What changed in this filing

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Item 1. Business

2023-02-17 compared with 2022-02-17 · 58 added, 65 removed, 224 unchanged (35% of the section changed)

11 unchanged sentences

We supply approximately 250,000 customer locations nationwide.

These customer locations include independently owned single and multi-unit restaurants, regional restaurant chains, national restaurant chains, hospitals, nursing homes, hotels and motels, country clubs, government and military organizations, colleges and universities, and retail locations.

These customer locations include independent restaurants, chain restaurants, healthcare, hospitality, education and other customers.

We provide more than 400,000 fresh, frozen, and dry food stock-keeping units, or SKUs, as well as non-food items, sourced from approximately 6,000 suppliers.

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Customer buying decisions are based on the assortment of product offered, quality, price, and service levels.

foodservice distribution industry serves different customer types of varying sizes, growth profiles, and product and service requirements, including independent restaurants, healthcare customers (such as hospital systems, nursing homes and long-term care facilities), hospitality customers (ranging from large hotel chains to local banquet halls, country clubs, casinos and entertainment complexes), regional and national restaurant chains, colleges and universities, K-12 schools, and retail locations.

foodservice distribution industry serves different customer types of varying sizes, growth profiles, and product and service requirements, including independent restaurants, regional and national restaurant chains, healthcare customers (such as hospital systems, nursing homes and long-term care facilities), hospitality customers (ranging from large hotel chains to local banquet halls, country clubs, casinos and entertainment complexes), colleges and universities, K-12 schools, and retail locations.

Our target customer types — independent restaurants, healthcare and hospitality — value foodservice distributors with a broad product offering and value-added services that help them be efficient and effective in running their operations.

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In fiscal year 2022, no single customer represented more than 3% of our total customer sales.

Sales to our top 50 customers represented approximately 39% of our net sales in fiscal year 2021.

Sales to our top 50 customers/GPOs represented approximately 43% of our net sales in fiscal year 2022.

We have entered into contractual relationships with certain group purchasing organizations (“GPOs”) that negotiate pricing, delivery and other terms on behalf of their members.

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• Growing importance of technology.

We see significant future growth being driven by the increased utilization of, and reliance on technology by foodservice distributors, customers and diners.

We see significant continued growth being driven by the increased utilization of, and reliance on technology by foodservice distributors, customers and diners.

E-commerce solutions streamline the purchasing process and increase customer retention.

They also deepen the relationship between foodservice distributors and customers, creating personalized insights and services that can make both more efficient.

We believe foodservice distributors with deeper, technology-enabled relationships with customers are better able to accelerate their customers’ adoption of new products and increase customer loyalty, giving them a competitive edge.

We believe foodservice distributors that have deeper, technology-enabled relationships with customers are better able to accelerate their customers’ adoption of new products and increase customer loyalty, giving them a competitive edge.

Technology is also growing in importance and helping to level the playing field for independent restaurants.

Mobile food delivery and social media apps make independent restaurants more competitive with larger restaurant chains, and help this customer type attract more diners at a relatively low cost.

We believe these technology trends will accelerate, as millennials and Generation Z place a greater reliance on technology and become key influencers and decision-makers within the food industry, including at the customer level.

We believe these technology trends will continue to accelerate as Millennials and Generation Z place a greater reliance on technology and become key influencers and decision-makers within the food industry, including at the customer level.

Consequently, we believe foodservice distributors which are focused on strengthening their technology, data analytics, and related capabilities will be well-positioned to capitalize on these trends.

We believe that we have the scale, foresight and agility required to proactively address these trends and, in turn, benefit from higher sales growth, greater customer retention, increased private label penetration, and improved profitability.

Since the World Health Organization characterized a novel strain of coronavirus, COVID-19, as a pandemic in March 2020, the pandemic has impacted our industry as further discussed in Item 7 of Part II, “Management's Discussion and Analysis of Financial Condition and Results of Operations.”

Our Business Strategy

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MADE EASY is aimed at providing operators reliability and flexibility in our service model supported by tools and resources to support them in running their businesses.

This means on-time and complete orders and customer choice via the multi-channel offering we have to serve our customers.

This means on-time and complete orders and customer choice via the omni-channel offering we have to serve our customers.

