Us Foods Holding Corp. · NYSE:USFD
Us Foods — Investor Day (March 2018)
100 slides from Us Foods's investor day presentation, Mar 15, 2018
Slide 1: A Taste of What's Cooking at US Foods
A TASTE OF WHAT’S COOKING AT US FOODS Investor Day March 15, 2018 1
Slide 2: Agenda
AGENDA 8:30am Welcome Melissa Napier 8:35am Opening Remarks Pietro Satriano 8:45am Industry Overview David Rickard 8:55am Merchandising Andrew Iacobucci, Stacie Sopinka, Jim Osborne 9:25am Independent Restaurants Jay Kvasnicka 9:40am Nationally Managed Customers Steve Guberman 9:55am Q&A Management
Slide 3: Forward-Looking Statement
Forward-Looking Statement 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 the forward-looking st
Slide 4: Opening Remarks
Opening Remarks Pietro Satriano Chairman and Chief Executive Officer 4
Slide 5: Three reasons to be an owner in US Foods
Three reasons to be an owner in US Foods 1 2 3 Attractive industry with Differentiated strategy Enhanced focus on favorable outlook deployed against most significant cost reduction favorable customer types opportunities Leads to 8-10% Adjusted EBITDA growth 5
Slide 6: Executive Leadership Team
Executive Leadership Team JAY KVASNICKA STEVE GUBERMAN ANDREW IACOBUCCI TY GENT DAVID RICKARD Executive Vice Executive Vice Chief Merchandising Chief Supply Executive Vice President, President, Locally President, Nationally Officer Chain Officer Strategy & Revenue Managed Sales Managed Business Mana
Slide 7: Industry Overview
Industry Overview David Rickard EVP Strategy and Revenue Management 7
Slide 8: The foodservice industry is large and growing, resilient and fragmented
The foodservice industry is large and growing, resilient and fragmented. 8
Slide 9: Foodservice Size and Growth
FOODSERVICE SIZE AND GROWTH CONSUMER SPENDING ON FOOD DISTRIBUTOR SHARE HISTORICAL TREND $B, 2017 dollars % of total US spend by type % of total market $24B $172B $289B 80% Top 5 24% 70% 35% $313 Food at Home $21B Top 6-50 7% 60% 8% 50% $289 Rest of 69% 40% market 57% $268 Food Away From Home 30% 20
Slide 10: Independents are positioned for continued strong growth
Independents are positioned for continued strong growth INDUSTRY GROWTH BY CUSTOMER TYPE CONSUMER PREFERENCES % case growth % gap between Independents and Chains Favor Favor Chains Independents 4.5% CUSTOMER EXPERIENCE: Community Oriented Is Special Personalized Service 3.2% Shares My Values FOOD QU
Slide 11: Two key trends expected to shape our industry
Two key trends are expected to shape our industry driving faster independent restaurant growth DEMOGRAPHIC DRIVE TO CHANGES DIGITAL 11
Slide 12: Demographic trends support growth of independents
Demographic trends support growth of independents Diversity Local and sustainable Eat out more Technology 12
Slide 13: Technology is also favoring independents
Technology is also favoring independents PERSONALIZED DELIVERY MEAL VIRTUAL APPS MADE EASY KITS RESTAURANTS GREEN SAVORY SUMMIT Note: Trademarks of third parties used in this presentation are the property of those third parties and are used only for reference purposes 13
Slide 14: Positive outlook for independent restaurants
Positive outlook for independent restaurants supported by… 1 2 3 Strong industry Favorable Growing importance fundamentals generational trends of technology 14
Slide 15: Merchandising
Merchandising Andrew Iacobucci Chief Merchandising Officer 15
Slide 16: We are different because of our industry leading…
We are different because of our industry leading… Product Team-Based Technology Innovation Selling 16
Slide 17: Product Innovation
Product Innovation Stacie Sopinka SVP Innovation and Quality 17
