Us Foods Holding Corp. · NYSE:USFD
Us Foods — Q1 2020 Earnings Presentation
29 slides from Us Foods's earnings presentation, May 5, 2020
Slide 1: COVID-19 Update and Q1 Fiscal 2020 Results
COVID-19 Update and Q1 Fiscal 2020 Results May 5, 2020
Slide 2: Cautionary statements regarding forward-looking information
Cautionary statements regarding forward-looking information This presentation contains “forward-looking statements” within the meaning of the federal securities laws concerning, among other things, our liquidity, our possible or assumed results of operations and our business strategies. These forwar
Slide 3: COVID-19 is impacting our communities, families and the world around us
COVID-19 is impacting our communities, families and the world around us A big THANK YOU to: Supporting our Communities • Frontline healthcare workers • Prioritizing deliveries for healthcare customers • Emergency responders • $10 million of product donated to those in need • Our customers • Supporti
Slide 4: Agenda
Agenda Q1 Review and Volume Trends Actions to Support Customers Industry Update Cost Reduction Actions Acquisition Update Liquidity Position Thoughts on 2020
Slide 5: Q1 showed solid momentum prior to COVID-19 outbreak
Q1 showed solid momentum prior to COVID-19 outbreak January and February case volume and Adj EBITDA growth was in line with expectations March case volume and Adj EBITDA heavily impacted by COVID-19 • Case volume decline began in week 2 of March; by the last week of the month case volumes were down
Slide 6: COVID-19 is having a significant impact on case volume; restaurant case volume beginning to show improvement
COVID-19 is having a significant impact on case volume; restaurant case volume beginning to show improvement Organic Case Growth by Customer Group and Week YOY percent change 100% Restaurants Healthcare Hospitality Retail Total 80% 60% 40% 20% 0% -20% -40% -60% -80% -100% WE 3/21 WE 3/28 WE 4/4 WE 4
Slide 7: Consumers are looking forward to going out to eat again
Consumers are looking forward to going out to eat again; total restaurant sales are showing week over week growth After COVID-19 resolves itself and social distancing Estimated foodservice spending restrictions are lifted, which of the following activities do you most look forward to engaging in aga
Slide 8: We have pivoted our team based selling and value added services to help customers
We have pivoted our team based selling and value added services to help customers respond to current environment What We’re Doing… …Resulting In Strong Customer Feedback 95% CARES Act Accelerating of participants are extremely or Education Take Out very likely to recommend our CARES Webinar to peers
Slide 9: In distribution, we quickly put safety and business continuity plans in place
In distribution, we quickly put safety and business continuity plans in place, while reducing variable labor in line with reduced volumes Committed to the ongoing safety of our associates and customers • Conducting associate wellness checks at all facilities • Associates assigned to specific work zo
Slide 10: We've also reduced both selling and admin costs, while managing working capital
We’ve also reduced both selling and admin costs, while managing working capital Actions taken to reduce selling costs • Furloughs to sales support • Reduced size of sales force Actions taken to reduce admin costs • Furloughs and hiring freezes across the enterprise • Temporary reductions to manageme
Slide 11: Recent acquisitions help fill white space; performance in line with expectations
Recent acquisitions help fill white space; performance in line with expectations Food Group • Case volume trends very similar to those seen in US Foods legacy business • Integration activities on pause until travel resumes and customers reopen • Synergies delayed in line with pause on integration ac
Slide 12: Current liquidity positions us well regardless of the length of the economic recovery
Current liquidity positions us well regardless of the length of the economic recovery Securing significant liquidity was important given the uncertainty in duration and severity of the COVID-19 impact Available liquidity positions US Foods to emerge as a stronger competitor post COVID-19 Two recover
Slide 13: Strong capital structure with no significant debt maturities until 2023
Strong capital structure with no significant debt maturities until 2023 ($ Millions) March 2020 April 20201 • Recent financing actions fund Debt: ABS $640 $0 acquisition and strengthen ABL $700 $700 liquidity position: Existing Term Loans $3,619 $3,610 • $500M preferred equity New Term Loan $0 $300
Slide 14: Thoughts on 2020
Thoughts on 2020 Unable to provide an updated FY 2020 financial outlook at this time Expect COVID-19 to have a significant impact on Q2 2020 results Recent financing actions allow us to operate from a position of strength We operate in a large, resilient industry and are well positioned to serve cus
