US Foods reported strong financial results for Q3 2016, with 4% total case volume growth and earnings growth outpacing revenue growth. Adjusted EBITDA increased 8.4% to $244 million compared to Q3 2015, driven by initiatives to offset deflationary pressures and lower restructuring charges. The company also raised full-year 2016 guidance for adjusted EBITDA growth to a range of 9-10% and continued to strengthen its portfolio through acquisitions.
2. Cautionary Statements
1
Forward-Looking Statements
This presentation contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform
Act of 1995. Forward-looking statements can be identified by words such as “believe,” “expect,” “project,” “anticipate,” “intend,” “plan,” “estimate,” “target,” “seek,”
“will,” “may,” “would,” “should,” “could,” “forecasts,” “mission,” “strive,” “more,” “goal,” or similar expressions. Because forward-looking statements relate to the future,
they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual
results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-
looking statements. Important factors that could cause our actual results to differ materially from the forward-looking statements contained in this presentation
include, among others: our ability to remain profitable during times of cost inflation, commodity volatility, and other factors; industry competition and our ability to
successfully compete; our reliance on third-party suppliers, including the impact of any interruption of supplies or increases in product costs; risks related to our
indebtedness, including our substantial amount of debt, our ability to incur substantially more debt, and increases in interest rates; any change in our relationships
with GPOs; any change in our relationships with long-term customers; our ability to increase sales to independent customers; our ability to successfully consummate
and integrate future acquisitions; our ability to achieve the benefits that we expect from our cost savings programs; 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; liability claims related to products we distribute; our ability to maintain a good reputation; costs and risks associated with labor relations and the
availability of qualified labor; changes in industry pricing practices; changes in competitors’ cost structures; our ability to retain customers not obligated by long-term
contracts to continue purchasing products from us; environmental, health and safety costs; 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;
technology disruptions and our ability to implement new technologies; costs and risks associated with a potential cybersecurity incident; our ability to manage future
expenses and liabilities associated with our retirement benefits; disruptions to our business caused by extreme weather conditions; costs and risks associated with
litigation; changes in consumer eating habits; costs and risks associated with our intellectual property protections; and risks associated with potential infringements
of the intellectual property of others.
For a detailed discussion of these risks and uncertainties, see the section entitled “Risk Factors” in our prospectus dated May 25, 2016, which was filed with the
Securities and Exchange Commission on May 27, 2016, pursuant to Rule 424(b)(4) of the Securities Act of 1933, as amended. All forward-looking statements made
in this presentation are qualified by these cautionary statements. The forward-looking statements contained in this presentation speak only as of the date of this
presentation. We undertake no obligation, other than as may be required by law, to update or revise any forward-looking or cautionary statements to reflect
changes in assumptions, the occurrence of events, unanticipated or otherwise, or changes in future operating results over time or otherwise. Comparisons of
results between current and prior periods are not intended to express any future trends, or indications of future performance, unless expressed as such, and should
only be viewed as historical data.
Non-GAAP Financial Measures
Some of the information included in this presentation is derived from our consolidated financial information but is not presented in our financial statements prepared
in accordance with U.S. generally accepted accounting principles (“GAAP”). Certain of these data are considered “Non-GAAP Financial Measures” under SEC rules.
These Non-GAAP Financial Measures supplement our GAAP disclosures and should not be considered an alternative to the GAAP measure. Reconciliations to the
most directly comparable GAAP financial measures can be found in the Appendix to this presentation. These Non-GAAP Financial Measures are provided as
supplemental measures to GAAP regarding our operational performance. Management uses these Non-GAAP Financial Measures (a) to evaluate the company’s
historical and prospective financial performance as well as its performance relative to its competitors as they assist in highlighting trends, (b) to set internal sales
targets and spending budgets, (c) to measure operational profitability and the accuracy of forecasting, (d) to assess financial discipline over operational
expenditures, and (e) as an important factor in determining variable compensation for management and employees. EBITDA and Adjusted EBITDA are also used
for certain covenants and restricted activities under our debt agreements. We believe these Non-GAAP financial measures are frequently used by securities
analysts, investors, and other interested parties to evaluate companies in our industry.
