USFD 10-K & 10-Q changes, risk factors and insider trading

The U.S. foodservice distribution industry is sensitive to national, regional and local economic conditions. An uneven level of general U.S. economic activity, uncertainty in the financial markets, inflation, and supply chain disruptions could have an adverse impact on consumer confidence and discretionary spending. A decline in economic activity or the frequency and amount spent by consumers for food prepared away from home, as well as other macroenvironmental factors that could decrease general consumer confidence (including deteriorating economic conditions, heightened volatility in the financial markets, tariffs, inflationary pressure, an uncertain politicalgeopolitical environmentenvironment, trade policies and supply chain disruptions, such as those the global economy is currently facing), may negatively impact our business, financial condition and results of operations. The extent of any such effects on our business, financial condition and results of operations depends in part on the magnitude and duration of such conditions, which cannot be predicted at this time.

Our business is a low-margin business, and our profitability and results of operations are directly affected by cost deflation or inflation, commodityvolatile volatilityfood costs and other factors.

The U.S. foodservice distribution industry is characterized by relatively high inventory turnover with relatively low profit margins. Volatile commodityfood costs have a direct impact on our industry. Our inability to quickly respond to inflationary and deflationary cost pressures could have a material adverse impact on our business, financial condition, or results of operations. We make a significant portion of our sales at prices that are based on the cost of products we sell, plus a margin percentage or markup. As a result, our profit levels may be negatively affected during periods of product cost deflation, even though our gross profit percentage may remain relatively constant. Prolonged periods of product cost inflation, or periods of rapid inflation, may negatively impact our results of operations as a result of decreased discretionary consumer spending. Such inflation may also reduce our profit margins and earnings if there is a lag between when costs increase and when we are able to pass iton along to customersall or ifa portion of such product cost increases cannot be passed onalong to customers because they resist paying higher prices.customers.

The U.S. foodservice distribution industry is highly competitive, with national, multi-regional, regional and local distributors and specialty competitors. RegionalCertain of our competitors may have greater scale, financial and other resources than we do in certain markets. In addition, regional and local companies may align themselves with other smaller distributors through purchasing cooperatives and marketing groups, with the goal of enhancing their geographic reach, private label offerings, overall purchasing power, cost efficiencies, and ability to meet customer distribution requirements. Such changes may occur particularly during periods of economic uncertainty or significant inflation. These distributors may also rely on local presence as a source of competitive advantage, and they may have a lower cost to serve and other competitive advantages due to geographic proximity. Additionally, we experience competition from cash-and-carry operations, commercial wholesale outlets, warehouse clubs and grocery stores that serve the commercial foodservice marketplace. We also experience competition from online direct food wholesalers and other retailers, and competitors that are utilizing technology, including artificial intelligence and machine learning technologiestechnologies, have served towhich further increase pressure on the industry’s profit margins. We generally do not have exclusive distribution agreements with our customers, and they may switch to other distributors that offer lower prices or differentiated products or customer service. The cost of switching distributors is very low, as are the barriers to entry into the U.S. foodservice distribution industry. We believe most purchasing decisions in the U.S. foodservice distribution industry are based on the type, quality and price of the product and a distributor’s ability to completely and accurately fill orders and provide timely deliveries. Disruptions caused by macroeconomic conditions, inflationary pressure, trade policies, supply chain disruptions, geopolitical events and labor shortages that impact our ability to completely and accurately fill orders and provide timely deliveries of quality products at competitive prices may have an adverse impact on our business, financial condition and results of operations.

We obtain most of our foodservice and related products from third party suppliers. We typically do not have long-term contracts with suppliers. Although our purchasing volume can provide an advantage when dealing with suppliers, suppliers may not provide the foodservice products and supplies we need in the quantities and at the time and prices requested. Our suppliers may also be affected by higher costs to source or produce and transport products, as well as by other related expenses that they pass through to their customers, which could result in higher costs for the products they supply to us. We do not control the actual production of most of the products we sell. This means we are also subject to delays caused by interruption in production and increases in product costs based on actions and conditions outside our control. These actions and conditions include changes in supplier pricing practices (including promotional allowances); labor shortages, work slowdowns, work interruptions, strikes or other job actions by employees of suppliers or carriers; government shutdowns; severe weather and climate conditions; rising sea levels or flooding; crop conditions; product or raw material scarcity; water shortages; outbreak of food-borne illnesses; product recalls; transportation interruptions; unavailability of fuel or increases in fuel costs; competitive demands; impact of climate change; and natural disasters, pandemics, terrorist attacks, international hostilities, civil insurrection or social unrest; or any other catastrophic events. Moreover, commodity prices continue to be volatile and generally increased due to supply chain disruptions and labor and transportation shortages. Our inability to obtain adequate supplies of foodservice and related products because of any of these or other factors could mean that we could not fulfill our obligations to our customers and, as a result, our customers may turn to other distributors. Furthermore, any changes to the pricing practices of our suppliers, including the reduction or elimination of promotional allowances, could result in a material adverse effect on our business, financial condition and results of operations.

Further, some of our customers purchase their products under arrangements with GPOs. GPOs act as agents on behalf of their members by negotiating pricing, delivery, and other terms with us. Our customers who are members of GPOs purchase products directly from us on the terms negotiated by their GPO. GPOs use the combined purchasing power of their members to negotiate more favorable prices than their members would typically be able to negotiate on their own,us, and we have experienced some pricing pressure from customers that associate themselvesassociated with a GPO. While no single customer represented more than 2% of our total net sales in fiscal year 2024,2025, approximately 25%27% of our net sales in fiscal year 20242025 were made to customers under terms negotiated by GPOs (including approximately 14% of our net sales in fiscal year 20242025 that were made to customers that are members of onea single GPO). If an independent restaurant customer becomes a member of a GPO that has a contract with us, we may be forced to lower our prices to that customer, which would negatively impact our operating margin. In addition, if we are unable or unwilling to maintain our relationships with GPOs, or if GPOs are able to negotiate more favorable terms for their members with our competitors, we could lose some or all of that business.

