Attached files
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| 8-K - 8-K - US FOODS, INC. | d61597d8k.htm |
 Q2
2015 Performance Update
A Taste of What’s Cooking at US Foods
August 2015 Exhibit 99.1 |
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EASY. While the information provided herein is believed to be accurate and reliable, US Foods, Inc. (the “Company”) does not make any
representations
or warranties, express or implied, as to the accuracy or completeness of such information or as to future results. No representation or warranty is made that any of the projections presented herein will be realized. This information should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended December 27, 2014.
Forward-looking statements notice
This presentation and related comments by our management may include “forward-looking statements” made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. Our use of the words “expect,” “anticipate,” “possible,” “potential,” “target,” “believe,” “commit,” “intend,” “continue,” “may,” “would,” “could,” “should,” “project,” “projected,” “positioned” or similar expressions is intended to identify forward-looking statements that represent our current judgment about possible future events. We believe these judgments are reasonable, but these statements are not guarantees of any events or financial results, and our actual results may differ materially due to a
variety of important factors. Among other items, such factors might include: our ability to remain profitable during times of cost inflation, cost deflation or commodity volatility; competition in the industry and our ability to compete successfully; our reliance on third-party
suppliers, including the impact of any interruption of supplies or
increases in product costs; shortages of fuel and increases or volatility in fuel costs; any declines in the consumption of food prepared away from home, including as a result of changes in the economy or other factors affecting consumer confidence; costs and risks associated with labor relations and the availability of qualified labor; any change in our relationships
with group purchasing organizations; our ability to increase sales to
independent restaurant customers; changes in industry pricing practices;
changes in cost structure of competitors; costs and risks associated with government
laws and regulations, including environmental, health, safety, food
safety, transportation, labor and employment laws and regulations, and changes in existing laws or regulations; a cyber-security incident, technology disruptions and our ability to implement new technologies; liability claims relating to products that we distribute; our ability to maintain a good reputation; costs and risks associated with litigation or governmental investigations; our ability to manage future expenses and
liabilities with respect to our retirement benefits; our ability to
successfully integrate future acquisitions; our ability to achieve the benefits that we expect to achieve from our cost savings programs; risks relating to our indebtedness, including our substantial amount of debt, our ability to incur substantially more debt, restrictions and limitations placed on us by our debt agreements, increases in interest rates; and the termination of the proposed acquisition of the Company by Sysco Corporation (“Sysco”), including risks to our relationships with customers, vendors
and employees. Additional information regarding these factors is
contained in our filings with the Securities and Exchange Commission, including, without limitation, our Annual Report on Form 10-K for the fiscal year ended December 27, 2014.
All forward-looking statements speak only as of the date they were made. We do not
undertake any obligation to update or publicly release any revisions to
any forward-looking statements to reflect events, circumstances or changes in expectations after the date of this presentation. |
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EASY. Non-GAAP financial measures This presentation contains unaudited financial measures which are not required by, or presented in accordance with, accounting principals
generally accepted in the United States of America (“GAAP”),
including EBITDA, Adjusted EBITDA, Consolidated EBITDA, Debt Coverage
Ratio, Interest Coverage Ratio, Adjusted Operating Expenses and Adjusted Gross Profit.
Management believes these non-GAAP financial measures provide
meaningful supplemental information regarding our operating performance because they exclude amounts that our management and our board of directors do not consider part of core operating results when assessing our performance. Our management uses
these non-GAAP financial measures to evaluate our historical
financial performance, establish future operating and capital budgets and
determine variable compensation for management and employees. Accordingly, we
believe these non-GAAP financial measures are useful in allowing for
a better understanding of our core operations. While management believes
that these non-GAAP financial measures provide useful information, they are not operating measures under GAAP, and there are limitations associated with their use. The calculation of these non-GAAP financial measures may not be completely comparable to
similarly
titled measures of other companies due to potential differences between companies in their method of calculation. As a result, the use of these non-GAAP financial measures has limitations and should not be considered in isolation from, or as a substitute for, other measures
such as net income. Due to these limitations, these non-GAAP
financial measures are used as a supplement to GAAP measures and should not
be considered as a substitute for net income (loss) from continuing operations,
operating profit or any other performance measures derived in accordance
with GAAP, nor are they a substitute for cash flow from operating activities as a measure of our liquidity. Management uses Adjusted EBITDA Margin and Consolidated EBITDA Margin to focus on year-over-year changes in our business and believes
this information is also helpful to investors. We use Adjusted EBITDA in these EBITDA-related margin measures because we believe our investors are familiar with Adjusted EBITDA and that consistency in presentation of EBITDA-related measures is helpful to investors.
