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| 8-K - FORM 8-K - US FOODS, INC. | d539437d8k.htm |
 Q1
2013 Performance Update
A Taste of What’s Cooking at US Foods
May 2013
Exhibit 99.1 |
 1
FOOD. FOOD PEOPLE. EASY. While
the
information
provided
herein
is
believed
to
be
accurate
and
reliable,
US
Foods
(“US
Foods”)
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.
Forward-looking statements notice
In
this
presentation
and
in
related
comments
by
our
management,
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, commodity
volatility, and other factors; 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 GPOs;
our ability to increase sales to independent customers; changes in industry pricing practices; changes in cost structure of competitors;
costs
and
risks
associated
with
government
laws
and
regulations,
including
environmental,
health,
and
safety,
food
safety,
transportation,
labor
and employment, laws and regulations, and changes in existing laws or regulations;
technology disruptions and our ability to implement new technologies;
product
liability
claims
relating
to
products
that
we
distribute;
our
ability
to
maintain
a
good
reputation;
costs
and
risks
associated
with litigation; 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, and increases in interest rates. Additional
information regarding these factors is contained in the company’s filings with
the Securities and Exchange Commission, including, without limitation, its
Registration Statements on Form S-4. All
forward-looking
statements
speak
only
as
of
the
date
they
were
made.
The
company
does
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. |
 2
FOOD. FOOD PEOPLE. EASY. Non-GAAP financial measures
This presentation contains unaudited non-GAAP financial measures, including
Reported 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 the performance of the Company.
Our management uses these non-GAAP financial measures to evaluate the
Company’s historical financial performance, establish future operating
and capital budgets and determine variable compensation for management and employees. Accordingly, the Company believes these
non-GAAP financial measures are useful in allowing for a better understanding
of the Company's core operations. While
management
believes
that
these
non-GAAP
financial
measures
provide
useful
information,
they
are
not
operating
measures
under
U.S.
GAAP, and there are limitations associated with their use. The Company's
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 or Net income attributable to
stockholders. Due to these limitations, these non-GAAP financial
measures are used as a supplement to U.S. GAAP measures.
Management uses Adjusted EBITDA Margin and Consolidated EBITDA Margin to focus on
year-over-year changes in the Company’s business and believes
this information is also helpful to investors. The Company uses Adjusted EBITDA in these EBITDA-related margin measures
because it believes its 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 management on year-over-year changes in
the Company’s leverage and believes this information is also helpful to
investors. The Company cautions investors that these non-GAAP
financial
measures
presented
also
are
intended
to
supplement
the
Company’s
GAAP
results
and
are
not
a
substitute
for
such
results.
Additionally, the Company cautions investors that the non-GAAP financial
measures used by the Company may differ from the non-GAAP measures used
by other companies. |
 3
FOOD. FOOD PEOPLE. EASY. Agenda
•
Business Highlights
•
Quarterly Financial Update
•
Closing Comments
•
Appendix |
 4
FOOD. FOOD PEOPLE. EASY. Agenda
•
Business Highlights
•
Quarterly Financial Update
•
Closing Comments
•
Appendix |
 5
FOOD. FOOD PEOPLE. EASY. Business Highlights
•
External macro ‘headwinds’
continue
•
Q1 sales increased 2.8%
•
Organic units declined (0.4%)
•
Acquisitions added 1.2%
•
Q1 results
•
Net loss was $95 million
•
Adjusted EBITDA was $156 million
•
Business transformation focus on differentiation and innovation
•
Category Management and Merchandising
•
Sales Force Effectiveness
•
Business/Organization Functionalization
Notes:
(1) Reconciliation of this non-GAAP measure is provided in the appendix.
1 |
 6
FOOD. FOOD PEOPLE. EASY. Agenda
•
Business Highlights
•
Quarterly Financial Update
•
Closing Comments
•
Appendix |
 7
FOOD. FOOD PEOPLE. EASY. $ IN MILLIONS
Q1 2013
Q1 2012
B/(W) Y-O-Y CHANGE
NET SALES
$5,405
$5,260
+2.8%
GROSS PROFIT
$909
$876
+33
ADJUSTED GROSS PROFIT
$911
$874
+37
% OF NET SALES
16.85%
16.62%
+23 bps
OPERATING EXPENSES
$886
$810
(76)
ADJUSTED OPERATING EXPENSES
$755
$696
(59)
% OF NET SALES
13.97%
13.23%
(74 bps)
NET LOSS
($95)
($3)
(92)
ADJUSTED EBITDA
$156
$178
(22)
ADJUSTED EBITDA MARGIN
2.89%
3.38%
(49 bps)
Delivered $156 million of Adjusted EBITDA in Q1,
ahead of expectations, but behind prior year.
Note:
(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.