Market competition, customer requirements, customer financial condition and customer consolidation through mergers and acquisitions also could adversely affect our ability to continue or expand our relationships with customers and GPOs. There is no guarantee that we will be able to retain or renew existing agreements, maintain relationships with any of our customers or GPOs on acceptable terms or at all or collect amounts owed to us from insolvent customers. Our customer and GPO agreements are generally terminable upon advance written notice (typically ranging from 30 days to 6six months) by either us orus, the customer or GPO, which provides our customers and GPOs with the opportunity to renegotiate their contracts with us or to award moreadditional business to our competitors.

Significant decreases in the number and/or size of our customers’ purchase orders, the loss of one or more of our major customers or GPOs or our inability to grow to our current customer base could adversely affect our business, financial condition and results of operations.

Our most profitable customers are independent restaurants. We tend to work closely with independent restaurant customers, providing them access to our customer value-added tools, and as a result are able to earn a higher operating margin on sales to them. These customers are also more likely to purchase our private label products, which are our most profitable products. Our ability to continue to gain market share of independent restaurant customers is critical to achieving increased operating profits. Changes in the buying practices of independent restaurant customers, including their ability to require us to sell to them at discounted rates, or decreases in our sales to this type of customer or a decrease in the sales of our private label products in general could have a material adverse impact on our profitability. A pandemic or recession could result in a substantial disruption in many of our independent restaurant customers’ operations and, in some cases, permanent closures of restaurants. Loss of business as a result of a pandemic or recession and its negative economic impact could change the buying practices of our independent restaurant customers and may also result in additional permanent closures of restaurants, which could have an adverse impact on our business, financial condition and results of operations.

Fuel costs related to outbound deliveries approximated $171$174 million during fiscal year 2024.2025. Higher costs of fuel may negatively affect consumer confidence and discretionary spending. This may reduce the frequency and amount spent by consumers for food prepared away from home. In addition, higher costs of fuel may increase the price we pay for products and the costs we incur to deliver products to our customers. We require significant quantities of fuel for our vehicle fleet, and the price and supply of fuel are unpredictable and fluctuate based on events outside our control, including but not limited to geopolitical developments, supply and demand for oil and gas, regional production patterns, weather conditions and environmental concerns. Although, from time to time, we enter into forward purchase commitments for some of our fuel requirements at prices equal to the then-current market price,requirements, these forward purchases may prove ineffective in protecting us from changes in fuel prices or even result in us paying higher than market costs for part of our fuel. In addition, the use of such derivative instruments may expose us to the risk that our counterparties fail to perform their obligations, which could result in financial losses. Furthermore, there is no guarantee that we will be able to pass along increased fuel costs to customers in the future. Each of these factors may, in turn, adversely affect our sales, margins, operating expenses, and operating results.

Changes in consumer eating habits (such as a decline in consuming food away from home, a decline in portion sizes, or a shift in preferences toward restaurants that are not our customers) could reduce demand for our products. Consumer eating habits could be affected by a number of factors, including changes in attitudes regarding diet and health, changes to nutritional guidelines or other regulatory or governmental action, advancement of pharmaceutical therapies, new information regarding the health effects of consuming certain foods ofor shifts away from carbon-intensive products. There is a growing consumer preference for sustainable, organic and locally grown products. Changes to consumer eating habits also occur due to generational shifts. Millennials, the largest demographic group in the U.S. in terms of consumer spending, generally seek new and different, as well as more ethnic and diverse, menu options and menu innovation. If consumer eating habits change significantly, we may be required to modify or discontinue sales of certain items in our product portfolio, and we may experience higher costs associated with the implementation of those changes. Changing consumer eating habits may reduce the frequency with which consumers purchase meals outside of the home. Additionally, changes in consumer eating habits may result in the enactment or amendment of laws and regulations that impact the sourcing, ingredients and nutritional content of our food products, or laws and regulations requiring us to make additional disclosures regarding the ingredients and nutritional content of our food products. Compliance with these and other laws and regulations may be costly and time-consuming. If we are not able to effectively adapt our product portfolio to trends in eating habits or respond to changes in consumer health perceptions or resulting new laws and regulations, our business, financial condition and results of operations could be adversely affected.

The effects of climate change may create financial and operational risks to our business, both directly and indirectly. There is an increased focus around the world by regulatory and legislative bodies at all levels towards policies relating to climate change and the impact of global warming, including the regulation of greenhouse gas (GHG) emissions, energy usageusage, extended producer responsibility laws and sustainability efforts. Increased compliance costs and expenses due to the impacts of climate change on our business, as well as additional legal or regulatory requirements regarding climate change or designed to reduce or mitigate the effects of carbon dioxide and other GHG emissions on the environment, may cause disruptions in, or an increase in the costs associated with, the running of our business, particularly with regard to our distribution and supply chain operations. Moreover, compliance with any such legal or regulatory requirements may require that we implement changes to our business operations and strategy, which would require us to devote substantial time and attention to these matters and cause us to incur additional costs. Climate-related reporting and disclosure requires significant time, attention, and financial resources. We must allocate substantial internal resources and may need to engage third-party experts to ensure accurate and comprehensive reporting. The effects of climate change, and legal or regulatory initiatives to address climate change, could have a long-term adverse impact on our business and results of operations.

We review our amortizable intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. We test goodwill and other indefinite-lived intangible assets for impairment at least annually, or more frequently if events or changes in circumstances indicate an asset may be impaired. Relevant factors, events and circumstances that affect the fair value of goodwill and indefinite-lived intangible assets may include external factors such as macroeconomic, industry, and market conditions, as well as entity-specific factors, such as actual and planned financial performance. We may be required to record a significant charge in our consolidated financial statements during the period in which any impairment of our goodwill or intangible assets is determined, which would negatively affect our results of operations. For example, the Company completed its most recent annual impairment assessment for goodwill and indefinite-lived intangible assets as of the first day of the third quarter of fiscal year 20242025, withwhich noresulted impairmentsin noted.a $13 million impairment during the fiscal year ended December 27, 2025. Impairment analysis requires significant judgment by management and is sensitive to changes in key assumptions used, such as future cash flows, discount rates and growth rates as well as current market conditions in both the United States and globally. To the extent that business conditions deteriorate further, or if changes in key assumptions and estimates differ significantly from management’s expectations, it may be necessary to record additional future impairment charges, which could be material. For more information on the goodwill assessment, see the section captioned “Valuation of Goodwill and Other Intangible Assets” in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 8,7, Goodwill and Other Intangibles, in our consolidated financial statements.

