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What changed in US Foods Holding Corp.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of US Foods Holding Corp.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+218 added−211 removedSource: 10-K (2025-02-13) vs 10-K (2024-02-15)

Top changes in US Foods Holding Corp.'s 2024 10-K

218 paragraphs added · 211 removed · 180 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

44 edited+12 added−10 removed57 unchanged
Biggest changeOn December 1, 2023, USF completed the acquisition of Saladino’s Foodservice (“Saladino’s”), a broadline distributor in California, for a purchase price of $56 million. The acquisition allows US Foods to further expand its reach into California. Integrating the above acquisitions and realizing synergies from these acquisitions are key priorities for the Company.
Biggest changeThe acquisition allows US Foods to further expand its reach into Tennessee and distribution channels in the southeast United States. Integrating the above acquisition and realizing synergies from these acquisitions are key priorities for the Company. The Company will selectively pursue acquisition opportunities in the future if they are aligned with and enhance our strategic priorities.
GPOs are primarily comprised of customers in the healthcare, hospitality, education, and government/military industries. There are several important dynamics affecting the industry, including: • Evolving consumer tastes and preferences. Consumers demand healthy and authentic food choices with fewer artificial ingredients, and they value locally-harvested and sustainably-manufactured food and packaging products.
GPOs are primarily comprised of customers in the healthcare, hospitality, education, and government/military industries. 2 There are several important dynamics affecting the industry, including: • Evolving consumer tastes and preferences. Consumers demand healthy and authentic food choices with fewer artificial ingredients, and they value locally-harvested and sustainably-manufactured food and packaging products.
Our extensive network of over 70 distribution facilities and fleet of over 6,500 trucks, along with approximately 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.
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.
Food and Drug Administration 4 (“FDA”) and the U.S. Department of Agriculture (“USDA”), and other federal, state and local laws and regulations relating to our operations and products that could restrict the sale of certain products or result in enforcement actions by federal, state and local government agencies under applicable standards.
Food and Drug Administration (“FDA”) and the U.S. Department of Agriculture (“USDA”), and other federal, state and local laws and regulations relating to our operations and products that could restrict the sale of certain products or result in enforcement actions by federal, state and local government agencies under applicable standards.
We do not have any patents or licenses that are material to our business. Suppliers Our suppliers generally are large corporations selling national brand name and private brand products. Additionally, regional and local suppliers support targeted geographic initiatives and private label programs requiring regional and local distribution.
We do not have any patents or licenses that are material to our business. 4 Suppliers Our suppliers generally are large corporations selling national brand name and private brand products. Additionally, regional and local suppliers support targeted geographic initiatives and private label programs requiring regional and local distribution.
From July 2017 until November 2023, Mr. Flitman served as a member of the board of directors of Veritiv Corporation, where he served as the Chair of the Compensation and Leadership Development Committee. Mr. Locascio has served as Executive Vice President, Chief Financial Officer since February 2017. Mr.
From July 2017 until November 2023, Mr. Flitman served as a member of the board of directors of Veritiv Corporation, where he served as the Chair of the Compensation and Leadership Development Committee. 7 Mr. Locascio has served as Executive Vice President, Chief Financial Officer since February 2017. Mr.
In addition, many ethnic food offerings are becoming more mainstream as consumers show a greater willingness to try new flavors and cuisines. Changes in consumer preferences create opportunities for new and innovative products and for unique food- 2 away-from-home destinations.
In addition, many ethnic food offerings are becoming more mainstream as consumers show a greater willingness to try new flavors and cuisines. Changes in consumer preferences create opportunities for new and innovative products and for unique food- away-from-home destinations.
Given our mix of products and services, we are considered a broadline distributor. A number of adjacent competitors also serve the U.S. foodservice distribution industry, including cash-and-carry retailers, commercial wholesale outlets, commercial website outlets, and grocery stores. Customer buying decisions are based on the assortment of product offered, quality, price, and service levels.
Given our mix of products and services, we are considered a broadline distributor. A number of adjacent competitors also serve the U.S. foodservice distribution industry, including cash-and-carry retailers, commercial wholesale or club, commercial website outlets, and grocery stores. Customer buying decisions are based on the assortment of product offered, quality, price, and service levels.
Ha served as Vice President, Chief Counsel - Corporate Governance, Mergers and Acquisitions and Cardiovascular Portfolio for Medtronic PLC from September 2016 to September 2023, where she was responsible for all corporate governance and securities matters, including ESG strategy and disclosures, shareholder and Board of Director matters and U.S. and Irish public company fillings and disclosures.
Ha served as Vice President, Chief Counsel - Corporate Governance, Mergers and Acquisitions and Cardiovascular Portfolio for Medtronic PLC from September 2016 to September 2023, where she was responsible for all corporate governance and securities matters, including ESG strategy and disclosures, shareholder and Board of Director matters and U.S. and Irish public company filings and disclosures.
We purchase from thousands of suppliers, with no suppliers accounting for more than 5% of our aggregate purchases in fiscal year 2023. Seasonality Our business does not fluctuate significantly from quarter to quarter and, as a result, is not considered seasonal.
We purchase from thousands of suppliers, with no suppliers accounting for more than 5% of our aggregate purchases in fiscal year 2024. Seasonality Our business does not fluctuate significantly from quarter to quarter and, as a result, is not considered seasonal.
Flitman previously served as Executive Vice President of Performance Food Group Company and was President and Chief Executive Officer of its Performance Foodservice division from January 2015 to September 2018. From January 2014 to December 2014, Mr. Flitman served as Chief Operating Officer and President USA & Mexico of Univar Solutions Inc. Mr.
In addition, Mr. Flitman previously served as Executive Vice President of Performance Food Group Company and was President and Chief Executive Officer of its Performance Foodservice division from January 2015 to September 2018. From January 2014 to December 2014, Mr. Flitman served as Chief Operating Officer and President USA & Mexico of Univar Solutions Inc. Mr.
Anticorruption Because we are organized under the laws of the State of Delaware and our principal place of business is in the U.S., we are considered a “domestic concern” under the Foreign Corrupt Practices Act and are covered by its anti-bribery provisions. Human Capital Management Employees As of December 30, 2023, we employed a total of approximately 30,000 associates.
Anticorruption Because we are organized under the laws of the State of Delaware and our principal place of business is in the U.S., we are considered a “domestic concern” under the Foreign Corrupt Practices Act and are covered by its anti-bribery provisions. Human Capital Management Employees As of December 28, 2024, we employed a total of approximately 30,000 associates.
Sales to our top 50 customers, including group purchasing organizations (“GPOs”), represented approximately 44% of our net sales in fiscal year 2023. We have entered into contractual relationships with certain GPOs that negotiate pricing, delivery and other terms on behalf of their members. In fiscal year 2023, GPOs accounted for approximately 23% of our net sales.
Sales to our top 50 customers, including group purchasing organizations (“GPOs”), represented approximately 47% of our net sales in fiscal year 2024. We have entered into contractual relationships with certain GPOs that negotiate pricing, delivery and other terms on behalf of their members. In fiscal year 2024, GPOs accounted for approximately 25% of our net sales.
Of these: • substantially all were employed in the United States and on a full-time basis; • approximately 69% of our associates were non-exempt, or paid on an hourly basis; 5 • approximately 6,300 of our associates were members of local unions associated with the International Brotherhood of Teamsters and other labor organizations; and • approximately 86% of our associates were working in “field” based roles within our broadline distribution, retail operations and broadline support business production facilities, with the remaining 14% working in shared service or corporate roles.
Of these: • substantially all were employed in the United States and on a full-time basis; • approximately 70% of our associates were non-exempt, or paid on an hourly basis; • approximately 6,600 of our associates were members of local unions associated with the International Brotherhood of Teamsters and other labor organizations; and • approximately 88% of our associates were working in “field” based roles within our broadline distribution, retail operations and broadline support business production facilities, with the remaining 12% working in shared service or corporate roles.
During fiscal year 2023, 14 CBAs covering approximately 1,100 union associates were renegotiated. During fiscal year 2024, 16 CBAs covering approximately 1,200 union associates will be subject to renegotiation.
During fiscal year 2024, 14 CBAs covering approximately 1,100 union associates were renegotiated. During fiscal year 2025, 16 CBAs covering approximately 1,750 union associates will be subject to renegotiation.
Our target customer types — independent restaurants, healthcare and hospitality — value foodservice distributors with a broad product offering and value-added services that help them be efficient and effective in running their operations. As described in more detail below, our GREAT FOOD.
Our target customer types — independent restaurants, healthcare and hospitality — value foodservice distributors with a broad product offering and value-added services that help them be efficient and effective in running their operations.
Prior to that, Mr. Flitman served as President and Chief Executive Officer and a member of the board of directors of BMC Stock Holdings, Inc. from August 2018 until its merger with Builders FirstSource. In addition, Mr.
Flitman previously served as Chief Executive Officer and a member of the board of directors of Builders FirstSource, Inc., serving in this role since April 2021. Prior to that, Mr. Flitman served as President and Chief Executive Officer and a member of the board of directors of BMC Stock Holdings, Inc. from August 2018 until its merger with Builders FirstSource.
In many categories, we offer products under a spectrum of private brands based on price and quality, covering a range of values and qualities. The table below presents the sales mix for our principal product categories for fiscal years 2023, 2022 and 2021.
Products and Brands We have a broad assortment of products and brands designed to meet customers’ needs. In many categories, we offer products under a spectrum of private brands based on price and quality, covering a range of values and qualities. The table below presents the sales mix for our principal product categories for fiscal years 2024, 2023 and 2022.
Fiscal Years 2023 2022 2021 (in millions) Meats and seafood $ 11,953 $ 12,375 $ 11,245 Dry grocery products 6,407 5,758 4,979 Refrigerated and frozen grocery products 6,053 5,253 4,453 Dairy 3,727 3,564 2,801 Equipment, disposables and supplies 3,571 3,536 3,090 Produce 1,915 1,840 1,454 Beverage products 1,971 1,731 1,465 Total Net sales $ 35,597 $ 34,057 $ 29,487 We have registered the trademarks US Foods ® , Food Fanatics ® , and CHEF’STORE ® as part of our overall brand strategy and our retail outlets.
Fiscal Years 2024 2023 2022 (in millions) Meats and seafood $ 12,930 $ 11,953 $ 12,375 Dry grocery products 6,624 6,407 5,758 Refrigerated and frozen grocery products 6,423 6,053 5,253 Dairy 4,036 3,727 3,564 Equipment, disposables and supplies 3,567 3,571 3,536 Produce 2,136 1,915 1,840 Beverage products 2,161 1,971 1,731 Total Net sales $ 37,877 $ 35,597 $ 34,057 We have registered the trademarks US Foods ® , Food Fanatics ® , and CHEF’STORE ® as part of our overall brand strategy and our retail outlets.
MADE EASY . ™ strategy resonates with these types of customers, and for this reason, we believe our growth prospects with these customers are greater than with other customer types. In fiscal year 2023, no single customer represented more than 2% of our total customer sales.
As described in more detail below, our WE HELP YOU MAKE IT™ , strategy resonates with these types of customers, and for this reason, we believe our growth prospects with these customers are greater than with other customer types. In fiscal year 2024, no single customer represented more than 2% of our total customer sales.
Environmental Our operations are subject to a broad range of U.S. federal, state, and local environmental laws and regulations, as well as zoning and building regulations.
Matters such as weight and dimension of equipment also fall under U.S. federal and state regulations. 5 Environmental Our operations are subject to a broad range of U.S. federal, state, and local environmental laws and regulations, as well as zoning and building regulations.
We must comply with the regulations promulgated by the Federal Motor Carrier Safety Administration, including those relating to drug and alcohol testing and hours of service for our drivers. Matters such as weight and dimension of equipment also fall under U.S. federal and state regulations.
We must comply with the regulations promulgated by the Federal Motor Carrier Safety Administration, including those relating to drug and alcohol testing and hours of service for our drivers.
In addition, we provide training and development programs that enable new associates to be safe and productive including: Sales Readiness, which gives new selling associates tools, resources and peer networking opportunities to help them succeed, and Selector Onboarding, which trains our warehouse selectors on safety, accuracy and performance standards.
In addition, we provide training and development programs that enable new associates to be safe and productive including: Sales Readiness, which gives new selling associates tools, resources and peer networking opportunities to help them succeed, and Selector Onboarding, which trains our warehouse selectors on safety, accuracy and performance standards. 6 Diversity and Inclusion As a company, we are committed to building a diverse and inclusive workforce and hiring the best talent that reflects the customers and communities we serve.
Hancock has served as Executive Vice President, Chief Supply Chain Officer since November 2020. Prior to joining US Foods, Mr.
Guberman joined US Foods in 1991, originally as part of Kraft/Alliant Foodservice. Mr. Hancock has served as Executive Vice President, Chief Supply Chain Officer since November 2020. Prior to joining US Foods, Mr.
Collective Bargaining Agreements As of December 30, 2023, we were party to 57 collective bargaining agreements (“CBAs”) covering 6,300, or 21%, of our associates working at 31 (or 41%) of our distribution facilities, 4 of our broadline support business production facilities and 23 of our cash and carry locations.
Collective Bargaining Agreements As of December 28, 2024, we were party to 58 collective bargaining agreements (“CBAs”) covering 6,600, or 22%, of our associates working at 33 (or 43%) of our distribution facilities, 4 of our broadline support business production facilities and 24 of our cash and carry locations.
Through this strategy, we also serve our customers as consultants and business partners, bringing our customers personalized solutions and tailoring a suite of innovative products and services to fit each customer’s needs.
