US Foods : Quarterly Report for Quarter Ending March 28, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

(Dollar amounts in tables presented in millions, unless otherwise noted)

The following discussion and analysis should be read together with the accompanying unaudited consolidated financial statements and the notes thereto included in this Quarterly Report and the audited consolidated financial statements and the notes thereto in the 2025 Annual Report. The following discussion and analysis contain certain financial measures that are not required by or presented in accordance with GAAP. We believe these non-GAAP measures provide meaningful supplemental information about our operating performance and liquidity. Information regarding reconciliations of and the rationale for these measures is discussed under "Non-GAAP Reconciliations" below. Results of operations for the 13 weeks ended March 28, 2026 are compared to the 13 weeks ended March 29, 2025, unless specifically noted otherwise.

Overview

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 strategy of WE HELP YOU MAKE IT®. Our Promise brings three key elements to the forefront for our customers; (1) more quality products, like our large and diverse portfolio of Exclusive Brands that is based on consistency, freshness and innovation, (2) more tools, centering on our MOXē® business platform, and lastly, (3) more deliveries, with options for on-time deliveries enabled by our traditional broadline services and our flexible and convenient Pronto® program. We operate as one business with standardized business processes, shared systems infrastructure, and an organizational model that optimizes national scale with local execution, allowing us to manage our business as a single operating segment. We have centralized activities where scale matters and our local field structure focuses on customer-facing activities.

We supply approximately 250,000 customer locations nationwide. These customer locations include independent restaurants, chain restaurants, healthcare, hospitality, government and education customers. We provide fresh, frozen, and dry food products, as well as non-food items, sourced from thousands of suppliers. Over 4,000 sales associates manage customer relationships at local, regional, and national levels. Our sales associates are supported by sophisticated marketing and category management capabilities, as well as world-class chefs, business development managers and others that help us to provide more comprehensive service to our customers. Our relationship with our customers is further strengthened by our industry-leading MOXē® digital platform that makes it easy for our customers to manage their orders and inventories, while also providing valuable support for their business. Our extensive network of over 70 distribution facilities and fleet of over 6,500 trucks, along with over 90 cash and carry locations, allow us to operate efficiently and provide high levels of customer service. This operating model allows us to leverage our nationwide scale and footprint while executing locally.

Operating Metrics

Case growth-Case growth, by customer type (e.g., independent restaurants) is reported as of a point in time. Customers periodically are reclassified, based on changes in size or other characteristics, and when those changes occur, the respective customer's historical volume is included within the new classification.

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

Highlights

For the 13 weeks ended March 28, 2026, compared to the same period a year ago, total case volume increased 1.4%, driven by a 4.6% increase in independent restaurant case volume, a 3.7% increase in healthcare volume and a 5.0% increase in hospitality volume, partially offset by a 2.3% decrease in chain volume.

For the 13 weeks ended March 28, 2026, compared to the same period a year ago, total organic case volume increased 1.1%, which includes 4.4% organic independent restaurant case volume growth for the 13 weeks ended March 28, 2026.

Net sales increased $259 million, or 2.8%, for the 13 weeks ended March 28, 2026, driven by case volume growth and food cost inflation of 1.0% for the 13 weeks ended March 28, 2026.

Gross profit increased $39 million, or 2.4%, to $1,653 million for the 13 weeks ended March 28, 2026. For the 13 weeks ended March 28, 2026, the increase was primarily a result of an increase in total case volume and improved cost of goods sold, partially offset by an unfavorable year-over-year LIFO adjustment. Gross profit was negatively impacted by LIFO expense of $38 million for the 13 weeks ended March 28, 2026. Gross profit was negatively impacted by LIFO expense of $5 million for the 13 weeks ended March 29, 2025. As a percentage of net sales, gross profit was 17.2% and 17.3% for the 13 weeks ended March 28, 2026, and March 29, 2025, respectively.

