q4 fy16 earnings slides final

Q4 and Full Year 2016 Results

US Foods Holding Corporation

February 15, 2017

11

Cautionary Statements

Forward-Looking Statements

This presentation and related comments by management contain “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements include information concerning our liquidity and our possible or assumed future results of operations, including descriptions of ourbusiness strategies. These statements often include words such as “believe,” “expect,” “project,” “anticipate,” “intend,” “plan,” “estimate,” “target,” “seek,”“will,” “may,” “would,” “should,” “could,” “forecasts,” “mission,” “strive,” “more,” “goal,” or similar expressions. The statements are based on assumptions thatwe have made, based on our experience in the industry as well as our perceptions of historical trends, current conditions, expected future developments,and other factors we think are appropriate. We believe these judgments are reasonable. However, you should understand that these statements are notguarantees of performance or results. Our actual results could differ materially from those expressed in the forward-looking statements. There are anumber of risks, uncertainties, and other important factors, many of which are beyond our control, that could cause our actual results to differ materially fromthe forward-looking statements contained in this presentation. Such risks, uncertainties, and other important factors include, among others: our ability toremain profitable during times of cost inflation/deflation, commodity volatility, and other factors; industry competition and our ability to successfully compete;our reliance on third-party suppliers, including the impact of any interruption of supplies or increases in product costs; risks related to our indebtedness,including our substantial amount of debt, our ability to incur substantially more debt, and increases in interest rates; any change in our relationships withgroup purchasing organizations; any change in our relationships with long-term customers; our ability to increase sales to independent restaurantcustomers; our ability to successfully consummate and integrate future acquisitions; our ability to achieve the benefits that we expect from our cost savingsinitiatives; shortages of fuel and increases or volatility in fuel costs; any declines in the consumption of food prepared away from home, including as a resultof changes in the economy or other factors affecting consumer confidence; liability claims related to products we distribute; our ability to maintain a goodreputation; costs and risks associated with labor relations and the availability of qualified labor; changes in industry pricing practices; changes incompetitors’ cost structures; our ability to retain customers not obligated by long-term contracts to continue purchasing products from us; environmental,health and safety costs; costs and risks associated with government laws and regulations, including environmental, health, safety, food safety,transportation, labor and employment, laws and regulations, and changes in existing laws or regulations; technology disruptions and our ability to implementnew technologies; costs and risks associated with a potential cybersecurity incident; our ability to manage future expenses and liabilities associated with ourretirement benefits; disruptions to our business caused by extreme weather conditions; costs and risks associated with litigation; changes in consumereating habits; costs and risks associated with our intellectual property protections; and risks associated with potential infringements of the intellectualproperty of others.

For a detailed discussion of these risks and uncertainties, see the section entitled “Risk Factors” in our prospectus dated January 25, 2017, which was filedwith the Securities and Exchange Commission (“SEC”) on January 25, 2017, pursuant to Rule 424(b)(4) of the Securities Act of 1933, as amended. Allforward-looking statements made in this presentation are qualified by these cautionary statements. The forward-looking statements contained in thispresentation 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 anyforward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, or changes in futureoperating results over time or otherwise. Comparisons of results between current and prior periods are not intended to express any future trends, orindications of future performance, unless expressed as such, and should only be viewed as historical data.

22

Cautionary Statements

Non-GAAP Financial Measures

This presentation contains unaudited financial measures which are not required by, or presented in accordance with, accounting principles generallyaccepted in the United States of America (“GAAP”). We provide EBITDA, Adjusted EBITDA, Adjusted Diluted EPS, Adjusted Gross Profit, AdjustedOperating Expense, Adjusted Net Income and Free Cash Flow as supplemental measures to GAAP regarding the Company’s operational performance.These non-GAAP financial measures exclude the impact of certain items and, therefore, have not been calculated in accordance with GAAP. We believeEBITDA and Adjusted EBITDA provide meaningful supplemental information about our operating performance because they exclude amounts that we donot consider part of our core operating results when assessing our performance. Examples of items excluded from Adjusted EBITDA include Restructuringand tangible asset impairment charges, Loss on extinguishment of debt, Sponsor fees, Share-based compensation expense, Pension settlements, the non-cash impact of LIFO reserve adjustments, Business transformation costs (business costs associated with the redesign of systems and processes),acquisition related costs, acquisition termination fees–net, and other items as specified in our debt agreements.

