Sales: $8.9 billion (up 4.8% year-on-year), slightly below expectations of $9.12 billion.
Net income: $82 million, below expectations of $131.29 million.
Earnings per share (EPS): Adjusted diluted EPS of $0.54, beating expected EPS of $0.53.
Gross margin: increased 4.9% to $1.5 billion due to organic deal volume growth and pricing optimization.
Adjusted EBITDA: increased 5.6% to $356 million, with adjusted EBITDA margin increasing 3 basis points compared to the prior year period.
Cash Flow: Operating cash flow decreased to $139 million from $279 million in the prior year, reflecting lower working capital returns.
Acquisition: Completed the acquisition of IWC Food Service, expanding our presence in the central Tennessee market.
On May 9, 2024, US Foods Holding Corp (NYSE:USFD), a leading U.S. food service distributor, released its 8-K filing, announcing its financial results for the first quarter of fiscal 2024. The company reported an increase of 4.8%. Net sales reached $8.9 billion and net income reached $82 million, demonstrating resilience and strategic growth in a challenging market environment.
US Foods Holding Corporation (USFD) Reports Fiscal Year 2024 First Quarter Earnings: A Closer Look at Performance and Financial Metrics
Company Profile
US Foods Holding Corp., headquartered in Rosemont, Illinois, is one of the largest food service distributors in the United States. The company sells food and non-food products to a variety of industries, including healthcare, hospitality and education, as well as independent and chain restaurants and grocery stores. US Foods operates under the Chef’Store banner through an extensive network of distribution facilities and cash-and-carry stores, and generates revenue primarily from meat and seafood products.
Financial performance and market challenges
First quarter results were in line with expectations, reflecting the company’s solid business model and effective market strategy. US Foods achieved gross profit of $1.5 billion, an increase of 4.9% year over year, driven by organic case volume growth and effective cost management. Adjusted EBITDA also increased by 5.6% to $356 million. Despite facing internal and external challenges, such as workforce disruption and rising food costs, the company’s focus on productivity and operational efficiency contributed to these positive results.
Strategic initiatives and acquisitions
US Foods’ strategic initiatives are critical to increasing profitability. The acquisition of IWC Foodservice, which was completed in April 2024, is expected to strengthen the company’s presence in the Middle Tennessee market, particularly in the rapidly growing Nashville area. This move is consistent with US Foods’ strategy to expand market share and strengthen service capabilities in key growth regions.
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Insights into financial statements
Detailed financial statements reveal a disciplined approach to capital management and investment. Operating expenses for the quarter were $1.3 billion, an increase of 7.4% due to higher distribution costs and the impact of recent acquisitions. The company’s net debt was $4.4 billion at the end of the quarter, maintaining a stable net leverage ratio of 2.8x. Management reaffirmed its guidance for fiscal year 2024, projecting net sales of $37.5 billion to $38.5 billion and adjusted EBITDA of $1.69 billion to $1.74 billion.
Investor and Analyst Perspective
During the earnings call, CEO Dave Fritman emphasized the company’s commitment to driving shareholder value and operational excellence. CFO Dirk LoCascio highlighted the strategic financial strategy that has positioned the company for sustained growth. Analysts are likely to focus on the company’s ability to maintain guidance and effectively manage operating costs in the coming quarters.
In conclusion, US Foods Holding Corp’s first quarter 2024 financial results represent a solid start to the year supported by strategic growth initiatives and solid financial management. The company continues to address market challenges and capitalize on strategic opportunities, and remains a leading player in the U.S. food distribution industry.
Looking to the future
US Foods is poised for continued growth with a clear strategic direction and strong market positioning. The company is focused on expanding its customer base, improving operational efficiencies and making strategic acquisitions that are expected to drive long-term growth and enhance shareholder value. Investors and stakeholders will be watching closely to see if US Foods moves forward with its efforts and updates its long-term plan at its investor day on June 5, 2024.
For more information, see US Foods Holding Corp’s full 8-K earnings release here.
This article first appeared on GuruFocus.