Through this strategy, we deliver unmatched value for customers as consultants and business partners, bringing them personalized solutions and tailoring a suite of innovative products and services to fit their needs. More Quality.
Grainger, Inc until November 2011 and before joining Grainger, she was Associate General Counsel at Baxter Healthcare Corporation for over 9 years from January 2002 until June 2011. Prior to joining Baxter Healthcare, Ms.
Grainger, Inc until November 2011 and before joining Grainger, she was Associate General Counsel at Baxter Healthcare Corporation for over 9 years from January 2002 until June 2011. Prior to joining Baxter Healthcare, Ms. Ha was an attorney in the Office of the General Counsel at Arthur Andersen LLP and a partner at Bell, Boyd & Lloyd law firm. Mr.
We believe that we have the scale, foresight and agility required to proactively address these trends and, in turn, benefit from higher sales growth, greater customer retention, increased private label penetration, and improved profitability. Our Business Strategy Our GREAT FOOD. MADE EASY.™ strategy is built on a differentiation focus in product assortment, customer experience and innovation.
We believe that we have the scale, foresight and agility required to proactively address these trends and, in turn, benefit from higher sales growth, greater customer retention, increased private label penetration, and improved profitability. Our Business Strategy Our WE HELP YOU MAKE IT™ brand promise is founded on our quality products and services but also on our commitment to innovation.
MADE EASY.™ strategy enables us to reach more customers and create deeper relationships with existing ones, particularly within our target customer types—independent restaurants, healthcare, and hospitality—and drive increased penetration of our private brand products. Further, we believe this strategy positions us to make the most of the continued growth in food-away-from-home consumption and consumer preferences for innovative, on-trend flavors.
We believe our WE HELP YOU MAKE IT™ strategy enables us to reach more customers and create deeper relationships with existing ones, particularly within our target customer types—independent restaurants, healthcare, and hospitality—and drive increased penetration of our private brand products.
In our facilities, our safety performance teams receive annual training and are focused on improving safety engagement and performance throughout our operations. Our Driver Safety Program has been implemented across all markets to train our drivers on transportation safety. We utilize technology to improve driver safety from distracted driver alerts to collision mitigation technology.
Our Get Home Safe campaign, directed at drivers and operations personnel, outlines actions aimed at reducing risks and improving safety routines. In our facilities, our safety performance teams receive annual training and are focused on improving safety engagement and performance throughout our operations. Our Driver Safety Program has been implemented across all markets to train our drivers on transportation safety.
Guberman served the Company as Chief Merchandising Officer from July 2015 to January 2017, Senior Vice President, Merchandising and Marketing Operations from January 2012 to July 2015 and Division President from August 2004 to December 2011. Mr. Guberman joined US Foods in 1991, originally as part of Kraft/Alliant Foodservice. Mr.
Guberman has served as Executive Vice President, Nationally Managed Business since August 2016 and as Chief Transformation Officer since May 2023. Mr. Guberman served the Company as Chief Merchandising Officer from July 2015 to January 2017, Senior Vice President, Merchandising and Marketing Operations from January 2012 to July 2015 and Division President from August 2004 to December 2011. Mr.
The GREAT FOOD portion of our strategy is anchored by leading quality and innovation in produce and center-of-the-plate and other innovative products such as those featured in Scoop™, a program that introduces innovative and on-trend products multiple times a year, helping our customers keep their menus fresh and delivering back-of-house convenience to reduce their labor and food costs.
This program introduces innovative and on-trend products multiple times a year, helping our customers keep their menus fresh and delivering back-of-house convenience to reduce their labor and food costs. A growing part of our Scoop portfolio is our Serve Good® program.
Additionally, US Foods Pronto™ service allows restaurant operators to receive smaller orders more frequently. All of these channels provide our customers options to shop their way. 3 We believe our GREAT FOOD.
Our US Foods Direct™ service more than doubles our product assortment and provides customers with access to thousands of specialty products which ship directly to them from the supplier. Additionally, US Foods Pronto™ service allows restaurant operators to receive smaller orders more frequently. All of these channels provide our customers options to shop their way. 3 More tools.
Tonnison 55 Executive Vice President, Chief Information and Digital Officer David Works 56 Executive Vice President, Chief Human Resources Officer Mr. Flitman has served as the Chief Executive Officer since January 2023. Mr. Flitman previously served as Chief Executive Officer and a member of the board of directors of Builders FirstSource, Inc., serving in this role since April 2021.
Taylor 52 Executive Vice President, Field Operations and Local Sales John A. Tonnison 56 Executive Vice President, Chief Information and Digital Officer David Works 57 Executive Vice President, Chief Human Resources Officer Mr. Flitman has served as the Chief Executive Officer since January 2023. Mr.
As an enabler of this strategy, we have invested in embedding continuous improvement in our operations to increase service consistency and efficiency and to engage employees in improving our day-to-day processes. Acquisitions have also historically played an important role in supporting the execution of our growth strategy.
Further, we believe this strategy positions us to make the most of the continued growth in food-away-from-home consumption and consumer preferences for innovative, on-trend flavors. As an enabler of this strategy, we have invested in embedding continuous improvement in our operations to increase service consistency and efficiency and to engage employees in improving our day-to-day processes.
These associate-led groups strengthen networking among colleagues and further personal and professional development. 6 Ongoing listening sessions between the ERGs and our executive leadership team allow for open dialogue and the identification of new opportunities to bolster our diversity and inclusion strategy and strengthen associate engagement.
Ongoing listening sessions between the EBRGs and our executive leadership team allow for open dialogue and the identification of new opportunities to bolster our diversity and inclusion strategy and strengthen associate engagement. Health and Safety We are committed to continuously driving an enhanced safety culture built on education, awareness and associate engagement.
A growing part of our Scoop portfolio is our Serve Good® program. The Serve Good program features more than 800 products that are sustainably-sourced or contribute to waste reduction. Our private brand portfolio is guided by a spirit of innovation and a commitment to delivering superior quality products and value to customers.
Together there are over 4,000 products in our Serve Good and Serve You portfolios.Our private brand portfolio is guided by a spirit of innovation and a commitment to delivering superior quality products and value to customers.
Guberman 59 Executive Vice President, Nationally Managed Business & Chief Transformation Officer William S. Hancock 44 Executive Vice President, Chief Supply Chain Officer David Poe 50 Executive Vice President, Chief Merchandising Officer Randy J. Taylor 51 Executive Vice President, Field Operations and Local Sales David A. Rickard 53 Executive Vice President, Strategy and Revenue Management John A.
Locascio 52 Executive Vice President, Chief Financial Officer Martha Ha 59 Executive Vice President, General Counsel and Corporate Secretary Steven M. Guberman 60 Executive Vice President, Nationally Managed Business & Chief Transformation Officer William S. Hancock 45 Executive Vice President, Chief Supply Chain Officer David Poe 51 Executive Vice President, Chief Merchandising Officer Randy J.
From September 1997 to March 2014, Mr. Rickard was Partner and Managing Director at the Boston Consulting Group, a consulting firm. Mr. Rickard began his career with Charles River Associates, an economic consulting firm. Mr. Tonnison has served as Executive Vice President, Chief Information and Digital Officer since July 2021. Prior to joining US Foods, Mr.
Mr. Tonnison has served as Executive Vice President, Chief Information and Digital Officer since July 2021. Prior to joining US Foods, Mr.
This means on-time and complete orders and customer choice via the omni-channel offering we have to serve our customers. These offerings are supported with technology and expertise that make it easier to transact with us and run their businesses. Our mobile technology platform provides customers with a personalized digital ordering experience and easy-to-use business analytics tools.
MOXē is the industry leading platform that makes it easy for our customers to transact with us and run their businesses. Our mobile technology platform provides customers with a personalized digital ordering experience and easy-to-use business analytics tools. Digital solutions are utilized in over 80% of our sales transactions.
We have 90 cash and carry locations to provide more customers with a retail option in between deliveries and to cost effectively serve more price-conscious and smaller customers. Our US Foods Direct™ service more than doubles our product assortment and provides customers with access to thousands of specialty products which ship directly to them from the supplier.
As noted above, our strategy of making it easier for our customers includes servicing our customers through multiple channels. We have over 90 cash and carry locations to provide more customers with a retail option in between deliveries and to cost effectively serve more price-conscious and smaller customers.
Information about our Executive Officers The section below provides information regarding our executive officers as of February 15, 2024: Name Age Position David E. Flitman 59 Chief Executive Officer Dirk J. Locascio 51 Executive Vice President, Chief Financial Officer Martha Ha 58 Executive Vice President, General Counsel and Corporate Secretary Steven M.
We utilize technology to improve driver safety from distracted driver alerts to collision mitigation technology. Information about our Executive Officers The section below provides information regarding our executive officers as of February 13, 2025: Name Age Position David E. Flitman 60 Chief Executive Officer Dirk J.
While we offer products under a spectrum of private brands, and at different price points, all are designed to deliver quality, performance and value to our customers. MADE EASY is aimed at providing operators reliability and flexibility in our service model supported by tools and resources to support them in running their businesses.
While we offer products under a spectrum of private brands, and at different price points, all are designed to deliver quality, performance and value to our customers. More Deliveries. This means more on-time and complete orders and customer choice via the omni-channel offering we have to serve our customers.
Our portfolio of value-added services helps customers address key pain points like food waste, back-of-house operations and diner traffic. By delivering our products and services through a differentiated team-based selling approach, we provide customers access to a diverse team of experts including chefs, center-of-the-plate and produce specialists and restaurant operations consultants.
Customers utilizing these solutions tend to purchase more products and have stronger commercial relationships with us. We also have Check Business Tools, our portfolio of value-added services that helps customers address key pain points like food waste, back-of-house operations and diner traffic.
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Our Company We are among America’s great food companies and leading foodservice distributors. Built through organic growth and acquisitions, we trace our roots back over 150 years to a number of heritage companies with rich legacies in food innovation and customer service. We strive to inspire and empower chefs and foodservice operators to bring great food experiences to consumers.
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Our Company At US Foods, we strive to inspire and empower chefs and foodservice operators to bring great food experiences to consumers.
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This mission is supported by our strategy of GREAT FOOD. MADE EASY.™ , which is centered on providing customers with the innovative products, business support and technology solutions they need to operate their businesses profitably.
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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; (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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More than 80% of our sales utilize our digital solutions. Customers utilizing these solutions tend to purchase more products and have stronger commercial relationships with us. As noted above, our strategy of making it easier for our customers includes servicing our customers through multiple channels.
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Our relationship with our customer 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.
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On July 7, 2023, USF completed the acquisition of Renzi Foodservice (“Renzi”), a broadline distributor in New York, for a purchase price of $142 million (less the amount of the post-closing working capital adjustment, which was $2 million). The acquisition allows US Foods to further expand its reach into central upstate New York.
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A portion of our strategy is anchored by leading quality and innovation in our own Exclusive Brands that span the categories of produce and center-of-the-plate and includes our commitment to innovative products through Scoop™.
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The Company will selectively pursue acquisition opportunities in the future if they are aligned with and enhance our strategic priorities. Products and Brands We have a broad assortment of products and brands designed to meet customers’ needs.
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The Serve Good program, including Progress Check™, features more than 900 products that are sustainably-sourced or contribute to waste reduction. We also recently launched our Serve You portfolio of products that is aligned to consumer preferences for plant-forward, gluten-free and cleaner ingredients.
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Diversity and Inclusion As a company, we are committed to building a diverse and inclusive workforce and hiring the best talent that reflects the customers and communities we serve.
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This suite of tools includes personalized, custom menu design all the way through integrated point of sale systems that enable a more seamless order experience. More Support. By delivering our products and services through a differentiated team-based selling approach, we provide customers access to a diverse team of experts.
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We continue to cultivate a culture of inclusion through training programs for our leaders and associates and by sponsoring ten Employee Resource Groups (“ERGs”): ADAPT - Ability and Disability Allies Partnering Together; BRIDGE - Black Resource for Inclusion, Diversity, Growth and Empowerment; Collective Asian Network; HOLA - Hispanic Organization for Leadership and Advancement; LINK-UP – Linking Information, Networks and Knowledge; Multigenerational Empowerment Resource Group for Employees; PACT - Parents and Caregivers Together; Pride Alliance; Those Who Serve - Military ERG; and WIN - Women in Network.
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In addition to our tenured and experienced sales representatives, our team includes chefs, center-of-the-plate and produce specialists and restaurant operations consultants.
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Health and Safety We are committed to continuously driving an enhanced safety culture built on education, awareness and associate engagement. Our Get Home Safe campaign, directed at drivers and operations personnel, outlines actions aimed at reducing risks and improving safety routines.
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Acquisitions have also historically played an important role in supporting the execution of our growth strategy.
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Ha was an attorney in the Office of the General Counsel at Arthur Andersen LLP and a partner at Bell, Boyd & Lloyd law firm. 7 Mr. Guberman has served as Executive Vice President, Nationally Managed Business since August 2016 and as Chief Transformation Officer since May 2023. Mr.
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On April 5, 2024, USF completed the acquisition of IWC Food Service, a broadline distributor in Tennessee, for a purchase price of $220 million (less the amount of cash received, which was $6 million) for a net purchase price of $214 million, subject to adjustments.
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Mr. Rickard has served as Executive Vice President, Strategy and Revenue Management, since November 2015. Prior to joining US Foods, Mr. Rickard served from March 2014 to November 2015 as Vice President of Uline Corporation, a distributor of shipping, industrial, and packing materials, and was responsible for identifying, leading and implementing improvement initiatives across all aspects of the organization.
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Overview We strive to inspire and empower chefs and foodservice operators to bring great food experiences to consumers.
