USFD

Culture & People Initiatives

• Safety is the top priority: Total injury and accident rates have improved by over 50% in the past 3.5 years, supported by the deployment of 2,500 center-ride pallet jacks across the distribution network (rollout is 87% complete, on track for full completion by end of 2026; severe injuries from this equipment are nearly eliminated at converted locations).
• Launched the Valor campaign to hit the Mission 2030 goal of hiring 3,000 military veterans by 2030; the company currently has over 1,500 veteran associates and is expanding recruiting efforts via dedicated platforms and partnerships.
• Invested 1.2 million hours in associate training in 2025, and published the 2025 Sustainability Report outlining progress on ESG and sustainable business goals.

Growth Initiatives

• Pronto, the small-order delivery service for independent restaurants, is a core growth driver and competitive differentiator: It is live in 52 markets, with Pronto Next Day (for existing independent customers) live in 35 markets (8 more markets to be added in 2026). Pronto grew to $1 billion in sales in 2025, is on track to hit ~$1.3 billion in 2026, and management increased the 2027 sales target to over $1.7 billion from the prior $1.5 billion estimate.
• A new 100% variable sales compensation plan went live company-wide in June 2026, aligned with long-term growth priorities focused on independent restaurant growth and Pronto adoption. Early results are positive: seller engagement is high, year-over-year attrition remains flat, and sellers are already shifting behaviors to align with plan incentives. Full transition for the local sales force is expected to take 2-3 years.
• Healthcare and hospitality continue to deliver strong performance supported by a robust deal pipeline and the successful Vitals and Signature programs, with meaningful growth opportunities remaining through the end of 2026.

Profit & Margin Initiatives

• Disciplined strategic vendor management delivered over $50 million in cost of goods savings in the first half of 2026, and is on track to deliver over $300 million in total savings over the 3-year plan ending in 2027.
• Inventory management initiatives delivered $35 million in gross profit benefit in 2025, with an additional $10 million expected in 2026; these initiatives also improve in-stock performance, product quality, and customer service.
• Indirect spend management completed full baseline deployment of a new procurement system in H1 2026, delivering over $20 million in incremental savings year-to-date, on track to hit $75 million in total 2026 savings and over $100 million in 2027 savings.

Technology & AI Integration

• AI is embedded across core business processes to drive productivity and competitive advantage: The internally developed Visit Assistant Insights AI tool provides customer-specific sales insights, and delivered over 700,000 actionable insights to independent restaurant sellers in its first six weeks, freeing sellers to spend more time engaging with customers instead of preparation work.
• The generative AI SUE AI Assistant chatbot for sellers is currently being piloted to provide real-time workflow insights and recommendations.
• AI is applied to supply chain operations for demand forecasting, labor planning, and delivery routing, improving in-stock performance, reducing waste and miles driven, and increasing overall productivity. A warehouse inventory scanning/automation pilot delivered positive early results, with testing expanding to 6 additional locations by the end of 2026.

Capital Allocation

• U.S. Foods generated $725 million in operating cash flow year-to-date. During Q2 2026, the company repurchased $374 million in shares, bringing year-to-date repurchases to ~$500 million.
• Net leverage at quarter-end was 2.6x, well within the 2x-3x target range, and the company successfully refinanced its ABL facility, extending maturity to 2031 and increasing the facility size to $2.5 billion. No long-term debt maturities are due before 2028, giving the company strong financial flexibility for growth investments, share repurchases, and accretive tuck-in acquisitions.

• Management reaffirmed its full fiscal year 2026 guidance, maintaining prior ranges with no upward or downward revision.
• Expected full-year 2026 net sales growth: 4% to 6%, driven by total case volume growth of 2.5% to 4.5%. The guidance includes a 1% tailwind from an extra 53rd accounting week.
• Expected full-year 2026 adjusted EBITDA growth: 9% to 13%.
• Expected full-year 2026 adjusted EPS growth: 18% to 24%, which continues the historical trend of adjusted EPS growing faster than adjusted EBITDA, supported by accretive share repurchases.
• Management remains confident in delivering results within the stated guidance range, even amid uncertainty around macro conditions, restaurant industry traffic, inflation, and fuel prices.

