US Foods Holding Corp. 10-Q

Item 1. Financial Statements US FOODS HOLDING CORP. CONSOLIDATED BALANCE SHEETS (In millions, except par value) March 29, 2025 December 28, 2024 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 101 $ 59 Accounts receivable, less allowances of $ 27 and $ 24 2,078 1,957 Vendor receivables, less allowances of $ 8 and $ 7 220 167 Inventories—net 1,518 1,626 Prepaid expenses 152 146 Assets held for sale — 8 Other current assets 22 11 Total current assets 4,091 3,974 Property and equipment—net 2,495 2,398 Goodwill 5,768 5,766 Other intangibles—net 828 836 Other assets 469 429 Noncurrent assets held for sale — 33 Total assets $ 13,651 $ 13,436 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Cash overdraft liability $ 206 $ 216 Accounts payable 2,423 2,231 Accrued expenses and other current liabilities 747 732 Current portion of long-term debt 116 109 Liabilities held for sale — 8 Total current liabilities 3,492 3,296 Long-term debt 4,689 4,819 Deferred tax liabilities 347 335 Other long-term liabilities 507 447 Noncurrent liabilities held for sale — 11 Total liabilities 9,035 8,908 Commitments and contingencies (Note 14) Shareholders’ equity: Common stock, $ 0.01 par value— 600 shares authorized; 255.8 issued and 231.3 outstanding as of March 29, 2025, and 254.7 issued and 230.5 outstanding as of December 28, 2024 3 3 Additional paid-in capital 3,744 3,748 Retained earnings 2,118 2,003 Accumulated other comprehensive income 43 43 Treasury Stock, 24.5 and 24.2 shares, respectively ( 1,292 ) ( 1,269 ) Total shareholders’ equity 4,616 4,528 Total liabilities and shareholders' equity $ 13,651 $ 13,436 See Notes to Consolidated Financial Statements (Unaudited). 1 US FOODS HOLDING CORP. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (In millions, except per share data) 13 Weeks Ended March 29, 2025 March 30, 2024 Net sales $ 9,351 $ 8,949 Cost of goods sold 7,737 7,454 Gross profit 1,614 1,495 Operating expenses: Distribution, selling and administrative costs 1,385 1,317 Restructuring activity and asset impairment charges 5 13 Total operating expenses 1,390 1,330 Operating income 224 165 Other income—net ( 1 ) ( 1 ) Interest expense—net 77 79 Income before income taxes 148 87 Income tax provision 33 5 Net income 115 82 Other comprehensive income—net of tax: Changes in retirement benefit obligations — 2 Comprehensive income $ 115 $ 84 Net income $ 115 $ 82 Net income per share Basic (Note 10) $ 0.50 $ 0.33 Diluted (Note 10) $ 0.49 $ 0.33 Weighted-average common shares outstanding Basic (Note 10) 231 245 Diluted (Note 10) 234 248 See Notes to Consolidated Financial Statements (Unaudited). 2 US FOODS HOLDING CORP. CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited) (In millions) Common Stock Additional Paid-In Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive Income Total Shareholders’ Equity Shares Amount Shares Amount BALANCE—December 28, 2024 254.7 $ 3 $ 3,748 $ 2,003 24.2 $ ( 1,269 ) $ 43 $ 4,528 Share-based compensation expense — — 22 — — — — 22 Proceeds from employee share purchase plan 0.1 — 6 — — — — 6 Vested restricted stock units, net 1.0 — — — — — — — Exercise of stock options — — 1 — — — — 1 Tax withholding payments for net share-settled equity awards — — ( 33 ) — — — — ( 33 ) Changes in retirement benefit obligations, net of income tax — — — — — — — — Common stock repurchased — — — — 0.3 ( 23 ) — ( 23 ) Net income — — — 115 — — — 115 BALANCE—March 29, 2025 255.8 $ 3 $ 3,744 $ 2,118 24.5 $ ( 1,292 ) $ 43 $ 4,616 Common Stock Additional Paid-In Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive Loss Total Shareholders’ Equity Shares Amount Shares Amount BALANCE—December 30, 2023 252.9 $ 3 $ 3,663 $ 1,509 7.8 $ ( 311 ) $ ( 115 ) $ 4,749 Share-based compensation expense — — 15 — — — — 15 Proceeds from employee share purchase plan 0.1 — 5 — — — — 5 Vested restricted stock units, net 0.7 — — — — — — — Exercise of stock options 0.2 — 5 — — — — 5 Tax withholding payments for net share-settled equity awards — — ( 20 ) — — — — ( 20 ) Changes in retirement benefit obligations, net of income tax — — — — — — 2 2 Common stock repurchased — — — — 0.3 ( 13 ) — ( 13 ) Net income — — — 82 — — — 82 BALANCE—March 30, 2024 253.9 $ 3 $ 3,668 $ 1,591 8.1 $ ( 324 ) $ ( 113 ) $ 4,825 See Notes to Consolidated Financial Statements (Unaudited). 3 US FOODS HOLDING CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In millions) 13 Weeks Ended March 29, 2025 March 30, 2024 Cash flows from operating activities: Net income $ 115 $ 82 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 112 105 Deferred tax provision 8 5 Share-based compensation expense 22 15 Provision for doubtful accounts 9 7 Other non-cash activities 3 3 Changes in operating assets and liabilities: Increase in receivables ( 174 ) ( 173 ) Decrease (increase) in inventories 120 ( 20 ) Increase in prepaid expenses and other assets ( 13 ) ( 1 ) Increase in accounts payable and cash overdraft liability 190 221 Decrease in accrued expenses and other liabilities ( 1 ) ( 105 ) Net cash provided by operating activities 391 139 Cash flows from investing activities: Proceeds from sales of property and equipment 1 1 Proceeds from divestitures 38 — Purchases of property and equipment ( 84 ) ( 87 ) Cash paid for acquisitions ( 85 ) — Net cash used in investing activities ( 130 ) ( 86 ) Cash flows from financing activities: Principal payments on debt and financing leases ( 1,907 ) ( 457 ) Principal payments on debt repricing — ( 14 ) Proceeds from debt repricing — 14 Proceeds from debt borrowings 1,737 426 Repurchase of common stock ( 23 ) ( 13 ) Debt financing costs and fees — ( 1 ) Proceeds from employee stock purchase plan 6 5 Proceeds from exercise of stock options 1 5 Tax withholding payments for net share-settled equity awards ( 33 ) ( 20 ) Net cash used in financing activities ( 219 ) ( 55 ) Net increase (decrease) in cash, cash equivalents and restricted cash 42 ( 2 ) Cash, cash equivalents and restricted cash—beginning of period 59 269 Cash, cash equivalents and restricted cash—end of period $ 101 $ 267 Supplemental disclosures of cash flow information: Interest paid—net of amounts capitalized 92 93 Income taxes paid—net 4 5 Property and equipment purchases included in accounts payable 41 20 Leased assets obtained in exchange for financing lease liabilities 45 56 Leased assets obtained in exchange for operating lease liabilities 48 7 Cashless exercise of stock options — 4 See Notes to Consolidated Financial Statements (Unaudited). 4 US FOODS HOLDING CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Amounts in tables in millions, except per share data, unless otherwise noted) 1. OVERVIEW AND BASIS OF PRESENTATION US Foods Holding Corp., a Delaware corporation, and its consolidated subsidiaries are referred to in these consolidated financial statements and notes as “we,” “our,” “us,” the “Company,” or “US Foods.” US Foods Holding Corp. conducts all of its operations through its wholly owned subsidiary US Foods, Inc. (“USF”) and its subsidiaries. All of the Company’s indebtedness, as further described in Note 9, Debt, is a direct obligation of USF and its subsidiaries. Business Description —The Company, through USF, operates in one business segment in which it markets, sells and distributes fresh, frozen and dry food and non-food products to foodservice customers throughout the United States (“U.S.”). These customers include independently owned single and multi-unit restaurants, regional concepts, national restaurant chains, hospitals, nursing homes, hotels and motels, country clubs, government and military organizations, colleges and universities and retail locations. Basis of Presentation —The Company operates on a 52- or 53-week fiscal year, with all periods ending on a Saturday. When a 53-week fiscal year occurs, the Company reports the additional week in the fiscal fourth quarter. Fiscal years 2025 and 2024 are both 52-week fiscal years. The consolidated financial statements included in this Quarterly Report have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in financial statements and notes prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The Company believes that the disclosures included in this Quarterly Report are adequate to make the information presented not misleading. These interim consolidated financial statements and notes should be read in conjunction with the audited consolidated financial statements and notes included in the Annual Report on Form 10-K for the fiscal year ended December 28, 2024 (the “2024 Annual Report”). The consolidated interim financial statements reflect all adjustments (consisting of normal recurring items) necessary for the fair presentation of the financial position, results of operations and cash flows for the interim periods presented. The results of operations for interim periods are not necessarily indicative of the results that might be achieved for any other interim period or the full fiscal year . 2. RECENT ACCOUNTING PRONOUNCEMENTS Recently Issued Accounting Pronouncements In December 2023, the FASB issued ASU No 2023-09 Income Taxes (“Topic 740”) “ Improvements to Income Tax Disclosures Topic 740 ”, which enhances the transparency of income tax disclosures primarily related to rate reconciliation and income taxes paid information. This guidance is effective for fiscal years beginning after December 15, 2024. This guidance is effective on a prospective basis, though retrospective application is permitted. The Company plans to adopt the provisions of ASU No. 2023-09 in its annual reporting in fiscal year 2025 and does not expect the provisions of the new standard to materially affect our financial position, results of operation or cash flows. In November 2024, the FASB issued ASU No 2024-03 Income Statement—Reporting Comprehensive Income—“ Expense Disaggregation Disclosures: Disaggregation of Income Statement Expenses ”, which requires disclosure of disaggregated information about certain income statement expense line items within the footnotes to the financial statements. This guidance is effective for fiscal years beginning after December 15, 2026, with early adoption permitted. The Company is currently evaluating the impact that this standard will have on the Company’s consolidated financial statements. 