What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-07 compared with 2024-08-08 · 73 added, 75 removed, 240 unchanged (38% of the section changed)

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Information regarding reconciliations of and the rationale for these measures is discussed under “Non-GAAP Reconciliations” below.

Results of operations for the 13 weeks and 26 weeks ended June 29, 2024 are compared to the 13 weeks and 26 weeks ended July 1, 2023, unless specifically noted otherwise.

Results of operations for the 13 weeks and 39 weeks ended September 28, 2024 are compared to the 13 weeks and 39 weeks ended September 30, 2023, unless specifically noted otherwise.

At US Foods, we strive to inspire and empower chefs and foodservice operators to bring great food experiences to consumers.

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On June 5, 2024, the Company announced it intends to explore the potential sale of its CHEF’STORE wholesale restaurant supply business and, if a sale is completed, then entirely focus on delivered broadline operations.

As of June 29, 2024, the Company was still in the early stages of this sale exploration.

For the 13 weeks ended June 29, 2024, net sales increased 7.7% driven by a total case volume increase of 5.2% compared to the prior year which was driven by a 5.7% increase in independent restaurant case volume, a 6.0% increase in healthcare volume, a 2.1% increase in hospitality volume and a 4.2% increase in chain volume.

Total organic case volume increase d 1.9% for the 13 weeks ended June 29, 2024 which includes 3.2% organic independent restaurant case volume growth.

For the 26 weeks ended June 29, 2024 , net sales increased 6.3% driven by a total case volume increase of 4.7% compared to the prior year which was driven by a 5.2% increase in independent restaurant case volume, a 6.2% increase in healthcare volume, 1.4% increase in hospitality volume, and a 3.9% increase in chain volume.

Total organic case volume increased 1.6% for the 26 weeks ended June 29, 2024 which includes 3.1% organic independent restaurant case volume growth.

As of September 28, 2024, the Company is in the process of exploring this sale.

For the 13 weeks ended September 28, 2024, net sales increased 6.8% driven by a total case volume increase of 3.8% compared to the prior year which was driven by a 4.1% increase in independent restaurant case volume, a 5.7% increase in healthcare volume, a 3.0% increase in hospitality volume and a 2.4% increase in chain volume.

Total organic case volume increase d 1.1% for the 13 weeks ended September 28, 2024, which includes 2.4% organic independent restaurant case volume growth.

For the 39 weeks ended September 28, 2024 , net sales increased 6.5% driven by a total case volume increase of 4.4% compared to the prior year which was driven by a 4.8% increase in independent restaurant case volume, a 6.1% increase in healthcare volume, a 2.0% increase in hospitality volume and a 3.5% increase in chain volume.

Total organic case volume increased 1.5% for the 39 weeks ended September 28, 2024, which includes 2.8% organic independent restaurant case volume growth.

Operating Metrics

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

For the 13 weeks and 26 weeks ended June 29, 2024, compared to the same period a year ago, total case volume increased 5.2% and 4.7% , respectively, and independent restaurant case volume increased 5.7% and 5.2% , respectively.

For the 13 weeks and 26 weeks ended June 29, 2024 , compared to the same period a year ago, total organic case volume increase d 1.9% and 1.6%, respectively, and organic independent restaurant case volume increased 3.2% and 3.1%, respectively.

Net sales increased $696 million, o r 7.7%, and $1,103 million, or 6.3% for the 13 weeks and 26 weeks ended June 29, 2024 , respectively, driven primarily by organic case volume

growth, the impact of acquisitions and food cost inflation of 2.9% and 2.2% for the 13 weeks and 26 weeks ended June 29, 2024, respectively.

Gross profit increased $115 million, or 7.2%, to $1,706 million for the 13 weeks ended June 29, 2024 and increased $185 million, or 6.1%, to $3,201 million for the 26 weeks ended June 29, 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 not impacted by LIFO benefit or expense for the 13 weeks ended June 29, 2024.

Gross profit was negatively impacted by a LIFO expense of $45 million for the 26 weeks ended June 29, 2024.

