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| 8-K - 8-K - US FOODS, INC. | d893733d8k.htm |
 Q4
& FY 2014 Performance Update
A Taste of What’s Cooking at US Foods
March 2015
Exhibit 99.1 |
 1
FOOD. FOOD PEOPLE. 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, 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
group
purchasing
organizations;
our
ability
to
increase
sales
to
independent
customers;
changes
in
industry
pricing
practices;
changes
in
the
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 and increases in interest rates; and risks related to and
our ability to consummate our proposed acquisition 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. |
 2
FOOD. FOOD PEOPLE. 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 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 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
or
net
income
attributable
to
stockholders.
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. |
 3
FOOD. FOOD PEOPLE. EASY. Agenda
•
Business Highlights
•
Financial Update
•
Closing Comments
•
Appendix |
 4
FOOD. FOOD PEOPLE. EASY. Agenda
•
Business Highlights
•
Financial Update
•
Closing Comments
•
Appendix |
 5
FOOD. FOOD PEOPLE. EASY. Business Highlights
Note:
(1) Reconciliation of this non-GAAP measure is provided in the
Appendix. •
Q4 results
•
Sales increased 3.7%, and cases decreased 1.8%
•
Net income was $48 million
•
Adjusted
EBITDA
was
$240
million,
a
2.4%
decrease
from
last
year
1
•
FY 2014 results
•
Sales increased 3.2%, and cases decreased 1.2%
•
Net loss was $73 million
•
Adjusted
EBITDA
was
$866
million,
a
2.5%
increase
from
last
year
1
•
Business transformation focused on differentiation and innovation
•
Category Management and Merchandising
•
Sales Force Effectiveness
•
Acquisition by Sysco (the “Acquisition”)
•
Entered into an asset purchase agreement with Performance Food Group for the
divestiture of 11 US Foods distribution centers upon completion of the
Acquisition. •
The
FTC
voted
by
a
margin
of
3-2
to
seek
a
preliminary
injunction
to
prevent
the
closing
of
the
Acquisition.
Sysco
and US Foods are contesting. |
 6
FOOD. FOOD PEOPLE. EASY. Agenda
•
Business Highlights
•
Financial Update
•
Closing Comments
•
Appendix |
 7
FOOD. FOOD PEOPLE. EASY. 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.
NET SALES
$5,754
$5,547
3.7%
GROSS PROFIT
$978
$972
$6
ADJUSTED GROSS PROFIT
1
$969
$977
($8)
% OF NET SALES
16.8%
17.6%
(77) bps
OPERATING EXPENSES
$865
$864
($1)
ADJUSTED OPERATING EXPENSES
1
$729
$731
$2
% OF NET SALES
12.7%
13.2%
51
bps
NET INCOME/(LOSS)
$48
($1)
$49
ADJUSTED
EBITDA
1
$240
$246
($6)
ADJUSTED
EBITDA
MARGIN
2
4.2%
4.4%
(26) bps
$ IN MILLIONS
Q4 2014
Q4 2013
B/(W) Y-O-Y CHANGE |
 8
FOOD. FOOD PEOPLE. EASY. FY 2014 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.
NET SALES
$23,020
$22,297
3.2%
GROSS PROFIT
$3,798
$3,823
($25)
ADJUSTED
GROSS
PROFIT
1
$3,858
$3,835
$23
% OF NET SALES
16.8%
17.2%
(44) bps
OPERATING EXPENSES
$3,546
$3,502
($44)
ADJUSTED
OPERATING
EXPENSES
1
$2,992
$2,990
($2)
% OF NET SALES
13.0%
13.4%
41 bps
NET INCOME/(LOSS)
($73)
($57)
($16)
ADJUSTED
EBITDA
1
$866
$845
$21
ADJUSTED
EBITDA
MARGIN
2
3.8%
3.8%
(3) bps
CONSOLIDATED
EBITDA
3
$916
CONSOLIDATED
EBITDA
MARGIN
2
4.0%
$ IN MILLIONS
FY 2014
FY 2013
B/(W) Y-O-Y CHANGE |
 9
FOOD. FOOD PEOPLE. EASY. Cash Flow
Individual components may not add to total presented due to rounding.
$ IN MILLIONS
Q1 2014
Q2 2014
Q3 2014
Q4 2014
FY 2014
Cash from Operating Activities
$31
$216
$56
$99
$402
Capital Expenditures, net of Proceeds
($40)
($25)
($16)
($36)
($118)
Cash provided by Financing Activities
$1
($45)
($12)
($64)
($120)
Net Cash Change
($8)
$146
$27
($1)
$164
Beginning Cash
$180
$172
$317
$345
$180
Ending Cash
$172
$317
$345
$344
$344 |
 10
FOOD. FOOD PEOPLE. EASY. 1.3x
Capital Structure & Credit Statistics
1.3x
Notes:
(1) Total debt as of December 27, 2014 of $4,733 million excludes $15 million of
unamortized premium on senior notes. (2) Debt coverage ratio equals net debt
divided by Consolidated EBITDA over last 12 months. Debt /LTM
As of
Consolidated
$ IN MILLIONS
12/27/2014
EBITDA
ABL Revolver (2016)
$0
ABS Facility (2016)
$636
CMBS Facility (2017)
$472
Term Loan (2019)
$2,074
Capital Leases (2018 -
2025)
$189
Other Debt (2018 -
2031)
$12
Total Senior Secured Debt
$3,383
3.7x
Senior Notes (2019)
$1,350
Total
Debt
1
$4,733
5.2x
Less: Restricted Cash
($6)
Less: Cash and Cash Equivalents
($344)
Net Debt
$4,383
4.8x
Credit Statistics
Debt Coverage
Interest Coverage
Ratio
2
Ratio
3
1.3x
3.2x
1.0x
2.0x
3.0x
4.0x
5.0x
6.0x
7.0x
8.0x
9.0x
At Close
7/2/2007
12/27/2014
1.0x
2.0x
3.0x
4.0x
5.0x
6.0x
7.0x
8.0x
9.0x
At Close
7/2/2007
12/27/2014
8.2x
4.8x
(3) Interest coverage ratio equals Consolidated EBITDA over last 12 months divided by net
interest expense over last 12 months. |
 11
FOOD. FOOD PEOPLE. EASY. We have $1,173 million of available liquidity.
