US Foods Holding Corp (USFD) Reports Strong Fiscal Year 2023 Results
Net Sales: Increased by 4.5% to $35.6 billion in FY 2023.
Adjusted EBITDA: Grew 19.0% to a record $1.56 billion in FY 2023.
Net Income: Available to common shareholders was $499 million.
Diluted EPS: Increased 100.0% to $2.02; Adjusted Diluted EPS increased 22.9% to $2.63.
Cash Flow: Operating activities provided $1.14 billion, an increase from the prior year.
Debt Management: Net Debt to Adjusted EBITDA ratio improved to 2.8x at the end of FY 2023.
Future Outlook: FY 2024 guidance anticipates Adjusted EBITDA of $1.69 to $1.74 billion.
On February 15, 2024, US Foods Holding Corp (NYSE:USFD) released its 8-K filing, announcing its fourth quarter and full fiscal year 2023 earnings. As the second-largest U.S. food service distributor, US Foods distributes a vast array of products to various industries, including healthcare, hospitality, and restaurants, and operates 80 cash-and-carry stores under the Chef'Store banner.
The company's fiscal year 2023 was marked by significant achievements, including a 4.5% increase in net sales to $35.6 billion, driven by strong case growth. Adjusted EBITDA grew by an impressive 19.0% to a record $1.56 billion, reflecting the company's ability to capture profitable market share and enhance margins. CEO Dave Flitman noted the execution of their strategy and long-range plan as key factors in achieving these results.
Financial Performance and Challenges
US Foods' financial performance in FY 2023 was robust, with net income available to common shareholders reaching $499 million. The company's diluted EPS doubled to $2.02, while adjusted diluted EPS saw a significant increase of 22.9% to $2.63. These metrics are particularly important for US Foods, operating in the competitive and defensive retail industry, as they demonstrate the company's profitability and efficiency in capital management.
Despite these achievements, the company faces challenges such as market fragmentation, cost inflation, and the need to continuously adapt to changing consumer preferences and regulatory environments. These challenges could impact future performance if not managed effectively.
Income Statement and Balance Sheet Highlights
US Foods' income statement for FY 2023 showed a gross profit increase of 11.9% to $6.1 billion, with a gross profit margin of 17.3%. Operating expenses rose by 4.8% to $5.1 billion, reflecting increased case volume and higher seller compensation costs, partially offset by cost savings initiatives. The balance sheet remained strong, with cash and cash equivalents of $269 million and a net debt reduction of $238 million from the previous year.
"I am proud of our associates ability to deliver solid financial results in the fourth quarter and record Adjusted EBITDA for 2023," said CFO Dirk Locascio. "We generated strong free cash flow, reduced our debt, invested organically and inorganically via two tuck-in acquisitions that expand our position in underserved markets and repurchased shares."
Analysis and Outlook
US Foods' performance in FY 2023 indicates a strong operational and financial position. The company's focus on case volume growth, cost optimization, and strategic acquisitions has paid off, leading to significant increases in key financial metrics. Looking ahead to FY 2024, US Foods has set an Adjusted EBITDA target of $1.69 to $1.74 billion, suggesting continued confidence in its business model and market strategy.
The company's disciplined approach to capital deployment and its ability to generate strong cash flow positions it well for ongoing investments and shareholder returns. With a healthy balance sheet and a clear strategic direction, US Foods appears well-equipped to navigate the challenges of the food distribution industry and continue delivering value to its shareholders.
For more detailed information and analysis, investors and interested parties are encouraged to review the full 8-K filing.
Explore the complete 8-K earnings release (here) from US Foods Holding Corp for further details.
This article first appeared on GuruFocus.