Q1 Financial Performance
1
1
1
2 |
 8
FOOD. FOOD PEOPLE. EASY. $ IN MILLIONS
CY LTM
(Q2 ‘12 –
Q1 ‘13)
PY LTM
(Q2 ‘11 –
Q1 ‘12)
B/(W) Y-O-Y CHANGE
NET SALES
$21,810
$20,772
+5.0%
GROSS PROFIT
$3,726
$3,564
+162
ADJUSTED
GROSS
PROFIT
1
$3,743
$3,589
+154
% OF NET SALES
17.16%
17.28%
(12 bps)
OPERATING EXPENSES
$3,434
$3,241
(193)
ADJUSTED OPERATING EXPENSES
1
$2,923
$2,770
(153)
% OF NET SALES
13.40%
13.34%
(6 bps)
NET LOSS
($142)
($59)
(83)
ADJUSTED EBITDA
1
$820
$819
+1
ADJUSTED
EBITDA
MARGIN
3
3.76%
3.94%
(18 bps)
CONSOLIDATED EBITDA
$870
CONSOLIDATED EBITDA MARGIN
4.0%
LTM Adjusted EBITDA of $820 million, $1 million
better than prior year.
Notes:
(1) Reconciliations of these non-GAAP measures are provided in the
appendix. (2) Consolidated EBITDA includes Adjusted EBITDA plus $50 million
for cost saving actions taken by the Company as specified under the Company’s debt agreements.
(3) Represents Adjusted EBITDA or Consolidated EBITDA as a percentage of Net
Sales. Individual components may not add to total presented due to
rounding. 2
3 |
 9
FOOD. FOOD PEOPLE. EASY. Quarterly Cash Flow
Note:
Individual components may not add to total presented due to rounding.
Cash Flow Performance
$ IN MILLIONS
Q1 2013
Q2 2012
Q3 2012
Q4 2012
LTM
Cash from Operating Activities
($10)
$157
($73)
$297
$371
Capital Expenditures, net of Proceeds
($51)
($72)
($26)
($54)
($204)
Acquisitions
-
($17)
($74)
($14)
($105)
Cash (used in) provided by Financing Activities
($32)
($48)
$202
($148)
($26)
Net Cash Change
($93)
$20
$29
$81
$37
Beginning Cash
$242
$112
$133
$162
$112
Ending Cash
$149
$133
$162
$242
$149 |
 10
FOOD. FOOD PEOPLE. EASY. Notes:
(1) Total Debt includes $4,858 million of US GAAP debt as of March 30, 2013 less
$21 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
twelve
months.
Q1 2013 Financial Performance
Credit Statistics
Debt / LTM
Debt Coverage
Interest Coverage
As of
Consolidated
Ratio
2
Ratio
3
$ IN MILLIONS
3/30/2013
EBITDA
ABL Revolver (2016)
$145
Cash Flow Revolver (2013)
$0
ABS Facility (2015)
$686
CMBS Facility (2017)
$472
Term Loans (2017)
$2,090
Other
Debt
(2018
-
2031)
$94
Total Senior Secured Debt
$3,487
4.0x
Senior Notes (2019)
$1,350
Total Debt
1
$4,837
5.6x
Less: Restricted Cash
($7)
Less: Cash and Cash Equivalents
($149)
Net Debt
$4,681
5.4x
8.2x
5.4x
1.0x
2.0x
3.0x
4.0x
5.0x
6.0x
7.0x
8.0x
9.0x
At Close
7/3/2007
3/30/2013
1.3x
2.7x
0.5x
1.0x
1.5x
2.0x
2.5x
3.0x
At Close
7/3/2007
3/30/2013
Capital Structure & Credit Statistics |
 11
FOOD. FOOD PEOPLE. EASY. We have $910 million of available liquidity.
Note:
Individual components may not add to total presented due to rounding.
Liquidity
As of
$ IN MILLIONS
3/30/2013
ABL Revolver (2016)
$661
Cash Flow Revolver (2013)
$100
Total Borrowing Availability
$761
Total Cash & Cash Equivalents
$149
Total Cash and Borrowing Availability
$910 |
 12
FOOD. FOOD PEOPLE. EASY. Agenda
•
Business Highlights
•
Quarterly Financial Update
•
Closing Comments
•
Appendix |
 13
FOOD. FOOD PEOPLE. EASY. Agenda
•
Business Highlights
•
Quarterly Financial Update
•
Closing Comments
•
Appendix |
 14
FOOD. FOOD PEOPLE. EASY. Non-GAAP Reconciliations
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
the
performance
of
the
Company.
