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    USFD
    Earnings call· Mar 2026(Q1 FY26)

    US Foods Holding Q1 FY26 earnings call USFD

    May 7, 2026 Source

    Executive summary

    US Foods Q1 FY26 — Strong Case Growth Amid Headwinds, Reaffirms FY26 Guidance

    US Foods delivered strong Q1 FY26 results, accelerating independent restaurant case growth and expanding adjusted EBITDA and EPS, despite significant weather and fuel cost headwinds. The company reaffirmed its full-year guidance, emphasizing the strength of its self-help initiatives and ability to control outcomes in a challenging macro environment, while continuing to invest in digital capabilities and sales force transformation.

    Highlights

    5

    • Accelerated year-over-year organic independent restaurant case growth by more than 300 basis points and sequential growth by 70 basis points.

    • Achieved strongest organic independent case growth in over 2 years at 4.4%.

    • Adjusted diluted EPS grew 15% despite a deteriorating macro environment.

    • Adjusted EBITDA increased 6% to $413 million.

    • Operations Quality Composite (Ops QC) improved by 21% year-over-year, reaching its best performance since Q1 2019.

    Concerns

    4

    • Severe weather and higher fuel costs reduced adjusted EBITDA growth by approximately 4 percentage points.

    • Consumer sentiment declined to an all-time low in March.

    • Chain restaurant volume was down 2.3%, largely in line with industry foot traffic trends.

    • Operating cash flow was below prior year due to less working capital benefit.

    Guidance & targets

    9
    CategoryTargetConfidence
    Adjusted EBITDA growth
    9% to 13%
    high materiality
    High
    Adjusted diluted EPS growth
    18% to 24%
    high materiality
    High
    Adjusted EBITDA growth
    mid- to upper single digits
    medium materiality
    Medium
    Cost of goods savings
    at least $300 million
    medium materiality
    High
    Indirect spend savings
    more than $75 million
    low materiality
    High
    Indirect spend savings
    more than $100 million
    low materiality
    High
    Pronto sales
    $1.5 billion
    medium materiality
    High
    Operating cash flow
    grow this year versus 2025
    medium materiality
    High
    Military veteran hires
    3,000
    low materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Independent Restaurants
    Accelerated organic independent restaurant case growth, marking the 20th consecutive quarter of market share gains. Includes 20 basis points from acquisitions.
    Organic independent case growth: 4.4%Case growth from acquisitions: 0.2%
    		—4.6%——
    Healthcare
    Achieved 22nd consecutive quarter of market share gains.
    		—3.7%——
    Hospitality
    Strong growth in the segment, supported by the new SIGNATURE solution.
    		—5%——
    Chain Restaurants
    Volume decline largely in line with industry foot traffic trends as reported by Black Box.
    		—-2.3%——

    Operational metrics

    23
    Net sales
    $9.6 billion+2.8%
    Q1 FY26

    Driven by total case volume growth and food cost inflation and mix.

    Total case volume growth
    1.4%
    Q1 FY26

    Overall case volume growth for the quarter.

    Total case volume growth (ex-Freshway divestiture)
    1.6%
    Q1 FY26

    Adjusted for the divestiture completed in Q1 FY25.

    Food cost inflation and mix
    1.4%
    Q1 FY26

    Contribution to net sales growth.

    Adjusted gross profit
    $1.7 billion+4.4%
    Q1 FY26

    Driven by volume growth and improved cost of goods sold.

    Adjusted gross profit per case
    $0.23+2.9%
    Q1 FY26

    Maintained strong and steady growth trajectory, primarily driven by self-help initiatives including COGS work.

    Adjusted operating expenses per case
    $0.14+2.3%
    Q1 FY26

    Includes $0.04 related to incremental expenses from weather and higher fuel.

    Adjusted EBITDA per case
    $1.98+$0.08
    Q1 FY26

    Resulted from adjusted gross profit per case growing 60 basis points faster than adjusted OpEx per case.

    Cash CapEx
    $98 million
    Q1 FY26

    Invested to support business, enable organic growth, enhance capacity, and strengthen technology leadership.