Liquidity
As of
$ IN MILLIONS
12/27/2014
Borrowing Availability:
ABL Facility (2016)
$765
ABS Facility (2016)
$64
Total Cash & Equivalents
$344
Total Cash and Borrowing Availability
$1,173 |
 12
FOOD. FOOD PEOPLE. EASY. Agenda
•
Business Highlights
•
Financial Update
•
Closing Comments
•
Appendix |
 13
FOOD. FOOD PEOPLE. EASY. Agenda
•
Business Highlights
•
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 the Company’s operating
performance
because
they
exclude
amounts
that
the
Company’s
management
and
board
of
directors
do
not
consider
part
of
core
operating
results when assessing the performance of the Company. 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
GAAP,
and there are limitations associated with their use. The Company's calculation of
these non-GAAP financial measures may not be 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 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
GAAP measures. |
 15
FOOD. FOOD PEOPLE. EASY. Non-GAAP Reconciliation -
Adjusted EBITDA.
Quarter Ended
FY Ended
(In millions)
Dec 27, 2014
Dec 28, 2013
Dec 27, 2014
Dec 28, 2013
Net income (loss)
48
$
(1)
$
(73)
$
(57)
$
Interest expense, net
71
73
289
306
Income tax provision (benefit)
(5)
36
36
30
Depreciation and amortization expense
102
101
412
388
EBITDA
215
209
664
667
Adjustments:
Sponsor
fees
1
2
2
10
10
Restructuring
and
tangible
asset
impairment
charges
2
-
3
-
8
Share-based
compensation
expense
3
3
(1)
12
8
Net LIFO reserve change
4
(9)
5
60
12
Loss
on
extinguishment
of
debt
5
-
-
-
42
Pension
settlement
6
2
2
2
2
Business
transformation
costs
7
14
17
54
61
Acquisition
related
costs
8
11
4
38
4
Other
9
2
5
26
31
Adjusted EBITDA
240
$
246
$
866
$
845
$
Notes:
(1)
Consists
of
management
fees
paid
to
Clayton,
Dubilier
&
Rice,
Inc.
and
Kohlberg
Kravis
Roberts
&
Co.
(collectively
the
“Sponsors”).
(2)
Primarily consists of facility closing, severance and related costs, and tangible
asset impairment charges. (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 net changes in the LIFO reserve.
(5)
Includes fees paid to debt holders, third party costs, early redemption premiums,
and the write-off of old debt facility 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) Consists of direct and incremental costs
related to the Acquisition. (9)
Other
includes
gains,
losses
or
charges,
as
specified
under
the
Company’s
debt
agreements,
including
$16
million
of
costs
subject
to
coverage
under
the
Company’s
insurance policies.
Individual components may not add to total presented due to rounding.
|
 16
FOOD. FOOD PEOPLE. EASY. Non-GAAP Reconciliation -
Adjusted Gross Profit
and Adjusted Operating Expenses.
Quarter Ended
FY Ended
(In millions)
Dec 27, 2014
Dec 28, 2013
Dec 27, 2014
Dec 28, 2013
Gross Profit
978
972
3,798
$
3,823
$
Net LIFO reserve change
1
(9)
5
60
12
Adjusted Gross Profit
969
$
977
$
3,858
$
3,835
$
Net sales
5,754
$
5,547
$
23,020
$
22,297
$
Operating Expenses
865
$
864
$
3,546
$
3,502
$
Adjustments:
Depreciation and amortization expense
(102)
(101)
(412)
(388)
Sponsor
fees
2
(2)
(2)
(10)
(10)
Restructuring
and
tangible
asset
impairment
charges
3
-
(3)
-
(8)
Share-based
compensation
expense
4
(3)
1
(12)
(8)
Pension settlement
5
(2)
(2)
(2)
(2)
Business
transformation
costs
6
(14)
(17)
(54)
(61)
Acquisition
related
costs
7
(11)
(4)
(38)
(4)
Other
8
(2)
(5)
(26)
(31)
Adjusted Operating Expenses
729
$
731
$
2,992
$
2,990
$
Notes:
(1)
Consists of net changes in the LIFO reserve.
(2)
Consists of management fees paid to the Sponsors.
(3)
Primarily consists of facility closing, severance and related costs, and tangible
asset impairment charges. (4)
Share-based
compensation
expense
represents
costs
recorded
for
vesting
of
USF
Holding
Corp.
stock
option
awards,
restricted
stock,
and
restricted
stock
units.
(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)
Consists of direct and incremental costs related to the Acquisition.
(8)
Other includes gains, losses or charges, as specified under the Company’s debt
agreements, including $16 million of costs subject to coverage under the
Company’s insurance policies.
Individual components may not add to total presented due to rounding.
|
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