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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; more quality products, including our large portfolio of exclusive brands, more tools, centering on our MOXē business platform, more support from our sellers and our team of experts and lastly, more deliveries, enabled by our traditional broadline services and Pronto™ program.
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We continue to cultivate a culture of inclusion through training programs for our leaders and associates and by sponsoring ten Employee Business Resource Groups (“EBRGs”). These associate-led groups strengthen networking among colleagues and further personal and professional development.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAny event that damages our reputation or calls into question the safety or integrity of our products, whether justified or not, could quickly and negatively affect our business, financial condition and results of operations. 13 Risks Relating to Human Capital Management We face risks related to labor relations, increased labor costs and the availability of qualified labor, any of which could have an adverse effect on our business, financial condition and results of operations.
Biggest changeAny event that damages our reputation or calls into question the safety or integrity of our products, whether justified or not, could quickly and negatively affect our business, financial condition and results of operations.
Further, the market price of our common stock could be subject to significant fluctuation or otherwise be adversely affected by the events, risks and uncertainties described above. General Risk Factors 17 Changes in applicable tax laws and regulations and the resolution of tax disputes may adversely affect our business, financial condition and results of operations.
Further, the market price of our common stock could be subject to significant fluctuation or otherwise be adversely affected by the events, risks and uncertainties described above. 17 General Risk Factors Changes in applicable tax laws and regulations and the resolution of tax disputes may adversely affect our business, financial condition and results of operations.
These actions and conditions include changes in supplier pricing practices (including promotional 9 allowances); labor shortages, work slowdowns, work interruptions, strikes or other job actions by employees of suppliers or carriers; government shutdowns; severe weather and climate conditions; crop conditions; product or raw material scarcity; water shortages; outbreak of food-borne illnesses; product recalls; transportation interruptions; unavailability of fuel or increases in fuel costs; competitive demands; impact of climate change; and natural disasters, pandemics, terrorist attacks, international hostilities, civil insurrection or social unrest; or any other catastrophic events.
These actions and conditions include changes in supplier pricing practices (including promotional allowances); labor shortages, work slowdowns, work interruptions, strikes or other job actions by employees of suppliers or carriers; government shutdowns; severe weather and climate conditions; crop conditions; product or raw material scarcity; water shortages; outbreak of food-borne illnesses; product recalls; transportation interruptions; unavailability of fuel or increases in fuel costs; competitive demands; impact of climate change; and natural disasters, pandemics, terrorist attacks, international hostilities, civil insurrection or social unrest; or any other catastrophic events.
Changes in legal or regulatory requirements (such as new product safety requirements, revised regulatory requirements for the sourcing, processing and packaging of products, and requirements to restrict or phase-out certain chemicals and ozone-depleting substances or otherwise regulating greenhouse gas emissions), or evolving interpretations of existing legal or regulatory requirements, may result in increased compliance cost, capital expenditures and other financial obligations including costs to upgrade, phase out, modify or replace products or equipment that could adversely affect our business, financial condition and results of operations.
Changes in legal or regulatory requirements (such as new product safety requirements, revised regulatory requirements for the sourcing, processing and packaging of products, and requirements to restrict or phase-out certain chemicals and ozone-depleting substances or otherwise regulating greenhouse gas emissions), or evolving interpretations of existing legal or regulatory requirements, may result in increased compliance cost, capital expenditures and other financial obligations including costs to upgrade, phase out, modify or 12 replace products or equipment that could adversely affect our business, financial condition and results of operations.
Increased compliance costs and expenses due to the impacts of climate change on our business, as well as additional legal or regulatory requirements regarding climate change or designed to reduce or mitigate the effects of carbon dioxide and other GHG emissions on the environment, may cause disruptions in, or an increase in the costs associated with, the running of our business, particularly with regard to our distribution and supply chain operations.
Increased compliance costs and expenses due to the impacts of climate change on our business, as well as additional legal or regulatory requirements regarding climate change or designed to reduce or mitigate the effects of carbon dioxide and other GHG emissions on the environment, may cause disruptions in, or an increase in the costs associated with, the running of our business, 11 particularly with regard to our distribution and supply chain operations.
Given the complexity of these laws and the requirements they place on businesses regarding the 16 collection, storage, handling, use, disclosure, transfer and security of personal data, it is important for us to understand their impact and respond accordingly. Failure to comply with data privacy laws can result in substantial fines or penalties, legal liability and reputational damage.
Given the complexity of these laws and the requirements they place on businesses regarding the collection, storage, handling, use, disclosure, transfer and security of personal data, it is important for us to understand their impact and respond accordingly. Failure to comply with data privacy laws can result in substantial fines or penalties, legal liability and reputational damage.
If we do not meet our publicly stated goals, then we may experience a negative reaction from the media, stockholders, activists and other interested stakeholders, and any perception that we have failed to act responsibly regarding climate change, whether or not valid, could result in adverse publicity and negatively affect our business and reputation.
If we do not meet our publicly stated goals, then we may experience a negative reaction from the media, stockholders, activists, customers and other interested stakeholders, and any perception that we have failed to act responsibly regarding climate change, whether or not valid, could result in adverse publicity and negatively affect our business and reputation.
Furthermore, extreme weather conditions may disrupt critical infrastructure in the United States and interrupt or impede access to our customers’ facilities, reduce the number of 18 consumers who visit our customers’ facilities, interrupt our suppliers’ production or shipments or increase our suppliers’ product costs, all of which could have an adverse effect on our business, financial condition and results of operations.
Furthermore, extreme weather conditions may disrupt critical infrastructure in the United States and interrupt or impede access to our customers’ facilities, reduce the number of consumers who visit our customers’ facilities, interrupt our suppliers’ production or shipments or increase our suppliers’ product costs, all of which could have an adverse effect on our business, financial condition and results of operations.
Our suppliers may also be affected by higher costs to source or produce and transport products, as well as by other related expenses that they pass through to their customers, which could result in higher costs for the products they supply to us. We do not control the actual production of most of the products we sell.
Our suppliers may also be affected by higher costs to source or produce and transport products, as well as by other related expenses that they pass through to their customers, which could result in higher costs for the products they supply to us. We do not control the actual production of most of the products 9 we sell.
Because these customers are not contractually obligated to continue purchasing products from us, we cannot be assured that the volume and/or number of our customers’ purchase orders will remain consistent or increase or that we will be able to maintain our existing customer base. Further, some of our customers purchase their products under arrangements with GPOs.
Because these customers are not always contractually obligated to continue purchasing products from us, we cannot be assured that the volume and/or number of our customers’ purchase orders will remain consistent or increase or that we will be able to maintain our existing customer base. Further, some of our customers purchase their products under arrangements with GPOs.
Some of our facilities and our customers’ and suppliers’ facilities are located in areas that may be subject to extreme, and occasionally prolonged, weather conditions, including hurricanes, tornadoes, blizzards, and extreme cold. Extreme weather conditions, whether caused by global climate change or otherwise, may interrupt our operations in such areas.
Some of our facilities and our customers’ and suppliers’ facilities are located in areas that may be subject to extreme, and occasionally prolonged, weather conditions, including hurricanes, tornadoes, blizzards, and extreme cold. Extreme weather conditions, whether 18 caused by global climate change or otherwise, may interrupt our operations in such areas.
Our ability to meet these and other related goals depends in part on significant technological advancements with respect to the development and availability of reliable, affordable and sustainable alternative solutions, including electric and other alternative fuel vehicles as well as alternative energy sources, which may not be developed or be available to us in the timeframe needed to achieve these goals.
Our ability to meet these and other related goals depends in part on significant technological advancements with respect to the development and availability of reliable, affordable and sustainable alternative solutions, including electric and other alternative fuel vehicles as well as alternative energy sources, which may not be developed or be available to us in the timeframe or at the levels needed to achieve these goals.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 9, Goodwill and Other Intangibles, in our consolidated financial statements. Risks Relating to Product Safety and Regulatory Requirements Our business is subject to significant governmental regulation, and failure to comply with applicable governmental regulations may lead to lawsuits, investigations and other liabilities and restrictions on our operations.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 8, Goodwill and Other Intangibles, in our consolidated financial statements. Risks Relating to Product Safety and Regulatory Requirements Our business is subject to significant governmental regulation, and failure to comply with applicable governmental regulations may lead to lawsuits, investigations and other liabilities and restrictions on our operations.
Our ability to comply with the covenants and restrictions contained in the agreements governing our indebtedness depends on our ongoing financial and operating performance, among other things, and may be affected by economic, financial and industry conditions beyond our control, including as discussed under the caption “Risks Related to Our Business and Industry” above.
Our ability to comply with the covenants and restrictions contained in the agreements governing our indebtedness depends on our ongoing financial and operating performance, among other things, and may be affected by economic, financial and industry conditions beyond our control, including as discussed under the caption “Risks Relating to Our Business and Industry” above.
Our ability to make scheduled payments on, or to refinance our obligations under, our debt facilities depend on our ongoing financial and operating performance, among other things, and may be affected by economic, financial and industry conditions beyond our control, including as discussed under the caption “Risks Related to Our Business and Industry” above.
Our ability to make scheduled payments on, or to refinance our obligations under, our debt facilities depend on our ongoing financial and operating performance, among other things, and may be affected by economic, financial and industry conditions beyond our control, including as discussed under the caption “Risks Relating to Our Business and Industry” above.
These pension and postretirement obligations give rise to costs that are dependent on various assumptions, including those discussed in Note 18, Retirement Plans, in our consolidated financial statements, many of which are outside of our control, such as performance of financial markets, interest rates, participant age and mortality.
These pension and postretirement obligations give rise to costs that are dependent on various assumptions, including those discussed in Note 17, Retirement Plans, in our consolidated financial statements, many of which are outside of our control, such as performance of financial markets, interest rates, participant age and mortality.
For example, the Company completed its most recent annual impairment assessment for goodwill and indefinite-lived intangible assets as of the first day of the third quarter of fiscal year 2023 with no impairments noted.
For example, the Company completed its most recent annual impairment assessment for goodwill and indefinite-lived intangible assets as of the first day of the third quarter of fiscal year 2024 with no impairments noted.
Our level of indebtedness could have important consequences, including the following: • a substantial portion of our cash flows from operations may be dedicated to the payment of principal and interest on our indebtedness, thereby reducing the funds available for other purposes, including working capital, capital expenditures, acquisitions and general corporate purposes; • we are exposed to the risk of increased interest rates because approximately 30% of the net principal amount of our indebtedness accrued interest at variable rates of interest as of December 30, 2023; • it may be difficult for us to satisfy our obligations to our lenders, resulting in possible defaults on and acceleration of such indebtedness; • we may be more vulnerable to general adverse economic and industry conditions; • we may be at a competitive disadvantage compared to our competitors with less debt or lower debt service requirements and they, as a result, may be better positioned to withstand competitive pressures and general adverse economic and industry conditions; • our ability to refinance indebtedness may be limited or the associated costs may increase; and • our ability to refinance indebtedness and obtain additional financing may be limited or the associated costs of refinancing and obtaining additional financing may increase.
Our level of indebtedness could have important consequences, including the following: • a material portion of our cash flows from operations may be dedicated to the payment of principal and interest on our indebtedness, thereby reducing the funds available for other purposes, including working capital, capital expenditures, acquisitions and general corporate purposes; • we are exposed to the risk of increased interest rates because approximately 32% of the net principal amount of our indebtedness accrued interest at variable rates of interest as of December 28, 2024; • it may be difficult for us to satisfy our obligations to our lenders, resulting in possible defaults on and acceleration of such indebtedness; • we may be more vulnerable to general adverse economic and industry conditions; • we may be at a competitive disadvantage compared to our competitors with less debt or lower debt service requirements and they, as a result, may be better positioned to withstand competitive pressures and general adverse economic and industry conditions; • our ability to refinance indebtedness may be limited or the associated costs may increase; and • our ability to refinance indebtedness and obtain additional financing may be limited or the associated costs of refinancing and obtaining additional financing may increase.
Additionally, in 2023, we established a goal for 67% of our suppliers by emissions covering purchased goods and services to have science-based climate targets by 2027.
Additionally, in 2022, we established a goal for 67% of our suppliers by emissions covering purchased goods and services to have science-based climate targets by 2027.
Fuel costs fluctuate, which may adversely affect our business, financial condition and results of operations. Fuel costs related to outbound deliveries approximated $191 million during fiscal year 2023. Higher costs of fuel may negatively affect consumer confidence and discretionary spending. This may reduce the frequency and amount spent by consumers for food prepared away from home.
Fuel costs fluctuate, which may adversely affect our business, financial condition and results of operations. Fuel costs related to outbound deliveries approximated $171 million during fiscal year 2024. Higher costs of fuel may negatively affect consumer confidence and discretionary spending. This may reduce the frequency and amount spent by consumers for food prepared away from home.
We require significant quantities of fuel for our vehicle fleet, and the price and supply of fuel are unpredictable and fluctuate based on events outside our control, including geopolitical developments, supply and demand for oil and gas, regional production patterns, weather conditions and environmental concerns.
We require significant quantities of fuel for our vehicle fleet, and the price and supply of fuel are unpredictable and fluctuate based on events outside our control, including but not limited to geopolitical developments, supply and demand for oil and gas, regional production patterns, weather conditions and environmental concerns.
Consumer eating habits could be affected by a number of factors, including changes in attitudes regarding diet and health or new information regarding the health effects of consuming certain foods. There is a growing consumer preference for sustainable, organic and locally grown products. Changes to consumer eating habits also occur due to generational shifts.