5 3. REVENUE RECOGNITION The Company recognizes revenue when the performance obligation is satisfied, which occurs when a customer obtains control of the promised goods or services. The amount of revenue recognized reflects the consideration which the Company expects to be entitled to receive in exchange for these goods or services. The Company generates substantially all of its revenue from the distribution and sale of food and food-related products and recognizes revenue when title and risk of loss passes to the customer and the customer accepts the goods, which occurs at delivery. Customer sales incentives, such as volume-based rebates or discounts, are treated as a reduction of revenue at the time the revenue is recognized. Sales taxes invoiced to customers and remitted to governmental authorities are excluded from net sales. Shipping and handling costs are treated as fulfillment costs and included in distribution, selling and administrative costs. The Company did not have any material outstanding performance obligations, contract liabilities or capitalized contract acquisition costs as of March 29, 2025 or December 28, 2024. Customer receivables, which are included in accounts receivable, less allowances in the Company’s Consolidated Balance Sheets, were $ 2.1 billion and $ 2.0 billion as of March 29, 2025 and December 28, 2024, respectively. The Company has certain customer contracts under which incentives are paid upfront to its customers. These payments have become industry practice and are not related to financing any customer’s business, nor are these payments associated with any distinct good or service to be received from any customer. These incentive payments are capitalized in prepaid expenses and other assets and amortized as a reduction of revenue over the life of the contract or as goods or services are transferred to the customer. The Company’s contract assets for these upfront payments were $ 52 million and $ 43 million included in prepaid expenses in the Company’s Consolidated Balance Sheets as of March 29, 2025 and December 28, 2024, respectively, and $ 52 million and $ 50 million included in other assets in the Company’s Consolidated Balance Sheets as of March 29, 2025 and December 28, 2024, respectively. The following table presents the disaggregation of revenue for each of the Company’s principal product categories: 13 Weeks Ended March 29, 2025 March 30, 2024 Meats and seafood $ 3,207 $ 2,976 Dry grocery products 1,616 1,614 Refrigerated and frozen grocery products 1,602 1,551 Dairy 1,057 927 Equipment, disposables and supplies 861 864 Beverage products 548 509 Produce 460 508 Total net sales $ 9,351 $ 8,949 4. ACQUISITIONS AND DIVESTITURES Acquisitions Jake’s Finer Foods Acquisition —On January 10, 2025 , the Company acquired Jake’s Finer Foods, a broadline distributor in Texas, for a purchase price of $ 92 million subject to holdbacks and adjustments (less the amount of cash received). The acquisition was funded with cash on hand and allows US Foods to further expand its reach into key markets in south Texas. The Jake’s Finer Foods acquisition, reflected in the Company’s consolidated financial statements commencing from the date of acquisition, did not materially affect the Company’s results of operations or financial position. The Company is in the process of finalizing working capital adjustments for this acquisition. The Company recorded goodwill of $ 4 million and intangible assets of $ 5 million for this acquisition. The goodwill recognized from the Jake’s Finer Foods acquisition is not deductible for tax purposes. Jake’s Finer Foods is integrated into the Company’s foodservice distribution network. 6 Divestitures Freshway Divestiture —During the fiscal quarter ended March 29, 2025, the Company completed the sale of the Freshway business for net proceeds of approximately $ 38 million. The Freshway business processes, repacks, and distributes fresh fruit and vegetables in the eastern half of the U.S. The Company recognized an immaterial loss included within distribution, selling and administrative costs in the Company’s Consolidated Statements of Comprehensive Income. The sale of the Freshway business did not represent a strategic shift that had a major effect on the Company’s operations and financial results and, therefore, did not qualify for presentation as discontinued operations. 5. INVENTORIES The Company’s inventories, consisting mainly of food and other food-related products, are primarily considered finished goods. Inventory costs include the purchase price of the product, freight costs to deliver it to the Company’s distribution and retail facilities, and depreciation and labor related to processing facilities and equipment and are net of certain cash or non-cash consideration received from vendors. The Company assesses the need for valuation allowances for slow-moving, excess and obsolete inventories by estimating the net recoverable value of such goods based upon inventory category, inventory age, specifically identified items, and overall economic conditions. The Company records inventories at the lower of cost or market primarily using the last-in, first-out (“LIFO”) method. For our LIFO based inventories, the base year values of beginning and ending inventories are determined using the inventory price index computation method. This “links” current costs to original costs in the base year when the Company adopted LIFO. LIFO reserves in the Company’s Consolidated Balance Sheets were $ 554 million and $ 549 million as of March 29, 2025 and December 28, 2024, respectively. As a result of changes in LIFO reserves, cost of goods increased $ 5 million and $ 45 million for the 13 weeks ended March 29, 2025 and March 30, 2024, respectively. 