Slide 18: We are leaders in product innovation
We are leaders in product innovation due to our unique capabilities SCOOP CASE VOLUME 460 products launched nationally 2011 2012 2013 2014 2015 2016 2017 83% 14% 6% Stick rate Bigger baskets Higher retention 18
Slide 19: How ideas become innovative products
How ideas become innovative products Ideation Supplier selection Prototype Plant trials Commercialization 19
Slide 20: Two key trends driving innovation
Two key trends are shaping the restaurant industry and driving innovation Local and sustainable Labor and food cost 20
Slide 21: E-Commerce and Value Added Services
E-Commerce and Value Added Services Jim Osborne SVP Locally Managed Sales and Business Solutions 21
Slide 22: Leading e-commerce centered around user experience
Leading e-commerce centered around user experience, personalization and integration 22
Slide 23: Our e-commerce site is available in ten languages
Our e-commerce site is available in ten different languages 23
Slide 24: Robust platform drives adoption and stickiness
Robust platform drives adoption and stickiness TECHNOLOGY Total E-Commerce Penetration Independent Restaurant E-Commerce Penetration IMPACT ON 80% INDEPENDENT CUSTOMERS 70% 60% 7% 50% Bigger baskets 40% 30% 5% 20% Higher retention 10% 0% 2013 2017 24
Slide 25: Value added services drive stickiness
Our value added services make it easier for customers to run their businesses and drive stickiness to US Foods Drive Optimize Reduce Traffic Labor Waste 25
Slide 26: Drive Traffic
ChowNow ) Batre Sua 2 Gear 1 tara Sarah Goldsmith smst Dish Details 126 Quinoa Pear Salad sonnes John Cummings ines saad with berbed prices, ADD TO ORDER e Christopher Goodman ADD TO ORDER
Slide 27: Optimize Labor
Optimize Labor 27
Slide 28: Reduce Waste
Reduce Waste 28
Slide 29: Growth of value added services
Growth of value added services highlights demand and helps customers build their business 7,000 6,000 Number of Customer Placements 5,000 4,000 3,000 2,000 1,000 0 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 29
Slide 30: Slide 30
Slide 31: JASONMACCURDY | : At
| = E JASONMACCURDY | : At The Chick MADE EASY.”
Slide 32: Several levers remain to expand Gross Profit
Several levers remain to continue to expand Gross Profit ADJUSTED GROSS PROFIT DOLLARS PER CASE KEY LEVERS Indexed Pricing and Analytics Strategic Vendor Management Private Brands Freight Management ◔ ● FY 14 FY 15 FY 16 FY 17 FY 18-20 Early Stages Completed 32
Slide 33: Big data drives margin gains
Big data helps to drive margin gains and consistent execution Pricing TM recommendations Personalized promos Firefly Customer retention “White space” opportunities 33
Slide 34: Strategic Vendor Management
Strategic Vendor Management is another contributor to gross profit expansion Centralize Focus on Merchandising Category Fundamentals Enhance Commodity Management 34
Slide 35: Private brand growth is a crucial source of Gross Profit
Private brand growth is a crucial source of Gross Profit GROSS PROFIT PER CASE PRIVATE BRAND OFFERING BEST 2X BETTER Manufacturer Brands US Foods Brands GOOD 35
Slide 36: Expanding our private brands playbook
We are expanding our playbook to ensure continued growth of our private brands PRIVATE BRAND PENETRATION DRIVERS OF FUTURE GROWTH +100bps TM Compensation per year +100bps per year Expanded Core 37% Assortment 34% 32% Enhanced Training and Conversion Support 2015 2017 2020 36
Slide 37: Inbound freight optimization
Inbound freight optimization is also an enabler of cost of goods improvement Produce Centralized Freight Redistribution Centers Replenishment Management 37