In the course of our operations, we process, handle, store and transport a wide variety of food and non-food products, operate and maintain vehicle fleets, operate forklifts and other equipment, store fuel in on-site aboveground and underground storage tanks, and sell, use and dispose of hazardous substances including in connection with our use of our ammonia or freon-based refrigeration systems, propane, and battery-powered forklifts. Our operations are subject to a broad range of laws and regulations including regulations governing the processing, packaging, storage, distribution, marketing, advertising, labeling, transportation, export, qualitysustainability, quality, safety and safetysale of our food and non-food products, as well as rights of our employees and the protection of the environment. Changes in legal or regulatory requirements (such as new product safety requirements, extended producer responsibility requirements, revised regulatory requirements for the sourcing, processingprocessing, packaging and packaginglabeling of products, and requirements to restrict or phase-out certain ingredients, chemicals and ozone-depleting substances or otherwise regulating greenhouse gas emissions), or evolving interpretations of existing legal or regulatory requirements, may result in increased compliance cost, capital expenditures and other financial obligations including costs to upgrade, phase out, modify or replace products or equipment that could adversely affect our business, financial condition and results of operations. Our product suppliers are also subject to various laws and regulations and their alleged noncompliance with applicable laws and regulations could create potential liability or other adverse impacts for our business. We generally seek contractual representations and warranties from suppliers that they comply with all applicable laws and regulations and we maintain supplier policies requiring their ongoing compliance with applicable laws and regulations as well.

We are subject to governmental regulation regarding our relationship with our employees including minimum wage, overtime, wage payment, wage and hour, employment discrimination, harassment and immigration. Due to contracts we have with federal and state governmental entities as customers, we are subject to various disclosure obligations related to our employment practices and business operations, including the recent implementation of requirements to disclose information related to our greenhouse gas emissions, all of which are subject to audit. In addition, in response to the COVID-19 pandemic, the Centers for Disease Control and Prevention, OSHA and various other federal, state, and local authorities have issued guidance, new interpretations of existing requirements, and implemented new requirements for employers that affect the operation of our facilities and the management of our workforce. The various federal, state and local requirements and guidance impacting our business continue to evolve, but we are continually monitoring for updates and responding to updated requirements and guidance applicable to our business as we become aware of them.

If the products we distribute are alleged to cause injury, illness or other damage or to fail to comply with applicable governmental regulations,regulations or applicable quality standards, we may need to recall or withdraw products.

As a distributor and manufacturer of food and non-food products, we may be subject to product recalls, including voluntary recalls or withdrawals, if the products we distribute or manufacture are alleged to cause injury, illness or other damage, to be mislabeled, misbranded, or adulterated, or to otherwise violate applicable governmental regulations. We may recall products basedfor ona variety of reasons including alleged occurrences of food-borne illnesses (such as E. coli, listeriosis, hepatitis A, trichinosis, salmonella, etc.), contamination, adulteration, mislabeling, misbranding, improper storage, or food tampering. We may also choose to voluntarily recall or withdraw products that we determine do not satisfy our quality standards, whether for taste, appearanceappearance, spoilage or otherwise, in order to protect customer relationships and our brand and reputation.

Any future product recall or withdrawal that results in substantial and unexpected expenditures, destruction of product inventory, damage to our reputation and/or lost sales due to the unavailability of the product for an extended period of time or customer concerns or dissatisfaction could adversely affect our business, financial condition and results of operations. If patrons of our customers become ill from food-borne illnesses, our customers could be forced to temporarily close locations and our sales would correspondingly decrease.

We may be exposed to potential product liability claims in the event that the products we distribute or manufacture are alleged to have caused injury, illness or other damage.damage or fail to comply with applicable laws and regulations. We believe we have sufficient liability insurance to cover product liability claims. We also generally seek contractual indemnification and insurance coverage from parties supplying products to us. If our current insurance does not continue to be available at a reasonable cost or is inadequate to cover all of our liabilities, or if our indemnification or insurance coverage is limited, as a practical matter, by the creditworthiness of the indemnifying party or the insured limits of our suppliers’ or the insured limits of our suppliers’ insurance coverage, the liability related to allegedly defective products that we distribute or manufacture could adversely affect our business, financial condition and results of operations.

Negative publicity fromabout productthe recalls, instances of food-borne illness,Company or allegedour food tamperingproducts may adversely impact our reputation and business.

EnsuringMaintaining a good reputation and public confidence in the safetysafety, quality and integrity of the products we produce and distribute isare critical to our business, particularly in selling our private label products, and to maintaining our good reputation.products. Events like product recalls, occurrences of food-borne illness, or alleged food tampering may cause negative publicity about the quality, safety, sustainability or integrity of our products, whether or not such events are related to our products. Any event that damages our reputationreputation, public confidence or calls into question the safetysafety, quality or integrity of our products, whether justified or not, could quickly and negatively affect our business, financial condition and results of operations. The increased use of social media may increase the likelihood and magnitude of negative publicity across media channels, regardless of its accuracy or the reputability of its source, including as a result of fictitious media content (such as content produced by generative artificial intelligence or bad actors). In addition, it may be difficult to address such negative publicity across media channels.

We face risks related to labor relations,relations and increased labor costs and the availability of qualified labor, any ofcosts, which could have an adverse effect on our business, financial condition and results of operations.

The success of our business depends on our ability to attract, train, develop and retain a highly skilled and diverse workforce. We rely heavily on our front-line associates, particularly warehouse workers and drivers, and any significant shortage of qualified labor amongst our front-line associates could adversely affect our business. Recruiting and retention efforts (particularly with respect to driver and warehouse personnel) and actions to increase productivity may not be successful, and we could encounter a shortage of qualified employee talent in the future. Shortages of, and increased competition for, qualified employees may result in increased labor costs and could decrease our ability to serve our customers effectively. Additionally, if our employees are unable to work for any reason, whether because of illness, quarantine, limitations on travel or other government restrictions in connection with any future pandemics, we could face additional shortages of qualified labor and higher labor costs. Any prolonged labor shortage or period of high employee turnover could have an adverse impact on our productivity and have an adverse effect on our business, financial condition and results of operations.

