US Foods (USFD) — Cash-Generating Growth, Heavy Buybacks and Rising Leverage

FY2024 delivered revenue growth and aggressive buybacks — but balance sheet tension rose#

US Foods [USFD] closed FY2024 with revenue of $37.88B (+6.41% YoY) and operating income of $1.10B (+7.84% YoY), while management repurchased $948MM of common stock during the year and ended FY2024 with just $59MM in cash and net debt of $5.38B. Those three datapoints — top-line growth, strong free-cash-flow conversion and large shareholder returns funded while cash balances fell — form the central trade-off in US Foods’ current investment story: operational momentum and capital returns versus rising leverage and thinner liquidity cushions. All figures in this paragraph are from US Foods’ FY2024 filings (filed 2025-02-13) and subsequent quarterly releases in 2025.

The headline numbers are straightforward, but the implications are mixed. On one hand, the company converted reported net income of $494MM into $833MM of free cash flow, producing a free-cash-flow-to-net-income conversion of ~168.6% for FY2024 — a signal of high cash quality and working-capital discipline. On the other hand, year-end cash of $59MM represents a steep decline from $269MM at FY2023-end, reflecting both the buyback cadence and financing activity. The result is higher net leverage: using FY2024 year-end figures, net debt / FY2024 EBITDA = $5.38B / $1.40B = 3.84x (see reconciliation below), a materially higher ratio than a conservative bench-mark would prefer for a distribution-and-logistics business with cyclical demand exposure.

Taken together, FY2024 shows US Foods executing on growth and cash returns while moving the capital structure incrementally toward greater leverage. The near-term question for investors is whether ongoing operating improvements and cash generation can sustainably lower net leverage — or whether continued buybacks will keep the company at elevated net-debt multiples that leave it more exposed in a downturn.

Financial performance: growth, margins and cash flow in context#

US Foods’ FY2024 topline expansion to $37.88B was broad-based enough to lift gross profit to $6.53B (+6.18% YoY) while preserving a stable gross margin of 17.25%. Operating expenses rose, but operating income expanded faster than revenue in percentage terms, pushing the operating margin to 2.90% (from 2.86% in FY2023). Net income slipped mildly to $494MM (-2.37% YoY), driven by tax and interest dynamics, but operating cash flow was robust at $1.17B, resulting in $833MM of free cash flow after capital expenditure of $341MM.

Cash generation quality stands out when comparing accounting earnings to cash flow. Operating cash flow of $1.17B exceeded net income by roughly $676MM, primarily reflecting depreciation & amortization (FY2024 D&A $438MM) and favorable working-capital movements. This cash conversion allowed the company to fund near-term investments and sizable buybacks without issuing equity. However, a material portion of financing activity in FY2024 shows $948MM of stock repurchases and $831MM of net cash used in financing — underscoring management’s prioritization of returns.

At the margin level, EBITDA for FY2024 was $1.40B — essentially flat versus FY2023. That results in an EBITDA margin of 3.70% on FY2024 revenue, slightly below the FY2023 EBITDA margin of ~3.92%. The slight compression in EBITDA margin despite operating income improvement points to cost pressures in SG&A and the narrow operating leverage characteristic of distribution businesses: small changes in SG&A or logistics costs can meaningfully move EBITDA.

Table: Income statement snapshot (FY2022–FY2024)#

All line items above are taken from US Foods’ annual filings and reflect reported currency amounts.

Balance sheet and leverage: rising net debt and a thin cash buffer#

US Foods’ balance sheet at FY2024 year-end shows total assets of $13.44B, total stockholders’ equity of $4.53B, and total debt of $5.43B. Cash and cash equivalents stood at $59MM, producing net debt of $5.38B. Using those year-end numbers and FY2024 reported EBITDA of $1.40B, the simple leverage ratio is net debt / EBITDA = 3.84x.