Slide 38: Cash and carry expands our reach
Cash and carry expands our reach and increases share of wallet with existing customers • Good sales per square foot • Accretive to truck delivered business • Attractive overall economics 38
Slide 39: Flexible delivery targets dense urban markets
Flexible delivery targets dense urban markets • Six-day-a-week deliveries • Late order cut-offs • Strong case growth and highly attractive economics 39
Slide 40: Omnichannel approach grows share of wallet
Omnichannel approach grows share of wallet and expands reach Get It By… Single Price • Doubles assortment available to customers • Fully integrated with online ordering interface 40
Slide 41: US. We Help You Make It
US. WE HELP YOU oops MAKE IT
Slide 42: Independent Restaurants
Independent Restaurants Jay Kvasnicka EVP Locally Managed Sales & Field Operations 42
Slide 43: Significant opportunity for growth with independent restaurants
4.8% We have a significant opportunity for growth 4.2% Healthcare with independent Retail EXPECT ED 5- Y EAR G RO W T H 3.6% restaurants $15B Hospitality BY CUST OM ER T Y PE Education 3.0% $34B (College & Universities) 2.4% $20B 1.8% Independent $9B Restaurants National Chain $71B 1.2% Restaurants
Slide 44: Growth with highly profitable independent restaurants
Growth with highly profitable independent restaurants remains a key focus INDEPENDENT RESTAURANT ORGANIC KEYS TO SUCCESS CASE GROWTH YOY Change 4-6% 8% expected growth 7% Product Team-Based Innovation Technology Selling 6% 5% 4% 3% 2% 1% 0% 2016 2017 2018-2020 Note: 2016 adjusted to remove impact of
Slide 45: Our selling model helps us win with independents
Our selling model is unique and helps us win with independent restaurants OLD SCHOOL US FOODS Customer Relationship Single Contact • Team-Based Selling Seller Taking Orders • Consultative Selling • Category: COP, Produce, Non-Foods Specialist Resource Ad Hoc • Business Solutions: ROC, Food Fanatic C
Slide 46: Significant opportunities with new and current customers
Significant opportunities exist with new and current customers INDEPENDENT RESTAURANTS 449K operators About 30% of our 87K Current US Foods Customers independent restaurant customers buy less than 20% of their purchases from US Foods Source: Technomic 2017 Industry Study 46
Slide 47: Prioritizing the right prospective customers
We are focused on prioritizing the right prospective customers INDEPENDENT RESTAURANTS 449K operators Proximity Size 362K Potential Customers Attitudes Source: Technomic 2017 Industry Study 47
Slide 48: Talent management increasing seller productivity
Talent management is increasing seller productivity and yielding faster growth and better customer retention NUMBER OF SALES REPS GROWTH PERCENT BY ROUTE SIZE 4,500 10 ▬ Growth Route size 8 4,000 Number of Sales Reps 3,500 8 6 Route size ($M) Avg. growth (%) 3,000 2,500 6 4 2,000 4 1,500 2 1,000 2
Slide 49: Above market growth with independents is driven by…
Above market growth with independent restaurants is driven by… 1 2 3 Large Superior Best opportunity selling model talent 49
Slide 50: Nationally Managed Customers
Nationally Managed Customers Steve Guberman EVP Nationally Managed Business 50
Slide 51: Opportunity across nationally managed customers
4.8% Targeted Nationally Managed We have a significant Customers opportunity for growth 4.2% Healthcare and profit improvement Retail EXPECT ED 5- Y EAR G RO W T H 3.6% across nationally $15B Hospitality BY CUST OM ER T Y PE managed customers 3.0% $34B Education (College & Universities) 2.4% $20B 1.