3. Third quarter highlights
2
• Top-line momentum continued with 4% total and 5.5% independent
restaurant case growth
• Solid earnings growth and margin expansion in a deflationary
environment
• New innovative products and a growing suite of leading e-commerce
tools for customers
• Two new cost initiatives launched following successful rollout of
field operating model
• Recent acquisitions successfully integrated, 2 more announced
• Raising full-year guidance to 9-10% Adjusted EBITDA growth
4. Case Volume Growth with Independent
Restaurant customers
YoY percent change
Total Case Volume Growth
YoY percent change
Top-line growth momentum continues
3
RESULTS SUMMARY
2.5%
4.0%
4.4% 4.7%
6.5%
4.6%
3.5%
8.0%
6.8%
5.5%
Q1 Q2 Q3 Q4* Q1 Q2 Q3
Acquisitions
2015 2016
4% total case volume growth in Q3
• 5.5% independent restaurant growth
• Broad-based customer wins
• Planned chain exits wrapped in Q3
2.5% total case volume growth YTD
• 6.5% independent restaurant growth
• 4.0-4.5% organic run-rate with
independents when normalized for
calendar timing and weather
Positive restaurant market growth
• 1-2% real growth outlook
• Independent restaurants faring better
than chains
Organic
4.0-4.5% organic run-rate
adjusted for calendar
timing and weather
(0.7%)
0.0%
(0.6%) (0.6%)
2.4%
1.2%
4.0%
Q1 Q2 Q3 Q4* Q1 Q2 Q3
2015 2016
* Q4 2015 results normalized to adjust for 53rd week
5. Growing portfolio of exclusive offerings to independent
restaurants supports market share growth
4
TIPPING POINT
FOOD COST MANAGEMENT
• Server Training Program
• Easy-to-use kit
• Focused on categories that increase
check average
• Over 4,000 independent restaurants
have participated
• Generates predictive sales forecast
– Purchase history
– Promotional events
– Weather
• Integration with e-commerce
– Seamless ordering
– Automatic inventory update
E-COMMERCE ADOPTION WITH
INDEPENDENT RESTAURANT CUSTOMERS
% of sales via e-commerce
5%
15%
25%
35%
45%
55%
2011 Q3 2016
48% trial
rate over
first 7
weeks of
launch
New
New
6. Five strategic acquisitions in the past 10 months
5
ACQUISITIONS
ANNOUNCED
FINANCIAL
TARGETS
SALES
INTEGRATION STRATEGY
• Market share growth with
independent restaurant customers
• Convert to USF systems, optimize
and operate facility
• Market share growth with
independent restaurant customers
• Fold-in to USF facilities
• Strengthen produce distribution
and value-added processing
capabilities
• Operate facility
• Market share growth with
independent restaurant customers
• Fold-in to USF facility
• Strengthen seafood sourcing and
distribution capabilities
• Operate facility
Wisconsin
December 2015
Massachusetts
March 2016
New York
September 2016
Ohio
May 2016
Florida
October 2016
ANNUAL
SALES
$ Millions
$120
$107
$130
$26
$80
Announced September 2016
Announced October 2016
OPERATIONS
AND
SYSTEMS
7. 6
Q3 Net Sales Growth Drivers
$ Millions
4.0%
0.8%
Case Growth
vs. PY
Net Sales
Growth vs. PY
100% = 320 bps
Product
Deflation
Freshway
Acquisition
& Mix
Net Sales results impacted by significant deflation
Deflation Trends: Beef & Dairy
Average selling price/case
INDEX:100 = Q3 2015
Q3 2015 Q4 Q1 2016 Q2 Q3
Dairy
Beef
100
80
Q3 Net Sales
$ Millions
YTD Net Sales
$ Millions
$17,192
$17,241
2015 2016
+0.3%
+0.8%$5,796
$5,841
2015 2016
8. Gross profit gains despite deflationary pressures
7
RESULTS SUMMARY
Solid year-over-gains as initiatives offset
deflationary headwinds
• Volume growth
• Favorable customer mix
• Merchandising initiatives
• Effective management of significant
commodity deflation
Q3 Gross Profit
$ Millions; Percent of Sales
$1,013
$1,033
2015 2016
17.5% 17.7%
+2.0%
+21 bps
YTD Gross Profit
$ Millions; Percent of Sales
$2,935
$3,026
2015 2016
17.1% 17.6% +48 bps
* Reconciliations of non-GAAP measures are provided in the Appendix
Adjusted Gross Profit*
