# US Foods Holding Corp.: Form 10-Q for the period ended Mar 30, 2024

- Company: [US Foods Holding Corp.](/companies/usfd.md) (CIK 1665918)
- Form: 10-Q
- Filed: 2024-05-09
- Accepted by EDGAR: May 9, 2024, 16:34 ET
- Period: 2024-03-30
- Accession: 0001665918-24-000101
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1665918/000166591824000101/usfd-20240330.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1665918/000166591824000101/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-03-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-12-31 to 2024-03-30 | $8.95bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2023-12-31 to 2024-03-30 | $7.45bn | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2023-12-31 to 2024-03-30 | $1.50bn | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2023-12-31 to 2024-03-30 | $1.32bn | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2023-12-31 to 2024-03-30 | $165.0m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2023-12-31 to 2024-03-30 | $79.0m | us-gaap:InterestExpense |
| Income tax | 3 months, 2023-12-31 to 2024-03-30 | $5.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-12-31 to 2024-03-30 | $82.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-12-31 to 2024-03-30 | $0.33 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-12-31 to 2024-03-30 | $0.33 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-12-31 to 2024-03-30 | 248,000,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2023-12-31 to 2024-03-30 | $139.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2023-12-31 to 2024-03-30 | $87.0m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 3 months, 2023-12-31 to 2024-03-30 | $13.0m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-03-30 | $267.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-03-30 | $4.23bn | us-gaap:AssetsCurrent |
| Total assets | at 2024-03-30 | $13.39bn | us-gaap:Assets |
| Current liabilities | at 2024-03-30 | $3.24bn | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-03-30 | $8.56bn | us-gaap:Liabilities |
| Shareholders' equity | at 2024-03-30 | $4.83bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 30,322 characters.

### (Dollar amounts in tables presented in millions, unless otherwise noted)

The following discussion and analysis should be read together with the accompanying unaudited consolidated financial statements and the notes thereto included in this Quarterly Report and the audited consolidated financial statements and the notes thereto in the 2023 Annual Report. The following discussion and analysis contain certain financial measures that are not required by or presented in accordance with GAAP. We believe these non-GAAP measures provide meaningful supplemental information about our operating performance and liquidity. Information regarding reconciliations of and the rationale for these measures is discussed under “Non-GAAP Reconciliations” below. Results of operations for the 13 weeks ended March 30, 2024 are compared to the 13 weeks ended April 1, 2023, unless specifically noted otherwise.

### Overview

At US Foods, we strive to inspire and empower chefs and foodservice operators to bring great food experiences to consumers. This mission is supported by our strategy of *GREAT FOOD. MADE EASY.™*, which is centered on providing customers with the innovative products, business support and technology solutions they need to operate their businesses profitably. We operate as one business with standardized business processes, shared systems infrastructure, and an organizational model that optimizes national scale with local execution, allowing us to manage our business as a single operating segment. We have centralized activities where scale matters and our local field structure focuses on customer-facing activities.

We supply approximately 250,000 customer locations nationwide. These customer locations include independent restaurants, chain restaurants, healthcare, hospitality, education and other customers. We provide fresh, frozen, and dry food products, as well as non-food items, sourced from thousands of suppliers. Approximately 4,000 sales associates manage customer relationships at local, regional, and national levels. Our sales associates are supported by sophisticated marketing and category management capabilities, as well as a sales support team that includes world-class chefs and restaurant operations consultants, new business development managers and others that help us provide more comprehensive service to our customers. Our extensive network of over 70 distribution facilities and fleet of over 6,500 trucks, along with over 90 cash and carry locations, allow us to operate efficiently and provide high levels of customer service. This operating model allows us to leverage our nationwide scale and footprint while executing locally.

For the 13 weeks ended March 30, 2024, net sales increased, with a total case volume increase of 4.2% compared to the prior year driven by a 4.6% increase in independent restaurant case volume, a 6.4% increase in healthcare volume, a 0.9% increase in hospitality volume and a 3.7% increase in chain volume. Total organic case volume increased 1.4% for the 13 weeks ended March 30, 2024 which includes 2.9% organic independent restaurant case volume growth.

### Operating Metrics

*Case growth—*Case growth, by customer type (e.g., independent restaurants) is reported as of a point in time. Customers periodically are reclassified, based on changes in size or other characteristics, and when those changes occur, the respective customer’s historical volume is included within the new classification.