Slide 52: Healthcare, hospitality and university customers key to growth
Healthcare, hospitality and university customers remain a key part of our growth strategy HEALTHCARE, HOSPITALITY, COLLEGE & UNIVERSITY CASE GROWTH YOY Change 5% 4% 2-3% expected growth Product Team-Based 3% Innovation Technology Selling 2% 1% 0% 2016 2017 2018-2020 Note: 2016 adjusted to remove imp
Slide 53: Our selling model wins with nationally managed customers
Our selling model is unique and helps us win with nationally managed customers OLD SCHOOL US FOODS • Empowered Single Point of Contact Corporate Relationship Limited Compliance • Consistent Execution • Consultative Selling Seller Administrative • Local Support • National Coverage Specialist Resource
Slide 54: Single technology platform leads to integrated solutions
Single technology platform leads to integrated customer solutions Centralized control Contract compliance Business intelligence Inventory and menu management Extensive product information US Foods® mobile 54
Slide 55: Value added services address healthcare operator challenges
Our value added services also address key challenges of healthcare operators Value Added Services Percent of operators who say their biggest challenges are: Trendview Keep Foodservice Costs On Target 63% 60% 55% Product Selection Cost-Management Made Easy. Dietary needs Managing Managing food costs
Slide 56: Opportunity with all other customers
4.8% We have a significant All Other Customers opportunity for growth 4.2% Healthcare and profit improvement Retail EXPECT ED 5- Y EAR G RO W T H 3.6% with all other customers $15B Hospitality BY CUST OM ER T Y PE Education 3.0% $34B (College & Universities) 2.4% $20B 1.8% Independent Restaurants $9
Slide 57: Becoming smarter about which customers to pursue
We are becoming smarter about which customers to pursue… ILLUSTRATIVE CUSTOMER PROFIT MODEL Indexed New Model Gross Profit Activity Based Dollars Costing Old Model Market Average Costing OPEX Contribution Margin -20 0 20 40 60 80 100 57
Slide 58: Increased profitability and positive case growth
…which leads to increased profitability and positive case growth IMPACT ON PROFITABILITY ALL OTHER CASE GROWTH 2017 Indexed, New vs Exited Customers YOY Change 3% 2% 0-1% Exits expected New 1% growth 0% 2016 2017 2018-2020 Contribution Margin ROIC Note: All other expected to be negative in fiscal 20
Slide 59: Grocery retail is a profitable growth segment
Grocery retail, or “grocerants,” US FOODS MARKET SHARE is a profitable growth segment in $ Billions; 2018 - 2020 forecasted growth which we are underrepresented and increasing our focus $25 1.8% 3.9% $20 3.5% Value Proposition US FOODS $15 Innovative Products $10 Technology $5 Selling Model $0
Slide 60: US. We Help You Make It
US. WE HELP YOU oops MAKE IT
Slide 61: Technology
Technology Keith Rohland Chief Information Officer 61
Slide 62: Maintaining best sales and customer technology in the industry
We will maintain our position as having the best sales and customer technology in the industry Common platform Customer focus Strategic alignment Integrated tools 62
Slide 63: Technology platform features benefit all customer types
4.8% The features of our 4.2% technology platform benefit all of our Healthcare COMMON FEATURES Retail customer types EXPECT ED 5- Y EAR G RO W T H 3.6% $15B Hospitality Robust Analytics BY CUSTOM ER T Y PE 3.0% $34B Education (College & Universities) Simple Ordering 2.4% $20B 1.8% Independent Flexi
Slide 64: Digital Customer Experience from prospect to customer
Our Digital Customer Experience creates comprehensive engagement from prospect to customer Awareness Intent Nurture Convert Retain 64