We believe Adjusted Net income is a useful measure of operating performance for both management and investors because it excludes items that are notreflective of our core operating performance and provides an additional view of our operating performance including depreciation, amortization, interestexpense, and income taxes on a consistent basis from period to period. Adjusted Net income is Net income (loss) excluding such items as Restructuringand tangible asset impairment charges, Loss on extinguishment of debt, Sponsor fees, Share-based compensation expense, Pension settlements, Businesstransformation costs ( cost associated with redesign of systems and process), and other items, and adjusted for the tax effect of the exclusions and discretetax items. We believe that Adjusted Net income is used by investors, analysts and other interested parties to facilitate period-over-period comparisons andprovides additional clarity as to how factors and trends impact our operating performance.

We use Free cash flow to review the liquidity of our operations. We measure Free cash flow as Cash flows provided by operating activities less capitalexpenditures. We believe that Free cash flow is a useful financial metric to assess our ability to pursue business opportunities and investments. Free cashflow is not a measure of our liquidity under GAAP and should not be considered as an alternative to cash flows provided by operating activities

Management uses these non-GAAP financial measures (a) to evaluate the Company’s historical and prospective financial performance as well as itsperformance relative to its competitors as they assist in highlighting trends, (b) to set internal sales targets and spending budgets, (c) to measure operationalprofitability and the accuracy of forecasting, (d) to assess financial discipline over operational expenditures, and (e) as an important factor in determiningvariable compensation for management and employees. EBITDA and Adjusted EBITDA are also used for certain covenants and restricted activities underour debt agreements. We believe these non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties toevaluate companies in our industry.

We caution readers that amounts presented in accordance with our definitions of EBITDA, Adjusted EBITDA, Adjusted Net income and Free cash flow maynot be the same as similar measures used by other companies. Not all companies and analysts calculate EBITDA, Adjusted EBITDA, Adjusted Net incomeor Free cash flow in the same manner. We compensate for these limitations by using these non-GAAP financial measures as supplements to GAAPfinancial measures and by presenting the reconciliations of the non-GAAP financial measures to their most comparable GAAP financial measures.

33

2016 was a very good year on many fronts; 2017 shaping

up well

• Good operating results; volume growth, margin expansion,12.5%* adjusted EBITDA growth

• Continued progress against our strategy; food leadership,easy customer experience, flawless fundamentals

• Successful integration of 5 acquisitions

• Stronger balance sheet; lower debt, extended maturities,ample liquidity

• Favorable outlook; for our target customers

• Mid-term guidance unchanged; 7-10% Adjusted EBITDAgrowth

*Results normalized to adjust for 53rd week in 2015

Our strategy continues to underpin our performance

4

VOLUME/MARGIN GROWTH

• Customer/category mix

• Private brand growth

• Customer retention/penetration/growth

EFFECTIVENESS/EFFICIENCY

• Perfect order

• Distribution productivity

• Selling productivity

• G&A cost/case

• Employee engagement

5

We made progress against key initiatives in 2016…

VOLUME/MARGIN GROWTH

• 63 scoop products launched

• Sustainable products

• Food cost management diagnostics

• CookBook pricing tools

• “Did You Forget?” order prompt

• Expansion of Category Specialists

• 20 Food Fanatic Live events; an increase of 40%

EFFECTIVENESS/EFFICIENCY

• Completion of new field operating model

• Indirect sourcing

• “Perfect Order” improvement

• Enhanced sales routines

• Targeted facility expansions and closures

• Streamlined corporate organization

• Talent management

6

…driving strong adjusted EBITDA growth

did

did

VOLUME+

Percent Change

did

GROSS PROFIT AND OPERATING EXPENSEPercent of Sales

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

GP OPEX

ADJUSTED EBITDA RESULTS BY QUARTER*+

YoY change

7%

0%

3%

6%

28%

10%

8%9%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2015 2016

2015 2016

2015 2016* Reconciliations of non-GAAP measures are provided in the Appendix+ Results normalized to adjust for 53rd week in 2015

(0.7%)

0.0%

(0.6%) (0.6%)