6. PROPERTY AND EQUIPMENT Property and equipment are stated at cost. Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the assets, which range from 3 to 40 years. Property and equipment under financing leases and leasehold improvements are amortized on a straight-line basis over the shorter of the remaining terms of the related leases or the estimated useful lives of the assets, if reasonably assured the Company will purchase the assets at the end of the lease terms. As of March 29, 2025 and December 28, 2024, property and equipment-net included accumulated depreciation of $ 3,345 million and $ 3,303 million, respectively. Depreciation expense was $ 98 million and $ 93 million for the 13 weeks ended March 29, 2025 and March 30, 2024, respectively. 7. GOODWILL AND OTHER INTANGIBLES Goodwill includes the cost of acquired businesses in excess of the fair value of the tangible and other intangible net assets acquired. Other intangible assets include customer relationships, noncompete agreements, amortizable trade names, the brand names comprising the Company’s portfolio of exclusive brands, and trademarks. Brand names and trademarks are indefinite-lived intangible assets and, accordingly, are not subject to amortization, but are subject to impairment assessments as described below. Customer relationships, noncompete agreements and amortizable trade names are intangible assets with definite lives, and are carried at the acquired fair value less accumulated amortization. Customer relationships, noncompete agreements and amortizable trade names are amortized over their estimated useful lives (which range from 3 to 15 years). Amortization expense was $ 14 million and $ 12 million for the 13 weeks ended March 29, 2025 and March 30, 2024, respectively. 7 Goodwill and other intangibles—net consisted of the following: March 29, 2025 December 28, 2024 Goodwill $ 5,768 $ 5,781 Reclassification to assets held for sale (1) — ( 15 ) Total Goodwill 5,768 5,766 Other intangibles—net Customer relationships—amortizable: Gross carrying amount $ 803 $ 798 Accumulated amortization ( 255 ) ( 241 ) Net carrying value 548 557 Trade names—amortizable: Gross carrying amount 4 4 Accumulated amortization ( 2 ) ( 2 ) Net carrying value 2 2 Noncompete agreements—amortizable: Gross carrying amount 9 8 Accumulated amortization ( 2 ) ( 2 ) Net carrying value 7 6 Brand names and trademarks—not amortizing 271 271 Total other intangibles—net $ 828 $ 836 1. Relates to the reclassification of goodwill allocated to the Freshway divestiture in 2024. Refer to Note 4 Acquisitions and Divestitures for additional information. The change in goodwill is attributable to the Freshway divestiture, offset by the Jake’s Finer Foods acquisition in the first quarter. The increase in the gross carrying amount of customer relationships and noncompete agreements is attributable to the Jake’s Finer Foods acquisition. The Company assesses for impairment of intangible assets with definite lives only if events occur that indicate that the carrying amount of an intangible asset may not be recoverable. The Company assesses goodwill and other intangible assets with indefinite lives for impairment annually, or more frequently if events occur that indicate an asset may be impaired. For goodwill and indefinite-lived intangible assets, the Company’s policy is to assess for impairment as of the beginning of each fiscal third quarter. No impairments were recognized for the 13 weeks ended March 29, 2025 and March 30, 2024. 8. FAIR VALUE MEASUREMENTS Certain assets and liabilities are carried at fair value under GAAP, under which fair value is a market-based measurement, not an entity-specific measurement. The Company’s fair value measurements are based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, fair value accounting standards establish a fair value hierarchy which prioritizes the inputs used in measuring fair value as follows: • Level 1—observable inputs, such as quoted prices in active markets • Level 2—observable inputs other than those included in Level 1, such as quoted prices for similar assets and liabilities in active or inactive markets that are observable either directly or indirectly, or other inputs that are observable or can be corroborated by observable market data • Level 3—unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions Any transfers of assets or liabilities between Level 1, Level 2, and Level 3 of the fair value hierarchy will be recognized as of the end of the reporting period in which the transfer occurs. There were no transfers between fair value levels in any of the periods presented below. 