The corporations on our annual list of the world's 500 largest companies combined to generate $41.7 trillion in revenue over the past year.

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Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

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The corporations on our annual list posted aggregate revenues of $41 trillion for the second year in a row.

Industries included in the sector are diversified, electronics, and food and grocery.

Fortune Sector Leaders: Wholesalers

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The corporations on our annual list of the world’s largest companies delivered a record $41 trillion in aggregate revenues.

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The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

Aggregate sales hit $37.8 trillion last year—an increase of 19%, the highest annual growth rate in the list’s history.

This year’s Fortune 500 marks the 68th running of the list.

This year’s Fortune 500 marks the 67th running of the list.

The foodservice distributor partners with approximately 300,000 restaurants and foodservice operators to distribute fresh, frozen, and dry food as well as non-food products. Even through net sales decreased by 0.7% from the prior year, CEO Pietro Satriano said the company was seeing "meaningful recovery" after posting first quarter results for 2021.

This year's Fortune Global 500 generated $33.3 trillion in revenues and $2.1 trillion in profits.

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Supplier of food and kitchen equipment to many restaurants, the company operates in more than 70 locations nationwide.

This year's Fortune 500 marks the 66th running of the list.

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This year's Fortune 500 marks the 65th running of the list.

This year's Fortune Global 500 generated $27.7 trillion in revenues and $1.5 trillion in profits.

This year's Fortune 500 marks the 64th running of the list.

This year's Fortune 500 marks the 63rd running of the list.

This year's Fortune Global 500 generated $27.6 trillion in revenues and $1.5 trillion in profits.

This year's Fortune 500 marks the 62nd running of the list.

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US Foods Holding distributes fresh, frozen, and dry food products, as well as nonfood products, to food-service customers, including restaurants, hospitals, nursing homes, and hotels. The company, which was previously known as USF Holding Corp., was incorporated in 2007.

Q2 2025

Q1 2025

Q4 2024

US Foods Holding (USFD): Company Profile, Stock Price, News, Rankings

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US Foods Holding

us foods holding

Thank you for standing by. My name is Jordan, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the U. S. Food Holding Corp.

Second Quarter twenty twenty five Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. Thank you. I would now like to turn the call over to Mike Neese, Senior Vice President of Investor Relations. You may begin.

Thank you, Jordan. Good morning, everyone, and welcome to the U. S. Foods second quarter fiscal twenty twenty five earnings call. On today's call, we have Dave Flippen, our CEO and Dirk Locascio, our CFO.

We will take your questions after our prepared remarks conclude. Please limit yourself to one question and one follow-up. Our earnings release issued earlier this morning and today's presentation can be found on the Investor Relations page of our website at ir.usfoods.com. During today's call, unless otherwise stated, we're comparing our second quarter fiscal year twenty twenty five to the same period in fiscal year twenty twenty four. In addition to historical information, certain statements made during today's call are considered forward looking statements.

Please review the risk factors in our Form 10 ks for a detailed discussion of the potential factors that could cause our actual results to differ materially from those anticipated in forward looking statements. Lastly, during today's call, we will refer to certain non GAAP financial measures. All reconciliations to the most comparable GAAP financial measures are included in the schedules on our earnings press release as well as in the presentation slides posted on our website. We are not providing reconciliations to forward looking non GAAP financial measures. With that, I'll turn the call over to Dave.

Thanks, Mike. Good morning, everyone, and thank you for joining us. Let's turn to today's agenda. I'll start with our key results for the second quarter and first six months of the year, which are underpinned by significant achievements across our strategic pillars as our team continues to execute very well.

I will then hand it over to Dirk to review our second quarter financial results and our updated fiscal twenty twenty five guidance. Turning to Slide three. We delivered strong second quarter and year to date financial results as we continue to demonstrate consistent progress against the long range plan we presented at our Investor Day last year. Importantly, our year to date earnings and EPS are in line with our long range plan algorithm. Year to date, we grew adjusted EBITDA 11%, expanded adjusted EBITDA margin by nearly 30 basis points and grew adjusted EPS 27%, which highlights our team's consistent execution and the strength of our differentiated business model.