2.4%

1.2%

4.0% 4.1%

Q1 Q2 Q3 Q4* Q1 Q2 Q3 Q4*

No change to mid-term guidance

7

Mid-Term Guidance

Unit Growth 2 – 4%

Net Sales Growth 4 – 6%

Adjusted EBITDA Growth 7 – 10%

Net Income Growth Over 15%

Net Debt/Adjusted EBITDA(ex Future Acquisitions)

~3x

CAPEX/Sales(ex Future Acquisitions)

~1%

8

Favorable industry outlook with Independents expected tocontinue to outpace Chains

-2.0%

-3.0%

-5.0%

-6.0%

-11.0%

-4.0%

0.0%

3.0%

2.0%

1.0%

-1.0%

-6.0%

2010

1.1%

2.2%2.7%

2011

1.3%

2014

1.5%

-10.4%

2009

-3.6%

1.6%

3.0%

2018-2021F

2.1%

1.1%0.9%

2012 2015

2.6%

2013

0.4%1.0%

2.8%

2017F

0.7%

2.5%

2016

-1.9%

National ChainsIndependents

Note: Independents include Independent Restaurants and small chains (up to 10 units); National Chains is the top 100 chainsSource: Technomic January 2017 Long Term Forecast

Real Growth%

9

A combination of new and more mature initiatives willdeliver against 2017 guidance

MORE MATURE RAMPING UP

• Product Innovation

• “Big Data” analytics

• Leading Mobile and e-commerce

• Specialty Products Focus

• Centralized Replenishment

• CookBook Pricing

• Salesforce Productivity

• Network Optimization

• Corporate Cost Streamlining

• Lean/ContinuousImprovement

• Expanded Business SharedServices

VOLUME/MARGIN

GROWTH

VOLUME/MARGIN

GROWTH

EFFICIENCY/EFFECTIVENESS

EFFICIENCY/EFFECTIVENESS

10

Case Volume Growth with IndependentRestaurant customersYoY percent change

Total Case Volume GrowthYoY percent change

Strong growth continues with Independent Restaurant andtarget customers

RESULTS SUMMARY*

2.5%

4.0%4.4% 4.7%

6.5%4.6%

3.5% 3.8%

8.0%

6.8%

5.5%6.1%

Q1 Q2 Q3 Q4* Q1 Q2 Q3 Q4*

Acquisitions

2015 2016

4.1% total case volume growth in Q4

• 6.1% independent restaurant growth

• 3.8% organic growth with independents

• Broad-based customer wins

2.9% total case volume growth in fiscal 2016

• 6.4% independent restaurant growth

• 4.5% organic growth with independents

• Wrapped national chain exits in Q3 2016

Organic

(0.7%)

0.0%

(0.6%) (0.6%)

2.4%

1.2%

4.0% 4.1%

Q1 Q2 Q3 Q4* Q1 Q2 Q3 Q4*

2015 2016

* Results normalized to adjust for 53rd week in 2015

4.0% - 4.5% organic run-rate when adjusted for

calendar timing

1111

Volume growth impact on sales was partially offset bydeflation

Q4 Net Sales*$ Millions b/(w)

YTD Net Sales*$ Millions b/(w)

$22,777

$22,919

2015 2016

0.6%

1.7%$5,585

$5,678

2015 2016

*Results normalized to adjust for 53rd week in 2015

RESULTS SUMMARY

Net Sales gains coming from:

• Good volume growth with target customers

• Independent Restaurants

• Healthcare & Hospitality

• National Chain

• Deflation negatively impacted sales

ProductDeflation

FreshwayAcquisition& Mix

FreshwayAcquisition& Mix

Q4 2016 FY2016

ProductDeflation

100% = ~240 bps 100% = ~230 bps

1212

Gross profit gains despite deflationary pressures

RESULTS SUMMARY

Gross Profit gains coming from:

• Increasing penetration with target customers

• Merchandising initiatives

• Effective commodity management duringdeflationary period

• LIFO negative YoY impact

Q4 Gross Profit+

$ Millions; Percent of Sales b/(w)