These offerings are supported with technology and expertise that make it easier to transact with us and run their businesses.

Our mobile technology platform provides customers with a personalized e-commerce ordering experience and easy-to-use business analytics tools.

Our portfolio of value-added services helps customers address key pain points like food

waste, back-of-house operations and diner traffic.

Our portfolio of value-added services helps customers address key pain points like food waste, back-of-house operations and diner traffic.

By delivering our products and services through a differentiated team-based selling approach, we provide customers access to a diverse team of experts including chefs, center-of-the-plate and produce specialists and restaurant operations consultants.

Approximately 80% of our customers utilize our e-commerce solutions.

Customers utilizing these solutions tend to purchase more and have stronger commercial relationships with us.

Customers utilizing these solutions tend to purchase more products and have stronger commercial relationships with us.

As noted above, our strategy of making it easier for our customers includes servicing our customers through multiple channels.

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The cash and carry offering was significantly enhanced by our acquisition in 2020 of Smart Foodservice (as described below).

In addition, US Foods Direct™, an online ordering platform, more than doubles our product assortment and provides customers with access to thousands of specialty products which ship directly to them from the supplier.

In addition, US Foods Direct™ more than doubles our product assortment and provides customers with access to thousands of specialty products which ship directly to them from the supplier.

More recently, we expanded our US Foods Pronto™ service in select markets to let restaurant operators receive smaller orders more frequently.

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We believe our GREAT FOOD.

MADE EASY.™ strategy will enable us to reach more customers and create deeper relationships with existing ones, particularly within our target customer types—independent restaurants, healthcare, and hospitality—and drive increased penetration of our private brand products.

MADE EASY.™ strategy enables us to reach more customers and create deeper relationships with existing ones, particularly within our target customer types—independent restaurants, healthcare, and hospitality—and drive increased penetration of our private brand products.

Further, we believe this strategy positions us to make the most of the continued growth in food-away-from-home consumption and consumer preferences for innovative, on-trend flavors.

As an enabler of this strategy, we have invested in embedding continuous improvement in our operations to increase consistency and efficiency and to engage employees in improving our day-to-day processes.

As an enabler of this strategy, we have invested in embedding continuous improvement in our operations to increase service consistency and efficiency and to engage employees in improving our day-to-day processes.

Acquisitions have also historically played an important role in supporting the execution of our growth strategy.

In September 2019, we completed the acquisition of five foodservice companies (the “Food Group”) from Services Group of America, Inc.:

Food Services of America, Inc., Systems Services of America, Inc., Amerifresh, Inc., Ameristar Meats, Inc.

and GAMPAC Express, Inc.

for $1.8 billion.

The acquisition of the Food Group expanded the Company’s network in the West and Northwest parts of the U.S.

On April 24, 2020, USF completed the acquisition of Smart Stores Holding Corp., a Delaware corporation (“Smart Foodservice”), from funds managed by affiliates of Apollo Global Management, Inc.

for $972 million.

Smart Foodservice, a company that operated 70 small-format cash and carry stores across California, Idaho, Montana, Nevada, Oregon, Utah and Washington that serve small and mid-sized restaurants and other food business customers with a broad assortment of products.

Integrating the Food Group and Smart Foodservice and realizing synergies from the acquisitions are key priorities for the Company.

Following the completion of these acquisitions, we have prioritized deleveraging our balance sheet, however we may selectively pursue acquisition opportunities in the future if they are aligned with and enhance our strategic priorities.

Smart Foodservice is a company that operated 70 small-format cash and carry stores across California, Idaho, Montana, Nevada, Oregon, Utah and Washington, serving small and mid-sized restaurants and other food business customers with a broad assortment of products.

Integrating Smart Foodservice and realizing synergies from acquisitions are key priorities for the Company.

Following the completion of the Smart Foodservice acquisition, we have prioritized deleveraging our balance sheet, however we may selectively pursue acquisition opportunities in the future if they are aligned with and enhance our strategic priorities.

Products and Brands

9 unchanged sentences

Equipment, disposables and supplies 3,536 3,090 2,455

Beverage products 1,465 1,186 1,403

Produce 1,840 1,454 1,205

Beverage products 1,731 1,465 1,186

Total Net sales $ 34,057 $ 29,487 $ 22,885

11 unchanged sentences

Government Regulation

As a marketer and distributor of food products, we are subject to various laws and regulations.