This momentum has fueled further market share gains with our independent restaurant, healthcare and hospitality customers. I'm incredibly proud and appreciative of our talented team of 30,000 associates whose dedication and hard work are delivering on our promise to help our customers make it. Moving to Slide four. We delivered record second quarter adjusted EBITDA of $548,000,000 and a record adjusted EBITDA margin of 5.4%, a 40 basis point increase through a combination of top line growth, strong gross profit gains and disciplined cost management. Our record adjusted EBITDA margin is not a ceiling and we have significant margin expansion opportunity for years to come, largely through continued improvement in the execution of our core business processes and benefits from improved customer mix.

And again this quarter, we gained market share with our target customer types of independent restaurants, health care and hospitality. This is the seventeenth consecutive quarter of market share gains with independent restaurants and the nineteenth consecutive quarter of market share gains with healthcare. In addition to our strong financial performance, we remain committed to delivering shareholder value through our capital return strategy. On our last earnings call, we stated we would accelerate share repurchases in the second quarter and balance of the year given our strong cash flow. We did just that and repurchased $250,000,000 of shares in the second quarter.

We will remain prudent as we allocate capital, first by investing in the business to drive growth and then balancing share repurchases with tuck in M and A opportunities. Let's turn to our case growth and our perspective on the industry. We continue to outperform the market and take share as our independent volume growth was 2.7% in line with our 2% to 5% guidance for the year. Our organic independent case growth accelerated 100 basis points from Q1 to Q2 and we gained share in every month of the second quarter. Total independent restaurant volumes per Surcana increased from the first quarter to the second quarter similar to our improvement in case growth.

Our organic independent case volume also accelerated throughout the second quarter with June growing at approximately 3%. July continued the approximately three percent growth rate. During the second quarter, we grew net accounts approximately 4% over the prior year, which was our strongest growth rate since the 2023. As a result of continued acceleration in our net accounts, we expect to build further momentum in our independent growth rate through the back half of the year. Additionally, Healthcare and Hospitality continue to help drive our overall volume growth with approximately 52.4% case growth respectively.

Turning to our chain business. Restaurant foot traffic as reported by Black Box improved sequentially throughout the second quarter versus the first quarter, but remained down 1.1% from the prior year. We continue to be disciplined in optimizing our chain portfolio to improve profitability. In the second quarter, our chain restaurant volume declined 4%, primarily driven by a strategic exit, which negatively impacted our total chain volume growth by approximately 300 basis points. We've recently onboarded several new business wins and expect our chain volume performance will improve in the back half of the year.

Additionally, in the first quarter, we divested Freshway, a small produce processing business that provided us with higher volume, but with lower margin. The divestiture resulted in nearly a 50 basis point impact to our total case growth in the second quarter. Regardless of the operating environment, we remain guided by four strategic pillars and I will highlight key elements of our progress over the next several slides. Moving to Slide five, our first pillar is culture. We remain committed to our goal of zero injuries and accidents for our associates.

In the second quarter, our injury and accident rates were twenty one percent better than the prior year. And over the past two years, we've improved our safety performance by 35%. Our team has made great progress in creating a strong safety culture, but we have more work to do. This past May, we published our 2024 sustainability report, highlighting our progress in the three focus areas of products, people and planet. I am proud of the work we accomplished in 2024 to further align our approach to sustainability with our strategy and our operating model.

We have reduced our scopes one and two greenhouse gas emissions by 16% since 2019 and are nearly halfway to our goal of reducing these emissions by 32.5% by 02/1932. Turning to Slide six, our second pillar, service. Our focus on service is one of the many reasons that our customers choose U. S. Foods.

Our ability to deliver service excellence is driven by our initiatives to improve reliability, enhance operational efficiency and provide a best in class customer experience through our Moxy digital platform. We improved routing productivity again this quarter as we continue the Descartes rollout across our distribution network. We are now live or in active deployment in sixty five markets, representing approximately 90% of routed miles and remain on track to be fully deployed by year end. We delivered more than a 2% improvement in cases per mile over the prior year and nearly 6% over two years via our routing initiatives. And in the second quarter, we achieved our best cases per mile performance in our company's history.