Total operating expenses increased $47 million, or 3.4%, to $1,437 million for the 13 weeks ended March 28, 2026. For the 13 weeks ended March 28, 2026, 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 15.0% and 14.9% for the 13 weeks ended March 28, 2026 and March 29, 2025, respectively.

Results of Operations

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

			13 weeks ended
			March 28, 2026						March 29, 2025
Consolidated Statements of Operations:
Net sales			$	9,610					$	9,351
Cost of goods sold			7,957						7,737
Gross profit			1,653						1,614
Operating expenses:
Distribution, selling and administrative costs			1,429						1,385
Restructuring activity and asset impairment charges			8						5
Total operating expenses			1,437						1,390
Operating income			216						224
Other income-net			(1)						(1)
Interest expense-net			75						77
Income before income taxes			142						148
Income tax provision			26						33
Net income			116						115
Percentage of Net Sales:
Gross profit			17.2		%				17.3		%
Operating expenses			15.0		%				14.9		%
Operating income			2.2		%				2.4		%
Net income			1.2		%				1.2		%
Adjusted EBITDA(1)			4.3		%				4.2		%
Other Data:
Cash flows-operating activities			$	294					$	391
Cash flows-investing activities			(97)						(130)
Cash flows-financing activities			(189)						(219)
Capital expenditures			98						84
EBITDA(1)			336						337
Adjusted EBITDA(1)			413						389
Adjusted Net Income(1)			174						159
Free Cash Flow(2)			197						308

(1) EBITDA is defined as net income, plus interest expense-net, income tax provision, and depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted for: (1) restructuring activity and asset impairment charges; (2) share-based compensation expense; (3) the impact of LIFO reserve adjustments; (4) loss on extinguishment of debt; (5) business transformation costs; and (6) other gains, losses, or costs as specified in the agreements governing our indebtedness. Adjusted EBITDA Margin is Adjusted EBITDA divided by total net sales. Adjusted Net Income is defined as net income excluding the items used to calculate Adjusted EBITDA listed above and further adjusted for the tax effect of the exclusions and discrete tax items. EBITDA, Adjusted EBITDA, and Adjusted Net Income as presented are supplemental measures of our performance that are not required by, or presented in accordance with, GAAP. They are not measurements of our performance under GAAP and should not be considered as alternatives to net income or any other performance measures derived in accordance with GAAP. For additional information, see the discussion under the caption "Non-GAAP Reconciliations" below.

(2) Free Cash Flow is defined as cash flows provided by operating activities and proceeds from sales of property and equipment less cash capital expenditures. Free Cash Flow as presented is a supplemental measure of our liquidity that is not required by, or presented in accordance with, GAAP. It is not a measure of our liquidity under GAAP and should not be considered as an alternative to cash flows provided by operating activities or any other liquidity measures derived in accordance with GAAP. For additional information, see the discussion under the caption "Non-GAAP Reconciliations" below.

Non-GAAP Reconciliations

We provide EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and Free Cash Flow as supplemental measures to GAAP financial measures regarding our operating performance and liquidity. These non-GAAP financial measures, as defined above, exclude the impact of certain items and, therefore, have not been calculated in accordance with GAAP.

We believe EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin provide meaningful supplemental information about our operating performance because they exclude amounts that we do not consider part of our core operating results when assessing our performance.

We believe that Adjusted Net Income is a useful measure of operating performance for both management and investors because it excludes items that are not reflective of our core operating performance and provides an additional view of our operating performance including depreciation, interest expense and income taxes on a consistent basis from period to period. We believe that Adjusted Net Income may be used by investors, analysts and other interested parties to facilitate period-over-period comparisons and provides additional clarity as to how factors and trends impact our operating performance.

Management uses these non-GAAP financial measures (1) to evaluate our historical and prospective financial performance as well as our performance relative to our competitors as they assist in highlighting trends, (2) to set internal sales targets and spending budgets, (3) to measure operational profitability and the accuracy of forecasting, (4) to assess financial discipline over operational expenditures, and (5) as an important factor in determining variable compensation for management and employees. EBITDA and Adjusted EBITDA are also used in connection with certain covenants and activity restrictions under the agreements governing our indebtedness. We also believe these and similar non-GAAP financial measures are frequently used by securities analysts, investors, and other interested parties to evaluate companies in our industry. EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Net Income are not measurements of our performance under GAAP and should not be considered as alternatives to net income or any other performance measures derived in accordance with GAAP.