Furthermore, as a government contractor, we are subject to oversight by the Department of Labor’s Office of Federal Contract Compliance Programs, which reviews our employment practices including affirmative action and non-discrimination based on race, sex and disability, among other characteristics.practices. If an audit or investigation reveals a failure to comply with regulations, we could become subject to civil or criminal penalties and/or administrative sanctions, including government pre-approval of our government contracting activities, termination of government contracts, and suspension or debarment from doing further business with the U.S. government and could also be subject to claims for breach of contract by our customers. Any of these actions could increase our expenses, reduce our revenue and damage our reputation as a reliable government supplier.

•we may be at a competitive disadvantage compared to our competitors withthat may have less debt or lower debt service requirements and they, as a result, may be better positioned to withstand competitive pressures and general adverse economic and industry conditions;

Our ability to serve customers most effectively, as well as to control costs and maximize profits, depends on the reliability of our information technology systems and related data entry processes in our transaction intensive business. We rely on software and other information technology to manage significant aspects of our business, such as purchasing, order processing, warehouse/inventory management, truck loading and logistics and optimization of storage space. We also rely on access to those online systems online including through mobile devices to connect with our employees, customers, suppliers and other business partners. The importance of such networks and systems has increased due to many of our employees, and the employees of our customers, suppliers and business partners, working remotely.

Cyberattacks have been occurring globally at a more frequent rate and are rapidly and continually evolving, making them more difficult to detect and protect against. Additionally, continued geopolitical turmoil, including the ongoing conflict between Russia and Ukraine,Ukraine and recent events in Venezuela, has heightened the risk of cyberattacks. In addition, new technologiestechnologies, suchincluding asbut artificialnot intelligencelimited to AI, may present new technological risks or vulnerabilities. While cyberattackers have threatened and attempted to breach our security and access the information stored in our information systems, no incident has been material or had a material impact on our business or financial condition. However, there is a risk that we may incur significant costs in protecting against or remediating cyberattacks or other cyber incidents. Although we maintain insurance that may, subject to policy terms and conditions, cover certain cyber incidents, it may be insufficient to cover all losses.

Historically, a portion of our growth has come through acquisitions. In 2024,2025, we completed onetwo acquisitionacquisitions - theJake’s acquisitionFiner ofFoods IWCand Food Service.Shetakis.

We are subject to income and other taxes in the U.S. and various state and local jurisdictions, and changes in tax laws or regulations or tax rulings may have an adverse impact on our effective tax rate. The U.S. and many state and local jurisdictions where we do business from time to time enact changes in relevant tax, accounting and other laws, regulations and interpretations. Given the unpredictability of possible changes to U.S. federal and state and local tax laws and regulations, it is very difficult to predict their cumulative effect on our results of operations and cash flows, but new and changed laws and regulations could adversely impact our results of operations. We are also subject to the examination of our tax returns and other tax matters by the Internal Revenue Service (the “IRS”) and other state and local tax authorities and governmental bodies, for which we regularly assess the likelihood of an adverse outcome. If the ultimate determination of these examinations is that taxes are owed by us for an amount in excess of amounts previously accrued, our business, financial condition and results of operations could be adversely affected.

Some of our facilities and our customers’ and suppliers’ facilities are located in areas that may be subject to extreme, and occasionally prolonged, weather conditions, including hurricanes, flooding, tornadoes, blizzards, and extreme cold. Extreme weather conditions, whether caused by global climate change or otherwise, may lead to increased expenses or interrupt our operations in such areas. Furthermore, extreme weather conditions may disrupt critical infrastructure in the United States and interrupt or impede access to our customers’ facilities, reduce the number of consumers who visit our customers’ facilities, interrupt our suppliers’ production or shipments or increase our suppliers’ product costs, all of which could have an adverse effect on our business, financial condition and results of operations.

At US Foods, we strive to inspire and empower chefs and foodservice operators to bring great food experiences to consumers. This mission is supported by our strategy of WE HELP YOU MAKE IT™®, which is centered on bringing fourthree key elements to the forefront for our customers; (1) moreMore qualityQuality products, including our large portfolio of exclusiveExclusive brands,Brands, (2) moreMore tools,Tools, centering on our MOXē® business platform, (3) more support from our sellers and our team of experts and lastly, (43) moreMore deliveries,Deliveries, enabled by our traditional broadline servicesservices, Pronto® program and Pronto™convenient program.delivery options. We operate as one business with standardized business processes, shared systems infrastructure, and an organizational model that optimizes national scale with local execution, allowing us to manage our business as a single operating segment. We have centralized activities where scale matters and our local field structure focuses on customer-facing activities. Net sales increased 6.4%, driven by case volume growth. Total case volumes increased 4.2% compared to the prior year driven by a 4.4% increase in independent restaurant case volume, a 5.7% increase in healthcare volume, a 2.1% increase in hospitality volume and a 3.2% increase in chain volume. Total organic case volume increased 1.4% which includes 2.6% organic independent restaurant case volume growth.

Financial Highlights—Total case volume increased 4.2%1.0% andcompared to the prior year driven by a 3.3% increase in independent restaurant case volumevolume, increaseda 4.4% increase in fiscalhealthcare yearvolume 2024.and a 2.9% increase in hospitality volume, partially offset by a 3.5% decrease in chain volume. Total organic case volume increased 1.4%0.4% in fiscal year 2024,2025, andwhich includes 2.7% organic independent restaurant case volume increased 2.6%.growth. Net sales increased $2,280$1,547 million, or 6.4%,4.1%, in fiscal year 20242025 driven primarily by case volume growth and food cost inflation of 2.6%.

Gross profit increased $386$330 million, or 6.3%,5.1%, to $6,534$6,864 million in fiscal year 2024,2025, primarily as a result of an increase in total case volume, improved cost of goods sold and pricinginventory optimization, partially offset by an unfavorable year-over-year LIFO adjustment.management. As a percentage of net sales, gross profit was 17.3%17.4% in fiscal year 20242025 and 17.3% in fiscal year 2023.2024.