8 There were no significant assets or liabilities on the Company’s Consolidated Balance Sheets measured at fair value on a nonrecurring basis for the periods presented above, except as further disclosed in Note 7, Goodwill and Other Intangibles. Recurring Fair Value Measurements Money Market Funds Money market funds include highly liquid investments with an original maturity of three or fewer months. These funds are valued using quoted market prices in active markets and are classified under Level 1 within the fair value hierarchy. As of March 29, 2025 and December 28, 2024, the fair value of the Company’s Level 1 assets was $ 36 million and zero , respectively. Derivative Financial Instruments The Company has in the past, and may in the future, use interest rate hedges, designated as cash flow hedges, to manage its exposure to interest rate movements in connection with its variable-rate de bt. In April 2023, the Company entered into two , two-year rate cap agreements, which matured on April 30, 2025, with a total notional amount of $ 450 million, which effectively capped the interest rate on approximately 34 % of the current principal amount of the Term Loan Facilities. The Company’s maximum exposure to the variable component of the interest rate on the Term Loan Facilities was 5 % on the notional amount covered by the interest rate cap. The Company’s derivative financial instruments are classified as Level 2 assets. As of March 29, 2025 and December 28, 2024, the fair value of the Company’s Level 2 assets recorded within other current assets was zero for both periods. The Company records its interest rate caps within other current assets in the Consolidated Balance Sheet at fair value, based on projections of cash flows and future interest rates. The determination of fair value includes the consideration of any credit valuation adjustments necessary, giving consideration to the creditworthiness of the respective counterparties or the Company, as appropriate. The effective portion of gains and losses on the interest rate caps are initially recorded in other comprehensive loss, net of tax and reclassified from accumulated other comprehensive income (loss), net of tax to interest expense within the Company’s Consolidated Statement of Comprehensive Income during the period in which the hedged transaction affects income. There was no ineffectiveness attributable to the Company’s interest rate caps during the 13 weeks ended March 29, 2025. On April 10, 2025, the Company entered into a one-year interest rate cap agreement, which will mature on April 30, 2026, with a total notional amount of $ 450 million, which effectively caps the interest rate on approximately 34 % of the current principal amount of the Term Loan Facilities. The Company’s maximum exposure to the variable component of the interest rate on the Term Loan Facilities will be 5 % on the notional amount covered by the interest rate cap. During the next twelve months, the Company estimates an immaterial amount will be reclassified from accumulated other comprehensive income (loss) to income. Other Fair Value Measurements The carrying value of cash, accounts receivable, vendor receivables, cash overdraft liability and accounts payable approximate their fair values due to their short-term maturities. The fair value of the Company’s total debt approximated $ 4.8 billion as of both March 29, 2025 and December 28, 2024, as compared to its carrying value of $ 4.8 billion and $ 4.9 billion as of March 29, 2025 and December 28, 2024, respectively. The fair value of the Company’s senior notes is based upon their quoted market prices on the respective dates and are classified under Level 2 of the fair value hierarchy. The fair value of all of the Company’s individual senior note issuances approximates carrying value. The fair value of the balance of the Company’s debt is primarily classified under Level 3 of the fair value hierarchy, with fair value estimated based upon a combination of the cash outflows expected under these debt facilities, interest rates that are currently available to the Company for debt with similar terms, and estimates of the Company’s overall credit risk. 9 9. DEBT Total debt consisted of the following: 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 % 514 490 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 ABL Facility The Company’s asset based senior secured revolving credit facility (the “ABL Facility”) provides the Company with loan commitments having a maximum aggregate principal amount of $ 2,300 million. The ABL Facility is scheduled to mature on December 7, 2027. Borrowings under the ABL Facility bear interest at a rate per annum equal to, at the Company’s periodic election, Term Secured Overnight Financing Rate (“Term SOFR”) or Adjusted Borrowing Rate (“ABR”), as described in the ABL facility, plus the following margin and credit spread adjustment: Borrowing Election Margin based on USF’s excess availability under the ABL Facility Credit Spread Adjustment SOFR Floor Margin at March 29, 2025 ABR 0.00 % to 0.50 % N/A N/A 0.25 % Term SOFR 1.00 % to 1.50 % 0.10 % 0.00 % 1.25 % On April 30, 2024, the ABL Facility was amended to provide certain providers of supply chain financings a security interest in certain assets of the Company under the ABL Facility. The Company had outstanding borrowings totaling $ 75 million, and had outstanding letters of credit totaling $ 567 million, under the ABL Facility as of March 29, 2025. The outstanding letters of credit primarily relate to securing USF’s obligations with respect to its insurance program and certain real estate leases. There was available 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. Term Loan Facilities The Amended and Restated Term Loan Credit Agreement, dated as of June 27, 2016 (as amended, the “Term Loan Credit Agreement”), provides the Company with an incremental senior secured term loan borrowed in October 2024 (the “2024 10 Incremental Term Loan Facility”), an incremental senior secured term loan borrowed