*Organic growth—*Organic growth includes growth from operating businesses that have been reflected in our results of operations for at least 12 months.

### Highlights

For the 13 weeks ended March 30, 2024, compared to the same period a year ago, total case volume increased 4.2% and independent restaurant case volume increased 4.6%. For the 13 weeks ended March 30, 2024, compared to the same period a year ago, total organic case volume increased 1.4%, organic independent restaurant case growth was 2.9%. Net sales increased $407 million, or 4.8%, for the 13 weeks ended March 30, 2024, driven primarily by case volume growth and food cost inflation of 1.5%.

Gross profit increased $70 million, or 4.9%, to $1,495 million for the 13 weeks ended March 30, 2024. The increase was primarily as a result of an increase in organic case volume, improved cost of goods sold, the impact of acquisitions and pricing optimization, partially offset by an unfavorable year-over-year LIFO adjustment. Gross profit was negatively impacted by a LIFO expense of $45 million for the 13 weeks ended March 30, 2024 and $20 million for the 13 weeks ended April 1, 2023, respectively. As a percentage of net sales, gross profit was 16.7% for both the 13 weeks ended March 30, 2024 and the 13 weeks ended April 1, 2023.

Total operating expenses increased $92 million, or 7.4%, to $1,330 million for the 13 weeks ended March 30, 2024. Operating expenses increased primarily as a result of an increase in organic case volume, higher distribution costs, reflecting increased labor costs, the impact of acquisitions and incremental costs to serve our customers during January labor disruptions, partially offset by continued productivity improvement. As a percentage of net sales, operating expenses were 14.9% for the 13 weeks ended March 30, 2024, compared to 14.5% for the prior year period.

### Results of Operations

The following table presents selected historical results of operations for the periods indicated:

| Consolidated Statements of Operations: | 13 Weeks Ended March 30, 2024 | April 1, 2023 |
| --- | ---: | ---: |
| Net sales | $8,949 | $8,542 |
| Cost of goods sold | 7,454 | 7,117 |
| Gross profit | 1,495 | 1,425 |
| Operating expenses: |  |  |
| Distribution, selling and administrative costs | 1,317 | 1,238 |
| Restructuring costs and other asset impairment costs | 13 | — |
| Total operating expenses | 1,330 | 1,238 |
| Operating income | 165 | 187 |
| Other income—net | (1) | (1) |
| Interest expense—net | 79 | 81 |
| Income before income taxes | 87 | 107 |
| Income tax provision | 5 | 25 |
| Net income | 82 | 82 |
| Series A Preferred Stock Dividends | — | (7) |
| Net income available to common shareholders | $82 | $75 |
| **Percentage of Net Sales:** |  |  |
| Gross profit | 16.7% | 16.7% |
| Operating expenses | 14.9% | 14.5% |
| Operating income | 1.8% | 2.2% |
| Net income | 0.9% | 1.0% |
| Adjusted EBITDA(1) | 4.0% | 3.9% |
| **Other Data:** |  |  |
| Cash flows—operating activities | $139 | $279 |
| Cash flows—investing activities | (86) | (60) |
| Cash flows—financing activities | (55) | (138) |
| Capital expenditures | 87 | 61 |
| EBITDA(1) | 271 | 286 |
| Adjusted EBITDA(1) | 356 | 337 |
| Adjusted EBITDA Margin(1) | 4.0% | 3.9% |
| Adjusted Net Income(1) | 134 | 125 |
| Free Cash Flow(2) | 53 | 219 |

(1) EBITDA is defined as net income, plus interest expense—net, income tax provision, and depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted for: (1) restructuring costs and asset impairment charges; (2) share-based compensation expense; (3) the impact of LIFO reserve adjustments; (4) loss on extinguishment of debt; (5) business transformation costs; and (6) other gains, losses, or costs as specified in the agreements governing our indebtedness. Adjusted EBITDA Margin is Adjusted EBITDA divided by total net sales. Adjusted Net Income is defined as net income excluding the items used to calculate Adjusted EBITDA listed above and further adjusted for the tax effect of the exclusions and discrete tax items. EBITDA, Adjusted EBITDA, and Adjusted Net Income as presented are supplemental measures of our performance that are not required by, or presented in accordance with, GAAP. They are not measurements of our performance under GAAP and should not be considered as alternatives to net income or any other performance measures derived in accordance with GAAP. For additional information, see the discussion under the caption “Non-GAAP Reconciliations” below.