Consumer eating habits could be affected by a number of factors, including changes in attitudes regarding diet and health, new information regarding the health effects of consuming certain foods of shifts away from carbon-intensive products. There is a growing consumer preference for sustainable, organic and locally grown products. Changes to consumer eating habits also occur due to generational shifts.
While no single customer represented more than 2% of our total net sales in fiscal year 2023, approximately 23% of our net sales in fiscal year 2023 were made to customers under terms negotiated by GPOs (including approximately 14% of our net sales in fiscal year 2023 that were made to customers that are members of one GPO).
While no single customer represented more than 2% of our total net sales in fiscal year 2024, approximately 25% of our net sales in fiscal year 2024 were made to customers under terms negotiated by GPOs (including approximately 14% of our net sales in fiscal year 2024 that were made to customers that are members of one GPO).
Millennials, the largest demographic group in the U.S. in terms of spend, generally seek new and different, as well as more ethnic and diverse, menu options and menu innovation.
Millennials, the largest demographic group in the U.S. in terms of consumer spending, generally seek new and different, as well as more ethnic and diverse, menu options and menu innovation.
We employed approximately 30,000 associates as of December 30, 2023, of which approximately 6,300 were members of local unions associated with the International Brotherhood of Teamsters and other labor organizations. Any failure to effectively negotiate CBAs could result in work stoppages.
We employed approximately 30,000 associates as of December 28, 2024, of which approximately 6,600 were members of local unions associated with the International Brotherhood of Teamsters and other labor organizations. Any failure to effectively negotiate CBAs could result in work stoppages.
In addition, in response to the COVID-19 pandemic, the CDC, OSHA and various other federal, state, and local authorities have issued guidance, new interpretations of existing requirements, and implemented new requirements for employers that affect the operation of our facilities and the management of our workforce.
In addition, in response to the COVID-19 pandemic, the Centers for Disease Control and Prevention, OSHA and various other federal, state, and local authorities have issued guidance, new interpretations of existing requirements, and implemented new requirements for employers that affect the operation of our facilities and the management of our workforce.
In addition, in the event our suppliers or customers experience a breach or system failure, cyberattack or other security breach, their businesses could be disrupted or otherwise negatively affected, which may result in a disruption in our supply chain or reduced customer orders, which would adversely affect our business, financial condition and results of operations.
In addition, in the event our suppliers or customers experience a breach or system failure, cyberattack or other security breach, their businesses could be disrupted or otherwise negatively affected, which may result in a disruption in our supply chain or reduced customer orders, which would adversely affect our business, financial condition and results of operations. 16 Our failure to comply with data privacy regulations could adversely affect our business.
We also experience competition from online direct food wholesalers and other retailers. We generally do not have exclusive distribution agreements with our customers, and they may switch to other distributors that offer lower prices or differentiated products or customer service. The cost of switching distributors is very low, as are the barriers to entry into the U.S. foodservice distribution industry.
We generally do not have exclusive distribution agreements with our customers, and they may switch to other distributors that offer lower prices or differentiated products or customer service. The cost of switching distributors is very low, as are the barriers to entry into the U.S. foodservice distribution industry.
These distributors may also rely on local presence as a source of competitive advantage, and they may have a lower cost to serve and other competitive advantages due to geographic proximity. Additionally, adjacent competition, such as other cash-and-carry operations, commercial wholesale outlets, warehouse clubs and grocery stores, continue to serve the commercial foodservice market.
These distributors may also rely on local presence as a source of competitive advantage, and they may have a lower cost to serve and other competitive advantages due to geographic proximity. Additionally, we experience competition from cash-and-carry operations, commercial wholesale outlets, warehouse clubs and grocery stores that serve the commercial foodservice marketplace.
Risks Relating to Acquisitions We may fail to realize the expected benefits of acquisitions or effectively integrate the businesses we acquire, which may adversely affect our business, financial condition and results of operations. Historically, a portion of our growth has come through acquisitions.
Risks Relating to Acquisitions We may fail to realize the expected benefits of acquisitions or effectively integrate the businesses we acquire, which may adversely affect our business, financial condition and results of operations. Historically, a portion of our growth has come through acquisitions. In 2024, we completed one acquisition - the acquisition of IWC Food Service.
Moreover, compliance with any such legal or regulatory 11 requirements may require that we implement changes to our business operations and strategy, which would require us to devote substantial time and attention to these matters and cause us to incur additional costs.
Moreover, compliance with any such legal or regulatory requirements may require that we implement changes to our business operations and strategy, which would require us to devote substantial time and attention to these matters and cause us to incur additional costs. Climate-related reporting and disclosure requires significant time, attention, and financial resources.
Our relationships with our customers and GPOs may be materially diminished, terminated or otherwise changed, which may adversely affect our business, financial condition and results of operations. Most of our customers buy from us pursuant to individual purchase orders, and we often do not enter into long-term agreements with these customers.
Our relationships with our customers and GPOs may be materially diminished, terminated or otherwise changed, which may adversely affect our business, financial condition and results of operations. Most of our customers buy from us pursuant to individual purchase orders.
In addition, we may determine that it is in our best interests to prioritize other business, social, governance or sustainable investments over the achievement of our current goals based on economic, regulatory or social factors, business strategy or other factors.
Our ability to meet there and other related goals also depends on the climate-related efforts and performance of our suppliers. In addition, we may determine that it is in our best interests to prioritize other business, social, governance or sustainable investments over the achievement of our current goals based on economic, regulatory or social factors, business strategy or other factors.
Our failure to comply with data privacy regulations could adversely affect our business. There are new and emerging data privacy laws, as well as frequent updates and changes to existing data privacy laws, in the jurisdictions in which we operate.
There are new and emerging data privacy laws, as well as frequent updates and changes to existing data privacy laws, in the jurisdictions in which we operate.
We had $4.7 billion of indebtedness outstanding, as of December 30, 2023.
We had $4.9 billion of indebtedness outstanding as of December 28, 2024.
However, there is a risk that we may incur significant costs in protecting against or remediating cyberattacks or other cyber incidents. Although we maintain insurance that may, subject to policy terms and conditions, cover certain cyber incidents, it may be insufficient to cover all losses.
Although we maintain insurance that may, subject to policy terms and conditions, cover certain cyber incidents, it may be insufficient to cover all losses.
The effects of climate change, and legal or regulatory initiatives to address climate change, could have a long-term adverse impact on our business and results of operations. In addition, from time to time we establish and publicly announce goals and commitments related to corporate social responsibility matters, including those related to reducing our impact on the environment.
In addition, from time to time we establish and publicly announce goals and commitments related to corporate social responsibility matters, including those related to reducing our impact on the environment.
We generally seek contractual representations and warranties from 12 suppliers that they comply with all applicable laws and regulations and we maintain supplier policies requiring their ongoing compliance with applicable laws and regulations as well.
We generally seek contractual representations and warranties from suppliers that they comply with all applicable laws and regulations and we maintain supplier policies requiring their ongoing compliance with applicable laws and regulations as well. We are subject to governmental regulation regarding our relationship with our employees including minimum wage, overtime, wage payment, wage and hour, employment discrimination, harassment and immigration.
These discussions resulted in the expenditure of significant time and energy by management and our Board of Directors and required dedication by the Company of significant resources.
Engagement with activist stockholders may lead to the expenditure of significant time and energy by management and our Board of Directors and require dedication by the Company of significant resources.
Additionally, continued geopolitical turmoil, including the ongoing conflict between Russia and Ukraine, has heightened the risk of cyberattacks. While cyberattackers have threatened and attempted to breach our security and access the information stored in our information systems, no incident has been material or had a material impact on our business or financial condition.
While cyberattackers have threatened and attempted to breach our security and access the information stored in our information systems, no incident has been material or had a material impact on our business or financial condition. However, there is a risk that we may incur significant costs in protecting against or remediating cyberattacks or other cyber incidents.
Removed
We are subject to governmental regulation regarding our relationship with our employees including minimum wage, overtime, wage payment, wage and hour, employment discrimination, harassment and immigration.
Added
We also experience competition from online direct food wholesalers and other retailers, and competitors that are utilizing technology, including artificial intelligence and machine learning technologies have served to further increase pressure on the industry’s profit margins.
Removed
In 2023, we completed two acquisitions - the acquisition of substantially all of the assets of Renzi Bros., Inc. and the acquisition of substantially all of the assets of Saladino’s, Inc.
Added
We must allocate substantial internal resources and may need to engage third-party experts to ensure accurate and comprehensive reporting. The effects of climate change, and legal or regulatory initiatives to address climate change, could have a long-term adverse impact on our business and results of operations.
Removed
In 2022, we engaged in extensive dialogue with Sachem Head Capital Management (“Sachem Head”) resulting in our entry into a cooperation agreement with Sachem Head in which we agreed on certain matters relating to our Board of Directors and our chief executive officer.
Added
The increased use of social media may increase the likelihood and magnitude of negative publicity across media channels, regardless of its accuracy or the reputability of its source, including as a result of fictitious media content (such as content produced by generative artificial intelligence or bad actors).
Added
In addition, it may be difficult to address such negative publicity across media channels. 13 Risks Relating to Human Capital Management We face risks related to labor relations, increased labor costs and the availability of qualified labor, any of which could have an adverse effect on our business, financial condition and results of operations.
Added
Additionally, continued geopolitical turmoil, including the ongoing conflict between Russia and Ukraine, has heightened the risk of cyberattacks. In addition, new technologies such as artificial intelligence may present new technological risks or vulnerabilities.
Added
On October 31, 2024, the Company terminated and settled the majority of the defined benefit plan.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeMoreover, we have implemented appropriate policies, processes, and technology to reduce the likelihood or impact of a breach, either at US Foods or through any third-party service provider, and have appropriate cyber insurance coverage through a standalone cyber policy.
Biggest changeWe have developed and implemented a comprehensive program designed to protect the confidentiality of sensitive information, ensure the integrity of critical data and automated processes, and safeguard the availability of our information technology capabilities. 19 Moreover, we have implemented appropriate policies, processes, and technology to reduce the likelihood or impact of a breach, either at US Foods or through any third-party service provider, and have appropriate cyber insurance coverage through a standalone cyber policy.
We have developed and continually evolve our privacy and security policies to promote organizational accountability for privacy, data governance, and data protection across our business and with our collaborative partners and suppliers. 19 In addition, we have an employee awareness program to regularly educate our workforce on the cybersecurity risks they face and how they can operate safely.
We have developed and continually evolve our privacy and security policies to promote organizational accountability for privacy, data governance, and data protection across our business and with our collaborative partners and suppliers. In addition, we have an employee awareness program to regularly educate our workforce on the cybersecurity risks they face and how they can operate safely.
Disclosure Committee The Disclosure Committee, which consists of individuals from our legal, accounting, finance and investor relations groups, provides general oversight in the area of cybersecurity and privacy, and is responsible for making disclosure determinations regarding cybersecurity incidents. The Disclosure Committee also receives periodic updates from the Chief Information Security Officer regarding threat detection and incident response.
Disclosure Committee The Disclosure Committee, which consists of individuals from our legal, accounting, finance and investor relations groups, provides general oversight in the area of cybersecurity and privacy reporting, and is responsible for making disclosure determinations regarding cybersecurity incidents. The Disclosure Committee also receives periodic updates from the Chief Information Security Officer regarding threat detection and incident response.
Schmidt served as Chief Information Security Officer for Farmers Insurance, a national insurance company, from 2019 to 2022, and various other positions from 2015 to 2019. Ms. Schmidt began her career as a cryptography analyst with the National Security Agency, learning best practices and tactics to be an effective hacker and defender.
Schmidt served as Chief Information Security Officer for Farmers Insurance, a national insurance company, from 2019 to 2022, and various other positions from 2015 to 2019. Ms. Schmidt began her career as a cryptography analyst with the National Security Agency (“NSA”), learning best practices and tactics to be an effective hacker and defender.
Our cybersecurity program is designed to protect the confidentiality, integrity and availability of critical assets and information, using a proactive and risk-based approach. We utilize the National Institute of Standards and Technology (“NIST”) Cyber Security Framework to define and regularly reassess our cybersecurity program.
Our cybersecurity program is designed to protect the confidentiality, integrity and availability of critical assets and information, using a proactive and risk-based approach. We utilize the National Institute of Standards and Technology (“NIST”) Cyber Security Framework and regularly reassess our cybersecurity program.
We provide all associates that have network access with annual data-security training. Our training and education programs include specialized training for associates handling confidential information, information security awareness training, periodic anti-phishing campaigns, one-click email-enabled phish alert reporting functionality and advisory emails on emerging threats.
We provide all associates that have network access with annual data-security training. Our training and education programs include specialized training for associates handling confidential information, associates with privileged access, executive specific training, general information security awareness training, periodic anti-phishing campaigns, one-click email-enabled phish alert reporting functionality and advisory emails on emerging threats.