Gross profit was positively impacted by a LIFO benefit of $15 million for the 13 weeks ended July 1, 2023, while gross profit was negatively impacted by a LIFO expense of $5 million for the 26 weeks ended July 1, 2023.

As a percentage of net sales, gross profit was 17.6% for the 13 weeks ended June 29, 2024, compared to 17.7% for the prior year period and was 17.2% for the 26 weeks ended July 1, 2023, compared to 17.2% for the prior year period.

Total operating expenses increased $84 million, or 6.6%, to $1,353 million for the 13 weeks ended June 29, 2024 and increased $176 million, or 7.0%, to $2,683 million for the 26 weeks ended June 29, 2024.

Operating expenses increased primarily as a result of an increase in organic case volume and higher distribution costs, reflecting increased labor costs and incremental costs to serve our customers during January labor disruptions, and the impact of acquisitions, partially offset by continued distribution productivity improvement driven by routing efficiency gains, turnover reduction and process standardization as well as actions to streamline administrative processes and costs.

As a percentage of net sales, operating expenses were 13.9% for the 13 weeks ended June 29, 2024, compared to 14.1% for the prior year period and were 14.4% for the 26 weeks ended June 29, 2024, compared to 14.3% for the prior year period.

For the 13 weeks and 39 weeks ended September 28, 2024, compared to the same period a year ago, total case volume increased 3.8% and 4.4% , respectively, and independent restaurant case volume increased 4.1% and 4.8% , respectively.

For the 13 weeks and 39 weeks ended September 28, 2024 , compared to the same period a year ago, total organic case volume increase d 1.1% and 1.5%, respectively, and organic independent restaurant case volume increased 2.4% and 2.8%, respectively.

Net sales increased $622 million, o r 6.8%, and $1,725 million, or 6.5% for the 13 weeks and 39 weeks ended September 28, 2024 , respectively, driven primarily by organic case volume growth, the impact of acquisitions and food cost inflation of 3.2% and 2.5% for the 13 weeks and 39 weeks ended September 28, 2024, respectively.

Gross profit increased $125 million, or 8.1%, to $1,667 million for the 13 weeks ended September 28, 2024, and increased $310 million, or 6.8%, to $4,868 million for the 39 weeks ended September 28, 2024.

For the 13 weeks ended September 28, 2024, the increase was primarily a result of an increase in total case volume, improved cost of goods sold, pricing optimization and a favorable year-over-year LIFO adjustment.

For the 39 weeks ended September 28, 2024, the increase was primarily a result of an increase in organic case volume, improved cost of goods sold, the impact of acquisition and pricing optimization, partially offset by an unfavorable year-over-year LIFO adjustment.

Gross profit was negatively impacted by LIFO expense of $23 million and $68 million for the 13 weeks and 39 weeks ended September 28, 2024, respectively.

Gross profit was negatively impacted by a LIFO expense of $37 million and $42 million for the 13 weeks and 39 weeks ended September 30, 2023, respectively.

As a percentage of net sales, gross profit was 17.1% for the 13 weeks ended September 28, 2024, compared to 16.9% for the prior year period and was 17.1% for both the 39 weeks ended September 28, 2024 and September 30, 2023.

Total operating expenses increased $76 million, or 5.8%, to $1,388 million for the 13 weeks ended September 28, 2024, and increased $252 million, or 6.6%, to $4,071 million for the 39 weeks ended September 28, 2024.

For the 13 weeks ended September 28, 2024, the increase was primarily a result of an increase in total case volume and higher distribution costs, reflecting increased labor costs, partially offset by continued distribution productivity improvement as well as actions to streamline administrative processes and costs.

For the 39 weeks ended September 28, 2024, the increase was primarily 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 14.3% for the 13 weeks ended September 28, 2024, compared to 14.4% for the prior year period and was 14.3% for both the 39 weeks ended September 28, 2024 and September 30, 2023.

