Why This Matters to Distributors: US Foods is increasing profits through growth among independent restaurants, improved purchasing costs, and operating efficiencies. Its reduced sales outlook, however, underscores the pressure distributors face from slow economic growth and higher delivery costs.
US Foods Holding Corp. reported a 42.5% increase in third-quarter profit but lowered the upper end of its annual sales and adjusted earnings forecasts, citing slower economic conditions and higher fuel costs.
The foodservice distributor’s results reflected continued growth among independent restaurants, healthcare customers, and hospitality businesses. US Foods also expanded its specialty food business with the October acquisition of Prime Line Distributors.
Sales increased 2.1% to $10.4 billion in the quarter ended Sept. 26, up from $10.19 billion a year earlier. Net income rose to $218 million from $153 million.
For the first nine months, sales increased 3.1% to $30.54 billion from $29.62 billion. Net income rose 23.8% to $609 million from $492 million.
“Our third quarter results reflect the strength of our strategy and disciplined execution, with continued market share gains and strong earnings growth,” CEO Dave Flitman said.
Total case volume (the number of cases of products sold) increased 1.3%. Volume grew 5% among independent restaurants, 3.3% in healthcare and 3.7% in hospitality, partially offset by a 1.5% decline among chain customers. Food cost inflation was 0.4%.
Flitman said the company had gained market share among independent restaurants for 22 consecutive quarters and in healthcare for 24 consecutive quarters.
“We again delivered 5% Independent Restaurant case growth and extended our history of share gains to 22 consecutive quarters with Independent Restaurants and 24 consecutive quarters with Healthcare,” he said.
US Foods completed its acquisition of Fort Lauderdale, Florida-based Prime Line in October, after the quarter ended. The release did not disclose financial terms.
Prime Line specializes in gourmet Italian products. Flitman said the acquisition expands US Foods’ specialty and imported assortment while adding capabilities to its Pronto delivery service and broader distribution business.
“We are also excited to have completed the acquisition of Prime Line, a specialty distributor of gourmet Italian products that broadens our specialty and imported assortment while adding complementary capabilities to Pronto and our broadline business,” he said.
Flitman also credited technology investments with supporting growth and operating improvements. The release did not identify specific new artificial intelligence applications or quantify their contribution to results.
“We continue to advance our digital ecosystem and AI initiatives, which are driving topline growth, productivity gains and margin expansion,” he said.
Gross profit increased 8.6% to $1.9 billion, reflecting higher sales volume, improved product costs and a $49 million favorable year-over-year change in inventory accounting. Excluding that accounting effect, adjusted gross profit increased 5.7%.
Operating expenses increased 4.2% to $1.53 billion as higher volume and distribution, selling and administrative costs were partially offset by administrative savings. Operating income rose 31.6% to $371 million from $282 million.
Despite those gains, US Foods now expects full-year sales growth of 4% to 5%, compared with its previous forecast of 4% to 6%. It narrowed its forecast for adjusted diluted earnings per share growth to 18% to 20% from 18% to 24%.
“Based on our year-to-date results and fourth quarter expectations, we have tightened our full-year outlook to reflect the reality of a sustained slower macroeconomic environment and the impact of elevated fuel costs,” Chief financial officer Dirk Locascio said.
The outlook includes a 53rd week in fiscal 2026, which US Foods expects to add approximately 1% to annual case growth. The company generated $1.16 billion in cash from operations during the first nine months, up 7.8% from a year earlier.
US Foods, based in Rosemont, Illinois, serves approximately 250,000 customer locations through more than 70 broadline distribution locations and more than 90 cash-and-carry stores. The company employs approximately 30,000 people.
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