$1,019$1,027

2015 2016

18.2% 18.1%

0.8%

(10) bps

YTD Gross Profit +


$3,954 $4,053

2015 2016

17.4% 17.7% 30 bps

Adjusted Gross Profit*

Q4: $1.0B, up $47M+ or 4.8%+

18.2% of sales, up 60 bps

YTD: $4.0B, up $155M+ or 4.0%+


2.5%

* Reconciliations of non-GAAP measures are provided in the Appendix+ Results normalized to adjust for 53rd week in 2015

1313

YTD Operating Expenses+


Operating expense performance showing continuedimprovement

RESULTS SUMMARY

Operating expense declines driven by:

• Lower distribution, selling & administrativecosts and restructuring

• New multi-site field model performing well

• Corporate reorganization underway

Adjusted Operating Expenses*

Q4: $768M, up $26M+ or 3.5%+


YTD: $3.1B, up $48M+ or 1.6%+


Q4 Operating Expenses+


$978

$911

2015 2016

17.5% 16.0%

6.9%

150 bps

$3,775$3,639

2015 2016

16.6% 15.9%

3.6%

70 bps


1414

Q4 Adjusted EBITDA*+


$244

$265

2015 2016

All profitability metrics show good improvement over prioryear

$41

$116

2015 2016

0.7% 2.0%

Q4 Operating Income+


$75$77

$120

GAAP Adjusted*

Q4 Net Income+

$ Millions

YTD Operating Income+


YTD Adjusted EBITDA*+


YTD Net Income+

$ Millions

$162 $148

$210

$321

GAAP Adjusted*

8.6%

$864

$972

2015 2016

$179

$414

2015 2016

4.4% 4.7%

183%

20152016

20152016

0.8% 1.8% 3.8% 4.2%


12.5%12.5%

($16)

131%

1515

YTD Free Cash Flow$ Millions

Net Debt* and Leverage$ Millions

FY2016 Interest Expense$ Millions, Percent Change b/(w)

Strong cash flow and continued deleveraging

$369

$392

2015 2016

Note: Free cash flow defined as cashfrom operations less capitalexpenditures

Leverage **Net Debt

$141

$88

1H 2H

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

$4,209

$4,871

$3,651

4.8x

5.3x

3.8x

2015 Pre-IPO 2016

38%

LTDebt

$4,682 $4,961 $3,706

1616

2017 Guidance Mid-Term Guidance

Unit Growth 2 – 4% 2 – 4%

Net Sales Growth 1 – 3% 4 – 6%

Adjusted EBITDA Growth 7 - 10% 7 - 10%

Net Income Growth 15 – 20% Over 15%

Net Debt/Adjusted EBITDA(ex Future Acquisitions)

~3x

Cash CAPEX(ex Future Acquisitions)

$230 - $250M ~1% of sales

Interest Expense $180 - $190M

Depreciation & Amortization $370 - $380M

Effective Tax Rate ~39% ~39%

Cash Income Taxes $25 - $35M

Adjusted Diluted EPS $1.26 - $1.40

7-10% Adjusted EBITDA growth in 2017; no change to mid-term guidance

1717

APPENDIX:

• Q4 AND FULL YEAR SUMMARY

• NON-GAAP RECONCILIATIONS

1818

2016 52 week vs 2015 53 week reconciliation

Q4 2016

Q42016

Excluding

Extra Week FY2016

FY2016

Excluding

Extra Week

Dollar Impact

of 53rd Week

on 2015 Results(millions)

Total case volume (1.9%) 4.1% 1.4% 2.9%

Organic Total case volume (3.8%) 2.0% (0.2%) 1.3%

Independent Restaurant (IR) case volume (1.0%) 6.1% 4.7% 6.4%

IR Organic case volume (3.2%) 3.8% 2.7% 4.5%

Net sales (4.3%) 1.7% (0.9%) 0.6% $350

Net sales from acquisitions 1.6% 1.7% 1.3% 1.3%

Gross profit (4.7%) 0.8% 1.0% 2.5% $59

Adjusted Gross profit* (1.1%) 4.8% 2.4% 4.0% $59

Operating expense 11.2% 6.9% 4.8% 3.6% $48

Adjusted Operating expense* 2.8% (3.5%) 0.0% (1.6%) $48

Operating income 123.1% 182.9% 117.9% 131.3% $11

Net income NM NM 25.0% 29.6% $6

Adjusted EBITDA* 3.9% 8.6% 11.1% 12.5% $11

NM - Percentage change not meaningful

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

Percent Change Over Prior Quarter Or Fiscal Year b/(w)