Results of Operations

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13 Weeks Ended 39 Weeks Ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Consolidated Statements of Operations:

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Distribution, selling and administrative costs 1,379 1,312 4,050 3,819

1,354 1,269 2,671 2,507

Restructuring activity and other asset impairment charges (1) — 12 —

Restructuring activity and asset impairment charges 9 — 21 —

Total operating expenses 1,388 1,312 4,071 3,819

Operating income 279 230 797 739

Other income—net 3 (2) 2 (3)

Other expense (income)—net 3 (1) 5 (4)

Interest expense—net 75 81 235 244

Loss on extinguishment of debt — 21 — 21

Income before income taxes 201 129 557 478

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Net income 148 95 428 359

Series A Preferred Stock Dividends — — — (7)

Series A convertible preferred stock dividends — — — (7)

Net income available to common shareholders $ 148 $ 95 $ 428 $ 352

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13 Weeks Ended 39 Weeks Ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Net income available to common shareholders and net income margin $ 148 1.5% $ 95 1.0% $ 428 1.5% $ 352 1.3 %

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LIFO reserve adjustment (3)

Loss on extinguishment of debt (4)

Business transformation costs (5)

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Depreciation expense (99) (85) (288) (256)

(96) (84) (189) (171)

Interest expense—net (75) (81) (235) (244)

(81) (82) (160) (163)

Income tax provision, as adjusted (7)

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Cash flows from operating activities $ 270 $ 282 $ 891 $ 935

$ 482 $ 374 $ 621 $ 653

Proceeds from sales of property and equipment 1 6 3 8

Capital expenditures (80) (59) (236) (167)

(69) (47) (156) (108)

Free Cash Flow $ 191 $ 229 $ 658 $ 776

$ 414 $ 328 $ 467 $ 547

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

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(3) Represents the impact of LIFO reserve adjustments.

(4) Includes early redemption premium and the write-off of certain pre-existing debt issuance cost s.

Se e Note 10, Debt, in ou r consolidated financial statements for additional information.

(5) 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 and 26 weeks ended June 29, 2024, business transformation costs related to projects associated with information technology infrastructure initiatives and workforce efficiencies.

For the 13 weeks and 26 weeks ended July 1, 2023, business transformation costs related to projects associated with information technology infrastructure initiatives.

For the 13 weeks and 39 weeks ended September 28, 2024, business transformation costs related to projects associated with information technology infrastructure initiatives and workforce efficiencies.

For the 13 weeks and 39 weeks ended September 30, 2023, business transformation costs related to projects associated with information technology infrastructure initiatives.

(6) Includes:

(i) aggregate acquisition related costs of $8 million and $11 million for the 13 weeks ended June 29, 2024 and July 1, 2023, respectively, and $10 million and $21 million for the 26 weeks ended June 29, 2024 and July 1, 2023, respectively ;

(ii) CEO sign on bonus of $3 million for the 26 weeks ended July 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.

(i) aggregate acquisition related costs of $6 million and $10 million for the 13 weeks ended September 28, 2024 and September 30, 2023, respectively, and $17 million and $31 million for the 39 weeks ended September 28, 2024 and September 30, 2023, respectively;

(ii) CEO sign on bonus of $3 million for the 39 weeks ended September 30, 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.

(7) 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.

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13 Weeks Ended 39 Weeks Ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

GAAP income tax provision $ 53 $ 34 $ 129 $ 119

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Comparison of Results

13 Weeks Ended June 29, 2024 and July 1, 2023

13 Weeks Ended September 28, 2024 and September 30, 2023

• Net sales increased $622 million, or 6.8%, to $9,728 million in 2024.

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Total organic case volume increased 1.1% and organic independent restaurant case volume increased 2.4% .

Organic broadline sales of private brands represented approximately 35% and 34% of net sales in 2024 and 2023, respectively.

Gross profit increased $115 million, or 7.2%, to $1,706 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 no benefit in 2024 compared to a benefit of $15 million i n 2023, driven by deflation in equipment and supplies and fruits and vegetables.

Gross profit as a percentage of net sales was 17.6% in 2024 due to the aforementioned factors.