Q3: $1.0B, up $33M or 3.3%
• 17.6% of sales, up 44 bps
YTD: $3.0B, up $109 or 3.7%
• 17.4% of sales, up 58 bps
+3.1%
9. Operating expense performance showing improvement
RESULTS SUMMARY
8
Initiatives and lower restructuring charges
driving year-over-year improvements
• Distribution, selling & admin costs down
$8M in Q3; $27M YTD
• Restructuring $14M lower in Q3; $43M YTD
• Impact from labor disruptions partially offset
by productivity initiatives
• Field reorganization successfully completed
Adjusted Operating Expenses*
Q3: $781M, up 1.8%
• 13.4% of sales, up 14 bps
YTD: $2.3B, up 1.0%
• 13.3% of sales, up 10 bps
Q3 Operating Expenses
$ Millions; Percent of Sales
$940
$917
2015 2016
16.2% 15.7%
(2.5)%
(52) bps
YTD Operating Expenses
$ Millions; Percent of Sales
$2,797
$2,728
2015 2016
16.3% 15.8%
(2.5)%
(45) bps
* Reconciliations of non-GAAP measures are provided in the Appendix
10. Two new cost initiatives launched following successful
implementation of new field operating model
9
2015
Productivity and Cost Reduction RECENT INITIATIVES
Field Operating Model
• Multi-site management model
• 8 regions to 5
• Streamlined and standardized business processes
Corporate Operating Model
• Targets corporate and administrative costs
• Simplify organization
• Streamline processes
• Extend shared services
Centralized Replenishment
• Targets COGS and logistics savings
• Extended central procurement
• Expanded produce redistribution network
COST ELEMENT
Distribution
Sales Force Efficiency
Corporate and Administrative
POST RECESSION COST REDUCTION
2007 2011 2016
REBRANDING AND GROWTH CURRENT FOCUS AREAS
• Common IT platform
• Back office centralization
• Shared service model
• E-Commerce
• Food innovation
• Category management
• Data analytics
• Extended customer services
• Field operating model
• Team-based selling model
MERGER UNCERTAINTY
Completed
Q3
Launched
Q4
Launched
Q3New
New
11. Solid Q3 and year-to-date earnings growth
10
$73
$115
2015 2016
1.3% 2.0%
Q3 Operating Income
$ Millions; Percent of Sales
Q3 Adjusted EBITDA*
$ Millions; Percent of Sales
$5
$55
$133
$87
GAAP Adjusted*
Q3 Net Income
$ Millions
YTD Operating Income
$ Millions; Percent of Sales
YTD Adjusted EBITDA*
$ Millions; Percent of Sales
YTD Net Income
$ Millions
$177
$72
$133
$201
GAAP Adjusted*
$225
$244
2015 2016
+8.4%
$620
$707
2015 2016
$137
$298
2015 2016
3.9% 4.2%
+118%
+58%
2015
2016
2015
2016
+14.0%
0.8% 1.7% 3.6% 4.1%
* Reconciliations of non-GAAP measures are provided in the Appendix
12. YTD Cash Flow from
Operations
$ Millions
Net Debt* and Leverage
$ Millions; Percent of Sales
FY2016 Interest Expense
$ Millions
Strong cash flow and continued deleveraging
11
$298
$440
2015 2016
LeverageNet Debt
$141
$85-$95
1H 2H
Defeasance of $472 million, 6.38%
CMBS Facility completed in Q3
* Reconciliations of non-GAAP measures are provided in the Appendix
Note: 2015 results normalized to exclude
$288 million one-time merger termination fee
$3,995
$4,860
$3,675
4.6x
5.3x
3.8x
Q3 2015 Pre-IPO Q3 2016
(33)-(40)%
13. Raising 2016 FY outlook: Adj. EBITDA growth of 9-10%
12
• 6-7% Independent Restaurant case volume growth over prior year
• 9-10% Adjusted EBITDA growth over prior year, raised from 8-9%
• Full year interest expense between $225-$235 million
• Capital Expenditures of $190-$200 million plus $80 million of fleet
capital leases
• Depreciation and Amortization estimate of $415-$425 million
• Approximately 225 million weighted average diluted shares expected at
end of Q4
14. Mid-Term Targets Remain Unchanged
13
Mid-Term Targets
Case Volume Growth 2 – 4%
Net Sales Growth 4 – 6%
Adjusted EBITDA Growth 7 – 10%
Net Debt/Adjusted EBITDA
(ex Future Acquisitions)
~3x
CAPEX/Sales
(ex Future Acquisitions)
~1%
16. 15
Q3 Financial Performance
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.