    Share repurchases
    $125 million
    Q1 FY26

    Repurchased 1.4 million shares for $125 million.

    Remaining share repurchase authorization
    $1 billion
    Q1 FY26

    Remaining authorization on share repurchase programs.

    Net leverage
    2.6x
    Q1 FY26

    Ended the quarter at 2.6x net leverage, lowest among large public peers.

    Injury and accident rates improvement
    12%YoY
    Q1 FY26

    Improved injury and accident rates by 12% compared to prior year and 45% over the past 3 years.

    Menu IQ adoption
    15%double early expectations
    Q1 FY26

    15% of independent customers are using Menu IQ within two months of launch, double early expectations.

    Ops QC improvement
    21%YoY
    Q1 FY26

    Strong progress in Operations Quality Composite, building upon 20% improvement last year.

    Pronto markets live
    47
    Q1 FY26

    Number of markets where Pronto small truck delivery service is live.

    Pronto Next Day markets live
    26
    Q1 FY26

    Number of markets where Pronto Next Day service is live, with plans to add more.

    Private label penetration
    54%remains strong
    Q1 FY26

    Private label penetration with core independent restaurant customers.

    Warehouse and selector productivity improvement
    3%YoY
    Q1 FY26

    Improvement driven in part through US Foods Market Operating System (UMOS).

    Fuel cost recovery rate
    30% to 40%
    FY26

    Typical recovery rate of fuel cost increases through surcharges, with a lag.

    Fuel gallons locked at fixed prices
    1/3
    FY26

    Approximately one-third of expected 2026 fuel gallons are locked into fixed price contracts at lower than current market prices.

    Sales force turnover (territory managers with 5+ years experience)
    better than it was a year agoYoY
    Q1 FY26

    Turnover for experienced territory managers is better than a year ago, indicating excitement for the new compensation plan.

    Preferred industry inflation rate
    2% to 3%
    over time

    The typical cost inflation rate preferred by the industry, as it provides a small positive to distributors and is manageable for operators.

    Industry KPIs

    2
    MetricValueDetails
    Gross margin drivers$0.23USD
    Private label own brand penetration54%%

    Product announcements

    2
    ProductTypeDetails
    Menu IQlaunch
    SIGNATURElaunch

    Deals & partnerships

    1
    FreshwayDivestiture of Freshway business

    The Freshway divestiture was completed in the first quarter of last year (FY25).

    Capital programs

    4
    Cost of goods savings (long-range plan)underwayat least $300 million

    Benefit: cost savings

    Targeted savings over a 3-year long-range plan, increased from an original $260 million commitment.

    Indirect spend procurement savingsunderwaymore than $100 million
    Period spend: more than $75 million for FY26
    Spent to date: $45 million last year

    Benefit: savings

    Expected savings for FY26, with a target of over $100 million in 2027, building on $45 million achieved last year.

    End ride powered industrial equipment replacementunderway
    Spent to date: 80% complete

    Benefit: greatly reduce risk of serious injury types

    Rollout to replace end ride equipment with safer center ride models, on track to finish by year-end.

    UMOS (US Foods Market Operating System) deploymentunderway
    Spent to date: live in 70 markets

    Benefit: supply chain process standardization, continuous improvement, annual productivity improvement goal of 3% to 5%

    Platform for supply chain process standardization and continuous improvement, nearing full deployment.

    Risks & headwinds

    4
    Severe weather (winter storms)Q1 FY26 (late January through much of the quarter)

    Nearly twice as many distribution center closure days compared to Q1 last year; reduced adjusted EBITDA growth by approximately 2 percentage points (part of 4% combined impact).

    Mitigation: Focus on controlling controllables and self-help initiatives.

    Elevated fuel costsQ1 FY26 and Q2 FY26 (near term)

    Reduced adjusted EBITDA growth by approximately 2 percentage points (part of 4% combined impact); expected to remain elevated in the near term.

    Mitigation: Fuel surcharges (recover 30-40% of increases, with ~1 month lag); approximately 1/3 of FY26 fuel gallons locked into fixed price contracts at lower than current market prices; self-help initiatives.

