approximately 2.0% by the planned mid-2021 exit of the lower margin grocery retail business the Company temporarily added during the pandemic and the strategic exit of a small number of lower margin chain restaurant and education customers.

Gross profit was $1.5 billion, an increase of 17.6% from the prior year. Key drivers included optimized pricing, increased freight income from improved inbound logistics, cost of goods sold optimization and food cost inflation in multiple product categories. The company’s LIFO method of inventory costing resulted in an expense of $6 million in 2022 compared to expense of $32 million in 2021 due to inflation in multiple product categories including grocery, disposables and pork. Gross profit as a percentage of net sales was 16.4%. Adjusted gross profit was $1.5 billion, a 15.2% increase from the prior year. Adjusted gross profit as a percentage of net sales was 16.4% and adjusted gross profit per case continued at strong levels due to the aforementioned factors.

Nine-month fiscal 2022 results

Net income available to common shareholders was $145 million, an improvement of $83 million compared to the prior year. Adjusted EBITDA was $960 million, an increase of $165 million or 20.8%, compared to the prior year. Adjusted EBITDA margin was 3.8%, an increase of 20 basis points compared to the prior year, reflecting the operating leverage from adjusted gross profit increasing greater than adjusted operating expenses. Diluted EPS was $0.64; Adjusted diluted EPS was $1.59.

Net sales were $25.5 billion for the first nine months of 2022, an increase of 16.9% from the prior year, driven by food cost inflation of 15% compared to the first nine months a year ago. Total case volume increased 1.3% from the prior year driven by a 3.8% increase in independent restaurant volume, a 35.5% increase in hospitality volume and a 1.9% increase in healthcare volume, partially offset by a 6.2% decrease in chain volume. Year-over-year total case growth for the first nine months was negatively impacted by approximately 3.5% by the planned mid-2021 exit of the lower margin grocery retail business the company temporarily added during the pandemic and the strategic exit of a small number of lower margin chain restaurant and education customers.

Gross profit was $4.0 billion, an increase of 18.3% from the prior year. Key drivers included an increase in total case volume, optimized pricing, increased freight income from improved inbound logistics, cost of goods sold optimization and food cost inflation in multiple product categories. 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 15.8%. Adjusted gross profit was $4.2 billion, a 17.3% increase from the prior year. Adjusted gross profit as a percentage of net sales was 16.4% and adjusted gross profit per case was strong due to the aforementioned factors.

Outlook for fiscal year 2022

The company is updating its 2022 guidance to:

  • Adjusted EBITDA of $1.28-$1.30 billion.
  • Adjusted diluted EPS of $2.10-$2.20.
  • Interest expense of $250-$255 million.
  • Cash capital expenditures of $270-$280 million with fleet capital leases to be an additional ~$125 million.
  • Net debt to adjusted EBITDA leverage of approximately 3.5x by end of fiscal year 2022.

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