Total operating expenses increased $304$230 million, or 5.9%,4.2%, to $5,435$5,665 million in fiscal year 2024. The increase was2025, primarily as a result of an increase in total case volume,volume and higher distributiondistribution, costs,selling reflectingand increased laboradministrative costs, partially offset by continued distribution productivity improvement as well as actions to streamline administrative processes and costs. As a percentage of net sales, operating expenses were 14.4% in fiscal year 2025 and 14.3% in fiscal year 2024, compared to 14.4% in fiscal year 2023.2024.

(1) EBITDA is defined as net income, plus interest expense—net, income tax provision, and depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted for (1) restructuring costsactivity and asset impairment charges; (2) share-based compensation expense; (3) the impact of LIFO reserve adjustments; (4) loss on extinguishment of debt; (5) business transformation costs; (6) recognition of net actuarial loss; and (67) other gains, losses, or costs as specified in the agreements governing our indebtedness. Adjusted EBITDA margin is Adjusted EBITDA divided by total net sales. Adjusted Net Income is defined as net income excluding the items used to calculate Adjusted EBITDA listed above and further adjusted for the tax effect of the exclusions and discrete tax items. EBITDA, Adjusted EBITDA, and Adjusted Net Income as presented in this Annual Report are supplemental measures of our performance that are not required by, or presented in accordance with GAAP. They are not measurements of our performance under GAAP and should not be considered as alternatives to net income or any other performance measures derived in accordance with GAAP. For additional information, see the discussion under the caption “Non-GAAP Reconciliations” below.

(6) Transformational costs represent non-recurring expenses prior to formal launch of strategic projects with anticipated long-term benefits to the Company. These costs generally relate to third party consulting and non-capitalizable technology. For both fiscal yearyears 2025 and 2024, business transformation costs related to projects associated with information technology infrastructure initiatives and related workforce efficiencies. For fiscal year 2023, business transformation costs related to projects associated with information technology infrastructure initiatives.

(7) Includes: (i) aggregate acquisition, integration related costs and planned divestiture costs of $32 million for fiscal year 2025, $22 million for fiscal year 2024,2024 and $41 million for fiscal year 2023 and $22 million for fiscal year 2022 (ii) CEO sign on bonus of $3 million for fiscal year 2023 (iii) contested proxy and related legal and consulting costs of $21 million for fiscal year 2022; (iv) CEO severance of $5 million for fiscal year 2022; and (viii) other gains, losses or costs that we are permitted to add back for purposes of calculating Adjusted EBITDA under certain agreements governing our indebtedness.

•Net income availableincreased to common shareholders decreased $5$182 million to $494$676 million in fiscal year 2024.2025.

•Adjusted EBITDA increased $182$191 million, or 11.7%,11.0%, to $1,741$1,932 million in fiscal year 2024. As a percentage of net sales, Adjusted EBITDA was 4.6% in fiscal year 2024, as compared to 4.4% in fiscal year 2023.2025.

Net sales increased $2,280$1,547 million, or 6.4%,4.1%, to $37,877$39,424 million in fiscal year 20242025 driven by case volume growth and food cost inflation of 2.6%. Total case volume increased 4.2%1.0% driven by a 4.4%3.3% increase in independent restaurant case volume, a 5.7%4.4% increase in healthcare volume,volume and a 2.1%2.9% increase in hospitality volumevolume, andpartially offset by a 3.2%3.5% increasedecrease in chain volume. Organic broadline sales of private brands represented approximately 35% and 34% of net sales in bothfiscal 2024years 2025 and 2023.2024, respectively.

Gross profit increased $386$330 million, or 6.3%,5.1%, to $6,534$6,864 million in fiscal year 2024,2025, primarily as a result of an increase in total case volume, improved cost of goods sold and pricinginventory optimization, partially offset by an unfavorable year-over-year LIFO adjustment.management. Our LIFO method of inventory costing resulted in an expense of $65 million in fiscal year 2025, compared to an expense of $61 million in fiscal year 2024, compared to a gain of $1 million in fiscal year 2023.2024. Gross profit as a percentage of net sales was 17.4% and 17.3% in fiscal years 20242025 and 2023.2024, respectively.

Operating expenses, comprised of distribution, selling and administrative costs and restructuring activity and asset impairment charges, increased $304$230 million, or 5.9%,4.2%, to $5,435$5,665 million in fiscal year 2024.2025. Operating expenses increased primarily as a result of an increase in total case volume,volume and higher distributiondistribution, costs,selling reflectingand increased laboradministrative costs, partially offset by continued distribution productivity improvement as well as actions to streamline administrative processes and costs. Operating expenses as a percentage of net sales were 14.4% in fiscal year 2025, compared to 14.3% in fiscal year 2024, compared to 14.4% in fiscal year 2023.2024.

Other Expense (Income) Expense—Net

Other expense (income) expense—net includes components of net periodic benefit costs (credits), exclusive of the service cost component associated with our defined benefit and other postretirement plans. We recognized other income—net of $4 million in fiscal year 2025 and other expense—net of $6 million in 2024 and other income—net of $6 million in 2023, respectively. Other expense—net is due to a increase in the pension benefit interest cost and a decrease in the expected return on assets compared to fiscal year 2023.2024.

Interest expense—net decreased $9$10 million in fiscal year 2024,2025, primarily due to lower outstanding debtrates in 2024fiscal year 2025 compared to 2023.fiscal year 2024.

We did not recognize a loss on extinguishment of debt for fiscal year 2025. We recognized a loss on extinguishment of debt of $10 million in fiscal year 2024 due to the amendment of the Company’s Incremental Term Loan Facility due September 13, 2026 (the “2024 Incremental Term Loan Facility”) and repricing of the Company’s Incremental Term Loan Facility due November 22, 2028 (the “2021 Incremental Term Loan Facility”).

We recognized a net actuarial loss for pension settlement of $124 million in fiscal 2024 due to a termination of certain defined benefit plans. WeNo didactivity notwas recognize any net actuarial loss for pension settlementrecognized in fiscal year 2023.2025.