Removed
We have developed and implemented a comprehensive program designed to protect the confidentiality of sensitive information, ensure the integrity of critical data and automated processes, and safeguard the availability of our information technology capabilities.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeLocation Number of Facilities Square Feet Alabama 2 458,304 Alaska 1 131,285 Arizona 4 493,116 Arkansas 1 135,009 California 28 2,722,565 Colorado 2 501,427 Connecticut 1 239,899 Florida 5 1,173,162 Georgia 2 691,017 Idaho 6 121,644 Illinois 3 528,295 Indiana 1 233,784 Iowa 1 114,250 Kansas 1 350,859 Louisiana 1 207,200 Michigan 1 276,003 Minnesota 2 414,963 Mississippi 1 287,356 Missouri 3 602,947 Montana 4 259,198 Nebraska 2 246,430 Nevada 5 895,956 New Hampshire 1 533,237 New Jersey 3 1,073,375 New Mexico 1 133,486 New York 4 533,408 North Carolina 4 1,024,923 North Dakota 2 221,314 Ohio 3 501,894 Oklahoma 2 345,559 Oregon 22 775,146 Pennsylvania 4 980,417 South Carolina 7 1,423,859 Tennessee 2 602,270 Texas 5 1,011,380 Utah 3 308,833 Virginia 4 878,257 Washington 31 1,580,339 West Virginia 1 220,537 Wisconsin 1 172,826 Total 177 23,405,729 Owned 16,411,888 70 % Leased 6,993,841 30 % In addition, we lease our corporate headquarters in Rosemont, Illinois (consisting of more than 250,000 square feet).
Biggest changeLocation Number of Facilities Square Feet Alabama 2 458,304 Alaska 1 131,285 Arizona 4 493,116 Arkansas 1 135,009 California 27 2,510,276 Colorado 2 501,427 Connecticut 1 239,899 Florida 5 1,173,162 Georgia 2 691,017 Idaho 6 121,644 Illinois 3 528,295 Indiana 1 233,784 Iowa 1 114,250 Kansas 1 350,859 Louisiana 1 207,200 Michigan 1 276,003 Minnesota 2 414,963 Mississippi 1 287,356 Missouri 3 602,947 Montana 4 259,198 Nebraska 2 246,430 Nevada 5 895,956 New Hampshire 1 533,237 New Jersey 3 1,073,375 New Mexico 1 133,486 New York 4 498,683 North Carolina 7 1,090,078 North Dakota 2 221,314 Ohio 3 501,894 Oklahoma 2 345,559 Oregon 22 775,146 Pennsylvania 4 980,417 South Carolina 6 1,403,855 Tennessee 4 774,729 Texas 5 1,011,380 Utah 3 308,833 Virginia 4 878,257 Washington 31 1,466,936 West Virginia 1 220,537 Wisconsin 1 172,826 Total 180 23,262,922 Owned 16,760,874 72 % Leased 6,502,048 28 % In addition, we lease our corporate headquarters in Rosemont, Illinois (consisting of more than 250,000 square feet).
Properties As of the date of this report, we operated (i) 74 distribution facilities (consisting of more than 20,000,000 square feet), 57 of which are owned, (ii) 90 cash and carry locations (consisting of more than 2,000,000 square feet), all of which are leased, and (iii) 13 broadline support business production facilities (consisting of more than 1,000,000 square feet), 9 of which are owned.
Properties As of the date of this report, we operated (i) 74 distribution facilities (consisting of more than 20,000,000 square feet), 57 of which are owned, (ii) 93 cash and carry locations (consisting of more than 2,000,000 square feet), all of which are leased, and (iii) 13 broadline support business production facilities (consisting of more than 1,000,000 square feet), 9 of which are owned.
The leases related to these facilities expire at various dates from 2024 to 2040, although some provide options for us to renew. The table below lists the aggregate square footage, by state for these operating facilities.
The leases related to these facilities expire at various dates from 2025 to 2040, although some provide options for us to renew. The table below lists the aggregate square footage, by state for these operating facilities.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAt December 30, 2023, there was approximately $192 million in remaining funds authorized under this program. For the year ended December 30, 2023, the Company repurchased 7,396,224 shares at an aggregate purchase price of approximately $294 million under the program.
Biggest changeFor the year ended December 28, 2024, the Company repurchased 16,400,895 shares at an aggregate purchase price of approximately $958 million under the Amended Share Repurchase Program and the Original Share Repurchase Program, inclusive of approximately $10 million 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 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 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 Share Repurchase Program does not obligate the Company to acquire any particular amount of shares, and the repurchase program may be suspended or discontinued at any time at the Company’s discretion. The repurchase authorization does not have an expiration date.
The Amended Share Repurchase Program does not obligate the Company to acquire any particular amount of shares, and the repurchase program may be suspended or discontinued at any time at the Company’s discretion. The repurchase authorization does not have an expiration date.
See Note 14, Convertible Preferred Stock, in our consolidated financial statements for further information. Share Repurchase Program On November 2, 2022, our Board of Directors approved, and we publicly announced, a Share Repurchase Program under which the Company is authorized to repurchase up to $500 million of its outstanding common stock.
See Note 13, Convertible Preferred Stock, in our consolidated financial statements for further information. Share Repurchase Program On November 2, 2022, our Board of Directors approved, and we publicly announced, 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.
The graph assumes the investment of $100 in our common stock and each of such indices on December 30, 2018 (the beginning of our fiscal year) and the reinvestment of dividends, as applicable.
The graph assumes the investment of $100 in our common stock and each of such indices on December 28, 2019 (the beginning of our fiscal year) and the reinvestment of dividends, as applicable.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Common Stock and Stockholders Our common stock is traded on the New York Stock Exchange (“NYSE”) under the symbol “USFD”. There were 20,364 holders of record of our common stock as of February 9, 2024.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Common Stock and Stockholders Our common stock is traded on the New York Stock Exchange (“NYSE”) under the symbol “USFD”. There were 19,445 holders of record of our common stock as of February 7, 2025.
Performance data for the Company, the S&P 500 Index and the S&P 500 Food and Staples Retailing Index is provided as of the last trading day of each of our last five fiscal years. 12/29/18 12/28/19 01/02/21 01/01/22 12/31/22 12/30/23 US Foods Holding Corp. $ 100 $ 132 $ 105 $ 110 $ 108 $ 144 S&P 500 100 131 156 200 164 207 S&P Food and Staples Retailing Index 100 107 120 127 122 138 Item 6. [Reserved] 24
Performance data for the Company, the S&P 500 Index and the S&P 500 Food and Staples Retailing Index is provided as of the last trading day of each of our last five fiscal years. 12/28/19 01/02/21 01/01/22 12/31/22 12/30/23 12/28/24 US Foods Holding Corp. $ 100 $ 80 $ 83 $ 81 $ 108 $ 161 S&P 500 100 118 152 125 158 197 S&P Food and Staples Retailing Index 100 116 146 131 151 204 Item 6. [Reserved] 24
The following table summarizes repurchases of US Foods common stock in the three months ended December 30, 2023: Period (Millions of dollars, except number and price per share) Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program October 1, 2023 through November 4, 2023 534,846 $ 37.41 534,846 $ 237 November 5, 2023 through December 2, 2023 698,397 42.96 698,397 207 December 3, 2023 through December 30, 2023 338,830 44.27 338,830 $ 192 Total 1,572,073 $ 41.35 1,572,073 23 Stock Performance Graph The following stock performance graph compares the cumulative total stockholder return of the Company’s common stock with the cumulative total return of the S&P 500 Index and the S&P 500 Food and Staples Retailing Index for the last five fiscal years.
The following table summarizes repurchases of US Foods common stock in the three months ended December 28, 2024: Period (Millions of dollars, except number and price per share) Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program September 29, 2024 through November 2, 2024 2,371,014 $ 61.83 2,371,014 $ 252 November 3, 2024 through November 30, 2024 2,010,896 66.97 2,010,896 117 December 1, 2024 through December 28, 2024 585,938 71.64 585,938 75 Total 4,967,848 $ 65.07 4,967,848 23 Stock Performance Graph The following stock performance graph compares the cumulative total stockholder return of the Company’s common stock with the cumulative total return of the S&P 500 Index and the S&P 500 Food and Staples Retailing Index for the last five fiscal years.
Added
Our Board of Directors 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 inclusive of any remaining funds authorized under the Original Share Repurchase Program (“Amended Share Repurchase Program”).
Added
As of December 28, 2024, there was approximately $75 million in remaining funds authorized under the Amended Share Repurchase Program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

71 edited+18 added−14 removed40 unchanged
Biggest changeThe increase was primarily due to increased total case volume and higher seller compensation costs, partially offset by lower distribution cost per case from cost savings initiatives including routing improvements and focused efforts positively impacting labor turnover and productivity as well as lower fuel costs. 25 Results of Operations The following table presents selected consolidated results of operations of our business for fiscal years 2023, 2022 and 2021: Fiscal Year 2023 2022 2021 (in millions) Consolidated Statements of Operations: Net sales $ 35,597 $ 34,057 $ 29,487 Cost of goods sold 29,449 28,565 24,832 Gross profit 6,148 5,492 4,655 Operating expenses: Distribution, selling and administrative costs 5,117 4,886 4,220 Restructuring costs and asset impairment charges 14 12 11 Total operating expenses 5,131 4,898 4,231 Operating income 1,017 594 424 Other income—net (6) (22) (26) Interest expense—net 324 255 213 Loss on extinguishment of debt 21 — 23 Income before income taxes 678 361 214 Income tax provision 172 96 50 Net income 506 265 164 Series A Preferred Stock dividends (7) (37) (43) Net income available to common shareholders $ 499 $ 228 $ 121 Net income per share: Basic $ 2.09 $ 1.02 $ 0.55 Diluted $ 2.02 $ 1.01 $ 0.54 Weighted-average number of shares used in per share amounts: Basic 239 224 222 Diluted 250 226 225 Percentage of Net Sales: Gross profit 17.3 % 16.1 % 15.8 % Operating expenses 14.4 % 14.4 % 14.3 % Operating income 2.9 % 1.7 % 1.4 % Net income 1.4 % 0.8 % 0.6 % Adjusted EBITDA (1) 4.4 % 3.8 % 3.6 % Other Data: Cash flows—operating activities $ 1,140 $ 765 $ 419 Cash flows—investing activities (495) (255) (262) Cash flows—financing activities (587) (447) (837) Capital expenditures 309 265 274 EBITDA (1) 1,397 988 805 Adjusted EBITDA (1) 1,559 1,310 1,057 Adjusted Net Income (1) 658 538 388 Free Cash Flow (2) 831 500 145 (1) EBITDA is defined as net income, plus interest expense—net, income tax provision, and depreciation and amortization.
Biggest changeAs a percentage of net sales, operating expenses were 14.3% in fiscal year 2024, compared to 14.4% in fiscal year 2023. 25 Results of Operations The following table presents selected consolidated results of operations of our business for fiscal years 2024, 2023 and 2022: Fiscal Year 2024 2023 2022 (in millions) Consolidated Statements of Operations: Net sales $ 37,877 $ 35,597 $ 34,057 Cost of goods sold 31,343 29,449 28,565 Gross profit 6,534 6,148 5,492 Operating expenses: Distribution, selling and administrative costs 5,412 5,117 4,886 Restructuring activity and asset impairment charges 23 14 12 Total operating expenses 5,435 5,131 4,898 Operating income 1,099 1,017 594 Other expense (income)—net 6 (6) (22) Interest expense—net 315 324 255 Loss on extinguishment of debt 10 21 — Recognition of net actuarial loss for pension settlement 124 — — Income before income taxes 644 678 361 Income tax provision 150 172 96 Net income 494 506 265 Series A convertible preferred stock dividends — (7) (37) Net income available to common shareholders $ 494 $ 499 $ 228 Net income per share: Basic $ 2.05 $ 2.09 $ 1.02 Diluted $ 2.02 $ 2.02 $ 1.01 Weighted-average number of shares used in per share amounts: Basic 241 239 224 Diluted 244 250 226 Percentage of Net Sales: Gross profit 17.3 % 17.3 % 16.1 % Operating expenses 14.3 % 14.4 % 14.4 % Operating income 2.9 % 2.9 % 1.7 % Net income 1.3 % 1.4 % 0.8 % Adjusted EBITDA (1) 4.6 % 4.4 % 3.8 % Other Data: Cash flows—operating activities $ 1,174 $ 1,140 $ 765 Cash flows—investing activities (552) (495) (255) Cash flows—financing activities (831) (587) (447) Capital expenditures 341 309 265 EBITDA (1) 1,397 1,397 988 Adjusted EBITDA (1) 1,741 1,559 1,310 Adjusted Net Income (1) 770 658 538 Free Cash Flow (2) 836 841 510 (1) EBITDA is defined as net income, plus interest expense—net, income tax provision, and depreciation and amortization.
Income Taxes Our effective income tax rate for fiscal year 2023 of 25% varied from the 21% federal corporate income tax rate, primarily as a result of state income taxes and the recognition of various discrete tax items.
Our effective income tax rate for fiscal year 2023 of 25% varied from the 21% federal corporate income tax rate, primarily as a result of state income taxes and the recognition of various discrete tax items.
Financing Activities Cash flows used in financing activities in fiscal year 2023 included $125 million of scheduled payments under our Term Loan Facilities and financing leases, $1 billion for refinancing of the Secured 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 and $7 million of dividends on our Series A Preferred Stock.
Cash flows used in financing activities in fiscal year 2023 included $125 million of scheduled payments under our Term Loan Facilities and financing leases, $1 billion for refinancing of the Secured 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 and $7 million of dividends on our Series A Preferred Stock.
Financing activities in fiscal year 2023 also included $294 million of common stock repurchased under the Share Repurchase Program, $24 million of proceeds received from stock purchases under our employee stock purchase plan and $26 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.
Financing activities in fiscal year 2023 also included $294 million of common stock repurchased under the Original Share Repurchase Program, $24 million of proceeds received from stock purchases under our employee stock purchase plan and $26 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.
We believe the following sources will be sufficient to meet our anticipated cash requirements for at least the next twelve months, while maintaining sufficient liquidity for normal operating purposes: • Our cash flow from operations; • The availability of additional capital under our existing ABL Facility; and 32 • Our availability to access capital from financial markets.
