Foodservice

US Foods Q3 sales take COVID hit, but company sees improvement

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November 3, 2020

US Foods Holding Corp. net sales for the third quarter ending Sept. 26, 2020 decreased 10.5%, from $6.53 billion the prior year to $5.84 billion, but saw improved throughout the quarter as many customers adjusted to social distancing measures and capacity restrictions put in place on non-essential businesses as a result of COVID-19, according to an earnings release.

Income before taxes was $21 million in the quarter compared to $144 million last year.

Diluted earnings per share was a 1-cent loss while adjusted EPS was 15 cents.

Shares traded at $21.43 on Monday against a 52-week range of $8.32 to $42.43.

Organic financial results exclude contributions during the respective period from Smart Stores Holding Corp., which was acquired on April 24, 2020.

"In the third quarter, we demonstrated the resiliency of our business model by continuing to gain market share in an industry significantly impacted by COVID-19," Chairman and CEO Pietro Satriano said in the release. "Our case volumes continue to recover and adjusted gross profit margin improved by 70 basis points over the prior quarter. This profitable growth, along with our prudent approach to cost management, enabled us to deliver Adjusted EBITDA of $209 million for the quarter, more than double what we delivered in the second quarter. "

The Food Group and Smart Foodservice acquisitions contributed net sales of $876 million, or 15.0%, for the quarter.

Gross profit of $974 million decreased $182 million, or 15.7%, from the prior year, primarily as a result of the negative impact of COVID-19 on case volume, changes to customer mix and lower logistics income. These were partially offset by contributions from the Food Group and Smart Foodservice acquisitions. Adjusted gross profit was $977 million, a decrease of $180 million or 15.6% from the prior year.

Operating expenses were $896 million, a decrease of $72 million or 7.4% from the prior year. The decrease was primarily due to actions put in place to reduce operating costs as a result of lower case volume, a $30 million reduction in the reserve for uncollectible accounts and a $17 million gain on the sale of excess property in Southern California, which were partially offset by operating expenses for the Food Group and Smart Foodservice acquisitions.

Net loss available to common shareholders was $2 million, a decrease of $108 million compared to the prior year. Adjusted EBITDA was $209 million, a decrease of $98 million or 31.9%, compared to the prior year.

Due to the continued uncertainty associated with COVID-19, the company withdrew its fiscal 2020 financial guidance on March 23, 2020, and is not providing financial guidance at this time.

For an update on how the coronavirus pandemic is affecting convenience services,click here.