Our routing initiatives help to drive greater delivery efficiency while enabling a better customer experience. As we discussed last quarter, an important element of our service is our operations quality composite or Ops QC, which measures our ability to deliver products to our customers without errors. During the second quarter, we made steady progress on Ops QC, resulting in nearly 28% improvement from the prior year. Over the past few quarters, we have also implemented new inventory control processes including scanning technology, which reduces manual inputs and results in fewer errors. We continue to sequence new opportunities to improve our service and reduce costs for our customers.

We also recently completed an independent Net Promoter Score study where customers provided their feedback and views regarding digital technology leadership in our industry. The results show that U. S. Foods' Moxie platform has a distinct advantage over the competition. We also have the highest customer digital adoption in the industry.

Significantly, more U. S. Foods customers use Moxie for all of their self help needs, including purchasing, delivery tracking and bill payments, which is a testament to our online leadership versus our competition. As we remain focused on enhancing our technology leadership, we drove record independent restaurant e commerce penetration of 78% and total company of 89%. We are on track to hit our goal of 95% penetration by 2027.

Turning to our growth pillar on slide seven. We remain focused on accelerating profitable growth and gaining market share with our three target customer types. We have continued investing in our Pronto small truck delivery service and are now live in 44 markets with plans to add a few more this year. We are nearly complete in launching Pronto Legacy across the company, but still have plenty of growth opportunity ahead by adding more trucks within our existing markets. In addition to Pronto legacy, we have expanded Pronto penetration to 15 markets to further grow our share of wallet with our existing customer base.

We continue to see a double digit percent uplift in overall case growth with customers in the program and we will be in a total of 20 markets by the 2025. Given the success of both Pronto legacy and penetration, the overall program is on track to deliver over $900,000,000 in sales this year and we now believe it will reach $1,500,000,000 in sales by 2027, up from the $1,000,000,000 that we've previously discussed. Beyond Pronto, we remain committed to investing in the business to fuel growth and enhance operational efficiencies. I'm excited to announce that we began limited shipping from our first new semi automated facility in Aurora, Illinois last month. This 310,000 square foot distribution center is a state of the art facility that will enable us to be more efficient, accelerate productivity, improve our ops QC metric and inventory accuracy and further reduce accidents and injuries.

Finally, we broke ground on a semi automated expansion in our distribution center in Austin, Texas, which will effectively expand our capacity in another high growth market. Targeted investments in semi automation will support our growth initiatives and help us accelerate our supply chain excellence work while delivering strong capital returns for the business. Moving to slide eight, our profit pillar. Our consistently strong execution drove adjusted gross profit growth during the second quarter and the first six months of the year. Second quarter adjusted gross profit was $1,800,000,000 up 5% from the prior year, driven by volume growth, improved cost of goods, more disciplined inventory management and increased private label penetration.

Our strategic vendor management initiative has delivered more than $50,000,000 in year to date cost of goods savings and for the full year we expect to drive more than $110,000,000 As we realize these benefits, we are reinvesting a portion of those savings to help accelerate growth. And we now have line of sight to exceed our 2027 long range plan commitment of $260,000,000 Private label penetration with our core independent restaurants grew by more than 80 basis points to over 53%. These margin driving high quality innovative products enable us to deliver significant value as we help customers offset inflationary pressures with lower costs. Before passing it to Dirk, I'd like to highlight one of our distribution centers and associates. Last month, several US Foods military veteran associates from our Manassas, Virginia distribution center and I took part in a wreath laying ceremony at the Arlington National Cemetery Tomb Of The Unknown Soldier to honor the sacrifices of our nation's service members.

We are proud of our veteran workforce and remain committed to recognizing the leadership, integrity, and service that our military community brings to U. S. Foods. And we are committed to increasing veteran new hires through our Mission 2030 recruitment initiative in which we intend to hire an additional 3,000 military veterans by 02/1930. I thank our Manassas team, our veteran associates across the company and all veterans for their service.