in November 2021 (the “2021 Incremental Term Loan Facility”) and the right to request additional incremental senior secured term loan commitments. The 2021 Incremental Term Loan Facility had an outstanding balance of $ 609 million, net of $ 1 million of unamortized deferred financing costs as of March 29, 2025. The 2024 Incremental Term Loan Facility had an outstanding balance of $ 717 million, net of $ 8 million of unamortized deferred financing costs as of March 29, 2025. Borrowings under the Term Loan Credit Agreement bear interest at a rate per annum equal to, at the Company’s periodic election, Term SOFR or ABR, as described in the Term Loan Credit Agreement, plus the following margin: Borrowing Election Margin SOFR Floor ABR 0.75 % N/A Term SOFR 1.75 % 0.00 % USF’s maximum exposure to the variable component of the interest rate on the Term Loan Facilities is 5 % on the notional amount covered by the interest rate caps described above. Borrowings under the Term Loan Credit Agreement may be voluntarily prepaid without penalty or premium, other than customary breakage costs related to prepayments of SOFR-based borrowings. The Term Loan Credit Agreement may require mandatory repayments if certain assets are sold. On February 27, 2024, the 2021 Incremental Term Loan Facility was amended to reduce the interest rate margins under the term loan facility to 2.00 % for Term SOFR borrowings and 1.00 % for ABR borrowings and eliminate the credit spread adjustment. The Company applied modification accounting to the majority of the continuing lenders as the terms were not substantially different from the terms that applied to those lenders prior to the amendment. For the remaining lenders, the Company applied debt extinguishment accounting. The Company recorded $ 1 million of third-party costs related to the February 27, 2024 amendment in interest expense. Unamortized deferred financing costs of $ 3 million as of February 27, 2024 were carried forward and will be amortized through November 22, 2028, the maturity date of the term loan facility. On October 3, 2024, the Company amended the 2021 Incremental Term Loan Facility, entered into the 2024 Incremental Term Loan Facility, and completed a private offering of $ 500 million aggregate principal amount of its 5.75 % Unsecured Senior Notes due 2033 (the “Unsecured Senior Notes due 2033”). Proceeds from the incremental term loans and senior notes, along with cash on hand, were used to repay all of the then outstanding borrowings under the incremental senior secured term loan facility borrowed in September 2019 (the “2019 Incremental Term Loan Facility”). The 2021 Incremental Term Loan Facility amendment reduced the interest rate margins under the term loan facility to 1.75 % for Term SOFR borrowings and 0.75 % for ABR borrowings. The Unsecured Senior Notes due 2033 are unconditionally guaranteed on a senior unsecured basis by each of the Company’s existing and future wholly-owned domestic subsidiaries that provide guarantees under the Company’s senior secured term loan credit facilities. In connection with the repayment of the 2019 Incremental Term Loan Facility during the fourth quarter of fiscal year 2024, the Company applied debt extinguishment accounting and recorded $ 10 million in the Company’s Consolidated Statements of Comprehensive Income, primarily consisting of a write-off of pre-existing unamortized deferred financing costs related to the incremental Term Loan Facility. Lender fees and third-party costs of $ 10 million related to the 2021 Incremental Term Loan amendment, issuance of the 2024 Incremental Term Loan Facility and the Unsecured Senior Notes due 2033 were capitalized as deferred financing costs. Senior Notes Each of the Company’s outstanding senior notes are redeemable, at USF’s option, in whole or in part, at a price multiplied by the remaining principal, plus accrued and unpaid interest, if any, to but not including the applicable redemption date. The senior notes are unconditionally guaranteed on a senior unsecured basis by each of the Company’s existing and future wholly-owned domestic subsidiaries that provide guarantees under the Company’s senior secured term loan credit facilities. As of March 29, 2025, the Term Loan Facility, ABL Facility and certain variable rate finance leases, which were approximately 30 % of the Company’s total debt, bore interest at a floating rate. Debt Covenants 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 assets, pay dividends, or engage in mergers or consolidations. 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. 