(2) Free Cash Flow is defined as cash flows provided by operating activities and proceeds from sales of property and equipment less cash capital expenditures. Free Cash Flow as presented is a supplemental measure of our liquidity that is not required by, or presented in accordance with, GAAP. It is not a measure of our liquidity under GAAP and should not be considered as an alternative to cash flows provided by operating activities or any other liquidity measures derived in accordance with GAAP. For additional information, see the discussion under the caption “Non-GAAP Reconciliations” below.

### Non-GAAP Reconciliations

We provide EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and Free Cash Flow as supplemental measures to GAAP financial measures regarding our operating performance and liquidity. These non-GAAP financial measures, as defined above, exclude the impact of certain items and, therefore, have not been calculated in accordance with GAAP.

We believe EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin provide meaningful supplemental information about our operating performance because they exclude amounts that we do not consider part of our core operating results when assessing our performance.

We believe that Adjusted Net Income is a useful measure of operating performance for both management and investors because it excludes items that are not reflective of our core operating performance and provides an additional view of our operating performance including depreciation, interest expense and income taxes on a consistent basis from period to period. We believe that Adjusted Net Income may be used by investors, analysts and other interested parties to facilitate period-over-period comparisons and provides additional clarity as to how factors and trends impact our operating performance.

Management uses these non-GAAP financial measures (1) to evaluate our historical and prospective financial performance as well as our performance relative to our competitors as they assist in highlighting trends, (2) to set internal sales targets and spending budgets, (3) to measure operational profitability and the accuracy of forecasting, (4) to assess financial discipline over operational expenditures, and (5) as an important factor in determining variable compensation for management and employees. EBITDA and Adjusted EBITDA are also used in connection with certain covenants and activity restrictions under the agreements governing our indebtedness. We also believe these and similar non-GAAP financial measures are frequently used by securities analysts, investors, and other interested parties to evaluate companies in our industry. EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Net Income are not measurements of our performance under GAAP and should not be considered as alternatives to net income or any other performance measures derived in accordance with GAAP.

We use Free Cash Flow as a supplemental measure to GAAP financial measures regarding the liquidity of our operations. We measure Free Cash Flow as cash flows provided by operating activities and proceeds from sales of property and equipment less cash capital expenditures. We believe that Free Cash Flow is a useful financial metric to assess our ability to pursue business opportunities and investments. Free Cash Flow is not a measure of our liquidity under GAAP and should not be considered as an alternative to cash flows provided by operating activities or any other liquidity measures derived in accordance with GAAP.

We caution readers that amounts presented in accordance with our definitions of EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, and Free Cash Flow may not be the same as similar measures used by other companies. Not all companies and analysts calculate EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income or Free Cash Flow in the same manner. We compensate for these limitations by using these non-GAAP financial measures as supplements to GAAP financial measures and by presenting the reconciliations of the non-GAAP financial measures to their most comparable GAAP financial measures.

The following table reconciles EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and Free Cash Flow to the most directly comparable GAAP financial performance and liquidity measures for the periods indicated:

|  | 13 Weeks Ended March 30, 2024 |  | April 1, 2023 |  |
| --- | ---: | ---: | ---: | ---: |
| **Net income available to common shareholders and net income margin** | $82 | 0.9% | $75 | 0.9% |
| Series A Preferred Stock Dividends | — |  | (7) |  |
| **Net income** | 82 |  | 82 |  |
| Interest expense—net | 79 |  | 81 |  |
| Income tax provision | 5 |  | 25 |  |
| Depreciation expense | 93 |  | 87 |  |
| Amortization expense | 12 |  | 11 |  |
| **EBITDA and EBITDA Margin** | 271 | 3.0% | 286 | 3.3% |
| Adjustments: |  |  |  |  |
| Restructuring costs and asset impairment charges(1) | 13 |  | — |  |
| Share-based compensation expense(2) | 15 |  | 14 |  |
| LIFO reserve adjustment(3) | 45 |  | 20 |  |
| Business transformation costs(4) | 9 |  | 4 |  |
| Business acquisition and integration related costs and other(5) | 3 |  | 13 |  |
| **Adjusted EBITDA and Adjusted EBITDA Margin** | 356 | 4.0% | 337 | 3.9% |
| Depreciation expense | (93) |  | (87) |  |
| Interest expense—net | (79) |  | (81) |  |
| Income tax provision, as adjusted(6) | (50) |  | (44) |  |
| **Adjusted Net Income** | $134 |  | $125 |  |
| **Cash flow** |  |  |  |  |
| Cash flows from operating activities | $139 |  | $279 |  |
| Proceeds from sales of property and equipment | 1 |  | 1 |  |
| Capital expenditures | (87) |  | (61) |  |
| Free Cash Flow | $53 |  | $219 |  |

(1) Consists primarily of severance and related costs, organizational realignment costs and asset impairment charges.