Management also uses Debt Coverage Ratios and Interest Coverage Ratios to
focus on year-over-year changes in our leverage and believes this
information is also helpful to investors. We caution investors that these non-GAAP financial measures presented also are intended to supplement our GAAP results and are not a substitute for such results and may differ from the non-GAAP measures used by other
companies. Please see the Appendix for a reconciliation of the
differences between the non-GAAP financial measures to the most directly comparable GAAP financial measures. |
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EASY. Agenda • Business Highlights • Financial Update • Closing Comments • Appendix |
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EASY. Business Highlights • Sysco Merger Termination • $300 million breakup fee paid by Sysco to USF Holding Corp., our parent company • $12.5 million breakup fee paid by US Foods, Inc. to Performance Food Group, Inc.
• CEO Transition • Q2 Performance Highlights • Unit volume was flat and Sales decreased 0.9% • Adjusted EBITDA was $236 million 1 • Net loss was $127 million • Business Focus Areas • Continued focus on differentiation – Food. Food People. Easy • Responsible cost management Note: (1) Reconciliation of this non-GAAP measure is provided in the Appendix. |
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EASY. Agenda • Business Highlights • Financial Update • Closing Comments • Appendix |
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EASY. Q2 Financial Performance Notes: (1) Reconciliations of these non-GAAP measures are provided in the Appendix.
(2) Represents Adjusted EBITDA as a percentage of Net Sales.
Individual components may not add to total presented due to rounding.
$ IN MILLIONS Q2 2015 Q2 2014 B/(W) Y-O-Y CHANGE NET SALES $5,843 $5,898 (0.9%) GROSS PROFIT $993 $964 +$29 ADJUSTED GROSS PROFIT 1 $995 $988 +$7 % OF NET SALES 17.0% 16.8% +28 bps OPERATING EXPENSES $984 $900 ($84) ADJUSTED OPERATING EXPENSES 1 $759 $751 ($8) % OF NET SALES 13.0% 12.7% (26) bps NET LOSS ($127) ($19) ($108) ADJUSTED EBITDA 1 $236 $237 ($1) ADJUSTED EBITDA MARGIN 2 4.0% 4.0% +2 bps |
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EASY. Q2 Last Twelve Month Financial Performance Notes: (1) Reconciliations of these non-GAAP measures are provided in the appendix.
(2) Represents Adjusted EBITDA or Consolidated EBITDA as a percentage of Net
Sales. (3) Consolidated EBITDA includes Adjusted EBITDA plus $50
million for cost saving actions taken by the Company as specified under the Company’s debt agreements. Individual components may not add to total presented due to rounding. $ IN MILLIONS Q2 2015 Q2 2014 B/(W) Y-O-Y CHANGE NET SALES $23,061 $22,588 +2.1% GROSS PROFIT $3,861 $3,801 +$60 ADJUSTED GROSS PROFIT $3,850 $3,854 ($4) % OF NET SALES 16.7% 17.1% (37) bps OPERATING EXPENSES $3,638 $3,523 ($115) ADJUSTED OPERATING EXPENSES $2,996 $2,985 ($11) % OF NET SALES 13.0% 13.2% +22 bps NET LOSS ($109) ($62) ($46) ADJUSTED EBITDA 1 $854 $869 ($15) ADJUSTED EBITDA MARGIN 2 3.7% 3.8% (15) bps CONSOLIDATED EBITDA 3 $904 CONSOLIDATED EBITDA MARGIN 2 3.9% 1 1 |
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EASY. Cash Flow Notes: (1) LTM Capital Expenditures does not include $35 million of fleet investment financed by capital leases.
(2) LTM Other, net includes proceeds from the sale of PP&E of $20 million, insurance proceeds related to PP&E of $5 million, less $21 million for the purchase of industrial revenue bonds. The outflow for the purchase of industrial revenue bonds is offset by a $21 million cash inflow in financing
activities. Individual components may not add to total presented due to
rounding. $ IN MILLIONS
Q3 2014 Q4 2014 Q1 2015 Q2 2015 LTM Cash from Operating Activities $56 $99 $102 $164 $420 Cash used by Investing Activities Capital Expenditures 1 ($31) ($42) ($57) ($54) ($183) Other Investing Activities, net 2 $14 $5 ($8) ($8) $4 Cash used by Financing Activities ($12) ($64) ($3) ($6) ($85) Net Cash Change $27 ($1) $34 $96 $156 Beginning Cash $317 $345 $344 $378 $317 Ending Cash $345 $344 $378 $473 $473 |
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EASY. Capital Structure & Credit Statistics Notes: (1) Total Debt as of June 27, 2015 of $4,757 million excludes $13 million of unamortized premium on senior notes.
(2) Debt Coverage Ratio equals net debt divided by Consolidated EBITDA over last
12 months. (3) Interest Coverage Ratio equals Consolidated EBITDA
over last 12 months divided by net interest expense over last 12 months.
