Rosemont, Illinois, U.S.A.-based foodservice distributor US Foods reported record earnings, as well as profit and sales increases, in fiscal year 2023 at the same time it announced the acquisition of broadline foodservice distributor IWC Food Service.
US Foods reported its net sales increased 4.5 percent to USD 35.6 billion (EUR 33 billion) in 2023, while gross profit increased 11.9 percent to USD 6.1 billion (EUR 5.6 billion). Its FY 2023 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) hit a record USD 1.56 billion (EUR 1.4 billion) – up 19 percent year over year – driven by strong case growth with its independent restaurant, healthcare, and hospitality customers, CEO David Flitman said.
“Through execution of our strategy and long-range plan, we captured profitable market share and enhanced margins,” Flitman said.
The year was capped off by a Q4 that saw US Foods’ net sales increase by 4.9 percent to USD 8.9 billion (EUR 8.2 billion), as total case volume increased by 5.6 percent and independent restaurant case volume increased 7.3 percent. The company’s adjusted EBITDA during the period reached USD 388 million (EUR 359 million)– up 10.9 percent – and it achieved a gross profit of USD 1.6 billion (EUR 1.5 billion) – up 9.4 percent year over year.
Operating expenses in Q4 2023 were up 4.3 percent, or USD 54 million (EUR 50 million), from the prior year, reaching USD 1.3 billion (EUR 1.2 billion), which US Foods attributed to increased case volume and higher seller compensation costs. Those costs were offset by lower distribution costs per case, which US Foods attributed to cost savings initiatives including “routing improvements and focused efforts positively impacting labor turnover and productivity,” as well as lower fuel costs.
“I am confident that our 2023 financial performance and our healthy balance sheet will enable us to execute our capital allocation priorities in 2024,” US Foods CFO Dirk Locascio said in a release.
At roughly the same time as it reported its FY 2023 and Q4 2023 results, it announced its acquisition of Cookeville, Tennessee, U.S.A.-based IWC Food Service for an undisclosed amount.
“The transaction is part of the company’s tuck-in acquisition strategy and will allow US Foods to further expand its reach into the central Tennessee region, where the company does not currently have a distribution center,” US Foods said in a press release.
IWC was founded more than 60 years ago and has more than USD 200 million (EUR 185 million) in annual revenue, serving more than 2,700 independent restaurants that, in all, comprise more than half of its business. It offers several frozen seafood species, including crab, crawfish, oysters, and a variety of fish fillets.
IWC will continue to operate in its current 160,000-square-foot facility and will also continue service at the local Cookeville Cash-and-Carry store, US Foods said.
"We are excited to welcome the dedicated IWC Food Service associates to US Foods as we continue to strategically grow the US Foods footprint," Flitman said. "With a heritage of putting innovation, quality, and integrity at the forefront of their commitment to their customers, IWC Food Service has maintained a superior reputation throughout the central Tennessee region, and we look forward to investing in the continued growth of the business after close."
IWC Food Service President Bob Mackie said the acquisition will allow it to combine its strengths with US Foods to continue “bringing our valued customers the service, solutions, and tools they need to help them thrive and succeed.”
US Foods said that pending regulatory approval, the acquisition is expected to close in the second quarter of 2024.
Photo courtesy of US Foods