As a manufacturer, processor, marketer, distributor and seller of food and non-food products, we are subject to various laws and regulations.

A summary of some of these laws and regulations is provided below.

Food Handling and Processing

We are subject to various laws and regulations relating to the manufacturing, handling, storage, transportation, sale and labeling of food products, including the applicable provisions of the Federal Food, Drug and Cosmetic Act, Bioterrorism Act, Food Safety Modernization Act, Federal Meat Inspection Act, Poultry Products Inspection Act, Perishable Agricultural Commodities Act, Country of Origin Labeling Act, and regulations issued by the U.S.

Product Distribution

We are subject to various laws and regulations relating to the manufacturing, processing, handling, storage, transportation, sale, advertising and labeling of food products, including the applicable provisions of the Federal Food, Drug and Cosmetic Act, Bioterrorism Act, Food Safety Modernization Act, Federal Meat Inspection Act, Poultry Products Inspection Act, Perishable Agricultural Commodities Act, Country of Origin Labeling Act, regulations issued by the U.S.

Food and Drug Administration (“FDA”) and the U.S.

Department of Agriculture (“USDA”).

Department of Agriculture (“USDA”), and other federal, state and local laws and regulations relating to our operations and products that could restrict the sale of certain products or result in enforcement actions by federal, state and local government agencies under applicable standards.

Our distribution facilities must be registered with the FDA and are subject to periodic government agency inspections by federal and/or state authorities.

1 unchanged sentence

These units are registered and inspected by the USDA (with respect to meat and poultry) and the FDA (with respect to produce and seafood) as applicable.

We also distribute a variety of non-food products, such as food containers, kitchen equipment and cleaning materials, and are subject to various laws and regulations relating to the storage, transportation, distribution, sale and labeling of those non-food products, including requirements to provide information about the hazards of certain chemicals present in some of the products we distribute.

Our CHEF’STORE locations are registered with and inspected by various state and local authorities.

We also distribute and sell a variety of non-food products, such as food containers, kitchen equipment and cleaning materials, and are subject to various laws and regulations relating to the storage, transportation, distribution, sale, advertising and labeling of those non-food products, including requirements to provide information about the hazards of certain chemicals present in some of the products we distribute and regulations restricting the sale of products made with certain materials or chemicals.

Our customers include several departments of the U.S.

8 unchanged sentences

We are also subject to the National Labor Relations Act, which governs the process for collective bargaining between employers and employees and protects the rights of both employers and employees in the workplace.

For the purchase of products produced, harvested or manufactured outside of the U.S., and for the shipment of products to customers located outside of the U.S., we are subject to certain reporting requirements and applicable customs laws regarding the import and export of various products.

For the purchase of products produced, harvested or manufactured outside of the U.S., and for the shipment of products to customers located outside of the U.S., we are subject to applicable customs laws regarding the import and export of various products.

Ground Transportation

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Human Capital Management

As of January 1, 2022, we employed a total of approximately 28,000 associates.

As of December 31, 2022, we employed a total of approximately 29,000 associates.

• substantially all were employed in the United States and on a full-time basis;

3 unchanged sentences

Collective Bargaining Agreements

As of January 1, 2022, we were party to 51 collective bargaining agreements (“CBAs”) covering 5,900, or 21%, of our associates working at 29 (or 41%) of our distribution facilities, 4 of our broadline support business production facilities and 23 of our cash and carry locations.

As of December 31, 2022, we were party to 57 collective bargaining agreements (“CBAs”) covering 6,100, or 21%, of our associates working at 31 (or 44%) of our distribution facilities, 4 of our broadline support business production facilities and 23 of our cash and carry locations.

During fiscal year 2022, 12 CBAs covering approximately 1,100 union associates were renegotiated.

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We are committed to compensation and benefits that respect and reward our associates for their dedication and hard work.

All of our exempt associates participate in our incentive plans, which provides eligible associates with cash bonus opportunities based upon the Company’s achievement of financial and other key performance metrics.

All of our exempt associates participate in our incentive plans, which provide eligible associates with cash bonus opportunities based upon the Company’s achievement of financial and other key performance metrics.