Slide 15: Q1 2020 Financial Results
Q1 2020 FINANCIAL RESULTS 14
Slide 16: Food Group acquisition driving total case growth; organic case growth heavily impacted
Food Group acquisition driving total case growth; organic case growth heavily impacted by COVID-19 outbreak in March Independent Restaurant Case Growth Organic Case Growth by Quarter YOY percent change YOY percent change Organic Acquisitions Independent Restaurants 11.9% 10% Healthcare/Hospitality A
Slide 17: Increase in Net Sales driven by addition of Food Group
Increase in Net Sales driven by addition of Food Group; inflation moderating from highs seen in 2019 Q1 Net Sales Results Summary $ Millions b/(w) Net Sales drivers: $6,339 5.1% • Food Group contributed $654M, or 10.3%, to Q1 Net Sales $6,031 • Inflation in cheese, grocery and produce • COVID-19 hea
Slide 18: Increase in total Gross Profit is a result of the addition of Food Group
Increase in total Gross Profit is a result of the addition of Food Group; customer mix changes are driving drop in Gross Profit rate Q1 Gross Profit Results Summary $ Millions; Percent of Sales b/(w) $1,052 $1,066 1.3% Gross Profit drivers: • 80 bps expansion in private brand sales • New grocery bus
Slide 19: Q1 Operating Expenses impacted by addition of Food Group and stranded costs
Q1 Operating Expenses impacted by addition of Food Group and stranded costs associated with COVID-19 case volume declines Q1 Operating Expense Results Summary $ Millions; Percent of Sales b/(w) $1,192 Operating Expense drivers: 29.4% $921 • Incremental $170 million reserve charge for uncollectible a
Slide 20: Key financial metrics impacted by decline in March case volume
Key financial metrics impacted by decline in March case volume Q1 Adjusted EBITDA* Q1 Adjusted Diluted Earnings Q1 Net Income (Loss) 2019 $ Millions; Percent of Sales Per Share* $ Millions 2020 $ $232 $89 $0.41 $71 $177 23.7% $32 64.0% $0.15 63.4% 3.8% 2.8% ($132) 2019 2020 2019 2020 GAAP Adjusted*
Slide 21: Working capital was the primary driver of cash flow decline
Working capital was the primary driver of cash flow decline; actions to address were put in place at the end of Q1 Q1 Operating Cash Flow Q1 Net Debt* and Leverage $ Millions $ Millions Leverage ** $154 $4,830 $4,638 $3,289 4.2x 3.9x 3.0x ($62) Q1 2019 Q4 2019 Q1 2020 2019 2020 * Reconciliations of
Slide 22: Appendix: Q1 Fiscal 2020 Summary & Non-GAAP Reconciliations
APPENDIX: Q1 FISCAL 2020 SUMMARY & NON-GAAP RECONCILIATIONS 21
Slide 23: First quarter financial performance
First quarter financial performance Reported Adjusted (1) (unaudited) (unaudited) 13 Weeks Ended 13 Weeks Ended March 28, March 30, March 28, March 30, ($ in millions, except per share data) 2020 2019 Change 2020 2019 Change Case Growth 3.4% Net Sales 6,339 6,031 5.1% Gross Profit 1,066 1,052 1.3% 1
Slide 24: Non-GAAP reconciliation - Adjusted Gross Profit and Adjusted Operating Expenses
Non-GAAP reconciliation - Adjusted Gross Profit and Adjusted Operating Expenses 13 Weeks Ended (unaudited) ($ in millions) March 28, 2020 March 30, 2019 Gross profit (GAAP) $1,066 $1,052 LIFO reserve change (1) (13) (2) Adjusted Gross profit (Non-GAAP) $1,053 $1,050 Operating expenses (GAAP) $1,192
Slide 25: First quarter Non-GAAP reconciliation - Adjusted EBITDA and Adjusted Net Income
First quarter Non-GAAP reconciliation - Adjusted EBITDA and Adjusted Net Income 13 Weeks Ended (unaudited) March 28, March 30, ($ in millions) 2020 2019 Net (loss) income (GAAP) $(132) $71 Interest expense—net 52 42 Income tax (benefit) provision (40) 20 Depreciation expense 82 71 Amortization expen
Slide 26: First quarter Non-GAAP reconciliation - Adjusted EBITDA and Adjusted Net Income
First quarter Non-GAAP reconciliation - Adjusted EBITDA and Adjusted Net Income (1) Share-based compensation expense for stock and option awards and discounts provided under employee stock purchase plan. (2) Represents the non-cash impact of LIFO reserve adjustments. (3) Consists primarily of costs
Slide 27: First quarter Non-GAAP reconciliation - Adjusted Diluted Earnings Per Share (EPS)
First quarter Non-GAAP reconciliation - Adjusted Diluted Earnings Per Share (EPS) 13 Weeks Ended (unaudited) March 28, March 30, 2020 2019 Diluted EPS (GAAP) ($0.60) $0.32 Share-based compensation expense (1) 0.03 0.03 LIFO reserve change (2) (0.06) (0.01) Business transformation costs (3) 0.03 — CO
Slide 28: Non-GAAP reconciliation - Net Debt and Net Leverage Ratios
Non-GAAP reconciliation - Net Debt and Net Leverage Ratios (unaudited) ($ in millions, except ratios) March 28, 2020 December 28, 2019 March 30, 2019 Total Debt (GAAP) $5,915 $4,736 $3,381 Cash, cash equivalents and restricted cash (1,085) (98) (92) Net Debt (Non-GAAP) $4,830 $4,638 $3,289 Adjusted
Slide 29: We Help You Make It
WE HELP YOU US. MAKE IT