We use Free Cash Flow as a supplemental measure to GAAP financial measures regarding the liquidity of our operations. We measure Free Cash Flow as cash flows provided by operating activities and proceeds from sales of property and equipment less cash capital expenditures. We believe that Free Cash Flow is a useful financial metric to assess our ability to pursue business opportunities and investments. Free Cash Flow is not a measure of our liquidity under GAAP and should not be considered as an alternative to cash flows provided by operating activities or any other liquidity measures derived in accordance with GAAP.

We caution readers that amounts presented in accordance with our definitions of EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, and Free Cash Flow may not be the same as similar measures used by other companies. Not all companies and analysts calculate EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income or Free Cash Flow in the same manner. We compensate for these limitations by using these non-GAAP financial measures as supplements to GAAP financial measures and by presenting the reconciliations of the non-GAAP financial measures to their most comparable GAAP financial measures.

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
			March 28, 2026									March 29, 2025
Net income and Net income margin			$	116		1.2%						$	115		1.2%
Interest expense-net			75									77
Income tax provision			26									33
Depreciation expense			105									98
Amortization expense			14									14
EBITDA and EBITDA margin			336			3.5%						337			3.6%
Adjustments:
Restructuring activity and asset impairment charges(1)			8									5
Share-based compensation expense(2)			22									22
LIFO reserve adjustments (3)			38									5
Business transformation costs(4)			7									7
Business acquisition, integration related costs, divestitures and other(5)			2									13
Adjusted EBITDA and Adjusted EBITDA margin			413			4.3%						389			4.2%
Depreciation expense			(105)									(98)
Interest expense-net			(75)									(77)
Income tax provision, as adjusted(6)			(59)									(55)
Adjusted Net Income			$	174								$	159
Cash flow
Cash flows from operating activities			$	294								$	391
Proceeds from sales of property and equipment			1									1
Capital expenditures			(98)									(84)
Free Cash Flow			$	197								$	308

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

(2) Share-based compensation expense for expected vesting of stock awards and employee stock purchase plan.

(3) Represents the impact of LIFO reserve adjustments.

(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 both the 13 weeks ended March 28, 2026 and March 29, 2025, business transformation costs related to projects associated with information technology infrastructure initiatives and workforce efficiencies.

(5) Includes: (i) aggregate acquisition, integration related costs and divestiture costs of $1 million and $13 million for the 13 weeks ended March 28, 2026 and March 29, 2025, 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. Applicable discrete tax items include changes in tax laws or rates, changes related to prior year unrecognized tax benefits, discrete changes in valuation allowances, and excess tax benefits associated with share-based compensation. The tax effect of pre-tax items excluded from Adjusted Net Income is computed using a statutory tax rate after taking into account the impact of permanent differences and valuation allowances.

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

			13 weeks ended
			March 28, 2026						March 29, 2025
GAAP income tax provision			$	26					$	33
Tax impact of pre-tax income adjustments			22						16
Discrete tax items			11						6
Income tax provision, as adjusted			$	59					$	55

Comparison of Results

13 weeks ended March 28, 2026 and March 29, 2025

Highlights

•Net sales increased $259 million, or 2.8%, to $9,610 million in 2026.

•Total case volume increased 1.4% and independent restaurant case volume increased 4.6%.

•Total organic case volume increased 1.1% and organic independent restaurant case volume increased 4.4%.

•Operating income decreased $8 million to $216 million in 2026.

•Net income increased $1 million to $116 million in 2026.

•Adjusted EBITDA increased $24 million, or 6.2%, to $413 million in 2026.

•Adjusted EBITDA as a percentage of net sales was 4.3% in 2026, compared to 4.2% in 2025.

