US Foods Earnings: Margin Milestone and Strategic Expansion Highlight Q2'25
- Hardik Shah
- Aug 7
- 3 min read
TLDR
• Revenue Strength: Net sales rose 3.8% to $10.1B, fueled by strong independent and healthcare volume growth.
• Margin Trends: Adjusted EBITDA margin hit a record 5.4%, with 12.1% Adjusted EBITDA growth and 28% Adjusted EPS growth.
• Forward Outlook: Full-year guidance was raised for both Adjusted EBITDA and EPS; new Pronto sales targets suggest longer-term upside.
Business Overview
US Foods Holding Corp. (NYSE: USFD) is a leading U.S. foodservice distributor serving ~250,000 customer locations across the country. With 70+ broadline distribution centers and 90+ cash-and-carry stores, it delivers food and business solutions to independent restaurants, healthcare, hospitality, and other away-from-home food channels. The company continues to invest in digital platforms (notably the Moxie ecosystem), route optimization, and automation to drive profitable growth.
US Foods Earnings Q2'25
Revenue & Volume
Net Sales: $10.1B (+3.8% YoY), driven by:
Total case volume: +0.9%
Independent restaurant case volume: +2.7%
Healthcare: +4.9%
Hospitality: +2.4%
Chain volume declined 4.0%, due to strategic exits.
Food cost inflation: ~2.5%
Margins & Profitability
Gross Profit: $1.8B (+4.2%), or 17.6% of sales
Adjusted Gross Profit: $1.8B (+5.0%), or 17.8% of sales
Adjusted EBITDA: $548M (+12.1%), a record high
Adjusted EBITDA Margin: 5.4% (+40 bps YoY)
Adjusted Diluted EPS: $1.19 (+28%)
GAAP Net Income: $224M (+13.1%)
GAAP Diluted EPS: $0.96
“Our record Adjusted EBITDA margin is not a ceiling… we have significant margin expansion opportunity for years to come,” said CEO Dave Flitman.
Forward Guidance
Net Sales Growth: 4% to 6% (unchanged)
Adjusted EBITDA Growth: 9.5% to 12% (up from 8%–12%)
Adjusted Diluted EPS Growth: 19.5% to 23% (up from 17%–23%)
Risks & Opportunities
Moderating inflation in key categories (e.g., beef, eggs)
Food away from home consumption continues upward trend
Chain restaurant volumes expected to rebound in H2 following strategic portfolio changes
Labor, commodity costs, and competition remain watchpoints
Operational Performance
Segment Snapshot
Independent restaurants: Gained share for the 17th consecutive quarter
Healthcare: 19 straight quarters of share gains
Pronto (small truck delivery): Now in 44 markets, on pace for $900M in sales in 2025, with a new 2027 target of $1.5B
Semi-automated facilities: Aurora, IL facility started shipping in July; expansion underway in Austin, TX
Productivity Gains
Inventory management initiatives expected to reduce losses by $30M in 2025
Indirect spend optimization projected to yield $45M in savings this year
“We are reinvesting savings to help accelerate growth... with line of sight to exceed our 2027 long range plan commitment of $260 million,” noted CFO Dirk Locascio.
Market Insights
Industry Dynamics
Restaurant industry seeing sequential traffic recovery; independents improving modestly
Commodity price moderation observed in categories like beef and eggs
Private label penetration climbed to over 53% with core independent customers
Competitor Environment
US Foods’ digital ecosystem (Moxie) leads in adoption and functionality vs. peers
Strategic vendor relationships are being leveraged for cost savings
Consumer Behavior & Sentiment
Digital engagement: 78% e-commerce penetration for independents, 89% company-wide
Customer experience: Net Promoter Score study shows Moxie leads the industry
Service Quality: Routing initiatives improved delivery efficiency by >2% YoY; Ops QC improved 28%
“We achieved our best cases-per-mile performance in company history,” said Flitman.
Strategic Initiatives
Mission 2030: Hiring 3,000 veterans by 2030
Sustainability: Scopes 1 & 2 GHG emissions down 16% since 2019; Serve Good® brand exceeded $1B in sales
CapEx: Focus on automation, routing, and operational efficiencies
Capital Allocation
Share Repurchases: $250M in Q2; $800M remains on the new $1B authorization
Net Leverage: 2.6x, within the 2.0x–3.0x target range
CapEx YTD: $161M, supporting technology and facility upgrades
The Bottom Line
US Foods’ Q2 2025 results showcase strong execution across volume growth, margin expansion, and digital leadership. Strategic focus on high-margin segments and self-help initiatives is delivering tangible returns. With raised guidance and significant cash deployment capacity, the company remains positioned as a resilient compounder.
“We expect to deliver a 5% sales CAGR, 10% Adjusted EBITDA CAGR, and 20% EPS CAGR through 2027,” Flitman reiterated.
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