Reported Adjusted(1)
$ Millions except per share
data
Q3 2016 Q3 2015
Y-O-Y %
Change
Q3 2016 Q3 2015
Y-O-Y %
Change
Case Growth +4.0%
Net Sales $5,841 $5,796 +0.8%
Gross Profit $1,033 $1,013 +2.0% $1,026 $993 +3.3%
% of Net Sales 17.7% 17.5% +21 bps 17.6% 17.1% +44 bps
Operating Expenses $917 $940 (2.5%) $781 $767 1.8%
% of Net Sales 15.7% 16.2% (52) bps 13.4% 13.2% +14 bps
Operating Income $115 $73 +57.5% $244 $226 +8.0%
Net Income $133 $5 +2,560.0% $87 $55 +58.2%
Diluted EPS $0.59 $0.03 +1,866.7% $0.39 $0.32 +21.9%
Adjusted EBITDA $244 $225 +8.4%
Adjusted EBITDA Margin (2) 4.2% 3.9% +30 bps
17. 16
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.
Reported Adjusted(1)
$ Millions except per share
data
Q3 2016 Q3 2015
Y-O-Y %
Change
Q3 2016 Q3 2015
Y-O-Y %
Change
Case Growth +2.5%
Net Sales $17,241 $17,192 +0.3%
Gross Profit $3,026 $2,935 +3.1% $3,001 $2,893 +3.7%
% of Net Sales 17.6% 17.1% +48 bps 17.4% 16.8% +58 bps
Operating Expenses $2,728 $2,797 (2.5%) $2,294 $2,271 1.0%
% of Net Sales 15.8% 16.3% (45) bps 13.3% 13.2% +10 bps
Operating Income $298 $137 +117.5% $707 $621 +13.8%
Net Income $133 $177 (24.9%) $201 $72 +179.2%
Diluted EPS $0.68 $1.04 (34.6%) $1.02 $0.42 +142.9%
Adjusted EBITDA $707 $620 +14.0%
Adjusted EBITDA Margin (2) 4.1% 3.6% +49 bps
Q3 Year to Date Financial Performance
18. 17
Non-GAAP Reconciliation - Adjusted Gross Profit and
Adjusted Operating Expenses
Notes: (1) Represents the non-cash impact of net LIFO reserve adjustments.
(2) Consists of management fees paid to Clayton, Dubilier & Rice, LLC. and Kohlberg Kravis Roberts & Co. L.P. (collectively, the “Sponsors”) for consulting and
management advisory services. On June 1, 2016, the consulting and management agreements with each of the Sponsors were terminated for an aggregate termination
fee of $31 million.
(3) Consists primarily of facility related closing costs, including severance and related costs, tangible asset impairment charges, organizational realignment costs,
and estimated multiemployer pension withdrawal liabilities.
(4) Share-based compensation expense for vesting of stock awards.
(5) Consists primarily of costs related to significant process and systems redesign, across multiple functions.
(6) Consists of costs related to the Acquisition, including certain employee retention costs.
(7) Other includes gains, losses or charges as specified under USF’s debt agreements. The balance for the quarter ended September 26, 2015 includes $9 million of
brand re-launch and marketing costs and $3 million of closed facility carrying costs, partially offset by a $9 million net insurance benefit. The balance for the year-to-date
period ended October 1, 2016 includes $5 million of initial public offering readiness costs, $4 million of closed facility carrying costs and $3 million of business acquisition
related costs, partially offset by a $10 million insurance benefit. The balance for the year-to-date period ended September 26, 2015 includes a $16 million legal
settlement charge, $9 million of brand re-launch and marketing costs, and $4 million of closed facility carrying costs, partially offset by a $11 million net insurance benefit.
