Us Foods Holding Corp. · NYSE:USFD
Us Foods — Q4 2017 Earnings Presentation
25 slides from Us Foods's earnings presentation, Feb 15, 2018
Slide 1: Q4 and Fiscal 2017 Results
US Foods Holding Corporation Q4 and Fiscal 2017 Results February 15, 2018
Slide 2: Cautionary Statements
Cautionary Statements Forward-Looking Statements This presentation contains “forward-looking statements” concerning, among other things, our liquidity, our possible or assumed future results of operations and our business strategies. Our actual results could differ materially from those expressed in
Slide 3: 2017 was another strong year
2017 was another strong year • Strong Adj. EBITDA growth • Above market Independent Restaurant growth • Gross Profit growing faster than Operating Expense • Private label growth • Sponsors fully exited their ownership position • Repurchased 10 million shares • Continued to delever the business 2
Slide 4: Strong organic growth with independent restaurants
Strong organic growth with independent restaurants Case Growth* with Independent Organic CASE GROWTH BY QUARTER* YoY Change* Restaurant Customers Acquisitions YoY percent change* IND Case Growth 10% HC/Hosp Case Growth 8.0% All Other 6.8% 7.1% 6.1% 6.0% 5.4% 8% 6.5% 4.7% 4.0% 5.2% 4.6% 4.1% 3.5% 3.8
Slide 5: Outlook shows continued growth for Independent Restaurants and consumer spending
Outlook shows continued growth for Independent Restaurants and consumer spending Real Growth % Real Consumer Spending at Restaurants Positively Impacted by Tax Reform Independents National Chains 3 December Forecast January Forecast 4 2 3 Percent change 2 1 1 0 0 2016 2017 2018 2017-2022 2016 2017 2
Slide 6: Our Great Food. Made Easy. strategy continues to resonate with customers
Our Great Food. Made Easy. strategy continues to resonate with customers Scoop E-Commerce Value Added Services 7000 # OF CUSTOMER PLACEMENTS 50% 60% SCOOP CUSTOMER TRIAL RATE* 6000 IND E-COMM PENETRATION 50% 5000 40% 40% 4000 30% 3000 30% 20% 2000 20% 1000 10% 10% 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 0% 0% Spr
Slide 7: Sustainable products are in demand and on trend
Sustainable products are in demand and on trend • Our 20th edition of Scoop is dedicated to sustainable products • More than 280 sustainable products launched under our Serve Good program • Almost 25% of customers purchase at least one sustainable product per month 6
Slide 8: Technology improvements are driving engagement
Technology improvements are driving engagement • Enhanced product and value added services content • My Favorites allows for a personalized user experience • Average time spent on the site is up 27% 7
Slide 9: Progress continues on Gross Profit and Operating Expense initiatives
Progress continues on Gross Profit and Operating Expense initiatives ◔ Just Starting ● Completed Expected Expected GP Initiatives Status Completion OPEX Initiatives Status Completion CookBook pricing ● Complete Cost resets* ● Complete Strategic vendor management ◕ Ongoing Indirect spend centralizati
Slide 10: Volume growth and year-over-year inflation driving increase in Net Sales
Volume growth and year-over-year inflation driving increase in Net Sales Q4 Net Sales RESULTS SUMMARY $ Millions b/(w) $5,996 Net Sales drivers: $5,678 • Volume growth with target customer types 5.6% • Acquisition volume • YOY inflation, primarily in commodity categories • Q4: positive impact from c
Slide 11: Q4 Gross Profit dollar gains significantly outpacing volume growth
Q4 Gross Profit dollar gains significantly outpacing volume growth Q4 Gross Profit RESULTS SUMMARY $ Millions; Percent of Sales b/(w) $1,074 Gross Profit drivers: $1,027 • Volume growth across target customer types 4.6% • Margin initiatives progressing • Cookbook pricing 18.1% 17.9% (20) bps • Priva
Slide 12: Strong operating expense management is offsetting cost increases
Strong operating expense management is offsetting cost increases Q4 Operating Expenses RESULTS SUMMARY $ Millions; Percent of Sales b/(w) Operating Expense drivers: $911 2.1% $892 • Higher volume • Positive impact from initiatives • Strong cost control 16.0% 14.9% 110 bps Additional benefits: • Q4:
Slide 13: Contribution margin leverage expanded throughout the year
Contribution margin leverage expanded throughout the year ADJ GROSS PROFIT AND ADJ OPERATING EXPENSE $/case higher/lower than prior year Adj GP Adj OPEX $0.15 $0.08 per case variable contribution $0.10 flat per case $0.12 per case $.11 variable contribution variable contribution better $0.05 $.06 $.
