q3 fy17 earnings-slides-final

Q3 Fiscal 2017 Results

US Foods Holding Corporation

November 7, 2017

11

Cautionary Statements

Forward-Looking Statements

This presentation contains “forward-looking statements” concerning, among other things, our liquidity, our possible or assumed future results of operations and our business strategies. Our actual results could differ materially from those expressed in theforward-looking statements. There are a number of risks, uncertainties, and other important factors, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking statements contained in this presentation.

For a detailed discussion of these risks and uncertainties, see the sections entitled “Risk Factors” and “Forward-Looking Statements” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, which was filed with the Securities and Exchange Commission and is available on our Investor Relations website and via EDGAR at www.sec.gov. The forward-looking statements contained in this presentation speak only as of the date of this presentation. We undertake no obligation, other than as may be required by law, to update or revise any forward-looking statements.

22

Q3 2017 was a very good quarter

• Strong Adj. EBITDA growth; 9.4% Q3*, 8.6% YTD

• Financial highlights

• Independent restaurant organic growth of 4.1%; strong overall growth with target customer types

• Gross Profit per case growth

• Progress against our Operating Expense initiatives

• Delivering on our Great Food. Made Easy. strategy

• New exclusive partnership with Chef Marcus Samuelsson

• Increasing demand for value added services

• 2017 guidance updates; raising Net Income, Adjusted Diluted EPS and tightening Adjusted EBITDA ranges

* Negative 80bps impact to Q3 2017 Adjusted EBITDA due to hurricanes.

Highest organic growth with independent restaurants since Q2 2016

CASE GROWTH BY QUARTER*YoY Change

* Q4 2016 growth figures normalized to adjust for 53rd week in 2015

-4%

-2%

1%

3%

5%

7%

9%

Q1 Q2 Q3 Q4 Q1 Q2 Q3

IND Case GrowthHC/Hosp Case GrowthAll Other

20172016

3

Case Growth* with Independent Restaurant CustomersYoY percent change*

Total Case Growth*YoY percent change*

6.5%

4.6%

3.5% 3.8%

2.8%

3.7% 4.1%

8.0%

6.8%

5.4%6.1%

4.0% 4.7%

6.0%

Q1 Q2 Q3 Q4 Q1 Q2 Q3

Acquisitions

2016 2017

Organic

2016 2017

1.8% 1.7% 2.0%

2.7% 2.3%

1.0%

2.4%

1.2%

4.0% 4.1% 4.3%

3.6%

2.0%

Q1 Q2 Q3 Q4 Q1 Q2 Q3

Acquisitions

Organic

~(30) bps from hurricanes

~(10) bps from hurricanes

44

0%

10%

20%

30%

40%

50%

60%

2011 Q3 2017

0

1000

2000

3000

4000

5000

Q1 Q2 Q3 Q4 Q1 Q2 Q3

# O

F C

US

TO

ME

RS

UT

ILIZ

ING

Our Great Food. Made Easy. strategy continues to resonate with customers

ScoopScoop Value Added ServicesValue Added ServicesE-CommerceE-Commerce

IND

E-C

OM

M P

EN

ET

RA

TIO

N

SC

OO

P C

US

TO

ME

R T

RIA

L R

AT

E*

0%

10%

20%

30%

40%

50%

Spring 2016 Fall 2017 2016 2017

*Customer required to purchase minimum of two cases

55

US Foods partners with Chef Marcus Samuelsson on Fall Scoop launch

• World renowned chef, author, independent restaurateur

• Five time James Beard award winner

• 13 worldwide restaurants

• Six exclusive new products inspired by Chef Samuelsson’s Ethiopian and Swedish heritage

• Chose US Foods for its:

• “passion for food”

• “unique ingredients”

• “distinctive flavors”

• Introduced US Foods scholarship program in partnership with Careers Through Culinary Arts Program