Our effective income tax rate for fiscal year 20232025 of 25% varied from the 21% federal corporate income tax rate, primarily as a result of state income taxes and the recognition of various discrete tax items. These discrete tax items included an aggregate tax benefit of $11 million consisting of a tax benefit of $5$10 million primarily related to excess tax benefits associated with share-based compensation, a tax benefit of $3 million related to a decrease in an unrecognized tax benefit, and a tax benefit of $3 million, primarily related to adjustments to prior year tax provision estimates.compensation.

Our net income availablewas $676 million in fiscal year 2025, compared to commona shareholdersnet wasincome of $494 million in fiscal year 2024, compared to a net income available to common shareholders of $499 million in fiscal year 2023.2024. The decreaseincrease in net income available to common shareholders was due to the relevant factors discussed above.

The Amended and Restated Term Loan Credit Agreement, dated as of June 27, 2016 (as amended,amended and restated, the “Term Loan Credit Agreement”) provides USF with the 2021 Incremental Term Loan Facility and the 2024 Incremental Term Loan Facility.

Cash flows provided by operating activities increased $34$195 million to $1,174$1,369 million in fiscal year 2025 driven by higher net income and a reduction in tax payments. Net cash provided by operating activities in fiscal year 2024 driven by changes in operating assets and liabilities. Net cash provided by operating activities in fiscal year 2023 benefited from higher net income and changes in operating assets and liabilities.

Cash flows used in investing activities in fiscal years 20242025 and 20232024 included cash expenditures of $341$410 million and $309$341 million, respectively, and related to investments in information technology, new construction and expansion of distribution facilities and property and equipment and construction of and improvements to distribution facilities. Cash flows used in investing activities in fiscal year 2025 also included approximately $87 million cash purchase price for fleetthe replacement.acquisition of Jake’s Finer Foods and $44 million cash purchase price for the acquisition of Shetakis. Investing activities for the fiscal year ended 2025 also included the cash proceeds from the sale of Freshway of $38 million. Cash flows used in investing activities in fiscal year 2024 also included $214 million cash purchase price for the acquisition of IWC Food Service. Cash flows used in investing activities in fiscal year 2023 also included $140 million cash purchase price for the acquisition of Renzi Food Service and $56 million cash purchase price for the acquisition of Saladino’s.

Cash flows used in financing activities in fiscal year 20242025 included $112 million of scheduled payments under our Term Loan Facilities and financing leases, $1,217 million for repayment of the 2019 Incremental Term Loan Facility and paydown of the 2021 Incremental Term Loan Facility, $14 million in principal payments for the repricing of the 2021 Incremental Term Loan Facility and $13 million of financing fees related to the repayment of the 2019 Incremental Term Loan Facility and the 2021 Incremental Term Loan Facility repricing, $223$206 million in net proceeds under the ABL Facility,facility $725and $110 million fromin thescheduled 2024payments Incrementalunder Termour Loanfinancing Facility issuance and $500 million from the 2033 Unsecured Senior Note issuance.leases. Financing activities in fiscal year 20242025 also included $948$926 million of common stock repurchased, exclusive of approximately $10$8 million of fees, commissions and the related 1% of excise tax under the AmendedOriginal Share Repurchase Program and the May 2025 Share Repurchase Program, $50 million of unsettled accelerated share repurchases, $28 million of proceeds received from stock purchases under our employee stock purchase plan and $15$6 million of proceeds from the exercise of employee stock options, which were offset by $21$38 million of employee tax withholdings paid in connection with the vesting of stock awards.

•Self-insured liabilities – We are primarily self-insured for general liability, fleet liability and workers’ compensation claims. Claims in excess of certain levels are insured by external parties. See Note 11,10, Accrued Expenses and Other Long-Term Liabilities, in our consolidated financial statements for further detail of our obligations and the expected timing of expected future payments.

We sponsor a defined benefit plan that pays benefits to eligible participants at retirement. Only certain union associates are eligible to participate and continue to accrue benefits under the plan per the collective bargaining agreements.agreements (“CBAs”). The plan is closed and frozen to all other employees. On October 31, 2024, the Company terminated and settled the majority of the defined benefit plan. In addition, we provide certain postretirement health and welfare benefits to eligible retirees and their dependents. On October 31, 2024, the Company terminated and settled the majority of the defined benefit plan. See Note 17,15, Retirement Plans, in our consolidated financial statements for further detail on the plan termination.plans. We did not make significant contributions to the Company-sponsored defined benefit and other postretirement plans in fiscal years 2025 and 2024 and 2023. We do not expect to make any contributions in 2025.2026.

We also are required to contribute to various multiemployermulti employer pension plans under the terms of certain of our CBAs. Our contributions to these plans were $57$60 million and $55$57 million in fiscal years 20242025 and 2023,2024, respectively.

We had entered into $592$315 million of letters of credit, primarily in favor of certain commercial insurerslenders to secure obligations withprimarily respectrelated to our insurance programs and certain real estate leases, under the ABL Facility as of December 28,27, 2024.2025 Incompared theto quarter$592 endingmillion as of December 28, 2024,2024. weWe entered intoheld approximately $362 million and $58 million of surety bonds,bonds as of December 27, 2025 and December 28, 2024, respectively, primarily in favor of certain commercial insurers to secure obligations with respect to our insurance programs. In certain cases, surety bonds may be used as an alternative to letters of credit. In fiscal year ended December 27, 2025, outstanding letters of credit were reduced by approximately $254 million after surety bonds were issued to secure the Company’s obligations with respect to its insurance program.

An uncertain tax position is recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Uncertain tax positions are recorded at the largest amount that is more likely than not to be sustained. We adjust the amounts recorded for uncertain tax positions when our judgment changes as a result of the evaluation of new information not previously available. These differences are reflected as increases or decreases to income tax expense in the period in which they are determined. The Company estimates it is reasonably possible that the liability for unrecognized tax benefits will decrease by up to $1 million in the next 12 months as a result of the completion of various tax audits currently in process and the expiration of the statute of limitations in several jurisdictions. Our uncertain tax positions contain uncertainties because management is required to make assumptions and to apply judgment in estimating the exposures associated with our various filing positions. We believe that the judgments and estimates discussed herein are reasonable; however, actual results could differ, and we may be exposed to losses or gains that could be material. To the extent we prevail in matters for which an uncertain tax position has been established, or pay amounts in excess of recorded positions, our effective income tax rate could be materially affected. An unfavorable tax settlement would generally require use of our cash and may result in an increase in our effective tax rate in the period of resolution. A favorable tax settlement may be recognized as a reduction in our effective income tax rate in the period of resolution.

