What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-08 compared with 2024-11-07 · 78 added, 133 removed, 180 unchanged (54% 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 39 weeks ended September 28, 2024 are compared to the 13 weeks and 39 weeks ended September 30, 2023, unless specifically noted otherwise.

Results of operations for the 13 weeks ended March 29, 2025 are compared to the 13 weeks ended March 30, 2024, unless specifically noted otherwise.

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

This mission is supported by our brand promise of WE HELP YOU MAKE IT.™ , which is centered on bringing four key elements to the forefront for our customers;

This mission is supported by our strategy of WE HELP YOU MAKE IT ™, which is centered on bringing four key elements to the forefront for our customers;

(1) more quality products, including our large portfolio of exclusive brands, (2) more tools, centering on our MOXē business platform, (3) more support from our sellers and our team of experts and lastly, (4) more deliveries, enabled by our traditional broadline services and Pronto™ program.

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This operating model allows us to leverage our nationwide scale and footprint while executing locally.

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 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 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.

For the 13 weeks ended March 29, 2025, compared to the same period a year ago, total case volume increased 1.1%, driven by a 2.5% increase in independent restaurant case volume, a 6.1% increase in healthcare volume, a 3.6% increase in hospitality volume, partially offset by a 4.3% decrease in chain volume.

For the 13 weeks ended March 29, 2025, compared to the same period a year ago, total organic case volume increased 0.1%, which includes 1.3% organic independent restaurant case volume growth.

Net sales increased $402 million, o r 4.5% for the 13 weeks ended March 29, 2025 , driven by case volume growth and food cost inflation of 3.0% for the 13 weeks ended March 29, 2025.

Gross profit increased $119 million, or 8.0%, to $1,614 million for the 13 weeks ended March 29, 2025.

For the 13 weeks ended March 29, 2025, 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.

Gross profit was negatively impacted by LIFO expense of $5 million and $45 million for the 13 weeks ended March 29, 2025 and March 30, 2024.

As a percentage of net sales, gross profit was 17.3% for the 13 weeks ended March 29, 2025, compared to 16.7% for the prior year period.

Total operating expenses increased $60 million, or 4.5%, to $1,390 million for the 13 weeks ended March 29, 2025.

For the 13 weeks ended March 29, 2025, the increase was primarily a result of an increase in total case volume and higher distribution, selling and administrative costs, partially offset by continued distribution productivity improvement as well as actions to streamline administrative processes and costs.

As a percentage of net sales, operating expenses were 14.9% for the 13 weeks ended March 29, 2025 and March 30, 2024.

Results of Operations

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

13 Weeks Ended 39 Weeks Ended

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

13 Weeks Ended

March 29, 2025 March 30, 2024

Consolidated Statements of Operations:

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Operating income 224 165

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

Other income—net (1) (1)

Interest expense—net 77 79

Loss on extinguishment of debt — 21 — 21

Income before income taxes 148 87

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Net income 115 82

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

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

Percentage of Net Sales:

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Operating income

2.9 % 2.5 % 2.8 % 2.8 %

1.5 % 1.0 % 1.5 % 1.3 %

Adjusted EBITDA (1)

4.7 % 4.4 % 4.6 % 4.4 %

Cash flows—operating activities

$ 270 $ 282 $ 891 $ 935

Cash flows—investing activities

(79) (195) (447) (301)

Cash flows—financing activities

(515) (120) (632) (499)

Capital expenditures

80 59 236 167

390 307 1,119 1,012

Adjusted EBITDA (1)

455 402 1,300 1,171

Adjusted EBITDA Margin (1)

4.7 % 4.4 % 4.6 % 4.4 %

Adjusted Net Income (1)

208 174 573 498

Free Cash Flow (2)

191 229 658 776

(1) EBITDA is defined as net income, plus interest expense—net, income tax provision, and depreciation and amortization.

