US Foods Holding Corp. Q4 FY2025 earnings call

• Culture: Safety improved with injury and accident frequency rates 16% better than prior year; over 60% of center ride deployment complete; donated over $12.5 million to hunger relief, etc.
• Service: Operations quality composite improved 15% for the year; Descartes deployed across distribution network, achieving ~2% cases per mile improvement; MOXe platform advanced with AI-driven ordering feature.
• Growth: Net sales grew 4.1% in 2025; Pronto live in 46 markets with plans to launch 10-15 more in 2026; fresh produce and center of plate categories grew ~150 basis points faster than industry for independent restaurants.
• Sales Compensation Change: Transitioning to 100% variable compensation for local sales force, piloting the plan, with feedback positive; expected to take 2-3 years to transition majority to 100% variable commission.
• Profit: Adjusted EBITDA margin expanded to 4.9% in 2025; realized over $150 million in cost of goods savings; private label penetration up ~90 basis points to nearly 54% with core independent restaurant customers; inventory management resulted in ~$40 million gross profit benefit; indirect cost savings of ~$45 million in 2025, expecting over $100 million by 2027.

In the fourth quarter, independent restaurant case volume grew 4.1%, with net new independent account growth of approximately 4.7% over the prior year, marking the best performance since the second quarter of 2023. Healthcare and Hospitality, together comprising more than 25% of sales, grew 2.9% and 3.1% respectively in the fourth quarter. For the full year, net sales grew 4.1% to $39.4 billion through market share gains.

Fiscal 2026 expects net sales growth 4%-6% driven by total case growth 2.5%-4.5%; independent case growth 4%-7%; adjusted EBITDA growth 9%-13%; adjusted diluted EPS 18%-24%. First quarter expected upper single-digit growth due to weather-related disruptions, but full year guidance maintained despite initial weather impact.

• Macro environment headwinds including government shutdown, winter storms, and challenges from lower income/younger demographic affecting industry demand.
• Labor contract announcements in the industry with potential impact on OpEx, but expecting incremental productivity gains to offset pressure.

Q: Could you provide more color on quarter-to-date volumes and underlying momentum of the business, tying to independent case growth outlook?

A: Fourth quarter had strong momentum until weather and shutdown, rebounded in early January but hit choppiness, but underlying momentum is strong with fourth quarter being strongest organic independent case growth in 2 years.

Q: What drove OpEx per case in the fourth quarter and sustainability?

A: Various initiatives like Descartes deployment, UMAs implementation, and ongoing operational consistency drove it, with expectation of continued benefit from rollouts.

Q: On the sales comp change, magnitude of unlock and impact on case growth?

A: Hard to quantify, but expected to unleash sales force over time, being the last major unlock to drive growth.

Q: How to think about seller productivity during sales comp transition?

A: Thoughtful and deliberate approach, expecting neutral to positive impact as it's individualized tailored conversations.

Q: AI capabilities in MOXe, cost productivity vs revenue upside?

A: Both, with MOXe enabling customers to buy more, improving sales force productivity by taking burden off, freeing up time for other activities.

Q: M&A environment and opportunity?

A: Focus on tuck-in M&A for local market density, with team building pipeline and multiples rational.