The following discussion and analysis should be read together with the accompanying unaudited consolidated financial statements and the notes thereto included in this Quarterly Report and the audited consolidated financial statements and the notes thereto in the 2025 Annual Report. The following discussion and analysis contain certain financial measures that are not required by or presented in accordance with GAAP. We believe these non-GAAP measures provide meaningful supplemental information about our operating performance and liquidity. Information regarding reconciliations of and the rationale for these measures is discussed under “Non-GAAP Reconciliations” below. Results of operations for the 13 weeks and 26 weeks ended MarchJune 28,27, 2026 are compared to the 13 weeks and 26 weeks ended MarchJune 29,28, 2025, unless specifically noted otherwise.

At US Foods, we strive to inspire and empower chefs and foodservice operators to bring great food experiences to consumers. This mission is supported by our strategy of WE HELP YOU MAKE IT®. Our Promise brings three key elements to the forefront for our customers;: (1) more quality products, like our large and diverse portfolio of Exclusive Brands that is based on consistency, freshness and innovation,innovation; (2) more tools, centering on our MOXē® business platform, and lastly,lastly; (3) more deliveries, with options for on-time deliveries enabled by our traditional broadline services and our flexible and convenient Pronto® program. We operate as one business with standardized business processes, shared systems infrastructure, and an organizational model that optimizes national scale with local execution, allowing us to manage our business as a single operating segment. We have centralized activities where scale matters and our local field structure focuses on customer-facing activities.

Case growthvolume—Case growth,volume, by customer type (e.g., independent restaurants) is reported as of a point in time. Customers periodically are reclassified, based on changes in size or other characteristics, and when those changes occur, the respective customer’s historical volume is included within the new classification.

Organic growthvolume—Organic growthvolume includes growthvolume from operating businesses that have been reflected in our results of operations for at least 12 months.

For the 13 weeks ended MarchJune 28,27, 2026, compared to the same period a year ago, total case volume increased 1.4%,1.9%, driven by a 4.6%5.1% increase in independent restaurant case volume, a 3.7%3.5% increase in healthcare volume and a 5.0%4.4% increase in hospitality volume, partially offset by a 2.3%1.5% decrease in chain volume.

For the 1326 weeks ended MarchJune 28,27, 2026, compared to the same period a year ago, total organic case volume increased 1.1%,1.6%, whichdriven includesby 4.4%a organic4.8% increase in independent restaurant case volume, a 3.6% increase in healthcare volume growthand fora the4.8% 13increase weeksin endedhospitality Marchvolume, 28,partially 2026.offset by a 1.9% decrease in chain volume.

Net sales increased $259$450 million, or 2.8%,4.5%, and $709 million, or 3.6%, for the 13 weeks and 26 weeks ended MarchJune 28,27, 2026, respectively, driven by case volume growth and food cost inflation of 1.0%2.3% and 1.7% for the 13 weeks and 26 weeks ended MarchJune 28,27, 2026.2026, respectively.

Gross profit increased $39$142 million, or 2.4%,8.0%, to $1,653$1,919 million for the 13 weeks ended MarchJune 28,27, 2026, and increased $181 million or 5.3%, to $3,572 million for the 26 weeks ended June 27, 2026. For the 13 weeks ended MarchJune 28,27, 2026, the increase was primarily a result of an increase in total case volume, improved cost of goods sold and a favorable year-over-year LIFO adjustment. For the 26 weeks ended June 27, 2026, the increase was primarily a result of an increase in total case volume and improved cost of goods sold, partially offset by an unfavorable year-over-year LIFO adjustment. Gross profit was negativelypositively impacted by a decrease to LIFO expensereserve of $38$5 million for the 13 weeks ended MarchJune 28,27, 2026 and negatively impacted by LIFO expense of $33 million for the 26 weeks ended June 27, 2026. Gross profit was negatively impacted by LIFO expense of $5$14 million and $19 million for the 13 weeks and 26 weeks ended MarchJune 29,28, 2025.2025, respectively. As a percentage of net sales, gross profit was 17.2%18.2% and 17.3%17.6% for the 13 weeks ended MarchJune 28,27, 2026, and MarchJune 29,28, 2025, respectively, and 17.7% and 17.4% for the 26 weeks ended June 27, 2026 and June 28, 2025, respectively.

Total operating expenses increased $47$71 million, or 3.4%,5.1%, to $1,437$1,476 million for the 13 weeks ended MarchJune 28,27, 2026, and increased $118 million, or 4.2%, to $2,913 million for the 26 weeks ended June 27, 2026. For the 13 weeks and 26 weeks ended MarchJune 28,27, 2026, the increase was primarily a result of an increase in total case volume and higher distribution, selling and administrative costs, partially offset by continued distribution productivity improvement as well as actions to streamline administrative processes and costs. As a percentage of net sales, operating expenses were 15.0%14.0% and 14.9%13.9% for the 13 weeks ended MarchJune 28,27, 2026 and MarchJune 29,28, 2025, respectively, and 14.5% and 14.4% for the 26 weeks ended June 27, 2026 and June 28, 2025, respectively.

(4) Transformational costs represent non-recurring expenses prior to formal launch of strategic projects with anticipated long-term benefits to the Company. These costs generally relate to third party consulting and non-capitalizable technology. For both the 13 weeks and 26 weeks ended MarchJune 28,27, 2026 and MarchJune 29,28, 2025, business transformation costs related to projects associated with information technology infrastructure initiatives and workforce efficiencies.

(5) Includes: (i) aggregate acquisition, integration related costs and divestiture costs of $1 million and $13$7 million for the 13 weeks and 26 weeks ended MarchJune 28,27, 2026 and MarchJune 29,28, 2025, respectively, and $2 million and $20 million for the 26 weeks ended June 27, 2026 and June 28, 2025, respectively; and (ii) other gains, losses or costs that we are permitted to addback for purposes of calculating Adjusted EBITDA under certain agreements governing our indebtedness.