Let me now turn the call over to Dirk to discuss our second quarter results and our updated 2025 guidance. Thank you, Dave, and good

morning, everyone. Our second quarter results demonstrate the consistent execution of our strategy and continued progress on our self help initiatives. We delivered top line growth and margin expansion combined with accretive share buybacks, which resulted in strong double digit adjusted EBITDA and adjusted EPS growth. Starting on slide ten, second quarter net sales increased 3.8% to $10,100,000,000 driven by case volume growth of 0.9% and food cost inflation and mix impact of 2.9%. We increased volumes with our target customer types of independent restaurants, healthcare and hospitality.

Despite a dynamic macro, we grew independent restaurant organic volume 2.3%. Healthcare continues to perform well and grew 4.9%, while hospitality grew 2.4%. Shifting to our financial performance, we delivered strong earnings growth and margin expansion. I'm pleased to report that adjusted EBITDA increased 12% from the prior year achieving a quarterly record of $548,000,000 This growth was fueled by consistent progress of our initiatives aimed at driving profitable volume growth and sustainable gross profit gains coupled with disciplined operating expense management. As a result, adjusted EBITDA margin expanded by 40 basis points achieving an all time high of 5.4%.

Finally, adjusted diluted EPS increased 28% to 1.19 per share. Our strong adjusted EPS growth is powered by our earnings growth combined with accretive share repurchases and continues to significantly outpace adjusted EBITDA growth. We expect to maintain this trend as we deploy our robust and growing cash flow to invest in the business to drive profitable growth and execute additional buybacks. Turning to slide 11. We again drove operating leverage gains through the execution of our initiatives including strategic vendor management, private label penetration and a new initiative targeted to reduce inventory losses.

Adjusted gross profit per case improved $0.32 or 4% compared to the prior year. A large part of the performance is driven by the success of our in place strategic vendor management initiative to improve cost of goods sold. As Dave highlighted earlier, we now have line of sight to exceed our twenty twenty seven long range plan commitment of $260,000,000 We have made significant improvements in more effectively managing inventory on hand in recent years, while at the same time improving customer service levels. To that end, we've made great strides on a new initiative to eliminate waste and reduce write offs. The focus here is on reducing losses from product that can't be sold due to damage or spoilage through improvements in process and insights.

As a result of our actions, we expect to reduce inventory losses by over $30,000,000 in 2025 and believe there is further savings opportunity in 2026. Adjusted operating expense per case increased $09 or 1.6%. We continue to offset a considerable portion of operating cost inflation by driving productivity improvement in both operations and administration through eliminating waste in our supply chain and instituting greater process discipline across the business. As previously communicated, a key element of our expense management where we are driving results is our indirect spend management initiative. As a reminder, indirect spend is a $1,000,000,000 plus bucket of addressable spend.

We are on track to generate $45,000,000 in total savings this year, which is about $15,000,000 above last year. As a result of the strong execution of our strategy, adjusted EBITDA per case increased $0.25 or 11% to a record high of $2.52 Moving to slide 12. U. S. Foods continues to generate strong cash flow funding record capital investments to maintain our business, support growth and drive attractive returns while also delivering on our commitment to return capital to shareholders through share repurchases.

Year to date, our operating cash flow increased by 104,000,000 to $725,000,000 driven by earnings growth. During the second quarter, we significantly accelerated the pace of share buybacks as we repurchased $250,000,000 of shares. Overall, we bought a total of 3,600,000.0 shares for $273,000,000 so far in 2025 and have $800,000,000 remaining on our $1,000,000,000 program authorized in May. Finally, we ended the quarter at 2.6 times net leverage, down from 2.8 times at the end of last year and well within our stated two to three times target range. Our debt structure is strong and we have no long term debt maturities until 2028.

Now turning to our guidance and modeling assumptions on Slide 13. Given our year to date performance and outlook for the remainder of the year, we are updating our fiscal year twenty twenty five guidance. We continue to expect net sales growth to be in the range of 4% to 6%. Due to our solid progress this year and our ability to deliver balanced profitable growth and enhanced margins, we are raising the low end of our guidance for adjusted EBITDA and adjusted diluted EPS. We now expect adjusted EBITDA growth of 9.5% to 12% and adjusted diluted EPS growth of 19.5% to 23%.