Gross profit as a percentage of net sales was also 17.6% in 2023.

Organic broadline sales of private brands represented approximately 35% of net sales in both 2024 and 2023.

Gros s profit increased $125 million, or 8.1%, to $1,667 million in 2024, primarily as a result of an increase in total case volume, improved cost of goods sold, pricing optimization and a favorable year-over-year LIFO adjustment.

Our LIFO method of inventory costing resulted in an expense of $23 million in 2024 compared to an expense of $37 million i n 2023 , driven by inflation in poultry, cheese, and seafood.

Gross profit as a percentage of net sales was 17.1% in 2024, due to the aforemention ed factors.

Gross profit as a percentage of net sales was 16.9% in 2023.

Operating Expenses

Operating expenses, comprised of distribution, selling and administrative costs, increased $76 million, or 5.8%, to $1,388 million in 2024 .

Operating expenses increased primarily as a result of an increase in organic case volume and higher distribution costs, reflecting increased labor costs and the impact of acquisitions, partially offset by continued distribution productivity improvement driven by routing efficiency gains, turnover reduction and process standardization as well as actions to streamline administrative processes and costs.

Operating expenses increased primarily as a result of an increase in total case volume and higher distribution costs, reflecting increased labor costs, partially offset by continued distribution productivity improvement as well as actions to streamline administrative processes and costs.

Operating expenses as a percentage of net sales were 14.3% in 2024, compared to 14.4% in 2023.

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Interest expense—net decreased $6 million to $75 million in 2024 primarily due to lower outstanding debt in 2024 compared to 2023.

For the 13 weeks ended June 29, 2024, the Company’s effective income tax rate of 26% 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.

For the 13 weeks ended September 28, 2024, the Company’s effective income tax rate of 26% 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 $1 million related to a decrease in an unrecognized tax benefit as a result of the expiration of the statute of limitations in several jurisdictions and a tax benefit of $1 million, primarily related to excess tax benefits associated with share-based compensation.

For the 13 weeks ended July 1, 2023, the Company’s effective income tax rate of 25% 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 $2 million primarily related to excess tax benefits associated with share-based compensation and a tax benefit of $3 million, primarily related to adjustments to prior year tax provision estimates.

For the 13 weeks ended September 30, 2023, the Company’s effective income tax rate of 27% 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 were not material individually or in the aggregate.

Our net income was $148 million in 2024, compared to a net income of $95 million in 2023.

The improvement in net income was due to the relevant factors discussed above.

26 Weeks Ended June 29, 2024 and July 1, 2023

39 Weeks Ended September 28, 2024 and September 30, 2023

• Net sales increased $1,725 million, or 6.5%, to $28,386 million in 2024.

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Total case volume increased 4.4% driven by a 4.8% increase in independent restaurant case volume, a 6.1% increase in healthcare volume, a 2.0% increase in hospitality volume and a 3.5% increase in chain volume.

Organic broadline sales of private brands represented approximately 35% and 34% of net sales in 2024 and 2023, respectively.

Organic broadline sales of private brands represented approximately 34% of net sales in both 2024 and 2023, respectively.

Gross profit increased $310 million, or 6.8%, to $4,868 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.

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Operating expenses increased primarily due to 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 expenses as a percentage of net sales were 14.4% in 2024, compared to 14.3% in 2023.

Operating expenses as a percentage of net sales were 14.3% in both 2024 and 2023.

Operating Income

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Interest expense—net decreased $9 million to $235 million in 2024 primarily due to lower outstanding debt in 2024 compared to 2023.

For the 26 weeks ended June 29, 2024, the Company’s effective income tax rate of 21% was equivalent to the 21% federal corporate income tax rate primarily as a result of state income taxes and the recognition of various discrete tax items.

For the 39 weeks ended September 28, 2024, the Company’s 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 $17 million, primarily 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 $8 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 tax provision estimates.

For the 26 weeks ended July 1, 2023, the Company’s effective income tax rate of 24% 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.