1919

Fourth Quarter Financial Performance

$ Millions* except per share data

Quarter Ended

December 31, 2016

Quarter Ended

January 2, 2016 Change

Quarter Ended

December 31, 2016

Quarter Ended


Case Growth (1.9)%

Net Sales $5,678 $5,935 (4.3)%

Gross Profit $1,027 $1,078 (4.7)% $1,034 $1,046 (1.1)%

% of Net Sales 18.1% 18.2% (10) bps 18.2% 17.6% +60 bps

Operating Expenses $911 $1,026 (11.2)% $768 $790 (2.8)%


Operating Income $116 $52 123.1% $266 $256 3.9%

Net Income $77 ($10) NM $120 $81 49.0%

Diluted EPS $0.34 ($0.06) NM $0.53 $0.47 11.8%

Adjusted EBITDA $265 $255 3.9%

Adjusted EBITDA Margin (2) 4.7% 4.3% +40 bps

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

NM Percent change not meaningful

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

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

Reported Adjusted(1)

2020

Fiscal Year Financial Performance

$ Millions* except per share data

Fiscal Year

December 31, 2016

Fiscal Year


Fiscal Year

December 31, 2016

Fiscal Year


Case Growth 1.4%

Net Sales $22,919 $23,127 (0.9)%

Gross Profit $4,053 $4,013 1.0% $4,035 $3,939 2.4%

% of Net Sales 17.7% 17.4% +30 bps 17.6% 17.0% +60 bps

Operating Expenses $3,639 $3,823 (4.8)% $3,063 $3,063 0.0%


Operating Income $414 $190 117.9% $972 $876 11.0%

Net Income $210 $168 25.4% $321 $154 108.4%

Diluted EPS $1.03 $0.98 5.1% $1.57 $0.90 74.4%

Adjusted EBITDA $972 $875 11.1%

Adjusted EBITDA Margin (2) 4.2% 3.8% +40 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.

Reported Adjusted(1)

2121

Non-GAAP Reconciliation - Adjusted Gross Profit andAdjusted Operating Expenses

(In millions)* December 31, 2016 January 2, 2016 December 31, 2016 January 2, 2016

Gross Profit 1,027$ 1,078$ 4,053$ 4,013$

LIFO reserve change 7 (32) (18) (74)

Adjusted Gross Profit 1,034$ 1,046$ 4,035$ 3,939$

Operating Expenses 911$ 1,026$ 3,639$ 3,823$

Adjustments:

Depreciation and amortization expense (107) (101) (421) (399)

Sponsor fees (1) - (3) (36) (10)

Restructuring and tangible asset impairment charges (2) (15) (91) (53) (173)

Share-based compensation expense (3) (4) (8) (18) (16)

Business transformation costs (4) (11) (15) (37) (46)

Acquisition related costs (5) - (3) (1) (85)

Other (6) (6) (15) (10) (31)

Adjusted Operating Expenses 768$ 790$ 3,063$ 3,063$

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

(1)

(2)

(3)

(4)

(5)

(6)

Quarter Ended* Fiscal Year Ended*

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

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

Consists primarily of facility related closing costs, including severance and related costs, tangible asset impairment charges, organizational realignment costs and estimated

multiemployer pension withdrawal liabilities and settlements.

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

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

Consists of costs related to the Acquisition, including certain employee retention costs.

Other includes gains, losses or charges as specified under USF’s debt agreements. The balance for the quarter ended December 31, 2016 includes $1 million of closed facility

carrying costs and $3 million of business acquisition related costs. The balance for the quarter ended January 2, 2016 includes $7 million of brand re-launch and marketing costs

and $4 million of business acquisition costs. The fiscal 2016 year balance includes $5 million of IPO readiness costs, $5 million of closed facility carrying costs and $6 million of

business acquisition related costs, partially offset by a $10 million insurance benefit. The fiscal 2015 year balance consists primarily of a $16 million litigation settlement cost and

$16 million of brand re-launch and marketing costs, partially offset by a net insurance benefit of $11 million.