66

Progress continues on Gross Profit and Operating Expense initiatives

CookBook pricing

Strategic vendor management

Centralized purchasing

Customer mix

Private brand growth

OPEX InitiativesStatus

◔

◕

◔

◔ ●

●GP Initiatives

Supply chain continuous improvement

◐

◐

◔

Just Starting Completed

●

Expected Completion Status

Expected Completion

Q1 2017

Ongoing

Q4 2018

Q4 2019

Q4 2020

Q2 2017

Ongoing

Q1 2018

Ongoing

Ongoing

◕

* Cost resets include: field model, corporate model and DB pension freeze

Cost Resets*

Sales force productivity

Indirect spend centralization

Enhanced shared services

◕

7

$17,241

$18,151

$5,841

$6,204

Volume growth and year-over-year inflation driving increase in Net Sales

Q3 Net Sales$ Millions b/(w)

YTD Net Sales$ Millions b/(w)

RESULTS SUMMARY

Net Sales gains coming from:

• Volume growth with target customer types

• Acquisition volume

• YOY inflation primarily in commodity categories

• Q3: $5.5M negative impact from Hurricanes to Net Sales

6.2%6.2%

2016 2017Case Growth2.0%

Inflation/Mix4.2%

5.3%5.3%

2016 Case Growth3.3%

Inflation/Mix2.0%

2017

Q4 2016 Q1 2017 Q2 2017 Q3 2017

YOY Inflation Trends Product & Acquisition MixProduct Inflation

~(240) bps

~(80) bps~240 bps ~420 bps

8

Q3 Gross Profit dollar gains significantly outpacing volume growth

RESULTS SUMMARY

Gross Profit impacts coming from:

• Volume growth across target customer types

• Margin expansion initiatives

• Cookbook pricing

• Centralized purchasing and sourcing

• Private label growth

• Q3: GP growth of 6.4% outpacing 2.0% volume growth

• Q3: LIFO positive YoY impact of $19M

• YTD: inflation negatively impacting GP %

Q3 Gross Profit$ Millions; Percent of Sales b/(w)

6.4%

0 bps

YTD Gross Profit$ Millions; Percent of Sales b/(w)

(30) bps

Adjusted Gross Profit*

Q3’17: $1.1B, higher $49M or 4.8%17.3% of sales, down 30 bps

YTD’17: $3.2B, higher $159M or 5.3%17.4% of sales, flat to PY

3.9%

* Reconciliations of non-GAAP measures are provided in the Appendix

$1,033

$1,099

2016 2017

17.7% 17.7%

$3,026

$3,144

2016 2017

17.3%17.6%

9

$2,728 $2,752

2016 2017

YTD Operating Expenses$ Millions; Percent of Sales b/(w)

Gross Profit growing faster than Operating Expense

RESULTS SUMMARY

Operating expenses drivers:

• Cost control initiatives limiting Operating Expense growth

• 2017 benefiting from lower sponsor fees and restructuring charges

• Q3: positive impact from D&A decline related to full amortization of customer intangible asset

• YTD: higher volume resulting in additional operating expenses

Adjusted Operating Expenses*

Q3’17: $807M, higher $26M or 3.3%13.0% of sales, better 40 bps

YTD’17: $2.4B, higher $98M or 4.3%13.2% of sales, better 10 bps

Q3 Operating Expenses$ Millions; Percent of Sales b/(w)

$917$909

2016 2017

15.7% 14.7%

0.9%

100 bps

60 bps


0.9%0.9%

15.2%15.8%

1010

ADJ GROSS PROFIT AND ADJ OPERATING EXPENSE$/case higher/lower than prior year

($0.10)

($0.05)

$0.00

$0.05

$0.10

$0.15

2015 2016 YTD 2017

Adj GP Adj OPEX

$.06 better

$.06 worse

$.06 better

$.06 better

$.11better

$.04 worse

Contribution margin per case improving

11

$707$768

2016 2017

$115

$190

2016 2017

Q3 Adjusted EBITDA*$ Millions; Percent of Sales b/(w)

$244

$267

2016 2017

Key profitability metrics improving over prior year

Q3 Operating Income$ Millions; Percent of Sales b/(w)

$133

$87$96 $89

GAAP Adjusted*

Q3 Net Income$ Millions

YTD Operating Income$ Millions; Percent of Sales b/(w)

YTD Adjusted EBITDA*$ Millions; Percent of Sales b/(w)