*Individual components may not add to total presented due to rounding.
(In millions)* October 1, 2016 Sept 26, 2015 October 1, 2016 Sept 26, 2015
Gross Profit 1,033$ 1,013$ 3,026$ 2,935$
LIFO reserve change1
(7) (20) (25) (42)
Adjusted Gross Profit 1,026$ 993$ 3,001$ 2,893$
Operating Expenses 917$ 940$ 2,728$ 2,797$
Adjustments:
Depreciation and amortization expense (106) (101) (314) (299)
Sponsor fees
2
- (3) (36) (8)
Restructuring and tangible asset impairment charges3
(15) (29) (39) (82)
Share-based compensation expense4
(5) (3) (14) (8)
Business transformation costs
5
(10) (11) (26) (31)
Acquisition related costs
6
- (23) (1) (79)
Other7
- (3) (4) (19)
Adjusted Operating Expenses 781$ 767$ 2,294$ 2,271$
Quarter Ended YTD
19. 18
Non-GAAP Reconciliation - Adjusted Operating Income
Notes: (1) Consists of management fees paid to the Sponsors for consulting and management advisory services. On June 1, 2016, the consulting and management agreements with
each of the Sponsors were terminated for an aggregate termination fee of $31 million.
(2) Consists primarily of facility related closing costs, including severance and related costs, tangible asset impairment charges, organizational realignment costs,
and estimated multiemployer pension withdrawal liabilities.
(3) Share-based compensation expense for vesting of stock awards.
(4) Represents the non-cash impact of net LIFO reserve adjustments.
(5) Consists primarily of costs related to significant process and systems redesign, across multiple functions.
(6) Consists of costs related to the Acquisition, including certain employee retention costs.
(7) Other includes gains, losses or charges as specified under USF’s debt agreements. The balance for the quarter ended September 26, 2015 includes $9 million of
brand re-launch and marketing costs and $3 million of closed facility carrying costs, partially offset by a $9 million net insurance benefit. The balance for the year-to-date
period ended October 1, 2016 includes $5 million of initial public offering readiness costs, $4 million of closed facility carrying costs and $3 million of business acquisition
related costs, partially offset by a $10 million insurance benefit. The balance for the year-to-date period ended September 26, 2015 includes a $16 million legal
settlement charge, $9 million of brand re-launch and marketing costs, and $4 million of closed facility carrying costs, partially offset by a $11 million net insurance benefit.
*Individual components may not add to total presented due to rounding.
(In millions)* October 1, 2016 Sept 26, 2015 October 1, 2016 Sept 26, 2015
Operating Income 115$ 73$ 298$ 137$
Adjustments:
Depreciation and amortization expense 106 101 314 299
Sponsor fees1
- 3 36 8
Restructuring and tangible asset impairment charges
2
15 29 39 82
Share-based compensation expense
3
5 3 14 8
LIFO reserve change4
(7) (20) (25) (42)
Business transformation costs5
10 11 26 31
Acquisition related costs
6
- 23 1 79
Other
7
- 3 4 19
Adjusted Operating Income 244$ 226$ 707$ 621$
Quarter Ended YTD
20. 19
Non-GAAP Reconciliation - Adjusted EBITDA
Notes: (1) Consists of management fees paid to the Sponsors for consulting and management advisory services. On June 1, 2016, the consulting and management agreements with each of the Sponsors were terminated for an aggregate
termination fee of $31 million.
(2) Consists primarily of facility related closing costs, including severance and related costs, tangible asset impairment charges, organizational realignment costs, and estimated multiemployer pension withdrawal liabilities.
(3) Share-based compensation expense for vesting of stock awards.
(4) Represents the non-cash impact of net LIFO reserve adjustments.
(5) Includes fees paid to debt holders, third party costs, early redemption premium, and the write off of certain pre-existing unamortized debt issuance costs, partially offset by the write-off of unamortized issue premium related to the
June 2016 debt refinancing, and the loss related to the September 2016 CMBS Fixed Facility defeasance.