(2) Share-based compensation expense for expected vesting of stock awards and employee stock purchase plan.

(3) Represents the impact of LIFO reserve adjustments.

(4) Transformational costs represent non-recurring expenses prior to formal launch of strategic projects with anticipated long-term benefits to the Company. These costs generally relate to third party consulting and non-capitalizable technology. For the 13 weeks ended March 30, 2024, business transformation costs related to projects associated with information technology and workforce efficiencies. For the 13 weeks ended April 1, 2023, business transformation costs related to projects associated with several supply chain strategy initiatives.

(5) Includes: (i) aggregate acquisition and integration related costs of $3 million and $4 million for the 13 weeks ended March 30, 2024 and April 1, 2023, respectively; (ii) CEO sign on bonus of $3 million for the 13 weeks ended April 1, 2023 and (iii) other gains, losses or costs that we are permitted to addback for purposes of calculating Adjusted EBITDA under certain agreements governing our indebtedness.

(6) Represents our income tax provision adjusted for the tax effect of pre-tax items excluded from Adjusted Net Income and the removal of applicable discrete tax items. Applicable discrete tax items include changes in tax laws or rates, changes related to prior year unrecognized tax benefits, discrete changes in valuation allowances, and excess tax benefits associated with share-based compensation. The tax effect of pre-tax items excluded from Adjusted Net Income is computed using a statutory tax rate after taking into account the impact of permanent differences and valuation allowances.

A reconciliation between the GAAP income tax provision and the income tax provision, as adjusted, is as follows:

|  | 13 Weeks Ended March 30, 2024 | April 1, 2023 |
| --- | ---: | ---: |
| GAAP income tax provision | $5 | $25 |
| Tax impact of pre-tax income adjustments | 25 | 15 |
| Discrete tax items | 20 | 4 |
| Income tax provision, as adjusted | $50 | $44 |

20

### Comparison of Results

### 13 Weeks Ended March 30, 2024 and April 1, 2023

### Highlights

- Net income remained flat at $82 million in 2024.
- Adjusted EBITDA increased $19 million, or 5.6%, to $356 million in 2024. As a percentage of net sales, Adjusted EBITDA was 4.0% in 2024, compared to 3.9% in 2023.
- Net sales increased $407 million, or 4.8%, to $8,949 million in 2024.
- Total case volume increased 4.2% and independent restaurant case volume increased 4.6%.
- Total organic case volume increased 1.4% and organic independent restaurant case volume increased 2.9%.
- Operating income decreased $22 million, to $165 million in 2024.

### Net Sales

Net sales increased $407 million or 4.8%, to $8,949 million in 2024 driven by case volume growth and food cost inflation of 1.5%. Total case volume increased 4.2% driven by a 4.6% increase in independent restaurant case volume, a 0.9% increase in hospitality volume, a 6.4% increase in healthcare volume and a 3.7% increase in chain volume. Total organic case volume increased 1.4% and organic independent restaurant case volume increased 2.9%. Sales of private brands represented approximately 33% of net sales in both 2024 and 2023.

### Gross Profit

Gross profit increased $70 million, or 4.9%, to $1,495 million in 2024 primarily as a result of an increase in organic case volume, improved cost of goods sold, the impact of acquisitions and pricing optimization, partially offset by an unfavorable year-over-year LIFO adjustment. Our LIFO method of inventory costing resulted in an expense of $45 million in 2024 compared to expense of $20 million in 2023, driven by inflation in multiple product categories including beef and poultry. Gross profit as a percentage of net sales was 16.7% in both 2024 and 2023. Gross profit as a percentage of net sales in 2024 is due to the aforementioned factors.

### Operating Expenses

Operating expenses, comprised of distribution, selling and administrative costs, increased $92 million, or 7.4%, to $1,330 million in 2024. Operating expenses as a percentage of net sales were 14.9% in 2024, compared to 14.5% in 2023. Operating expenses increased primarily as a result of an increase in organic case volume, higher distribution costs, reflecting increased labor costs, the impact of acquisitions and incremental costs to serve our customers during January labor disruptions, partially offset by continued productivity improvement.