Our
management
uses
these
non-GAAP
financial measures to evaluate the Company’s historical financial performance,
establish future operating and capital budgets and determine variable
compensation for management and employees. Accordingly, the Company believes
these non-GAAP financial measures are useful in allowing for a better
understanding of the Company's core operations. While
management
believes
that
these
non-GAAP
financial
measures
provide
useful
information,
they
are
not
operating
measures under U.S. GAAP, and there are limitations associated with their use. The
Company's 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 or Net income attributable to stockholders. Due to these limitations,
these non-GAAP financial measures are used as a supplement to U.S. GAAP
measures. |
 15
FOOD. FOOD PEOPLE. EASY. Non-GAAP Reconciliation -
Adjusted EBITDA
Notes:
(1) Consists of management fees paid to the Sponsors. (2) Restructuring and tangible asset impairment charges primarily consist of facility closing,
severance and related costs and tangible asset impairment charges.
(3) Share-based compensation expense represents costs recorded for Share Option Awards and
Restricted Share Awards granted.
(4) Consists of changes in the LIFO
reserve. (5) The 2013 loss on extinguishment of debt consists of an early redemption premium and a
write-off of unamortized debt issuance costs related to the Senior
Subordinated Notes redemption. The Q1 2013 LTM loss on extinguishment of debt consists of fees paid to debt holders, certain third party costs and the write-off of
unamortized debt issuance costs related to the 2007 Term Loan amendments, certain third party costs
related to the 2012 ABS Facility, a write-off of unamortized debt issuance costs related to the previous ABS Facility and an early redemption premium and a
write-off of unamortized debt premium and related to the December 2012 Senior Subordinated Notes redemption. The Q1 2012 LTM loss on extinguishment of debt consists of an
early redemption premium and a write-off of unamortized debt issuance costs issuance costs related to the May 2011 debt refinancing transactions. (6) Consists of a non-recurring charge resulting from lump-sum payment settlements to former
employees participating in several Company sponsored pension plans.
(7) Consists of costs to functionalize and optimize our business processes and systems. (8) Other includes gains, losses or charges as specified under the Company’s debt agreements. Individual components may not add to total presented due to rounding. 13-Weeks
Ended LTM
(In millions)
March 30, 2013
March 31, 2012
Q1 2013
Q1 2012
Net loss
(95)
$
(3)
$
(142)
$
(59)
$
Interest expense, net
82
71
322
296
Income tax provision (benefit)
12
(2)
57
10
Depreciation and amortization expense
94
84
366
347
EBITDA
93
150
603
594
Adjustments:
Sponsor fees (1)
3
3
10
10
Restructuring and tangible asset impairment charges (2)
2
-
11
17
Share-based compensation expense (3)
4
2
6
10
LIFO reserve change (4)
2
(2)
17
25
Loss on extinguishment of debt (5)
24
-
55
76
Pension settlement (6)
-
-
18
-
Business transformation costs (7)
14
19
70
58
Other (8)
14
6
30
29
Adjusted EBITDA
156
$
178
$
820
$
819
$
|
 16
FOOD. FOOD PEOPLE. EASY. Non-GAAP Reconciliation -
Adjusted Gross Profit
and Adjusted Operating Expense
Notes:
(1) Consists of changes in the LIFO reserve.
(2) Consists of management fees paid to the Sponsors.
(3) Restructuring and tangible asset impairment charges primarily consist of
facility closing, severance and related costs and tangible asset impairment charges.
(4) Share-based compensation expense represents costs recorded for Share Option
Awards and Restricted Share Awards granted. (5) Consists of a
non-recurring charge resulting from lump-sum payment settlements to former employees participating in several Company sponsored pension plans.
(7) Other includes gains, losses or charges as specified under the Company’s
debt agreements. Individual components may not add to total presented due to
rounding. 13-Weeks Ended
LTM
(In millions)
March 30, 2013
March 31, 2012
Q1 2013
Q1 2012
Gross Profit
909
$
876
$
3,726
$
3,564
$
LIFO reserve change (1)
2
(2)
17
25
Adjusted Gross Profit
911
$
874
$
3,743
$
3,589
$
Net sales
5,405
$
5,260
$
21,810
$
20,772
$
Operating Expenses
886
$
810
$
3,434
$
3,241
$
Adjustments:
Depreciation and amortization expense
(94)
(84)
(366)
(347)
Sponsor fees (2)
(3)
(3)
(10)
(10)
Restructuring and tangible asset impairment charges (3)
(2)
-
(11)
(17)
Share-based compensation expense (4)
(4)
(2)
(6)
(10)
Pension settlement (5)
-
-
(18)
-
Business transformation costs (6)
(14)
(19)
(70)
(58)
Other (7)
(14)
(6)
(30)
(29)
Adjusted Operating Expenses
755
$
696
$
2,923
$
2,770
$
(6) Consists of costs to functionalize and optimize our business processes and systems. |
 |