Net Sales

Net sales increased $259 million or 2.8%, to $9,610 million in 2026, driven by case volume growth and food cost inflation of 1.0%. Total case volume increased 1.4% driven by a 4.6% increase in independent restaurant case volume, a 3.7% increase in healthcare volume and a 5.0% increase in hospitality volume, partially offset by a 2.3% decrease in chain volume. Total organic case volume increased 1.1% and organic independent restaurant case volume increased 4.4%. Organic broadline cases of private brands represented approximately 34% of total cases in 2026 and 2025.

Gross Profit

Gross profit increased $39 million, or 2.4%, to $1,653 million in 2026, primarily as a result of an increase in total case volume and improved cost of goods sold, partially offset by a $33 million unfavorable year-over-year LIFO adjustment. Our LIFO method of inventory costing resulted in an expense of $38 million in 2026 compared to $5 million expense in 2025, driven by inflation and an increase in inventory values in multiple categories. Gross profit as a percentage of net sales was 17.2% in 2026, compared to 17.3% in 2025.

Operating Expenses

Operating expenses, comprised of distribution, selling and administrative costs, increased $47 million, or 3.4%, to $1,437 million in 2026. 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 percentage of net sales were 15.0% in 2026, compared to 14.9% in 2025.

Operating Income

Our operating income was $216 million in 2026, compared to operating income of $224 million in 2025. The decrease in operating income was due to the factors discussed in the relevant sections above.

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 2026 and $1 million in 2025.

Interest Expense-Net

Interest expense-net decreased $2 million to $75 million in 2026 primarily due to lower borrowings under the ABL Facility revolver and lower interest rates for our variable rate debt.

Income Taxes

For the 13 weeks ended March 28, 2026, the Company's effective income tax rate of 18% 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 expense of $4 million related to an increase in an unrecognized tax benefit due to tax positions taken in prior years and a tax benefit of $15 million, primarily related to excess tax benefits associated with share-based compensation. 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.

Net Income

Our net income was $116 million in 2026, compared to a net income of $115 million in 2025. The improvement in net income was due to the relevant factors discussed above.

Liquidity and Capital Resources

Our ongoing operations and strategic objectives require working capital and continuing capital investment. 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 March 28, 2026, the Company had approximately $1.6 billion in cash and available liquidity.

Indebtedness

Debt Description						Maturity						Interest Rate as of March 28, 2026						Carrying Value as of March 28, 2026						Carrying Value as of December 27, 2025
ABL Facility						December 7, 2027						5.35%						$	388					$	429
2021 Incremental Term Loan Facility (net of $1 and $1 of unamortized deferred financing costs, respectively)						November 22, 2028						5.42%						609						609
2024 Incremental Term Loan Facility (net of $7 and $7 of unamortized deferred financing costs, respectively)						October 3, 2031						5.42%						710						712
Senior Notes due 2028 (net of $2 and $3 of unamortized deferred financing costs, respectively)						September 15, 2028						6.88%						498						497
Senior Notes due 2029 (net of $3 and $4 of unamortized deferred financing costs, respectively)						February 15, 2029						4.75%						897						896
Senior Notes due 2030 (net of $2 and $2 of unamortized deferred financing costs, respectively)						June 1, 2030						4.63%						498						498
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 $2 and $2 of unamortized deferred financing costs, respectively)						April 15, 2033						5.75%						498						498
Obligations under financing leases						2026-2033						1.26%-8.31%						565						557
Other debt						January 1, 2031						5.75%						8						8
Total debt																		5,167						5,200
Current portion of long-term debt																		(142)						(137)
Long-term debt																		$	5,025					$	5,063

We had outstanding borrowings totaling $388 million and had issued letters of credit totaling $315 million under the ABL Facility as of March 28, 2026. There was remaining capacity of $1,597 million under the ABL Facility as of March 28, 2026.

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 may 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 $2.9 billion of restricted payment capacity under these covenants and approximately $1.4 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 28, 2026.