Slide 65: Optimizing back-office processes and systems
We are optimizing our back-office processes and systems to decrease costs and provide actionable insights Digital Collaboration Modern Finance Platform Self-Service HR Portal Data Visualization AI, IoT and Bots Note: Trademarks of third parties used in this presentation are the property of those thi
Slide 66: Technology for supply chain
We have begun to do for supply chain what we did to enable our sales and customer technology IT CAPITAL SPEND Supply Chain Other Input from the front lines Identify key pain points Leverage latest technology Deliver on commitments 2015-2017 2018-2020 66
Slide 67: Supply Chain
Supply Chain Ty Gent Chief Supply Chain Officer 67
Slide 68: Highly motivated teams with a performance culture
US Foods has highly motivated teams with a tremendous performance culture Supply Chain Organization World Class Sales Organization Merch Organization Talented & Focused Innovative & Experienced Leading Edge E-Commerce/IT Capabilities 68
Slide 69: Moving supply chain to a strategic advantage
Our vision is to move our supply chain from an operational necessity to a strategic advantage Re-designing Targeted Investments Value Capture Our Network Warehouse Automation Upgrading Supply Implementing End to Chain Systems End Demand Chain Solutions Rapid Establishing a Implementation Culture of
Slide 70: A clear roadmap to achieve supply chain objectives
We have a clear roadmap to achieve our supply chain objectives. As we speak… IMPLEMENTING INVESTING AND PILOTING EXPLORING Best Practices Systems Automation and Continuous and Technology and Network Improvement • Route optimization • Warehouse picking technology • Warehouse automation • Process simp
Slide 71: Implementing best practices to deliver results in 2018
BEST PRACTICES We have begun to implement best practices that will deliver results in 2018 ROUTING OPTIMIZATION PROCESS SIMPLIFICATION Monday route Tuesday route Before After Before After What is it What is it • Consolidating adjacent customers on same days • Optimizing our picking process for e
Slide 72: Piloting new technologies and upgrading systems
TECHNOLOGY At the same time we are piloting new technologies and upgrading our current systems to improve our performance VOICE DIRECT/SCAN CONFIRM OPTIMIZING INBOUND FREIGHT What is it What is it • New voice picking technology • Optimizing our logistics network Benefits Benefits • More accurate pic
Slide 73: Exploring advanced supply chain capabilities
TRANSFORMATION We are simultaneously exploring advanced supply chain capabilities WAREHOUSE AUTOMATION TRANSPORTATION TECHNOLOGY NETWORK DESIGN What is it What is it What is it • Automated storage and retrieval • Emerging technologies • Network of redistribution centers − CNG & electric tractors − A
Slide 74: Transformation led by talented teams
This transformation will be led by talented teams pursuing operational excellence Upgrading the Leadership • Broadening end to end accountabilities • Deepen functional excellence • Enhanced speed to execution Specialized Deployment Teams • Reengineer processes • Standardizing methods • Ensuring flaw
Slide 75: Initiatives to drive productivity gains and working capital reductions
Initiatives expected to drive significant productivity gains as well as working capital reductions SUPPLY CHAIN COST PER CASE MID-TERM BENEFIT (3 YR TOTALS) Indexed $100 – $120 million OPEX productivity $100 – $150 million working capital reduction 2016 2017 2018 2019 2020 75
Slide 76: Admin Costs
Admin Costs Dirk Locascio Chief Financial Officer 76
Slide 77: Savings opportunities across all three OPEX buckets
