US Foods Holding Corp (USFD) Reports Growth in Q3 and Nine-Month Fiscal 2023 Results
US Foods Holding Corp (NYSE:USFD) sees a 2.1% increase in net sales to $9.1 billion in Q3 fiscal year 2023.
Gross profit up by 6% to $1.5 billion, with net income reaching $95 million.
Adjusted EBITDA grows by 15% to $402 million, with a margin expansion of approximately 50 basis points.
USFD announces definitive agreement to acquire Saladino's Foodservice, marking its second tuck-in acquisition this year.
On November 9, 2023, US Foods Holding Corp (NYSE:USFD) disclosed its financial results for the third quarter of fiscal year 2023, showcasing a robust performance with increased net sales, gross profit, and adjusted EBITDA. The company's net sales rose to $9.1 billion, a 2.1% increase from the previous year, driven by case volume growth despite food cost deflation. Gross profit followed suit, climbing 5.6% to $1.5 billion, primarily due to volume increases and cost of goods sold optimization.
Financial Highlights and Performance Analysis
USFD's net income available to common shareholders was reported at $95 million, with adjusted EBITDA growing significantly by 14.5% to $402 million. The adjusted EBITDA margin expanded by 48 basis points to 4.4%. However, diluted EPS saw a decrease of 11.6% to $0.38, while adjusted diluted EPS increased by 16.7% to $0.70.
For the nine-month period, USFD's net sales increased by 4.4% to $26.7 billion, with a gross profit increase of 12.9% to $4.6 billion. Net income available to common shareholders for the nine months was a notable $352 million, and adjusted EBITDA increased by 22.0% to $1.2 billion. Diluted EPS for the nine-month period increased by 123.4% to $1.43, with adjusted diluted EPS up by 25.2% to $1.99.
Operational Efficiency and Market Expansion
USFD's CEO, Dave Flitman, attributed the strong results to growth and market share gains in target customer types, operational efficiencies, and the dedication of their associates. Flitman highlighted the company's success in driving case volume growth, particularly with independent restaurants, healthcare, and hospitality sectors. He also mentioned the acquisition of Saladino's Foodservice, which is expected to enhance USFD's position in central California.
CFO Dirk Locascio emphasized the sustainable operating leverage gains and disciplined capital deployment, which included prepaying additional debt and executing share repurchases. The company's net leverage was reduced to 2.9x, aligning with their target range. Following these strong financial results, USFD has raised its adjusted EBITDA guidance for fiscal 2023 to a range of $1.54 billion to $1.56 billion.
Capital Management and Future Outlook
USFD demonstrated effective capital management, with cash flow from operating activities for the first nine months of fiscal 2023 at $935 million, an increase from the prior year. The company also made significant voluntary prepayments on debt and repurchased shares under its share repurchase program.
Looking ahead, USFD has updated its fiscal year 2023 guidance, now expecting adjusted EBITDA of $1.54-$1.56 billion and adjusted diluted EPS of $2.60-$2.70. The company aims to maintain a net debt to adjusted EBITDA leverage below 3.0x by the end of fiscal year 2023.
USFD's financial stability and strategic acquisitions position it well for continued growth and market share expansion. The company's focus on operational efficiency and disciplined capital deployment are expected to drive compounded shareholder value over the long term.
For more detailed information, investors and interested parties can access the webcast discussing the third quarter fiscal 2023 results on USFD's Investor Relations website.
For comprehensive financial analysis and the latest updates on USFD, visit GuruFocus.com.
Explore the complete 8-K earnings release (here) from US Foods Holding Corp for further details.
This article first appeared on GuruFocus.