(6) Consists primarily of costs related to significant process and systems redesign, across multiple functions.
(7) Consists of costs related to the Acquisition, including certain employee retention costs.
(8) Consists of net fees received in connection with the termination of the Acquisition Agreement.
(9) Other includes gains, losses or charges as specified under USF’s debt agreements. The balance for the quarter ended September 26, 2015 includes $9 million of brand re-launch and marketing costs and $3 million of closed facility
carrying costs, partially offset by a $9 million net insurance benefit. The balance for the year-to-date period ended October 1, 2016 includes $5 million of initial public offering readiness costs, $4 million of closed facility carrying costs
and $3 million of business acquisition related costs, partially offset by a $10 million insurance benefit. The balance for the year-to-date period ended September 26, 2015 includes a $16 million legal settlement charge, $9 million of
brand re-launch and marketing costs, and $4 million of closed facility carrying costs, partially offset by a $11 million net insurance benefit.
(10) Represents our income tax (provision) benefit adjusted for the tax effect of pre-tax items excluded from Adjusted Net income and the removal of applicable discrete tax items. Applicable discrete tax items include changes in tax laws
or rates, changes related to prior year unrecognized tax benefits, discrete changes in valuation allowances, and the tax benefits recognized in continuing operations due to the existence of a gain in Other comprehensive income and
loss in continuing operations. The tax effect of pre-tax items excluded from Adjusted Net income is computed using a statutory tax rate after taking into account the impact of permanent differences and valuation allowances. We
released the valuation allowance against federal and certain state net deferred tax assets in the 13-week and 39-week periods ended October 1, 2016. We were required to reflect the portion of the valuation allowance release
related to current year ordinary income in the estimated annual effective tax rate and the portion of the valuation allowance release related to future years’ income discretely in the 13-weeks ended October 1, 2016. We maintained a
valuation allowance against federal and state net deferred tax assets in the 13-week and 39-week periods ended September 26, 2015. The result was an immaterial tax effect related to pre-tax items excluded from Adjusted Net
income in the 13-week and 39-week periods ended October 1, 2016 and September 26, 2015.
*Individual components may not add to total presented due to rounding.
(In millions)* October 1, 2016 Sept 26, 2015 October 1, 2016 Sept 26, 2015
Net income 133$ 5$ 133$ 177$
Interest expense, net 49 70 190 211
Income tax provision (benefit) (78) (2) (78) 37
Depreciation and amortization expense 106 101 314 299
EBITDA 210 175 559 724
Adjustments:
Sponsor fees1
- 3 36 8
Restructuring and tangible asset impairment charges2
15 29 39 82
Share-based compensation expense
3
5 3 14 8
LIFO reserve change4
(7) (20) (25) (42)
Loss on extinguishment of debt5
12 - 54 -
Business transformation costs
6
10 11 26 31
Acquisition related costs
7
- 23 1 79
Acquisition termination fees - net8
- - - (288)
Other9
- 3 4 19
Adjusted EBITDA 244 225 707 620
Depreciation and amortization expense (106) (101) (314) (299)
Interest expense, net (49) (70) (190) (211)
Income tax (provision) benefit10
(2) 1 (2) (38)
Adjusted Net income 87$ 55$ 201$ 72$
Quarter Ended YTD
21. 20
Non-GAAP Reconciliation – Adjusted Diluted Earnings
Per Share (EPS)
October 1, 2016 Sept 26, 2015 October 1, 2016 Sept 26, 2015
Diluted EPS (GAAP) 0.59$ 0.03$ 0.68$ 1.04$
Sponsor fees
1
- 0.01 0.18 0.04
Restructuring and tangible asset impairment charges
2
0.07 0.17 0.20 0.48
Share-based compensation expense
3
0.02 0.02 0.07 0.05
LIFO reserve change
4
(0.03) (0.12) (0.13) (0.25)
Loss on extinguishment of debt
5
0.05 - 0.27 -
Business transformation costs
6
0.04 0.06 0.13 0.18
Acquisition related costs7
- 0.13 - 0.46
Acquisition termination fees, net8
- - - (1.68)
Other9
- 0.02 0.02 0.11
Income tax impact of adjustments10
(0.35) - (0.40) (0.01)
Adjusted Diluted EPS (Non-GAAP) 0.39$ 0.32$ 1.02$ 0.42$
Weighted-average diluted shares outstanding 225,054,051 170,841,583 196,805,990 170,881,801
Quarter Ended YTD
Notes: (1) Consists of management fees paid to the Sponsors for consulting and management advisory services. On June 1, 2016, the consulting and management agreements with each of the Sponsors were terminated for an aggregate
termination fee of $31 million.
