Attached files
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| 8-K - 8-K - US FOODS, INC. | d695000d8k.htm |
 Q4
2013 Performance Update
A Taste of What’s Cooking at US Foods
March 2014 |
 1
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
This presentation and related comments by our management may include “forward-looking
statements.” 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, increases in interest rates, and our proposed
acquisition by Sysco. Additional information regarding these factors is contained in the company’s
filings with the Securities and Exchange Commission, including, without limitation, its Annual Report
on Form 10-K for the fiscal year ended December 28, 2013. 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.
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 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 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 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.
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 3
Agenda
•
Business Highlights
•
Quarterly Financial Update
•
Closing Comments
•
Appendix |
 4
Agenda
•
Business Highlights
•
Quarterly Financial Update
•
Closing Comments
•
Appendix |
 5
Business Highlights
•
Q4 sales increased 2.1%, and units increased 1.1%
•
Organic units increased 0.9%
•
Acquisition units added 0.2%
1
•
Q4 results
•
Net income/(loss) was ($1) million
•
Adjusted EBITDA was $246 million
2
•
Business transformation focused on differentiation and innovation
•
Category Management and Merchandising
•
Sales Force Effectiveness
•
Sysco merger announcement
•
Deal is expected to close in Q3 2014
Note:
(1) Includes 2013 Acquisitions and part of Q4 2012 Acquisition unit
volume (2) Reconciliation of this non-GAAP measure is provided in
the appendix. |
 6
Agenda
•
Business Highlights
•
Quarterly Financial Update
•
Closing Comments
•
Appendix |
 7
Q4 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
Q4 2013
Q4 2012
B/(W) Y-O-Y CHANGE
NET SALES
$5,547
$5,435
2.1%
GROSS PROFIT
$972
$948
+$24
ADJUSTED GROSS PROFIT
1
$977
$942
+$35
% OF NET SALES
17.6%
17.3%
+28 bps
OPERATING EXPENSES
$863
$850
($13)
ADJUSTED OPERATING EXPENSES
1
$730
$715
($15)
% OF NET SALES
13.2%
13.1%
(4bps)
NET INCOME/(LOSS)
($1)
($51)
+$50
ADJUSTED EBITDA
1
$246
$228
+$19
ADJUSTED EBITDA MARGIN
2
4.4%
4.2%
+ 25bps |
 8
Q4 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
LTM Q4 2013
LTM Q4 2012
B/(W) Y-O-Y CHANGE
NET SALES
$22,297
$21,665
2.9%
GROSS PROFIT
$3,823
$3,693
+$130
ADJUSTED
GROSS
PROFIT
1
$3,835
$3,706
+$129
% OF NET SALES
17.2%
17.1%
+ 9bps
OPERATING EXPENSES
$3,502
$3,359
($143)
ADJUSTED
OPERATING
EXPENSES
1
$2,990
$2,865
($125)
% OF NET SALES
13.4%
13.2%
(19bps)
NET INCOME/(LOSS)
($57)
($51)
+$6
ADJUSTED EBITDA
$845
$841
+$4
ADJUSTED
EBITDA
MARGIN
2
3.8%
3.9%
(9) bps
CONSOLIDATED
EBITDA
3
$895
CONSOLIDATED
EBITDA
MARGIN
2
4.0% |
 9
Quarterly Cash Flow
Note: Individual components may not add to total presented due to rounding.
$ IN MILLIONS
Q1 2013
Q2 2013
Q3 2013
Q4 2013
LTM
Cash from Operating Activities
($10)
$120
$5
$208
$322
Capital Expenditures, net of Proceeds
($51)
($35)
($34)
($56)
($176)
Acquisitions, net
-
-
-
($11)
($11)
Cash Used in Financing Activities
($32)
($31)
($36)
($98)
($197)
Net Cash Change
($93)
$54
($66)
$43
($62)
Beginning Cash
$242
$149
$203
$137
$242
Ending Cash
$149
$203
$137
$180
$180 |
 10
1.3x
Capital Structure & Credit Statistics
1.3x
Q4 2013 Financial Performance
Debt /LTM
As of
Consolidated
$ IN MILLIONS
12/28/2013
EBITDA
ABL Revolver (2016)
$20
ABS Facility (2015)
$686
CMBS Facility (2017)
$472
Term Loan (2019)
$2,095
Other Debt (2018 -
2031)
$129
Total Senior Secured Debt
$3,402
3.8x
Senior Notes (2019)
$1,350
Total Debt
1
$4,752
5.3x
Less: Restricted Cash
($7)
Less: Cash and Cash Equivalents
($180)
Net Debt
$4,565
5.1x
Credit Statistics
Debt Coverage
Interest Coverage
Ratio²
Ratio³
5.1x
1.0x
2.0x
3.0x
4.0x
5.0x
6.0x
7.0x
8.0x
9.0x
At Close
7/2/2007
12/28/2013
8.2x
1.3x
2.9x
1.0x
2.0x
3.0x
4.0x
5.0x
6.0x
7.0x
8.0x
9.0x
At Close
7/2/2007
12/28/2013
Notes:
(1) Total Debt includes $4,770 million of US GAAP debt as of December 28, 2013 less $18 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. |
 11
We have $967 million of available liquidity.
