US Foods Holding Corp. (NYSE: USFD), one of the largest and most influential foodservice distributors in the United States, announced its financial results for the third quarter of fiscal year 2025, showcasing steady growth across key performance areas. The company continued to strengthen its market position through targeted customer expansion, disciplined operational management, and strategic capital deployment.
The quarter was highlighted by meaningful increases in case volume, sales, gross profit, earnings, and adjusted metrics, reflecting the company’s ability to execute its long-term growth strategy even amid a dynamic operating environment. Leadership emphasized continued momentum across independent restaurants, healthcare, and hospitality customers, while also underscoring progress in productivity and cost management initiatives intended to support long-term margin enhancement.
Third Quarter Fiscal 2025 Highlights
US Foods delivered year-over-year improvements across its core metrics for the quarter ended:
- Total case volume increased 1.1%
- Independent restaurant case volume increased 3.9%
- Net sales grew 4.8% to $10.2 billion
- Gross profit rose 5.2% to $1.8 billion
- Net income increased 3.4% to $153 million
- Adjusted EBITDA grew 11.0% to $505 million
- Diluted EPS increased 9.8% to $0.67
- Adjusted Diluted EPS surged 25.9% to $1.07
As noted in the earnings release, certain metrics—including Adjusted EBITDA and Adjusted Diluted EPS—are non-GAAP financial measures. Definitions and reconciliations to comparable GAAP metrics can be found in the Non-GAAP Financial Measures and Non-GAAP Reconciliation sections of the company’s official release.
Management Commentary
Dave Flitman, CEO of US Foods, praised the company’s continued operational execution and marketplace momentum:
“Our third quarter performance reflects our team’s ability to consistently deliver earnings growth through share gains and margin expansion. We generated double-digit Adjusted Diluted EPS growth during the quarter, fueled by continued growth across our three target customer types and further progress on our self-help initiatives,” Flitman said. “We’re focused on delivering long-term shareholder value and disciplined capital allocation—investing for growth while executing share repurchases and targeted tuck-in M&A. I thank our associates for their commitment to our customers’ success and serving them with excellence.”
Dirk Locascio, CFO, highlighted the strong profitability and disciplined deployment of capital:
“We delivered a combination of top-line growth and 28 basis points of Adjusted EBITDA margin expansion again this quarter, resulting in 11% Adjusted EBITDA growth. We are deploying our strong cash flow to invest in the business, execute share repurchases and pursue opportunistic tuck-in M&A which will enable us to deliver on our commitment to generating long-term profitable growth and creating shareholder value.”
Third Quarter Fiscal 2025 Detailed Results
Case Volume and Net Sales
Total case volume increased 1.1% compared to the same quarter last year. Growth was driven primarily by:
- Independent restaurants: up 3.9%, reflecting strong demand and continued share gains
- Healthcare: up 3.9%, supported by stable demand patterns
- Hospitality: up 2.4%, driven by ongoing recovery and customer expansion
These gains were partially offset by a 2.4% decline in chain volume, reflecting broader pressures in the chain restaurant segment.
On an organic basis, total case volume increased 0.8%, with organic independent restaurant volume rising 3.5%.
Net sales reached $10.2 billion, representing an increase of 4.8% from the prior year. The growth was supported by higher case volumes and food cost inflation of approximately 3.0%.
Gross Profit and Margin Performance
Gross profit for the quarter totaled $1.8 billion, an increase of 5.2%, or $86 million, from the prior year. The improvement resulted from:
- Higher case volume
- Benefits from improved cost of goods sold
- More efficient inventory management
These positive factors were partially offset by an unfavorable year-over-year LIFO adjustment. Gross profit margin stood at 17.2% of net sales.
On an adjusted basis, gross profit reached $1.8 billion, representing a 6.4% increase, or $109 million, year over year. Adjusted gross profit margin rose to 17.7%, reflecting stronger underlying profitability and effective management of procurement and inventory processes.
Operating Expenses
Operating expenses rose 6.0% to $1.5 billion, driven primarily by:
- Increased total case volume
- Higher distribution, selling, and administrative costs
- Strategic investments in customer-facing capabilities
These increases were partially offset by continued productivity improvements across the distribution network and cost-saving initiatives aimed at streamlining administrative functions.
Operating expenses represented 14.4% of net sales.
Adjusted operating expenses were $1.3 billion, up 5.0% from the prior year, and accounted for 12.7% of net sales.
Profitability and Earnings
US Foods reported net income of $153 million, a 3.4% increase. Net income margin was 1.5%, a slight decline of two basis points from the prior year, reflecting a combination of higher costs and the LIFO impact.
Adjusted EBITDA reached $505 million, up 11.0%, with margin expanding by 28 basis points to 5.0%.
Diluted earnings per share were $0.67, and Adjusted Diluted EPS rose to $1.07, reflecting stronger operating performance and ongoing capital allocation strategies.
Cash Flow and Capital Deployment
US Foods generated $1.076 billion in cash flow from operating activities during the first nine months of fiscal 2025, an increase of $185 million year over year. Higher net income and reduced tax payments contributed to the improvement.
Capital expenditures totaled $276 million, up $40 million from the prior year. Investments focused on:
- Enhancing information technology capabilities
- Upgrading property and equipment
- Building and improving distribution facilities
These investments support the company’s long-term efficiency and growth objectives.
Debt and Share Repurchases
Net Debt at the end of the third quarter stood at $4.9 billion. The company’s Net Debt to Adjusted EBITDA ratio improved to 2.6x, compared to 2.8x at fiscal year-end 2024, signaling stronger financial flexibility.
During the quarter, US Foods repurchased 4.1 million shares of common stock for approximately $335 million. As of quarter-end, the company had $467 million remaining under its current $1 billion share repurchase authorization, demonstrating continued commitment to returning value to shareholders.
Source Link:https://ir.usfoods.com/