YTD Net Income$ Millions

$133

$201$188

$214

GAAP Adjusted*

4.2% 4.3%

20162017

20162017


9.4%

3.1%2.0%

32%$298

$392

2016 2017

2.2%1.7%

8.6%

4.2%4.1%

65%

Pre tax incomeup $92M over PY

Pre tax incomeup $211M YTD

1212

YTD Operating Cash Flow$ Millions

YTD Net Debt* and Leverage$ Millions

YTD Interest Expense$ Millions, Percent Change b/(w)

Operating cash flow also improving, leading to lower leverage and interest expense

$440

$506

2016 2017

Leverage **$190

$126

2016 2017

* Reconciliations of non-GAAP measures are provided in the Appendix** Net Debt / TTM Adjusted EBITDA

$3,675

$3,556

2016 2017

3.8x

3.4x

34%

1313

Prior 2017 Guidance

Updated 2017 Guidance

Unit Growth 2 – 4% 2.5 – 3%

Net Sales Growth 3 – 5% 4.5 – 5%

Adjusted EBITDA Growth 7 - 10% 8 – 9%

Net Income Growth 15 – 20% 20 – 25%

Cash CAPEX(ex Future Acquisitions)

$230 - $250M $220 - $230M

Interest Expense $175 - $180M $170 - $175M

Depreciation & Amortization $370 - $380M $375 - $380M

Adj Effective Tax Rate ~39% ~39%

Cash Income Taxes $20 - $25M $20 - $25M

Adjusted Diluted EPS $1.30 - $1.40 $1.35 - $1.40

Updates to 2017 guidance

Orange text represents updated guidance numbers

1414

APPENDIX:

• Q3 FISCAL 2017 SUMMARY

• NON-GAAP RECONCILIATIONS

1515

Third Quarter Financial Performance

$ in millions, except per share data*

13-Weeks Ended

September 30,

2017

13-Weeks Ended

October 1,

2016 Change

13-Weeks Ended

September 30,

2017

13-Weeks Ended

October 1,

2016 Change

Case Growth 2.0 %

Net Sales 6,204 5,841 6.2 %

Gross Profit 1,099 1,033 6.4 % 1,075 1,026 4.8 %

% of Net Sales 17.7% 17.7% 0 bps 17.3% 17.6% (30) bps

Operating Expenses 909 917 (0.9)% 807 781 3.3 %

% of Net Sales 14.7% 15.7% (100) bps 13.0% 13.4% (40) bps

Operating Income 190 115 65.2 % 268 244 9.8%

Net Income 96 133 (27.8)% 89 87 2.3%

Diluted EPS $0.42 $0.59 (28.8)% $0.39 $0.39 —

Adjusted EBITDA 267 244 9.4%

Adjusted EBITDA Margin (2) 4.3% 4.2% 10 bps

* Individual components may not add to total presented due to rounding.

(1) Reconciliations of these non-GAAP measures are provided in the Appendix.

(2) Represents Adjusted EBITDA as a percentage of Net Sales.

NM - Percentage change not meaningful.

Reported(unaudited)

Adjusted(1)

(unaudited)

1616

Year to Date Financial Performance

$ in millions* except per share data

39-Weeks Ended

September 30,

2017

39-Weeks Ended

October 1,

2016 Change

39-Weeks Ended

September 30,

2017

39-Weeks Ended

October 1,

2016 Change

Case Growth 3.3%

Net Sales 18,151 17,241 5.3 %

Gross Profit 3,144 3,026 3.9% 3,160 3,001 5.3%

% of Net Sales 17.3% 17.6% (30) bps 17.4% 17.4% 0 bps

Operating Expenses 2,752 2,728 0.9 % 2,392 2,294 4.3%

% of Net Sales 15.2% 15.8% (60) bps 13.2% 13.3% (10) bps

Operating Income 392 298 31.5% 768 707 8.6%

Net Income 188 133 41.4 % 214 201 6.5%

Diluted EPS $0.83 $0.68 22.1% $0.95 $1.02 (6.9)%

Adjusted EBITDA 768 707 8.6%

Adjusted EBITDA Margin (2) 4.2% 4.1% 10 bps

* Individual components may not add to total presented due to rounding.

(1) Reconciliations of these non-GAAP measures are provided in the Appendix

(2) Represents Adjusted EBITDA as a percentage of Net Sales.