We also now expect interest expense to commence slightly lower at $300,000,000 to $315,000,000 I'm pleased with the progress we have made this year on execution within our business. As we navigate the dynamic macro, we continue to grow our top line, gain share, expand our margins and deploy our strong cash flow toward our capital priorities. And we remain committed to achieving the financial targets in our long range plan. With that, I'll now pass it back to Dave for his closing remarks.

Thanks, Dirk. As we close this quarter, I am encouraged by the progress that we've made in driving strong profit growth, executing our self help initiatives and the ongoing opportunity we have ahead to drive significant value for our stakeholders. We operate in a large, fragmented, resilient and growing industry with our focus on independent restaurants, healthcare and hospitality, which are the fastest growing and most profitable customer types. And food away from home continues to steadily increase, a multi decade trend that we believe will continue. U.

S. Foods is a national leader with significant sustainable advantages and the only pure play U. S.-focused broad line foodservice distributor with national scale. We will remain disciplined with our capital allocation strategy, which will enable us to be a consistent double digit earnings compounder for many years to come. Before we move to Q and A, I want to address the recent speculation about a potential transaction with Performance Food Group.

Many of you know that as part of our commitment to generating long term profitable growth and creating shareholder value, U. S. Foods regularly considers accretive tuck in M and A and evaluates potential strategic opportunities. We believe that a combination with PFG has the potential to create significant value for both companies and our collective stakeholders while enhancing competition in the foodservice industry. We approached PFG to work with us to explore the merits and opportunities of a combination.

To date, PFG has declined our invitation to do so. Let me provide some thoughts about the strategic rationale of a potential transaction based on our knowledge of foodservice, both companies and where the industry is going. We believe a combination would bring together the best of both companies resulting in meaningful economies of scale, expanded growth opportunities, complementary geographic reach, operational efficiencies and a differentiated go to market offering based on service excellence, industry leading digital capabilities and a strong customer centric sales force. We believe customers would further benefit from the broader product offering, our strengthened ability to compete in the marketplace and increased efficiencies. We believe the combination will result in a thriving inspired culture supported by investment in the development of associates.

Finally, we estimate a combination would generate meaningful multiyear synergies and significant opportunities for profitable growth and shareholder returns. Our ask of PFG is simply to work together to further understand the merits and opportunities of a potential combination. At this time, we have no further information to disclose on this topic and will not be taking any questions regarding our outreach to PFG. Regardless of the outcome, and I want to be crystal clear about this, I remain highly confident in U. S.

Foods' future and our ability to deliver our long range plan and financial algorithm. As a reminder, we expect to deliver a 5% sales CAGR, 10% adjusted EBITDA CAGR, at least 20 basis points of annual adjusted EBITDA margin expansion and a 20% adjusted EPS CAGR through 2027. With that, Jordan, please open up the line for questions about our results.

Your first question comes from the line of Laurence Silberman from Deutsche Bank. Your line is live.

Thanks so much. I wanted to try to follow-up a bit on your last comments, Dave. You talked about you've talked about a preference for more tuck in acquisitions rather than anything transformative. Obviously, PFGC would be pretty transformative. Can you just talk about any changes to your philosophy on M and A given the openness to engage with performance?

Yeah. Really no change to our philosophy and I would probably, Lauren, just leave it with my prepared remarks. And, you know, in that, I stated that, you know, the company from time to time explores strategic opportunities to create value for all of our stakeholders. And I would, just point you to that comment.

Okay, fair. On the just traffic chain restaurant traffic across the industry improved nearly 200 basis points quarter over quarter. What are you seeing from the independent side at an industry level? Did it accelerate at the same pace? Are you seeing it less than that?

Any color in terms of those dynamics would be helpful.

Yes. I think let me start with the chain piece because you asked about that first, the 200 basis points improvement and that accelerated throughout the quarter versus Q1. But it was still down over 100 basis points in the quarter, but we're encouraged by that improving momentum. Independence according to Surcana accelerated as I mentioned in my prepared remarks about 100 basis points slightly less than that. And so it's improving, but not to the extent we'd like to see it.

But I'm hopeful that that will continue to improve and we've kind of seen the turn in the bottom here. For our results, we accelerated our case growth with independents throughout the second quarter. As I mentioned in my prepared remarks, ended up in June about three that carried over to July and we're encouraged by what we see in the early days of August so far.