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

13 Weeks Ended 39 Weeks Ended

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 %

Series A Preferred Stock Dividends — — — (7)

13 Weeks Ended

March 29, 2025 March 30, 2024

Net income and net income margin $ 115 1.2% $ 82 0.9%

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LIFO reserve adjustment (3)

Loss on extinguishment of debt (4)

Business transformation costs (4)

Business acquisition and integration related costs and other (6)

Business acquisition, integration related costs, divestitures and other (5)

Adjusted EBITDA and Adjusted EBITDA margin 389 4.2% 356 4.0%

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Income tax provision, as adjusted (6)

(73) (62) (204) (173)

Adjusted Net Income $ 159 $ 134

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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.

(4) Transformational costs represent non-recurring expenses prior to formal launch of strategic projects with anticipated long-term benefits to the Company.

These costs generally relate to third party consulting and non-capitalizable technology.

For the 13 weeks 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.

For the 13 weeks ended March 29, 2025, business transformation costs related to projects associated with information technology infrastructure initiatives and workforce efficiencies.

For the 13 weeks ended March 30, 2024, business transformation costs related to projects associated with information technology and workforce efficiencies.

(5) Includes:

(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.

(i) aggregate acquisition, integration related costs and divestiture costs of $13 million and $3 million for the 13 weeks ended March 29, 2025 and March 30, 2024, respectively;

and (ii) other gains, losses or costs that we are permitted to addback for purposes of calculating Adjusted EBITDA under certain agreements governing our indebtedness.

(6) Represents our income tax provision adjusted for the tax effect of pre-tax items excluded from Adjusted Net Income and the removal of applicable discrete tax items.

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

13 Weeks Ended 39 Weeks Ended

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

13 Weeks Ended

March 29, 2025 March 30, 2024

GAAP income tax provision $ 33 $ 5

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Comparison of Results

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

13 Weeks Ended March 29, 2025 and March 30, 2024

• Net sales increased $402 million, or 4.5%, to $9,351 million in 2025.

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As a percentage of net sales, Adjusted EBITDA was 4.2% in 2025, compared to 4.0% in 2024.

Net sales increased $622 million or 6.8%, to $9,728 million in 2024, driven by organic case volume growth, the impact of acquisitions and food cost inflation of 3.2%.

Total case volume increased 3.8% 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.

Net sales increased $402 million or 4.5%, to $9,351 million in 2025, driven by case volume growth and food cost inflation of 3.0%.

Total case volume increased 1.1% driven by a 2.5% increase in independent restaurant case volume, a 6.1% increase in healthcare volume, a 3.6% increase in hospitality volume, partially offset by a 4.3% decrease in chain volume.

Total organic case volume increased 0.1% and organic independent restaurant case volume increased 1.3% .

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

Organic broadline cases of private brands represented approximately 34% of total cases in 2025 and 2024.

Gros s profit increased $119 million, or 8.0%, to $1,614 million in 2025, 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 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.

Operating Income

Our operating income was $279 million in 2024, compared to operating income of $230 million in 2023.

The increase in operating income was due to the factors discussed in the relevant sections above.

Other Expense (Income)—Net

Other expense (income)—net includes components of net periodic pension benefit credits, exclusive of the service cost component associated with our defined benefit and other postretirement plans.

We recognized other expense—net of $3 million in 2024 and other income—net of $1 million in 2023.

The decrease in other income-net is due to an increase in the pension benefit interest cost and a decrease in the expected return on pension assets compared to 2023.

Interest Expense—Net

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 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 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.

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.

• Total case volume increased 4.4% and independent restaurant case volume increased 4.8%.

• Operating income increased $58 million, to $797 million in 2024.

• Net income increased $69 million to $428 million in 2024.

• Adjusted EBITDA increased $129 million or 11.0%, to $1,300 million in 2024.

As a percentage of net sales, Adjusted EBITDA was 4.6% in 2024, compared to 4.4% in 2023.

Net sales increased $1,725 million, or 6.5%, to $28,386 million in 2024 driven by organic case volume growth, the impact of acquisitions and food cost inflation of 2.5%.