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.

Every quarter, we review rating agency changes for all of the lenders that have a continuing obligation to provide us with funding. We are not aware of any facts that indicate our lenders will not be able to comply with the contractual terms of their agreements with us. We continue to monitor the credit markets generally and the strength of our lender counterparties.

From time to time, we may repurchase or otherwise retire our debt and take other steps to reduce our debt or otherwise improve our leverage. These actions may include open market repurchases, negotiated repurchases, and other retirements of outstanding debt. The amount of debt that may be repurchased or otherwise retired, if any, will depend on market conditions, our debt trading levels, our cash position, and other considerations. Any potential debt reduction or other debt retirement could require significant use of our other available liquidity and capital resources.

See Note 9, Debt, in our consolidated financial statements, for a further description of our indebtedness.

Cash Flows

The following table presents condensed highlights from our Consolidated Statements of Cash Flows for the periods presented:

			13 weeks ended
			March 28, 2026						March 29, 2025
Net income			$	116					$	115
Changes in operating assets and liabilities			16						122
Other adjustments			162						154
Net cash provided by operating activities			294						391
Net cash used in investing activities			(97)						(130)
Net cash used in financing activities			(189)						(219)
Net increase in cash, cash equivalents and restricted cash			8						42
Cash, cash equivalents and restricted cash−beginning of period			41						59
Cash, cash equivalents and restricted cash−end of period			$	49					$	101

Operating Activities

Cash flows provided by operating activities was $294 million for the 13 weeks ended March 28, 2026, representing a decrease of $97 million as compared to cash flows provided by operating activities of $391 million for the 13 weeks ended March 29, 2025, driven by changes in operating assets and liabilities including an increase in tax payments for the 13 weeks ended March 28, 2026 compared to the 13 weeks ended March 29, 2025.

Investing Activities

Cash flows used in investing activities in the 13 weeks ended March 28, 2026 and March 29, 2025 included cash expenditures of $98 million and $84 million, respectively, related to investments in information technology, property and equipment and construction of and improvements to 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 was approximately $85 million. Investing activities for the 13 weeks ended March 29, 2025, also included cash proceeds from the sale of Freshway of $38 million.

We expect total cash capital expenditures in fiscal year 2026 to be between $400 million and $450 million. We expect to fund our capital expenditures with available cash or cash generated from operations.

Financing Activities

Cash flows used in financing activities in the 13 weeks ended March 28, 2026 included $41 million in net payments under the ABL Facility and $35 million in scheduled payments under our financing leases. Financing activities in the 13 weeks ended March 28, 2026 also included $75 million common stock repurchased under the May 2025 Repurchase Program, $7 million of proceeds received from stock purchases under our employee stock purchase plan, $7 million of proceeds from the exercise of employee stock options, which were offset by $51 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 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.

Other Obligations and Commitments

There have been no material changes in the Company's cash obligations and commitments since the end of fiscal year 2025. Refer to Item 7 of our 2025 Annual Report for additional information regarding the Company's cash obligations and commitments as of the end of fiscal year 2025.

Retirement Plans

See Note 10, Retirement Plans, in our consolidated financial statements for a description of our retirement plans.

Off-Balance Sheet Arrangements

We had $315 million of letters of credit outstanding primarily securing the Company's obligations with respect to certain real estate leases, under the ABL Facility as of March 28, 2026.

We held approximately $377 million of surety bonds, as of March 28, 2026 and $362 million as of December 27, 2025, 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.

Critical Accounting Policies and Estimates

We have prepared the financial information in this Quarterly Report in accordance with GAAP. Preparing the Company's consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during these reporting periods. We base our estimates and judgments on historical experience and other factors we believe are reasonable under the circumstances. These assumptions form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Part II, Item 7-"Management's Discussion and Analysis of Financial Condition and Results of Operations" of the 2025 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 13 weeks ended March 28, 2026.

Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements, see Note 2, Recent Accounting Pronouncements, in our consolidated financial statements.