We believe the following sources will be sufficient to meet our anticipated cash requirements for at least the next twelve months, while maintaining sufficient liquidity for normal operating purposes: • Our cash flow from operations; • The availability of additional capital under our existing ABL Facility; and • Our availability to access capital from financial markets.
Our most critical accounting policies and estimates pertain to the valuation of goodwill and other intangible assets, vendor consideration and income taxes. Valuation of Goodwill and Other Intangible Assets Goodwill and other intangible assets include the cost of the acquired business in excess of the fair value of the tangible net assets recorded in connection with each acquisition.
Our most critical accounting policies and estimates pertain to the valuation of goodwill and other intangible assets, vendor consideration and income taxes. 33 Valuation of Goodwill and Other Intangible Assets Goodwill and other intangible assets include the cost of the acquired business in excess of the fair value of the tangible net assets recorded in connection with each acquisition.
See Note 12, Accrued Expenses and Other Long-Term Liabilities, in our consolidated financial statements for further detail of our obligations and the expected timing of expected future payments. • Purchase and Other Obligations – 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.
See Note 11, Accrued Expenses and Other Long-Term Liabilities, in our consolidated financial statements for further detail of our obligations and the expected timing of expected future payments. • Purchase and Other Obligations – 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.
(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) Includes early redemption premium and the write-off of certain pre-existing debt issuance costs. See Note 11, Debt, in our consolidated financial statements for additional information.
(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) Includes early redemption premium and the write-off of certain pre-existing debt issuance costs. See Note 10, Debt, in our consolidated financial statements for additional information.
(9) 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.
(8) 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 Company estimates it is reasonably possible that the liability for unrecognized tax benefits will decrease by up to $15 million in the next 12 months as a result of the completion of various tax audits currently in process and the expiration of the statute of limitations in several jurisdictions.
The Company estimates it is reasonably possible that the liability for unrecognized tax benefits will decrease by up to $1 million in the next 12 months as a result of the completion of various tax audits currently in process and the expiration of the statute of limitations in several jurisdictions.
Our fiscal year 2023 assessment for impairment of goodwill was performed using a qualitative approach to determine, as of the date of the assessment, whether it was more likely than not that the fair value of goodwill was less than its carrying value.
Our fiscal year 2024 assessment for impairment of goodwill was performed using a qualitative approach to determine, as of the date of the assessment, whether it was more likely than not that the fair value of goodwill was less than its carrying value.
Based on our fiscal year 2023 annual impairment analysis for indefinite-lived intangible assets, we concluded that the fair value of our trademark indefinite-lived intangible asset and brand name indefinite-lived intangible asset exceeded their respective carrying values 33 by substantial margins. These margins would not be materially impacted by a 5% increase in the discount rate.
Based on our fiscal year 2024 annual impairment analysis for indefinite-lived intangible assets, we concluded that the fair value of our trademark indefinite-lived intangible asset and brand name indefinite-lived intangible asset exceeded their respective carrying values by substantial margins. These margins would not be materially impacted by a 5% increase in the discount rate.
Based on our qualitative fiscal year 2023 annual impairment analysis for goodwill, we concluded that it is more likely than not that the fair value of goodwill exceeded its carrying value.
Based on our qualitative fiscal year 2024 annual impairment analysis for goodwill, we concluded that it is more likely than not that the fair value of goodwill exceeded its carrying value.
For goodwill, the reporting unit used in assessing impairment is the Company’s one business segment as described in Note 24, Business Information, in our consolidated financial statements.
For goodwill, the reporting unit used in assessing impairment is the Company’s one business segment as described in Note 23, Business Information, in our consolidated financial statements.
Our long-term cash requirements under our various contractual obligations and commitments include: • Debt, including financing lease obligations – See Note 11, Debt, in our consolidated financial statements for further detail of our debt and the timing of expected future principal payments. • Operating and finance lease obligations – See Note 17, Leases, in our consolidated financial statements for further detail of our obligations and the timing of expected future payments. • Pension plans and other postretirement benefit contributions – We sponsor a defined benefit plan that pays benefits to eligible employees at retirement.
Our long-term cash requirements under our various contractual obligations and commitments include: • Debt, including financing lease obligations – See Note 10, Debt, in our consolidated financial statements for further detail of our debt and the timing of expected future principal payments. • Operating and finance lease obligations – See Note 16, Leases, in our consolidated financial statements for further detail of our obligations and the timing of expected future payments. 32 • Pension plans and other postretirement benefit contributions – We sponsor a defined benefit plan that pays benefits to eligible employees at retirement.
Purchase obligations also include amounts committed with various third-party service providers to provide information technology services for periods up to fiscal 2028. See Note 22, Commitments and Contingencies, in our consolidated financial statements for further detail of our obligations and the expected timing of expected future payments.
Purchase obligations also include amounts committed with various third-party service providers to provide information technology services for periods up to fiscal 2029. See Note 21, Commitments and Contingencies, in our consolidated financial statements for further detail of our obligations and the expected timing of expected future payments.
We made employer matching contributions to the 401(k) plan of $65 million and $57 million in fiscal years 2023 and 2022, respectively. We also are required to contribute to various multiemployer pension plans under the terms of certain of our CBAs. Our contributions to these plans were $55 million and $47 million in fiscal years 2023 and 2022, respectively.
We made employer matching contributions to the 401(k) plan of $82 million and $65 million in fiscal years 2024 and 2023, respectively. We also are required to contribute to various multiemployer pension plans under the terms of certain of our CBAs. Our contributions to these plans were $57 million and $55 million in fiscal years 2024 and 2023, respectively.
The following includes a comparison of our consolidated results of operations for fiscal years 2023 and 2022.
The following includes a comparison of our consolidated results of operations for fiscal years 2024 and 2023.
See Note 11, Debt, in our consolidated financial statements for a further description of our indebtedness.
See Note 10, Debt, in our consolidated financial statements for a further description of our indebtedness.
Our effective income tax rate for fiscal year 2022 of 27% varied from the 21% federal corporate income tax rate, primarily as a result of state income taxes and the recognition of various discrete tax items.
Income Taxes Our effective income tax rate for fiscal year 2024 of 23% varied from the 21% federal corporate income tax rate, primarily as a result of state income taxes and the recognition of various discrete tax items.
For a comparison of our consolidated results of operations for fiscal years 2022 and 2021, see Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 16, 2023.
For a comparison of our consolidated results of operations for fiscal years 2023 and 2022, see Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, of our Annual Report on Form 10-K for the fiscal year ended December 30, 2023, filed with the SEC on February 15, 2024.
Off-Balance Sheet Arrangements We had entered into $567 million of letters of credit, primarily in favor of certain commercial insurers to secure obligations with respect to our insurance programs and certain real estate leases, under the ABL Facility as of December 30, 2023.
Off-Balance Sheet Arrangements We had entered into $592 million of letters of credit, primarily in favor of certain commercial insurers to secure obligations with respect to our insurance programs and certain real estate leases, under the ABL Facility as of December 28, 2024.
We measure Free Cash Flow as cash flows provided by operating activities 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.
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.
For additional information, see Item 1A of Part I, “Risk Factors-Risks Relating to Our Indebtedness.” USF had approximately $2.0 billion of restricted payment capacity under these covenants and approximately $2.8 billion of its net assets were restricted after taking into consideration the net deferred tax assets and intercompany balances that eliminate in consolidation as of December 30, 2023.
For additional information, see Item 1A of Part I, “Risk Factors-Risks Relating to Our Indebtedness.” The Company had approximately $2.4 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 December 28, 2024.
There was remaining capacity of $1,733 million under the ABL Facility based on our borrowing base as of December 30, 2023. The Company’s 6.875% Senior Notes due 2028 ( the “Unsecured Senior Notes due 2028”) had an outstanding balance of $495 million, net of $5 million of unamortized deferred financing costs, as of December 30, 2023.
There was remaining capacity of $1,485 million under the ABL Facility based on our borrowing base as of December 28, 2024. The Company’s 6.875% Senior Notes due 2028 (the “Unsecured Senior Notes due 2028”) had an outstanding balance of $496 million, net of $4 million of unamortized deferred financing costs, as of December 28, 2024.
We did not make significant contributions to the Company-sponsored defined benefit and other postretirement plans in fiscal years 2023 and 2022. In connection with the plan termination, we expect to make a contribution in 2024. Certain employees are eligible to participate in our 401(k) savings plan.
We did not make significant contributions to the Company-sponsored defined benefit and other postretirement plans in fiscal years 2024 and 2023. We do not expect to make any contributions in 2025. Certain employees are eligible to participate in our 401(k) savings plan.
The Company’s 4.630% Senior Notes due 2030 (the “Unsecured Senior Notes due 2030”) had an outstanding balance of $496 million, net of $4 million of unamortized deferred financing costs, as of December 30, 2023.
The Company’s 4.630% Senior Notes due 2030 (the “Unsecured Senior Notes due 2030”) had an outstanding balance of $497 million, net of $3 million of unamortized deferred financing costs, as of December 28, 2024.
(8) Includes: (i) aggregate acquisition and integration related costs of $41 million for fiscal year 2023 and $22 million for both fiscal years 2022 and 2021 (ii) contested proxy and related legal and consulting costs of $21 million for fiscal year 2022; (iii) CEO severance of $5 million for fiscal year 2022; (iv) favorable legal settlement recoveries of $29 million for fiscal year 2021; and (v) other gains, losses or costs that we are permitted to add back for purposes of calculating Adjusted EBITDA under certain agreements governing our indebtedness.
(7) Includes: (i) aggregate acquisition, integration related costs and planned divestiture costs of $22 million for fiscal year 2024, $41 million for fiscal year 2023 and $22 million for fiscal year 2022 (ii) CEO sign on bonus of $3 million for fiscal year 2023 (iii) contested proxy and related legal and consulting costs of $21 million for fiscal year 2022; (iv) CEO severance of $5 million for fiscal year 2022; and (v) other gains, losses or costs that we are permitted to add back for purposes of calculating Adjusted EBITDA under certain agreements governing our indebtedness.
Loss on Extinguishment of Debt We recognized a loss on extinguishment of debt of $21 million in fiscal year 2023 due to the early redemption of the Company’s 6.25% senior secured notes due April 15, 2025 (the “Secured Senior Notes due 2025”). There was no gain or loss on extinguishment of debt in fiscal year 2022.
We recognized a loss on extinguishment of debt of $21 million in fiscal year 2023 due to the repayment of the Company’s 6.25% senior secured notes due April 15, 2025 (the “Secured Senior Notes due 2025”).
Net sales increased 4.5%, driven by case volume growth. Total case volumes increased 4.4% compared to the prior year driven by a 6.9% increase in independent restaurant case volume, a 7.2% increase in healthcare volume and a 8.9% increase in hospitality volume, offset by a 2.1% decrease in chain volume.
Total case volumes increased 4.2% compared to the prior year driven by a 4.4% increase in independent restaurant case volume, a 5.7% increase in healthcare volume, a 2.1% increase in hospitality volume and a 3.2% increase in chain volume. Total organic case volume increased 1.4% which includes 2.6% organic independent restaurant case volume growth.
The Company’s 7.250% Senior Notes due 2032 ( the “Unsecured Senior Notes due 2032”) had an outstanding balance of $495 million, net of $5 million of unamortized deferred financing costs, as of December 30, 2023.
The Company’s 7.250% Senior Notes due 2032 (the “Unsecured Senior Notes due 2032”) had an outstanding balance of $496 million, net of $4 million of unamortized deferred financing costs, as of December 28, 2024. 30 The Company’s 5.75% Senior Notes due 2033 (the “Unsecured Senior Notes due 2033”) had an outstanding balance of $496 million net of $4 million of unamortized deferred financing costs, as of December 28, 2024.
Indebtedness The aggregate carrying value of our indebtedness was $4,674 million, net of $34 million of unamortized deferred financing costs, as of December 30, 2023. We had no outstanding borrowings and had issued letters of credit totaling $567 million under the ABL Facility as of December 30, 2023.
Indebtedness The aggregate carrying value of our indebtedness was $4,928 million, net of $28 million of unamortized deferred financing costs, as of December 28, 2024. We had $223 million outstanding borrowings and had issued letters of credit totaling $592 million under the ABL Facility as of December 28, 2024.
Cash Flows The following table presents condensed highlights from our Consolidated Statements of Cash Flows for fiscal years 2023 and 2022: Fiscal Year 2023 2022 (in millions) Net income $ 506 $ 265 Changes in operating assets and liabilities 117 43 Other adjustments 517 457 Net cash provided by operating activities 1,140 765 Net cash used in investing activities (495) (255) Net cash used by financing activities (587) (447) Net increase in cash, cash equivalents and restricted cash 58 63 Cash, cash equivalents and restricted cash—beginning of year 211 148 Cash, cash equivalents and restricted cash—end of year $ 269 $ 211 Operating Activities Cash flows provided by operating activities increased $375 million to $1,140 million in fiscal year 2023 driven by higher net income and changes in operating assets and liabilities.
Cash Flows The following table presents condensed highlights from our Consolidated Statements of Cash Flows for fiscal years 2024 and 2023: Fiscal Year 2024 2023 (in millions) Net income $ 494 $ 506 Changes in operating assets and liabilities 18 117 Other adjustments 662 517 Net cash provided by operating activities 1,174 1,140 Net cash used in investing activities (552) (495) Net cash used by financing activities (831) (587) Net increase in cash, cash equivalents and restricted cash (209) 58 Cash, cash equivalents and restricted cash—beginning of year 269 211 Cash, cash equivalents and restricted cash—end of year $ 60 $ 269 Operating Activities Cash flows provided by operating activities increased $34 million to $1,174 million in fiscal year 2024 driven by changes in operating assets and liabilities.
