US Foods Holding Corp., one of the largest foodservice distributors in the United States, announced results for the second quarter fiscal year 2022.
Second-quarter fiscal 2022 highlights
- Net income available to common shareholders improved to $61 million.
- Adjusted EBITDA increased 10.8% to $368 million.
- Diluted EPS was $0.27; adjusted diluted EPS was $0.67.
- Net sales increased 15.2% to $8.8 billion.
- Total case volume and independent restaurant case volume were flat.
- Gross profit increased 18.3% to $1.4 billion.
Six-month fiscal 2022 highlights
- Net income available to common shareholders was $45 million.
- Adjusted EBITDA increased 20.8% to $609 million.
- Diluted EPS was $0.20; adjusted diluted EPS was $0.99.
- Net sales increased 19.1% to $16.6 billion.
- Total case volume increased 1.7%; independent restaurant case volume increased 4.3%.
- Gross profit increased 18.7% to $2.6 billion.
Interim CEO Andrew Iacobucci stated in the announcement, “Our results this quarter demonstrate significant progress on the execution of our long-range plan. Our strategic initiatives are driving results as we grew market share with gains in key customer types, implemented key supply chain initiatives to improve service levels, and expanded our omnichannel strategy with continued CHEF'STORE growth. We remain well-positioned to deliver profitable growth and value for our shareholders in a challenging macro environment and I am confident in our ability to achieve our 2022 outlook and long-range plan.”
Second-quarter fiscal 2022 results
Net income available to common shareholders was $61 million, an improvement of $15 million compared to the prior year. Adjusted EBITDA was $368 million, an increase of $36 million or 10.8%, compared to the prior year. Adjusted EBITDA margin was 4.2%, a decrease of 10 basis points compared to the prior year. Diluted EPS was $0.27; Adjusted diluted EPS was $0.67.
Net sales were $8.8 billion for the quarter, an increase of 15.2% from the prior year, driven by food cost inflation of 15% compared to the same quarter a year ago. Total case volume was flat to the prior year driven by flat independent restaurant case volume, a 35.0% increase in hospitality volume and a 2.4% increase in healthcare volume, offset by an 8.7% decrease in chain volume. Year-over-year total case growth for the second quarter was also negatively impacted roughly 375 basis points by the mid-2021 exit of the lower margin grocery retail business we temporarily added during the pandemic and the strategic exit of a small number of lower margin chain restaurant and education customers.
Gross profit was $1.4 billion, an increase of 18.3% from the prior year. Key drivers included optimized pricing, increased freight income from improved inbound logistics, and cost of goods sold optimization. Food cost inflation in multiple product categories also contributed to increased Gross profit. LIFO method of inventory costing resulted in an expense of $65 million in 2022 compared to expense of $97 million in 2021 due to inflation in multiple product categories including poultry, dairy, and grocery. Gross profit as a percentage of net sales was 15.7%. Adjusted gross profit was $1.4 billion, a 14.4% increase from the prior year. Adjusted gross profit as a percentage of net sales was 16.4%. Adjusted gross profit per case in the second quarter of 2022 continued at very strong levels due to the aforementioned factors.
Six-month fiscal 2022 results
Net income available to common shareholders was $45 million, an improvement of $38 million compared to the prior year. Adjusted EBITDA was $609 million, an increase of $105 million or 20.8%, compared to the prior year. Adjusted EBITDA margin was 3.7%, an increase of 10 basis points compared to the prior year and reflecting the operating leverage from adjusted gross profit increasing greater than adjusted operating expenses. Diluted EPS was $0.20; adjusted diluted EPS was $0.99.
Net sales were $16.6 billion for the first six months of 2022, an increase of 19.1% from the prior year, driven by food cost inflation of 16% compared to the first six months a year ago. Total case volume increased 1.7% from the prior year driven by a 4.3% increase in independent restaurant volume, a 46.4% increase in hospitality volume and a 1.6% increase in healthcare volume, partially offset by an 5.9% decrease in chain volume.
Year-over-year total case growth for the first six months was also negatively impacted roughly 425 basis points by the 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 $2.6 billion, an increase of 18.7% from the prior year. Key drivers included an increase in total case volume, optimized pricing, increased freight income from improved inbound logistics and cost of goods sold optimization. Food cost inflation in multiple product categories also contributed to increased gross profit. 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 15.5%. Adjusted gross profit was $2.7 billion, an 18.6% increase from the prior year. Adjusted gross profit as a percentage of net sales was 16.3%. Adjusted gross profit per case for the first six months of 2022 was very strong due to the aforementioned factors.
Outlook for fiscal year 2022
The Company reaffirms its 2022 guidance of:
- Adjusted EBITDA of $1.2-$1.3 billion, with continued confidence toward the higher end of the Adjusted EBITDA range.
- Adjusted diluted EPS of $1.95-$2.25.
- Cash capital expenditures of $280-$300 million with fleet capital leases to be an additional ~$110 million.
- Net debt to adjusted EBITDA leverage of approximately 3.5x by end of fiscal year 2022.