    Macro uncertainty / declining consumer sentimentQ1 FY26, persisting into Q2 and potentially H2 FY26.

    Consumer sentiment declined to an all-time low in March; chain restaurant volume down 2.3% (in line with industry foot traffic).

    Mitigation: Focus on self-help initiatives, target customer types (independent restaurants, healthcare, hospitality), and ability to win in any environment.

    Geopolitical conflict (Iranian war)Q1 FY26

    Increased macro uncertainty.

    Mitigation: Focus on controlling controllables.

    What to watch in Q2 FY26

    5

    Fuel cost moderation and macro strengthening

    Q2 FY26 and H2 FY26
    CurrentElevated fuel costs, weak macro, consumer sentiment at all-time low in March.
    TargetFuel moderates, macro strengthens.

    Why it matters

    Determines if the company reaches the higher or lower end of its full-year guidance range.

    If fuel remains at these elevated levels and macro uncertainty🌐 persists into the second half of the year, we believe we will be at the lower end of our full year guidance range. Absent those pressures, we expect growth to be in line with our long-term algorithm.

    Q&A highlights

    7

    How are elevated gas prices affecting restaurant customer orders and foot traffic, and thus US Foods' top line?

    Management acknowledged gas prices add pressure on consumers and that foot traffic has been declining for 2.5 years. However, they emphasized the industry's resiliency and US Foods' ability to deliver strong results, expand margins, and accelerate growth in target customer types despite these headwinds, focusing on controllable outcomes.

    “People want to go out and have a good time and enjoy their families and have a meal out every once in a while. I think that speaks to the resiliency of the industry.”

    asked by Pratik Patel · answered by David Flitman

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Pillars & Self-Help Initiatives Drive Performance

    US Foods demonstrated strong execution across its strategic pillars of culture, service, growth, and profit, contributing to its Q1 FY26 performance. Despite external headwinds🌐, the company accelerated independent case growth and expanded margins, underscoring the effectiveness of its self-help initiatives. These efforts are focused on driving sustainable operational improvements and productivity gains, positioning the business for continued growth.

    02

    Digital Innovation with AI Enhances Customer Experience

    The company launched Menu IQ, an AI-powered tool integrated into its MOXe platform, designed to help independent restaurant operators manage food costs and menu profitability more efficiently. Customer adoption has been robust, with 15% of independent customers utilizing the tool within two months of launch, double initial expectations. This innovation aims to deepen customer relationships and improve sales force productivity.

    03

    Operational Excellence and Service Quality Improvements

    US Foods achieved significant progress in its Operations Quality Composite (Ops QC), which measures the accuracy and error-free delivery of customer orders. Ops QC improved by 21% year-over-year in Q1 FY26, marking the best performance since Q1 2019. This focus on operational excellence is a key driver in enhancing the quality of service and customer satisfaction.

    04

    Sales Force Transformation for Future Growth

    A new seller compensation plan, transitioning to a fully variable model, is set to go live next month. This multi-year transition, expected to take 2-3 years for most of the sales force, aims to create better alignment with business strategy, enhance seller earning potential, and fuel future case growth. The company emphasizes a thoughtful, individualized approach to ensure a smooth transition and maintain sales force stability.

    05

    Cost Savings and Productivity Gains

    US Foods is on track to deliver at least $300 million in cost of goods (COGS) savings over its 3-year long-range plan ending in 2027, an increase from its original $260 million commitment. Additionally, the company expects over $75 million in indirect spend savings for FY26, projected to exceed $100 million in FY27. Warehouse and selector productivity improved 3% year-over-year, driven by the ongoing deployment of the US Foods Market Operating System (UMOS), which is expected to be fully deployed by mid-year.

    06

    Private Label Penetration and Growth Opportunity

    Private label penetration remains strong at 54% among core independent restaurant customers, representing a meaningful growth opportunity. These brands offer cost-effective products for customers and higher profitability for the company. The new sales compensation structure is designed to heavily incentivize the sales force to promote private label brands, further driving penetration and growth.

    AI-generated summary of the company’s earnings call. Not investment advice.