This calculation differs from some TTM metrics published in dataset summaries (which show net-debt-to-EBITDA of 3.31x and EV/EBITDA of 15.01x). The discrepancy arises because published TTM ratios typically use an EBITDA measure that smooths quarterly results or a market-cap/EV calculated at a different timestamp. For transparency, our leverage math above uses FY2024 reported year-end balances and the FY2024 EBITDA figure. Using market capitalization of $17.48B (closing price $77.63) and the balance-sheet debt/cash figures produces an enterprise value of ~$22.85B, which implies an EV/EBITDA of ~16.32x on FY2024 EBITDA — above the 15x figure shown in some forward-looking tables and consistent with our conservative, year-end reconciliation.

Year-over-year working-capital dynamics also merit attention. Cash fell materially from $269MM at FY2023-end to $59MM at FY2024-end; yet operating cash flow increased to $1.17B, signalling that reductions in liquidity were driven by discretionary capital allocation (not operating deterioration). The company returned capital to shareholders while maintaining a capital expenditure profile of ~$341MM (capex to revenue ~0.90%), consistent with a distribution operator that invests primarily in fleet, facilities and IT rather than heavy fixed-capex projects.

Table: Balance sheet & cash flow metrics (FY2022–FY2024)#

Source: US Foods FY filings and cash-flow statements (filing dates 2025-02-13, 2024-02-15, 2023-02-17).

Capital allocation: buybacks dominate; dividends absent#

A defining characteristic of the FY2024 financials is capital allocation. US Foods repurchased $948MM of common stock in FY2024, up sharply from $294MM in FY2023. There were no dividends paid in FY2024. Buybacks equal approximately ~5.4% of year-end market capitalization (buybacks $948MM / market cap $17.48B), indicating an active share-repurchase program intended to return cash to shareholders and reduce share count.

The trade-off is clear: buybacks can be value-accretive if funded from sustainable free cash flow and executed when shares are attractively priced. However, funding repurchases while cash balances decline and net leverage rises toward the mid-3x range increases sensitivity to macro shocks or earnings shortfalls. For a business exposed to foodservice demand cycles and input-cost volatility, maintaining a comfortable liquidity buffer is important operationally.

Recent quarterly cadence and earnings surprises: steady beats but mixed guidance signals#

During 2025 the company’s quarterly results exhibited modest beats and misses versus consensus. Notably, on 2025-08-07 US Foods reported adjusted EPS of $1.19 versus estimated $1.14 — a +4.39% beat, while on 2025-05-08 the company posted $0.68 versus est $0.693 (a -1.88% miss). Earlier quarters in 2025 (Feb and Nov 2024 releases) also showed small beats. The pattern is one of generally tight execution around expectations with occasional upside, reflecting disciplined cost management and predictable demand from core foodservice customers.

Those quarterly beats support management’s narrative of operational improvement (pricing, route efficiency, and procurement) but do not yet translate into substantial EBITDA expansion. The company’s ability to convert operational initiatives into higher recurring margins will determine whether FY-level free cash flow can sustainably reduce net leverage even while maintaining share-repurchase programs.

Strategy & operational levers: where margin upside could come from#

US Foods is a national foodservice distributor with scale advantages in procurement, logistics and customer reach. The company lists several practical levers to improve profitability: demand forecasting to reduce waste, route optimization to lower fuel and labor costs, and price optimization to capture better unit economics. These are precisely the sorts of initiatives where enterprise AI and routing/optimization software can deliver step-change efficiency. If US Foods achieves incremental improvements in inventory turns, on-time fill rates and route utilization, even modest percentage improvements can amplify operating margin given the company’s large revenue base.

Execution evidence is mixed but encouraging: the company’s operating income increased faster than revenue in FY2024, and free cash flow rose to $833MM, indicating some operating leverage. The caveat is that EBITDA remained flat year-over-year, so operating income gains are concentrated in line items that may not be as durable as full-cycle margin expansion. Sustained margin expansion will require persistent improvements across purchasing, logistics and SG&A.