11 10. STOCKHOLDERS’ EQUITY Earnings Per Share The Company computes EPS in accordance with Accounting Standards Codification (“ASC”) 260, Earnings per Share . Basic EPS is computed by dividing net income available to common shareholders by the weighted-average number of shares of common stock outstanding. Diluted EPS is computed using the weighted average number of shares of common stock, plus the effect of potentially dilutive securities. The Company applied the treasury method to calculate the dilution impact of share-based awards—stock options, non-vested restricted shares with forfeitable dividend rights, restricted stock units, and employee stock purchase plan deferrals. For both, the 13 weeks ended March 29, 2025 and March 30, 2024, share-based awards representing 1 million underlying common shares were not included in the computation because the effect would have been anti-dilutive. The following table sets forth the computation of basic and diluted EPS: 13 Weeks Ended March 29, 2025 March 30, 2024 Numerator: Net income $ 115 $ 82 Denominator: Weighted-average common shares outstanding—basic 231 245 Effect of dilutive share-based awards 3 3 Weighted-average common shares outstanding—diluted 234 248 Net income per share Basic $ 0.50 $ 0.33 Diluted $ 0.49 $ 0.33 Share Repurchase Programs On November 2, 2022, our Board of Directors approved a share repurchase program (“Original Share Repurchase Program”) under which the Company was authorized to repurchase up to $ 500 million of its outstanding common stock. On June 1, 2024, the Board approved, and on June 5, 2024, the Company announced, an increase in the amount of common stock that could be purchased under the Original Share Repurchase Program to $ 1 billion (“Amended Share Repurchase Program”). As of March 29, 2025, there was approximately $ 52 million in remaining funds authorized under the Amended Share Repurchase Program. For the 13 weeks ended March 29, 2025, the Company repurchased 328,000 shares at an aggregate purchase price of approximately $ 23 million under the Amended Share Repurchase Program inclusive of fees, commissions, and the related 1% excise tax. The size and timing of any repurchases will depend on a number of factors, including share price, general business and market conditions and other factors. Under the Amended Share Repurchase Program, repurchases can be made from time to time using a variety of methods, including open market purchases, privately negotiated transactions, accelerated share repurchases and Rule 10b5-1 trading plans. The Amended Share Repurchase Program does not obligate the Company to acquire any particular amount of shares, and the Amended Share Repurchase Program may be suspended or discontinued at any time at the Company’s discretion. The Amended Share Repurchase Program does not have an expiration date. On May 7, 2025, the Board authorized a new share repurchase program of up to $ 1 billion. 11. RETIREMENT PLANS The Company sponsors various retirement plans for eligible employees, and provides certain postretirement health and welfare benefits to eligible retirees and their dependents. Certain employees are eligible to participate in the Company’s 401(k) plan. The Company made employer matching contributions to the 401(k) plan of $ 22 million and $ 21 million for the 13 weeks ended March 29, 2025 and March 30, 2024, respectively. 12 The Company is also required to contribute to various multiemployer pension plans under the terms of collective bargaining agreements that cover certain of its union-represented employees. The Company’s contributions to these plans were $ 16 million and $ 15 million for the 13 weeks ended March 29, 2025 and March 30, 2024, respectively. During the fourth quarter of fiscal year 2024, the Company terminated the majority of its defined benefit plan (“Terminating Plan”). After the Terminating Plan was settled, the net funded status of the remainder of the defined benefit plan (“Ongoing Plan”) was recorded within other long term assets and other long term liabilities as of December 28, 2024. The Company does not expect to make any material contributions to its defined benefit pension plan in fiscal year 2025. 12. CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The following table presents changes in accumulated other comprehensive income (loss) by component for the periods presented: 13 Weeks Ended March 29, 2025 March 30, 2024 Accumulated other comprehensive income (loss) components Retirement benefit obligations: Balance as of beginning of period (1) $ 42 $ ( 116 ) Reclassification adjustments: Amortization of net loss (2) (3) — 2 Balance as of end of period (1) $ 42 $ ( 114 ) Interest rate Caps: Balance at beginning of period (1) $ 1 $ 1 Change in fair value of interest rate caps — — Balance at end of period (1) $ 1 $ 1 Accumulated other comprehensive income (loss) at end of period (1) $ 43 $ ( 113 ) (1) Amounts are presented net of tax. (2) Included in the computation of net periodic benefit costs. (3) Included in other income—net in the Company’s Consolidated Statements of Comprehensive Income (Loss). Included in the retirement benefit obligations balance as of March 29, 2025 is $ 45 million of tax effects, $ 44 million of which represents tax effects on items within accumulated other comprehensive income (loss) related to the Tax Cuts and Jobs Act of 2017 and the presence of a valuation allowance in certain historical periods. The Company expects the tax effects to remain in accumulated other comprehensive income (loss) until the Retirement Plan ceases to exist. 13. INCOME TAXES The determination of the Company’s overall effective income tax rate requires the use of estimates. The effective income tax rate reflects the income earned and taxed in U.S. federal and various state jurisdictions based on enacted tax law, permanent differences between book and tax items, tax credits and the Company’s change in relative income in each jurisdiction. The Company estimated its annual effective income tax rate for the full fiscal year and applied the annual effective income tax rate to the results of the 13 weeks ended March 29, 2025 and March 30, 2024, and then recognized the impact of discrete tax items for purposes of determining its year-to-date tax provision. 