US Foods Holding Corp. Q1 FY2026 earnings call

Salesforce transitioning to fully variable compensation plan. Team managed challenging quarter with disciplined execution of self-help initiatives. Progress on strategic vendor management for cost of goods savings. Reinvesting savings to accelerate growth. Focus on growing private label brands with 54% penetration in core independent restaurant customers. Offsetting operating expense inflation by accelerating productivity, simplifying administrative processes, and capturing savings on indirect spend procurement. UMOS live in 70 markets, expects to finish deployment by mid-year. Expect to deliver more than $75 million in indirect spend savings this year. Acknowledging 10th anniversary of US Foods IPO and National Military Appreciation Month. Highlighting associate Jayden Fonkemdang's achievement. Committed to hiring 3,000 military veterans by 2030.

Adjusted gross profit was $1.7 billion, up 4.4% from prior year, driven by volume growth and improved cost of goods sold. First quarter net sales increased 2.8% to $9.6 billion, driven by total case volume growth of 1.4% and food cost inflation and mix of 1.4%. Adjusted EBITDA grew 6.2% to $413 million. Adjusted diluted EPS increased by 14.7% to 78 cents. Adjusted gross profit per case increased 23 cents, or 2.9%, and adjusted operating expenses per case increased 14 cents, or 2.3%. Adjusted EBITDA per case increased by 8 cents to $1.98.

Reaffirming 2026 guidance. Expect adjusted EBITDA growth in range of 9 to 13% and adjusted diluted EPS growth between 18 and 24% (includes impact of 53rd week). Second quarter adjusted EBITDA growth expected to be mid to upper single digits. If fuel remains elevated and macro uncertainty persists into second half, will be at lower end of full year guidance range. Absent those pressures, growth in line with long-term algorithm. Approximately one-third of 2026 fuel gallons locked into fixed price contracts at lower than current market prices.

Macro uncertainty, OPEX timing shifts, higher fuel costs which could impact profitability and growth. Fuel costs can reduce adjusted EBITDA growth, and if fuel remains elevated and macro uncertainty persists, could lead to lower end of guidance range. Competitive intensity in the industry which could impact market share and performance.

Q: About elevated gas prices and top line impact; A: Headwinds related to fuel are pressure point, but industry is resilient.

Q: On inflation outlook; A: Outlook of point and a half between inflation and mix still best estimate, movement around from quarter to quarter primarily protein and commodity related.

Q: On guidance, Q2 headwinds and full year dynamics; A: Second quarter assumes fuel remains elevated, if fuel spikes further or macro weak, could be lower end, if fuel moderates and macro strengthens, higher end.

Q: On M&A and pipeline; A: Strategy around M&A unchanged, aimed at tuck-in acquisitions, active in several conversations.

Q: On expense side, weather vs fuel impact and fuel surcharge percentage; A: About half and half between fuel and weather impacts in first quarter, recover about 30 to 40% of fuel costs.

Q: On independent case growth and expenses; A: Independent case growth has momentum, expenses pressured due to weather with demand destruction and round tripping.

Q: On drop size, wallet penetration, and compensation plan; A: Penetration improving, compensation plan transition with good feedback, simple and clear line of sight.

Q: On competitive front and hospitality business; A: Competitive intensity high, no significant pressure from fuel, hospitality business has strong momentum with new technology.

Q: On total case growth outlook; A: Remain confident in case growth guidance, expect sequential improvement.

Q: On Salesforce comp plan pilot feedback; A: Good feedback, tweaks made, simple and clear plan.

Q: On signature program launch for hospitality; A: Brings together best of company, helps hospitality customers with technology and process.

Q: On U.S. foods performance across inflation environments; A: Two to three percent cost inflation is most constructive, grocery part stable, movement around commodity categories.

Q: On strengths and weaknesses by cuisine or region; A: Bar and grill, Hispanic, mid-scale family dining, white tablecloth are strengths.

Q: On compensation plan timing and AI-enabled tools; A: Everyone goes live next month, AI-enabled tools measure success by deeper customer relationships and improved productivity.

Q: On hospitality business into summer; A: Pipeline in hospitality remains strong, focus on winning and taking market share.

Q: On volume outlook and ChefStore; A: Expect to outperform macro, ChefStore business improved but not right long term owner.

Q: On Pronto investments; A: Opportunities in more trucks, new markets, deepening penetration.

Q: On private label growth; A: Pleased with progress, sales force incented to sell brands, long runway for growth