For the 39 weeks ended September 30, 2023, the Company’s effective income tax rate of 25% 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 $6 million, primarily related to excess tax benefits associated with share-based compensation and a tax benefit of $4 million, primarily related to adjustments to prior year tax provision estimates.

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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 June 29, 2024, the Company had approximately $2.1 billion in cash and available liquidity.

The aggregate outstanding balance of our indebtedness was $4,707 million, net of $29 million of unamortized deferred financing costs, as of June 29, 2024.

We had no outstanding borrowings and had issued letters of credit totaling $562 million under the ABL Facility as of June 29, 2024.

There was remaining capacity of $1,738 million under the ABL Facility as of June 29, 2024.

The 2019 Incremental Term Loan Facility had an outstanding balance of $1,100 million, net of $9 million of unamortized deferred financing costs, as of June 29, 2024.

The 2021 Incremental Term Loan Facility had an outstanding balance of $718 million, net of $3 million of unamortized deferred financing costs, as of June 29, 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 June 29, 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 June 29, 2024.

The Unsecured Senior Notes due 2030 had an outstanding balance of $497 million, net of $3 million of unamortized deferred financing costs, as of June 29, 2024.

The Unsecured Senior Notes due 2032 had an outstanding balance of $496 million, net of $4 million of unamortized deferred financing costs, as of June 29, 2024.

We also had $498 million of obligations under financing leases for transportation equipment and building leases as of June 29, 2024.

As of September 28, 2024, the Company had approximately $1.7 billion in cash and available liquidity.

The aggregate outstanding balance of our indebtedness was $4,789 million, net of $26 million of unamortized deferred financing costs, as of September 28, 2024.

We had outstanding borrowings totaling $75 million and had issued letters of credit totaling $578 million under the ABL Facility as of September 28, 2024.

There was remaining capacity of $1,647 million under the ABL Facility as of September 28, 2024.

The 2019 Incremental Term Loan Facility had an outstanding balance of $1,101 million, net of $8 million of unamortized deferred financing costs, as of September 28, 2024.

The 2021 Incremental Term Loan Facility had an outstanding balance of $719 million, net of $2 million of unamortized deferred financing costs, as of September 28, 2024.

The Senior Notes due 2028 had an outstanding balance of $496 million, net of $4 million of unamortized deferred financing costs, as of September 28, 2024.

The Senior Notes due 2029 had an outstanding balance of $895 million, net of $5 million of unamortized deferred financing costs, as of September 28, 2024.

The Senior Notes due 2030 had an outstanding balance of $497 million, net of $3 million of unamortized deferred financing costs, as of September 28, 2024.

The Senior Notes due 2032 had an outstanding balance of $496 million, net of $4 million of unamortized deferred financing costs, as of September 28, 2024.

We also had $502 million of obligations under financing leases for transportation equipment and building leases as of September 28, 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 Senior Notes due 2028, the Senior Notes due 2029, the Senior Notes due 2030 and the 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 $2.2 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 June 29, 2024.

The Company had approximately $2.3 billion of restricted payment capacity under these covenants and approximately $2.3 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 September 28, 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.

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39 Weeks Ended

June 29, 2024 July 1, 2023

September 28, 2024 September 30, 2023

Net income $ 428 $ 359

Changes in operating assets and liabilities 95 188

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Net cash used in financing activities (632) (499)

Net increase in cash, and cash equivalents and restricted cash 136 168

Net increase in cash, cash equivalents and restricted cash (188) 135

Cash, cash equivalents and restricted cash−beginning of period 269 211

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Operating Activities

Cash flows provided by operating activities was $621 million for the 26 weeks ended June 29, 2024, representing a decrease of $32 million as compared to cash flows provided by operating activities of $653 million for the 26 weeks ended July 1, 2023, due to less working capital benefit for the 26 weeks ended June 29, 2024 compared to the 26 weeks ended July 1, 2023.