Competitive dynamics and industry context#

US Foods operates in a low-margin, high-volume industry alongside peers that include Sysco and regional distributors. Competitive advantage is a function of scale, logistics footprint, vendor relationships and margin management. US Foods’ large footprint and distribution network supply it with purchasing scale and potential network efficiencies, but the segment remains competitive on service and price. Industry trends such as consolidation, labor and fuel cost volatility, and technological adoption (routing/forecasting/AI) will determine long-term relative performance.

US Foods’ financials indicate it is keeping pace with peers on revenue growth and is investing enough in capex and technology to preserve competitiveness. However, margin differentiation will be key — and that requires measurable improvements in unit economics rather than one-off cost saves.

What this means for investors (no recommendation)#

First, US Foods demonstrates strong cash generation. FY2024 free cash flow of $833MM and operating cash flow of $1.17B show the business can produce cash well in excess of GAAP net income, which is a structural advantage in a capital-light distribution model. This cash generation supports growth investments, working-capital needs and shareholder returns.

Second, management is prioritizing share repurchases: $948MM of buybacks in FY2024 materially increased capital returned to shareholders. Investors should monitor the interplay between buybacks and leverage; continued repurchases at similar magnitudes without commensurate deleveraging would keep net-debt multiples elevated.

Third, leverage and liquidity deserve active monitoring. Our year-end reconciliation shows net debt / FY2024 EBITDA ~3.84x and a thin cash buffer ($59MM). That leverage level is manageable for a stable distributor but reduces financial flexibility compared with less-levered peers. The key question for the next 12–18 months is whether FCF generation and potential deleveraging programs (or slower repurchases) reduce net leverage meaningfully.

Finally, margin expansion remains the primary path to durable valuation upside. US Foods has plausible operational levers — forecasting, routing and pricing — that can incrementally lift margin. Evidence of sustained EBITDA margin improvement (quarter-over-quarter compounding) would materially shift the investment case because it would convert strong cash conversion into lower leverage and higher valuation multiples.

Key takeaways#

US Foods’ FY2024 results show revenue momentum (+6.41% YoY) and strong cash conversion (FCF $833MM), combined with aggressive capital returns ($948MM in buybacks). Those actions produced a tighter liquidity profile ($59MM cash) and higher year-end net leverage (our FY2024 reconciliation: net debt / EBITDA ~3.84x). The company’s operational levers could drive margin improvement, but investors should watch execution cadence and capital-allocation discipline closely because continued large repurchases without meaningful deleveraging will maintain elevated leverage and limit optionality.

Appendix: reconciliations and calculation notes#

All calculations use FY2024 year-end reported figures unless explicitly identified as TTM or analyst-estimate figures. Specific reconciliation highlights:

• Revenue growth FY2024 vs FY2023 = (37,880 - 35,600) / 35,600 = +6.41%.
• Operating income growth FY2024 vs FY2023 = (1,100 - 1,020) / 1,020 = +7.84%.
• Free-cash-flow / net-income = 833 / 494 = 168.6%.
• Net debt (FY2024) = Total debt ($5,430M) - Cash ($59M) = $5,371M (rounded to $5.38B in text).
• Net debt / FY2024 EBITDA = 5,371 / 1,400 = 3.84x (rounded).
• Enterprise value (year-end snapshot) = Market cap ($17,480M) + Total debt ($5,430M) - Cash ($59M) = $22,851M; EV / FY2024 EBITDA = 22,851 / 1,400 = 16.32x.

Where published TTM or forward multiples differ from our year-end reconciliations (for example, a dataset EV/EBITDA of 15.01x or net-debt/EBITDA of 3.31x), the differences reflect alternative EBITDA definitions (TTM smoothing), differing EV timestamps, or analyst-estimate adjustments. For transparency, we prioritize year-end reported balances and FY2024 reported EBITDA in the core analysis above.

All primary financial figures cited are taken from US Foods’ FY2024 annual filings and the company’s subsequent quarterly releases in 2025 (filing dates and accepted dates as reported in the company’s financial dataset).