Your next question comes from the line of Harbour from Morgan Stanley. Your line is live.

Hi, this is Hillary Lee on for Brian Harbour. I just want to talk about the sales guide and the sales dynamics for the quarter. So you're tracking around 4% year to date at the low end of guidance. So what kind of gives you guys the confidence to maybe reach the midpoint or even higher for the rest of the year?

Yes. I'd point to two things. And as we commented, we did have a strategic exit in the chain business early in the second quarter. We have since are in the process of onboarding a few new concepts and we're encouraged to and believe that that will accelerate in the back half of the year. And then my comments just to the last question on the independent side, we've seen acceleration as we finish the second quarter.

We're encouraged by what we see in July and August and we would expect those volumes to accelerate in the back half of the year as well.

Got it. Thanks. And just to follow-up. Inflation seems pretty tempered this quarter compared to prior quarters and from what we've been hearing to what we've been hearing across in restaurant industry. So could you talk about what you're seeing, particularly kind of interested in beef and eggs as we've kind of seen the inflation in those categories go up the past couple of months?

And this is Dirk. Yeah. You're right. It has tempered, so the quarter was less than it was last quarter. You've seen, several center plate categories, to your point, either, moderate or see sequential deflation of both eggs and beef squarely fit within there.

I'd say, you know, you we see broadly speaking, grocery continues to see very modest inflation and center of the plate, overall as a basket is still seeing a little higher inflation, but, as you pointed out, definitely seeing some moderation for where it had been. So well within the range of the 2% to 3% that we all talk about that we like as an industry, and you see through the first half of the year, we're basically right on between that and mix with our 3% that's embedded in our modeling assumption.

Your next question comes from the line of John Heinbockel from Guggenheim. Line is live.

Dave, I wanted to start with your thoughts on expanding the sales force, right? I think you've always said, I guess mid single digit four to five. Thoughts on that today, sort of the quality of people you're onboarding? And then I know it's been a bit of a struggle, right, for all of you guys to improve wallet penetration. Is there something that can sort of jump start that going forward or that's just going to be a challenge for all of you?

Yes. Good morning, John. Appreciate the questions. Yes, we will stay in that mid single digit. You know, I think I've bracketed around the four to 6%, Salesforce growth.

And I've I've been trying to be clear about regardless of what's going on with the macro, we think that is the right number for us, in order to be able to support the development and onboarding of those sales reps and further them into our organization. So we don't anticipate anything changing that. Second question you had there was around the quality of the sell sellers. I continue to be very excited about the quality of the incoming hires that we've had. We've seen no change or degradation in that.

We are able to attract high quality sales talent into the organization. And I think to your point around penetration, you know, the industry has been challenged for, you know, a couple years. We're we're just coming off of eight consecutive quarters of black box data being down quarter over quarter. And and so penetration has been a challenge. Independents have not been immune to that.

I will tell you that I was encouraged to see our penetration, albeit still pressured, improve from q one to q two slightly on the independent side. So we think that there's a as a turn potentially and and, you know, a sign of good things to come. But I would say the thing that we're most excited on the penetration side is Pronto. And as I've stated before, you know, that that enables us to compete against the part of the market, particularly the specialty suppliers that historically we haven't had the service model to compete against. And with the uplift in case growth we're seeing as we expand Pronto across the company, that gives me real encouragement around that penetration ramping up in the future.

And then just as a follow-up, right? I don't think you talked about UMAS and where we are in that rollout and its contribution to productivity. But where are we? And how do you think about that relative to the Descartes contribution?

Yes. Great question. I didn't mention UMOS this morning. We have UMOS across 37 markets and we're currently in live deployment and an additional 10. By the end of the year, we expect to be live and complete across more than 60 of our 74 markets.

So we haven't forgotten about UMass. With things like the cart, that has certainly taken the priority for us. And as you see, we've ramped that up now to 65 markets covering 90% of our miles. It's really just been a prioritization effort for us, John. But I'm pleased with the progress we've seen in UMass, the consistency in our operating practices that that brings.

And I think that means good things for productivity and the quality of product that our customers are going to get in the long term. So we're moving it all ahead.