Liquidity
As of
$ IN MILLIONS
12/28/2013
Borrowing Availability:
ABL Revolver (2016)
$787
Total Cash & Cash Equivalents
$180
Total Cash and Borrowing Availability
$967 |
 12
Agenda
•
Business Highlights
•
Quarterly Financial Update
•
Closing Comments
•
Appendix |
 13
Agenda
•
Business Highlights
•
Quarterly Financial Update
•
Closing Comments
•
Appendix |
 14
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
Non-GAAP Reconciliation -
Adjusted EBITDA
Quarter Ended
Year Ended
(In millions)
December 28, 2013
December 29, 2012
December 28, 2013
December 29, 2012
Net loss (income)
(1)
$
(51)
$
(57)
$
(51)
$
Interest expense, net
73
85
306
312
Income tax provision (benefit)
36
42
30
42
Depreciation and amortization expense
101
94
388
356
EBITDA
209
170
667
659
Adjustments:
Sponsor fees (1)
2
2
10
10
Restructuring and tangible asset impairment charges (2)
3
-
8
9
Share-based compensation expense (3)
(1)
1
8
4
LIFO reserve change (4)
5
(5)
12
13
Loss on extinguishment of debt (5)
-
21
42
31
Pension settlement (6)
2
18
2
18
Business transformation costs (7)
17
19
61
75
Other (8)
9
2
35
21
Adjusted EBITDA
246
$
228
$
845
$
841
$
Notes:
(1) Consists of management fees paid to the Sponsors. (2) Consists primarily of facility closing, severance and related costs, and
tangible asset impairment charges.
(3) Represents costs recorded for USF Holding Corp. share option awards, restricted
shares, and restricted stock units vested.
(4) Consists of changes in the LIFO reserve. (5) Includes fees paid to debt holders, third party costs, early redemption premiums, and
write-off of unamortized debt issuance costs.
(6) Consists of charges resulting from lump-sum payment settlements to retirees and
former employees participating in several Company sponsored pension plans.
(7) Consists primarily of costs related to functionalization and significant process
and systems redesign.
(8) Other includes gains, losses, or charges, including $3.5 million of 2013 direct
and incremental costs related to the Sysco merger, as specified under the Company’s debt
agreements. Individual components may not add to total presented due to rounding. |
 16
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)
Consists primarily of facility closing, severance and related costs, and tangible
asset impairment charges. (4)
Represents costs recorded for USF Holding Corp. share option awards, restricted
shares, and restricted stock units vested. (5)
Consists of charges resulting from lump-sum payment settlements to retirees
and former employees participating in several Company sponsored pension plans.
(6)
Consists primarily of costs related to functionalization and significant
process and systems redesign. (7)
Other includes gains, losses or charges, including $3.5 million of 2013 direct and
incremental costs related to the Sysco merger, as specified under the Company’s
debt agreements.
Individual components may not add to total presented due to rounding.
Quarter Ended
Year Ended
(In millions)
December 28, 2013
December 29, 2012
December 28, 2013
December 29, 2012
Gross Profit
972
$
948
$
3,823
$
3,693
$
LIFO reserve change (1)
5
(5)
12
13
Adjusted Gross Profit
977
$
942
$
3,835
$
3,706
$
Net sales
5,547
$
5,435
$
22,297
$
21,665
$
Operating Expenses
863
$
850
$
3,502
$
3,359
$
Adjustments:
Depreciation and amortization expense
(101)
(94)
(388)
(356)
Sponsor fees (2)
(2)
(2)
(10)
(10)
Restructuring and tangible asset impairment charges (3)
(3)
-
(8)
(9)
Share-based compensation expense (4)
1
(1)
(8)
(4)
Pension settlement (5)
(2)
(18)
(2)
(18)
Business transformation costs (6)
(17)
(19)
(61)
(75)
Other (7)
(9)
(2)
(35)
(21)
Adjusted Operating Expenses
730
$
715
$
2,990
$
2,865
$
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