Savings opportunities exist across all three OPEX buckets KEYS TO SUCCESS ADJUSTED OPERATING EXPENSE SUMMARY* 100% = $3.2 Billion (Fiscal 2017) Administrative Supply ~15% Selling Admin Chain ~30% Selling ~55% Supply Chain Revamp with Continue to Leverage continuous optimize the shared improvement te
Slide 78: Opportunity to optimize our shared services center
While our shared services center has been around for some time, we have a significant opportunity to optimize it VALUE Today III Full Service Solution Provider II High Performance I Service Engine Transactional Services TIME 78
Slide 79: Continuous improvement yielding significant improvements
Applying continuous improvement and an end-to-end process view is beginning to yield significant improvements ACTIVITIES UNDERWAY CONTRACT UPDATE PROCESS IMPROVEMENT EXAMPLE Pre CI Post CI Improvement End-to-End Process Orientation Cycle Time 8 Hrs 4 Hrs 50% Leverage Lean Six Sigma Tools Accuracy 10
Slide 80: Key takeaways from today
Key takeaways from today 1 2 3 Attractive industry with Differentiated strategy Enhanced focus on favorable outlook deployed against most significant cost reduction favorable customer types opportunities 80
Slide 81: Financial Outlook
Financial Outlook Dirk Locascio Chief Financial Officer 81
Slide 82: Margin expansion and strong Adjusted EBITDA growth since IPO
Margin expansion and strong Adjusted EBITDA growth since IPO ADJUSTED EBITDA* $ Millions, % of Sales $1,058 $972 $875 Strong track record +9% +11% Consistent growth 60 basis point margin expansion FY2015 FY2016 FY2017 3.8% 4.2% 4.4% *See Appendix for reconciliation 82
Slide 83: Strong cash flow supports growth and capital structure
Strong cash flow used to support growth and strengthen our capital structure NET DEBT AND LEVERAGE* SINCE FY2015 $ Millions 3.1x ex share repurchase $390 million cash CAPEX $4,209 $3,651 $3,638 10 M&A transactions 4.8x $280 million share repurchase 3.8x 3.4x Delevered from 4.8x to 3.4x FY2015 FY2016
Slide 84: Expected $275–350 million Adjusted EBITDA growth
Balanced approach drives expected $275–350 million Adjusted EBITDA growth ADJUSTED EBITDA GROWTH DRIVERS $ Millions (est.) $150-170 $200-220 ($30-40) $1,330-1,410 $170-200 ($200-210) $1,058 +8-10% CAGR FY 2017 Volume Gross Profit OPEX Supply Chain Cost FY 2020 Growth Expansion Improvement Investment
Slide 85: Organic growth outlook for case growth
Positive outlook for case growth coming from targeted customer types and M&A 2018-2020 % Annual Case Growth (est.) Organic Growth Independent Restaurants 4 - 6% Healthcare and Hospitality 2 - 3% All Other 0 - 1%* M&A ~1% Total Case Growth 2 - 4% $170-200 million estimated benefit *All other expected
Slide 86: M&A expected to remain a meaningful contributor
M&A expected to remain a meaningful contributor to our results 2018-2020 2016(1) 2017 (Est. per year) # Deals 3 3 2-4 Broadline Spend(2) ~$125 ~$110 $100-150 $ Millions # Deals 2 2 1-3 Specialty Spend(2) ~$75 ~$70 $50-100 # Deals 5 5 ~5 Total Spend(2) ~$200 ~$180 ~$200 (1) Includes one acquisition c
Slide 87: GP and OPEX benefit from mix of initiatives
GP and OPEX benefit coming from a mix of initiatives at different stages GROSS PROFIT OPEX Pricing and analytics Sales force productivity Strategic vendor management Indirect spend Mix Shared services Freight management Private brands Supply chain improvement $200-220 million estimated benefit $120-
Slide 88: Mid-term outlook: Adjusted EBITDA growth of 8-10%
Mid-term outlook: Adjusted EBITDA growth of 8-10% and continued margin expansion 2016 2017 2018 2019 – 2020 Case Growth 1% 3% 1 - 2% 3 - 4% Growth Trends and Outlook % Change vs PY Adjusted Gross Profit 2% 5% 4 - 5% 5 - 6% % $ Change vs PY Adjusted OPEX 0% 4% 3 - 4% 3 - 4% % $ Change vs PY Adjusted