Your next question comes from the line of Kelly Dania from BMO Capital Markets. Your line is live.

Good morning. Thanks for taking our questions. Dave, the quarter and the year and the last few quarters continue to be strong on a bottom line perspective. I guess there's a little bit of investor questions just about the top line and the case growth. And if there is starting to get any risk of maybe cutting expenses too aggressively.

Maybe can you just talk to that and why that's maybe not a concern or something that investors should worry about? And maybe just any sort of timeline on when we should expect that case growth and EBITDA growth to get a little bit more in balance with your longer term plan?

Yes. I'd point you to my earlier comments around the expectation that, that case growth would continue to accelerate in the back half of the year. We've got line of sight to that happening. I feel really good about it. And I think Kelly for the past eighteen months or so given the industry pressure, our ability to drive the double digit EBITDA growth and hit our algorithm in the new long range plan should give investors confidence that as the volumes come back in the industry and we continue to accelerate our growth on the top line, it's really going to mean very, very good things across the P and L.

I'm not concerned personally. Obviously, I'd like to see the top line be stronger. We're working on that aggressively and I have an expectation that it will do just that.

And Kelly, the other thing that I would add is if you look at what's driving a lot of our margin expansion, it really isn't just an OpEx reduction. It's we are seeing some good productivity offsetting a portion of cost inflation. However, we've got a number of initiatives across gross profits, whether it be the cost of goods, the customer mix, private label, the inventory management that we talked about, they're all contributing. So there's not a single thing, and I think it really demonstrates that portfolio of initiatives that we have faced throughout our long range plan, and that's why we have such confidence in our ability to continue to deliver on this outcome.

And the last thing I would say there is, I came in day one, two point five years ago talking about the importance of 3% to 5% productivity. You see us delivering that and as Dirk says all the time, we are doing this in a very healthy and sustainable way for the business.

Your next question comes from the line of Alex Slagle from Jefferies. Your line is live.

Hey, thanks and congrats on the momentum here. I wanted to ask on the net new independent account growth, how that's been accelerating. I know that's a key driver and source of visibility and confidence for you just hitting the independent case growth targets. And you had talked about the new Gen AI automatic order guide and, you know, I I know that was rolled out a couple quarters ago and was driving some of the acceleration on the March and April, and I imagine that's continued. But I wanted to get a sense for just how fully your sales team's already learning how to fully harness some of this and and the learning curve there and but sometimes takes a little bit.

But just wanted to kinda understand what that learning curve looks like and the potential benefits ahead as as they start to figure that out and get the muscle memory and, you know, use these tools better and really set in and maybe just a little bit more color there, what gives you confidence?

Yeah. Sure. Good morning, Alex, thanks for the questions. On the net new generation, we're excited that we had the highest level since the 2023. And as you hear us say all the time, the lifeblood of our growth is that net new account generation.

So it's clear our teams are are very focused on that. And as we continue to take market share and onboard new net new customers, that also informs my confidence in the future of us continuing to ramp up that growth. So I feel very, very good about that. Our sales team is intensely focused on that and will remain focused on that, you know, well into the future. And to your point on the generative AI stuff, we continue to deploy that across the company.

The automated order guide we spoke about continues to get very good traction and we're making that very easy for our sellers to adopt and just help make it easier to create, you know, the the right recipes for our customers to to drive that growth around their proposals. And it's it's being well adopted and well accepted by our Salesforce. So we continue to expect good things there. We continue to deploy AI across not only the sales part of the business, but also internally around replenishment organization, way we do labor planning. AI is here to stay and we are embracing it fully to drive profitability, growth, productivity and efficiency for our teams.

Got it. Thank you. And I had a follow-up on the cost of goods vendor management initiative. You talked about reinvesting a portion of the savings this year to further accelerate the growth. Is there an example what that means and how we should think about that?

Overall, Alex, that would be and this is not new. We we do this regularly. I mean, as part of driving these savings, the portion of, giving a portion of a back to typically, it comes in the form of whether it's customer promotions, customer incentives in order to, again, pass some of that, savings back on the customers. That's the primary way you see it show up. But again, it's not new.

It's as we drive these savings that have driven them, that's what we do.