Under our long-term incentive plan, we grant equity compensation awards, such as stock options, restricted stock units and performance awards, which vest over a period of time, to eligible associates in order to attract and retain key personnel, strengthen their commitment to the welfare of the Company and align their interests with those of our stockholders.

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Our ability to attract, develop and retain high-performing associates is crucial to our success, from building trusting relationships with our customers to timely and accurately preparing and delivering orders.

In 2021, in response to the challenging job market, we initiated a program to train interested warehouse associates to become commercial driver’s license (“CDL”) Class A delivery drivers.

We have a program to train interested warehouse associates to become commercial driver’s license (“CDL”) Class A delivery drivers.

Additionally, through training, mentoring, e-learning and on-the-job development, we help associates at all levels learn and grow, while building a pipeline of diverse talent.

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Those Who Serve - Military ERG;

and Women in Network.

and WIN - Women in Network.

These associate-led groups strengthen networking among colleagues and further personal and professional development.

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We utilize technology to improve driver safety from distracted driver alerts to collision mitigation technology.

During fiscal years 2020 and 2021, in response to the COVID-19 pandemic, we implemented, and continue to maintain, protocols and enhanced safety measures to protect the health and safety of our associates and customers.

During 2021, we partnered with third-party providers to host more than 90 on-site COVID-19 vaccination clinics for associates and their family members, supporting thousands of associates in becoming vaccinated.

We continue to proactively monitor guidance and requirements from the Centers for Disease Control (“CDC”), OSHA and various other federal, state and local authorities and public health agencies and adjust our protocols and safety measures as appropriate to help mitigate the impact of the pandemic on our associates and customers.

Information about our Executive Officers

1 unchanged sentence

Name Age Position

Pietro Satriano

59 Chief Executive Officer

49 Chief Financial Officer

53 Executive Vice President, General Counsel and Chief Compliance Officer

Flitman 58 Chief Executive Officer

56 Executive Vice President, Chief Transition Officer

50 Executive Vice President, Chief Financial Officer

58 Executive Vice President, Nationally Managed Business

Hancock 43 Executive Vice President, Chief Supply Chain Officer

55 Chief Commercial Officer

55 Executive Vice President, Field Operations

51 Executive Vice President, Strategy, Insights and Financial Planning

52 Executive Vice President, Strategy and Revenue Management

Tonnison 54 Executive Vice President, Chief Information and Digital Officer

55 Executive Vice President, Chief Human Resources Officer

Satriano has served as Chief Executive Officer and a director of US Foods since July 2015 and served as Chairman of the Board from December 2017 through February 2022.

From February 2011 to July 2015, Mr.

Satriano served as our Chief Merchandising Officer.

Flitman has served as the Chief Executive Officer since January 2023.

Flitman previously served as Chief Executive Officer and a member of the board of directors of Builders FirstSource, Inc., serving in this role since April 2021.

Prior to that, Mr.

Flitman served as President and Chief Executive Officer and a member of the board of directors of BMC Stock Holdings, Inc.

from August 2018 until its merger with Builders FirstSource.

In addition, Mr.

Flitman previously served as Executive Vice President of Performance Food Group Company and was President and Chief Executive Officer of its Performance Foodservice division from January 2015 to September 2018.

From January 2014 to December 2014, Mr.

Flitman served as Chief Operating Officer and President USA & Mexico of Univar Solutions Inc.

Flitman joined Univar in December 2012 as President USA with additional responsibility for Univar’s Global Supply Chain & Export Services teams.

From November 2011 to September 2012, he served as Executive Vice President and President of Water and Process Services at Ecolab Inc.

and prior to that, from August 2008 to November 2011, Mr.

Flitman served as Senior Executive Vice President of Nalco Holding Company until it was acquired by Ecolab in 2011.

He also served as President of Allegheny Power System from February 2005 to July 2008.

Before holding these executive positions, Mr.

Flitman spent nearly twenty years in operational, commercial, and global business leadership positions at DuPont de Nemours, Inc.

Since July 2017, Mr.

Flitman has also served as a member of the board of directors of Veritiv Corporation, where he serves as the Chair of the Compensation and Leadership Development Committee.

Iacobucci has served as Executive Vice President, Chief Transition Officer since January 2023.