Slide 14: Key profitability metrics improving over prior year
Key profitability metrics improving over prior year Q4 Adjusted EBITDA* Q4 Operating Income Q4 Net Income $ Millions; Percent of Sales $ Millions; Percent of Sales $ Millions 2016 $118M tax benefit 2017 $290 $182 $256 $265 9.4% $116 57% $120 $98 $77 4.7% 4.8% 2.0% 3.0% 2016 2017 2016 2017 GAAP Adjus
Slide 15: Operating cash flow also improving, leading to lower leverage and interest expense
Operating cash flow also improving, leading to lower leverage and interest expense FY Operating Cash Flow FY Net Debt* and Leverage FY Interest Expense $ Millions $ Millions $ Millions, Percent Change b/(w) Leverage ** Net Debt ex buyback $229 $748 $3,651 $3,638 26% 3.8x $170 $556 3.4x 2016 2017 201
Slide 16: 2018 guidance
2018 guidance 2018 Guidance Unit Growth 1 – 2% Net Sales Growth 3 – 4% Adjusted EBITDA Growth 6 – 8% Cash CAPEX $250 - $260M (ex Future Acquisitions) Interest Expense $175 - $180M Depreciation & Amortization $340 - $350M Adj Effective Tax Rate 25% - 26% Adjusted Diluted EPS $2.00 - $2.10 Three Year
Slide 17: Appendix
APPENDIX: • Q4 AND FISCAL 2017 SUMMARY • NON-GAAP RECONCILIATIONS 16
Slide 18: Fourth Quarter Financial Performance
Fourth Quarter Financial Performance (1) Reported Adjusted (unaudited) (unaudited) 13-Weeks Ended 13-Weeks Ended 13-Weeks Ended 13-Weeks Ended $ in millions, except per share data* December 30, 2017 December 31, 2016 Change December 30, 2017 December 31, 2016 Change Case Growth 1.9 % Net Sales 5,996
Slide 19: Year to Date Financial Performance
Year to Date Financial Performance Reported Adjusted(1) (unaudited) (unaudited) 52-Weeks Ended 52-Weeks Ended 52-Weeks Ended 52-Weeks Ended $ in millions* except per share data December 30, 2017 December 31, 2016 Change December 30, 2017 December 31, 2016 Change Case Growth 2.9% Net Sales 24,147 22,
Slide 20: Non-GAAP Reconciliation - Adjusted Gross Profit and Adjusted Operating Expenses
Non-GAAP Reconciliation - Adjusted Gross Profit and Adjusted Operating Expenses 13-Weeks Ended 52-Weeks Ended (unaudited) (unaudited) December 30, December December 30, December ($ in millions)* 2017 31, 2016 2017 31, 2016 Gross Profit (GAAP) $1,074 $1,027 $4,218 $4,053 LIFO reserve change (1) - 7 1
Slide 21: Non-GAAP Reconciliation - Adjusted Operating Income
Non-GAAP Reconciliation - Adjusted Operating Income 13-Weeks Ended 52-Weeks Ended (unaudited) (unaudited) December 30, December December 30, December 2017 31, 2016 2017 31, 2016 ($ in millions)* Operating Income (GAAP) $182 $116 $574 $414 Adjustments: Depreciation and amortization expense 83 107 378
Slide 22: Non-GAAP Reconciliation - Adjusted EBITDA and Adjusted Net Income
Non-GAAP Reconciliation - Adjusted EBITDA and Adjusted Net Income 13-Weeks Ended 52-Weeks Ended (unaudited) (unaudited) December 30, December 31, December 30, December 31, ($ in millions)* 2017 2016 2017 2016 Net income (GAAP) $256 $77 $444 $210 Interest expense, net 44 39 170 229 Income tax benefit
Slide 23: Non-GAAP Reconciliation - Adjusted Diluted Earnings Per Share (EPS)
Non-GAAP Reconciliation - Adjusted Diluted Earnings Per Share (EPS) 13-Weeks Ended 52-Weeks Ended (unaudited) (unaudited) December 30, December December 30, December 2017 31, 2016 2017 31, 2016 Diluted EPS (GAAP) $ 1.15 $ 0.34 $ 1.97 $ 1.03 Sponsor fees (1) - - - 0.18 Restructuring (benefit) charges
Slide 24: Non-GAAP Reconciliation – Net Debt and Net Leverage Ratios
Non-GAAP Reconciliation – Net Debt and Net Leverage Ratios (unaudited) ($ in millions)* December 30, 2017 December 31, 2016 Total Debt (GAAP) $3,757 $3,782 Cash and cash equivalents (119) (131) Net Debt (Non-GAAP) $3,638 $3,651 Adjusted EBITDA (1) $1,058 $972 Net Leverage Ratio (2) 3.4 3.8 *Individu
Slide 25: FOODS
@ FOODS KEEPING KITCHENS COOKING.”