usfd-20240629

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 29, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 001-37786

US FOODS HOLDING CORP.

(Exact name of registrant as specified in its charter)

Delaware

26-0347906

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification Number)

9399 W. Higgins Road, Suite 100

Rosemont, IL 60018

(847) 720-8000

(Address, including Zip Code, and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

USFD

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

244,558,482 shares of the registrant’s common stock were outstanding as of August 2, 2024.

Forward-Looking Statements

Statements in this Quarterly Report on Form 10-Q (this “Quarterly Report”) 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;
• cost inflation/deflation, rising interest rates and volatile commodity costs;
• 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;
• fluctuations in fuel costs;
• changes in consumer eating habits;
• cost and pricing structures;
• the impact of climate change or measures implemented to address climate change;
• impairment charges for goodwill, indefinite-lived intangible assets or other long-lived assets;
• changes to or failure to comply with applicable governmental regulations;
• product recalls and product liability claims;
• our reputation in the industry;
• labor relations and increased labor costs and continued access to qualified and diverse labor;
• our level of indebtedness and restrictions under agreements governing our indebtedness;
• interest rate increases;
• disruption of existing technologies and implementation of new technologies;
• cybersecurity incidents and other technology disruptions;
• risks associated with intellectual property, including potential infringement;
• effective integration of acquired businesses;
• the impact of activist shareholders;
• changes in tax laws and regulations and resolution of tax disputes;
• limitations related to our governing documents;
• risks to the health and safety of our associates and others;
• 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; and
• management of retirement benefits and pension obligations.

For a detailed discussion of these and other risks, uncertainties and factors, see Part I, Item 1A— “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 30, 2023 (the “2023 Annual Report”).

In light of these risks, uncertainties and other important factors, the forward-looking statements in this Quarterly Report might not prove to be accurate, and you should not place undue reliance on them. All forward-looking statements attributable to us, or others acting on our behalf, are expressly qualified in their entirety by the cautionary statements above and contained elsewhere in this Quarterly Report. All of these statements speak only as of the date made, and we undertake no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events or otherwise, except as required by law.

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 be viewed only as historical data.


	TABLE OF CONTENTS
		Page No.
Part I. Financial Information
Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets as of June 29 , 2024 and December 30, 2023	1
	Consolidated Statements of Comprehensive Income for the 13 weeks and 26 weeks ended June 29 , 2024 and July 1, 2023	2
	Consolidated Statements of Shareholders’ Equity for the 13 weeks and 26 weeks ended June 29, 2024 and J uly 1, 2023	3
	Consolidated Statements of Cash Flows for the 26 weeks ended June 29, 2024 and July 1, 2023	4
	Notes to Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	28

Part II. Other Information
Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3.	Defaults Upon Senior Securities	29
Item 4.	Mine Safety Disclosures	29
Item 5.	Other Information	29
Item 6.	Exhibits	30

Signatures		31

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements


US FOODS HOLDING CORP.
CONSOLIDATED BALANCE SHEETS
(In millions, except par value)

	June 29, 2024		December 30, 2023
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	405	$	269
Accounts receivable, less allowances of $20 and $18	1,976		1,854
Vendor receivables, less allowances of $6 and $5	212		156
Inventories—net	1,593		1,600
Prepaid expenses	131		138

Other current assets	17		14
Total current assets	4,334		4,031
Property and equipment—net	2,359		2,280
Goodwill	5,779		5,697
Other intangibles—net	867		803
Other assets	364		376
Total assets	$	13,703	$	13,187
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Cash overdraft liability	$	193	$	220
Accounts payable	2,349		2,051
Accrued expenses and other current liabilities	706		731
Current portion of long-term debt	118		110
Total current liabilities	3,366		3,112
Long-term debt	4,589		4,564
Deferred tax liabilities	282		293
Other long-term liabilities	455		469
Total liabilities	8,692		8,438
Commitments and contingencies (Note 17)


Shareholders’ equity:
Common stock, $0.01 par value—600 shares authorized; 254.3 issued and 245.5 outstanding as of June 29, 2024, and 252.9 issued and 245.1 outstanding as of December 30, 2023	3		3
Additional paid-in capital	3,696		3,663
Retained earnings	1,789		1,509
Accumulated other comprehensive loss	(112)		(115)
Treasury Stock, 8.8 and 7.8 shares, respectively	(365)		(311)
Total shareholders’ equity	5,011		4,749
Total liabilities and shareholders’ equity	$	13,703	$	13,187

See Notes to Consolidated Financial Statements (Unaudited).


US FOODS HOLDING CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(In millions, except per share data)

	13 Weeks Ended				26 Weeks Ended
	June 29, 2024		July 1, 2023		June 29, 2024		July 1, 2023
Net sales	$	9,709	$	9,013	$	18,658	$	17,555
Cost of goods sold	8,003		7,422		15,457		14,539
Gross profit	1,706		1,591		3,201		3,016
Operating expenses:
Distribution, selling and administrative costs	1,354		1,269		2,671		2,507
Restructuring activity and asset impairment charges	(1)		—		12		—
Total operating expenses	1,353		1,269		2,683		2,507
Operating income	353		322		518		509
Other expense (income)—net	3		(2)		2		(3)
Interest expense—net	81		82		160		163

Income before income taxes	269		242		356		349
Income tax provision	71		60		76		85
Net income	198		182		280		264
Other comprehensive income —net of tax:
Changes in retirement benefit obligations	1		—		3		1
Unrecognized gain on interest rate caps	—		1		—		1
Comprehensive income	$	199	$	183	$	283	$	266
Net income	$	198	$	182	$	280	$	264
Series A convertible preferred stock dividends	—		—		—		(7)
Net income available to common shareholders	$	198	$	182	$	280	$	257
Net income per share
Basic (Note 13)	$	0.81	$	0.76	$	1.14	$	1.11
Diluted (Note 13)	$	0.80	$	0.73	$	1.13	$	1.05
Weighted-average common shares outstanding
Basic (Note 13)	246		238		245		232
Diluted (Note 13)	248		251		248		251

See Notes to Consolidated Financial Statements (Unaudited).


US FOODS HOLDING CORP.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited)
(In millions)
	Common Stock			Additional Paid-In Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Loss		Total Shareholders’ Equity
	Shares	Amount						Shares	Amount
BALANCE—December 30, 2023	252.9	$	3	$	3,663	$	1,509	7.8	$	(311)	$	(115)	$	4,749
Share-based compensation expense	—	—		15		—		—	—		—		15
Proceeds from employee stock purchase plan	0.1	—		5		—		—	—		—		5
Vested restricted stock units, net	0.7	—		—		—		—	—		—		—
Exercise of stock options	0.2	—		5		—		—