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 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.

Our LIFO method of inventory costing resulted in an expense of $68 million in 2024, compared to expense of $42 million in 2023.

LIFO expense in both periods is driven by a reduction in inventory values in multiple categories.

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

Gross profit as a percentage of net sales was also 17.1% in 2023.

Our LIFO method of inventory costing resulted in an expense of $5 million in 2025 compared to an expense of $45 million i n 2024 , driven by inflation.

Gross profit as a percentage of net sales was 17.3% in 2025, compared to 16.7% in 2024.

Operating Expenses

Operating expenses, comprised of distribution, selling and administrative costs, increased $60 million, or 4.5%, to $1,390 million in 2025 .

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 14.3% in both 2024 and 2023.

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

Operating expenses as a per centage of net sales were 14.9% in both 2025 and 2024.

Operating Income

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The increase in operating income was due to the factors discussed in the relevant sections above.

Other Expense (Income)—Net

Other expense (income)—net includes components of net periodic pension benefit credits, exclusive of the service cost component associated with our defined benefit and other postretirement plans.

We recognized other expense—net of $5 million in 2024 and other income —net of $4 million in 2023.

The decrease in other income-net is due to an increase in the pension benefit interest cost and a decrease in the expected return on pension assets compared to 2023.

Other Income—Net

Other income—net includes components of net periodic pension benefit credits, exclusive of the service cost component associated with our defined benefit and other postretirement plans.

We recognized other income—net of $1 million in 2025 and other income—net of $1 million in 2024.

Interest Expense—Net

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

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 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.

Interest expense—net decreased $2 million to $77 million in 2025 primarily due to lower interest rates in 2025 compared to 2024.

For the 13 weeks ended March 29, 2025, the Company’s effective income tax rate of 22% 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 $6 million, primarily related to excess tax benefits associated with share-based compensation.

For the 13 weeks ended March 30, 2024, the Company’s effective income tax rate of 6% differed from the 21% federal corporate income tax rate primarily as a result of state income taxes and the recognition of various discrete tax items.

These discrete tax items included a tax benefit of $15 million related to a decrease in an unrecognized tax benefit as a result of the expiration of the statute of limitations in several jurisdictions, a tax benefit of $6 million, primarily related to excess tax benefits associated with share-based compensation and a tax expense of $3 million, primarily related to adjustments to prior year provision estimates.

Our net income was $115 million in 2025, compared to a net income of $82 million in 2024.

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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 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 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.

As of March 29, 2025, the Company had approximately $1.8 billion in cash and available liquidity.

Debt Description Maturity Interest Rate as of March 29, 2025 Carrying Value as of March 29, 2025 Carrying Value as of December 28, 2024

ABL Facility December 7, 2027 5.67% $ 75 $ 223

2021 Incremental Term Loan Facility (net of $1 and $0 of unamortized deferred financing costs, respectively)

November 22, 2028 6.07% 609 610

2024 Incremental Term Loan Facility (net of $8 and $8 of unamortized deferred financing costs, respectively) October 3, 2031 6.07% 717 717

Senior Notes due 2028 (net of $3 and $4 of unamortized deferred financing costs, respectively) September 15, 2028 6.88% 497 496

Senior Notes due 2029 (net of $5 and $5 of unamortized deferred financing costs, respectively)

February 15, 2029 4.75% 895 895

Senior Notes due 2030 (net of $3 and $3 of unamortized deferred financing costs, respectively) June 1, 2030 4.63% 497 497

Senior Notes due 2032 (net of $4 and $4 of unamortized deferred financing costs, respectively) January 15, 2032 7.25% 496 496

Senior Notes due 2033 (net of $3 and $4 of unamortized deferred financing costs, respectively) April 15, 2033 5.75% 497 496

Obligations under financing leases 2025–2037 1.26%-8.31%

Other debt January 1, 2031 5.75% 8 8

Total debt 4,805 4,928

Current portion of long-term debt (116) (109)

Long-term debt $ 4,689 $ 4,819

We had outstanding borrowings totaling $75 million and had issued letters of credit totaling $567 million under the ABL Facility as of March 29, 2025.