Slide 89: Capital allocation: reinvest, M&A, debt paydown, repurchases
Reinvesting in the business and M&A remain the priority; expect to begin repurchases and continue debt pay down CAPITAL ALLOCATION APPROACH Reinvest in Strategic Debt Pay Share Business M&A Down Repurchase • Cash Capex • 4-6 transactions per annum • Balance deleveraging and • Repurchase to offset di
Slide 90: Cash flow enables reinvestment and stronger capital structure
Significant cash flow enables reinvestment and further strengthening of capital structure SOURCES AND USES OF OPERATING CASH FLOW NET DEBT AND LEVERAGE* $ Billions (est.) $2.6 – 2.8 $0.8 – 1.0 $3.6B $2.5 3.4x ~$3.0B $2.0 $0.6 $1.5 2.2-2.3x $0.8 – 1.0 $1.0 $0.5 $0.3 $0 $0.0 Op Cash Cash CAPEX M&A Deb
Slide 91: Expect Adjusted Diluted EPS to double and ROIC to improve 300 bps
Expect Adjusted Diluted EPS to double and ROIC to improve 300 bps ADJUSTED DILUTED EPS* RETURN ON INVESTED CAPITAL* $ per share (est.) % (est.) 20% $2.70-$3.00 17% $1.38 +300 ~30% bps CAGR 2017 2020 2017 2020 *See Appendix for reconciliation 91
Slide 92: Outlook calls for strong operating results and improved leverage
Outlook calls for strong operating results and improved leverage 2018 – 2020 Total Case Growth 2 – 4% Net Sales Growth 4 – 6% Estimated annual improvement unless noted otherwise Gross Profit $ Growth 4 – 6% OPEX $ Growth 3 – 5% Adjusted EBITDA Growth 8 – 10% Adjusted Diluted EPS Growth ~30% ROIC – F
Slide 93: US. We Help You Make It
US. WE HELP YOU oops MAKE IT
Slide 94: Appendix: Non-GAAP Reconciliations
APPENDIX: NON-GAAP RECONCILIATIONS 94
Slide 95: Historical Non-GAAP Reconciliation
Historical Non-GAAP Reconciliation $ IN MILLIONS 2015 2016 2017 NET INCOME/(LOSS) $168 $210 $444 INTEREST EXPENSE, NET 285 229 170 INCOME TAX PROVISION/(BENEFIT) 25 (79) (40) DEPRECIATION AND AMORTIZATION EXPENSE 399 421 378 EBITDA 876 782 952 ADJUSTMENTS: Sponsor fees(1) 10 36 — Restructuring (bene
Slide 96: Footnotes to Historical Non-GAAP Reconciliation
Footnotes to Historical Non-GAAP Reconciliation (1) Consists of fees paid to the Sponsors for consulting and management advisory services. On June 1, 2016, the consulting agreements with each of the Sponsors were terminated for an aggregate termination fee of $31 million. (2) Consists primarily of f
Slide 97: Adjusted Gross Profit and Adjusted Operating Expenses
Non-GAAP Reconciliation - Adjusted Gross Profit and Adjusted Operating Expenses 52-Weeks Ended (unaudited) December 30, December ($ in millions)* 2017 31, 2016 Gross Profit (GAAP) $4,218 $4,053 LIFO reserve change (1) 14 (18) Impact from hurricanes (2) 2 - Adjusted Gross Profit (Non-GAAP) $4,234 $4,
Slide 98: Net Debt and Net Leverage Ratios
Non-GAAP Reconciliation – Net Debt and Net Leverage Ratios ($ in millions)* January 2, 2016 December 31, 2016 December 30, 2017 Total debt (GAAP) $ 4,745 $ 3,782 $ 3,757 Old Senior Notes premium (12) - - Restricted cash (6) - - Cash and cash equivalents (518) (131) (119) Net Debt (Non-GAAP) $ 4,209
Slide 99: Adjusted Diluted Earnings Per Share (EPS)
Non-GAAP Reconciliation - Adjusted Diluted Earnings Per Share (EPS) 52-Weeks Ended (unaudited) December 30, 2017 December 31, 2016 Diluted EPS (GAAP) $ 1.97 $ 1.03 Sponsor fees (1) - 0.18 Restructuring (benefit) charges (2) - 0.26 Share-based compensation expense (3) 0.09 0.09 LIFO reserve change (4
Slide 100: Return on Invested Capital (ROIC)
Non-GAAP Reconciliation – Return on Invested Capital (ROIC) We calculate ROIC as adjusted operating income after tax divided by average invested capital. Average invested capital is computed as Total Assets less the sum of Cash, Non Interest Bearing Current Liabilities, which include all current lia