NM - Percentage change not meaningful.

Reported(unaudited)

Adjusted(1)

(unaudited)

1717

Non-GAAP Reconciliation - Adjusted Gross Profit and Adjusted Operating Expenses

($ in millions)*

September 30,

2017

October 1,

2016

September 30,

2017

October 1,

2016

Gross Profit (GAAP) $1,099 $1,033 $3,144 $3,026

LIFO reserve change (1) (26) (7) 14 (25)

Impact from hurricanes (2) 2 - 2 -

Adjusted Gross Profit (Non-GAAP) $1,075 $1,026 $3,160 $3,001

Operating Expenses (GAAP) $909 $917 $2,752 $2,728

Adjustments:

Depreciation and amortization expense (81) (106) (295) (314)

Sponsor fees (3) - - - (36)

Restructuring charges (4) (1) (15) (3) (39)

Share-based compensation expense (5) (7) (5) (15) (14)

Business transformation costs (6) (7) (10) (33) (26)

Other (7) (6) - (14) (5)

Adjusted Operating Expenses (Non-GAAP) $807 $781 $2,392 $2,294

*Individual components may not add to total presented due to rounding

(1)

(2)

(3)

(4)

(5)

(6)

(7)

Represents the non-cash impact of LIFO reserve adjustments.

13-Weeks Ended 39-Weeks Ended

(unaudited) (unaudited)

Impact from hurricanes consists of costs recognized in Cost of Sales for inventory losses from recent hurricanes and product

donations that we made for hurricane relief.

Consists of fees paid to the Sponsors for consulting and management advisory services. On June 1, 2016, the consulting agreements

with each of the Sponsors were terminated for an aggregate termination fee of $31 million.

Consists primarily of severance and related costs and organizational realignment costs.

Share-based compensation expense for vesting of stock awards and employee share purchase plan.

Consists primarily of costs related to significant process and systems redesign across multiple functions.

Other includes gains, losses or charges as specified under USF’s debt agreements.

1818

Non-GAAP Reconciliation - Adjusted Operating Income

($ in millions)*

September 30,

2017

October 1,

2016

September 30,

2017

October 1,

2016

Operating Income (GAAP) $190 $115 $392 $298

Adjustments:

Depreciation and amortization expense 81 106 295 314

Sponsor fees (1) - - - 36

Restructuring charges (2) 1 15 3 39

Share-based compensation expense (3) 7 5 15 14


Business transformation costs (5) 7 10 33 26

Other (6) 8 - 16 5

Adjusted Operating Income (Non-GAAP) $268 $244 $768 $707


(1)

(2)

(3)

(4)

(5)

(6)



Consists of fees paid to the Sponsors for consulting and management advisory services. On June 1, 2016, the consulting

agreements with each of the Sponsors were terminated for an aggregate termination fee of $31 million.






1919

Non-GAAP Reconciliation - Adjusted EBITDA and Adjusted Net Income

($ in millions)*

September 30,

2017

October 1,

2016

September 30,

2017

October 1,

2016

Net income (GAAP) $96 $133 $188 $133

Interest expense, net 43 49 126 190

Income tax provision (benefit) 51 (78) 78 (78)

Depreciation and amortization expense 81 106 295 314

EBITDA (Non-GAAP) 271 210 687 559

Adjustments:

Sponsor fees (1) - - - 36

Restructuring charges (2) 1 15 3 39

Share-based compensation expense (3) 7 5 15 14


Loss on extinguishment of debt (5) - 12 - 54

Business transformation costs (6) 7 10 33 26

Other (7) 8 - 16 5

Adjusted EBITDA (Non-GAAP) $267 $244 $768 $707

Adjusted EBITDA (Non-GAAP) $267 $244 $768 $707

Depreciation and amortization expense (81) (106) (295) (314)

Interest expense, net (43) (49) (126) (190)

Income tax provision, as adjusted (8) (54) (2) (133) (2)

Adjusted Net income (Non-GAAP) $89 $87 $214 $201


(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)