Iacobucci served as the Interim Chief Executive Officer from May 2022 to January 2023, Chief Commercial Officer from February 2021 through May 2022 and Chief Merchandising Officer from January 2017 to February 2021.

Prior to joining US Foods, Mr.

Satriano was President of LoyaltyOne Canada, a provider of loyalty marketing and programs, from 2009 to 2011.

From 2002 to 2008, he served in a number of leadership positions at Loblaw Companies Limited, a Canadian grocery retailer and wholesale food distributor, including Executive Vice President, Loblaw Brands, and Executive Vice President, Food Segment.

Satriano began his career in strategy consulting, first in Toronto, Canada with Canada Consulting Group and then in Milan, Italy with the Monitor Company.

Satriano currently serves on the board of directors of CarMax, Inc.

Locascio has served as Chief Financial Officer since February 2017.

Iacobucci served as Executive Vice President, Merchandising of Ahold USA, Inc., a food retailer, from April 2016 to January 2017.

Prior to joining Ahold, he served from February 2012 to November 2015 in several senior roles at Loblaw Companies Limited, a Canadian grocery retailer and wholesale food distributor, including President, Discount Division.

Locascio has served as Executive Vice President, Chief Financial Officer since February 2017.

Locascio served the Company as Senior Vice President, Financial Accounting and Analysis from November 2016 to February 2017, Senior Vice President, Operations Finance and Financial Planning from May 2015 to November 2016, and Senior Vice President, Financial Planning and Analysis from May 2013 to May 2015.

2 unchanged sentences

Locascio held senior finance roles with United Airlines, a global airline, and Arthur Andersen LLP, a public accounting firm.

Coleman has served as Executive Vice President, General Counsel and Chief Compliance Officer since February 2017.

Prior to joining US Foods, Ms.

Coleman served as Senior Vice President, General Counsel and Corporate Secretary of Sears Holdings Corporation, a retailer, beginning in July 2014.

Prior to joining Sears, she served as Vice President, General Counsel and Corporate Secretary of Brunswick Corporation, a manufacturing company, from May 2009 to July 2014.

Before moving in-house, she worked in private practice with Sidley Austin LLP.

Guberman has served as Executive Vice President, Nationally Managed Business since August 2016.

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Prior to joining US Foods, Mr.

Hancock served as Senior Vice President of Supply Chain Operations of American Tire Distributors from November 2017 to October 2020, and was responsible for the oversight of 115 distribution facilities across America and a fleet of vehicles accountable for last-mile delivery to customers.

Hancock served as Senior Vice President of Supply Chain Operations of American Tire Distributors from November 2017 to October 2020, where he was responsible for the oversight of 115 distribution facilities across America and a fleet of vehicles accountable for last-mile delivery to customers.

Prior to joining American Tire Distributors, he served as Vice President of Global Supply Chain Operations for Target, where he spent 14 years, from 2003 to 2017, in various supply chain roles with the company.

Iacobucci has served as Chief Commercial Officer since February 2021.

He served the Company as Chief Merchandising Officer from January 2017 to February 2021.

Prior to joining US Foods, Mr.

Iacobucci served as Executive Vice President, Merchandising of Ahold USA, Inc., a food retailer, from April 2016 to January 2017.

Kvasnicka has served as Executive Vice President, Field Operations since February 2021.

3 unchanged sentences

Kvasnicka joined US Foods in 1995, originally as part of Alliant Foodservice.

Rickard has served as Executive Vice President, Strategy, Insights and Financial Planning since February 2019.

Rickard served the Company as Executive Vice President, Strategy and Revenue Management from November 2015 to February 2019.

Rickard has served as Executive Vice President, Strategy and Revenue Management, since November 2015.

Prior to joining US Foods, Mr.

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Our filings with the SEC are available to the public on the SEC’s website at www.sec.gov.

Those filings are also available to the public on, or accessible through, our corporate website for free via the “Investors” section at ir.usfoods.com/investors.

Those filings are also made available for free as soon as reasonably practicable after we file or furnish them to the SEC on our corporate website via the “Investors” section at ir.usfoods.com/investors.

The information contained on or accessible through our corporate website or any other website that we may maintain is not incorporated by reference into and is not part of this Annual Report.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business