Credit Statistics Debt Coverage Interest Coverage Ratio 2 Ratio 3 Debt /LTM As of Consolidated $ IN MILLIONS 6/27/2015 EBITDA ABL Revolver (2017) $0 ABS Facility (2016) $636 CMBS Facility (2017) $472 Term Loan (2019) $2,063 Obligations Under Capital Leases $205 Other Debt (2018 - 2031) $33 Total Senior Secured Debt $3,409 3.8x Senior Notes (2019) $1,348 Total Debt 1 $4,757 5.3x Less: Restricted Cash ($6) Less: Cash and Cash Equivalents ($473) Net Debt $4,278 4.7x |
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EASY. We have $1.3 billion of available liquidity Liquidity As of $ IN MILLIONS 6/27/2015 Borrowing Availability: ABL Facility (2017) $731 ABS Facility (2016) $65 Total Cash & Equivalents $473 Total Cash and Borrowing Availability $1,269 |
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EASY. Agenda • Business Highlights • Financial Update • Closing Comments • Appendix |
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EASY. Non-GAAP Reconciliation - Adjusted EBITDA Notes: (1) Consists of management fees paid to Clayton, Dubilier & Rice, Inc. and Kohlberg Kravis Roberts & Co. (collectively, the “Sponsors”). (2) Consists primarily of facility related closing costs, including severance and related costs, asset impairment charges, and estimated
multiemployer pension
withdrawal liabilities.
(3) Share-based compensation expense represents costs recorded for vesting of USF Holding Corp. stock option awards, restricted stock, and
restricted stock units. (4)
Consists of charges resulting from lump-sum payment settlements to retirees and
former employees participating in several Company sponsored pension plans.
(5) Consists primarily of costs related to significant process and systems redesign.
(6) Consists of direct and incremental costs related to the Acquisition. (7) Other includes gains, losses or charges, as specified under the Company’s debt agreements. The 2015 LTM period includes a $16 million legal settlement charge and a $10 million insurance recovery gain. Individual components may not add to total presented due to rounding. LTM (In millions) June 27, 2015 June 28, 2014 June 27, 2015 June 28, 2014 Net Loss (127) $
(19) $
(109) $ (62) $
Interest expense, net
70 74 284 292 Income tax provision 66 9 48 48 Depreciation and amortization expense 98 106 404 403 EBITDA 107 170 627 681 Adjustments: Sponsor fees 1 2 2 10 10 Restructuring and asset impairment charges 2 52 - 53 5 Share-based compensation expense 3 3 3 11 8 Net LIFO reserve change 2 24 (11) 53 Pension settlement 4 - - 2 2 Business transformation costs 5 11 14 47 59 Acquisition related costs 6 53 16 86 24 Other 7 6 8 29 27 Adjusted EBITDA 236 $
237 $
854 $
869 $
Quarter Ended |
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EASY. Non-GAAP Reconciliation - Adjusted Gross Profit and Adjusted Operating Expenses Notes: (1) Consists of management fees paid to Clayton, Dubilier & Rice, Inc. and Kohlberg Kravis Roberts & Co. (collectively, the “Sponsors”). (2) Consists primarily of facility related closing costs, including severance and related costs, asset impairment charges, and estimated
multiemployer pension
withdrawal liabilities.
(3) Share-based compensation expense represents costs recorded for vesting of USF Holding Corp. stock option awards, restricted stock, and restricted stock units. (4) Consists of charges resulting from lump-sum payment settlements to retirees and former employees participating in several Company sponsored
pension plans. (5)
Consists primarily of costs related to significant process and systems redesign.
(6) Consists of direct and incremental costs related to the Acquisition. (7) Other includes gains, losses or charges, as specified under the Company’s debt agreements. The 2015 LTM period includes a $16 million legal settlement charge and a $10 million insurance recovery gain. Individual components may not add to total presented due to rounding. LTM (In millions) June 27, 2015 June 28, 2014 June 27, 2015 June 28, 2014 Gross Profit 993 $
964 $
3,861 $ 3,801 $ Net LIFO reserve change 2 24 (11) 53 Adjusted Gross Profit 995 $
988 $
3,850 $ 3,854 $ Net sales 5,843 $
5,898 $
23,061 $ 22,588 $ Operating Expenses 984 $
900 $
3,638 $ 3,523 $ Adjustments: Depreciation and amortization expense (98) (106) (404) (403) Sponsor fees 1 (2) (2) (10) (10) Restructuring and asset impairment charges 2 (52) - (53) (5) Share-based compensation expense 3 (3) (3) (11) (8) Pension settlement 4 - - (2) (2) Business transformation costs 5 (11) (14) (47) (59) Acquisition related costs 6 (53) (16) (86) (24) Other 7 (6) (8) (29) (27) Adjusted Operating Expenses 759 $
751 $
2,996 $ 2,985 $ Quarter Ended |
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