US Foods sees growth despite Q1 challenges By Investing.com

US Foods Holding Corp . (NYSE:) has reported a 6% increase in adjusted EBITDA for the first quarter of fiscal year 2024, reaching $356 million. Despite facing headwinds from labor disruptions and adverse weather in January, the company managed to achieve growth and remains optimistic about its full-year guidance. US Foods also emphasized its ongoing commitment to cost savings and efficiency improvements, as well as plans to accelerate share repurchases throughout the year.

Key Takeaways

• US Foods reported a 6% year-over-year growth in adjusted EBITDA for Q1 FY 2024, reaching $356 million.
• Excluding labor and weather-related impacts, the underlying adjusted EBITDA growth was approximately 12%.
• The company announced the acquisition of IWC Foodservice and plans for aggressive share repurchases.
• Cost-saving initiatives are expected to generate over $55 million in expense savings for 2024.
• US Foods is focusing on culture, service, growth, and profit pillars to enhance long-term shareholder value.
• The company reaffirmed its FY 2024 guidance, with adjusted EBITDA between $1.69 billion and $1.74 billion, and adjusted diluted EPS from $3 to $3.20.

Company Outlook

• US Foods is confident in achieving its full-year guidance for 2024.
• The company remains focused on its strategic pillars and expects to generate long-term shareholder value.

Bearish Highlights

• Organic sales were down 4% in the first quarter, which was anticipated.
• Challenges in January led to relatively flat growth, with issues such as weather and labor strikes.

Bullish Highlights

• The company has saved approximately $120 million over the past 12 months through its COGS initiative.
• Private label brands grew by 90 basis points year-over-year, now exceeding 52% penetration.
• Delivery productivity improved by 4%, with a goal of 3-5% annual gains to counteract wage inflation.

Misses

• Despite growth, the company saw a downturn in organic sales by 4% in the first quarter.

Q&A Highlights

• Executives discussed the mid-single-digit range trajectory for case growth.
• The company’s M&A strategy is focused on accretive deals, with a near-term priority on share repurchases.
• Gross profit per case is expected to continue its upward trend.

In conclusion, US Foods is navigating through early-year challenges with a strategic focus on efficiency and market penetration. The company’s efforts in streamlining operations and expanding its private label…