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

changes in tax laws or rates, changes related to prior year unrecognized tax benefits, discrete changes in valuation allowances, and excess tax benefits associated with share-based compensation. The tax effect of pre-

tax items excluded from Adjusted Net income is computed using a statutory tax rate after considering the impact of permanent differences and valuation allowances. We released the valuation allowance against federal

and certain state net deferred tax assets in the 13-week period ended October 1, 2016. We were required to reflect the portion of the valuation allowance release related to the 2016 ordinary income in the estimated

annual effective tax rate and the portion of the valuation allowance release related to future years’ income discretely in the 13-weeks ended October 1, 2016. We maintained a valuation allowance on certain state net

operating loss and tax credit carryforwards expected to expire unutilized as a result of insufficient forecasted taxable income in the carryforward period, or the utilization of which are subject to limitation.

Consists of fees paid to the Sponsors for consulting and management advisory services. On June 1, 2016, the consulting agreements with each of the Sponsors were terminated for an aggregate termination fee of $31

million.Consists primarily of severance and related costs and organizational realignment costs.



Includes fees paid to debt holders, third party costs, the write off of certain pre-existing unamortized debt issuance costs and unamortized issue premium, an early redemption premium and the loss on our September

2016 CMBS Fixed Facility defeasance.


2020

Non-GAAP Reconciliation - Adjusted Diluted EarningsPer Share (EPS)

September 30,

2017

October 1,

2016

September 30,

2017

October 1,

2016

Diluted EPS (GAAP) 0.42$ 0.59$ 0.83$ 0.68$

Sponsor fees (1) - - - 0.18

Restructuring charges (2) - 0.07 0.01 0.20

Share-based compensation expense (3) 0.03 0.02 0.07 0.07

LIFO reserve change (4) (0.12) (0.03) 0.06 (0.13)

Loss on extinguishment of debt (5) - 0.05 - 0.27

Business transformation costs (6) 0.03 0.04 0.15 0.13

Other (7) 0.04 - 0.07 0.02

Income tax impact of adjustments (8) (0.02) (0.35) (0.24) (0.40)

Adjusted Diluted EPS (Non-GAAP) 0.39$ 0.39$ 0.95$ 1.02$

Weighted-average diluted shares outstanding (GAAP) 225,862,274 225,054,051 226,325,711 196,805,990


(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)




Represents our income tax provision (benefit) adjusted for the tax effect of pre-tax items excluded from Adjusted Net income and the removal of applicable discrete tax items. Applicable discrete tax items include changes in tax

laws or rates, changes related to prior year unrecognized tax benefits, discrete changes in valuation allowances, and excess tax benefits associated with share-based compensation. The tax effect of pre-tax items excluded

from Adjusted Net income is computed using a statutory tax rate after considering the impact of permanent differences and valuation allowances. We released the valuation allowance against federal and certain state net

deferred tax assets in the 13-week period ended October 1, 2016. We were required to reflect the portion of the valuation allowance release related to the 2016 ordinary income in the estimated annual effective tax rate and the

portion of the valuation allowance release related to future years’ income discretely in the 13-weeks ended October 1, 2016. We maintained a valuation allowance on certain state net operating loss and tax credit carryforwards

expected to expire unutilized as a result of insufficient forecasted taxable income in the carryforward period, or the utilization of which are subject to limitation.

Consists of fees paid to the Sponsors for consulting and management advisory services. On June 1, 2016, the consulting agreements with each of the

Sponsors were terminated for an aggregate termination fee of $31 million.




Includes fees paid to debt holders, third party costs, the write off of certain pre-existing unamortized debt issuance costs and unamortized issue premium, an early redemption premium and the loss on our September 2016

CMBS Fixed Facility defeasance.


2121

Non-GAAP Reconciliation – Net Debt and Net Leverage Ratios

($ in millions)*

September 30,

2017

December 31,

2016

October 1,

2016

Total debt (GAAP) $3,703 $3,782 $3,831

Cash and cash equivalents (147) (131) (150)

Restricted cash - - (6)

Net Debt (Non-GAAP) $3,556 $3,651 $3,675

Adjusted EBITDA (1) $1,033 $972 $962

Net Leverage Ratio (2) 3.4 3.8 3.8


(1)

(2)

(unaudited)

Trailing Twelve Months (TTM) EBITDA

Net debt/(TTM) Adjusted EBITDA