### Operating Income

Our operating income was $165 million in 2024, compared to operating income of $187 million in 2023. The decrease in operating income was due to the factors discussed in the relevant sections above.

### Other Income—Net

Other income—net includes components of net periodic pension benefit credits, exclusive of the service cost component associated with our defined benefit and other postretirement plans. We recognized other income—net of $1 million in both 2024 and 2023.

### Interest Expense—Net

Interest expense—net decreased $2 million to $79 million in 2024 primarily due to the interest associated with the unrecognized tax benefit recorded as a result of the expiration of various statutes of limitations, partially offset by higher average interest rates.

### Income Taxes

For the 13 weeks ended March 30, 2024, the Company’s effective income tax rate of 6% differed from the 21% federal corporate income tax rate primarily as a result of state income taxes and the recognition of various discrete tax items. These discrete tax items included a tax benefit of $15 million related to a decrease in an unrecognized tax benefit as a result of the expiration of the statute of limitations in several jurisdictions, a tax benefit of $6 million, primarily related to excess tax benefits associated with share-based compensation and a tax expense of $3 million, primarily related to adjustments to prior year provision estimates. For the 13 weeks ended April 1, 2023, our effective income tax rate of 23% differed from the 21% federal corporate income tax rate primarily as a result of state income taxes and the recognition of various discrete tax items. These discrete tax items included a tax benefit of $4 million primarily related to excess tax benefits associated with share-based compensation.

### Net Income

Our net income was $82 million in both periods for 2024 and 2023.

### Liquidity and Capital Resources

Our ongoing operations and strategic objectives require working capital and continuing capital investment. Our primary sources of liquidity include cash provided by operations, as well as access to capital from bank borrowings and other types of debt and financing arrangements. As of March 30, 2024, the Company had approximately $2.0 billion in cash and available liquidity.

### Indebtedness

The aggregate outstanding balance of our indebtedness was $4,701 million, net of $32 million of unamortized deferred financing costs, as of March 30, 2024.

We had no outstanding borrowings and had issued letters of credit totaling $542 million under the ABL Facility as of March 30, 2024. There was remaining capacity of $1,758 million under the ABL Facility as of March 30, 2024.

The 2019 Incremental Term Loan Facility had an outstanding balance of $1,102 million, net of $10 million of unamortized deferred financing costs, as of March 30, 2024.

The 2021 Incremental Term Loan Facility had an outstanding balance of $719 million, net of $3 million of unamortized deferred financing costs, as of March 30, 2024.

The Unsecured Senior Notes due 2028 had an outstanding balance of $496 million, net of $4 million of unamortized deferred financing costs, as of March 30, 2024.

The Unsecured Senior Notes due 2029 had an outstanding balance of $894 million, net of $6 million of unamortized deferred financing costs, as of March 30, 2024.

The Unsecured Senior Notes due 2030 had an outstanding balance of $496 million, net of $4 million of unamortized deferred financing costs, as of March 30, 2024.

The Unsecured Senior Notes due 2032 had an outstanding balance of $495 million, net of $5 million of unamortized deferred financing costs, as of March 30, 2024.

We also had $491 million of obligations under financing leases for transportation equipment and building leases as of March 30, 2024.

The ABL Facility will mature in 2027. The 2019 Incremental Term Loan Facility and the 2021 Incremental Term Loan Facility will mature in 2026 and 2028, respectively. The Unsecured Senior Notes due 2028, the Unsecured Senior Notes due 2029, the Unsecured Senior Notes due 2030 and the Unsecured Senior Notes due 2032 will mature in 2028, 2029, 2030 and 2032, respectively.

The agreements governing our indebtedness contain customary covenants. These include, among other things, covenants that restrict our ability to incur certain additional indebtedness, create or permit liens on our assets, pay dividends, or engage in mergers or consolidations. The Company had approximately $2.0 billion of restricted payment capacity under these covenants and approximately $2.8 billion of its net assets were restricted after taking into consideration the net deferred tax assets and intercompany balances that eliminate in consolidation as of March 30, 2024.

We believe that the combination of cash generated from operations, together with borrowing capacity under the agreements governing our indebtedness and other financing arrangements, will be adequate to permit us to meet our debt service obligations, ongoing costs of operations, working capital needs, and capital expenditure requirements for the next 12 months.