Your next question comes from the line of Ed Kelly from Wells Fargo. Your line is live.

Hi. Good morning, everyone. Dave, I wanted to ask you, just maybe stepping back for a moment given we've learned a lot on this call. If you could just maybe assess the industry for us at the moment. You think about you're driving a lot of self help.

So it's not surprising to me that you're very confident in your three year outlook. But the industry has been softer. And I'm curious, like taking a step back, has your view on the industry started to change at all related to that? Or do you just simply attribute it to the macro? Is that the catalyst at all for thinking about things like whether it's more transformational M and A or maybe even like leaning in on tuck ins?

I'm just kind of curious because ultimately I think what we're all sort of wondering is like the case volume targets that you laid out over the three year, whether you can get back to those numbers.

Yes. I believe we can with one caveat, Ed, and we were clear at Investor Day. That 5% to 8% independent case growth, if that's what you're referencing, was predicated on 2% traffic growth, which was historical in the industry. And as excited as we are about, you know, what seems to be a stabilization in the industry and black box improving and all that, you know, the industry was was still challenged and pressured. And I feel that it's I would describe it as soft but stable at this point.

Softer than we'd like to see but stable. It's certainly not getting worse. And look, I do attribute it to the macro as we've been talking about for a long time, which has seen a lot of pressure. More recently, you've got tariff impacts. And while that is a very minor impact to our company and to our customers, it's a big impact to the consumer.

Right? And I think that uncertainty has kind of kept a little bit of the pressure and the lid on the industry for a while. Now I fully expect this industry is extremely resilient, as I said in my prepared remarks and continue to say. I believe there's a day coming, hopefully sooner than later, when we get back to that standard growth piece of it. But in the meantime, we continue to take market share, support our customers, drive cost and productivity and make sure we're delivering as efficiently and cost effectively as we can for our customers and importantly position ourselves with our share gains to drive that top line growth into the future.

All right. And then just one quick follow-up. Healthcare Hospitality sequentially a touch slower, not a big deal. But just kind of curious as to what the underlying momentum of demand looks like there, what the pipeline looks like on the new business side and how you're thinking about the back half?

Yes. Pipeline remains strong in both of those. Healthcare, we continue to take share, very solid numbers. Hospitality has followed a little bit more like the local customer piece of it. Recall that historically we've been over indexed a bit to lodging.

And so you see some of those consumer pressures, less travel, those sorts of things. We've had a little bit of impact there. But the pipeline remains strong and we've shifted our focus as we've talked about before, bit away from lodging to drive growth in other segments that are growing inside of hospitality. So we've got a solid pipeline and we expect growth and share gains to continue in both of those.

Your next question comes from the line of Jeffrey Bernstein from Barclays. Your line is live.

Great. Thank you. My first question is just on the independent case growth. I think you mentioned you're up now 3% or so in June and July, and I think you mentioned even early thought on August. Just wondering whether you're seeing I think you just said stable.

It would seem like it's been somewhat volatile. I'm just wondering your level of confidence in that further acceleration in the second half. Unlike chain onboarding? Would seem harder to have independent visibility as they're all such small players. So just your level of confidence that you can get that independent to accelerate further from here? And then I had one follow-up.

Yes. We do have confidence Jeff, and believe line of sight to new customer onboardings and all that. While they're not as large in any one area as a potential chain onboarding by region and by market, we do understand what our pipeline looks like. That's informing the confidence as well as what I previously mentioned around our share gains and our continued focus on net account generation. So feeling good about my commentary there.

Got it. And the follow-up is just on the chain business. I think you said down 4% for the past quarter, but you have some unique drivers there. I'm just wondering with the new accounts you're adding, how do you think about the right balance of chain versus kind of total restaurants? And how you think about the margin of those chains?

Because it does seem like from an independent side, you're hiring at a mid single digit clip, but maybe growing a little bit below that. So just trying to figure out how you think holistically about balancing kind of more of the uncertainty around independents versus perhaps the consistency of chains, but yet the different profitability profile of the two. Any thoughts would be great. Thank you.

US Foods Holding Q2 2025 Earnings Call Transcript | Fortune

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US Foods Holding (USFD) Q2 2025 Earnings Call Transcript

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