Cash flows provided by operating activities was $891 million for the 39 weeks ended September 28, 2024, representing a decrease of $44 million as compared to cash flows provided by operating activities of $935 million for the 39 weeks ended September 30, 2023, due to less working capital benefit for the 39 weeks ended September 28, 2024 compared to the 39 weeks ended September 30, 2023.

Investing Activities

During the 26 weeks ended June 29, 2024, the Company completed the asset acquisition of IWC Food Service.

During the 39 weeks ended September 28, 2024, the Company completed the asset acquisition of IWC Food Service.

Total consideration consisted of cash of approximately $220 million (less the amount of cash received, which was $6 million) for a net purchase price of $214 million.

In addition, c ash flows used in investing activities in the 26 weeks ended June 29, 2024 and July 1, 2023 included cash expenditures of $156 million and $108 million, respectively, on investments in information technology, property and equipment for fleet replacement, and maintenance of distribution facilities.

In addition, c ash flows used in investing activities in the 39 weeks ended September 28, 2024 and September 30, 2023 included cash expenditures of $236 million and $167 million, respectively, related to investments in information technology, property and equipment and maintenance of distribution facilities.

We expect total cash capital expenditures in fisc al year 2024 to be between $325 million and $350 million.

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Financing Activities

Cash flows used by financing activities in the 26 weeks ended June 29, 2024 included $65 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 26 weeks ended June 29, 2024 also included $54 million common stock repurchased under the Share Repurchase Program, inclusive of $1 million of excise taxes, fees and commissions, $14 million of proceeds received from stock purchases under our employee stock purchase plan, $9 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 26 weeks ended July 1, 2023 included $66 million of scheduled payments under our Term Loan Facilities and financing leases, $65 million of voluntary prepayments of our 2021 Incremental Term Loan Facility, $60 million of voluntary prepayments of our 2019 Incremental Term Loan Facility, $3 million associated with interest rate cap purchases, $7 million of dividends on our Series A Preferred Stock and no net payments under the ABL Facility.

Financing activities in the 26 weeks ended July 1, 2023 also included $200 million common stock repurchased under the Share Repurchase Program, $2 million of excise tax associated with common stock repurchases, $13 million of proceeds received from stock purchases under our employee stock purchase plan and $22 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.

Cash flows used in financing activities in the 39 weeks ended September 28, 2024 included $91 million of scheduled payments under our Term Loan Facilities and financing leases, $75 million in net proceeds under the ABL Facility, $14 million for repricing of the 2021 Term Loan Facility and $1 million of financing fees related to the 2021 Term Loan Facility repricing.

Financing activities in the 39 weeks ended September 28, 2024 also included $628 million common stock repurchased under the Amended Share Repurchase Program, $19 million of proceeds received from stock purchases under our employee stock purchase plan, $14 million of proceeds from the exercise of employee stock options, which were offset by $20 million of employee tax withholdings paid in connection with the vesting of stock awards.

Cash flows used by financing activities in the 39 weeks ended September 30, 2023 included $95 million of scheduled payments under our Term Loan Facilities and financing leases, $1 billion for refinancing of the Senior Notes due 2025, $10 million of financing fees related to the refinancing, $65 million of voluntary prepayments of our 2021 Incremental Term Loan Facility, $120 million of voluntary prepayments of our 2019 Incremental Term Loan Facility, $3 million associated with interest rate cap purchases, $7 million of dividends on our Series A Preferred Stock and no net payments under the ABL Facility.

Financing activities in the 39 weeks ended September 30, 2023 also included $229 million common stock repurchased under the Amended Share Repurchase Program, $19 million of proceeds received from stock purchases under our employee stock purchase plan and $23 million of proceeds from the exercise of employee stock options, which were offset by $12 million of employee tax withholdings paid in connection with the vesting of stock awards.

Other Obligations and Commitments

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Off-Balance Sheet Arrangements

We had $562 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 June 29, 2024.

We had $578 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 September 28, 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.

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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 26 weeks ended June 29, 2024.

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 39 weeks ended September 28, 2024.

Recent Accounting Pronouncements

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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-Q

Item 2. Management’s Discussion and Analysis