Every quarter, we review rating agency changes for all of the lenders that have a continuing obligation to provide us with funding. We are not aware of any facts that indicate our lenders will not be able to comply with the contractual terms of their agreements with us. We continue to monitor the credit markets generally and the strength of our lender counterparties.

From time to time, we may repurchase or otherwise retire our debt and take other steps to reduce our debt or otherwise improve our leverage. These actions may include open market repurchases, negotiated repurchases, and other retirements of outstanding debt. The amount of debt that may be repurchased or otherwise retired, if any, will depend on market conditions, our debt trading levels, our cash position, and other considerations. Any potential debt reduction or other debt retirement could require significant use of our other available liquidity and capital resources.

See Note 9, Debt, in our consolidated financial statements, for a further description of our indebtedness.

### Cash Flows

The following table presents condensed highlights from our Consolidated Statements of Cash Flows for the periods presented:

|  | 13 Weeks Ended March 30, 2024 | April 1, 2023 |
| --- | ---: | ---: |
| Net income | $82 | $82 |
| Changes in operating assets and liabilities | (78) | 64 |
| Other adjustments | 135 | 133 |
| Net cash provided by operating activities | 139 | 279 |
| Net cash used in investing activities | (86) | (60) |
| Net cash used in financing activities | (55) | (138) |
| Net (decrease) increase in cash, and cash equivalents and restricted cash | (2) | 81 |
| Cash, cash equivalents and restricted cash—beginning of period | 269 | 211 |
| Cash, cash equivalents and restricted cash—end of period | $267 | $292 |

### Operating Activities

Cash flows provided by operating activities was $139 million for the 13 weeks ended March 30, 2024, representing a decrease of $140 million as compared to cash flows provided by operating activities of $279 million for the 13 weeks ended April 1, 2023, due to less working capital benefit for the 13 weeks ended March 30, 2024 compared to the 13 weeks ended April 1, 2023.

### Investing Activities

Cash flows used in investing activities in the 13 weeks ended March 30, 2024 and April 1, 2023 included cash expenditures of $87 million and $61 million, respectively, on investments in information technology, property and equipment for fleet replacement and maintenance of distribution facilities.

We expect total cash capital expenditures in fiscal year 2024 to be between $325 million and $375 million. We expect to fund our capital expenditures with available cash or cash generated from operations and through fleet financing.

### Financing Activities

Cash flows used by financing activities in the 13 weeks ended March 30, 2024 included $31 million of scheduled payments under our Term Loan Facilities and financing leases, $14 million for repricing of the 2021 Term Loan Facility, $1 million of financing fees related to the 2021 Term Loan Facility repricing and no net payments under the ABL Facility. Financing activities in the 13 weeks ended March 30, 2024 also included $13 million common stock repurchased under the Share Repurchase Program, $5 million of proceeds received from stock purchases under our employee stock purchase plan, $5 million of proceeds from the exercise of employee stock options and $20 million of employee tax withholdings paid in connection with the vesting of stock awards.

Cash flows used by financing activities in the 13 weeks ended April 1, 2023 included $33 million of scheduled payments under our Term Loan Facilities and financing leases, $65 million of voluntary prepayments of our 2021 Incremental Term Loan Facility, $7 million of dividends on our Series A Preferred Stock and no net payments under the ABL Facility. Financing activities in the 13 weeks ended April 1, 2023 also included $34 million common stock repurchased under the Share Repurchase Program, $5 million of proceeds received from stock purchases under our employee stock purchase plan and $7 million of proceeds from the exercise of employee stock options, which were offset by $11 million of employee tax withholdings paid in connection with the vesting of stock awards.

### Other Obligations and Commitments

There have been no material changes in the Company’s cash obligations and commitments since the end of fiscal year 2023. Refer to Item 7 of our 2023 Annual Report for additional information regarding the Company’s cash obligations and commitments as of the end of fiscal year 2023.

### Retirement Plans

See Note 11, Retirement Plans, in our consolidated financial statements for a description of our retirement plans.

### Off-Balance Sheet Arrangements

We had $542 million of letters of credit outstanding primarily securing the Company’s obligations with respect to its insurance program and certain real estate leases, under the ABL Facility as of March 30, 2024.

Except as disclosed above, we have no off-balance sheet arrangements that currently have or are reasonably likely to have a material effect on our consolidated financial condition, changes in financial condition, results of operations, liquidity, capital expenditures or capital resources.