The Company’s 4.75% Senior Notes due 2029 (the “Unsecured Senior Notes due 2029”), had an outstanding balance of $894 million, net of $6 million of unamortized deferred financing costs, as of December 30, 2023.
The Company’s 4.750% Senior Notes due 2029 (the “Unsecured Senior Notes due 2029”), had an outstanding balance of $895 million, net of $5 million of unamortized deferred financing costs, as of December 28, 2024.
Historically, adjustments to our estimates for vendor consideration or related allowances have not been significant, and we do not expect adjustments to our estimates for vendor consideration or related allowances to be significant in the next 12 months.
Changes in the estimated amount of incentives earned are treated as changes in estimates and are recognized in the period of change. Historically, adjustments to our estimates for vendor consideration or related allowances have not been significant, and we do not expect adjustments to our estimates for vendor consideration or related allowances to be significant in the next 12 months.
An uncertain tax position is recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Uncertain tax positions are recorded at the largest amount that is more likely than not to be sustained.
We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. 34 An uncertain tax position is recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits.
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. 27 The following table reconciles EBITDA, Adjusted EBITDA, Adjusted Net Income and Free Cash Flow to the most directly comparable GAAP financial performance and liquidity measures for the periods indicated: Fiscal Year 2023 2022 2021 (in millions) Net income available to common shareholders $ 499 $ 228 $ 121 Series A Preferred Stock dividends (see Note 14) (7) (37) (43) Net income 506 265 164 Interest expense—net 324 255 213 Income tax provision 172 96 50 Depreciation expense 349 327 323 Amortization expense 46 45 55 EBITDA 1,397 988 805 Adjustments: Restructuring costs and asset impairment charges (1) 14 12 11 Share-based compensation expense (2) 56 45 48 LIFO reserve adjustment (3) (1) 147 165 Loss on extinguishment of debt (4) 21 — 23 Business transformation costs (5) 28 52 22 COVID-19 bad debt benefit (6) — — (15) COVID-19 other related expenses (7) — — 3 Business acquisition and integration related costs and other (8) 44 66 (5) Adjusted EBITDA 1,559 1,310 1,057 Depreciation expense (349) (327) (323) Interest expense—net (324) (255) (213) Income tax provision, as adjusted (9) (228) (190) (133) Adjusted Net Income $ 658 $ 538 $ 388 Cash flow Cash flows from operating activities $ 1,140 $ 765 $ 419 Capital expenditures (309) (265) (274) Free Cash Flow $ 831 $ 500 $ 145 (1) Consists primarily of non-CEO severance and related costs associated with organizational realignment and other impairment charges.
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. 27 The following table reconciles EBITDA, Adjusted EBITDA, Adjusted Net Income and Free Cash Flow to the most directly comparable GAAP financial performance and liquidity measures for the periods indicated: Fiscal Year 2024 2023 2022 (in millions) Net income available to common shareholders and net income margin $ 494 1.3% $ 499 1.4% $ 228 0.7 % Series A convertible preferred stock dividends — (7) (37) Net income and net income margin 494 1.3% 506 1.4% 265 0.8% Interest expense—net 315 324 255 Income tax provision 150 172 96 Depreciation expense 384 349 327 Amortization expense 54 46 45 EBITDA and EBITDA margin 1,397 3.7% 1,397 3.9% 988 2.9 % Adjustments: Restructuring activity and asset impairment charges (1) 25 14 12 Share-based compensation expense (2) 63 56 45 LIFO reserve adjustment (3) 61 (1) 147 Loss on extinguishment of debt (4) 10 21 — Recognition of net actuarial loss for pension settlement (5) 124 — — Business transformation costs (6) 39 28 52 Business acquisition, integration related costs, divestitures and other (7) 22 44 66 Adjusted EBITDA and Adjusted EBITDA margin 1,741 4.6% 1,559 4.4% 1,310 3.8 % Depreciation expense (384) (349) (327) Interest expense—net (315) (324) (255) Income tax provision, as adjusted (8) (272) (228) (190) Adjusted Net Income $ 770 $ 658 $ 538 Cash flow Cash flows from operating activities $ 1,174 $ 1,140 $ 765 Proceeds from sales of property and equipment 3 10 10 Capital expenditures (341) (309) (265) Free Cash Flow $ 836 $ 841 $ 510 (1) Consists primarily of severance and related costs, organizational realignment and asset impairment charges.
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 December 30, 2023, the Company had approximately $2.0 billion in cash and available liquidity.
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 December 28, 2024, the Company had approximately $1.5 billion in cash and available liquidity.
Cash flows used in investing activities in fiscal year 2023 also included $140 million cash purchase price for the acquisition of Renzi Food Service and $56 million cash purchase price for the acquisition of Saladino’s. 31 We expect total cash capital expenditures in fiscal year 2024 to be between $325 million and $375 million.
Cash flows used in investing activities in fiscal year 2024 also included $214 million cash purchase price for the acquisition of IWC Food Service. Cash flows used in investing activities in fiscal year 2023 also included $140 million cash purchase price for the acquisition of Renzi Food Service and $56 million cash purchase price for the acquisition of Saladino’s.
In addition, we provide certain postretirement health and welfare benefits to eligible retirees and their dependents. In the quarter ending July 1, 2023, the Company issued a notice of intent to terminate the majority of the US Foods Consolidated Defined Benefit Retirement Plan. See Note 18, Retirement Plans, in our consolidated financial statements for further detail on the plan termination.
In addition, we provide certain postretirement health and welfare benefits to eligible retirees and their dependents. On October 31, 2024, the Company terminated and settled the majority of the defined benefit plan. See Note 17, Retirement Plans, in our consolidated financial statements for further detail on the plan termination.
Investing Activities Cash flows used in investing activities in fiscal years 2023 and 2022 included cash expenditures of $309 million and $265 million, respectively, and related to investments in information technology, new construction and expansion of distribution facilities and property and equipment for fleet replacement.
Net cash provided by operating activities in fiscal year 2023 benefited from higher net income and changes in operating assets and liabilities. 31 Investing Activities Cash flows used in investing activities in fiscal years 2024 and 2023 included cash expenditures of $341 million and $309 million, respectively, and related to investments in information technology, new construction and expansion of distribution facilities and property and equipment for fleet replacement.
We expect to fund our capital expenditures with available cash or cash generated from operations and through fleet financing.
We expect total cash capital expenditures in fiscal year 2025 to be between $375 million and $425 million. We expect to fund our capital expenditures with available cash or cash generated from operations and through fleet financing.
In addition, we provide certain postretirement health and welfare benefits to eligible retirees and their dependents. See Note 18, Retirement Plans, in our consolidated financial statements for further detail of our obligations and the timing of expected future payments. • Self-insured liabilities – We are self-insured for general liability, fleet liability and workers’ compensation claims.
See Note 17, Retirement Plans, in our consolidated financial statements for further detail of our obligations and the timing of expected future payments. • Self-insured liabilities – We are self-insured for general liability, fleet liability and workers’ compensation claims. Claims in excess of certain levels are insured by external parties.
Financing activities in fiscal year 2022 also included $22 million of proceeds received from stock purchases under our employee stock purchase plan and $15 million of proceeds from the exercise of employee stock options, which were offset by $16 million of employee tax withholdings paid in connection with the vesting of stock awards.
Financing activities in fiscal year 2024 also included $948 million of common stock repurchased, exclusive of approximately $10 million of fees, commissions and the related 1% of excise tax under the Amended Share Repurchase Program, $28 million of proceeds received from stock purchases under our employee stock purchase plan and $15 million of proceeds from the exercise of employee stock options, which were offset by $21 million of employee tax withholdings paid in connection with the vesting of stock awards.
Operating Income Our operating income was $1,017 million in fiscal year 2023, compared to operating income of $594 million in fiscal year 2022. Operating income as a percentage of net sales was 2.9% in fiscal year 2023, compared to 1.7% in fiscal year 2022.
Operating Income Our operating income was $1,099 million in fiscal year 2024, compared to operating income of $1,017 million in fiscal year 2023. Operating income as a percentage of net sales was 2.9% in fiscal year 2024 and 2.9% in fiscal year 2023. The increase in operating income was due to the factors discussed in the relevant sections above.
The amount and timing of recognition of consideration under these incentives requires management judgment and estimates. Consideration under these incentives is estimated during the year based on historical and forecasted purchasing activity, as our obligations under the programs are fulfilled primarily when products are purchased.
Consideration under these incentives is estimated during the year based on historical and forecasted purchasing activity, as our obligations under the programs are fulfilled primarily when products are purchased. Consideration is typically received in the form of invoice deductions, or less often in the form of cash payments.
The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. We record net deferred tax assets to the extent we believe these assets will more likely than not be realized.
The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.
Net Sales Total case volume increased 4.4% driven by a 6.9% increase in independent restaurant case volume, a 7.2% increase in healthcare volume and a 8.9% increase in hospitality volume, offset by a 2.1% decrease in national chain volume. Total organic case volume increased 3.9% and organic independent restaurant case volume increased 6.4%.
Total case volume increased 4.2% driven by a 4.4% increase in independent restaurant case volume, a 5.7% increase in healthcare volume, a 2.1% increase in hospitality volume and a 3.2% increase in chain volume. Organic broadline sales of private brands represented approximately 34% of net sales in both 2024 and 2023.
Due to the many variables inherent in estimating fair value and the relative size of the indefinite-lived intangible assets, differences in assumptions could have a material effect on the results of the Company’s impairment analysis in future periods. Vendor Consideration We participate in various rebate and promotional incentives with our suppliers, primarily through purchase-based programs.
The recoverability of our indefinite-lived intangible assets could be impacted if estimated future cash flows are not achieved. Due to the many variables inherent in estimating fair value and the relative size of the indefinite-lived intangible assets, differences in assumptions could have a material effect on the results of the Company’s impairment analysis in future periods.
For additional information, see the discussion under the caption “Non-GAAP Reconciliations” below. 26 (2) Free Cash Flow is defined as cash flows provided by operating activities less cash capital expenditures. Free Cash Flow as presented in this Annual Report is a supplemental measure of our liquidity that is not required by, or presented in accordance with, GAAP.
For additional information, see the discussion under the caption “Non-GAAP Reconciliations” below. 26 (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.
Our LIFO method of inventory costing resulted in a gain of $1 million in fiscal year 2023, compared to an expense of $147 million in fiscal year 2022.
Our LIFO method of inventory costing resulted in an expense of $61 million in fiscal year 2024, compared to a gain of $1 million in fiscal year 2023. Gross profit as a percentage of net sales was 17.3% in fiscal years 2024 and 2023.
These discrete tax items included an aggregate tax benefit of $5 million consisting primarily of a tax benefit of $1 million related to a decrease in an unrecognized tax benefit and a tax benefit of $4 million, related to excess tax benefits associated with share-based compensation.
These discrete tax items included an aggregate tax benefit of $24 million consisting of 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 $9 million primarily related to excess tax benefits associated with share-based compensation, and a tax expense of $2 million, primarily related to adjustments to prior year tax provision estimates.
Gross Profit Gross profit increased $656 million, or 11.9%, to $6,148 million in fiscal year 2023, primarily as a result of an increase in total case volume, cost of goods sold optimization, increased freight income from improved inbound logistics and optimized pricing.
Gross Profit Gross profit increased $386 million, or 6.3%, to $6,534 million in fiscal year 2024, primarily as a result of an increase in total case volume, improved cost of goods sold and pricing optimization, partially offset by an unfavorable year-over-year LIFO adjustment.
The increase in operating income was due to the factors discussed in the relevant sections above. 29 Other Income—Net Other income—net includes components of net periodic benefit costs (credits), exclusive of the service cost component associated with our defined benefit and other postretirement plans.
Other Expense (Income)—Net Other expense (income)—net includes components of net periodic benefit costs (credits), exclusive of the service cost component associated with our defined benefit and other postretirement plans. We recognized other expense—net of $6 million in 2024 and other income—net of $6 million in 2023, respectively.
(5) Transformational costs represent non-recurring expenses prior to formal launch of strategic projects with anticipated long-term benefits to the Company. These costs generally relate to third party consulting and non-capitalizable construction or technology. For fiscal year 2023, business transformation costs related to projects associated with information technology infrastructure initiatives.
(5) Recognition of net actuarial loss for pension settlement represents non-recurring expense for the termination of certain defined benefit plans. (6) 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.
Operating Expenses Operating expenses, comprised of distribution, selling and administrative costs and restructuring costs and asset impairment charges, increased $233 million, or 4.8%, to $5,131 million in fiscal year 2023. Operating expenses as a percentage of net sales were 14.4% in fiscal year 2023, compared to 14.4% in fiscal year 2022.
Operating Expenses Operating expenses, comprised of distribution, selling and administrative costs and restructuring activity and asset impairment charges, increased $304 million, or 5.9%, to $5,435 million in fiscal year 2024.
We adjust the amounts recorded for uncertain tax positions when our judgment changes as a result of the evaluation of new information not previously available. These differences are reflected as increases or decreases to income tax expense in the period in which they are determined.
Uncertain tax positions are recorded at the largest amount that is more likely than not to be sustained. We adjust the amounts recorded for uncertain tax positions when our judgment changes as a result of the evaluation of new information not previously available.
Net sales increased $1,540 million, or 4.5%, in fiscal year 2023 primarily due to case volume growth. Gross profit increased $656 million, or 11.9%, to $6,148 million in fiscal year 2023, primarily as a result of an increase in total case volume, cost of goods sold optimization, increased freight income from improved inbound logistics and optimized pricing.