2222

Non-GAAP Reconciliation - Adjusted Operating Income


Operating Income 116$ 52$ 414$ 190$

Adjustments:

Depreciation and amortization expense 107 101 421 399

Sponsor fees (1) - 3 36 10

Restructuring and tangible asset impairment charges (2) 15 91 53 173

Share-based compensation expense (3) 4 8 18 16

LIFO reserve change (4) 7 (32) (18) (74)

Business transformation costs (5) 11 15 37 46

Acquisition related costs (6) - 3 1 85

Other (7) 6 15 10 31

Adjusted Operating Income 266$ 256$ 972$ 875$


(1)

(2)

(3)

(4) Represents the non-cash impact of LIFO reserve adjustments.

(5)

(6)

(7)


Other includes gains, losses or charges as specified under USF’s debt agreements. The balance for the quarter ended December 31, 2016 includes $1 million of closed facility

carrying costs and $3 million of business acquisition related costs. The balance for the quarter ended January 2, 2016 includes $7 million of brand re-launch and marketing costs

and $4 million of business acquisition costs. The fiscal 2016 year balance includes $5 million of IPO readiness costs, $5 million of closed facility carrying costs and $6 million of

business acquisition related costs, partially offset by a $10 million insurance benefit. The fiscal 2015 year balance consists primarily of a $16 million litigation settlement cost and

$16 million of brand re-launch and marketing costs, partially offset by a net insurance benefit of $11 million.


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

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

Consists primarily of facility related closing costs, including severance and related costs, tangible asset impairment charges, organizational realignment costs and estimated




2323

Non-GAAP Reconciliation - Adjusted EBITDA


Net income 77$ (10)$ 210$ 168$

Interest expense, net 39 74 229 285

Income tax (benefit) provision (1) (12) (79) 25

Depreciation and amortization expense 107 101 421 399

EBITDA 222 153 782 877

Adjustments:

Sponsor fees (1) - 3 36 10

Restructuring and tangible asset impairment charges (2) 15 91 53 173

Share-based compensation expense (3) 4 8 18 16

LIFO reserve change (4) 7 (32) (18) (74)

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

Business transformation costs (6) 11 15 37 46

Acquisition related costs (7) - 3 1 85

Acquisition termination fees - net (8) - - - (288)

Other (9) 6 15 10 31

Adjusted EBITDA 265$ 255$ 972$ 875$

Adjusted EBITDA 265$ 255$ 972$ 875$

Depreciation and amortization expense (107) (101) (421) (399)

Interest expense, net (39) (74) (229) (285)

Income tax benefit (provision) (10) 1 1 (1) (37)

Adjusted Net income 120$ 81$ 321$ 154$


(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

(10) 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 the tax benefits recognized in

continuing operations due to the existence of a gain in Other comprehensive income and loss in continuing operations. 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. We released the valuation allowance against federal and certain

state net deferred tax assets in fiscal year 2016. We were required to reflect the portion of the valuation allowance release related to current year ordinary income in the estimated annual

effective tax rate and the portion of the valuation allowance release related to future years’ income discretely in fiscal year 2016. We maintained a valuation allowance against federal and state

net deferred tax assets in fiscal years 2012 through 2015. The result was an immaterial tax effect related to pre-tax items excluded from Adjusted Net income in the fiscal years 2012 through

2016.


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

terminated for an aggregate termination fee of $31 million.Consists primarily of facility related closing costs, including severance and related costs, tangible asset impairment charges, organizational realignment costs and estimated multiemployer

pension withdrawal liabilities and settlements.Share-based compensation expense for vesting of stock awards and share purchase plan.

Represents the non-cash impact of LIFO reserve adjustments.

Includes fees paid to debt holders, third party costs, the write off of certain pre-existing unamortized deferred financing costs related to the 2016 debt refinancing transactions; early redemption

premium and the write-off of unamortized issue premium related to the June 2016 debt refinancing; and the loss related to the September 2016 CMBS Fixed Facility defeasance.



Consists of net fees received in connection with the termination of the Acquisition Agreement.