### Critical Accounting Policies and Estimates

We have prepared the financial information in this Quarterly Report in accordance with GAAP. Preparing the Company’s consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during these reporting periods. We base our estimates and judgments on historical experience and other factors we believe are reasonable under the circumstances. These assumptions form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Part II, Item 7—“Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the 2023 Annual Report includes a summary of the critical accounting policies we believe are the most important to aid in understanding our financial results. There have been no changes to those critical accounting policies that have had a material impact on our reported amounts of assets, liabilities, revenue, or expenses during the 13 weeks ended March 30, 2024.

### Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements, see Note 2, Recent Accounting Pronouncements, in our consolidated financial statements.

## Market risk

As filed, 3,941 characters.

We are exposed to certain risks arising from both our business operations and overall economic conditions. Our market risks include interest rate risk and fuel price risk. We do not enter into derivatives or other financial instruments for trading or speculative purposes.

### Interest Rate Risk

Our debt exposes us to risk of fluctuations in interest rates. Floating rate debt, where the interest rate fluctuates periodically, exposes us to short-term changes in market interest rates. Fixed rate debt, where the interest rate is fixed over the life of the instrument, exposes us to changes in market interest rates reflected in the fair value of the debt and to the risk that we may need to refinance maturing debt with new debt at higher rates. We manage our debt portfolio to achieve an overall desired position of fixed and floating rates and may employ interest rate hedges as a tool to achieve that position. In April 2023, the Company entered into two, two-year rate cap agreements, which will each mature on April 30, 2025 with a total notional amount of $450 million. The interest rate cap agreements will effectively cap the interest rate on approximately 24% of the principal amount of the Term Loan Facilities. The Company’s maximum exposure to the variable component of the interest rate on the Term Loan Facilities will be 5% on the notional amount covered by the interest rate cap agreements. We may, in the future, enter into additional interest rate hedges, the risks of which include changes in the interest rates affecting the fair value of such instruments, potential increases in interest expense due to market increases in floating interest rates and the creditworthiness of the counterparties.

After considering interest rate caps that fixed the interest rate on a total notional amount of $450 million of the current principal amount of the Term Loan Facilities, approximately 30% of the principal amount of our debt bore interest at floating rates based on Term SOFR or an alternative reference rate, as defined in our credit agreements, as of March 30, 2024. A hypothetical 1% change in the applicable rate would cause the interest expense on our floating rate debt to change by approximately $16 million per year (see Note 9, Debt, in our consolidated financial statements).

### Fuel Price Risk

We are also exposed to risk due to fluctuations in the price and availability of diesel fuel. We require significant quantities of diesel fuel for our vehicle fleet, and the price and supply of diesel fuel are unpredictable and fluctuate based on events outside our control, including geopolitical developments, supply and demand for oil and gas, regional production patterns, weather conditions and environmental concerns. Increases in the cost of diesel fuel can negatively affect consumer confidence and discretionary spending and increase the prices we pay for products, and the costs we incur to deliver products to our customers.

Fuel costs related to outbound deliveries approximated $190 million during the fiscal year ended December 30, 2023. Our activities to minimize fuel cost risk include route optimization, improving fleet utilization, growing our fleet of electric vehicles and assessing fuel surcharges. We typically directly offset approximately 40% of the increases in fuel costs through fuel surcharges to customers. We also enter into forward purchase commitments for a portion of our projected diesel fuel requirements. As of March 30, 2024, we had diesel fuel forward purchase commitments totaling $24 million, which lock approximately 26% of our projected diesel fuel purchase needs through December 2024. Using current published market price projections for diesel and estimated fuel consumption needs, a hypothetical 10% unfavorable change in diesel prices from the market price could result in approximately $11 million in additional fuel cost on uncommitted volumes through December 2024.

## Controls and procedures

As filed, 1,775 characters.

### Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is processed, recorded, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that this information is accumulated and communicated to Company management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

As required by Exchange Act Rule 13a-15(b), we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of March 30, 2024.

### Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the fiscal quarter ended March 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 233 characters.

There have been no material changes to the principal risks that we believe are material to our business, results of operations, and financial condition from those disclosed in Part I, Item 1A—“Risk Factors” of the 2023 Annual Report.

Filed May 9, 2024.
Source: SEC EDGAR, the filing index for accession 0001665918-24-000101. Last ingested by Listed: Nov 5, 2026, 19:05 ET. No prices; not investment advice.