Gross profit increased $386 million, or 6.3%, to $6,534 million in fiscal year 2024, primarily a result of an increase in total case volume, improved cost of goods sold and pricing optimization, partially offset by an unfavorable year-over-year LIFO adjustment. As a percentage of net sales, gross profit was 17.3% in fiscal year 2024 and 17.3% in fiscal year 2023.
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.
Any potential debt reduction or refinancing could require significant use of our available liquidity and capital resources.
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. Independent restaurant case volumes exclude the impacts of CHEF’STORE, which is recorded as other case volume.
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.
We recognized other income—net of $6 million and $22 million in fiscal years 2023 and 2022, respectively. The decrease in other income—net in 2023 is primarily due to a decrease in the expected return on assets and the value of pension assets compared to fiscal year 2022.
Other expense—net is due to a increase in the pension benefit interest cost and a decrease in the expected return on assets compared to fiscal year 2023. 29 Interest Expense—Net Interest expense—net decreased $9 million in fiscal year 2024, primarily due to lower outstanding debt in 2024 compared to 2023.
We incurred approximately $4 million of lender fees and third-party costs in connection with the ABL Facility refinancing transaction.
We incurred approximately $1 million total of lender fees and third-party costs in connection with the repricing of the 2021 Incremental Term Loan Facility, which were capitalized as deferred financing costs.
The incremental senior secured term loan borrowed in September 2019 (the “2019 Incremental Term Loan Facility”) had a carrying value of $1,105 million, net of $11 million of unamortized deferred financing costs, as of December 30, 2023.
The 2021 Incremental Term Loan Facility had a carrying value of $610 million, with no unamortized deferred financing costs, as of December 28, 2024. The 2024 Incremental Term Loan Facility borrowed in October 2024 had a carrying value of $717 million, net of $8 million of unamortized deferred financing costs, as of December 28, 2024.
The incremental senior secured term loan borrowed in November 2021 (the “2021 Incremental Term Loan Facility”) had a carrying value of $718 million, net of $3 million of unamortized deferred financing costs, as of December 30, 2023. 30 The Amended and Restated Term Loan Credit Agreement, dated as of June 27, 2016 (as amended, the “Term Loan Credit Agreement”) provides USF with the 2019 Incremental Term Loan Facility and 2021 Incremental Term Loan Facility.
The Amended and Restated Term Loan Credit Agreement, dated as of June 27, 2016 (as amended, the “Term Loan Credit Agreement”) provides USF with the 2021 Incremental Term Loan Facility and the 2024 Incremental Term Loan Facility. We also had $490 million of obligations under financing leases for transportation equipment and building leases as of December 28, 2024.
As a percentage of net sales, Adjusted EBITDA was 4.4% in fiscal year 2023, as compared to 3.8% in fiscal year 2022. • Net sales increased $1,540 million, or 4.5% to $35,597 million in fiscal year 2023. • Total case volume increased 4.4% and independent restaurant case volume increased 6.9% in fiscal year 2023. • Total organic case volume increased 3.9% and organic independent restaurant case volume increased 6.4%. • Operating income was $1,017 million in fiscal year 2023, compared to operating income of $594 million in fiscal year 2022.
As a percentage of net sales, Adjusted EBITDA was 4.6% in fiscal year 2024, as compared to 4.4% in fiscal year 2023. Net Sales Net sales increased $2,280 million, or 6.4%, to $37,877 million in fiscal year 2024 driven by case volume growth and food cost inflation of 2.6%.
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. 28 A reconciliation between the GAAP income tax provision (benefit) and the income tax provision, as adjusted, is as follows: Fiscal Year 2023 2022 2021 (in millions) GAAP income tax provision $ 172 $ 96 $ 50 Tax impact of pre-tax income adjustments 48 89 74 Discrete tax items 8 5 9 Income tax provision, as adjusted $ 228 $ 190 $ 133 Comparison of Results Fiscal Years Ended December 30, 2023 and December 31, 2022 Highlights • Net income was $506 million in fiscal year 2023, compared to net income of $265 million in fiscal year 2022. • Adjusted EBITDA increased $249 million, or 19.0%, to $1,559 million in fiscal year 2023.
A reconciliation between the GAAP income tax provision and the income tax provision, as adjusted, is as follows: Fiscal Year 2024 2023 2022 (in millions) GAAP income tax provision $ 150 $ 172 $ 96 Tax impact of pre-tax income adjustments 96 48 89 Discrete tax items 26 8 5 Income tax provision, as adjusted $ 272 $ 228 $ 190 28 Comparison of Results Fiscal Years Ended December 28, 2024 and December 30, 2023 Highlights • Net sales increased $2,280 million, or 6.4% to $37,877 million in fiscal year 2024. • Total case volume increased 4.2% and independent restaurant case volume increased 4.4% in fiscal year 2024. • Total organic case volume increased 1.4% and organic independent restaurant case volume increased 2.6%. • Operating income increased $82 million to $1,099 million in fiscal year 2024. • Net income available to common shareholders decreased $5 million to $494 million in fiscal year 2024. • Adjusted EBITDA increased $182 million, or 11.7%, to $1,741 million in fiscal year 2024.
Total organic case volume increased 3.9% which includes 6.4% organic independent restaurant case volume growth. Operating Metrics Case growth —Case growth, by customer type (e.g., independent restaurants) is reported as of a point in time.
As of December 28, 2024, the Company is in the process of exploring this sale which has not met held for sale criteria in the current year. Operating Metrics Case growth —Case growth, by customer type (e.g., independent restaurants) is reported as of a point in time.
Net Income Our net income was $506 million in fiscal year 2023, compared to $265 million in fiscal year 2022. The increase 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.
Net Income Our net income available to common shareholders was $494 million in fiscal year 2024, compared to a net income available to common shareholders of $499 million in fiscal year 2023. The decrease in net income available to common shareholders was due to the relevant factors discussed above.
Organic growth —Organic growth includes growth from operating businesses that have been reflected in our results of operations for at least 12 months. Fiscal Year 2023 Highlights Financial Highlights —Total case volume increased 4.4% and independent restaurant case volume increased 6.9% in fiscal year 2023. Total organic case volume increased 3.9% in fiscal year 2023.
Fiscal Year 2024 Highlights Financial Highlights —Total case volume increased 4.2% and independent restaurant case volume increased 4.4% in fiscal year 2024. Total organic case volume increased 1.4% in fiscal year 2024, and organic independent restaurant case volume increased 2.6%.
The increase in operating expenses was primarily due to increased total case volume and higher seller compensation costs, partially offset by lower distribution cost per case from cost savings initiatives including routing improvements and focused efforts positively impacting labor turnover and productivity as well as lower fuel costs.
Total operating expenses increased $304 million, or 5.9%, to $5,435 million in fiscal year 2024. The increase was primarily a result of an increase in total case volume, higher distribution costs, reflecting increased labor costs, partially offset by continued distribution productivity improvement as well as actions to streamline administrative processes and costs.
Cash flows used in financing activities in fiscal year 2022 included $108 million of schedule payments under our Term Loan Facilities and financing leases, $100 million of voluntary prepayments of our 2021 Incremental Term Loan Facility, $200 million of voluntary prepayments of our 2019 Incremental Term Loan Facility, $37 million of dividends on our Series A Preferred Stock and $14 million of share repurchases.
Financing Activities Cash flows used in financing activities in fiscal year 2024 included $112 million of scheduled payments under our Term Loan Facilities and financing leases, $1,217 million for repayment of the 2019 Incremental Term Loan Facility and paydown of the 2021 Incremental Term Loan Facility, $14 million in principal payments for the repricing of the 2021 Incremental Term Loan Facility and $13 million of financing fees related to the repayment of the 2019 Incremental Term Loan Facility and the 2021 Incremental Term Loan Facility repricing, $223 million in net proceeds under the ABL Facility, $725 million from the 2024 Incremental Term Loan Facility issuance and $500 million from the 2033 Unsecured Senior Note issuance.
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Overview 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 GREAT FOOD. MADE EASY.™ , which is centered on providing customers with the innovative products, business support and technology solutions they need to operate their businesses profitably.
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Overview At US Foods, we strive to inspire and empower chefs and foodservice operators to bring great food experiences to consumers.
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As a percentage of net sales, gross profit was 17.3% in fiscal year 2023, compared to 16.1% in fiscal year 2022. Total operating expenses increased $233 million, or 4.8%, to $5,131 million in fiscal year 2023.
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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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For fiscal year 2022, business transformation costs consist of new facility openings, supply chain strategy improvements, and information technology infrastructure initiatives. (6) Includes the changes in the reserve for doubtful accounts expense reflecting the collection risk associated with our customer base as a result of the COVID-19 pandemic.
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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. Net sales increased 6.4%, driven by case volume growth.
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(7) Includes COVID-19 related costs that we are permitted to add back under certain agreements governing our indebtedness.
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On June 5, 2024, the Company announced it intends to explore the potential sale of its assets and liabilities related to CHEF’STORE wholesale restaurant supply business and, if a sale is completed, then entirely focus on delivered broadline operations.
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As a percentage of net sales, operating income was 2.9% in fiscal year 2023, as compared to 1.7% in fiscal year 2022.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe also enter into forward purchase commitments for a portion of our projected diesel fuel requirements. As of December 30, 2023, we had diesel fuel forward purchase commitments totaling $33 million, which fix approximately 26% of our projected diesel fuel purchase needs through December 2024.
Biggest changeWe also enter into forward purchase commitments for a portion of our projected diesel fuel requirements. As of December 28, 2024, we had diesel fuel forward purchase commitments totaling $33 million, which fix approximately 30% of our projected diesel fuel purchase needs through December 2025.
Our activities to minimize fuel cost risk include route optimization, improving fleet utilization, assessing fuel surcharges and enhancing fleet technology and transitioning to alternative fuel sources, including electric vehicles. We typically directly offset approximately 40% of the increases in fuel costs through fuel surcharges to customers.
Our activities to minimize fuel cost risk include route optimization, improving fleet utilization, assessing fuel surcharges and enhancing fleet technology and transitioning to alternative fuel sources, including electric vehicles. We typically directly offset approximately 41% of the increases in fuel costs through fuel surcharges to customers.
The interest rate cap agreements will effectively cap the interest rate on approximately 24% of the 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 agreements.
The interest rate cap agreements will effectively cap the interest rate on approximately 34% of the 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 agreements.
We manage our debt portfolio to achieve an overall desired position of fixed and floating rates and may employ interest rate hedges as a tool to achieve that position. In April 2023, USF entered into two two-year rate cap 34 agreements, which will each mature on April 30, 2025 with a total notional amount of $450 million .
We manage our debt portfolio to achieve an overall desired position of fixed and floating rates and may employ interest rate hedges as a tool to achieve that position. In April 2023, the Company entered into two two-year rate cap agreements, which will each mature on April 30, 2025 with a total notional amount of $450 million .
A hypothetical 1% change in the applicable rate would cause the interest expense on our floating rate debt to change by approximately $16 million per year (see Note 11, Debt, in our consolidated financial statements). Fuel Price Risk We are also exposed to risk due to fluctuations in the price and availability of diesel fuel.
A hypothetical 1% change in the applicable rate would cause the interest expense on our floating rate debt to change by approximately $17 million per year (see Note 10, Debt, in our consolidated financial statements). Fuel Price Risk We are also exposed to risk due to fluctuations in the price and availability of diesel fuel.
Using current published market price projections for diesel and estimated fuel consumption needs, a hypothetical 10% unfavorable change in diesel prices from the market price could result in approximately $14 million in additional fuel cost on uncommitted volumes through December 2024. 35
Using current published market price projections for diesel and estimated fuel consumption needs, a hypothetical 10% unfavorable change in diesel prices from the market price could result in approximately $12 million in additional fuel cost on uncommitted volumes through December 2025. 35
After considering interest rate caps that fixed the interest rate on a total notional amount of $450 million of the current principal amount of the Term Loan Facilities, approximately 30% of the principal amount of our debt bore interest at floating rates based on Term SOFR or an alternative reference rate, as defined in our credit agreements, as of December 30, 2023.
After considering interest rate caps that fixed the interest rate on a total notional amount of $450 million of the current principal amount of the Term Loan Facilities, approximately 32% of the principal amount of our debt bore interest at floating rates based on Term SOFR or an alternative reference rate, as defined in our credit agreements, as of December 28, 2024.
Increases in the cost of diesel fuel can negatively affect consumer confidence and discretionary spending and increase the prices we pay for products, and the costs we incur to deliver products to our customers. Fuel costs related to outbound deliveries approximated $191 million during the fiscal year ended December 30, 2023.
Increases in the cost of diesel fuel can negatively affect consumer confidence and discretionary spending and increase the prices we pay for products, and the costs we incur to deliver products to our customers. Fuel costs related to outbound deliveries approximated $171 million during the fiscal year ended December 28, 2024.
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Following the Intercontinental Exchange Benchmark Administration’s announcement that it will cease publication of the U.S. dollar LIBOR tenors as of June 30, 2023, we evaluated the impact of such announcement and the use of alternative reference rates on our existing contracts, including with respect to our term loan credit agreement.
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On June 1, 2023, we entered into an amendment to our term loan credit agreement to replace the LIBOR-based interest rate option included in the term loan credit agreement with an interest rate option based upon the Term Secured Overnight Financing Rate (“Term SOFR”). Term SOFR is a relatively new reference rate and has a very limited history.
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The future performance of Term SOFR cannot be predicted based on its limited historical performance. As a result, we are unable to predict the impact of using alternative reference rates and corresponding rate risk as of this time.

Other USFD 10-K year-over-year comparisons