There was remaining capacity of $1,658 million under the ABL Facility as of March 29, 2025.

Subsequent to the fiscal quarter ended March 29, 2025, outstanding letters of credit were reduced by approximately $118 million after additional surety bonds were issued in the first quarter of 2025 to secure the Company’s obligations with respect to its insurance program.

As economic conditions permit, we will consider opportunities to repurchase, refinance or otherwise reduce our debt obligations on favorable terms.

Any potential debt reduction or refinancing could require significant use of our available liquidity and capital resources.

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 $2.3 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.

The Company had approximately $2.5 billion of restricted payment capacity under these covenants and approximately $2.1 billion of its net assets were restricted after taking into consideration the net deferred tax assets and intercompany balances that eliminate in consolidation as of March 29, 2025.

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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13 Weeks Ended

September 28, 2024 September 30, 2023

March 29, 2025 March 30, 2024

Net income $ 115 $ 82

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Operating Activities

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.

Cash flows provided by operating activities was $391 million for the 13 weeks ended March 29, 2025, representing an increase of $252 million as compared to cash flows provided by operating activities of $139 million for the 13 weeks ended March 30, 2024, due to changes in operating assets and liabilities f or the 13 weeks ended March 29, 2025 compared to the 13 weeks ended March 30, 2024.

Investing Activities

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 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.

During the 13 weeks ended March 29, 2025, the Company completed the asset acquisition of Jake’s Finer Foods.

Cash paid for the acquisition of Jake’s Finer Foods consisted of cash of approximately $85 million.

Investing activities for the 13 weeks ended March 29, 2025, also included the cash proceeds from the sale of Freshway of $38 million .

In addition, c ash flows used in investing activities in the 13 weeks ended March 29, 2025 and March 30, 2024 included cash expenditures of $84 million and $87 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 2025 to be between $375 million and $425 million.

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Financing Activities

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.

Cash flows used in financing activities in the 13 weeks ended March 29, 2025 included $147 million in net payments under the ABL Facility and $23 million in scheduled payments under our financing leases.

Financing activities in the 13 weeks ended March 29, 2025 also included $23 million common stock repurchased under the Amended Share Repurchase Program, $6 million of proceeds received from stock purchases under our employee stock purchase plan, $1 million of proceeds from the exercise of employee stock options, which were offset by $33 million of employee tax withholdings paid in connection with the vesting of stock awards.

Cash flows used by financing activities in the 13 weeks ended March 30, 2024 included $31 million of scheduled payments under our Term Loan Facilities and financing leases, $14 million for repricing of the 2021 Incremental Term Loan Facility, $1 million of financing fees related to the 2021 Incremental Term Loan Facility repricing and no net payments under the ABL Facility.

Financing activities in the 13 weeks ended March 30, 2024 also included $13 million common stock repurchased under the Amended Share Repurchase Program, $5 million of proceeds received from stock purchases under our employee stock purchase plan, $5 million of proceeds from the exercise of employee stock options and $20 million of employee tax withholdings paid in connection with the vesting of stock awards.

Other Obligations and Commitments

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Off-Balance Sheet Arrangements

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.

We had $567 million of letters of credit outstanding primarily securing the Company’s obligations with respect to its insurance program and certain real estate leases, under the ABL Facility as of March 29, 2025.

For the 13 weeks ended March 29, 2025 and for the fiscal year ended December 28, 2024, we held approximately $176 million and $58 million of surety bonds, primarily in favor of certain commercial insurers to secure obligations with respect to our insurance programs.

In certain cases, surety bonds may be used as an alternative to letters of credit.

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 2024 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 39 weeks ended September 28, 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 13 weeks ended March 29, 2025.

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