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 of $ 6 million, primarily related to excess tax benefits associated with share-based compensation. 13 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. 14. COMMITMENTS AND CONTINGENCIES Purchase Commitments —The Company enters into purchase orders with vendors and other parties in the ordinary course of business and has a limited number of purchase contracts with certain vendors that require it to buy a predetermined volume of products. The Company had $ 726 million of purchase orders and purchase contract commitments as of March 29, 2025 to be purchased in the remainder of fiscal year 2025 and continuing through fiscal year 2029 and $ 196 million of information technology commitments through 2028 that are not recorded in the Company’s Consolidated Balance Sheets. The Company has entered into various minimum volume purchase agreements at various pricing terms. Minimum amounts committed to as of March 29, 2025 totaled approximately $ 0.8 billion. Minimum amounts committed to by year are as follows: Amount (In millions) 2025 $ 651 2026 158 2027 and thereafter — To minimize fuel price risk, the Company enters into forward purchase commitments for a portion of its projected diesel fuel requirements. The Company had diesel fuel forward purchase commitments totaling $ 29 million through December 2025 as of March 29, 2025. Additionally, the Company had electricity forward purchase commitments totaling $ 2 million through July 2026, as of March 29, 2025. The Company does not measure its forward purchase commitments for fuel and electricity at fair value, as the amounts under contract meet the physical delivery criteria in the normal purchase exception. Legal Proceedings —The Company is subject to a number of legal proceedings arising in the normal course of business. These legal proceedings, whether pending, threatened or unasserted, if decided adversely to or settled by the Company, may result in liabilities material to its financial position, results of operations, or cash flows. The Company has recognized provisions with respect to the proceedings, where appropriate, in its Consolidated Balance Sheets. It is possible that the Company could settle one or more of these proceedings or could be required to make expenditures, in excess of the established provisions, in amounts that cannot be reasonably estimated. However, the Company, at present, believes that the ultimate outcome of these proceedings will not have a material adverse effect on its consolidated financial position, results of operations or cash flows. Surety Bonds —As of March 29, 2025, the Company had approximately $ 176 million of surety bonds that were not recorded on the Consolidated Balance Sheets. The surety bonds are primarily used as security against certain insurance program contractual commitments in the normal course of business. 15. BUSINESS INFORMATION Single Operating Segment Reporting The Company operates as one operating segment. The Company markets, sells, and distributes fresh, frozen and dry food and non-food products to foodservice customers throughout the U.S. The Company uses a centralized management structure, and its strategies and initiatives are implemented and executed consistently across the organization. The Company uses shared resources for sales, procurement, and general and administrative activities across each of its distribution facilities and operations. The Company’s distribution facilities form a single network to reach its customers; it is common for a single customer to make purchases from several different distribution facilities. Capital projects, whether for cost savings or generating incremental revenue, are evaluated based on estimated economic returns to the organization as a whole. The Company’s consolidated results represent the results of its one operating segment based on how the Company’s chief operating decision maker (the “CODM”), the Chief Executive Officer (the “CEO”), views the business for purposes of evaluating performance and making operating decisions. 14 The CODM utilizes the U.S. GAAP measurement of consolidated net income to assess financial performance and allocate resources. This financial metric is used by the CODM to make key operating decisions, such as allocation of budget between net sales, cost of goods sold, distribution costs and selling and administrative costs. The measure of segment assets is reported on the Company’s Consolidated Balance Sheets as total consolidated assets. In addition, the measure of capital expenditures, depreciation and amortization is reported on the Company’s Consolidated Statements of Cash Flows. The following table presents selected financial information with respect to the Company’s single operating segment for the 13 weeks ended March 29, 2025 and March 30, 2024: 13 Weeks Ended March 29, 2025 March 30, 2024 Net sales $ 9,351 $ 8,949 Cost of goods sold 7,737 7,454 Distribution costs 643 634 Selling and administrative costs 742 683 Restructuring activity and asset impairment charges 5 13 Other income—net ( 1 ) ( 1 ) Interest expense—net 77 79 Income tax provision 33 5 Net income $ 115 $ 82 15