Other includes gains, losses or charges as specified under USF’s debt agreements. The balance for the quarter ended December 31, 2016 includes $1 million of closed facility carrying

costs and $3 million of business acquisition related costs. The balance for the quarter ended January 2, 2016 includes $7 million of brand re-launch and marketing costs and $4 million of

business acquisition costs. The fiscal 2016 year balance includes $5 million of IPO readiness costs, $5 million of closed facility carrying costs and $6 million of business acquisition related

costs, partially offset by a $10 million insurance benefit. The fiscal 2015 year balance consists primarily of a $16 million litigation settlement cost and $16 million of brand re-launch and

marketing costs, partially offset by a net insurance benefit of $11 million.

2424

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

December 31, 2016 January 2, 2016 December 31, 2016 January 2, 2016

Diluted EPS (GAAP) 0.34$ (0.06)$ 1.03$ 0.98$

Sponsor fees (1) - 0.01 0.18 0.06

Restructuring and tangible asset impairment charges (2) 0.07 0.53 0.26 1.01

Share-based compensation expense (3) 0.02 0.05 0.09 0.09

LIFO reserve change (4) 0.03 (0.19) (0.09) (0.43)

Loss on extinguishment of debt (5) - - 0.26 -

Business transformation costs (6) 0.05 0.09 0.18 0.27

Acquisition related costs (7) - 0.02 - 0.50

Acquisition termination fees - net (8) - - - (1.68)

Other (9) 0.03 0.09 0.05 0.18

Income tax impact of adjustments (10) - (0.06) (0.39) (0.07)

Effect of dilutive shares assuming net income (11) - (0.01) - -

Adjusted Diluted EPS (Non-GAAP) 0.53$ 0.47$ 1.57$ 0.90$

Weighted-average diluted shares outstanding 225,522,264 169,492,994 204,024,726 171,060,720

Dilutive shares assuming net income (11) n/a 2,104,483

Adjusted diluted shares n/a 171,597,477


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

terminated for an aggregate termination fee of $31 million.Consists primarily of facility related closing costs, including severance and related costs, tangible asset impairment charges, organizational realignment costs and estimated


Other includes gains, losses or charges as specified under USF’s debt agreements. The balance for the quarter ended December 31, 2016 includes $1 million of closed facility carrying

costs and $3 million of business acquisition related costs. The balance for the quarter ended January 2, 2016 includes $7 million of brand re-launch and marketing costs and $4 million

of business acquisition costs. The fiscal 2016 year balance includes $5 million of IPO readiness costs, $5 million of closed facility carrying costs and $6 million of business acquisition

related costs, partially offset by a $10 million insurance benefit. The fiscal 2015 year balance consists primarily of a $16 million litigation settlement cost and $16 million of brand re-

launch and marketing costs, partially offset by a net insurance benefit of $11 million.

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 the tax benefits recognized

in continuing operations due to the existence of a gain in Other comprehensive income and loss in continuing operations. 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. We released the valuation allowance against

federal and certain state net deferred tax assets in fiscal year 2016. We were required to reflect the portion of the valuation allowance release related to current year ordinary income in the

estimated annual effective tax rate and the portion of the valuation allowance release related to future years’ income discretely in fiscal year 2016. We maintained a valuation allowance

against federal and state net deferred tax assets in fiscal years 2012 through 2015. The result was an immaterial tax effect related to pre-tax items excluded from Adjusted Net income in

the fiscal years 2012 through 2016.


Represents the non-cash impact of LIFO reserve adjustments.

Includes fees paid to debt holders, third party costs, the write off of certain pre-existing unamortized deferred financing costs related to the 2016 debt refinancing transactions; early

redemption premium and the write-off of unamortized issue premium related to the June 2016 debt refinancing; and the loss related to the September 2016 CMBS Fixed Facility



Consists of net fees received in connection with the termination of the Acquisition Agreement.

The effect of the "dilutive shares assuming net income" represents the difference between the Adjusted Diluted EPS calculated using the GAAP based weighted-average dilutive shares outstanding

compared to the Adjusted Diluted EPS calculated using the weighted-average shares outstanding plus the effect of potentially dilutive securities that would have been applicable if the company had

net income during the period. Since the company was in a net loss position for the quarter ended January 2, 2016, basic and diluted shares are the same because the inclusion of additional shares

would be anti-dilutive.

q4 fy16 earnings slides final

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