13 weeks ended MarchJune 28,27, 2026 and MarchJune 29,28, 2025

•Operating income decreasedincreased $8$71 million to $216$443 million in 2026.

Gross profit increased $39$142 million, or 2.4%,8.0%, to $1,653$1,919 million in 2026, primarily as a result of an increase in total case volume andvolume, improved cost of goods sold, partially offset byand a $33$19 million unfavorablefavorable year-over-year LIFO adjustment. Our LIFO method of inventory costing resulted in ana expensebenefit of $38$5 million in 2026 compared to $5$14 million expense in 2025, driven by a reduction in inflation and an increasedecrease in inventory values in multiple categories. Gross profit as a percentage of net sales was 17.2%18.2% in 2026, compared to 17.3%17.6% in 2025.

Operating expenses, comprised of distribution, selling and administrative costs, increased $47$71 million, or 3.4%,5.1%, to $1,437$1,476 million in 2026. Operating expenses increased primarily as a result of an increase in total case volume and higher distribution, selling and administrative costs, partially offset by continued distribution productivity improvement as well as actions to streamline administrative processes and costs. Operating expenses as a percentage of net sales were 15.0%14.0% in 2026, compared to 14.9%13.9% in 2025.

Our operating income was $216$443 million in 2026, compared to operating income of $224$372 million in 2025. The decreaseincrease in operating income was due to the factors discussed in the relevant sections above.

Interest expense—net decreasedincreased $2$3 million to $75$77 million in 2026 primarily due to lowerhigher borrowings under the ABL FacilityFacility, revolverpartially andoffset by lower interest rates for our variable rate debt.

Our ongoing operations and strategic objectives require working capital and continuing capital investment. Our primary sources of liquidity include cash provided by operations, as well as access to capital from bank borrowings and other types of debt and financing arrangements. As of MarchJune 28,27, 2026, the Company had approximately $1.6$1.8 billion in cash and available liquidity.

We had outstanding borrowings totaling $388$433 million and had issued letters of credit totaling $315 million under the ABL Facility as of MarchJune 28,27, 2026. There was remaining capacity of $1,597$1,752 million under the ABL Facility as of MarchJune 28,27, 2026.

The agreements governing our indebtedness contain customary covenants. These include, among other things, covenants that may restrict our ability to incur certain additional indebtedness, create or permit liens on our assets, pay dividends, or engage in mergers or consolidations. The Company had approximately $2.9$3.1 billion of restricted payment capacity under these covenants and approximately $1.4$1.2 billion of its net assets were restricted after taking into consideration the net deferred tax assets and intercompany balances that eliminate in consolidation as of MarchJune 28,27, 2026.

Cash flows provided by operating activities was $294$725 million for both the 1326 weeks ended MarchJune 27, 2026 and June 28, 2026,2025. representingHigher anet decreaseincome ofin $97the millioncurrent asperiod comparedwas to cash flows providedoffset by operating activities of $391 million for the 13 weeks ended March 29, 2025, driven byfavorable changes in operating assets and liabilities including an increase in tax payments for the 13prior weekscomparative ended March 28, 2026 compared to the 13 weeks ended March 29, 2025.period.

Cash flows used in investing activities in the 1326 weeks ended MarchJune 28,27, 2026 and MarchJune 29,28, 2025 included cash expenditures of $98$174 million and $84$161 million, respectively, related to investments in information technology, property and equipment and construction of and improvements to distribution facilities.

During the 1326 weeks ended MarchJune 29,28, 2025, the Company completed the asset acquisition of Jake’s Finer Foods. Cash paid for the acquisition of Jake’s Finer Foods was approximately $85$87 million. Investing activities for the 1326 weeks ended MarchJune 29,28, 2025, also included cash proceeds from the sale of Freshway of $38 million.

Cash flows used in financing activities in the 1326 weeks ended MarchJune 28,27, 2026 included $41$4 million in net paymentsborrowings under the ABL Facility and $35$63 million in scheduled payments under our financing leases. The Company incurred approximately $4 million of lender fees and third-party costs in connection with the ABL Facility amendment, which were capitalized as deferred financing costs. Financing activities in the 1326 weeks ended MarchJune 28,27, 2026 also included $75$445 million common stock repurchased under the May 2025 Share Repurchase Program and the November 2025 Share Repurchase Program, $7$17 million of proceeds received from stock purchases under our employee stock purchase plan, $7$10 million of proceeds from the exercise of employee stock options, which were offset by $51 million of employee tax withholdings paid in connection with the vesting of stock awards.

Cash flows used by financing activities in the 1326 weeks ended MarchJune 29,28, 2025 included $147$175 million in net payments under the ABL Facility and $23$77 million in scheduled payments under our financing leases. Financing activities in the 1326 weeks ended MarchJune 29,28, 2025 also included $23$270 million common stock repurchased under the AmendedCompany’s Shareprior Repurchaseand Program,original $6share repurchase program initially approved in November 2022, $16 million of proceeds received from stock purchases under our employee stock purchase plan, $1$5 million of proceeds from the exercise of employee stock options, which were offset by $33$34 million of employee tax withholdings paid in connection with the vesting of stock awards.

We had $315 million of letters of credit outstanding primarily securing the Company’s obligations with respect to certain real estate leases, under the ABL Facility as of MarchJune 28,27, 2026.

We held approximately $377$354 million of surety bonds, as of MarchJune 28,27, 2026 and $362 million as of December 27, 2025, primarily in favor of certain commercial insurers to secure obligations with respect to our insurance programs. In certain cases, surety bonds may be used as an alternative to letters of credit.

We have prepared the financial information in this Quarterly Report in accordance with GAAP. Preparing the Company’s consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during these reporting periods. We base our estimates and judgments on historical experience and other factors we believe are reasonable under the circumstances. These assumptions form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Part II, Item 7—“Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the 2025 Annual Report includes a summary of the critical accounting policies we believe are the most important to aid in understanding our financial results. There have been no changes to those critical accounting policies that have had a material impact on our reported amounts of assets, liabilities, revenue, or expenses during the 1326 weeks ended MarchJune 28,27, 2026.