US Foods Holding Corp (USFD, Financial) released its 8-K filing on November 7, 2024, reporting a notable performance for the third quarter of fiscal year 2024. The company, a leading U.S. food service distributor, saw significant growth in net sales and profitability, surpassing analyst expectations.
Company Overview
US Foods Holding Corp is a major player in the U.S. food service distribution sector, providing food and nonfood products to various industries, including healthcare, hospitality, and education. The company operates 80 cash-and-carry stores under the Chef'Store banner and generates a substantial portion of its revenue from meats and seafood products.
Financial Performance Highlights
In the third quarter of fiscal year 2024, US Foods reported a 6.8% increase in net sales, reaching $9.7 billion, driven by a 3.8% rise in total case volume and a 3.2% food cost inflation. The company's gross profit surged by 8.1% to $1.7 billion, reflecting improved cost management and pricing strategies.
Net income rose by 55.8% to $148 million, while adjusted EBITDA increased by 13.2% to $455 million, with a margin expansion of 27 basis points. The diluted EPS was $0.61, and the adjusted diluted EPS was $0.85, exceeding the analyst estimate of $0.75.
Operational Challenges and Strategic Execution
Despite facing a softer macroeconomic environment and weather-related disruptions, US Foods successfully executed its strategy-driven operating model. The company achieved its 14th consecutive quarter of market share gains with independent restaurants, highlighting its resilience and adaptability.
“We delivered strong results in the third quarter despite the softer macro environment and weather-related challenges which pressured industry case volumes,” said Dave Flitman, CEO.
Key Financial Metrics and Achievements
US Foods' financial achievements are crucial for its position in the Retail - Defensive industry. The company's ability to grow sales and expand margins amidst challenging conditions underscores its operational efficiency and strategic focus.
| Metric | Q3 2024 | Change |
|---|---|---|
| Net Sales | $9.7 billion | +6.8% |
| Gross Profit | $1.7 billion | +8.1% |
| Net Income | $148 million | +55.8% |
| Adjusted EBITDA | $455 million | +13.2% |
| Adjusted Diluted EPS | $0.85 | +21.4% |
Balance Sheet and Cash Flow Insights
US Foods maintained a strong balance sheet with net debt of $4.7 billion and a net debt to adjusted EBITDA ratio of 2.8x. Cash flow from operating activities for the first nine months of fiscal year 2024 was $891 million, despite a decrease from the prior year due to reduced working capital benefits.
Conclusion
US Foods Holding Corp's robust third-quarter performance, marked by significant sales growth and margin expansion, positions the company well in the competitive food service distribution industry. The company's strategic initiatives and operational efficiencies have enabled it to navigate challenges effectively, delivering value to shareholders and stakeholders alike.
Explore the complete 8-K earnings release (here) from US Foods Holding Corp for further details.