For Q2 2026, U.S. Foods reported total net sales of $10.5 billion, representing a 4.5% year-over-year increase, driven by 1.9% total case volume growth and a 2.6% combined impact from food cost inflation and mix. By customer segment: 1) Independent restaurants: 5.1% case volume growth, the strongest result in over two years, driven by accelerating net new account generation and improved penetration. 2) Healthcare: 3.5% case volume growth. 3) Hospitality: 4.4% case volume growth. 4) Chain restaurants: 1.5% case volume decline, which outperformed industry traffic by 30 basis points. Healthcare and Hospitality combined represent over 25% of U.S. Foods' total sales. Overall profitability: Adjusted EBITDA grew 10.2% year-over-year to a record $604 million, with an adjusted EBITDA margin of 5.7% (up 29 basis points year-over-year). Adjusted diluted EPS grew 21% to $1.44. Adjusted gross profit per case increased 5% (41 cents) to $8.61, while adjusted operating expenses per case increased 3.7% (21 cents). Adjusted EBITDA per case grew 8.3% (21 cents) to $2.73.

No material new or unanticipated risks or operational failures were discussed during the call. Management noted general macro uncertainty related to restaurant industry traffic, inflation, and fuel prices, but noted the company's strategic initiatives and operating discipline position it to perform well across potential scenarios.

Q: Independent restaurant case growth is the strongest in over two years, even with steady industry traffic. What is driving accelerating share gains, and will the new sales compensation plan further accelerate this growth? / A: Growth was consistent throughout the quarter, driven primarily by accelerating net new account generation, which hit a three-year high in the quarter. Penetration has also improved sequentially for several quarters, with more lines per customer even as cases per line remain slightly pressured by industry foot traffic challenges. Management expects independent volume growth to continue accelerating, with the new sales compensation plan acting as a long-term growth driver that is already producing encouraging early results, though full transition will take 2-3 years. Sales attrition has remained flat through the launch, consistent with pre-transition expectations. (612 characters)

Q: What drove the upside Q2 EBITDA beat relative to guidance amid elevated fuel costs, and what fuel assumptions are embedded in the back-half guidance? / A: Two key factors drove the upside: First, fuel cost recovery reached 70% for the quarter, well above the expected 30-40% recovery rate. Second, strategic vendor management savings that were originally expected to close in the second half of the year were completed earlier than planned, delivering incremental margin gains in Q2. Back-half guidance assumes fuel prices hold around current levels, and management remains confident in full-year results after the strong Q2 performance. (487 characters)

Q: Pronto is accelerating growth – where is it seeing the most success, and how are you managing margin while expanding the service? / A: After several years of piloting, Pronto is now being accelerated across existing customers and markets, with management focusing on two core guardrails: maintaining attractive incremental margins for the higher-cost service, and avoiding cannibalization of existing larger broad-line orders. Both guardrails have held up well through expansion, and the investment delivers strong returns. Management sees a long multi-year growth runway for Pronto and is accelerating deployment without abandoning the pragmatic, margin-focused approach that has driven its success to date. (493 characters)

Q: How big is the long-term AI opportunity for U.S. Foods, relative to the operational execution gains you have already captured? / A: U.S. Foods has been deploying practical AI applications across customer experience, sales productivity, and supply chain for years, including Menu IQ, demand forecasting, and delivery routing. While the company is still in the early innings of broader AI deployment, management believes AI could ultimately deliver transformative long-term benefits, widening the competitive gap with smaller distributors that cannot match U.S. Foods' scale of technology investment. Near-term, AI will continue to drive incremental sales productivity and operational efficiency gains that support the company's existing growth and margin targets. (511 characters)