(2) Consists primarily of facility related closing costs, including severance and related costs, tangible asset impairment charges, organizational realignment costs, and estimated multiemployer pension withdrawal liabilities.
(3) Share-based compensation expense for vesting of stock awards.
(4) Represents the non-cash impact of net LIFO reserve adjustments.
(5) Includes fees paid to debt holders, third party costs, early redemption premium, and the write off of certain pre-existing unamortized debt issuance costs, partially offset by the write-off of unamortized issue premium related to the
June 2016 debt refinancing, and the loss related to the September 2016 CMBS Fixed Facility defeasance.
(6) Consists primarily of costs related to significant process and systems redesign, across multiple functions.
(7) Consists of costs related to the Acquisition, including certain employee retention costs.
(8) Consists of net fees received in connection with the termination of the Acquisition Agreement.
(9) Other includes gains, losses or charges as specified under USF’s debt agreements. The balance for the quarter ended September 26, 2015 includes $9 million of brand re-launch and marketing costs and $3 million of closed facility
carrying costs, partially offset by a $9 million net insurance benefit. The balance for the year-to-date period ended October 1, 2016 includes $5 million of initial public offering readiness costs, $4 million of closed facility carrying costs
and $3 million of business acquisition related costs, partially offset by a $10 million insurance benefit. The balance for the year-to-date period ended September 26, 2015 includes a $16 million legal settlement charge, $9 million of
brand re-launch and marketing costs, and $4 million of closed facility carrying costs, partially offset by a $11 million net insurance benefit.
(10) Represents our income tax (provision) benefit adjusted for the tax effect of pre-tax items excluded from Adjusted Net income and the removal of applicable discrete tax items. Applicable discrete tax items include changes in tax laws
or rates, changes related to prior year unrecognized tax benefits, discrete changes in valuation allowances, and the tax benefits recognized in continuing operations due to the existence of a gain in Other comprehensive income and
loss in continuing operations. The tax effect of pre-tax items excluded from Adjusted Net income is computed using a statutory tax rate after taking into account the impact of permanent differences and valuation allowances. We
released the valuation allowance against federal and certain state net deferred tax assets in the 13-week and 39-week periods ended October 1, 2016. We were required to reflect the portion of the valuation allowance release
related to current year ordinary income in the estimated annual effective tax rate and the portion of the valuation allowance release related to future years’ income discretely in the 13-weeks ended October 1, 2016. We maintained a
valuation allowance against federal and state net deferred tax assets in the 13-week and 39-week periods ended September 26, 2015. The result was an immaterial tax effect related to pre-tax items excluded from Adjusted Net
income in the 13-week and 39-week periods ended October 1, 2016 and September 26, 2015.
*Individual components may not add to total presented due to rounding.
22. 21
Non-GAAP Reconciliation – Net Debt and Free Cash Flow
Notes: (1) The September 26, 2015 Net Debt balance has been reclassified to conform to current year presentation.
*Individual components may not add to total presented due to rounding.
($ in millions)*
October 1, 2016 September 26, 2015
Long-term debt (GAAP) 3,756$ 4,652$
Current portion of long-term debt (GAAP) 75 60
Old Senior Notes premium - (12)
Cash and cash equivalents (150) (699)
Restricted cash (6) (6)
Net Debt (Non-GAAP)
1
3,675$ 3,995$
LTM Adjusted EBITDA (Non-GAAP) 962$ 860$
Leverage (Net Debt/Adjusted EBITDA) 3.8x 4.6x
October 1, 2016 September 26, 2015
Cash flow from operating activities (GAAP) 440$ 586$
Capital expenditures (105) (142)
Free cash flow (Non-GAAP) 335$ 444$
LTM
YTD